Edgar Filing: PNM RESOURCES INC

f11k_062308.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

______________________

FORM 11-K

ANNUAL REPORT PURSUANT TO SECTION 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

[ X ] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES

EXCHANGE ACT OF 1934 [NO FEE REQUIRED].

For the fiscal year ended December 31, 2007

[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES

EXCHANGE ACT OF 1934 [NO FEE REQUIRED].

For the transition period from ________ to _______

Commission File Number		Name of Registrant, State of Incorporation, Address and Telephone Number		I.R.S. Employer Identification No.
001-32462		PNM Resources, Inc. (A New Mexico Corporation) Alvarado Square Albuquerque, New Mexico 87158 (505) 241-2700		85-0468296

PNM RESOURCES, INC.

RETIREMENT SAVINGS PLAN

(Full title of the plan)

PNM Resources, Inc.

(Name of issuer)

Alvarado Square

Albuquerque, New Mexico 87158

(Address of issuer’s principal executive office)

PNM RESOURCES, INC. RETIREMENT SAVINGS PLAN

Table of Contents

	Page
Report of Independent Registered Public Accounting Firm	2
Report of Independent Registered Public Accounting Firm	3
Statements of net assets available for benefits as of December 31, 2007 and 2006	4
Statement of changes in net assets available for benefits
for the year ended December 31, 2007	5
Notes to financial statements	6
Supplemental schedules:
Schedule I: Schedule H, Line 4(i) – Schedule of Assets (Held At End of Year) -
December 31, 2007	12
Schedule II: Schedule H, Line 4(j) – Schedule of Reportable Transactions
for the Year Ended December 31, 2007	13
Exhibit Index	14
Signature	15

NOTE: The accompanying financial statements have been prepared in part for the purpose of filing with the Department of Labor's Form 5500. Supplemental schedules required by 29 CFR 2520.103-10 of the Department of Labor's Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974, other than the schedules listed above, are omitted because of the absence of the conditions under which they are required.

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Plan Administrator and Participants of PNM Resources, Inc. Retirement Savings Plan

We have audited the accompanying statement of net assets available for benefits of the PNM Resources, Inc. Retirement Savings Plan (the “Plan”) as of December 31, 2007 and the related statement of changes in net assets available for benefits for the year ended December 31, 2007. These financial statements are the responsibility of the Plan’s management. Our responsibility is to express an opinion on these financial statements based on our audit.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the net assets available for benefits of the Plan as of December 31, 2007, and the related statement of changes in net assets available for benefits for the year ended December 31, 2007 in conformity with U.S. generally accepted accounting principles.

Our audit was performed for the purpose of forming an opinion on the basic 2007 financial statements taken as a whole. The supplemental schedules of assets held (at end of year) and schedule of reportable transactions are presented for the purpose of additional analysis and are not a required part of the basic 2007 financial statements but are supplementary information required by the Department of Labor’s Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. These supplemental schedules are the responsibility of the Plan’s management. These supplemental schedules have been subjected to the auditing procedures applied in the audit of the basic 2007 financial statements and, in our opinion, are fairly stated in all material respects in relation to the basic 2007 financial statements taken as a whole.

/s/ GRANT THORNTON LLP

Albuquerque, New Mexico

June 17, 2008

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Plan Administrator and Participants of

PNM Resources, Inc. Retirement Savings Plan:

We have audited the accompanying statement of net assets available for benefits of the PNM Resources, Inc. Retirement Savings Plan (the "Plan") as of December 31, 2006. This financial statement is the responsibility of the Plan's management. Our responsibility is to express an opinion on this financial statement based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statement is free of material misstatement. The Plan is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Plan's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statement, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the financial statement referred to above presents fairly, in all material respects, the net assets available for benefits of the Plan as of December 31, 2006 in conformity with accounting principles generally accepted in the United States of America.

In 2006, the Plan changed its method of accounting for investments in collective funds which hold investment contracts due to the adoption of Financial Accounting Standards Board Staff Position, FSP AAG INV-1 and SOP 94-4-1, Reporting of Fully Benefit-Responsive Contracts Held by Certain Investment Companies Subject to the AICPA Investment Company Guide and Defined-Contribution Health and Welfare and Pension Plans.

/s/ DELOITTE & TOUCHE LLP

Dallas, Texas

June 26, 2007

PNM Resources, Inc.

