SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-Q
(Mark One)
(X) COMBINED QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1995
or
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission File Number: 1-8847
TNP ENTERPRISES, INC.
(Exact name of registrant as specified in its charter)
Texas 75-1907501
(State of incorporation) (I.R.S. employer identification number)
4100 International Plaza, P. O. Box 2943, Fort Worth, Texas 76113
(Address and zip code of principal executive offices)
Registrant's telephone number, including area code 817-731-0099
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes \X\ No \ \
TNP Enterprises, Inc. had 10,896,733 shares of common stock
outstanding as of April 25, 1995.
Commission File Number: 2-97230
TEXAS-NEW MEXICO POWER COMPANY
(Exact name of registrant as specified in its charter)
Texas 75-0204070
(State of incorporation) (I.R.S. employer identification number)
4100 International Plaza, P. O. Box 2943, Fort Worth, Texas 76113
(Address and zip code of principal executive offices)
Registrant's telephone number, including area code 817-731-0099
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes \X\ No \ \
Texas-New Mexico Power Company had 10,705 shares of common stock
outstanding as of April 25, 1995.
<PAGE>
TNP Enterprises Inc. and Subsidiaries
Texas-New Mexico Power Company and Subsidiaries
Combined Quarterly Report on Form 10-Q for the period ended March 31,
1995
This Combined Quarterly Report on Form 10-Q is separately filed by TNP
Enterprises, Inc. and Texas-New Mexico Power Company. Texas-New Mexico
Power Company makes no representation as to information relating to
TNP Enterprises, Inc., except as it may relate to Texas-New Mexico Power
Company, or to any other affiliate or subsidiary of TNP Enterprises, Inc.
<TABLE>
<CAPTION>
TABLE OF CONTENTS
PART I. FINANCIAL INFORMATION
<S> <C>
Item 1. Financial Statements.
(Unaudited for Period Ended March 31, 1995 and 1994)
TNP Enterprises, Inc. and Subsidiaries:
Consolidated Statements of Operations
Three Month Periods Ended March 31, 1995 and 1994 3
Consolidated Statements of Cash Flows
Three Month Periods Ended March 31, 1995 and 1994 4
Consolidated Balance Sheets
March 31, 1995 and December 31, 1994 5
Texas-New Mexico Power Company and Subsidiaries:
Consolidated Statements of Operations
Three Month Periods Ended March 31, 1995 and 1994 6
Consolidated Statements of Cash Flows
Three Month Periods Ended March 31, 1995 and 1994 7
Consolidated Balance Sheets
March 31, 1995 and December 31, 1994 8
Notes to Consolidated Financial Statements 9
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations. 12
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders. 15
Item 6. Exhibits and Reports on Form 8-K. 15
(a) Exhibits 15
(b) Reports on Form 8-K 15
Signature page (TNPE and TNMP) 16
</TABLE>
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.
The following interim consolidated financial statements of TNP
Enterprises, Inc. ("TNPE") and subsidiaries and Texas-New Mexico Power
Company ("TNMP") and subsidiaries are unaudited. In management's
opinion, they reflect all adjustments (consisting only of normal
recurring accruals) necessary to state fairly results for the interim
periods presented. Results for interim periods are not necessarily
indicative of results to be expected for a full year or for previously
reported periods, due in part to seasonal revenue fluctuations.
Amounts shown for TNPE and TNMP at December 31, 1994, are based on
audited consolidated financial statements appearing in TNPE's and
TNMP's 1994 Combined Annual Report on Form 10-K.
<TABLE>
<CAPTION>
TNP ENTERPRISES, INC. AND SUBSIDIARIES
Consolidated Statements of Operations (Unaudited)
Three Months Ended
March 31,
1995 1994
(In Thousands Except
Per Share Amounts)
<S> <C> <C>
OPERATING REVENUES $107,622 $107,599
OPERATING EXPENSES:
Power purchased for resale 42,007 46,308
Fuel 10,698 10,172
Other operating and general expenses 18,235 17,450
Maintenance 2,851 3,053
Depreciation of utility plant 9,376 9,105
Taxes, other than on income 6,688 7,192
Income taxes (note 2) (561) (1,385)
Total operating expenses 89,294 91,895
NET OPERATING INCOME 18,328 15,704
Other income, net of taxes (note 2) 37 7
EARNINGS BEFORE INTEREST CHARGES 18,365 15,711
INTEREST CHARGES:
Interest on long-term debt 18,451 17,753
Amortization of debt-related
costs and other interest 1,006 950
Allowance for borrowed funds
used during construction (55) (108)
Total interest charges 19,402 18,595
NET LOSS (1,037) (2,884)
DIVIDENDS ON PREFERRED STOCK 188 211
LOSS APPLICABLE TO COMMON STOCK $(1,225) $(3,095)
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING 10,877 10,702
LOSS PER SHARE OF COMMON STOCK $ (0.11) $(0.29)
DIVIDENDS PER SHARE OF COMMON STOCK $ .20 $0.4075
See accompanying Notes to Consolidated Financial Statements.
<PAGE>
TNP ENTERPRISES, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows (Unaudited)
</TABLE>
<TABLE>
<CAPTION>
Three Months Ended
March 31,
1995 1994
(In Thousands)
CASH FLOWS FROM OPERATING ACTIVITIES:
<S> <C> <C>
Cash received from customers $108,979 $104,158
Power purchased for resale (42,828) (44,828)
Fuel costs paid (9,515) (11,404)
Cash paid to other suppliers and for payroll (20,892) (19,635)
Interest paid, net of amounts capitalized (22,889) (26,782)
Income taxes paid (905) -
Other taxes paid, net of amounts capitalized (16,081) (16,283)
Other operating cash receipts and payments, net 447 496
NET CASH USED IN OPERATING ACTIVITIES (3,684) (14,278)
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to utility plant, net of
capitalized depreciation and interest (5,822) (5,742)
Purchases of temporary investments (9,997) -
Maturities of temporary investments 5,636 -
NET CASH USED IN INVESTING ACTIVITIES (10,183) (5,742)
CASH FLOWS FROM FINANCING ACTIVITIES:
Dividends paid on preferred and common stocks (2,364) (4,571)
Issuances:
Common stock 309 371
Borrowings under secured notes payable 16,000 77,000
Redemptions:
Preferred stock (300) (300)
Repayments under secured notes payable (9,000) (50,151)
Other long-term debt - (120)
NET CASH PROVIDED BY FINANCING ACTIVITIES 4,645 22,229
NET CHANGE IN CASH AND CASH EQUIVALENTS (9,222) 2,209
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 15,297 12,423
CASH AND CASH EQUIVALENTS AT END OF PERIOD $6,075 $14,632
RECONCILIATION OF NET LOSS TO NET CASH
USED IN OPERATING ACTIVITIES:
Net loss $(1,037) $(2,884)
Adjustments to reconcile net loss
to net cash used in operating activities:
Depreciation of utility plant 9,376 9,105
Amortization of debt expense,
discount, and premium and other
deferred charges 1,244 1,294
Allowance for borrowed funds
used during construction (55) (108)
Deferred income taxes (266) (351)
Investment tax credit adjustments (300) (448)
Cash flows impacted by changes in current assets and liabilities:
Customer receivables 1,777 (3,898)
Accrued interest (4,326) (8,963)
Accrued taxes (9,893) (9,407)
Changes in other current assets and liabilities 186 1,515
Other, net (390) (133)
NET CASH USED IN OPERATING ACTIVITIES $(3,684) $(14,278)
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
<PAGE>
TNP ENTERPRISES, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
<TABLE>
<CAPTION>
March 31, 1995 December 31,
ASSETS (Unaudited) 1994
(In Thousands)
UTILITY PLANT:
<S> <C> <C>
Electric plant $1,198,138 $1,192,277
Construction work in progress 2,105 3,816
Total 1,200,243 1,196,093
Less accumulated depreciation 236,469 228,820
Net utility plant 963,774 967,273
NONUTILITY PROPERTY, at cost 1,206 1,308
CURRENT ASSETS:
Cash and cash equivalents 6,075 15,297
Temporary investments 10,041 5,590
Customer receivables 2,055 3,832
Inventories, at lower of average cost or market:
Fuel 976 1,157
Materials and supplies 7,495 7,527
Deferred purchased power and fuel costs 15,113 15,258
Accumulated deferred taxes on income 3,417 2,702
Other current assets 1,002 1,817
Total current assets 46,174 53,180
REGULATORY TAX ASSETS 17,299 17,304
DEFERRED CHARGES 31,610 32,727
$1,060,063 $1,071,792
CAPITALIZATION AND LIABILITIES
CAPITALIZATION:
Common stockholders' equity:
Common stock - no par value per share.
Shares authorized 50,000,000; issued
10,896,733 shares in 1995 and
10,866,441 in 1994 $134,426 $134,117
Retained earnings (note 1) 47,351 50,752
Total common stockholders' equity 181,777 184,869
Preferred stock 8,380 8,680
Long-term debt, less current maturities 689,841 682,832
Total capitalization 879,998 876,381
CURRENT LIABILITIES:
Current maturities of long-term debt 2,670 2,670
Accounts payable 20,436 21,951
Accrued interest 7,367 11,693
Accrued taxes 7,829 17,722
Customers' deposits 3,553 3,973
Revenues subject to refund (note 3) 4,881 4,782
Other current liabilities 11,470 10,621
Total current liabilities 58,206 73,412
REGULATORY TAX LIABILITIES 47,688 47,307
ACCUMULATED DEFERRED INCOME TAXES 47,021 46,960
ACCUMULATED DEFERRED INVESTMENT TAX CREDITS 16,612 16,912
DEFERRED CREDITS 10,538 10,820
COMMITMENTS AND CONTINGENCIES (notes 2, 3)
$1,060,063 $1,071,792
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
<PAGE>
TEXAS-NEW MEXICO POWER COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of TNP Enterprises, Inc.)
Consolidated Statements of Operations (Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
1995 1994
(In Thousands)
<S> <C> <C>
OPERATING REVENUES $107,622 $107,599
OPERATING EXPENSES:
Power purchased for resale 42,007 46,308
Fuel 10,698 10,172
Other operating and general expenses 18,235 17,450
Maintenance 2,851 3,053
Depreciation of utility plant 9,376 9,105
Taxes, other than on income 6,688 7,192
Income taxes (note 2) (561) (1,385)
Total operating expenses 89,294 91,895
NET OPERATING INCOME 18,328 15,704
Other income, net of taxes (note 2) 204 93
EARNINGS BEFORE INTEREST CHARGES 18,532 15,797
INTEREST CHARGES:
Interest on long-term debt 18,451 17,753
Amortization of debt-related costs
and other interest 1,006 950
Allowance for borrowed funds used
during construction (55) (108)
Total interest charges 19,402 18,595
NET LOSS (870) (2,798)
DIVIDENDS ON PREFERRED STOCK 188 211
LOSS APPLICABLE TO COMMON STOCK $(1,058) $(3,009)
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
<PAGE>
TEXAS-NEW MEXICO POWER COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of TNP Enterprises, Inc.)
Consolidated Statements of Cash Flows (Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
1995 1994
(In Thousands)
CASH FLOWS FROM OPERATING ACTIVITIES:
<S> <C> <C>
Cash received from customers $108,979 $104,158
Power purchased for resale (42,828) (44,828)
Fuel costs paid (9,515) (11,404)
Cash paid to other suppliers and for payroll (20,834) (19,811)
Interest paid, net of amounts capitalized (22,889) (26,782)
Income taxes paid (569) -
Other taxes paid, net of amounts capitalized (16,488) (16,209)
Other operating cash receipts and payments, net 349 620
NET CASH USED IN OPERATING ACTIVITIES (3,795) (14,256)
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to utility plant, net of
capitalized depreciation and interest (5,822) (5,742)
CASH FLOWS FROM FINANCING ACTIVITIES:
Dividends paid on preferred and common stocks (188) (4,611)
Issuances:
Borrowings under secured notes payable 16,000 77,000
Redemptions:
Preferred stock (300) (300)
Repayments under secured notes payable (9,000) (50,151)
Other long-term debt - (120)
NET CASH PROVIDED BY FINANCING ACTIVITIES 6,512 21,818
NET CHANGE IN CASH AND CASH EQUIVALENTS (3,105) 1,820
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 8,614 2,078
CASH AND CASH EQUIVALENTS AT END OF PERIOD $5,509 $3,898
RECONCILIATION OF NET LOSS TO NET CASH USED IN OPERATING
ACTIVITIES:
Net loss $(870) $(2,798)
Adjustments to reconcile net loss
to net cash used in operating activities:
Depreciation of utility plant 9,376 9,105
Amortization of debt expense, discount,
and premium and other deferred charges 1,244 1,294
Allowance for borrowed funds used
during construction (55) (108)
Deferred income taxes (421) (335)
Investment tax credit adjustments (299) (443)
Cash flows impacted by changes in current assets and liabilities:
Customer receivables 1,777 (3,898)
Accrued interest (4,326) (8,963)
Accrued taxes (10,064) (9,484)
Changes in other current assets and liabilities 127 1,508
Other, net (284) (134)
NET CASH USED IN OPERATING ACTIVITIES $(3,795) $(14,256)
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
<PAGE>
TEXAS-NEW MEXICO POWER COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of TNP Enterprises, Inc.)
