f8k_022808bpnmr.htm
 

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 event reported)
         February 28, 2008
  
 
        (February 28, 2008)
  
 
Commission
  
Name of Registrants, State of Incorporation,
  
I.R.S. Employer
File Number
  
Address and Telephone Number
  
Identification No.
         
001-32462
  
PNM Resources, Inc.
  
85-0468296
   
(A New Mexico Corporation)
    
   
Alvarado Square
    
   
Albuquerque, New Mexico  87158
    
   
(505) 241-2700
    
         
001-06986
  
Public Service Company of New Mexico
  
85-0019030
   
(A New Mexico Corporation)
    
   
Alvarado Square
    
   
Albuquerque, New Mexico  87158
    
   
(505) 241-2700
    
         
002-97230
  
Texas-New Mexico Power Company
  
75-0204070
   
(A Texas Corporation)
    
   
225 East John Carpenter Freeway
    
   
Irving, TX  75062
    
   
(469) 484-8500
    
______________________________
 
(Former name, former address and former fiscal year, if changed since last report)
 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
 
o      Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o      Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o      Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)

o      Pre-commencement communications pursuant to Rule 13e-4 (c) under the Exchange Act (17 CFR 240.13e-4(c)

 
 
 

Item 2.02 Results of Operations and Financial Condition

2007 Earnings

On February 11, 2008, PNM Resources, Inc. (“PNMR” or the “Company”) announced unaudited preliminary 2007 Generally Accepted Accounting Principles ("GAAP") and on-going earnings.  This information was subject to the year-end audit by the Company’s auditors and subject to final review and adjustment by the Company.   The year-end audit has been completed and, as a result, the Company made adjustments to its previously reported preliminary results of operations that in the aggregate totaled quarterly and annual after-tax reductions of $1.5 million to GAAP earnings and $0.6 million to on-going earnings.  The impacts of the reductions on quarterly and annual GAAP and on-going earnings per diluted share, rounded to the nearest cent, are reflected below:

   
Year Ended
December 31, 2007
    
Quarter Ended
December 31, 2007
  
Unaudited Preliminary Earnings
            
On-going earnings per diluted share
   $ 1.08     $ 0.11  
GAAP Earnings per diluted share
   $ 0.98     $ 0.23  
                 
Final Results
                
On-going earnings per diluted share
   $ 1.07     $ 0.11  
GAAP Earnings per diluted share
   $ 0.96     $ 0.21  

The Company provided quarterly and annual reconciliations of GAAP to non-GAAP earnings and earnings per diluted share by segment in its February 11, 2008 announcement and has included updated reconciliations in the attached Schedules 1 through 3.

Non-GAAP Financial Measures

This report and other communications from the Company 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 return on rate base (“regulated return”).  The Company uses ongoing earnings and ongoing earnings per diluted share (or ongoing diluted earnings per share) to evaluate the operations of the Company and to establish goals for management and employees.  Regulated return is used to evaluate the operations of each of its regulated business segments, and the Company believes the rate base to be a measure that is required the New Mexico Public Regulation Commission and the Public Utility Commission of Texas.  Regulated return measures the regulated earnings contribution of a business segment as a percentage of the portion of its rate base deemed financed by common equity.  This return is calculated by dividing ongoing earnings for the regulated portion of the business segment, as adjusted, by the common equity portion of its estimated rate base, based on a defined capital structure.  Non-GAAP financial measures utilized by the Company exclude the impact of non-recurring items and net unrealized mark-to-market gains and losses on economic hedges. The Company’s management believes that 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 measures is largely 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 with respect to prior periods.

 
2
As previously announced, on January 12, 2008, an agreement to sell the gas operations of the Company was signed.  The gas operations are classified as discontinued operations under GAAP.  The sale is subject to approval by the New Mexico Public Regulation Commission.  Pending regulatory approval, management must continue to actively manage the gas operations to fulfill its obligations to its regulated customers.  Therefore, management has determined to include discontinued operations in ongoing earnings to reflect these obligations.

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.2 of Form 8-K, the information in this report, including exhibits, is furnished pursuant to Item 2.02 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.

 
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SIGNATURE

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.
 
PUBLIC SERVICE COMPANY OF NEW MEXICO
 
TEXAS-NEW MEXICO POWER COMPANY
 
(Registrants)
   
   
Date:  February 28, 2008
/s/ Thomas G. Sategna
 
Thomas G. Sategna
 
Vice President and Corporate Controller
 
(Officer duly authorized to sign this report)


 
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PNM Resources
Schedule 1:
4th Quarter 2007 Reconciliation of Ongoing Earnings to GAAP Earnings

   
Quarter Ended
  
   
December 31, 2007
  
   
Earnings
    
EPS
  
   
(in '000s)
    
Diluted
  
GAAP Net Earnings
   $ 16,597     $ 0.21  
                 
Adjustments to reconcile GAAP net earnings to
          
ongoing net earnings (net of income tax effects):
          
Favorable Tax Decisions
     (4,708 )     (0.06 )
Loss on Contribution of Altura
     380       0.01  
Business Improvement Plan
     (354 )     (0.00 )
Consulting and Legal Costs for Sale of Assets
     1,829       0.02  
Sale of Turbine
     (804 )     (0.01 )
JV Formation Costs
     (840 )     (0.01 )
Economic Mark-to-Market
     (3,898 )     (0.05 )
Total Adjustments
     (8,395 )     (0.10 )
                 
Ongoing Net Earnings
   $ 8,202     $ 0.11  
                 
Average Diluted Shares Outstanding (in '000s)
       77,257  

 
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PNM Resources
Schedule 2:
2007 Reconciliation of Ongoing to GAAP Earnings
($ in thousands)