Retirement Savings Plan

STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS

As of December 31, 2007 and 2006

	2007			2006

Investments, at fair value:
Shares of registered investment companies	$	435,503,482		$	397,557,620
Shares of common/collective trusts		21,775,987			21,619,429
Participant loans		11,111,579			10,282,649
PNM Resources, Inc. Common Stock Fund		7,621,490			10,831,711

Total investments		476,012,538			440,291,409

Receivables:
Employer contributions		560,957			420,101
Participant contributions		30			165
Total receivables		560,987			420,266

Total assets		476,573,525			440,711,675

Net assets available for benefits at fair value		476,573,525			440,711,675

Adjustment from fair value to contract value for
benefit-responsive investment contracts		(165,063	)		208,036

Net assets available for benefits	$	476,408,462		$	440,919,711

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

PNM Resources, Inc.

Retirement Savings Plan

STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS

Year Ended December 31, 2007

Additions to net assets:
Investment income:
Interest and dividend income	$	28,224,768
Net appreciation in fair value of investments		1,388,217

Total income		29,612,985

Contributions:
Participants' contributions		24,416,743
Employer's contributions		21,971,051
Other additions		6,707

Total contributions		46,394,501

Total additions		76,007,486

Deductions from net assets:
Benefits paid to participants		37,512,741
Administrative expenses		35,099

Total deductions		37,547,840

Net increase in net assets available for benefits		38,459,646

Assets transferred out to EnergyCo Plan (See Note 1)		2,970,895

Net assets available for benefits, beginning of year		440,919,711

Net assets available for benefits, end of year	$	476,408,462

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

PNM Resources, Inc.

Retirement Savings Plan

NOTES TO FINANCIAL STATEMENTS

As of December 31, 2007 and December 31, 2006, and for the Year Ended December 31, 2007

NOTE 1 - PLAN DESCRIPTION

The following description of the PNM Resources, Inc. (“PNMR” or the “Company”) Retirement Savings Plan (the “Plan”) is provided for general information purposes only. More complete information regarding the Plan’s provisions may be found in the Plan document.

General

The Plan is a defined contribution plan sponsored by the Company and covering all employees of the Company and adopting affiliates who meet the eligibility requirements as defined by the Plan. The Plan is subject to the provisions of the Employee Retirement Income Security Act of 1974 (“ERISA”). The Plan is administered by the PNMR Benefits Governance Committee (the “Committee”) and the PNMR Corporate Investment Committee has the authority regarding investment oversight for the Plan. The PNMR Services Company Benefits Department also has responsibility for certain aspects of Plan administration.

Eligibility

Employees of the Company and its participating affiliates may participate in the before-tax contributions portion of the Plan as of the first payroll period after the employee completes and submits the enrollment materials. An employee becomes eligible to participate in the Company contributions portion of the Plan as of the first day of the payroll period after the employee completes three months of continuous service with the Company or its participating affiliates.

Employees of the Company and its participating affiliates who are hired on or after January 1, 2006, and who do not voluntarily elect to enroll in the before-tax contributions portion of the Plan will be automatically enrolled in the before-tax contributions portion of the Plan on the first day of the first payroll period after the employee has received notice of automatic enrollment and been given a reasonable period in which to make an election. If an employee hired on or after January 1, 2006 does not want to be automatically enrolled in the before-tax contributions portion of the plan, the employee must affirmatively elect not to participate.

Contributions and Vesting

Eligible employees may contribute between 1% and 100% of compensation as defined by the Plan, limited by requirements of the Internal Revenue Code (“IRC”). For 2007, the maximum allowable before-tax contribution was $15,500. The Plan also allows participants attaining the age of 50 or older by the end of the calendar year to make catch-up contributions in accordance with Section 414(v) of the IRC. The maximum catch-up contribution for 2007 was $5,000.

If an employee is automatically enrolled in the Plan, the Company and its participating affiliates will automatically withhold 3% of the participant’s compensation each payroll period and contribute that amount on a before-tax basis to the participant’s account in the Plan. Effective June 2006, each participant's before-tax contributions will be automatically increased by 1% on the first pay date each June until the participant reaches the greater of (1) 100% of available eligible earnings or (2) the maximum amount of before-tax contributions permitted by the IRC, unless a participant affirmatively elects to not have the participant’s contributions increased.

PNM Resources, Inc.

