Attached files

file filename
EX-32.2 - EXHIBIT 32.2 CERTIFICATION - PNM RESOURCES INCpnm3312015ex322.htm
EX-10.1 - EXHIBIT 10.1 2015 OFFICER ANNUAL INCENTIVE PLAN - PNM RESOURCES INCpnm3312015ex101.htm
EX-31.4 - EXHIBIT 31.4 CERTIFICATION - PNM RESOURCES INCpnm3312015ex314.htm
EX-12.1 - EXHIBIT 12.1 PNMR RATIO OF EARNINGS TO FIXED CHARGES - PNM RESOURCES INCpnm3312015ex121.htm
EX-31.3 - EXHIBIT 31.3 CERTIFICATION - PNM RESOURCES INCpnm3312015ex313.htm
EX-31.2 - EXHIBIT 31.2 CERTIFICATION - PNM RESOURCES INCpnm3312015ex312.htm
EX-10.3 - EXHIBIT 10.3 CHIEF EXECUTIVE OFFICER RETENTION PLAN - PNM RESOURCES INCpnm3312015ex103.htm
EX-12.3 - EXHIBIT 12.3 TNMP RATIO OF EARNINGS TO FIXED CHARGES - PNM RESOURCES INCpnm3312015ex123.htm
EX-32.3 - EXHIBIT 32.3 CERTIFICATION - PNM RESOURCES INCpnm3312015ex323.htm
EX-31.1 - EXHIBIT 31.1 CERTIFICATION - PNM RESOURCES INCpnm3312015ex311.htm
EX-10.2 - EXHIBIT 10.2 2015 LONG-TERM INCENTIVE PLAN - PNM RESOURCES INCpnm3312015ex102.htm
EX-32.1 - EXHIBIT 32.1 CERTIFICATION - PNM RESOURCES INCpnm3312015ex321.htm
EX-12.2 - EXHIBIT 12.2 PNM RATIO OF EARNINGS TO FIXED CHARGES - PNM RESOURCES INCpnm3312015ex122.htm
EX-31.6 - EXHIBIT 31.6 CERTIFICATION - PNM RESOURCES INCpnm3312015ex316.htm
EXCEL - IDEA: XBRL DOCUMENT - PNM RESOURCES INCFinancial_Report.xls
EX-31.5 - EXHIBIT 31.5 CERTIFICATION - PNM RESOURCES INCpnm3312015ex315.htm

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, 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
 





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 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 April 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 April 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


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

INDEX

 
Page No.
 
 
 
 
 
 


3


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, 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
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
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
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

4


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
PG&E
 
Pacific Gas and Electric Co.
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
PPA
  
Power Purchase Agreement
PSD
  
Prevention of Significant Deterioration
PUCT
  
Public Utility Commission of Texas

5


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
SCE
 
Southern California Edison Company
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
S&P
  
Standard and Poor’s Ratings Services
TCEQ
 
Texas Commission on Environmental Quality
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
Tucson
 
Tucson Electric Power Company
Valencia
  
Valencia Energy Facility
VaR
  
Value at Risk
WACC
 
Weighted Average Cost of Capital
WEG
 
WildEarth Guardians

6


PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS


PNM RESOURCES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
(Unaudited)
 
Three Months Ended March 31,
 
2015
 
2014
 
(In thousands, except per share amounts)
Electric Operating Revenues 
$
332,868

 
$
328,897

Operating Expenses:

 
 
Cost of energy
115,645

 
112,614

Administrative and general
43,859

 
43,859

Energy production costs
42,669

 
47,288

Regulatory disallowances
215

 

Depreciation and amortization
45,461

 
41,965

Transmission and distribution costs
16,487

 
16,906

Taxes other than income taxes
18,963

 
17,512

Total operating expenses
283,299

 
280,144

Operating income
49,569

 
48,753

Other Income and Deductions:
 
 
 
Interest income
1,750

 
2,117

Gains on available-for-sale securities
4,024

 
2,573

Other income
4,961

 
1,574

Other (deductions)
(3,662
)
 
