XNYS:PNM PNM Resources Inc Quarterly Report 10-Q Filing - 6/30/2012

Effective Date 6/30/2012

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

(Mark One)
 [X]
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2012

Commission File
 
Name of Registrants, State of Incorporation,
 
I.R.S. Employer
 Number
 
 Address and Telephone Number
 
 Identification No.
001-32462
 
PNM Resources, Inc.
 
85-0468296
 
 
(A New Mexico Corporation)
 
 
 
 
Alvarado Square
 
 
 
 
Albuquerque, New Mexico 87158
 
 
 
 
(505) 241-2700
 
 
 
 
 
 
 
001-06986
 
Public Service Company of New Mexico
 
85-0019030
 
 
(A New Mexico Corporation)
 
 
 
 
Alvarado Square
 
 
 
 
Albuquerque, New Mexico 87158
 
 
 
 
(505) 241-2700
 
 
 
 
 
 
 
002-97230
 
Texas-New Mexico Power Company
 
75-0204070
 
 
(A Texas Corporation)
 
 
 
 
577 N. Garden Ridge Blvd.
 
 
 
 
Lewisville, Texas 75067
 
 
 
 
(972) 420-4189
 
 

Indicate by check mark whether each 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.
 
PNM Resources, Inc. (“PNMR”)
YES
ü
NO
 
 
Public Service Company of New Mexico (“PNM”)
YES
ü
NO
 
 
Texas-New Mexico Power Company (“TNMP”)
YES
 
NO
ü

(NOTE: As a voluntary filer, not subject to the filing requirements, TNMP filed all reports under Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months.)

Indicate by check mark whether each registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

 
PNMR
YES
ü
NO
 
 
PNM
YES
ü
NO
 
 
TNMP
YES
ü
NO
 





Indicate by check mark whether registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer or a smaller reporting company (as defined in Rule 12b-2 of the Act).

 
 
Large accelerated
filer
 
Accelerated
filer
 
Non-accelerated
filer
 
Smaller Reporting Company
 
PNMR
 
ü
 
 
 
   
 
 
 
   
 
 
 
   
 
 
PNM
 
   
 
 
 
   
 
 
 
ü
 
 
 
   
 
 
TNMP
 
   
 
 
 
   
 
 
 
ü
 
 
 
   
 


Indicate by check mark whether any of the registrants is a shell company (as defined in Rule 12b-2 of the Exchange Act). YES     NO ü

As of July 27, 2012, 79,653,624 shares of common stock, no par value per share, of PNMR were outstanding.

The total number of shares of common stock of PNM outstanding as of July 27, 2012 was 39,117,799 all held by PNMR (and none held by non-affiliates).

The total number of shares of common stock of TNMP outstanding as of July 27, 2012 was 6,358 all held indirectly by PNMR (and none held by non-affiliates).

PNM AND TNMP MEET THE CONDITIONS SET FORTH IN GENERAL INSTRUCTIONS (H) (1) (a) AND (b) OF FORM 10-Q AND ARE THEREFORE FILING THIS FORM WITH THE REDUCED DISCLOSURE FORMAT PURSUANT TO GENERAL INSTRUCTION (H) (2).

This combined Form 10-Q is separately filed by PNMR, PNM, and TNMP.  Information contained herein relating to any individual registrant is filed by such registrant on its own behalf.  Each registrant makes no representation as to information relating to the other registrants.  When this Form 10-Q is incorporated by reference into any filing with the SEC made by PNMR, PNM, or TNMP, as a registrant, the portions of this Form 10-Q that relate to each other registrant are not incorporated by reference therein.




PNM RESOURCES, INC. AND SUBSIDIARIES
PUBLIC SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARIES
TEXAS-NEW MEXICO POWER COMPANY AND SUBSIDIARIES

INDEX

 
Page No.
 
 
 
 
 
 


3


GLOSSARY
Definitions:
  
 
Afton
  
Afton Generating Station
AFUDC
 
Allowance for Funds Used During Construction
ALJ
  
Administrative Law Judge
AMS
 
Advanced Meter System
AOCI
  
Accumulated Other Comprehensive Income
APS
  
Arizona Public Service Company, which is the operator and a co-owner of PVNGS and Four Corners
BART
  
Best Available Retrofit Technology
BHP
  
BHP Billiton, Ltd, the Parent of SJCC
Board
  
Board of Directors of PNMR
CAA
 
Clean Air Act
CCB
  
Coal Combustion Byproducts
CO2
  
Carbon Dioxide
CTC
  
Competition Transition Charge
Decatherm
  
Million British Thermal Units
Delta
  
Delta-Person Generating Station
DOE
  
United States Department of Energy
DOI
  
United States Department of Interior
ECJV
  
ECJV Holdings, LLC, a wholly owned subsidiary of Cascade Investment, L.L.C.
EIB
  
New Mexico Environmental Improvement Board
EIP
  
Eastern Interconnection Project
EPA
  
United States Environmental Protection Agency
ERCOT
  
Electric Reliability Council of Texas
Exchange Act
 
Securities Exchange Act of 1934
FASB
  
Financial Accounting Standards Board
FERC
  
Federal Energy Regulatory Commission
FIP
  
Federal Implementation Plan
First Choice
  
FCP Enterprises, Inc. and Subsidiaries
Four Corners
  
Four Corners Power Plant
FPPAC
  
Fuel and Purchased Power Adjustment Clause
GAAP
  
Generally Accepted Accounting Principles in the United States of America
GEaR
  
Gross Earnings at Risk
GHG
  
Greenhouse Gas Emissions
GWh
  
Gigawatt hours
IBEW
  
International Brotherhood of Electrical Workers, Local 611
IRP
 
Integrated Resource Plan
KW
  
Kilowatt
KWh
  
Kilowatt Hour
Lordsburg
  
Lordsburg Generating Station
Luna
  
Luna Energy Facility
MD&A
  
Management’s Discussion and Analysis of Financial Condition and Results of Operations
Moody’s
  
