Exhibit 99.1
For Immediate Release
May 1, 2009
PNM Resources Reports Improved 2009 First Quarter Earnings
Regulatory initiatives, First Choice Power rebuilding value
Management to discuss results during call today
(ALBUQUERQUE, N.M.) – PNM Resources (NYSE: PNM) today reported unaudited 2009 first quarter consolidated GAAP earnings of $95.4 million, or $1.04 per diluted share, compared with losses of $48.6 million, or $0.63 per diluted share, in 2008. GAAP earnings for the quarter reflect various non-recurring items that have a net positive impact totaling $86.1 million, including the after-tax gain from the January sale of the company’s gas operations.
Unaudited, consolidated ongoing earnings were $9.3 million, or $0.10 per diluted share, compared with $3.5 million, or $0.05 per diluted share, in 2008. Improved ongoing earnings were a result of significantly better performance at the PNM electric business as a result of the implementation of new rates and a fuel and purchased power cost adjustment clause and better performance at First Choice Power. Reconciliations of GAAP to non-GAAP measures are shown in the attached schedules 1-4.
“We’ve worked aggressively to restore the financial health of the PNM utility and the entire corporation, and our 2009 first quarter results show success in those areas,” said Jeff Sterba, PNM Resources chairman and CEO. “Numerous steps have been implemented to manage costs across all subsidiaries, improve our liquidity position and strengthen our balance sheets.
“Work continues to achieve appropriate return for our utilities. Specifically, we’ve reached an agreement with key parties regarding the pending PNM electric rate case and we amended our pending TNMP rate case in Texas to include Hurricane Ike and higher interest costs,” Sterba said. “In addition, recent legislation that will allow utilities to seek a future test period in upcoming rate cases in New Mexico was passed. We have accomplished many initiatives and we will continue to work to ensure PNM’s viability and ability to return to investment grade.
“Regarding First Choice Power, we are seeing improvement there as a new business focus is in place. However, First Choice Power, as well as our utility operations in New Mexico and Texas, experienced lower retail electric sales volumes as milder weather and current economic conditions reduced demand.”
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PNM Resources Reports Q1 Earnings 5-1-09 p. 2 of 5
IMPACT OF ECONOMIC CONDITIONS
Economic indicators and trends in PNM Resources’ operating territories in New Mexico and Texas have fared better than the nation during the current recession. As of March, unemployment in New Mexico and Texas was 5.9 percent and 6.7 percent, respectively, compared with the national rate of 8.7 percent.
“While we are seeing a reduction in load throughout our operations, it appears to be less than what is being observed in other parts of the country,” Sterba said.
Comparing first quarter 2009 with 2008, residential and commercial customer counts grew 0.9 percent for PNM and 1.6 percent for TNMP. However, lower use-per-customer resulted in weather-normalized residential load decline of 2.4 percent for PNM and 3.1 percent for TNMP. PNM weather-normalized total retail load decreased 3.7 percent, largely attributable to a 6.1 percent reduction in industrial sales volumes, half of which was expected because of customer decisions made prior to the recession.
TNMP’s service territory experienced a total weather-normalized load reduction of 3.0 percent during the comparable periods, largely attributed to the decline in residential usage.
QUARTERLY SEGMENT REPORTING OF EARNINGS
Regulated Operations
PNM Electric – a vertically integrated electric utility in New Mexico with distribution, transmission and generation assets.
| · | Ongoing losses were less than $0.1 million, compared with losses of $14.4 million, or $0.19 per diluted share, in 2008. GAAP losses were $5.1 million, or $0.05 per diluted share, compared with losses of $27.1 million, or $0.35 per diluted share, in 2008. |
| · | Higher base rates and implementation of the fuel clause improved earnings by $6.3 million, or $0.08 per diluted share. Earnings were offset by the decrease in retail sales volumes and higher interest charges. |
TNMP – a transmission and distribution company in Texas.
| · | TNMP reported GAAP and ongoing earnings of $1.4 million, or $0.02 per diluted share, compared with earnings of $3.7 million, or $0.05 per diluted share, in 2008. |
| · | Higher medical, pension and other administrative expenses and the decline in load in 2009, compared with 2008, reduced earnings. |
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PNM Resources Reports Q1 Earnings 5-1-09 p. 3 of 5
Unregulated Operations
First Choice Power – a competitive retail electric provider in Texas.
| · | First Choice Power reported ongoing earnings of $6.8 million, or $0.07 per diluted share, compared with $2.2 million, or $0.03 per diluted share, in 2008. GAAP earnings were $7.0 million, or $0.07 per diluted share, compared with losses of $24.1 million, or $0.31 per diluted share, in 2008. GAAP losses in 2008 reflected speculative trading activities totaling $30.3 million after tax. |
| · | Lower natural gas and power prices significantly improved average retail margins during the quarter. Margins are expected to return to traditional levels as First Choice Power aligns contracts prices with current, lower fuel costs. |
| · | Bad debt expense increased from $3.6 million in 2008 to $14.3 million in 2009 due to higher average final bills, higher default rates, overall economic conditions and an increased churn. |
Optim Energy – jointly owned by PNM Resources and a subsidiary of Cascade Investment, L.L.C. Optim Energy owns two generating assets – the coal-fired Twin Oaks Power facility and the natural gas-fired Altura Cogen facility – and is one of two developers of a fourth unit at the Cedar Bayou Generating Station.
| · | Optim Energy reported PNM Resources' equity in net ongoing losses of $2.0 million, or $0.02 per diluted share, compared with losses of $0.2 million in 2008. A scheduled outage at Twin Oaks Power facility and higher operating costs negatively affected results. |
| · | PNM Resources' equity in the net GAAP earnings of Optim Energy was $0.8 million, or $0.01 per diluted share, compared with losses of $15.2 million, or $0.20 per diluted share, in 2008. Unrealized mark-to-market losses on economic hedges significantly lowered results by $14.2 million after tax in 2008. |
| · | PNM Resources' share of Optim Energy's ongoing 2009 EBITDA was $4.3 million, compared with $7.6 million in 2008. |
| · | Twin Oaks had an equivalent availability factor of 83.7 percent during the quarter, which included a 35-day planned outage. Altura Cogen produced a quarterly availability factor of 96.9 percent. |
Corporate/Other – a business segment that reflects costs at the PNM Resources holding company, comprised mainly of interest expense related to certain short- and long-term debt.