Retirement Savings Plan

NOTES TO FINANCIAL STATEMENTS (continued)

As of December 31, 2007 and December 31, 2006, and for the Year Ended December 31, 2007

NOTE 1 - PLAN DESCRIPTION (continued)

The Company provides a matching contribution of 75% of the participant’s contributions up to 6% of the participant’s eligible compensation (maximum Company contribution of 4.5%). The Company also makes a contribution based on the participant’s age as follows:

Under 40 years of age	3%
40 - 44 years of age	5%
45 - 49 years of age	6%
50 - 54 years of age	8%
55 years of age or older	10%

The retirement benefit provided by this Plan is dependent upon the contributions made by the employee, the Company match, the Company’s age based contribution described in the table and the rate of return on the investments. Should an employee not participate in the matching contributions, a retirement benefit will be derived exclusively from the age based contribution made by the Company. Should an employee take full advantage of the matching portions by contributing 6%, a retirement contribution ranging from 13.5% to 20.5% can be accrued each year along with any investment gain or loss.

Participants are fully vested in their contributions and earnings (losses) thereon. In addition, participants are vested in the Company’s contributions to the participant’s Plan accounts as soon as they are made. There were no forfeitures during the Plan year.

Benefits

Upon termination of service for any reason, a participant may elect to receive benefits via a distribution in a lump sum, take installment distributions not to exceed a period longer than his or her life expectancy, direct a rollover of the account balance to another qualified plan or individual retirement account or leave the account in the Plan if the balance is $1,000 or greater.

Participant Accounts

Individual accounts are maintained for each Plan participant to reflect the participant’s contribution, the Company’s contribution and the participant’s share of the Plan’s income and expenses. Allocations are based on participant account balances, as defined in the Plan document. The benefit to which a participant is entitled is the benefit that can be provided from the participant’s vested account.

Investment Options

Participants are able to allocate their contributions among various investment options.

PNM Resources, Inc.

Retirement Savings Plan

NOTES TO FINANCIAL STATEMENTS (continued)

As of December 31, 2007 and December 31, 2006, and for the Year Ended December 31, 2007

NOTE 1 - PLAN DESCRIPTION (continued)

Participant Loans

Participants may borrow from their fund accounts a minimum of $1,000 up to a maximum aggregate equal to the lesser of $50,000 or 50% of their account balance. Amortization periods may not exceed five years. Loans for the purchase of a primary residence may be repaid over a longer period of time, as determined by the Committee. All loans shall be repaid with a substantially level amortization of both principal and interest on a schedule prescribed by the Committee with payments made at least quarterly. Any loan is secured by 50% of the balance in the participant’s account and bears interest at a rate commensurate with the interest rates charged by persons in the business of lending money for loans which would be made under similar circumstances, as determined by the Committee. Interest rates on outstanding loans at December 31, 2007 range from 5% to 10.75% and have maturity dates that range from January 2006 to December 2016.

Transfers

In early 2007, PNMR and ECJV Holdings, LLC (“ECJV”), a wholly owned subsidiary of Cascade Investment, L.L.C., formed EnergyCo, LLC (“EnergyCo”). PNMR and ECJV each have a 50 percent ownership interest in EnergyCo, a limited liability company. A new defined contribution plan was established by EnergyCo to provide benefits for employees of EnergyCo, including employees transferred from the Company. Therefore, during 2007, plan assets related to these transferred employees were transferred to the new defined contribution plan at EnergyCo in the amount of $2,970,895, which is included on the accompanying statement of changes in net assets.

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America.

Income Recognition

Interest income is recorded as earned on the accrual basis. Dividend income is recorded on the exdividend date. Capital gain distributions are included in dividend income.

Investment Valuation

Investments of the Plan are stated at fair value. Investments in registered investment companies are valued at quoted market prices, which represent the net asset value of shares held by the Plan at year-end. Units in the Retirement Savings Trust are valued at net asset value at year-end. The Company stock fund is valued at its year-end unit closing price (comprised of year-end market price plus uninvested cash position). Participant loans are valued at cost, which approximates fair value. Purchases and sales are reflected on a trade-date basis.

The common collective trust fund holds underlying investments in investment contracts and is valued based on the fair value of the contracts and is then adjusted by the issuer to contract value. Participants may ordinarily direct the withdrawal or transfer of all or a portion of their investment at contract value. Contract value represents contributions made to the fund, plus earnings, less participant withdrawals.

Participants do not have a beneficial ownership in specific underlying securities in the fund, but have an interest therein represented by units valued as of the last business day of the period.

PNM Resources, Inc.