Moody’s Investor Services, Inc.
MW
  
Megawatt
MWh
  
Megawatt Hour
Navajo Acts
  
Navajo Nation Air Pollution Prevention and Control Act, Navajo Nation Safe Drinking Water Act, and Navajo Nation Pesticide Act
NDT
  
Nuclear Decommissioning Trusts for PVNGS
NEC
 
Navopache Electric Cooperative, Inc.
NERC
  
North American Electric Reliability Corporation
NMAG
  
New Mexico Attorney General
NMED
  
New Mexico Environment Department
NMIEC
  
New Mexico Industrial Energy Consumers Inc.
NMPRC
  
New Mexico Public Regulation Commission

4


NOx
  
Nitrogen Oxides
NOI
  
Notice of Inquiry
NRC
  
United States Nuclear Regulatory Commission
NSPS
  
New Source Performance Standards
NSR
  
New Source Review
O&M
  
Operations and Maintenance
OCI
  
Other Comprehensive Income
OPEB
  
Other Post Employment Benefits
Optim Energy
  
Optim Energy, LLC, a limited liability company, formerly known as EnergyCo, LLC
OSM
 
United States Office of Surface Mining Reclamation and Enforcement
PCRBs
  
Pollution Control Revenue Bonds
PNM
  
Public Service Company of New Mexico and Subsidiaries, a wholly owned subsidiary of PNMR
PNM Revolving Credit Facility
 
PNM's $400.0 Million Unsecured Revolving Credit Facility
PNMR
  
PNM Resources, Inc. and Subsidiaries
PNMR Revolving Credit Facility
 
PNMR's $300.0 Million Unsecured Revolving Credit Facility
PPA
  
Power Purchase Agreement
PSD
  
Prevention of Significant Deterioration
PUCT
  
Public Utility Commission of Texas
PV
  
Photovoltaic
PVNGS
  
Palo Verde Nuclear Generating Station
RCRA
  
Resource Conservation and Recovery Act
RCT
  
Reasonable Cost Threshold
REA
 
New Mexico's Renewable Energy Act of 2004
REC
  
Renewable Energy Certificates
REP
  
Retail Electricity Provider
RFP
  
Request for Proposal
RMC
  
Risk Management Committee
RPS
  
Renewable Energy Portfolio Standard
SCE
  
Southern California Edison Company
SCR
 
Selective Catalytic Reduction
SEC
  
United States Securities and Exchange Commission
SIP
  
State Implementation Plan
SJCC
  
San Juan Coal Company
SJGS
  
San Juan Generating Station
SNCR
 
Selective Non-Catalytic Reduction
SO2
  
Sulfur Dioxide
SPS
  
Southwestern Public Service Company
S&P
  
Standard and Poor’s Ratings Services
TECA
  
Texas Electric Choice Act
TNMP
  
Texas-New Mexico Power Company and Subsidiaries, a wholly owned subsidiary of TNP
TNMP Revolving Credit Facility
  
TNMP’s $75.0 Million Revolving Credit Facility
TNP
  
TNP Enterprises, Inc. and Subsidiaries, a wholly owned subsidiary of PNMR
Valencia
  
Valencia Energy Facility
VaR
  
Value at Risk


5


PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS


PNM RESOURCES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
(Unaudited)
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
2012
 
2011
 
2012
 
2011
 
(In thousands, except per share amounts)
Electric Operating Revenues 
$
323,860

 
$
415,586

 
$
629,234

 
$
803,249

Operating Expenses:

 
 
 

 

Cost of energy
94,719

 
173,454

 
186,565

 
331,961

Administrative and general
45,289

 
68,795

 
90,089

 
127,260

Energy production costs
46,053

 
47,127

 
91,182

 
95,779

Regulatory disallowances

 
21,402

 

 
21,402

Depreciation and amortization
41,054

 
38,272

 
79,468

 
76,745

Transmission and distribution costs
17,565

 
18,161

 
33,814

 
35,038

Taxes other than income taxes
14,074

 
15,515

 
29,281

 
29,985

Total operating expenses
258,754

 
382,726

 
510,399

 
718,170

Operating income
65,106

 
32,860

 
118,835

 
85,079

Other Income and Deductions:
 
 
 
 
 
 
 
Interest income
3,386

 
4,234

 
6,678

 
8,261

Gains (losses) on investments held by NDT
(795
)
 
5,894

 
3,660

 
11,797

Other income
1,862

 
809

 
4,507

 
1,804

Other deductions
(2,716
)
 
(3,881
)
 
(7,268
)
 
