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CFC’s Financial Webinar SeriesThe CFC KRTA:

Viewed through the eyes of a director

Financial Webinar Series

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CFC’s Financial Webinar SeriesThe CFC KRTA:

Viewed through the eyes of a director


TRENDS…





• Mercury Cougar

• Pontiac Firebird

• Oldsmobile Rocket 88

• Plymouth Road Runner

• Chevy Chevelle SS

What do most car magazine editors

consider to be the first muscle car? Was it the…


Today’s takeaway:

Learn to look for trends if you

want to make successful

decisions.


Steve KettlerVice President, Portfolio

Manager

XYZ Rural Electric Cooperative (XXX)XYZ Rural Electric Cooperative (XXX)XYZ Rural Electric Cooperative (XXX)XYZ Rural Electric Cooperative (XXX)

XYZ Rural Electric Cooperative (XXX)XYZ Rural Electric Cooperative (XXX)XYZ Rural Electric Cooperative (XXX)XYZ Rural Electric Cooperative (XXX)

How The KRTA Works

Compares System Value to Medians of Five

Comparison Groups by Year


What The KRTA DOES

Provides a Good Place to Begin Asking Questions


The KRTA DOES NOT

Provide Enough Data to Draw Conclusions Without

Interpretation


Key Ratios Directors Should

Monitor

• Revenue per kWh (rates)– Ratio 38: Residential Revenue per KWH Sold

• Operating costs– Ratio 105: Total cost of service minus power cost

per KWH sold

– Ratio 89: Power cost per total KWH sold


Key Ratios Directors Should Monitor

• Power outages– Ratio 144: System Average Interruption Duration

Index (SAIDI)

• Financial Coverage Ratios– Ratio 6: Times Interest Earned Ratio (TIER)

– Ratio 10: Modified Debt Service Coverage (MDSC)

– Ratio 12: Debt Service Coverage (DSC)

• Equity– Ratio 16: Equity to Total Assets


Residential Revenue / KWH Sold

95

100

105

110

115

2007 2008 2009 2010 2011

Mill

s p

er k

Wh

+6.1%

+4.8%+1.7%

+2.9%


Operating Cost Ratios

30

35

40

45

50

55

60

65

70

2007 2008 2009 2010 2011

Mill

s p

er k

Wh

105: Distribution Adder 89: Power Cost

+3.3% +5.1% -1.3% +3.7%

+7.2%+2.4% +2.6% +3.3%


Power Outages

100

120

140

160

180

200

220

2007 2008 2009 2010 2011

Min

ute

s

144: SAIDI

SAIDI = System Average Interruption Duration Index

2 Hrs

3 Hrs


Financial Coverage Ratios

1.75

2

2.25

2.5

2007 2008 2009 2010 2011

Mill

s p

er k

Wh

10: MDSC 6: TIER 12: DSC

Notes: RUS minimum TIER & DSC = 1.25; CFC minimum MDSC = 1.35


Equity as a % of Assets

40.5%

41.0%

41.5%

42.0%

42.5%

2007 2008 2009 2010 2011

Mill

s p

er k

Wh


Distribution Systems

• 815 distribution systems reporting for 2011

– 568 co-ops are RUS borrowers

– 247 systems are independent co-ops

• Executive Summary

– Mailed on June 22 to CEO’s


Growth Ratios

• kWh Sales

• Consumers

• Total Utility Plant (TUP)


3.70

1.22

(1.06)

4.80

(0.13)

-1.75

-0.75

0.25

1.25

2.25

3.25

4.25

5.25

6.25

2007 2008 2009 2010 2011

Annual Growth in KWH Sold (%)

815 817 816 813 814# Reporting

Co-ops

Annual Growth in kWh Sold (%)Median Rural Electric Distribution Cooperatives



Annual Growth in kWh Sold (%) by StateMedian Rural Electric Distribution Cooperatives

US Median


1.35

0.99

0.47 0.37

0.30

0.00

0.20

0.40

0.60

0.80

1.00

1.20

1.40

1.60

1.80

2.00

2007 2008 2009 2010 2011

Annual Growth in Number of Consumers

(%)

815 817 816 813 814# Reporting

Co-ops

Annual Growth in Number of Consumers(%)

Median Rural Electric Distribution Cooperatives


Annual Growth in Number of Consumers Served (%)

by StateMedian Rural Electric Distribution Cooperatives


Annual Growth in TUP Dollars (%)