| · | Corporate/Other reported ongoing losses of $4.5 million, or $0.05 per diluted share, compared with losses of $7.1 million, or $0.09 per diluted share in 2008. GAAP earnings were $9.4 million, or $0.10 per diluted share, compared with losses of $8.5 million, or $0.12 per diluted share, in 2008. |
| · | 2009 GAAP earnings include non-recurring, after-tax gains of $4.5 million and $9.1 million associated with reacquired debt and the termination of the Cap Rock Energy acquisition agreement, respectively. |
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PNM Resources Reports Q1 Earnings 5-1-09 p. 4 of 5
Discontinued Operations
PNM Gas: On Jan. 30, 2009, PNM completed the sale of its natural gas utility to New Mexico Gas Co.
| · | PNM Gas operations contributed $7.6 million, or $0.08 per diluted share, to ongoing earnings prior to its sale. GAAP earnings were $81.7 million, or $0.89 per diluted share, including the one-time gain associated with the sale. |
FIRST QUARTER EARNINGS CALL: 9 AM EDT TODAY
PNM Resources will discuss 2009 first quarter earnings results and the 2009 earnings outlook during a live conference call and Web cast today at 9 a.m. EDT. Speaking on the call will be Jeff Sterba, PNM Resources chairman and CEO; Pat Vincent-Collawn, PNM Resources president and COO; and Chuck Eldred, PNM Resources executive vice president and CFO.
Investors, analysts and other participants can listen to the live conference call by dialing 877-852-6561 (toll free) or 719-325-4799 (toll) five to 10 minutes prior to the event and referencing “the PNM Resources earnings conference call.” A telephone replay will be available at noon EDT until midnight May 8 by dialing 888-203-1112 (toll free) or 719-457-0820 and using confirmation code 4930679.
A live Web cast of the call will be available at http://www.pnmresources.com/investors/events.cfm. Listeners are encouraged to visit the Web site at least 30 minutes before the event to register, download and install any necessary audio software.
Background:
PNM Resources (NYSE: PNM) is an energy holding company based in Albuquerque, N.M., with 2008 consolidated operating revenues from continuing and discontinued operations of $2.5 billion. Through its utility and energy subsidiaries, PNM Resources has more than 2,700 megawatts of generation resources and serves electricity to more than 884,000 homes and businesses in New Mexico and Texas. The company also has a 50-percent ownership of Optim Energy, which owns approximately 920 megawatts of generation. For more information, visit the company’s Web site at www.PNMResources.com.
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PNM Resources Reports Q1 Earnings 5-1-09 p. 5 of 5
Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995
Statements made in this news release that relate to future events or PNM Resources’, PNM’s, or TNMP’s (collectively, the “Companies”) expectations, projections, estimates, intentions, goals, targets and strategies, are made pursuant to the Private Securities Litigation Reform Act of 1995. Readers are cautioned that all forward-looking statements are based upon current expectations and estimates and the Companies assume no obligation to update this information. Because actual results may differ materially from those expressed or implied by these forward-looking statements, the Companies caution readers not to place undue reliance on these statements. The Companies’ business, financial condition, cash flow and operating results are influenced by many factors, which are often beyond their control that can cause actual results to differ from those expressed or implied by the forward-looking statements. These factors include conditions affecting the Companies’ ability to access the financial markets or Optim Energy’s access to additional debt financing following the utilization of its existing credit facility, including actions by ratings agencies affecting the Companies’ credit ratings; the recession and its consequent extreme disruption in the credit markets; state and federal regulatory and legislative decisions and actions, including the PNM and TNMP electric rate cases filed in 2008, and appeals of prior regulatory proceedings; the performance of generating units, including the Palo Verde Nuclear Generating Station, the San Juan Generating Station, the Four Corners Plant, and Optim Energy generating units, and transmission systems; the risk that Optim Energy is unable to identify and implement profitable acquisitions, including development of the Cedar Bayou Generating Station Unit 4, or that PNM Resources and ECJV will not agree to make additional capital contributions to Optim Energy; the potential unavailability of cash from PNM Resources’ subsidiaries or Optim Energy due to regulatory, statutory or contractual restrictions; the impacts of the decline in the values of marketable equity securities on the trust funds maintained to provide nuclear decommissioning funding and pension and other postretirement benefits, including the levels of funding and expense; the ability of First Choice Power to attract and retain customers and collect amounts billed; changes in Electric Reliability Council of Texas protocols; changes in the cost of power acquired by First Choice Power; collections experience; insurance coverage available for claims made in litigation; fluctuations in interest rates; weather; water supply; changes in fuel costs; the risk that PNM Electric may incur fuel and purchased power costs that exceed the cap allowed under its Emergency FPPAC; availability of fuel supplies; the effectiveness of risk management and commodity risk transactions; seasonality and other changes in supply and demand in the market for electric power; variability of wholesale power prices and natural gas prices; volatility and liquidity in the wholesale power markets and the natural gas markets; uncertainty regarding the ongoing validity of government programs for emission allowances; changes in the competitive environment in the electric industry; the risk that the Companies and Optim Energy may have to commit to substantial capital investments and additional operating costs to comply with new environmental control requirements, including possible future requirements to address concerns about global climate change; the risks associated with completion of generation, including the Optim Energy Cedar Bayou Generating Station Unit 4, transmission, distribution, and other projects, including construction delays and unanticipated cost overruns; the outcome of legal proceedings; changes in applicable accounting principles; uncertainty regarding the ability to reach a new collective bargaining agreement with the International Brotherhood of Electrical Workers for certain PNM employees in New Mexico operations and generation business units; and the performance of state, regional, and national economies.
