UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITES EXCHANGE ACT OF 1934
Date of Report (Date of earliest events reported) February 12, 2003
-----------------------
(February 11, 2003)
-----------------------
PNM RESOURCES, INC.
-------------------
(Exact name of registrant as specified in its charter)
New Mexico 85-0468296
---------------------------- Commission ----------------------
(State or Other Jurisdiction File Number 333-32170 (I.R.S. Employer
of Incorporation) --------- Identification) Number)
Alvarado Square, Albuquerque, New Mexico 87158
---------------------------------------- -----
(Address of principal executive offices) (Zip Code)
(505) 241-2700
--------------
(Registrant's telephone number, including area code)
------------------------------
(Former name, former address and former fiscal year,
if changed since last report)
Item 9. Regulation FD Disclosure
The Company is filing to this Form 8-K its Quarter Ended December 31, 2002
Earnings Announcement, Unaudited Consolidated Statement of Earnings, Unaudited
Consolidated Balance Sheets; Unaudited Consolidated Statement of Cash Flows;
Comparative Operating Statistics and Other Select Financial Information.
PNM Resources Reports 2002 Earnings
Highlights:
o GAAP 2002 net earnings of $1.61 per diluted share, compared to
$3.77 per share in 2001.
o 2002 results included net one-time charges against earnings of
$0.20 per share; ongoing earnings for the year totaled $1.81
per share.
o Fourth Quarter 2002 GAAP net earnings of $0.26 per diluted share,
compared to $0.11 per share in the final quarter of 2001.
o Total operating revenues for 2002 of $1.17 billion, compared to
$2.35 billion in the previous year.
o Retail electric revenues increased 2.7 percent in 2002, to $546.9
million, on retail sales of 7.4 million megawatt-hours (MWh).
o Wholesale electric revenues for 2002 dropped 76.9 percent, to
$325.4 million, on a 24.9 percent decrease in MWh sales.
ALBUQUERQUE, N.M., February 11, 2003 - PNM Resources (NYSE: PNM) today reported
consolidated net earnings available for common stock for the year ended December
31, 2002, of $63.7 million, or $1.61 per diluted share. In 2001, the company
reported consolidated net earnings available for common stock of $149.8 million,
or $3.77 per diluted share. For the quarter ended Dec. 31, 2002, the company
reported earnings of $0.26 per diluted share, compared to $0.11 per diluted
share in the final three months of 2001. A one-time gain and various one-time
charges reduced 2002 earnings by a net of $0.20 per share, including net charges
of $0.06 per share in the fourth quarter. Ongoing earnings were $1.81 per share
for the year and $0.32 per share for the final quarter, compared to ongoing
earnings of $4.52 per share for all of 2001 and $0.20 per share in the final
quarter of 2001.
"In 2002, the upheaval in the wholesale power market caused a general decline in
prices and sales activity," said PNM Resources Chairman, President and Chief
Executive Officer Jeff Sterba.
2
"Fortunately, PNM was not overextended, and our strategic plan has never
depended on the short-term ups and downs in the power market," Sterba continued.
"As a result, we finished the year with a healthy, investment-grade balance
sheet, supported by the continuing steady cash flow and earnings from our
electric and gas utility. We remain committed to participating in the wholesale
power business as an asset-backed marketer, and we are well-positioned to
benefit when that market regains equilibrium."
PNM Resources, Inc.
Reconciliation of Ongoing Earnings Per Share To GAAP Reported EPS
December 31, 2002
Three Months Twelve Months
Q4 2002 Q4 2001 YTD `02 YTD `01
------- ------- ------- -------
GAAP Reported EPS $0.26 $0.11 $1.61 $3.77
One-time charges 0.10 --- 0.24 0.48
WR transaction costs (1) (0.04) 0.09 (0.04) 0.27
----- ----- ----- -----
Ongoing earnings $0.32 $0.20 $1.81 $4.52
===== ===== ===== =====
Average diluted shares (000s) 39,380 39,611 39,443 39,731
Note 1. This transaction with Western Resources has been terminated.
PERFORMANCE SUMMARY
PNM electric gross margin (Electric Operating Revenues less Fuel and Purchased
Power Expense) for the fourth quarter 2002 was $122.9 million, an increase of
approximately $7.1 million from the $115.8 million reported in the comparable
period last year. Electric gross margin was $485.3 million for all of 2002,
compared to $679.9 million in 2001.