(6,953
)
Net other income (deductions)
1,737

 
7,056

 
7,577

 
14,909

Interest Charges
30,198

 
30,512

 
59,765

 
61,127

Earnings before Income Taxes
36,645

 
9,404

 
66,647

 
38,861

Income Taxes
11,546

 
1,735

 
21,071

 
11,241

Net Earnings
25,099

 
7,669

 
45,576

 
27,620

(Earnings) Attributable to Valencia Non-controlling Interest
(3,455
)
 
(3,470
)
 
(6,720
)
 
(6,652
)
Preferred Stock Dividend Requirements of Subsidiary
(132
)
 
(132
)
 
(264
)
 
(264
)
Net Earnings Attributable to PNMR
$
21,512

 
$
4,067

 
$
38,592

 
$
20,704

Net Earnings Attributable to PNMR per Common Share:
 
 
 
 
 
 
 
Basic
$
0.27

 
$
0.04

 
$
0.48

 
$
0.23

Diluted
$
0.27

 
$
0.04

 
$
0.48

 
$
0.22

Dividends Declared per Common Share
$
0.145

 
$
0.125

 
$
0.290

 
$
0.250


The accompanying notes, as they relate to PNMR, are an integral part of these financial statements.



6


PNM RESOURCES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)

 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
2012
 
2011
 
2012
 
2011
 
(In thousands)
Net Earnings
$
25,099

 
$
7,669

 
$
45,576

 
$
27,620

Other Comprehensive Income (Loss):
 
 
 
 
 
 
 
Unrealized Gain on Investment Securities:
 
 
 
 
 
 
 
Unrealized holding gains arising during the period, net of income tax (expense) of $(3,022), $(5,827), $(10,437), and $(9,280)
4,611

 
8,892

 
15,924

 
14,161

Reclassification adjustment for (gains) included in net earnings, net of income tax expense of $4,992, $7,892, $8,538, and $9,962
(7,617
)
 
(12,043
)
 
(13,028
)
 
(15,201
)
Changes in unrecognized amounts of pension and postretirement benefits, net of income tax (expense) benefit of $(476), $(425), $(952), and $601
727

 
648

 
1,454

 
(966
)
Fair Value Adjustment for Cash Flow Hedges:
 
 
 
 
 
 
 
Change in fair market value, net of income tax (expense) benefit of $40, $327, $99, and $318
(72
)
 
(585
)
 
(178
)
 
(562
)
Reclassification adjustment for (gains) losses included in net earnings, net of income tax expense (benefit) of $(16), $(215), $(31), and $(302)
29

 
389

 
56

 
543

Total Other Comprehensive Income (Loss)
(2,322
)
 
(2,699
)
 
4,228

 
(2,025
)
Comprehensive Income
22,777

 
4,970

 
49,804

 
25,595

Comprehensive (Income) Attributable to Valencia Non-controlling Interest
(3,455
)
 
(3,470
)
 
(6,720
)
 
(6,652
)
Preferred Stock Dividend Requirements of Subsidiary
(132
)
 
(132
)
 
(264
)
 
(264
)
Comprehensive Income Attributable to PNMR
$
19,190

 
$
1,368

 
$
42,820

 
$
18,679


The accompanying notes, as they relate to PNMR, are an integral part of these financial statements.


7


PNM RESOURCES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
 
Six Months Ended June 30,
 
2012
 
2011
 
(In thousands)
Cash Flows From Operating Activities:
 
 
 
Net earnings
$
45,576

 
$
27,620

Adjustments to reconcile net earnings to net cash flows from operating activities:
 
 
 
Depreciation and amortization
99,971

 
97,404

Bad debt expense
1,790

 
11,732

Deferred income tax expense
21,354

 
17,992

Net unrealized (gains) losses on derivatives
1,978

 
(6,996
)
Realized (gains) on investments held by NDT
(3,660
)
 
(11,797
)
Stock based compensation expense
1,435

 
2,867

Regulatory disallowances

 
21,402

Other, net
(2,610
)
 
(443
)
Changes in certain assets and liabilities:
 
 
 
Accounts receivable and unbilled revenues
(20,901
)
 
(44,371
)
Materials, supplies, and fuel stock
(5,250
)
 
1,109

Other current assets
(12,021
)
 
1,679

Other assets
(6,659
)
 
(257
)
Accounts payable
(4,882
)
 
6,101

Interest and taxes
(9,944
)
 
(6,798
)
Other current liabilities
(3,016
)
 
(10,532
)
Proceeds from governmental grants
21,567

 

Other liabilities
(83,432
)
 
(21,972
)
Net cash flows from operating activities
41,296

 
84,740

 
 
 
 
Cash Flows From Investing Activities:
 
 
 
Additions to utility and non-utility plant
(156,796
)
 
(153,168
)
Proceeds from sales of investments held by NDT
45,787

 
94,890

Purchases of investments held by NDT
(47,313
)
 
(96,410
)
Return of principal on PVNGS lessor notes
12,632

 
15,374

Proceeds from sales of utility plant
1,367

 

Other, net
2,320

 
760

Net cash flows from investing activities
(142,003
)
 
(138,554
)

The accompanying notes, as they relate to PNMR, are an integral part of these financial statements.

