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 Sierra Pacific Resources (the “Company”) believes that these measures are useful to investors because the rating 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)
                                    
   
Nine Months ended September 30,
       Year Ended December 31,    
LTM September 30,
  
   
2008
    
2007
    
2007
    
2006
    
2005
    
2008
  
                                     
Net Income Applicable to Common Stock
   $ 210,975     $ 193,583     $ 197,295     $ 277,451     $ 82,237     $ 214,687  
                                                 
Adjustments to reconcile net income to net cash from
     operating activities:
                                             -  
Depreciation and amortization
     185,656       174,787       235,532       228,875       214,662       246,401  
Deferred taxes and deferred investment tax credit
     172,425       103,598       79,337       136,026       41,609       148,164  
AFUDC (Debt and Equity)
     (58,353 )     (40,662 )     (57,776 )     (35,345 )     (45,013 )     (75,467 )
Reinstatement of deferred energy costs
     -       -       -       (178,825 )     -       -  
Carrying charge on Lenzie plant
     -       (16,080 )     (16,080 )     (33,440 )     -       -  
Reinstated interest on deferred energy
     -       (11,076 )     (11,076 )     -       -       -  
Gain on sale of investment
     -       -       (1,369 )     (62,927 )     -       (1,369 )
Other, net
     13,087       26,518       23,679       24,650       (219 )     10,248  
Funds from Operations (Before Deferred Energy Costs)
     523,790       430,668       449,542       356,465       293,276       542,664  
                                                 
Amortization of deferred energy costs - electric
     140,522       172,046       246,907       166,821       188,221       215,383  
Amortization of deferred energy costs - gas
     (983 )     734       701       6,234       1,446       (1,016 )
Deferral of energy costs - electric plus terminated suppliers
     (203,396 )     11,900       51,311       (45,996 )     (23,063 )     (163,985 )
Deferral of energy costs - gas
     483       3,749       10,668       436       (2,519 )     7,402  
Payment to terminating supplier
     -       -       -       (65,368 )     -       -  
Proceeds from claim on terminating supplier
     -       -       -       41,365       -       -  
Adjusted Funds from Operations
   $ 460,416     $ 619,097     $ 759,129     $ 459,957     $ 457,361     $ 600,448  
                                                 
Long-term debt
     4,793,078       4,337,745     $ 4,137,864     $ 4,001,542     $ 3,817,122       4,793,078  
Current maturities of long-term debt
     9,794       109,614       110,285       8,348       58,909       9,794  
Total Debt
   $ 4,802,872     $ 4,447,359     $ 4,248,149     $ 4,009,890     $ 3,876,031     $ 4,802,872  
                                                 
Preferred Stock
   $ -     $ -     $ -     $ -     $ 50,000       -  
                                                 
Interest charges
     213,500       210,037     $ 279,788     $ 311,088     $ 284,927       283,251  
AFUDC (Debt)
     25,418       18,269       25,967       17,119       24,691       33,116  
Adjusted Interest Expense
   $ 238,918     $ 228,306     $ 305,755     $ 328,207     $ 309,618     $ 316,367  
                                                 
Total Debt/Funds from operations
                     9.45 x     11.25 x     13.22 x     8.85 x
Total Debt/Adjusted FFO
                     5.60 x     8.72 x     8.47 x     8.00 x
Funds from Operations Interest Coverage
                     2.47 x     2.09 x     1.95 x     2.72 x
Adjusted Funds From Operations Interest Coverage
                     3.48 x     2.40 x     2.48 x     2.90 x
Common Shareholders' Equity
                   $ 2,996,575     $ 2,622,297     $ 2,060,154     $ 3,156,607  
Total Capitalization (including current maturities of long-term
     debt)
                   $ 7,244,724     $ 6,632,187     $ 5,986,185     $ 7,959,479  
Total Debt/Total Capitalization
                     58.64 %     60.46 %     64.75 %     60.34 %
                                                 



RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
  
(Dollars in thousands)
  
Nevada Power Company
                                    
Funds From Operations (FFO)
                                    
   
Nine Months ended September 30,
       Year Ended December 31,    
LTM September 30,
  
   
2008
    
2007
    
2007
    
2006
    
2005
    
2008
  
                                     
Net Income
   $ 165,482     $ 161,280     $ 165,694     $ 224,540     $ 132,734     $ 169,896  
                                              -  
Adjustments to reconcile net income to net cash from operating activities:
                                             -  
Depreciation and amortization
     120,855       112,745       152,139       141,585       124,098       160,249  
Deferred taxes and deferred investment tax credit
     89,543       76,188       56,868       107,392       86,910       70,223  
AFUDC (Debt and Equity)
     (37,596 )     (20,235 )     (29,057 )     (23,369 )     (41,870 )     (46,418 )
Reinstatement of deferred energy costs
     -       -       -       (178,825 )     -       -  
Carrying charge on Lenzie plant
     -       (16,080 )     (16,080 )     (33,440 )     -       -  
Reinstated interest on deferred energy
     -       (11,076 )     (11,076 )     -       -       -  
Other, net
     2,659       3,077       5,831       3,394       (7,433 )     5,413  
Funds from Operations (Before Deferred Energy Costs)
     340,943       305,899       324,319       241,277       294,439       359,363  
                                                 
