Texas New Mexico Power 10Q 2001 Q3 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 endedSeptember 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 September 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 Three Month Periods Ended September 30, 2001, and 2000	3

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

	Consolidated Statements of Cash Flows Nine Month Periods Ended September 30, 2001, and 2000	5

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

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

	Consolidated Statements of Cash Flows Nine Month Periods Ended September 30, 2001, and 2000	8

	Consolidated Balance Sheets September 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 (MD&A).	14

PART II. OTHER INFORMATION
Item 1.	Legal Proceedings	19

Item 5.	Other Items	19

Item 6.	Exhibits and Reports on Form 8-K	19

	(a) Exhibit Index	19

	(b) Reports on Form 8-K	19

Statement Regarding Forward Looking Information		20

Signature Page		20

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

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

OPERATING REVENUES			$ 186,309	$ 203,666
OPERATING EXPENSES:
	Purchased power and fuel		98,472	107,318
	Other operating and maintenance		28,310	25,008
	Depreciation and amortization		13,540	13,261
	Charge for recovery of stranded plant		(2,188)	10,521
	Taxes other than income taxes		10,296	10,514
	Income taxes		8,688	5,958
		Total operating expenses	157,118	172,580
NET OPERATING INCOME			29,191	31,086
OTHER INCOME:
	Other income and deductions, net		242	768
	Income taxes		(135)	(220)
		Other income, net of taxes	107	548

INCOME BEFORE INTEREST CHARGES			29,298	31,634
INTEREST CHARGES:
	Interest on long-term debt		15,370	19,341
	Other interest and amortization of debt-related costs		1,434	1,726
		Total interest charges	16,804	21,067
NET INCOME			12,494	10,567
	Dividends on preferred stock and other		4,195	3,754
INCOME APPLICABLE TO COMMON STOCK			$ 8,299	$ 6,813



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

3

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

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

OPERATING REVENUES			$ 515,998	$ 359,597	$ 124,526
OPERATING EXPENSES:
	Purchased power and fuel		293,783	188,633	59,550
	Other operating and maintenance		80,856	50,711	29,398
	Depreciation and amortization		40,468	26,236	10,230
	Charge for recovery of stranded plant		3,581	13,917	1,629
	Taxes other than income taxes		27,337	19,655	7,941
	Income taxes		7,651	7,353	1,745
		Total operating expenses	453,676	306,505	110,493

NET OPERATING INCOME			62,322	53,092	14,033
OTHER INCOME:
	Other income and deductions, net		1,302	1,096	465
	Income taxes		(506)	(296)	(131)
		Other income, net of taxes	796	800	334

INCOME BEFORE INTEREST CHARGES			63,118	53,892	14,367
INTEREST CHARGES:
	Interest on long-term debt		49,936	38,958	9,626
	Other interest and amortization of debt-related costs		3,716	3,835	888
		Total interest charges	53,652	42,793	10,514

INCOME BEFORE THE CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING			9,466	11,099	3,853

	Cumulative effect of change in accounting for major maintenance costs, net of taxes (Note 3)		(1,170)	-	-

NET INCOME			8,296	11,099	3,853
	Dividends on preferred stock and other		12,308	7,068	5

INCOME (LOSS) APPLICABLE TO COMMON STOCK			$ (4,012)	$ 4,031	$ 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)


			Nine Months	Six Months	Three Months
			Ended	Ended	Ended
			September 30,	September 30,	March 31,
			2001	2000	2000
					Predecessor
			(In thousands)
CASH FLOWS FROM OPERATING ACTIVITIES:
	Cash received from sales to customers		$ 552,548	$ 324,404	$ 102,091
	Purchased power and fuel costs paid		(293,522)	(170,318)	(63,613)
	Cash paid for payroll and to other suppliers		(70,897)	(46,568)	(24,234)
	Interest paid, net of amounts capitalized		(45,862)	(24,401)	(14,690)
	Income taxes (paid) refunded		(4,402)	(1,819)	5,500
	Other taxes paid		(27,296)	(10,721)	(17,089)
	Other operating cash receipts and payments, net		92	41	147
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES			110,661	70,618	(11,888)
CASH FLOWS FROM INVESTING ACTIVITIES:
	Merger costs, net of cash acquired		-	(605,145)	-
	Additions to utility plant		(26,719)	(20,954)	(9,200)
	Other investing activities		(912)	702	-
NET CASH USED IN INVESTING ACTIVITIES			(27,631)	(625,397)	(9,200)

CASH FLOWS FROM FINANCING ACTIVITIES:
	Dividends paid on preferred and common stocks		(7,618)	(1,844)	(3,926)
	Borrowings from (repayments to) revolving credit facilities - net
		TNMP $325 million facility	(72,000)	-	-
		TNMP 1996 facility	-	8,000	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	7,618	99,000	-
		TNP common stock	-	100,000	1,202
		Financing costs	(109)	(21,721)	-
	Redemptions:
		TNMP secured debentures	-	(140,000)	-
		TNMP first mortgage bonds	-	(100,000)	-
		TNP term loan	(1,200)	(800)	-
		TNMP preferred stock, net of gain	-	(1,534)	(117)
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES			(73,309)	579,101	18,159

