EX-99.2 3 exhibit99-2.htm EXHIBIT 99.2 exhibit99-2.htm
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.
 
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES          
  
(Dollars in thousands)          
  
Sierra Pacific Resources
  
Funds From Operations (FFO)
                                    
   
Six Months ended June 30,
    
Year ended December 31,  
    
LTM June 30,
  
   
2007
    
2006
    
2006
    
2005
    
2004
    
2007
  
                                     
Net Income Applicable to Common Stock
   $
41,361
     $
29,078
     $
277,451
     $
82,237
     $
28,571
     $
289,734
  
                                                 
Adjustments to reconcile net income to net cash provided by operating activities:
                                          
                                                 
Depreciation and amortization
    
115,911
      
114,083
      
228,875
      
214,662
      
205,922
      
230,703
  
Deferred taxes and deferred investment tax credit
    
31,661
      
6,510
      
136,026
      
41,609
      
33,690
      
161,177
  
AFUDC (Debt and Equity)
     (23,887 )     (20,315 )     (35,345 )     (45,013 )     (14,535 )     (38,917 )
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 )
Reinstated Interest on Deferred Energy
     (11,076 )    
-
      
-
      
-
      
-
       (11,076 )
Carrying Charge on Lenzie Plant
     (16,080 )     (13,166 )     (33,440 )    
-
      
-
       (36,354 )
Gain on Sale of Investment
    
-
      
-
       (62,927 )    
-
      
-
       (62,927 )
Other, net
    
7,805
       (3,494 )    
24,650
       (219 )     (23,453 )    
35,949
  
Funds from Operations (Before Deferred Energy Costs)
    
145,695
      
112,696
      
356,465
      
293,276
      
299,059
      
389,464
  
Amortization Deferred energy costs - electric
    
88,482
      
75,025
      
166,821
      
188,221
      
265,418
      
180,278
  
Amortization Deferred energy costs - gas
    
638
      
4,136
      
6,234
      
1,446
      
3,242
      
2,736
  
Deferral of energy costs - electric plus terminated suppliers
    
30,941
       (31,842 )     (45,996 )     (23,063 )     (147,589 )    
16,787
  
Deferral of energy costs - gas
     (638 )    
1,744
      
436
       (2,519 )     (7,480 )     (1,946 )
Payment to terminating supplier
    
-
       (65,368 )     (65,368 )    
-
       (61,129 )    
-
  
Proceeds from claim on terminating supplier
    
-
      
41,365
      
41,365
      
-
      
-
      
-
  
Adjusted Funds from Operations
   $
265,118
     $
137,756
     $
459,957
     $
457,361
     $
351,521
     $
587,319
  
                                                 
Long-term Debt
    
4,291,833
      
4,403,714
      
4,001,542
      
3,817,122
      
4,081,281
      
4,291,833
  
Current maturities of long term debt
    
109,092
      
28,640
      
8,348
      
58,909
      
8,491
      
109,092
  
Total Debt
   $
4,400,925
     $
4,432,354
     $
4,009,890
     $
3,876,031
     $
4,089,772
     $
4,400,925
  
                                                 
Preferred Stock
    
-
      
-
      
-
      
50,000
      
50,000
      
-
  
                                                 
Net interest expense
    
140,286
      
150,887
      
311,088
      
284,927
      
307,546
      
300,487
  
AFUDC Debt
    
10,708
      
10,009
      
17,119
      
24,691
      
8,587
      
17,818
  
Adjusted Interest Expense
   $
150,994
     $
160,896
     $
328,207
     $
309,618
     $
316,133
     $
318,305
  
                                                 
Debt/Funds from operations
                    
11.25x
      
13.22x
      
13.68x
      
11.30x
  
Debt/Adjusted FFO
                    
8.72x
      
8.47x
      
11.63x
      
7.49x
  
Funds from Operations Interest Coverage
                    
2.09x
      
1.95x
      
1.95x
      
2.22x
  
Adjusted Funds From Operations Interest Coverage
                    
2.40x
      
2.48x
      
2.11x
      
2.85x
  
Common shareholders equity
                   $
2,622,297
     $
2,060,154
     $
1,498,616
     $
2,673,234
  