(2,931
)
Net other income and deductions
7,073

 
3,333

Interest Charges
30,273

 
29,535

Earnings before Income Taxes
26,369

 
22,551

Income Taxes
8,517

 
6,420

Net Earnings
17,852

 
16,131

(Earnings) Attributable to Valencia Non-controlling Interest
(3,380
)
 
(3,531
)
Preferred Stock Dividend Requirements of Subsidiary
(132
)
 
(132
)
Net Earnings Attributable to PNMR
$
14,340

 
$
12,468

Net Earnings Attributable to PNMR per Common Share:
 
 
 
Basic
$
0.18

 
$
0.16

Diluted
$
0.18

 
$
0.16

Dividends Declared per Common Share
$
0.200

 
$
0.185


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



7


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

 
Three Months Ended March 31,
 
2015
 
2014
 
(In thousands)
Net Earnings
$
17,852

 
$
16,131

Other Comprehensive Income:
 
 
 
Unrealized Gain on Available-for-Sale Securities:
 
 
 
Unrealized holding gains arising during the period, net of income tax (expense) of $(2,679) and $(1,332)
4,157

 
2,047

Reclassification adjustment for (gains) included in net earnings, net of income tax expense of $1,635 and $1,283
(2,537
)
 
(1,972
)
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) and $(508)
905

 
780

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

 
(100
)
Reclassification adjustment for (gains) losses included in net earnings, net of income tax expense (benefit) of $0 and $(19)

 
36

Total Other Comprehensive Income
2,525

 
791

Comprehensive Income
20,377

 
16,922

Comprehensive (Income) Attributable to Valencia Non-controlling Interest
(3,380
)
 
(3,531
)
Preferred Stock Dividend Requirements of Subsidiary
(132
)
 
(132
)
Comprehensive Income Attributable to PNMR
$
16,865

 
$
13,259


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


8


PNM RESOURCES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
 
Three Months Ended March 31,
 
2015
 
2014
 
(In thousands)
Cash Flows From Operating Activities:
 
 
 
Net earnings
$
17,852

 
$
16,131

Adjustments to reconcile net earnings to net cash flows from operating activities:
 
 
 
Depreciation and amortization
55,062

 
51,949

Deferred income tax expense
8,326

 
6,276

Net unrealized (gains) losses on commodity derivatives
1,720

 
2,761

Realized (gains) on available-for-sale securities
(4,024
)
 
(2,573
)
Stock based compensation expense
2,214

 
2,131

Regulatory disallowances
215

 

Other, net
148

 
1,005

Changes in certain assets and liabilities:
 
 
 
Accounts receivable and unbilled revenues
12,170

 
17,207

Materials, supplies, and fuel stock
(2,657
)
 
5,894

Other current assets
3,817

 
8,344

Other assets
4,220

 
6,386

Accounts payable
(2,639
)
 
(34,373
)
Accrued interest and taxes
24,811

 
25,813

Other current liabilities
(21,223
)
 
(30,359
)
Other liabilities
(33,278
)
 
(199
)
Net cash flows from operating activities
66,734

 
76,393

 
 
 
 
Cash Flows From Investing Activities:
 
 
 
Additions to utility and non-utility plant
(100,214
)
 
(83,838
)
Proceeds from sales of available-for-sale securities
31,852

 
22,804

Purchases of available-for-sale securities
(32,661
)
 
(23,612
)
Return of principal on PVNGS lessor notes
14,188

 
10,231

Other, net
144

 
13

Net cash flows from investing activities
(86,691
)
 
(74,402
)

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

9


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

 
Three Months Ended March 31,
 
2015
 
2014
 
(In thousands)
Cash Flows From Financing Activities:
 
 
 
Short-term borrowings (repayments), net
(5,600
)
 
(49,200
)
Long-term borrowings
150,000

 
175,000

Repayment of long-term debt

 
(75,000
)
Proceeds from stock option exercise
6,847

 
3,258

Awards of common stock
(17,140
)
 
(11,639
)
Dividends paid
(16,063
)
 
(14,868
)
Valencia’s transactions with its owner
(4,160
)
 
(4,369
)
Other, net
194

 
(539
)
Net cash flows from financing activities
114,078

 
22,643

 
 
