Business Context and Reporting Period
This Form 8-K, dated October 29, 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 and nine months ended September 30, 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 referenced Exhibit 99.1 (Press Release and Unaudited Condensed Consolidated Financial Statements) but are not detailed 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 earnings per diluted share.
- Cash earnings.
- Earnings before interest, taxes, depreciation, and amortization (EBITDA) and ongoing EBITDA.
Material Changes and Discontinued Operations
A significant structural change occurred on January 30, 2009, when PNM Resources completed the sale of its natural gas operations to New Mexico Gas Company, Inc. These operations are classified as discontinued operations under GAAP. Management included these discontinued operations in "ongoing earnings" prior to the closing date to reflect obligations to regulated customers, although GAAP does not record depreciation on assets in discontinued operations.
Guidance, Outlook, and Management Commentary
Management provides guidance based on non-GAAP measures such as ongoing earnings, ongoing EBITDA, and cash earnings. The Company explicitly states that:
- Ongoing earnings guidance is not a GAAP measure and does not represent an expectation of GAAP net earnings.
- Management is generally unable to estimate the impact of reconciling items between ongoing earnings guidance and forecasted GAAP earnings.
- Reconciling items may include cumulative effects of accounting changes, non-recurring transactions, and net unrealized mark-to-market gains/losses on economic hedges.
- Non-GAAP measures exclude non-recurring items, impairments of intangible assets, unrealized impairments on nuclear decommissioning trusts, and speculative trading results.
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.
Investor Verification Checklist
- Review Exhibit 99.1 for specific GAAP revenue, net earnings, and cash flow figures for the three and nine months ended September 30, 2009.
- Verify the reconciliation between reported GAAP earnings and the non-GAAP "ongoing earnings" metrics provided in the press release.
- Confirm the treatment of the natural gas operations sale and its impact on the current period's financial statements.
- Assess the magnitude of non-recurring items and mark-to-market adjustments excluded from non-GAAP measures.