ML20080D008
| ML20080D008 | |
| Person / Time | |
|---|---|
| Site: | Palo Verde  |
| Issue date: | 08/24/1983 |
| From: | Geist J PUBLIC SERVICE CO. OF NEW MEXICO |
| To: | |
| Shared Package | |
| ML17298A528 | List: |
| References | |
| NUDOCS 8308290442 | |
| Download: ML20080D008 (36) | |
Text
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George Arthur Schreiber George Arthur Schreiber, Chairman of the Board and former President of PNN1, died November 7,1982 after a long illness. He i was 63. I l l Few corporations are as fortunate as PNN1 in its succession of leaders. Over the decades these men have guided PNN1 through difficult times while preparing your Company for the future. This
' long line of leaders has given PNN1 continuous strategic vision. Now one of those leaders is gone.
f Schreiber joined PNN1 in 1949. Seventeen years later he was named President. In 1974 he was elected Board Chairman. During his 16 years as President and later Chairman of the Board, Schreiber -l furthered the PNN1 tradition of strategic management and initiated actual conversion to coal-fired electric generation. He enhanced the Company's reputation as a respected, innovative utility. Lending his managerial skills to the City of Albuquerque, Schreiber led an urban renewal program in the 1960s and 1970s that brought
$20 million in federal money and $100 million in private investment into the city. The program sparked a resurgence : hat remade the face of downtown Albuquerque.
1 Those associated with PNN1 have lost a mentor, a leader and 1 a friend. l l 1 [
Thblo cf Contents Chairman's i.et ter 2 The Corporate Environment 4 1982 Company Operations 8 Financial Data and Consolidated Financial Statements 14 Directors and Oflicers 35 Smem N1ap Inside Back Cover Financial Higleliglets 1982 1981 % Change Operating revenues S 426,543,000 $ 336.165,000 26.9 Operating expenses S 308,889,000 $ 250,121,000 23.5 Operating income $ 117,654,000 $ 86,044,000 36.7 Net earnings $ 115,822,000 $ 107,958,000 7.3 Net earnings applicable to common stock $ 91,760,000 $ 88,095,000 4.2 Return on average common equity 13.6 % 18.6 % (26.9) Average number of common shares outstanding 28,508,000 20,804,000 37.0 Net earnings per common share $ 3.22 $ 4.23 (23.9) Dividends paid per common share $ 2.77 $ 2.68 3.4 Book value per common share ai year-end S 24.36 $ 23.89 2.0 Utility construction expenditures S 314,692,000 $ 328,342,000 (4.2) Gross in estment in utility property $2,054,713,000 $1,757,029,000 16.9 Kilowatt-hour sales 6,491,459,000 5,760,574,000 12.7 Number of electrie customers served at year-end 222,471 217,530 2.3 Aserage kwhr usage per residential customer 5,751 5,697 0.9 Number of employees 3,189 3,081 3.5 Number of common shareholders 54,495 47,430 14.9 Arreal Meeting Forni10 K Ihe annual meeting of our pertaining to the information in this A copy of the Company's Annual shareholders is scheduled to be held on report, please contact A.J. Robison, Report (Form 10-K) filed with the April 26,1983 at the Kimo Theatre, Sector Vice President, Finance, at Securities and Exchange Commission Albuquerque, New N1esico. We extend (505) 848-2890 or N1.A. Clifton, will be provided to shareholders upon an imitation to our shareholders to N1anager, Financial Planning, at (505) request to D.E. Peckham, Secretary, attend the annual meeting. 848-4537, Public Service Company of Public Service Company of New A prosy form and notice of the New N1cxico, Alvarado Square, Albu- N1exico, Alvarado Square, Albu-annual meeting along with additional querque, New N1exico 87158. querque, New Niexico 87158. information will be mailed to all The Common Stock of our shareholders on N1 arch 21,1983. Company is traded on the New York 6 For further information and details Stock Exchange under the symbol PNN1. 1 I J
I Chairman'a Letter 1 I electric supplies for your Company's We continue to work with our service area are secure for the future. regulators seeking new ways to benent in 1983,97 percent of our fuel for our customers and PNN1 through the
, electric generation will be coal. Due regulatory process. The innovative j chie0y to the lower cost of coal as fuel, ratemaking mechanism, Cost of Senice e our rates are declining relative to the Indexing, was ended in 1982. Ilowever, I o region. This year's costs of electricity there are other options that could also will be lower in real terms and, barring work to our customers' and PNN1's unforeseen events, relathcly stable prices lorc,-range benefit. One such option is are likely for the next several yeus. " inventorying capacity."
L Relieved of the demands of heavy Inventorying capacity addresses the construction, your Company is con- question of uncommitted generating centrating on innovative ways to capacity resulting from the uncertainties manage in this new economic climate, associated with the long lead times For instance, we have completed an in- required to construct a plant. The fact depth examination of our operating that capacity comes into ser ice like a expenses and programs. We have staircase rather than a smooth line has N!anaging rapid growth during delayed sorae programs and reduced resulted in requirements for large stair-innationary times has been a major others. The 1982 operating budget was step rate increases. The New Niexico theme facing American businesses in reduced by $10 million and the 1983 Public Service Commission is the recent past. This was especially budget will be reduced by about pioneering regulation of the capacity true for PNNI. In a massive con- $17 million. inventorying concept. struction program, we converted from Regarding cur market, we are Under this concept we place into natural gas and oil to coal as a boiler working with state and local officials inventory the uncommitted capacity fuel to meet the long-term needs of in their efforts to spur area and capitalize carrying charges against our customers in this rapidly growing deselopment and economic growth, it until that capacity is required to meet Sunbelt state. A key contribution is your Company's firm load. In this way, customers who As managers we now have a new diversification strategy. A major step in ultimately benefit from the lower cost-concern: slower growth in the near this strategy occurred in October 1982 inventoried capacity will also share the term. In light of this, PNN1 has accel- with groundbreaking for a medium carrying costs. PNN1 will avoid crated our efforts for increased pro- density fiberboard plant near Las earnings penalties for the high level of ductivity and efficiency, simultaneously Vegas, New Niexico. This $60 million uncertainty associated with planning encouraging growth in our service area plant will employ about 200 workers and the nature of plant additions. and pursuing new markets, when it reaches full production in 1984. PNN1 now has a construction This is not unique to PNNI. At this writing, the 1983 State program that is significantly more Businesses around the nation are Legislature is considering several bills modest than in the past and that will grappling with the challenge of creating relating to utility diversi0 cation. We keep pace with our service area's future the opportunities for innovation and believe the law passed in 1982 provides needs. The outlook for PNN1 is an development while simultaneously an adequate framework for allowing exciting one, given a more stable increasing efficiency and productivity utility diversification. If no additional growth trend in kilowatt-hour sales, the l of existing operations. A key to restrictive legislation is passed, PNN1's smaller construction program, relatively i meeting this challenge is for companies diversification will be allowed to stable electric prices and our sig-to position themselves strategically move forward to the benefit of New nificantly improved fuel base. in order to make things happen in Niexico's economy. The world has changed quickly, but the market and to seek innovation. To enhance long-term decision- PNN1 has maintained its competitive l 1 believe PNN1 is doing that. PNN1 making, we hase added an issues position. Our coal conversion will allow virtually has completed the strategic analysis system to provide senior your Company to maintain high quality capital mvestment program required to management with a well-coordinated, senice at reasonable prices while being meet the electric demands of future thoughtful analysis of the many issues in the position to meet the economic growth in New Niexico for this decade. we face. Through this program, upsurge that will surely come to this including advanced pollution control Company resources are assembled to energy-rich Sunbelt state. technologies, coal-Gred generating analyze issues in context, identify The skills our employees gained capacity is in place and, therefore, options and develop recommendations. during the period of rapid growth are 2
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'5 hew .\feAico n a leading statefor solar energy applications. PN.\f's resezrch and development efforts over the years have helped customersfind the best solar apphcations that operate in harmony wuh the utihty system.
