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 0-296
El Paso Electric Company
(Exact name of registrant as specified in its charter)
| Texas | 74-0607870 | |
| (State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
| Stanton Tower, 100 North Stanton, El Paso, Texas | 79901 | |
| (Address of principal executive offices) | (Zip Code) |
(915) 543-5711
(Registrant’s telephone number, including area code)
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 Rule 12b-2 of the Exchange Act).
YES x NO ¨
As of May 3, 2004, there were 47,589,845 shares of the Company’s no par value common stock outstanding.
EL PASO ELECTRIC COMPANY AND SUBSIDIARY
INDEX TO FORM 10-Q
| Page No. | ||
| PART I. FINANCIAL INFORMATION | ||
| Item 1. Financial Statements |
||
| Consolidated Balance Sheets – March 31, 2004 and December 31, 2003 |
1 | |
| Consolidated Statements of Operations – Three Months and Twelve Months Ended March 31, 2004 and 2003 |
3 | |
| 4 | ||
| Consolidated Statements of Cash Flows – Three Months Ended March 31, 2004 and 2003 |
5 | |
| 6 | ||
| 18 | ||
| Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations |
19 | |
| Item 3. Quantitative and Qualitative Disclosures About Market Risk |
26 | |
| 26 | ||
| PART II. OTHER INFORMATION | ||
| 27 | ||
| 27 | ||
i
PART I. FINANCIAL INFORMATION
| Item 1. | Financial Statements |
EL PASO ELECTRIC COMPANY AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
| ASSETS (In thousands) |
March 31, (Unaudited) |
December 31, 2003 | ||||
| Utility plant: |
||||||
| Electric plant in service |
$ | 1,793,040 | $ | 1,784,134 | ||
| Less accumulated depreciation and amortization |
608,760 | 591,613 | ||||
| Net plant in service |
1,184,280 | 1,192,521 | ||||
| Construction work in progress |
72,935 | 69,175 | ||||
| Nuclear fuel; includes fuel in process of $1,182 and $6,878, respectively |
72,275 | 70,198 | ||||
| Less accumulated amortization |
38,230 | 33,888 | ||||
| Net nuclear fuel |
34,045 | 36,310 | ||||
| Net utility plant |
1,291,260 | 1,298,006 | ||||
| Current assets: |
||||||
| Cash and temporary investments |
44,348 | 34,426 | ||||
| Accounts receivable, principally trade, net of allowance for doubtful accounts of $3,343 and $3,470, respectively |
58,682 | 66,589 | ||||
| Accumulated deferred income taxes |
30,953 | 36,248 | ||||
| Inventories, at cost |
25,308 | 25,321 | ||||
| Undercollection of fuel revenues |
11,913 | 12,399 | ||||
| Prepayments and other |
22,942 | 27,190 | ||||
| Total current assets |
194,146 | 202,173 | ||||
| Deferred charges and other assets: |
||||||
| Decommissioning trust funds |
82,763 | 80,475 | ||||
| Other |
13,180 | 15,200 | ||||
| Total deferred charges and other assets |
95,943 | 95,675 | ||||
| Total assets |
$ | 1,581,349 | $ | 1,595,854 | ||
See accompanying notes to consolidated financial statements.
