UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K/A CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITES EXCHANGE ACT OF 1934 Date of Report (Date of earliest events reported) November 16, 2000 ------------------- November 14, 2000 ------------------- PUBLIC SERVICE COMPANY OF NEW MEXICO (Exact name of registrant as specified in its charter) New Mexico 85-0019030 --------------------------- Commission ---------------------- (State or Other Jurisdiction File Number 1-6986 (I.R.S. Employer of Incorporation) ------ Identification) Number) Alvarado Square, Albuquerque, New Mexico 87158 ---------------------------------------- ----- (Address of principal executive offices) (Zip Code) (505) 241-2700 -------------- (Registrant's telephone number, including area code) ------------------------------ (Former name, former address and former fiscal year, if changed since last report) Item 9. Regulation FD Disclosure The following is information from a slide presentation by Jeff Sterba the Company's Chairman, President and Chief Executive Officer to utility investment analysts in New York on November 14, 2000, which has been amended for changes subsequent to the previous Form 8-K filing and is being filed herewith as a Regulation FD disclosure. A High-Voltage Combination PNM and Western Resources 1. Strategic Rationale o Creates scope and scale needed to compete o Solidifies market reach from Midwest to West Coast o Builds on successful track record in wholesale marketing o Combines stable utility core with strong wholesale growth 2. Transaction Terms o $4.4B Purchase Price o Stock for Stock Transaction o New Holding Company Issues 55 Million Shares (subject to adjustment) o Tax Free o New Holding Company Assumes $2.9B in Western Resources debt o Reverse Merger Accounting (PNM balance sheet marked to market) 3. Purchase Price Multiples Purchase Price $4.424 Billion Estimated EBIT (2000) $357 Million Estimated EBIT Multiple 12.4 Times Estimated EBITDA $527 Million Estimated EBITDA Multiple 8.4 Times 4. PNM/WR Coal-Fired Power Plant Utilization Capacity Factor % Western PNM 1997 60 81 1998 57 82 1999 63 82 3 5. Western Resources Coal-Fired Power Plant Estimated Opportunity Additional At At Capacity $10/Mwh Margin $20/Mwh Margin 5% $14,561,482 $29,122,963 10% $29,122,963 $58,245,927 15% $43,684,445 $87,368,890 20% $58,245,927 $116,491,854 6. PNM Churn Rate Gwh Generation Total Sales 1997 3,200 6,926 1998 3,200 8,784 1999 3,200 11,171 7. Western Resources Estimated Churn Opportunity Western Sales to Generation At At Ratio $2/Mwh Margin $4/Mwh Margin 1.5:1 $33,600,000 $67,200,000 2.0:1 $44,800,000 $89,600,000 2.5:1 $56,000,000 $112,000,000 8. 5-year Estimated Free Cash Flow Summary($000) PNM Cash from Operations $ 1,388 Capital Expenditures $ (1,341) --------- Free Cash Flow $ 47 ========= WR Cash from Operations $ 1,904 Capital Expenditures $ (725) --------- Free Cash Flow $ 1,179 ========= 4 9. Earnings Power Assumptions: Net Income (In millions, except per share amounts) PRO FORMA: 2001 PNM @ $2.50 - $2.60 $100 2001 Western $100 ----- $200 2002 Earnings Growth 10 ----- $210 PRO FORMA ADJUSTMENTS: (after-tax) PNM Balance Sheet Marked to Fair Market Value 49 Merger Integration Effects (9) Western Resources Rate Case ($0-$30 Million after-tax) 15 Wholesale Marketing Improvements ($15-Unknown Million after-tax) 15 ----- $280 +/- ===== Earnings Per Share (95 Million Shares Outstanding) $2.95 +/- ===== 10. Regulatory Material Adverse Effect o PNM Board determines whether there is a Material Adverse Effect on the revenue potential of Western Resources 11. Financial Benefits o Accretive in First Year o Broader, More Predictable Cash Flow o Accelerated Revenue and Earnings Growth o Diversified Business/Geographic Mix o Improved Access to Capital o Increased Market Float 12. A Strong Commitment to Investment Grade o Operating companies expected to be investment grade immediately o Holding company is expected to be debt free in 3 years o Western and Westar have opportunity to convert debt into equity and preferred stock 5 13. Acquisition Consideration