being used to deselop innovative approaches to increase your Company's productisity and to contribute to New Mexico's growing economic activity. With the enthusiasm of our employees and the judgment of our Directors and Officers, we hope not only to succeed, but to excel. Finally, I wish to express my personal loss with the passing of i George A. Schreiber. His combination l of experience, judgment, vision and humanity made him a leader-the i rarest kind of individual. He will be missed. ( J.D. Geist Chairman and President 3 E
[ j ; The Corporate Environntent The long term growth rate in firm Environmental issues have been a product by creating new types of power electric energy sales is projected to slow major concern for PNN1 for almost sales. This will help us compete in this relative to the last ten years. From 1972 two decades and remain a priority. changing market. through 1982, PNN1's energy sales grew N1ost utilities firing their generators Currently, PNN1 has a six-year sales at a rate of 9.6 percent per year. The with coal will face clean-up costs. Our contract to sell up to 236 megawatts of rate of growth through 1993 is projected completion of environmentally efficient contingent capacity from San Juan to be approximately 5 percent. PNN1 coal-fired units at the San Juan Gen- Station to San Diego Gas and Electric has modified its long-range forecasts erating Station assures PNN1 a com- Company. The Company entered into a for new generating units and reduced petitive price posture for the 1980s. block energy agreement with the cities its construction budget accordingly. Perhaps the most important question of Burbank and Pasadena, California, With the completion of the San Juan facing PNN1 today is how to encourage on October 15, 1982. The agreement Generating Station, the major portion and facilitate the continued movement provides for the cities to purchase
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of PNN1 s construction budget will be by the New Niexico Public Service up to 307 Gwh of energy from N1ay 1, applied to its share of the Palo Verde Commission (NN1PSC) and the State 1983 through April 30,1984 at a Nuclear Generating Station in Arizona. Legislature toward sound regulation delivery rate of up to 35 megawatts per Due to the slower rate of growth in focusing on strategic objectives to hour. The Company also entered into a energy sales and associated demand, benefit PNN1's customers and investors. short-term energy agreement with El PNN1 expects to have temporary Regulators across the country were Paso Electric Company, headquartered uncommitted capacity to market to slow to recognize inflation. Cost of in El Paso, Texas, for the sale of up to neighboring utilities. Service Indexing (COSI) was one of the 400 Gwh of energy during the period As a utility in the Sunbelt, PNN1's few progressive regulatory mechanisms of N1 arch 1,1983 through January 31, service area will continue to experience that responded effectively to rising 1984 at a delivery rate of up to 50 comparatively rapid population growth inflation. COSI was eliminated by the megawatts per hour. This agreement in the future and the Company will be State Legislature in 1982. PNN1 now was executed January 28,1983. These under pressure to construct new must work closely with the NN1PSC to agreements are subject to approval by generating facilities to be available in insure the long-ran.e availability of the Federal Energy Regulatory the 1990s. Our best option is still New electricity for customers at a fair price. Commission (FERC). Niexico Station, now planned for the in November 1982, your Company mid-1990s. Strategies For The Future signed an agreement with Southwestern Since the OPEC price shock of 1973, The environment in which PNN1 now Public Service Company (SPS) fuel has been a major concern to utility is operating calls for new strategies for headquartered in Amarillo, Texas. investors and management. PNN1 has the future. Your Company is shifting Under this agreement, PNN1 will sell to cut its dependence on oil and natural from a heavy construction program to SPS up to 200 megawatts each hour of gas from about 60 percent in 1972 to greater emphasis on operating efficien- firm surplus energy between 1985 and about 5 percent in 1982, resulting in cies and enhanced customer sersice. 1990. From 1991 to 1995, PNN1 will major savings to its customers. New opportunities await. purchase 100 megawatts of interruptible power from SPS. From 1995 to 2011, Starketing SPS will provide PNN1 with up to 200 Because of uncommitted capacity in megawatts of interruptible power. the mid-term, your Company has Subject to regulatory approval, a 345 activated new marketing strategies. The kilovolt transmission line will be first phase is sales to other milities, built from Albuquerque to the vicinity The interutility market in the West is of Clovis, New Niexico, to serve that changing quickly. Limited transmission new market. capacity and a healthy spot market This transmission capacity will open offer obstacles to long-term contracts. the possibility of sales and purchases in PNN1 is seeking ways to sell our a new market to the East and proside PNN1 with needed mid-range capacity , in the future. These sales have reduced ; significantly the levels of uncommitted I capacity the Company must market in the 1980s while giving the Company mid-range capacity in the 1990s and beyond. 4
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c, ! trends, asew menko's P W,B 9 ,. ., ecomeney has slowed i sierlag 1982. Owr state's meining ladestry, espeelelly gj eepper end ersalene, has 9 w- : deellmed along with sonne je 7.c; >Q- *M -, erees of enenefacturing. We de expect the eteneeny to l a u.-4.w
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! Economic actinty in PNM's servia territory is projected to begin increasing in 1983. An early in- , dicator of that growth is the increuse in new housing starts during 1982. Mr. Brian Mcdonald [ Director. l PNh1 currently is studying a retail This team effort demonstrates that !c"$*n'orn$c esj"a cb " marketing plan. As an extension of business and government need not wait University of New Mexico load management concepts, the plan for market forces to change. Also, our would promote efficient electrical diversification strategy creates jobs and I utilization such as passive solar homes capital for New hiexico. Finally, we I with electric backup heating systems on offer new businesses energy supplies at off. peak rates. reasonable costs for years into the In addition, PNN1 has joined with future, with a degree of reliability not local and state groups under the leader- generally available around the country. ship of the Governor and the Depart- Not only does PNh1 have reliable ment of Commerce and Industry to energy supplies, but our industrial rates encourage economic growth in the are declining relative to those of our state. Designed to bring appropriate regional competitors. These facts create new industries, as well as expand those excellent prospects for accelerated already here, these efforts will bring economic development in PNh1's jobs to New hiexico and increase the sersice area. economic health of our service area. $
T l-l Finance ___ _ ,_ Your Company has adopted a
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i; [%' q t ' delaying otl.ers. - g- 3- 7; ; Additionally, the Company examined . ,.j .g a various projects planned for 1983 to g *( f approximately 1986. Some have been N 4. ~ , delayed to 1987 and beyond. By R delaying projects, PNM has held planned construction expenditures for s , , 1983 to 1987 constant as compared with previously projected levels, even / though costs for the Palo Verde Nuclear Ger.erating Station rose eC m is seeking to strengthen PNM's capitalization if / structure by shifting the common 't i ' equity ratio target to 40 percent. This \ oeb j strategy was enhanced in 1982 by two - i public offerings of Common Stock that - sold above book value.
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-mMTW 1982 Company Operations Farnings Resenues And inpenses Financing Requirements Net earnings applicable to Common Total operating revenues were up New external funds were obtained in '
i Stock increased from $88.1 million in 26.9 percent, from $336 million in 1981 1982 through the sale of $35 million of j 1981 to $91.8 million in 1982, an to $427 million in 1982. The increase in Preferred Stock in January and i ) increase of 4.2 percent. In spite of this revenues reDects rate relief from both through the public issuance of 6.0 i increase, net earnings per average share the NN1PSC and the FERC. Kilowatt- million shares of Common Stock of Common Stock decreased from hour sales increased 12.7 percent duc during the year with net proceeds of
$4.23 in 1981 to $3.22 in 1982. This primarily to energy sales to San Diego $147.9 million. Additionally, the decrease in carnings per share was due Gas and Electric Company and a 2.3 Company issued $60 million of first chie0y to a 37.0 percent increase in the percent increase in the number mortgage bonds in November. Short-j number of aserage shares of Common of customers, term debt was approximately $63.9 Stock outstanding. Operating expenses increased 23.5 million at the end of the year.
Furthermore, in 1981 PNN1 sold an percent in 1982 to $309 million, During 1932, the NN1PSC authorized
, 8.475 percent undivided interest in San primarily due to San Juan Unit 4 issuance of up to 500,000 shares of j Juan Unit 4 and 37.5 percent of its becoming operational in April and an Common Stock for a new Consumer i
retained economic interest in certain outage of San Juan Unit 2 from Stock Plan. Also,1.5 million shares i coal leases. These two transactions February I until June 9,1982, which of Common Stock were authorized to contributed approximately $5.1 million required additional purchased power. meet the continuing requirements of ($.25 per share) and $18.8 million ($.90 the Shareholder's Dividend Reinvest-per share), respectisely, to 1981 net ment Plan. earnings. No similar transactions occurred in 1932. The return on Hond Rating ) average common equity was 13.6 per- During September and October, cent in 1982, compared to 18.6 percent l PNN1's investment security ratings were ) ! in 1981. resiewed by Nicody's investment Ser- l vice, Inc., Standard and Poor's j Corporation, and Duff and Phelps, j inc. As a result, PNN1's ratings were downgraded for first mortgage bonds, pollution control revenue bonds secured by the Company's first mortgage ) Usmg mme-mouth operariums. thus reducing the to t offuel. PN.t! employed coal as 95 perwns of as generatmg fueldurmg 1982, bonds, unsecured pollution control l i revenue bonds guaranteed by the l Company, preferred stock and com-i mercial paper. ! l . The major factor cited by the rating I gI , l organizations for the downgrading was the 1982 State legislation ending the 1 t _ #[ m g_, COSI. The rating agencies also men-tioned a previously announced delay in completion dates and increased costs j 9" f P Verde Nuclear Generating
~'
Station, of which PNN1 is a 10.2 42 percent owner. Your Company's management believes maintenance of a high level of credit quality is of critical importance to overall financial objectives. The recent ! downgrading of PNN1's securities does l not reflect a change in that view. It reflects the rating agencies' concern for possible near-term effects of economic, regulatory, operating and 8 market conditions. l l l
Rates and Hegulation in October 1981, PNN1 filed an In 1982, the final COSI factor was application with the FERC for a rate set in place. This factor was calculated increase for wholesale customers based Y. to achieve a 15.5 percent return on on a 1982 test year. Settlement was + New hiexico jurisdictional year-end reached with these customers, except I i ciectric common equity. The Company for the City of Gallup, for this case originally requested $38.3 million rate and a previously filed case based on a relief in 1982, and began collecting 90 1981 test year. The FERC approved the p:rcent ($34.4 million) of this amount, agreed-upon rates in N1ay 1932. subject to refund, as of January 1,1982. Customers affected by these decisions '4-On December 30,1982, the are the City of Farmington, the Company received an order from the Department of Energy at Los Alamos, NN1PSC on the COSI factor allowing the Texas-New Niexico Power an increase of approximately $20.4 Company and Plains Electric Genera-million for 1982. The Company will tion and Transmission Cooperative, Inc. refund, as a credit on monthly billings The 1981 settlement rates reflect about a 6.7 percent ($4.8 million) during the year, approximately $17.6 million, including interest, to New revenue increase over the 1980 rates. M,".,, pwet.as ,he to s hiexico jurisdictional customers during The 1982 settlement further increased eled mm .emey steds. 1983 for revenues collected during revenues by approximately 15.2 NiU, , 1982. The refund also includes revenues percent, or $12.5 million, beyond the e.x dv s, seabete asso:iated with costs of rebuilding the 1981 settlement rates. The 1982 rates 3***'3*** 9'*** became effective in 51ay 1982. PNN1 ',1*i,, *d 7' "I '8r'd'$d,,, SO2equipment for San Juan Units I , and 2 as well as the gain from the sale made refunds including interest totaling s.l.sts .f pob4k Servk. of 40 megawatts of San Juan Unit 4 to $7.2 million in the 1981 case. A portion c p y of as.w mexk.. the City of Farmington, New hiexico. of that amount, $2.1 million, was fi., M
