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) April 30, 2003
--------------------------
(April 29, 2003)
--------------------------
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 9. Regulation FD Disclosure
See Item 12. Results of Operations and Financial Condition.
Item 12. Results of Operations and Financial Condition
On April 29, 2003, PNM Resources, Inc. (the "Company") issued a press
release announcing its unaudited results of operations for the three months
ended March 31, 2003. 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, earnings per share and other GAAP measures of operating
performance that exclude or include the effect of litigation settlements,
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 instructions B.2 and B.6 of Form 8-K, the
information in this report, including exhibits, is furnished pursuant to Items 9
and 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.
2
EXHIBIT INDEX
Exhibit Number Description
99.1 Press Release dated April 29, 2003.
3
EXHIBIT 99.1
PNM Resources Reports First Quarter 2003 Earnings
Highlights:
o GAAP First Quarter 2003 net earnings of $1.22 per diluted share,
compared to $0.63 per share in the first quarter of 2002.
o First quarter 2003 results included a one-time gain of $0.95 per
diluted share as the result of a change in accounting principle
and a one-time charge against earnings of $0.26 per diluted
share.
o Ongoing earnings for the latest quarter totaled $0.53 per diluted
share, compared to $0.63 per share in the first quarter of 2002.
o Total operating revenues increased $85.9 million, or 28.5
percent, to $387.7 million in the latest quarter compared to
$301.8 million in the first quarter of 2002.
o A new, long-term sales contract and higher prices in the regional
power market helped boost PNM wholesale revenues by $34.8
million, or 47.6 percent.
ALBUQUERQUE, N.M., April 29, 2003 - PNM Resources (NYSE: PNM) today reported
consolidated net earnings available for common stock for the three months ended
March 31, 2003, of $48.2 million, or $1.22 per diluted share of common stock. In
the comparable period in 2002, the company reported consolidated net earnings
available for common stock of $24.8 million, or $0.63 per diluted share.
A one-time gain of $61.9 million, or $0.95 per share, and a one-time charge of
$16.7 million, or $0.26 a share, were recorded in the latest quarter. Ongoing
earnings for the quarter were $0.53 per share, compared to $0.63 per share for
the first quarter of 2002.
Total operating revenue for the latest quarter was $387.7 million, up from
$301.8 million in the comparable 2002 period. Operating revenues from the
company's electric and gas utility operation totaled $275.3 million, compared to
$238.5 million in the first quarter of 2002, primarily as the result of the
higher cost of gas in 2003.
A new, long-term power sales contract to the U.S. Navy, together with increased
sales under an existing contract and higher market prices during the period,
helped boost PNM wholesale power revenues by $34.8 million, to $107.8 million
for the latest quarter. Total wholesale sales increased 6.1 percent, to 2.5
million megawatt-hours (MWh). Wholesale power prices in the latest quarter
averaged $42 per MWh, compared to $24 per MWh in the first three months of 2002.
"While we saw encouraging signs of a recovery in the regional power market
during the first quarter, PNM's ability to benefit from those improved prices
was restricted by the limited amount of power we had available," said PNM
Resources Chairman, President and Chief Executive Officer Jeff Sterba.
4
EXHIBIT 99.1 (Continued)
A planned maintenance outage shut down one unit of the company's San Juan
Generating Station during much of the quarter, and other San Juan units
experienced intermittent forced outages in February and March. The restricted
availability of the San Juan plant due to those outages added about $5.5 million
to purchased power expense during the quarter.
PNM Resources, Inc.
Reconciliation of Ongoing Earnings Per Share To GAAP Reported EPS
March 31, 2003
Three Months Twelve Months
Q1 2003 Q1 2002 3/31/03 3/31/02
------------ ------------ ---------- ----------
GAAP Reported EPS $1.22 $0.63 $2.21 $2.80
One-time charges 0.26 --- (0.50) 0.57
Change in Accounting (1) (0.95) --- --- ---
------------ ------------ ---------- ----------
Ongoing earnings $0.53 $0.63 $1.71 $3.37
Average diluted shares (000s) 39,365 39,649 39,390 39,755
Note 1. To conform to FASB Statement 143, `Accounting for Asset Retirement
Obligations.'
PERFORMANCE SUMMARY
Consolidated gross margin improved $0.06 per share as wholesale electric margins
improved as a result of new long-term contracts and improved wholesale market
conditions, although plant performance limited PNM's ability to take full
advantage of wholesale market conditions for the quarter. Retail electric load
growth also contributed to better margin performance. These margin improvements
were only partially offset by the impact of the warmest January in history for
PNM's gas business. Better margin performance was countered by higher net
interest costs, increased depreciation expense, and higher employee benefits
costs that lowered EPS by $0.16 per share.
