UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest events reported) April 30, 2004
------------------------
(April 26, 2004)
------------------------
Commission Name of Registrants, State of Incorporation, I.R.S. Employer
File Number Address and Telephone Number Identification No.
----------- -------------------------------------------- ------------------
333-32170 PNM Resources, Inc. 85-0468296
(A New Mexico Corporation)
Alvarado Square
Albuquerque, New Mexico 87158
(505) 241-2700
1-6986 Public Service Company of New Mexico 85-0019030
(A New Mexico Corporation)
Alvarado Square
Albuquerque, New Mexico 87158
(505) 241-2700
------------------------------
(Former name, former address and former fiscal year,
if changed since last report)
Item 12. Results of Operations and Financial Condition
On April 26, 2004, PNM Resources, Inc. (the "Company") issued a press
release announcing its unaudited results of operations for the three and twelve
months ended March 31, 2004. The press release is furnished herewith as Exhibit
99.1 and incorporated by reference herein.
The Company's press release and other communications from time to time
may include certain non-GAAP financial measures. A "non-GAAP financial measure"
is defined as a numerical measure of a company's financial performance,
financial position or cash flows that excludes (or includes) amounts that are
included in (or excluded from) the most directly comparable measure calculated
and presented in accordance with GAAP in the Company's financial statements.
Non-GAAP financial measures utilized by the Company include presentations
of revenues, operating expenses, operating income, other income and deductions,
net income, earnings per share and other GAAP measures of operating performance
that exclude or include the effect of litigation settlements, accounting or
regulatory changes, the restructuring of selected operations, certain merger
activities and other similar events. The Company's management believes these
non-GAAP financial measures provide useful information to investors by removing
the effect of variances in GAAP reported results of operations that are not
indicative of fundamental changes in the earnings capacity of the Company's
operations. Management also believes that the presentation of the non-GAAP
financial measure is consistent with its past practice, as well as industry
practice in general, and will enable investors and analysts to compare current
non-GAAP measures with non-GAAP measures presented in prior periods. The
non-GAAP financial measures used by the Company should not be considered in
isolation or as a substitute for measures of performance prepared in accordance
with GAAP.
Limitation on Incorporation by Reference
In accordance with general instruction B.6 of Form 8-K, the information
in this report, including exhibits, is furnished pursuant to Item 12 and shall
not be deemed "filed" for the purposes of Section 18 of the Securities Exchange
Act of 1934, or otherwise subject to the liability of that section and not
deemed incorporated by reference in any filing under the Securities Act of 1933.
EXHIBIT INDEX
Exhibit Number Description
99.1 Press Release dated April 26, 2004 and PNM Resources, Inc.
and Subsidiaries Consolidated Statements of Earnings for
the three and twelve months ended March 31, 2004 and 2003 and
other financial information.
2
EXHIBIT 99.1
PNM Resources Posts Solid Quarter As Profits Climb 15 Percent
Highlights:
o GAAP First Quarter 2004 net earnings of $0.61 per diluted share,
compared to $1.22 per share in the first quarter of 2003.
o Ongoing earnings for the latest quarter totaled $0.61 per diluted
share, compared to $0.53 per share in the first quarter of 2003.
o There were no one-time gains or charges included in the first
quarter 2004 results. In the first quarter of 2003, the company
reported a one-time gain of $0.95 per diluted share and a
one-time charge of $0.26 per share.
o Total operating revenues increased $58.1 million, or 15.1
percent, to $443.7 million in the latest quarter, compared to
$385.6 million in the first quarter of 2003.
o Plant availability at San Juan Generating Station improved
offsetting plant outages at Palo Verde Nuclear Generating
Station.
ALBUQUERQUE, N.M., April 26, 2004 - PNM Resources (NYSE: PNM) today reported
consolidated net earnings available for common stock for the three months ended
March 31, 2004, of $24.8 million, or $0.61 per diluted share of common stock. In
the comparable period in 2003, the company reported consolidated net earnings
available for common stock of $48.2 million, or $1.22 per diluted share.
