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 (used by) 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)
                                    
   
Nine Months ended September 30,
    
 
    
Year Ended December 31,
    
LTM September 30,
  
   
2009
    
2008(1)
    
2008
    
2007(1)
    
2006(1)
    
2009
  
                                     
Net Income
   $ 178,785     $ 210,975     $ 208,887     $ 197,295     $ 277,451     $ 176,697  
                                                 
Adjustments to reconcile net income to net cash from operating activities:
                                             -  
Depreciation and amortization
     240,912       185,656       260,608       235,532       228,875       315,864  
Deferred taxes and deferred investment tax credit
     115,389       172,425       52,060       79,337       136,026       (4,976 ) 
AFUDC(2) (Debt and Equity)
     (34,940 )     (58,353 )     (67,968 )     (57,776 )     (35,345 )     (44,555 )
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
     11,188       13,087       100,482       71,543       53,561       98,583  
Funds from Operations (Before Deferred Energy Costs)
     511,334       523,790       554,069       497,406       385,376       541,613  
                                                 
Deferred energy costs, net of amortizations
     221,321       (63,374 )     2,717       309,587       127,495       287,412  
Payment to terminating supplier
     -       -       -       -       (65,368 )     -  
Proceeds from claim on terminating supplier
     -       -       -       -       41,365       -  
Adjusted Funds from Operations
   $ 732,655     $ 460,416     $ 556,786     $ 806,993     $ 488,868     $ 829,025  
                                                 
Long-term debt
   $ 5,549,052     $ 4,793,078     $ 5,266,982     $ 4,137,864     $ 4,001,542     $  5,549,052  
Current maturities of long-term debt
     9,286       9,794       9,291       110,285       8,348       9,286  
Total Debt
   $ 5,558,338     $ 4,802,872     $ 5,276,273     $ 4,248,149     $ 4,009,890     $ 5,558,338  
                                                 
                                                 
Interest charges
   $  250,996     $ 213,500     $ 300,857     $ 279,788     $ 311,088     $  338,353  
AFUDC(2) (Debt)
     15,847       25,418       29,527       25,967       17,119       19,956  
Adjusted Interest Expense
   $ 266,843     $ 238,918     $ 330,384     $ 305,755     $ 328,207     $ 358,309  
                                                 
Total Debt/Funds from operations
                     9.52 x     8.54 x     10.41 x     10.26 x
Total Debt/Adjusted FFO
                     9.48 x     5.26 x     8.20 x     6.70 x
Funds from Operations Interest Coverage
                     2.68 x     2.63 x     2.17 x     2.51 x
Adjusted Funds From Operations Interest Coverage
                 2.69 x     3.64 x     2.49 x     3.31 x
Common Shareholders' Equity
                   $ 3,131,186     $ 2,996,575     $ 2,622,297     $ 3,243,820  
Total Capitalization (including current maturities of long-term debt)
             $ 8,407,459     $ 7,244,724     $ 6,632,187     $ 8,802,158  
Total Debt/Total Capitalization
                     62.76 %     58.64 %     60.46 %     63.15 %
                                                 
                                                 

 
(1)  Certain financial statement line items of prior period's information have been re-grouped or reclassified to conform with current period presentation.  The re-grouping 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.


 
 
 


 
(Dollars in thousands)
  
   
Nevada Power Company
  
Funds From Operations (FFO)
                                    
   
Nine Months ended September 30,
    
 
    
Year Ended December 31,
    
LTM September 30,
  
 
  
2008
    
2008(1)
    
2008
    
2007(1)
    
2006(1)
    
2009
  
                                     
Net Income
   $ 140,941     $ 165,482     $ 151,431     $ 165,694     $ 224,540     $ 126,890  
                                              -  
Adjustments to reconcile net income to net cash from operating activities:
                                             -  
Depreciation and amortization
     160,869       120,855       171,080       152,139       141,585       211,094  
Deferred taxes and deferred investment tax credit
     100,126       89,543       45,039       56,868       107,392       55,622  
AFUDC(2) (Debt and Equity)
     (30,041 )     (37,596 )     (45,980 )     (29,057 )     (23,369 )     (38,425 )
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
     (14,497 )     2,659       73,209       38,821       25,783       56,053  
Funds from Operations (Before Deferred Energy Costs)
     357,398       340,943       394,779       357,309       263,666       411,234  
                                                 
Deferred energy costs, net of amortizations
     144,656       (49,647 )     4,211       218,992       74,413       198,514  
Payment to terminating supplier
     -       -       -       -       (37,410 )     -  
Proceeds from claim on terminating supplier
     -       -       -       -       26,391       -  
Adjusted Funds from Operations
   $ 502,054     $ 291,296     $ 398,990     $ 576,301     $ 327,060     $ 609,748  
                                                 
