UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
FORM 10-Q
| þ | Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 | |
| o | Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
| For the Quarter Ended: September 30, 2002 | Commission File Number: 001-15891 |
NRG Energy, Inc.
| Delaware (State or other jurisdiction of incorporation or organization) |
41-1724239 (I.R.S. Employer Identification No.) |
|
| 901 Marquette Avenue, Suite 2300 Minneapolis, Minnesota (Address of principal executive offices) |
55402 (Zip Code) |
(612) 373-5300
(Registrant’s telephone number, including area code)
(Former name, former address and former fiscal year, if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes þ No o
Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12 b-2 of the Exchange Act).
Yes o No þ
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
As of October 31, 2002, there were 3 shares of Class A common stock and 1 share of Common stock outstanding, all of which were owned by Xcel Energy Wholesale Group Inc.
TABLE OF CONTENTS
Index
| Page No. | |||||||||
| Part I — FINANCIAL INFORMATION | |||||||||
| Item 1. | Consolidated
Financial Statements and Notes |
3 | |||||||
Consolidated Statement of Operations |
3 | ||||||||
Consolidated Balance Sheet |
4-5 | ||||||||
Consolidated Statement of Stockholder’s Deficit |
6-7 | ||||||||
Consolidated Statement of Cash Flows |
8 | ||||||||
Notes to Financial Statements |
9-33 | ||||||||
| Item 2. | Management’s Discussion and Analysis of Financial
Condition and Results of Operations |
34-43 | |||||||
| Item 3. | Quantitative and Qualitative Disclosures About Market Risk |
43 | |||||||
| Item 4. | Controls and Procedures |
43 | |||||||
| Part II — OTHER INFORMATION | |||||||||
| Item 1. | Legal Proceedings |
44 | |||||||
| Item 3. | Defaults Upon Senior Securities |
47 | |||||||
| Item 6. | Exhibits and Reports on Form 8-K |
49 | |||||||
Cautionary Statement Regarding Forward Looking Information |
51-52 | ||||||||
| SIGNATURES | 53 | ||||||||
| CERTIFICATIONS | 54-55 | ||||||||
2
Part I — FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements and Notes
NRG Energy, Inc. and Subsidiaries
Consolidated Statement of Operations
(Unaudited)
| Three Months Ended | Nine Months Ended | ||||||||||||||||
| September 30, | September 30, | ||||||||||||||||
| (In thousands) | 2002 | 2001 | 2002 | 2001 | |||||||||||||
Operating Revenues and Equity Earnings |
|||||||||||||||||
Revenues from majority-owned operations |
$ | 729,451 | $ | 749,071 | $ | 1,859,123 | 1,855,290 | ||||||||||
Equity in earnings of unconsolidated affiliates |
25,920 | 111,130 | 68,916 | 193,874 | |||||||||||||
Total operating revenues and equity earnings |
755,371 | 860,201 | 1,928,039 | 2,049,164 | |||||||||||||
Operating Costs and Expenses |
|||||||||||||||||
Cost of majority-owned operations |
508,986 | 449,208 | 1,291,693 | 1,209,169 | |||||||||||||
Depreciation and amortization |
74,530 | 55,506 | 207,751 | 132,834 | |||||||||||||
General, administrative and development |
66,799 | 63,188 | 176,049 | 143,107 | |||||||||||||
Write down and losses on equity method investments |
117,868 | — | 122,037 | — | |||||||||||||
Special charges |
2,908,551 | — | 2,964,917 | — | |||||||||||||
Total operating costs and expenses |
3,676,734 | 567,902 | 4,762,447 | 1,485,110 | |||||||||||||
Operating (Loss)/Income |
(2,921,363 | ) | 292,299 | (2,834,408 | ) | 564,054 | |||||||||||
Other Income (Expense) |
|||||||||||||||||
Minority interest in losses/(earnings) of consolidated
subsidiaries |
26,403 | (892 | ) | 26,791 | (6,886 | ) | |||||||||||
Other income, net |
8,277 | 15,101 | 16,139 | 25,958 | |||||||||||||
Interest expense, net |
(138,392 | ) | (123,450 | ) | (380,606 | ) | (304,085 | ) | |||||||||
Total other expense |
(103,712 | ) | (109,241 | ) | (337,676 | ) | (285,013 | ) | |||||||||
Net (Loss)/Income From Continuing Operations Before
Income Taxes |
(3,025,075 | ) | 183,058 | (3,172,084 | ) | 279,041 | |||||||||||
Income Tax (Benefit)/Expense |
(106,516 | ) | 55,562 | (161,130 | ) | 68,151 | |||||||||||
Net (Loss)/Income From Continuing Operations |
(2,918,559 | ) | 127,496 | (3,010,954 | ) | 210,890 | |||||||||||
Net (Loss)/Income on Discontinued Operations |
(6,755 | ) | 14,084 | 17,825 | 14,982 | ||||||||||||
Net (Loss)/Income |
$ | (2,925,314 | ) | $ | 141,580 | $ | (2,993,129 | ) | $ | 225,872 | |||||||
See notes to consolidated financial statements.
