UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest events reported) July 26, 2004
--------------------------
(July 26, 2004)
--------------------------
Commission Name of Registrants, State of Incorporation, I.R.S. Employer
File Number Address and Telephone Number Identification No.
----------- -------------------------------------------- ------------------
333-32170 PNM Resources, Inc. 85-0468296
(A New Mexico Corporation)
Alvarado Square
Albuquerque, New Mexico 87158
(505) 241-2700
1-6986 Public Service Company of New Mexico 85-0019030
(A New Mexico Corporation)
Alvarado Square
Albuquerque, New Mexico 87158
(505) 241-2700
------------------------------
(Former name, former address and former fiscal year,
if changed since last report)
Item 12. Results of Operations and Financial Condition
On July 26, 2004, PNM Resources, Inc. (the "Company") issued a press
release announcing its unaudited results of operations for the six and twelve
months ended June 30, 2004. The press release is furnished herewith as Exhibit
99.1 and incorporated by reference herein.
The Company's press release and other communications from time to time
may include certain non-GAAP financial measures. A "non-GAAP financial measure"
is defined as a numerical measure of a company's financial performance,
financial position or cash flows that excludes (or includes) amounts that are
included in (or excluded from) the most directly comparable measure calculated
and presented in accordance with GAAP in the Company's financial statements.
Non-GAAP financial measures utilized by the Company include presentations
of revenues, operating expenses, operating income, other income and deductions,
net income, earnings per share and other GAAP measures of operating performance
that exclude or include the effect of litigation settlements, accounting or
regulatory changes, the restructuring of selected operations, certain merger
activities and other similar events. The Company's management believes these
non-GAAP financial measures provide useful information to investors by removing
the effect of variances in GAAP reported results of operations that are not
indicative of fundamental changes in the earnings capacity of the Company's
operations. Management also believes that the presentation of the non-GAAP
financial measure is consistent with its past practice, as well as industry
practice in general, and will enable investors and analysts to compare current
non-GAAP measures with non-GAAP measures presented in prior periods. The
non-GAAP financial measures used by the Company should not be considered in
isolation or as a substitute for measures of performance prepared in accordance
with GAAP.
Limitation on Incorporation by Reference
In accordance with general instruction B.6 of Form 8-K, the information
in this report, including exhibits, is furnished pursuant to Item 12 and shall
not be deemed "filed" for the purposes of Section 18 of the Securities Exchange
Act of 1934, or otherwise subject to the liability of that section and not
deemed incorporated by reference in any filing under the Securities Act of 1933.
EXHIBIT INDEX
Exhibit Number Description
99.1 Press Release dated July 26, 2004 and PNM Resources, Inc. and
Subsidiaries Consolidated Statements of Earnings for the six
and twelve months ended June 30, 2004 and 2003 and other
financial information.
2
EXHIBIT 99.1
PNM Reports Second Quarter Earnings, Increases 2004 Earnings Guidance
o The company expects 2004 ongoing earnings per share of between
$1.30 and $1.45.
o Second quarter net earnings of $16.8 million, or $0.28 per
diluted share.
o Net earnings of $41.6 million, or $0.68 per diluted share, for
the six months ended June 30, 2004.
o Ongoing earnings per diluted share of $0.68 for the first six
months of 2004, compared to $0.65 in the first half of 2003.
o Total operating revenues up $39.9 million, or 12.2 percent, in
the latest quarter compared to the same period last year.
o For the six months ended June 30, operating revenues increased
$97.9 million, or 13.8 percent, compared to the same period last
year.
o Retail electric load grew 3.2 percent in the first half of 2004,
while the number of retail gas customers increased 1.9 percent.
o Wholesale power revenues increased $25.3 million or 18.9 percent
in the latest quarter compared to the same period last year,
primarily due to new long-term contracts added over the past
year.
ALBUQUERQUE, N.M., July 26, 2004 - PNM Resources (NYSE: PNM) today reported
consolidated net earnings of $16.8 million, or $0.28 per share (diluted), for
the three months ended June 30, 2004. There were no one-time items reported in
the latest quarter of 2004 or in the comparable three months of 2003.
Total operating revenues rose $39.9 million, or 12.2 percent, to $365.6 million
in the latest quarter, compared to $325.7 million in the second quarter of 2003.
