PNM 6.30.2015 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 June 30, 2015

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 July 24, 2015, 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 July 24, 2015 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 July 24, 2015 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:
  
 
ABCWUA
 
Albuquerque-Bernalillo County Water Utility Authority
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, the operator and a co-owner of PVNGS and Four Corners
ASU
 
Accounting Standards Update
BACT
  
Best Available Control Technology
BART
  
Best Available Retrofit Technology
BDT
 
Balanced Draft 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
COFA
 
Capacity Option and Funding Agreement
CSA
 
Coal Supply Agreement
CTC
  
Competition Transition Charge
D.C. Circuit
 
United States Court of Appeals for the District of Columbia Circuit
Delta
  
Delta-Person Generating Station, now known as Rio Bravo
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
EPE
 
El Paso Electric
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
FTY
 
Future Test Year
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
IRS
 
Internal Revenue Service

4

Table of Contents

ISFSI
 
Independent Spent Fuel Storage Installation
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
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.
NEPA
 
National Environmental Policy Act
NERC
  
North American Electric Reliability Corporation
New Mexico Wind
 
New Mexico Wind Energy Center
NMAG
 
New Mexico Attorney General
NMED
  
New Mexico Environment Department
NMIEC
 
New Mexico Industrial Energy Consumers Inc.
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
PCRBs
 
Pollution Control Revenue Bonds
PNM
  
Public Service Company of New Mexico and Subsidiaries
PNM 2013 Term Loan Agreement
 
PNM’s $75.0 Million Unsecured Term Loan
PNM 2014 Term Loan Agreement
 
PNM’s $175.0 Million Unsecured Term Loan
PNM Multi-draw Term Loan
 
PNM’s $125.0 Million Unsecured Multi-draw 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
PNMR
  
PNM Resources, Inc. and Subsidiaries
PNMR 2015 Term Loan Agreement
 
PNMR’s $150.0 Million Unsecured Term Loan
PNMR Development
 
PNMR Development and Management Company, an unregulated wholly-owned subsidiary of PNMR
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

5

Table of Contents

PPA
  
Power Purchase Agreement
PSD
  
Prevention of Significant Deterioration
PUCT
  
Public Utility Commission of Texas
PV
  
Photovoltaic
PVNGS
  
Palo Verde Nuclear Generating Station
RA
 
San Juan Project Restructuring Agreement
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
Rio Bravo
 
Rio Bravo Generating Station, formerly known as Delta
RMC
  
Risk Management Committee
ROE
 
Return on Equity
RPS
  
Renewable Energy Portfolio Standard
RSIP
  
Revised State Implementation Plan
S&P
  
Standard and Poor’s Ratings Services
SCE
 
Southern California Edison Company
SCPPA
 
Southern California Public Power Authority
SCR
 
Selective Catalytic Reduction
SEC
  
United States Securities and Exchange Commission
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
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 2011 Term Loan Agreement
 
TNMP’s $50.0 Million Secured Term Loan
TNMP Revolving Credit Facility
  
TNMP’s $75.0 Million Secured Revolving Credit Facility
TNP
 
TNP Enterprises, Inc. and Subsidiaries
Tucson
 
Tucson Electric Power Company
UG-CSA
 
Underground Coal Sales Agreement
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 June 30,
 
Six Months Ended June 30,
 
2015
 
2014
 
2015
 
2014
 
(In thousands, except per share amounts)
Electric Operating Revenues 
$
352,887

 
$
346,160

 
$
685,755

 
$
675,057

Operating Expenses:

 
 
 

 

Cost of energy
114,038

 
109,419

 
229,683

 
222,033

Administrative and general
39,928

 
45,235

 
83,787

 
89,093

Energy production costs
44,790

 
45,846

 
87,459

 
93,134

Regulatory disallowances
1,529

 

 
1,744

 

Depreciation and amortization
46,049

 
42,163

 
91,510

 
84,130

Transmission and distribution costs
16,868

 
16,068

 
33,354

 
32,974

Taxes other than income taxes
17,271

 
16,133

 
36,234

 
33,644

Total operating expenses
280,473

 
274,864

 
563,771

 
555,008

Operating income
72,414

 
71,296

 
121,984

 
120,049

Other Income and Deductions:
 
