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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 June 30, 2003

 

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.

 

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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, 2003

 

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, 2003 and 2002    3
         Consolidated Statements of Comprehensive Income (Loss) Three and Six Month Periods Ended June 30, 2003 and 2002    4
         Consolidated Statements of Cash Flows Six Month Periods Ended June 30, 2003 and 2002    5
         Consolidated Balance Sheets June 30, 2003, and December 31, 2002    6
   

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

     
         Consolidated Statements of Income Three and Six Month Periods Ended June 30, 2003 and 2002    7
         Consolidated Statements of Comprehensive Income Three and Six Month Periods Ended June 30, 2003 and 2002    8
         Consolidated Statements of Cash Flows Six Month Periods Ended June 30, 2003 and 2002    9
         Consolidated Balance Sheets June 30, 2003, and December 31, 2002    10
   

Notes to Consolidated Financial Statements

   11

Item 2.

  

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

   21

Item 4.

  

Controls and Procedures

   32
     PART 2. OTHER INFORMATION     

Item 1.

  

Legal Proceedings

   33

Item 6.

  

Exhibits and Reports on Form 8-K

   33
    (a)    Exhibit Index    33
   

(b)

    Reports on Form 8-K    33
    Statement Regarding Forward Looking Information    33
Signature page         34

Certifications

         35

 

-2-

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TNP ENTERPRISES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME (LOSS)

(Unaudited)

 

     Three Months Ended June 30,
     Six Months Ended June 30,
  
     2003
     2002
     2003
     2002
  
     (In thousands)  

OPERATING REVENUES

    $ 223,525     $ 173,376     $ 407,246     $ 294,041  
    
 
 
 

OPERATING EXPENSES:

                                 

Purchased power and fuel

      138,024       87,598       274,993       141,853  

Other operating and maintenance

      54,948       41,722       107,010       71,053  

Accrual for payment to TNMP (Note 2)

      419       —         419       —    

Depreciation

      7,196       7,026       14,320       14,048  

Credit for recovery of stranded plant

      —         —         —         (733 )

Taxes other than income taxes

      6,939       7,739       13,709       15,807  
    
 
 
 

Total operating expenses

      207,526       144,085       410,451       242,028  
    
 
 
 

OPERATING INCOME (LOSS)

      15,999       29,291       (3,205 )     52,013  
    
 
 
 

INTEREST CHARGES AND OTHER INCOME AND DEDUCTIONS:

                                 

Interest on long-term debt

      16,065       13,725       28,499       27,444  

Other interest and amortization of debt-related costs

      2,249       1,326       3,366       2,602  

Other income and deductions, net

      (505 )     (185 )     (875 )     (287 )
    
 
 
 

Total

      17,809       14,866       30,990       29,759  
    
 
 
 

INCOME (LOSS) BEFORE INCOME TAXES

      (1,810 )     14,425       (34,195 )     22,254  

Income taxes

      (792 )     5,210       (13,151 )     7,870  
    
 
 
 

NET INCOME (LOSS)

      (1,018 )     9,215       (21,044 )     14,384  

Dividends on preferred stock and other

      5,515       4,808       10,664       9,299  
    
 
 
 

INCOME (LOSS) APPLICABLE TO COMMON STOCK

    $ (6,533 )   $ 4,407     $ (31,708 )   $ 5,085  
    
 
 
 

 

The accompanying notes are an integral part of these consolidated financial statements.

 

-3-

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TNP ENTERPRISES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(Unaudited)

 

     Three Months Ended June 30,
      Six Months Ended June 30,
     2003
     2002
      2003
     2002
     (In thousands)

NET INCOME (LOSS)

    $ (1,018 )   $ 9,215      $ (21,044 )   $ 14,384
    
 
    
 

Cash flow hedges, net of tax:

                                

Interest rate hedge, net of reclassification adjustment (Note 4)

      (990 )     —          (1,635 )     —  

Gas hedge

      762       —          (2,262 )     —  
    
 
    
 

Total cash flow hedges

      (228 )     —          (3,897 )     —  
    
 
    
 

COMPREHENSIVE INCOME (LOSS)

    $ (1,246 )   $ 9,215      $ (24,941 )   $ 14,384
    
 
    
 

 

The accompanying notes are an integral part of these consolidated financial statements.

 

-4-

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TNP ENTERPRISES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

 

     Six Months Ended June 30,
  
     2003
     2002
  
    

(In thousands)

  

CASH FLOWS FROM OPERATING ACTIVITIES:

                 

Cash received from sales to customers

    $ 362,723     $ 202,448  

Purchased power and fuel costs paid

      (233,001 )     (138,283 )

Natural gas option premiums paid

      (19,147 )     —    

Cash paid for payroll and to other suppliers

      (92,703 )     (57,230 )

Interest paid, net of amounts capitalized

      (32,137 )     (28,707 )

Income taxes received (paid)

      1,044       (3,292 )

Other taxes paid

      (15,468 )     (21,997 )

Other operating cash receipts and payments, net

      104       (71 )
    
 

NET CASH USED IN OPERATING ACTIVITIES

      (28,585 )     (47,132 )
    
 

CASH FLOWS FROM INVESTING ACTIVITIES:

                 

Additions to utility plant and other investing activities

      (20,075 )     (14,827 )
    
 

NET CASH USED IN INVESTING ACTIVITIES

      (20,075 )     (14,827 )
    
 

CASH FLOWS FROM FINANCING ACTIVITIES:

                 

Issuance of TNMP senior notes, net of discount

      248,923       —    

Borrowings from (repayments to) TNMP/First Choice credit facility—net

      (164,000 )     67,000  

Other

      —         (5,839 )

Redemptions:

                 

TNP term loan

      (800 )     (800 )

Deferred costs associated with financings

      (2,332 )     —    
    
 

NET CASH PROVIDED BY FINANCING ACTIVITIES

      81,791       60,361  
    
 

NET CHANGE IN CASH AND CASH EQUIVALENTS

      33,131       (1,598 )

CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD

      16,690       14,145  
    
 

CASH AND CASH EQUIVALENTS AT END OF PERIOD

    $ 49,821     $ 12,547  
    
 

RECONCILIATION OF NET INCOME (LOSS) TO NET

                 

CASH USED IN OPERATING ACTIVITIES:

                 

Net income (loss)

    $ (21,044 )   $ 14,384  

Adjustments to reconcile net income (loss) to net cash used in operating activities:

                 

Accrual for payment to TNMP

      419       —    

Depreciation

      14,320       14,048  

Credit for recovery of stranded plant

      —         (733 )

Amortization of debt-related costs and other deferred charges

      3,205       2,111  

Allowance for funds used during construction

      (457 )     (161 )

Deferred income taxes

      118       5,487  

Investment tax credits

      (397 )     (780 )

Deferred purchased power and fuel costs

      1,324       10,641  

Cash flows impacted by changes in current assets and liabilities: