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

FORM 10-Q
 

(Mark One)

(X)   COMBINED ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

  

For the quarterly period ended June 30, 2002
 

or

  

(  )   TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
        

For the transition period from            to           
 

____________________________________________________________________________________________________________

Commission File Number: 1-8847

 

TNP ENTERPRISES, INC.
(Exact name of registrant as specified in its charter)

  

      Texas      
(State of Incorporation)

  

            75-1907501             
(I.R.S. employer identification number)
     
 

4100 International Plaza, P. O. Box 2943, Fort Worth, Texas 76113
(Address and zip code of principal executive offices)

  
     
 

Registrant's telephone number, including area code: 817-731-0099

  
   

Indicate by check mark whether the 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. Yes \X\  No \  \

TNP Enterprises, Inc. has no publicly traded shares of common stock outstanding.

______________________________________________________________________________________________________________
 

Commission File Number: 2-97230

  
     
 

TEXAS-NEW MEXICO POWER COMPANY
(Exact name of registrant as specified in its charter)

  

      Texas      
(State of Incorporation)

  

            75-0204070             
(I.R.S. employer identification number)
     
 

4100 International Plaza, P. O. Box 2943, Fort Worth, Texas 76113
(Address and zip code of principal executive offices)

  
     
 

Registrant's telephone number, including area code: 817-731-0099

  
     

Indicate by check mark whether the 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. Yes \X\  No \  \

          TNP Enterprises, Inc. holds all 10,705 outstanding common shares of Texas-New Mexico Power Company.

TNP Enterprises, Inc. and Subsidiaries
Texas-New Mexico Power Company and Subsidiaries
Combined Quarterly Report on Form 10-Q for the Period Ended June 30, 2002

        This Combined Quarterly Report on Form 10-Q is filed separately by TNP Enterprises, Inc. and Texas-New Mexico Power Company. Texas-New Mexico Power Company makes no representation as to information relating to TNP Enterprises, Inc., except as it may relate to Texas-New Mexico Power Company, or to any other affiliate or subsidiary of TNP Enterprises, Inc.

TABLE OF CONTENTS                  

PART 1.   FINANCIAL STATEMENTS                

     
 

Item 1.

Financial Statements

  
     
 

TNP Enterprises, Inc. (TNP) and Subsidiaries:

  
     
 

       Consolidated Statements of Income (Loss)

  
 

       Three and Six Month Periods Ended June 30, 2002 and 2001

3
     
 

       Consolidated Statements of Cash Flows

  
 

       Six Month Periods Ended June 30, 2002 and 2001

4
     
 

       Consolidated Balance Sheets

  
 

       June 30, 2002, and December 31, 2001

5
     
 

Texas-New Mexico Power Company (TNMP) and Subsidiaries:

  
     
 

       Consolidated Statements of Income

  
 

       Three and Six Month Periods Ended June 30, 2002 and 2001

6
     
 

       Consolidated Statements of Cash Flows

  
 

       Six Month Periods Ended June 30, 2002 and 2001

7
     
 

       Consolidated Balance Sheets

  
 

       June 30, 2002, and December 31, 2001

8
     

Notes to Consolidated Financial Statements

9
     

Item 2.

Management's Discussion and Analysis of Financial Condition and Results of Operations

15
     

PART 2.    OTHER INFORMATION                

     

Item 1.

Legal Proceedings

21
     

Item 5.

Other Items

21
     

Item 6.

Exhibits and Reports on Form 8-K

21
     
 

(a) Exhibit Index

21
     
 

(b) Reports on Form 8-K

21
     

Statement Regarding Forward Looking Information

22
     

Signature Page

22
     

-2-

TNP ENTERPRISES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME (LOSS)
(Unaudited)
       
        Three Months Ended June 30,
   Six Months Ended June 30,
        2002
   2001
   2002
   2001
  
            (In thousands)      
                       