 
 
 
 
 
 
Interest income
1,941

 
2,040

 
3,691

 
4,158

Gains on available-for-sale securities
5,556

 
4,699

 
9,580

 
7,272

Other income
5,717

 
3,180

 
10,679

 
4,754

Other (deductions)
(3,707
)
 
(2,169
)
 
(7,370
)
 
(5,102
)
Net other income and deductions
9,507

 
7,750

 
16,580

 
11,082

Interest Charges
28,913

 
29,972

 
59,186

 
59,506

Earnings before Income Taxes
53,008

 
49,074

 
79,378

 
71,625

Income Taxes
17,353

 
15,893

 
25,870

 
22,313

Net Earnings
35,655

 
33,181

 
53,508

 
49,312

(Earnings) Attributable to Valencia Non-controlling Interest
(3,850
)
 
(3,908
)
 
(7,231
)
 
(7,439
)
Preferred Stock Dividend Requirements of Subsidiary
(132
)
 
(132
)
 
(264
)
 
(264
)
Net Earnings Attributable to PNMR
$
31,673

 
$
29,141

 
$
46,013

 
$
41,609

Net Earnings Attributable to PNMR per Common Share:
 
 
 
 
 
 
 
Basic
$
0.40

 
$
0.37

 
$
0.58

 
$
0.52

Diluted
$
0.40

 
$
0.36

 
$
0.57

 
$
0.52

Dividends Declared per Common Share
$
0.200

 
$
0.185

 
$
0.400

 
$
0.370


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 June 30,
 
Six Months Ended June 30,
 
2015
 
2014
 
2015
 
2014
 
(In thousands)
Net Earnings
$
35,655

 
$
33,181

 
$
53,508

 
$
49,312

Other Comprehensive Income (Loss):
 
 
 
 
 
 
 
Unrealized Gain on Available-for-Sale Securities:
 
 
 
 
 
 
 
Unrealized holding gains (losses) arising during the period, net of income tax (expense) benefit of $266, $(2,602), $(2,413) and $(3,809)
(413
)
 
3,999

 
3,744

 
6,046

Reclassification adjustment for (gains) included in net earnings, net of income tax expense of $3,278, $2,210, $4,913 and $3,488
(5,087
)
 
(3,397
)
 
(7,624
)
 
(5,369
)
Pension Liability Adjustment:
 
 
 
 
 
 
 
Reclassification adjustment for amortization of experience (gain) loss recognized as net periodic benefit cost, net of income tax expense (benefit) of $(583), $(508), $(1,166) and $(1,016)
905

 
780

 
1,810

 
1,560

Fair Value Adjustment for Cash Flow Hedges:
 
 
 
 
 
 
 
Change in fair market value, net of income tax (expense) benefit of $0, $0, $0 and $53

 

 

 
(100
)
Reclassification adjustment for (gains) losses included in net earnings, net of income tax expense (benefit) of $0, $(42), $0 and $(61)

 
79

 

 
115

Total Other Comprehensive Income (Loss)
(4,595
)
 
1,461

 
(2,070
)
 
2,252

Comprehensive Income
31,060

 
34,642

 
51,438

 
51,564

Comprehensive (Income) Attributable to Valencia Non-controlling Interest
(3,850
)
 
(3,908
)
 
(7,231
)
 
(7,439
)
Preferred Stock Dividend Requirements of Subsidiary
(132
)
 
(132
)
 
(264
)
 
(264
)
Comprehensive Income Attributable to PNMR
$
27,078

 
$
30,602

 
$
43,943

 
$
43,861


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)
 
Six Months Ended June 30,
 
2015
 
2014
 
(In thousands)
Cash Flows From Operating Activities:
 
 
 
Net earnings
$
53,508

 
$
49,312

Adjustments to reconcile net earnings to net cash flows from operating activities:
 
 
 
Depreciation and amortization
108,891

 
103,436

Deferred income tax expense
26,675

 
24,252

Net unrealized (gains) losses on commodity derivatives
6,127

 
3,187

Realized (gains) on available-for-sale securities
(9,580
)
 