Ongoing earnings for the quarter were $0.61 per share, up 15.1 percent compared
to $0.53 per share for the first quarter of 2003.
Operating revenue for the latest quarter totaled $443.7 million, up from $385.6
million in the comparable 2003 period, an increase of 15.1 percent. Operating
revenues from the company's retail utility operation totaled $305.9 million, up
13.1 percent over the first quarter of 2003.
PNM wholesale power revenues were up 20.3 percent over the comparable quarter
last year to $133.1 million. Total wholesale sales increased 15.3 percent, to
3.0 million megawatt-hours (MWh). Short-term and forward wholesale power prices
averaged $42 a MWh during the first quarter 2004, compared to $41 a MWh in the
same period last year.
"The new long-term wholesale contracts, together with strong growth in PNM's
home service territory and good coal unit performance all contributed to
earnings growth in the first quarter," said PNM Resources Chairman, President
and Chief Executive Officer Jeff Sterba.
3
EXHIBIT 99.1 (Continued)
PNM Resources, Inc.
Reconciliation of Ongoing Earnings Per Share To GAAP Reported EPS
March 31, 2004
Three Months Twelve Months
Q1 2004 Q1 2003 3/31/04 3/31/03
--------- --------- --------- ---------
GAAP Reported EPS $0.61 $1.22 $1.77 $2.21
One-time charges 0 0.26 0.27 0.49
One-time gains 0 0 0 (0.04)
Change in Accounting (1) 0 (0.95) 0 (0.95)
--------- --------- --------- ---------
Ongoing earnings $0.61 $0.53 $2.04 $1.71
Average diluted shares (000s) 40,751 39,365 40,497 39,390
Note 1. To conform to FASB Statement 143, 'Accounting for Asset Retirement
Obligations.'
PERFORMANCE SUMMARY
Wholesale electric gross margin improved 21.3 percent or $4.2 million during the
first quarter compared to the same period in 2003, primarily due to additional
sales under long-term contract, improved short-term prices and sales volumes,
and lower cost of generation at the company's coal-fired generating plants.
Growth in the utility service territory was up 3.5 percent, while generating
costs at the company's San Juan plant fell 10 percent. These positives combined
to more than offset a 4 percent reduction in retail electric rates implemented
in 2003. The Company also benefited from a normal winter season in 2004 compared
to 2003. As a result, retail electric gross margin was $2.4 million higher in
the latest quarter compared to the first quarter of 2003.
Gas gross margin was $5.4 million higher than in the comparable period in 2003,
primarily because of load growth and increased sales volumes due to colder
temperatures in New Mexico during the 2004 period. The first three months of
2003 were unusually warm in New Mexico.
Interest charges were reduced by $4.4 million, primarily due to refinancing of
long-term debt and lower short-term interest rates.
OTHER RECENT SIGNIFICANT DEVELOPMENTS AFFECTING PNM RESOURCES:
o On April 16, PNM entered into a 15-year agreement to transport
natural gas to fuel two power plants operated by the City of
Farmington, N.M. The company estimates the contract will produce
about $550,000 in annual revenues.
o On March 10, Moody's Investors Service upgraded the rating on
debt securities of PNM Resources to Baa2 with a stable outlook.
o On February 27, Standard & Poor's raised the PNM Resources
corporate credit rating to 'BBB,' with a stable outlook from
BBB-. In addition, PNM's commercial paper program is now rated by
both agencies.
4
EXHIBIT 99.1 (Continued)
o On February 17, the PNM Resources Board of Directors approved a
4.3 percent increase in the common stock dividend.
o On January 13, New Mexico regulators approved a $22 million
increase in rates and fees for the PNM gas utility.
Details of these announcements and other PNM Resources news are available at the
company's website, pnm.com.