3
NRG Energy, Inc. and Subsidiaries
Consolidated Balance Sheet
(Unaudited)
| September 30, | December 31, | |||||||||
| (In thousands) | 2002 | 2001 | ||||||||
Assets |
||||||||||
Current Assets |
||||||||||
Cash and cash equivalents |
$ | 347,654 | $ | 122,153 | ||||||
Restricted cash |
208,277 | 143,009 | ||||||||
Accounts receivable — trade, less allowance for doubtful accounts of $26,033
and $22,962 |
349,952 | 245,441 | ||||||||
Accounts receivable — affiliates |
8,503 | 1,571 | ||||||||
Income tax receivable |
2,758 | 29,894 | ||||||||
Inventory |
262,225 | 324,465 | ||||||||
Current portion of notes receivable |
3,000 | 737 | ||||||||
Derivative instruments — at market |
71,639 | 54,934 | ||||||||
Prepayments and other current assets |
119,869 | 67,873 | ||||||||
Current assets held for sale |
192,135 | 180,413 | ||||||||
Total current assets |
1,566,012 | 1,170,490 | ||||||||
Property, Plant and Equipment, at Original Cost |
||||||||||
In service |
7,162,125 | 6,401,413 | ||||||||
Under construction |
595,218 | 2,942,979 | ||||||||
Total property, plant and equipment |
7,757,343 | 9,344,392 | ||||||||
Less accumulated depreciation |
(584,992 | ) | (458,533 | ) | ||||||
Net property, plant and equipment |
7,172,351 | 8,885,859 | ||||||||
Other Assets |
||||||||||
Equity investments in affiliates |
1,023,632 | 1,050,510 | ||||||||
Notes receivable |
606,527 | 573,454 | ||||||||
Notes receivable — affiliates |
201,268 | 202,411 | ||||||||
Intangible assets, net of accumulated amortization of $22,941 and $20,860 |
83,323 | 84,170 | ||||||||
Debt issuance costs, net of accumulated amortization of $26,624 and $17,250 |
159,652 | 107,661 | ||||||||
Derivative instruments — at market |
255,415 | 179,605 | ||||||||
Other assets, net of accumulated amortization of $3,919 and $2,979 |
55,383 | 39,307 | ||||||||
Non-current assets held for sale |
550,888 | 584,211 | ||||||||
Total other assets |
2,936,088 | 2,821,329 | ||||||||
Total Assets |
$ | 11,674,451 | $ | 12,877,678 | ||||||
See notes to consolidated financial statements.