(7,272
)
Stock based compensation expense
2,761

 
3,399

Regulatory disallowances
1,744

 

Other, net
(1,926
)
 
38

Changes in certain assets and liabilities:
 
 
 
Accounts receivable and unbilled revenues
(20,899
)
 
(17,543
)
Materials, supplies, and fuel stock
(8,285
)
 
6,346

Other current assets
16,342

 
(20,688
)
Other assets
8,062

 
18,237

Accounts payable
(20,777
)
 
(29,384
)
Accrued interest and taxes
(4,380
)
 
(2,830
)
Other current liabilities
(10,195
)
 
(3,341
)
Other liabilities
(38,394
)
 
(3,343
)
Net cash flows from operating activities
109,674

 
123,806

 
 
 
 
Cash Flows From Investing Activities:
 
 
 
Additions to utility and non-utility plant
(232,964
)
 
(160,893
)
Proceeds from sales of available-for-sale securities
94,522

 
53,119

Purchases of available-for-sale securities
(94,905
)
 
(54,338
)
Return of principal on PVNGS lessor notes
14,188

 
10,231

Other, net
2,694

 
750

Net cash flows from investing activities
(216,465
)
 
(151,131
)

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)

 
Six Months Ended June 30,
 
2015
 
2014
 
(In thousands)
Cash Flows From Financing Activities:
 
 
 
Short-term borrowings (repayments), net
82,000

 
(44,200
)
Long-term borrowings
214,300

 
255,000

Repayment of long-term debt
(158,066
)
 
(125,000
)
Proceeds from stock option exercise
7,347

 
4,446

Awards of common stock
(18,814
)
 
(13,939
)
Dividends paid
(32,125
)
 
(29,732
)
Valencia’s transactions with its owner
(7,614
)
 
(8,189
)
Other, net
(2,107
)
 
(1,482
)
Net cash flows from financing activities
84,921

 
36,904

 
 
 
 
Change in Cash and Cash Equivalents
(21,870
)
 
9,579

Cash and Cash Equivalents at Beginning of Period
28,274

 
2,533

Cash and Cash Equivalents at End of Period
$
6,404

 
$
12,112

 
 
 
 
Supplemental Cash Flow Disclosures:
 
 
 
Interest paid, net of amounts capitalized
$
56,309

 
$
54,712

Income taxes paid (refunded), net
$
(1,231
)
 
$
(2,534
)
 
 
 
 
Supplemental schedule of noncash investing and financing activities:
 
 
 
Changes in accrued plant additions
$
(743
)
 
$
(7,909
)

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)
 
June 30,
2015
 
December 31,
2014
 
(In thousands)
ASSETS
 
 
 
Current Assets:
 
 
 
Cash and cash equivalents
$
6,404

 
$
28,274

Accounts receivable, net of allowance for uncollectible accounts of $1,363 and $1,466
94,703

 
87,038

Unbilled revenues
75,527

 
63,719

Other receivables
30,027

 
39,857

Materials, supplies, and fuel stock
71,913

 
63,628

Regulatory assets
23,142

 
47,855

Commodity derivative instruments
4,550

 
11,232

Income taxes receivable
5,934

 
6,360

Current portion of accumulated deferred income taxes
26,383

 
26,383

Other current assets
71,482

 
58,471

Total current assets
410,065

 
432,817

Other Property and Investments:
 
 
 
Investment in PVNGS lessor notes

 
9,538

Available-for-sale securities
253,550

 
250,145

Other investments
507

 
1,762

Non-utility property
3,404

 
3,406

Total other property and investments
257,461

 
264,851

Utility Plant:
 
 
 
Plant in service and plant held for future use
6,085,078

 
5,941,581

Less accumulated depreciation and amortization
2,017,711

 
1,939,760

 
4,067,367

 
4,001,821

Construction work in progress
261,049

 
190,389

Nuclear fuel, net of accumulated amortization of $45,138 and $44,507
81,275

 
77,796

Net utility plant
4,409,691

 
4,270,006

Deferred Charges and Other Assets:
 
