-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, P5pJmVBy7E3DVxh4X+jfOe2QjsHTzsLWPYWWBR2sD4looJMku462UR+EfO3y/zmR amO7Hnv3rHwc31GkHU3mjQ== 0001108426-07-000082.txt : 20070607 0001108426-07-000082.hdr.sgml : 20070607 20070607171750 ACCESSION NUMBER: 0001108426-07-000082 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20070607 ITEM INFORMATION: Entry into a Material Definitive Agreement ITEM INFORMATION: Completion of Acquisition or Disposition of Assets ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20070607 DATE AS OF CHANGE: 20070607 FILER: COMPANY DATA: COMPANY CONFORMED NAME: PNM RESOURCES INC CENTRAL INDEX KEY: 0001108426 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRIC SERVICES [4911] IRS NUMBER: 850019030 STATE OF INCORPORATION: NM FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-32462 FILM NUMBER: 07907564 BUSINESS ADDRESS: STREET 1: ALVARADO SQUARE STREET 2: NEW MEXICO CITY: ALBUQUERQUE STATE: NM ZIP: 87158 BUSINESS PHONE: 5052412700 MAIL ADDRESS: STREET 1: ALVARADO SQUARE CITY: ALBUQUERQUE STATE: NM ZIP: 87158 FORMER COMPANY: FORMER CONFORMED NAME: MANZANO CORP DATE OF NAME CHANGE: 20000303 8-K 1 f8k_060707pnmr.htm FORM 8-K f8k_060707pnmr.htm
 

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.  20549
 
 
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)    
     June 7, 2007
  
 
    (June 1, 2007)
  

Commission
  
Name of Registrants, State of Incorporation,
  
I.R.S. Employer
File Number
  
Address and Telephone Number
  
Identification No.
         
001-32462
  
PNM Resources, Inc.
  
85-0468296
   
(A New Mexico Corporation)
    
   
Alvarado Square
    
   
Albuquerque, New Mexico  87158
    
   
(505) 241-2700
    
         
______________________________
 
(Former name, former address and former fiscal year, if changed since last report)
 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
 
      Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

      Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

      Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

      Pre-commencement communications pursuant to Rule 13e-4 (c) under the Exchange Act (17 CFR 240.13e-4(c))




Item 1.01
Entry Into a Material Definitive Agreement

On June 1, 2007, PNM Resources, Inc. (“PNMR”) entered into a Contribution Agreement (the “Contribution Agreement”) with ECJV Holdings, LLC (“ECJV”) and EnergyCo, LLC (“EnergyCo”).  Pursuant to the Contribution Agreement, on June 1, 2007,

·  
PNMR made a capital contribution (the “PNMR Contribution”) to EnergyCo of 100% of the membership interests in Altura Energy, LLC, which indirectly owns and operates the 305-megawatt, coal-fired Twin Oaks power plant;

·  
ECJV made a capital contribution (the “ECJV Contribution”) to EnergyCo of $276,900,000, which amount was equal to 50% of the agreed fair value of the PNMR Contribution; and

·  
EnergyCo distributed to PNMR the entirety of the ECJV Contribution.

In addition to the Twin Oaks power plant, assets owned by Altura Energy, LLC and included in the PNMR Contribution included two power sales agreements, a long-term fuel supply agreement and the development rights for a possible 600-megawatt expansion of the Twin Oaks power plant.

The terms of the Contribution Agreement are consistent in all material respects with those contemplated by the previously disclosed, non-binding letter of intent signed by PNMR, ECJV and EnergyCo.

PNMR and ECJV each have a 50% ownership interest in EnergyCo.  ECJV is a wholly owned subsidiary of Cascade Investment, L.L.C., which is PNMR’s second-largest shareholder.

Item 2.01
Completion of Acquisition or Disposition of Assets

Please read Item 1.01 for a discussion of the Contribution Agreement, which discussion is incorporated by reference into this Item 2.01.

Item 9.01
Financial Statements and Exhibits

(b) Pro forma financial information

The Unaudited Pro Forma Condensed Consolidated Financial Statements of PNMR as of and for the three months ended March 31, 2007 and for the year ended December 31, 2006, which give effect to PNMR’s disposition of Altura Energy, LLC, are attached as Exhibit 99.1.

(c)  Exhibits

Exhibit Number
Description

 
99.1
PNMR’s Unaudited Pro Forma Condensed Consolidated Financial Statements as of and for the three months ended March 31, 2007 and for the year ended December 31, 2006.



2

SIGNATURE

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.

 
PNM RESOURCES, INC.
 
(Registrant)
   
   
Date:  June 7, 2007
/s/ Charles N. Eldred
 
Charles N. Eldred
 
Senior Vice President and Chief Financial Officer
 
(Officer duly authorized to sign this report)

3

 EX-99.1 2 exh991_060707.htm EXHIBIT 99.1 exh991_060707.htm
 
EXHIBIT 99.1
 
 
PNM RESOURCES, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 
 
The following Unaudited Pro Forma Condensed Consolidated Financial Statements are derived from and should be read in conjunction with the historical Consolidated Financial Statements and related notes of PNM Resources, Inc. ("PNMR").
 
On April 18, 2006, PNMR, through its wholly owned subsidiary Altura Energy, LLC, purchased the Twin Oaks business (collectively, “Altura”), which included the 305-megawatt coal-fired Twin Oaks power plant located 150 miles south of Dallas, Texas.  The results of Twin Oaks operations have been included in the Consolidated Financial Statements of PNMR from that date.  PNMR borrowed $480 million to finance this purchase under a bridge loan arrangement.  Through December 31, 2006, PNMR repaid $230.5 million of the bridge loan and the remainder was repaid on April 17, 2007, at which time PNMR borrowed $250.5 million under its revolving credit facility.
 
In January 2007, PNMR and ECJV Holdings, LLC (“ECJV”), a wholly owned subsidiary of Cascade Investment, L.L.C., created a joint venture called EnergyCo, LLC (“EnergyCo”) to serve expanding U.S. energy markets throughout the Southwest, Texas and the West.  PNMR and ECJV each have a 50% ownership interest in EnergyCo, a limited liability company.
 
On June 1, 2007, PNMR contributed its ownership of Altura to EnergyCo at fair value of $553.8 million, ECJV made a cash contribution to EnergyCo equal to 50% of the fair value amount, and EnergyCo  distributed that cash to PNMR.  PNMR accounted for this transaction by (1) removing the assets and liabilities transferred to EnergyCo from its consolidated financial statements; (2) recording an additional investment in EnergyCo for an amount equal to 50% of the net carrying value of the Altura assets and liabilities transferred, reflecting that 50% of the items transferred are in effect still owned by PNMR; and (3) reflecting in results of operations the difference between the cash received and 50% of the net carrying value of the items transferred that in effect were sold to ECJV.
 
The Unaudited Pro Forma Condensed Consolidated Balance Sheet presents the historical financial position of PNMR as if PNMR's transfer of Altura to EnergyCo was consummated on March 31, 2007.  It also gives effect to the repayment of debt with the cash received from EnergyCo and the removal of unamortized costs associated with the issuance of the bridge loan.
 
The Unaudited Pro Forma Condensed Consolidated Statements of Earnings for the three months ended March 31, 2007 and the year ended December 31, 2006, reflect:
 
·  
the transfer of Altura to EnergyCo and the receipt of cash from EnergyCo as if that transaction had occurred on April 18, 2006;
 
·  
the reduction in interest expense due to the pro forma use of the cash received from EnergyCo to reduce the amount outstanding on the bridge loan and other short term debt.
 
The Unaudited Pro Forma Condensed Consolidated Financial Statements have been prepared based upon currently available information and assumptions that are deemed appropriate by PNMR's management.  The pro forma information is for informational purposes only and is not intended to be indicative of the actual consolidated financial position or consolidated results of operations that would have been reported had the transactions occurred on the dates indicated, nor does the information represent a forecast of the consolidated financial position at any future date or the financial results of PNMR for any future period.
 

