PNM 3.31.2014 10-Q
Table of Contents

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, 2014

Commission File
 
Name of Registrants, State of Incorporation,
 
I.R.S. Employer
 Number
 
 Address and Telephone Number
 
 Identification No.
001-32462
 
PNM Resources, Inc.
 
85-0468296
 
 
(A New Mexico Corporation)
 
 
 
 
414 Silver Ave. SW
 
 
 
 
Albuquerque, New Mexico 87102-3289
 
 
 
 
(505) 241-2700
 
 
 
 
 
 
 
001-06986
 
Public Service Company of New Mexico
 
85-0019030
 
 
(A New Mexico Corporation)
 
 
 
 
414 Silver Ave. SW
 
 
 
 
Albuquerque, New Mexico 87102-3289
 
 
 
 
(505) 241-2700
 
 
 
 
 
 
 
002-97230
 
Texas-New Mexico Power Company
 
75-0204070
 
 
(A Texas Corporation)
 
 
 
 
577 N. Garden Ridge Blvd.
 
 
 
 
Lewisville, Texas 75067
 
 
 
 
(972) 420-4189
 
 

Indicate by check mark whether each 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.
 
PNM Resources, Inc. (“PNMR”)
YES
ü
NO
 
 
Public Service Company of New Mexico (“PNM”)
YES
ü
NO
 
 
Texas-New Mexico Power Company (“TNMP”)
YES
 
NO
ü

(NOTE: As a voluntary filer, not subject to the filing requirements, TNMP filed all reports under Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months.)

Indicate by check mark whether each registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

 
PNMR
YES
ü
NO
 
 
PNM
YES
ü
NO
 
 
TNMP
YES
ü
NO
 




Table of Contents

Indicate by check mark whether registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer or a smaller reporting company (as defined in Rule 12b-2 of the Exchange Act).

 
 
Large accelerated
filer
 
Accelerated
filer
 
Non-accelerated
filer
 
Smaller Reporting Company
 
PNMR
 
ü
 
 
 
   
 
 
 
   
 
 
 
   
 
 
PNM
 
   
 
 
 
   
 
 
 
ü
 
 
 
   
 
 
TNMP
 
   
 
 
 
   
 
 
 
ü
 
 
 
   
 


Indicate by check mark whether any of the registrants is a shell company (as defined in Rule 12b-2 of the Exchange Act). YES     NO ü

As of April 25, 2014, 79,653,624 shares of common stock, no par value per share, of PNMR were outstanding.

The total number of shares of common stock of PNM outstanding as of April 25, 2014 was 39,117,799 all held by PNMR (and none held by non-affiliates).

The total number of shares of common stock of TNMP outstanding as of April 25, 2014 was 6,358 all held indirectly by PNMR (and none held by non-affiliates).

PNM AND TNMP MEET THE CONDITIONS SET FORTH IN GENERAL INSTRUCTIONS (H) (1) (a) AND (b) OF FORM 10-Q AND ARE THEREFORE FILING THIS FORM WITH THE REDUCED DISCLOSURE FORMAT PURSUANT TO GENERAL INSTRUCTION (H) (2).

This combined Form 10-Q is separately filed by PNMR, PNM, and TNMP.  Information contained herein relating to any individual registrant is filed by such registrant on its own behalf.  Each registrant makes no representation as to information relating to the other registrants.  When this Form 10-Q is incorporated by reference into any filing with the SEC made by PNMR, PNM, or TNMP, as a registrant, the portions of this Form 10-Q that relate to each other registrant are not incorporated by reference therein.



2

Table of Contents

PNM RESOURCES, INC. AND SUBSIDIARIES
PUBLIC SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARIES
TEXAS-NEW MEXICO POWER COMPANY AND SUBSIDIARIES

INDEX

 
Page No.
 
 
 
 
 
 
ITEM 5. OTHER INFORMATION


3

Table of Contents

GLOSSARY

Definitions:
  
 
Afton
  
Afton Generating Station
AFUDC
 
Allowance for Funds Used During Construction
ALJ
  
Administrative Law Judge
AMS
 
Advanced Meter System
AOCI
  
Accumulated Other Comprehensive Income
APS
  
Arizona Public Service Company, which is the operator and a co-owner of PVNGS and Four Corners
BACT
  
Best Available Control Technology
BART
  
Best Available Retrofit Technology
BHP
  
BHP Billiton, Ltd, the parent of SJCC
Board
  
Board of Directors of PNMR
BTU
  
British Thermal Unit
CAA
 
Clean Air Act
CCB
  
Coal Combustion Byproducts
CCN
 
Certificate of Convenience and Necessity
CO2
  
Carbon Dioxide
CTC
  
Competition Transition Charge
D.C. Circuit
 
United States Court of Appeals for the District of Columbia Circuit
Delta
  
Delta-Person Generating Station
DOE
  
United States Department of Energy
DOI
  
United States Department of Interior
EGU
 
Electric Generating Unit
EIB
  
New Mexico Environmental Improvement Board
EIP
  
Eastern Interconnection Project
EIS
 
Environmental Impact Statement
EPA
  
United States Environmental Protection Agency
ERCOT
  
Electric Reliability Council of Texas
ESA
 
Endangered Species Act
Exchange Act
 
Securities Exchange Act of 1934
FASB
  
Financial Accounting Standards Board
FERC
  
Federal Energy Regulatory Commission
FIP
  
Federal Implementation Plan
Four Corners
  
Four Corners Power Plant
FPPAC
  
Fuel and Purchased Power Adjustment Clause
GAAP
  
Generally Accepted Accounting Principles in the United States of America
Gallup
  
City of Gallup, New Mexico
GHG
  
Greenhouse Gas Emissions
GWh
  
Gigawatt hours
IBEW
  
International Brotherhood of Electrical Workers
IRP
 
Integrated Resource Plan
KW
  
Kilowatt
KWh
  
Kilowatt Hour
Lightning Dock Geothermal
 
Lightning Dock geothermal power facility, also known as the Dale Burgett Geothermal Plant
Lordsburg
  
Lordsburg Generating Station
Luna
  
Luna Energy Facility
MD&A
  
Management’s Discussion and Analysis of Financial Condition and Results of Operations

4

Table of Contents

MMBTU
  
Million BTUs
Moody’s
  
Moody’s Investor Services, Inc.
MW
  
Megawatt
MWh
  
Megawatt Hour
NAAQS
 
National Ambient Air Quality Standards
Navajo Acts
  
Navajo Nation Air Pollution Prevention and Control Act, Navajo Nation Safe Drinking Water Act, and Navajo Nation Pesticide Act
NDT
  
Nuclear Decommissioning Trusts for PVNGS
NEC
 
Navopache Electric Cooperative, Inc.
NERC
  
North American Electric Reliability Council
New Mexico Wind
 
New Mexico Wind Energy Center
Ninth Circuit
  
United States Court of Appeals for the Ninth Circuit
NMED
  
New Mexico Environment Department
NMPRC
  
New Mexico Public Regulation Commission
NOx
  
Nitrogen Oxides
NOPR
 
Notice of Proposed Rulemaking
NRC
  
United States Nuclear Regulatory Commission
NSPS
  
New Source Performance Standards
NSR
  
New Source Review
OCI
  
Other Comprehensive Income
OPEB
  
Other Post Employment Benefits
OSM
 
United States Office of Surface Mining Reclamation and Enforcement
PNM
  
Public Service Company of New Mexico and Subsidiaries
PNM 2014 Term Loan Agreement
 
PNM’s $175.0 Million Unsecured Term Loan Facility
PNM New Mexico Credit Facility
 
PNM’s $50.0 Million Unsecured Revolving Credit Facility
PNM Revolving Credit Facility
 
PNM’s $400.0 Million Unsecured Revolving Credit Facility
PNM Term Loan Agreement
 
PNM’s $75.0 Million Unsecured Term Loan Facility
PNMR
  
PNM Resources, Inc. and Subsidiaries
PNMR Development
 
PNMR Development and Management Corporation
PNMR Revolving Credit Facility
 
PNMR’s $300.0 Million Unsecured Revolving Credit Facility
PNMR Term Loan Agreement
  
PNMR’s $100.0 Million Unsecured Term Loan Facility
PPA
  
Power Purchase Agreement
PSD
  
Prevention of Significant Deterioration
PUCT
  
Public Utility Commission of Texas
PV
  
Photovoltaic
PVNGS
  
Palo Verde Nuclear Generating Station
RCRA
  
Resource Conservation and Recovery Act
RCT
  
Reasonable Cost Threshold
REA
 
New Mexico’s Renewable Energy Act of 2004
REC
  
Renewable Energy Certificates
Red Mesa Wind
 
Red Mesa Wind Energy Center
REP
  
Retail Electricity Provider
RMC
  
Risk Management Committee
RPS
  
Renewable Energy Portfolio Standard
SCR
 
Selective Catalytic Reduction
SEC
  
United States Securities and Exchange Commission

5

Table of Contents

SIP
  
State Implementation Plan
SJCC
  
San Juan Coal Company
SJGS
  
San Juan Generating Station
SJPPA
 
San Juan Project Participation Agreement
SNCR
 
Selective Non-Catalytic Reduction
SO2
  
Sulfur Dioxide
SPS
  
Southwestern Public Service Company
S&P
  
Standard and Poor’s Ratings Services
TECA
  
Texas Electric Choice Act
Tenth Circuit
 
United States Court of Appeals for the Tenth Circuit
TNMP
  
Texas-New Mexico Power Company and Subsidiaries
TNMP Revolving Credit Facility
  
TNMP’s $75.0 Million Revolving Credit Facility
Valencia
  
Valencia Energy Facility
VaR
  
Value at Risk
WACC
 
Weighted Average Cost of Capital
WEG
 
WildEarth Guardians


6

Table of Contents

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS


PNM RESOURCES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
(Unaudited)
 
Three Months Ended March 31,
 
2014
 
2013
 
(In thousands, except per share amounts)
Electric Operating Revenues 
$
328,897

 
$
317,665

Operating Expenses:

 
 
Cost of energy
112,614

 
104,706

Administrative and general
43,859

 
44,691

Energy production costs
47,288

 
43,573

Depreciation and amortization
41,965

 
40,807

Transmission and distribution costs
16,906

 
16,295

Taxes other than income taxes
17,512

 
16,889

Total operating expenses
280,144

 
266,961

Operating income
48,753

 
50,704

Other Income and Deductions:
 
 
 
Interest income
2,117

 
2,634

Gains on available-for-sale securities
2,573

 
1,530

Other income
1,574

 
1,710

Other (deductions)
(2,931
)
 
(3,350
)
Net other income and deductions
3,333

 
2,524

Interest Charges
29,535

 
31,297

Earnings before Income Taxes
22,551

 
21,931

Income Taxes
6,420

 
7,969

Net Earnings
16,131

 
13,962

(Earnings) Attributable to Valencia Non-controlling Interest
(3,531
)
 
(3,204
)
Preferred Stock Dividend Requirements of Subsidiary
(132
)
 
(132
)
Net Earnings Attributable to PNMR
$
12,468

 
$
10,626

Net Earnings Attributable to PNMR per Common Share:
 
 
 
Basic
$
0.16

 
$
0.13

Diluted
$
0.16

 
$
0.13

Dividends Declared per Common Share
$
0.185

 
$
0.165


The accompanying notes, as they relate to PNMR, are an integral part of these financial statements.



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Table of Contents

PNM RESOURCES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)

 
Three Months Ended March 31,
 
2014
 
2013
 
(In thousands)
Net Earnings
$
16,131

 
$
13,962

Other Comprehensive Income:
 
 
 
Unrealized Gain on Available-for-Sale Securities:
 
 
 
Unrealized holding gains arising during the period, net of income tax (expense) of $(1,332) and $(3,111)
2,047

 
4,747

Reclassification adjustment for (gains) included in net earnings, net of income tax expense of $1,283 and $529
(1,972
)
 
(807
)
Pension Liability Adjustment:
 
 
 
Reclassification adjustment for amortization of experience (gain) loss recognized as net periodic benefit cost, net of income tax expense (benefit) of $(508) and $(631)
780

 
960

Fair Value Adjustment for Cash Flow Hedges:
 
 
 
Change in fair market value, net of income tax (expense) benefit of $53 and $(4)
(100
)
 
8

Reclassification adjustment for (gains) losses included in net earnings, net of income tax expense (benefit) of $(19) and $(17)
36

 
31

Total Other Comprehensive Income
791

 
4,939

Comprehensive Income
16,922

 
18,901

Comprehensive (Income) Attributable to Valencia Non-controlling Interest
(3,531
)
 
(3,204
)
Preferred Stock Dividend Requirements of Subsidiary
(132
)
 
(132
)
Comprehensive Income Attributable to PNMR
$
13,259

 
$
15,565


The accompanying notes, as they relate to PNMR, are an integral part of these financial statements.