 
 
Regulatory assets
474,426

 
491,007

Goodwill
278,297

 
278,297

Other deferred charges
97,078

 
92,347

Total deferred charges and other assets
849,801

 
861,651

 
$
5,927,018

 
$
5,829,325


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)
 
June 30,
2015
 
December 31,
2014
 
(In thousands, except share information)
LIABILITIES AND STOCKHOLDERS’ EQUITY
 
 
 
Current Liabilities:
 
 
 
Short-term debt
$
187,600

 
$
105,600

Current installments of long-term debt
300,000

 
333,066

Accounts payable
88,509

 
110,029

Customer deposits
12,711

 
12,555

Accrued interest and taxes
49,452

 
53,863

Regulatory liabilities
2,202

 
1,703

Commodity derivative instruments
1,153

 
1,209

Dividends declared
132

 
16,063

Other current liabilities
59,345

 
70,194

Total current liabilities
701,104

 
704,282

Long-term Debt
1,731,158

 
1,642,024

Deferred Credits and Other Liabilities:
 
 
 
Accumulated deferred income taxes
918,519

 
891,111

Regulatory liabilities
470,558

 
466,143

Asset retirement obligations
108,406

 
104,170

Accrued pension liability and postretirement benefit cost
70,583

 
110,738

Commodity derivative instruments

 
477

Other deferred credits
101,282

 
103,759

Total deferred credits and other liabilities
1,669,348

 
1,676,398

Total liabilities
4,101,610

 
4,022,704

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)
1,165,003

 
1,173,845

Accumulated other comprehensive income (loss), net of income taxes
(63,825
)
 
(61,755
)
Retained earnings
639,538

 
609,456

Total PNMR common stockholders’ equity
1,740,716

 
1,721,546

Non-controlling interest in Valencia
73,163

 
73,546

Total equity
1,813,879

 
1,795,092

 
$
5,927,018

 
$
5,829,325

 
 
 
 

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, 2014
$
1,173,845

 
$
(61,755
)
 
$
609,456

 
$
1,721,546

 
$
73,546

 
$
1,795,092

Proceeds from stock option exercise
7,347

 

 

 
7,347

 

 
7,347

Awards of common stock
(18,814
)
 

 

 
(18,814
)
 

 
(18,814
)
Excess tax (shortfall) from stock-based payment arrangements
(136
)
 

 

 
(136
)
 

 
(136
)
Stock based compensation expense
2,761

 

 

 
2,761

 

 
2,761

Valencia’s transactions with its owner

 

 

 

 
(7,614
)
 
(7,614
)
Net earnings before subsidiary preferred stock dividends

 

 
46,277

 
46,277

 
7,231

 
53,508

Subsidiary preferred stock dividends

 

 
(264
)
 
(264
)
 

 
(264
)
Total other comprehensive income

 
(2,070
)
 

 
(2,070
)
 

 
(2,070
)
Dividends declared on common stock

 

 
(15,931
)
 
(15,931
)
 

 
(15,931
)
Balance at June 30, 2015
$
1,165,003

 
$
(63,825
)
 
$
639,538

 
$
1,740,716

 
$
73,163

 
$
1,813,879



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



13

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 June 30,
 
Six Months Ended June 30,
 
2015
 
2014
 
2015
 
2014
 
(In thousands)
Electric Operating Revenues
$
275,450

 
$
275,704

 
$
537,390

 
$
538,441

Operating Expenses:
 
 
 
 
 
 
 
Cost of energy
95,728

 
92,642

 
193,594

 
189,268

Administrative and general
36,956

 
40,603

 
76,524

 
79,213

Energy production costs
44,790

 
45,846

 
87,459

 
93,134

Regulatory disallowances
1,529

 

 
1,744

 

Depreciation and amortization
29,002

 
27,023

 
57,405

 
54,105

Transmission and distribution costs
10,272

 
10,183

 
21,040

 
21,510

Taxes other than income taxes
9,994

 
9,601

 
20,790

 
20,100

Total operating expenses
228,271

 
225,898

 
458,556

 
457,330

Operating income
47,179

 
49,806

 
78,834

 
81,111

Other Income and Deductions:
 