4
NRG Energy, Inc. and Subsidiaries
Consolidated Balance Sheet
(Unaudited)
| September 30, | December 31, | |||||||||
| (In thousands) | 2002 | 2001 | ||||||||
Liabilities and Stockholder’s Deficit |
||||||||||
Current Liabilities |
||||||||||
Current portion of long-term debt |
6,989,468 | $ | 237,282 | |||||||
Revolving line of credit |
1,000,000 | 170,000 | ||||||||
Revolving line of credit, non-recourse debt |
— | 40,000 | ||||||||
Project-level, non-recourse debt |
14,871 | 22,156 | ||||||||
Corporate level, recourse debt |
— | 600,000 | ||||||||
Accounts payable |
576,463 | 288,897 | ||||||||
Accrued property, sales and other taxes |
20,319 | 14,585 | ||||||||
Accrued salaries, benefits and related costs |
11,776 | 38,913 | ||||||||
Accrued interest |
167,542 | 95,010 | ||||||||
Derivative instruments — at market |
38,066 | 21,910 | ||||||||
Other current liabilities |
119,547 | 94,174 | ||||||||
Current liabilities held for sale |
296,929 | 310,810 | ||||||||
Total current liabilities |
9,234,981 | 1,933,737 | ||||||||
Other Liabilities |
||||||||||
Project-level, long-term, non-recourse debt |
1,659,396 | 4,643,334 | ||||||||
Corporate level, long-term, recourse debt |
— | 2,972,400 | ||||||||
Deferred income taxes |
249,500 | 427,040 | ||||||||
Postretirement and other benefit obligations |
71,523 | 75,455 | ||||||||
Derivative instruments — at market |
104,786 | 36,389 | ||||||||
Other long-term obligations and deferred income |
217,515 | 222,468 | ||||||||
Minority interest |
30,822 | 49,978 | ||||||||
Non-current liabilities held for sale |
240,895 | 279,748 | ||||||||
Total liabilities |
11,809,418 | 10,640,549 | ||||||||
Commitments and Contingencies |
||||||||||
Stockholder’s Deficit |
||||||||||
Class A — common stock; $.01 par value; 100 shares authorized; 3
shares at September 30, 2002 and 147,604,500 shares at December 31,
2001
issued and outstanding |
— | 1,476 | ||||||||
Common stock; $.01 par value; 100 shares authorized; 1
share at September 30, 2002 and 50,939,875 shares at December 31, 2001
issued and outstanding |
— | 509 | ||||||||
Additional paid-in capital |
2,227,692 | 1,713,984 | ||||||||
Retained (deficit)/earnings |
(2,357,780 | ) | 635,349 | |||||||
Accumulated other comprehensive loss |
(4,879 | ) | (114,189 | ) | ||||||
Total stockholder’s (deficit)/equity |
(134,967 | ) | 2,237,129 | |||||||
Total Liabilities and Stockholder’s Deficit |
$ | 11,674,451 | $ | 12,877,678 | ||||||
See notes to consolidated financial statements.
5
NRG Energy, Inc. and Subsidiaries
Consolidated Statement of Stockholder’s Deficit
For the Three Months Ended September 30, 2002 and September 30, 2001
(Unaudited)
| Class A | Accumulated | |||||||||||||||||||||||||||||||
| Common | Common | Additional | Other | Total | ||||||||||||||||||||||||||||
| Paid-in | Retained | Comprehensive | Stockholder's | |||||||||||||||||||||||||||||
| (In thousands) | Stock | Shares | Stock | Shares | Capital | Deficit | Income (Loss) | Deficit | ||||||||||||||||||||||||
Balances at June 30, 2001 |
$ | 1,476 | 147,605 | $ | 509 | 50,928 | $ | 1,714,001 | $ | 454,437 | $ | (120,927 | ) | $ | 2,049,496 | |||||||||||||||||
Net Income |
141,580 | 141,580 | ||||||||||||||||||||||||||||||
Foreign currency translation
adjustments |
14,655 | 14,655 | ||||||||||||||||||||||||||||||
Deferred unrealized losses on
derivatives, net |
(32,678 | ) | (32,678 | ) | ||||||||||||||||||||||||||||
Comprehensive income |
123,557 | |||||||||||||||||||||||||||||||
Issuance of common stock |
3 | 151 | 151 | |||||||||||||||||||||||||||||
Balances at September 30,
2001 |
$ | 1,476 | 147,605 | $ | 509 | 50,931 | $ | 1,714,152 | $ | 596,017 | $ | (138,950 | ) | $ | 2,173,204 | |||||||||||||||||