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 | |
| o | Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 | |
| For the Quarter Ended: September 30, 2003 | Commission File Number: 001-15891 |
NRG Energy, Inc.
| Delaware | 41-1724239 | |
| (State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) |
|
| 901 Marquette Avenue, Suite 2300 Minneapolis, Minnesota |
55402 |
|
| (Address of principal executive offices) | (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 x 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 x
Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Section 12, 13 or 15 (d) of the Securities and Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court.
Yes x No o
As of November 13, 2003, 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 |
|||||
Consolidated Statements of Operations |
3 | ||||
Consolidated Balance Sheets |
4 | ||||
Consolidated Statements of Stockholder’s (Deficit)/Equity |
6 | ||||
Consolidated Statements of Cash Flows |
8 | ||||
Notes
to Consolidated Financial Statements |
9 | ||||
Item 2 Management’s Discussion and Analysis of Financial
Condition and Results of Operations |
48 | ||||
Item 3 Quantitative and Qualitative Disclosures About Market Risk |
62 | ||||
Item 4 Controls and Procedures |
63 | ||||
Part II — OTHER INFORMATION |
|||||
Item 1 Legal Proceedings |
64 | ||||
Item 3 Defaults Upon Senior Securities |
64 | ||||
Item 6 Exhibits and Reports on Form 8-K |
67 | ||||
Cautionary Statement Regarding Forward Looking Information |
67 | ||||
SIGNATURES |
70 | ||||
2
Part I — FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements and Notes
NRG Energy, Inc. and Subsidiaries
Consolidated Statements of Operations
(Unaudited)
| Three Months Ended | Nine Months Ended | ||||||||||||||||
| September 30, | September 30, | ||||||||||||||||
| (In thousands) | 2003 | 2002 | 2003 | 2002 | |||||||||||||
| (Restated) | (Restated) | ||||||||||||||||
Operating Revenues and Equity Earnings |
|||||||||||||||||
Revenues from majority-owned operations |
$ | 608,009 | $ | 627,352 | $ | 1,616,869 | $ | 1,602,859 | |||||||||
Equity in earnings of unconsolidated affiliates |
63,272 | 25,920 | 155,758 | 68,916 | |||||||||||||
Total operating revenues and equity earnings |
671,281 | 653,272 | 1,772,627 | 1,671,775 | |||||||||||||
Operating Costs and Expenses |
|||||||||||||||||
Cost of majority-owned operations |
401,290 | 424,251 | 1,186,241 | 1,064,021 | |||||||||||||
Depreciation and amortization |
64,476 | 64,141 | 203,050 | 176,686 | |||||||||||||
General, administrative and development |
36,609 | 65,463 | 128,010 | 171,855 | |||||||||||||
Write downs and (gains) losses on sales of equity method investments |
(12,310 | ) | 117,869 | 136,717 | 127,715 | ||||||||||||
Restructuring professional fees and expenses |
416,698 | — | 423,032 | — | |||||||||||||
Restructuring and impairment charges |
6,252 | 2,487,746 | 298,019 | 2,533,670 | |||||||||||||
Total operating costs and expenses |
913,015 | 3,159,470 | 2,375,069 | 4,073,947 | |||||||||||||
Operating (Loss) |
(241,734 | ) | (2,506,198 | ) | (602,442 | ) | (2,402,172 | ) | |||||||||
Other Income (Expense) |
|||||||||||||||||
Minority interest in earnings of consolidated subsidiaries |
(1,166 | ) | (637 | ) | (2,415 | ) | (1,317 | ) | |||||||||
Other income (expense), net |
6,090 | 7,464 | 7,316 | 14,441 | |||||||||||||
Restructuring interest income |
478 | — | 608 | — | |||||||||||||
Interest expense |
(42,367 | ) | (66,470 | ) | (317,984 | ) | (289,346 | ) | |||||||||
Total other expense |
(36,965 | ) | (59,643 | ) | (312,475 | ) | (276,222 | ) | |||||||||
Loss From Continuing Operations Before Income Taxes |
(278,699 | ) | (2,565,841 | ) | (914,917 | ) | (2,678,394 | ) | |||||||||
Income Tax Expense (Benefit) |
4,991 | (96,905 | ) | 44,864 | (150,755 | ) | |||||||||||
Loss From Continuing Operations |
(283,690 | ) | (2,468,936 | ) | (959,781 | ) | (2,527,639 | ) | |||||||||
(Loss)/Income on Discontinued Operations, Net of Income Taxes |
(1,104 | ) | (586,458 | ) | 53,954 | (595,570 | ) | ||||||||||
Net Loss |
$ | (284,794 | ) | $ | (3,055,394 | ) | $ | (905,827 | ) | $ | (3,123,209 | ) | |||||
See notes to consolidated financial statements.