 
 
 
 
 
 
Interest income
1,946

 
2,065

 
3,717

 
4,193

Gains on available-for-sale securities
5,556

 
4,699

 
9,580

 
7,272

Other income
4,901

 
2,443

 
8,292

 
3,555

Other (deductions)
(3,011
)
 
(1,630
)
 
(4,615
)
 
(3,647
)
Net other income and deductions
9,392

 
7,577

 
16,974

 
11,373

Interest Charges
19,681

 
20,023

 
39,640

 
39,835

Earnings before Income Taxes
36,890

 
37,360

 
56,168

 
52,649

Income Taxes
11,527

 
13,106

 
17,302

 
17,189

Net Earnings
25,363

 
24,254

 
38,866

 
35,460

(Earnings) Attributable to Valencia Non-controlling Interest
(3,850
)
 
(3,908
)
 
(7,231
)
 
(7,439
)
Net Earnings Attributable to PNM
21,513

 
20,346

 
31,635

 
28,021

Preferred Stock Dividends Requirements
(132
)
 
(132
)
 
(264
)
 
(264
)
Net Earnings Available for PNM Common Stock
$
21,381

 
$
20,214

 
$
31,371

 
$
27,757


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


14

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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 June 30,
 
Six Months Ended June 30,
 
2015
 
2014
 
2015
 
2014
 
(In thousands)
Net Earnings
$
25,363

 
$
24,254

 
$
38,866

 
$
35,460

Other Comprehensive Income (Loss):
 
 
 
 
 
 
 
Unrealized Gain on Available-for-Sale Securities:
 
 
 
 
 
 
 
Unrealized holding gains (losses) arising during the period, net of income tax (expense) benefit of $266, $(2,602), $(2,413) and $(3,809)
(413
)
 
3,999

 
3,744

 
6,046

Reclassification adjustment for (gains) included in net earnings, net of income tax expense of $3,278, $2,210, $4,913 and $3,488
(5,087
)
 
(3,397
)
 
(7,624
)
 
(5,369
)
Pension Liability Adjustment:
 
 
 
 
 
 
 
Reclassification adjustment for amortization of experience (gain) loss recognized as net periodic benefit cost, net of income tax expense (benefit) of $(583), $(508), $(1,166) and $(1,016)
905

 
780

 
1,810

 
1,560

Total Other Comprehensive Income (Loss)
(4,595
)
 
1,382

 
(2,070
)
 
2,237

Comprehensive Income
20,768

 
25,636

 
36,796

 
37,697

Comprehensive (Income) Attributable to Valencia Non-controlling Interest
(3,850
)
 
(3,908
)
 
(7,231
)
 
(7,439
)
Comprehensive Income Attributable to PNM
$
16,918

 
$
21,728

 
$
29,565

 
$
30,258


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


15

Table of Contents



PUBLIC SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARIES
A WHOLLY OWNED SUBSIDIARY OF PNM RESOURCES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
 
Six Months Ended June 30,
 
2015
 
2014
 
(In thousands)
Cash Flows From Operating Activities:
 
 
 
Net earnings
$
38,866

 
$
35,460

Adjustments to reconcile net earnings to net cash flows from operating activities:
 
 
 
Depreciation and amortization
73,701

 
71,327

Deferred income tax expense
18,464

 
19,716

Net unrealized (gains) losses on commodity derivatives
6,127

 
3,187

Realized (gains) on available-for-sale securities
(9,580
)
 
(7,272
)
Regulatory disallowances
1,744

 

Other, net
(2,958
)
 
193

Changes in certain assets and liabilities:
 
 
 
Accounts receivable and unbilled revenues
(15,283
)
 
(13,885
)
Materials, supplies, and fuel stock
(7,860
)
 
6,447

Other current assets
15,882

 
(22,588
)
Other assets
7,568

 
18,790

Accounts payable
(21,315
)
 
(26,737
)
Accrued interest and taxes
412

 
(1,575
)
Other current liabilities
(3,259
)
 