Non-GAAP Financial Measures
PNM Resources (“the Company”) uses ongoing earnings and ongoing earnings per diluted share (or ongoing diluted earnings per share) and EBITDA (earnings before interest charges, income taxes, depreciation and amortization) to evaluate the operations of the Company and to establish goals for management and employees. While the Company believes these financial measures are appropriate and useful for investors, they are not measures presented in accordance with generally accepted accounting principles in the U.S. (GAAP). The Company does not intend for these measures, or any piece of these measures, to represent any financial measure as defined by GAAP. Furthermore, the Company’s calculations of these measures as presented may or may not be comparable to similarly titled measures used by other companies.
CONTACTS:
Analysts Analysts & Media
Gina Jacobi, (505) 241-2211 Frederick Bermudez, (505) 241-4831
(END)
PNM Resources
Schedule 1
2009 Reconciliation of Ongoing to GAAP Earnings
(Preliminary and Unaudited)
| | | Three Months Ended March 31, 2009 | | |
| | | (in thousands) | | |
| | | | Utilities | | First | Optim | Corp/ | | |
| | | PNM Electric | TNMP Electric | PNM Gas | Choice | Energy (50%) | Other | | |
| Ongoing Earnings (Loss) | | $ (84) | $ 1,421 | $ 7,621 | $ 6,760 | $ (1,986) | $ (4,456) | | $ 9,276 |
| | | | | | | | | | |
| Non-Recurring Items | | | | | | | | | |
| Business improvement plan | | (320) | - | | - | - | 350 | | 30 |
| Depreciation on gas assets | | - | - | 1,112 | - | - | - | | 1,112 |
| Cap Rock Energy acquisition termination agreement | | - | - | - | - | - | 9,062 | | 9,062 |
| Economic mark-to-market hedges | | (3,554) | - | | 278 | 2,829 | | | (447) |
| Gain on reacquired debt | | - | - | - | - | - | 4,493 | | 4,493 |
| Gain on sale of PNM Gas | | - | - | 72,942 | - | - | - | | 72,942 |
| Unrealized impairments of NDT securities | | (1,097) | - | - | - | - | - | | (1,097) |
| Total Non-Recurring Items | | (4,971) | - | 74,054 | 278 | 2,829 | 13,905 | | 86,095 |
| | | | | | | | | | |
| | | | | | | | | | |
| GAAP Earnings (Loss) from Continuing Operations | | (5,055) | 1,421 | | 7,038 | 843 | 9,449 | | 13,696 |
| GAAP Earnings from Discontinued Operations | | | | 81,675 | | | | | 81,675 |
| GAAP Net Earnings (Loss) | | $ (5,055) | $ 1,421 | $ 81,675 | $ 7,038 | $ 843 | $ 9,449 | | $ 95,371 |
| | | | Three Months Ended March 31, 2009 | | |
| | | | (earnings per diluted share) | | |
| | | | | Utilities | | | Optim | Corp/ | | PNMR |
| | | | PNM Electric | TNMP Electric | PNM Gas | Choice | Energy (50%) | Other | | |
| Ongoing Earnings (Loss) | | | $ (0.00) | $ 0.02 | $ 0.08 | $ 0.07 | $ (0.02) | $ (0.05) | | $ 0.10 |
| | | | | | | | | | | |
| Non-Recurring Items | | | | | | | | | | |
| Business improvement plan | | | - | - | - | - | - | - | | - |
| Depreciation on gas assets | | | - | - | 0.01 | - | - | - | | 0.01 |
| Cap Rock Energy acquisition termination agreement | | - | - | - | - | - | 0.10 | | 0.10 |
| Economic mark-to-market hedges | | | (0.04) | - | - | - | 0.03 | - | | (0.01) |
| Gain on reacquired debt | | | - | - | - | - | - | 0.05 | | 0.05 |
| Gain on sale of PNM Gas | | | - | - | 0.80 | - | - | - | | 0.80 |
| Unrealized impairments of NDT securities | | | (0.01) | - | - | - | - | - | | (0.01) |
| Total Non-Recurring Items | | | (0.05) | - | 0.81 | - | 0.03 | 0.15 | | 0.94 |
| | | | | | | | | | | |
| | | | | | | | | | | |
| GAAP Earnings (Loss) from Continuing Operations | | (0.05) | 0.02 | | 0.07 | 0.01 | 0.10 | | 0.15 |
| GAAP Earnings from Discontinued Operations | | | | 0.89 | | | | | 0.89 |
| GAAP Net Earnings (Loss) | | | $ (0.05) | $ 0.02 | $ 0.89 | $ 0.07 | $ 0.01 | $ 0.10 | | $ 1.04 |
| Average Diluted Shares Outstanding: | 91,422,697 | | | | | | | | | |
PNM Resources
Schedule 2
2008 Reconciliation of Ongoing to GAAP Earnings
(Preliminary and Unaudited)
| | | Three Months Ended March 31, 2008 | | |
| | | (in thousands) | | |
| | | | Utilities | | First | Optim | Corp/ | | PNMR |
| | | PNM Electric | TNMP Electric | PNM Gas | Choice | Energy (50%) | Other | | |
| Ongoing Earnings (Loss) | | $ (14,440) | $ 3,730 | $ 19,290 | $ 2,155 | $ (179) | $ (7,070) | | $ 3,486 |
| | | | | | | | | | |
| Non-Recurring Items | | | | | | | | | |
| Business improvement plan | | 241 | | (8) | | | (1,469) | | (1,236) |
| Depreciation on gas assets | | | | 3,182 | | | | | 3,182 |
| Speculative trading | | | | | (30,284) | (735) | | | (31,019) |
| Unrealized impairments of NDT securities | | (1,202) | | | | | | | (1,202) |
| Regulatory disallowances | | (18,273) | | | | | | | (18,273) |
| Economic mark-to-market hedges | | 6,565 | | 35 | 4,065 | (14,239) | | | (3,574) |
| Total Non-Recurring Items | | (12,669) | - | 3,209 | (26,219) | (14,974) | (1,469) | | (52,122) |