Total Capitalization (including current maturities of long-term debt)
                   $
6,632,187
     $
5,986,185
     $
5,638,388
     $
7,074,159
  
Debt/Capitalization
                     60.46 %     64.75 %     72.53 %     62.21 %
                                                 


RECONCILIATION OF NON-GAAP FINANCIAL MEASURES          
  
(Dollars in thousands)          
  
Nevada Power Company
  
Funds From Operations (FFO)
                                    
   
Six Months ended June 30,   
    
Year ended December 31,      
    
LTM June 30,
  
   
2007
    
2006
    
2006
    
2005
    
2004
    
2007
  
                                     
Net Income
   $
28,186
     $
25,160
     $
224,540
     $
132,734
     $
104,312
     $
227,566
  
                                                 
Adjustments to reconcile net income to net cash provided by operating activities:
                                                
                                                 
Depreciation and amortization
    
74,594
      
69,121
      
141,585
      
124,098
      
118,841
      
147,058
  
Deferred taxes and deferred investment tax credit
    
9,826
      
3,983
      
107,392
      
86,910
      
57,066
      
113,235
  
AFUDC (Debt and Equity)
     (11,598 )     (16,226 )     (23,369 )     (41,870 )     (9,968 )     (18,741 )
Deferred Energy Costs Disallowed
    
-
      
-
      
-
      
-
      
1,586
      
-
  
Reinstatement of Deferred Energy Costs
    
-
      
-
       (178,825 )                     (178,825 )
Reinstated Interest on Deferred Energy
     (11,076 )    
-
      
-
      
-
      
-
       (11,076 )
Carrying Charge on Lenzie Plant
     (16,080 )     (13,166 )     (33,440 )    
-
      
-
       (36,354 )
Other, net
     (3,394 )     (12,650 )    
3,394
       (7,433 )     (44,149 )    
12,650
  
Funds from Operations (Before Deferred Energy Costs)
    
70,458
      
56,222
      
241,277
      
294,439
      
227,688
      
255,513
  
Amortization Deferred energy costs
    
64,747
      
52,399
      
120,499
      
131,471
      
228,765
      
132,847
  
Deferral of energy costs plus terminated suppliers
    
23,023
       (29,909 )     (46,086 )     (31,219 )     (112,992 )    
6,846
  
Payment to terminating supplier
    
-
       (37,410 )     (37,410 )    
-
       (50,311 )    
-
  
Proceeds from claim on terminating supplier
    
-
      
26,391
      
26,391
      
-
      
-
      
-
  
Adjusted Funds from Operations
   $
158,228
     $
67,693
     $
304,671
     $
394,691
     $
293,150
     $
395,206
  
                                                 
Long-term Debt
    
2,655,630
      
2,670,057
      
2,380,139
      
2,214,063
      
2,275,690
      
2,655,630
  
Current maturities of long term debt
    
7,449
      
6,240
      
5,948
      
6,509
      
6,091
      
7,449
  
Total Debt
   $
2,663,079
     $
2,676,297
     $
2,386,087
     $
2,220,572
     $
2,281,781
     $
2,663,079
  
                                                 
Net interest expense
    
88,260
      
88,149
      
176,612
      
134,657
      
137,388
      
176,723
  
AFUDC Debt
    
5,253
      
8,072
      
11,614
      
23,187
      
5,738
      
8,795
  
Adjusted Interest Expense
    
93,513
      
96,221
     $
188,226
     $
157,844
     $
143,126
     $
185,518
  
                                                 
Debt/Funds from operations
                    
9.89x
      
7.54x
      
10.02x
      
10.42x
  
Debt/Adjusted FFO
                    
7.83x
      
5.63x
      
7.78x
      
6.74x
  
Funds from Operations Interest Coverage
                    
2.28x
      
2.87x
      
2.59x
      
2.38x
  
Adjusted Funds From Operations Interest Coverage
                    
2.62x
      
3.50x
      
3.05x
      
3.13x
  
Common shareholders equity
                   $
2,172,198
     $
1,762,089
     $
1,436,788
     $
2,200,590
  
Total Capitalization (including current maturities of long-term debt)
                   $
4,558,285
     $
3,982,661
     $
3,718,569
     $
4,863,669
  