In the second quarter of 2003 the company reported consolidated net earnings
available for common stock of $17.6 million, or $0.30 per diluted share.
Net earnings available for common stock totaled $41.6 million, or $0.68 per
diluted share, for the six months ended June 30, 2004. In the first half of
2003, the company reported net earnings of $65.8 million, or $1.11 per diluted
share, including a net gain of $0.46 per share in one-time gains and charges.
Ongoing earnings for the six months ended June 30, 2004, were $0.68 per share,
up nearly 5 percent from $0.65 per share for the first six months of 2003.
The increase in ongoing earnings for the first half of 2004 compared to the same
period in 2003 was primarily due to the addition of several new long-term power
contracts, coupled with strong customer growth in both the retail electric and
gas utilities, and significantly lower interest costs due to refinancing
long-term debt. Lower fuel costs for coal-fired generation and colder
temperatures in the first quarter of 2004 also increased retail electric and gas
gross margins. These improvements, together with a gas rate increase implemented
beginning in the first quarter 2004, more than offset a retail electric rate
reduction that took effect in September 2003. Rolling 12-month earnings are up
over 7 percent reflecting the factors noted above.
One-Time and Non-Recurring Gains and Charges
There were no one-time gains or charges recorded in the first six months of
2004. In the first quarter of 2003 the company reported a non-cash gain (after
tax) of $37.4 million or $0.63 per diluted share, and a one-time charge (after
tax) of $10.1 million, or $0.17 per diluted share.
3
EXHIBIT 99.1 (Continued)
PNM Resources, Inc.
Reconciliation of GAAP Reported to Ongoing Earnings Per Share June 30, 2004
Three Months Six Months Twelve Months
Q2 2004 Q2 2003 6/30/04 6/30/03 6/30/04 6/30/03
----------------- ----------------- ------------------
GAAP Reported EPS $0.28 $0.30 $0.68 $1.11 $1.16 $1.58
One-time charges -- -- -- 0.17 0.17 0.30
Change in Acctng -- -- -- (0.63) 0.01 (0.63)
------ ------ ------ ------ ------ ------
Ongoing earnings $0.28 $0.30 $0.68 $0.65 $1.34 $1.25
Average diluted shares (000s) 61,159 59,632 61,193 59,354 61,180 59,196
Performance Summary
Consolidated gross margin (operating revenues less cost of energy) for the
quarter decreased $8.0 million, or 4.9 percent, from the comparable period last
year. Retail electric gross margin (operating revenues less cost of energy)
decreased by $3.0 million, from $92.7 million in the second quarter 2003 to
$89.7 million in the latest quarter.
The reduction in retail electric gross margin was due to the electric rate
decrease implemented in 2003 and to the amortization of costs related to closing
the surface mine at San Juan Generating Station. Wholesale electric gross margin
decreased $5.4 million due to higher purchased power costs and reduced plant
availability during the quarter.
Gas gross margin (operating revenues less cost of gas) increased $1.5 million,
or 5.4 percent, in the most recent quarter compared to the second quarter 2003.
The increase in gas gross margin was primarily due to a rate increase
implemented beginning in the first quarter of 2004.
Earnings Guidance Raised for 2004
Based on results for the first six months and its financial and operating
forecasts for the remainder of the year, and adjusting for the 3-for-2 stock
split, PNM Resources is raising its earnings guidance for 2004. The company now
expects 2004 ongoing earnings (not including one-time gains and charges) will be
in the range of between $1.30 and $1.45 per share.
PNM Resources is an energy holding company based in Albuquerque, New Mexico.
PNM, the principal subsidiary of PNM Resources, serves about 460,000 natural gas
customers and 405,000 electric customers in New Mexico. The company also sells
power on the wholesale market in the Western U.S. PNM Resources stock is traded
primarily on the NYSE under the symbol PNM. For more information about our
company, see our web site at www.pnm.com.
4
EXHIBIT 99.1 (Continued)
Conference Call and Webcast at 9:00 AM (ET) Today
With yesterday's announced acquisition of TNP Enterprises, PNM Resources will
host a conference call today for investors and analysts at 9:00 AM (ET) to
discuss both the TNP Enterprises transaction as well as PNM Resources' second
quarter earnings results. Interested participants should call 800-838-4403
(U.S.) or 973-317-5319 (outside of the U.S.). Accordingly, the company's
previously scheduled earnings call for Tuesday, July 27, has been cancelled.