| | | | | | | | | | |
| | | | | | | | | | |
| GAAP Earnings (Loss) from Continuing Operations | | (27,109) | 3,730 | | (24,064) | (15,153) | (8,539) | | (71,135) |
| GAAP Earnings from Discontinued Operations | | | | 22,499 | | | | | 22,499 |
| GAAP Net Earnings (Loss) | | $ (27,109) | $ 3,730 | $ 22,499 | $ (24,064) | $ (15,153) | $ (8,539) | | $ (48,636) |
| | | | | | | | | | |
| | | Three Months Ended March 31, 2008 | | |
| | | (earnings per diluted share) | | |
| | | | Utilities | | First | Optim | Corp/ | | PNMR |
| | | PNM Electric | TNMP Electric | PNM Gas | Choice | Energy (50%) | Other | | |
| Ongoing Earnings (Loss) | | $ (0.19) | $ 0.05 | $ 0.25 | $ 0.03 | $ - | $ (0.09) | | $ 0.05 |
| | | | | | | | | | |
| Non-Recurring Items | | | | | | | | | |
| Business improvement plan | | 0.01 | | | | | (0.03) | | (0.02) |
| Depreciation on gas assets | | | | 0.05 | | | | | 0.05 |
| Speculative trading | | | | | (0.39) | (0.01) | | | (0.40) |
| Unrealized impairments of NDT securities | | (0.02) | | | | | | | (0.02) |
| Regulatory disallowances | | (0.24) | | | | | | | (0.24) |
| Economic mark-to-market hedges | | 0.09 | | | 0.05 | (0.19) | | | (0.05) |
| Total Non-Recurring Items | | (0.16) | - | 0.05 | (0.34) | (0.20) | (0.03) | | (0.68) |
| | | | | | | | | | |
| | | | | | | | | | |
| GAAP Earnings (Loss) from Continuing Operations | | (0.35) | 0.05 | | (0.31) | (0.20) | (0.12) | | (0.93) |
| GAAP Earnings from Discontinued Operations | | | | 0.30 | | | | | 0.30 |
| GAAP Net Earnings (Loss) | | $ (0.35) | $ 0.05 | $ 0.30 | $ (0.31) | $ (0.20) | $ (0.12) | | $ (0.63) |
| Average Shares Outstanding (Basic and Diluted): 76,849,717 | | | | | | | | | |
PNM Resources
Schedule 3
Segment Reconciliation of GAAP Net Earnings to Ongoing EBITDA
(Earnings Before Interest Charges, Income Taxes, Depreciation and Amortization)
(Preliminary and Unaudited)
| | | (in millions) |
| | | Three Months Ended March 31, 2009 |
| | | PNM Electric | | TNMP Electric | | PNM Gas | | First Choice | | Corporate & Other | | PNMR Consolidated |
| GAAP Net Earnings (Loss) | | ($5.1) | | $1.4 | | $81.7 | | $7.0 | | $10.4 | | $95.4 |
| | | | | | | | | | | | | |
| Interest charges | | 17.2 | | 4.1 | | 1.0 | | 1.0 | | 6.6 | | 29.9 |
| Income taxes | | (3.3) | | 1.0 | | 43.8 | | 3.9 | | 6.0 | | 51.4 |
| Depreciation and amortization | | 21.7 | | 8.6 | | 0.0 | | 0.5 | | 4.6 | | 35.4 |
| | | | | | | | | | | | | |
| EBITDA | | 30.5 | | 15.1 | | 126.5 | | 12.4 | | 27.6 | | 212.1 |
| | | | | | | | | | | | | |
| Ongoing adjustments (before tax) | | 8.4 | | 0.0 | | (111.0) | | (0.4) | | (27.8) | | (130.8) |
| | | | | | | | | | | | | |
| Ongoing EBITDA | | $38.9 | | $15.1 | | $15.5 | | $12.0 | | ($0.2) | | $81.3 |
| | | | | | | | | | | | | |
| | | (in millions) |
| | | Three Months Ended March 31, 2008 |
| | | PNM Electric | | TNMP Electric | | PNM Gas | | First Choice | | Corporate & Other | | PNMR Consolidated |
| GAAP Net Earnings (Loss) | | ($27.1) | | $3.7 | | $22.5 | | ($24.1) | | ($23.6) | | ($48.6) |
| | | | | | | | | | | | | |
| Interest charges | | 14.1 | | 5.0 | | 3.0 | | 0.3 | | 8.4 | | 30.8 |
| Income taxes | | (17.1) | | 2.3 | | 13.7 | | (12.8) | | (14.5) | | (28.4) |
| Depreciation and amortization | | 21.0 | | 8.4 | | 0.0 | | 0.5 | | 4.1 | | 34.0 |
| | | | | | | | | | | | | |
| EBITDA | | (9.1) | | 19.4 | | 39.2 | | (36.1) | | (25.6) | | (12.2) |
| | | | | | | | | | | | | |
| Ongoing adjustments (before tax) | | 21.1 | | 0.0 | | (0.1) | | 40.7 | | 27.1 | | 88.8 |
| | | | | | | | | | | | | |
| Ongoing EBITDA | | $12.0 | | $19.4 | | $39.1 | | $4.6 | | $1.5 | | $76.6 |
| | | | | | | | | | | | | |
PNM Resources
Schedule 4
Calculation of Optim Energy Ongoing EBITDA
(Earnings Before Interest Charges, Income Taxes, Depreciation and Amortization)
(Preliminary and Unaudited)
| | | Three Months Ended |
| | | March 31, 2009 |
| | | (in millions) |
| | | |
| GAAP Net Earnings | | $ 3.1 |
| | | |
| Interest expense | | 2.5 |
| Income tax | | 0.2 |
| Depreciation and amortization expense | | 7.7 |
| Purchase accounting amortizations | | 4.4 |
| Losses on forward mark on economic hedges | | (9.4) |
| | | |
| Ongoing Optim Energy EBITDA | | 8.5 |
| | | |
| 50 percent of Ongoing EBITDA (PNMR share) | | $ 4.3 |
| | | |
| | Three Months Ended |
| | March 31, 2008 |
| | (in millions) |
| | |
| GAAP Net Earnings (Loss) | $ (51.0) |
| | |
| Interest expense | 6.6 |
| Income tax | (0.4) |
| Depreciation and amortization expense | 7.6 |
| Purchase accounting amortizations | 2.8 |
| Losses on forward mark on economic hedges | 47.1 |
| Speculative trading | 2.4 |
| | |
| Ongoing Optim Energy EBITDA | 15.1 |
| | |
| 50 percent of Ongoing EBITDA (PNMR share) | $ 7.6 |
PNM Resources
Schedule 5