8


PNM RESOURCES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)

 
Six Months Ended June 30,
 
2012
 
2011
 
(In thousands)
Cash Flows From Financing Activities:
 
 
 
Short-term borrowings (repayments), net
124,300

 
82,000

Proceeds from stock option exercise
5,410

 
2,172

Purchases to satisfy awards of common stock
(12,674
)
 
(4,535
)
Dividends paid
(21,770
)
 
(23,127
)
Valencia’s transactions with its owner
(7,449
)
 
(7,232
)
Proceeds from transmission interconnection agreements
983

 
589

Other, net

 
2,566

Net cash flows from financing activities
88,800

 
52,433

 
 
 
 
Change in Cash and Cash Equivalents
(11,907
)
 
(1,381
)
Cash and Cash Equivalents at Beginning of Period
15,091

 
15,404

Cash and Cash Equivalents at End of Period
$
3,184

 
$
14,023

 
 
 
 
Supplemental Cash Flow Disclosures:
 
 
 
Interest paid, net of amounts capitalized
$
56,217

 
$
57,930

Income taxes paid (refunded), net
$
5,302

 
$
(1,775
)

The accompanying notes, as they relate to PNMR, are an integral part of these financial statements.


9


PNM RESOURCES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
 
June 30,
2012
 
December 31,
2011
 
(In thousands)
ASSETS
 
 
 
Current Assets:
 
 
 
Cash and cash equivalents
$
3,184

 
$
15,091

Accounts receivable, net of allowance for uncollectible accounts of $1,931 and $1,778
89,479

 
87,794

Unbilled revenues
74,827

 
57,401

Other receivables
49,077

 
71,069

Materials, supplies, and fuel stock
59,481

 
54,231

Regulatory assets
47,906

 
44,993

Commodity derivative instruments
4,659

 
3,713

Income taxes receivable
100,715

 
95,130

Other current assets
41,463

 
33,397

Total current assets
470,791

 
462,819

Other Property and Investments:
 
 
 
Investment in PVNGS lessor notes
67,400

 
79,049

Investments held by NDT
178,834

 
168,851

Other investments
8,450

 
12,207

Non-utility property, net of accumulated depreciation of $132 and $120
4,621

 
4,631

Total other property and investments
259,305

 
264,738

Utility Plant:
 
 
 
Plant in service and plant held for future use
5,196,375

 
5,120,167

Less accumulated depreciation and amortization
1,748,487

 
1,705,520

 
3,447,888

 
3,414,647

Construction work in progress
140,409

 
132,420

Nuclear fuel, net of accumulated amortization of $43,218 and $36,411
88,961

 
80,067

Net utility plant
3,677,258

 
3,627,134

Deferred Charges and Other Assets:
 
 
 
Regulatory assets
475,366

 
482,155

Goodwill
278,297

 
278,297

Other deferred charges
91,572

 
89,470

Total deferred charges and other assets
845,235

 
849,922

 
$
5,252,589

 
$
5,204,613


The accompanying notes, as they relate to PNMR, are an integral part of these financial statements.


10


PNM RESOURCES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
 
June 30,
2012
 
December 31,
2011
 
(In thousands, except share information)
LIABILITIES AND STOCKHOLDERS’ EQUITY
 
 
 
Current Liabilities:
 
 
 
Short-term debt
$
207,000

 
$
82,700

Current installments of long-term debt
2,387

 
2,387

Accounts payable
74,227

 
103,139

Customer deposits
17,350

 
15,971

Accrued interest and taxes
48,755

 
53,114

Commodity derivative instruments
1,742

 
1,632

Dividends declared
132

 
10,089

Current portion of accumulated deferred income taxes
9,080

 
9,080

Other current liabilities
90,526

 
95,156

Total current liabilities
451,199

 
373,268

Long-term Debt
1,671,958

 
1,671,626

Deferred Credits and Other Liabilities:
 
 
 
Accumulated deferred income taxes
670,608

 
645,099

Accumulated deferred investment tax credits
14,658

 
15,771

Regulatory liabilities
431,454

 
418,098

Asset retirement obligations
82,503

 
79,233

Accrued pension liability and postretirement benefit cost
133,490

 
224,766

Commodity derivative instruments
5,156

 
2,437

Other deferred credits
99,291

 
106,378

Total deferred credits and other liabilities
1,437,160

 
1,491,782

Total liabilities
3,560,317

 
3,536,676

Commitments and Contingencies (See Note 9)


 


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

Equity:
 
 
 
PNMR common stockholders’ equity:
 
 
 
Common stock outstanding (no par value; 120,000,000 shares authorized; issued and outstanding 79,653,624 shares)
1,186,985

 
1,193,191

Accumulated other comprehensive income (loss), net of income taxes
(62,628
)
 
(66,856
)
Retained earnings
474,692

 
447,650

Total PNMR common stockholders’ equity
1,599,049

 
1,573,985

Non-controlling interest in Valencia
81,694

 
82,423

Total equity
1,680,743

 
1,656,408

 
$
5,252,589

 
$
5,204,613

 
 
 
 

The accompanying notes, as they relate to PNMR, are an integral part of these financial statements.


