Business Context and Reporting Period
This Form 8-K, dated May 1, 2009, 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 months ended March 31, 2009. The filing incorporates a press release and preliminary financial statements as Exhibit 99.1.
Key Financial Metrics
The filing text 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) and are not explicitly stated in the body of this 8-K report.
The Company utilizes several non-GAAP financial measures to evaluate performance, including:
- Ongoing earnings (loss) and ongoing diluted earnings (loss) per share.
- Cash earnings.
- Earnings before interest, taxes, depreciation, and amortization (EBITDA) and ongoing EBITDA.
These measures exclude non-recurring items, net unrealized mark-to-market gains/losses on economic hedges, impairments of intangible assets, unrealized impairments on nuclear decommissioning trusts, and speculative trading results.
Material Changes and Discontinued Operations
A significant material change noted is the successful sale of the Company's natural gas operations to New Mexico Gas Company, Inc., completed on January 30, 2009. These operations are classified as discontinued operations under GAAP.
Management includes discontinued operations in "ongoing earnings" prior to the closing date to reflect obligations to regulated customers. Additionally, while GAAP does not record depreciation on assets in discontinued operations, the Company reflects this depreciation in its ongoing earnings calculations.
Guidance, Outlook, and Risks
The Company provides guidance based on "ongoing earnings," "ongoing EBITDA," and "cash earnings" rather than GAAP net earnings. Management states it is generally unable to estimate the impact of reconciling items between ongoing earnings guidance and forecasted GAAP earnings. Consequently, the Company does not provide a corresponding GAAP equivalent for its earnings guidance.
Reconciling items that may affect the difference between non-GAAP and GAAP measures include:
- Cumulative effects of changes in accounting principles or estimates.
- Revenues and expenses from transactions outside normal business operations.
- Net unrealized mark-to-market gains and losses on economic hedges.
The filing includes a limitation stating that the information is furnished pursuant to Item 2.02 and is not deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, nor is it incorporated by reference in filings under the Securities Act of 1933.
Investor Verification Checklist
- Review Exhibit 99.1 (Press Release) for specific numerical values regarding revenue, net earnings, and cash flow for the quarter ended March 31, 2009.
- Verify the reconciliation between reported GAAP results and the non-GAAP "ongoing earnings" metrics provided in the press release.
- Confirm the impact of the January 30, 2009, sale of natural gas operations on the current quarter's financial statements.
- Assess the Company's ability to provide GAAP equivalents for future guidance, given the stated limitations on estimating reconciling items.