Reconciliation of Ongoing (non-GAAP) Net Earnings (Loss)
to GAAP Consolidated Statements of Earnings (Loss)
(Preliminary and Unaudited)
| | | (in thousands, except per share data) |
| | | Three Months Ended March 31, |
| | | 2009 | | 2008 |
| | | GAAP | | Adjustments | | Ongoing | | GAAP | | Adjustments | | | Ongoing |
| | | | | | | | | | | | | | | |
| Operating revenues | $ 385,865 | | $ (2,752) | (a) | $ 383,113 | | $ 364,503 | | $ 77,063 | (f) | $ 441,566 |
| Cost of energy | 181,248 | | (8,202) | (a) | 173,046 | | 234,380 | | 47,185 | (a) | 281,565 |
| Gross margin | 204,617 | | 5,450 | | | 210,067 | | 130,123 | | 29,878 | | | 160,001 |
| Operating expenses | 138,643 | | 37 | (b) | 138,680 | | 155,057 | | (32,245) | (g) | 122,812 |
| Depreciation and amortization | 36,071 | | - | | | 36,071 | | 34,037 | | - | | | 34,037 |
| Operating income (loss) | 29,903 | | 5,413 | | | 35,316 | | (58,971) | | 62,123 | | | 3,152 |
| Equity in net earnings (loss) of Optim Energy | 1,395 | | (4,682) | (a) | (3,287) | | (25,083) | | 24,787 | (h) | (296) |
| Net other income and deductions | 21,645 | | (20,634) | (c) | 1,011 | | (1,167) | | 2,011 | (i) | | 844 |
| Interest charges | 28,949 | | - | | | 28,949 | | 27,835 | | - | | | 27,835 |
| Earnings (Loss) before Income Taxes | 23,994 | | (19,903) | | | 4,091 | | (113,056) | | 88,921 | | | (24,135) |
| Income Taxes (Benefit) | 7,587 | | (7,862) | (d) | (275) | | (42,053) | | 33,590 | (j) | | (8,463) |
| Preferred Stock Dividend Requirements of Subsidiary | 132 | | - | | | 132 | | 132 | | - | | | 132 |
| Earnings (Loss) from Continuing Operations | 16,275 | | (12,041) | | | 4,234 | | (71,135) | | 55,331 | | | (15,804) |
| Earnings from Discontinued Operations, net | | | | | | | | | | | | |
| of Income Taxes | 81,675 | | (74,054) | (e) | 7,621 | | 22,499 | | (3,209) | (k) | 19,290 |
| Net Earnings (Loss) | 97,950 | | (86,095) | | | 11,855 | | (48,636) | | 52,122 | | | 3,486 |
| Earnings Attributable to Valencia Non-controlling | | | | | | | | | | | | |
| | Interest | (2,579) | | - | | | (2,579) | | - | | - | | | - |
| Net Earnings (Loss) attributable to PNMR | $ 95,371 | | $ (86,095) | | | $ 9,276 | | $ (48,636) | | $ 52,122 | | | $ 3,486 |
| | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
| Net Earnings (Loss) from Continuing Operations per Common Share: | | | | | | | |
| | Basic | $ 0.15 | | $ (0.13) | | | $ 0.02 | | $ (0.93) | | $ 0.73 | | | $ (0.20) |
| | Diluted | $ 0.15 | | $ (0.13) | | | $ 0.02 | | $ (0.93) | | $ 0.73 | | | $ (0.20) |
| | | | | | | | | | | | | | | |
| Net Earnings (Loss) per Common Share: | | | | | | | | | | | | | |
| | Basic | $ 1.04 | | $ (0.94) | | | $ 0.10 | | $ (0.63) | | $ 0.68 | | | $ 0.05 |
| | Diluted | $ 1.04 | | $ (0.94) | | | $ 0.10 | | $ (0.63) | | $ 0.68 | | | $ 0.05 |
| | | | | | | | | | | | | | | |
| Average common shares outstanding: | | | | | | | | | | | | | |
| | Basic | 91,332 | | | | | | | 76,850 | | | | | |
| | Diluted | 91,423 | | | | | | | 76,850 | | | | | |
| | | | | | | | | | | | | | | |
| (a) | Economic mark-to-market hedges | | | | | | | | | | | | | |
| (b) | Business improvement plan | | | | | | | | | | | | | |
| (c) | Business improvement plan $(12), Cap Rock Energy acquisition termination agreement $(15,000), Gain on reacquired debt $(7,438), Unrealized impairments of NDT securities $1,816 |
| (d) | Economic mark-to-market hedges $321, Business improvement plan $(19), Cap Rock Energy acquisition termination agreement $(5,938), Gain on reacquired debt $(2,945), Unrealized impairments of NDT $719 |
| (e) | Depreciation on gas assets $(1,112), Gain on sale of PNM Gas $(72,942) | | | | | | | |
| (f) | Economic mark-to-market hedges $30,001, Speculative trading $47,062 | | | | | | | |
| (g) | Business improvement plan $(1,997), Regulatory disallowances $(30,248) | | | | | | | |
| (h) | Economic mark-to-market hedges $23,571, Speculative trading $1,216 | | | | | | | |
| (i) | Business improvement plan $21, Unrealized impairments of NDT securities $1,990 | | | | | |
| (j) | Economic mark-to-market hedges $2,778, Speculative trading $17,301, Business improvement plan $790, Regulatory disallowances $11,975, Unrealized impairments of NDT securities $788 |
| (k) | Business improvement plan $8, Depreciation on gas assets $(3,182), Economic mark-to-market hedges $(35) |
| | | | | | | | | | | | | | | |
PNM RESOURCES, INC. AND SUBSIDIARIES
(Unaudited)
| | Three Months Ended March 31, |
| | 2009 | | 2008 |
| | (In thousands, except per share amounts) |
| Operating Revenues: | | | |
| Electric | $ 385,803 | | $ 364,403 |
| Other | 62 | | 100 |
| Total operating revenues | 385,865 | | 364,503 |
| | | | |
| Operating Expenses: | | | |
| Cost of energy | 181,248 | | 234,380 |
| Administrative and general | 62,138 | | 47,362 |
