UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITES EXCHANGE ACT OF 1934
Date of Report (Date of earliest events reported) May 2, 2001
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May 2, 2001
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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
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(Registrant's telephone number, including area code)
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(Former name, former address and former fiscal year,
if changed since last report)
Item 9. Regulation FD Disclosure
Public Service Company of New Mexico, Inc. (the "Company" or "PNM") is
filing as a Regulation FD disclosure certain information from the accompanying
slide presentation by the Company's Chairman, President and Chief Executive
Officer, Jeff Sterba, scheduled to be delivered on May 3, 2001 at 8:45 EDT. This
presentation will be simultaneously webcast through pnm.com and through a
conference call at 1-973-694-6836. A re-broadcast of the presentation is
available after the conference at 1-973-709-2089 (passcode ID 182135).
Transforming Ideas Into Results
1. A Knockout Quarter
Three Months Ended March 31, 2001 Compared to Three Months Ended March 31,
2000
o Total Operating Revenues increased 129%
o Wholesale Revenues increased 310%
o EPS (diluted) increased 191%
2. Quarterly (Ongoing) Earnings Per Share
1999 2000 2001
---- ---- ----
1st Quarter 0.55 0.55 1.65
2nd Quarter 0.41 0.45
3rd Quarter 0.52 0.97
4th Quarter 0.43 0.52
3. Continuing Gains
The Company's Wholesale Revenues and PVNGS On-Peak Pricing Index ($/MWh)
Average PVNGS
Wholesale Revenues Daily On-Peak
(In thousands) Pricing Index
------------------ -------------
July 2000 $84,047 119.74
August 2000 $120,957 183.66
December 2000 $96,867 231.66
January 2001 $121,635 276.88
February 2001 $136,767 207.79
March 2001 $151,847 211.15
4. Wholesale Revenues
Wholesale Revenues
Year (In thousands)
---- --------------
1995 $80,949
1996 $121,329
1997 $185,334
1998 $274,979
1999 $365,368
2000 $748,192
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Average Annual Growth Rate - 56%
5. The PNM Advantage (Wholesale)
o Strategic Location on Western Grid
o Experienced Trading Staff
o Relationship Marketing
o An Innovative Approach to a Commodity Market
o Strong Risk Management
o Productive Resources
6. Effective Asset Utilization
Capacity Factors at San Juan Generating Station:
1998 82%
1999 80%
2000 86%
1st Quarter 2001 93%
o Plans to add 300 - 400 MW annually
o 400 MWs of turbines on order
o 4 Projects in development
7. The PNM Advantage (Retail)
o Combined electric and gas utility
o 369,000 electric customers and 435,000 gas customers
o $519 million electric revenues and $320 million gas revenues
o 3-3.5% underlying growth rate
o Rate stability through 2002
8. The New Mexico Solution to Deregulation
A new holding company:
PNM Resources with PNM and Avistar as wholly-owned direct subsidiaries
o Safeguards Customers
o Expedites New Resources
o Allows Flexibility for Utilities
9. PNM and Western Resources Equals a Strategic Combination
o Extends regional footprint
o Strengthens competitive position
o Accelerates planned growth of asset base
o Expands financial scale
o Creates platform to repeat wholesale success in Midwest market
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10. Transforming from Traditional Utility to Merchant/Utility
o Maximizing Capacity Utilization
o Increasing Trading Velocity
o Addressing Niche Markets
11. PNM's Historical Capacity Factor and Trading Velocity (1)
o Increased utilization of coal units
o Increased ratio of sales to generation
Capacity Factor % Trading Velocity (1)
PNM WSCC PNM WSCC
--- ---- --- ----
1992 65.91 76.03 1.06 1.28
1993 71.59 75.75 1.06 1.32
1994 73.76 79.78 1.10 1.33
1995 71.19 72.12 1.00 1.34
1996 80.43 71.76 1.14 1.41
1997 81.81 74.84 1.37 1.55
1998 82.73 79.32 1.55 1.57
1999 82.30 80.42 2.45 1.85
(1) Ratio of total sales to net generation
12. Western Resources Coal Resources Utilization
Capacity Factor %
Mid
Western Resources Continent Average
----------------- -----------------
1992 49.07 53.77
1993 59.43 57.56
1994 56.09 56.75
1995 55.56 58.84
1996 64.42 62.61
1997 61.25 63.86
1998 58.14 64.65
1999 63.28 65.91
13. Western Resources' Coal Generation Competitive Position
o Western Resources' coal units have lower costs than 60% of the coal
units in mid-continent, not including SERC (2)
o 80% with SERC included
(2) South East Reliability Council