 
 
Change in Cash and Cash Equivalents
94,121

 
24,634

Cash and Cash Equivalents at Beginning of Period
28,274

 
2,533

Cash and Cash Equivalents at End of Period
$
122,395

 
$
27,167

 
 
 
 
Supplemental Cash Flow Disclosures:
 
 
 
Interest paid, net of amounts capitalized
$
6,191

 
$
4,718

Income taxes paid (refunded), net
$
(1,450
)
 
$
(1,419
)
 
 
 
 
Supplemental schedule of noncash investing and financing activities:
 
 
 
Changes in accrued plant additions
$
5,186

 
$
(13,095
)

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


10


PNM RESOURCES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
 
March 31,
2015
 
December 31,
2014
 
(In thousands)
ASSETS
 
 
 
Current Assets:
 
 
 
Cash and cash equivalents
$
122,395

 
$
28,274

Accounts receivable, net of allowance for uncollectible accounts of $1,466 and $1,466
89,844

 
87,038

Unbilled revenues
48,042

 
63,719

Other receivables
37,898

 
39,857

Materials, supplies, and fuel stock
66,284

 
63,628

Regulatory assets
33,550

 
47,855

Commodity derivative instruments
9,342

 
11,232

Income taxes receivable
4,719

 
6,360

Current portion of accumulated deferred income taxes
26,383

 
26,383

Other current assets
65,264

 
58,471

Total current assets
503,721

 
432,817

Other Property and Investments:
 
 
 
Investment in PVNGS lessor notes

 
9,538

Available-for-sale securities
257,464

 
250,145

Other investments
509

 
1,762

Non-utility property
3,406

 
3,406

Total other property and investments
261,379

 
264,851

Utility Plant:
 
 
 
Plant in service and plant held for future use
5,982,387

 
5,941,581

Less accumulated depreciation and amortization
1,971,832

 
1,939,760

 
4,010,555

 
4,001,821

Construction work in progress
230,014

 
190,389

Nuclear fuel, net of accumulated amortization of $51,203 and $44,507
79,208

 
77,796

Net utility plant
4,319,777

 
4,270,006

Deferred Charges and Other Assets:
 
 
 
Regulatory assets
481,057

 
491,007

Goodwill
278,297

 
278,297

Other deferred charges
95,108

 
92,347

Total deferred charges and other assets
854,462

 
861,651

 
$
5,939,339

 
$
5,829,325


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


11


PNM RESOURCES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
 
March 31,
2015
 
December 31,
2014
 
(In thousands, except share information)
LIABILITIES AND STOCKHOLDERS’ EQUITY
 
 
 
Current Liabilities:
 
 
 
Short-term debt
$
100,000

 
$
105,600

Current installments of long-term debt
333,066

 
333,066

Accounts payable
102,204

 
110,029

Customer deposits
12,791

 
12,555

Accrued interest and taxes
77,234

 
53,863

Regulatory liabilities
178

 
1,703

Commodity derivative instruments
1,235

 
1,209

Dividends declared
16,063

 
16,063

Other current liabilities
50,263

 
70,194

Total current liabilities
693,034

 
704,282

Long-term Debt
1,791,941

 
1,642,024

Deferred Credits and Other Liabilities:
 
 
 
Accumulated deferred income taxes
902,901

 
891,111

Regulatory liabilities
470,180

 
466,143

Asset retirement obligations
106,267

 
104,170

Accrued pension liability and postretirement benefit cost
75,236

 
110,738

Commodity derivative instruments
277

 
477

Other deferred credits
100,816

 
103,759

Total deferred credits and other liabilities
1,655,677

 
1,676,398

Total liabilities
4,140,652

 
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)
1,165,757

 
1,173,845

Accumulated other comprehensive income (loss), net of income taxes
(59,230
)
 
(61,755
)
Retained earnings
607,865

 
609,456

Total PNMR common stockholders’ equity
1,714,392

 
1,721,546

Non-controlling interest in Valencia
72,766

 
73,546

Total equity
1,787,158

 
1,795,092

 
$
5,939,339

 
$
5,829,325

 
 