NET CHANGE IN CASH AND CASH EQUIVALENTS			9,721	24,322	(2,929)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD			8,110	-	14,456

CASH AND CASH EQUIVALENTS AT END OF PERIOD			$ 17,831	$ 24,322	$ 11,527

RECONCILIATION OF NET INCOME TO NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES:
	Net income		$ 8,296	$ 11,099	$ 3,853
	Adjustments to reconcile net income 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	40,468	26,236	10,230
		Charge for recovery of stranded plant	3,581	13,917	1,629
		Purchased power settlement adjustment	-	-	(2,425)
		Amortization of debt-related costs and other deferred charges	3,131	3,877	957
		Allowance for funds used during construction	(197)	(241)	(82)
		Deferred income taxes	(6,657)	1,554	2,541
		Investment tax credits	(374)	(1,522)	(401)
		Deferred purchased power and fuel costs	39,201	(16,622)	(2,233)
	Cash flows impacted by changes in current assets and liabilities:
		Accounts receivable	11,795	(5,885)	(1,021)
		Accounts payable	(3,007)	16,913	(2,740)
		Accrued interest	4,800	14,834	(4,990)
		Accrued taxes	12,280	15,180	(3,825)
		Changes in other current assets and liabilities	708	(5,512)	(13,763)
	Other, net		(4,534)	(3,210)	382
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES			$ 110,661	$ 70,618	$ (11,888)



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


5

TNP ENTERPRISES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS

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

UTILITY PLANT:
	Electric plant				$ 841,520	$ 818,247
	Construction work in progress				4,905	1,508
				Total	846,425	819,755
	Less accumulated depreciation				55,763	27,566
				Net utility plant	790,662	792,189
OTHER PROPERTY AND INVESTMENTS, at cost					3,763	3,636
CURRENT ASSETS:
	Cash and cash equivalents				17,831	8,110
	Accounts receivable				9,863	21,658
	Inventories, at lower of average cost or market:
				Fuel	175	406
				Materials and supplies	3,797	3,990
	Deferred purchased power and fuel costs				137	1,977
	Other current assets				1,942	695
				Total current assets	33,745	36,836
LONG-TERM AND OTHER ASSETS:
	Goodwill				273,160	281,870
	Recoverable stranded costs				116,296	119,857
	Deferred purchased power and fuel costs				-	37,251
	Deferred charges				53,646	57,092
				Total long-term and other assets	443,102	496,070
					$ 1,271,272	$ 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)		(17,392)	(13,380)
				Total common shareholder's equity	82,608	86,620
	Redeemable cumulative preferred stock				116,700	104,393
	Long-term debt, less current maturities				785,390	858,527
				Total capitalization	984,698	1,049,540
CURRENT LIABILITIES:
	Current maturities of long-term debt				1,600	1,600
	Accounts payable				35,665	38,672
	Accrued interest				19,352	14,552
	Accrued taxes				30,289	18,009
	Customers' deposits				5,529	3,945
	Accumulated deferred income taxes				-	13,427
	Other current liabilities				17,202	18,417
				Total current liabilities	109,637	108,622
LONG-TERM AND OTHER LIABILITIES:
	Regulatory tax liabilities				-	6,371
	Accumulated deferred income taxes				111,404	98,353
	Accumulated deferred investment tax credits				21,187	22,377
	Deferred credits				44,346	43,468
				Total long-term and other liabilities	176,937	170,569
COMMITMENTS AND CONTINGENCIES (Note 4)

					$ 1,271,272	$ 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		Nine Months Ended
			September 30,		September 30,
			2001	2000	2001	2000
			(In thousands)

OPERATING REVENUES			$185,834	$203,694	$515,523	$484,123
OPERATING EXPENSES:
	Purchased power and fuel		98,104	107,318	293,414	248,182
	Other operating and maintenance		25,653	23,857	73,970	71,557
	Depreciation of utility plant		10,609	10,378	31,691	30,889
	Charge for recovery of stranded plant		(2,188)	10,521	3,581	15,546
	Taxes other than income taxes		10,206	10,188	26,969	26,916
	Income taxes		13,293	10,582	21,778	19,996
		Total operating expenses	155,677	172,844	451,403	413,086
NET OPERATING INCOME			30,157	30,850	64,120	71,037
OTHER INCOME:
	Other income and deductions, net		209	599	1,145	1,127
	Income taxes		(77)	(213)	(449)	(420)
		Other income, net of taxes	132	386	696	707
INCOME BEFORE INTEREST CHARGES			30,289	31,236	64,816	71,744
INTEREST CHARGES:
	Interest on long-term debt		5,558	8,413	19,482	27,340
	Other interest and amortization of debt-related costs		1,025	1,314	2,476	3,929
		Total interest charges	6,583	9,727	21,958	31,269

INCOME BEFORE THE CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING			23,706	21,509	42,858	40,475