Earnings Guidance
Based on first quarter results and its financial and operating forecasts for the
remainder of the year, PNM reaffirmed existing earnings guidance for 2004. The
company expects 2004 ongoing earnings (not including one-time gains and charges)
will be in the range of between $1.90 and $2.15 per diluted share.
Earnings Teleconference Scheduled
PNM Resources has scheduled a teleconference for 9:00 a.m. Eastern Time on
Tuesday, April 27, to discuss First Quarter 2004 earnings and other issues of
interest to shareholders and investors. The public is invited to listen to the
teleconference by calling 1- 800-915-4836. A webcast of the teleconference and
an accompanying slide presentation can be accessed through the company's website
at pnm.com. A replay of the conference call will be available beginning at 11:00
a.m. (ET) on April 27 through midnight. (ET) May 3, at 1-800-428-6051 (passcode
I.D. 345458).
PNM Resources is an energy holding company based in Albuquerque, New Mexico.
PNM, the principal subsidiary of PNM Resources, serves about 460,000 natural gas
customers and 400,000 electric customers in New Mexico. The company also sells
power on the wholesale market in the Western U.S. PNM Resources stock is traded
primarily on the NYSE under the symbol PNM. For more information about our
company, see our web site at www.pnm.com.
Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995
Statements made in this news release that relate to future events are made
pursuant to the Private Securities Litigation Reform Act of 1995. These
forward-looking statements are based upon current expectations and 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. Future financial results will be affected by
a number of factors, including interest rates, weather, fuel costs, changes in
supply and demand in the market for electric power, wholesale power prices,
market liquidity, the competitive environment in the electric and natural gas
industries, the performance of generating units and transmission system, state
and federal regulatory and legislative decisions and actions, and the
performance of state, regional and national economies. For a detailed discussion
of the important factors affecting PNM Resources, please see "Management's
Discussion and Analysis of Financial Condition and Results of Operations" in the
Company's Form 10-K for the year ended December 31, 2002, and Form 8-K filings
with the Securities and Exchange Commission.
5
EXHIBIT 99.1 (Continued)
PNM RESOURCES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(Unaudited)
Three Months Ended
March 31,
-------------------------------
2004 2003
--------------- --------------
(In thousands, except
per share amounts)
Operating Revenues:
Electric.............................................. $267,528 $241,378
Gas................................................... 175,874 144,186
Other................................................. 251 60
--------------- --------------
Total operating revenues............................ 443,653 385,624
--------------- --------------
Operating Expenses:
Cost of energy sold................................... 269,767 223,867
Administrative and general............................ 40,374 32,042
Energy production costs............................... 37,554 35,094
Depreciation and amortization......................... 26,137 28,374
Transmission and distribution costs................... 15,492 16,159
Taxes, other than income taxes........................ 9,484 7,786
Income taxes.......................................... 11,311 8,876
--------------- --------------
Total operating expenses............................ 410,119 352,198
--------------- --------------
Operating income.................................... 33,534 33,426
--------------- --------------
Other Income and Deductions:
Other income.......................................... 11,588 11,206
Other deductions...................................... (3,372) (17,912)
Income tax benefit (expense).......................... (2,996) 2,407
--------------- --------------
Net other income and (deductions)................... 5,220 (4,299)
--------------- --------------
Earnings before interest charges.................... 38,754 29,127
--------------- --------------
Interest Charges........................................ 13,829 18,233
Preferred Stock Dividend Requirements................... 147 146
--------------- --------------
Net Earnings Before Cumulative Effect of a Change in
Accounting Principle................................. 24,778 10,748
Cumulative Effect of a Change in Accounting Principle,
Net of Tax of $24,524................................ - 37,422
--------------- --------------
Net Earnings............................................ $ 24,778 $ 48,170
=============== ==============
Net Earnings per Common Share:
Basic................................................. $ 0.62 $ 1.23
=============== ==============
Diluted............................................... $ 0.61 $ 1.22
=============== ==============
Dividends Paid per Common Share......................... $ 0.23 $ 0.22
=============== ==============
The accompanying notes are an integral part of these
financial statements.
