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) October 31, 2003
----------------------
(October 30, 2003)
----------------------
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 October 30, 2003, PNM Resources, Inc. (the "Company") issued a press
release announcing its unaudited results of operations for the three and nine
months ended September 30, 2003. 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 October 30, 2003, PNM Resources, Inc. and
Subsidiaries Consolidated Statements of Earnings for the three
and nine months ended September 30, 2003 and 2002 and other
select financial information.
2
EXHIBIT 99.1
PNM Resources Reports Third Quarter Earnings
Highlights:
o Third Quarter 2003 GAAP earnings of $0.41 per diluted share,
compared to $0.45 per diluted share in the third quarter of 2002.
o Latest quarter includes a one-time charge of $0.24 per share due
to cost associated with early retirement of debt.
o Ongoing earnings for third quarter 2003 were $0.65 per share, up
10 percent or $0.06 per share over the comparable three months in
2002.
o Gas utility operations lost $0.12 per share in the most recent
quarter, compared to a loss of $0.10 in the third quarter of
2002. A proposed settlement of PNM's pending gas rate case is
awaiting decision from the New Mexico Public Regulation
Commission.
o Total operating revenues rose $110.5 million, or 40 percent, to
$385.2 million for the latest quarter.
o Wholesale power revenues increased $73.0 million, or 72.1
percent, in the most recent quarter.
o Gross operating margin improved $13.9 million or 8.9 percent, to
$170.7 million for third quarter 2003, compared to $156.8 million
in the third quarter 2002.
o Gross margin on wholesale power sales increased 47.2 percent, to
$27.1 million in the latest quarter, primarily due to additional
long term power sales.
o Gross margin on PNM utility operations rose $5.6 million or 4.1
percent over the comparable period last year, to $143.7 million
in the latest quarter.
ALBUQUERQUE, N.M., October 30, 2003 - PNM Resources (NYSE: PNM) today reported
ongoing earnings (before including one-time gains or charges) of $0.65 per share
in the third quarter 2003, compared to $0.59 per share in the same period last
year. Consolidated GAAP earnings were $16.6 million, or $0.41 per share
(diluted), for the three months ended September 30, 2003. In the comparable
period in 2002, the company reported consolidated net earnings of $17.7 million,
or $0.45 per diluted share.
A one-time charge of $0.24 per share was recorded in the latest quarter. In the
comparable period last year, PNM Resources reported a one-time charge of $0.14
per share.
3
EXHIBIT 99.1 (Continued)
GAAP net earnings of $2.06 per diluted common share for the nine months ended
September 30, 2003, included a one-time gain of $0.94 per share (the cumulative
effect of a change in accounting principle) and one-time charges of $0.51 per
share, increasing earnings by a net of $0.43 per share. Ongoing earnings for the
first three quarters of 2003 were $1.63 per diluted share, compared to ongoing
earnings of $1.49 per diluted share in the first nine months of 2002.
PNM Resources, Inc.
Reconciliation of GAAP Reported to Ongoing Earnings Per Share
September 30, 2003
Three Months Nine Months Twelve Months
Q3 2003 Q3 2002 9/30/03 9/30/02 9/30/03 9/30/02
------- ------- ------- -------- ------- -------
GAAP Reported EPS $0.41 $0.45 $2.06 $1.35 $2.33 $1.46
One-time charges 0.24 0.14 0.51 0.14 0.74 0.27
Change in Accounting (1) -- -- (0.94) -- (0.99) --
------- ------- ------- -------- ------- -------
Ongoing earnings $0.65 $0.59 $1.63 $1.49 $2.08 $1.73
Average diluted shares (000s) 40,706 39,325 39,936 39,484 39,795 39,502
"Our success in expanding our long-term wholesale contract business over the
past year has been an important factor in improving PNM earnings in 2003," said
PNM Resources Chairman, President and Chief Executive Officer Jeff Sterba.
"Electric utility earnings were also up for the quarter, but our gas utility
continues to underperform. Losses in our gas utility increased 20 percent in
this latest quarter compared to last year. The company is awaiting commission
action on the negotiated settlement of our pending rate increase."
PERFORMANCE SUMMARY
Consolidated gross margin (operating revenues less cost of energy) for the
quarter increased $13.9 million, or about 8.9 percent, to $170.7 million in the
most recent quarter, compared to $156.8 million in the third quarter of 2002.
Retail electric gross margin increased $4.3 million, or 4.2 percent, to $104.8
million for the quarter, compared to $100.5 million in the third quarter last
year. An increase in operating revenues due to growth in the PNM service
territory and warmer weather in the third quarter 2003 compared to the same
period last year was partially offset by the transfer of a large retail customer
to wholesale status, and by a reduction in retail electric rates implemented in
September 2003.