Today's call will also be broadcast live over the Internet, and can be accessed
from a link at www.pnm.com. PNM Resources will have an investor presentation as
part of the webcast and will also mount the presentation on its home page prior
to the teleconference. The company will reference the presentation during the
call.
Today's conference call will be archived and rebroadcast through August 9, 2004,
at noon (ET). Call 800-428-6051 (U.S.) or 973-709-2089 (outside of the U.S.),
passcode identification number 367700. A copy of the transcript will be posted
on PNM Resources' website at www.pnm.com as soon as possible.
Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995
Statements made in this filing and documents the Company files with the SEC that
relate to future events or the Company's expectations, projections, estimates,
intentions, goals, targets and strategies, both with respect to PNM Resources
and with respect to the proposed acquisition of TNP Enterprises, are made
pursuant to the Private Securities Litigation Reform Act of 1995. You are
cautioned that all forward-looking statements are based upon current
expectations and estimates and we assume no obligation to update this
information. Because actual results may differ materially from those expressed
or implied by the forward-looking statements, PNM Resources cautions you not to
place undue reliance on these statements. Many factors could cause actual
results to differ, and will affect our future financial condition, cash flow and
operating results. These factors include, risks and uncertainties relating to
the receipt of regulatory approvals of the proposed transaction, the risks that
the businesses will not be integrated successfully, the risk that the benefits
of the transaction will not be fully realized or will take longer to realize
than expected, disruption from the transaction making it more difficult to
maintain relationships with customers, employees, suppliers or other third
parties, conditions in the financial markets relevant to the proposed
transaction, interest rates, weather, fuel costs, changes in supply and demand
in the market for electric power, wholesale power prices, market liquidity, the
competitive environment in the electric and natural gas industries, the
performance of generating units and transmission system, state and federal
regulatory and legislative decisions and actions, the outcome of legal
proceedings and the performance of state, regional and national economies. For a
detailed discussion of the important factors that affect PNM Resources and that
could cause actual results to differ from those expressed or implied by our
forward-looking statements, please see "Management's Discussion and Analysis of
Financial Condition and Results of Operations" in our current and future Annual
Reports on Form 10-K and Quarterly Reports on Form 10-Q and our current and
future Current Reports on Form 8-K, filed with the SEC.
5
EXHIBIT 99.1 (Continued)
PNM RESOURCES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
--------------------------- ---------------------------
2004 2003 2004 2003
------------ ------------ ------------ ------------
(In thousands, except per share amounts)
Operating Revenues:
Electric..................................... $284,599 $266,150 $552,127 $507,528
Gas.......................................... 80,886 59,520 256,760 203,706
Other........................................ 128 52 379 112
------------ ------------ ------------ ------------
Total operating revenues................... 365,613 325,722 809,266 711,346
------------ ------------ ------------ ------------
Operating Expenses:
Cost of energy sold.......................... 208,737 160,846 478,504 384,713
Administrative and general................... 42,575 42,600 82,949 74,642
Energy production costs...................... 36,688 34,515 74,242 69,609
Depreciation and amortization................ 26,431 28,850 52,568 57,224
Transmission and distribution costs.......... 14,150 15,194 29,642 31,353
Taxes, other than income taxes............... 8,262 6,720 17,746 14,506
Income taxes................................. 6,506 7,083 17,817 15,959
------------ ------------ ------------ ------------
Total operating expenses................... 343,349 295,808 753,468 648,006
------------ ------------ ------------ ------------
Operating income........................... 22,264 29,914 55,798 63,340
------------ ------------ ------------ ------------
Other Income and Deductions:
Other income................................. 10,590 12,745 22,178 23,951
Other deductions............................. (614) (4,020) (3,986) (21,932)
Income tax expense........................... (3,190) (3,132) (6,186) (725)
