Texas New Mexico Power 10Q 2001 Q2 Quarterly report

UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549

FORM 10-Q

(Mark One)
(X) COMBINED QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period endedJune 30, 2001

or

( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
____________________________________________________________________________________________
Commission File Number:1-8847

TNP ENTERPRISES, INC.
(Exact name of registrant as specified in its charter)

Texas		75-1907501
(State of incorporation)		(I.R.S. employer identification number)

4100 International Plaza, P. O. Box 2943, Fort Worth, Texas 76113
(Address and zip code of principal executive offices)

Registrant's telephone number, including area code817-731-0099

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes \X\ No \ \

TNP Enterprises, Inc. has no publicly traded shares of common stock outstanding.

____________________________________________________________________________________________
Commission File Number:2-97230

TEXAS-NEW MEXICO POWER COMPANY
(Exact name of registrant as specified in its charter)

Texas		75-0204070
(State of incorporation)		(I.R.S. employer identification number)

4100 International Plaza, P. O. Box 2943, Fort Worth, Texas 76113
(Address and zip code of principal executive offices)

Registrant's telephone number, including area code817-731-0099

TNP Enterprises, Inc. holds all 10,705 outstanding common shares of Texas-New Mexico Power Company.

____________________________________________________________________________________________

TNP Enterprises, Inc. And Subsidiaries

Texas New-Mexico Power Company And Subsidiaries

Combined Quarterly Report on Form 10-Q for the period ended June 30, 2001

This Combined Quarterly Report on Form 10-Q is filed separately by TNP Enterprises, Inc., and Texas-New Mexico Power Company. Texas-New Mexico Power Company makes no representation as to information relating to TNP Enterprises, Inc., except as it may relate to Texas-New Mexico Power Company, or to any other affiliate or subsidiary of TNP Enterprises, Inc.

TABLE OF CONTENTS

PART I. FINANCIAL INFORMATION
Item 1.	Financial Statements

	TNP Enterprises, Inc. (TNP) and Subsidiaries:
	Consolidated Statements of Income (Loss) Three Month Periods Ended June 30, 2001, and 2000	3

	Consolidated Statements of Income (Loss) Six Month Periods Ended June 30, 2001, and 2000	4

	Consolidated Statements of Cash Flows Six Month Periods Ended June 30, 2001, and 2000	5

	Consolidated Balance Sheets June 30, 2001, and December 31, 2000	6

	Texas-New Mexico Power Company (TNMP) and Subsidiaries:
	Consolidated Statements of Income Three and Six Month Periods Ended June 30, 2001, and 2000	7

	Consolidated Statements of Cash Flows Six Month Periods Ended June 30, 2001, and 2000	8

	Consolidated Balance Sheets June 30, 2001, and December 31, 2000	9

	Notes to Consolidated Financial Statements	10

Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations.	13
PART II. OTHER INFORMATION
Item 1.	Legal Proceedings	18

Item 5.	Other Items	18

Item 6.	Exhibits and Reports on Form 8-K	18

	(a) Exhibit Index	18

	(b) Reports on Form 8-K	18

Statement Regarding Forward Looking Information		19

Signature Page		19

____________________________________________________________________________________________

TNP ENTERPRISES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME (LOSS)
(Unaudited)


			Three Months Ended June 30,
			2001	2000
			(In thousands)

OPERATING REVENUES			$ 161,335	$ 155,931
			_________________	_________________
OPERATING EXPENSES:
	Purchased power and fuel		90,735	81,314
	Other operating and maintenance		27,486	25,703
	Depreciation and amortization		13,418	12,975
	Charge for recovery of stranded plant		2,657	3,396
	Taxes other than income taxes		8,622	9,142
	Income taxes		752	1,395
			_________________	_________________
		Total operating expenses	143,670	133,925
			_________________	_________________
NET OPERATING INCOME			17,665	22,006
			_________________	_________________
OTHER INCOME:
	Other income and deductions, net		581	328
	Income taxes		(180)	(76)
			_________________	_________________
		Other income, net of taxes	401	252
			_________________	_________________
INCOME BEFORE INTEREST CHARGES			18,066	22,258
			_________________	_________________
INTEREST CHARGES:
	Interest on long-term debt		16,804	19,617
	Other interest and amortization of debt-related costs		1,148	2,109
			_________________	_________________
		Total interest charges	17,952	21,726
			_________________	_________________
NET INCOME			114	532
	Dividends on preferred stock and other		4,195	3,314
			_________________	_________________
LOSS APPLICABLE TO COMMON STOCK			$ (4,081)	$ (2,782)
			_________________	_________________
			_________________	_________________

The accompanying notes are an integral part of these consolidated financial statements.