Retirement Savings Plan

NOTES TO FINANCIAL STATEMENTS (continued)

As of December 31, 2007 and December 31, 2006, and for the Year Ended December 31, 2007

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Risks and Uncertainties

The Plan invests in various investment securities. Investments are exposed to various risks such as interest rate, market and credit risks. Due to the level of risk associated with certain investments and the level of uncertainty related to changes in the value of investments, it is at least reasonably possible that changes in risks in the near term could materially affect the amounts reported in the statements of net assets available for benefits and the statements of changes in net assets available for benefits.

Administrative Expenses

The Company pays substantially all administrative expenses of the Plan, except for the administrative costs of mutual funds and loan processing fees.

Payment of Benefits

Benefits are recorded when paid.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities and changes therein, and disclosure of contingent assets and liabilities at the date of the financial statements. Actual results could differ from those estimates.

Fully Benefit-Responsive Investment Contracts

As described in Financial Accounting Standards Board Staff Position FSP AAG INV-1 and SOP 94-4-1, Reporting of Fully Benefit-Responsive Investment Contracts Held by Certain Investment Companies Subject to AICPA Investment Company Guide and Defined-Contribution Health and Welfare and Pension Plans (the “FSP”), investment contracts held by a defined-contribution plan are required to be reported at fair value. However, contract value is the relevant measurement attribute for that portion of the net assets available for benefits of a defined-contribution plan attributable to direct or indirect investments in fully benefit-responsive investment contracts because contract value is the amount participants would receive if they were to initiate permitted transactions under the terms of the Plan. As required by the FSP, the Statement of Net Assets Available for Benefits presents the investment contracts at fair value and an adjustment to contract value. The Statement of Changes in Net Assets Available for Benefits is prepared on a contract value basis.

PNM Resources, Inc.

Retirement Savings Plan

NOTES TO FINANCIAL STATEMENTS (continued)

As of December 31, 2007 and December 31, 2006, and for the Year Ended December 31, 2007

NOTE 3 - INVESTMENTS

The fair value of individual investments as of December 31 that represent five percent or more of the Plan’s net assets at the respective year-end dates are as follows:

	2007			2006
Vanguard PRIMECAP Fund	$	64,040,445		$	60,941,789
Vanguard Wellington Fund		63,174,135			60,420,760
Vanguard Prime Money Market Fund		57,227,250			51,225,990
Vanguard 500 Index Fund		52,332,662			52,600,397
Vanguard Windsor II Fund		44,206,493			45,279,613
American Funds EuroPacific R5		34,422,980			28,256,614
PIMCO Total Return Fund		25,299,474			22,302,151
Vanguard Target Retirement 2015		24,334,735			17,414,446

During 2007, the Plan’s investments appreciated in fair value as follows:

Registered investment companies	$	4,720,733
PNM Resources, Inc. Common Stock Fund		(3,332,516	)

	$	1,388,217

The net appreciation in fair value of investments includes both realized gains (losses) and unrealized appreciation (depreciation).

NOTE 4 - TAX STATUS

The Internal Revenue Service (“IRS”) has determined and informed the Company by a letter dated April 19, 2004, that the Plan and the related trust are designed in accordance with applicable sections of the IRC. Although the Plan has been amended since receiving the Determination Letter, the Plan Administrator believes that the Plan is designed and is currently being operated in compliance with the applicable requirements of the IRC. In January 2007, the Company applied for a new Determination Letter. The IRS, by letter dated February 9, 2007, acknowledged the Company’s application, which remains pending.

NOTE 5 - PARTY-IN-INTEREST

The Plan presently holds shares of the Company’s stock. Participants are allowed to invest their accounts in the PNMR Common Stock Fund. In addition, the Plan invests in shares of mutual funds managed by an affiliate of Vanguard Fiduciary Trust Company (“VFTC”). VFTC acts as the Trustee for only those investments as defined by the Plan. Transactions in these investments qualify as party-in-interest transactions which are exempt from the prohibited transaction rules.

NOTE 6 - PLAN TERMINATION

Although it has not expressed any interest to do so, the Company has the right under the Plan to terminate the Plan subject to the provisions of ERISA. In the event of Plan termination, participants will become 100% vested in their account balances remaining after the final allocation of expenses and fund profits or losses.

PNM Resources, Inc.