Debt/Capitalization
                     52.35 %     55.76 %     61.36 %     54.75 %
                                                 



RECONCILIATION OF NON-GAAP FINANCIAL MEASURES          
  
(Dollars in thousands)          
  
Sierra Pacific Power Company
  
Funds From Operations (FFO)
                                    
   
Six Months ended June 30,
    
Year ended December 31,  
    
LTM June 30,
  
   
2007
    
2006
    
2006
    
2005
    
2004
    
2007
  
                                     
Net Income
   $
31,976
     $
22,271
     $
57,709
     $
52,074
     $
18,577
     $
67,414
  
                                                 
Adjustments to reconcile net income to net cash provided by operating activities:
                                          
                                                 
Depreciation and amortization
    
41,317
      
44,962
      
87,279
      
90,569
      
86,806
      
83,634
  
Deferred taxes and deferred investment tax credit
     (7,652 )     (37,847 )     (39,361 )    
209
      
11,640
       (9,166 )
AFUDC (Debt and Equity)
     (12,289 )     (4,089 )     (11,976 )     (3,143 )     (4,567 )     (20,176 )
Plant Costs disallowed
    
-
      
-
      
-
      
-
      
47,092
      
-
  
Other, net
    
11,221
      
6,230
      
16,935
      
318
      
474
      
21,926
  
Funds from Operations (Before Deferred Energy Costs)
    
64,573
      
31,527
      
110,586
      
140,027
      
160,022
      
143,632
  
Amortization Deferred energy costs - electric
    
23,735
      
22,626
      
46,322
      
56,750
      
36,653
      
47,431
  
Amortization Deferred energy costs - gas
    
638
      
4,136
      
6,234
      
1,446
      
3,241
      
2,736
  
Deferral of energy costs - electric plus terminated suppliers
    
7,918
       (1,932 )    
90
      
8,156
       (34,598 )    
9,940
  
Deferral of energy costs - gas
     (638 )    
1,744
      
436
       (2,519 )     (7,480 )     (1,946 )
Payment to terminating supplier
    
-
       (27,958 )     (27,958 )    
-
       (10,818 )    
-
  
Proceeds from claim on terminating supplier
    
-
      
14,974
      
14,974
      
-
      
-
      
-
  
Adjusted Funds from Operations
   $
96,226
     $
45,117
     $
150,684
     $
203,860
     $
147,020
     $
201,793
  
                                                 
Long-term Debt
    
1,085,764
      
1,072,566
      
1,070,858
      
941,804
      
994,309
      
1,085,764
  
Current maturities of long term debt
    
101,643
      
22,400
      
2,400
      
52,400
      
2,400
      
101,643
  
Total Debt
   $
1,187,407
     $
1,094,966
     $
1,073,258
     $
994,204
     $
996,709
      
1,187,407
  
                                                 
Preferred Stock
    
-
      
-
      
-
      
50,000
      
50,000
      
-
  
                                                 
Net interest expense
    
30,237
      
36,240
      
71,506
      
69,067
      
62,831
      
65,503
  
AFUDC Debt
    
5,455
      
1,937
      
5,505
      
1,504
      
2,849
      
9,023
  
Adjusted Interest Expense
   $
35,692
     $
38,177
     $
77,011
     $
70,571
     $
65,680
      
74,526
  
                                                 
Debt/Funds from operations
                    
9.71x
      
7.10x
      
6.23x
      
8.27x
  
Debt/Adjusted FFO
                    
7.12x
      
4.88x
      
6.78x
      
5.88x
  
Funds from Operations Interest Coverage
                    
2.44x
      
2.98x
      
3.44x
      
2.93x
  
Adjusted Funds From Operations Interest Coverage
                    
2.96x
      
3.89x
      
3.24x
      
3.71x
  
Common shareholders equity
                   $
884,737
     $
727,777
     $
705,395
     $
916,994
  
Total Capitalization (including current maturities of long-term debt)
                   $
1,957,995
     $
1,771,981
     $
1,752,104
     $
2,104,401
  
Debt/Capitalization
                     54.81 %     56.11 %     56.89 %     56.42 %