OPERATING REVENUES $    173,376
  $    161,335
  $    294,041
  $    329,689
 
                       
OPERATING EXPENSES:                
  Purchased power and fuel 87,598   90,735   141,853   195,311  
  Other operating and maintenance 41,722   27,486   71,053   52,545  
  Depreciation and amortization 7,026   13,418   14,048   26,929  
  Charge for recovery of stranded plant -   2,657   (733)   5,768  
  Taxes other than income taxes 7,739
  8,622
  15,807
  17,041
 
      Total operating expenses 144,085
  142,918
  242,028
  297,594
 
                       
OPERATING INCOME 29,291   18,417   52,013   32,095  
Other income and deductions, net 185
  581
  287
  1,060
 
                       
INCOME BEFORE INTEREST CHARGES                
  AND INCOME TAXES 29,476
  18,998
  52,300
  33,155
 
                       
INTEREST CHARGES:                
  Interest on long-term debt 13,725   16,804   27,444   34,566  
  Other interest and amortization of debt-related costs 1,326
  1,148
  2,602
  2,281
 
      Total interest charges 15,051
  17,952
  30,046
  36,847
 
                       
INCOME (LOSS) BEFORE INCOME TAXES 14,425   1,046   22,254   (3,692)  
Income taxes 5,210
  932
  7,870
  (664)
  
                       
INCOME (LOSS) BEFORE CUMULATIVE                
  EFFECT OF CHANGE IN ACCOUNTING 9,215   114   14,384   (3,028)  
Cumulative effect of change in accounting for                
  major maintenance costs, net of taxes (Note 3) -
  -
  -
  (1,170)
  
                       
NET INCOME (LOSS) 9,215   114   14,384   (4,198)  
Dividends on preferred stock and other 4,808
  4,195
  9,299
  8,113
 
                       
INCOME (LOSS) APPLICABLE TO COMMON STOCK $       4,407
  $      (4,081)
   $       5,085
  $    (12,311)
  
                       
                       
The accompanying notes are an integral part of these consolidated financial statements.  
                       
                       

-3-

TNP ENTERPRISES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
     
         
      Six Months Ended June 30,
        2002
   2001
          (In thousands)  
CASH FLOWS FROM OPERATING ACTIVITIES:        
  Cash received from sales to customers   $    202,867   $    363,322
  Purchased power and fuel costs paid   (138,283)   (197,305)
  Cash paid for payroll and to other suppliers   (57,649)   (50,900)
  Interest paid, net of amounts capitalized   (28,707)   (33,507)
  Income taxes paid   (3,292)   (844)
  Other taxes paid   (21,997)   (22,075)
  Other operating cash receipts and payments, net   (71)
  81
             
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES   (47,132)
   58,772
             
CASH FLOWS FROM INVESTING ACTIVITIES:        
  Additions to utility plant   (14,827)   (16,539)
  Other investing activities   -
  (913)
             
NET CASH USED IN INVESTING ACTIVITIES   (14,827)
   (17,452)
             
CASH FLOWS FROM FINANCING ACTIVITIES:        
  Borrowings from (repayments to) revolving credit facilities - net        
    TNMP/FCP $325 million facility   67,000   (37,000)
  Other   (5,839)   -
  Financing costs   -   (109)
  Redemptions:        
    TNP term loan   (800)
   (800)
             
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES   60,361
  (37,909)
             
NET CHANGE IN CASH AND CASH EQUIVALENTS   (1,598)   3,411
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD   14,145
  8,110
CASH AND CASH EQUIVALENTS AT END OF PERIOD   $    12,547
  $    11,521
             
RECONCILIATION OF NET INCOME (LOSS) TO NET        
  CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES:        
Net income (loss)   $    14,384   $    (4,198)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:        
  Cumulative effect of change in accounting for major maintenance costs, net of taxes   -   1,170
  Depreciation and amortization   14,048   26,929
  Charge for recovery of stranded plant   (733)   5,768
  Amortization of debt-related costs and other deferred charges   2,111   2,089
  Allowance for funds used during construction   (161)   (102)
  Deferred income taxes   5,487   (5,915)
  Investment tax credits   (780)   549
  Deferred purchased power and fuel costs   10,641   19,783
             
Cash flows impacted by changes in current assets and liabilities: