EX-99.2 3 ex99-2.htm EXHIBIT 99.2 Exhibit 99.2
EXHIBIT 99.2
 
Funds from Operations (“FFO”) and Adjusted FFO, which is FFO adjusted to account for cash inflows or outflows associated with the deferred energy accounts, are presented here because the Company believes that these measures are useful to investors because the ratings agencies use these measures when determining a company's credit ratings. The cost of the Company's debt, the ability of the Company's subsidiaries to pay dividends to the Company, and other capital and operational costs and expenses are impacted by the Company's credit ratings. The Company believes that net income is the most directly comparable GAAP measure to FFO.

Since FFO excludes certain items includable in net income, reliance on the measure has limitations; management compensates for these limitations by using the measure simply as a supplemental measure that is weighed in the balance with other GAAP measures. FFO is not necessarily an indication of the Company's cash flow available to fund cash needs. Additionally, it should not be used as an alternative to net income when evaluating the Company's financial performance or to cash flow from operating, investing and financing activities when evaluating the Company's liquidity or ability to make cash distributions or pay debt service. The FFO presented by the Company may not be comparable to the FFO presented by other utility companies.

     
(Dollars in thousands)
      
                           
Sierra Pacific Resources
  
 
  
 
  
 
  
 
  
 
  
 
  
                           
Funds From Operations (FFO)
                          
   
Three Months ended March 31,
 
Year ended December 31,
 
LTM March 31,
 
   
2007
  
2006
  
2006
  
2005
  
2004
  
2007
  
                           
Net Income Applicable to Common Stock
  
$
15,607
  
$
1,242
  
$
277,451
  
$
82,237
  
$
28,571
  
$
291,816
  
                                       
Adjustments to reconcile net income to net cash provided by operating activities:
                                     
                                 
Depreciation and amortization
    
56,233
   
57,461
   
228,875
   
214,662
   
205,922
   
227,647
 
Deferred taxes and deferred investment tax credit
    
5,165
   
(1,822
)
  
136,026
   
41,609
   
33,690
   
143,013
 
AFUDC (Debt and Equity)
    
(11,901
)
  
(12,134
)
  
(35,345
)
  
(45,013
)
  
(14,535
)
  
(35,112
)
Deferred Energy Costs Disallowed
    
-
   
-
   
-
   
-
   
1,586
   
-
 
Goodwill Impairment
    
-
   
-
   
-
   
-
   
11,695
   
-
 
Impairment of assets of subsidiary
    
-
   
-
   
-
   
-
   
10,997
   
-
 
Gain on Sale of Discontinued Operations
    
-
   
-
   
-
   
-
   
(2,506
)
  
-
 
Plant Costs disallowed
    
-
   
-
   
-
   
-
   
47,092
   
-
 
Reinstatement of deferred energy costs
    
-
   
-
   
(178,825
)
  
-
   
-
   
(178,825
)
Reinstatement of interest on deferred energy
    
(11,076
)
  
-
   
-
   
-
   
-
   
(11,076
)
Carrying Charge on Lenzie Plant
    
(10,082
)
  
(4,031
)
  
(33,440
)
  
-
   
-
   
(39,491
)
Gain on Sale of Investment
    
-
   
-
   
(62,927
)
  
-
   
-
   
(62,927
)
Other, net
    
(3,637
)
  
41
   
24,650
   
(219
)
  
23,453
 
  
20,972
 
Funds from Operations (Before Deferred Energy Costs)
    
40,309
   
40,757
   
356,465
   
293,276
   
345,965
   
356,017
 
Amortization Deferred energy costs - electric
    
36,141
   
32,560
   
166,821
   
188,221
   
265,418
   
170,402
 
Amortization Deferred energy costs - gas
    
478
   
3,021
   
6,234
   
1,446
   
3,242
   
3,691
 
Deferral of energy costs - electric plus terminated suppliers
    
228
   
(34,776
)
  
(45,996
)
  
(23,063
)
  
(147,589
)
  
(10,992
)
Deferral of energy costs - gas
    
(2,330
)
  
1,592
   
436
   
(2,519
)
  
(7,480
)
  
(3,486
)
Payment to terminating supplier
    
-
   
(65,368
)
  
(65,368
)
  
-
   
(61,129
)
  