 
       
 Wholesale
      
Corp/Other
  
   
 
PNM Gas
PNM Electric
PNM Wholesale
 
Altura
 
TNMP
 
FCP
 
EnergyCo
PNM
Corp/Other
  PNMR Corp/Other
 
PNMR
             
 
 
 
Ongoing Earnings - Previous Segments
  
$10,110
$35,841
$4,405
$7,259
$18,932
$26,845
$4,579
$854
($25,236)
$83,589
                       
Segment Changes
                      
Combine PNM Electric (Retail) and PNM Wholesale
    
4,405
(4,405)
            
0
Reclass PNM Corporate/Other
  
(98)
952
          
(854)
  
0
After Segment Changes
  
10,012
41,198
0
7,259
18,932
26,845
4,579
0
(25,236)
83,589
                       
                       
   
 
PNM Gas
 
PNM Electric
 
Altura
 
TNMP
 
FCP
 
EnergyCo
PNM Corp/Other
PNMR Corp/Other
 
PNMR
   
10,012
41,198
  
7,259
18,932
26,845
4,579
0
(25,236)
83,589
Corporate items allocated to PNM Gas that are not considered discontinued operations under GAAP:
 
6,362
 
(6,362)
  
 
0
 
0
 
0
 
0
 
0
 
0
 
0
                       
                       
Ongoing Earnings
  
16,374
34,836
  
7,259
18,932
26,845
4,579
0
(25,236)
83,589
                   
 
  
                       
Non-Recurring Items
                      
Favorable Tax Decisions
    
4,709
            
16,037
20,746
Twin Oaks III Impairment
        
(2,042)
          
(2,042)
Business Improvement Plan
  
(859)
(2,116)
    
(524)
      
(3,693)
(7,192)
Consulting and Legal Costs for Sale of Assets
    
(161)
            
(1,724)
(1,885)
Loss on Altura Contribution
                  
(2,577)
(2,577)
Sale of Turbine
    
2,482
              
2,482
Afton Write-Down
    
(11,780)
              
(11,780)
JV Formation Costs
                  
(1,702)
(1,702)
Economic Mark-to-Market
  
1
(5,107)
      
341
      
(4,765)
Total Non-Recurring Items
  
(858)
(11,973)
  
(2,042)
(524)
341
0
  
6,341
(8,715)
                       
                       
GAAP Earnings from Continuing Operations
    
22,863
  
5,217
18,408
27,186
4,579
  
(18,895)
59,358
GAAP Earnings from Discontinued Operations
15,516
                
15,516
GAAP Net Earnings
  
$15,516
$22,863
  
$5,217
$18,408
$27,186
$4,579
  
($18,895)
$74,874
 
 

 
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PNM Resources
Schedule 3:
2007 Reconciliation of Ongoing to GAAP Earnings per Share
 

       
 Wholesale
      
Corp/Other
  
   
 
PNM Gas
PNM Electric
PNM Wholesale
  
Altura
 
TNMP
 
FCP
 
EnergyCo
PNM
Corp/Other
 PNMR Corp/Other
 
PNMR
             
 
Ongoing Earnings - Previous Segments
$0.13
$0.46
$0.06
$0.09
$0.24
$0.34
$0.06
$0.01
($0.32)
$1.07
                       
Segment Changes
                      
Combine PNM Electric (Retail) and PNM Wholesale
0.06
(0.06)
            
0.00
Reclass PNM Corporate/Other
  
(0.00)
0.01
          
(0.01)
  
0.00
After Segment Changes
  
0.13
0.53
0.00
0.09
0.24
0.34
0.06
0.00
(0.32)
1.07
                       
                       
   
 
PNM Gas
 
PNM Electric
 
Altura
 
TNMP
 
FCP
 
EnergyCo
PNM
Corp/Other
PNMR Corp/Other
 
PNMR
   
0.13
0.53
0.09
0.24
0.34
0.06
  
(0.32)
1.07
Corporate items allocated to PNM Gas that are not considered discontinued operations under GAAP:
0.08
(0.08)
0.00
0.00
0.00
0.00
  
0.00
0.00
                       
                       
Ongoing Earnings
  
0.21
0.45
0.09
0.24
0.34
0.06
  
(0.32)
1.07
                       
                       
Non-Recurring Items
                      
Favorable Tax Decisions
    
0.06
          
0.21
0.27
Twin Oaks III Impairment
        
(0.03)
          
(0.03)
Business Improvement Plan
  
(0.01)
(0.03)
  
(0.01)
      
(0.05)
(0.10)
Consulting and Legal Costs for Sale of Assets
                  
(0.02)
(0.02)
Loss on Altura Contribution
                  
(0.03)
(0.03)
Sale of Turbine
    
0.03
            
0.03
Afton Write-Down
    
(0.15)
            
(0.15)
JV Formation Costs
                  
(0.02)
(0.02)
Economic Mark-to-Market
    
(0.07)
    
0.01
      
(0.06)
Total Non-Recurring Items
  
(0.01)
(0.16)
(0.03)
(0.01)
0.01
0.00
  
0.09
(0.11)
                       
                       
GAAP Earnings from Continuing Operations
    
0.29
0.06
0.23
0.35
0.06
  
(0.23)
0.76
GAAP Earnings from Discontinued Operations
0.20
                
0.20
GAAP Net Earnings
  
$0.20
$0.29
$0.06
$0.23
$0.35
$0.06
  
($0.23)
$0.96
 
Average Diluted Shares Outstanding                                 77,928
 
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