------------ ------------ ------------ ------------
Net other income and deductions............ 6,786 5,593 12,006 1,294
Interest Charges............................... 12,055 17,764 25,884 35,997
Preferred Stock Dividend Requirements
of Subsidiary............................... 146 147 293 293
------------ ------------ ------------ ------------
Net Earnings Before Cumulative Effect of a
Change in Accounting Principle.............. 16,849 17,596 41,627 28,344
Cumulative Effect of a Change in Accounting
Principle, Net of Tax of Zero and $24,524... - - - 37,422
------------ ------------ ------------ ------------
Net Earnings................................... $ 16,849 $ 17,596 $ 41,627 $ 65,766
============ ============ ============ ============
Net Earnings per Common Share:
Basic........................................ $ 0.28 $ 0.30 $ 0.69 $ 1.12
============ ============ ============ ============
Diluted...................................... $ 0.28 $ 0.30 $ 0.68 $ 1.11
============ ============ ============ ============
Dividends Paid per Common Share................ $ 0.16 $ 0.15 $ 0.31 $ 0.30
============ ============ ============ ============
6
EXHIBIT 99.1 (Continued)
PNM RESOURCES, INC. AND SUBSIDIARIES
COMPARATIVE OPERATING STATISTICS
The following table shows electric revenues by customer class and average
customers:
Electric Retail Revenues
Three Months Ended
June 30,
2004 2003 Variance
------------- ------------- --------------
(In thousands)
Residential................ $46,821 $46,582 $ 239
Commercial................. 63,114 63,273 (159)
Industrial................. 15,373 16,350 (977)
Other...................... 5,387 4,887 500
------------- ------------- --------------
$130,695 $131,092 $ (397)
============= ============= ==============
Average customers.......... 405,325 394,617 10,708
============= ============= ==============
Six Months Ended
June 30,
2004 2003 Variance
------------- ------------- --------------
(In thousands)
Residential................ $100,953 $97,590 $3,363
Commercial................. 119,865 118,334 1,531
Industrial................. 30,260 32,263 (2,003)
Other...................... 9,653 9,109 544
------------- ------------- --------------
$260,731 $257,296 $ 3,435
============= ============= ==============
Average customers.......... 404,285 393,573 10,712
============= ============= ==============
(Intentionally left blank)
7
EXHIBIT 99.1 (Continued)
PNM RESOURCES, INC. AND SUBSIDIARIES
COMPARATIVE OPERATING STATISTICS
The following table shows electric sales by customer class:
Electric Sales
Three Months Ended
June 30,
2004 2003 Variance
------------- ------------- --------------
(Megawatt hours)
Residential............... 567,825 543,195 24,630
Commercial................ 862,490 834,103 28,387
Industrial................ 318,633 325,242 (6,609)
Other..................... 65,038 63,131 1,907
------------- ------------- --------------
1,813,986 1,765,671 48,315
============= ============= ==============
Six Months Ended
June 30,
2004 2003 Variance
------------- ------------- --------------
(Megawatt hours)
Residential............... 1,223,309 1,136,055 87,254
Commercial................ 1,639,332 1,554,240 85,092
Industrial................ 629,308 642,650 (13,342)
Other..................... 115,727 113,307 2,420
------------- ------------- --------------
3,607,676 3,446,252 161,424
============= ============= ==============
(Intentionally left blank)
8
EXHIBIT 99.1 (Continued)
PNM RESOURCES, INC. AND SUBSIDIARIES
COMPARATIVE OPERATING STATISTICS
The following table shows gas revenues by customer and average customers:
Gas Revenues
Three Months Ended
June 30,
2004 2003 Variance
------------- ------------- --------------
(In thousands)
Residential............... $39,053 $33,882 $5,171
Commercial................ 12,796 11,470 1,326
Industrial................ 622 434 188
Transportation*........... 3,639 6,010 (2,371)
Other..................... 24,776 7,724 17,052
------------- ------------- --------------
$80,886 $59,520 $21,366
============= ============= ==============
Average customers......... 459,398 450,948 8,450
============= ============= ==============
Six Months Ended
June 30,
2004 2003 Variance
------------- ------------- --------------
(In thousands)
Residential............... $154,791 $130,282 $24,509
Commercial................ 48,952 41,398 7,554
Industrial................ 1,290 1,465 (175)
Transportation*........... 7,943 9,755 (1,812)
Other..................... 43,784 20,806 22,978
------------- ------------- --------------
$256,760 $203,706 $53,054
============= ============= ==============
Average customers......... 460,263 451,558 8,705
============= ============= ==============
*Customer-owned gas.