6
EXHIBIT 99.1 (Continued)
The following table shows electric revenues by customer class and average
customers:
Electric Revenues
Three Months Ended
March 31,
2004 2003 Variance
------------- ------------- --------------
(In thousands)
Residential................ $ 54,132 $ 51,008 $ 3,124
Commercial................. 56,751 55,061 1,690
Industrial................. 14,887 15,913 (1,026)
Other...................... 4,266 4,222 44
------------- ------------- --------------
$ 130,036 $ 126,204 $ 3,832
============= ============= ==============
Average customers.......... 403,245 392,529 10,716
============= ============= ==============
The following table shows electric sales by customer class:
Electric Sales
Three Months Ended
March 31,
2004 2003 Variance
------------- ------------- --------------
(Megawatt hours)
Residential............... 655,484 592,860 62,624
Commercial................ 776,842 720,137 56,705
Industrial................ 310,675 317,408 (6,733)
Other..................... 50,689 50,176 513
------------- ------------- --------------
1,793,690 1,680,581 113,109
============= ============= ==============
The following table shows gas revenues by customer and average customers:
Gas Revenues
Three Months Ended
March 31,
2004 2003 Variance
------------- ------------- --------------
(In thousands)
Residential............... $115,738 $ 96,400 $19,338
Commercial................ 36,156 29,928 6,228
Industrial................ 668 1,031 (363)
Transportation*........... 4,304 3,745 559
Other..................... 19,008 13,082 5,926
------------- ------------- --------------
$175,874 $144,186 $31,688
============= ============= ==============
Average customers......... 461,128 452,167 8,961
============= ============= ==============
7
EXHIBIT 99.1 (Continued)
The following table shows gas throughput by customer class:
Gas Throughput
Three Months Ended
March 31,
2004 2003 Variance
------------- ------------- --------------
(Thousands of decatherms)
Residential............... 14,014 12,206 1,808
Commercial................ 4,818 4,334 484
Industrial................ 104 186 (82)
Transportation*........... 7,720 8,635 (915)
Other..................... 3,058 1,943 1,115
------------- ------------- --------------
29,714 27,304 2,410
============= ============= ==============
*Customer-owned gas
Electric Transmission Revenues
Three Months Ended
March 31,
2004 2003 Variance
--------------------------------------------
(In thousands)
External customers........ $ 4,414 $ 4,557 $ (143)
============= ============= ==============
The following table shows revenues by customer class:
Wholesale Revenues
Three Months Ended
March 31,
2004 2003 Variance
------------- ------------- --------------
(In thousands)
Long-term contracts*...... $ 37,545 $29,018 $8,527
Forward sales*............ 27,961 22,938 5,023
Short-term sales.......... 68,266 58,661 9,605
------------- ------------- --------------
$133,772 $ 110,617 $23,155
============= ============= ==============
*Includes mark-to-market gains/(losses).
Note: For comparative purposes, wholesale revenues for the three months
ended March 31, 2004 have not been reclassified to a net margin basis in
accordance with GAAP. The impact would be to reduce 2004 forward sales
revenue by $0.7 million.
8
EXHIBIT 99.1 (Continued)
The following table shows sales by customer class:
Wholesale Sales
Three Months Ended
March 31,
2004 2003 Variance
------------- ------------- --------------
(Megawatt hours)
Long-term contracts....... 714,421 555,673 158,748
Forward sales............. 623,160 588,080 35,080
Short-term sales.......... 1,643,685 1,430,858 212,827
------------- ------------- --------------
2,981,266 2,574,611 406,655
============= ============= ==============
9
SIGNATURES
----------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrants have duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
PNM RESOURCES, INC. AND
PUBLIC SERVICE COMPANY OF NEW MEXICO
---------------------------------------------
(Registrants)
Date: April 30, 2004 /s/ Thomas G. Sategna
---------------------------------------------
Thomas G. Sategna
Vice President and Corporate Controller
(Officer duly authorized to sign this report)
10