P N M R E S O U R C E S • 2 0 0 3 A n n u a l R e p o r t t o S h a r e h o l d e r s 57 Corporate and Other NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2003, 2002, 2001 56 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2003, 2002, 2001 Summarized financial information by business segment for the year ended December 31, 2002 is as follows (In thousands): The Holding Company performs substantially all of the corporate activities of PNM. These activities are billed to PNM on a cost basis to the extent they are for the corporate management of PNM and are allocated to the operating segments. The Holding Company’s wholly-owned subsidiary, Avistar, was formed in August 1999 as a New Mexico corporation and is currently engaged in certain unregulated and non-utility businesses. In January 2002, Avistar was dividended by PNM to the Holding Company pursuant to an order from the PRC. Summarized financial information by business segment for the year ended December 31, 2003 is as follows (In thousands): (a) Reflects EITF 03-11 impact, under which wholesale revenues and the associated cost of energy of $15.0 million are reclassified to a net margin basis in accordance with GAAP. (b) Includes $9.5 million write-off of transition costs, net of tax benefit of $7.2 million, due to the repeal of deregulation in New Mexico, and the $10.0 million write- off related to refinancing of long-term debt, net of tax benefit of $6.6 million, reduced consolidated net earnings.  Summarized financial information by business segment for the year ended December 31, 2001 is as follows (In thousands):  (a) Reflects EITF 02-3 impact, under which wholesale revenues and the associated cost of energy of $74.0 million are reclassified to a net margin basis in accordance with GAAP. (b) Includes re-alignment costs due to the negative impact on the wholesale market uncertainty of $5.3 million, net of tax benefit of $3.5 million, and severance costs  due to a workforce reduction of $0.9 million, net of tax benefit of $0.6 , which reduced consolidated operating income and net earnings. (c) The Company recognized a $1.5 million gain, net of tax expense of $1.0 million, from the reversal of a reserve due to the successful resolution of litigation stemming from the terminated Western Resources transaction, which was offset by a $2.7 write-off, net of tax benefit of $1.9 million, of a transmission line project. UTILITY ELECTRIC GAS TRANSMISSION ELIMINATIONS TOTAL 2003: Operating revenues: External customers $ 543,850)% $ 358,267)% $ 19,453)% $ –)% $ 921,570)% Intersegment revenues –)% –)% 32,499)% (32,499)% –)% Depreciation and amortization 63,428)% 22,186)% 10,104)% –)% 95,718)% Interest income 28,703)% 2,437)% (34)% –)% 31,106)% Interest charges 24,737)% 13,406)% 6,566)% –)% 44,709)% Total income tax expense (benefit) 34,649)% (84)% 3,233)% –)% 37,798)% Operating income 56,587)% 11,451)% 11,417)% –)% 79,455)% Segment net income (loss) 51,435)% (128)% 4,933)% –)% 56,240)% TOTAL ASSETS 1,429,291)% 509,111)% 275,301)% –)% 2,213,703)% GROSS PROPERTY ADDITIONS 74,922)% 45,616)% 33,901)% –)% 154,439)% CORPORATE WHOLESALE AND OTHER CONSOLIDATED 2003: Operating revenues: External customers $ 548,847)% $ (14,703)(a)) $ 1,455,714)% Intersegment revenues 1,535)% (1,535)(a)) –)% Depreciation and amortization 14,230)% 5,701)(a)) 115,649)% Interest income 5,493)% 3,922)(a)) 40,521)% Interest charges 15,562)% 5,918)(a)) 66,189)% Total income tax expense (benefit) 12,725)% (22,634)(b)) 27,889)% Operating income 30,997)% 8,140)(a)) 118,592)% Segment net income (loss) 19,416)% (17,104)(b)) 58,552)% TOTAL ASSETS 425,372)% 739,554)(a)) 3,378,629)% GROSS PROPERTY ADDITIONS 14,620)% 8,145)(a)) 177,204)% UTILITY ELECTRIC GAS TRANSMISSION ELIMINATIONS TOTAL 2002: Operating revenues: External customers $ 546,939 $ 277,406 $ 23,150 $ – $ 847,495 Intersegment revenues – – 31,950 (31,950) – Depreciation and amortization 59,654 20,673 8,741 – 89,068 Interest income 30,790 436 29 – 31,255 Interest charges 27,509 13,546 5,988 – 47,043 Total income tax expense (benefit) 37,482 3,755 4,475 – 45,712 Operating income 68,370 17,672 13,159 – 99,201 Segment net income 57,194 5,731 6,827 – 69,752 TOTAL ASSETS 1,442,104 563,395 224,637 – 2,230,136 GROSS PROPERTY ADDITIONS 134,483 46,676 15,472 – 196,631 CORPORATE WHOLESALE AND OTHER CONSOLIDATED 2002: Operating revenues: External customers $ 343,780) $ (72,581)(a)b, $ 1,118,694 Intersegment revenues –) –(b,c) – Depreciation and amortization 8,808) 4,533(b,c) 102,409 Interest income 4,946) 8,753(b,c) 44,954 Interest charges 8,348) 6,021(b,c) 61,412 Total income tax expense (benefit) (1,613) (11,068)(b,c) 33,031 Operating income (loss) 3,398) (825)(b)b, 101,774 Segment net income (loss) (2,461) (3,605)(c)b, 63,686 TOTAL ASSETS 380,436) 636,655(b,c) 3,247,227 GROSS PROPERTY ADDITIONS 23,190) 20,404(b,c) 240,225 UTILITY ELECTRIC GAS TRANSMISSION ELIMINATIONS TOTAL 2001: Operating revenues: External customers $ 532,673)% $ 371,265)% $ 26,553)% $ –)% $ 930,491)% Intersegment revenues –)% –)% 31,273)% (31,273)% –)% Depreciation and amortization 59,352)% 20,362)% 7,328)% –)% 87,042)% Interest income 33,751)% 596)% 24)% –)% 34,371)% Interest charges 31,828)% 11,807)% 4,582)% –)% 48,217)% Total income tax expense (benefit) 24,986)% 1,605)% 4,475)% –)% 31,066)% Operating income 52,866)% 14,657)% 12,886)% –)% 80,409)% Segment net income 38,124)% 2,451)% 6,828)% –)% 47,403)% TOTAL ASSETS 1,751,481)% 524,130)% 209,504)% –)% 2,485,115)% GROSS PROPERTY ADDITIONS 159,223)% 48,978)% 18,067)% –)% 226,268)%