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Table of Contents


PNM RESOURCES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
 
Three Months Ended March 31,
 
2014
 
2013
 
(In thousands)
Cash Flows From Operating Activities:
 
 
 
Net earnings
$
16,131

 
$
13,962

Adjustments to reconcile net earnings to net cash flows from operating activities:
 
 
 
Depreciation and amortization
51,949

 
51,818

Deferred income tax expense
6,276

 
7,795

Net unrealized (gains) losses on commodity derivatives
2,761

 
4,902

Realized (gains) on available-for-sale securities
(2,573
)
 
(1,530
)
Stock based compensation expense
2,131

 
1,903

Other, net
1,005

 
(351
)
Changes in certain assets and liabilities:
 
 
 
Accounts receivable and unbilled revenues
17,207

 
4,062

Materials, supplies, and fuel stock
5,894

 
944

Other current assets
8,344

 
2,335

Other assets
6,386

 
8,774

Accounts payable
(34,373
)
 
(17,895
)
Accrued interest and taxes
25,813

 
25,430

Other current liabilities
(30,359
)
 
(38,761
)
Other liabilities
(199
)
 
(64,763
)
Net cash flows from operating activities
76,393

 
(1,375
)
 
 
 
 
Cash Flows From Investing Activities:
 
 
 
Additions to utility and non-utility plant
(83,838
)
 
(73,584
)
Proceeds from sales of available-for-sale securities
22,804

 
14,284

Purchases of available-for-sale securities
(23,612
)
 
(15,128
)
Return of principal on PVNGS lessor notes
10,231

 
10,965

Other, net
13

 
1,247

Net cash flows from investing activities
(74,402
)
 
(62,216
)

The accompanying notes, as they relate to PNMR, are an integral part of these financial statements.

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Table of Contents


PNM RESOURCES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)

 
Three Months Ended March 31,
 
2014
 
2013
 
(In thousands)
Cash Flows From Financing Activities:
 
 
 
Short-term borrowings (repayments), net
(49,200
)
 
84,600

Long-term borrowings
175,000

 

Repayment of long-term debt
(75,000
)
 

Proceeds from stock option exercise
3,258

 
2,293

Awards of common stock
(11,639
)
 
(9,651
)
Dividends paid
(14,868
)
 
(11,683
)
Valencia’s transactions with its owner
(4,369
)
 
(5,260
)
Other, net
(539
)
 
(584
)
Net cash flows from financing activities
22,643

 
59,715

 
 
 
 
Change in Cash and Cash Equivalents
24,634

 
(3,876
)
Cash and Cash Equivalents at Beginning of Period
2,533

 
8,985

Cash and Cash Equivalents at End of Period
$
27,167

 
$
5,109

 
 
 
 
Supplemental Cash Flow Disclosures:
 
 
 
Interest paid, net of amounts capitalized
$
4,718

 
$
4,817

Income taxes paid (refunded), net
$
(1,419
)
 
$
(603
)
 
 
 
 
Supplemental schedule of noncash investing activities:
 
 
 
Changes in accrued plant additions
$
(13,095
)
 
$
(3,847
)

The accompanying notes, as they relate to PNMR, are an integral part of these financial statements.


10

Table of Contents



PNM RESOURCES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
 
March 31,
2014
 
December 31,
2013
 
(In thousands)
ASSETS
 
 
 
Current Assets:
 
 
 
Cash and cash equivalents
$
27,167

 
$
2,533

Accounts receivable, net of allowance for uncollectible accounts of $1,423 and $1,423
81,611

 
90,251

Unbilled revenues
49,408

 
58,806

Other receivables
41,476

 
53,909

Materials, supplies, and fuel stock
61,329

 
67,223

Regulatory assets
27,163

 
24,416

Commodity derivative instruments
4,003

 
4,064

Income taxes receivable
5,503

 
7,066

Current portion of accumulated deferred income taxes
58,681

 
58,681

Other current assets
44,689

 
34,590

Total current assets
401,030

 
401,539

Other Property and Investments:
 
 
 
Investment in PVNGS lessor notes
17,757

 
32,200

Available-for-sale securities
230,250

 
226,855

Other investments
1,813

 
1,835

Non-utility property, net of accumulated depreciation of $62 and $61
4,352

 
4,353

Total other property and investments
254,172

 
265,243

Utility Plant:
 
 
 
Plant in service and plant held for future use
5,602,590

 
5,563,061

Less accumulated depreciation and amortization
1,866,635

 
1,838,832

 
3,735,955

 
3,724,229

Construction work in progress
147,870

 
132,080

Nuclear fuel, net of accumulated amortization of $54,338 and $47,347
78,778

 
77,602

Net utility plant
3,962,603

 
3,933,911

Deferred Charges and Other Assets:
 
 
 
Regulatory assets
513,727

 
523,955

Goodwill
278,297

 
278,297

Commodity derivative instruments
2,474

 
3,002

Other deferred charges
94,723

 
94,263

Total deferred charges and other assets
889,221

 
899,517

 
$
5,507,026

 
$
5,500,210


The accompanying notes, as they relate to PNMR, are an integral part of these financial statements.