11


PNM RESOURCES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
(Unaudited)

 
Attributable to PNMR
 
Non-
controlling
Interest
in Valencia
 
 
 
Common
Stock
 
AOCI
 
Retained
Earnings
 
Total PNMR Common Stockholder's Equity
 
 
Total
Equity
 
(In thousands)
Balance at December 31, 2011
$
1,193,191

 
$
(66,856
)
 
$
447,650

 
$
1,573,985

 
$
82,423

 
$
1,656,408

Proceeds from stock option exercise
5,410

 

 

 
5,410

 

 
5,410

Purchases to satisfy awards of common stock
(12,674
)
 

 

 
(12,674
)
 

 
(12,674
)
Excess tax (shortfall) from stock-based payment arrangements
(377
)
 

 

 
(377
)
 

 
(377
)
Stock based compensation expense
1,435

 

 

 
1,435

 

 
1,435

Valencia’s transactions with its owner

 

 

 

 
(7,449
)
 
(7,449
)
Net earnings before subsidiary preferred stock dividends

 

 
38,856

 
38,856

 
6,720

 
45,576

Subsidiary preferred stock dividends

 

 
(264
)
 
(264
)
 

 
(264
)
Total other comprehensive income

 
4,228

 

 
4,228

 

 
4,228

Dividends declared on common stock

 

 
(11,550
)
 
(11,550
)
 

 
(11,550
)
Balance at June 30, 2012
$
1,186,985

 
$
(62,628
)
 
$
474,692

 
$
1,599,049

 
$
81,694

 
$
1,680,743



The accompanying notes, as they relate to PNMR, are an integral part of these financial statements.



12



PUBLIC SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARIES
A WHOLLY OWNED SUBSIDIARY OF PNM RESOURCES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS (LOSS)
(Unaudited)

 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
2012
 
2011
 
2012
 
2011
 
(In thousands)
Electric Operating Revenues
$
260,094

 
$
239,234

 
$
510,510

 
$
473,472

Operating Expenses:
 
 
 
 
 
 
 
Cost of energy
83,235

 
81,497

 
163,792

 
170,711

Administrative and general
40,657

 
38,580

 
79,706

 
72,916

Energy production costs
46,053

 
47,127

 
91,182

 
95,779

Regulatory disallowances

 
17,479

 

 
17,479

Depreciation and amortization
23,946

 
22,897

 
47,580

 
46,632

Transmission and distribution costs
11,664

 
11,902

 
22,507

 
23,509

Taxes other than income taxes
7,870

 
9,209

 
16,969

 
17,740

Total operating expenses
213,425

 
228,691

 
421,736

 
444,766

Operating income
46,669

 
10,543

 
88,774

 
28,706

Other Income and Deductions:
 
 
 
 
 
 
 
Interest income
3,429

 
4,225

 
6,764

 
8,282

Gains (losses) on investments held by NDT
(795
)
 
5,894

 
3,660

 
11,797

Other income
1,370

 
441

 
3,203

 
742

Other deductions
(1,564
)
 
(1,851
)
 
(2,868
)
 
(2,837
)
Net other income (deductions)
2,440

 
8,709

 
10,759

 
17,984

Interest Charges
18,928

 
18,027

 
37,422

 
36,107

Earnings before Income Taxes
30,181

 
1,225

 
62,111

 
10,583

Income Taxes (Benefit)
9,841

 
(872
)
 
20,694

 
1,522

Net Earnings
20,340

 
2,097

 
41,417

 
9,061

(Earnings) Attributable to Valencia Non-controlling Interest
(3,455
)
 
(3,470
)
 
(6,720
)
 
(6,652
)
Net Earnings (Loss) Attributable to PNM
16,885

 
(1,373
)
 
34,697

 
2,409

Preferred Stock Dividends Requirements
(132
)
 
(132
)
 
(264
)
 
(264
)
Net Earnings (Loss) Available for PNM Common Stock
$
16,753

 
$
(1,505
)
 
$
34,433

 
$
2,145


The accompanying notes, as they relate to PNM, are an integral part of these financial statements.


13


PUBLIC SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARIES
A WHOLLY OWNED SUBSIDIARY OF PNM RESOURCES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(Unaudited)
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
2012
 
2011
 
2012
 
2011
 
(In thousands)
Net Earnings
$
20,340

 
$
2,097

 
$
41,417

 
$
9,061

Other Comprehensive Income (Loss):
 
 
 
 
 
 
 
Unrealized Gain on Investment Securities:
 
 
 
 
 
 
 
Unrealized holding gains arising during the period, net of income tax (expense) of $(3,022), $(5,827), $(10,437), and $(9,280)
4,611

 
8,892

 
15,924

 
14,161

Reclassification adjustment for (gains) included in net earnings, net of income tax expense of $4,992, $7,892, $8,538 and $9,962
(7,617
)
 
(12,043
)
 
(13,028
)
 
(15,201
)
Change in unrecognized amounts of pension and postretirement benefits, net of income tax (expense) benefit of $(476), $(423), $(952), and $432
727

 
646

 
1,454

 
(659
)
Fair Value Adjustment for Cash Flow Hedges:
 
 
 
 
 
 
 
Reclassification adjustment for (gains) losses included in net earnings, net of income tax expense (benefit) of $0, $0, $0, and $(11)

 

 

 
17

Total Other Comprehensive Income (Loss)
(2,279
)
 
(2,505
)
 
4,350

 
(1,682
)
Comprehensive Income (Loss)
18,061

 
(408
)
 
45,767

 
7,379

Comprehensive (Income) Attributable to Valencia Non-controlling Interest
(3,455
)
 
(3,470
)
 
(6,720
)
 
(6,652
)
Comprehensive Income (Loss) Attributable to PNM
$
14,606

 
$
(3,878
)
 
$
39,047

 
$
727


The accompanying notes, as they relate to PNM, are an integral part of these financial statements.