1
EL PASO ELECTRIC COMPANY AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS (Continued)
| March 31, 2004 (Unaudited) |
December 31, 2003 |
|||||||
| CAPITALIZATION AND LIABILITIES (In thousands except for share data) |
||||||||
| Capitalization: |
||||||||
| Common stock, stated value $1 per share, 100,000,000 shares authorized, 62,549,631 and 62,487,263 shares issued, and 108,995 and 146,489 restricted shares, respectively |
$ | 62,659 | $ | 62,633 | ||||
| Capital in excess of stated value |
264,470 | 264,235 | ||||||
| Unearned compensation – restricted stock awards |
(625 | ) | (878 | ) | ||||
| Retained earnings |
357,980 | 354,993 | ||||||
| Accumulated other comprehensive loss, net of tax |
(9,570 | ) | (9,613 | ) | ||||
| 674,914 | 671,370 | |||||||
| Treasury stock, 15,070,266 shares, at cost |
(171,548 | ) | (171,548 | ) | ||||
| Common stock equity |
503,366 | 499,822 | ||||||
| Long-term debt, net of current portion |
574,159 | 588,536 | ||||||
| Financing obligations, net of current portion |
— | 20,186 | ||||||
| Total capitalization |
1,077,525 | 1,108,544 | ||||||
| Current liabilities: |
||||||||
| Current portion of long-term debt and financing obligations |
40,838 | 22,106 | ||||||
| Accounts payable, principally trade |
22,247 | 19,197 | ||||||
| Taxes accrued other than federal income taxes |
13,487 | 15,167 | ||||||
| Interest accrued |
14,427 | 14,706 | ||||||
| Overcollection of fuel revenues |
10,660 | 10,070 | ||||||
| Other |
22,199 | 20,781 | ||||||
| Total current liabilities |
123,858 | 102,027 | ||||||
| Deferred credits and other liabilities: |
||||||||
| Accumulated deferred income taxes |
130,789 | 139,605 | ||||||
| Accrued postretirement benefit liability |
96,266 | 94,510 | ||||||
| Asset retirement obligation |
56,458 | 55,149 | ||||||
| Accrued pension liability |
53,550 | 53,000 | ||||||
| Other |
42,903 | 43,019 | ||||||
| Total deferred credits and other liabilities |
379,966 | 385,283 | ||||||
| Commitments and contingencies |
||||||||
| Total capitalization and liabilities |
$ | 1,581,349 | $ | 1,595,854 | ||||
See accompanying notes to consolidated financial statements.
2
EL PASO ELECTRIC COMPANY AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(In thousands except for share data)
| Three Months Ended March 31, |
Twelve Months Ended March 31, |
|||||||||||||||
| 2004 |
2003 |
2004 |
2003 |
|||||||||||||
| Operating revenues |
$ | 155,852 | $ | 147,486 | $ | 672,728 | $ | 688,375 | ||||||||
| Energy expenses: |
||||||||||||||||
| Fuel |
39,049 | 32,351 | 172,065 | 137,607 | ||||||||||||
| Purchased and interchanged power |
12,852 | 12,776 | 55,668 | 95,266 | ||||||||||||
| 51,901 | 45,127 | 227,733 | 232,873 | |||||||||||||
| Operating revenues net of energy expenses |
103,951 | 102,359 | 444,995 | 455,502 | ||||||||||||
| Other operating expenses: |
||||||||||||||||
| Other operations |
41,212 | 39,317 | 169,392 | 157,581 | ||||||||||||
| Impairment loss on CIS project |
— | — | 17,576 | — | ||||||||||||
| FERC settlements |
— | — | — | 15,500 | ||||||||||||
| Maintenance |
9,203 | 15,063 | 42,386 | 51,568 | ||||||||||||
| Depreciation and amortization |
23,059 | 21,362 | 88,838 | 88,378 | ||||||||||||
| Taxes other than income taxes |
11,537 | 11,083 | 43,182 | 43,400 | ||||||||||||
| 85,011 | 86,825 | 361,374 | 356,427 | |||||||||||||
| Operating income |
18,940 | 15,534 | 83,621 | 99,075 | ||||||||||||
| Other income (deductions): |
||||||||||||||||
| Investment and interest income (loss), net |
271 | 130 | 1,981 | (1,323 | ) | |||||||||||
| Loss on extinguishments of debt |
(2,106 | ) | (1 | ) | (2,106 | ) | (101 | ) | ||||||||
| Other, net |
(899 | ) | (761 | ) | (1,634 | ) | (2,608 | ) | ||||||||
| (2,734 | ) | (632 | ) | (1,759 | ) | (4,032 | ) | |||||||||
| Income before interest charges |
16,206 | 14,902 | 81,862 | 95,043 | ||||||||||||
| Interest charges (credits): |
||||||||||||||||
| Interest on long-term debt and financing obligations |
12,673 | 13,096 | 50,977 | 54,099 | ||||||||||||
| Other interest |
148 | 99 | 744 | 6,759 | ||||||||||||
| Interest capitalized |
(770 | ) | (1,316 | ) | (5,026 | ) | (5,583 | ) | ||||||||
| 12,051 | 11,879 | 46,695 | 55,275 | |||||||||||||
| Income before income taxes and cumulative effect of accounting change |
4,155 | 3,023 | 35,167 | 39,768 | ||||||||||||
| Income tax expense |
1,168 | 907 | 13,680 | 14,535 | ||||||||||||
| Income before cumulative effect of accounting change |
2,987 | 2,116 | 21,487 | 25,233 | ||||||||||||
| Cumulative effect of accounting change, net of tax |
— | 39,635 | — | 39,635 | ||||||||||||