Gross margin on wholesale electric sales increased $8.7 million, or 47.2
percent, to $27.1 million for the third quarter 2003, compared to $18.4 million
in the third quarter 2002. Long-term contract sales revenues increased by $28.7
million, to $41.3 million for the quarter, primarily due to the addition of
several new contracts in 2003. Short-term and forward contract wholesale
revenues increased from $88.5 million in the third quarter of 2002 to $132.8
million in the latest quarter, primarily due to higher average prices and
increased sales volume in 2003.
4
EXHIBIT 99.1 (Continued)
ONE-TIME AND NON-RECURRING GAINS AND CHARGES
Third quarter 2003 results included a one time charge of $16.6 million, or $0.24
per share, reflecting the cost of refinancing long-term debt.
OTHER RECENT SIGNIFICANT DEVELOPMENTS AFFECTING PNM RESOURCES:
o In October, PNM announced an agreement to sell 50MW of energy,
together with renewable energy credits, in the third quarter of
each year from 2004-2008 to Salt River Project in Arizona.
o In September, PNM entered into a contract to supply from 15 to 25
MW of power to Overton Power District Number 5 in Nevada.
o Also in September, PNM issued $300 million in Senior Unsecured
Notes to replace $268 million in existing debt in a transaction
expected to save about $5 million annually in interest expense.
o In October, the company proposed deferring the residential
portion of a $22 million increase in gas revenues (including $20
million in gas service rates and $1.6 million in a tariff for
miscellaneous charges) until the spring and summer of 2004. The
increase, part of a negotiated settlement of PNM's pending gas
rate case, was originally planned to take effect in November
2003.
Details of these announcements and other PNM Resources news are available at the
company's website, pnm.com.
EARNINGS GUIDANCE UNCHANGED FOR 2003
Based on results for the first three quarters of 2003 and its financial and
operating forecasts for the remainder of the year, the company today reaffirmed
existing earnings guidance for 2003. The company expects 2003 ongoing earnings
(not including one-time gains and charges) will be between $1.80 and $2.05 per
diluted share.
EARNINGS TELECONFERENCE SCHEDULED
PNM Resources has scheduled a teleconference for 9:00 a.m. Eastern Time on
October 31, 2003, to discuss Third Quarter 2003 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 after 8:45 a.m. ET. A webcast of the
teleconference can be accessed through a link on the company's website at
pnm.com. A presentation that will accompany the teleconference is also available
at pnm.com.
PNM Resources is an energy holding company based in Albuquerque, New Mexico.
PNM, the principal subsidiary of PNM Resources, serves about 450,000 natural gas
customers and 390,000 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.
5
EXHIBIT 99.1 (Continued)
Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995
--------------------------------------------------------------------------------
Statements made in this filing and documents the Company files with the SEC that
relate to future events or the Company expectations, projections, estimates,
intentions, goals, targets and strategies are made pursuant to the Private
Securities Litigation Reform Act of 1995. You are cautioned that all
forward-looking statements are based upon current expectations and estimates and
we assume no obligation to update this information. Because actual results may
differ materially from those expressed or implied by the forward-looking
statements, the Company cautions you not to place undue reliance on these
statements. Many factors could cause actual results to differ, and will affect
the Company's future financial condition, cash flow and operating results. These
factors include 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, the outcome of
legal proceedings and the performance of state, regional and national economies.
For a detailed discussion of the important factors that affect the Company and
that could cause actual results to differ from those expressed or implied by our
forward-looking statements, please see "Management's Discussion and Analysis of
Financial Condition and Results of Operations" in the Company's current and
future Annual Reports on Form 10-K and Quarterly Reports on Form 10-Q and the
Company's current and future Current Reports on Form 8-K, filed with the SEC.