Retirement Savings Plan

NOTES TO FINANCIAL STATEMENTS (continued)

As of December 31, 2007 and December 31, 2006, and for the Year Ended December 31, 2007

NOTE 7 - RECONCILIATION OF FINANCIAL STATEMENTS TO FORM 5500

The following is a reconciliation of net assets available for benefits per the financial statements to the amounts reflected in the Form 5500 as of December 31:

	2007		2006

Net assets available for benefits per the financial statements	$	476,408,462	$	440,919,711
Adjustment from contract value for fully benefit-responsive investment contracts		165,063		(208,036	)

Net assets available for benefits per the Form 5500	$	476,573,525	$	440,711,675

The following is a reconciliation of the net increase in assets before transfers-in per statements to the amounts reflected in the Form 5500 as of December 31, 2007:

	2007

Net increase in assets after transfers out per the financial statements	$	35,488,751
Adjustment from contract value to fair value for fully benefit-responsive investment contracts		373,099

Net increase in assets after transfers out per Form 5500	$	35,861,850

NOTE 8 - SUBSEQUENT EVENT

The Plan was amended effective April 1, 2008 to include a Roth 401(k) feature available to all participants. The Roth 401(k) vehicle was introduced as an additional deferral source for employees to diversify their retirement income from a tax perspective.

******

Schedule I

PNM Resources, Inc.

Retirement Savings Plan

EIN 85-0468296, Plan No. 005

SCHEDULE H, LINE 4(i) - SCHEDULE OF ASSETS (HELD AT END OF YEAR)

December 31, 2007

Identity of Issue				Description of Investment	Cost	Current Value

	Vanguard Group:
*		Vanguard PRIME CAP Fund		Registered investment company	**	$ 64,040,445
*		Vanguard Wellington Fund		Registered investment company	**	63,174,135
*		Vanguard Prime Money Market Fund		Registered investment company	**	57,277,250
*		Vanguard 500 Index Fund		Registered investment company	**	52,332,662
*		Vanguard Windsor II Fund		Registered investment company	**	44,206,493
*		Vanguard Retirement Savings Trust		Common/Collective Trust	**	21,775,987
*		Vanguard Explorer Fund		Registered investment company	**	18,940,574
*		Vanguard Target Retirement 2005		Registered investment company	**	5,175,380
*		Vanguard Target Retirement 2015		Registered investment company	**	24,334,735
*		Vanguard Target retirement 2025		Registered investment company	**	18,142,744
*		Vanguard Target Retirement 2035		Registered investment company	**	9,390,310
*		Vanguard Target Retirement 2045		Registered investment company	**	7,602,976
*		Vanguard Target Retirement Income		Registered investment company	**	3,875,265
*	American Funds EuroPacific R5			Registered investment company	**	34,422,980
*	PIMCO Total Return Fund			Registered investment company	**	25,299,474
*	RS Partners			Registered investment company	**	7,288,059
*	Participant Loans			5% - 10.75%, maturing	**	11,111,579
				1/2007 to 12/2016

*	PNM Resources, Inc. Common Stock Fund			Company stock fund	**	7,621,490

			Total investments			$ 476,012,538

*		Represents a party-in-interest.
* *		Participant-directed investment, cost not required.

Schedule II

PNM Resources, Inc. Retirement Savings Plan

EIN 85-0468296, Plan No. 005

LINE 4(j) - SCHEDULE OF REPORTABLE TRANSACTIONS

Year Ended December 31, 2007


						Current Value
						of Asset
Identity of			Purchase	Selling	Historical	on Transaction	Historical
Party Involved		Description of Asset	Price	Price	Cost	Date	Gain

*	Vanguard	Vanguard PRIME CAP Fund	$ 12,849,723	$ -	$ -	$ 12,849,723	$ -
*	Vanguard	Vanguard PRIME CAP Fund	-	12,685,018	11,111,841	12,685,018	1,573,177
*	Vanguard	Vanguard Prime Money Mkt Fund	25,954,702	-	-	25,954,702	-
*	Vanguard	Vanguard Prime Money Mkt Fund	-	19,933,761	19,933,761	19,933,761	-
*	Vanguard	Vanguard Wellington Inv	13,125,252	-	-	13,125,252	-
*	Vanguard	Vanguard Wellington Inv	-	10,760,113	9,829,065	10,760,113	931,048

*	Represents a party-in-interest.

EXHIBIT INDEX

Exhibits Number:


	23.1	Consent of Grant Thornton LLP.
	23.2	Consent of Deloitte & Touche LLP.

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the Committee has duly caused this annual report to be signed by the undersigned hereunto duly authorized.

		PNM RESOURCES, INC.
		Retirement Savings Plan
		(Name of Plan)


Date: June 23, 2008	By:	/s/ Alice Cobb
		Alice Cobb
		Committee Chairperson, PNM Resources, Inc.
		Benefits Governance Committee