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Table of Contents



PNM RESOURCES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
 
March 31,
2014
 
December 31,
2013
 
(In thousands, except share information)
LIABILITIES AND STOCKHOLDERS’ EQUITY
 
 
 
Current Liabilities:
 
 
 
Short-term debt
$
100,000

 
$
149,200

Current installments of long-term debt

 
75,000

Accounts payable
62,198

 
109,666

Customer deposits
13,065

 
13,456

Accrued interest and taxes
73,978

 
49,600

Regulatory liabilities
353

 
1,081

Commodity derivative instruments
5,446

 
2,699

Dividends declared
14,864

 
14,864

Other current liabilities
42,184

 
77,105

Total current liabilities
312,088

 
492,671

Long-term Debt
1,845,338

 
1,670,420

Deferred Credits and Other Liabilities:
 
 
 
Accumulated deferred income taxes
833,240

 
801,408

Accumulated deferred investment tax credits
25,314

 
25,855

Regulatory liabilities
463,106

 
460,649

Asset retirement obligations
98,076

 
96,135

Accrued pension liability and postretirement benefit cost
75,745

 
80,046

Commodity derivative instruments
907

 
1,094

Other deferred credits
99,671

 
109,805

Total deferred credits and other liabilities
1,596,059

 
1,574,992

Total liabilities
3,753,485

 
3,738,083

Commitments and Contingencies (See Note 11)


 


Cumulative Preferred Stock of Subsidiary
 
 
 
without mandatory redemption requirements ($100 stated value; 10,000,000 shares authorized; issued and outstanding 115,293 shares)
11,529

 
11,529

Equity:
 
 
 
PNMR common stockholders’ equity:
 
 
 
Common stock outstanding (no par value; 120,000,000 shares authorized; issued and outstanding 79,653,624 shares)
1,172,098

 
1,178,369

Accumulated other comprehensive income (loss), net of income taxes
(57,349
)
 
(58,140
)
Retained earnings
551,072

 
553,340

Total PNMR common stockholders’ equity
1,665,821

 
1,673,569

Non-controlling interest in Valencia
76,191

 
77,029

Total equity
1,742,012

 
1,750,598

 
$
5,507,026

 
$
5,500,210

 
 
 
 

The accompanying notes, as they relate to PNMR, are an integral part of these financial statements.


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Table of Contents

PNM RESOURCES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
(Unaudited)

 
Attributable to PNMR
 
Non-
controlling
Interest
in Valencia
 
 
 
Common
Stock
 
AOCI
 
Retained
Earnings
 
Total PNMR Common Stockholder’s Equity
 
 
Total
Equity
 
(In thousands)
Balance at December 31, 2013
$
1,178,369

 
$
(58,140
)
 
$
553,340

 
$
1,673,569

 
$
77,029

 
$
1,750,598

Proceeds from stock option exercise
3,258

 

 

 
3,258

 

 
3,258

Awards of common stock
(11,639
)
 

 

 
(11,639
)
 

 
(11,639
)
Excess tax (shortfall) from stock-based payment arrangements
(21
)
 

 

 
(21
)
 

 
(21
)
Stock based compensation expense
2,131

 

 

 
2,131

 

 
2,131

Valencia’s transactions with its owner

 

 

 

 
(4,369
)
 
(4,369
)
Net earnings before subsidiary preferred stock dividends

 

 
12,600

 
12,600

 
3,531

 
16,131

Subsidiary preferred stock dividends

 

 
(132
)
 
(132
)
 

 
(132
)
Total other comprehensive income

 
791

 

 
791

 

 
791

Dividends declared on common stock

 

 
(14,736
)
 
(14,736
)
 

 
(14,736
)
Balance at March 31, 2014
$
1,172,098

 
$
(57,349
)
 
$
551,072

 
$
1,665,821

 
$
76,191

 
$
1,742,012



The accompanying notes, as they relate to PNMR, are an integral part of these financial statements.



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Table of Contents


PUBLIC SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARIES
A WHOLLY OWNED SUBSIDIARY OF PNM RESOURCES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
(Unaudited)

 
Three Months Ended March 31,
 
2014
 
2013
 
(In thousands)
Electric Operating Revenues
$
262,736

 
$
257,894

Operating Expenses:
 
 
 
Cost of energy
96,626

 
91,660

Administrative and general
38,609

 
38,758

Energy production costs
47,288

 
43,566

Depreciation and amortization
27,082

 
25,834

Transmission and distribution costs
11,327

 
10,603

Taxes other than income taxes
10,500

 
10,234

Total operating expenses
231,432

 
220,655

Operating income
31,304

 
37,239

Other Income and Deductions:
 
 
 
Interest income
2,128

 
2,673

Gains on available-for-sale securities
2,573

 
1,530

Other income
1,113

 
1,314

Other (deductions)
(2,018
)
 
(1,437
)
Net other income and deductions
3,796

 
4,080

Interest Charges
19,812

 
19,957

Earnings before Income Taxes
15,288

 
21,362

Income Taxes
4,083

 
6,589

Net Earnings
11,205

 
14,773

(Earnings) Attributable to Valencia Non-controlling Interest
(3,531
)
 
(3,204
)
Net Earnings Attributable to PNM
7,674

 
11,569

Preferred Stock Dividends Requirements
(132
)
 
(132
)
Net Earnings Available for PNM Common Stock
$
7,542

 
$
11,437


The accompanying notes, as they relate to PNM, are an integral part of these financial statements.


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Table of Contents

PUBLIC SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARIES
A WHOLLY OWNED SUBSIDIARY OF PNM RESOURCES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)
 
Three Months Ended March 31,
 
2014
 
2013
 
(In thousands)
Net Earnings
$
11,205

 
$
14,773

Other Comprehensive Income:
 
 
 
Unrealized Gain on Available-for-Sale Securities:
 
 
 
Unrealized holding gains arising during the period, net of income tax (expense) of $(1,332) and $(3,111)
2,047

 
4,747

Reclassification adjustment for (gains) included in net earnings, net of income tax expense of $1,283 and $529
(1,972
)
 
(807
)
Pension Liability Adjustment:
 
 
 
Reclassification adjustment for amortization of experience (gain) loss recognized as net periodic benefit cost, net of income tax expense (benefit) of $(508) and $(631)
780

 
960

Total Other Comprehensive Income
855

 
4,900

Comprehensive Income
12,060

 
19,673

Comprehensive (Income) Attributable to Valencia Non-controlling Interest
(3,531
)
 
(3,204
)
Comprehensive Income Attributable to PNM
$
8,529

 
$
16,469


The accompanying notes, as they relate to PNM, are an integral part of these financial statements.


