UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITES EXCHANGE ACT OF 1934
Date of Report (Date of earliest events reported) November 13, 2000
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November 9, 2000
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PUBLIC SERVICE COMPANY OF NEW MEXICO
(Exact name of registrant as specified in its charter)
New Mexico 85-0019030
--------------------------- Commission ----------------------
(State or Other Jurisdiction File Number 1-6986 (I.R.S. Employer
of Incorporation) ------ Identification) Number)
Alvarado Square, Albuquerque, New Mexico 87158
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(Address of principal executive offices) (Zip Code)
(505) 241-2700
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(Registrant's telephone number, including area code)
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(Former name, former address and former fiscal year,
if changed since last report)
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Item 5. Other Event
The following is a press release recently issued by the Company and is being
filed herewith as current events.
PNM's Acquisition of Western Resources Electric Operations Expected to Provide
Immediate Earnings Boost, PNM Chairman and CEO Tells Analysts
ALBUQUERQUE, N.M. November 9, 2000 - Combining PNM, Public Service Company of
New Mexico (NYSE:PNM) with the Kansas electric utility operations of Western
Resources (NYSE:WR) will increase earnings over what either company would be
able to return on a stand-alone basis, PNM Chairman, President and CEO Jeff
Sterba said today.
"We expect that the combination will be immediately accretive to earnings - that
is, earnings per share from the combined company will be larger than what PNM
would earn by itself," Sterba told Wall Street analysts in a conference call
hosted by PNM this morning. "We continue to maintain our goal of achieving
average annual earnings growth of 10 percent over the next five years."
The company noted that the earnings accretion will come from:
o Non-cash gains from market value adjustments
Because the transaction will be accounted for as a reverse merger, PNM
will adjust its balance sheet, bringing the book value of its assets
and liabilities to fair market value. Non-cash gains from this process
will add $82 million, or about 52 cents per share, to earnings in the
first year and will continue throughout the life of the merged company.
o Enhanced revenue and earnings growth opportunities
PNM also expects that adding Western Resources' generating assets and
wholesale marketing operation to PNM's own wholesale trading business
will offer the opportunity for significant growth in revenues and
earnings from wholesale power sales.
"With the addition of Western Resources' strategically positioned and
cost-effective generation portfolio and its experienced power marketing staff,
we believe we can successfully penetrate the mid-continent market, using the
same asset-backed, niche strategy that has served us well in the West," Sterba
said.
Under the terms of the agreement, PNM and Western Resources, whose utility
operations consist of its KPL division and KGE subsidiary, will both become
subsidiaries of a new holding company to be named at a future date. Prior to the
consummation of this combination, Western Resources will reorganize all of its
non-utility assets into Westar Industries which will be spun off to its
shareholders.
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The companies expect the transaction to be completed within the next 12 to 15
months. The new holding company will serve over one million retail electric
customers and 400,000 retail gas customers in New Mexico and Kansas and will
have generating capacity of more than 7,000 megawatts. The transaction also will
make the new company a leading energy supplier in the Western and Midwestern
wholesale markets.
More than 1.3 million people in New Mexico rely on PNM for the delivery of
electric power and natural gas service to their homes and businesses. PNM's
1,521megawatts of generation capacity includes power from coal, nuclear and
natural gas-fired plants. Selling electricity to other utilities is the
fastest-growing part of the company's business. Through Avistar, PNM's
wholly-owned subsidiary, PNM is engaged in energy management and advanced
metering services, as well as assisting in the development of a new,
Internet-based energy auction system. For more information, visit the company's
website at www.pnm.com.
Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995
This press release contains forward looking statements within the meaning of the
"safe harbor" provisions of the United States Private Securities Litigation
Reform Act of 1995. Investors are cautioned that such forward-looking statements
with respect to revenues, earnings, performance, strategies, prospects and other
aspects of the businesses of PNM and Western Resources and with respect to the
benefits of the transaction are based on current expectations that are subject
to risk and uncertainties. Such statements are based upon the current beliefs
and expectations of the management of PNM and Western Resources. A number of
factors could cause actual results or outcomes to differ materially from those
indicated by such forward looking statements. These factors include, but are not
limited to, risks and uncertainties relating to: the possibility that
shareholders of PNM and/or Western Resources will not approve the transaction,
the risks that the businesses will not be integrated successfully, the risk that
the benefits of the transaction may not be fully realized or may take longer to
realize than expected, disruption from the transaction making it more difficult
to maintain relationships with clients, employees, suppliers or other third
parties, conditions in the financial markets relevant to the proposed
transaction, the receipt of regulatory and other approvals of the transaction,
that future circumstances could cause business decisions or accounting treatment
to be decided differently than now intended, changes in laws or regulations,
changing governmental policies and regulatory actions with respect to allowed
rates of return on equity and equity ratio limits, industry and rate structure,
stranded cost recovery, operation of nuclear power facilities, acquisition,
disposal, depreciation and amortization of assets and facilities, operation and
construction of plant facilities, recovery of fuel and purchased power costs,
decommissioning costs, present or prospective wholesale and retail competition
(including retail wheeling and transmission costs), political and economic
risks, changes in and compliance with environmental and safety laws and
policies, weather conditions (including natural disasters such as tornadoes),
population growth rates and demographic patterns, competition for retail and
wholesale customers, availability, pricing and transportation of fuel and other
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energy commodities, market demand for energy from plants or facilities, changes
in tax rates or policies or in rates of inflation or in accounting standards,
unanticipated delays or changes in costs for capital projects, unanticipated
changes in operating expenses and capital expenditures, capital market
conditions, competition for new energy development opportunities and legal and
administrative proceedings (whether civil, such as environmental, or criminal)
and settlements, the outcome of Protection One accounting issues reviewed by the
SEC staff as disclosed in previous Western Resources SEC filings, the impact of
Protection One's financial condition on Western Resources' consolidated results,
and other factors. PNM and Western Resources disclaim any obligation to update
any forward-looking statements as a result of developments occurring after the
date of this news release. Readers are referred to PNM's and Western Resources'
most recent reports filed with the Securities and Exchange Commission.
Additional Information
In connection with the proposed transaction, PNM and Western Resources will file
a joint proxy statement / prospectus with the Securities and Exchange
Commission. INVESTORS AND SECURITY HOLDERS ARE ADVISED TO READ THE JOINT PROXY
STATEMENT / PROSPECTUS WHEN IT BECOMES AVAILABLE, BECAUSE IT WILL CONTAIN
IMPORTANT INFORMATION. Investors and security holders may obtain a free copy of
the joint proxy statement / prospectus (when available) and other documents
filed by PNM and Western Resources with the SEC at the SEC's web site at
http://www.sec.gov. Free copies of the joint proxy statement / prospectus, when
available, and each company's other filings with the SEC may also be obtained
from the respective companies. Free copies of PNM's filings may be obtained by
directing a request to PNM, Alvarado Square, Albuquerque, New Mexico.
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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 thereunto duly authorized.
PUBLIC SERVICE COMPANY OF NEW MEXICO
(Registrant)
Date: November 13, 2000 /s/ John R. Loyack
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John R. Loyack
Vice President, Corporate Controller
and Chief Accounting Officer
(Officer duly authorized
to sign this report)
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