14


PUBLIC SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARIES
A WHOLLY OWNED SUBSIDIARY OF PNM RESOURCES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
 
Six Months Ended June 30,
 
2012
 
2011
 
(In thousands)
Cash Flows From Operating Activities:
 
 
 
Net earnings
$
41,417

 
$
9,061

Adjustments to reconcile net earnings to net cash flows from operating activities:
 
 
 
Depreciation and amortization
63,303

 
63,077

Deferred income tax expense
21,067

 
8,784

Net unrealized (gains) losses on derivatives
1,978

 
(1,453
)
Realized (gains) on investments held by NDT
(3,660
)
 
(11,797
)
Regulatory disallowances

 
17,479

Other, net
(545
)
 
874

Changes in certain assets and liabilities:
 
 
 
Accounts receivable and unbilled revenues
(17,867
)
 
(8,796
)
Materials, supplies, and fuel stock
(5,152
)
 
830

Other current assets
(10,885
)
 
7,467

Other assets
(5,868
)
 
3,301

Accounts payable
(7,112
)
 
(2,791
)
Interest and taxes
61,503

 
(4,196
)
Other current liabilities
10,095

 
6,730

Proceeds from governmental grants
21,567

 

Other liabilities
(78,105
)
 
(22,339
)
Net cash flows from operating activities
91,736

 
66,231

 
 
 
 
Cash Flows From Investing Activities:
 
 
 
Utility plant additions
(111,344
)
 
(125,939
)
Proceeds from sales of NDT investments
45,787

 
94,890

Purchases of NDT investments
(47,313
)
 
(96,410
)
Return of principal on PVNGS lessor notes
12,632

 
15,374

Other, net
1,372

 
1,037

Net cash flows from investing activities
(98,866
)
 
(111,048
)

The accompanying notes, as they relate to PNM, are an integral part of these financial statements.


15


PUBLIC SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARIES
A WHOLLY OWNED SUBSIDIARY OF PNM RESOURCES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)

 
Six Months Ended June 30,
 
2012
 
2011
 
(In thousands)
Cash Flows From Financing Activities:
 
 
 
Short-term borrowings (repayments), net
20,400

 
83,000

Valencia’s transactions with its owner
(7,449
)
 
(7,232
)
Proceeds from transmission interconnection arrangements
983

 
589

Dividends paid
(17,944
)
 
(43,949
)
Other, net
1

 
2,558

Net cash flows from financing activities
(4,009
)
 
34,966

 
 
 
 
Change in Cash and Cash Equivalents
(11,139
)
 
(9,851
)
Cash and Cash Equivalents at Beginning of Period
12,307

 
10,336

Cash and Cash Equivalents at End of Period
$
1,168

 
$
485

 
 
 
 
Supplemental Cash Flow Disclosures:
 
 
 
Interest paid, net of amounts capitalized
$
36,286

 
$
35,081

Income taxes paid (refunded), net
$
(63,114
)
 
$
(1,539
)

The accompanying notes, as they relate to PNM, are an integral part of these financial statements.


16


PUBLIC SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARIES
A WHOLLY OWNED SUBSIDIARY OF PNM RESOURCES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
 
June 30,
2012
 
December 31,
2011
 
(In thousands)
ASSETS
 
 
 
Current Assets:
 
 
 
Cash and cash equivalents
$
1,168

 
$
12,307

Accounts receivable, net of allowance for uncollectible accounts of $1,931 and $1,778
67,910

 
68,661

Unbilled revenues
65,756

 
48,928

Other receivables
44,218

 
65,465

Affiliate receivables
8,893

 
8,912

Materials, supplies, and fuel stock
56,673

 
51,521

Regulatory assets
44,219

 
44,480

Commodity derivative instruments
4,659

 
3,713

Income taxes receivable
66,117

 
128,858

Other current assets
36,376

 
26,776

Total current assets
395,989

 
459,621

Other Property and Investments:
 
 
 
Investment in PVNGS lessor notes
67,400

 
79,049

Investments held by NDT
178,834

 
168,851

Other investments
1,525

 
2,900

Non-utility property
976

 
976

Total other property and investments
248,735

 
251,776

Utility Plant:
 
 
 
Plant in service and plant held for future use
4,062,329

 
4,009,873

Less accumulated depreciation and amortization
1,333,994

 
1,305,754

 
2,728,335

 
2,704,119

Construction work in progress
120,092

 
116,030

Nuclear fuel, net of accumulated amortization of $43,218 and $36,411
88,961

 
80,067

Net utility plant
2,937,388

 
2,900,216

Deferred Charges and Other Assets:
 
 
 
Regulatory assets
353,110

 
352,387

Goodwill
51,632

 
51,632

Other deferred charges
82,521

 
79,655

Total deferred charges and other assets
487,263

 
483,674

 
$
4,069,375

 
$
4,095,287

 
 
 
 

The accompanying notes, as they relate to PNM, are an integral part of these financial statements.