"* M*,Z Under the NN1PSC decision, PNh1 accrued in 1981. No refunds were c p y's , e required for the 1982 case. **yle. Ny'r. very fetw.-
will begin cempounding A!!owance for " *d '*
- Funds Used During Construction PNN1 negotiated a separate settle- % i , gw ;
(AFUDC) semiannually to more ment with the City of Gallup. This is ex ps..FF accurately reflect financing costs. PNN1 settlement relates to the 1982 test year Mrs. Barbara Holter was allowed to book such com- case and was approved by the FERC in out-of. state Investor pounding retroactive to January 1982. July 1982. A portion of the settlement The N A1PSC also allowed PNN1 to rates to Gallup became effective hiay capitalize carrying charges for 1982 on 1,1982. The balance will become 105 megawatts of San Juan Unit 4, effective in January 1984. The 1981 representing the portion of new case still is pending before the FERC. generating capacity which is not In February of 1983, PNh1 applied required by nor committed to the to the FERC for a rate increase for service of firm customers. This capacity wholesale customers based on a 1983 is being " inventoried" until it is test year. The application requests a , required by our customers. $10.4 million increase over the l Due to actions by the New hiexico presently effective rates from PNht's ! Legislature in 1982, COSI supplemental power customers and a was disallowed as a rate-making $1.35 million increase to the City of I mechanism. Future rate filings will Gallup over the 1982 settlement rates. be formulated on traditional rate-making concepts. 9
l 1 Electric Operations Water Operations Subsidiary Companies in April 1982, the fourth and final Through its operating division, the PNN! has three wholly-owned sub-unit at the San Juan Generating Station Sangre de Cristo Water Company, sidiary companies: Paragon Resources, became operational under budget and PNM has served the water needs of Inc., Sunbelt hiining Company, Inc. on schedule. With the completion of custcmers in Senta Fe and Las Vegas. and hieadows Resources, Inc. Each this unit, PNN1's total generating Headquartered in Santa Fe, this company has an independent mission. capability is 1,473 megawatts. division is separate from electric Paragon Resources, Inc. works Coal accounted for 95 percent of operations, reflecting the local nature exclusively for utility operations. It PNht's generating fuel in 1982. Natural of water operations. maintains land and water rights for gas and oil provided about 5 percent. The City of Las Vegas (City) future power plants by operating farms Forecasted fuel requirements in 1983 expressed an interest in operating the and ranches. Under New hiexico law, are about 97 percent coal and 3 percent Las Vegas water system and the water rights must be put to beneficial natural gas. The electricity generated by Company's evaluations indicated that use or revert to the state. Therefore, PNN1 during 1982 came from the fol. donation of the water system would be Paragon operates those farms and lowing generating facilities: beneficial to both PNht's shareholders ranches it owns to maintain water and the City. rights for the future. Location and PNN1's Share In late December 1982, PNN1 and Sunbelt hiining Company, Inc. e erating of C acity the City of Las Vegas, New hiexico designs, builds and operates coal mines reached an agreement which provides for PNN1 and regional customers. In Coal-fired stations, near Farmington f r the transfer of the Las Vegas water 1982, it operated the De-Na-Zin Stine i Four Corners units system to the City as a charitable and opened the Gateway hiine in north-l 4 and 5 206 contribution. Approval of the transfer western New hiexico. Both mines are San Juan units 1-4 976 is required by the NMPSC. targeted to provide st.pplemental coal Gas- and oil-fired to the San Juan Generating Station. l stations Albuquerque hieadows Resources, Inc. is Person Station 96 responsible for PNWs non-energy re-
" 5 lated diversification strategy. None of Ga a o-rd the work done by hieadows is related station, Las Vegas Las Vegas Turbine 20 to utility operations.
1,473 PNM provides electric service to approximately half the people of New Mexico. The Albuquerque Division service area encompasses approximately Itighty trained operators and sophisticated control systems are rnuired to operate a modern. coal-one third of the population of New fired power plant. Mexico. The Bernalillo and Belen - . c mm- v- -- ii Divisions serve the areas north and south of Albuquerque. The Santa Fe -
--m - m:'=P , ,~"
Division serves the state capital and .Vy , surrounding areas. The Las Vegas _. Q Q p gi ; l Division serves the City of Las Vegas in N .j c R- , north-central New Mexico. The ~~35GGETTSUIS Q@ 25 O. , Deming Division lies in the extreme OMOfE 3 OO~TE Nk - ' southern portion of the state, just north of the Mexico border. In addi-T U M IM1I I l - ' ~-Q t wW() Q Q M i tion to these operating divisions, PNM .x _J ' sells electricity to other utilities. 5 ~: l Total system requirements in 1982, .y@ s
- lip - '
l including sales to wholesale customers, _
~
have increased 13 percent over 1981. 7 m% ~ Total system peak demand was 957 , megawatts. This is a decrease of 3.7 10 percent from 1981. .
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.f sempentes, through u-._
funding ertheelegy, are
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resevreas. The truth of the l metter is that by fwnding P sp fj hoe stedles, h more we IJ know about the ershoelog-
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~ Informed deelslens we een
.. ; make. We come to h San ,
Jean Basin in 1977 for the ' 1 purpose of identifying l Aneseal communities that l
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> primerlly to locate these "g "s
, belldings and communities l
{l se that the Informulien could j , AC be taken Inte consideration 0 in early planning of devel-
' opment projects. In this 1
way, cost effestive and in. I- -'i formed destelens could be l y made for h preservetten of hoe sites.M
~
s s Mr. John Stein [,' y [-
!!: Archeologist
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ne a the result of dedicated,
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i
. s PNM/New Mexico Electric scrsice Compan) Merger On Nosember 23,1982, the ' ,, L SM
('ompany and New Meuco Electric TNch '
' I[$
%eruce Company (NME) of Ilobbs, [lh .[j C
New Meuco terminated the Agreement - and Plan of Merger dated January 31, .$ !!i [A. 1981 lxtween the two companies. The g merger agreement prouded for the merger of NME mio PNM. The l l propaed merger was approsed in 1981 N by a majority of shareholders of both 9 l companies. An application seeking approsal ot the merger was denied by ((..h h F .. l E the NMPSC late in 1981. ? Although the companies had com-menced preparation of a new -r 1 apphcation to request NMPSC appros al, it subsequently was deter-mmed to be in the best interests of both companies and Iheir customers to
- j l termmate the agreement. The merger p{ .
agreement would hase expired by its g terms on December 31, 1982. p
- v. m g
\
Organisation Your Company's Board of Directors QQ elected President J.D. Geist as Chair-man of the Board on Nosember 23, g*
~
1982. He succeeds Board Chairman George A. Schreiber who died i sl$:g [ i g" n Nosember 7. Since joining PNM m t 1960 Mr. Geist has sersed the ,. , 4dL a_d,"~ Company .n sarious executne posi- , ,. tions. lie was elected President in 1976 0 W ( l alter serung three years as Executive j '.
't*
Vice President. lie previously held y positions as Vice President of % Engineering and Operations and Vice ! President of Corporate Affairs. Your Board of Directors appointed Demand Sector Vice President John P. . A f l Bundrant to the Board in January 1983. lie tills the unexpired term of Mr. Schreibet Mr. Bundrant is the officer primarily responsible for utility l sersice to PNM's customers. His .. i g appointment demonstrates PNM's commitment to providing the best
- gll available seruce to its customers. .
m . han Juan Generatmg Station h features advanced pollutitm Il control s niems.
. I l________________________ __ _ _ _ ______. l
l _ _ _ . 6 [ l Consumer Stock Plan Southern Union Antitrust Suit in Nosember 1982, your Company In 1981, the Company filed suit in i ' s announced a Consumer Stock Plan, the United States District Court for the I 9 Any PNN1 consumer, including District of New Nicxico, alleging that wholesale customers, may purchase the natural gas supply contracts entered - 3 PNN1 Common Stock directly from into by the defendants constituted . gf the Company without a broker's violations of the Federal antitrust laws. service charge. In N1 arch 1982, a jury returned a - Consumers may invest as little as $10 verdict in favor of the Company and . but not more than $1,000 per purchase the other plaintiffs and agamst , each month. Subject to these dollar limits, consumers may make payments Southern Union Company, Southern Union Gathering Company, j gh I as often as they like, but they are Consolidated Oil and Gas, Inc. and - Q under no obligation to make a payment Conoco, Inc. The amount of damages l each month or to invest any minimum was not determined. The Court ,, ,,,,,,,,,, _ , amount over time. subsequently issued an order grantmg a ., , g , , a Your Company believes that con- motion by the defendants to set aside us ideos seaser= Ins di-sumers with a financial stake in PNN1 *** the jury verdict and for a new trial on - l are more likely to become interested m the issue of liability. The order for a '*%'
.,i e ,, g,g e ,eseem the Company's activities and plans. new trial in no way altered the merits of managerfel foreslekt end Such interest should result in a more thorough understanding of the issues of the case. '*y*j
,, **8*['*,,,
- i. ,,hless,a serpereesen facing PNN1 and the utility industry. most be esemible-te edgest Although the Plan's contribution to toebene.,balmeseend s
eteneenic circeanstesses. This overall capital requirements is expected pesas has done whheet ef-to be small, the Plan should ease cash fests., the well belas of its i flow needs. " breed and bewer" bas-ness-electrielty. To
,enerate additional revenue end create job -;; : . *^y, the state, too, has to be flexible in its cetteek and pelkies. It needs the help of '
business end, perhaps, set-ef state cosapenlos will ep-peer for this purpose. Itowever, we should not base eer bepe of eeeeesnie selvetsen en thats rather, resident besleess emeltfes Although slowed on 19H, populatoon growth cont.nues at rates greater than national averages M b* *****'*9*4 ** twause of the opportunities and twury of New Mexico. I * *M** *
~~ _
i.h = te . pressed 80ew Alemlee M sesellfles. II Mr. William R. Dales 4 in State imestor l t.: i ,j N - M. ._
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J Comparativa Operating Statistics l l l l 1982 1981 1980 1979 1978 Electric Sersice Energy sales- kwhr (in thousands) Residential 1,134,827 1,104,827 1,090,003 1,067,755 1,000,564 Commercial 1,515,664 1,483,105 1,441,634 1,403,282 1,353,805 Industrial 784,158 858,454 859,178 858,533 797,314 Other ultimate eastomers 215,853 186,939 167,070 159,396 164,901 Total sales to ultimate customers 3,650,502 3,633,325 3,557,885 3,488,966 3,316,584 Sales for resale 2,840,957 2,127,249 1,844,213 1,471,485 1,211,242 Total energy sales _6,491,459 5,760,574 5,402,098 4,960,451 4,527,826 Electric resenues (in thousands) Residential $ 91,065 $ 80.627 $ 72,596 $ 66,262 $ 51,414 Commercial 110,745 97,699 85,480 77,806 60,125 Industrial 51,714 50,111 44,524 40,467 28,860 I Other ultimate customers 14,775 12,170 9,750 8,704 _ 7,052 Total revenues from ultimate customers 268,299 240,607 212,350 193,239 147,451 Sales for resale 149,115 86,781 59,475 44,000 32,568 Total revenues from energy sales 417.414 327,388 271,825 237,239 180,019 2,581 { Miscellaneous electric resenues 2,743 2,581 2,598 2,532 Total electric revenues S 420,157 $_329,969 $ 274,423 $ 239,771 j82,600 Customers at 3 car-end Residential 199,679 195,722 191,495 184,979 175,439 Commercial 22,148 21,164 20,932 20,334 19,496 Industrial 453 458 466 485 482 Other ultimate customers 185 180 179 179 178 Total ultimate customers 222,465 217,524 213,072 205,977 195,595 Sales for resale 6 6 6 5 5 l Total customers 222,471 217,530 213,078 205,982 195,600 Reliable nel capabilit3-kW 1,473,000 1,047,000 1,080,000 1,082,000 842,000 Coincidental peak demand-kW 957,000 992,000 913,000 855,000 809,000 ) Ascrage fuel cost per l million HTU $ 1.1502 $ 1.1952 $ 1.0961 $ 1.2072 $ 1.0552 l HTU per kwhr of net generation 11,296 11,227 10,551 10.7_46 10,993 Water Service Sales-gallons (in thousands) 2,842,381 2,729,457 2,699,816 2,515,815 2,753,122 Resenues (in thousands) $ 6,386 $ 62 96 $ 6,093 $ 4,599 $ 4,605 Customers at 3 ear-end 20,432* 19,899 19,303 18,755 18,079 16
- Includes 4,508 customers for the Las Vegas water system which was contributed to the City of Las Vegas on December 30,1982.