3,943

Other liabilities
(34,729
)
 
(3,193
)
Net cash flows from operating activities
67,780

 
83,813

 
 
 
 
Cash Flows From Investing Activities:
 
 
 
Utility plant additions
(172,937
)
 
(92,567
)
Proceeds from sales of available-for-sale securities
94,522

 
53,119

Purchases of available-for-sale securities
(94,905
)
 
(54,338
)
Return of principal on PVNGS lessor notes
14,188

 
10,231

Other, net
2,859

 
(70
)
Net cash flows from investing activities
(156,273
)
 
(83,625
)

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


16

Table of Contents



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

 
Six Months Ended June 30,
 
2015
 
2014
 
(In thousands)
Cash Flows From Financing Activities:
 
 
 
Short-term borrowings (repayments), net
51,100

 
(49,200
)
Short-term borrowings (repayments), affiliate, net

 
(32,500
)
Long-term borrowings
64,300

 
175,000

Repayment of long-term debt
(39,300
)
 
(75,000
)
Valencia’s transactions with its owner
(7,614
)
 
(8,189
)
Dividends paid
(264
)
 
(264
)
Other, net
(1,659
)
 
(700
)
Net cash flows from financing activities
66,563

 
9,147

 
 
 
 
Change in Cash and Cash Equivalents
(21,930
)
 
9,335

Cash and Cash Equivalents at Beginning of Period
25,480

 
21

Cash and Cash Equivalents at End of Period
$
3,550

 
$
9,356

 
 
 
 
Supplemental Cash Flow Disclosures:
 
 
 
Interest paid, net of amounts capitalized
$
36,977

 
$
36,601

Income taxes paid (refunded), net
$
(1,450
)
 
$
(215
)
 
 
 
 
Supplemental schedule of noncash investing activities:
 
 
 
Changes in accrued plant additions
$
2,813

 
$
(5,595
)

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


17

Table of Contents



PUBLIC SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARIES
A WHOLLY OWNED SUBSIDIARY OF PNM RESOURCES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
 
June 30,
2015
 
December 31,
2014
 
(In thousands)
ASSETS
 
 
 
Current Assets:
 
 
 
Cash and cash equivalents
$
3,550

 
$
25,480

Accounts receivable, net of allowance for uncollectible accounts of $1,363 and $1,466
70,342

 
67,622

Unbilled revenues
65,277

 
54,140

Other receivables
29,751

 
37,622

Affiliate receivables
10,746

 
8,853

Materials, supplies, and fuel stock
68,719

 
60,859

Regulatory assets
17,699

 
43,980

Commodity derivative instruments
4,550

 
11,232

Income taxes receivable
5,816

 
6,105

Current portion of accumulated deferred income taxes
12,418

 
12,418

Other current assets
64,082

 
53,095

Total current assets
352,950

 
381,406

Other Property and Investments:
 
 
 
Investment in PVNGS lessor notes

 
9,538

Available-for-sale securities
253,550

 
250,145

Other investments
265

 
397

Non-utility property
96

 
96

Total other property and investments
253,911

 
260,176

Utility Plant:
 
 
 
Plant in service and plant held for future use
4,698,267

 
4,581,066

Less accumulated depreciation and amortization
1,542,034

 
1,486,406

 
3,156,233

 
3,094,660

Construction work in progress
217,860

 
169,673

Nuclear fuel, net of accumulated amortization of $45,138 and $44,507
81,275

 
77,796

Net utility plant
3,455,368

 
3,342,129

Deferred Charges and Other Assets:
 
 
 
Regulatory assets
344,472

 
357,045

Goodwill
51,632

 
51,632

Other deferred charges
85,946

 
81,264

Total deferred charges and other assets
482,050

 
489,941

 
$
4,544,279

 
$
4,473,652

 
 
 
 

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)
 
June 30,
2015
 
December 31,
2014
 
(In thousands, except share information)
LIABILITIES AND STOCKHOLDER’S EQUITY
 
 
 
Current Liabilities:
 
 
 