15

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PUBLIC SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARIES
A WHOLLY OWNED SUBSIDIARY OF PNM RESOURCES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
 
Three Months Ended March 31,
 
2014
 
2013
 
(In thousands)
Cash Flows From Operating Activities:
 
 
 
Net earnings
$
11,205

 
$
14,773

Adjustments to reconcile net earnings to net cash flows from operating activities:
 
 
 
Depreciation and amortization
35,950

 
34,655

Deferred income tax expense
4,185

 
6,685

Net unrealized (gains) losses on commodity derivatives
2,761

 
4,902

Realized (gains) on available-for-sale securities
(2,573
)
 
(1,530
)
Other, net
1,042

 
(346
)
Changes in certain assets and liabilities:
 
 
 
Accounts receivable and unbilled revenues
15,018

 
5,467

Materials, supplies, and fuel stock
5,974

 
879

Other current assets
6,809

 
(84
)
Other assets
6,042

 
8,772

Accounts payable
(31,847
)
 
(18,857
)
Accrued interest and taxes
22,362

 
20,932

Other current liabilities
(29,609
)
 
(44,068
)
Other liabilities
(806
)
 
(64,893
)
Net cash flows from operating activities
46,513

 
(32,713
)
 
 
 
 
Cash Flows From Investing Activities:
 
 
 
Utility plant additions
(51,594
)
 
(44,389
)
Proceeds from sales of available-for-sale securities
22,804

 
14,284

Purchases of available-for-sale securities
(23,612
)
 
(15,128
)
Return of principal on PVNGS lessor notes
10,231

 
10,965

Other, net
(1
)
 
1,220

Net cash flows from investing activities
(42,172
)
 
(33,048
)

The accompanying notes, as they relate to PNM, are an integral part of these financial statements.


16

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PUBLIC SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARIES
A WHOLLY OWNED SUBSIDIARY OF PNM RESOURCES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)

 
Three Months Ended March 31,
 
2014
 
2013
 
(In thousands)
Cash Flows From Financing Activities:
 
 
 
Short-term borrowings (repayments), net
(49,200
)
 
67,800

Short-term borrowings (repayments), affiliate, net
(32,500
)
 

Long-term borrowings
175,000

 

Repayment of long-term debt
(75,000
)
 

Valencia’s transactions with its owner
(4,369
)
 
(5,260
)
Dividends paid
(132
)
 
(132
)
Other, net
(409
)
 
(584
)
Net cash flows from financing activities
13,390

 
61,824

 
 
 
 
Change in Cash and Cash Equivalents
17,731

 
(3,937
)
Cash and Cash Equivalents at Beginning of Period
21

 
3,958

Cash and Cash Equivalents at End of Period
$
17,752

 
$
21

 
 
 
 
Supplemental Cash Flow Disclosures:
 
 
 
Interest paid, net of amounts capitalized
$
4,222

 
$
4,304

Income taxes paid (refunded), net
$
(215
)
 
$

 
 
 
 
Supplemental schedule of noncash investing activities:
 
 
 
Changes in accrued plant additions
$
(8,133
)
 
$
1,128


The accompanying notes, as they relate to PNM, are an integral part of these financial statements.


17

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PUBLIC SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARIES
A WHOLLY OWNED SUBSIDIARY OF PNM RESOURCES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
 
March 31,
2014
 
December 31,
2013
 
(In thousands)
ASSETS
 
 
 
Current Assets:
 
 
 
Cash and cash equivalents
$
17,752

 
$
21

Accounts receivable, net of allowance for uncollectible accounts of $1,423 and $1,423
61,394

 
70,126

Unbilled revenues
41,874

 
48,992

Other receivables
40,788

 
52,964

Affiliate receivables
9,646

 
10,054

Materials, supplies, and fuel stock
58,546

 
64,520

Regulatory assets
23,016

 
19,394

Commodity derivative instruments
4,003

 
4,064

Income taxes receivable
3,917

 
4,030

Current portion of accumulated deferred income taxes
43,827

 
43,827

Other current assets
40,498

 
30,510

Total current assets
345,261

 
348,502

Other Property and Investments:
 
 
 
Investment in PVNGS lessor notes
17,757

 
32,200

Available-for-sale securities
230,250

 
226,855

Other investments
436

 
445

Non-utility property
976

 
976

Total other property and investments
249,419

 
260,476

Utility Plant:
 
 
 
Plant in service and plant held for future use
4,339,081

 
4,314,016

Less accumulated depreciation and amortization
1,420,194

 
1,402,531

 
2,918,887

 
2,911,485

Construction work in progress
112,093

 
107,344

Nuclear fuel, net of accumulated amortization of $54,338 and $47,347
78,778

 
77,602

Net utility plant
3,109,758

 
3,096,431

Deferred Charges and Other Assets:
 
 
 
Regulatory assets
377,334

 
384,217

Goodwill
51,632

 
51,632

Commodity derivative instruments
2,474

 
3,002

Other deferred charges
83,757

 
83,356

Total deferred charges and other assets
515,197

 
522,207

 
$
4,219,635

 
$
4,227,616

 
 
 
 

The accompanying notes, as they relate to PNM, are an integral part of these financial statements.


18

Table of Contents



PUBLIC SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARIES
A WHOLLY OWNED SUBSIDIARY OF PNM RESOURCES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
 
March 31,
2014
 
December 31,
2013
 
(In thousands, except share information)
LIABILITIES AND STOCKHOLDER’S EQUITY
 
 
 
Current Liabilities:
 
 
 
Short-term debt
$

 
$
49,200

Short-term debt - affiliate

 
32,500

Current installments of long-term debt

 
75,000

Accounts payable
44,663

 
84,643

Affiliate payables
12,315

 
20,498

Customer deposits
13,065

 
13,456

Accrued interest and taxes
50,096

 
27,665

Regulatory liabilities
353

 
1,081

Commodity derivative instruments
5,446

 
2,699

Dividends declared
132

 
132

Other current liabilities
30,070

 
50,392

Total current liabilities
156,140

 
357,266

Long-term Debt
1,390,627

 
1,215,618

Deferred Credits and Other Liabilities:
 
 
 
Accumulated deferred income taxes
672,136

 
651,239

Accumulated deferred investment tax credits
25,314

 
25,855

Regulatory liabilities
415,537

 
414,611

Asset retirement obligations
97,147

 
95,225

Accrued pension liability and postretirement benefit cost
72,654

 
76,611

Commodity derivative instruments
907

 
1,094

Other deferred credits
82,857

 
91,340

Total deferred credits and liabilities
1,366,552

 
1,355,975

Total liabilities
2,913,319

 
2,928,859

Commitments and Contingencies (See Note 11)


 


Cumulative Preferred Stock
 
 
 
without mandatory redemption requirements ($100 stated value; 10,000,000 authorized; issued and outstanding 115,293 shares)
11,529

 
11,529

Equity:
 
 
 
PNM common stockholder’s equity:
 
 
 
Common stock outstanding (no par value; 40,000,000 shares authorized; issued and outstanding 39,117,799 shares)
1,061,776

 
1,061,776

Accumulated other comprehensive income (loss), net of income taxes
(57,022
)
 
(57,877
)
Retained earnings
213,842

 
206,300

Total PNM common stockholder’s equity
1,218,596

 
1,210,199

Non-controlling interest in Valencia
76,191

 
77,029

Total equity
1,294,787

 
1,287,228

 
$
4,219,635

 
$
4,227,616


The accompanying notes, as they relate to PNM, are an integral part of these financial statements.