M Selected Financial Data 1982 1981 1980 1979 1978 (In thousands except per share amounts and ratios) Total operating resenues S 426,543 $ 336,165 $ 280,516 $ 244,370 $ 187,205 Net earnings $ 115,822 $ 107,958 $ 71,436 $ 54,803 $ 37,464 Net earnings per common share $ 3.22 $ 4.23 $ 3.36 $ 2.97 $ 2.83 Tot:1 assets $2,146,496 $1,832,315 $1,458,412 $1,186,446 $ 888,747 Preferred stock with mandatory redemption requirements $ 125,000 $ 90,000 $ 90,000 $ 40,000 - 1.cng term debt, lew current maturities S 811,653 $ 707,472 $ 567,190 $ 431,655 $ 356,347 Common stock data: Cash dividends declared per common share $ 2.77 $ 2.68 $ 2.04 $ 1.88 $ 1.72 Disidend pay-out ratio 86.0 % 63.4 % 60.7 % 63.3 % 60.8 % Market price per common share at year end S 26.00 $ 23.75 $ 19.75 $ 18.25 $ 19.87 Hook value per common share at year end S 24.36 $ 23.89 $ 23.36 $ 22.26 $ 21.85 Aserage number of common shares outstanding 28,508 20,804 15,933 14,363 10,289 Return on average common equity 13.6 % 18.6 % 14.9 % 13.6 % 13.0 % Ratio of earnings to fised charges (S.E.C. method) 2.70 3.00 2.94 3.52 3.28 Capitalisation: Common stock equity 42.8 % 39.5 % 33.3 % 37.5 % 37.4 S o Preferred stock: Without mandatory ? redemption requirements 5.8 7.1 9.3 11.5 14.4 With mandatory redemption requirements 6.9 6.0 7.9 4.3 - l ong-term debt, less current maturities 44.5 47.4 49.5 ___ 46.7 48.2 100.0 % 100.0 % 100.0 % _ 100.0 % 100.0 % i 17
Managensent'a Discussion and Analysis of Financizi Condition and Results of Operations i l I.iquidit) and Capital itesources The Company is continuing a construction program which will meet future customer sersice requirements. The Company estimates its fise-year utility construction program for the period 1983-1987 to be approximately $881 million including allowance for funds used during construction ( Al UDC) of $151 million. The Company's non-utility investment program for the same period is projected to be $114 million for a total Company expenditure budget for the 1983-1987 period of
$995 million.
I or the 1983-1987 time frame, the Company is forecasting a significant decline in its utility construction program. The years 1981 and 1982 were the peak of the Company's utility construction program with expenditures of $328 million and $315 million, respectively. During 1983 and 1984, the Company forecasts total utility expenditures of $280 million and $236 million, respectisely, including Al UDC. With the completion of a major portion of the Palo Verde Nuclear Generating Station (PVNGS), the Company's construction expenditures are forecasted to decline to $131 million in 1985, $112 million in 1986 and
$122 million in 1987. The Company estimates its total external funding requirements to be $490 million for the period 1983-1987. The proicetion of internal cash generation in the 1983-1987 time period assumes timely and adequate rate relief with respect to both retail and wholesale customers. The projection of external funding requirements assumes that the New N1exico Public Sersice Commission (Commission) will require the Company to continue to capitalize charges, similar to AFUDC, associated with specifically identifiable uncommitted capacity, and that such charges will be recovered through amortization when the plant capacity is required for customers. The projection also assumes that the non-utility subsidiaries will proside a substantial portion of their capital requirements from internally generated funds.
In 1982, the Company issued 5184 million of common stock, $35 million of preferred stock, $60 million of first mortgage bonds and also utilized $44 million of proceeds from pollution control financing to finance the Company's construction program. The Company's interim financing requirements are met through issuance of unsecured notes payable to banks and commercial paper. The bank commitments consisted of both lines of credit and revohing credit agreements ranging in duration from one to three years. Arrangements for bank lines of credit amounted to $34 million and revohing credit arrangements amounted to $166 million at December 31, 1982. Ihe Company has applied a Cost of Sersice Index (COSI) adjustment to all electric billings subject to the jurisdiction of the Commission since 1975. The COSI factor was calculated annually to achiese a 15.5 percent return on New N1exico jurisdictional year-end common equity. In 1982, the New N1exico Legislature passed a bill that abolished COSI as a rate-making mechanism after 1982. Future rate filings will be formulated on traditional rate-making concepts. In 1982, three major rating agencies resiewed the Company's imestment security ratings, which resulted in the ratings on the Company's first mortgage bonds declining from double A to single A. Similar downgradings were applied to the Company's pollution control resenue bonds secured by the Company's first mortgage bonds, the unsecured pollution control bonds guaranteed by the Company, the Company's preferred stock and its commercial paper. Factors cited by the rating organizations which contributed to the downgradings included the elimination of COSI by the New N1exico Legislature and the presiously announced delay in completioa dates and increase in construction costs for the PVNGS. l 1(esults of Operations ( Operating resenues increased oser the comparable prior periods. The principal contributing factor was increased kwhr sales, l primarily to wholesale customers. Approximately 43.8 percent of total energy sales for 1982 was derived from wholesale l customers as compared with 36.9 percent and 34.1 percent for 1981 and 1980, respectively. 1 i Operating expenses increased oser the comparable periods primarily from increased fuel eyenses as a result of increased system l requirements and generation from Company-owned generating facilities. The addition of San Juan Unit 4 in April 1982 was a I primary factor in the increase in other operation expenses, maintenance and repairs expense and the provision for depreciation and amortization. Net other income und deductions decreased from the prior year but increased substantia'ly oser 1980. The decrease from the l prior year was primarily due to the gain realized in 1981 from the sale of a portion of the Company's interest in a trust and the i gain from the sale of an 8.475 percent undisided interest in San Juan Unit 4 to ib City of Farmington. See notes (8) and (11). During 1982, the Company wrote off approximately $6.9 million in costs associatw with the Haea Geothermal Project and the rebuild of the SO2 scrubber systems of Unit I and 2 at the San Juan Generating Stauen. Allowanee for equity funds used during construction increased oser the comparable periods primarily due to changes prescribed by regulatory authorities in gg connection with ratemaking actions. See note (1). l I
o Interest charges and preferred stock disidend requirements increased over the comparable periods primarily from the issuance of addit:onal first mortgage bonds, pollution control revenue bonds and preferred stock. During the period 1980-1982, the Company issued $198 mill;on of first mortgage bonds, utilized $187 million of pollution control resenue bonds proceeds and issued $85 million of cumulatise preferred stock and also issued 13.5 million common shares through public offerings. As a result of the items detailed above, net earnings applicable to common stock increased oser the comparable periods while net earnings per share of common stock decreased. During these periods, the Company experienced high rates of in0ation in the ensironment in which it operates. The effect of innation on the Company is discussed within the Supplementary Information Concerning the Effects of Changing Prices on pages 32-34. Managesnent's Responsibility for Financial Stateenents The management of Public Sersice Company of New Niexico is responsible for the preparation and presentation of the accompanying financial statements. The financial statements have been prepared in conformity with generally accepted accounting principles and include amounts that are based on informed estimates and judgments of management. Nianagement maintains a system of internal accounting controls which it belieses is adequate to provide reasonable assurance that assets are sateguarded, transactions are executed in accordance with management authorization and the financial records are reliable for preparing the financial statements. The system of internal accounting controls is supported by written policies and procedures, a staff of internal auditors who conduct comprehensive internal audits and by the selection and training of qualified personnel. The lloard of Directors, through its Audit Committee comprised entirely of outside directors, meets periodically with management, internal auditors and the Company's independent auditors to discuss auditing, internal control and financial reporting matters. To ensure their independence, both the internal auditors and independent auditors have full and free access to the Audit Committee. The independent audnors, Peat, N1arwick, N1itchell & Co., are engaged to examine the Company's financial statements in accordance with generally accepted auditing standards. 3 Anditors' Report l
'Ihe lloard of Directors and Stockholders Public Sersice Company of New N1exico:
We base esamined the consolidated balance sheet of Public Service Company of New N1exico and subsidiaries as of December 31,1982 and 1981 and the related consolidated statements of earnings, capitalization and changes in financial position for each of the years in the three-year period ended December 31, 1982. Our examinations were made in accordance with generally accepted auditing standards and, accordingly, included such tests of the accounting records and such other auditing procedures as we considered necessary in the circumstances. In our opinion, the aforementioned consolidated financial statements present fairly the financial position of Public Sersice Company of New Niexico and subsidiaries at December 31,1982 and 1981 and the results of their operations and changes in their financial position for each of the years in the three-year period ended December 31,1982, in conformity with generally accepted accounting principles applied on a consistent basis. PEM, N1ARWICK, N11TCllELL & CO. Albuquerque, New N!csico I ebruary 18,1983 _ 19
M 1 Consolidated Balance Sheet December 31 1982 1981 (in thousands) 1 Assels Utility plant, at original cost (notes 4,8 and 12): i Electric plant in ser ice $ 1,329,675 $ 800,736 Water plant in service 34,128 37,615 Common plant in service 29,767 24,530 1,393,570 862,881 i Less accumulated depreciation and amortization 206,892 173,989 l i 1,186,678 688,892 Construction work in progress 599,272 887,100 Electric plant held for future use 61,871 7,048 Net utility plant 1,847,821 1,583,040 Other property and imestments: Non-utility property, at cost, net of accumulated l depreciation of $2,848,000 in 1982 and i
$2,538,000 in 1981 40,587 58,157 Investment in unconsolidated affiliates 58,528 27,375 Other, at cost 4,261 3,039 Total other property and investments 103,376 88,571 Current assets:
Cash 4,721 10,105 Temporary cash investments 53,707 28,591 t Receivables: l Customers 43,036 33,061 Other 17,312 22,580 Allowance for doubtfut receivables (1,140) (499) ,; Fuel, materials and supplies, at aserage cost 46,242 34,002 Prepaid expenses 3,663 2,611 Deferred fuel costs - 10,091 Total current assets 167,541 140,542 l Deferred charges 27,758 20,162
$_2,146,496 $1832,315 See accompanying notes to consolidated financial statements. 1 20
4 f December 31 1982 1981 (In thousands) Capitalization and Liabilities Capitditation: Common stock equity (note 2): Common stock of $5 par value. Authorized l 40,000,000 shares; outstanding 32,NO,731 ! shares in 1982 and 24,675,305 shares in 1981 $ 160,204 $ 123,377 Additiona' puid-in capital 470,477 327,625 Retained cornmgs _149,921 138,514 Total common stock equity 780,602 589.516 Cumulative preferred stock. Authorized 10,000,000 shares (note 3): Without mandatory redemption requirements 106,000 106.000 With mandatory redemption requirements 125,000 90.000 Long-term debt, less current maturities (note 4) 811,653 707,472 Total capitalization 1,823,255 1,492,988 _ Current liabilities: Short-term debt (note 5) 63,862 108,808 l Accounts payable 35,362 48,171 Preferred dividends declared 5,808 4,712 Current maturities of long-term debt (note 4) 3,692 5,390 Accrued interest 14,401 11,321 Accrued taxes 12,245 20,146 Prosision for refunds (note 10) 19,101 2,150 Other current liabilities 18,927 11,799 Total current liabilities 173,398 212,497 Deferred credits: f Accumulated deferred investment tax credits (note 6) 75,423 58,960 Accumulated deferred income taxes (note 6) 53,220 48,941 l Other deferred credits 21,200 _ 18 929 l Total deferred credits 149,843 126,830 Commitments and contingencies (notes 8 and 9)
$_2,14 G,49G $1,832,315
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Consolidated Stateenent cf Earnings Year ended December 31 1982 1981 1980 (In thousands except per share amounts) Operating resenues: Electric (note 10) $420,157 $329,969 $274,423 Water 6,386 6,196 6,093 Total operating resenues 426,543 336,165 280,516 Operating expenses: Fuel and purchased power 115,531 104,084 84,125 Other operation expenses 68,842 55,367 46,017
\taintenance and repairs 38,125 28,836 21,201 Prosision for depreciation and amortization 34,984 26,162 25,003 Taxes, other than income taxes 16,552 13,740 12,299 income taxes (note 6) 34,855 21,932 20,073 Tatal operating e.xpenses 308,889 250,121 208,718 Opera:Ing income 117,654 86,044 71,798 Other income and deductions:
Allowance 'or equiry funds used during construdion 45,911 33,957 27,236 Equity in earnings of unconsolidated affdiates, net of taxes tnote 6) 2,001 5,249 2,953 Gain on sale of equity inierest in trust, net of taxes (notes 6 and 11) - 18,805 - Other, net of takes (notes 6 and 8) 1,178 8,206 385 Net other income and deductions 49,090 66,217 30,574 Incorpe before interest charges 166,744 152,261 102,372 Interest charges: Interest on long-term debt 55,537 41,572 29,012 Other in:ciew charges 14,476 18,947 12,771 s Allowance for bonawed funds used during construction (19,091) (16,216) (10,847) Net inteiest charges 50,922 44,303 30,936 Nel carnings 115,822 107,958 71,436 l Preferred stuk disivend requirements 24,062 19,863 17,834 ! Net earnings applicable to common stock $ 91,760 $ 88,095 $ 53,602 Ascrage number of common shares outstanding 28,508 20,804 15,933 Per share amounts: Net earnings $ 3.22 $ 4.23 $ 3.36 Dividends $ 2.77 $ 2.68 $ 2.04 See accompanying notes to consolidated financial statements. l 22 l l l
Consolidated Stateenent of Capitalization Year ended December 31 1982 1981 1980 (In thousands) Common stock equit): Common ! tock: llalance at teginning of year $ 123,377 $ B1,652 $ 78,009 Issuance of connuon stock 36,827 41,725 3,643 Italance at end of year 100,204 123,377 81,652 Additional paid-in capital: llalance at beginning of year 327,625 195,026 185,600 1 remium on common stock issued 147,241 138,336 10,120 Expenses of stock issuance (4,389) (5,737) (694) Italance at end of year 470,477 327,625 105,026
~ Retained earnings:
11alance at beginning of year 138,514 104,847 83,719 Net earnings 115,822 107,958 _ _ 71,436 254,336 212,805 155,155 Cash dividends: l Cumulative preferred stock 24,062 19,863 17,834 i Common uock 80,353 54,428 32,474 _, 104,415 74,291 50,308 l Ilaiance at ecd of year _ 149,921 138,514 104,847 Ti>tal co amon stock equity _ 780,60 0 42.8 % 589,516 39.5 % 381,525 33.3 % Cumulathe preferred su>ck: l Withorit mandatary redemption requirementsuaalance at - begir.r.ing and end of year 106,000 5.8 106,000 7.1 106,000 9.3 With mand >mry redemption requirements l l Italance at Fcginning of year 90,000 90,000 40,000 p Issuance of pr.ferred stock 35,000 - 50,000 llalance at end of year 125,000 6.9 90,000 6.0 90,000 7.9 I,on; serm debt, less current matuitio: llalande in beginning of year 707,472 567,190 431,655 Addition to long-term debt 109,073 148,510 137,837 Reduction of long-term debt (4,657) (7,460) (2,284) Net chrage in unamortized discount and premium (235) (768) (18)
' tblana: at end of year 811 653 44.5 707,472 47.4 567,190 49.5 Total cyiilization at end1 of yeas ;'~ $1823,255 100.0 % $1,492,988 100.0 % $1,144,715 100.0 %
Number on shws iswcd:
$100 stated value cumulative preferred stock - -
500
$50 stated value cumulative preferred stock 700 - --
Common stock , 7,365 8J45 729
- 23 l See accompanying notes to consolidated financit( statements.
l I e ,
Consolidated Statenient of Cinanges la Financi:1 Position Year ended December 31 1982 1981 1980 (In thousands) Funds prosided: Net earnings $115,822 $107,958 $ 71,436 Charges (credits) to earnings not requiring funds: Depreciation and amortization 37,940 28,962 26,889 Provision for noncurrent deferred income taxes, net 4,279 6,584 9,668 Investment tax credit, net 16,463 17,923 10,216 Allowance for equity funds used during construction (45,911) (33,957) (27,236) Earnings of unconsolidated affiliates (3,138) (7,275) (6,856) Funds derived from operations 125,455 120,195 84,117 Sale of common stock 184,068 180,061 13,763 Sale of cumulative preferred stock 35,000 - 50,000 Sale of first mortgage bonds 60,000 60,000 78,000 Proceeds from pollution control revenue bonds 44,143 84,677 57,942 Proceeds f:om other long-term debt 4,930 3,833 1,895 Proceeds from short-term debt 434,221 432,560 308,834 Disidends from fifty-percent-owned company - 10,374 9,868 Disposition and retirements of utility plant 12,375 1,397 141 Proceeds from sale of utility plant, net of pre-tax gain of $11,005,000 - 37,867 - Other 3,107 2,702 3,603
$903,299 $933,666 $608,163 Funds used:
Cash dividends $104,415 $ 74,291 $ 50,308 Utility plant additions 267,137 290,382 254,805 Payment of short-term debt 479,167 453,107 275,439 Reduction of long-term debt 4,657 7,460 2,284 Additions to other property and investments 12,470 52,653 17,613 increase in wa king capital other than short-term debt 21,152 43,440 5,975 Other 14,301 12,333 1,739 3
$903,299 $933,666 $608,163 Changes in working capital other than short-term debt:
Cash $ (5,384) $ 4,093 $ 2,202 Temporary cash investments 25,116 28,591 - Receivables 4,066 20,220 (2,481) Fuel, materials and supplies 12,240 7,649 4,280 Prepaid expenses 1,052 391 180 Deferred fuel costs (10,091) 1,555 (2,786) Accounts payable 12,809 (7,929) 11,453 Preferred dividends declared (1,096) - (1,843) Current maturities of long-term debt 1,698 (3,903) 3,737 Actrued interest (3,080) (865) (4,879) Accrued taxes 7,901 (7,652) 3,839 Provision for refunds (16,951) 7,444 (6,302) Other current liabilities (7,128) (6,154) (1,425) Increase in working capital other than short term debt $ 21,152 $ 43,440 $ 5,975 24 See accompanying notes to consolidated financial statements.