Short-term debt
$
51,100

 
$

Current installments of long-term debt
300,000

 
214,300

Accounts payable
67,553

 
86,055

Affiliate payables
20,991

 
18,232

Customer deposits
12,711

 
12,555

Accrued interest and taxes
29,817

 
29,298

Regulatory liabilities
2,202

 
1,703

Commodity derivative instruments
1,153

 
1,209

Dividends declared
20,132

 
132

Other current liabilities
45,276

 
52,053

Total current liabilities
550,935

 
415,537

Long-term Debt
1,215,676

 
1,276,357

Deferred Credits and Other Liabilities:
 
 
 
Accumulated deferred income taxes
734,871

 
715,814

Regulatory liabilities
431,552

 
425,481

Asset retirement obligations
107,377

 
103,182

Accrued pension liability and postretirement benefit cost
63,340

 
102,850

Commodity derivative instruments

 
477

Other deferred credits
83,679

 
86,023

Total deferred credits and liabilities
1,420,819

 
1,433,827

Total liabilities
3,187,430

 
3,125,721

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
(63,825
)
 
(61,755
)
Retained earnings
274,206

 
262,835

Total PNM common stockholder’s equity
1,272,157

 
1,262,856

Non-controlling interest in Valencia
73,163

 
73,546

Total equity
1,345,320

 
1,336,402

 
$
4,544,279

 
$
4,473,652


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

19

Table of Contents

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, 2014
$
1,061,776

 
$
(61,755
)
 
$
262,835

 
$
1,262,856

 
$
73,546

 
$
1,336,402

Valencia’s transactions with its owner

 

 

 

 
(7,614
)
 
(7,614
)
Net earnings

 

 
31,635

 
31,635

 
7,231

 
38,866

Total other comprehensive income

 
(2,070
)
 

 
(2,070
)
 

 
(2,070
)
Dividends declared on preferred stock

 

 
(264
)
 
(264
)
 

 
(264
)
Dividends declared on common stock

 

 
(20,000
)
 
(20,000
)
 

 
(20,000
)
Balance at June 30, 2015
$
1,061,776

 
$
(63,825
)
 
$
274,206

 
$
1,272,157

 
$
73,163

 
$
1,345,320



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 June 30,
 
Six Months Ended June 30,
 
2015
 
2014
 
2015
 
2014
 
(In thousands)
Electric Operating Revenues
$
77,437

 
$
70,456

 
$
148,365

 
$
136,616

Operating Expenses:
 
 
 
 
 
 
 
Cost of energy
18,310

 
16,777

 
36,089

 
32,765

Administrative and general
8,042

 
8,768

 
17,875

 
18,609

Depreciation and amortization
13,591

 
12,003

 
27,049

 
23,844

Transmission and distribution costs
6,596

 
5,885

 
12,314

 
11,464

Taxes other than income taxes
6,169

 
5,758

 
12,378

 
11,408

Total operating expenses
52,708

 
49,191

 
105,705

 
98,090

Operating income
24,729

 
21,265

 
42,660

 
38,526

Other Income and Deductions:
 
 
 
 
 
 
 
Other income
792

 
586

 
2,332

 
1,006

Other (deductions)
1

 
(72
)
 
(248
)
 
(304
)
Net other income and deductions
793

 
514

 
2,084

 
702

Interest Charges
6,856

 
6,655

 
13,781

 
13,252

Earnings before Income Taxes
18,666

 
15,124

 
30,963

 
25,976

Income Taxes
6,801

 
5,590

 
11,404

 
9,640

Net Earnings
$
11,865

 
$
9,534

 
$
19,559

 
$
16,336


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 June 30,
 
Six Months Ended June 30,
 
2015
 
2014
 
2015
 
2014
 
(In thousands)
Net Earnings
$
11,865

 
$
9,534

 
$
19,559

 
$
16,336

Other Comprehensive Income:
 
 
 
 
 
 
 
Fair Value Adjustment for Cash Flow Hedges:
 
 
 
 
 
 
 
Change in fair market value, net of income tax (expense) benefit of $0, $0, $0 and $53

 

 

 
(100
)
Reclassification adjustment for (gains) losses included in net earnings, net of income tax expense (benefit) of $0, $(42), $0 and $(61)