-
 
Proceeds from claim on terminating supplier
    
-
   
41,365
   
41,365
   
-
   
-
   
-
 
Adjusted Funds from Operations
  
$
74,826
  
$
19,151
  
$
459,957
  
$
457,361
  
$
398,427
  
$
515,632
  
                                       
Long-term Debt
    
4,147,322
   
4,122,580
   
4,001,542
   
3,817,122
   
4,081,281
   
4,147,322
 
Current maturities of long term debt plus short-term borrowings
    
8,625
   
196,325 
    
8,348
   
58,909
   
8,491
   
8,625
 
Total Debt
  
$
4,155,947
  
$
4,318,905
  
$
4,009,890
  
$
3,876,031
  
$
4,089,772
  
$
4,155,947
  
                                       
Preferred Stock
    
-
   
-
   
-
   
50,000
   
50,000
   
-
 
                                       
Net interest expense
    
69,669
   
72,599
   
311,088
   
284,927
   
307,546
   
308,158
 
AFUDC Debt
    
5,334
   
6,002
   
17,119
   
24,691
   
8,587
   
16,451
 
Adjusted Interest Expense
  
$
75,003
  
$
78,601
  
$
328,207
  
$
309,618
  
$
316,133
  
$
324,609
  
                                       
Debt/Funds from operations
                
11.25x
    
13.22x
    
11.82x
    
11.67x
  
Debt/Adjusted FFO
                
8.72x
    
8.47x
    
10.26x
    
8.06x
  
Funds from Operations Interest Coverage
                
2.09x
    
1.95x
    
2.09x
    
2.10x
  
Adjusted Funds From Operations Interest Coverage
                
2.40x
    
2.48x
    
2.26x
    
2.59x
  
Common shareholders equity
              
$
2,622,297
  
$
2,060,154
  
$
1,498,616
  
$
2,642,158
  
Total Capitalization
              
$
6,632,187
  
$
5,986,185
  
$
5,638,388
  
$
6,789,480
  
Debt/Capitalization
                
60.46
%
  
64.75
%
  
72.53
%
  
61.21
%
 
 

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
      
(Dollars in thousands)
      
       
Nevada Power Company
  
 
  
 
  
 
  
 
  
 
  
 
  
                           
Funds From Operations (FFO)
                          
   
Three Months ended March 31,
 
Year ended December 31,
 
LTM March 31,
 
 
  
2007
  
2006
  
2006
  
2005
  
2004
  
2007
  
                           
Net Income (Loss)
  
$
4,582
  
$
(3,296
)
$
224,540
  
$
132,734
  
$
104,312
  
$
232,418
  
                                       
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
                                     
                                 
Depreciation and amortization
    
35,761
   
34,237
   
141,585
   
124,098
   
118,841
   
143,109
 
Deferred taxes and deferred investment tax credit
    
(2,645
)
  
(4,820
)
  
107,392
   
86,910
   
57,066
   
109,567
 
AFUDC (Debt and Equity)
    
(5,648
)
  
(10,801
)
  
(23,369
)
  
(41,870
)
  
(9,968
)
  
(18,216
)
Deferred Energy Costs Disallowed
    
-
   
-
   
-
   
-
   
1,586
   
-
 
Reinstatement of Deferred Energy Costs
   
-
   
-
   
(178,825
)
              
(178,825
)
Reinstatement of Interest of Deferred Energy
    
(11,076
)
  
-
   
-
   
-
   
-
   
(11,076
)
Carrying Charge on Lenzie Plant
    
(10,082
)
  
(4,031
)
  
(33,440
)
  
-
   
-
   
(39,491
)
Other, net
    
(4,419
)
  
(405
)
  
3,394
   
(7,433
)
  
(44,149
)
  
(620
)
Funds from Operations (Before Deferred Energy Costs)
    
6,473
   
10,884
   
241,277
   
294,439
   
227,688
   
236,866
 
Amortization Deferred energy costs
   
24,082
   
21,278
   
120,499
   
131,471
   
228,765
   
123,303
 
Deferral of energy costs plus terminated suppliers
    
(844
)
  
(23,286
)
  
(46,086
)
  
(31,219
)
  
(112,992
)
  
(23,644
)
Payment to terminating supplier
    
-
   
(37,410
)
  
(37,410
)
  
-
   
(50,311
)
  