Notes to Consolidated Financial Statesments December 31,1982,1981 and 1980 (1) Summary of Significant Accounting Policies System of Accounts The Company maintains its accounting records in accordance with the uniform system of accounts prescribed by the Federal Energy Regulatory Comminion (FERC) and adopted by the New hiexico Public Service Commission (Commission). As a result of the rate-making process, the application of generally accepted accounting principles by the Company differs in certain respects from the application by non-regulated businesses. Such differences generally regard the time at which certain items enter into the determination of net earnings in order to follow the principle of matching costs and revenues. Certain prior year amounts hase been reclassified for comparability. Principles of Consolidation The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries, Paragon Resources, Inc., Sunbelt hiining Company, Inc. and N1eadows Resources, Inc. (Nieadows) and 51ontana de Fibra, a joint venture in which Nicadows is a participant. All significant intercompany transactions and balances have been eliminated. The Company's investments in unconsolidated affiliates, including Western Coal Co. prior to its liquidation in 1981, are accounted for using the equity method. Utility Plant Utility plant is stated at original cost, which includes payroll-related costs such as taxes, pensions and other fringe benefits, administrative costs and an allowance for funds used during construction. It is Company policy to charge repairs and minor replacements of property to maintenance expense and to charge major replacements to utility plant. Gains or losses resulting from retirements or other dispositions of operating property in the normal course of business are credited or charged to the e ':mulated provision for depreciation. Depreciation Provision for depreciation of utility plant is made at annual straight-line rates approved by the Commission. The average depreciation rates used were as follows: 1982 1981 1980 Electric plant 3.16 % 3.38 % 3.36 % Water plant 1.94 % 1,94 % 1.94 % Common plant 6.87 % 6.74 % 7.36 % The prosision for depreciation and amortization of certain equipment, including amortization applicable to capital leases, is charged to clearing accounts along with other costs of operation and subsequently apportioned to operating expenses and l property accounts based on the use of the equipment. Depreciation of non-utility property is computed on the straight-line method.
- Allow nce for Funds Used During Construction (AFUDC) l As provided by the uniform system of accounts, AFUDC, a non-cash item, is charged to utility plant. AFUDC represents the cost of borrowed funds (allowance for borrowed funds used during construction) and a return on other funds (allowance for equity funds used during construction) and is allocated based on the method required by FERC. The Company capitalizes AFUDC on construction work in progress to the extent allowed by regulatory agencies. In 1982, the Company also capitalized AFUDC on its plant held for future use as allowed by the Commission.
AFUDC is computed using the maximum rate, net of taxes, permitted by FERC. Accordingly, the rates used for 1980 and 1981 were 8.65 percent and 8.85 percent, respectively, without compounding. For 1982 the rate used was 9.38 percent and included semiannual compounding as ordered by the Commission. In 1982, the Commission also ordered the Company to capitalize carrying charges, similar to AFUDC, associated with specifically identifiable uncommitted capacity, which for 1982 represented 105 51W of San Juan Unit 4. The 9.42 percent rate used for 1982 was calculated using the maximum rate, net of taxes, allowed by FERC, except for the exclusion of short-term debt from such calculation. 25
l i Capitalised Interest The Company capitalized interest costs on non-utility property in the amounts of $2,519,000 in 1982,54,%I,000 in 1981 and ;
$2,003,000 in 1980.
Deferred Fuel Costs The Company uses the deferral method of accounting for the portion of fuel costs which is reDected in subsequent periods under fuel adjustment clauses. Amortisation of Debt Discount Expense and Premium Discount, expense and premium incurred m the issuance of the presently outstanding debt are being amortized by charges to ) income over the lives of the respective issues on the debt outstanding method. Insessment Ta Credits The Company follows the practice of deferring investment tax credits and amortizing them over the estimated useful lives of the related assets. Pursuant to 1981 orders from the Commission and FERC, the Company records investment tax credits only to the extent they are utilized to offset current income taxes. Prior to 1981, investment tax credit carryforwards were partially recorded as reductions of deferred Federalincome taxes. Income Tases Certain revenue and expense items in the Consolidated Statement of Earnings are recorded for accounting purposes in a year different from the year in which they are recorded for income tax purposes. Deferred income taxes are provided on these timing differences to the extent allowed for rate-making purposes. This normalization method is used primarily for differences attributable to deferred fuel costs and the use of liberalized depreciation and accelerated cost recovery methods. Certain other timing differences result in reductions of income tax expense in the current year. This Dow-through method is used primarily for minor differences between book and tax depreciation and for certain capitalized construction costs. At present, rates subject to FERC control allow recovery of amounts necessary to provide additional tax normalization of the i items described above which aie accounted for under the now-through method for other customers. Provision has been made for additional deferred income taxes attributable to amounts collected under these rates. i Non-utility deferred taxes are prosided on all non-permanent differences between book and taxable income. These differences consist primarily of interest, mining development and other expenses which are capitalized for book purposes and income which is taxable in periods other than when recognized for financial reporting purposes. Resenues Revenues are recognized based on cycle billings rendered to customers monthly. The Company does not accrue revenues for services provided but not billed at the end of a fiscal period. Segment Information ' Sales to two major customers accounted for approximately 12.5 percent and 10.5 percent of total operating revenues during the current period. Sales to these unaffiliated utility companies accounted for less than 10 percent of total operating revenues in the 3 previous years. The Company has a sales contract to sell up to 236 megawatts of capacity to one of these customers through 1 April 1988. Pension Plan , The Company's policy is to fund pension costs which are composed of normal costs and amortization of past service costs over Oirty years. , I l , i 1 (2) Common Stock Equity j The lloard of Directors has periodically reserved common stock for the Shareholder's Dividend Reinvestment Plan, the 1 Employee Stock Purchase Plan, the Tax Reduction Act Stock Ownership Plan and the Consumer Stock Plan, of which 2,465,353 shares remained unissued at December 31,1982. Charter provisions relating to the cumulative preferred stock and the indenture securing the first mortgage bonds impose certain restrictions upon the payment of cash dividends on common stock of the Company. At December 31,1982, there were no retained earnings restricted under such provisions. 26
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l (3) Cumulative Preferred Stock Information concerning the cumulative preferred stock is as follows: Aggregate Stated Stated Shares Stated Value Redemption Value Outstanding (In thousands) Price (a) Without mandatory redemption requirements: 1%5 Series,4.58% $100 130,000 $ 13,000 $102.00 1974 Series,9.2% 100 170,000 17,000 107.00 1975 Series,10.12% 100 100,000 10,000 107.00 9.16% Series 25 800,000 20,000 26.70 l 8.48% Seiies 100 200,000 20,000 108.00 8.80% S ries (b) 100 260,000 26,000 108.80 1,660,000 $106,000 With mandatory redemption requirements: 8.75% Series (b)(c) 100 400,000 $ 40,000 108.75 14.75% Series (b)(c) 100 500,000 50,000 114.75 12.52% Series (b)(c)(d) 50 700,000 35,000 52.97 1,600,000 $125,000 (a) The cumulative preferred stock may be redeemed by the Company, upon thirty days notice, at stated redemption prices plus accrued and unpaid dividends. Redemption prices are at reduced premiams in future years. (b) Redemp lon may not be made through certain refunding operations prior to April 1,1983 for the 8.80% Series, February 1,1984 for the 8.75% Series, April 1,1990 for the 14.75% Series or October 15, 1991 for the 12.52% Series. (c) Beginning in 1984 for the 8.75% Series,1986 for the 14.75% Series and 1987 for the 12.52% Series, the Company must annually redeem 13,000,20,000 and 46,660 shares, respectively, at their stated value plus accrued and unpaid dividends. (d) The Company has agreed to indemnify the investors against the loss of certain income tax benefits. However, the Company has the option to redeem the entire series should payments under such indemnification increase the effective dividend rate on the stock by more than one-half of one percent. (4) Long-Term Debt The details of the Company's outstanding long-term debt including unamartized discount and premium, less currert maturities, are as follows: Issue and Maturity Interest Rates 1982 1981 (In thousands) First mortgage bonds: 1983 through 1987 3 5/8% to 12.95% $ 52,190 $ 52,221 1988 through 1992 4 3/8% to 4 7/8% 17,772 17,986 1993 through 1997 57/8% 17,706 17,916 1998 through 2002 71/4% to 81/8% 50,404 50,948 2003 through 2007 81/8% to 101/8% 98,326 98,842 2008 through 2012 9% to 171/2% 182,653 123,623 2000 through 2010-pollution control series, securing pollution control revenue bonds 6% to 81/8% 300,133 300,048 Funds held by trustee (10,153) (60,399) Total first mortgage bonds 709,031 601,185 Pollution control revenue bonds, due 1984 5% to 8 3/4% 207,000 207,000 Funds held by trustee (112,744) (106,641) Other 8,366 5,928 Total long-term debt $811,653 $707,472 Substantially all utility plant is pledged to secure the first mortgage bonds.
Approximately 25 percent of the original principal amount of each series of first mortgage bonds will be redeemed through sinking fund requirements prior to the aforementioned due dates. The aggregate amounts (in thousands) of maturities on a!! long-term debt outstanding at December 31,1982 are as follows: 1983 $ 3,692
, 1984 136,310 1985 53,684 1986 4,430 1987 5,707 In August 1977, the City of Farmington, New Mexico, issued and sold $77,045,000 principal amount of its 5.9 percent pollution control revenue refunding bonds, Series 1977, the procee6 of which are expected to be used to retire $77,000,000 of presently outstanding pollution control revenue bonds at their maturity in 1984. From and after such retirement, but not before, the Refunding lionds will be payable out of revenues received by the City from the Company. Upon such retirement, the Company will also guarantee the payment of the Series 1977 Honds and secure its guaranty with an equal principal amount of its first mortgage bonds.
