falsedesktopEE2020-03-31000003197820000012{"tbl_sim": "https://q10k.com/tbl-sim", "search": "https://q10k.com/search"}{"q10k_tbl_0": "Large Accelerated Filer\t☒\tAccelerated Filer\t☐\nNon-accelerated Filer\t☐\tSmaller Reporting Company\t☐\n\t\tEmerging Growth Company\t☐\n", "q10k_tbl_1": "Abbreviations Acronyms or Defined Terms\tTerms\nA&G\tAdministrative and general\nADIT\tAccumulated Deferred Income Taxes\nAEFUDC\tAllowance for Equity Funds Used During Construction\nAFUDC\tAllowance for Funds Used During Construction\nALJ\tAdministrative Law Judge\nAmended REA\tAmendment to the REA by the New Mexico Energy Transition Act effective June 14 2019\nANPP Participation Agreement\tArizona Nuclear Power Project Participation Agreement dated August 23 1973 as amended\nAPS\tArizona Public Service Company\nASU\tAccounting Standards Update\nCCN\tCertificate of Convenience and Necessity\nCompany\tEl Paso Electric Company\nCOVID-19\tCoronavirus Disease 2019 the disease caused by the 2019 novel coronavirus (SARS-CoV-2)\nDCRF\tDistribution Cost Recovery Factor\nDOE\tU.S. Department of Energy\nEECRF\tEnergy Efficiency Cost Recovery Factor\nEl Paso\tCity of El Paso Texas\nEUERF\tEfficient Use of Energy Recovery Factor\nExchange Act\tThe Securities Exchange Act of 1934 as amended\nFASB\tFinancial Accounting Standards Board\nFCC\tFederal Communications Commission\nFERC\tFederal Energy Regulatory Commission\nFPPCAC\tNew Mexico Fuel and Purchased Power Cost Adjustment Clause\nFTC\tFederal Trade Commission\nGAAP\tU.S. Generally Accepted Accounting Principles\nGorski Action\tGorski v. El Paso Electric Company. et al. Case No. 1:19-cv-07211 in the U.S. District Court for the Southern District of New York\nHearing Examiner\tThe Hearing Examiner of the NMPRC\nHSR Act\tHart-Scott-Rodino Antitrust Improvements Act of 1976\nIIF\tInfrastructure Investments Fund an investment vehicle advised by J.P. Morgan Investment Management Inc.\nkWh\tKilowatt-hour(s)\nLTPPA\tLong-Term Purchased Power Agreement\nMerger\tMerger of Merger Sub with and into the Company with the Company as the surviving corporation pursuant to the Merger Agreement\nMerger Agreement\tAgreement and Plan of Merger by and among the Company Parent and Merger Sub dated June 1 2019\nMerger Consideration\tThe right to receive $68.25 in cash per share of common stock without interest on and subject to the terms and conditions set forth in the Merger Agreement\nMerger Sub\tSun Merger Sub Inc.\nMW\tMegawatt(s)\nMWh\tMegawatt-hour(s)\nNAV\tNet Asset Value\n", "q10k_tbl_2": "Abbreviations Acronyms or Defined Terms\tTerms\nNDT\tThe Company's Palo Verde nuclear decommissioning trust funds\nNewman\tThe Company's Newman Power Station\nNMPRC\tNew Mexico Public Regulation Commission\nNMPUA\tNew Mexico Public Utility Act\nNMSU\tNew Mexico State University\nNOPR\tNotice of Proposed Rulemaking\nNRC\tU.S. Nuclear Regulatory Commission\nO&M\tOperations and maintenance\nOATT\tOpen Access Transmission Tariff\nParent\tSun Jupiter Holdings LLC\nPalo Verde\tPalo Verde Generating Station\nPalo Verde Participation\tThose utilities that share in power and energy entitlements and bear certain allocated costs with respect to Palo Verde pursuant to the ANPP Participation Agreement\nPCBs\tPollution Control Bonds\nPUCT\tPublic Utility Commission of Texas\nPURA\tTexas Public Utility Regulatory Act\nRCF\tThe Company's Revolving Credit Facility\nREA\tNew Mexico Renewable Energy Act\nRGRT\tRio Grande Resources Trust II\nRio Grande\tThe Company's Rio Grande Power Station\nRosenblatt Action\tRosenblatt v. El Paso Electric Company et al. Case No. 1:19-cv-01367-UNA in the U.S. District Court for the District of Delaware\nROU\tRight-of-use\nRPS\tRenewable Portfolio Standard\nRule 551\tNMPRC Rule 17.9.551 of the New Mexico Administrative Code\nSEC\tU.S. Securities and Exchange Commission\nShow Cause Proceeding\tFERC proceeding in which a company must revise its transmission rates for the TCJA effect or show cause as to why it should not be required to do so\nSPS\tSouthwestern Public Service Company\nSPS Appeal No. 1\tSouthwestern Public Service Co. v. NMPRC No. S-1-SC-37248 in the New Mexico Supreme Court\nSPS Appeal No. 2\tSouthwestern Public Service Co. v. NMPRC No. S-1-SC-37308 in the New Mexico Supreme Court\nStein Action\tStein v. El Paso Electric Company. et al. Case No. 1:19-cv-06703 in the U.S. District Court for the Southern District of New York\nTCJA\tThe federal legislation commonly referred to as the Tax Cuts and Jobs Act of 2017\nTCRF\tTransmission Cost Recover Factor\nTexas Fuel Rule\tFuel cost recovery rule of the PUCT\nU.S.\tUnited States\n2017 PUCT Final Order\tPUCT Final Order in Docket No. 46831\n2019 DCRF rate filing\tDCRF rate filing in PUCT Docket No. 49395\n2019 Form 10-K\tAnnual Report of El Paso Electric Company on Form 10-K for the fiscal year ended December 31 2019\n2019 TCRF rate filing\tTCRF rate filing in PUCT Docket No. 49148\n", "q10k_tbl_3": "\t\tPage No.\nPART I. FINANCIAL INFORMATION\t\t\nItem 1.\tFinancial Statements\t\n\tBalance Sheets - March 31 2020 and December 31 2019\t1\n\tStatements of Operations - Three Months and Twelve Months Ended March 31 2020 and 2019\t3\n\tStatements of Comprehensive Operations - Three Months and Twelve Months Ended March 31 2020 and 2019\t4\n\tStatements of Changes in Common Stock Equity - Three Months Ended March 31 2020 and 2019\t5\n\tStatements of Cash Flows - Three Months Ended March 31 2020 and 2019\t6\n\tNotes to Financial Statements\t7\n\tReport of Independent Registered Public Accounting Firm\t32\nItem 2.\tManagement's Discussion and Analysis of Financial Condition and Results of Operations\t33\nItem 3.\tQuantitative and Qualitative Disclosures About Market Risk\t51\nItem 4.\tControls and Procedures\t51\nPART II. OTHER INFORMATION\t\t\nItem 1.\tLegal Proceedings\t52\nItem 1A.\tRisk Factors\t52\nItem 2.\tUnregistered Sales of Equity Securities and Use of Proceeds\t53\nItem 5.\tOther Information\t53\nItem 6.\tExhibits\t53\n", "q10k_tbl_4": "\tMarch 31 2020\tDecember 31 2019\n\t(Unaudited)\nASSETS (In thousands)\t\t\nUtility plant:\t\t\nElectric plant in service\t4447169\t4404150\nLess accumulated depreciation and amortization\t(1486274)\t(1461385)\nNet plant in service\t2960895\t2942765\nConstruction work in progress\t164528\t157851\nNuclear fuel; includes fuel in process of $57845 and $61709 respectively\t211336\t198075\nLess accumulated amortization\t(81560)\t(71588)\nNet nuclear fuel\t129776\t126487\nNet utility plant\t3255199\t3227103\nCurrent assets:\t\t\nCash and cash equivalents\t57379\t10818\nAccounts receivable principally trade net of allowance for doubtful accounts of $1778 and $1900 respectively\t66307\t79814\nInventories at cost\t60429\t60872\nRegulatory assets\t9290\t9939\nPrepayments and other\t15539\t11203\nTotal current assets\t208944\t172646\nDeferred charges and other assets:\t\t\nDecommissioning trust funds\t294501\t325998\nRegulatory assets\t69640\t70805\nOther\t17551\t16648\nTotal deferred charges and other assets\t381692\t413451\nTotal assets\t3845835\t3813200\n", "q10k_tbl_5": "\tMarch 31 2020\tDecember 31 2019\n\t(Unaudited)\nCAPITALIZATION AND LIABILITIES (In thousands except for share data)\t\t\nCapitalization:\t\t\nCommon stock stated value $1 per share 100000000 shares authorized 64312516 and 64332884 shares issued and 116172 and 95804 restricted shares respectively\t64429\t64429\nCapital in excess of stated value\t322890\t323367\nRetained