Gas gross margin (Gas Operating Revenues less Gas Purchased for Resale) was
$39.1 million in the final quarter of 2002, compared to $36.0 million in the
fourth quarter of 2001. Gas gross margin was $133.1 million for the full year
2002, compared to $134.1 million in 2001.
Non-fuel operations and maintenance (O&M) expense fell slightly for the latest
quarter and decreased 4.6 percent for the full year compared to the same periods
in 2001. In the latest quarter, the company recorded a one-time charge against
earnings of $1.6 million, or $0.03 a share, due to severance costs related to a
reduction in work force at Palo Verde Nuclear Generating Station and the Four
Corners Power Plant in 2002. The company also recorded a charge of $4.8 million,
or $0.07 a share, related to the cancellation of a planned transmission line
project in northern New Mexico. Finally, in the fourth quarter the company also
recorded a one-time gain of $2.4 million, or $0.04 cents a share to reflect the
successful outcome of litigation stemming from the terminated transaction with
Western Resources. In the final quarter of 2001, the company reported a one-time
charge of $10.0 million, or $0.09 per share, in connection with that same
transaction.
Other Recent Significant Developments
PNM Resources has recently announced several significant developments designed
to lay the groundwork for future growth in revenues and earnings:
o On January 28, New Mexico regulators approved an agreement
lowering PNM electric rates by $21 million in September 2003
and by another $14 million in 2005. Rates will then be frozen
at that level until at least 2008.
3
o Also in January, PNM began providing 80 Megawatts of power to
the U.S. Navy facilities in San Diego. The contract, which
runs through March 2005, is expected to gross $42 million
annually in revenues.
o At the end of 2002, PNM negotiated an expanded, $195 million
revolving credit agreement with a group of 11 lenders.
o In December 2002, the company also acquired one of two leases of
a transmission line connecting the PNM system with the Texas
electrical grid to the east. Purchasing the lease will allow PNM
to retire approximately $26 million in long-term lease bonds
paying an interest rate of 10.25 percent.
Details of these announcements and other PNM Resources news are available at the
company's website, pnm.com.
Earnings Guidance for 2003
Based on its financial and operating forecasts, the company expects 2003 ongoing
earnings will be in the range of between $1.80 and $2.05 per diluted share, not
including a one-time charge of $16.7 million, or $0.26 per share the company
plans to take in the first quarter 2003 as a result of the electric rate
agreement approved by the New Mexico Public Regulation Commission (PRC) in
January 2003. The company expects that 2003 earnings will benefit from lower
fuel costs stemming from reduced coal costs for San Juan Generating Station,
increased revenues from the company's wholesale power marketing business and
from continued load growth in the PNM New Mexico service territory. In the final
quarter of 2003, earnings will be reduced $5 million with implementation of the
decrease in retail electric rates approved by the PRC in January.
Earnings Teleconference Scheduled
PNM Resources has scheduled a teleconference for 9:00 a.m. Eastern Time on
Wednesday, February 12, to discuss 2002 earnings and other issues of interest to
shareholders and investors. The public is invited to listen to the
teleconference by calling 1-973-317-5319. A webcast of the PNM Resources
quarterly earnings presentation can be accessed through the company's website at
pnm.com. A replay of the conference call will be available beginning at 11:00
a.m. (ET) on February 12 through 11:00 p.m. (ET) February 19, 2003, at
1-973-709-2089 (passcode 274494).
PNM Resources is an energy holding company based in Albuquerque, New Mexico.
PNM, the principal subsidiary of PNM Resources, provides natural gas service to
441,000 gas customers and electric utility service to 378,000 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.
Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995
--------------------------------------------------------------------------------
Statements made in this filing that relate to future events are made pursuant to
the Private Securities Litigation Reform Act of 1995. These forward-looking
statements are based upon current expectations and the company assumes no
obligation to update this information. Because actual results may differ
materially from expectations, the company cautions readers not to place undue
reliance on these statements. Future financial results will be affected by a
number of factors, including 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
4
and federal regulatory and legislative decisions and actions, and the
performance of state, regional and national economies. For a detailed discussion
of the important factors affecting PNM Resources, please see "Management's
Discussion and Analysis of Financial Condition and Results of Operations" in the
Company's Form 10-K for the year ended December 31, 2001, Form 10-Q for the
quarter ended September 30, 2002 and Form 8-K filings with the Securities and
Exchange Commission.
5
SIGNATURES
----------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
PNM RESOURCES, INC.