| Energy production costs | 48,557 | | 51,204 |
| Regulatory disallowances | - | | 30,248 |
| Depreciation and amortization | 36,071 | | 34,037 |
| Transmission and distribution costs | 14,017 | | 13,376 |
| Taxes other than income taxes | 13,931 | | 12,867 |
| Total operating expenses | 355,962 | | 423,474 |
| Operating income (loss) | 29,903 | | (58,971) |
| | | | |
| Other Income and Deductions: | | | |
| Interest income | 5,223 | | 5,530 |
| Gains (losses) on investments held by NDT | (4,382) | | (3,705) |
| Other income | 23,164 | | 890 |
| Equity in net earnings (loss) of Optim Energy | 1,395 | | (25,083) |
| Other deductions | (2,360) | | (3,882) |
| Net other income and deductions | 23,040 | | (26,250) |
| | | | |
| Interest Charges: | | | |
| Interest on long-term debt | 24,200 | | 18,908 |
| Other interest charges | 4,749 | | 8,927 |
| Total interest charges | 28,949 | | 27,835 |
| | | | |
| Earnings (Loss) before Income Taxes | 23,994 | | (113,056) |
| | | | |
| Income Taxes (Benefit) | 7,587 | | (42,053) |
| | | | |
| Earnings (Loss) from Continuing Operations | 16,407 | | (71,003) |
| | | | |
| Earnings from Discontinued Operations, net of Income | | | |
| Taxes of $43,842 and $13,655 | 81,675 | | 22,499 |
| | | | |
| Net Earnings (Loss) | 98,082 | | (48,504) |
| | | | |
| Earnings Attributable to Valencia Non-controlling Interest | (2,579) | | - |
| Preferred Stock Dividend Requirements of Subsidiary | (132) | | (132) |
| | | | |
| Net Earnings (Loss) Attributable to PNMR | $ 95,371 | | $ (48,636) |
| | | | |
| Earnings (Loss) from Continuing Operations Attributable to PNMR per Common Share: | | | |
| Basic | $ 0.15 | | $ (0.93) |
| Diluted | $ 0.15 | | $ (0.93) |
| Net Earnings (Loss) Attributable to PNMR per Common Share: | | | |
| Basic | $ 1.04 | | $ (0.63) |
| Diluted | $ 1.04 | | $ (0.63) |
| | | | |
| Dividends Declared per Common Share | $ 0.125 | | $ 0.230 |
PNM RESOURCES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
| | March 31, | | December 31, |
| | 2009 | | 2008 |
| | (In thousands) |
| ASSETS | | | |
| Current Assets: | | | |
| Cash and cash equivalents | $ 70,470 | | $ 140,619 |
| Special deposits | 3,480 | | 3,480 |
| Accounts receivable, net of allowance for uncollectible accounts of $18,659 and $21,466 | 102,949 | | 119,174 |
| Unbilled revenues | 66,368 | | 81,126 |
| Other receivables | 89,149 | | 73,083 |
| Materials, supplies, and fuel stock | 47,450 | | 49,397 |
| Regulatory assets | 1,537 | | 1,541 |
| Derivative instruments | 72,259 | | 51,250 |
| Income taxes receivable | - | | 49,584 |
| Current assets of discontinued operations | - | | 107,986 |
| Other current assets | 83,928 | | 75,393 |
| | | | |
| Total current assets | 537,590 | | 752,633 |
| | | | |
| Other Property and Investments: | | | |
| Investment in PVNGS lessor notes | 154,172 | | 168,729 |
| Equity investment in Optim Energy | 254,279 | | 239,950 |
| Investments held by NDT | 107,992 | | 111,671 |
| Other investments | 31,833 | | 32,966 |
| Non-utility property, net of accumulated depreciation of $2,938 and $2,582 | 8,768 | | 9,135 |
| | | | |
| Total other property and investments | 557,044 | | 562,451 |
| | | | |
| Utility Plant: | | | |
| Electric plant in service | 4,387,225 | | 4,329,169 |
| Common plant in service and plant held for future use | 156,907 | | 147,576 |
| | 4,544,132 | | 4,476,745 |
| Less accumulated depreciation and amortization | 1,569,235 | | 1,545,950 |
| | 2,974,897 | | 2,930,795 |
| Construction work in progress | 186,405 | | 202,556 |
| Nuclear fuel, net of accumulated amortization of $19,671 and $16,018 | 67,283 | | 58,674 |
| | | | |
| Net utility plant | 3,228,585 | | 3,192,025 |
| | | | |
| Deferred Charges and Other Assets: | | | |
| Regulatory assets | 490,334 | | 629,141 |
| Goodwill | 321,310 | | 321,310 |
| Other intangible assets, net of accumulated amortization of $4,822 and $4,672 | 27,017 | | 27,167 |
| Derivative instruments | 29,500 | | 25,620 |
| Non-current assets of discontinued operations | - | | 561,915 |
| Other deferred charges | 86,182 | | 75,720 |
| | | | |
| Total deferred charges and other assets | 954,343 | | 1,640,873 |
| | $ 5,277,562 | | $ 6,147,982 |
PNM RESOURCES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
| | March 31, | | December 31, |
| | 2009 | | 2008 |
| | (In thousands, except share information) |
| LIABILITIES AND STOCKHOLDERS’ EQUITY | | | |
| Current Liabilities: | | | |
| Short-term debt | $ 145,600 | | $ 744,667 |
| Current installments of long-term debt | 38,004 | | 205,694 |
| Accounts payable | 102,952 | | 174,068 |
| Accrued interest and taxes | 141,595 | | 51,618 |
| Regulatory liabilities | 8,776 | | 1,746 |
| Derivative instruments | 61,340 | | 33,951 |