-
 
Proceeds from claim on terminating supplier
    
-
   
26,391
   
26,391
   
-
   
-
   
-
 
Adjusted Funds from Operations
  
$
29,711
  
$
(2,143
)
$
304,671
  
$
394,691
  
$
293,150
  
$
336,525
  
                                       
Long-term Debt
    
2,501,650
   
2,388,210
   
2,380,139
   
2,214,063
   
2,275,690
   
2,501,650
 
Current maturities of long term debt
    
6,225
   
163,925 
    
5,948
   
6,509
   
6,091
   
6,225
 
Total Debt
  
$
2,507,875
  
$
2,552,135
  
$
2,386,087
  
$
2,220,572
  
$
2,281,781
  
$
2,507,875
  
                                       
Net interest expense
    
43,992
   
41,194
   
176,612
   
134,657
   
137,388
   
179,410
 
AFUDC Debt
    
2,550
   
5,372
   
11,614
   
23,187
   
5,738
   
8,792
 
Adjusted Interest Expense
    
46,542
   
46,566
 
$
188,226
  
$
157,844
  
$
143,126
  
$
188,202
  
                                       
Debt/Funds from operations
                
9.89x
    
7.54x
    
10.02x
    
10.59x
  
Debt/Adjusted FFO
                
7.83x
    
5.63x
    
7.78x
    
7.45x
  
Funds from Operations Interest Coverage
                
2.28x
    
2.87x
    
2.59x
    
2.26x
  
Adjusted Funds From Operations Interest Coverage
                
2.62x
    
3.50x
    
3.05x
    
2.79x
  
Common shareholders equity
              
$
2,172,198
  
$
1,762,089
  
$
1,436,788
  
$
2,176,988
  
Total Capitalization
              
$
4,558,285
  
$
3,982,661
  
$
3,718,569
  
$
4,678,638
  
Debt/Capitalization
                
52.35
%
  
55.76
%
  
61.36
%
  
53.60
%
                                       



RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
      
(Dollars in thousands)
      
       
Sierra Pacific Power Company
  
 
  
 
  
 
  
 
  
 
  
 
  
                           
Funds From Operations (FFO)
                          
   
Three Months ended March 31,
 
Year ended December 31,
 
LTM March 31,
 
   
2007
  
2006
  
2006
  
2005
  
2004
  
2007
  
                           
Net Income
  
$
21,968
  
$
12,272
  
$
57,709
  
$
52,074
  
$
18,577
  
$
67,405
  
                                       
Adjustments to reconcile net income to net cash provided by operating activities:
                                     
                                 
Depreciation and amortization
    
20,472
   
23,224
   
87,279
   
90,569
   
86,806
   
84,527
 
Deferred taxes and deferred investment tax credit
    
1,142
   
(41,878
)
  
(39,361
)
  
209
   
11,640
   
3,659
 
AFUDC (Debt and Equity)
    
(6,253
)
  
(1,333
)
  
(11,976
)
  
(3,143
)
  
(4,567
)
  
(16,896
)
Plant Costs disallowed
    
-
   
-
   
-
   
-
   
47,092
   
-
 
Other, net
    
1,881
   
1,090
   
16,935
   
318
   
474
   
17,726
 
Funds from Operations (Before Deferred Energy Costs)
    
39,210
   
(6,625
)
  
110,586
   
140,027
   
160,022
   
156,421
 
Amortization Deferred energy costs - electric
    
12,052
   
11,282
   
46,322
   
56,750
   
36,653
   
47,092
 
Amortization Deferred energy costs - gas
    
478
   
3,021
   
6,234
   
1,446
   
3,241
   
3,691
 
Deferral of energy costs - electric plus terminated suppliers
    
1,072
   
(11,490
)
  
90
   
8,156
   
(34,598
)
  
12,652
 
Deferral of energy costs - gas
    
(2,330
)
  
1,592
   
436
   
(2,519
)
  
(7,480
)
  
(3,486
)
Payment to terminating supplier
    
-
   
(27,958
)
  
(27,958
)
  
-
   
(10,818
)
  
-
 
Proceeds from claim on terminating supplier
    
-
   
14,974
   
14,974
   
-
   
-
   
-
 
Adjusted Funds from Operations
  
$
50,482
  
$
(15,204
)
$
150,684
  
$
203,860
  
$
147,020
  
$
216,370
  
                                       
Long-term Debt
    
1,095,180
   
1,073,197
   
1,070,858
   
941,804
   
994,309
   
1,095,180
 
Current maturities of long term debt plus short-term borrowings
    
2,400
   
32,400
   
2,400
   
52,400
   
2,400
   
2,400
 
Total Debt
  
$
1,097,580
  
$
1,105,597
  
$
1,073,258
  
$
994,204
  
$
996,709
    
1,097,580
 
                                       
Preferred Stock
    
-
   
-
   
-
   
50,000
   
50,000
   
-
 
                                       
Net interest expense
    
14,783
   
18,156
   
71,506
   
69,067
   
62,831
   
68,133
 
AFUDC Debt
    
2,784
   
630
   
5,505
   
1,504
   
2,849
   
7,659
 
Adjusted Interest Expense
  
$
17,567
  
$
18,786
  
$
77,011
  
$
70,571
  
$
65,680
    
75,792
 
                                       
Debt/Funds from operations
                
9.71x
    
7.10x
    
6.23x
    
7.02x
  
Debt/Adjusted FFO
                
7.12x
    
4.88x
    
6.78x
    
5.07x
  
Funds from Operations Interest Coverage
                
2.44x
    
2.98x
    
3.44x
    
3.06x
  
Adjusted Funds From Operations Interest Coverage
                
2.96x
    
3.89x
    
3.24x
    
3.85x
  
Common shareholders equity
              
$
884,737
  
$
727,777
  
$
705,395
  
$
906,987
  
Total Capitalization
              
$
1,957,995
  
$
1,771,981
  
$
1,752,104
  
$
2,002,167
  
Debt/Capitalization
                
54.81
%
  
56.11
%
  
56.89
%
  
54.82
%