3
_____________________________________________________________________________________

TNP ENTERPRISES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME (LOSS)
(Unaudited)

			Six Months Ended	Three Months Ended
			June 30, 2001	June 30, 2000	March 31, 2000
					Predecessor
			(In thousands)

OPERATING REVENUES			$ 329,689	$ 155,931	$ 124,526
			_________________	_________________	_________________
OPERATING EXPENSES:
	Purchased power and fuel		195,311	81,314	59,550
	Other operating and maintenance		52,545	25,703	29,398
	Depreciation and amortization		26,929	12,975	10,230
	Charge for recovery of stranded plant		5,768	3,396	1,629
	Taxes other than income taxes		17,041	9,142	7,941
	Income taxes		(1,036)	1,395	1,745
			_________________	_________________	_________________
		Total operating expenses	296,558	133,925	110,493
			_________________	_________________	_________________
NET OPERATING INCOME			33,131	22,006	14,033
			_________________	_________________	_________________
OTHER INCOME:
	Other income and deductions, net		1,060	328	465
	Income taxes		(372)	(76)	(131)
			_________________	_________________	_________________
		Other income, net of taxes	688	252	334
			_________________	_________________	_________________
INCOME BEFORE INTEREST CHARGES			33,819	22,258	14,367
			_________________	_________________	_________________
INTEREST CHARGES:
	Interest on long-term debt		34,566	19,617	9,626
	Other interest and amortization of debt-related costs		2,281	2,109	888
			_________________	_________________	_________________
		Total interest charges	36,847	21,726	10,514
			_________________	_________________	_________________
INCOME (LOSS) BEFORE THE CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING			(3,028)	532	3,853

	Cumulative effect of change in accounting for major maintenance costs, net of taxes (Note 3)		(1,170)	-	-
			_________________	_________________	_________________
NET INCOME (LOSS)			(4,198)	532	3,853
	Dividends on preferred stock and other		8,113	3,314	5
			_________________	_________________	_________________
INCOME (LOSS) APPLICABLE TO COMMON STOCK			$ (12,311)	$ (2,782)	$ 3,848
			_________________	_________________	_________________
			_________________	_________________	_________________

The accompanying notes are an integral part of these consolidated financial statements.

4
_____________________________________________________________________________________

TNP ENTERPRISES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)


			Six Months Ended	Three Months Ended
			June 30, 2001	June 30, 2000	March 31, 2000
					Predecessor
			(In thousands)
CASH FLOWS FROM OPERATING ACTIVITIES:
	Cash received from sales to customers		$ 363,322	$ 139,920	$ 102,091
	Purchased power and fuel costs paid		(197,305)	(69,107)	(63,613)
	Cash paid for payroll and to other suppliers		(50,900)	(24,686)	(24,234)
	Interest paid, net of amounts capitalized		(33,507)	(8,954)	(14,690)
	Income taxes (paid) refunded		(844)	(801)	5,500
	Other taxes paid		(22,075)	(6,083)	(17,089)
	Other operating cash receipts and payments, net		81	(200)	147
			________________	________________	________________
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES			58,772	30,089	(11,888)
			________________	________________	________________
CASH FLOWS FROM INVESTING ACTIVITIES:
	Merger costs, net of cash acquired		-	(604,968)	-
	Additions to utility plant		(16,539)	(10,588)	(9,200)
	Other investing activities		(913)	702	-
			________________	________________	________________
NET CASH USED IN INVESTING ACTIVITIES			(17,452)	(614,854)	(9,200)
			________________	________________	________________
CASH FLOWS FROM FINANCING ACTIVITIES:
	Dividends paid on preferred and common stocks		-	(1,826)	(3,926)
	Borrowings from (repayments to) revolving credit facilities - net
		TNMP $315 million facility	(37,000)	-	-
		TNMP 1996 facility	-	(13,000)	21,000
	Issuances:
		TNP senior subordinated notes	-	275,000	-
		TNP term loan	-	160,000	-
		TNMP backstop facility	-	203,000	-
		TNP preferred stock, net of discount	-	99,000	-
		TNP common stock	-	100,000	1,202
		Financing costs	(109)	(21,596)	-
	Redemptions:
		TNMP secured debentures	-	(112,776)	-
		TNMP first mortgage bonds	-	(90,506)	-
		TNP term loan	(800)	(400)	-
		TNMP preferred stock, net of gain	-	-	(117)
			________________	________________	________________
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES			(37,909)	596,896	18,159
			________________	________________	________________
NET CHANGE IN CASH AND CASH EQUIVALENTS			3,411	12,131	(2,929)

CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD			8,110	-	14,456
			________________	________________	________________
CASH AND CASH EQUIVALENTS AT END OF PERIOD			$ 11,521	$ 12,131	$ 11,527
			________________	________________	________________
			________________	________________	________________

RECONCILIATION OF NET INCOME (LOSS) TO NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES:
	Net income (loss)		$ (4,198)	$ 532	$ 3,853
	Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
		Cumulative effect of change in accounting for major maintenance costs, net of taxes	1,170	-	-
		Depreciation and amortization	26,929	12,975	10,230
		Charge for recovery of stranded plant	5,768	3,396	1,629
		Purchased power settlement adjustment	-	-	(2,425)
		Amortization of debt-related costs and other deferred charges	2,089	2,129	957
		Allowance for funds used during construction	(102)	(96)	(82)
		Deferred income taxes	(5,915)	551	2,541
		Investment tax credits	549	(400)	(401)
		Deferred purchased power and fuel costs	19,783	(8,030)	(2,233)

	Cash flows impacted by changes in current assets and liabilities:
		Accounts receivable	13,367	(3,270)	(1,021)
		Accounts payable	(5,966)	11,481	(2,740)
		Accrued interest	1,332	10,787	(4,990)
		Accrued taxes	186	4,304	(3,825)
		Reserve for customer refund	(1,694)	639	838
		Changes in other current assets and liabilities	10,153	(2,491)	(14,601)
	Other, net		(4,679)	(2,418)	382
			________________	________________	________________
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES			$ 58,772	$ 30,089	$ (11,888)
			________________	________________	________________
			________________	________________	________________

The accompanying notes are an integral part of these consolidated financial statements.


5
_____________________________________________________________________________________

TNP ENTERPRISES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS


					June 30, 2001	December 31,
					(Unaudited)	2000
					(In thousands)
*ASSETS*

UTILITY PLANT:
	Electric plant				$ 832,934	$ 818,247
	Construction work in progress				3,220	1,508
					_____________	_____________
				Total	836,154	819,755
	Less accumulated depreciation				46,314	27,566
					_____________	_____________
				Net utility plant	789,840	792,189
					_____________	_____________
OTHER PROPERTY AND INVESTMENTS, at cost					3,763	3,636
					_____________	_____________
CURRENT ASSETS:
	Cash and cash equivalents				11,521	8,110
	Accounts receivable				8,291	21,658
	Inventories, at lower of average cost or market:
				Fuel	451	406
				Materials and supplies	3,867	3,990
	Deferred purchased power and fuel costs				102	1,977
	Other current assets				930	695
					_____________	_____________
				Total current assets	25,162	36,836
					_____________	_____________
LONG-TERM AND OTHER ASSETS:
	Goodwill				276,064	281,870
	Recoverable stranded costs				117,483	119,857
	Deferred purchased power and fuel costs				19,343	37,251
	Deferred charges				54,542	57,092
					_____________	_____________
				Total long-term and other assets	467,432	496,070
					_____________	_____________
					$ 1,286,197	$ 1,328,731
					_____________	_____________
					_____________	_____________
*CAPITALIZATION AND LIABILITIES*

CAPITALIZATION:
	Common shareholder's equity:
		Common stock, no par value per share - Authorized 1,000,000
				shares; issued 100 shares	$ 100,000	$ 100,000
			Retained earnings (deficit)		(25,691)	(13,380)
			Accumulated other comprehensive loss		(125)	-
					_____________	_____________
				Total common shareholder's equity	74,184	86,620
	Redeemable cumulative preferred stock				112,506	104,393
	Long-term debt, less current maturities				820,769	858,527
					_____________	_____________
				Total capitalization	1,007,459	1,049,540
					_____________	_____________
CURRENT LIABILITIES:
	Current maturities of long-term debt				1,600	1,600
	Accounts payable				32,706	38,672
	Accrued interest				15,884	14,552
	Accrued taxes				18,195	18,009
	Customers' deposits				4,565	3,945
	Accumulated deferred income taxes				9,332	13,427
	Reserve for customer refund				861	2,555
	Other current liabilities				25,303	15,862
					_____________	_____________
				Total current liabilities	108,446	108,622
					_____________	_____________
LONG-TERM AND OTHER LIABILITIES:
	Regulatory tax liabilities				87	6,371
	Accumulated deferred income taxes				102,406	98,353
	Accumulated deferred investment tax credits				21,581	22,377
	Deferred credits				46,218	43,468
					_____________	_____________
				Total long-term and other liabilities	170,292	170,569
					_____________	_____________
COMMITMENTS AND CONTINGENCIES (Note 4)
					_____________	_____________
					$ 1,286,197	$ 1,328,731
					_____________	_____________
					_____________	_____________

The accompanying notes are an integral part of these consolidated financial statements.