3
NRG Energy, Inc. and Subsidiaries
Consolidated Balance Sheets
(Unaudited)
| September 30, | December 31, | |||||||||
| (In thousands) | 2003 | 2002 | ||||||||
ASSETS |
||||||||||
Current Assets |
||||||||||
Cash and cash equivalents |
$ | 292,644 | $ | 381,514 | ||||||
Restricted cash |
487,644 | 277,489 | ||||||||
Accounts receivable — trade, less allowance for doubtful accounts of $11,069 and $18,163 |
383,631 | 273,944 | ||||||||
Current portion of notes receivable — affiliates |
— | 2,442 | ||||||||
Current portion of notes receivable |
1,639 | 3,000 | ||||||||
Income tax receivable |
19,092 | 4,320 | ||||||||
Inventory |
255,803 | 265,585 | ||||||||
Derivative instruments valuation |
543 | 28,791 | ||||||||
Prepayments and other current assets |
166,952 | 138,567 | ||||||||
Current assets — discontinued operations |
35,842 | 119,509 | ||||||||
Total current assets |
1,643,790 | 1,495,161 | ||||||||
Property, Plant and Equipment |
||||||||||
In service |
6,364,407 | 6,499,685 | ||||||||
Under construction |
460,989 | 623,750 | ||||||||
Total property, plant and equipment |
6,825,396 | 7,123,435 | ||||||||
Less accumulated depreciation |
(771,613 | ) | (602,712 | ) | ||||||
Net property, plant and equipment |
6,053,783 | 6,520,723 | ||||||||
Other Assets |
||||||||||
Equity investments in affiliates |
954,602 | 884,263 | ||||||||
Notes receivable, less current portion — affiliates |
168,185 | 206,308 | ||||||||
Notes receivable, less current portion |
813,006 | 778,945 | ||||||||
Intangible assets, net of accumulated amortization of $25,126 and $22,110 |
72,424 | 76,639 | ||||||||
Debt issuance costs, net of accumulated amortization of $62,143 and $50,382 |
140,119 | 136,346 | ||||||||
Derivative instruments valuation |
80,543 | 90,766 | ||||||||
Other assets, net of accumulated amortization of $4,095 and $4,229 |
34,866 | 24,810 | ||||||||
Non-current assets — discontinued operations |
213,454 | 678,822 | ||||||||
Total other assets |
2,477,199 | 2,876,899 | ||||||||
Total Assets |
$ | 10,174,772 | $ | 10,892,783 | ||||||
See notes to consolidated financial statements.