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14. Trading Velocity of Select Companies
1999 Ratio
----------
Cleco Utility Group 3.25
Conway Corporation 2.08
Kansas City Power & Light Company 1.06
KGE Western Resources Company 0.85
KPL Western Resources Company 1.10
Lubbock Power & Light 2.31
Minneapolis Light, Water & Power 5.01
Southwestern Electric Power Company 1.07
Southwestern Public Service Company 0.99
UtiliCorp United Inc. 1.72
SPP average 1.27
15. Wholesale Trading Opportunities for Western Resources Energy
Western Resources generation assets are strategically located in the
Southwest Power Pool which is centrally located to several adjacent
markets:
MAPP - Mid Continent Area Power Pool
MAIN - Mid America Interconnected Network, Inc.
SERC - South East Reliability Council
16. The Path to Closing
o Western Resources Rate Case
o Shareholder Vote
o Kansas/New Mexico Regulatory Approvals
o Other Regulatory Filings
o Closing
17. Basis for Earnings Projection
o Energy conservation efforts
o Credit quality concerns
o New generation additions
o Mix of short- to long-term sales
o Federal and state regulatory decisions
18. Upside Potential
Price Earnings Market to
Ratio Book Ratio
-------------- ----------
PNM 9.8% 106%
UniSource 15.2% 180%
Pinnacle West 12.2% 155%
Reliant 16.2% 216%
Xcel 20.7% 175%
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Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995
Statements made in this filing that relate to future events are made
pursuant to the Private Securities Litigation Reform Act of 1995. Readers are
cautioned that such forward-looking statements with respect to revenues,
earnings, performance, strategies, prospects and other aspects of the business
of the Company are based upon current expectations and are subject to risk and
uncertainties, as are the forward-looking statements with respect to the
benefits of the Company's proposed acquisition of Western Resources and the
businesses of the Company and Western Resources. The Company assumes no
obligation to update this information.
Because actual results may differ materially from expectations, the Company
cautions readers not to place undue reliance on these statements. A number of
factors, including weather, fuel costs, changes in supply and demand in the
market for electric power, the performance of generating units and transmission
system, and state and federal regulatory and legislative decisions and actions,
including rulings issued by the New Mexico Public Regulation Commission pursuant
to the Electric Utility Industry Restructuring Act of 1999, as amended, and in
other cases now pending or which may be brought before the commission and any
action by the New Mexico Legislature to further amend or repeal that Act, or
other actions relating to restructuring or stranded cost recovery, or federal or
state regulatory, legislative or legal action connected with the California
wholesale power market, could cause the Company's results or outcomes to differ
materially from those indicated by such forward-looking statements in this
filing.
In addition, factors that could cause actual results or outcomes related to
the proposed acquisition of Western Resources to differ materially from those
indicated by such forward looking statements include, but are not limited to,
risks and uncertainties relating to: the possibility that shareholders of the
Company 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, and the impact of Protection One's financial condition on
Western Resources' consolidated results.
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Additional Information
In connection with the proposed transaction with Western Resources, 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.
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 or will be incorporated in PNM's
Annual Report on Form 10-K filed with the SEC on February 22, 2001, and
information concerning Western Resources' directors and executive officers
participating in the solicitation is set forth in or will be incorporated in
Western Resources' Annual Report on Form 10-K filed with the SEC on April 2,
2001. 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.
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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: May 2, 2001 /s/ John R. Loyack
------------------------------------
John R. Loyack
Vice President, Corporate Controller
and Chief Accounting Officer
(Officer duly authorized
to sign this report)
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