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Table of Contents
 
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
 
FORM 10-Q
 
(Mark One)
 
x
 
COMBINED QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the quarterly period ended September 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
  
75-1907501
(State of incorporation)
  
(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
  
75-0204070
(State of incorporation)
  
(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.
 

Table of Contents
TNP Enterprises, Inc. And Subsidiaries
Texas New-Mexico Power Company and Subsidiaries
Combined Quarterly Report on Form 10-Q for the period ended September 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.
        
    
TNP Enterprises, Inc. (TNP) and Subsidiaries:
     
       
3
       
4
       
5
    
Texas-New Mexico Power Company (TNMP) and Subsidiaries:
     
       
6
       
7
       
8
       
9
Item 2.
      
16
Item 4.
      
23
PART 2.    OTHER INFORMATION
     
Item 1.
      
23
Item 6.
      
23
    
(a)     Exhibit Index
  
23
       
23
       
24
  
24
  
25

-2-

Table of Contents
 
TNP ENTERPRISES, INC. AND SUBSIDIARIES
 
CONSOLIDATED STATEMENTS OF INCOME (LOSS)
(Unaudited)
 
    
Three Months Ended September 30,
     
Nine Months Ended September 30,
  
    
2002
   
2001
     
2002
     
2001
  
    
(In thousands)
  
OPERATING REVENUES
   
$
229,161
   
$
186,309
 
   
$
523,202
 
   
$
515,998
 
    
  
  
  
OPERATING EXPENSES:
                                  
Purchased power and fuel
   
 
108,642
   
 
98,472
 
   
 
250,495
 
   
 
293,783
 
Other operating and maintenance
   
 
51,676
   
 
28,310
 
   
 
122,730
 
   
 
80,856
 
Depreciation and amortization
   
 
6,857
   
 
13,540
 
   
 
20,904
 
   
 
40,468
 
Charge for recovery of stranded plant
   
 
—  
   
 
(2,188
)
   
 
(733
)
   
 
3,581
 
Taxes other than income taxes
   
 
9,245
   
 
10,296
 
   
 
25,051
 
   
 
27,337
 
    
  
  
  
Total operating expenses
   
 
176,420
   
 
148,430
 
   
 
418,447
 
   
 
446,025
 
    
  
  
  
OPERATING INCOME
   
 
52,741
   
 
37,879
 
   
 
104,755
 
   
 
69,973
 
Other income and deductions, net
   
 
19
   
 
242
 
   
 
306
 
   
 
1,302
 
    
  
  
  
INCOME BEFORE INTEREST CHARGES AND INCOME TAXES
   
 
52,760
   
 
38,121
 
   
 
105,061
 
   
 
71,275
 
    
  
  
  
INTEREST CHARGES:
                                  
Interest on long-term debt
   
 
13,589
   
 
15,370
 
   
 
41,033
 
   
 
49,936
 
Other interest and amortization of debt-related costs
   
 
1,918
   
 
1,434
 
   
 
4,520
 
   
 
3,716
 
    
  
  
  
Total interest charges
   
 
15,507
   
 
16,804
 
   
 
45,553
 
   
 
53,652
 
    
  
  
  
INCOME BEFORE INCOME TAXES
   
 
37,253
   
 
21,317
 
   
 
59,508
 
   
 
17,623
 
Income taxes
   
 
13,922
   
 
8,823
 
   
 
21,792
 
   
 
8,157
 
    
  
  
  
INCOME BEFORE CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING
   
 
23,331
   
 
12,494
 
   
 
37,716
 
   
 
9,466
 
Cumulative effect of change in accounting for major maintenance costs, net of taxes (Note 3)
   
 
—  
   
 
—  
 
   
 
—  
 
   
 
(1,170
)
    
  
  
  
NET INCOME
   
 
23,331
   
 
12,494
 
   
 
37,716
 
   
 
8,296
 
Dividends on preferred stock and other
   
 
4,808
   
 
4,195
 
   
 
14,108
 
   
 
12,308
 
    
  
  
  
INCOME (LOSS) APPLICABLE TO COMMON STOCK
   
$
18,523
   
$
8,299
 
   
$
23,608
 
   
$
(4,012
)
    
  
  
  
 
The accompanying notes are an integral part of these consolidated financial statements.