Consolidated Balance Sheets
<TABLE>
<CAPTION>
March 31, 1995 December 31,
ASSETS (Unaudited) 1994
(In Thousands)
<S> <C> <C>
UTILITY PLANT:
Electric plant $1,198,138 $1,192,277
Construction work in progress 2,105 3,816
Total 1,200,243 1,196,093
Less accumulated depreciation 236,469 228,820
Net utility plant 963,774 967,273
NONUTILITY PROPERTY, at cost 183 183
CURRENT ASSETS:
Cash and cash equivalents 5,509 8,614
Customer receivables 2,055 3,832
Inventories, at lower of average cost or market:
Fuel 976 1,157
Materials and supplies 7,495 7,527
Deferred purchased power and fuel costs 15,113 15,258
Accumulated deferred taxes on income 3,417 2,702
Other current assets 1,200 1,958
Total current assets 35,765 41,048
REGULATORY TAX ASSETS 17,299 17,304
DEFERRED CHARGES 33,441 34,674
$1,050,462 $1,060,482
CAPITALIZATION AND LIABILITIES
CAPITALIZATION:
Common stockholder's equity:
Common stock, $10 par value per share.
Authorized 12,000,000 shares;
issued 10,705 shares $107 $107
Capital in excess of par value 175,111 175,111
Retained earnings (note 1) 9,501 10,559
Total common stockholder's equity 184,719 185,777
Redeemable cumulative preferred stock 8,380 8,680
Long-term debt, less current maturities 689,841 682,832
Total capitalization 882,940 877,289
CURRENT LIABILITIES:
Current maturities of long-term debt 2,670 2,670
Accounts payable 20,436 21,951
Accrued interest 7,367 11,693
Accrued taxes 6,834 16,898
Customers' deposits 3,553 3,973
Revenues subject to refund (note 3) 4,881 4,782
Other current liabilities 11,470 10,622
Total current liabilities 57,211 72,589
REGULATORY TAX LIABILITIES 47,688 47,307
ACCUMULATED DEFERRED INCOME TAXES 36,676 36,769
ACCUMULATED DEFERRED INVESTMENT TAX CREDITS 15,409 15,708
DEFERRED CREDITS 10,538 10,820
COMMITMENTS AND CONTINGENCIES (notes 2, 3)
$1,050,462 $1,060,482
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
<PAGE>
TNP Enterprises Inc. and Subsidiaries
Texas-New Mexico Power Company and Subsidiaries
Notes to Consolidated Financial Statements
(1) Retained Earnings
TNMP's first mortgage bond indenture restricts the payment of cash
dividends on TNMP's common stock (which is wholly owned by TNPE). The
restrictions do not permit TNMP to pay cash dividends to TNPE unless
unrestricted retained earnings are available.
The restriction became operative during 1994 due to the recognition of
$35.0 million of regulatory disallowances and precludes TNMP from
paying cash dividends to TNPE until unrestricted retained earnings are
available. The restriction continues to be operative at March 31,
1995. TNMP currently expects to be able to resume cash dividends to
TNPE before the end of 1995. Information concerning TNMP's
unrestricted retained earnings is summarized below (in thousands):
<TABLE>
<CAPTION>
Mar. 31, 1995 Dec. 31, 1994
<S> <C> <C>
Total retained earnings $9,501 $10,559
Less restricted level
required by bond indenture 13,879 13,696
Unrestricted retained earnings $(4,378) $(3,137)
</TABLE>
TNMP can pay cash dividends to TNPE only to the extent that
unrestricted retained earnings are positive.
TNPE has continued to pay cash dividends to its shareholders from cash
on hand at the parent company level during the period that TNMP has
been unable to pay cash dividends to TNPE.
(2) Income Taxes
The components of income taxes for the three months ended March 31,
1995, and 1994, respectively, were as follows:
<TABLE>
<CAPTION>
TNPE TNMP
1995 1994 1995 1994
(In Thousands)
Taxes included in net operating income:
<S> <C> <C> <C> <C>
Federal - current $ 359 $(607) $359 $(607)
Federal - deferred (621) (335) (621) (335)
ITC adjustments (299) (443) (299) (443)
(561) (1,385) (561) (1,385)
Taxes included in other income (loss):
Federal - current (70) 49 (55) 66
Federal - deferred 355 (16) 200 -
ITC adjustments (1) (5) - -
284 28 145 66
Total income taxes $(277) $(1,357) $(416) $(1,319)
</TABLE>
The following summarizes federal tax carryforwards as of March 31, 1995:
<TABLE>
<CAPTION>
TNPE TNMP
(In Thousands)
Net operating loss
<S> <C> <C>
Amount $56,896 $72,416
First year of expiration period 2008 2006
Last year of expiration period 2010 2010
Minimum tax credits
Amount $9,959 $14,872
Expiration period none none
Investment tax credit ("ITC")
Amount $17,501 $18,702
Expiration period 2005 2005
</TABLE>
<PAGE>
(2) Income Taxes - continued
Based on TNPE's and TNMP's historical and projected pretax
earnings, management believes that both TNPE and TNMP likely will
realize the benefit of the deferred tax assets existing at March
31, 1995.
As indicated in the 1994 Combined Annual Report on Form 10-K, an
Internal Revenue Service ("IRS") revenue agent involved in auditing
TNPE's 1990 and 1991 consolidated federal income tax returns
recommended, in March 1995, that a private letter ruling concerning
eligibility of the TNP One generating plant for ITC be revoked
retroactively. Management believes that TNMP's claim for ITC is
valid and is contesting the agent's recommendation.
3) Commitments and Contingencies
Sale of Texas Panhandle Properties
As discussed in the 1994 Combined Annual Report on Form 10-K, TNMP
has agreed to sell the Panhandle properties to Southwestern Public
Service Company for $29.2 million, subject to certain conditions
and regulatory approvals. Management anticipates that the sale will
be finalized during 1995.
Revenues Subject to Refund
At March 31, 1995, revenues subject to refund totaled $4.9 million
under an income tax-related issue from a Texas rate case. The
revenues subject to refund, which were billed from 1991 through
October 1, 1994, have been excluded from results of operations.
Recognition of these revenues is conditioned upon TNMP obtaining a
private letter ruling from the IRS supporting TNMP's position on
certain related income tax consequences.
While no assurances can be given, based upon a similar revenue
ruling received by an unrelated utility, TNMP expects a favorable
ruling during 1995. In addition, the Texas Supreme Court recently
ruled that Texas law does not bind the Public Utility Commission of
Texas to require a utility to pass through to its Texas customers
income tax benefits applicable to disallowed utility plant.
