-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, Ba0LjutPC068px1DOegGgsSdmo1deANFgV0umizpB9vWtBGAvkfmZqKR9oESdv4q AUCFsgOS+kMizr5bYf90KA== 0000092521-95-000007.txt : 199507170000092521-95-000007.hdr.sgml : 19950717 ACCESSION NUMBER: 0000092521-95-000007 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 19950531 FILED AS OF DATE: 19950714 SROS: NYSE SROS: PSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: SOUTHWESTERN PUBLIC SERVICE CO CENTRAL INDEX KEY: 0000092521 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRIC SERVICES [4911] IRS NUMBER: 750575400 STATE OF INCORPORATION: NM FISCAL YEAR END: 0831 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-03789 FILM NUMBER: 95554080 BUSINESS ADDRESS: STREET 1: SPS TOWER STREET 2: TYLER AT SIXTH ST CITY: AMARILLO STATE: TX ZIP: 79170 BUSINESS PHONE: 8063782121 MAIL ADDRESS: STREET 1: PO BOX 1261 CITY: AMARILLO STATE: TX ZIP: 79170 10-Q 1 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. 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 PART I. FINANCIAL INFORMATION
SOUTHWESTERN PUBLIC SERVICE COMPANY Condensed Consolidated Balance Sheets Assets 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 . . .
SOUTHWESTERN PUBLIC SERVICE COMPANY Condensed Consolidated Balance Sheets Capitalization and Liabilities 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.
SOUTHWESTERN PUBLIC SERVICE COMPANY Condensed Consolidated Statements of Earnings (Unaudited) 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.
SOUTHWESTERN PUBLIC SERVICE COMPANY Condensed Consolidated Statements of Cash Flows (Unaudited) 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.
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:
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
(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. 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. 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 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.
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.
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). 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 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 EX-4 2 SUPPLEMENTAL INDENTURE 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 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 -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:
Principal Amounts Series ___Outstanding___ 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
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 -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. -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 -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 -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 -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 -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 -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, -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 -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 -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 -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 -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. -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 -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. -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 - ---------------------------------- 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 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 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. 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. 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. 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. EXHIBIT A (Continued)
SUBSTATIONS - NEW MEXICO KVA County Capacity Zia Lea 10,000 Coopers Ranch Lea 12,000 Sand Dunes Eddy 7,500 IMC #4 Eddy 5,000 Dollarhide Lea 12,000
SUBSTATIONS - TEXAS KVA County Capacity 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 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. EXHIBIT A (Continued)
FRANCHISES JANUARY 1993 - FEBRUARY 1995 TYPE DATE OF TOWN COUNTY OF SERVICE EXPIRATION Idalou, Texas Lubbock Electric 10/12/2019 Ropesville, Texas Hockley Electric 12/30/2019
EX-12 3 RATIO OF EARNINGS
SOUTHWESTERN PUBLIC SERVICE COMPANY EXHIBIT 12. Statement of Computation of Ratio of Earnings Twelve Months Ended May 31, 1995 (Dollars In Thousands) 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
EX-15 4 LETTER OF DELOITTE & TOUCHE LLP 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 EX-27 5 FINANCIAL DATA SCHEDULE
UT 1,000 9-MOS AUG-31-1995 MAY-31-1995 PER-BOOK 1,533,087 53,421 124,705 128,459 0 1,839,672 40,918 306,376 343,980 691,274 0 72,680 576,201 0 0 0 325 0 0 0 499,192 1,839,672 574,251 36,043 444,298 480,341 93,910 3,635 97,545 31,270 66,275 3,658 62,617 67,515 29,872 121,812 1.53 0
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