17


PUBLIC SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARIES
A WHOLLY OWNED SUBSIDIARY OF PNM RESOURCES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
 
June 30,
2012
 
December 31,
2011
 
(In thousands, except share information)
LIABILITIES AND STOCKHOLDER’S EQUITY
 
 
 
Current Liabilities:
 
 
 
Short-term debt
$
86,400

 
$
66,000

Accounts payable
57,372

 
82,619

Affiliate payables
17,092

 
14,592

Customer deposits
17,350

 
15,971

Accrued interest and taxes
30,874

 
32,111

Commodity derivative instruments
1,742

 
1,632

Dividends declared
132

 
132

Current portion of accumulated deferred income taxes
16,563

 
16,562

Other current liabilities
67,387

 
60,944

Total current liabilities
294,912

 
290,563

Long-term Debt
1,215,560

 
1,215,540

Deferred Credits and Other Liabilities:
 
 
 
Accumulated deferred income taxes
529,370

 
504,419

Accumulated deferred investment tax credits
14,658

 
15,771

Regulatory liabilities
384,336

 
373,703

Asset retirement obligations
81,667

 
78,425

Accrued pension liability and postretirement benefit cost
128,857

 
213,688

Commodity derivative instruments
5,156

 
2,437

Other deferred credits
88,444

 
94,700

Total deferred credits and liabilities
1,232,488

 
1,283,143

Total liabilities
2,742,960

 
2,789,246

Commitments and Contingencies (See Note 9)


 


Cumulative Preferred Stock
 
 
 
without mandatory redemption requirements ($100 stated value; 10,000,000 authorized; issued and outstanding 115,293 shares)
11,529

 
11,529

Equity:
 
 
 
PNM common stockholder’s equity:
 
 
 
Common stock outstanding (no par value; 40,000,000 shares authorized; issued and outstanding 39,117,799 shares)
1,061,776

 
1,061,776

Accumulated other comprehensive income (loss), net of income taxes
(62,448
)
 
(66,798
)
Retained earnings
233,864

 
217,111

Total PNM common stockholder’s equity
1,233,192

 
1,212,089

Non-controlling interest in Valencia
81,694

 
82,423

Total equity
1,314,886

 
1,294,512

 
$
4,069,375

 
$
4,095,287


The accompanying notes, as they relate to PNM, are an integral part of these financial statements.


18


PUBLIC SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARIES
A WHOLLY OWNED SUBSIDIARY OF PNM RESOURCES, INC.
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
(Unaudited)
 
Attributable to PNM
 
 
 
 
 
 
 
 
 
Total PNM
Common
Stockholder’s
Equity
 
Non-
controlling
 Interest in Valencia
 
 
 
 
 
 
 
 
 
 
 
Common
Stock
 
AOCI
 
Retained
Earnings
 
 
 
Total
Equity
 
 
 
 
 
 
 
(In thousands)
Balance at December 31, 2011
$
1,061,776

 
$
(66,798
)
 
$
217,111

 
$
1,212,089

 
$
82,423

 
$
1,294,512

Valencia’s transactions with its owner

 

 

 

 
(7,449
)
 
(7,449
)
Net earnings

 

 
34,697

 
34,697

 
6,720

 
41,417

Total other comprehensive income

 
4,350

 

 
4,350

 

 
4,350

Dividends declared on preferred stock

 

 
(264
)
 
(264
)
 

 
(264
)
Dividends declared on common stock

 

 
(17,680
)
 
(17,680
)
 

 
(17,680
)
Balance at June 30, 2012
$
1,061,776

 
$
(62,448
)
 
$
233,864

 
$
1,233,192

 
$
81,694

 
$
1,314,886



The accompanying notes, as they relate to PNM, are an integral part of these financial statements.

19



TEXAS-NEW MEXICO POWER COMPANY AND SUBSIDIARIES
A WHOLLY OWNED SUBSIDIARY OF PNM RESOURCES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
(Unaudited)
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
2012
 
2011
 
2012
 
2011
 
(In thousands)
Electric Operating Revenues:
 
 
 
 
 
 
 
   Non-affiliates
$
63,766

 
$
50,359

 
$
118,724

 
$
95,387

   Affiliate

 
9,598

 

 
18,412

        Total electric operating revenues
63,766

 
59,957

 
118,724

 
113,799

Operating Expenses:
 
 
 
 
 
 
 
Cost of energy
11,484

 
10,259

 
22,773

 
20,412

Administrative and general
10,103

 
10,135

 
20,570

 
19,801

Regulatory disallowances

 
3,923

 

 
3,923

Depreciation and amortization
12,066

 
10,726

 
23,353

 
20,987

Transmission and distribution costs
5,901

 
6,256

 
11,307

 
11,524

Taxes other than income taxes
5,315

 
4,963

 
10,031

 
9,733

Total operating expenses
44,869

 
46,262

 
88,034

 
86,380

Operating income
18,897

 
13,695

 
30,690

 
27,419

Other Income and Deductions:
 
 
 
 
 
 
 
Other income
448

 
288

 
937

 
650

Other deductions
326

 
(29
)
 
(59
)
 
(75
)
Net other income (deductions)
774

 
259

 
878

 
575

Interest Charges
7,069

 
7,305

 
14,167

 
14,604

Earnings Before Income Taxes
12,602

 
6,649

 
17,401

 
13,390

Income Taxes
4,584

 
2,547

 
6,372

 
5,125

Net Earnings
$
8,018

 
$
4,102

 
$
11,029

 
$
8,265


The accompanying notes, as they relate to TNMP, are an integral part of these financial statements.