Amortization of deferred energy costs
     123,875       137,633       203,213       120,499       131,471       189,455  
Deferral of energy costs - electric plus terminated suppliers
     (173,522 )     700       15,779       (46,086 )     (31,219 )     (158,443 )
Payment to terminating supplier
     -       -       -       (37,410 )     -       -  
Proceeds from claim on terminating supplier
     -       -       -       26,391       -       -  
Adjusted Funds from Operations
   $ 291,296     $ 444,232     $ 543,311     $ 304,671     $ 394,691     $ 390,375  
                                                 
Long-term debt
     2,975,201       2,677,193     $ 2,528,141     $ 2,380,139     $ 2,214,063       2,975,201  
Current maturities of long-term debt
     8,656       7,971       8,642       5,948       6,509       8,656  
Total Debt
   $ 2,983,857     $ 2,685,164     $ 2,536,783     $ 2,386,087     $ 2,220,572     $ 2,983,857  
                                                 
Interest charges
   $ 130,732     $ 132,155     $ 174,667     $ 176,612     $ 134,657       173,244  
AFUDC (Debt)
     16,503       9,189       13,196       11,614       23,187       20,510  
Adjusted Interest Expense
   $ 147,235     $ 141,344     $ 187,863     $ 188,226     $ 157,844     $ 193,754  
                                                 
Total Debt/Funds from Operations
                     7.82 x     9.89 x     7.54 x     8.30 x
Total Debt/Adjusted FFO
                     4.67 x     7.83 x     5.63 x     7.64 x
Funds from Operations Interest Coverage
                     2.73 x     2.28 x     2.87 x     2.85 x
Adjusted Funds From Operations Interest Coverage
                     3.89 x     2.62 x     3.50 x     3.01 x
Common Shareholder's Equity
                   $ 2,376,740     $ 2,172,198     $ 1,762,089     $ 2,975,201  
Total Capitalization (including current maturities of long-term debt)
                   $ 4,913,523     $ 4,558,285     $ 3,982,661     $ 5,959,058  
Total Debt/Total Capitalization
                     51.63 %     52.35 %     55.76 %     50.07 %
                                                 

 
 
 



RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
  
(Dollars in thousands)
  
Sierra Pacific Power Company
                                    
Funds From Operations (FFO)
                                    
   
Nine Months ended September 30,
       Year Ended December 31,    
LTM September 30,
  
   
2008
    
2007
    
2007
    
2006
    
2005
    
2008
  
                                     
Net Income
   $ 68,052     $ 57,528     $ 65,667     $ 57,709     $ 52,074     $ 76,191  
                                                 
Adjustments to reconcile net income to net cash from operating activities:
                                                
Depreciation and amortization
     64,801       62,043       83,393       87,279       90,569       86,151  
Deferred taxes and deferred investment tax credit
     28,472       (25,456 )     (36,713 )     (39,361 )     209       17,215  
AFUDC (Debt and Equity)
     (20,757 )     (20,427 )     (28,719 )     (11,976 )     (3,143 )     (29,049 )
Other, net
     14,476       22,141       14,577       16,935       318       6,912  
Funds from Operations (Before Deferred Energy Costs)
     155,044       95,829       98,205       110,586       140,027       157,420  
                                                 
Amortization of deferred energy costs - electric
     16,647       34,413       43,694       46,322       56,750       25,928  
Amortization of deferred energy costs - gas
     (983 )     734       701       6,234       1,446       (1,016 )
Deferral of energy costs - electric plus terminated suppliers
     (29,874 )     11,200       35,532       90       8,156       (5,542 )
Deferral of energy costs - gas
     483       3,749       10,668       436       (2,519 )     7,402  
Payment to terminating supplier
     -       -       -       (27,958 )     -       -  
Proceeds from claim on terminating supplier
     -       -       -       14,974       -       -  
Adjusted Funds from Operations
   $ 141,317     $ 145,925     $ 188,800     $ 150,684     $ 203,860     $ 184,192  
                                                 
Long-term debt
   $ 1,292,867     $ 1,110,166     $ 1,084,550     $ 1,070,858     $ 941,804     $ 1,292,867  
Current maturities of long-term debt
   $ 1,139     $ 101,643       101,643       2,400       52,400       1,139  
Total Debt
   $ 1,294,006     $ 1,211,809     $ 1,186,193     $ 1,073,258     $ 994,204     $ 1,294,006  
                                                 
Preferred Stock
   $ -     $ -     $ -     $ -     $ 50,000       -  
                                                 
Interest charges
   $ 51,458     $ 45,199     $ 60,735     $ 71,506     $ 69,067     $ 66,994  
AFUDC (Debt)
     8,915       9,080       12,771       5,505       1,504       12,606  
Adjusted Interest Expense
   $ 60,373     $ 54,279     $ 73,506     $ 77,011     $ 70,571     $ 79,600  
                                                 
Total Debt/Funds from Operations
                     12.08 x     9.71 x     7.10 x     8.22 x
Total Debt/Adjusted FFO
                     6.28 x     7.12 x     4.88 x     7.03 x
Funds from Operations Interest Coverage
                     2.34 x     2.44 x     2.98 x     2.98 x
Adjusted Funds From Operations Interest Coverage
                     3.57 x     2.96 x     3.89 x     3.31 x
Common Shareholder's Equity
                   $ 1,001,840     $ 884,737     $ 727,777     $ 1,015,690  
Total Capitalization (including current maturities of long-term debt)
                   $ 2,188,033     $ 1,957,995     $ 1,771,981     $ 2,309,696  
Total Debt/Total Capitalization
                     54.21 %     54.81 %     56.11 %     56.02 %