 
 

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


12


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
6,847

 

 

 
6,847

 

 
6,847

Awards of common stock
(17,140
)
 

 

 
(17,140
)
 

 
(17,140
)
Excess tax (shortfall) from stock-based payment arrangements
(9
)
 

 

 
(9
)
 

 
(9
)
Stock based compensation expense
2,214

 

 

 
2,214

 

 
2,214

Valencia’s transactions with its owner

 

 

 

 
(4,160
)
 
(4,160
)
Net earnings before subsidiary preferred stock dividends

 

 
14,472

 
14,472

 
3,380

 
17,852

Subsidiary preferred stock dividends

 

 
(132
)
 
(132
)
 

 
(132
)
Total other comprehensive income

 
2,525

 

 
2,525

 

 
2,525

Dividends declared on common stock

 

 
(15,931
)
 
(15,931
)
 

 
(15,931
)
Balance at March 31, 2015
$
1,165,757

 
$
(59,230
)
 
$
607,865

 
$
1,714,392

 
$
72,766

 
$
1,787,158



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



13



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,
 
2015
 
2014
 
(In thousands)
Electric Operating Revenues
$
261,940

 
$
262,736

Operating Expenses:
 
 
 
Cost of energy
97,866

 
96,626

Administrative and general
39,567

 
38,609

Energy production costs
42,669

 
47,288

Regulatory disallowances
215

 

Depreciation and amortization
28,403

 
27,082

Transmission and distribution costs
10,769

 
11,327

Taxes other than income taxes
10,796

 
10,500

Total operating expenses
230,285

 
231,432

Operating income
31,655

 
31,304

Other Income and Deductions:
 
 
 
Interest income
1,771

 
2,128

Gains on available-for-sale securities
4,024

 
2,573

Other income
3,392

 
1,113

Other (deductions)
(1,606
)
 
(2,018
)
Net other income and deductions
7,581

 
3,796

Interest Charges
19,959

 
19,812

Earnings before Income Taxes
19,277

 
15,288

Income Taxes
5,775

 
4,083

Net Earnings
13,502

 
11,205

(Earnings) Attributable to Valencia Non-controlling Interest
(3,380
)
 
(3,531
)
Net Earnings Attributable to PNM
10,122

 
7,674

Preferred Stock Dividends Requirements
(132
)
 
(132
)
Net Earnings Available for PNM Common Stock
$
9,990

 
$
7,542


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


14


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,
 
2015
 
2014
 
(In thousands)
Net Earnings
$
13,502

 
$
11,205

Other Comprehensive Income:
 
 
 
Unrealized Gain on Available-for-Sale Securities:
 
 
 
Unrealized holding gains arising during the period, net of income tax (expense) of $(2,679) and $(1,332)
4,157

 
2,047

Reclassification adjustment for (gains) included in net earnings, net of income tax expense of $1,635 and $1,283
(2,537
)
 
(1,972
)
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) and $(508)
905

 
780

Total Other Comprehensive Income
2,525

 
855

Comprehensive Income
16,027

 
12,060

Comprehensive (Income) Attributable to Valencia Non-controlling Interest
(3,380
)
 
(3,531
)
Comprehensive Income Attributable to PNM
$
12,647

 
$
8,529


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


15


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,
 
2015
 
2014
 
(In thousands)
Cash Flows From Operating Activities:
 
 
 
Net earnings
$
13,502

 
$
11,205

Adjustments to reconcile net earnings to net cash flows from operating activities:
 
 
 
Depreciation and amortization
37,470

 
35,950

Deferred income tax expense
5,908

 
4,185

Net unrealized (gains) losses on commodity derivatives
1,720

 
2,761

Realized (gains) on available-for-sale securities
(4,024
)
 
(2,573
)
Regulatory disallowances
215

 

Other, net
(974
)
 
1,042

Changes in certain assets and liabilities:
 
 
 
Accounts receivable and unbilled revenues
12,385

 
15,018

Materials, supplies, and fuel stock
(2,558
)
 