(5) Short-Term Debt The Company's interim financing requirements are met through issuance of unsecured notes payable to banks and commercial paper. The Company generally pays fees to compensate for bank credit commitments. The commitments consist of both lines of credit and revolving credit agreements ranging in duration from one to three years. Although it is not required to do so, the Company generally maintains sufficient unused bank commitments to cover all outstanding commercial paper. Details of the Company's short-term debt at December 31,1982,1981 and 1980 and for the years then ended are as follows: I 1982 1981 1980 l l (In thousands) Aggregate short-term debt outstanding: Notes payable to banks S 13,887 $ 64,053 $ 79,575 , Commercial paper S 49,975 $ 44,755 $ 49,780 4 I Weighted average interest rate on outstanding debt: Notes payable to banks 10 1/8 % 15 3/4 % 18 3/8 % Commercial paper 91/8% 12 % 18 3/8 % Maximum outstanding dering year: Notes payable to banks S 67,003 $101,107 $ 80,175 Commercial paper $105,225 $ 82,100 $ 67,825 % Aserage outstanding during year: , Notes payable to banks S 29,832 $ 62,095 $ 31,092 Commercial paper S 71,806 $ 70,040 $ 61,437 Weighted aserage interest rate on short-term debt , outstanding during the year, computed using daily ! outstanding balances: l Notes payable to banks 14 3/8 % 17 7/8 % 14 1/4 % l l Commercial paper 12 5/8 % 16 3/8 % 12 3/8 % l Unused bank commitments $186,088 $222,122 $ 76,878 l 28
(6) Incorne Taxes income taxes consist of the following components: 1982 1981 1980 (in thousands) Current Federal income tax $ 1,262 $ 6,887 $ 4,185 Current state income tax 2,349 4,798 1,205 Defeired Federal income tax 7,332 7,019 7,226 Deferred state income tax 980 302 1,089 Amount equivalent to current investment tax credit 16,785 20,660 11,809 Amortization of accumulated investment tax credit (2,639) (1,925) _(1,802) Total income taxes $26,069 $37,741 $23,712 Charged to operating expenses $34,855 $21,932 $20,073 Charged to other income and deductions (8,786) 15,809 3,639 Total income taxes $26,069 $37,741 $23,712 The Company, for tax purposes, has investment tax credit carryforwards of approximately $75 million as of December 31,1982 which would, if unused, expire in 1995 through 1997 and a charitable contribution carryforward of $14 million which would, if unused, expire in 1987. Deferred income taxes result from certain timing differences between the recognition of income and expense for tax and accounting purposes, as described in note (1). The major sources of these differences and the tax effects of each are as follows: 1982 1981 1980 (In thousands) Deferred fuel costs $ (6,566) $ 737 $(1,353) Depreciation and cost recovery timing differences 16,153 10,386 9,386 Mining development costs 2,009 - - Charitable contribution carryforward (6,915) - - Prepaid income taxes on liquidation of Western Coal Co. - (11,028) - Other 3,631 7,226 282
$ 8,312_
$ 7,321 $ 8,315 The current portion of deferred income taxes (included in accrued taxes) results from timing differences on deferred fuel costs.
I The Company's effective income tax rate was less than the Federal income tax statutory rate for each of the years shown. The differences are attributable to the following factors: I 1982 1981 1980 Federal income tax statutory rate 46.0 % 46.0 % 46.0 % Allowance for funds used during construction (21.1) (15.8) (18.4) Charitable contribution of appreciated property (3.4) - - Taxes recorded at capital gains rate net of related minimum tax (.1) (5.0) (.1) Amortization of investment tax credits (1.9) (1.3) (1.9) Other (1.1) 2.0 (.7) Company's effectise tax rate 18.4 % 25.9 % 24.9 % (7) Pension Plan The Company and its subsidiaries have a pension plan covering substantially all of their employees, including officers. The plan is noncontributory and provides for monthly pension payments to participating employees upon their attaining the age of 65 or the age of 62 with 30 years of service. The amounts of such payments are dependent upon length of service and the average salary of the three highest consecutive years of employment. Total pension cost was $7,798,000 in 1982, $6,798,000 in 1981 and $4,815,000 in 1980. 29
As of the two most recent actuarial valuation dates, accumulated plan benefits and plan net assets for the Company's pension l plan are as follows:
]
January 1 1 1982 1981 l (In thousands) Actuarial present value of l accumulated plan benefits: ! Vested $21,014 $19,810 Nonvested 2,163 2,762
$23,177 $22,572 Net assets available for benefits (market value) $29,301 $22,354 The weighted average assumed rate of return used in determining the actuarial present value of accumulated plan benefits was 8 3/4 percent for 1982 and 7 percent for 1981. The effect of this change was to reduce the actuarial present value of accumulated plan benefits by approximately $5 million.
j (8) Construction Program and Jointly-Owned Plants l The Company operates and jointly owns the steam turbo-electric San Juan Generating Station, for which the fourth and final unit was placed into commercial operation in 1982. In November 1981, the Company sold 8.475 percent of its 100 percent undivided interest in San Juan Unit 4. Of the approximately $48.9 million from the sale, the Company realized a gain of $5.1 million, net of applicable income taxes. The Company owns an undivided fifty percent interest in 'he first three units of the station. The Company is also participating with several other utilities in the construction of the Palo Verde Nuclear Generating Station with the first unit scheduled for completion in 1984. l It is estimated that the Company's and its subsidiaries' construction expenditures for 1983 will approximate $320 million ! including expenditures on the jointly-owned projects. In connection therewith, substantial commitments have been made. Details of the Company's interest in jointly-owned plants at December 31,1982 are as follows: l Construction Share of Plant Accumulated Work in Total in Service Depreciation Progress Plant d: (In thousands) San Juan Generating Station $876,085 $71,103 $ 65,093 62.4 % Palo Verde Nuclear Generating Station - - $481,046 10.2 % Four Corners Generating Station Units 4 and 5 $ 52,786 $ 8,267 $ 17,167 13.0 % These amounts represent the Company's share of capital costs, and the Company has provided its own financing. The Company's share of direct expenses is included in the corresponding operating expenses in the Consolidated Statement of l Earnings. The Company also has undivided interests in transmission facilities which are not significant. (9) Lease Commitments The Company leases data processing, communication, office and other equipment, office space, utility poles (joint use) and real estate. Certain leases provide purchase options in the approximate amount of $318,000 for data processing equipment. The leases for office buildings provide for purchase options equal to fair market value at the end of the primary terms. Renewal options and contingent rental provisions were not significant. 30
Leased property under capital lea- s at December 31,1932 and 1981 is as follows: 1982 1981 l (In thousands) Data processing equipment $2,785 $ 4,384 Other 408 518 3,193 4,902 Less accumulated amortization 1,302 2,921
$1,891 $ 1,981 Future minimum lease payments at December 31,1982 are:
Capital Operating Leases Leases (In thousands) 1983 $ 939 $ 2,220 1984 741 3,238 1985 486 3,091 1986 145 2,990 1987 127 3,047 Later years 288 60,213 Total minimum lease payments 2,726 $74,799 Less amount representing executory costs 144 Net minimum lease payments 2,582 Less amount representing interest 565 Present value of net minimum lease payments $2,017 Rents charged to operating expenses were $4,539,000 in 1982, $3,736,000 in 1981 and $1,486,000 in 1980. Rents charged to utility plant were $457,000 in 1982, $362,000 in 1981 and $914,000 in 1980. All such amounts exclude payments made on capital leases. As of December 31,1982, the aggregate minimum rentals to be received under noncancellable subleases are approximately $2,%3,000. (10) Rate Matters On December 39,1982, the Commission issued its order regarding the Company's annual Cost of Service Index adjustment
? based upon 1981 operating results. The Company initially requested a $38.3 million annual increase in the rates charged to its retail customers. During 1982,90 percer:t of the requested rate increase was collected subject to refund. Under the order, a rate increase of approximately $20.4 million was allowed by the Commission. Accordingly, the Company recorded, in December 1982, $17.6 million including interest, as a provision for refund which will be refunded to its retail customers during 1983.
(11) Gain on Sale of Equity Interest in Trust Prior to its liquidation, Western Coal Co. (Western), a corporation owned fifty-percent each by the Company and Tucson Electric Power Company (TEP), held a retained economic interest in a sublease covering various Federal, state and private coal leases at the mine which is the primary source of coal for the San Juan Generating Station. See note (8). On November 30,
- 1981, in completion of its liquidation, Western assigned all of its interest under the sublease to a trust, of which the Company l and TEP were initially the sole beneficiaries. On December 31,1981, the Company sold 37.5 percent of its interest in the trust l to institutional investors for $30 million, resulting in an after-tax gain of approximmely $18.8 million, or 5.90 per share of common stock.