19

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PUBLIC SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARIES
A WHOLLY OWNED SUBSIDIARY OF PNM RESOURCES, INC.
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
(Unaudited)
 
Attributable to PNM
 
 
 
 
 
 
 
 
 
Total PNM
Common
Stockholder’s
Equity
 
Non-
controlling
 Interest in Valencia
 
 
 
 
 
 
 
 
 
 
 
Common
Stock
 
AOCI
 
Retained
Earnings
 
 
 
Total
Equity
 
 
 
 
 
 
 
(In thousands)
Balance at December 31, 2013
$
1,061,776

 
$
(57,877
)
 
$
206,300

 
$
1,210,199

 
$
77,029

 
$
1,287,228

Valencia’s transactions with its owner

 

 

 

 
(4,369
)
 
(4,369
)
Net earnings

 

 
7,674

 
7,674

 
3,531

 
11,205

Total other comprehensive income

 
855

 

 
855

 

 
855

Dividends declared on preferred stock

 

 
(132
)
 
(132
)
 

 
(132
)
Balance at March 31, 2014
$
1,061,776

 
$
(57,022
)
 
$
213,842

 
$
1,218,596

 
$
76,191

 
$
1,294,787



The accompanying notes, as they relate to PNM, are an integral part of these financial statements.

20

Table of Contents


TEXAS-NEW MEXICO POWER COMPANY AND SUBSIDIARIES
A WHOLLY OWNED SUBSIDIARY OF PNM RESOURCES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
(Unaudited)
 
Three Months Ended March 31,
 
2014
 
2013
 
(In thousands)
Electric Operating Revenues
$
66,161

 
$
59,771

Operating Expenses:
 
 
 
Cost of energy
15,988

 
13,046

Administrative and general
9,840

 
11,119

Depreciation and amortization
11,842

 
11,681

Transmission and distribution costs
5,579

 
5,692

Taxes other than income taxes
5,650

 
5,179

Total operating expenses
48,899

 
46,717

Operating income
17,262

 
13,054

Other Income and Deductions:
 
 
 
Other income
420

 
337

Other (deductions)
(231
)
 
(129
)
Net other income and deductions
189

 
208

Interest Charges
6,598

 
7,246

Earnings before Income Taxes
10,853

 
6,016

Income Taxes
4,050

 
2,290

Net Earnings
$
6,803

 
$
3,726


The accompanying notes, as they relate to TNMP, are an integral part of these financial statements.



21

Table of Contents

TEXAS-NEW MEXICO POWER COMPANY AND SUBSIDIARIES
A WHOLLY OWNED SUBSIDIARY OF PNM RESOURCES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)
 
Three Months Ended March 31,
 
2014
 
2013
 
(In thousands)
Net Earnings
$
6,803

 
$
3,726

Other Comprehensive Income (Loss):
 
 
 
Fair Value Adjustment for Cash Flow Hedges:
 
 
 
Change in fair market value, net of income tax (expense) benefit of $53 and $(4)
(100
)
 
8

Reclassification adjustment for (gains) losses included in net earnings, net of income tax expense (benefit) of $(19) and $(17)
36

 
31

Total Other Comprehensive Income (Loss)
(64
)
 
39

Comprehensive Income
$
6,739

 
$
3,765


The accompanying notes, as they relate to TNMP, are an integral part of these financial statements.

22

Table of Contents


TEXAS-NEW MEXICO POWER COMPANY AND SUBSIDIARIES
A WHOLLY OWNED SUBSIDIARY OF PNM RESOURCES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
 
Three Months Ended March 31,
 
2014
 
2013
 
(In thousands)
Cash Flows From Operating Activities:
 
 
 
Net earnings
$
6,803

 
$
3,726

Adjustments to reconcile net earnings to net cash flows from operating activities:
 
 
 
Depreciation and amortization
12,851

 
12,686

Deferred income tax expense
3,665

 
2,448

Other, net
(36
)
 

Changes in certain assets and liabilities:
 
 
 
Accounts receivable and unbilled revenues
2,189

 
(1,405
)
Materials and supplies
(81
)
 
65

Other current assets
2,446

 
218

Other assets
302

 
(58
)
Accounts payable
(2,551
)
 
4,130

Accrued interest and taxes
335

 
686

Other current liabilities
(1,768
)
 
(1,278
)
Other liabilities
1,465

 
1,076

Net cash flows from operating activities
25,620

 
22,294

Cash Flows From Investing Activities:
 
 
 
Utility plant additions
(27,420
)
 
(24,594
)
Net cash flows from investing activities
(27,420
)
 
(24,594
)
Cash Flow From Financing Activities:
 
 
 
Short-term borrowings (repayments), net

 
25,000

Short-term borrowings (repayments) – affiliate, net
1,800

 
(22,700
)
Net cash flows from financing activities
1,800

 
2,300

 
 
 
 
Change in Cash and Cash Equivalents

 

Cash and Cash Equivalents at Beginning of Period
1

 
1
Cash and Cash Equivalents at End of Period
$
1

 
$
1

 
 
 
 
Supplemental Cash Flow Disclosures:
 
 
 
Interest paid, net of amounts capitalized
$
73

 
$
171

Income taxes paid, net
$
(1,204
)
 
$
(604
)
 
 
 
 
Supplemental schedule of noncash investing activities:
 
 
 
Changes in accrued plant additions
$
(1,109
)
 
$
(932
)

The accompanying notes, as they relate to TNMP, are an integral part of these financial statements.