| Current liabilities of discontinued operations | - | | 77,082 |
| Other current liabilities | 113,793 | | 139,562 |
| | | | |
| Total current liabilities | 612,060 | | 1,428,388 |
| | | | |
| Long-term Debt | 1,530,906 | | 1,379,011 |
| | | | |
| Deferred Credits and Other Liabilities: | | | |
| Accumulated deferred income taxes | 437,792 | | 572,719 |
| Accumulated deferred investment tax credits | 22,437 | | 23,834 |
| Regulatory liabilities | 327,911 | | 327,175 |
| Asset retirement obligations | 66,732 | | 63,492 |
| Accrued pension liability and postretirement benefit cost | 243,713 | | 246,136 |
| Derivative instruments | 14,769 | | 6,934 |
| Non-current liabilities of discontinued operations | - | | 94,615 |
| Other deferred credits | 143,994 | | 149,237 |
| | | | |
| Total deferred credits and other liabilities | 1,257,348 | | 1,484,142 |
| | | | |
| Total liabilities | 3,400,314 | | 4,291,541 |
| | | | |
| Commitments and Contingencies | | | |
| | | | |
| Cumulative Preferred Stock of Subsidiary | | | |
| without mandatory redemption requirements ($100 stated value, 10,000,000 shares authorized: | | | |
| issued and outstanding 115,293 shares) | 11,529 | | 11,529 |
| | | | |
| Convertible Preferred Stock, Series A | | | |
| without mandatory redemption requirements (no stated value, 10,000,000 shares authorized: | | | |
| issued and outstanding 477,800 and 0 shares) | 100,000 | | 100,000 |
| | | | |
| Common Stockholders’ Equity: | | | |
| PNMR common stockholders’ equity: | | | |
| Common stock outstanding (no par value, 120,000,000 shares authorized: issued | | | |
| and outstanding 86,607,560 and 86,531,644 shares) | 1,288,536 | | 1,288,168 |
| Accumulated other comprehensive income (loss), net of income taxes | (27,743) | | 30,948 |
| Retained earnings | 411,239 | | 327,290 |
| Total PNMR common stockholders’ equity | 1,672,032 | | 1,646,406 |
| Non-controlling interest in Valencia | 93,687 | | 98,506 |
| Total common stockholders’ equity | 1,765,719 | | 1,744,912 |
| | | | |
| | $ 5,277,562 | | $ 6,147,982 |
PNM RESOURCES, INC. AND SUBSIDIARIES
(Unaudited)
| | Three Months Ended March 31, |
| | 2009 | | 2008 |
| | (In thousands) |
| Cash Flows From Operating Activities: | | | |
| Net earnings (loss) | $ 98,082 | | $ (48,504) |
| Adjustments to reconcile net earnings (loss) to net cash flows from operating activities: | | | |
| Depreciation and amortization | 42,305 | | 39,855 |
| Amortization of pre-payments on PVNGS firm-sales contracts | (6,330) | | - |
| Deferred income tax expense (benefit) | (85,899) | | (24,849) |
| Equity in net (earnings) loss of Optim Energy | (1,395) | | 25,083 |
| Net unrealized losses on derivatives | 6,954 | | 18,015 |
| Realized losses on investments held by NDT | 4,382 | | 3,705 |
| Gain on sale of PNM Gas | (111,006) | | - |
| Gain on reacquired debt | (7,467) | | - |
| Stock based compensation expense | 1,070 | | 1,983 |
| Regulatory disallowances | - | | 30,248 |
| Other, net | (2,474) | | (2,961) |
| Changes in certain assets and liabilities: | | | |
| Customer accounts receivable and unbilled revenues | 14,504 | | 10,161 |
| Materials, supplies, and fuel stock | 2,098 | | 525 |
| Other current assets | (1,034) | | 9,156 |
| Other assets | 1,386 | | (360) |
| Accounts payable | (79,025) | | (17,754) |
| Accrued interest and taxes | 139,815 | | (12,873) |
| Other current liabilities | (26,815) | | (9,168) |
| Other liabilities | (4,439) | | 2,562 |
| Net cash flows from operating activities | (15,288) | | 24,824 |
| | | | |
| Cash Flows From Investing Activities: | | | |
| Utility plant additions | (75,442) | | (77,793) |
| Proceeds from sales of investments held by NDT | 44,391 | | 36,635 |
| Purchases of investments held by NDT | (44,724) | | (36,760) |
| Proceeds from sale of PNM Gas | 640,620 | | - |
| Return of principal on PVNGS lessor notes | 11,458 | | 10,645 |
| Reduction in restricted special deposits | - | | 2,554 |
| Other, net | (15,596) | | (3,183) |
| Net cash flows from investing activities | 560,707 | | (67,902) |
PNM RESOURCES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
| | Three Months Ended March 31, |
| | 2009 | | 2008 |
| | (In thousands) |
| Cash Flows From Financing Activities: | | | |
| Short-term borrowings (repayments), net | (599,067) | | 71,100 |
| Long-term borrowings | 309,242 | | - |
| Repayment of long-term debt | (314,079) | | - |
| Issuance of common stock | 620 | | 1,309 |
| Proceeds from stock option exercise | - | | 86 |
| Purchase of common stock to satisfy stock awards | (803) | | (1,140) |
| Excess tax (shortfall) from stock-based payment arrangements | (519) | | (380) |
| Dividends paid | (11,546) | | (17,934) |
| Payments received on PVNGS firm-sales contracts | 7,634 | | - |
| Other, net | (7,075) | | (3) |