6
_____________________________________________________________________________________

TEXAS-NEW MEXICO POWER COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of TNP Enterprises, Inc.)
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)


			Three Months Ended June 30,			Six Months Ended June 30,
				2001	2000	2001	2000
				(In thousands)

OPERATING REVENUES				$ 161,335	$ 155,918	$ 329,689	$ 280,430
				____________	____________	____________	____________
OPERATING EXPENSES:
	Purchased power and fuel			90,735	81,314	195,311	140,864
	Other operating and maintenance			24,889	24,093	48,317	47,699
	Depreciation of utility plant			10,492	10,281	21,082	20,512
	Charge for recovery of stranded plant			2,657	3,396	5,768	5,025
	Taxes other than income taxes			8,502	8,907	16,763	16,729
	Income taxes			5,756	5,787	8,486	9,414
				____________	____________	____________	____________
		Total operating expenses		143,031	133,778	295,727	240,243
				____________	____________	____________	____________
NET OPERATING INCOME				18,304	22,140	33,962	40,187
				____________	____________	____________	____________
OTHER INCOME:
	Other income and deductions, net			529	198	936	528
	Income taxes			(180)	(76)	(372)	(207)
				____________	____________	____________	____________
		Other income, net of taxes		349	122	564	321
				____________	____________	____________	____________
INCOME BEFORE INTEREST CHARGES				18,653	22,262	34,526	40,508
				____________	____________	____________	____________
INTEREST CHARGES:
	Interest on long-term debt			6,654	9,333	13,924	18,927
	Other interest and amortization of debt-related costs			733	1,726	1,450	2,615
				____________	____________	____________	____________
		Total interest charges		7,387	11,059	15,374	21,542
				____________	____________	____________	____________

INCOME BEFORE THE CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING				11,266	11,203	19,152	18,966

Cumulative effect of change in accounting for major maintenance costs, net of taxes (Note 3)				-	-	(1,170)	-
				____________	____________	____________	____________
NET INCOME				11,266	11,203	17,982	18,966
	Dividends on preferred stock and other			-	18	-	23
				____________	____________	____________	____________
INCOME APPLICABLE TO COMMON STOCK				$ 11,266	$ 11,185	$ 17,982	$ 18,943
				____________	____________	____________	____________
				____________	____________	____________	____________

The accompanying notes are an integral part of these consolidated financial statements.


7
_____________________________________________________________________________________

TEXAS-NEW MEXICO POWER COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of TNP Enterprises, Inc.)
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)


			Six Months Ended June 30,
			2001	2000
			(In thousands)
CASH FLOWS FROM OPERATING ACTIVITIES:
	Cash received from sales to customers		$ 363,304	$ 241,932
	Purchased power and fuel costs paid		(197,305)	(132,720)
	Cash paid for payroll and to other suppliers		(48,282)	(41,074)
	Interest paid, net of amounts capitalized		(13,619)	(20,668)
	Income taxes paid		(9,174)	(50)
	Other taxes paid		(21,623)	(22,731)
	Other operating cash receipts and payments, net		(40)	(319)
			____________	____________
NET CASH PROVIDED BY OPERATING ACTIVITIES			73,261	24,370
			____________	____________
CASH FLOWS FROM INVESTING ACTIVITIES:
	Additions to utility plant		(16,147)	(19,778)
	Other investing activities		(128)	102
			____________	____________
NET CASH USED IN INVESTING ACTIVITIES			(16,275)	(19,676)
			____________	____________
CASH FLOWS FROM FINANCING ACTIVITIES:
	Dividends paid on preferred and common stocks		(19,000)	(7,536)
	Borrowings from (repayments to) revolving credit facilities - net
		$315 million facility	(37,000)	-
		1996 facility	-	8,000
	Issuances:
		Backstop facility	-	203,000
	Deferred expenses associated with financings		1,923	(3,048)
	Redemptions:
		Secured debentures	-	(112,776)
		First mortgage bonds	-	(90,506)
		Preferred stock, net of gain	-	(117)
			____________	____________
NET CASH USED IN FINANCING ACTIVITIES			(54,077)	(2,983)
			____________	____________
NET CHANGE IN CASH AND CASH EQUIVALENTS			2,909	1,711
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD			2,613	4,002
			____________	____________
CASH AND CASH EQUIVALENTS AT END OF PERIOD			$ 5,522	$ 5,713
			____________	____________
RECONCILIATION OF NET INCOME TO NET			____________	____________
	CASH PROVIDED BY OPERATING ACTIVITIES:
	Net income		$ 17,982	$ 18,966
	Adjustments to reconcile net income to net cash provided by operating activities:
		Cumulative effect of change in accounting for major maintenance costs, net of taxes	1,170	-
		Depreciation of utility plant	21,082	20,512
		Charge for recovery of stranded plant	5,768	5,025
		Purchased power settlement adjustment	-	(2,425)
		Amortization of debt-related costs and other deferred charges	1,255	2,703
		Allowance for funds used during construction	(99)	(178)
		Deferred income taxes	(1,167)	5,494
		Investment tax credits	(796)	(801)
		Deferred purchased power and fuel costs	19,783	(10,263)

