Business Context and Reporting Period
This Form 8-K, filed on August 6, 2010, reports the unaudited results of operations for PNM Resources, Inc. and its subsidiaries (Public Service Company of New Mexico and Texas-New Mexico Power Company) for the three and six months ended June 30, 2010. The filing incorporates a press release (Exhibit 99.1) containing condensed financial statements.
Key Financial Metrics
The filing text itself does not provide specific numerical values for revenue, profit, cash flow, margins, debt, or liquidity. These figures are contained within the incorporated press release (Exhibit 99.1) referenced in Item 2.02. The document notes the use of non-GAAP measures, including ongoing earnings, cash earnings, and EBITDA, which exclude net unrealized mark-to-market gains/losses on economic hedges and changes in unrealized impairments on nuclear decommissioning assets.
Material Changes and Corrections
- Discontinued Operations: The Company sold its natural gas operations to New Mexico Gas Company on January 30, 2009. These are classified as discontinued operations under GAAP, though management included them in "ongoing earnings" prior to closing to reflect obligations to regulated customers.
- Correction of Prior Data: The press release was corrected for typographical errors in Schedule 7 regarding Optim Energy Ongoing EBITDA for the three and six months ended June 30, 2009. Specifically, amounts for the mark-to-market impact of economic hedges and purchase accounting amortizations were inadvertently swapped. The filing states this error had no impact on the total ongoing EBITDA amounts.
Guidance, Outlook, and Risks
Management utilizes ongoing earnings, ongoing EBITDA, and cash earnings guidance to communicate expectations of financial performance. The filing explicitly states that these non-GAAP measures are not substitutes for GAAP measures. Management notes it is generally unable to estimate the impact of reconciling items (such as mark-to-market variances and non-recurring items) on forecasted GAAP earnings, and therefore cannot provide a GAAP equivalent for its earnings guidance.
Investor Verification Checklist
- Review Exhibit 99.1 (Press Release) for specific GAAP and non-GAAP financial figures for the periods ended June 30, 2010 and 2009.
- Verify the reconciliation between reported GAAP net earnings and the non-GAAP "ongoing earnings" and "EBITDA" metrics.
- Confirm the impact of the corrected Schedule 7 data on historical comparisons for Optim Energy.
- Assess the magnitude of excluded items (mark-to-market hedges, nuclear decommissioning impairments) to understand the variance between GAAP and non-GAAP results.