An unfavorable private letter ruling would require TNMP to refund
to Texas customers the $4.9 million previously collected. In
addition, TNMP would recognize an expense of $7.9 million to
provide for a regulatory liability and would pass through to Texas
customers income tax benefits applicable to disallowed plant.
<PAGE>
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations.
The following discussion should be read in conjunction with the
related consolidated financial statements and notes.
RESULTS OF OPERATIONS
Overall Results
TNPE's $1.2 million loss applicable to common stock for the first
quarter of 1995 ("current period") represents a significant
improvement from a $3.1 million loss for the first quarter of
1994 ("prior period"). Since the operations of TNMP (the
principal subsidiary) represent virtually all of TNPE's
operations, the following discussion focuses primarily on TNMP's
operations. The $1.9 million improvement resulted primarily from
rate increases received during 1994 which were partially offset
by increased interest charges.
Operating Revenues
Current period operating revenues were slightly higher as
compared to the prior period. The components of operating
revenues are summarized in the following table (in thousands):
<TABLE>
<CAPTION>
Variance:
Current Prior Increase
period period (Decrease)
<S> <C> <C> <C>
Total operating revenues $107,622 $107,599 $ 23
Less pass-through items:
Power purchased for resale 42,007 46,308 (4,301)
Fuel & standby power 11,484 10,477 1,007
Base revenues $ 54,131 $ 50,814 $ 3,317
</TABLE>
Pass-through items are the portion of operating revenues that
recover from customers the costs of power purchased for resale,
fuel, and standby power. These items affect customer rates but do
not affect operating income. The $4.3 million reduction in power
purchased for resale and the $1.0 million increase in fuel and
standby power are discussed under "Results of Operations --
Operating Expenses."
Although total operating revenues increased slightly, base
revenues were $3.3 million higher than the prior period. Base
revenues increased primarily due to annualized rate increases in
both Texas ($17.5 million) and New Mexico ($0.4 million). These
rate increases resulted from settlement agreements in October
1994 and May 1994, respectively.
Current period sales of 1,475 GWH, a 1.6% improvement over prior
period sales, contributed $0.5 million to the increase in base
revenues. The increase in sales resulted from a 2.1% increase in
total customers and more consumption by commercial and industrial
users. However, residential sales were 3.7% lower than in the
prior period due to milder temperatures in the current period.
Operating Expenses
TNMP's current period operating expenses decreased by $2.6
million as compared to the prior period. The decrease is
primarily due to lower pass-through expenses. Excluding the
effect of pass-through items ($3.3 million decrease), other
operating expenses increased by $0.7 million.
Pass-through Expenses. Pass-through expenses consist of power
purchased for resale, fuel, and standby power.
Power purchased for resale in the current period decreased $4.3
million from the prior period. The decrease in power purchased
for resale resulted from TNMP exercising rights under its New
Mexico purchased power contracts to shift purchases to lower cost
suppliers. TNMP's customers directly benefit from this reduction
as these expenses are recovered through adjustment clauses. TNMP
recently undertook similar action in Texas to reduce the cost of
power purchased for resale for supplemental summer peaking
capacity. As a result, an additional cost savings of $8 million
annually is expected beginning in 1995.
<PAGE>
The $1.0 million increase in fuel and standby power is directly
related to an increased fixed fuel recovery factor approved by
the Public Utility Commission of Texas in connection with the
1994 Texas rate case settlement. The majority of TNMP's fuel
expense is equal to the amount recovered in revenues and any
difference from actual costs is deferred until a new factor is
established under a fuel factor reconciliation hearing.
Other Operating Expenses. In the current period other operating
expenses increased $0.7 million from the prior period. Although
direct payroll expenses decreased $0.8 million as a result of the
1994 reorganization, increases in certain employee benefits and
customer collection costs and decreases in income tax benefits
more than offset the decreases. Employee benefits increased as a
result of the 1995 adoption of cash incentive compensation plans.
Future results of operations are expected to be impacted by the
plans approved by the shareholders discussed in Item 4.
Interest Charges
Current period total interest charges increased by $0.8 million
over the prior period amount due to increased interest rates
under the Unit 2 Credit Agreement.
FINANCIAL CONDITION
Liquidity
TNMP believes that cash flow from operations and periodic
borrowings under its Unit 2 Credit Agreement will be sufficient
to meet working capital requirements and planned capital
expenditures at least through December 1996. TNMP has sufficient
liquidity to satisfy the possibility of adverse rulings, if any,
for the contingencies described in notes 2 and 3, respectively,
of Notes to Consolidated Financial Statements.
As of March 31, 1995, available unused credit under the Unit 2
Credit Agreement was $55.5 million, subject to interest coverage
and equity ratio tests. Management is investigating alternative
credit arrangements to lower interest expense and gain additional
financial flexibility.
Common Stock Dividend
At March 31, 1995, TNPE had unconsolidated cash and investments
of approximately $10.5 million, which is expected to be
sufficient to pay dividends at the current level for at least
four quarters.
Sale of Texas Panhandle Properties
The discussion in TNPE's and TNMP's 1994 Combined Annual Report
on Form 10-K at page 52 concerning the anticipated sale of the
Panhandle properties is incorporated in this report by reference.
<PAGE>
PART II - OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders.
TNPE's annual shareholders' meeting was held April 28, 1995. R.
Denny Alexander, Sidney M. Gutierrez, and Kevern R. Joyce were re-
elected as Class 1 directors. Voting results with respect to each
of them were: Mr. Alexander: 8,302,023 for, 349,674 against; Mr.
Gutierrez: 8,281,142 for, 370,555 against; and Mr. Joyce:
8,258,281 for, 393,416 against.
The TNPE Equity Incentive Plan was approved by a vote of
7,433,755 for, 1,001,998 against, 215,942 abstaining, and no
broker nonvotes.
The TNPE Nonemployee Director Stock Plan was approved by
7,353,064 for, 1,062,618 against, 236,014 abstaining, and no
broker nonvotes.
The appointment of KPMG Peat Marwick LLP, Independent Certified
Public Accountants, to continue to serve as independent auditors
for the current year was ratified by a vote of 8,431,072 for,
108,895 against, 111,729 abstaining, and no broker nonvotes.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits
The Exhibit Index on pages 56 to 67 of TNPE's and TNMP's 1994
Combined Annual Report on Form 10-K and the exhibits listed
in that Exhibit Index are incorporated in this report by
reference. A copy of the referenced Exhibit Index is filed as
Exhibit 99(c) to this report.