ONE-TIME AND NON-RECURRING GAINS AND CHARGES
PNM first quarter 2003 income includes a non-cash gain of $61.9 million or $0.95
per share, stemming from the initial adoption of Financial Accounting Standards
Board (FASB) Statement No. 143, Accounting for Asset Retirement Obligations. In
the latest quarter, the company also recorded a one-time charge against earnings
of $16.7 million, or $0.26 per share, to reflect the write-off of regulatory
assets related to the cost of preparing for the transition to a competitive
retail electric market in New Mexico. PNM agreed to write off those costs as
part of the Global Electric Agreement in 2002.
OTHER RECENT SIGNIFICANT DEVELOPMENTS AFFECTING PNM RESOURCES:
o On April 8, New Mexico Governor Bill Richardson signed
legislation repealing the 1999 law that set the state on the path
toward retail electric competition. Repeal of the restructuring
law means that PNM will continue to serve as a regulated electric
and gas utility in its New Mexico service territory for the
foreseeable future.
5
EXHIBIT 99.1 (Continued)
o Also in April, PNM completed two financial transactions designed
to reduce high-cost debt and to expand the utility's available
liquidity facilities. In the first transaction, PNM eliminated
$45 million of off-balance sheet lease obligations financing a
major PNM transmission line. In a second, unrelated transaction,
PNM completed arrangements for a three-year, $90 million
liquidity facility secured by outstanding accounts receivable.
o On February 18, the PNM Resources Board of Directors approved a
4.5 percent increase in the company's common stock dividend. The
quarterly dividend of $0.23 per share on the outstanding shares
of PNM Resources common stock will be payable May 16, 2003, to
shareholders of record at the close of business on May 2, 2003.
Details of these announcements and other PNM Resources news are available at the
company's website, pnm.com.
Earnings Guidance Unchanged for 2003
Based on first quarter results and its financial and operating forecasts for the
remainder of the year, PNM reaffirmed existing earnings guidance for 2003. The
company expects 2003 ongoing earnings (not including one-time gains and charges)
will be in the range of between $1.80 and $2.05 per diluted share.
Earnings Teleconference Scheduled
PNM Resources has scheduled a teleconference for 9:00 a.m. Eastern Time on
Wednesday, April 30, to discuss First Quarter 2003 earnings and other issues of
interest to shareholders and investors. The public is invited to listen to the
teleconference by calling 1- 973-694-6836. 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 April 30 through midnight. (ET) May 6, at 1-800-428-6051 (passcode
I.D. 288949).
PNM Resources is an energy holding company based in Albuquerque, New Mexico.
PNM, the principal subsidiary of PNM Resources, serves 452,162 average natural
gas customers and 392,529 average 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.
Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995
Statements made in this news release 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
6
EXHIBIT 99.1 (Continued)
transmission system, state 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, 2002, and
Form 8-K filings with the Securities and Exchange Commission.
7
EXHIBIT 99.1 (Continued)
PNM RESOURCES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(Unaudited)
Three Months Ended
March 31,
--------------------------------
2003 2002
--------------- --------------
(In thousands, except
per share amounts)
Operating Revenues:
Electric............................................................ $241,378 $190,706
Gas................................................................. 146,253 109,201
Energy trading margin............................................... - 1,255
Unregulated businesses.............................................. 60 655
--------------- --------------
Total operating revenues.......................................... 387,691 301,817
--------------- --------------
Operating Expenses:
Cost of energy sold................................................. 225,934 143,605
Energy production costs............................................. 35,094 34,971
Administrative and general.......................................... 32,042 31,388
Depreciation and amortization....................................... 28,374 24,779
Transmission and distribution costs................................. 16,159 16,537
Income taxes........................................................ 8,876 9,366
Taxes, other than income taxes...................................... 7,786 8,484
--------------- --------------
Total operating expenses.......................................... 354,265 269,130
--------------- --------------
Operating income.................................................. 33,426 32,687
--------------- --------------
Other Income and Deductions
Other income........................................................ 11,206 13,727
Other deductions.................................................... (17,912) (1,497)
Income tax expense.................................................. 2,407 (4,842)
--------------- --------------
Net other income and deductions................................... (4,299) 7,388
--------------- --------------
Income before interest charges.................................... 29,127 40,075
--------------- --------------
Interest Charges...................................................... 18,233 15,126
--------------- --------------
Net Earnings from Operations.......................................... 10,894 24,949
Cumulative Effect of a Change in Accounting Principle, Net of Tax 37,422 -
--------------- --------------
Net Earnings.......................................................... 48,316 24,949
Preferred Stock Dividend Requirements................................. 146 146
--------------- --------------
Net Earnings Applicable to Common Stock............................... $ 48,170 $ 24,803
=============== ==============
Net Earnings per Common Share:
Basic............................................................... $ 1.23 $ 0.63
=============== ==============
Diluted............................................................. $ 1.22 $ 0.63
=============== ==============
Dividends Paid per Common Share....................................... $ 0.22 $ 0.20
=============== ==============
8
EXHIBIT 99.1 (Continued)
The following table shows electric revenues by customer class and average
customers:
Electric Revenues
(In thousands)
Three Months Ended
March 31,
------------------------------
2003 2002 Variance
-------------- -------------- --------------
(In thousands)
Residential................ $50,963 $50,722 $ 241
Commercial................. 55,106 55,005 101
Industrial................. 18,751 19,628 (877)
Other...................... 4,224 3,989 235
-------------- -------------- --------------
$129,044 $129,344 $ (300)
============== ============== ==============
Average customers.......... 392,529 381,661 10,868
============== ============== ==============
Note: Transmission revenues of $4.6 million and $6.1 million for the
three months ended March 31, 2003 and 2002, respectively, are not
included in the above table.