 
79

 

 
115

Total Other Comprehensive Income

 
79

 

 
15

Comprehensive Income
$
11,865

 
$
9,613

 
$
19,559

 
$
16,351


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)
 
Six Months Ended June 30,
 
2015
 
2014
 
(In thousands)
Cash Flows From Operating Activities:
 
 
 
Net earnings
$
19,559

 
$
16,336

Adjustments to reconcile net earnings to net cash flows from operating activities:
 
 
 
Depreciation and amortization
27,839

 
25,728

Deferred income tax expense
6,175

 
6,162

Other, net
(90
)
 
(38
)
Changes in certain assets and liabilities:
 
 
 
Accounts receivable and unbilled revenues
(5,616
)
 
(3,658
)
Materials and supplies
(425
)
 
(101
)
Other current assets
(1,264
)
 
(803
)
Other assets
68

 
(273
)
Accounts payable
385

 
1,381

Accrued interest and taxes
(173
)
 
(726
)
Other current liabilities
2,530

 
2,167

Other liabilities
(4,132
)
 
365

Net cash flows from operating activities
44,856

 
46,540

Cash Flows From Investing Activities:
 
 
 
Utility plant additions
(50,256
)
 
(64,502
)
Net cash flows from investing activities
(50,256
)
 
(64,502
)
Cash Flow From Financing Activities:
 
 
 
Short-term borrowings (repayments), net
24,000

 

Short-term borrowings (repayments) – affiliate, net
(18,600
)
 
(4,200
)
Long-term borrowings

 
80,000

Repayment of long-term debt

 
(50,000
)
Dividends paid

 
(6,803
)
Other, net

 
(783
)
Net cash flows from financing activities
5,400

 
18,214

 
 
 
 
Change in Cash and Cash Equivalents

 
252

Cash and Cash Equivalents at Beginning of Period
1

 
1
Cash and Cash Equivalents at End of Period
$
1

 
$
253

 
 
 
 
Supplemental Cash Flow Disclosures:
 
 
 
Interest paid, net of amounts capitalized
$
12,990

 
$
11,847

Income taxes paid (refunded), net
$
950

 
$
(304
)
 
 
 
 
Supplemental schedule of noncash investing and financing activities:
 
 
 
Changes in accrued plant additions
$
(2,311
)
 
$
1,038


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)
 
June 30,
2015
 
December 31,
2014
 
(In thousands)
ASSETS
 
 
 
Current Assets:
 
 
 
Cash and cash equivalents
$
1

 
$
1

Accounts receivable
24,361

 
19,416

Unbilled revenues
10,250

 
9,579

Other receivables
712

 
2,063

Materials and supplies
3,194

 
2,769

Regulatory assets
5,443

 
3,875

Current portion of accumulated deferred income taxes
6,398

 
6,398

Other current assets
2,117

 
938

Total current assets
52,476

 
45,039

Other Property and Investments:
 
 
 
Other investments
242

 
242

Non-utility property
2,240

 
2,240

Total other property and investments
2,482

 
2,482

Utility Plant:
 
 
 
Plant in service and plant held for future use
1,207,232

 
1,182,112

Less accumulated depreciation and amortization
391,169

 
375,407

 
816,063

 
806,705

Construction work in progress
32,149

 
16,538

Net utility plant
848,212

 
823,243

Deferred Charges and Other Assets:
 
 
 
Regulatory assets
129,954

 
133,962

Goodwill
226,665

 
226,665

Other deferred charges
9,073

 
8,850

Total deferred charges and other assets
365,692

 
369,477

 
$
1,268,862

 
$
1,240,241


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)
 
June 30,
2015
 
December 31,
2014
 
(In thousands, except share information)
LIABILITIES AND STOCKHOLDER’S EQUITY
 
 
 
Current Liabilities:
 
 
 
Short-term debt
$
29,000

 
$
5,000

Short-term debt – affiliate
4,100

 
22,700

Accounts payable
12,277

 
14,203

Affiliate payables
4,123

 
2,469

Accrued interest and taxes
28,401