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 NV Energy, Inc. (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)
  
                   
NV Energy, Inc.
                  
Funds From Operations (FFO)
                  
   
Year Ended December 31,
  
   
2008
    
2007(1)
    
2006(1)
  
                   
Net Income Applicable to Common Stock
   $ 208,887     $ 197,295     $ 277,451  
                         
Adjustments to reconcile net income to net cash from operating activities:
                  
                         
Depreciation and amortization
     260,608       235,532       228,875  
Deferred taxes and deferred investment tax credit
     52,060       79,337       136,026  
AFUDC(2) (Debt and Equity)
     (67,968 )     (57,776 )     (35,345 )
Reinstatement of deferred energy costs
     -       -       (178,825 )
Carrying charge on Lenzie plant
     -       (16,080 )     (33,440 )
Reinstated interest on deferred energy
     -       (11,076 )     -  
Gain on sale of investment
     -       (1,369 )     (62,927 )
Other, net
     100,482       71,543       53,561  
Funds from Operations (Before Deferred Energy Costs)
     554,069       497,406       385,376  
Amortization of deferred energy costs, net of deferrals
     2,717       309,587       127,495  
Payment to terminating supplier
     -        -       (65,368 )
Proceeds from claim on terminating supplier
     -        -       41,365  
Adjusted Funds from Operations
   $ 556,786     $ 806,993     $ 488,868  
                         
Long-term debt
   $ 5,266,982     $ 4,137,864     $ 4,001,542  
Current maturities of long-term debt
     9,291       110,285       8,348  
Total Debt
   $ 5,276,273     $ 4,248,149     $ 4,009,890  
                         
                         
Interest charges
   $ 300,857     $ 279,788     $ 311,088  
AFUDC(2) (Debt)
     29,527       25,967       17,119  
Adjusted Interest Expense
   $ 330,384     $ 305,755     $ 328,207  
                         
Total Debt/Funds from operations
     9.52 x     8.54 x     10.41 x
Total Debt/Adjusted FFO
     9.48 x     5.26 x     8.20 x
Funds from Operations Interest Coverage
     2.68 x     2.63 x     2.17 x
Adjusted Funds From Operations Interest Coverage
     2.69 x     3.64 x     2.49 x
Common Shareholders' Equity
   $ 3,131,186     $ 2,996,575     $ 2,622,297  
Total Capitalization (including current maturities of long-term debt)
   $ 8,407,459     $ 7,244,724     $ 6,632,187  
Total Debt/Total Capitalization
     62.76 %     58.64 %     60.46 %
                         
 
(1)  Certain financial statement line items of prior year’s information have been re-grouped or reclassified to conform with current year presentation.  The re-groupings or reclassifications have not affected previously reported results of operations or common shareholders’ equity.

(2)  Allowance for Funds Used During Construction or Allowance for Borrowed Funds Used During Construction


 
 


RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
  
(Dollars in thousands)
  
                   
Nevada Power Company
                  
Funds From Operations (FFO)
                  
   
Year Ended December 31,
  
   
2008
    
2007(1)
    
2006(1)
  
                   
Net Income
   $ 151,431     $ 165,694     $ 224,540  
                         
Adjustments to reconcile net income to net cash from operating activities:
                        
                         
Depreciation and amortization
     171,080       152,139       141,585  
Deferred taxes and deferred investment tax credit
     45,039       56,868       107,392  
AFUDC(2) (Debt and Equity)
     (45,980 )     (29,057 )     (23,369 )
Reinstatement of deferred energy costs
     -       -       (178,825 )
Carrying charge on Lenzie plant
     -       (16,080 )     (33,440 )
Reinstated interest on deferred energy
     -       (11,076 )     -  
Other, net
     73,209       38,821       25,783  
Funds from Operations (Before Deferred Energy Costs)
     394,779       357,309       263,666  
Amortization of deferred energy costs, net of deferrals
     4,211       218,992       74,413  
Payment to terminating supplier
     -       -       (37,410 )
Proceeds from claim on terminating supplier
     -       -       26,391  
Adjusted Funds from Operations
   $ 398,990     $ 576,301     $ 327,060  
                         