1

PNM RESOURCES, INC. AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
AS OF MARCH 31, 2007
(Unaudited)
 
 
         
Pro Forma Adjustments
        
   
 PNMR
    
 Contribution
                
   
 Historical
    
 of Altura
      
 Other
    
 Pro Forma
  
         
(In thousands)
        
                           
ASSETS
                          
Utility Plant:
                          
Electric plant in service
   $
4,278,802
     $ (594,836 )  
a
   $
-
     $
3,683,966
  
Gas plant in service
    
732,152
                          
732,152
  
Common plant in service and plant held for future use
    
159,925
                          
159,925
  
     
5,170,879
       (594,836 )        
-
      
4,576,043
  
Less accumulated depreciation and amortization
    
1,668,056
       (17,663 )  
a
            
1,650,393
  
     
3,502,823
       (577,173 )        
-
      
2,925,650
  
Construction work in progress
    
262,850
       (1,206 )  
a
            
261,644
  
Nuclear fuel, net of accumulated amortization
    
32,610
                          
32,610
  
                                     
Net utility plant
    
3,798,283
       (578,379 )        
-
      
3,219,904
  
                                     
Other Property and Investments:
                                    
Investment in PVNGS lessor notes
    
245,356
                          
245,356
  
Investment in EnergyCo
    
1,838
      
275,325
    
c
            
277,163
  
Other investments
    
177,759
                          
177,759
  
Non-utility property, net of accumulated depreciation
    
7,307
                          
7,307
  
                                     
Total other property and investments
    
432,260
      
275,325
          
-
      
707,585
  
                                     
Current Assets:
                  
 
                
Cash and cash equivalents
    
44,986
      
276,041
    
d
     (276,041 )  
e
  
44,986
  
Special deposits
    
818
                            
818
  
Accounts receivable, net of allowance for uncollectible accounts
    
199,719
       (5,329 )  
a
              
194,390
  
Unbilled revenues
    
82,482
                            
82,482
  
Other receivables
    
73,396
                            
73,396
  
Inventories
    
69,712
       (9,819 )  
a
              
59,893
  
Regulatory assets
    
2,833
                            
2,833
  
Derivative instruments
    
54,290
       (5,493 )  
a
              
48,797
  
Income taxes receivable
    
61,526
                            
61,526
  
Other current assets
    
62,820
       (211 )  
a
     (450 )  
f
  
62,159
  
                                       
Total current assets
    
652,582
      
255,189
           (276,491 )      
631,280
  
                                       
Deferred Charges:
                                      
Regulatory assets
    
547,084
                            
547,084
  
Pension asset
    
9,508
                            
9,508
  
Goodwill
    
494,513
                            
494,513
  
Other intangible assets, net of accumulated amortization
    
101,874
       (25,000 )  
a
              
76,874
  
Derivative instruments
    
22,897
                            
22,897
  
Other deferred charges
    
73,401
       (25,019 )  
a
              
48,382
  
                                       
Total deferred charges
    
1,249,277
       (50,019 )        
-
        
1,199,258
  
                                       
    $
6,132,402
     $ (97,884 )       $ (276,491 )     $
5,758,027
  
 
The accompanying notes are an integral part of these pro forma financial statements.

2

PNM RESOURCES, INC. AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
AS OF MARCH 31, 2007
(Unaudited)
 
         
Pro Forma Adjustments
        
     PNMR    
 Contribution
                  
   
Historical
    
of Altura
        
Other
    
 Pro Forma
  
       
   (In thousands)   
        
                             
CAPITALIZATION AND LIABILITIES
                            
Capitalization:
                            
Common stockholders' equity:
                            
Common stock outstanding
   $
1,039,908
     $
-
         $
-
      
1,039,908
  
Accumulated other comprehensive income, net of income tax
    
13,855
       (100 )  
b
              
13,755
  
Retained earnings
    
637,907
      
537
    
b
       (272 )  
f
  
638,172
  
Total common stockholders' equity
    
1,691,670
      
437
             (272 )      
1,691,835
  
Cumulative preferred stock of subsidiary without mandatory
                                  
redemption requirements
    
11,529
                              
11,529
  
    Long-term debt
    
1,766,994
                              
1,766,994
  
                                         
  Total capitalization
    
3,470,193
      
437
             (272 )      
3,470,358
  
                                         
Current Liabilities:
                                        
Short-term debt
    
739,345
                     (275,708 )  
e
  
463,637
  
Accounts payable
    
190,070
       (4,397 )  
a
                
185,673
  
Accrued interest and taxes
    
55,269
       (2,863 )  
a
       (178 )  
f
  
51,895
  
                            (333 )  
e
      
Regulatory liabilities
    
16,131
                              
16,131
  
Derivative instruments
    
49,698
                              
49,698
  
Other current liabilities
    
222,209
       (64,832 )  
a
                
157,377
  
                                         
Total current liabilities
    
1,272,722
       (72,092 )           (276,219 )      
924,411
  
                                         
Long-Term Liabilities:
                                        
Accumulated deferred income taxes
    
582,501
      
279
    
b
                
582,780
  
Accumulated deferred investment tax credits
    
29,383
                              
29,383
  
Regulatory liabilities
    
400,101
                              
400,101
  
Asset retirement obligations
    
62,602
       (88 )  
a
                
62,514
  
Accrued pension liability and postretirement benefit cost
    
132,461
                              
132,461
  
Derivative instruments
    
21,075
       (5,162 )  
a
                
15,913
  
Other deferred credits
    
161,364
       (21,258 )  
a
                
140,106
  
                                         
Total long-term liabilties
    
1,389,487
       (26,229 )          
-
        
1,363,258
  
                                         
Commitments and Contingencies
                                        
                                         
    $
6,132,402
     $ (97,884 )         $ (276,491 )     $
5,758,027
  
 
The accompanying notes are an integral part of these pro forma financial statements.

3

PNM RESOURCES, INC. AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF EARNINGS
FOR THE THREE MONTHS ENDED MARCH 31, 2007
(Unaudited)
 
         
Pro Forma Adjustments
        
   
PNMR
    
Altura
                    
   
Historical
    
Historical
          
Other
    
Pro Forma
  
   
(In thousands, except per share information)
        
Operating Revenues:
                              
Electric
   $
436,807
     $ (36,803 )    
a
     $
46
    
g
 $
400,050
  
Gas
    
216,484
                                
216,484
  
Other
    
210
                                
210
  
Total operating revenues
    
653,501
       (36,803 )            
46
        
616,744
  
                                           
Operating Expenses:
                                          
Cost of energy sold
    
378,520
       (12,166 )    
a
      
46
    
g
  
366,400
  
Administrative and general
    
71,206
       (2,319 )    
a
                
68,887
  
Energy production costs
    
47,500
       (6,989 )    
a
                
40,511
  
Depreciation and amortization
    
40,442
       (4,609 )    
a
                
35,833
  
Transmission and distribution costs
    
22,567
              
 
                
22,567
  
Taxes other than income taxes
    
18,620
       (2,951 )    
a
                
15,669
  
Income taxes
    
13,969
       (3,011 )    
a
      
2,257
    
i
  
13,215
  
Total operating expenses
    
592,824
       (32,045 )            
2,303
        
563,082
  
Operating income
    
60,677
       (4,758 )             (2,257 )      
53,662
  
                                           
Other Income and Deductions:
                                          
Interest income
    
10,788
       (117 )    
a
                
10,671
  
Gains on investment securities
    
70
                                
70
  
Other income
    
2,012
                                
2,012
  
Equity in net earnings (loss) of EnergyCo
     (662 )                    
3,861
    
h
  
3,199
  
Other deductions
     (987 )                          
 
   (987 )
Other income taxes
     (3,950 )    
46
      
a
       (1,529 )  
h
   (5,433 )
 Net other income and deductions
    
7,271
       (71 )            
2,332
        
9,532
  
       Earnings before interest charges
    
67,948
       (4,829 )            
75
        
63,194
  
                                           
Interest Charges :
                                          
 Interest on long-term debt
    
24,009
                                
24,009
  
 Other interest charges
    
13,838
       (164 )    
a
       (5,702 )  
i
  
7,972
  
Total interest charges
    
37,847
       (164 )             (5,702 )      
31,981
  
                                           
Preferred Stock Dividend Requirements of Subsidiary
    
132
                                
132
  
                                           
Net Earnings
   $
29,969
     $ (4,665 )           $
5,777
       $
31,081
  
                                           
Net Earnings per Common Share:
                                          
Basic
   $
0.39
                               $
0.41
  
Diluted
   $
0.38
                               $
0.40
  
Dividends Declared per Common Share
   $
0.23
                               $
0.23
  
                                           
                                           
Number of shares used in calculating earnings per share:
                                    
    Basic
    
76,659
                                
76,659
  
    Diluted
    
78,099
                                
78,099
  
 
The accompanying notes are an integral part of these pro forma financial statements.

4

PNM RESOURCES, INC. AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF EARNINGS
FOR THE YEAR ENDED DECEMBER 31, 2006
(Unaudited)

         
Pro Forma Adjustments
        
   
PNMR
    
Altura
                    
   
Historical
    
Historical
          
Other
    
Pro Forma
  
   
                                     (In thousands, except per share information)
        
Operating Revenues:
                              
Electric
   $
1,962,073
     $ (125,131 )    
a
     $
140
    
g
  
1,837,082
  
Gas
    
508,410
                                
508,410
  
Other
    
1,186
                                
1,186
  
Total operating revenues
    
2,471,669
       (125,131 )            
140
        
2,346,678
  
                                           
Operating Expenses:
                                          
Cost of energy sold
    
1,445,790
       (38,860 )    
a
      
140
    
g
  
1,407,070
  
Administrative and general
    
276,023
       (3,114 )    
a
                
272,909
  
Energy production costs
    
164,169
       (6,917 )    
a
                
157,252
  
Depreciation and amortization
    
152,271
       (13,060 )    
a
                
139,211
  
Transmission and distribution costs
    
81,809
      
-
                        
81,809
  
Taxes, other than income taxes
    
71,902
       (2,951 )    
a
                
68,951
  
Income taxes
    
46,198
       (23,707 )    
a
      
4,735
    
i
  
27,226
  
Total operating expenses
    
2,238,162
       (88,609 )            
4,875
        
2,154,428
  
Operating income
    
233,507
       (36,522 )             (4,735 )      
192,250
  
                                           
Other Income and Deductions:
                                          
Interest income
    
39,682
       (250 )    
a
                
39,432
  
Gains on investment securities
    
5,979
                                
5,979
  
Other income
    
6,636
                                
6,636
  
Equity in net earnings of EnergyCo
                            
30,074
    
h
  
30,074
  
Carrying charges on regulatory assets
    
6,993
                                
6,993
  
Other deductions
     (6,861 )     (14 )    
a
                 (6,875 )
Other income taxes
     (17,772 )    
105
      
a
       (11,906 )  
h
   (29,573 )
Net other income and deductions
    
34,657
       (159 )            
18,168
        
52,666
  
Earnings before interest charges
    
268,164
       (36,681 )            
13,433
        
244,916
  
                                           
Interest Charges :
                                          
Interest on long-term debt
    
95,301
                                
95,301
  
Other interest charges
    
50,221
       (345 )    
a
       (11,960 )  
i
  
37,916
  
Total interest charges
    
145,522
       (345 )             (11,960 )      
133,217
  
                                           
Preferred Stock Dividend Requirements of Subsidiary
    
528
                                
528
  
                                           
Net Earnings
   $
122,114
     $ (36,336 )           $
25,393
       $
111,171
  
                                           
Net Earnings per Common Share:
                                          
Basic
   $
1.75
                               $
1.59
  
Diluted
   $
1.73
                               $
1.57
  
Dividends Declared per Common Share
   $
0.88
                               $
0.88
  
                                           
Number of shares used in calculating earnings per share:
                                          
Basic
    
69,829
                                
69,829
  
Diluted
    
70,636
                                
70,636
  

The accompanying notes are an integral part of these pro forma financial statements.

5
 
PNM RESOURCES, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
(Unaudited)
 
 
(1)
PNMR Basis of Presentation
 
Historical financial information for PNM Resources, Inc. ("PNMR”) as of and for the three months ended March 31, 2007, and the year ended December 31, 2006, has been derived from PNMR's historical financial statements.
 
 
(2)
Twin Oaks Acquisition and Basis of Presentation
 
On April 18, 2006, PNMR, through its wholly owned subsidiary Altura Energy, LLC, purchased the Twin Oaks business, which included the 305-megawatt coal-fired Twin Oaks power plant located 150 miles south of Dallas, Texas (collectively, “Altura”).  The results of Twin Oaks operations have been included in PNMR’s Consolidated Financial Statements and in the PNMR historical information included in the pro forma financial statements from that date.  PNMR borrowed $480 million to finance this purchase under a bridge loan arrangement.  Through December 31, 2006, PNMR repaid $230.5 million of the bridge loan and the remainder was repaid on April 17, 2007, at which time PNMR borrowed $250.5 million under its revolving credit facility.  Interest expense, including amortization of debt costs, is recorded in the PNMR historical amounts, but not in the Altura historical amounts.
 
Historical financial information for Altura as of and for the three months ended March 31, 2007, and the year ended December 31, 2006, has been derived from Altura’s historical financial information from the date of acquisition included within the PNMR Consolidated Financial Statements.
 
 
(3)
Transfer of Altura to EnergyCo
 
In January 2007, PNMR and ECJV Holdings, LLC (“ECJV”), a wholly owned subsidiary of Cascade Investment, L.L.C., created a joint venture called EnergyCo, LLC (“EnergyCo”) to serve expanding U.S. energy markets throughout the Southwest, Texas and the West.  PNMR and ECJV each have a 50% ownership interest in EnergyCo, a limited liability company.  PNMR accounts for its investment in EnergyCo using the equity method of accounting.  PNMR records as income its percentage share of earnings or loss and distributions of EnergyCo and carries its investment at cost, adjusted for its share of undistributed earnings or losses.
 
On June 1, 2007, PNMR contributed its ownership of Altura to EnergyCo at fair value of $553.8 million, ECJV made a cash contribution to EnergyCo equal to 50% of the fair value amount, and EnergyCo distributed that cash to PNMR.  PNMR accounted for this transaction by (1) removing the assets and liabilities transferred to EnergyCo from its consolidated financial statements; (2) recording an additional investment in EnergyCo for an amount equal to 50% of the net carrying value of the Altura assets and liabilities transferred, reflecting that 50% of the items transferred are in effect still owned by PNMR; and (3) reflecting in results of operations the difference between the cash received and 50% of the net carrying value of the items transferred that in effect were sold to ECJV.
 
 
(4)
Pro Forma Adjustments
 
Following are brief descriptions of the pro forma adjustments to the Condensed Consolidated Balance Sheet and Condensed Consolidated Statements of Earnings to reflect PNMR’s transfer of Altura to EnergyCo, the receipt of cash from EnergyCo, and the use of the cash received to reduce debt of PNMR.  The Pro Forma Condensed Consolidated Balance Sheet reflects these as if they had occurred on March 31, 2007 and the Pro Forma Condensed Consolidated Statements of Earnings reflect them as if they had occurred at April 18, 2006, the date PNMR purchased Twin Oaks and the date from which it is included in the PNMR historical amounts. 
 
 
a.
Removal of Altura historical amounts (applicable to assets, liabilities, and operations transferred to EnergyCo) that are included in PNMR historical amounts.
 

6

 
PNM RESOURCES, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
(Unaudited)
 
 
b.
Difference between cash received and 50% of the net assets transferred and related deferred income taxes.
 
 
c.
Increase in PNMR’s investment in EnergyCo equal to 50% of net assets transferred.
 
 
d.
Cash received by PNMR from EnergyCo amounting to $276.9 million.  For pro forma purposes such amount was reduced by approximately $0.9 million related to an adjustment for changes in working capital from the date used in the determination of the fair value of Altura and March 31, 2007.
 
 
e.
Use of cash to repay PNMR’s short-term debt, including accrued interest.
 
 
f.
Removal of remaining unamortized debt costs related to bridge loan and related income taxes.
 
 
g.
Reversal of elimination, reflected in the PNMR historical amounts, of intercompany sales between PNMR and Altura.
 
 
h.
Reflects 50% of Altura’s pre tax earnings as equity in earnings of EnergyCo, and related income taxes.
 
 
i.
Reflects the pro forma reduction in interest expense, including amortization of debt costs, related to the bridge loan and other short-term debt upon the application of the cash received from EnergyCo to reduce debt.
 
 
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