5,974

Other current assets
5,110

 
6,809

Other assets
4,479

 
6,042

Accounts payable
4,622

 
(31,847
)
Accrued interest and taxes
22,832

 
22,362

Other current liabilities
(18,836
)
 
(29,609
)
Other liabilities
(30,178
)
 
(806
)
Net cash flows from operating activities
51,673

 
46,513

 
 
 
 
Cash Flows From Investing Activities:
 
 
 
Utility plant additions
(81,988
)
 
(51,594
)
Proceeds from sales of available-for-sale securities
31,852

 
22,804

Purchases of available-for-sale securities
(32,661
)
 
(23,612
)
Return of principal on PVNGS lessor notes
14,188

 
10,231

Other, net
144

 
(1
)
Net cash flows from investing activities
(68,465
)
 
(42,172
)

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


16


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,
 
2015
 
2014
 
(In thousands)
Cash Flows From Financing Activities:
 
 
 
Short-term borrowings (repayments), net

 
(49,200
)
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
(4,160
)
 
(4,369
)
Dividends paid
(132
)
 
(132
)
Other, net
(144
)
 
(409
)
Net cash flows from financing activities
(4,436
)
 
13,390

 
 
 
 
Change in Cash and Cash Equivalents
(21,228
)
 
17,731

Cash and Cash Equivalents at Beginning of Period
25,480

 
21

Cash and Cash Equivalents at End of Period
$
4,252

 
$
17,752

 
 
 
 
Supplemental Cash Flow Disclosures:
 
 
 
Interest paid, net of amounts capitalized
$
4,287

 
$
4,222

Income taxes paid (refunded), net
$
(1,450
)
 
$
(215
)
 
 
 
 
Supplemental schedule of noncash investing activities:
 
 
 
Changes in accrued plant additions
$
7,421

 
$
(8,133
)

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


17


PUBLIC SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARIES
A WHOLLY OWNED SUBSIDIARY OF PNM RESOURCES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
 
March 31,
2015
 
December 31,
2014
 
(In thousands)
ASSETS
 
 
 
Current Assets:
 
 
 
Cash and cash equivalents
$
4,252

 
$
25,480

Accounts receivable, net of allowance for uncollectible accounts of $1,466 and $1,466
67,420

 
67,622

Unbilled revenues
41,255

 
54,140

Other receivables
33,636

 
37,622

Affiliate receivables
8,819

 
8,853

Materials, supplies, and fuel stock
63,416

 
60,859

Regulatory assets
29,932

 
43,980

Commodity derivative instruments
9,342

 
11,232

Income taxes receivable
4,788

 
6,105

Current portion of accumulated deferred income taxes
12,418

 
12,418

Other current assets
60,399

 
53,095

Total current assets
335,677

 
381,406

Other Property and Investments:
 
 
 
Investment in PVNGS lessor notes

 
9,538

Available-for-sale securities
257,464

 
250,145

Other investments
267

 
397

Non-utility property
96

 
96

Total other property and investments
257,827

 
260,176

Utility Plant:
 
 
 
Plant in service and plant held for future use
4,614,218

 
4,581,066

Less accumulated depreciation and amortization
1,506,576

 
1,486,406

 
3,107,642

 
3,094,660

Construction work in progress
199,367

 
169,673

Nuclear fuel, net of accumulated amortization of $51,203 and $44,507
79,208

 
77,796

Net utility plant
3,386,217

 
3,342,129

Deferred Charges and Other Assets:
 
 
 
Regulatory assets
349,295

 
357,045

Goodwill
51,632

 
51,632

Other deferred charges
83,839

 
81,264

Total deferred charges and other assets
484,766

 
489,941

 
$
4,464,487

 
$
4,473,652

 
 
 
 

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


18


PUBLIC SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARIES
A WHOLLY OWNED SUBSIDIARY OF PNM RESOURCES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
 
March 31,
2015
 
December 31,
2014
 
(In thousands, except share information)
LIABILITIES AND STOCKHOLDER’S EQUITY
 
 
 
Current Liabilities:
 
 
 
