National Rural Utilities Cooperative Finance Corporation Releases Final Data From 2009 Key Ratio Trend Analysis

  National Rural Utilities Cooperative Finance Corporation (CFC) (NYSE: NRU) (NYSE: NRN) (NYSE: NRC) announced final results from its Key Ratio Trend Analysis (KRTA), an annual assessment of financial trends among electric distribution cooperatives nationwide.

"Electric cooperatives successfully managed their businesses during another challenging year, as evidenced by KRTA data showing healthy margins, equity growth and strong financial ratios," said Claudia Phillips, CFC vice president, Program and Planning Analysis, and KRTA manager.

The latest KRTA report is based on data submitted by 817 distribution cooperatives for the year ending December 31, 2009. Phillips identified four major findings in the data:

• Cooperative financial ratios remained strong. The median times interest earned ratio (TIER), which measures the ability to generate earnings adequate to meet interest payments on long-term debt, increased to 2.30 -- the highest level in the five-year period covered by the report. The modified debt service coverage (MDSC) ratio, which measures a system's ability to cover cash requirements, adjusted to eliminate non-cash amounts included in margins, increased to 1.85. Equity as a percentage of assets rose by 64 basis points to 41.3 percent. The blended interest rate, which measures the weighted cost of long-term borrowed funds, declined by five basis points to a median level of 5.07 percent. This is the lowest level since 2005 when it was 4.92 percent.
• Revenue and margins outpaced increasing operating costs. On the income side of the ledger, median total operating revenue per kilowatt-hour (kwh) sold rose by 3.8 percent to 100.87 mills (one mill equals one-tenth of one cent). On the expense side, total cost of service per kwh sold rose by 3.1 percent to 97.39 mills. The median power cost per kwh sold rose by 2.4 percent to 64.59 mills, while cost of service (minus power costs) per kwh sold rose by 5.1 percent to 34.03 mills. Median total margins per kwh sold -- which measures revenue received over and above the total cost of providing electric service -- increased by a healthy 9 percent to 6.68 mills and further indicates that cooperatives are more than meeting expenses.
• Kilowatt-hour sales fell, but the decline was less than that of the industry as a whole. Total kwh sold fell by 1.06 percent, compared with a 4.22-percent drop in retail sales for the entire electric utility industry (industry data from U.S. Energy Information Administration).
• Consumers continued to pay their electric bills despite the weak economy. Accounts receivable over 60 days as a percentage of operating revenue was just 0.17 percent -- unchanged from 2008. The amount written off as a percentage of operating revenue increased only slightly to 0.20 percent in 2009 from 0.18 percent in 2008.

The following national totals were also derived from reported KRTA data:

• Total combined megawatt-hour (mwh) sales fell 1.94 percent in 2009 to 389 million mwh (816 rural electric distribution systems reported mwh sales).
• Total mwh sales by class of service show residential consumers at 57 percent, commercial and industrial accounts at 39 percent, irrigation at about 2 percent and other at about 2 percent.
• Electric cooperatives added 86,262 new residential households in 2009.
• Electric distribution cooperatives' gross utility plant investment totaled more than $82.2 billion in 2009, up roughly $3.9 billion from 2008.

About CFC CFC is a cooperative association whose principal purpose is to provide its members with financing to supplement the loan programs of the Rural Utilities Service (RUS) of the United States Department of Agriculture. CFC provides attractively priced financial products to rural electric and telecommunications members while maintaining sound financial results required for investment-grade credit ratings on CFC debt instruments. More information can be found online at www.nrucfc.coop.

About KRTA CFC developed the KRTA in 1975 to help electric cooperative managers and board members analyze a complete picture of their system's performance as compared to national median numbers (medians are used as opposed to averages, which can be skewed by extreme responses on the high or low end). The KRTA is based on unaudited data from RUS and CFC Form 7 reports. All distribution cooperatives are welcome to provide data and receive a KRTA report regardless of membership status with CFC. In 2009, 817 of 864 electric distribution cooperatives reported.

CFC's Final KRTA Data (2005 to 2009) All numbers are medians

TIER 2005: 2.20 2006: 2.29 2007: 2.24 2008: 2.27 2009: 2.30

MDSC 2005: 1.90 2006: 1.91 2007: 1.86 2008: 1.82 2009: 1.85

Equity as % of Assets 2005: 42.3% 2006: 42.0% 2007: 41.1% 2008: 40.62% 2009: 41.26%

Power Cost per Total kwh Sold (mills) 2005: 51.67 2006: 56.53 2007: 58.82 2008: 63.05 2009: 64.59

Total Cost of Service (Minus Power Costs) per kwh Sold (mills) 2005: 29.81 2006: 30.71 2007: 31.33 2008: 32.38 2009: 34.03

Total Cost of Electrical Service per kwh Sold (mills) 2005: 80.74 2006: 85.45 2007: 88.09 2008: 94.48 2009: 97.39

Total Operating Expense per kwh Sold (mills) 2005: 18.12 2006: 18.66 2007: 19.04 2008: 19.60 2009: 20.27

Total Operating Revenue per kwh Sold (mills) 2005: 83.40 2006: 88.12 2007: 91.18 2008: 97.15 2009: 100.87

Total Margins per kwh Sold (mills) 2005: 4.91 2006: 5.71 2007: 6.05 2008: 6.13 2009: 6.68

Annual Growth in Number of Consumers (%) 2005: 1.50% 2006: 1.51% 2007: 1.35% 2008: 0.99% 2009: 0.47%

Annual Growth in kwh Sold (%) 2005: 4.66% 2006: 1.78% 2007: 3.70% 2008: 1.22% 2009: -1.06%

Accounts Receivable Over 60 Days as % of Operating Revenue 2005: 0.23% 2006: 0.20% 2007: 0.19% 2008: 0.17% 2009: 0.17%

Amount Written Off as % of Operating Revenue 2005: 0.18% 2006: 0.18% 2007: 0.18% 2008: 0.18% 2009: 0.20%

Contact: Mike O'Brien Vice President Corporate Communications 703-709-6709 Email Contact