4
NRG Energy, Inc. and Subsidiaries
Consolidated Balance Sheets
(Unaudited)
| September 30, | December 31, | |||||||||
| (In thousands) | 2003 | 2002 | ||||||||
LIABILITIES AND STOCKHOLDER’S DEFICIT |
||||||||||
Liabilities Not Subject to Compromise |
||||||||||
Current Liabilities |
||||||||||
Current portion of long-term debt |
$ | 1,444,450 | $ | 7,026,771 | ||||||
Revolving line of credit |
— | 1,000,000 | ||||||||
Project-level, non-recourse debt |
18,991 | 30,064 | ||||||||
Accounts payable — trade |
307,641 | 556,712 | ||||||||
Accounts payable — affiliate |
28,948 | 50,659 | ||||||||
Accrued property, sales and other taxes |
27,227 | 24,420 | ||||||||
Accrued salaries, benefits and related costs |
20,768 | 21,018 | ||||||||
Accrued interest |
46,103 | 289,553 | ||||||||
Derivative instruments valuation |
649 | 13,439 | ||||||||
Other current liabilities |
81,190 | 110,645 | ||||||||
Current liabilities — discontinued operations |
113,339 | 694,464 | ||||||||
Total current liabilities |
2,089,306 | 9,817,745 | ||||||||
Other Liabilities |
||||||||||
Long-term debt |
1,188,599 | 1,184,287 | ||||||||
Deferred income taxes |
178,197 | 91,634 | ||||||||
Postretirement and other benefit obligations |
45,852 | 67,495 | ||||||||
Derivative instruments valuation |
69,731 | 91,039 | ||||||||
Other long-term obligations |
143,053 | 154,710 | ||||||||
Minority interest |
32,151 | 29,625 | ||||||||
Non-current liabilities — discontinued operations |
22,773 | 152,447 | ||||||||
Total liabilities not subject to compromise |
3,769,662 | 11,588,982 | ||||||||
Liabilities Subject to Compromise |
||||||||||
Financing debt |
6,409,964 | — | ||||||||
Accounts payable — trade |
157,855 | — | ||||||||
Accounts payable — affiliate |
68,989 | — | ||||||||
Accrued liabilities |
1,071,527 | — | ||||||||
Other liabilities |
68,882 | — | ||||||||
Liabilities — discontinued operations |
159,110 | — | ||||||||
Total liabilities subject to compromise |
7,936,327 | — | ||||||||
Commitments and Contingencies |
||||||||||
Stockholder’s Deficit |
||||||||||
Class A — common stock; $.01 par value; 100 shares authorized; 3
shares at September 30, 2003 and at December 31, 2002 issued and
outstanding |
— | — | ||||||||
Common stock; $.01 par value; 100 shares authorized, 1 share at
September 30, 2003 and at December 31, 2002 issued and outstanding |
— | — | ||||||||
Additional paid-in capital |
2,227,692 | 2,227,692 | ||||||||
Retained deficit |
(3,734,760 | ) | (2,828,933 | ) | ||||||
Accumulated other comprehensive loss |
(24,149 | ) | (94,958 | ) | ||||||
Total stockholder’s deficit |
(1,531,217 | ) | (696,199 | ) | ||||||
Total Liabilities and Stockholder’s Deficit |
$ | 10,174,772 | $ | 10,892,783 | ||||||
See notes to consolidated financial statements.
5
NRG Energy, Inc. and Subsidiaries
Consolidated Statements of Stockholder’s (Deficit)/Equity
For the Three Months Ended September 30, 2003 and September 30, 2002
(Unaudited)
| Class A | Accumulated | |||||||||||||||||||||||||||||||
| Common | Common | Additional | Other | Total | ||||||||||||||||||||||||||||
| Paid-in | Retained | Comprehensive | Stockholder’s | |||||||||||||||||||||||||||||
| (In thousands) | Stock | Shares | Stock | Shares | Capital | (Deficit)/Earnings | Income (Loss) | Deficit | ||||||||||||||||||||||||
Balances at June 30, 2002 |
$ | — | — | $ | — | — | $ | 2,227,692 | $ | 567,534 | $ | (9,306 | ) | $ | 2,785,920 | |||||||||||||||||
Net Loss |
(3,055,394 | ) | (3,055,394 | ) | ||||||||||||||||||||||||||||
Foreign currency translation
adjustments and other |
(34,598 | ) | (34,598 | ) | ||||||||||||||||||||||||||||
Deferred unrealized loss on
derivatives, net |
(22,588 | ) | (22,588 | ) | ||||||||||||||||||||||||||||
Comprehensive loss for the
three months ended September
30, 2002 |
(3,112,580 | ) | ||||||||||||||||||||||||||||||
Balances
at September 30, 2002, as restated |
$ | — | — | $ | — | — | $ | 2,227,692 | $ | (2,487,860 | ) | $ | (66,492 | ) | $ | (326,660 | ) | |||||||||||||||
Balances at June 30, 2003 |
$ | — | — | $ | — | — | $ | 2,227,692 | $ | (3,449,966 | ) | $ | (56,072 | ) | $ | (1,278,346 | ) | |||||||||||||||
Net Loss |
(284,794 | ) | &nb | |||||||||||||||||||||||||||||