Current installments of long-term debt
$
214,300

 
$
214,300

Accounts payable
83,257

 
86,055

Affiliate payables
15,812

 
18,232

Customer deposits
12,791

 
12,555

Accrued interest and taxes
51,015

 
29,298

Regulatory liabilities
178

 
1,703

Commodity derivative instruments
1,235

 
1,209

Dividends declared
132

 
132

Other current liabilities
36,923

 
52,053

Total current liabilities
415,643

 
415,537

Long-term Debt
1,276,366

 
1,276,357

Deferred Credits and Other Liabilities:
 
 
 
Accumulated deferred income taxes
725,130

 
715,814

Regulatory liabilities
429,698

 
425,481

Asset retirement obligations
105,258

 
103,182

Accrued pension liability and postretirement benefit cost
67,706

 
102,850

Commodity derivative instruments
277

 
477

Other deferred credits
84,743

 
86,023

Total deferred credits and liabilities
1,412,812

 
1,433,827

Total liabilities
3,104,821

 
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
(59,230
)
 
(61,755
)
Retained earnings
272,825

 
262,835

Total PNM common stockholder’s equity
1,275,371

 
1,262,856

Non-controlling interest in Valencia
72,766

 
73,546

Total equity
1,348,137

 
1,336,402

 
$
4,464,487

 
$
4,473,652


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

19


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

 

 

 

 
(4,160
)
 
(4,160
)
Net earnings

 

 
10,122

 
10,122

 
3,380

 
13,502

Total other comprehensive income

 
2,525

 

 
2,525

 

 
2,525

Dividends declared on preferred stock

 

 
(132
)
 
(132
)
 

 
(132
)
Balance at March 31, 2015
$
1,061,776

 
$
(59,230
)
 
$
272,825

 
$
1,275,371

 
$
72,766

 
$
1,348,137



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

20



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,
 
2015
 
2014
 
(In thousands)
Electric Operating Revenues
$
70,928

 
$
66,161

Operating Expenses:
 
 
 
Cost of energy
17,779

 
15,988

Administrative and general
9,833

 
9,840

Depreciation and amortization
13,458

 
11,842

Transmission and distribution costs
5,718

 
5,579

Taxes other than income taxes
6,209

 
5,650

Total operating expenses
52,997

 
48,899

Operating income
17,931

 
17,262

Other Income and Deductions:
 
 
 
Other income
1,540

 
420

Other (deductions)
(249
)
 
(231
)
Net other income and deductions
1,291

 
189

Interest Charges
6,925

 
6,598

Earnings before Income Taxes
12,297

 
10,853

Income Taxes
4,603

 
4,050

Net Earnings
$
7,694

 
$
6,803


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



21


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,
 
2015
 
2014
 
(In thousands)
Net Earnings
$
7,694

 
$
6,803

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

 
(100
)
Reclassification adjustment for (gains) losses included in net earnings, net of income tax expense (benefit) of $0 and $(19)

 
36

Total Other Comprehensive Income (Loss)

 
(64
)
Comprehensive Income
$
7,694

 
$
6,739


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

22


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,
 
2015
 
2014
 
(In thousands)
Cash Flows From Operating Activities:
 
 
 
Net earnings
$
7,694

 
$
6,803

Adjustments to reconcile net earnings to net cash flows from operating activities:
 
 
 
Depreciation and amortization
13,831

 
12,851

Deferred income tax expense
4,170

 
3,665

Other, net

 
(36
)
Changes in certain assets and liabilities:
 
 
 
Accounts receivable and unbilled revenues
(215
)
 
2,189

Materials and supplies
(99
)
 
(81
)
Other current assets
981

 
2,446

Other assets
(139
)
 
302

Accounts payable
(7,640
)
 
(2,551
)
Accrued interest and taxes
(2,006
)
 
335

Other current liabilities
368

 
(1,768
)
Other liabilities
(3,631
)
 
1,465

Net cash flows from operating activities
13,314

 
25,620

Cash Flows From Investing Activities:
 
 
 
Utility plant additions
(13,763
)
 
(27,420
)
Net cash flows from investing activities
(13,763
)
 
(27,420
)
Cash Flow From Financing Activities:
 
 
 
