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
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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.
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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
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. holds all 10,705 outstanding common shares of Texas-New Mexico Power Company.
1
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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)
3
Consolidated Statements of Income (Loss)
4
Consolidated Statements of Cash Flows
5
Consolidated Balance Sheets
6
Texas-New Mexico Power Company (TNMP) and Subsidiaries:
Consolidated Statements of Income
7
Consolidated Statements of Cash Flows
8
Consolidated Balance Sheets
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
2
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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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