Adjustment Mechanism o Base 55 million shares Fixed # of shares for all stock of Western and $234 million of intra-company debt o Western Resources Adjustment Each $27 = 1 share DRIP, rights offering, other non-utility assets (unlimited) o Westar Adjustment Each $27 = 1 share up to 9.9% Sale of Westar Asset, maximum $407 million of NEWCO - then - convertible preferred stock 7.5%, 20% premium (maximum 19.9% of NEWCO fully diluted) o Application of Cash Debt reduction at Western Resources 14. Approval Process o NMPRC o KCC o FERC/NRC o SEC o HSR o SHAREHOLDERS 15. Going Forward o 10% Earnings Growth Target Maintained o Commitment to Investment Grade Rating o Dedicated to utility and utility-related businesses 16. Our Strategy: o Committed to the regulated business o Focused on expanded wholesale market opportunities o Pursuit of new growth opportunities rooted in technological innovation and the new economy 6 17. Market Rank Company Market Cap* Pinnacle West Capital $3,643.8 Newco (1) $2,565.0 Utilicorp United Inc. $2,478.4 OGE Energy $1,557.2 Western Resources $1,540.0 Sierra Pacific Resources $1,240.3 Public Service Co of New Mexico $1,080.0 Avista $1,072.4 El Paso Electric Co. $682.9 Unisource $474.8 (1) Calculated using the number of new Holding Company expected shares outstanding of 95,000,000 times the targer price of $27.00 pursuant to the merger agreement. *As of 11/7/00 18. 1999 Revenue Mix % of Combined (in millions) PNM Western Combined Total Electric Revenues: Residential $184.1 $407.4 $591.5 23.7 Commercial $238.8 $356.3 $595.1 23.9 Industrial $85.8 $251.4 $337.2 13.5 Wholesale $365.4 $368.3 $733.7 29.4 Gas Revenues: $236.7 N/A $236.7 9.5 Total $1,110.8 $1,383.4 $2,494.2 100.0 19. Example Calculation Additional Equity Contributions Newco Shares (000's) ------------ 1. Merger Consideration (see note 1) --------------------------------- 68 million shares of Western Resources (WR) 48,345 9.36 million shares of Western Resources issued to Westar for conversion of $234 million inter-company debt 6,655 ------------ Total Initial Merger Consideration 55,000 7 2. Equity Contribution by Western Resources ---------------------------------------- (assumes $135 million in equity contributions through sale of non utility assets or equity offerings, such as rights offering, DRIP, etc.) Newco shares issued for $135 million equity contribution at $27/Share 5,000 -------- Newco Shares issued after WR contributions 60,000 3. PNM Shares Exchanged for Newco 39,500 ------------------------------ 4. Additional Equity Contribution by Westar (see note 2) ----------------------------------------------------- (assumes maximum $407 million in equity contributions) (a) Common stock issued at $27/share up to a maximum of 9.9% ownership in Newco 3,547 -------- Total Newco Shares outstanding 103,047 (b) $ 311,231, 000. Convertible Preferred Stock at 7.5%, with conversion 20% Premium ($32.40) 9,606 TOTAL NEWCO SHARES (fully diluted) 112,653 ======== Note 1 Shares to be issued to Westar from Western Resources in consideration for the conversion of a $234 million inter-company note owed to Westar: Assumptions: Shares of Western Resources trade at $25/share prior to closing. - ----------- 68 million WR shares outstanding prior to closing. (In Thousands) $234 million inter-company note exchanged for WR stock at $25/share, new WR shares to be issued 9,360 WR shares outstanding prior to close 68,000 ----------- Total WR shares outstanding at closing 77,360 Total Newco shares to be exchanged for WR 55,000 Exchange Ratio .711 Newco shares to WR shareholders (68,000 x .711) 48,345 Newco shares to Westar (9360x .711) 6,655 8 Note 2 PNM Shares Exchanged for Newco 39,500 Newco shares issued to WR and Westar 60,000 Total owned by Westar (6,655) ----------- Newco shares owned directly by WR Shareholders and PNM Shareholders 92,845 90.1% Newco share maximum 10,202 9.9% ----------- ------ Total Newco shares outstanding 103,047 100% Additional shares to be issue to Westar: Maximum ownership 10,202 less shares issued for note conversion (6,655) ----------- Additional Newco common