The following table shows electric sales by customer class:
Electric Sales
(Megawatt hours)
Three Months Ended
March 31,
--------------------------------
2003 2002 Variance
--------------- -------------- ---------------
(In thousands)
Residential............... 592,135 588,996 3,139
Commercial................ 720,862 711,259 9,603
Industrial................ 371,635 392,346 (20,711)
Other..................... 42,886 46,874 (3,988)
--------------- -------------- ---------------
1,727,518 1,739,475 (11,957)
=============== ============== ===============
(Intentionally left blank)
9
EXHIBIT 99.1 (Continued)
The following table shows gas revenues by customer and average customers:
Gas Revenues
(In thousands)
Three Months Ended
March 31,
-------------------------------
2003 2002 Variance
-------------- -------------- --------------
(In thousands)
Residential............. $97,974 $72,112 $25,862
Commercial.............. 30,421 22,399 8,022
Industrial.............. 1,031 649 382
Transportation.......... 3,745 3,611 134
Other................... 13,082 10,430 2,652
-------------- -------------- --------------
$146,253 $109,201 $37,052
============== ============== ==============
Average customers....... 452,162 443,927 8,235
============== ============== ==============
The following table shows gas throughput by customer class:
Gas Throughput
(Thousands of decatherms)
Three Months Ended
March 31,
--------------------------------
2003 2002 Variance
-------------- --------------- --------------
(In thousands)
Residential.............. 12,206 13,516 (1,310)
Commercial............... 4,334 4,970 (636)
Industrial............... 186 172 14
Transportation........... 8,635 7,397 1,238
Other.................... 1,943 1,990 (47)
-------------- --------------- --------------
27,304 28,045 (741)
============== =============== ==============
(Intentionally left blank)
10
EXHIBIT 99.1 (Continued)
The following table shows revenues by customer class:
Wholesale Revenues
(In thousands)
Three Months Ended
March 31,
--------------------------------
2003 2002 Variance
-------------- -------------- --------------
(In thousands)
Long-term contracts....... $26,179 $17,015 $ 9,164
Forward sales............. 22,938 17,743 5,195
Short-term sales.......... 58,661 38,272 20,389
-------------- -------------- --------------
$107,778 $73,030 $34,748
============== ============== ==============
Note: For comparative purposes, wholesale revenues for the three months
ended March 31, 2002 have not been reclassified to a net margin basis in
accordance with GAAP. The impact would be to reduce 2002 forward sales
revenue by $16.5 million.
The following table shows sales by customer class:
Wholesale Sales
(Megawatt hours)
Three Months Ended
March 31,
--------------------------------
2003 2002 Variance
-------------- --------------- --------------
(In thousands)
Long-term contracts...... 501,445 281,153 220,292
Forward sales............ 562,200 256,096 306,104
Short-term sales......... 1,456,738 1,838,146 (381,408)
-------------- --------------- --------------
2,520,383 2,375,395 144,988
============== =============== ==============
(Intentionally left blank)
11
SIGNATURE
---------
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: April 30, 2003 /s/ Robin A. Lumney
---------------------------------------------
Robin A. Lumney
Vice President, Controller
and Chief Accounting Officer
(Officer duly authorized to sign this report)
12