20


TEXAS-NEW MEXICO POWER COMPANY AND SUBSIDIARIES
A WHOLLY OWNED SUBSIDIARY OF PNM RESOURCES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
2012
 
2011
 
2012
 
2011
 
(In thousands)
Net Earnings
$
8,018

 
$
4,102

 
$
11,029

 
$
8,265

Other Comprehensive Income (Loss):
 
 
 
 
 
 
 
Change in unrecognized amounts of pension and postretirement benefits, net of income tax (expense) benefit of $0, $(1), $0, and $170

 
2

 

 
(307
)
Fair Value Adjustment for Cash Flow Hedges:
 
 
 
 
 
 
 
Change in fair market value, net of income tax (expense) benefit of $40, $307, $99, and $272
(72
)
 
(555
)
 
(178
)
 
(491
)
Reclassification adjustment for losses included in net earnings, net of income tax expense (benefit) of $(16), $(102), $(31), and $(202)
29

 
184

 
56

 
365

Total Other Comprehensive Income (Loss)
(43
)
 
(369
)
 
(122
)
 
(433
)
Comprehensive Income
$
7,975

 
$
3,733

 
$
10,907

 
$
7,832


The accompanying notes, as they relate to TNMP, are an integral part of these financial statements.

21


TEXAS-NEW MEXICO POWER COMPANY AND SUBSIDIARIES
A WHOLLY OWNED SUBSIDIARY OF PNM RESOURCES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
 
Six Months Ended June 30,
 
2012
 
2011
 
(In thousands)
Cash Flows From Operating Activities:
 
 
 
Net earnings
$
11,029

 
$
8,265

Adjustments to reconcile net earnings to net cash flows from operating activities:
 
 
 
Depreciation and amortization
25,885

 
22,569

Deferred income tax expense
6,247

 
4,805

Regulatory disallowances

 
3,923

Other, net
(258
)
 
31

Changes in certain assets and liabilities:
 
 
 
Accounts receivable and unbilled revenues
(3,034
)
 
(5,798
)
Materials and supplies
(98
)
 
74

Other current assets
(3,904
)
 
(2,243
)
Other assets
(1,066
)
 
(657
)
Accounts payable
2,987

 
(154
)
Interest and taxes
(4,755
)
 
(6,034
)
Other current liabilities
4,214

 
1,628

Other liabilities
(3,408
)
 
(1,078
)
Net cash flows from operating activities
33,839

 
25,331

Cash Flows From Investing Activities:
 
 
 
Additions to utility and non-utility plant
(39,595
)
 
(24,072
)
Proceeds from sales of utility plant
1,367

 

Net cash flows from investing activities
(38,228
)
 
(24,072
)
Cash Flow From Financing Activities:
 
 
 
Short-term borrowings (repayments), net – affiliate
7,400

 
5,800

Dividends paid
(3,010
)
 
(7,066
)
Debt issuance costs and other
(1
)
 
7

Net cash flows from financing activities
4,389

 
(1,259
)
 
 
 
 
Change in Cash and Cash Equivalents

 

Cash and Cash Equivalents at Beginning of Period
1

 
1
Cash and Cash Equivalents at End of Period
$
1

 
$
1

 
 
 
 
Supplemental Cash Flow Disclosures:
 
 
 
Interest paid, net of amounts capitalized
$
12,761

 
$
13,852

Income taxes paid (refunded), net
$
1,848

 
$
3,250


The accompanying notes, as they relate to TNMP, are an integral part of these financial statements.




22


TEXAS-NEW MEXICO POWER COMPANY AND SUBSIDIARIES
A WHOLLY OWNED SUBSIDIARY OF PNM RESOURCES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
 
June 30,
2012
 
December 31,
2011
 
(In thousands)
ASSETS
 
 
 
Current Assets:
 
 
 
Cash and cash equivalents
$
1

 
$
1

Accounts receivable
21,569

 
19,133

Unbilled revenues
9,071

 
8,473

Other receivables
1,199

 
847

Materials and supplies
2,808

 
2,710

Regulatory assets
3,687

 
513

Current portion of accumulated deferred income taxes
2,272

 
2,272

Other current assets
1,786

 
694

Total current assets
42,393

 
34,643

Other Property and Investments:
 
 
 
Other investments
267

 
271

Non-utility property
2,240

 
2,240

Total other property and investments
2,507

 
2,511

Utility Plant:
 
 
 
Plant in service and plant held for future use
972,383

 
947,327

Less accumulated depreciation and amortization
332,193

 
323,123

 
640,190

 
624,204

Construction work in progress
14,409

 
12,968

Net utility plant
654,599

 
637,172

Deferred Charges and Other Assets:
 
 
 
Regulatory assets
122,256

 
129,768

Goodwill
226,665

 
226,665

Other deferred charges
6,259

 
6,686

Total deferred charges and other assets
355,180

 
363,119

 
$
1,054,679

 
$
1,037,445


The accompanying notes, as they relate to TNMP, are an integral part of these financial statements.

23


TEXAS-NEW MEXICO POWER COMPANY AND SUBSIDIARIES
A WHOLLY OWNED SUBSIDIARY OF PNM RESOURCES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
 
June 30,
2012
 
December 31,
2011
 
(In thousands, except share information)
LIABILITIES AND STOCKHOLDER’S EQUITY
 
 
 
Current Liabilities:
 
 
 
Short-term debt – affiliate
$
8,100

 
$
700

Accounts payable
11,065