SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) February 18, 1997
TNP ENTERPRISES, INC.
(Exact name of registrant as specified in charter)
Texas 1-8847 75-1907501
(State or other jurisdiction (Commission File Number) (IRS Employer Identifi-
of Incorporation) cation No.)
4100 International Plaza, P.O. Box 2943, Fort Worth, Texas 76113
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(Address of Principal Executive Offices)
Registrant's telephone number, including area code: (817) 731-0099
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TEXAS-NEW MEXICO POWER COMPANY
(Exact name of registrant as specified in charter)
Texas 2-97230 75-0204070
(State or other (Commission File Number) (IRS Employer Identifi-
jurisdiction of Incorporation) cation No.)
4100 International Plaza, P.O. Box 2943, Fort Worth, Texas 76113
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(Address of Principal Executive Offices)
Registrant's telephone number, including area code: (817) 731-0099
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(Former name or former address, if changed since last report)
<PAGE>
Item 4. Changes in Registrant's Certifying Accountant.
A. In August 1996, the Audit Committees of the Boards of Directors of
TNP Enterprises, Inc. ("TNPE") and Texas-New Mexico Power Company ("TNP")
instructed management to request proposals from four qualified firms of
certified public accountants to perform independent audit services for TNPE, TNP
and their subsidiaries (collectively, the "Company") beginning in 1997.
Management had recommended to the Audit Committees that a solicitation for
external auditing services be made as part of a proper qualitative analysis and
review of existing services. The Company had not made a request for competitive
proposals for external auditing services for several years.
On January 6, 1997, management advised the Company's current
accountants, KPMG Peat Marwick LLP ("KPMG"), that management had not recommended
the reappointment of KPMG as the Company's independent accountants to the audit
committee. On January 20, 1997, the Audit Committee interviewed two accounting
firms. As a result of this process, it determined that it would recommend Arthur
Andersen LLP ("Andersen") as the new independent accountants.
On February 18, 1997, the Board of Directors of TNPE, upon
recommendation by its Audit Committee, approved the engagement of Andersen as
the new independent accountants of the Company. Andersen will replace KPMG
beginning with the audit for 1997. KPMG, which was notified of the Board's
action on the same date, will be dismissed as the independent accountant of the
Company effective upon completion of the 1996 audit.
A proposal that the appointment of Andersen be ratified will be
submitted to TNPE shareholders at TNPE's Annual Meeting in 1997.
B. KPMG's reports on the Company's consolidated financial statements
for fiscal years 1995 and 1994 contained no adverse opinions or disclaimers of
opinion, nor were such reports qualified as to uncertainty, audit scope or
accounting principles. During such periods and through February 18, 1997, there
were no disagreements between the Company and KPMG on any matter of accounting
principles or practices, financial statement disclosure or auditing scope or
procedures which, if not resolved to KPMG's satisfaction, would have caused it
to make a reference in connection with its report to the subject matter of the
disagreements, except for a disagreement that occurred in early February 1997
arising out of discussions at a senior level regarding when the Company should
report the accounting effect of the tentative settlement reached January 30,
1997 of the litigation between TNP and Jackson National Life Insurance Company.
The Audit Committees discussed the subject matter of the disagreement with KPMG.
This issue was resolved to the satisfaction of KPMG.
During discussions regarding this issue, the Company communicated to
KPMG that two other accounting firms disagreed with KPMG's conclusions. On
February 5, 1997, the Company informally discussed the potential effects of this
settlement as a 1997 transaction with Andersen, in anticipation of their
appointment as auditors of TNP for 1997, but relied upon the previous experience
of a TNP staff member with regard to the expressed views of another accounting
firm. The Company did not request from Andersen or any other accounting firm a
formal opinion on KPMG's conclusions on the accounting for this transaction.
During 1997, in connection with its audit of the Company's 1996
consolidated financial statements, KPMG informed the Company of a material
weakness in the internal control structure of a newly-formed non-regulated
subsidiary. Management has begun measures to correct such weakness.
There were no other reportable events (as defined in Regulation S-K,
Item 304 (a)(1)(v)) with KPMG on any matter of accounting principles or
practices, financial statement disclosure, or auditing scope or procedure that
were not resolved to the satisfaction of KPMG, during the past two fiscal years
and through February 18, 1997.
TNPE and TNP have authorized KPMG to respond fully to inquiries of
Andersen concerning the subject matter of the disagreement described herein.
C. TNPE and TNP have requested that KPMG furnish it with a letter
addressed to the Securities and Exchange Commission stating whether it agrees
with the above statements. A copy of KPMG's letter to the Commission dated
February 25, 1997 is filed as an exhibit to this Report.
Item 7. Exhibits.
16 Letter from KPMG Peat Marwick LLP regarding change of certifying
independent accountants.
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SIGNATURES
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 hereunto duly authorized.
TNP ENTERPRISES, INC.
(Registrant)
Date: February 25, 1997 By: /s/ M. S. Cheema
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M. S. Cheema
Vice President
TEXAS-NEW MEXICO POWER COMPANY
(Registrant)
Date: February 25, 1997 By: /s/ M. S. Cheema,
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M. S. Cheema
Senior Vice President
Exhibit 16
[KPMG Peat Marwick LLP Letterhead]
February 25, 1997
Securities and Exchange Commission
Washington, D.C. 20549
Ladies and Gentlemen:
We are currently principal accountants for TNP Enterprises, Inc. and Texas-New
Mexico Power Company (collectively, the "Company") and, under the date of
February 6, 1996, we reported on the consolidated financial statements of TNP
Enterprises, Inc. and subsidiaries and Texas-New Mexico Power Company and
subsidiaries as of and for the years ended December 31, 1995 and 1994. On
February 18, 1997, we were notified that our appointment as principal
accountants will cease upon the issuance of our reports on the Company's 1996
consolidated financial statements. We have read the Company's statements
included under Item 4 of its Form 8-K, dated February 18, 1997, and we agree
with such statements, except that we are not in a position to agree or disagree
with the Company's statements regarding (i) the solicitation process and reasons
for changing independent accountants, (ii) the approval of the decision to
change accountants by the Company's board of directors, (iii) the proposal to
submit the appointment of new independent accountants to the shareholders of TNP
Enterprises, Inc. in 1997, (iv) the Company's discussions with other accountants
regarding the specific subject matter of our reportable disagreement with the
Company, and (v) the Company's measures begun to correct its material weakness
in internal control.
Very truly yours,
/s/KPMG Peat Marwick LLP
cc: Kevern R. Joyce, TNP Enterprises, Inc.
and Texas-New Mexico Power Company