Short-term borrowings (repayments), net
(5,000
)
 

Short-term borrowings (repayments) – affiliate, net
5,800

 
1,800

Net cash flows from financing activities
800

 
1,800

 
 
 
 
Change in Cash and Cash Equivalents
351

 

Cash and Cash Equivalents at Beginning of Period
1

 
1
Cash and Cash Equivalents at End of Period
$
352

 
$
1

 
 
 
 
Supplemental Cash Flow Disclosures:
 
 
 
Interest paid, net of amounts capitalized
$
1,664

 
$
73

Income taxes paid (refunded), net
$

 
$
(1,204
)
 
 
 
 
Supplemental schedule of noncash investing and financing activities:
 
 
 
Changes in accrued plant additions
$
(2,537
)
 
$
(1,109
)

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



23


TEXAS-NEW MEXICO POWER COMPANY AND SUBSIDIARIES
A WHOLLY OWNED SUBSIDIARY OF PNM RESOURCES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
 
March 31,
2015
 
December 31,
2014
 
(In thousands)
ASSETS
 
 
 
Current Assets:
 
 
 
Cash and cash equivalents
$
352

 
$
1

Accounts receivable
22,424

 
19,416

Unbilled revenues
6,787

 
9,579

Other receivables
1,220

 
2,063

Materials and supplies
2,868

 
2,769

Regulatory assets
3,618

 
3,875

Current portion of accumulated deferred income taxes
6,398

 
6,398

Other current assets
1,057

 
938

Total current assets
44,724

 
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
1,188,967

 
1,182,112

Less accumulated depreciation and amortization
383,711

 
375,407

 
805,256

 
806,705

Construction work in progress
23,427

 
16,538

Net utility plant
828,683

 
823,243

Deferred Charges and Other Assets:
 
 
 
Regulatory assets
131,762

 
133,962

Goodwill
226,665

 
226,665

Other deferred charges
9,094

 
8,850

Total deferred charges and other assets
367,521

 
369,477

 
$
1,243,410

 
$
1,240,241


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

24


TEXAS-NEW MEXICO POWER COMPANY AND SUBSIDIARIES
A WHOLLY OWNED SUBSIDIARY OF PNM RESOURCES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
 
March 31,
2015
 
December 31,
2014
 
(In thousands, except share information)
LIABILITIES AND STOCKHOLDER’S EQUITY
 
 
 
Current Liabilities:
 
 
 
Short-term debt
$

 
$
5,000

Short-term debt – affiliate
28,500

 
22,700

Accounts payable
9,101

 
14,203

Affiliate payables
2,120

 
2,469

Accrued interest and taxes
26,568

 
28,574

Other current liabilities
2,986

 
2,271

Total current liabilities
69,275

 
75,217

Long-term Debt
365,575

 
365,667

Deferred Credits and Other Liabilities:
 
 
 
Accumulated deferred income taxes
222,171

 
217,945

Regulatory liabilities
40,482

 
40,662

Asset retirement obligations
866

 
848

Accrued pension liability and postretirement benefit cost
7,530

 
7,888

Other deferred credits
5,152

 
7,349

Total deferred credits and other liabilities
276,201

 
274,692

Total liabilities
711,051

 
715,576

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

Retained earnings
128,129

 
120,435

Total common stockholder’s equity
532,359

 
524,665

 
$
1,243,410

 
$
1,240,241


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


25


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
 
Retained Earnings
 
Total Common Stockholder’s Equity
 
(In thousands)
Balance at December 31, 2014
$
64

 
$
404,166

 
$
120,435

 
$
524,665

Net earnings

 

 
7,694

 
7,694

Balance at March 31, 2015
$
64

 
$
404,166

 
$
128,129

 
$
532,359


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



26


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, 2015 and December 31, 2014 and the consolidated results of operations, comprehensive income, and the cash flows for the three months ended March 31, 2015 and 2014. 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 2014 Condensed Consolidated Financial Statements and Notes thereto have been reclassified to conform to the 2015 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 2014 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 began consolidating Rio Bravo, formerly known as Delta, upon its acquisition on July 17, 2014. 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 equity transactions. All intercompany transactions and balances have been eliminated. See Note 14.