(Intentionally left blank)
9
EXHIBIT 99.1 (Continued)
PNM RESOURCES, INC. AND SUBSIDIARIES
COMPARATIVE OPERATING STATISTICS
The following table shows gas throughput by customer class:
Gas Throughput
Three Months Ended
June 30,
2004 2003 Variance
------------- ------------- --------------
(Thousands of decatherms)
Residential............... 3,334 3,651 (317)
Commercial................ 1,455 1,641 (186)
Industrial................ 88 70 18
Transportation*........... 13,014 16,455 (3,441)
Other..................... 4,077 1,026 3,051
------------- ------------- --------------
21,968 22,843 (875)
============= ============= ==============
Six Months Ended
June 30,
2004 2003 Variance
------------- ------------- --------------
(Thousands of decatherms)
Residential............... 17,348 15,857 1,491
Commercial................ 6,273 5,975 298
Industrial................ 192 256 (64)
Transportation*........... 20,734 25,090 (4,356)
Other..................... 7,135 2,969 4,166
------------- ------------- --------------
51,682 50,147 1,535
============= ============= ==============
*Customer-owned gas
Electric Transmission Revenues
Three Months Ended
June 30,
2004 2003 Variance
------------- ------------- --------------
(In thousands)
External customers........ $4,420 $2,317 $2,103
============= ============= ==============
Six Months Ended
June 30,
2004 2003 Variance
------------- ------------- --------------
(In thousands)
External customers........ $8,834 $6,874 $1,960
============= ============= ==============
10
EXHIBIT 99.1 (Continued)
PNM RESOURCES, INC. AND SUBSIDIARIES
COMPARATIVE OPERATING STATISTICS
The following table shows revenues by customer class:
Wholesale Revenues
Three Months Ended
June 30,
2004 2003 Variance
------------- ------------- --------------
(In thousands)
Long-term contracts*...... $40,214 $33,607 $6,607
Forward sales*............ 48,045 44,010 4,035
Short-term sales.......... 70,635 55,124 15,511
------------- ------------- --------------
$158,894 $132,741 $26,153
============= ============= ==============
Six Months Ended
June 30,
2004 2003 Variance
------------- ------------- --------------
(In thousands)
Long-term contracts....... $77,759 $62,625 $15,134
Forward sales*............ 76,006 66,948 9,058
Short-term sales.......... 138,901 113,785 25,116
------------- ------------- --------------
$292,666 $243,358 $49,308
============= ============= ==============
*Includes mark-to-market gains/(losses).
Note: For comparative purposes, wholesale revenues for the three months
and six months ended June 30, 2004 have not been reclassified to a net
margin basis in accordance with GAAP. The impact would be to reduce 2004
forward sales revenue by $9.4 million and $10.1 million, respectively.
(Intentionally left blank)
11
EXHIBIT 99.1 (Continued)
PNM RESOURCES, INC. AND SUBSIDIARIES
COMPARATIVE OPERATING STATISTICS
The following table shows sales by customer class:
Wholesale Sales
Three Months Ended
June 30,
2004 2003 Variance
------------- ------------- --------------
(Megawatt hours)
Long-term contracts....... 718,389 560,672 157,717
Forward sales............. 930,800 929,300 1,500
Short-term sales.......... 1,599,519 1,377,886 221,633
------------- ------------- --------------
3,248,708 2,867,858 380,850
============= ============= ==============
Six Months Ended
June 30,
2004 2003 Variance
------------- ------------- --------------
(Megawatt hours)
Long-term contracts....... 1,432,810 1,116,345 316,465
Forward sales............. 1,553,960 1,517,380 36,580
Short-term sales.......... 3,243,204 2,808,744 434,460
------------- ------------- --------------
6,229,974 5,442,469 787,505
============= ============= ==============
(Intentionally left blank)
12
SIGNATURES
----------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrants have duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
PNM RESOURCES, INC. AND
PUBLIC SERVICE COMPANY OF NEW MEXICO
---------------------------------------------
(Registrants)
Date: July 26, 2004 /s/ Thomas G. Sategna
---------------------------------------------
Thomas G. Sategna
Vice President and Corporate Controller
(Officer duly authorized to sign this report)
13