UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
FORM 10-Q
| [X] | Quarterly report pursuant to section 13 or 15(d) of the securities exchange act of 1934 | |
| [ ] | 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 No. 333-48900 |
NRG South Central Generating LLC
(Exact name of Registrant as specified in its charter)
| Delaware (State or other jurisdiction of incorporation or organization) |
41-1963217 (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)
None
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 to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter 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 x No o
Indicate by checkmark whether the Registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes o No x
Index
Part I |
||||||||
Item 1 |
Consolidated Financial Statements and Notes | 1 | ||||||
| Consolidated Statements of Income | 1 | |||||||
| Consolidated Balance Sheets | 2 | |||||||
| Consolidated Statements of Members’ Equity | 3 | |||||||
| Consolidated Statements of Cash Flows | 4 | |||||||
| Notes to Consolidated Financial Statements | 5 | |||||||
Item 2 |
Management’s Discussion and Analysis of Financial Condition and | |||||||
| Results of Operation | 18 | |||||||
Item 3 |
Quantitative and Qualitative Disclosures About Market Risk | 25 | ||||||
Item 4 |
Controls and Procedures | 25 | ||||||
Part II |
||||||||
Item 1 |
Legal Proceedings | 25 | ||||||
Item 3 |
Defaults on Senior Securities | 26 | ||||||
Item 4 |
Controls and Procedures | 26 | ||||||
Item 6 |
Exhibits and Reports on Form 8-K | 27 | ||||||
| Cautionary Statement Regarding Forward Looking Information | 28 | |||||||
SIGNATURES |
29 | |||||||
CERTIFICATION |
30 | |||||||
NRG SOUTH CENTRAL GENERATING LLC AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
| Three Months | Three Months | Nine Months | Nine Months | |||||||||||||||
| Ended | Ended | Ended | Ended | |||||||||||||||
| September 30, | September 30, | September 30, | September 30, | |||||||||||||||
| (Thousands of Dollars) | 2002 | 2001 | 2002 | 2001 | ||||||||||||||
Operating revenues |
||||||||||||||||||
Revenues from majority owned operations |
$ | 102,852 | $ | 110,185 | $ | 296,030 | $ | 313,312 | ||||||||||
Earnings (losses) of unconsolidated
affiliates |
1,248 | — | (3,146 | ) | — | |||||||||||||
Total operating revenues and equity
earnings |
104,100 | 110,185 | 292,884 | 313,312 | ||||||||||||||
Operating costs and expenses |
||||||||||||||||||
Cost of operations |
68,041 | 81,977 | 191,073 | 219,487 | ||||||||||||||
Depreciation and amortization |
9,306 | 7,824 | 27,245 | 21,913 | ||||||||||||||
General and administrative expenses |
1,982 | 1,379 | 6,600 | 5,147 | ||||||||||||||
Write down and losses on equity method investments |
48,392 | — | 48,392 | — | ||||||||||||||
Special charges |
12,208 | — | 12,208 | — | ||||||||||||||
Operating income |
(35,829 | ) | 19,005 | 7,366 | 66,765 | |||||||||||||
Other income (expense) |
||||||||||||||||||
Other income, net |
154 | 179 | 456 | 473 | ||||||||||||||
Interest expense |
(19,094 | ) | (18,183 | ) | (54,315 | ) | (54,653 | ) | ||||||||||
Net income (loss) |
$ | (54,769 | ) | $ | 1,001 | $ | (46,493 | ) | $ | 12,585 | ||||||||
See accompanying notes to consolidated financial statements
1
NRG SOUTH CENTRAL GENERATING LLC AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
| September 30, | December 31, | |||||||||||
| (Thousands of Dollars) | 2002 | 2001 | ||||||||||
ASSETS |
||||||||||||
CURRENT ASSETS: |
||||||||||||
Cash and cash equivalents |
$ | — | $ | 3,208 | ||||||||
Restricted cash |
41,214 | — | ||||||||||
Accounts receivable, net |
43,146 | 44,122 | ||||||||||
Notes
receivable —current |
3,000 | — | ||||||||||
Inventory |
60,301 | 52,916 | ||||||||||
Prepaid expenses |
6,194 | 2,627 | ||||||||||
Total current assets |
153,855 | 102,873 | ||||||||||
NON-CURRENT ASSETS |
||||||||||||
Equity investments in affiliates |
— | 50,233 | ||||||||||
Property, plant & equipment, net of accumulated depreciation
of $75,731 and $50,556 |
1,267,063 | 1,166,512 | ||||||||||
Notes receivable — non-current |
1,500 | — | ||||||||||
Decommissioning fund investments |
4,588 | 4,336 | ||||||||||
Deferred financing costs, net of accumulated amortization of
$1,435 and $750 |
30,446 | 9,969 | ||||||||||
Derivative instruments valuation — at market |
1,466 | — | ||||||||||
Other assets, net of accumulated amortization of $492 and $458 |
7,167 | 7,356 | ||||||||||
Total assets |
$ | 1,466,085 | $ | 1,341,279 | ||||||||
LIABILITIES AND MEMBERS’ EQUITY |
||||||||||||
CURRENT LIABILITIES: |
||||||||||||
Current portion of long-term debt |
$ | 858,103 | $ | 25,500 | ||||||||
Revolving line of credit |
— | 40,000 | ||||||||||
Accounts payable |
15,884 | 324 | ||||||||||
Accounts payable-affiliates |
66,433 | 27,246 | ||||||||||
Accrued fuel and purchased power expense |
16,010 | 26,599 | ||||||||||
Accrued interest |
39,191 | 20,453 | ||||||||||
Checks in excess of cash |
4,225 | 5,865 | ||||||||||
Other current liabilities |
9,174 | 6,161 | ||||||||||
Total current liabilities |
1,009,020 | 152,148 | ||||||||||
Long-term debt |
— | 738,000 | ||||||||||
Other non-current liabilities |
6,298 | 5,600 | ||||||||||
Derivative instruments valuation-at market |
1,736 | 18 | ||||||||||
Total liabilities |
1,017,054 | 895,766 | ||||||||||
Commitments and contingencies |
||||||||||||
MEMBERS’ EQUITY |
449,031 | 445,513 | ||||||||||
Total liabilities and members’ equity |
$ | 1,466,085 | $ | 1,341,279 | ||||||||
See accompanying notes to consolidated financial statements.
2
NRG SOUTH CENTRAL GENERATING LLC AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF MEMBERS’ EQUITY
(Unaudited)
For the Three Months Ended September 30, 2002 and 2001
| Accumulated | |||||||||||||||||
| Other | |||||||||||||||||
| Member | Comprehen- | Total | |||||||||||||||
| Contributions/ | Accumulated | sive | Members' | ||||||||||||||
| (Thousands of Dollars) | Distributions | Income/(Loss) | Income | Equity | |||||||||||||
Balances
at June 30, 2001 |
$ | 352,519 | $ | 37,600 | $ | — | $ | 390,119 | |||||||||
Net income |
— | 1,001 | — | 1,001 | |||||||||||||
Total comprehensive income for the
period ended September 30, 2001 |
— | 1,001 | — | 1,001 | |||||||||||||
Member contributions, net |
11,253 | — | — | 11,253 | |||||||||||||
Balances
at September 30, 2001 |
$ | 363,772 | $ | 38,601 | $ | — | $ | 402,373 | |||||||||
Balances
at June 30, 2002 |
$ | 459,400 | $ | 44,400 | $ | — | $ | 503,800 | |||||||||
Net loss |
— | (54,769 | ) | — | (54,769 | ) | |||||||||||
Total comprehensive loss
for the period ended
September 30, 2002 |
— | (54,769 | ) | — | (54,769 | ) | |||||||||||
Member contributions, net |
— | — | — | — | |||||||||||||
Balances
at September 30, 2002 |
$ | 459,400 | $ | (10,369 | ) | $ | — | $ | 449,031 | ||||||||
For the Nine Months Ended September 30, 2002 and 2001
| Accumulated | |||||||||||||||||
| Other | |||||||||||||||||
| Member | Comprehen- | Total | |||||||||||||||
| Contributions/ | Accumulated | sive | Members' | ||||||||||||||
| (Thousands of Dollars) | Distributions | Income/(Loss) | Income | Equity | |||||||||||||
Balances at December 31, 2000 |
$ | 300,746 | $ | 26,016 | $ | — | $ | 326,762 | |||||||||
Cumulative effect upon
adoption of SFAS 133 |
— | — | 500 | 500 | |||||||||||||
Impact of SFAS No. 133 for period
ended September 30, 2001 |
— | — | (500 | ) | (500 | ) | |||||||||||
Net income |
— | 12,585 | — | 12,585 | |||||||||||||
Total comprehensive income for the
period ended September 30, 2001 |
— | 12,585 | — | 12,585 | |||||||||||||
Member contributions, net |
63,026 | — | — | 63,026 | |||||||||||||
Balances at September 30, 2001 |
$ | 363,772 | $ | 38,601 | $ | — | $ | 402,373 | |||||||||
Balances at December 31, 2001 |
$ | 409,389 | $ | 36,124 | $ | — | $ | 445,513 | |||||||||
Net loss |
— | (46,493 | ) | — | (46,493 | ) | |||||||||||
Total comprehensive loss for the
period ended September 30, 2002 |
— | (46,493 | ) | — | (46,493 | ) | |||||||||||
Member contributions, net |
50,011 | — | — | 50,011 | |||||||||||||
Balances at September 30, 2002 |
$ | 459,400 | $ | (10,369 | ) | $ | — | $ | 449,031 | ||||||||
See accompanying notes to consolidated financial statements.
3
NRG SOUTH CENTRAL GENERATING LLC AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
| Nine Months | Nine Months | ||||||||
| Ended | Ended | ||||||||
| (Thousands of Dollars) | September 30, 2002 | September 30, 2001 | |||||||
Cash flows from operating activities: |
|||||||||
Net (loss) income |
$ | (46,493 | ) | $ | 12,585 | ||||
Adjustments to reconcile net (loss) income to net cash
provided by (used in) operating activities: |
|||||||||
Losses of unconsolidated affiliates |
3,146 | — | |||||||
Depreciation and amortization |
25,380 | 21,913 | |||||||
Noncash loss on disposal of property |
1,865 | ||||||||
Write down of equity method investments |
48,392 | — | |||||||
Special charges |
12,208 | — | |||||||
Amortization of deferred finance costs |
685 | 508 | |||||||
Unrealized loss on energy contracts |
252 | 1,197 | |||||||
Changes in assets and liabilities: |
|||||||||
Accounts receivable |
976 | 11,519 | |||||||
Inventory |
(7,385 | ) | (15,848 | ) | |||||
Prepaid expenses |
(3,567 | ) | (2,325 | ) | |||||
Accounts payable |
15,560 | 1,362 | |||||||
Accounts payable-affiliates |
(1,536 | ) | (44,611 | ) | |||||
Accrued interest |
18,738 | (17,303 | ) | ||||||
Accrued fuel and purchased power expense |
(10,589 | ) | 10,099 | ||||||
Other current liabilities |
3,512 | 10,764 | |||||||
Changes in other assets and liabilities |
447 | 13 | |||||||
Net cash provided by (used in) operating activities |
61,591 | (10,127 | ) | ||||||
Cash flows from investing activities: |
|||||||||
C | |||||||||