---------------------------------------------
(Registrant)
Date: February 12, 2003 /s/ Robin Lumney
---------------------------------------------
Robin Lumney
Vice President, Controller
and Chief Accounting Officer
(Officer duly authorized to sign this report)
6
PNM RESOURCES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF EARNINGS
Three Months Ended Twelve Months Ended
December 31 December 31
--------------------------- --------------------------
2002 2001 2002 2001
------------- ------------ ------------ ------------
(Unaudited) (Unaudited)
Operating Revenues
Electric..................................... $218,134 $260,752 $895,474 $1,965,142
Gas.......................................... 82,705 66,748 272,118 385,418
Unregulated.................................. 152 81 1,404 1,538
------------- ------------ ------------ ------------
Total operating revenues................... 300,991 327,581 1,168,996 2,352,098
------------- ------------ ------------ ------------
Operating Expenses
Cost of energy sold.......................... 138,843 175,662 550,053 1,536,566
Operation and maintenance expenses........... 100,788 101,465 359,630 376,848
Depreciation and amortization................ 26,633 24,594 102,409 96,936
Taxes, other than income taxes............... 9,654 8,866 34,243 30,302
Income taxes, net............................ 4,570 (413) 20,887 88,769
------------- ------------ ------------ ------------
Total operating expenses................... 280,488 310,174 1,067,222 2,129,421
------------- ------------ ------------ ------------
Operating income........................... 20,503 17,407 101,774 222,677
Other Income and Deductions, Net of Tax......... 5,707 3,517 23,910 (7,404)
------------- ------------ ------------ ------------
Income before interest charges............. 26,210 20,924 125,684 215,273
Net Interest Charges............................ 15,841 16,415 61,412 64,840
------------- ------------ ------------ ------------
Net Earnings.................................... 10,369 4,509 64,272 150,433
Preferred Stock Dividend Requirements........... 146 146 586 586
------------- ------------ ------------ ------------
Net Earnings Applicable to Common Stock......... $10,223 $ 4,363 $ 63,686 $ 149,847
============= ============ ============ ============
Earnings Per Share of Common Stock (Basic)...... $ 0.26 $ 0.11 $ 1.63 $ 3.83
============= ============ ============ ============
Average Shares Outstanding (Basic).............. 39,118 39,118 39,118 39,118
============= ============ ============ ============
Earnings Per Share of Common Stock (Diluted).... $ 0.26 $ 0.11 $ 1.61 $ 3.77
============= ============ ============ ============
Average Shares Outstanding (Diluted)............ 39,380 39,611 39,443 39,731
============= ============ ============ ============
Dividends Paid Per Share of Common Stock........ $ 0.22 $ 0.20 $ 0.88 $ 0.80
============= ============ ============ ============
7
PNM RESOURCES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
As of December 31,
---------------------------------
2002 2001
--------------- ---------------
(Unaudited)
(In thousands)
ASSETS
Total utility plant.................................................. $2,997,366 $2,738,990
Accumulated depreciation and amortization............................ (1,330,800) (1,234,629)
Construction work in progress........................................ 176,756 249,656
Nuclear fuel, net of accumulated amortization........................ 26,833 26,940
--------------- ---------------
Net Utility Plant.................................................. 1,870,155 1,780,957
--------------- ---------------
Other Property and Investments....................................... 444,232 554,237
--------------- ---------------
Current Assets
Cash and cash equivalents............................................ 3,702 26,057
Accounts receivables, net of allowance for uncollectible accounts.... 76,850 85,410
Unbilled revenues.................................................... 49,079 62,377
Short-term investments............................................... 79,630 45,111
Other receivables.................................................... 49,607 52,158
Inventories.......................................................... 37,230 36,483
Other current assets................................................. 56,779 41,901
--------------- ---------------
Total Current Assets............................................... 352,877 349,497
--------------- ---------------
Deferred Charges........................................................ 364,716 249,947
--------------- ---------------
Total Assets....................................................... $3,031,980 $2,934,638
=============== ===============
CAPITALIZATION AND LIABILITIES
Capitalization
Common stock......................................................... $ 624,119 $ 625,632
Accumulated other comprehensive income, net of tax................... (94,721) (28,996)
Retained earnings.................................................... 444,651 415,388
Minority interest.................................................... 11,760 11,652
Preferred stock...................................................... 12,800 12,800
Long-term debt, less current maturities.............................. 980,092 953,884
--------------- ---------------
Total Capitalization............................................... 1,978,701 1,990,360
--------------- ---------------
Current Liabilities
Short-term debt...................................................... 150,000 35,000
Accounts payable..................................................... 97,968 77,117
Accrued interest and taxes........................................... 46,189 72,022
Other current liabilities............................................ 99,019 145,498
--------------- ---------------
Total Current Liabilities.......................................... 393,176 329,637
--------------- ---------------
Deferred Credits
Accumulated deferred income taxes.................................... 125,595 120,153
Accumulated deferred investment tax credits.......................... 41,583 44,714
Other deferred credits............................................... 492,925 449,774
--------------- ---------------
Total Deferred Credits............................................. 660,103 614,641
--------------- ---------------
Total Capitalization and Liabilities............................... $3,031,980 $2,934,638
=============== ===============
8
PNM RESOURCES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
Year Ended December 31,
---------------------------------
2002 2001
--------------- ---------------
(Unaudited)
(In thousands)
Cash Flows From Operating Activities:
Net earnings....................................................... $ 64,272 $ 150,433
Adjustments to reconcile net earnings to net cash flows
from operating activities:
Depreciation and amortization.................................. 115,415 106,768
Other, net..................................................... 12,722 34,874
Changes in certain assets and liabilities:
Accounts receivables......................................... 8,560 59,430
Other assets................................................. (40,499) 63,690
Accounts payable............................................. 20,851 (93,272)
Other liabilities............................................ (81,717) 3,072
--------------- ---------------
Net cash flows provided from operating activities...... 99,604 324,995
--------------- ---------------
Cash Flows From Investing Activities:
Utility plant additions............................................ (240,226) (264,844)
Return of PVNGS lease obligation bonds............................. 17,531 16,674
Merger acquisition costs........................................... - (11,567)
Redemption of short-term investments............................... 76,633 -
Other investing.................................................... (54,367) (147,277)
--------------- ---------------
Net cash flows used in investing activities............ (200,429) (407,014)
--------------- ---------------
Cash Flows From Financing Activities:
Borrowings......................................................... 115,000 35,000
Exercise of employee stock options................................. (2,412) (2,179)
Dividends paid..................................................... (34,226) (31,876)
Other Financing.................................................... 108 (560)
--------------- ---------------
Net cash flows provided by financing activities........ 78,470 385
--------------- ---------------
Decrease in Cash and Cash Equivalents................................ (22,355) (81,634)
Beginning of Period.................................................. 26,057 107,691
--------------- ---------------
End of Period........................................................ $ 3,702 $ 26,057
=============== ===============
Supplemental cash flow disclosures:
Interest paid...................................................... $ 59,441 $ 62,216
=============== ===============
Capitalized interest............................................... $ 6,400 $ -
=============== ===============
Income taxes paid, net of refunds.................................. $ 13,541 $ 72,146
=============== ===============
Long-term debt assumed for transmission line....................... $ 26,152 $ -
=============== ===============
9
PNM RESOURCES, INC. AND SUBSIDIARIES
COMPARATIVE OPERATING STATISTICS
The following table shows electric revenues by customer class and average
customers:
Electric Segment Revenues
(In thousands)
Three Months Ended Twelve Months Ended
December 31, December 31,
2002 2001 2002 2001
----------- ----------- ----------- -----------
Residential............. $ 47,543 $ 44,815 $ 197,174 $ 187,600
Commercial.............. 60,418 59,000 247,800 242,372
Industrial.............. 19,770 20,591 82,009 82,752
Other................... 10,605 10,748 43,812 47,209
----------- ----------- ----------- -----------
$ 138,336 $ 135,154 $ 570,795 $ 559,933
=========== =========== =========== ===========
Average customers....... 387,193 380,795 384,478 377,589
=========== =========== =========== ===========
The following table shows electric sales by customer class:
Electric Segment Sales
(Megawatt hours)
Three Months Ended Twelve Months Ended
December 31, December 31,
2002 2001 2002 2001
----------- ----------- ------------ -----------
Residential.......... 554,830 521,620 2,298,542 2,197,891
Commercial........... 791,848 765,974 3,254,576 3,213,205
Industrial........... 387,325 393,000 1,612,723 1,603,266
Other................ 57,075 58,485 240,665 240,935
----------- ----------- ------------ -----------
1,791,078 1,739,079 7,406,506 7,255,297
=========== =========== ============ ===========
10
PNM RESOURCES, INC. AND SUBSIDIARIES
COMPARATIVE OPERATING STATISTICS
The following table shows gas revenues by customer and average customers:
Gas Segment Revenues
(In thousands)
Three Months Ended Twelve Months Ended
December 31, December 31,
2002 2001 2002 2001
---------- ---------- ----------- -----------
Residential............... $53,926 $44,208 $172,200 $ 232,321
Commercial................ 15,692 12,520 52,530 68,895
Industrial................ 1,460 978 2,872 27,519
Transportation*........... 5,185 3,751 17,735 20,188
Other..................... 6,442 5,291 26,781 36,495
---------- ---------- ----------- -----------
$82,705 $66,748 $272,118 $ 385,418
========== ========== =========== ===========
Average customers.......... 446,503 437,730 443,396 434,591
========== ========== =========== ===========
*Customer-owned gas.