| Net cash flows from financing activities | (615,593) | | 53,038 |
| | | | |
| Change in Cash and Cash Equivalents | (70,174) | | 9,960 |
| Cash and Cash Equivalents at Beginning of Period | 140,644 | | 17,791 |
| Cash and Cash Equivalents at End of Period | $ 70,470 | | $ 27,751 |
| | | | |
| Supplemental Cash Flow Disclosures: | | | |
| Interest paid, net of capitalized interest | $ 29,240 | | $ 41,321 |
| Income taxes paid (refunded), net | $ (1,777) | | $ (4,176) |
The following table shows PNM Electric operating revenues by customer class, including intersegment revenues and average number of customers:
| | Three Months Ended March 31, |
| | 2009 | | 2008 | | Change | |
| | (In millions, except customers) | |
Residential | $ 73.7 | | $ 71.2 | | $ 2.5 | |
Commercial | 69.9 | | 67.5 | | 2.4 | |
Industrial | 19.0 | | 25.8 | | (6.8) | |
Public authority | 4.4 | | 3.5 | | 0.9 | |
Other retail | 3.0 | | 2.8 | | 0.2 | |
Transmission | 7.7 | | 6.5 | | 1.2 | |
Firm requirements wholesale | 7.6 | | 12.3 | | (4.7) | |
Other sales for resale | 43.5 | | 93.6 | | (50.1) | |
Mark-to-market activity | 3.2 | | (30.5) | | 33.7 | |
| | $ 232.0 | | $ 252.7 | | $ (20.7) | |
Average retail customers (thousands) | 498.0 | | 494.1 | | 3.9 | |
The following table shows PNM Electric GWh sales by customer class:
| | Three Months Ended March 31, |
| | | | | | |
| | 2009 | | 2008 | | Change |
| | (Gigawatt hours) |
Residential | 795.7 | | 857.7 | | (62.0) |
Commercial | 855.5 | | 910.3 | | (54.8) |
Industrial | 355.2 | | 441.8 | | (86.6) |
Public authority | 58.8 | | 59.6 | | (0.8) |
Other retail | - | | - | | - |
Transmission | - | | - | | - |
Firm requirements wholesale | 183.6 | | 295.0 | | (111.4) |
Other sales for resale | 1,060.1 | | 1,438.5 | | (378.4) |
Mark-to-market activity | - | | - | | - |
| | 3,308.9 | | 4,002.9 | | (694.0) |
The following table shows TNMP Electric operating revenues by customer class, including intersegment revenues, and average number of customers:
| | | Three Months Ended March 31, |
| | 2009 | | 2008 | | Change | |
| | (In millions, except customers) | |
Residential | $ 14.4 | | $ 15.3 | | $ (0.9) | |
Commercial | 16.0 | | 16.6 | | (0.6) | |
Industrial | 3.0 | | 3.2 | | (0.2) | |
Other | 7.8 | | 7.1 | | 0.7 | |
| | $ 41.2 | | $ 42.2 | | $ (1.0) | |
Average customers (thousands) (1) | 230.1 | | 227.4 | | 2.7 | |
| (1) | Under TECA, customers of TNMP Electric in Texas have the ability to choose First Choice or any other REP to provide energy. The average customers reported above include 90,398 and 124,349 customers of TNMP Electric for the three months ended March 31, 2009 and 2008, who have chosen First Choice as their REP. These customers are also included in the First Choice segment. |
The following table shows TNMP Electric GWh sales by customer class:
| | | Three Months Ended March 31, |
| | 2009 | | 2008 | | Change | |
| | (Gigawatt hours(1)) | |
Residential | 509.8 | | 538.5 | | (28.7) | |
Commercial | 460.3 | | 473.7 | | (13.4) | |
Industrial | 424.1 | | 543.1 | | (119.0) | |
Other | 25.8 | | 26.5 | | (0.7) | |
| | 1,420.0 | | 1,581.8 | | (161.8) | |
| (1) | The GWh sales reported above include 248.3 and 395.0 GWhs for the three months ended March 31, 2009 and 2008 used by customers of TNMP Electric, who have chosen First Choice as their REP. These GWhs are also included below in the First Choice segment. |
The following table shows First Choice operating revenues by customer class, including intersegment revenues, and actual number of customers:
| | Three Months Ended March 31, |
| | 2009 | | 2008 | | Change | |
| | (In millions, except customers) | |
Residential | $ 76.0 | | $ 76.7 | | $ (0.7) | |
Mass-market | 8.3 | | 15.9 | | (7.6) | |
Mid-market | 32.1 | | 35.6 | | (3.5) | |
Trading gains (losses) | (0.1) | | (47.1) | | 47.0 | |
Other | 5.9 | | 3.1 | | 2.8 | |
| | $ 122.2 | | $ 84.2 | | $38.0 | |
Actual customers (thousands) (1,2) | 246.7 | | 257.1 | | (10.4) | |
| (1) | See note above in the TNMP Electric segment discussion about the impact of TECA. |
| (2) | Due to the competitive nature of First Choice’s business, actual customer count at March 31 is presented in the table above as a more representative business indicator than the average customers that are shown in the table for TNMP customers. |
The following table shows First Choice GWh electric sales by customer class:
| | Three Months Ended March 31, |
| | 2009 | | 2008 | | Change | |
| | (Gigawatt hours) (1) | |
Residential | 501.8 | | 563.7 | | (61.9) | |
Mass-market | 42.0 | | 94.9 | | (52.9) | |
Mid-market | 248.7 | | 278.8 | | (30.1) | |
Other | 2.3 | | 4.4 | | (2.1) | |
| | 794.8 | | 941.8 | | (147.0) | |
| (1) | See note above in the TNMP Electric segment discussion about the impact of TECA. |