The following exhibits are filed with this report:
*10(vv) TNP Enterprises, Inc. Equity Incentive Plan
(incorporated by reference to Exhibit 4(i) of TNPE's
registration statement on Form S-8 filed with the SEC
on April 28, 1995, File No. 33-58897)
*10(ww) TNP Enterprises, Inc. Nonemployee Director
Stock Plan (incorporated by reference to Exhibit 4(j)
of TNPE's registration statement on Form S-8 filed with
the SEC on April 28, 1995, File No. 33-58897)
*10(xx) TNP Enterprises, Inc. Management Short-Term Incentive Plan
*10(yy) TNP Enterprises, Inc. Broad-Based Short-Term Incentive Plan
*10(zz) TNMP Excess Benefit Plan, as amended
27(a) Financial Data Schedule for TNPE
27(b) Financial Data Schedule for TNMP
99(a) Discussion of Private Letter Ruling on ITC
(incorporated by reference to the last paragraph on
page 50 of TNPE's and TNMP's 1994 Combined Annual
Report on Form 10-K)
99(b) Sale of Texas Panhandle Properties
(incorporated by reference to page 52 of TNPE's and
TNMP's 1994 Combined Annual Report on Form 10-K)
99(c) Exhibit Index (incorporated by reference to
pages 56 to 67 of TNPE's and TNMP's 1994 Combined
Annual Report on Form 10-K)
* Management contracts.
(b) Reports on Form 8-K
None.
<PAGE>
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
(Registrant) TNP ENTERPRISES, INC.
By \s\ Monte W. Smith
Monte W. Smith
Date: May 10, 1995 Treasurer and as Chief Accounting Officer
(Registrant) TEXAS-NEW MEXICO POWER COMPANY
By \s\ Monte W. Smith
Monte W. Smith
Date: May 10, 1995 Controller and as Chief Accounting Officer
Management Short-Term Incentive
Plan
TNP Enterprises, Inc.
March 1995
Plan Purposes
* Provide a meaningful and competitive incentive opportunity geared to
the achievement of specified corporate financial, operational, and
individual strategic goals.
* Vary performance criteria/goals and incentive award amounts
to reflect differences in operational and individual participant
challenges and accomplishments.
Concept
A short-term incentive plan for key management employees where
the award opportunity and performance goals are set at the beginning
of each year. Actual payments are based on the achievement of
corporate financial, operational, and individual strategic goals
measured over a one-year period. Awards will only be paid if a
predetermined threshold level of overall corporate performance is
met. Payment will be made in cash as soon as practical after year end.
Plan Administration
The Personnel, Organization, and Nominating Committee (or any other
successor committee [the "Committee"]) will have responsibility for
administration of the program in accordance with the provisions of
the plan, as set forth in these administrative plan specifications.
Plan Year
The plan year for the Management Short-Term Incentive Plan
will coincide with the Company's fiscal year which ends on December 31.
Participation
Participation will be limited to those key individuals whose
actions can have a substantial impact on TNP's success. This
group will initially consist of the officer group, directors,
assistant officers, and key management employees designated by the
Chief Executive Officer and approved by the Committee.
Incentive
Opportunities
At the beginning of each plan year, a minimum, target, and maximum
award opportunity will be established for each participant grouping.
The "target" award will be earned for achievement of expected
performance. "Minimum" and "maximum" performance award levels then
will be developed in relation to the performance target award levels.
<PAGE>
Actual participant award opportunities can vary from 0 to 150 percent
of the target award opportunity in relation to actual corporate financial,
operational, and individual performance.
Performance
Apportionment
Performance will be assessed at three levels--corporate financial,
operational, and individual. The Chief Executive Officer will
recommend, and the Committee will approve, the split of incentive
opportunity. The apportionments will vary by participant level.
The results of one performance area will not affect the amount
of the award opportunity from other performance areas, except that
no payouts will occur if the Company does not meet its overall
corporate threshold performance target. A participant's total
incentive award will be equal to the sum of the amounts earned from
each portion of the incentive opportunity.
<PAGE>
Corporate Financial
Performance
Corporate financial performance will be measured based on
earnings per share (EPS). At the beginning of each plan year, a
"target" EPS goal will be established for the Company.
"Minimum" and "maximum" performance levels, for incentive award
determination purposes, will be set up in relation to this
performance target. No award is paid for performance below
minimum. Straight-line interpolation would be used for results
between minimum and the maximum.
The Chief Executive Officer will suggest, and the Committee will
determine, the treatment of "extraordinary" gains or losses and their
impact on EPS in the plan. Where possible, this determination will be
made prior to establishing the annual target for EPS.
Corporate
Operational
Performance
Corporate operational goals for employees will be based equally upon
overall safety, O&M costs, and system reliability. Targets for each of
these goals will be established. Minimum and maximum performance levels
also will be determined. Tables will then be established to define
award opportunities based on various levels of achievement.
Individual
Performance
The purpose of individual performance is to recognize and to reward
those contributions that may not be adequately reflected by financial
or operational measures. Individual performance will be measured for
participants at the officer level only.
<PAGE>
At the beginning of the plan year, preset goals and objectives will be
set which should be:
* Supportive of corporate and operational objectives;
* Controllable by the participant; and
* Varied in scope and complexity.
Goals will be set forth by the Chief Executive Officer. Following
year end, the Chief Executive Officer, with the approval of the
Committee, shall determine the extent to which individual goals have
been accomplished. The Committee shall make this determination for the
Chief Executive Officer.
Overall
Corporate
Threshold
At the beginning of each plan year, an overall threshold level of
corporate financial performance will be established. Performance
below the threshold level will result in no award payouts,
regardless of actual corporate financial, operational, or
individual performance achievements.
<PAGE>
Form and
Timing of Payment
Awards will be paid in cash as soon as practical following
approval of award amounts by the Committee.
Termination of
Employment Due to
Retirement, Death,
or Disability
If a participant's employment is terminated due to retirement,
death, or disability during a plan year, the award earned shall
be prorated based on the number of months of participation within the
plan year. The prorated award will be based upon performance
determined at year end and will be paid fully in cash at the same
time all other awards are paid from the plan.
Termination for
Any Other Reason
Termination of employment for reasons other than retirement, death,
or disability before the end of a plan year will result in forfeiture
of any associated cash or stock award opportunity for the current
plan year. However, the Chief Executive Officer, with the approval of
the Committee, may waive such forfeiture provision.
Termination after the plan year end, but prior to award payout, will
not result in award forfeiture, except in the event of termination
for "cause."
Tax Treatment
Payments are taxable to the participant in the year of receipt. The
Company receives a tax deduction at the same time and in the same
amount as the participant recognizes taxable income.