(12) Charitable Contribution of Appreciatett Property On December 30,1982, the Company entered into an agreement with the City of Las Vegas, New Mexico (the City) whereby the Company contributed its Las Vegas water system to the City. The physical assets contributed had a net book value of
$6,726,000 and a fair market value of $19,600,000. The transaction resulted in a $1,171,000 gain after recognition of income tax benefits under the rules governing contributions of appreciated property. The contribution is subject to approval by the Commission. 31
Supplenientary Inforneation Concerning flee EHects cf Cleanging Prices The following supplementary information is presented in accordance with the requirements of Statement No. 33, " Financial Reporting and Changing Prices" of the Financial Accounting Standards lloard. Statement No. 33 deals with two different aspects of inflation: (1) the decline in the purchasing power of the dollar (the " constant dollar" method) and (2) the effects of changes in specific prices of certain assets of the Company (the " current cost" method). The Company believes it is important for users of the financial statements to develop an understanding of the more significant impacts of inflation upon the Compan). Iloweser, the Company advises readers that the information presented in accordance with Statement No. 33 is determined through the use of experimental techniques and is not intended to replace traditional l statements based on historical cost. Ihe constant dollar information represents historical costs stated in terms of dollars of the same general purchasing power as I measured by the aserage level of the Consumer Price Index for all Urban Consumers for 1982. The current cost data reflects the change in specific prices of utility plant and equipment from the date the property was acquired to the present, as measured primarily by the llandy-Whitman index of Public Utility Construction Costs. Consolidated Statement of Earnings Adjusted for Changing Prices
- Year Ended I)ecember 31, 1982 Adjusted Adjusted for for General Changes in As Reported inflation Specific Prices in the Primary (Constant (Current Statement Dollars) Cost)
(in thousands) Operating resenues $426,543 $426,543 $426,543 ( Operating expenses (excluding depreciation and amortization) 273,905 273,905 273,905 l Depreciation and amortization (note A) 34,984 57,800 66,743 Interest charges 50,922 50,922 50,922 Other income and deductions, net (49,090) (49,090) (49,090) _310,721 333,537 342,480 Net earnings (excluding reduction to ! net recoserable cost) $115,822 $ 93 0_06*
$ 84,063 increase in specific prices of net utility plant $103,532 Reduction to net recoserable cost (note 10 $ (54,906) (192,938) liffects of increase in the general price level 43,443 Excess of increase in the general price lesel over the increase in specilie prices of net utility plant after reduction to net recoserable cost (45,963)
Gain from decline in purchasing power of net amounts owed (note C) 42,205 42,205 Net $_(12201) $__(3,75_8) y ~,
- Including the reduction to net recoserable cost, the net earnings on a constant dollar basis would have been $38.100 for 1982.
l'ive Year Comparison of Seleckd Supplementary Financial Data Adjusted for Effects of Changing Prices Year ended December 31 1982 1981 1980 1979 1978 (In thousands of average 1982 dollars except per share amounts) , Constint dollar information: ( Revenues $426,543 $357,021 $328,822 $325,189 $277,167 Net earnings excluding reduction to net recoverable cost S 93,006 $ 92,659 $ 63,654 $ 59,938 Net earnings per common share $ 2.42 $ 3.44 $ 2.68 $ 3.04 Net assets at year-end, at net recoverable cost $870,356 $714,787 $545,824 $570,456 Current cost information: Net earnings excluding reduction to net recoserable cost S 84,063 $ 91,365 $ 62,876 $ 58,206 Net earnings per common share $ 2.10 $ 3.38 $ 2.63 $ 2.92 Excess of increase in general price level oser increase in specific prices after reduction to net recoverable cost S 45,963 $123,652 5142,432 $136,348 Net assets at year-end, at net recoverable cost $870,356 $714,787 $545,824 $570,456 1 General information: Purchasing power gain on net amounts owed S 42,205 5 87,940 $102,089 $ 85,021 Cash disidends declared per common share $ 2.77 $ 2.85 $ 2.39 $ 2.50 $ 2.55 Market price per common share at year-end S 25.52 $ 24.16 $ 22.11 $ 22.97 $ 28.34 Consumer price index for all urban consumers: Average 289.3
- 272.4 246.8 217.4 195.4 Year-end 294.7
- 281.5 258.4 229.9 202.9
- Estimated Note A-Depreciation and amortization adjusted for changing prices in adjusting historical cost income statement items for general inflation, changes were made only to the provision for i depreciation and amortization. All other revenue and expense items were considered to reflect the current average price level for
! the year. Estimated utility plant was determined under both methods by applying the indices specified to the historical cost of utility plant by sintage year. Depreciation expense was then determined for the adjusted amounts of utility plant by applying the same rates used to compute the historical amount of depreciation. Note B-Reduction to net reemerable cost Under the rate making prescribed by the regulatory commissions to which the Company is subject, only historical cost of plant is recoserable in revenues as depreciation and amortization. Therefore, the excess of the cost of plant, stated in terms of constant dollars or current cost over the historical cost of plant, is not presently recoverable in rates as depreciation and amortization, and is reflected as a reduction to net recoverable cost. While the rate-making process gives no recognition to the current cost of replacing property, plant and equipment, the Company believes it will be allowed to earn on the increased cost of its net imestment when replacement of facilities actually occurs. 33
Note C-Gain from decline in purchasing power of net amounts owed During periods of inflation, the holders of monetary assets suffer a loss of general purchasing power because such items will purchase less at a future date. Alternatively, holders of monetary liabilities such as long-term debt experience a gain because the , amount of money required to ultimately settle the liabilities represents dollars of diminished purchasing power. Since the Company owed net monetary liabilities during a period in which the general purchasing power of the dollar declined, the Company experienced an economic gain in purchasing power. All assets and liabilities other than utility plant and amounts applicable to the cumulative preferred stock not subject to mandatory redemption requirements were treated as monetary items. Quarterly Results of Operations 1 The unaudited results of operations (in thousands except per share amounts) by quarters for 1982 and 1981 arc as follows: l Net Operating Operating Net Earnings Quarter Ended Revenues income Earnings per Share December 31,1982 $105,962 $35,111 $32,280 $.84 September 30,1982 $118,603 $38,515 $35,239 $ .97 June 30, !982 $106,647 $25,721 $26,149 $ .72 N! arch 31, I?82 $ 95,331 $18,307 $22,154 $.66 December 31,1981 $ 85,860 $15,442 $42,693 $1.54 September 30,1981 $ 93,407 $28,317 $25,916 $.99 June 30,1981 $ 81,902 $21,202 $19,103 $ .70 N1 arch 31,1981 $ 74,996 $21,083 $20,246 5 .89 In the opinion of managem;nt of the Company, all adjustments (consisting of normal recurring accruals) necessary for a fair t statement of the results of operations for such periods have been included. Results for the f.rst three quarters of 1982 have been restated to reflect a rate decision in December 1982. t - Stock / Dividend Data Common Stock: Range of sales prices of the Company's common stock, on the New York Stock Exchange (Symbol:PNN1), and dividends paid on common stock for fiscal 1982 and 1981, by quarters, are as follows: Range of Sales Prices Dividends High Low Per Share Fourth Quarter,1982 28 1/8 24 3/4 $0.70 3' Third Quarter,1982 26 3/8 22 1/4 0.70 Second Quarter,1982 25 1/4 23 1/2 0.70 First Quarter,1982 24 3/4 21 5/8 0.67 Fiscal Year 28 1/8 21 5/8 $2.77 l l Fourth Quarter,19S1 24 1/2 22 $0.67 Third Quarter,1981 24 1/4 21 1/2 0.67 Second Quarter,1981 24 7/8 20 3/8 0.67 First Quarter,1981 21 3/4 19 1/4 0.67 Fiscal Year 24 7/8 19 1/4 $2.68 Cumulatise preferred Stock: While isolated sales of th C )mpany's cumulatise preferred stock have occurred in the past, the Company is not aware of any actise trading market for its cumulative preferred stock. Quarterly cash disidends were paid on each series of the Company's cumulative preferred stock at their stated rates during 1982 and 1981. 34
l l Directors and l l Officers l l Iloard of Directon Officers Officers (con't) i l J.P. Bundrant J.D. Geist R.51. Wihon Sector Vice President, Chairman and President Assistant Controller Public Senice Company of New Niexico R.ll. Rountree P.R. Gamertsfelder A.ll. Collins, Jr. Senior Vice President, District Vice President, President, Commercial Las Vegas and Santa Fe Divisions Reddy Communications, Inc. Greenwich, Connecticut C.D. Iledford F.E. Gray Sector Vice President, Supply Vice President, Urban Development II.I,. Galles, Jr. ** Chairman of the Board, J.P. Ilundrant R.A. Lake Galles Chesrolet Company Sector Vice President, Demand District Vice President, Albuquerque, New N1exico Belen, Bernalillo and J.ll. 51ulcock, Jr. Deming Divisions J.D. Geist ** Sector Vice President, Chairman and President, Corporate Affairs and D.J. Niorse Public Service Company of New Niexico Assistant Secretary Albuquerque and Western Division District N1anager l C.E. Lc3endecker* A.J. Rohison President, N1imbres Valley Bank Sector Vice President, Finance L.C. Edwards l Deming, New N1exico Belen Division N1anager J.T. Ackerman D.W. Rees es *
- Vice President, Division Operations E.L. King Chairman of the Executive Committee Bernalillo Disision N1anager of the lloard of Directors, ts.D. Lackey Public Senice Company of New Niexico Vice President and Controller F. Van Gund)
Deming Division N1anager R.R. Rehder* R.F. Stershon Professor of N1anagement, Vice President, Industrial Relations A. Lujan Robert O. Anderson Graduate School Las Vegas Division N1anager of N1anagement, R. Stullins Unisersity of New Niexico Vice President, Operations St.C. Slota l Albuquerque, New Niexico Santa Fe Division N1anager 1 J.L. Wilkins 6.A. Schreiber** (deceas(d) Group Vice President, J. Godwin Chairman of the Board of Directors, Engineering, Construction San Juan Plant Nianager Public Senice Company of New Niexico and Operations i D.A. Trujillo l R.ll. Stephens
- P.J. Archibeck Sangre de Cristo Water Company, ,
Stephens-Irish Agency Treasurer and Assistant Secretary Las Vegas Division N1anager Las Vegas, New Niexico l l D.E. Peckham W.51. Ilicks l E.R. Wood " Secretary and Assistant Treasurer Sangre de Cristo Water Company, President, Santa Fe Ntotor Company Santa Fe Division N!anager Santa Fe, Jew N1exico II.L. liitchins, Jr. Assistant Secretary and Assistant Treasurer l
*Niembers of the Audit Committee "N1 embers of the Executive Committec 35 l l
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Execulise Offices Alvarado Square Albuquerque, New Niexico 87158 Transfer Agents Registrars Common Stock Common and Preferred Stock Public Service Company of New Niexico First Nationalllank in Albuquerque Stockholder Services Post Office Box 1305 Alvarado Square Albuquerque, New N1exico 87103 Albuquerque, New Niexico 87158 id Bd Chemical 11ank Corporate Trust Department Corporate Trust Department 55 Water Street 55 Water Street New York, New York 10041 New York, New York 10041 l l l Preferred Stock Public Service Company of New N1cxico Stockholder Services Alvarado Square Albuquerque, New N1exico 87158 l 8 I l 36
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