6
EXHIBIT 99.1 (Continued)
PNM RESOURCES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
--------------------------- --------------------------
2003 2002 2003 2002
------------ ------------ ------------ ------------
(In thousands, except per share amounts)
Operating Revenues:
Electric..................................... $337,198 $238,096 $844,726 $636,017
Gas.......................................... 47,938 36,244 268,200 189,413
Unregulated businesses....................... 25 335 137 1,252
------------ ------------ ------------ ------------
Total operating revenues................... 385,161 274,675 1,113,063 826,682
------------ ------------ ------------ ------------
Operating Expenses:
Cost of energy sold.......................... 214,416 117,899 615,685 369,887
Administrative and general................... 38,599 38,787 113,241 106,494
Energy production costs...................... 34,217 35,238 103,826 104,411
Depreciation and amortization................ 29,260 25,780 86,484 75,776
Transmission and distribution costs.......... 15,150 15,949 46,503 47,937
Taxes, other than income taxes............... 7,439 7,077 21,945 24,589
Income taxes................................. 10,199 4,810 26,158 16,317
------------ ------------ ------------ ------------
Total operating expenses................... 349,280 245,540 1,013,842 745,411
------------ ------------ ------------ ------------
Operating income........................... 35,881 29,135 99,221 81,271
------------ ------------ ------------ ------------
Other Income and Deductions:
Other income................................. 15,455 13,801 39,406 39,252
Other deductions............................. (18,761) (6,842) (40,693) (10,234)
Income tax expense........................... 1,193 (2,541) 468 (10,815)
------------ ------------ ------------ ------------
Net other income and deductions............ (2,113) 4,418 (819) 18,203
------------ ------------ ------------ ------------
Income before interest charges............. 33,768 33,553 98,402 99,474
Interest Charges............................... 17,053 15,756 53,050 45,571
Preferred Stock Dividend Requirements
of Subsidiary............................... 147 147 440 440
------------ ------------ ------------ ------------
Net Earnings from Operations................... 16,568 17,650 44,912 53,463
------------ ------------ ------------ ------------
Cumulative Effect of a Change in Accounting
Principle, Net of Tax of $24,524............ - - 37,422 -
------------ ------------ ------------ ------------
Net Earnings................................... $ 16,568 $ 17,650 $ 82,334 $ 53,463
============ ============ ============ ============
Net Earnings per Common Share:
Basic........................................ $ 0.41 $ 0.45 $ 2.08 $ 1.37
============ ============ ============ ============
Diluted...................................... $ 0.41 $ 0.45 $ 2.06 $ 1.35
============ ============ ============ ============
Dividends Paid per Share of Common Stock....... $ 0.23 $ 0.22 $ 0.68 $ 0.64
============ ============ ============ ============
7
EXHIBIT 99.1 (Continued)
PNM RESOURCES, INC. AND SUBSIDIARIES
COMPARATIVE OPERATING STATISTICS
The following tables show electric revenues by customer class and average
customers:
Electric Retail Revenues
Three Months Ended
September 30,
2003 2002 Variance
------------- ------------- --------------
(In thousands)
Residential.............. $58,301 $53,213 $5,088
Commercial............... 73,918 69,800 4,118
Industrial............... 16,689 21,819 (5,130)
Other.................... 5,838 5,838 -
------------- ------------- --------------
$154,746 $150,670 $4,076
============= ============= ==============
Average customers........ 397,489 385,468 12,021
============= ============= ==============
Nine Months Ended
September 30,
2003 2002 Variance
------------- ------------- --------------
(In thousands)
Residential............. $156,135 $149,631 $6,504
Commercial.............. 192,008 187,382 4,626
Industrial.............. 51,791 62,239 (10,448)
Other................... 14,947 15,174 (227)
------------- ------------- --------------
$414,881 $414,426 $ 455
============= ============= ==============
Average customers....... 394,878 383,572 11,306
============= ============= ==============
8
EXHIBIT 99.1 (Continued)
PNM RESOURCES, INC. AND SUBSIDIARIES
COMPARATIVE OPERATING STATISTICS
The following tables show electric sales by customer class:
Electric Sales
Three Months Ended
September 30,
2003 2002 Variance
------------- ------------- --------------
(Megawatt hours)
Residential............ 688,617 620,299 68,318
Commercial............. 995,470 928,250 67,220
Industrial............. 332,747 427,481 (94,734)
Other.................. 76,305 80,711 (4,406)
------------- ------------- --------------
2,093,139 2,056,741 36,398
============= ============= ==============
Nine Months Ended
September 30,
2003 2002 Variance
------------- ------------- --------------
(Megawatt hours)
Residential............ 1,827,897 1,743,712 84,185
Commercial............. 2,546,486 2,462,727 83,759
Industrial............. 1,029,625 1,225,398 (195,773)
Other.................. 189,612 203,736 (14,124)
------------- ------------- --------------
5,593,620 5,635,573 (41,953)
============= ============= ==============
9
EXHIBIT 99.1 (Continued)
PNM RESOURCES, INC. AND SUBSIDIARIES
COMPARATIVE OPERATING STATISTICS
The following tables show gas revenues by customer and average customers:
Gas Revenues
Three Months Ended
September 30,
2003 2002 Variance
------------- ------------- --------------
(In thousands)
Residential............ $25,852 $20,550 $5,302
Commercial............. 9,281 6,249 3,032
Industrial............. 391 348 43
Transportation*........ 5,584 4,941 643
Other.................. 6,830 4,156 2,674
------------- ------------- --------------
$47,938 $36,244 $11,694
============= ============= ==============
Average customers...... 450,378 439,638 10,740
============= ============= ==============
Nine Months Ended
September 30,
2003 2002 Variance
------------- ------------- --------------
(In thousands)
Residential............ $168,525 $118,274 $50,251
Commercial............. 54,844 36,839 18,005
Industrial............. 1,856 1,412 444
Transportation*........ 15,339 13,686 1,653
Other.................. 27,636 19,202 8,434
------------- ------------- --------------
$268,200 $189,413 $78,787
============= ============= ==============
Average customers...... 451,164 442,360 8,804
============= ============= ==============
*Customer-owned gas.