Withholding taxes
The Company will have the right to deduct any Federal, state, or
local taxes required by law to be withheld.
Beneficiary
Designation
A participant may name a beneficiary or beneficiaries to whom any
benefit under this plan is to be paid in the event of death.
Effect on Employee
Benefit Plans
Payments from this plan shall not be included in calculating the
amount of employee benefits to be paid under the terms of any of the
Company's qualified employee benefit plans.
Participant Rights
Participation in this plan shall not interfere with the Company's
right to terminate any participant's employment at any time. Rights
or interests of any participants in this plan are nontransferable.
<PAGE>
Plan Amendments
The Committee may, in its sole discretion, modify, amend, suspend, or
terminate, in whole or in part, any or all of the provisions of the
plan. However, no modification, amendment, suspension, or termination
may adversely affect a payment or distribution to which a participant
is entitled.
New Hires,
Promotions,
Demotions
The Chief Executive Officer, with the approval of the Committee,
will have the discretion to determine participation and award levels
for new hires, promotions, or demotions.
<PAGE>
Broad-Based
Short-Term
Incentive Plan
Plan Purposes
* Provide a meaningful and competitive incentive opportunity geared to
the achievement of specified corporate financial and operational goals.
* Reward teamwork, cost consciousness, and other behaviors that result
in "value added" to both customers and shareholders.
Concept
A short-term incentive plan for all employees where the award opportunity
and performance goals are set at the beginning of
each plan year. Actual payments are based on the achievement of corporate
financial and operational goals. Awards will only be
paid if a predetermined threshold level of overall corporate performance is
met. Payment will be made in cash as soon as practical after year end.
Plan Administration
The Personnel, Organization, and Nominating Committee (or any other
successor committee [the "Committee"]) will have responsibility for
administration of the program in accordance with the provisions of the
plan, as set forth in these administrative plan specifications.
Plan Year
The plan year for the Broad-Based Short-Term Incentive Plan
will coincide with the Company's fiscal year which ends on December 31.
Participation
Participation will include all full-time hourly and salaried employees of the
Company.
Incentive
Opportunities
At the beginning of each plan year, a minimum, target, and maximum
award opportunity will be established. The "target" award will be earned
for achievement of expected performance. "Minimum" and "maximum"
performance award levels then will be developed in relation to the
performance target award levels.
The target award opportunity for each participant before apportionment
will be 4 percent of year-end W-2 earnings (excluding noncash items and
bonuses). Actual participant award opportunities can vary from 0 to 150
percent of the target award opportunity in relation to actual corporate
financial and operational performance.
<PAGE>
Performance
Apportionment
Performance will be assessed at two levels--corporate financial and
corporate operational. The Chief Executive Officer will recommend, and
the Committee will approve, the split of incentive opportunity. The
apportionments will vary by participant level. The performance of one area
will not affect the amount of the award opportunity from the other, except
that no payouts will occur if the Company does not meet its overall
corporate threshold performance target. A participant's total incentive
award will be equal to the sum of the amounts earned from each portion of
the incentive opportunity.
Corporate Financial
Performance
Corporate financial performance will be measured based on
earnings per share (EPS). At the beginning of each plan year, a "target"
EPS goal will be established for the Company. "Minimum" and
"maximum" performance levels, for incentive award determination
purposes, will be set up in relation to this performance
target. No award is paid for performance below minimum.
Straight-line interpolation would be used for results between
the minimum and the maximum.
<PAGE>
The Chief Executive Officer will suggest, and the Committee will
determine, the treatment of "extraordinary" gains or losses and their
impact on EPS in the plan. Where possible, this determination will be
made prior to establishing the annual target for EPS.
Corporate
Operational
Performance
Corporate operational goals for employees will be based equally upon
overall safety, O&M costs, and system reliability. Targets for each of these
goals will be established. Minimum and maximum performance levels also
will be determined. Tables will then be established to define award
opportunities based on various levels of achievement.
Overall
Corporate
Threshold
At the beginning of each plan year, an overall threshold level of corporate
financial performance will be established. Performance below the threshold
level will result in no award payouts, regardless of actual corporate
financial or operational performance achievements.
Form and
Timing of Payment
Awards will be paid in cash as soon as practical following approval of
award amounts by the Committee.
Termination of
Employment Due to
Retirement, Death,
or Disability
If a participant's employment is terminated due to retirement,
death, or disability during a plan year, the award earned shall
be prorated based on the number of months of participation within the plan
year. The prorated award will be based upon performance determined at
year end and will be paid in cash at the same time all other awards are
paid from the plan.
Termination for
Any Other Reason
Termination of employment for reasons other than retirement, death, or
disability before the end of a plan year will result in forfeiture
of any associated award opportunity. However, the Chief Executive
Officer, with the approval of the Committee, may waive such forfeiture
provision.
Termination after the plan year end, but prior to award payout, will not
result in award forfeiture, except in the event of termination
for "cause."
Tax Treatment
Payments are taxable to the participant in the year of receipt. The
Company receives a tax deduction at the same time and in the same
amount as the participant recognizes taxable income.
Withholding taxes
The Company will have the right to deduct any Federal, state, or local
taxes required by law to be withheld.
<PAGE>
Beneficiary
Designation
A participant may name a beneficiary or beneficiaries to whom any benefit
under this plan is to be paid in the event of death.
Effect on Employee
Benefit Plans
Payments from this plan shall not be included in calculating the amount of
employee benefits to be paid under the terms of any of the Company's
qualified employee benefit plans.
Participant Rights
Participation in this plan shall not interfere with the Company's right to
terminate any participant's employment at any time. Rights or interests of
any participants in this plan are nontransferable.
Plan Amendments
The Committee may, in its sole discretion, modify, amend, suspend, or
terminate, in whole or in part, any or all of the provisions of the plan.
However, no modification, amendment, suspension, or termination may
adversely affect a payment or distribution to which a participant is entitled.
New Hires,
Promotions,
Demotions
The Chief Executive Officer, with the approval of the Committee, will
have the discretion to determine participation and award levels for new
hires, promotions, or demotions.
TEXAS-NEW MEXICO POWER COMPANY EXCESS BENEFIT PLAN
(As Amended and Restated Effective January 1, 1987)
<PAGE>
ARTICLE I
Purpose
The purpose of this Plan is to provide those defined
benefit plan and defined contribution plan benefits which
are not payable to an employee under such plans because of
the limitations of Code Sections 401(a)(17), 401(k)(3)(A),
401(m)(2), 402(g) and 415.
I-1
<PAGE>
ARTICLE II
Definitions and Construction
2.1 Definitions: Where the following words and
phrases appear in this Plan, they shall have the
respective meanings set forth below, unless their context
clearly indicates to the contrary.