The following table shows gas throughput by customer class:
Gas Segment Throughput
(Thousands of decatherms)
Three Months Ended Twelve Months Ended
December 31, December 31,
2002 2001 2002 2001
--------- --------- ---------- ---------
Residential........... 10,836 9,491 29,627 27,848
Commercial............ 4,183 3,554 12,009 10,421
Industrial............ 359 255 749 3,920
Transportation*....... 9,663 10,152 44,889 51,395
Other................. 901 814 4,806 4,355
--------- --------- ---------- ---------
25,942 24,266 92,080 97,939
========= ========= ========== =========
*Customer-owned gas.
11
PNM RESOURCES, INC. AND SUBSIDIARIES
COMPARATIVE OPERATING STATISTICS
The following table shows revenues by customer class:
Generation and Marketing Revenues By Market
(In thousands)
Three Months Ended Twelve Months Ended
December 31, December 31,
2002 2001 2002 2001
----------- ----------- ----------- -----------
Intersegment sales........ $ 84,381 $ 81,882 $348,935 $ 341,608
Long-term contracts....... 7,972 15,488 40,132 77,250
Other merchant sales *.... 67,254 108,573 266,956 1,326,020
Other..................... 4,748 1,714 18,297 2,646
----------- ----------- ----------- -----------
$ 164,355 $207,657 $674,320 $1,747,524
=========== =========== =========== ===========
*Includes mark-to-market gains/(losses).
The following table shows sales by customer class:
Generation and Marketing Sales By Market
(Megawatt hours)
Three Months Ended Twelve Months Ended
December 31, December 31,
2002 2001 2002 2001
----------- ----------- ------------ ------------
Intersegment sales........ 1,791,078 1,739,079 7,406,506 7,255,297
Long-term contracts....... 175,069 293,154 844,168 1,463,031
Other merchant sales...... 2,036,978 2,457,446 8,605,987 11,114,069
----------- ----------- ------------ ------------
4,003,125 4,489,679 16,856,661 19,832,397
=========== =========== ============ ============
12
Table 1. Reconcile GAAP to Ongoing 2002 vs. 2001
4thQ02 2002 4thQ01 2001
-------- -------- -------- ---------
GAAP Earnings (diluted) $0.26 $1.61 $0.11 $3.77
One-Time Items - - - -
Re-alignment costs - 0.14 - -
Severance costs 0.03 0.03 - -
Transmission line write-off 0.07 0.07 - -
Merger acquisition costs (0.04) (0.04) 0.09 0.27
Avistar investments - - - 0.20
Coal mine decommissioning - - - 0.20
Contribution to PNM Foundation - - - 0.08
Ongoing earnings: $0.32 $1.81 $0.20 $4.52
Table 2. Reconcile GAAP to Ongoing Earnings - Quarterly, 1999-2002
1stQ 2ndQ 3rdQ 4thQ Year-End
-------------------------- ------ ------ ------ ------- --------
2002
GAAP Earnings $0.63 $0.28 $0.45 $0.26 $1.61
One-Time Charges - - 0.14 0.06 0.20
Ongoing Earnings $0.63 $0.28 $0.59 $0.32 $1.81
-------------------------- ------ ------ ------ ------- --------
2001
GAAP Earnings $1.60 $1.24 $0.82 $0.11 $3.77
One-Time Charges 0.17 0.34 0.14 0.09 0.75
Ongoing Earnings $1.77 $1.58 $0.96 $0.20 $4.52
-------------------------- ------ ------ ------ ------- --------
2000
GAAP Earnings $0.55 $0.45 $1.18 $0.35 $2.53
One-Time Charges - - (0.17 0.23 0.05
Ongoing Earnings $0.55 $0.45 $1.01 $0.58 $2.58
-------------------------- ------ ------ ------ ------- --------
1999
GAAP Earnings $0.63 $0.44 $0.52 $0.41 $2.01
One-Time Charges (0.08) (0.03) - 0.02 (0.10)
Ongoing Earnings $0.55 $0.41 $0.52 $0.43 $1.91
-------------------------- ------ ------ ------ ------- --------
Table 3. Performance of Plants
Equivalent
Availability
Factor - YTD Net Capacity Factor
-------------------------- ------------------- ----------------------
2002
San Juan 89.70% 85.90%
Four Corners 75.50 73.10
Palo Verde 94.40 94.40
-------------------------- ------------------- ----------------------
2001
San Juan 84.70 82.10
Four Corners 86.60 85.80
Palo Verde 88.10 88.10
-------------------------- ------------------- ----------------------
2000
San Juan 88.90 85.60
Four Corners 83.45 83.40
Palo Verde 92.70 92.70
-------------------------- ------------------- ----------------------
13
Table 4. Capital Expenditures
2002 (Actual) 2003 2003-2007
(in Millions) (In Millions, Est.) (In Millions, Est.)