-3-

Table of Contents
 
TNP ENTERPRISES, INC. AND SUBSIDIARIES
 
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
 
    
Nine Months Ended September 30,
  
    
2002
     
2001
  
    
(In thousands)
  
CASH FLOWS FROM OPERATING ACTIVITIES:
                  
Cash received from sales to customers
   
$
395,229
 
   
$
552,548
 
Purchased power and fuel costs paid
   
 
(240,935
)
   
 
(293,522
)
Cash paid for payroll and to other suppliers
   
 
(95,864
)
   
 
(70,897
)
Interest paid, net of amounts capitalized
   
 
(37,991
)
   
 
(45,862
)
Income taxes paid
   
 
(3,848
)
   
 
(4,402
)
Other taxes paid
   
 
(27,118
)
   
 
(27,296
)
Other operating cash receipts and payments, net
   
 
(106
)
   
 
92
 
    
  
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES
   
 
(10,633
)
   
 
110,661
 
    
  
CASH FLOWS FROM INVESTING ACTIVITIES:
                  
Additions to utility plant
   
 
(25,495
)
   
 
(26,719
)
Other investing activities
   
 
—  
 
   
 
(912
)
    
  
NET CASH USED IN INVESTING ACTIVITIES
   
 
(25,495
)
   
 
(27,631
)
    
  
CASH FLOWS FROM FINANCING ACTIVITIES:
                  
Borrowings from (repayments to) revolving credit facilities—net
                 
TNMP/FCP $325 million facility
   
 
56,000
 
   
 
(72,000
)
Other
   
 
(5,839
)
   
 
—  
 
Financing costs
   
 
(570
)
   
 
(109
)
Redemptions:
                  
TNP term loan
   
 
(1,200
)
   
 
(1,200
)
    
  
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES
   
 
48,391
 
   
 
(73,309
)
    
  
NET CHANGE IN CASH AND CASH EQUIVALENTS
   
 
12,263
 
   
 
9,721
 
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD
   
 
14,145
 
   
 
8,110
 
    
  
CASH AND CASH EQUIVALENTS AT END OF PERIOD
   
$
26,408
 
   
$
17,831
 
    
  
RECONCILIATION OF NET INCOME TO NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES:
                  
Net income
   
$
37,716
 
   
$
8,296
 
Adjustments to reconcile net income 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
   
 
20,904
 
   
 
40,468
 
Charge for recovery of stranded plant
   
 
(733
)
   
 
3,581
 
Amortization of debt-related costs and other deferred charges
   
 
3,738
 
   
 
3,131
 
Allowance for funds used during construction
   
 
(309
)
   
 
(197
)
Deferred income taxes
   
 
13,827
 
   
 
(6,657
)
Investment tax credits
   
 
(2,352
)
   
 
(374
)
Deferred purchased power and fuel costs
   
 
11,756
 
   
 
39,201
 
Cash flows impacted by changes in current assets and liabilities:
                  
Accounts receivable
   
 
(116,795
)
   
 
11,795
 
Accounts payable
   
 
22,249
 
   
 
(3,007
)
Accrued interest
   
 
3,336
 
   
 
4,800
 
Accrued taxes
   
 
4,624
 
   
 
12,280
 
Changes in other current assets and liabilities
   
 
(9,328
)
   
 
708
 
Other, net
   
 
734
 
   
 
(4,534
)
    
  
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES
   
$
(10,633
)
   
$
110,661
 
    
  
 
The accompanying notes are an integral part of these consolidated financial statements.

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Table of Contents
 
TNP ENTERPRISES, INC. AND SUBSIDIARIES
 
CONSOLIDATED BALANCE SHEETS