shares to be issued to Westar 3,547 Equity contribution to be converted: $407,000 a) Into 3,547 shares at $27 $(95,769) b) Preferred stock to be issued for remainder $311,231 20. Greater Scope and Scale PNM WR Newco % Chg Generating Capacity 1,521 MW 5,604 MW 7,125 MW 368 Peak Load 2000 1,350 MW 4,512 MW Transmission Lines 2,000 Miles 4,500 Miles 6,500 Miles 225 Distribution System 11,000 Miles 25,000 Miles 36,000 Miles 227 Retail Electric Customers 361,000 634,000 989,000 174 Communities Served 112 471 583 420 21. Strategically Positioned A map showing the resources of KPL and KGE strongly interconnected to MAPP, MAIN, SERC and SPP NERC regions. Projects planned by third parties may provide access to the Rocky Mountain region. The resources of PNM are located in the Arizona-New Mexico sub-region of WSCC which is interconnected to southern California, Nevada, Utah and Colorado. In addition to access to the WSCC markets, PNM is interconnected to SPP. 9 22. The Opportunity in Trading and Generation (coal) PNM Western Resources SJGS Four Corners Jeffrey Lacygne Lawrence Tecumseh Energy Energy Energy Center Center Center Ownership 46% 13% 84% 50% 100% 100% In Service 1973 1969 1978 1973 1954 1957 Net Gen. Capacity 265 MW 192 MW 1,871MW 681 MW 572 MW 284 MW Fuel Cost $/MWh $18.00 $10.00 $12.04 $9.05 $13.31 $12.94 Capacity Factor 87.5% 84% 65% 68% 49% 46% 23. A Balanced Generation Mix (1999) PNM WR NEWCO Coal 63% 61% 61% Gas/Oil 11% 29% 26% Nuclear 26% 10% 13% 24. Diversified Fuel Mix (1999 - Based on MWh Produced) PNM WR NEWCO Coal 68% 76% 73% Gas/Oil 1% 6% 5% Nuclear 31% 18% 22% 25. Post Merger Organization Holding Company (Parent): Direct subsidiaries of parent: Western Intermediate Holding Company Avistar Division of Western: KPL Subsidiaries of Intermediate Holding Company: Manzano Energy PNM Utility Subsidiary of Western KGE 10 Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995 This press release contains forward looking statements within the meaning of the "safe harbor" provisions of the United States Private Securities Litigation Reform Act of 1995. Investors are cautioned that such forward-looking statements with respect to revenues, earnings, performance, strategies, prospects and other aspects of the businesses of PNM and Western Resources and with respect to the benefits of the transaction are based on current expectations that are subject to risk and uncertainties. Such statements are based upon the current beliefs and expectations of the management of PNM and Western Resources. A number of factors could cause actual results or outcomes to differ materially from those indicated by such forward looking statements. These factors include, but are not limited to, risks and uncertainties relating to: the possibility that shareholders of PNM and/or Western Resources will not approve the transaction, the risks that the businesses will not be integrated successfully, the risk that the benefits of the transaction may not be fully realized or may take longer to realize than expected, disruption from the transaction making it more difficult to maintain relationships with clients, employees, suppliers or other third parties, conditions in the financial markets relevant to the proposed transaction, the receipt of regulatory and other approvals of the transaction, that future circumstances could cause business decisions or accounting treatment to be decided differently than now intended, changes in laws or regulations, changing governmental policies and regulatory actions with respect to allowed rates of return on equity and equity ratio limits, industry and rate structure, stranded cost recovery, operation of nuclear power facilities, acquisition, disposal, depreciation and amortization of assets and facilities, operation and construction of plant facilities, recovery of fuel and purchased power costs, decommissioning costs, present or prospective wholesale and retail competition (including retail wheeling and transmission costs), political and economic risks, changes in and compliance with environmental and safety laws and policies, weather conditions (including natural disasters such as tornadoes), population growth rates and demographic patterns, competition for retail and wholesale customers, availability, pricing and transportation of fuel and other energy commodities, market demand for energy from plants or facilities, changes in tax rates or policies or in rates of inflation or in accounting standards, unanticipated delays or changes in costs for capital projects, unanticipated changes in operating expenses and capital expenditures, capital market conditions, competition for new energy development opportunities and legal and administrative proceedings (whether civil, such as environmental, or criminal) and settlements, the outcome of Protection One accounting issues reviewed by the SEC staff as disclosed in previous Western Resources SEC filings, the impact of Protection One's financial condition on Western Resources' consolidated results, and other factors. PNM and Western Resources disclaim any obligation to update any forward-looking statements as a result of developments occurring after the date of this news release. Readers are referred to PNM's and Western Resources' most recent reports filed with the Securities and Exchange Commission. 11 Additional Information In connection with the proposed transaction, PNM and Western Resources will file a joint proxy statement / prospectus with the Securities and Exchange Commission. INVESTORS AND SECURITY HOLDERS ARE ADVISED TO READ THE JOINT PROXY STATEMENT / PROSPECTUS WHEN IT BECOMES AVAILABLE, BECAUSE IT WILL CONTAIN IMPORTANT INFORMATION. Investors and security holders may obtain a free copy of the joint proxy statement / prospectus (when available) and other documents filed by PNM and Western Resources with the SEC at the SEC's web site at http://www.sec.gov. Free copies of the joint proxy statement / prospectus, when available, and each company's other filings with the SEC may also be obtained from the respective companies. Free copies of PNM's filings may be obtained by directing a request to PNM, Alvarado Square, Albuquerque, New Mexico 87158. Phone: (800) 545-4425. Free copies of Western Resources' filings may be obtained by directing a request to Western Resources, P.O. Box 889, Topeka, Kansas 66601-0889. Phone: (800) 527-2495. Participants in Solicitation. PNM, Western Resources and certain of their respective directors, executive officers and other members of their management and employees, each of whom may be considered participants in this transaction under applicable securities laws, may be soliciting proxies from their respective stockholders in favor of the transaction. Information concerning PNM's directors and executive officers participating in the solicitation is set forth in PNM's Annual Report on Form 10-K filed with the Commission on March 9, 2000 and information concerning Western Resources' directors and executive officers participating in the solicitation is set forth in Western Resources' Annual Report on Form 10-K filed with the Commission on March 29, 2000 and amended on April 3, 2000. Certain directors and executive officers of PNM and Western Resources may have direct or indirect interests in the transaction due to securities holdings, vesting of options, and rights to severance payments if their employment is terminated following the transaction. In addition, directors and officers, after the transaction, will be indemnified by PNM and Western Resources, and benefit from insurance coverage for liabilities that may arise from their service as directors and officers of PNM or Western Resources prior to the transaction. Additional information regarding PNM's and Western Resources' respective participants in the solicitation will be contained in the joint proxy statement/prospectus. 12 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. PUBLIC SERVICE COMPANY OF NEW MEXICO (Registrant) Date: November 16, 2000 /s/ John R. Loyack ------------------------------------ John R. Loyack Vice President, Corporate Controller and Chief Accounting Officer (Officer duly authorized to sign this report) 13