UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the period ended May 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 1-3789
SOUTHWESTERN PUBLIC SERVICE COMPANY
(Exact name of registrant as specified in its charter)
New Mexico 75-0575400
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
Tyler at Sixth, Amarillo, Texas 79101
(Address of principal executive offices) (Zip Code)
Registrant's Telephone Number, including area code (806) 378-2121
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 __
As of July 11, 1995, 40,917,908 shares of the Company's common stock
were outstanding.
<PAGE>
SOUTHWESTERN PUBLIC SERVICE COMPANY
FORM 10-Q
For the Quarter Ended May 31, 1995
TABLE OF CONTENTS
PART I. Financial Information
Condensed Consolidated Balance Sheets at May 31, 1995
and August 31, 1994
Condensed Consolidated Statements of Earnings for the three,
nine and twelve months ended May 31, 1995 and May 31, 1994
Condensed Consolidated Statements of Cash Flows for the
nine and twelve months ended May 31, 1995 and May 31, 1994
Notes to Condensed Consolidated Financial Statements
Independent Accountants' Report
Management's Discussion and Analysis of Financial Condition
and Results of Operations
PART II. Other Information
Signatures
Exhibit 12. Statement of Computation of Ratio of Earnings
<PAGE>
PART I. FINANCIAL INFORMATION
<TABLE>
<CAPTION>
SOUTHWESTERN PUBLIC SERVICE COMPANY
Condensed Consolidated Balance Sheets
Assets
<S> <C> <C>
May 31, August 31,
1995 1994
(Unaudited)
(In Thousands)
Utility plant:
Utility plant in service $2,282,442 $2,280,126
Accumulated depreciation (832,399) (794,102)
Net plant in service 1,450,043 1,486,024
Construction work in progress 83,044 22,590
Net utility plant 1,533,087 1,508,614
Nonutility property and investments 53,421 41,868
Current assets:
Cash and temporary investments 27,671 20,782
Accounts receivable, net 56,577 69,357
Accrual for unbilled revenues 8,063 21,318
Materials and supplies, at average cost 19,904 18,238
Prepayments and other current assets 12,490 8,555
Total current assets 124,705 138,250
Deferred debits 128,459 132,503
Total assets $1,839,672 $1,821,235
Continued . . .
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
SOUTHWESTERN PUBLIC SERVICE COMPANY
Condensed Consolidated Balance Sheets
Capitalization and Liabilities
<S> <C> <C>
May 31, August 31,
1995 1994
(Unaudited)
(In Thousands)
Capitalization:
Common stock, $1 par value, authorized - 100,000,000 shares;
issued and outstanding - 40,917,908 shares $ 40,918 $ 40,918
Premium on capital stock 306,376 306,376
Retained earnings 343,980 348,878
Total common shareholders' equity 691,274 696,172
Preferred stock - redemption not required 72,680 72,680
Long-term debt 576,201 506,487
Total capitalization 1,340,155 1,275,339
Current liabilities:
Short-term debt - 14,994
Current maturities of long-term debt 325 16,741
Accounts payable 8,970 12,301
Liability for refunds to customers 2,107 3,804
Interest accrued 15,749 8,799
Fuel and purchased power expense accrued 32,506 40,884
Taxes accrued 20,188 30,359
Dividends payable on common stock 22,505 22,505
Other current liabilities 33,475 35,092
Total current liabilities 135,825 185,479
Deferred credits:
Deferred income taxes 346,449 339,456
Unamortized investment tax credits 6,116 6,303
Other 11,127 14,658
Total deferred credits 363,692 360,417
Total capitalization and liabilities $1,839,672 $1,821,235
See accompanying notes to condensed consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
SOUTHWESTERN PUBLIC SERVICE COMPANY
Condensed Consolidated Statements of Earnings
(Unaudited)
<S> <C> <C> <C> <C> <C> <C>
Three Months Ended Nine Months Ended Twelve Months Ended
5-31-95 5-31-94 5-31-95 5-31-94 5-31-95 5-31-94
(In Thousands, Except Per Share Amounts)
Operating revenues $205,187 $196,173 $574,251 $588,636 $829,063 $833,108
Operating expenses:
Operation:
Fuel 95,054 95,723 262,702 285,162 380,74 399,644
Purchased power 1,069 997 3,399 3,432 4,572 4,627
Other 25,717 26,778 77,129 77,433 106,990 106,795
Maintenance 7,261 7,908 23,207 21,513 29,970 28,043
Depreciation and amortization 15,292 14,448 45,871 45,681 60,741 60,927
Taxes other than property and
income taxes 4,389 4,536 14,055 14,310 19,216 19,386
Property taxes 6,074 5,765 17,935 16,703 23,700 22,799
Income taxes (note 2) 14,294 10,964 36,043 35,122 58,779 55,813
Total operating expenses 169,150 167,119 480,341 499,356 684,714 698,034
Operating income 36,037 29,054 93,910 89,280 144,349 135,074
Other income, net:
Income taxes (note 2) (857) (575) (2,074) (1,828) (778) (2,213)
Other, net 2,202 1,513 5,709 5,933 3,179 7,739
Total other income, net 1,345 938 3,635 4,105 2,401 5,526
Earnings before interest charges 37,382 29,992 97,545 93,385 146,750 140,600
Interest charges 10,953 10,213 31,270 30,189 41,504 40,367
Net earnings 26,429 19,779 66,275 63,196 105,246 100,233
Dividends and premiums on cumu-
lative preferred stock 1,219 1,219 3,658 3,658 4,878 5,261
Earnings applicable to
common stock $ 25,210 $ 18,560 $ 62,617 $ 59,538 $100,368 $ 94,972
Earnings per common share* $ 0.62 $ 0.45 $ 1.53 $ 1.46 $ 2.45 $ 2.32
Weighted average shares
outstanding 40,918 40,918 40,918 40,918 40,918 40,918
Dividends declared per
common share $ 0.55 $ 0.55 $ 1.65 $ 1.65 $ 2.20 $ 2.20
( ) Denotes deduction.
*Based on weighted average shares outstanding.
See accompanying notes to condensed consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
SOUTHWESTERN PUBLIC SERVICE COMPANY
Condensed Consolidated Statements of Cash Flows
(Unaudited)
<S> <C> <C> <C> <C>
Nine Months Ended Twelve Months Ended
5-31-95 5-31-94 5-31-95 5-31-94
(In Thousands)
Operating Activities:
Cash received from customers $ 597,886 $ 617,666 $ 831,822 $ 835,958
Cash paid to suppliers and employees (384,192) (397,076) (523,734) (530,830)
Interest paid (24,420) (24,022) (39,967) (39,081)
Income taxes paid (36,663) (36,098) (47,691) (48,986)
Taxes other than income taxes paid (35,294) (35,291) (41,391) (44,417)
Other operating cash receipts and payments, net 4,495 3,439 13,808 9,188
Net cash provided by operating activities 121,812 128,618 192,847 181,832
Investing Activities:
Construction expenditures (70,501) (74,164) (88,125) (90,187)
Nonutility property and investments (11,553) (9,411) (14,906) (11,369)
Net cash used in investing activities (82,054) (83,575) (103,031) (101,556)
Financing Activities:
Issuance of long-term debt 70,000 - 70,000 -
Retirement of long-term debt (16,702) (25,200) (17,046) (25,459)
Change in short-term debt (14,994) 49,000 (49,000) 49,000
Dividends paid (common and preferred) (71,173) (71,173) (94,898) (95,280)
Net cash used in financing activities (32,869) (47,373) (90,944) (71,739)
Net Increase (Decrease) in Cash and Temporary Investments 6,889 (2,330) (1,128) 8,537
Cash and Temporary Investments at Beginning of Period 20,782 31,129 28,799 20,262
Cash and Temporary Investments at End of Period $ 27,671 $ 28,799 $ 27,671 $ 28,799
Reconciliation of Net Earnings to Net Cash Provided
by Operating Activities:
Net earnings $ 66,275 $ 63,196 $ 105,246 $ 100,233
Adjustments to reconcile net earnings to net cash
provided by operating activities:
Depreciation and amortization 45,871 45,681 60,741 60,927
Deferred income taxes 8,586 8,507 11,644 10,158
Investment tax credits (188) (188) (250) (250)
Allowance for equity funds used during construction (219) (571) (207) (1,067)
Total 120,325 116,625 177,174 170,001
Cash flows impacted by changes in:
Accounts receivable 12,780 17,576 (716) 950
Accrual for unbilled revenues 13,255 11,965 3,594 5,163
Materials and supplies (1,666) (933) (2,228) (1,336)
Accounts payable (3,331) (1,480) (779) 60
Fuel and purchased power expense accrued (8,378) (9,633) 949 1,585
Taxes accrued (10,171) (11,664) 6,105 176
Liability for refunds to customers (1,697) 232 839 (2,226)
Other, net 695 5,930 7,909 7,459
Net cash provided by operating activities $ 121,812 $ 128,618 $ 192,847 $ 181,832
See accompanying notes to condensed consolidated financial statements.