Long-term debt
   $ 3,385,106     $ 2,528,141     $ 2,380,139  
Current maturities of long-term debt
     8,691       8,642       5,948  
Total Debt
   $ 3,393,797     $ 2,536,783     $ 2,386,087  
                         
Interest charges
   $ 186,822     $ 174,667     $ 176,612  
AFUDC(2) (Debt)
     20,063       13,196       11,614  
Adjusted Interest Expense
   $ 206,885     $ 187,863     $ 188,226  
                         
Total Debt/Funds from Operations
     8.60 x     7.10 x     9.05 x
Total Debt/Adjusted FFO
     8.51 x     4.40 x     7.30 x
Funds from Operations Interest Coverage
     2.91 x     2.90 x     2.40 x
Adjusted Funds From Operations Interest Coverage
     2.93 x     4.07 x     2.74 x
Common Shareholder's Equity
   $ 2,627,567     $ 2,376,740     $ 2,172,198  
Total Capitalization (including current maturities of long-term debt)
   $ 6,021,364     $ 4,913,523     $ 4,558,285  
Total Debt/Total Capitalization
     56.36 %     51.63 %     52.35 %
                         

(1)  Certain financial statement line items of prior year’s information have been re-grouped or reclassified to conform with current year presentation.  The re-groupings or reclassifications have not affected previously reported results of operations or common shareholders’ equity.

(2)  Allowance for Funds Used During Construction or Allowance for Borrowed Funds Used During Construction

 
 


RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
  
(Dollars in thousands)
  
                   
Sierra Pacific Power Company
                  
Funds From Operations (FFO)
                  
   
Year Ended December 31,
  
   
2008
    
2007(1)
    
2006(1)
  
                   
Net Income
   $ 90,582     $ 65,667     $ 57,709  
                         
Adjustments to reconcile net income to net cash from operating activities:
                  
                         
Depreciation and amortization
     89,528       83,393       87,279  
Deferred taxes and deferred investment tax credit
     24,598       (36,713 )     (39,361 )
AFUDC(2) (Debt and Equity)
     (21,988 )     (28,719 )     (11,976 )
Other, net
     22,872       29,451       23,457  
Funds from Operations (Before Deferred Energy Costs)
     205,592       113,079       117,108  
Amortization of deferred energy costs, net of deferrals
     (1,494 )     90,595       53,082  
Payment to terminating supplier
     -       -       (27,958 )
Proceeds from claim on terminating supplier
     -       -       14,974  
Adjusted Funds from Operations
   $ 204,098     $ 203,674     $ 157,206  
                         
Long-term debt
   $ 1,395,987     $ 1,084,550     $ 1,070,858  
Current maturities of long-term debt
     600       101,643       2,400  
Total Debt
   $ 1,396,587     $ 1,186,193     $ 1,073,258  
                         
                         
Interest charges
   $ 72,712     $ 60,735     $ 71,506  
AFUDC(2) (Debt)
     9,464       12,771       5,505  
Adjusted Interest Expense
   $ 82,176     $ 73,506     $ 77,011  
                         
Total Debt/Funds from Operations
     6.79 x     10.49 x     9.16 x
Total Debt/Adjusted FFO
     6.84 x     5.82 x     6.83 x
Funds from Operations Interest Coverage
     3.50 x     2.54 x     2.52 x
Adjusted Funds From Operations Interest Coverage
     3.48 x     3.77 x     3.04 x
Common Shareholder's Equity
   $ 877,961     $ 1,001,840     $ 884,737  
Total Capitalization (including current maturities of long-term debt)
   $ 2,274,548     $ 2,188,033     $ 1,957,995  
Total Debt/Total Capitalization
     61.40 %     54.21 %     54.81 %
                         

(1)  Certain financial statement line items of prior year’s information have been re-grouped or reclassified to conform with current year presentation.  The re-groupings or reclassifications have not affected previously reported results of operations or common shareholders’ equity.
 
(2)  Allowance for Funds Used During Construction or Allowance for Borrowed Funds Used During Construction.