earnings\t1221513\t1272418\nAccumulated other comprehensive loss net of tax\t(48977)\t(48952)\n\t1559855\t1611262\nTreasury stock 23656061 and 23696262 shares respectively at cost\t(394044)\t(394715)\nCommon stock equity\t1165811\t1216547\nLong-term debt net of current portion\t1341131\t1340981\nTotal capitalization\t2506942\t2557528\nCurrent liabilities:\t\t\nCurrent maturities of long-term debt\t44979\t44969\nShort-term borrowings under the revolving credit facility\t240781\t113801\nAccounts payable principally trade\t43386\t65745\nTaxes accrued\t27205\t39315\nInterest accrued\t18920\t14196\nRegulatory liabilities\t12908\t19961\nOther\t41565\t38408\nTotal current liabilities\t429744\t336395\nDeferred credits and other liabilities:\t\t\nAccumulated deferred income taxes\t337366\t348398\nAccrued pension liability\t94378\t96745\nAccrued post-retirement benefit liability\t23599\t23081\nAsset retirement obligations\t112553\t110105\nRegulatory liabilities\t298705\t298466\nOther\t42548\t42482\nTotal deferred credits and other liabilities\t909149\t919277\nCommitments and contingencies\t\t\nTotal capitalization and liabilities\t3845835\t3813200\n", "q10k_tbl_6": "\tThree Months Ended\t\tTwelve Months Ended\t\n\tMarch 31\t\tMarch 31\t\n\t2020\t2019\t2020\t2019\nOperating revenues\t158563\t174363\t846194\t902253\nOperating expenses:\t\t\t\t\nFuel and purchased power\t33624\t48326\t161219\t225247\nOperations and maintenance\t80704\t80413\t332848\t335136\nDepreciation and amortization\t26466\t25126\t103412\t97694\nTaxes other than income taxes\t16071\t16189\t73233\t71682\n\t156865\t170054\t670712\t729759\nOperating income\t1698\t4309\t175482\t172494\nOther income (deductions):\t\t\t\t\nAllowance for equity funds used during construction\t586\t1001\t2130\t3534\nInvestment and interest income (losses) net\t(25599)\t23707\t20321\t36929\nMiscellaneous non-operating income\t2945\t3048\t15166\t12735\nStrategic transaction costs\t(1295)\t0\t(13405)\t0\nMiscellaneous non-operating deductions\t(3149)\t(2357)\t(10738)\t(11594)\n\t(26512)\t25399\t13474\t41604\nInterest charges (credits):\t\t\t\t\nInterest on long-term debt and revolving credit facility\t18743\t18989\t74542\t76425\nOther interest\t4547\t5233\t20680\t18469\nCapitalized interest\t(1378)\t(1532)\t(5575)\t(5801)\nAllowance for borrowed funds used during construction\t(885)\t(972)\t(3928)\t(3686)\n\t21027\t21718\t85719\t85407\nIncome (loss) before income taxes\t(45841)\t7990\t103237\t128691\nIncome tax expense (benefit)\t(10632)\t1901\t21498\t31321\nNet income (loss)\t(35209)\t6089\t81739\t97370\nBasic earnings (loss) per share\t(0.87)\t0.15\t2.01\t2.39\nDiluted earnings (loss) per share\t(0.87)\t0.15\t2.00\t2.39\nDividends declared per share of common stock\t0.385\t0.360\t1.540\t1.440\nWeighted average number of shares outstanding\t40653326\t40582936\t40623151\t40543986\nWeighted average number of shares and dilutive potential shares outstanding\t40653326\t40663753\t40691961\t40661228\n", "q10k_tbl_7": "\tThree Months Ended\t\tTwelve Months Ended\t\n\tMarch 31\t\tMarch 31\t\n\t2020\t2019\t2020\t2019\nNet income (loss)\t(35209)\t6089\t81739\t97370\nOther comprehensive income (loss):\t\t\t\t\nUnrecognized pension and post-retirement benefit costs:\t\t\t\t\nNet loss arising during period\t0\t0\t(12110)\t(5898)\nReclassification adjustments included in net income for amortization of:\t\t\t\t\nPrior service benefit\t(1651)\t(2186)\t(8205)\t(9427)\nNet loss\t1445\t843\t4017\t5655\nNet unrealized gains/losses on marketable securities:\t\t\t\t\nNet holding gains arising during period\t0\t2471\t3601\t1107\nReclassification adjustments for net (gains) losses included in net income\t0\t829\t(3061)\t1756\nNet losses on cash flow hedges:\t\t\t\t\nReclassification adjustment for interest expense included in net income\t158\t148\t615\t577\nTotal other comprehensive income (loss) before income taxes\t(48)\t2105\t(15143)\t(6230)\nIncome tax benefit (expense) related to items of other comprehensive income (loss):\t\t\t\t\nUnrecognized pension and post-retirement benefit costs\t53\t265\t3655\t2144\nNet unrealized gains on marketable securities\t0\t(665)\t(233)\t(577)\nLosses on cash flow hedges\t(30)\t(48)\t(129)\t(143)\nTotal income tax benefit (expense)\t23\t(448)\t3293\t1424\nOther comprehensive income (loss) net of tax\t(25)\t1657\t(11850)\t(4806)\nComprehensive income (loss)\t(35234)\t7746\t69889\t92564\n", "q10k_tbl_8": "\tCommon Stock\t\tCapital in Excess of Stated Value\tRetained Earnings\t\tAccumulated Other Comprehensive Income (Loss) Net of Tax\tTreasury Stock\t\tCommon Stock Equity\n\tShares\tAmount\t\tShares\tAmount\t\nBalances at December 31 2019\t64428688\t64429\t323367\t1272418\t\t(48952)\t23696262\t(394715)\t1216547\nRestricted common stock grants and deferred compensation\t\t\t(40)\t\t\t\t(20368)\t339\t299\nPerformance share awards vested\t\t\t197\t\t\t\t(32119)\t535\t732\nStock awards withheld for taxes\t\t\t(640)\t\t\t\t12404\t(206)\t(846)\nCompensation paid in shares\t\t\t6\t\t\t\t(118)\t3\t9\nNet loss\t\t\t\t(35209)\t\t\t\t\t(35209)\nOther comprehensive loss\t\t\t\t\t\t(25)\t\t\t(25)\nCommon stock dividends declared $0.385 per share\t\t\t\t(15696)\t\t\t\t\t(15696)\nBalances at March 31 2020\t64428688\t64429\t322890\t1221513\t\t(48977)\t23656061\t(394044)\t1165811\n", "q10k_tbl_9": "\tCommon Stock\t\tCapital in Excess of Stated Value\tRetained Earnings\t\tAccumulated Other Comprehensive Income (Loss) Net of Tax\tTreasury Stock\t\tCommon Stock Equity\n\tShares\tAmount\t\tShares\tAmount\t\nBalances at December 31 2018\t65828688\t65829\t328480\t1227471\t\t(38784)\t25147567\t(418893)\t1164103\nRestricted common stock grants and deferred compensation\t\t\t(1328)\t\t\t\t(31461)\t524\t(804)\nPerformance share awards vested\t\t\t1478\t\t\t\t(39923)\t665\t2143\nStock awards withheld for taxes\t\t\t(430)\t\t\t\t12425\t(207)\t(637)\nForfeited restricted common stock\t\t\t\t\t\t\t2566\t(43)\t(43)\nCompensation paid in shares\t\t\t28\t\t\t\t(669)\t11\t39\nNet income\t\t\t\t6089\t\t\t\t\t6089\nOther comprehensive income\t\t\t\t\t\t1657\t\t\t1657\nCommon stock dividends declared $0.36 per share\t\t\t\t(14658)\t\t\t\t\t(14658)\nBalances at March 31 2019\t65828688\t65829\t328228\t1218902\t\t(37127)\t25090505\t(417943)\t1157889\n", "q10k_tbl_10": "\tThree Months Ended\t\n\tMarch 31\t\n\t2020\t2019\nCash flows from operating activities:\t\t\nNet income (loss)\t(35209)\t6089\nAdjustments to reconcile net income (loss) to net cash provided by (used for) operating activities:\t\t\nDepreciation and amortization of electric plant in service\t26466\t25126\nAmortization of nuclear fuel\t10739\t10706\nDeferred income taxes net\t(10718)\t1236\nAllowance for equity funds used during construction\t(586)\t(1001)\nOther amortization and accretion\t4937\t5173\nNet losses (gains) on decommissioning trust funds\t33164\t(15989)\nOther operating activities\t(163)\t349\nChange in:\t\t\nAccounts receivable\t9021\t8352\nInventories\t1718\t(2110)\nPrepayments and other\t(4403)\t(5519)\nAccounts payable\t(22071)\t(11021)\nTaxes accrued\t(12110)\t(8827)\nInterest accrued\t4724\t2971\nNet over-collection (under-collection) of fuel revenues\t(6174)\t12799\nOther current liabilities\t2694\t1599\nDeferred charges and credits\t(3513)\t(3513)\nNet cash provided by (used for) operating activities\t(1484)\t26420\nCash flows from investing activities:\t\t\nCash additions to utility property plant and equipment\t(50897)\t(52428)\nCash