	Cash flows impacted by changes in current assets and liabilities:
		Accounts receivable	13,348	(4,342)
		Accounts payable	(5,898)	8,789
		Accrued interest	579	(1,543)
		Accrued taxes	(3,403)	(425)
		Reserve for customer refund	(1,694)	1,477
		Changes in other current assets and liabilities	10,337	(17,092)
	Other, net		(4,986)	(1,527)
			____________	____________
NET CASH PROVIDED BY OPERATING ACTIVITIES			$ 73,261	$ 24,370
			____________	____________
			____________	____________


The accompanying notes are an integral part of these consolidated financial statements.


8
_____________________________________________________________________________________

TEXAS-NEW MEXICO POWER COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of TNP Enterprises, Inc.)
CONSOLIDATED BALANCE SHEETS


				June 30, 2001	December 31,
				(Unaudited)	2000
				(In thousands)
*ASSETS*

UTILITY PLANT:
	Electric plant			$ 1,327,728	$ 1,326,296
	Construction work in progress			2,865	1,508
				_____________	_____________
			Total	1,330,593	1,327,804
	Less accumulated depreciation			423,683	415,816
				_____________	_____________
			Net utility plant	906,910	911,988
				_____________	_____________
OTHER PROPERTY AND INVESTMENTS, at cost				334	206
				_____________	_____________
CURRENT ASSETS:
	Cash and cash equivalents			5,522	2,613
	Accounts receivable			8,020	21,368
	Inventories, at lower of average cost or market:
		Fuel		451	406
		Materials and supplies		3,867	3,990
	Deferred purchased power and fuel costs			102	1,977
	Other current assets			922	641
				_____________	_____________
			Total current assets	18,884	30,995
				_____________	_____________
LONG-TERM AND OTHER ASSETS:
	Deferred purchased power and fuel costs			19,343	37,251
	Deferred charges			15,799	18,057
				_____________	_____________
			Total long-term and other assets	35,142	55,308
				_____________	_____________
				$ 961,270	$ 998,497
				_____________	_____________
				_____________	_____________
*CAPITALIZATION AND LIABILITIES*

CAPITALIZATION:
	Common shareholder's equity:
	Common stock, $10 par value per share
		Authorized 12,000,000 shares; issued 10,705 shares		$ 107	$ 107
	Capital in excess of par value			222,149	222,149
	Retained earnings			103,703	100,721
	Accumulated other comprehensive loss			(125)	-
				_____________	_____________
			Total common shareholder's equity	325,834	322,977
		Long-term debt, less current maturities		389,369	426,327
				_____________	_____________
			Total capitalization	715,203	749,304
				_____________	_____________
CURRENT LIABILITIES:
	Accounts payable			32,428	38,326
	Accrued interest			7,499	6,920
	Accrued taxes			17,780	21,183
	Customers' deposits			4,565	3,945
	Accumulated deferred income taxes			9,422	13,767
	Reserve for customer refund			861	2,555
	Other current liabilities			24,964	19,044
				_____________	_____________
			Total current liabilities	97,519	105,740
				_____________	_____________
LONG-TERM AND OTHER LIABILITIES:
	Regulatory tax liabilities			87	6,371
	Accumulated deferred income taxes			109,436	100,177
	Accumulated deferred investment tax credits			21,581	22,377
	Deferred credits			17,444	14,528
				_____________	_____________
			Total long-term and other liabilities	148,548	143,453
				_____________	_____________
COMMITMENTS AND CONTINGENCIES (Note 4)
				_____________	_____________
				$ 961,270	$ 998,497
				_____________	_____________
				_____________	_____________

The accompanying notes are an integral part of these consolidated financial statements.


9
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Texas New Mexico Power 10-Q2001 Q2 Quarterly report

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