------------------------------ --------------------- ---------------------- ---------------------
Gas
Transmission & Distribution $47 $43 $168
------------------------------ --------------------- ---------------------- ---------------------
Electric
Transmission & Distribution $63 $54 $263
------------------------------ --------------------- ---------------------- ---------------------
Generation $114 $45 $197
------------------------------ --------------------- ---------------------- ---------------------
Corporate $14 $14 $80
------------------------------ --------------------- ---------------------- ---------------------
TOTAL $238 $156 $708
------------------------------ --------------------- ---------------------- ---------------------
Table 5. 2003 Earnings Guidance
$1.80 2003 EPS Range $2.05
Low End Assumptions: EPS Opportunities/Risks:
--------------------------------------- ----------------------------------- ----------------------
-Avg. wholesale price $34/MWh - Wholesale price $1+/- = $0.05
------------------------ -------------- ----------------------------------- ----------------------
-Merchant sales 1.5x - Merchant sales velocity 0.1x +/- = $0.01
velocity
------------------------ -------------- ----------------------------------- ----------------------
-Spark spread $1/MWh -Improved spark spread $5/MWh = $0.06
------------------------ -------------- ----------------------------------- ----------------------
-Retail electric growth 2.5% -Retail electric growth 1%+/- = $0.05
------------------------ -------------- ----------------------------------- ----------------------
-Retail gas growth 1.0% -Retail gas growth 1%+/- = 40.02
------------------------ -------------- ----------------------------------- ----------------------
Please note that these are simplifying guidelines that attempt to quantify
a number of complex and interdependent factors affecting the company's
earnings. These are provided to generally assist investors in developing
their own independent assessment of the company's future earnings
prospects.
Table 6. Historical Market Data
Spark Spread* Merchant Sales Velocity
---------- -------------------------- -----------------------------------
Q4 Only Annual Q4 Only Annual
---------- -------------- ----------- --------------- -------------------
2002 1.43 (0.04) 1.81 1.61
---------- -------------- ----------- --------------- -------------------
2001 2.87 78.03 1.91 1.93
---------- -------------- ----------- --------------- -------------------
2000 104.73 75.95 1.73 1.88
---------- -------------- ----------- --------------- -------------------
1999 8.35 8.49 1.81 1.80
---------- -------------- ----------- --------------- -------------------
* Source: RDI
Table 7. Pension & Health Care Costs
2002 2003
----------------- ------------------- -----------------------
Pension $(1,392,382) $ 3,800,000
----------------- ------------------- -----------------------
Health Care $11,350,240 $12,993,212
----------------- ------------------- -----------------------
The increase in pension expense is due to the dramatic decline in the
capital markets during the last two years. Pension expense is expected to
decline in future years. The Company is considering additional funding in
2003.
14
Table 8. Current Liquidity Arrangements as of 12/31/2002
PNM PNM Resources
--- -------------
$195 million unsecured Revolver- $15 million unsecured Local Lines of Credit -
$100 million Drawn $ 0 Drawn
---------------------------------- ----------------------------------------------
$ 20 million unsecured Local $83.3 million in Cash and Liquid Investments
Lines of Credit -
$0 Drawn
---------------------------------- ----------------------------------------------
15