5.72 5.23

4.40 3.92 3.92

0.00

2.00

4.00

6.00

8.00

2007 2008 2009 2010 2011

Annual Growth in TUP Dollars (%)

816 818 817 814 815# Reporting

Co-ops


Financial Ratios

• TIER

• MDSC

• Equity as % of Assets

• General Funds as a % of TUP


2.24 2.27 2.30 2.45 2.40

0.00

0.50

1.00

1.50

2.00

2.50

3.00

3.50

2007 2008 2009 2010 2011

TIER

820 819 817 816 815# Reporting

Co-ops

TIER



MDSC


1.86 1.82 1.85 1.95 1.81

0.00

0.50

1.00

1.50

2.00

2.50

3.00

3.50

2007 2008 2009 2010 2011

Modified DSC (MDSC)

820 819 817 816 815# Reporting

Co-ops


41.14 40.62 41.26 41.78 42.32

0.00

10.00

20.00

30.00

40.00

50.00

2007 2008 2009 2010 2011

Equity as a % of Assets

820 819 817 816 815# Reporting

Co-ops

Equity As A % of Assets



General Funds as a % of TUP


3.91 3.91 3.72

4.16 4.21

0.00

1.00

2.00

3.00

4.00

5.00

2007 2008 2009 2010 2011

General Funds per TUP (%)

820 819 817 816 815# Reporting

Co-ops


Rates and Costs Ratios

• Electric Revenue per kWh Sold (Mills)

• Power Cost per Total kWh Sold (Mills)

• Blended Interest Rate (%)

• Long-Term Interest as a % of Revenue


Electric Revenue per kWh Sold (Mills)


89.17 95.42 98.81 100.25

104.14

0.00

20.00

40.00

60.00

80.00

100.00

120.00

2007 2008 2009 2010 2011

Electric Revenue per KWH Sold (Mills)

819 818 816 815 814# Reporting

Co-ops


Power Cost per Total kWh Sold (Mills)


58.82

63.05

64.59

66.26

68.44

54.00

56.00

58.00

60.00

62.00

64.00

66.00

68.00

70.00

2007 2008 2009 2010 2011

Power Cost per Total KWH Sold (Mills)

819 818 816 815 814# Reporting

Co-ops


Blended Interest Rate (%)


5.19 5.12 5.07 4.96 4.81

0.00

2.00

4.00

6.00

2007 2008 2009 2010 2011

Blended Interest Rate (%)

813 811 809 807 805# Reporting

Co-ops


Long-Term Interest as a % of Revenue


5.27 5.06 5.14

4.87 4.66

0.00

2.00

4.00

6.00

2007 2008 2009 2010 2011

Long-Term Interest as a % of Revenue

813 811 809 807 805# Reporting

Co-ops


What the KRTA says…


Getting The Most From Your KRTA

• KRTA GraphPro

• KRTA Histogram

• Expert Analysis

• Staff and Board Presentations


Summary

• A Tool Designed to Help Begin Asking Questions

• Look for Both Positive & Negative Trends• Analyzed Relative to Other Ratios and

the Unique Characteristics of the System• Reviewed Annually by Management and

the Board of Directors


Now…let’s turn it over to our audience!


What is the key coverage ratio that CFC uses to determine if a member is in

compliance with its financial covenants?

A. TIER - Times Interest Earned Ratio

B. MDSC - Modified Debt Service Coverage

C. Equity to Total Assets

www.surveymonkey.com/s/cfcjuly19


WWW.NRUCFC.COOP

Events &

Training Tab

Look for the

replay of this

program early

next week


Mark Your Calendar For Our Next

Director Web Event:

October 18, 3 p.m. Eastern Time

The Topic isThe Topic is……

The Rise of Prepaid Metering:The Rise of Prepaid Metering:

The information coThe information co--op directors need to know!op directors need to know!


Our next Manager’s Event—Directors can attend too!

August 8August 8,

1 p.m. Eastern Daylight Time1 p.m. Eastern Daylight Time

The Economic Outlook for the The Economic Outlook for the Remainder of 2012Remainder of 2012: :

A conversation with John SuterA conversation with John Suter


Make the CFC KRTA truly your own…

Contact Contact youryour CFC regional vice CFC regional vice president for a personalized president for a personalized

review of this onereview of this one--ofof--a kind tool!a kind tool!


This program—The CFC KRTA: Viewed

through the eyes of a director—is a copyrighted presentation of CFC. No

portion of this program may be reproduced, used or distributed without

CFC’s written consent.


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