Sale of First Choice

PNMR has previously reported that it was evaluating strategic alternatives with respect to First Choice. On September 23, 2011, PNMR entered into an agreement for the sale of First Choice to Direct LP, Inc. for $270.0 million, subject to adjustment to reflect the actual amounts of certain components of working capital at closing, pursuant to a Stock Purchase Agreement dated September 23, 2011. Closing of the transaction was subject to customary conditions, including an antitrust review under the Hart-Scott-Rodino Antitrust Improvements Act, which was received on October 7, 2011. Closing occurred on November 1, 2011, with PNMR receiving $329.3 million, which includes an estimate of the components of working capital discussed above. For accounting purposes, the sale was effective as of the close of business on October 31, 2011. Such amount is subject to adjustment based on the actual amounts of the components of working capital at October 31, 2011. PNMR expects to use the net proceeds from the sale of First Choice to repurchase, depending on market conditions, certain of PNMR's outstanding debt and equity (see Note 7) and for other corporate purposes, including repayment of borrowings under the PNMR Revolving Credit Facility. PNMR Services Company will continue to provide certain services at cost to First Choice for a transitional period of up to nine months following closing.

First Choice is reflected as being "held-for-sale" in PNMR's September 30, 2011 Condensed Consolidated Balance Sheet. Because PNMR will continue to have direct cash flows resulting from transmission and distribution services provided by TNMP to First Choice, First Choice is not reflected as discontinued operations. A summary of the major assets and liabilities reflected

as "held-for-sale" in PNMR's September 30, 2011 Condensed Consolidated Balance Sheet. The amounts included in the December 31, 2010 Condensed Consolidated Balance Sheet are also presented for comparative purposes although such amounts are not presented separately on the Condensed Consolidated Balance Sheet.



	September 30,		December 31,
	2011		2010
	(In thousands)
Current assets of business unit held for sale
Cash and cash equivalents	$	3,462	$	3,888
Accounts receivable, net of allowance for uncollectible accounts of $11,009 and $9,694	49,749		25,719
Unbilled revenues	38,527		26,666
Derivative instruments	28,452		14,556
Other current assets	45,929		44,408
	$	166,119	$	115,237

Non-current assets of business unit held for sale
Net property and equipment	$	7,345	$	6,986
Goodwill and other intangible assets, net	69,308		69,439
Derivative instruments	8,817		5,264
Other long-term assets	15,589		10,718
	$	101,059	$	92,407

Current liabilities of business unit held for sale
Accounts payable	$	40,757	$	28,157
Affiliate accounts payable	6,632		5,001
Derivative instruments	39,272		28,297
Other current liabilities	17,254		17,085
	$	103,915	$	78,540

Non-current liabilities of business unit held for sale
Derivative instruments	$	14,460	$	10,823
Other long-term liabilities	3,136		4,847
	$	17,596	$	15,670