23

Table of Contents



TEXAS-NEW MEXICO POWER COMPANY AND SUBSIDIARIES
A WHOLLY OWNED SUBSIDIARY OF PNM RESOURCES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
 
March 31,
2014
 
December 31,
2013
 
(In thousands)
ASSETS
 
 
 
Current Assets:
 
 
 
Cash and cash equivalents
$
1

 
$
1

Accounts receivable
20,217

 
20,125

Unbilled revenues
7,534

 
9,814

Other receivables
1,057

 
1,246

Materials and supplies
2,783

 
2,703

Regulatory assets
4,147

 
5,022

Current portion of accumulated deferred income taxes
6,501

 
6,501

Other current assets
752

 
980

Total current assets
42,992

 
46,392

Other Property and Investments:
 
 
 
Other investments
245

 
245

Non-utility property
2,240

 
2,240

Total other property and investments
2,485

 
2,485

Utility Plant:
 
 
 
Plant in service and plant held for future use
1,081,881

 
1,074,193

Less accumulated depreciation and amortization
359,205

 
352,105

 
722,676

 
722,088

Construction work in progress
33,377

 
16,790

Net utility plant
756,053

 
738,878

Deferred Charges and Other Assets:
 
 
 
Regulatory assets
136,393

 
139,738

Goodwill
226,665

 
226,665

Other deferred charges
8,440

 
8,273

Total deferred charges and other assets
371,498

 
374,676

 
$
1,173,028

 
$
1,162,431


The accompanying notes, as they relate to TNMP, are an integral part of these financial statements.

24

Table of Contents



TEXAS-NEW MEXICO POWER COMPANY AND SUBSIDIARIES
A WHOLLY OWNED SUBSIDIARY OF PNM RESOURCES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
 
March 31,
2014
 
December 31,
2013
 
(In thousands, except share information)
LIABILITIES AND STOCKHOLDER’S EQUITY
 
 
 
Current Liabilities:
 
 
 
Short-term debt – affiliate
$
31,200

 
$
29,400

Accounts payable
8,878

 
12,543

Affiliate payables
2,209

 
3,181

Accrued interest and taxes
24,113

 
23,778

Other current liabilities
9,380

 
8,999

Total current liabilities
75,780

 
77,901

Long-term Debt
335,944

 
336,036

Deferred Credits and Other Liabilities:
 
 
 
Accumulated deferred income taxes
193,887

 
190,197

Regulatory liabilities
47,569

 
46,038

Asset retirement obligations
798

 
782

Accrued pension liability and postretirement benefit cost
3,091

 
3,435

Other deferred credits
6,289

 
5,111

Total deferred credits and other liabilities
251,634

 
245,563

Total liabilities
663,358

 
659,500

Commitments and Contingencies (See Note 11)


 


Common Stockholder’s Equity:
 
 
 
Common stock outstanding ($10 par value; 12,000,000 shares authorized;
 
 
 
issued and outstanding 6,358 shares)
64

 
64

Paid-in-capital
404,166

 
404,166

Accumulated other comprehensive income (loss), net of income taxes
(327
)
 
(263
)
Retained earnings
105,767

 
98,964

Total common stockholder’s equity
509,670

 
502,931

 
$
1,173,028

 
$
1,162,431


The accompanying notes, as they relate to TNMP, are an integral part of these financial statements.


25

Table of Contents

TEXAS-NEW MEXICO POWER COMPANY AND SUBSIDIARIES
A WHOLLY OWNED SUBSIDIARY OF PNM RESOURCES, INC.
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN COMMON STOCKHOLDER’S EQUITY
(Unaudited)
 
Common Stock
 
Paid-in Capital
 
AOCI
 
Retained Earnings
 
Total Common Stockholder’s Equity
 
(In thousands)
Balance at December 31, 2013
$
64

 
$
404,166

 
$
(263
)
 
$
98,964

 
$
502,931

Net earnings

 

 

 
6,803

 
6,803

Total other comprehensive income (loss)

 

 
(64
)
 

 
(64
)
Balance at March 31, 2014
$
64

 
$
404,166

 
$
(327
)
 
$
105,767

 
$
509,670


The accompanying notes, as they relate to TNMP, are an integral part of these financial statements.



26

Table of Contents

PNM RESOURCES, INC. AND SUBSIDIARIES
PUBLIC SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARIES
TEXAS-NEW MEXICO POWER COMPANY AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)



(1)
Significant Accounting Policies and Responsibility for Financial Statements

Financial Statement Preparation

In the opinion of management, the accompanying unaudited interim Condensed Consolidated Financial Statements reflect all normal and recurring accruals and adjustments that are necessary to present fairly the consolidated financial position at March 31, 2014 and December 31, 2013, and the consolidated results of operations, comprehensive income, and cash flows for the three months ended March 31, 2014 and 2013. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could ultimately differ from those estimated. Weather causes the Company’s results of operations to be seasonal in nature and the results of operations presented in the accompanying Condensed Consolidated Financial Statements are not necessarily representative of operations for an entire year.

The Notes to Condensed Consolidated Financial Statements include disclosures for PNMR, PNM, and TNMP. This report uses the term “Company” when discussing matters of common applicability to PNMR, PNM, and TNMP. Discussions regarding only PNMR, PNM, or TNMP are so indicated. Certain amounts in the 2013 Condensed Consolidated Financial Statements and Notes thereto have been reclassified to conform to the 2014 financial statement presentation.

These Condensed Consolidated Financial Statements are unaudited. Certain information and note disclosures normally included in the annual Consolidated Financial Statements have been condensed or omitted, as permitted under the applicable rules and regulations. Readers of these financial statements should refer to PNMR’s, PNM’s, and TNMP’s audited Consolidated Financial Statements and Notes thereto that are included in their respective 2013 Annual Reports on Form 10-K.

GAAP defines subsequent events as events or transactions that occur after the balance sheet date but before financial statements are issued or are available to be issued. Based on their nature, magnitude, and timing, certain subsequent events may be required to be reflected at the balance sheet date and/or required to be disclosed in the financial statements. The Company has evaluated subsequent events as required by GAAP.