27


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)


New Accounting Pronouncements

Information concerning recently issued accounting pronouncements that have not been adopted by the Company is presented below.

Accounting Standards Update 2014-09 Revenue from Contracts with Customers (Topic 606)

On May 28, 2014, the FASB issued ASU No. 2014-09. The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The ASU will replace most existing revenue recognition guidance in GAAP when it becomes effective. The new standard is effective for the Company beginning on January 1, 2017. Early adoption is not permitted. The standard permits the use of either the retrospective or cumulative effect transition method. On April 1, 2015, the FASB announced that it intends to propose a one-year delay in the effective date of ASU 2014-09. The Company is analyzing the impacts this new standard will have on its consolidated financial statements and related disclosures. The Company has not yet selected a transition method nor has it determined the effect of the standard on its ongoing financial reporting.

Accounting Standards Update 2014-15 Presentation of Financial Statements Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern

On August 27, 2014, the FASB issued ASU No. 2014-15, which requires management to evaluate whether there is substantial doubt about a company’s ability to continue as a going concern in connection with the preparation of financial statements for each annual and interim reporting period. Disclosure requirements associated with management’s evaluation are also outlined in the new guidance. The new standard is effective for the Company for reporting periods ending after December 15, 2016, with early adoption permitted. The Company is in the process of analyzing the impacts of this new standard.

Accounting Standards Update 2015-03 - Interest - Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs

On April 7, 2015, the FASB issued ASU No. 2015-03, which requires that issuance costs related to a recognized debt liability be presented in the balance sheet as a direct reduction of the carrying amount of that debt and not as an asset. The ASU is effective for the Company for reporting periods beginning after December 15, 2015, with early adoption permitted. The Company is in process of evaluating the impacts of the ASU. Currently, unamortized debt issuance costs are included in other deferred charges on the Condensed Consolidated Balance Sheets and, at March 31, 2015, amounted to $17.7 million for PNMR, $10.7 million for PNM, and $5.4 million for TNMP.

28


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,
 
2015
 
2014
 
(In thousands, except per share amounts)
Net Earnings Attributable to PNMR
$
14,340

 
$
12,468

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

 
79,654

    Vested awards of restricted stock
112

 
182

Average Shares – Basic
79,766

 
79,836

Dilutive Effect of Common Stock Equivalents (1):
 
 
 
Stock options and restricted stock
387

 
551

Average Shares – Diluted
80,153

 
80,387

Net Earnings Per Share of Common Stock:
 
 
 
Basic
$
0.18

 
$
0.16

Diluted
$
0.18

 
$
0.16


(1) 
Excludes the effect of out-of-the-money options for 248,750 shares of common stock at March 31, 2015.

(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 currently 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.

29


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
 
(In thousands)
Three Months Ended March 31, 2015
 
Electric operating revenues
$
261,940

 
$
70,928

 
$

 
$
332,868

Cost of energy
97,866

 
17,779

 

 
115,645

Margin
164,074

 
53,149

 

 
217,223

Other operating expenses
104,016

 
21,760

 
(3,583
)
 
122,193

Depreciation and amortization
28,403

 
13,458

 
3,600

 
45,461

Operating income (loss)
31,655

 
17,931

 
(17
)
 
49,569

Interest income
1,771

 

 
(21
)
 
1,750

Other income (deductions)
5,810

 
1,291

 
(1,778
)
 
5,323

Net interest charges
(19,959
)
 
(6,925
)
 
(3,389
)
 
(30,273
)
Segment earnings (loss) before income taxes
19,277

 
12,297

 
(5,205
)
 
26,369

Income taxes (benefit)
5,775

 
4,603

 
(1,861
)
 
8,517

Segment earnings (loss)
13,502

 
7,694

 
(3,344
)
 
17,852

Valencia non-controlling interest
(3,380
)
 

 

 
(3,380
)
Subsidiary preferred stock dividends
(132
)
 

 

 
(132
)
Segment earnings (loss) attributable to PNMR
$
9,990

 
$
7,694

 
$
(3,344
)