Cumulative effect of change in accounting for major maintenance costs, net of taxes (Note 3)			-	-	(1,170)	-
NET INCOME			23,706	21,509	41,688	40,475
	Dividends on preferred stock and other		-	15	-	38
INCOME APPLICABLE TO COMMON STOCK			$ 23,706	$ 21,494	$ 41,688	$ 40,437


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)

			Nine Months Ended
			September 30,
			2001	2000
			(In thousands)
CASH FLOWS FROM OPERATING ACTIVITIES:
	Cash received from sales to customers		$ 552,531	$ 425,717
	Purchased power and fuel costs paid		(293,522)	(233,931)
	Cash paid for payroll and to other suppliers		(63,840)	(60,858)
	Interest paid, net of amounts capitalized		(22,735)	(32,145)
	Income taxes paid		(15,116)	(3,343)
	Other taxes paid		(26,921)	(26,934)
	Other operating cash receipts and payments, net		(56)	(247)
NET CASH PROVIDED BY OPERATING ACTIVITIES			130,341	68,259
CASH FLOWS FROM INVESTING ACTIVITIES:
	Additions to utility plant		(25,918)	(30,115)
	Other investing activities		(127)	102
NET CASH USED IN INVESTING ACTIVITIES			(26,045)	(30,013)

CASH FLOWS FROM FINANCING ACTIVITIES:
	Dividends paid on preferred and common stocks		(19,000)	(24,554)
	Borrowings from (repayments to) revolving credit facilities - net
		$325 million facility	(76,000)	-
		1996 facility	-	29,000
	Issuances:
		Backstop facility	-	203,000
	Deferred expenses associated with financings		1,923	(3,048)
	Redemptions:
		Secured debentures	-	(140,000)
		First mortgage bonds	-	(100,000)
		Preferred stock, net of gain	-	(1,651)
NET CASH USED IN FINANCING ACTIVITIES			(93,077)	(37,253)
NET CHANGE IN CASH AND CASH EQUIVALENTS			11,219	993
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD			2,613	4,002
CASH AND CASH EQUIVALENTS AT END OF PERIOD			$ 13,832	$ 4,995
RECONCILIATION OF NET INCOME TO NET
	CASH PROVIDED BY OPERATING ACTIVITIES:
	Net income		$ 41,688	$ 40,475
	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	31,691	30,889
		Charge for recovery of stranded plant	3,581	15,546
		Purchased power settlement adjustment	-	(2,425)
		Amortization of debt-related costs and other deferred charges	1,881	4,039
		Allowance for funds used during construction	(175)	(323)
		Deferred income taxes	473	8,395
		Investment tax credits	(1,191)	(1,202)
		Deferred purchased power and fuel costs	39,201	(18,855)
	Cash flows impacted by changes in current assets and liabilities:
		Accounts receivable	12,255	(7,684)
		Accounts payable	(3,151)	14,222
		Accrued interest	(2,527)	(4,453)
		Accrued taxes	7,594	10,488
		Changes in other current assets and liabilities	861	(18,434)
	Other, net		(3,010)	(2,419)
NET CASH PROVIDED BY OPERATING ACTIVITIES			$ 130,341	$ 68,259


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


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

UTILITY PLANT:
	Electric plant			$ 1,334,351	$ 1,326,296
	Construction work in progress			4,092	1,508
			Total	1,338,443	1,327,804
	Less accumulated depreciation			432,294	415,816
			Net utility plant	906,149	911,988
OTHER PROPERTY AND INVESTMENTS, at cost				334	206
CURRENT ASSETS:
	Cash and cash equivalents			13,832	2,613
	Accounts receivable			9,113	21,368
	Inventories, at lower of average cost or market:
		Fuel		175	406
		Materials and supplies		3,797	3,990
	Deferred purchased power and fuel costs			137	1,977
	Other current assets			1,768	641
			Total current assets	28,822	30,995
LONG-TERM AND OTHER ASSETS:
	Deferred purchased power and fuel costs			-	37,251
	Deferred charges			13,682	18,057
			Total long-term and other assets	13,682	55,308
				$ 948,987	$ 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			111,409	100,721
			Total common shareholder's equity	333,665	322,977
		Long-term debt		350,390	426,327
			Total capitalization	684,055	749,304
CURRENT LIABILITIES:
	Accounts payable			35,175	38,326
	Accrued interest			4,393	6,920
	Accrued taxes			28,777	21,183
	Customers' deposits			5,527	3,945
	Accumulated deferred income taxes			-	13,767
	Other current liabilities			32,758	21,599
			Total current liabilities	106,630	105,740
LONG-TERM AND OTHER LIABILITIES:
	Regulatory tax liabilities			-	6,371
	Accumulated deferred income taxes			121,521	100,177
	Accumulated deferred investment tax credits			21,187	22,377
	Deferred credits			15,594	14,528
			Total long-term and other liabilities	158,302	143,453
COMMITMENTS AND CONTINGENCIES (Note 4)

				$ 948,987	$ 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 Q3 Quarterly report

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