10
EXHIBIT 99.1 (Continued)
PNM RESOURCES, INC. AND SUBSIDIARIES
COMPARATIVE OPERATING STATISTICS
The following tables show gas throughput by customer class:
Gas Throughput
Three Months Ended
September 30,
2003 2002 Variance
------------- ------------- --------------
(Thousands of decatherms)
Residential............. 2,212 2,291 (79)
Commercial.............. 1,306 1,263 43
Industrial.............. 62 94 (32)
Transportation*......... 17,613 13,753 3,860
Other................... 955 800 155
------------- ------------- --------------
22,148 18,201 3,947
============= ============= ==============
Nine Months Ended
September 30,
2003 2002 Variance
------------- ------------- --------------
(Thousands of decatherms)
Residential............. 18,069 18,791 (722)
Commercial.............. 7,281 7,827 (546)
Industrial.............. 318 390 (72)
Transportation*......... 42,703 35,226 7,477
Other................... 3,924 3,904 20
------------- ------------- --------------
72,295 66,138 6,157
============= ============= ==============
*Customer-owned gas.
Electric Transmission Revenues
Three Months Ended
September 30,
2003 2002 Variance
------------- ------------- --------------
(In thousands)
External customers....... $ 8,920 $ 5,693 $ 3,227
============= ============= ==============
Nine Months Ended
September 30,
2003 2002 Variance
------------- ------------- --------------
(In thousands)
External customers....... $ 15,794 $ 17,504 $(1,710)
============= ============= ==============
11
EXHIBIT 99.1 (Continued)
PNM RESOURCES, INC. AND SUBSIDIARIES
COMPARATIVE OPERATING STATISTICS
The following tables show revenues by customer class:
Wholesale Revenues
Three Months Ended
September 30,
2003 2002 Variance
------------- ------------- --------------
(In thousands)
Long-term contracts.... $40,702 $12,682 $28,020
Forward sales*......... 58,708 18,792 39,916
Short-term sales....... 74,122 69,722 4,400
------------- ------------- --------------
$173,532 $101,196 $72,336
============= ============= ==============
Nine Months Ended
June 30,
2003 2002 Variance
------------- ------------- --------------
(In thousands)
Long-term contracts.... $100,488 $45,742 $54,746
Forward sales*......... 125,656 56,942 68,714
Short-term sales....... 187,907 156,298 31,609
------------- ------------- --------------
$414,051 $258,982 $155,069
============= ============= ==============
*Includes mark-to-market gains/(losses).
Note: For comparative purposes, wholesale revenues for the three months
and nine months ended September 30, 2002 included in these comparative
operating statistics have not been reclassified to a net margin basis in
accordance with GAAP. The impact would be to reduce 2002 forward sales
revenue by $19.5 million and $54.9 million, respectively. These GAAP
adjustments are included in the statement of earnings.
12
EXHIBIT 99.1 (Continued)
PNM RESOURCES, INC. AND SUBSIDIARIES
COMPARATIVE OPERATING STATISTICS
The following tables show sales by customer class:
Wholesale Sales
Three Months Ended
September 30,
2003 2002 Variance
------------- ------------- --------------
(Megawatt hours)
Long-term contracts..... 730,536 160,947 569,589
Forward sales........... 1,063,000 292,640 770,360
Short-term sales........ 1,514,924 2,013,673 (498,749)
------------- ------------- --------------
3,308,460 2,467,260 841,200
============= ============= ==============
Nine Months Ended
September 30,
2003 2002 Variance
------------- ------------- ---------------
(Megawatt hours)
Long-term contracts..... 1,792,653 669,100 1,123,553
Forward sales........... 2,580,380 945,620 1,634,760
Short-term sales........ 4,323,668 5,623,388 (1,299,720)
------------- ------------- ---------------
8,696,701 7,238,108 1,458,593
============= ============= ===============
13
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.
PNM RESOURCES, INC. AND
PUBLIC SERVICE COMPANY OF NEW MEXICO
--------------------------------------------
(Registrant)
Date: October 31, 2003 /s/ Robin A. Lumney
--------------------------------------------
Robin A. Lumney
Vice President, Controller
and Chief Accounting Officer
(Officer duly authorized to sign this report)
14