UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-Q
(Mark One)
| x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended March 31, 2004
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 ¨
Indicate by check mark whether the registrant is an accelerated filer (as defined in Exchange Act Rule 12b-2). Yes ¨ No x
TNP Enterprises, Inc. has no publicly traded shares of common stock outstanding.
TNP Enterprises, Inc. And Subsidiaries
Quarterly Report on Form 10-Q for the period ended March 31, 2004
TABLE OF CONTENTS
| PART 1. FINANCIAL STATEMENTS | ||||
| Item 1. |
Financial Statements. |
|||
| TNP Enterprises, Inc. (TNP) and Subsidiaries: |
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| Consolidated Statements of Loss Three Month Periods Ended March 31, 2004 and 2003 |
3 | |||
| 4 | ||||
| Consolidated Statements of Cash Flows Three Month Periods Ended March 31, 2004 and 2003 |
5 | |||
| Consolidated Balance Sheets March 31, 2004, and December 31, 2003 |
6 | |||
| 7 | ||||
| Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
15 | ||
| Item 4. |
23 | |||
| PART 2. OTHER INFORMATION | ||||
| Item 1. |
24 | |||
| Item 6. |
24 | |||
| (a) Exhibit Index |
24 | |||
| 24 | ||||
| 24 | ||||
| 25 | ||||
| Certifications |
26 | |||
-2-
TNP ENTERPRISES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF LOSS
(Unaudited)
| Three Months Ended March 31, |
||||||||
| 2004 |
2003 |
|||||||
| (In thousands) | ||||||||
| OPERATING REVENUES |
$ | 162,150 | $ | 183,721 | ||||
| OPERATING EXPENSES: |
||||||||
| Purchased power |
79,037 | 136,969 | ||||||
| Other operating and maintenance |
47,181 | 52,062 | ||||||
| Depreciation |
7,433 | 7,123 | ||||||
| Taxes other than income taxes |
6,761 | 6,770 | ||||||
| Total operating expenses |
140,412 | 202,924 | ||||||
| OPERATING INCOME (LOSS) |
21,738 | (19,203 | ) | |||||
| INTEREST CHARGES, PREFERRED DIVIDENDS, |
||||||||
| AND OTHER INCOME AND DEDUCTIONS: |
||||||||
| Interest on long-term debt |
15,580 | 12,434 | ||||||
| Other interest and amortization of debt-related costs |
1,111 | 1,116 | ||||||
| Dividends on preferred stock and other |
5,907 | — | ||||||
| Other income and deductions, net |
(555 | ) | (369 | ) | ||||
| Total |
22,043 | 13,181 | ||||||
| LOSS BEFORE INCOME TAXES |
(305 | ) | (32,384 | ) | ||||
| Income taxes (benefits) |
1,942 | (12,359 | ) | |||||
| NET LOSS |
(2,247 | ) | (20,025 | ) | ||||
| Dividends on preferred stock and other |
— | 5,149 | ||||||
| LOSS APPLICABLE TO COMMON STOCK |
$ | (2,247 | ) | $ | (25,174 | ) | ||
The accompanying notes are an integral part of these consolidated financial statements.
-3-
TNP ENTERPRISES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(Unaudited)
| Three Months Ended March 31, |
||||||||
| 2004 |
2003 |
|||||||
| (In thousands) | ||||||||
| NET LOSS |
$ | (2,247 | ) | $ | (20,025 | ) | ||
| Cash flow hedges, net of tax: |
||||||||
| Gas hedge |
2,691 | (3,024 | ) | |||||
| Interest rate hedge, net of reclassification adjustment (Note 4) |
108 | (645 | ) | |||||
| Total cash flow hedges |
2,799 | (3,669 | ) | |||||
| COMPREHENSIVE INCOME (LOSS) |
$ | 552 | $ | (23,694 | ) | |||
The accompanying notes are an integral part of these consolidated financial statements.