additions to nuclear fuel\t(12590)\t(9502)\nProceeds from insurance\t4591\t0\nCapitalized interest and AFUDC:\t\t\nUtility property plant and equipment\t(1471)\t(1973)\nNuclear fuel and other\t(1378)\t(1532)\nAllowance for equity funds used during construction\t586\t1001\nDecommissioning trust funds:\t\t\nPurchases including funding of $0.5 million and $0.5 million respectively\t(3073)\t(37613)\nSales and maturities\t1406\t35468\nOther investing activities\t829\t(724)\nNet cash used for investing activities\t(61997)\t(67303)\nCash flows from financing activities:\t\t\nDividends paid\t(15696)\t(14658)\nBorrowings under the revolving credit facility:\t\t\nProceeds\t202095\t215196\nPayments\t(75115)\t(61452)\nPayment on repurchase of pollution control bonds\t0\t(63500)\nOther financing activities\t(1242)\t(653)\nNet cash provided by financing activities\t110042\t74933\nNet increase in cash cash equivalents and restricted cash\t46561\t34050\nCash cash equivalents and restricted cash at beginning of period\t10818\t12900\nCash cash equivalents and restricted cash at end of period\t57379\t46950\n", "q10k_tbl_11": "\tThree Months Ended\t\n\tMarch 31\t\n\t2020\t2019\nBalance at beginning of period\t1900\t2070\nAdditions:\t\t\nIncrease to provision\t676\t217\nRecovery of previous write-offs\t340\t342\nUncollectible receivables written off\t(1138)\t(1115)\nBalance at end of period\t1778\t1514\n", "q10k_tbl_12": "Supplemental Cash Flow Disclosures (in thousands)\t\t\n\tThree Months Ended\t\n\tMarch 31\t\n\t2020\t2019\nCash paid (refunded) for:\t\t\nInterest on long-term debt and borrowings under the revolving credit facility\t12240\t11592\nIncome tax paid (refunded) net\t180\t(300)\nNon-cash investing and financing activities:\t\t\nChanges in accrued plant additions\t(288)\t(218)\nGrants of restricted shares of common stock\t339\t524\nIssuance of performance shares\t732\t2143\nNon-cash operating activities:\t\t\nOperating lease liabilities arising (reducing) from obtaining ROU assets\t(88)\t6217\n", "q10k_tbl_13": "\tThree Months Ended March 31\t\tTwelve Months Ended March 31\t\n\t2020\t2019\t2020\t2019\nRetail\t134277\t132126\t744661\t775174\nWholesale\t18540\t35691\t75245\t102221\nWheeling (transmission)\t5079\t6005\t21695\t20745\nTotal revenues from contracts with customers\t157896\t173822\t841601\t898140\nOther\t667\t541\t4593\t4113\nTotal operating revenues\t158563\t174363\t846194\t902253\n", "q10k_tbl_14": "Changes in Accumulated Other Comprehensive Income (Loss) (net of tax) by component are presented below (in thousands):\t\t\t\t\t\t\t\t\n\tThree Months Ended March 31 2020\t\t\t\tThree Months Ended March 31 2019\t\t\t\n\tUnrecognized Pension and Post-retirement Benefit Costs\tNet Unrealized Gains (Losses) on Debt Securities\tNet Losses on Cash Flow Hedges\tAccumulated Other Comprehensive Income (Loss)\tUnrecognized Pension and Post-retirement Benefit Costs\tNet Unrealized Gains (Losses) on Debt Securities\tNet Losses on Cash Flow Hedges\tAccumulated Other Comprehensive Income (Loss)\nBalance at beginning of period as previously reported\t(38491)\t0\t(10461)\t(48952)\t(24923)\t(2942)\t(10919)\t(38784)\nOther comprehensive income before reclassifications\t0\t0\t0\t0\t0\t1973\t0\t1973\nAmounts reclassified from accumulated other comprehensive income (loss)\t(153)\t0\t128\t(25)\t(1078)\t662\t100\t(316)\nBalance at end of period\t(38644)\t0\t(10333)\t(48977)\t(26001)\t(307)\t(10819)\t(37127)\n", "q10k_tbl_15": "\tTwelve Months Ended March 31 2020\t\t\t\tTwelve Months Ended March 31 2019\t\t\t\n\tUnrecognized Pension and Post-retirement Benefit Costs\tNet Unrealized Gains (Losses) on Debt Securities\tNet Losses on Cash Flow Hedges\tAccumulated Other Comprehensive Income (Loss)\tUnrecognized Pension and Post-retirement Benefit Costs\tNet Unrealized Gains (Losses) on Debt Securities\tNet Losses on Cash Flow Hedges\tAccumulated Other Comprehensive Income (Loss)\nBalance at beginning of period as previously reported\t(26001)\t(307)\t(10819)\t(37127)\t(18475)\t(2593)\t(11253)\t(32321)\nOther comprehensive income before reclassifications\t(9424)\t2682\t0\t(6742)\t(4589)\t892\t0\t(3697)\nAmounts reclassified from accumulated other comprehensive income (loss)\t(3219)\t(2375)\t486\t(5108)\t(2937)\t1394\t434\t(1109)\nBalance at end of period\t(38644)\t0\t(10333)\t(48977)\t(26001)\t(307)\t(10819)\t(37127)\n", "q10k_tbl_16": "Details about Accumulated Other Comprehensive Income (Loss) Components\tThree Months Ended March 31\t\tTwelve Months Ended March 31\t\tAffected Line Item in the Statements of Operations\n2020\t2019\t2020\t2019\t\nAmortization of pension and post-retirement benefit costs:\t\t\t\t\t\nPrior service benefit\t1651\t2186\t8205\t9427\tMiscellaneous non-operating income\nNet loss\t(1445)\t(843)\t(4017)\t(5655)\tMiscellaneous non-operating deductions\n\t206\t1343\t4188\t3772\tIncome (loss) before income taxes\nIncome tax effect\t(53)\t(265)\t(969)\t(835)\tIncome tax expense (benefit)\n\t153\t1078\t3219\t2937\tNet income (loss)\nMarketable securities:\t\t\t\t\t\nNet realized gain (loss) on sale of securities\t0\t(829)\t3061\t(1756)\tInvestment and interest income net\n\t0\t(829)\t3061\t(1756)\tIncome (loss) before income taxes\nIncome tax effect\t0\t167\t(686)\t362\tIncome tax expense (benefit)\n\t0\t(662)\t2375\t(1394)\tNet income (loss)\nLoss on cash flow hedge:\t\t\t\t\t\nAmortization of loss\t(158)\t(148)\t(615)\t(577)\tInterest on long-term debt and revolving credit facility\n\t(158)\t(148)\t(615)\t(577)\tIncome (loss) before income taxes\nIncome tax effect\t30\t48\t129\t143\tIncome tax expense (benefit)\n\t(128)\t(100)\t(486)\t(434)\tNet income (loss)\nTotal reclassifications\t25\t316\t5108\t1109\t\n", "q10k_tbl_17": "\t2020\t2019\nThree months ended March 31\t19613\t21344\nTwelve months ended March 31\t93794\t95623\n", "q10k_tbl_18": "Basic and Diluted Earnings Per Share. The basic and diluted earnings per share are presented below (in thousands except for share data):\t\t\t\t\n\tThree Months Ended March 31\t\tTwelve Months Ended March 31\t\n\t2020\t2019\t2020\t2019\nWeighted average number of common shares outstanding:\t\t\t\t\nBasic number of common shares outstanding\t40653326\t40582936\t40623151\t40543986\nDilutive effect of unvested performance awards\t0\t80817\t68810\t117242\nDiluted number of common shares outstanding\t40653326\t40663753\t40691961\t40661228\nBasic net income (loss) per common share:\t\t\t\t\nNet income (loss)\t(35209)\t6089\t81739\t97370\nIncome allocated to participating restricted stock\t(43)\t(47)\t(250)\t(340)\nNet income (loss) available to common shareholders\t(35252)\t6042\t81489\t97030\nDiluted net income (loss) per common share:\t\t\t\t\nNet income (loss)\t(35209)\t6089\t81739\t97370\nIncome reallocated to participating restricted stock\t(43)\t(47)\t(250)\t(339)\nNet income (loss) available to common shareholders\t(35252)\t6042\t81489\t97031\nBasic net income (loss) per common share:\t\t\t\t\nDistributed earnings\t0.385\t0.36\t1.54\t1.44\nUndistributed earnings (losses)\t(1.255)\t(0.21)\t0.47\t0.95\nBasic net income (loss) per common share\t(0.870)\t0.15\t2.01\t2.39\nDiluted net income (loss) per common share:\t\t\t\t\nDistributed earnings\t0.385\t0.36\t1.54\t1.44\nUndistributed earnings (losses)\t(1.255)\t(0.21)\t0.46\t0.95\nDiluted net income (loss) per common share\t(0.870)\t0.15\t2.00\t2.39\n", "q10k_tbl_19": "The number of restricted stock awards and performance shares at 100% performance level excluded from the calculation of the diluted number of common shares outstanding because their effect was antidilutive is presented below:\t\t\t\t\n\tThree Months Ended\t\tTwelve Months Ended\t\n\tMarch 31\t\tMarch 31\t\n\t2020\t2019\t2020\t2019\nRestricted stock awards\t53100\t62605\t49270\t60432\nPerformance shares (a)\t0\t43652\t0\t22234\n", "q10k_tbl_20": "\tThree Months Ended\t\tTwelve Months Ended\t\n\tMarch 31\t\tMarch 31\t\n\t2020\t2019\t2020\t2019\nComponents of net periodic benefit cost:\t\t\t\t\nService cost\t3157\t2488\t10575\t10818\nInterest cost\t3095\t3608\t13941\t13263\nExpected return on plan assets\t(5691)\t(5383)\t(21800)\t(21144)\nAmortization of:\t\t\t\t\nNet loss\t2281\t1418\t6655\t7871\nPrior service benefit\t(877)\t(878)\t(3505)\t(3506)\nNet periodic benefit cost\t1965\t1253\t5866\t7302\n", "q10k_tbl_21": "\tThree Months Ended\t\tTwelve Months Ended\t\n\tMarch 31\t\tMarch 31\t\n\t2020\t2019\t2020\t2019\nComponents of net periodic benefit:\t\t\t\t\nService cost\t801\t625\t2599\t2720\nInterest cost\t489\t618\t2327\t2305\nExpected return on plan assets\t(612)\t(530)\t(2202)\t(2352)\nAmortization of:\t\t\t\t\nPrior service benefit\t(774)\t(1308)\t(4700)\t(5921)\nNet gain\t(836)\t(575)\t(2638)\t(2216)\nNet periodic benefit\t(932)\t(1170)\t(4614)\t(5464)\n", "q10k_tbl_22": "\tMarch 31 2020\t\tDecember 31 2019\t\n\tCarrying Amount\tEstimated Fair Value\tCarrying Amount\tEstimated Fair Value\nPollution Control Bonds\t157982\t163903\t157965\t167256\nSenior Notes\t1118487\t1320125\t1118371\t1398645\nRGRT Senior Notes (1)\t109641\t111570\t109614\t114270\nRCF (1)\t240781\t240780\t113801\t113801\nTotal\t1626891\t1836378\t1499751\t1793972\n", "q10k_tbl_23": "\tThree Months Ended\t\tTwelve Months Ended\t\n\tMarch 31\t\tMarch 31\t\n\t2020\t2019\t2020\t2019\nProceeds from sales or maturities of available for sale securities\t0\t15771\t152406\t29969\nGross realized gains included in pre-tax income\t0\t58\t4757\t66\nGross realized losses included in pre-tax income\t0\t(887)\t(1696)\t(1822)\nNet gains (losses) included in pre-tax income\t0\t(829)\t3061\t(1756)\n", "q10k_tbl_24": "\tThree Months Ended\t\tTwelve Months Ended\t\n\tMarch 31\t\tMarch 31\t\n\t2020\t2019\t2020\t2019\nNet gains (losses) recognized on equity securities\t(33164)\t16818\t(13700)\t7287\nLess: Net gains recognized on equity securities sold\t24\t128\t326\t5417\nUnrealized gains (losses) recognized on equity securities still held at reporting date\t(33188)\t16690\t(14026)\t1870\n", "q10k_tbl_25": "Description of Securities\tFair Value as of March 31 2020\tQuoted Prices in Active Markets for Identical Assets (Level 1)\tSignificant Other Observable Inputs (Level 2)\tSignificant Unobservable Inputs (Level 3)\nTrading Securities:\t\t\t\t\nInvestments in Debt Securities\t1565\t0\t0\t1565\nEquity Securities:\t\t\t\t\nDomestic (a)\t270522\t270522\t0\t0\nInternational\t21938\t21938\t0\t0\nTotal Equity Securities\t292460\t292460\t0\t0\nCash and Cash Equivalents\t2041\t2041\t0\t0\nTotal\t294501\t294501\t0\t0\n", "q10k_tbl_26": "Description of Securities\tFair Value as of December 31 2019\tQuoted Prices in Active Markets for Identical Assets (Level 1)\tSignificant Other Observable Inputs (Level 2)\tSignificant Unobservable Inputs (Level 3)\nTrading Securities:\t\t\t\t\nInvestments in Debt Securities\t1587\t0\t0\t1587\nEquity Securities:\t\t\t\t\nDomestic (a)\t295065\t295065\t0\t0\nInternational\t29202\t29202\t0\t0\nTotal Equity Securities\t324267\t324267\t0\t0\nCash and Cash Equivalents\t1731\t1731\t0\t0\nTotal\t325998\t325998\t0\t0\n", "q10k_tbl_27": "\tThree Months Ended\t\tTwelve Months Ended\t\n\tMarch 31\t\tMarch 31\t\n\t2020\t2019\t2020\t2019\nNet income (loss) (in thousands)\t(35209)\t6089\t81739\t97370\nBasic earnings (loss) per share\t(0.87)\t0.15\t2.01\t2.39\n", "q10k_tbl_28": "\tThree Months Ended\tTwelve Months Ended\nMarch 31 2019 net income\t6089\t97370\nChange in (net of tax):\t\t\nDecreased investment and interest income NDT (a)\t(39780)\t(13179)\n(Increased) decreased operations and maintenance expenses at fossil-fuel generating plants (b)\t(1106)\t1702\nStrategic transaction costs (c)\t(1065)\t(11279)\nIncreased depreciation and amortization (d)\t(1059)\t(4518)\nDecreased other changes in income taxes (e)\t1875\t4976\nIncreased retail non-fuel base revenues (f)\t588\t7253\nOther\t(751)\t(586)\nMarch 31 2020 net income (loss)\t(35209)\t81739\n", "q10k_tbl_29": "\tThree Months Ended\t\n\tMarch 31\t\n\t2020 (1)\t2019\n\t(In thousands except for per share data)\t\nNet income (loss) (GAAP)\t(35209)\t6089\nAdjusting items before income tax effects\t\t\nUnrealized (gains) losses net\t33188\t(16690)\nRealized (gains) losses net\t(24)\t701\nTotal adjustments before income tax effects\t33164\t(15989)\nIncome taxes on above adjustments\t(6633)\t3198\nAdjusting items net of income taxes\t26531\t(12791)\nAdjusted net loss (non-GAAP)\t(8678)\t(6702)\nBasic earnings (loss) per share (GAAP)\t(0.87)\t0.15\nAdjusted basic loss per share (non-GAAP)\t(0.21)\t(0.17)\n", "q10k_tbl_30": "\tTwelve Months Ended\t\n\tMarch 31\t\n\t2020 (1)\t2019\n\t(In thousands except for per share data)\t\nNet income (GAAP)\t81739\t97370\nAdjusting items before income tax effects\t\t\nUnrealized (gains) losses net\t14026\t(1870)\nRealized gains net\t(3387)\t(3661)\nTotal adjustments before income tax effects\t10639\t(5531)\nIncome taxes on above adjustments\t(2128)\t1107\nAdjusting items net of income taxes\t8511\t(4424)\nAdjusted net income (non-GAAP)\t90250\t92946\nBasic earnings per share (GAAP)\t2.01\t2.39\nAdjusted basic earnings per share (non-GAAP)\t2.21\t2.28\n", "q10k_tbl_31": "\tThree Months Ended\t\t\tTwelve Months Ended\t\t\n\tMarch 31\t\t\tMarch 31\t\t\n\t\t\t10-Year\t\t\t10-Year\n\t2020\t2019\tAverage\t2020\t2019\tAverage*\nHeating degree days\t1079\t1134\t1092\t2076\t2106\t2055\nCooling degree days\t12\t36\t35\t2983\t3173\t2887\n", "q10k_tbl_32": "Comparisons of kWh sales and operating revenues are shown below (in thousands):\t\t\t\t\n\t\t\tIncrease (Decrease)\t\nThree Months Ended March 31\t2020\t2019\tAmount\tPercent\nkWh sales:\t\t\t\t\nRetail:\t\t\t\t\nResidential\t574083\t574089\t(6)\t-%\nCommercial and industrial small\t486410\t496367\t(9957)\t(2.0)\nCommercial and industrial large (1)\t231676\t252056\t(20380)\t(8.1)\nSales to public authorities\t331249\t331947\t(698)\t(0.2)\nTotal retail sales\t1623418\t1654459\t(31041)\t(1.9)\nWholesale:\t\t\t\t\nSales for resale - full requirements customer\t11281\t11770\t(489)\t(4.2)\nOff-system sales\t847137\t837162\t9975\t1.2\nTotal wholesale sales\t858418\t848932\t9486\t1.1\nTotal kWh sales\t2481836\t2503391\t(21555)\t(0.9)\nOperating revenues:\t\t\t\t\nNon-fuel base revenues:\t\t\t\t\nRetail:\t\t\t\t\nResidential\t55579\t54452\t1127\t2.1%\nCommercial and industrial small\t33460\t33004\t456\t1.4\nCommercial and industrial large (1)\t6925\t7246\t(321)\t(4.4)\nSales to public authorities\t16769\t17285\t(516)\t(3.0)\nTotal retail non-fuel base revenues (2) (3)\t112733\t111987\t746\t0.7\nWholesale:\t\t\t\t\nSales for resale - full requirements customer\t442\t546\t(104)\t(19.0)\nTotal non-fuel base revenues\t113175\t112533\t642\t0.6\nFuel revenues:\t\t\t\t\nRecovered from customers during the period\t25268\t28545\t(3277)\t(11.5)\nOver collection of fuel\t(7744)\t(12758)\t5014\t39.3\nTotal fuel revenues (4)\t17524\t15787\t1737\t11.0\nOff-system sales (5) (6)\t17971\t34979\t(17008)\t(48.6)\nWheeling revenues (7)\t5079\t6005\t(926)\t(15.4)\nEnergy efficiency cost recovery\t2343\t2508\t(165)\t(6.6)\nMiscellaneous (7)\t1804\t2010\t(206)\t(10.2)\nTotal revenues from customers\t157896\t173822\t(15926)\t(9.2)\nOther (7) (8)\t667\t541\t126\t23.3\nTotal operating revenues\t158563\t174363\t(15800)\t(9.1)\nAverage number of retail customers (9):\t\t\t\t\nResidential\t383958\t377396\t6562\t1.7%\nCommercial and industrial small\t43212\t42222\t990\t2.3\nCommercial and industrial large\t48\t48\t0\t0\nSales to public authorities\t6659\t6204\t455\t7.3\nTotal\t433877\t425870\t8007\t1.9\n", "q10k_tbl_33": "Comparisons of kWh sales and operating revenues are shown below (in thousands):\t\t\t\t\n\t\t\tIncrease (Decrease)\t\nTwelve Months Ended March 31\t2020\t2019\tAmount\tPercent\nkWh sales:\t\t\t\t\nRetail:\t\t\t\t\nResidential\t2998511\t3003221\t(4710)\t(0.2)%\nCommercial and industrial small\t2396666\t2429612\t(32946)\t(1.4)\nCommercial and industrial large (1)\t1007782\t1054605\t(46823)\t(4.4)\nSales to public authorities\t1567660\t1566845\t815\t0.1\nTotal retail sales\t7970619\t8054283\t(83664)\t(1.0)\nWholesale:\t\t\t\t\nSales for resale - full requirements customer\t61326\t59031\t2295\t3.9\nOff-system sales\t2997796\t2660907\t336889\t12.7\nTotal wholesale sales\t3059122\t2719938\t339184\t12.5\nTotal kWh sales\t11029741\t10774221\t255520\t2.4\nOperating revenues:\t\t\t\t\nNon-fuel base revenues:\t\t\t\t\nRetail:\t\t\t\t\nResidential\t304118\t298757\t5361\t1.8%\nCommercial and industrial small\t196285\t194048\t2237\t1.2\nCommercial and industrial large (1)\t34890\t35040\t(150)\t(0.4)\nSales to public authorities\t97324\t95589\t1735\t1.8\nTotal retail non-fuel base revenues (2) (3) (4)\t632617\t623434\t9183\t1.5\nWholesale:\t\t\t\t\nSales for resale - full requirements customer\t2738\t2850\t(112)\t(3.9)\nTotal non-fuel base revenues\t635355\t626284\t9071\t1.4\nFuel revenues:\t\t\t\t\nRecovered from customers during the period\t118184\t145094\t(26910)\t(18.5)\nOver collection of fuel (5)\t(22156)\t(9544)\t(12612)\t0\nTotal fuel revenues (6)\t96028\t135550\t(39522)\t(29.2)\nOff-system sales (7) (8)\t71335\t98342\t(27007)\t(27.5)\nWheeling revenues (9)\t21695\t20745\t950\t4.6\nEnergy efficiency cost recovery\t9293\t9480\t(187)\t(2.0)\nMiscellaneous (9)\t7895\t7739\t156\t2.0\nTotal revenues from customers\t841601\t898140\t(56539)\t(6.3)\nOther (9) (10)\t4593\t4113\t480\t11.7\nTotal operating revenues\t846194\t902253\t(56059)\t(6.2)\nAverage number of retail customers (11):\t\t\t\t\nResidential\t381796\t375649\t6147\t1.6%\nCommercial and industrial small\t42932\t42354\t578\t1.4\nCommercial and industrial large\t48\t48\t0\t0\nSales to public authorities\t6416\t5898\t518\t8.8\nTotal\t431192\t423949\t7243\t1.7\n", "q10k_tbl_34": "\tThree Months Ended March 31\t\t\t\t\t\n\t2020\t\t\t2019\t\t\nFuel Type\tCost\tMWh\tCost per MWh\tCost\tMWh\tCost per MWh\n\t(in thousands)\t\t\t(in thousands)\t\t\nNatural gas\t12849\t969987\t13.25\t22279\t915521\t24.33\nCoal (a)\t165\t0\t0\t165\t0\t0\nNuclear\t10843\t1288399\t8.42\t10919\t1364307\t8.00\nTotal\t23857\t2258386\t10.56\t33363\t2279828\t14.63\nPurchased power:\t\t\t\t\t\t\nPhotovoltaic\t4623\t57656\t80.18\t4793\t58768\t81.56\nOther\t5144\t272930\t18.85\t10170\t265303\t38.33\nTotal purchased power\t9767\t330586\t29.54\t14963\t324071\t46.17\nTotal fuel and purchased power\t33624\t2588972\t12.99\t48326\t2603899\t18.56\n", "q10k_tbl_35": "\tTwelve Months Ended March 31\t\t\t\t\t\n\t2020\t\t\t2019\t\t\nFuel Type\tCost\tMWh\tCost per MWh\tCost\tMWh\tCost per MWh\n\t(in thousands)\t\t\t(in thousands)\t\t\nNatural gas\t69182\t5255791\t13.16\t120717\t4960277\t24.34\nCoal (a)\t661\t0\t0\t661\t0\t0\nNuclear\t41109\t(b) 4968486\t8.49\t(b) 40293\t4931658\t8.17\nTotal\t110952\t10224277\t10.96\t161671\t9891935\t16.34\nPurchased power:\t\t\t\t\t\t\nPhotovoltaic\t22874\t281277\t81.32\t21997\t272767\t80.64\nOther\t27393\t1058987\t25.87\t41579\t1116799\t37.23\nTotal purchased power\t50267\t1340264\t37.51\t63576\t1389566\t45.75\nTotal fuel and purchased power\t161219\t11564541\t14.03\t225247\t11281501\t19.97\n", "q10k_tbl_36": "\tThree Months Ended\t\tTwelve Months Ended\t\n\tMarch 31\t\tMarch 31\t\n\t2020\t2019\t2020\t2019\nAllowance for equity funds used during construction\t586\t1001\t2130\t3534\nInvestment and interest income net:\t\t\t\t\nNDT unrealized gains (losses) net\t(33188)\t16690\t(14026)\t1870\nNDT realized gains (losses) net\t24\t(701)\t3387\t3661\nNDT dividends and interest income\t1242\t1788\t6977\t7337\nExpected returns on benefit plans (ASU 2017-07)\t6303\t5913\t24002\t23496\nOther\t20\t17\t(19)\t565\n\t(25599)\t23707\t20321\t36929\nMiscellaneous non-operating income\t2945\t3048\t15166\t12735\nStrategic transaction costs\t(1295)\t0\t(13405)\t0\nMiscellaneous non-operating deductions\t(3149)\t(2357)\t(10738)\t(11594)\nTotal other income (deductions)\t(26512)\t25399\t13474\t41604\n", "q10k_tbl_37": "Period\tTotal Number of Shares Purchased (a)\tAverage Price Paid per Share (Including Commissions)\tTotal Number of Shares Purchased as Part of a Publicly Announced Program\tMaximum Number of Shares that May Yet Be Purchased Under the Plans or Programs\nJanuary 1 to January 31 2020\t12404\t68.24\t0\t393816\nFebruary 1 to February 29 2020\t0\t0\t0\t393816\nMarch 1 to March 31 2020\t0\t0\t0\t393816\n", "q10k_tbl_38": "Exhibit Number\tExhibit\n† 10.01\tForm of Restricted Stock Award Agreement between the Company and Adrian J. Rodriguez Interim Chief Executive Officer General Counsel and Assistant Secretary of the Company dated April 2 2020.\n10.02\tAmendment dated February 12 2020 to the Franchise Agreement between the Company and the City of El Paso dated July 12 2005.\n15\tLetter re Unaudited Interim Financial Information\n31.01\tCertifications pursuant to Section 302 of the Sarbanes-Oxley Act of 2002\n32.01\tCertifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002\n101.INS\tInline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.\n101.SCH\tInline XBRL Taxonomy Extension Schema Linkbase Document\n101.CAL\tInline XBRL Taxonomy Extension Calculation Linkbase Document\n101.DEF\tInline XBRL Taxonomy Extension Definition Linkbase Document\n101.LAB\tInline XBRL Taxonomy Extension Label Linkbase Document\n101.PRE\tInline XBRL Taxonomy Extension Presentation Linkbase Document\n104\tThe cover page from the Company's Quarterly Report on Form 10-Q for the three months ended March 31 2020 has been formatted in Inline XBRL and contained in Exhibit 101.\n†\tManagement contract or compensatory plan or arrangement.\n"}{"bs": "q10k_tbl_4", "is": "q10k_tbl_6", "cf": "q10k_tbl_10"}None
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Item 4. Controls and Procedures
Part II. Other Information
Item 1. Legal Proceedings
Item 1A. Risk Factors
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Item 5. Other Information
Item 6. Exhibits
Exhibits
EX-10.01
eeex100120200331q1.htm
EX-10.02
eeex100220200331q1.htm
EX-15
eeex1520200331q1.htm
EX-31.01
eeex310120200331q1.htm
EX-32.01
eeex320120200331q1.htm
El Paso Electric Earnings 2020-03-31
Balance Sheet
Income Statement
Cash Flow
Assets, Equity
Rev, G Profit, Net Income
Ops, Inv, Fin
Document
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2020
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: 001-14206
El Paso Electric Company
(Exact name of registrant as specified in its charter)
Texas
74-0607870
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer Identification No.)
Stanton Tower
100 North Stanton Street
El Paso,
Texas
79901
(Address of principal executive offices)
(Zip Code)
(915) 543-5711
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading symbol(s)
Name of each exchange on which registered
Common Stock, No Par Value
EE
New York Stock Exchange
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☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large Accelerated Filer
☒
Accelerated Filer
☐
Non-accelerated Filer
☐
Smaller Reporting Company
☐
Emerging Growth Company
☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
As of April 30, 2020, there were 40,787,627 shares of the Company’s common stock outstanding.
DEFINITIONS
The following abbreviations, acronyms or defined terms used in this report are defined below:
Abbreviations, Acronyms or Defined Terms
Terms
A&G
Administrative and general
ADIT
Accumulated Deferred Income Taxes
AEFUDC
Allowance for Equity Funds Used During Construction
AFUDC
Allowance for Funds Used During Construction
ALJ
Administrative Law Judge
Amended REA
Amendment to the REA by the New Mexico Energy Transition Act, effective June 14,
2019
ANPP Participation Agreement
Arizona Nuclear Power Project Participation Agreement dated August 23, 1973, as amended
APS
Arizona Public Service Company
ASU
Accounting Standards Update
CCN
Certificate of Convenience and Necessity
Company
El Paso Electric Company
COVID-19
Coronavirus Disease 2019, the disease caused by the 2019 novel coronavirus (SARS-CoV-2)
DCRF
Distribution Cost Recovery Factor
DOE
U.S. Department of Energy
EECRF
Energy Efficiency Cost Recovery Factor
El Paso
City of El Paso, Texas
EUERF
Efficient Use of Energy Recovery Factor
Exchange Act
The Securities Exchange Act of 1934, as amended
FASB
Financial Accounting Standards Board
FCC
Federal Communications Commission
FERC
Federal Energy Regulatory Commission
FPPCAC
New Mexico Fuel and Purchased Power Cost Adjustment Clause
FTC
Federal Trade Commission
GAAP
U.S. Generally Accepted Accounting Principles
Gorski Action
Gorski v. El Paso Electric Company., et al., Case No. 1:19-cv-07211, in the U.S. District Court for the Southern District of New York
Hearing Examiner
The Hearing Examiner of the NMPRC
HSR Act
Hart-Scott-Rodino Antitrust Improvements Act of 1976
IIF
Infrastructure Investments Fund, an investment vehicle advised by J.P. Morgan Investment Management Inc.
kWh
Kilowatt-hour(s)
LTPPA
Long-Term Purchased Power Agreement
Merger
Merger of Merger Sub with and into the Company with the Company as the surviving corporation pursuant to the Merger Agreement
Merger Agreement
Agreement and Plan of Merger, by and among the Company, Parent and Merger Sub, dated June 1, 2019
Merger Consideration
The right to receive $68.25 in cash per share of common stock, without interest, on and subject to the terms and conditions set forth in the Merger Agreement
Merger Sub
Sun Merger Sub Inc.
MW
Megawatt(s)
MWh
Megawatt-hour(s)
NAV
Net Asset Value
(i)
Abbreviations, Acronyms or Defined Terms
Terms
NDT
The Company's Palo Verde nuclear decommissioning trust funds
Newman
The Company's Newman Power Station
NMPRC
New Mexico Public Regulation Commission
NMPUA
New Mexico Public Utility Act
NMSU
New Mexico State University
NOPR
Notice of Proposed Rulemaking
NRC
U.S. Nuclear Regulatory Commission
O&M
Operations and maintenance
OATT
Open Access Transmission Tariff
Parent
Sun Jupiter Holdings LLC
Palo Verde
Palo Verde Generating Station
Palo Verde Participation
Those utilities that share in power and energy entitlements, and bear certain allocated costs, with respect to Palo Verde pursuant to the ANPP Participation Agreement
PCBs
Pollution Control Bonds
PUCT
Public Utility Commission of Texas
PURA
Texas Public Utility Regulatory Act
RCF
The Company's Revolving Credit Facility
REA
New Mexico Renewable Energy Act
RGRT
Rio Grande Resources Trust II
Rio Grande
The Company's Rio Grande Power Station
Rosenblatt Action
Rosenblatt v. El Paso Electric Company, et al., Case No. 1:19-cv-01367-UNA, in the
U.S. District Court for the District of Delaware
ROU
Right-of-use
RPS
Renewable Portfolio Standard
Rule 551
NMPRC Rule 17.9.551 of the New Mexico Administrative Code
SEC
U.S. Securities and Exchange Commission
Show Cause Proceeding
FERC proceeding in which a company must revise its transmission rates for the TCJA effect or show cause as to why it should not be required to do so
SPS
Southwestern Public Service Company
SPS Appeal No. 1
Southwestern Public Service Co. v. NMPRC, No. S-1-SC-37248, in the New Mexico Supreme Court
SPS Appeal No. 2
Southwestern Public Service Co. v. NMPRC, No. S-1-SC-37308, in the New Mexico Supreme Court
Stein Action
Stein v. El Paso Electric Company., et al., Case No. 1:19-cv-06703, in the U.S. District Court for the Southern District of New York
TCJA
The federal legislation commonly referred to as the Tax Cuts and Jobs Act of 2017
TCRF
Transmission Cost Recover Factor
Texas Fuel Rule
Fuel cost recovery rule of the PUCT
U.S.
United States
2017 PUCT Final Order
PUCT Final Order in Docket No. 46831
2019 DCRF rate filing
DCRF rate filing in PUCT Docket No. 49395
2019 Form 10-K
Annual Report of El Paso Electric Company on Form 10-K for the fiscal year ended December 31, 2019
Nuclear fuel; includes fuel in process of $57,845 and $61,709, respectively
211,336
198,075
Less accumulated amortization
(81,560
)
(71,588
)
Net nuclear fuel
129,776
126,487
Net utility plant
3,255,199
3,227,103
Current assets:
Cash and cash equivalents
57,379
10,818
Accounts receivable, principally trade, net of allowance for doubtful accounts of $1,778 and $1,900, respectively
66,307
79,814
Inventories, at cost
60,429
60,872
Regulatory assets
9,290
9,939
Prepayments and other
15,539
11,203
Total current assets
208,944
172,646
Deferred charges and other assets:
Decommissioning trust funds
294,501
325,998
Regulatory assets
69,640
70,805
Other
17,551
16,648
Total deferred charges and other assets
381,692
413,451
Total assets
$
3,845,835
$
3,813,200
See accompanying notes to financial statements.
1
EL PASO ELECTRIC COMPANY
BALANCE SHEETS (Continued)
March 31, 2020
December 31, 2019
(Unaudited)
CAPITALIZATION AND LIABILITIES
(In thousands except for share data)
Capitalization:
Common stock, stated value $1 per share, 100,000,000 shares authorized, 64,312,516 and 64,332,884 shares issued, and 116,172 and 95,804 restricted shares, respectively
$
64,429
$
64,429
Capital in excess of stated value
322,890
323,367
Retained earnings
1,221,513
1,272,418
Accumulated other comprehensive loss, net of tax
(48,977
)
(48,952
)
1,559,855
1,611,262
Treasury stock, 23,656,061 and 23,696,262 shares, respectively, at cost
(394,044
)
(394,715
)
Common stock equity
1,165,811
1,216,547
Long-term debt, net of current portion
1,341,131
1,340,981
Total capitalization
2,506,942
2,557,528
Current liabilities:
Current maturities of long-term debt
44,979
44,969
Short-term borrowings under the revolving credit facility
240,781
113,801
Accounts payable, principally trade
43,386
65,745
Taxes accrued
27,205
39,315
Interest accrued
18,920
14,196
Regulatory liabilities
12,908
19,961
Other
41,565
38,408
Total current liabilities
429,744
336,395
Deferred credits and other liabilities:
Accumulated deferred income taxes
337,366
348,398
Accrued pension liability
94,378
96,745
Accrued post-retirement benefit liability
23,599
23,081
Asset retirement obligations
112,553
110,105
Regulatory liabilities
298,705
298,466
Other
42,548
42,482
Total deferred credits and other liabilities
909,149
919,277
Commitments and contingencies
Total capitalization and liabilities
$
3,845,835
$
3,813,200
See accompanying notes to financial statements.
2
EL PASO ELECTRIC COMPANY
STATEMENTS OF OPERATIONS
(Unaudited)
(In thousands except for share data)
Three Months Ended
Twelve Months Ended
March 31,
March 31,
2020
2019
2020
2019
Operating revenues
$
158,563
$
174,363
$
846,194
$
902,253
Operating expenses:
Fuel and purchased power
33,624
48,326
161,219
225,247
Operations and maintenance
80,704
80,413
332,848
335,136
Depreciation and amortization
26,466
25,126
103,412
97,694
Taxes other than income taxes
16,071
16,189
73,233
71,682
156,865
170,054
670,712
729,759
Operating income
1,698
4,309
175,482
172,494
Other income (deductions):
Allowance for equity funds used during construction
586
1,001
2,130
3,534
Investment and interest income (losses), net
(25,599
)
23,707
20,321
36,929
Miscellaneous non-operating income
2,945
3,048
15,166
12,735
Strategic transaction costs
(1,295
)
—
(13,405
)
—
Miscellaneous non-operating deductions
(3,149
)
(2,357
)
(10,738
)
(11,594
)
(26,512
)
25,399
13,474
41,604
Interest charges (credits):
Interest on long-term debt and revolving credit facility
18,743
18,989
74,542
76,425
Other interest
4,547
5,233
20,680
18,469
Capitalized interest
(1,378
)
(1,532
)
(5,575
)
(5,801
)
Allowance for borrowed funds used during construction
(885
)
(972
)
(3,928
)
(3,686
)
21,027
21,718
85,719
85,407
Income (loss) before income taxes
(45,841
)
7,990
103,237
128,691
Income tax expense (benefit)
(10,632
)
1,901
21,498
31,321
Net income (loss)
$
(35,209
)
$
6,089
$
81,739
$
97,370
Basic earnings (loss) per share
$
(0.87
)
$
0.15
$
2.01
$
2.39
Diluted earnings (loss) per share
$
(0.87
)
$
0.15
$
2.00
$
2.39
Dividends declared per share of common stock
$
0.385
$
0.360
$
1.540
$
1.440
Weighted average number of shares outstanding
40,653,326
40,582,936
40,623,151
40,543,986
Weighted average number of shares and dilutive potential shares outstanding
40,653,326
40,663,753
40,691,961
40,661,228
See accompanying notes to financial statements.
3
EL PASO ELECTRIC COMPANY
STATEMENTS OF COMPREHENSIVE OPERATIONS
(Unaudited)
(In thousands)
Three Months Ended
Twelve Months Ended
March 31,
March 31,
2020
2019
2020
2019
Net income (loss)
$
(35,209
)
$
6,089
$
81,739
$
97,370
Other comprehensive income (loss):
Unrecognized pension and post-retirement benefit costs:
Net loss arising during period
—
—
(12,110
)
(5,898
)
Reclassification adjustments included in net income for amortization of:
Prior service benefit
(1,651
)
(2,186
)
(8,205
)
(9,427
)
Net loss
1,445
843
4,017
5,655
Net unrealized gains/losses on marketable securities:
Net holding gains arising during period
—
2,471
3,601
1,107
Reclassification adjustments for net (gains) losses included in net income
—
829
(3,061
)
1,756
Net losses on cash flow hedges:
Reclassification adjustment for interest expense included in net income
158
148
615
577
Total other comprehensive income (loss) before income taxes
(48
)
2,105
(15,143
)
(6,230
)
Income tax benefit (expense) related to items of other comprehensive income (loss):
Unrecognized pension and post-retirement benefit costs
53
265
3,655
2,144
Net unrealized gains on marketable securities
—
(665
)
(233
)
(577
)
Losses on cash flow hedges
(30
)
(48
)
(129
)
(143
)
Total income tax benefit (expense)
23
(448
)
3,293
1,424
Other comprehensive income (loss), net of tax
(25
)
1,657
(11,850
)
(4,806
)
Comprehensive income (loss)
$
(35,234
)
$
7,746
$
69,889
$
92,564
See accompanying notes to financial statements.
4
EL PASO ELECTRIC COMPANY
STATEMENTS OF CHANGES IN COMMON STOCK EQUITY
(Unaudited)
(In thousands except for share data)
Common Stock
Capital in
Excess of Stated Value
Retained Earnings
Accumulated
Other
Comprehensive Income (Loss), Net of Tax
Treasury Stock
Common Stock Equity
Shares
Amount
Shares
Amount
Balances at December 31, 2019
64,428,688
$
64,429
$
323,367
$
1,272,418
$
(48,952
)
23,696,262
$
(394,715
)
$
1,216,547
Restricted common stock grants and deferred compensation
(40
)
(20,368
)
339
299
Performance share awards vested
197
(32,119
)
535
732
Stock awards withheld for taxes
(640
)
12,404
(206
)
(846
)
Compensation paid in shares
6
(118
)
3
9
Net loss
(35,209
)
(35,209
)
Other comprehensive loss
(25
)
(25
)
Common stock, dividends declared, $0.385 per share
(15,696
)
(15,696
)
Balances at March 31, 2020
64,428,688
$
64,429
$
322,890
$
1,221,513
$
(48,977
)
23,656,061
$
(394,044
)
$
1,165,811
Common Stock
Capital in
Excess of Stated Value
Retained Earnings
Accumulated
Other
Comprehensive Income (Loss), Net of Tax
Treasury Stock
Common Stock Equity
Shares
Amount
Shares
Amount
Balances at December 31, 2018
65,828,688
$
65,829
$
328,480
$
1,227,471
$
(38,784
)
25,147,567
$
(418,893
)
$
1,164,103
Restricted common stock grants and deferred compensation
(1,328
)
(31,461
)
524
(804
)
Performance share awards vested
1,478
(39,923
)
665
2,143
Stock awards withheld for taxes
(430
)
12,425
(207
)
(637
)
Forfeited restricted common stock
2,566
(43
)
(43
)
Compensation paid in shares
28
(669
)
11
39
Net income
6,089
6,089
Other comprehensive income
1,657
1,657
Common stock, dividends declared, $0.36 per share
(14,658
)
(14,658
)
Balances at March 31, 2019
65,828,688
$
65,829
$
328,228
$
1,218,902
$
(37,127
)
25,090,505
$
(417,943
)
$
1,157,889
See accompanying notes to financial statements.
5
EL PASO ELECTRIC COMPANY
STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)
Three Months Ended
March 31,
2020
2019
Cash flows from operating activities:
Net income (loss)
$
(35,209
)
$
6,089
Adjustments to reconcile net income (loss) to net cash provided by (used for) operating activities:
Depreciation and amortization of electric plant in service
26,466
25,126
Amortization of nuclear fuel
10,739
10,706
Deferred income taxes, net
(10,718
)
1,236
Allowance for equity funds used during construction
(586
)
(1,001
)
Other amortization and accretion
4,937
5,173
Net losses (gains) on decommissioning trust funds
33,164
(15,989
)
Other operating activities
(163
)
349
Change in:
Accounts receivable
9,021
8,352
Inventories
1,718
(2,110
)
Prepayments and other
(4,403
)
(5,519
)
Accounts payable
(22,071
)
(11,021
)
Taxes accrued
(12,110
)
(8,827
)
Interest accrued
4,724
2,971
Net over-collection (under-collection) of fuel revenues
(6,174
)
12,799
Other current liabilities
2,694
1,599
Deferred charges and credits
(3,513
)
(3,513
)
Net cash provided by (used for) operating activities
(1,484
)
26,420
Cash flows from investing activities:
Cash additions to utility property, plant and equipment
(50,897
)
(52,428
)
Cash additions to nuclear fuel
(12,590
)
(9,502
)
Proceeds from insurance
4,591
—
Capitalized interest and AFUDC:
Utility property, plant and equipment
(1,471
)
(1,973
)
Nuclear fuel and other
(1,378
)
(1,532
)
Allowance for equity funds used during construction
586
1,001
Decommissioning trust funds:
Purchases, including funding of $0.5 million and $0.5 million, respectively
(3,073
)
(37,613
)
Sales and maturities
1,406
35,468
Other investing activities
829
(724
)
Net cash used for investing activities
(61,997
)
(67,303
)
Cash flows from financing activities:
Dividends paid
(15,696
)
(14,658
)
Borrowings under the revolving credit facility:
Proceeds
202,095
215,196
Payments
(75,115
)
(61,452
)
Payment on repurchase of pollution control bonds
—
(63,500
)
Other financing activities
(1,242
)
(653
)
Net cash provided by financing activities
110,042
74,933
Net increase in cash, cash equivalents and restricted cash
46,561
34,050
Cash, cash equivalents and restricted cash at beginning of period
10,818
12,900
Cash, cash equivalents and restricted cash at end of period
These condensed financial statements should be read in conjunction with the financial statements and notes thereto in the Annual Report of El Paso Electric Company (the "Company") on Form 10-K for the fiscal year ended December 31, 2019 ("2019 Form 10-K"). Capitalized terms used in this report and not defined herein have the meaning ascribed to such terms in the 2019 Form 10-K. In the opinion of the Company’s management, the accompanying financial statements contain all adjustments necessary to present fairly the financial position of the Company at March 31, 2020 and December 31, 2019; the results of its operations and comprehensive operations for the three and twelve months endedMarch 31, 2020 and 2019; changes in common stock equity for the three months endedMarch 31, 2020 and 2019; and its cash flows for the three months endedMarch 31, 2020 and 2019. The results of operations, comprehensive operations and the changes in common stock equity for the three months endedMarch 31, 2020 and 2019, and the cash flows for the three months endedMarch 31, 2020 and 2019, are not necessarily indicative of the results to be expected for the full calendar year.
Pursuant to the rules and regulations of the United States ("U.S.") Securities and Exchange Commission ("SEC"), certain financial information has been condensed and certain footnote disclosures have been omitted. Such information and disclosures are normally included in financial statements prepared in accordance with U.S. Generally Accepted Accounting Principles ("GAAP").
Coronavirus Disease 2019 ("COVID-19") Impacts. On March 11, 2020, the World Health Organization declared the current COVID-19 outbreak to be a global pandemic, and on March 13, 2020, the U.S. declared a national emergency. In response to these declarations and the rapid spread of COVID-19, federal, state, and local governments have imposed varying degrees of restrictions on business and social activities to contain the spread of COVID-19, including quarantine and “stay-at-home” orders and directives in the Company's service territory. The pandemic and directives have significantly impacted many sectors of the economy, including record levels of unemployment, with businesses, nonprofit organizations, and governmental entities modifying, curtailing or ceasing normal operations. The Company also modified certain business practices to conform to government restrictions and best practices encouraged by the Centers for Disease Control and Prevention, the World Health Organization, and other governmental and regulatory authorities.
While the Company continues to assess the impact of COVID-19 on its business, the Company cannot predict the full impact that COVID-19 or the significant disruption and volatility currently being experienced in the markets will have on its business, cash flows, liquidity, financial condition, and results of operations at this time, due to the numerous uncertainties that exist. The ultimate impact will depend on future developments, including, among others, the ultimate geographic spread of COVID-19, the consequences of governmental and other measures designed to prevent the spread of COVID-19, the development of effective treatments and/or vaccines, the duration of the outbreak, actions taken by governmental authorities, customers, suppliers and other third parties, workforce availability, and the timing and extent to which normal economic and operating conditions resume. An extended slowdown of economic growth in the U.S. could result in lower growth and reduced demand for and usage of electricity in the Company's service territory as facilities continue to close or remain closed. The ability of customers, contractors and suppliers to meet their obligations to the Company, including payment obligations, could also be affected under the current economic conditions.
Agreement and Plan of Merger. On June 1, 2019, the Company entered into an Agreement and Plan of Merger (the "Merger Agreement"), by and among the Company, Sun Jupiter Holdings LLC, a Delaware limited liability company ("Parent"), and Sun Merger Sub Inc., a Texas corporation and wholly owned subsidiary of Parent ("Merger Sub"). Pursuant to the Merger Agreement, on and subject to the terms and conditions set forth therein, Merger Sub will merge with and into the Company (the "Merger"), with the Company continuing as the surviving corporation in the Merger and becoming a wholly owned subsidiary of Parent. Parent and Merger Sub are affiliates of the Infrastructure Investments Fund, an investment vehicle advised by J.P. Morgan Investment Management Inc. ("IIF"). See Part I, Item 1, Financial Statements, Note M of Notes to Financial Statements for a discussion of the Merger.
Use of Estimates. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The Company evaluates its estimates on an on-going basis, including those related to depreciation, unbilled revenue, income taxes, fuel costs, pension and other post-retirement obligations and asset retirement obligations. Actual results could differ from those estimates.
Operating Revenues. The Company accrues revenues for services rendered, including unbilled electric service revenues. The Company recognizes revenue associated with contracts with customers when performance obligations under the terms of the contract with the customer are satisfied. Revenue is measured as the amount of consideration the Company receives in exchange for transferring goods or providing services to the customer. Taxes collected concurrently with revenue producing activities are excluded from revenue. Unbilled revenues are recorded for estimated amounts of energy delivered in the period following the customer's last billing cycle to the end of the reporting period. Unbilled revenues are estimated based on monthly generation volumes and by applying an average revenue/kilowatt-hour ("kWh") to the number of estimated kWhs delivered but not billed. Accounts receivable included accrued unbilled revenues of $18.3 million at March 31, 2020 and $25.6 million at December 31, 2019.
The Company’s Texas retail customers are billed under base rates and a fixed fuel factor approved by the Public Utility Commission of Texas ("PUCT"). The Company’s New Mexico retail customers are billed under base rates and a fuel adjustment clause that is adjusted monthly, as approved by the New Mexico Public Regulation Commission ("NMPRC"). The Company's Federal Energy Regulatory Commission ("FERC") sales for resale customers are billed under formula base rates and fuel factors and a fuel adjustment clause that is adjusted monthly. The Company’s recovery of fuel and purchased power expenses is subject to periodic reconciliations of actual fuel and purchased power expenses incurred to actual fuel revenues collected. The difference between fuel and purchased power expenses incurred and fuel revenues charged to customers is reflected as over/under-collection of fuel revenues, which is included in regulatory liabilities/assets - current in the balance sheets. See Part I, Item 1, Financial Statements, Note D of Notes to Financial Statements for further discussion.
Credit Losses. On January 1, 2020, the Company adopted Accounting Standards Update ("ASU") 2016-13, Financial Instruments - Credit Losses (Topic 326). There was no cumulative effect adjustment at the initial application of the new standard. In addition, comparative information has not been restated and continues to be reported under the accounting standards in effect for those periods. The Company expects the ongoing impact of the new standard to be immaterial to its financial position and results of operations and no significant changes in the Company's business processes and internal controls were necessary upon adoption of the new standard. The Company is exposed to credit losses as a result of recording customer receivables related to retail and wholesale electric sales and the provision of transmission services to customers. The allowance for doubtful accounts represents the Company’s estimate of existing accounts receivable that will ultimately be uncollectible. The allowance is calculated by applying estimated write-off factors to various classes of outstanding receivables. The write-off factors used to estimate uncollectible accounts are based upon consideration of both historical collections experience and management’s best estimate of future collections success given the existing collections environment and qualitative forecasts of future conditions. During the first quarter of 2020, the Company performed its assessment, which included consideration of the COVID-19 pandemic. Based on that assessment, the Company recorded a charge for anticipated uncollectible customer accounts. Additions, deductions and balances for the allowance for doubtful accounts for the three months ended March 31, 2020 and March 31, 2019 are as follows (in thousands):
Three Months Ended
March 31,
2020
2019
Balance at beginning of period
$
1,900
$
2,070
Additions:
Increase to provision
676
217
Recovery of previous write-offs
340
342
Uncollectible receivables written off
(1,138
)
(1,115
)
Balance at end of period
$
1,778
$
1,514
Leases. The Company determines if an arrangement contains a lease and the classification of that lease at inception. Operating lease right-of-use ("ROU") assets represent the Company’s right to use an underlying asset for the lease term and operating lease liabilities represent the obligation to make payments under the lease. ROU assets and lease liabilities are recognized at the lease commencement date based on the estimated present value of the minimum lease payments over the lease term. In determining lease terms, the Company considers any options to extend or terminate the lease that are reasonably certain of being exercised. As the Company’s leases do not include an implicit rate, the Company uses an estimated incremental borrowing rate, at lease commencement, to determine the present value of the future lease payments. In calculating the incremental borrowing rate, the Company takes into consideration recent debt issuances and other data for instruments with similar characteristics. The Company’s lease agreements do not contain residual value guarantees or restrictive covenants. For leases with lease and non-lease components,
the Company has elected to account for the consideration as a single lease component. The Company has also elected not to record leases with a term of 12 months or less on the balance sheets. The operating lease ROU assets are included as part of electric plant in service and lease liabilities are included as part of current and non-current liabilities in the Company’s balance sheets.
Depreciation. The Company routinely evaluates the depreciable service lives, cost of removal and salvage values of its property, plant and equipment. Depreciation is provided on a straight-line basis over the estimated remaining lives of the assets (ranging in average from 5 to 48 years). When property subject to composite depreciation is retired or otherwise disposed of in the normal course of business, its cost together with the cost of removal, less salvage is charged to accumulated depreciation. For other property dispositions, the applicable cost and accumulated depreciation is removed from the balance sheet accounts and a gain or loss is recognized, if applicable.
New Accounting Standards Adopted in 2020
In June 2016, the Financial Accounting Standards Board ("FASB") issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326). ASU 2016-13 changes how companies measure and recognize credit impairment for many financial assets. The new expected credit loss model requires companies to immediately recognize an estimate of credit losses expected to occur over the remaining life of the financial assets that are in the scope of the standard. ASU 2016-13 is required for reporting periods beginning after December 15, 2019. ASU 2016-13 was applied in a modified retrospective approach through a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is implemented. The Company adopted ASU 2016-13 on January 1, 2020. As part of its implementation process, the Company evaluated the impact of the new standard, which included evaluating the impact of (i) ASU 2019-04, Codification Improvements to Topic 326, Financial Instruments - Credit Losses; Topic 815, Derivatives and Hedging; and Topic 825, Financial Instruments and (ii) ASU 2019-05, Financial Instruments - Credit Losses (Topic 326): Targeted Transition Relief. The adoption of this standard did not have a material impact or require a cumulative effect adjustment to retained earnings. The Company anticipates the ongoing impact of ASU 2016-13 will be immaterial to the Company’s financial position, results of operations, and cash flows.
New Accounting Standards to be Adopted in the Future
In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740), as part of its initiative to reduce complexity in accounting standards. ASU 2019-12 amends the accounting for income taxes by removing certain exceptions to the general principles in Topic 740. The amendments also improve consistent application of and simplify GAAP for other areas of Topic 740 by clarifying and amending existing guidance. ASU 2019-12 will be effective for fiscal years and interim periods within those fiscal years beginning after December 15, 2020. Early adoption is permitted, including adoption in any interim periods for reporting periods for which financial statements have not been issued. The Company is currently evaluating the future impact of ASU 2019-12.