Business Context and Reporting Period
This Form 8-K, dated November 5, 2008, 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 nine months ended September 30, 2008. The filing incorporates by reference a press release containing the financial statements.
Key Financial Metrics
The filing text does not provide specific numerical values for revenue, profit, cash flow, margins, debt, or liquidity. It references a press release (Exhibit 99.1) containing the unaudited condensed consolidated statements of earnings. The company utilizes non-GAAP financial measures, including ongoing earnings, ongoing EBITDA, and earnings per share, to evaluate operations.
Material Changes and Accounting Adjustments
- Discontinued Operations: Gas operations, subject to a sale agreement signed on January 12, 2008, are classified as discontinued operations under GAAP pending regulatory approval.
- Non-GAAP Adjustments: Management includes discontinued operations in "ongoing earnings" to reflect continued management obligations. Additionally, depreciation on assets in discontinued operations is reflected in ongoing earnings, whereas GAAP does not record depreciation on such assets.
- Exclusions: Non-GAAP measures exclude non-recurring items, net unrealized mark-to-market gains/losses on economic hedges, impairments of intangible assets, and speculative trading results.
Guidance, Outlook, and Risks
Management provides "ongoing earnings guidance" to indicate expectations for financial performance. However, the filing explicitly states that this guidance is not a GAAP measure and does not represent an expectation of GAAP net earnings. Management notes it is generally unable to estimate the impact of reconciling items (such as accounting principle changes or mark-to-market adjustments) on forecasted GAAP earnings, and therefore cannot provide a corresponding GAAP equivalent for the guidance.
Investor Verification Checklist
- Review Exhibit 99.1 (Press Release) for specific GAAP and non-GAAP financial figures for the three and nine months ended September 30, 2008.
- Verify the status of the gas operations sale agreement and the timeline for New Mexico Public Regulation Commission approval.
- Examine the reconciliation between reported GAAP earnings and the company's "ongoing earnings" guidance to understand the magnitude of excluded items.
- Assess the impact of unrealized mark-to-market gains and losses on economic hedges on the company's reported volatility.