-4-
TNP ENTERPRISES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
| Three Months Ended March 31, |
||||||||
| 2004 |
2003 |
|||||||
| (In thousands) | ||||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: |
||||||||
| Cash received from sales to customers |
$ | 176,062 | $ | 163,935 | ||||
| Purchased power costs paid |
(95,085 | ) | (96,141 | ) | ||||
| Natural gas option premiums paid |
— | (18,652 | ) | |||||
| Cash paid for payroll and to other suppliers |
(47,529 | ) | (44,580 | ) | ||||
| Interest paid, net of amounts capitalized |
(7,566 | ) | (7,912 | ) | ||||
| Income taxes refunded |
630 | 2,620 | ||||||
| Other taxes paid |
(12,948 | ) | (11,526 | ) | ||||
| Other operating cash receipts and payments, net |
357 | 216 | ||||||
| NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES |
13,921 | (12,040 | ) | |||||
| CASH FLOWS FROM INVESTING ACTIVITIES: |
||||||||
| Additions to utility plant and other investing activities |
(9,537 | ) | (9,035 | ) | ||||
| NET CASH USED IN INVESTING ACTIVITIES |
(9,537 | ) | (9,035 | ) | ||||
| CASH FLOWS FROM FINANCING ACTIVITIES: |
||||||||
| Redemptions: |
||||||||
| TNMP senior notes |
(5,000 | ) | — | |||||
| TNP senior secured credit facility |
(281 | ) | — | |||||
| TNP term loan |
— | (400 | ) | |||||
| Borrowings from TNMP/First Choice credit facility - net |
— | 14,000 | ||||||
| Financing costs |
(399 | ) | — | |||||
| NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES |
(5,680 | ) | 13,600 | |||||
| NET CHANGE IN CASH AND CASH EQUIVALENTS |
(1,296 | ) | (7,475 | ) | ||||
| CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD |
117,788 | 16,690 | ||||||
| CASH AND CASH EQUIVALENTS AT END OF PERIOD |
$ | 116,492 | $ | 9,215 | ||||
| RECONCILIATION OF NET LOSS TO NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES: |
||||||||
| Net loss |
$ | (2,247 | ) | $ | (20,025 | ) | ||
| Adjustments to reconcile net loss to net cash provided by (used in) operating activities: |
||||||||
| Accrued dividends on preferred stock and other |
5,907 | — | ||||||
| Depreciation |
7,433 | 7,123 | ||||||
| Amortization of debt-related costs and other deferred charges |
1,155 | 1,041 | ||||||
| Allowance for funds used during construction |
(277 | ) | (220 | ) | ||||
| Deferred income taxes |
2,859 | (288 | ) | |||||
| Investment tax credits |
(317 | ) | (159 | ) | ||||
| Deferred purchased power and fuel costs |
34 | 921 | ||||||
| Cash flows impacted by changes in current assets and liabilities: |
||||||||
| Accounts receivable |
23,084 | (12,437 | ) | |||||
| Accounts payable |
(19,430 | ) | 43,108 | |||||
| Accrued interest |
8,106 | 4,603 | ||||||
| Accrued taxes |
(5,606 | ) | (14,151 | ) | ||||
| Changes in other current assets and liabilities |
(7,451 | ) | (17,227 | ) | ||||
| Other, net |
671 | (4,329 | ) | |||||
| NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES |
$ | 13,921 | $ | (12,040 | ) | |||
The accompanying notes are an integral part of these consolidated financial statements.
-5-
TNP ENTERPRISES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
| March 31, 2004 (Unaudited) |
December 31, 2003 |
|||||||
| (In thousands) | ||||||||
| ASSETS |
||||||||
| CURRENT ASSETS: |
||||||||
| Cash and cash equivalents |
$ | 116,492 | $ | 117,788 | ||||
| Special deposits |
2,524 | 2,520 | ||||||
| Accounts receivable |
71,903 | 94,987 | ||||||
| Materials and supplies, at lower of cost or market |
1,143 | 1,082 | ||||||
| Deferred purchased power and fuel costs |
220 | 135 | ||||||
| Accumulated deferred income taxes |
139 | 139 | ||||||
| Gas hedges |
9,542 | 6,237 | ||||||
| Other current assets |
7,923 | 2,640 | ||||||
| Total current assets |
209,886 | 225,528 | ||||||
| UTILITY PLANT: |
||||||||
| Electric plant |
648,558 | 642,732 | ||||||
| Construction work in progress |
15,157 | 13,666 | ||||||
| Total |
663,715 | 656,398 | ||||||
| Less accumulated depreciation |
101,730 | 94,974 | ||||||
| Net utility plant |
561,985 | 561,424 | ||||||
| LONG-TERM AND OTHER ASSETS: |
||||||||
| Other property and investments, at cost |
1,273 | 1,273 | ||||||
| Goodwill |
270,256 | 270,256 | ||||||
| Recoverable stranded costs |
298,651 | 298,651 | ||||||
| Regulatory tax assets |
1,906 | 1,685 | ||||||
| Deferred charges |
49,572 | 49,956 | ||||||
| Total long-term and other assets |
621,658 | 621,821 | ||||||
| $ | 1,393,529 | $ | 1,408,773 | |||||
| LIABILITIES AND SHAREHOLDER’S EQUITY |
||||||||
| CURRENT LIABILITIES: |
||||||||
| Current maturities of long-term debt |
$ | 1,125 | $ | 1,125 | ||||
| Accounts payable |
35,424 | 57,379 | ||||||
| Accrued interest |
23,385 | 15,279 | ||||||
| Accrued taxes |
1,148 | 6,754 | ||||||
| Accrued payroll and benefits |
2,935 | 5,367 | ||||||
| Customers’ deposits |
6,662 | 6,342 | ||||||
| Other current liabilities |
5,694 | 5,689 | ||||||
| Total current liabilities |
76,373 | 97,935 | ||||||
| LONG-TERM AND OTHER LIABILITIES: |
||||||||