</TABLE>
<PAGE>
SOUTHWESTERN PUBLIC SERVICE COMPANY
Notes to Condensed Consolidated Financial Statements
(Unaudited)
(1) Interim periods. The results of operations for the interim periods are
not necessarily an indication of the expected results for the fiscal year due
to the seasonal nature of Southwestern Public Service Company's (the Company)
business. The unaudited condensed consolidated financial statements included
herein were prepared from the books of the Company in accordance with
generally accepted accounting principles and reflect all adjustments (none of
which are other than normal recurring adjustments) which are, in the opinion
of management, necessary to provide a fair statement of the results of
operations and financial position for the interim periods. Such financial
statements generally conform to the presentation reflected in the Company's
Annual Report to Shareholders. The current interim periods reported herein
are included in the fiscal year subject to independent audit at the end of
the year.
(2) Income taxes. The components of income tax expense (benefit) are as
follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Three Months Ended Nine Months Ended Twelve Months Ended
5-31-95 5-31-94 5-31-95 5-31-94 5-31-95 5-31-94
(In Thousands)
Taxes on operating income:
Federal-current $10,675 $ 5,440 $26,165 $25,008 $45,035 $43,356
Federal-deferred 3,266 5,213 8,963 9,156 12,195 10,854
Investment tax credits (63) (62) (188) (188) (250) (250)
State-current 416 373 1,103 1,146 1,799 1,853
14,294 10,964 36,043 35,122 58,779 55,813
Taxes on other income:
Federal-current 1,097 558 2,430 2,476 1,309 2,910
Federal-deferred (249) 17 (377) (648) (552) (697)
State-current 9 - 21 - 21 -
857 575 2,074 1,828 778 2,213
Total income taxes $15,151 $11,539 $38,117 $36,950 $59,557 $58,026
</TABLE>
(3) Long-term debt. The Company issued $70 million of First Mortgage Bonds
(Bonds) on February 22, 1995. The proceeds from the Bonds were applied
primarily to the retirement of short-term debt.
(4) Rate and regulatory matters. On December 19, 1989, the FERC issued its
order regarding the 1985 rate case (see Note 10 in Form 10-K for fiscal years
1985 and 1989), and on October 18, 1990, denied rehearing of that order. The
Company appealed certain portions of the order that related to recognition in
rates of the reduction of the federal income tax rate from 46% to 34%. The
United States Court of Appeals for the District of Columbia Circuit remanded
the case, directing the FERC to reconsider the Company's claim of an
offsetting cost and limiting the FERC's actions. The FERC issued its Order on
Remand in July, 1992, required filings were made and a hearing was completed
in February 1994. In October 1994, the administrative law judge issued a
favorable initial decision that, if approved by the FERC, would result in a
substantial recovery by the Company. Negotiated settlements with the
Company's partial requirements customers and Texas-New Mexico Power Company
were approved by the FERC in July 1993 and September 1993, respectively, and
totaled $2.8 million. In May 1995, a settlement with the Company's New Mexico
cooperative customers amounting to $6.9 million, including interest, was
filed with the FERC and an order accepting this settlement is expected in
August 1995. Resolutions with the remaining wholesale customers, Golden
Spread member cooperatives and Lyntegar Electric Cooperative have not been
reached. Until a final order is issued by the FERC, the Company is unable to
accurately estimate the remaining amount recoverable from these proceedings.
<PAGE>
A Public Utility Commission of Texas (PUCT) substantive rule requires
periodic examination of the Company's fuel and purchased power costs, the
efficiency of the use of such fuel and purchased power, fuel acquisition and
management policies and purchase power commitments (see Item 1. Business -
Fuel Supply and Purchased Power in the Company's 1994 Form 10-K). On May 1,
1995, the Company filed with the PUCT, a petition for a fuel reconciliation
for the months of January 1992 through December 1994. The Commission has
scheduled hearings to begin September 6, 1995.
(5) General. See note (1) of Notes to Consolidated Financial Statements in
the Company's 1994 Annual Report on Form 10-K for a summary of the Company's
significant accounting policies.
<PAGE>
Independent Accountants' Report
Southwestern Public Service Company:
We have reviewed the accompanying condensed consolidated balance sheet of
Southwestern Public Service Company and subsidiaries as of May 31, 1995, and
the related condensed consolidated statements of earnings for the three-
month, nine-month and twelve-month periods ended May 31, 1995 and 1994, and
cash flows for the nine-month and twelve-month periods ended May 31, 1995 and
1994. These financial statements are the responsibility of the Company's
management.
We conducted our review in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical procedures
to financial data and making inquiries of persons responsible for financial
and accounting matters. It is substantially less in scope than an audit in
accordance with generally accepted auditing standards, the objective of which
is the expression of an opinion regarding the financial statements taken as a
whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that
should be made to such condensed consolidated financial statements for them
to be in conformity with generally accepted accounting principles.
We have previously audited, in accordance with generally accepted auditing
standards, the consolidated balance sheet and statement of capitalization of
Southwestern Public Service Company and subsidiaries as of August 31, 1994,
and the related consolidated statements of income, stockholders' equity, and
cash flows for the year then ended (not presented herein); and in our report
dated October 7, 1994, we expressed an unqualified opinion on those
consolidated financial statements. In our opinion, the information set forth
in the accompanying condensed consolidated balance sheet as of August 31,
1994, is fairly stated, in all material respects, in relation to the
consolidated balance sheet from which it has been derived.
Deloitte & Touche LLP
July 11, 1995
Dallas, Texas
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
Operating Revenues and Kilowatt-Hour Sales
Substantially all of the Company's operating revenues result from the sale
of electric energy. The principal factors determining revenues are the amount
and price per unit of energy sold. The following table describes the
principal components of changes in revenues.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Increase (Decrease) From Corresponding Prior Period
Three Months Nine Months Twelve Months
Ended Ended Ended
5-31-95 5-31-95 5-31-95
(Dollars In Thousands)
Estimated effect on revenues of variations in:
Kilowatt-hour (kwh) sales * $ 10,744 $ 13,287 $ 33,906
Rates 2,387 1,470 (3,154)
Fuel and purchased power cost recovery (2,615) (16,469) (19,511)
Subtotal 10,516 (1,712) 11,241
Non-firm kwh sales (1,502) (12,673) (15,286)
Total revenue increase (decrease) $ 9,014 $(14,385) $ (4,045)
Increase in kwh sales* (in millions) 315 409 872
Decrease in non-firm kwh sales (in millions) (26) (449) (521)
*Comprised of retail and wholesale excluding economy and interruptible (non-firm) wholesale kwh sales.
</TABLE>
Variations in Kwh Sales. The revenue increases in all periods are
attributable primarily to increased wholesale sales to rural electric
cooperatives (RECs). These increases are principally due to sales to Cap Rock
Electric Cooperative that began in February 1994 and increased to 100% of Cap
Rock's requirements on February 15, 1995. Increased irrigation resulting from
dry weather also contributed to greater REC sales. Sales in the twelve-month
period were also favorably impacted by record-breaking hot weather in June
and July 1994. Improved economic conditions also caused increases in retail
kwh sales in all periods.
Variations in Rates. Revenues increased in the three- and nine-month
periods due primarily to contractually set demand charges for certain
wholesale customers. Although firm wholesale kwh sales declined, the average
revenue per kwh sold increased due to such contractual demand charges. The
decline in the twelve-month period is due primarily to the effects of the
retail rate reductions in Texas and New Mexico. In Texas reduced rates
totaling approximately $13 million annually were implemented October 15,
1993. In New Mexico an approximate
$4 million annual reduction became effective April 1, 1994.
Variations in Fuel and Purchased Power Cost Recovery. Revenue decreases are
due to lower natural gas prices in all periods. Marginally lower coal costs
also contributed to the decline in the twelve-month period.
Variations in Non-Firm Kwh Sales. The amount of revenues arising from non-
firm sales is dependent, in large part, upon the availability of
hydroelectric power from the Northwest and competing generation from major
plants in the West. Lower non-firm sales in all periods were due primarily to
available power from these major western plants and excess hydroelectric
power in the Northwest. Mild weather throughout the region also contributed
to the decline in the three- and nine-month periods.
Operating Expenses and Non-Operating Items
Fuel and purchased power expense comprised 56.8%, 55.4% and 56.3% of total
operating expenses for the three, nine and twelve months ended May 31, 1995,
respectively. When compared to the corresponding periods last year, these
expenses decreased $0.6 million or 0.6%, $22.5 million or 7.8% and $19.0
million or 4.7%, respectively. Fuel expense (excluding purchased power
expense), per net kwh generated, decreased from 1.90 to 1.81 cents, from 1.89
to 1.76 cents, and from 1.89 to 1.77 cents for the respective three-, nine-
and twelve-month periods because of lower spot-market prices for natural gas
in all periods and lower coal costs in the twelve-month period.
Total operating expenses, excluding fuel and purchased power, increased
$2.6 million or 3.7%, $3.5 million or 1.7%, and $5.6 million or 1.9%, for the
respective three-, nine- and twelve-month periods. The increases for the
nine- and twelve-month periods resulted primarily from scheduled power plant
maintenance. The rise in the three-month period is due primarily to increased
income taxes as a result of higher income. Property taxes were greater in all
periods due to continuing escalation of ad valorem taxes in the state of
Texas related to school funding. Increased utility plant also contributed to
the rise in property taxes. Management does not expect significant increases
in the future related to such Texas school funding.
An increase in "other income" for the three-month period is due to
increased subsidiary income and allowance for funds used during construction
(AFUDC). A decline in "other income" in the twelve-month period is due to
previously reported nonrecurring expenses.
Earnings
Current operating income and earnings applicable to common stock increased
for all periods due principally to the increased kwh sales to RECs.
Assuming normal weather conditions, earnings for the 1995 fiscal year are
expected to improve. Additionally, settlement of the 1985 FERC rate case with
the New Mexico wholesale cooperative customers (see note 4) is expected to
add approximately $4.5 million, including interest, (after tax) or 11 cents
per share to earnings in the fourth quarter.
LIQUIDITY AND CAPITAL RESOURCES
The Company's demand for capital is primarily related to the construction
of utility plant and equipment. Cash construction expenditures excluding
AFUDC for the three, nine and twelve months ended May 31, 1995, were $25.9
million, $70.5 million and $88.1 million, respectively. The Company cannot
accurately forecast the portion of capital expenditures to be provided from
internally generated funds, but expects that it will be approximately 70% in
fiscal 1995.
The Company issued $70 million of 8.5% First Mortgage Bonds (Bonds) on
February 22, 1995. The proceeds from such Bonds were applied to the
retirement of short-term debt. The Company has effective a shelf registration
under which remains an aggregate of $130 million of Bonds and Cumulative
Preferred Stock that may be issued (a maximum of $40 million Preferred Stock
is issuable thereunder).
<PAGE>
PART II. OTHER INFORMATION
Item 5. Other Information.
The Company's ratio of earnings to fixed charges for the twelve months
ended May 31, 1995, was 4.70. The ratio of earnings to fixed charges and
preferred dividend requirements combined was 4.01 for such period.
The Company has agreed in principle to purchase TUCO, Inc., (TUCO) a
wholly owned subsidiary of Cabot Corporation, for $75 million. TUCO owns the
coal inventory maintained at the Company's Harrington and Tolk generating
stations. It also administers contracts with coal mines, railroads and the
coal-handling operator at the two coal-fueled power plants. This purchase is
expected to lower fuel costs. Regulatory approval is required.
On June 9, 1995, Central and Southwest Corporation (CSW) terminated its
merger agreement with El Paso Electric Company (EPE), and revoked EPE's
Modified Third Amended Plan of Reorganization. On June 23, 1995, the Company
filed a motion with the FERC requesting that the Section 211 application for
a mandatory transmission order filed by CSW and EPE be dismissed as moot.
(See Item 1. Business - Other in the Company's 1994 Form 10-K.)
On May 31, 1995, the Company filed applications with the FERC for
approval of proposed Open Access Transmission Service Tariffs and Market
Based Generation Power Sales Rates. Approval of these tariffs and rates will
enable the Company to participate in the increasingly competitive wholesale
power markets. The Company's proposed transmission service tariffs are
designed to meet the Commission's recently announced standards for comparable
open access transmission services.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits:
4 Supplemental Indenture dated February 15, 1995, to the Indenture
of Mortgage and Deed of Trust dated August 1, 1946
12 Statement showing computations of ratio of earnings for the twelve
months ended May 31, 1995
15 Letter of Deloitte & Touche LLP regarding unaudited condensed
consolidated interim financial information
(b) Reports on Form 8-K:
None
<PAGE>
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.
SOUTHWESTERN PUBLIC SERVICE COMPANY
Doyle R. Bunch II
Executive Vice-President
Accounting and Corporate Development
DATE: July 11, 1995
Executed in 25 counterparts of
which this is counterpart No. ___
SOUTHWESTERN PUBLIC SERVICE COMPANY
TO
CHEMICAL BANK
(Successor by Merger to The New York Trust Company
and Chemical Bank New York Trust Company),
As Trustee
_____________________
SUPPLEMENTAL INDENTURE DATED FEBRUARY 15, 1995
SUPPLEMENTAL TO INDENTURE OF MORTGAGE AND
DEED OF TRUST, DATED AUGUST 1, 1946
THIS INSTRUMENT CONTAINS AFTER-ACQUIRED
PROPERTY PROVISIONS
THIS INSTRUMENT GRANTS A SECURITY
INTEREST BY A UTILITY
Relates to First Mortgage Bonds, 8 1/2% Series due 2025
<PAGE>
THIS INSTRUMENT CONTAINS AFTER-ACQUIRED
PROPERTY PROVISIONS
SUPPLEMENTAL INDENTURE, dated the 15th day of February, 1995,
between SOUTHWESTERN PUBLIC SERVICE COMPANY, a corporation organized and
existing under the laws of the State of New Mexico (hereinafter called the
"Company"), party of the first part, and CHEMICAL BANK (successor by merger
to The New York Trust Company and Chemical Bank New York Trust Company), a
corporation organized and existing under the laws of the State of New York,
as Trustee under the Indenture hereinafter mentioned (hereinafter called
the "Trustee"), party of the second part.
WHEREAS, the Company executed and delivered to The New York
Trust Company, as Trustee, an Indenture of Mortgage and Deed of Trust dated
August 1, 1946 (hereinafter called the "Original Indenture") and executed
and delivered to The New York Trust Company or to Chemical Bank New York
Trust Company or to Chemical Bank, as Trustee, supplemental indentures
dated February 1, 1949, February 1, 1953, February 1, 1967, February 9,
1977, March 1, 1979, October 1, 1981, two supplemental indentures dated
July 15, 1992 and two supplemental indentures dated December 1, 1992
(hereinafter called the "Supplemental Indentures"), to secure authorized
issues of First Mortgage Bonds (hereinafter called the "Bonds") of the
Company; and
WHEREAS, on September 8, 1959, The New York Trust Company was
merged under the Banking Law of New York into Chemical Corn Exchange Bank
under the name of Chemical Bank New York Trust Company and on February 17,
1969, Chemical Bank New York Trust Company was merged under the Banking Law
of New York into Chemical Bank under the name of Chemical Bank, which is
now the Trustee under the Original Indenture and Supplemental Indentures;
and
<PAGE>
-2-
WHEREAS, First Mortgage Bonds of the following Series were duly
issued under and in accordance with the terms of the Original Indenture and
the Supplemental Indentures and as of the date of this Supplemental
Indenture are outstanding in the aggregate principal amounts set opposite
the designations of the Series:
<TABLE>
<CAPTION>
Principal Amounts
Series ___Outstanding___
<S> <C>
5.70% Series due 1997 ...................... $ 15,000,000
6.875% Series due 1999 ..................... $ 90,000,000
13 1/2% Series due 2001 .................... $ 25,000,000
6 1/2% Series due 2004 ..................... $ 25,000,000
7 1/4% Series due 2004 ..................... $135,000,000
6 5/8% Series due 2009 ..................... $ 32,300,000
8.20% Series due 2022 ...................... $100,000,000
8 1/4% Series due 2022 ..................... $ 40,000,000
</TABLE>
and
WHEREAS, as permitted by the Original Indenture, the Company by
resolutions of its Board of Directors duly adopted has determined to create
a new series of Bonds to be known as First Mortgage Bonds, 8 1/2% Series
due 2025 (hereinafter called "Bonds of the New Series" or "Bonds of Series
due 2025") in the form and having the characteristics set forth in this
Supplemental Indenture; and
WHEREAS, the Company has paid, redeemed or otherwise retired
and heretofore delivered to the Trustee certain Bonds not heretofore made
the basis of the issuance of additional Bonds under Article 6 of the
Original Indenture as heretofore supplemented and it desires to issue Bonds
of Series due 2025 against such retired Bonds; and
WHEREAS, the Company has purchased, constructed or otherwise
acquired subsequent to the execution and delivery of the Original Indenture
certain Property Additions not heretofore specifically mortgaged and
pledged under the Original Indenture as heretofore supplemented and it
desires by the inclusion of the descriptions thereof in this Supplemental
Indenture to specifically mortgage and pledge such property; and
WHEREAS, the Company, in the exercise of the powers and
authority conferred upon and reserved to it under and by
<PAGE>
-3-
virtue of the provisions of the Original Indenture, as heretofore
supplemented, and particularly the provisions contained in Articles Two and
Eighteen thereof, and pursuant to appropriate resolutions of its Board of
Directors, has duly resolved and determined to make, execute and deliver to
the Trustee a Supplemental Indenture in the form hereof for the purposes
herein provided; and
WHEREAS, all conditions and requirements necessary to make this
Supplemental Indenture a valid, binding and legal instrument in accordance
with its terms have been done, performed and fulfilled, and the execution
and delivery hereof have been in all respects duly authorized, and this
Supplemental Indenture has been authorized by resolution duly adopted by a
vote of a majority of the entire Board of Directors of the Company;
NOW, THEREFORE, THIS INDENTURE WITNESSETH: That the Company,
in consideration of the premises and of one dollar to it duly paid by the
Trustee at or before the ensealing and delivery of these presents, the
receipt whereof is hereby acknowledged, and of other good and valuable
consideration, in order to better secure the payment both of the principal
of and interest on all Bonds issued under the Original Indenture and the
Supplemental Indentures and that may be issued under this or any other
indenture supplemental to the Original Indenture, according to their tenor
and effect, and the performance by the Company of all the covenants and
conditions therein and herein contained, and in order to establish the
terms of the Bonds of the New Series, hereby further covenants and agrees
to and with the Trustee and its successors in the trust under the Original
Indenture for the benefit of all those who shall from time to time hold the
Bonds and interest coupons, if any, pertaining thereto, as herein set
forth, and does hereby ratify and confirm its mortgage and pledge to the
Trustee of all property described in the Original Indenture and the
Supplemental Indentures and does by these presents grant, bargain, sell,
warrant, alien, remise, release, convey, confirm, assign, transfer,
mortgage, pledge, and set over unto the Trustee and to its successors and
assigns forever the described property set forth in Exhibit A hereto (which
shall for all purposes be treated as being set forth in full herein)
constituting property acquired by the Company since the execution and
delivery of the Original Indenture, and not heretofore specifically
mortgaged and pledged under the Original Indenture as heretofore
supplemented.
<PAGE>
-4-
TOGETHER with all buildings, improvements, plants, stations and
substations located on the property referred to in Exhibit A hereto (in the
case of those located on leased property, all of the Company's interest
therein) or upon any other property or rights of way now or hereafter owned
by the Company, together with all easements, rights of way, permits,
privileges, towers, poles, machinery, transformers, insulators, equipment,
appliances, appurtenances, and all other property, real or personal, of the
Company forming a part of, or pertaining to, or used, occupied or enjoyed
by the Company in connection with, said improvements and miscellaneous
property.
Also all other property, real, personal and mixed, which the
Company now owns and which the Company may hereafter acquire.
TOGETHER with, all and singular, the tenements, hereditaments
and appurtenances belonging or in anywise appertaining to said property or
any part thereof with the reversion and reversions, remainder and
remainders, tolls, rents, revenues, issues, earnings, income, products and
profits thereof, and all the estate, right, title and interest and claim
whatsoever, at law as well as in equity, which the Company now has or may
hereafter acquire in and to said property, rights and franchises, and every
part and parcel thereof;
EXPRESSLY EXCEPTING AND EXCLUDING, HOWEVER, from this
Supplemental Indenture and from the lien and operation hereof:
(a) any and all property of the character expressly excepted
and excluded from the Original Indenture as heretofore supplemented
and from the lien and operation thereof, referred to therein as
Excepted Property; and
(b) all property which has been released by the Trustee or
otherwise disposed of by the Company free from the lien of the
Original Indenture, as heretofore supplemented, in accordance with
the provisions thereof;
TO HAVE AND TO HOLD all such properties, real, personal and
mixed, mortgaged, pledged or conveyed by the Company as aforesaid, or
intended so to be, unto the Trustee and its successors and assigns forever;
SUBJECT HOWEVER, to the exceptions hereinabove recited, and to
Permitted Encumbrances as defined in Section 4.01 of the Original
Indenture, and liens existing on any
<PAGE>
-5-
property hereafter acquired by the Company at the time of such acquisition
and permitted by Section 9.15 of the Original Indenture, Section 3.02 of
the Supplemental Indenture dated February 1, 1967, and Section 2.02 of the
Supplemental Indentures dated March 1, 1979, October 1, 1981, two
Supplemental Indentures dated July 15, 1992 and two Supplemental Indentures
dated December 1, 1992 and of this Supplemental Indenture;
IN TRUST, NEVERTHELESS, for the purposes and upon the trusts,
terms and conditions, and subject to and with the provisos and covenants
set forth in the Original Indenture, the Supplemental Indentures and this
Supplemental Indenture with the same effect in all respects as if the
property and rights herein described and herein conveyed to the Trustee had
at the time of the execution and delivery of the Original Indenture been
owned by the Company and had been specifically and at length described in
and conveyed to the Trustee by the Original Indenture as a part of the
property therein stated to be conveyed and as if this Supplemental
Indenture had been executed and delivered at the time of the execution and
delivery of the Original Indenture.
ARTICLE ONE
BONDS OF THE NEW SERIES
Section 1.01. There is hereby created a series of Bonds, known
as and entitled "First Mortgage Bonds, 8 1/2% Series due 2025," and the
form thereof shall be as provided in this Supplemental Indenture.
The aggregate principal amount of Bonds of the New Series which
may be authenticated and delivered and outstanding under the Original
Indenture and this Supplemental Indenture shall be unlimited except as
provided in Articles Two, Three, Four, Five and Six of the Original
Indenture, as amended by the Supplemental Indenture dated February 9, 1977.
Bonds of the New Series shall bear interest at the rate of 8 1/2% per annum
until the principal thereof becomes due and payable and thereafter, if
default be made in the payment of such principal, at the rate of 6% per
annum until the principal thereof shall be paid and shall mature on
February 15, 2025.
Bonds of the New Series shall be registered Bonds in book-entry
form or in definitive form without coupons of the denominations of $1,000
and any integral multiple of $1,000 which may be executed by the Company
and delivered to the
<PAGE>
-6-
Trustee for authentication and delivery. Bonds of the New Series, if
authenticated and delivered prior to August 15, 1995, shall be dated
February 22, 1995, and, if authenticated and delivered on or after August
15, 1995, shall be dated as provided in Section 2.05 of the Original
Indenture. Bonds of the New Series shall bear interest from their
respective dates, such interest to be payable on August 15, 1995 and semi-
annually thereafter on the fifteenth day of February and August in each
year. The principal of and interest on the Bonds of the New Series shall
be payable at the principal corporate trust office of the Trustee or its
successor in trust under the Indenture, in the Borough of Manhattan, The
City of New York (unless the Company shall designate and maintain some
other office or agency for such purpose), in any coin or currency of the
United States of America which at the time of payment shall be legal tender
for the payment of public and private debts. Notwithstanding anything in
the Original Indenture or this Supplemental Indenture to the contrary, so
long as the Bonds are in a book-entry only system, payment of principal of
and interest on the Bonds of the new Series will be in accordance with
arrangements with Depository Trust Company, New York, New York and its
successor and assigns ("DTC"). Bonds of the New Series shall be subject to
redemption as provided in Section 1.03 of this Supplemental Indenture.
Definitive Bonds of the New Series may be issued in the form of
engraved Bonds or Bonds lithographed or printed with steel engraved
borders, and the signature of the Chairman of the Board, the President or a
Vice-President and of the Secretary or an Assistant Secretary of the
Company may be facsimile. Subject to the foregoing provisions of this
Section, definitive Bonds of the New Series, upon surrender to the Trustee
at its principal corporate trust office, shall be exchangeable for other
Bonds of the same series (dated February 22, 1995, in the case of an
exchange prior to August 15, 1995 and dated as provided in Section 2.05 of
the Original Indenture in case of an exchange on or after August 15, 1995)
in such authorized denomination or denominations in the same aggregate
principal amount, as may be requested by the holder surrendering the same.
No charge for any such exchange shall be made except for taxes or
governmental charges. The Company will execute, and the Trustee shall
authenticate and deliver, Bonds whenever the same shall be required for any
such exchange.
If the Bonds of the New Series are to be issued in book-entry
form only, notwithstanding any provision of the Original Indenture or this
Supplemental Indenture to the
<PAGE>
-7-
contrary, unless the Company shall otherwise direct (which direction shall
promptly be given at the written request of the Company), all Bonds of the
New Series issued hereunder shall be registered in the name of Cede & Co.,
as nominee of DTC, as registered owner of the Bonds of the New Series, and
held in the custody of DTC. Unless otherwise requested by DTC, a single
certificate will be issued and delivered to DTC. Beneficial owners of
Bonds of the New Series will not receive physical delivery of Bond
certificates except as provided hereinafter. For so long as DTC shall
continue to serve as securities depository for the Bonds of the New Series
as provided herein, all transfers of beneficial ownership interests will be
made by book-entry only, and no investor or other party purchasing, selling
or otherwise transferring beneficial ownership of Bonds of the New Series
is to receive, hold or deliver any Bond certificate.
With respect to Bonds of the New Series registered in the name
of Cede & Co., as nominee of DTC, the Trustee and the Company shall have no
responsibility or obligation to the securities brokers and dealers, banks,
trust companies, clearing corporations and certain other organizations on
whose behalf DTC was created to hold securities to facilitate the clearance
and settlement of securities transactions among DTC Participants ("DTC
Participants") or to any person on whose behalf a DTC Participant holds an
interest in the Bonds of the New Series. Without limiting the immediately
preceding sentence, the Trustee and the Company shall have no
responsibility or obligation with respect to (i) the accuracy of the
records of DTC, Cede & Co. or any DTC Participant with respect to any own-
ership interest in the Bonds of the New Series, (ii) the delivery to any
DTC Participant or any other person, other than a registered owner of the
Bonds of the New Series, as shown on the registration books, of any notice
with respect to the Bonds of the New Series, including any notice of
redemption, or (iii) the payment to any DTC Participant or any other
person, other than a registered owner of the Bonds of the New Series, as
shown in the registration books, of any amount with respect to principal of
or premium, if any, or interest on the Bonds of the New Series.
If the Bonds of the New Series are to be issued in book-entry
form only, replacement Bonds may be issued directly to beneficial owners of
Bonds of the New Series other than DTC, or its nominee, but only in the
event that (i) DTC determines not to continue to act as securities
depository for the Bonds of the New Series (which determination shall
become effective
<PAGE>
-8-
by the giving of reasonable notice to the Company or the Trustee); or (ii)
the Company has advised DTC of its determination (which determination is
conclusive as to DTC and beneficial owners of the Bonds of the New Series)
to terminate the services of DTC as securities depository for the Bonds of
the New Series; or (iii) the Company has determined (which determination is
conclusive as to DTC and the beneficial owners of the Bonds of the New
Series) that the interests of the beneficial owners of the Bonds of the New
Series might be adversely affected if such book-entry only system of
transfer is continued. Upon occurrence of the event set forth in (i)
above, the Company shall use its best efforts to attempt to locate another
qualified securities depository. If the Company fails to locate another
qualified securities depository to replace DTC, the Company shall direct
the Trustee to cause to be authenticated and delivered replacement Bonds of
the New Series, in certificate form, to the beneficial owners of the Bonds
of the New Series. In the event that the Company makes the determination
noted in (ii) or (iii) above (provided that the Company undertakes no
obligation to make any investigation to determine the occurrence of any
events that would permit the Company to make any such determination), and
has made provisions to notify the beneficial owners of Bonds of the New
Series of such determination by mailing an appropriate notice to DTC, the
Company shall cause to be issued replacement Bonds of the New Series in
certificate form to beneficial owners of the Bonds of the New Series as
shown on the records of DTC provided to the Trustee and the Company.
Whenever, during the term of the Bonds of the New Series, the
beneficial ownership thereof is determined by a book-entry at DTC, the
requirements in the Original Indenture or this Supplemental Indenture of
holding, delivering or transferring Bonds or selection of Bonds to be
redeemed shall be deemed modified to require the appropriate person or
entity to meet the requirements of DTC as to registering or transferring
the book-entry to produce the same effect.
If the Bonds of the New Series are to be issued in book-entry
form only, notwithstanding any provision of the Original Indenture or this
Supplemental Indenture to the contrary, all Bonds of the New Series issued
hereunder, if DTC so requires, shall bear a legend substantially to the
following effect:
Unless this certificate is presented by an authorized
representative of the Depository Trust Company, a New York
<PAGE>
-9-
corporation ("DTC"), to the Company or its agent for registration of
transfer, exchange, or payment, and any certificate issued is
registered in the name of Cede & Co. or in such other name as is
requested by an authorized representative of DTC (and any payment is
made to Cede & Co. or to such other entity as is requested by an
authorized representative of DTC), ANY TRANSFER, PLEDGE, OR OTHER USE
HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL
inasmuch as the registered owner hereof, Cede & Co., has an interest
herein.
If the Bonds of the New Series are to be issued in book-entry
form only, the Company and the Trustee shall enter into a letter of
representations with DTC to implement the book-entry only system of Bond
registration described above.
If at any time DTC ceases to hold the Bonds of the New Series,
all references herein to DTC shall be of no further force or effect.
Section 1.02. The text of the Bonds of the New Series and the
certificate of authentication of the Trustee to be executed thereon are to
be substantially in the following forms, respectively:
(FORM OF FACE OF BONDS OF THE NEW SERIES)
No. R ........... $............
SOUTHWESTERN PUBLIC SERVICE COMPANY
First Mortgage Bond, 8 1/2% Series Due 2025
Due February 15, 2025,
SOUTHWESTERN PUBLIC SERVICE COMPANY (hereinafter called the
"Company"), a corporation organized and existing under the laws of the
State of New Mexico, for value received, hereby promises to pay to
or registered assigns, on the fifteenth day of February,
2025 DOLLARS in any coin or currency of the United States of
America which at the time of payment shall be legal tender for the payment
of public and private debts, and to pay interest thereon from the date
hereof, at the rate of 8 1/2 per cent per annum, payable in like coin or
currency semi-annually on February 15 and August 15 in each year,
commencing August 15, 1995 until the principal hereof shall have become due
and payable, and thereafter if default be made in the payment of such
principal,
<PAGE>
-10-
at the rate of six per cent per annum, until the principal hereof shall be
paid.
The principal of and interest on this Bond are payable at the
principal corporate trust office of Chemical Bank or its successor in trust
under the Indenture referred to on the reverse hereof, in the Borough of
Manhattan, the City of New York (unless the Company shall designate and
maintain some other office or agency for such purpose). Notwithstanding
anything in the Original Indenture or this Supplemental Indenture to the
contrary, so long as the Bonds are in a book-entry only system, payment of
principal of and interest on this Bond will be in accordance with
arrangements with Depository Trust Company, a New York corporation ("DTC").
The provisions of this Bond are continued on the reverse hereof
and such continued provisions shall for all purposes have the same effect
as though fully set forth at this place.
This Bond shall not be valid or become obligatory for any
purpose until the certificate of authentication hereon shall have been duly
executed by Chemical Bank, as Trustee, or its successor, as Trustee, under
the Indenture.
IN WITNESS WHEREOF, the Company has caused this Bond to be
signed in its name by the manual or facsimile signature of its Chairman of
the Board, its President or a Vice-President and its corporate seal to be
impressed or imprinted hereon and attested by the manual or facsimile
signature of its Secretary or an Assistant Secretary.
Dated
SOUTHWESTERN PUBLIC SERVICE COMPANY,
By
President
Attest:
Secretary
<PAGE>
-11-
(FORM OF TRUSTEE'S CERTIFICATE FOR BONDS OF THE NEW SERIES)
This is one of the Bonds described in the within mentioned
Indenture,
CHEMICAL BANK
As Trustee
By
Authorized Officer
(FORM OF REVERSE OF BONDS OF THE NEW SERIES)
This Bond is one of an authorized issue of Bonds of the Company
known as its "First Mortgage Bonds," issued and to be issued in one or more
series under, and all equally and ratably secured (except as any sinking,
amortization improvement, renewal or other analogous fund, established in
accordance with the provisions of the Indenture hereinafter mentioned, may
afford additional security for the Bonds of any particular series) by, an
Indenture of Mortgage and Deed of Trust dated August 1, 1946, as
supplemented by Supplemental Indentures dated February 1, 1949 and February
1, 1953, from the Company to The New York Trust Company, as Trustee, and by
Supplemental Indenture dated February 1, 1967, from the Company to Chemical
Bank New York Trust Company, as Trustee, and by Supplemental Indentures
dated February 9, 1977, March 1, 1979, October 1, 1981, two Supplemental
Indentures dated July 15, 1992, two Supplemental Indentures dated December
1, 1992, and February 15, 1995, from the Company to Chemical Bank
(hereinafter called the "Trustee"), successor by merger to The New York
Trust Company and Chemical Bank New York Trust Company, as Trustee (said
Mortgage and Deed of Trust as so supplemented being hereinafter
collectively called the "Indenture"), to which Indenture and all indentures
supplemental thereto reference is hereby made for a description of the
properties mortgaged and pledged, the nature and extent of the security,
the rights of the holders of said Bonds and the coupons appurtenant to
coupon Bonds and of the Trustee and of the Company in respect of such
security, and the terms and conditions upon which said Bonds are and are to
be secured. To the extent permitted by the Indenture and as provided
therein, with the consent of the Company and upon the written consent or
affirmative vote of the holders of at least sixty-six and two-thirds per
cent in principal amount of the Bonds then outstanding and entitled to
consent, and of the
<PAGE>
-12-
holders of not less than sixty-six and two-thirds per cent in principal
amount of the Bonds then outstanding and entitled to consent of each series
affected thereby in case one or more but less than all of the series of
Bonds issued under the Indenture are so affected, the rights and
obligations of the Company and of the holders of Bonds and coupons
appurtenant to coupon Bonds, and the terms and provisions of the Indenture
and of any instrument supplemental thereto may be modified from time to
time, provided that no such modification or alteration shall be made which
will affect the terms of payment of the principal of, or interest or
premium on, the Bonds, or reduce the percentage of the principal amount of
Bonds, the consent of which is required for the authorization of any such
modification or alteration, or which would modify, without the written
consent of the Trustee, the rights or obligations of the Trustee. The
Company has reserved the right to amend the Indenture without any consent
or other action by holders of any Series of Bonds created after July 15,
1992, including the First Mortgage Bonds, 8 1/2% Series due 2025, to make
such amendments to the Indenture as shall be necessary in order to amend or
delete in its entirety the maintenance covenant contained therein. As
provided in the Indenture, said Bonds are issuable in series which may vary
as in the Indenture provided or permitted. This Bond is one of a series of
Bonds entitled "First Mortgage Bonds 8 1/2% Series due 2025".
This Bond is subject to redemption at any time on or after
February 15, 2005 upon at least thirty (30) days' and not more than fifty
(50) days' notice given as provided in the Indenture, at the option of the
Company at the following general redemption prices, expressed in
percentages of principal amount:
If redeemed If redeemed
during 12 General during 12 General
months beginning Redemption months beginning Redemption
February 15, Prices____ February 15, Prices____
2005................104.225% 2011...............101.690%
2006................103.802 2012...............101.267
2007................103.380 2013...............100.845
2008................102.957 2014...............100.422
2009................102.535 2015 and
2010................102.112 thereafter........100.000
together with accrued and unpaid interest on the principal amount thereof
to the date fixed for redemption. This Bond is
<PAGE>
-13-
subject to redemption at any time out of proceeds received by the Trustee
by reason of the taking of any property subject to the Indenture by the
power of eminent domain or by lawful governmental authority, upon the
notice hereinabove mentioned, all as more fully provided in the Indenture,
at the special redemption price of 100% of its principal amount, together
with accrued and unpaid interest thereon to the date fixed for redemption.
If an Event of Default, as defined in the Indenture, shall
occur, the principal of this Bond may become or be declared due and
payable, in the manner and with the effect provided in the Indenture. This
Bond is transferable by the registered owner hereof in person or by
attorney authorized in writing, at the principal corporate trust office of
the Trustee in the Borough of Manhattan, The City of New York (unless the
Company shall designate and maintain some other office or agency for such
purpose), upon surrender for cancellation of this Bond and on payment of
the charges and subject to the terms and conditions set forth in the
Indenture, and upon any such transfer a new bond of the same series, for
the same aggregate principal amount, dated February 22, 1995 if authen-
ticated and delivered prior to August 15, 1995, and dated as provided in
Section 2.05 of the Original Indenture if authenticated and delivered on or
after August 15, 1995 will be issued to the transferee in exchange herefor.
First Mortgage Bonds, 8 1/2% Series due 2025, are issuable as registered
Bonds without coupons of the denominations of $1,000 and any integral
multiple of $1,000 which may be executed by the Company and delivered to
the Trustee for authentication and delivery. All Bonds of said Series,
upon surrender to the Trustee at its principal corporate trust office in
the Borough of Manhattan, The City of New York (unless the Company shall
designate and maintain some other office or agency for such purpose), are
exchangeable for other Bonds of the same series (dated February 22, 1995,
in the case of an exchange prior to August 15, 1995, and dated as provided
in Section 2.05 of the Original Indenture in case of an exchange on or
after August 15, 1995) in such authorized denomination or denominations in
the same aggregate principal amount, as may be requested by the holder
surrendering the same. The Company and the Trustee and any paying agent
may deem and treat the person in whose name this Bond is registered as the
absolute owner hereof, for the purpose of receiving payment of or on
account of the principal hereof and interest due hereon, and neither the
Company nor the Trustee nor any paying agent shall be affected by any
notice to the contrary. No recourse under or upon any obligation, covenant
or agreement
<PAGE>
-14-
contained in this Bond or in the Indenture or any indenture supplemental
thereto or under or upon any indebtedness secured by or arising out of the
Indenture or any indenture supplemental thereto shall be had against any
incorporator, stockholder, director or officer, as such, past, present or
future, of the Company or of any predecessor or successor corporation,
either directly or through the Company or such predecessor or successor
corporation, whether by virtue of any constitution, statute or rule of law,
or by the enforcement of any assessment or penalty or by any legal or
equitable proceeding or otherwise howsoever; all such liability being, by
the acceptance hereof and as a part of the consideration for the issuance
hereof, expressly waived and released by every holder hereof, and being
likewise released by the terms of the Indenture.
Whenever the beneficial ownership of this Bond is determined by
a book entry at a securities depository for the Bonds, the foregoing
requirements of holding, delivering or transferring this Bond shall be
modified to require the appropriate person or entity to meet the
requirements of the securities depository as to registering or transferring
the book entry to produce the same effect.
SECTION 1.03. Bonds of the New Series shall be redeemable
(except as otherwise provided in Section 8.05 of the Original Indenture, as
amended by Section 3.01 of the Supplemental Indenture dated February 1,
1949) at the option of the Company, at any time and from time to time on or
after February 15, 2005, in whole or in part, in the manner, with the
effect and upon the notice provided in Article Eleven of the Original
Indenture at the general redemption prices set forth in Section 1.02 of
this Supplemental Indenture, together with accrued and unpaid interest on
the principal amount thereof to the date fixed for redemption. The
redemption price for Bonds of the New Series which are to be redeemed by
the use of Trust Monies which are the proceeds of the taking of any part of
the Trust Estate through exercise of the power of eminent domain or by the
exercise of any State, municipality or other governmental authority of any
right which it may have to purchase any part of the Trust Estate, as
provided in Section 8.05 of the Original Indenture, as amended by
Section 3.01 of the Supplemental Indenture dated February 1, 1949, shall be
100% together with accrued and unpaid interest on the principal amount
thereof to the date fixed for redemption.
<PAGE>
-15-
ARTICLE TWO
MISCELLANEOUS PROVISIONS
Section 2.01. All the provisions, terms and conditions of the
Original Indenture, as heretofore supplemented and amended by the
Supplemental Indentures, shall continue in full force and effect. All
terms defined in the Original Indenture, as heretofore supplemented, shall,
for all purposes of this Supplemental Indenture, have the meaning specified
in the Original Indenture, as heretofore supplemented, unless the text
otherwise indicates.
Section 2.02. (a) The Company covenants that so long as any
Bonds of the New Series shall remain outstanding it will comply with the
covenants contained in Sections 9.06 and 9.15 of the Original Indenture to
the same extent as if the clause "so long as any of the Bonds of 2 7/8%
Series due 1971 shall be outstanding" in each instance where it or a
similar clause appears in such Sections were replaced by the clause "so
long as any of the Bonds of 2 7/8% Series due 1971 or any of the Bonds of
8 1/2% Series due 2025 shall be outstanding".
(b) The Company reserves the right, subject to appropriate
corporate action, but without any consent or other action by holders of
Bonds of any series created after July 15, 1992, including the Bonds of the
New Series, to make such amendments to the Original Indenture, and to the
Original Indenture as supplemented, as shall be necessary in order to amend
or delete in its entirety paragraph (a) of this Section 2.02 and/or Section
9.06 of the Original Indenture.
Section 2.03. To the extent authorized, permitted or necessary
under applicable law, this Supplemental Indenture shall also be considered
to be a security agreement and financing statement under the Uniform
Commercial Code as adopted or hereafter adopted in one or more of the
states in which any part of such properties, as aforesaid, are situated.
The mailing address of Southwestern Public Service Company (the Debtor) is:
SPS Tower, Tyler at Sixth, Amarillo, Texas 79101. The mailing address of
Chemical Bank, as Trustee (the Secured Party) is: 450 West 33rd Street,
15th Floor, New York, New York 10001, Attention: Corporate Trust
Administration.
Section 2.04. This Supplemental Indenture may be executed in
several counterparts, all or any of which may be
<PAGE>
-16-
treated for all purposes as one original, and shall constitute and be one
and the same instrument.
Section 2.05. The Trustee shall not be responsible in any
manner whatsoever for or in respect of the validity or sufficiency of this
Supplemental Indenture, or the due execution hereof by the Company, or for
or in respect of the recitals contained herein, all of which recitals are
made by the Company solely.
This Supplemental Indenture has been dated February 15, 1995,
solely for convenience, but has in fact been executed by the parties hereto
on the dates indicated by their respective acknowledgments.
<PAGE>
-17-
IN WITNESS WHEREOF, SOUTHWESTERN PUBLIC SERVICE COMPANY, party
hereto of the first part, has caused this Supplemental Indenture to be duly
executed on its behalf and its corporate seal to be hereto affixed and to
be attested, and CHEMICAL BANK, party hereto of the second part, in
evidence of its acceptance of the trust hereby created, has caused this
Supplemental Indenture to be duly executed on its behalf and its corporate
seal to be hereto affixed and to be attested, all as of the day and year
first above written.
SOUTHWESTERN PUBLIC SERVICE
COMPANY,
/s/ Bill D. Helton
Attest: /s/ Mary Pullum ----------------------------
----------------------- Name: Bill D. Helton
Name: Mary Pullum Title: Chairman of the Board
Title: Assistant Secretary
Signed, sealed and delivered by [CORPORATE SEAL]
SOUTHWESTERN PUBLIC SERVICE
COMPANY, in the presence of:
/s/ Patricia L. Belcher
- ------------------------------
/s/ Louise C. Ross
- ------------------------------
/s/ Diane Allen
- ------------------------------ CHEMICAL BANK,
/s/ Josiane De Sousa
---------------------------
Name: Josiane De Sousa
Title: Assistant Vice
President
Attest: /s/ R. Lorenzen
---------------------------
Name: R. Lorenzen
Title: Senior Trust Officer
Signed, sealed and delivered by [CORPORATE SEAL]
CHEMICAL BANK, in the presence of:
/s/ T.C. Knight
- ----------------------------------
/s/ A. M. Deal
- ----------------------------------
<PAGE>
STATE OF TEXAS )
: ss.:
COUNTY OF POTTER )
The foregoing instrument was acknowledged before me this 16th
day of February, 1995, by Bill D. Helton, Chairman of the Board of
SOUTHWESTERN PUBLIC SERVICE COMPANY, a New Mexico corporation, on behalf of
said corporation.
(NOTARIAL SEAL)
/s/ Patricia L. Belcher
-----------------------------------
Notary Public, State of Texas
My Commission Expires
STATE OF NEW YORK )
: ss.:
COUNTY OF NEW YORK )
The foregoing instrument was acknowledged before me this 22nd
day of February, 1995, by Josiane De Sousa, an Assistant Vice President of
CHEMICAL BANK, a New York corporation, on behalf of said corporation acting
in its capacity as trustee under the Southwestern Public Service Company
Indenture of Mortgage and Deed of Trust dated August 1, 1946, as
supplemented and amended.
(NOTARIAL SEAL)
/s/ Emily Fayan
-----------------------------------
Notary Public, State of New York
<PAGE>
STATE OF TEXAS )
: ss.:
COUNTY OF POTTER )
BEFORE ME, the undersigned authority, on this day personally
appeared Mary Pullum, who, having been by me first duly sworn, upon oath
says:
That she is Assistant Secretary of Southwestern Public Service
Company which executed the foregoing instrument, as Party of the First
Part, and that Southwestern Public Service Company is a corporation engaged
in the States of Texas, New Mexico and Oklahoma in the generation,
manufacture, transmission, distribution and sale of electric energy and
power to the public for domestic, commercial, industrial and other uses,
and is one of the corporations referred to in the Business and Commerce
Code of Texas, Title 4, Chapter 35 and in Chapter 62, Article 13 Section 5
Paragraph A of New Mexico Statutes Annotated (Laws 1961, ch. 76, Sec. 1,
Laws 1973, ch. 253, Sec. 1) and in 46 Okl. St. Ann., Section 17 (Laws 1963,
ch. 359, Sec. 1, Laws 1984, ch. 229, Sec. 14).
The foregoing instrument is a Supplemental Indenture
supplemental to an Indenture of Mortgage and Deed of Trust from
Southwestern Public Service Company to Chemical Bank (successor by merger
to The New York Trust Company and Chemical Bank New York Trust Company), as
Trustee, dated August 1, 1946, which contains after-acquired property
provisions, and supplements thereto dated February 1, 1949, February 1,
1953, February 1, 1967, February 9, 1977, March 1, 1979, October 1, 1981,
two supplements dated July 15, 1992, two supplements dated December 1,
1992, and February 15, 1995, each of which contains after-acquired property
provisions.
Dated this 16th day of February, 1995.
/s/ Mary Pullum
-------------------------------
Name: Mary Pullum
Subscribed and sworn to before me by Mary Pullum on this 16th
day of February, 1995.
(NOTARIAL SEAL)
/s/ Patricia L. Belcher
-------------------------------
Notary Public State of Texas
My Commission Expires
<PAGE>
EXHIBIT A
PROPERTY SITUATED IN THE STATE OF NEW MEXICO
ROOSEVELT COUNTY, NEW MEXICO
A tract in the Northwest Quarter of Northeast Quarter (NW/4
NE/4) of Section Thirty-six (36), Township One (1) South,
Range Thirty-four (34) East, N.M.P.M. in Roosevelt County,
New Mexico and described as: Beginning at a #4 bar (at the
southeast corner of Southwestern Public Service's
transformer station) on the north alley line through Block 6
from which a #4 bar at the northwest corner of Lot 21, Block
6, Paula's Zodiac Addition, Unit 3, bears S 09 degrees 48'
W, 20.4 feet distant: thence, N 01 degrees 18' E, 95.0 feet
to an existing #4 bar at SPS's northeast corner: thence,
Northeasterly, 28.5 feet around a curve to the left of
radius 50 feet thru a delta angle of 32 degrees 41':
thence, East, 3.2 feet: thence, S 01 degrees 18' W, 105.0
feet to the north line of the alley: thence, West, 30.0
feet along the alley line to the point of beginning.<PAGE>
EXHIBIT A (Continued)
PROPERTY SITUATED IN THE STATE OF TEXAS
BORDEN COUNTY, TEXAS
A tract of land out of Section 12, Block 33, T-3-N, T&P RR.
Co. Survey, Borden County, Texas, described by metes and
bounds as follows: Beginning at the Southeast corner of the
Candace Lou Good Jacobson Tract #2, as described in Exhibit
"H" of a partition deed recorded in volume 209, page 247
thru 261 of the Borden County Deed Records. Thence, S 76
degrees 37' 28"W, 700.0 feet along the north right of way
line of a paved county road and the south line of said
Candace Lou Good Jacobson Tract #2 to a point; thence N 15
degrees 07' 30"W, 400.0 feet to a point, thence N 76 degrees
37' 28"E, 700.0 feet to a point, thence S 15 degrees 07'
30"E, 400.0 feet to the place of beginning, containing 6.42
acres of land, more or less.<PAGE>
EXHIBIT A (Continued)
ELECTRIC TRANSMISSION SYSTEMS - NEW MEXICO
1. Lea County Interchange to New Mexico State Line - 23.45
miles of 230 kV wood H-Frame line with some steel pole
corners and angles extending South from Lea County
Interchange, thence East, and thence Southwest to the New
Mexico State Line.
2. South Portales to E.F.D.C. Substation - 2 miles of 69 kV
wood single pole line extending West from South Portales
Substation to E.F.D.C. Substation, Roosevelt County.
3. Urton Substation to Roswell Interchange - 6.5 miles of
115 kV steel single pole line extending Southwest to City
Substation, and thence South to Roswell Interchange, Chaves
County.
4. Jal Substation to Dollarhide Substation - 3.5 miles of
115 kV wood H-Frame line extending East from Jal Substation
to Dollarhide Substation, Lea County.
5. Potash Junction Substation to PCA Interchange - 4.5
miles of 115 kV and 69 kV double circuit wood H-Frame line
extending North from Potash Junction Substation to PCA
Interchange, Eddy County.
6. Duvall Substation to IMC Substation - 3 miles of 69 kV
wood H-Frame line extending Southeast from Duvall Substation
to IMC Substation, Eddy County.
7. Wipp Substation to Sand Dunes Substation - 6 miles of
wood H-Frame line extending South from Wipp Substation to
Sand Dunes Substation, Eddy County.
<PAGE>
EXHIBIT A (Continued)
ELECTRIC TRANSMISSION SYSTEMS - TEXAS
1. New Mexico State Line to Midland Interchange - 65.62
miles of 230 kV wood H-Frame line with some steel pole
corners and angles extending South and Southwest from the
New Mexico State Line, thence East and Southeast to Midland
Interchange, Midland County.
2. Jones Plant to Grassland Interchange - 26.60 miles of
230 kV wood H-Frame line with some steel pole corners and
angles extending South from Jones Plant to Grassland
Interchange, Lynn County.
3. Lynn County Interchange to Graham Substation - 23.50
miles of 115 kV wood H-Frame line with some steel pole
corners and angles extending South from Lynn County
Interchange, thence East to Graham Substation, Garza County.
4. Seagraves Interchange to Sulphur Springs Interchange -
12.50 miles of 115 kV wood H-Frame line with some steel pole
corners and angles extending East from Seagraves
Interchange, thence North to Sulphur Springs Interchange,
Terry County.
5. Graham Interchange to Justiceburg - 15.4 miles of 69 kV
wood H-Frame line extending South from Graham Interchange,
thence Southeast to Justiceburg, Garza County.
6. Grassland Interchange to Borden Interchange - 43.76
miles of 230 kV wood H-Frame line with some steel pole
corners and angles extending South from Grassland
Interchange to Borden Interchange, Borden County.
<PAGE>
EXHIBIT A (Continued)
<TABLE>
<CAPTION>
SUBSTATIONS - NEW MEXICO
KVA
County Capacity
<S> <C> <C>
Zia Lea 10,000
Coopers Ranch Lea 12,000
Sand Dunes Eddy 7,500
IMC #4 Eddy 5,000
Dollarhide Lea 12,000
</TABLE>
<TABLE>
<CAPTION>
SUBSTATIONS - TEXAS
KVA
County Capacity
<S> <C> <C>
Graham Interchange Garza 23,000
McClellan Gray 5,000
Sulpher Springs Interchange Terry 72,900
Borden County Interchange Borden 150,000
Grassland Interchange Lynn 60,000
Midland Interchange Midland 150,000
Cedar Lake Gaines 10,000
/TABLE
<PAGE>
EXHIBIT A (Continued)
LEASES
JANUARY 1993 - FEBRUARY 1995
1. Lease renewal granted to the Company by Floyd Rowland
for the Company's office space in the City of Post, Texas,
for a period of 5 years beginning February 1, 1993.
2. Lease renewal granted to the Company by C. E. Basinger
for the Company's office space in the City of Post, Texas,
for a period of 5 years beginning April 1, 1993.
3. Lease renewal granted to the Company by Mrs. Howard
Hoffman for the Company's office space in the City of
Slaton, Texas, for a period of 5 years beginning July 1,
1993.
4. Lease renewal granted to the Company by Louise Baird
for the Company's office space in the City of Boise City,
Oklahoma, for a period of 5 years beginning August 1, 1993.
5. Lease renewal granted to the Company by James M.
Davidson for the Company's office space in the City of
Silverton, Texas, for a period of 5 years beginning October
1, 1993.
6. Lease renewal granted to the Company by Olton State,
Branch of First National Bank of Lockney for the Company's
office space in the City of Olton, Texas, for a period of 5
years beginning January 1, 1995.
7. Lease renewal granted to the Company by Roscoe Thompson
for the Company's office space in the City of Elkhart,
Kansas, for a period of 5 years beginning February 1, 1994.
8. Lease renewal granted to the Company by William J.
Mencarow, Jr. for the Company's office space in the City of
Dalhart, Texas, for a period of 5 years beginning May 1,
1994.
9. Lease renewal granted to the Company by Reznik Family
Trust for the Company's office space in the City of Dumas,
Texas, for a period of 5 years beginning July 20, 1994.
10. Lease renewal granted to the Company by Lynch
Properties Corporation for the Company's office space in the
City of Hobbs, New Mexico, for a period of 18 months
beginning September 1, 1994.
<PAGE>
EXHIBIT A (Continued)
<TABLE>
<CAPTION>
FRANCHISES
JANUARY 1993 - FEBRUARY 1995
TYPE DATE OF
TOWN COUNTY OF SERVICE EXPIRATION
<S> <C> <C> <C>
Idalou, Texas Lubbock Electric 10/12/2019
Ropesville, Texas Hockley Electric 12/30/2019
</TABLE>
<TABLE>
<CAPTION>
SOUTHWESTERN PUBLIC SERVICE COMPANY
EXHIBIT 12. Statement of Computation of Ratio of Earnings
Twelve Months Ended
May 31, 1995
(Dollars In Thousands)
<S> <C>
Computation of Ratio of Earnings to Fixed Charges:
Fixed charges, as defined:
Interest on long-term debt $ 39,253
Amortization of debt premium, discount and expense 526
Other interest 3,630
Estimated interest factor of rental charges 1,184
Total fixed charges $ 44,593
Earnings as defined:
Net earnings per statement of earnings $105,246
Fixed charges as shown 44,593
Income taxes:
Federal-current 46,344
Federal-deferred 11,643
State 1,820
Investment tax credits (250)
Earnings available for fixed charges $209,396
Ratio of earnings to fixed charges 4.70
Computation of Ratio of Earnings to Fixed Charges
and Preferred Dividend Requirements Combined:
Total fixed charges, as shown above $ 44,593
Preferred dividend requirements* 7,593
Total fixed charges and preferred dividend
requirements combined $ 52,186
Earnings available for fixed charges and preferred dividend
requirements combined $209,396
Ratio of earnings to fixed charges and preferred dividend
requirements combined 4.01
*Preferred dividend requirements:
Annual preferred dividend requirement $ 4,878
Less amount deductible for income tax purposes 82
Net requirement [A] $ 4,796
1 / (100% - effective tax rate) [B] 1.566
Effective tax rate 36.1%
[A] x [B] $ 7,511
Add amount deductible for income tax purposes 82
Preferred dividend requirements $ 7,593
</TABLE>
EXHIBIT 15.
Southwestern Public Service Company:
We have made a review, in accordance with standards established by the
American Institute of Certified Public Accountants, of the unaudited
condensed consolidated interim financial information of Southwestern Public
Service Company and subsidiaries for the periods ended May 31, 1995 and 1994,
as indicated in our report dated July 11, 1995; because we did not perform an
audit, we expressed no opinion on that information.
We are aware that our report referred to above, which is included in your
Quarterly Report on Form 10-Q for the quarter ended May 31, 1995, is
incorporated by reference in Amendment No. 1 to Registration Statement No.
33-53171 on Form S-3 and Registration Statement Nos. 33-27452 and 33-57869 on
Form S-8.
We are also aware that the aforementioned report, pursuant to Rule 436(c)
under the Securities Act of 1933, is not considered a part of the
Registration Statement prepared or certified by an accountant or a report
prepared or certified by an accountant within the meaning of Sections 7 and
11 of that Act.
Deloitte & Touche LLP
July 11, 1995
Dallas, Texas
<TABLE> <S> <C>
<ARTICLE> UT
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> AUG-31-1995
<PERIOD-END> MAY-31-1995
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 1,533,087
<OTHER-PROPERTY-AND-INVEST> 53,421
<TOTAL-CURRENT-ASSETS> 124,705
<TOTAL-DEFERRED-CHARGES> 128,459
<OTHER-ASSETS> 0
<TOTAL-ASSETS> 1,839,672
<COMMON> 40,918
<CAPITAL-SURPLUS-PAID-IN> 306,376
<RETAINED-EARNINGS> 343,980
<TOTAL-COMMON-STOCKHOLDERS-EQ> 691,274
0
72,680
<LONG-TERM-DEBT-NET> 576,201
<SHORT-TERM-NOTES> 0
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 0
<LONG-TERM-DEBT-CURRENT-PORT> 325
0
<CAPITAL-LEASE-OBLIGATIONS> 0
<LEASES-CURRENT> 0
<OTHER-ITEMS-CAPITAL-AND-LIAB> 499,192
<TOT-CAPITALIZATION-AND-LIAB> 1,839,672
<GROSS-OPERATING-REVENUE> 574,251
<INCOME-TAX-EXPENSE> 36,043
<OTHER-OPERATING-EXPENSES> 444,298
<TOTAL-OPERATING-EXPENSES> 480,341
<OPERATING-INCOME-LOSS> 93,910
<OTHER-INCOME-NET> 3,635
<INCOME-BEFORE-INTEREST-EXPEN> 97,545
<TOTAL-INTEREST-EXPENSE> 31,270
<NET-INCOME> 66,275
3,658
<EARNINGS-AVAILABLE-FOR-COMM> 62,617
<COMMON-STOCK-DIVIDENDS> 67,515
<TOTAL-INTEREST-ON-BONDS> 29,872
<CASH-FLOW-OPERATIONS> 121,812
<EPS-PRIMARY> 1.53
<EPS-DILUTED> 0
</TABLE>