Principles of Consolidation
The Condensed Consolidated Financial Statements of each of PNMR, PNM, and TNMP include their accounts and those of subsidiaries in which that entity owns a majority voting interest. PNM also consolidates the PVNGS Capital Trust and Valencia. PNM owns undivided interests in several jointly-owned power plants and records its pro-rata share of the assets, liabilities, and expenses for those plants. The agreements for the jointly-owned plants provide that if an owner were to default on its payment obligations, the non-defaulting owners would be responsible for their proportionate share of the obligations of the defaulting owner. In exchange, the non-defaulting owners would be entitled to their proportionate share of the generating capacity of the defaulting owner. There have been no such payment defaults under any of the agreements for the jointly-owned plants.

PNMR shared services’ administrative and general expenses, which represent costs that are primarily driven by corporate level activities, are charged to the business segments at cost. Other significant intercompany transactions between PNMR, PNM, and TNMP include interest and income tax sharing payments, as well as dividends paid on common stock. All intercompany transactions and balances have been eliminated. See Note 14.


27

Table of Contents

PNM RESOURCES, INC. AND SUBSIDIARIES
PUBLIC SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARIES
TEXAS-NEW MEXICO POWER COMPANY AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)


(2)
Earnings Per Share

In accordance with GAAP, dual presentation of basic and diluted earnings per share is presented in the Condensed Consolidated Statements of Earnings of PNMR. Information regarding the computation of earnings per share is as follows:
 
Three Months Ended
 
March 31,
 
2014
 
2013
 
(In thousands, except per share amounts)
Net Earnings Attributable to PNMR
$
12,468

 
$
10,626

Average Number of Common Shares:
 
 
 
Outstanding during period
79,654

 
79,654

    Vested awards of restricted stock
182

 
211

Average Shares - Basic
79,836

 
79,865

Dilutive Effect of Common Stock Equivalents (1):
 
 
 
Stock options and restricted stock
551

 
715

Average Shares - Diluted
80,387

 
80,580

Net Earnings Per Share of Common Stock:
 
 
 
Basic
$
0.16

 
$
0.13

Diluted
$
0.16

 
$
0.13


(1) 
Excludes the effect of out-of-the-money options for 486,016 shares of common stock at March 31, 2014.

(3)
Segment Information

The following segment presentation is based on the methodology that management uses for making operating decisions and assessing performance of its various business activities. A reconciliation of the segment presentation to the GAAP financial statements is provided.

PNM
PNM includes the retail electric utility operations of PNM that are subject to traditional rate regulation by the NMPRC. PNM provides integrated electricity services that include the generation, transmission, and distribution of electricity for retail electric customers in New Mexico. PNM also provides generation service to firm-requirements wholesale customers and sells electricity into the wholesale market, as well as providing transmission services to third parties. The sale of electricity into the wholesale market includes the optimization of PNM’s jurisdictional capacity, as well as the capacity from PVNGS Unit 3, which is not included in retail rates. FERC has jurisdiction over wholesale and transmission rates.

TNMP
TNMP is an electric utility providing regulated transmission and distribution services in Texas under the TECA. TNMP’s operations are subject to traditional rate regulation by the PUCT.

Corporate and Other

The Corporate and Other segment includes PNMR holding company activities, primarily related to corporate level debt and PNMR Services Company.

The following tables present summarized financial information for PNMR by segment. PNM and TNMP each operate in only one segment. Therefore, tabular segment information is not presented for PNM and TNMP.

28

Table of Contents

PNM RESOURCES, INC. AND SUBSIDIARIES
PUBLIC SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARIES
TEXAS-NEW MEXICO POWER COMPANY AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)



PNMR SEGMENT INFORMATION
 
PNM
 
TNMP
 
Corporate
and Other
 
Consolidated
Three Months Ended March 31, 2014
(In thousands)
Electric operating revenues
$
262,736

 
$
66,161

 
$

 
$
328,897

Cost of energy
96,626

 
15,988

 

 
112,614

Margin
166,110

 
50,173

 

 
216,283

Other operating expenses
107,724

 
21,069

 
(3,228
)
 
125,565

Depreciation and amortization
27,082

 
11,842

 
3,041

 
41,965

Operating income
31,304

 
17,262

 
187

 
48,753

Interest income
2,128

 

 
(11
)
 
2,117

Other income (deductions)
1,668

 
189

 
(641
)
 
1,216

Net interest charges
(19,812
)
 
(6,598
)
 
(3,125
)
 
(29,535
)
Segment earnings (loss) before income taxes
15,288

 
10,853

 
(3,590
)
 
22,551

Income taxes (benefit)
4,083

 
4,050

 
(1,713
)
 
6,420

Segment earnings (loss)
11,205

 
6,803

 
(1,877
)
 
16,131

Valencia non-controlling interest
(3,531
)
 

 

 
(3,531
)
Subsidiary preferred stock dividends
(132
)
 

 

 
(132
)
Segment earnings (loss) attributable to PNMR
$
7,542

 
$
6,803

 
$
(1,877
)
 
$
12,468

 
 
 
 
 
 
 
 
At March 31, 2014:
 
 
 
 
 
 
 
Total Assets
$
4,219,635

 
$
1,173,028

 
$
114,363

 
$
5,507,026

Goodwill
$
51,632

 
$
226,665

 
$

 
$
278,297

 
PNM
 
TNMP
 
Corporate
and Other
 
Consolidated
Three Months Ended March 31, 2013
(In thousands)
Electric operating revenues
$
257,894

 
$
59,771

 
$

 
$
317,665

Cost of energy
91,660

 
13,046

 

 
104,706

Margin
166,234

 
46,725

 

 
212,959

Other operating expenses
103,161

 
21,990

 
(3,703
)
 
121,448

Depreciation and amortization
25,834

 
11,681

 
3,292

 
40,807

Operating income
37,239

 
13,054

 
411

 
50,704

Interest income
2,673

 

 
(39
)
 
2,634

Other income (deductions)
1,407

 
208

 
(1,725
)
 
(110
)
Net interest charges
(19,957
)
 
(7,246
)
 
(4,094
)
 
(31,297
)
Segment earnings (loss) before income taxes
21,362

 
6,016

 
(5,447
)
 
21,931

Income taxes (benefit)
6,589

 
2,290

 
(910
)
 
7,969

Segment earnings (loss)
14,773

 
3,726

 
(4,537
)
 
13,962