Long-term debt
   $  3,701,308     $  2,975,201     $ 3,385,106     $ 2,528,141     $ 2,380,139     $ 3,701,308  
Current maturities of long-term debt
     9,286       8,656       8,691       8,642       5,948       9,286  
Total Debt
   $ 3,710,594     $ 2,983,857     $ 3,393,797     $ 2,536,783     $ 2,386,087     $ 3,710,594  
                                                 
Interest charges
   $ 170,535     $ 130,732     $ 186,822     $ 174,667     $ 176,612     $  226,625  
AFUDC(2) (Debt)
     13,483       16,503       20,036       13,196       11,614       17,016  
Adjusted Interest Expense
   $ 184,018     $ 147,235     $ 206,858     $ 187,863     $ 188,226     $ 243,641  
                                                 
Total Debt/Funds from Operations
                     8.60 x     7.10 x     9.05 x     9.02 x
Total Debt/Adjusted FFO
                     8.51 x     4.40 x     7.30 x     6.09 x
Funds from Operations Interest Coverage
                     2.91 x     2.90 x     2.40 x     2.69 x
Adjusted Funds From Operations Interest Coverage
               2.93 x     4.07 x     2.74 x     3.50 x
Common Shareholder's Equity
                   $ 2,627,567     $ 2,376,740     $ 2,172,198     $ 2,691,551  
Total Capitalization (including current maturities of long-term debt)
             $ 6,021,364     $ 4,913,523     $ 4,558,285     $ 6,402,145  
Total Debt/Total Capitalization
                     56.36 %     51.63 %     52.35 %     57.96 %
                                                 
                                                 
                               

(1)  Certain financial statement line items of prior period's information have been re-grouped or reclassified to conform with current period presentation.  The re-grouping 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)
                                    
   
Nine Months ended September 30,
    
 
    
Year Ended December 31,
    
LTM September 30,
  
   
2009
    
2008(1)
    
2008
    
2007(1)
    
2006(1)
    
2009
  
                                     
Net Income
   $ 58,206     $ 68,052     $ 90,582     $ 65,667     $ 57,709     $ 80,736  
                                                 
Adjustments to reconcile net income to net cash from operating activities:
                                                
Depreciation and amortization
     80,043       64,801       89,528       83,393       87,279       104,770  
Deferred taxes and deferred investment tax credit
     38,782       28,472       24,598       (36,713 )     (39,361 )     34,908  
AFUDC(2) (Debt and Equity)
     (4,899 )     (20,757 )     (21,988 )     (28,719 )     (11,976 )     (6,130 )
Other, net
     24,917       14,476       22,872       29,451       23,457       33,313  
Funds from Operations (Before Deferred Energy Costs)
     197,049       155,044       205,592       113,079       117,108       247,597  
                                                 
Deferred energy costs, net of amortizations
     76,665       (13,727 )     (1,494 )     90,595       53,082       88,898  
Payment to terminating supplier
     -       -       -       -       (27,958 )     -  
Proceeds from claim on terminating supplier
     -       -       -       -       14,974       -  
Adjusted Funds from Operations
   $ 273,714     $ 141,317     $ 204,098     $ 203,674     $ 157,206     $ 336,495  
                                                 
Long-term debt
   $ 1,362,002     $ 1,292,867     $ 1,395,987     $ 1,084,550     $ 1,070,858     $ 1,362,002  
Current maturities of long-term debt
     -       1,139       600       101,643       2,400       -  
Total Debt
   $ 1,362,002     $ 1,294,006     $ 1,396,587     $ 1,186,193     $ 1,073,258     $ 1,362,002  
                                                 
                                                 
Interest charges
   $ 51,473     $ 51,458     $ 72,712     $ 60,735     $ 71,506     $ 72,727  
AFUDC(2) (Debt)
     2,364       8,915       9,464       12,771       5,505       2,913  
Adjusted Interest Expense
   $ 53,837     $ 60,373     $ 82,176     $ 73,506     $ 77,011     $ 75,640  
                                                 
Total Debt/Funds from Operations
                     6.79 x     10.49 x     9.16 x     5.50 x
Total Debt/Adjusted FFO
                     6.84 x     5.82 x     6.83 x     4.05 x
Funds from Operations Interest Coverage
                     3.50 x     2.54 x     2.52 x     4.27 x
Adjusted Funds From Operations Interest Coverage
               3.48 x     3.77 x     3.04 x     5.45 x
Common Shareholder's Equity
                   $ 877,961     $ 1,001,840     $ 884,737     $ 994,495  
Total Capitalization (including current maturities of long-term debt)
             $ 2,274,548     $ 2,188,033     $ 1,957,995     $ 2,356,497  
Total Debt/Total Capitalization
                     61.40 %     54.21 %     54.81 %     57.80 %
                                                 
                                                 

(1)  Certain financial statement line items of prior period's information have been re-grouped or reclassified to conform with current period presentation.  The re-grouping 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.