(a) Basic Pension Plan Benefit: The amount of
pension payable to the Participant under the Pension
Plan after reduction to comply with the limits of
Code Sections 401(a)(17) and/or 415.
(b) Basic Thrift Plan Contribution: The amount
of Employer contribution allocated to the
Participant's account during any year under the
Thrift Plan after reduction to comply with the limits
of Code Sections 401(a)(17), 401(k)(3)(A), 401(m)(2),
402(g) and/or 415.
(c) Board of Directors: The duly elected and
serving Board of Directors of the Employer or any
duly authorized committee of that Board.
(d) Code: The Internal Revenue Code of 1954, as
amended from time to time.
(e) Committee: The persons appointed to
administer the Plan in accordance with Article VIII.
(f) Effective Date: January 1, 1983.
(g) Employer: Texas-New Mexico Power Company, a
corporation organized and existing under the laws of
the State of Texas, or its successor or successors.
(h) Excess Pension Plan Benefit: A Participant's
vested pension benefit, if any, provided under
Section 5.1 hereof attributable to the reduction in
his Pension Plan benefit in compliance with Code
Sections 401(a)(17) and/or 415.
(i) Excess Thrift Plan Benefit: A Participant's
vested benefit balance, if any, provided under
Section 5.2 hereof attributable to reductions in
Thrift Plan contributions in compliance with Code
Sections 401(a)(17), 401(k)(3)(A), 401(m)(2), 402(g)
and/or 415.
II-1
<PAGE>
(j) Participant: An eligible employee of the
Employer who meets the requirements to participate in
the Plan in accordance with the provisions of Article
III hereof.
(k) Plan: Texas-New Mexico Power Company Excess
Benefit Plan, as amended or restated from time to
time.
(l) Pension Plan: Texas-New Mexico Power Company
Pension Plan, as amended or restated from time to
time.
(m) Plan Year: The twelve (12) month period
beginning on January lst and ending on December 31st.
(n) Thrift Plan: Texas-New Mexico Power Company
Thrift Plan for Employees, as amended or restated
from time to time.
2.2 Construction: The masculine gender, where
appearing in the Plan, shall be deemed to include the
feminine gender; the singular may include the plural; and
vice versa, unless the context clearly indicates to the
contrary.
2.3. Governing Law: The Plan shall be construed in
accordance with and governed by the laws of the State of
Texas.
II-2
<PAGE>
ARTICLE III
Eligibility and Participation
3.1 Employees Eligible to Participate: Any Employee of the
Employer whose Pension Plan benefit and/or Thrift Plan
contribution is limited by the benefit limitations of Code
Sections 401(a)(17), 401(k)(3)(A), 401(m)(2), 402(g)
and/or 415 shall participate in this Plan if designated
for coverage hereunder by the Board of Directors. Only
Employees who are within a select group of management or
highly compensated Employees may be designated for
coverage hereunder.
III-1
<PAGE>
ARTICLE IV
Provisions for Benefits
4.1 Amounts Provided by the Employer: Benefits under
the Plan shall constitute general obligations of the
Employer in accordance with the terms of the Plan. No
amounts in respect of such benefits shall be set aside or
held in trust, and no recipient of any benefit shall have
any right to have the benefit paid out of any particular
assets of the Employer. (Except that the Board of
Directors may establish a trust(s) out of which the
benefits hereunder may be paid, provided that the
principal and income of such trust(s) are subject to the
claims of the creditors of the Employer in the event of
insolvency as provided for under the terms of such
trust(s).
IV-1
<PAGE>
ARTICLE V
Amount of Benefits
5.1 Excess Pension Plan Benefits: If the pension
payable to the Participant from the Pension Plan is
limited by Code Sections 401(a)(7), 401(k)(3)(A),
401(m)(2), 402(g) and/or 415, the amount by which such
pension benefit is so limited shall be provided for such
Participant under this Plan.
5.2 Excess Thrift Plan Benefits: If, during any year,
a Participant's Basic Thrift Plan Contribution is limited
by Code Sections 401(a)(7), 401(k)(3)(A), 401(m)(2),
402(g) and/or 415, (referred to below in this Section as
the Qualified Plan Limits), then an amount equal to the
amount by which such contribution is so limited shall be
credited to such Participant under this Plan, provided
that:
a. The amount by which any Participant's
elective contribution under the Thrift Plan is so
limited shall be credited to such Participant under
this Plan only if and to the extent that the
Participant elects to defer an equivalent amount to
this Plan in accordance with the provisions below in
this Section.
b. The amount of any Employer matching Thrift
Plan Contribution that would have been allocated to
a Participant if the Qualified Plan Limits had not
applied shall be determined on the basis of the
Thrift Plan Contribution the Participant elected to
make from his own compensation for such year
(whether pre-tax or after-tax) regardless of whether
such election was in fact limited by the Qualified
Plan Limits, but only to the extent that the amount
of any such elective contribution to be made from
his own compensation that could not be made under
the Thrift Plan because of the Qualified Plan Limits
is actually deferred under this Plan.
c. Any such election to defer an excess
elective contribution amount under this Plan shall
be made in
V-1
<PAGE>
writing on a form approved by the Committee, which
form shall be filed with the Secretary of the
Employer prior to January 1 of the calendar year in
which it is to take effect (except that an election
to defer any such amount under this Plan in calendar
year 1987 may be made and filed no later than thirty
(30) days after adoption of .this Plan amendment by
the Board of Directors.)
d. Any such election shall become effective and
irrevocable on January 1 of the calendar year in
which it is to take effect (or, in the case of an
election to defer in calendar year 1987, upon
execution of the election form by the Participant)
and shall continue to be effective in, and
irrevocable with respect to, each succeeding
calendar year through and including the calendar
year in which the Participant files either a written
revocation of such election or a new election in
accordance with the provisions of this paragraph.
e. Any such written revocation or new election
shall take effect only in calendar years subsequent
to the calendar year in which such revocation or new
election is filed, and shall become irrevocable on
January 1 of the first such subsequent calendar
year.
f. Any election to defer in calendar year 1987
shall not be effective with respect to any
compensation payable prior to the date of such
deferral election.
Any such excess contribution amount credited to
the Participant hereunder shall be increased at a
rate determined by the Committee, taking into
account the actual rate of return under the Thrift
Plan.
The amount of benefit applicable to the
Participant at any time under this Section shall be
the benefit described above in this Section
multiplied by the vested percentage then applicable
to the Participant under the Thrift Plan.
V-2
<PAGE>
ARTICLE VI
Payment of Benefits
6.1 Payment of Excess Pension Plan Benefits: Payment
of any Participant's Excess Pension Plan Benefit under
Section 5.1 hereof, shall be made after his termination of
employment with the Employer at such time and in such
manner as determined by the Employer, provided that no
such time of payment may be later than the Participant's
normal retirement date under the Pension Plan, or, if
later, the first day of the month coincident with or next
following the date his employment terminates with the
Employer and any such manner of payment must be in
accordance with a form of payment available under the
Pension Plan, and further provided that, the amount of
benefit so payable must be determined on the same
actuarial basis as that which would be used for
determining his corresponding Basic Pension Plan Benefit
if it were payable in a like manner and time.
6.2 Payment of Excess Thrift Plan Benefits: Payment
of any Participant's Excess Thrift Plan Benefit under
Section 5.2 hereof shall be made after his termination of
employment with the Employer at such time and in such
manner as determined by the Employer, provided that no
such time of payment may be later than the date when
payment could first be demanded (either by the Participant
or his beneficiary if the Participant has died) under the
Thrift Plan and any such manner of payment must be in
accordance with a form of payment available under the
Thrift Plan.
VI-1
<PAGE>
ARTICLE VII
Death Benefits
7.1 Death Benefits: In the event any death benefit
payable under the Pension Plan prior to commencement of the Basic
Pension Plan Benefit thereunder is limited due to Code
Sections 401(a)(17) and/or 415 limitations, the amount by
which such death benefit is so limited shall be payable
hereunder at the same time and in the same manner as the
death benefit payable under the Pension Plan.
VII-1
<PAGE>
ARTICLE VIII
Administration
8.1 Appointment of Committee: The Plan shall be
administered by a Committee, which, unless otherwise
determined by the Board of Directors, shall be the Board
of Directors. The membership of the Committee may be
reduced, changed, or increased from time to time in the
absolute discretion of the Board of Directors.
8.2 Committee Powers and Duties: The duties of the
Committee will be determined by the Board of Directors.
The Committee shall have such powers as may be necessary
to discharge its duties hereunder.
VIII-1
<PAGE>
ARTICLE IX
Miscellaneous Provisions
9.1 Amendment, Termination, Etc.: The Board of
Directors may, by resolution, in its absolute discretion,
from time to time, amend, suspend, or terminate in whole
or in part, and, if terminated, reinstate any or all of
the provisions of the Plan, except that no amendment,
suspension, or termination may apply so as to decrease the
payment to any Participant (or beneficiary) of any benefit
under the Plan, which he accrued prior to the effective
date of such amendment, suspension, or termination. Any
such amendment, suspension, or termination shall become
effective on such date as shall be specified in such
resolution and, except as expressly limited in this
Section 9.1, include such provisions and have such effect
as the Board of Directors, in its absolute discretion,
deems desirable.
9.2 Nonguarantee of Employment: Nothing contained in
this Plan shall be construed as a contract of employment
between the Employer and any employee, or as a right of
any employee to be continued in the employment of the
Employer, or as a limitation of the right of the Employer
to discharge any of its employees, with or without cause.
9.3 Nonalienation of Benefits: To the extent
permitted by law, benefits payable under this Plan shall
not, without Committee consent, be subject in any manner
to anticipation, alienation,
IX-1
<PAGE>
sale, transfer, assignment, pledge, encumbrance, charge,
garnishment, execution, or levy of any kind, either voluntary or
involuntary. Any unauthorized attempt to anticipate, alienate, sell,
transfer, assign, pledge, encumber, charge or otherwise
dispose of any right to benefits payable hereunder shall
be void. No part of the assets of the Employer shall be
subject to seizure by legal process resulting from any
attempt by creditors of or claimants against any
Participant (or beneficiary), or any person claiming under
or through the foregoing, to attach his interest under the
Plan.
9.4 Liability: No member of the Board of Directors,
or of the Committee shall be liable for any act or action,
whether of commission or omission, taken by any other
member, or by any officer, agent, or employee of the
Employer or of any such body, nor, except in circumstances
involving his bad faith, for anything done or omitted to
be done by himself.
IX-2
<PAGE>
AMENDMENT NO. 1 TO
TEXAS-NEW MEXICO POWER COMPANY
EXCESS BENEFIT PLAN
WHEREAS, effective January 1, 1983, the
Board of Directors of Texas-New Mexico Power Company (the
"Company") approved and adopted the Texas-New Mexico Power
Company Excess Benefit Plan (the "Plan"); and
WHEREAS, effective January 1, 1987, the
Company adopted an amendment and restatement in its
entirety to the Plan; and
WHEREAS, the Company desires to make certain
changes to the Plan; and
WHEREAS, the Company has established,
subject to the approval of the Board of Directors,
Amendment Number One herein; and
WHEREAS, the Plan may be amended pursuant
to Article IX therein.
NOW, THEREFORE, BE IT RESOLVED, that the
Plan is hereby amended effective January 1, 1995, as
follows:
Article V is amended by renumbering the existing
Section 5.2 as Section 5.3 and by adding a new section 5.2
which shall read as follows:
"Section 5.2 Compensation For IRS Limitations: In the
event a Participant's compensation reduction election in
the William M. Mercer, Incorporated Regional Prototype Non-
Standardized 401(k) Profit Sharing Plan and Trust as
adopted by the Company is limited or adjusted as the
result of the application of 401(k), 402(g), and 415 of
the Internal Revenue Code and the implementing regulations
thereof, the Participant shall be entitled to elect one of
the following options:
(a) Sign an election to continue the compensation
reduction pursuant to the Excess Benefit Plan,
receiving the Company matching as set out therein;
(b) Elect not to continue deferrals pursuant to
the Excess Benefit Plan in which event the
Participant shall be entitled to take the
previously deferred compensation reduction as
current income and receive as current compensation
the contribution that had been made as Company
matching based upon the Participant's percent
compensation reduction in effect pursuant to
Participant's election immediately prior to the
limits of Section 402(g) being exceeded.
The Company shall pay the Participant under either
election above on the same basis as the Participant is
ordinarily paid from the time the limits of Section 402(g)
are exceeded until the end of the then current calendar
year."
Article V is further amended by adding a new Section
5.4 to read as follows:
"5.4 Employment Contract Benefits: If the
employment contract of a Participant grants
additional pension benefits that cannot be paid to
the Participant from the Pension Plan, such pension
benefits shall be provided under this Plan. The
pension benefits payable under this Plan shall be
those as described in the employment contract of the
Participant."
<TABLE> <S> <C>
<ARTICLE> UT
<CIK> 0000741612
<NAME> TNP ENTERPRISES, INC
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
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<TABLE> <S> <C>
<ARTICLE> UT
<CIK> 0000022767
<NAME> TEXAS-NEW MEXICO POWER COMPANY
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