01—Abstract
Summary
Summary of the 10-K/A filed December 7, 2004. Cited figures are marked; the original filing is the authoritative source.
NRG Energy, Inc. filed this Amendment No. 3 on Form 10-K/A to reissue its audited financial statements for the year ended December 31, 2003.
The amendment updates discontinued operations to include four NEO Corporation projects (NEO Nashville LLC, NEO Hackensack LLC, NEO Prima Deshecha LLC and NEO Tajiguas LLC), in addition to the entities covered by Amendment No. 2 filed November 3, 2004. The company describes itself as a wholesale power generation company that emerged from Chapter 11 bankruptcy on December 5, 2003, with the Predecessor Company's results for January 1 through December 5, 2003 separated from Reorganized NRG's results for December 6 through December 31, 2003. For the Predecessor Company period, the filing reports net income of $2.77 billiona, driven largely by a $4.12 billion gain from Fresh Start adjustments in continuing operations.
Revenues from majority-owned operations were $1.80 billionb for that period and $138.5 million for the Reorganized NRG period, which produced net income of $11.0 million, or $0.11 per share. Total assets were $9.24 billion at December 31, 2003, and long-term debt including current maturities was $4.13 billion. The company issued $1.25 billion of 8% Second Priority Senior Secured Notes in December 2003 and an additional $475.0 million in January 2004, and it refinanced most of its project-level debt in connection with emergence.
The filing also discloses substantial legal and regulatory exposure, including California wholesale electricity litigation and investigations involving West Coast Power, a $396.0 millionc FirstEnergy arbitration claim settled in 2003, New York environmental enforcement matters, and turbine supplier termination claims from GE and Siemens. KPMG LLP replaced PricewaterhouseCoopers LLP as independent auditor in 2004, and the filing notes that PricewaterhouseCoopers' report remains included for the 2003 periods.
02—Key points
Key Highlights
- Net income of $2.77 billion for the Predecessor Company period January 1 through December 5, 2003, including a $4.12 billion Fresh Start gain from continuing operations.
- Reorganized NRG reported net income of $11.0 million, or $0.11 per share, for December 6 through December 31, 2003, on revenues from majority-owned operations of $138.5 million.
- Total assets were $9.24 billion and long-term debt including current maturities was $4.13 billion at December 31, 2003.
- The company eliminated approximately $5.2 billion of corporate-level bank and bond debt through the plan of reorganization and issued 100 million shares of new common stock at $24.04 per share.
- Financing included $1.25 billion of 8% Second Priority Senior Secured Notes due 2013 issued December 23, 2003, a $475.0 million add-on in January 2004, and a $950.0 million term loan within a $1.45 billion New Credit Facility.
- Discontinued operations were expanded in this amendment to include four NEO Corporation projects, with the McClain sale to Oklahoma Gas & Electric completed July 9, 2004 for $160.2 million in proceeds.
- Significant contingent exposure remains from California market litigation and investigations, New York environmental enforcement, and turbine supplier termination claims from GE ($120 million) and Siemens (approximately $45 million).
03—Questions
Frequently Asked Questions
Why does the filing show two separate sets of 2003 results?
Under SOP 90-7 and Fresh Start reporting, the company's results are split into a Predecessor Company period (January 1 through December 5, 2003) and a Reorganized NRG period (December 6 through December 31, 2003). The two periods are not comparable because assets and liabilities were revalued to fair value on emergence. The Predecessor period includes the $3.9 billion net reorganization gain, while the Reorganized period reflects post-emergence operations.
What changed in this amended filing compared with the original 2003 10-K?
This Amendment No. 3 reissues the 2003 audited financial statements to add four NEO Corporation projects (NEO Nashville LLC, NEO Hackensack LLC, NEO Prima Deshecha LLC and NEO Tajiguas LLC) to discontinued operations. Those projects were added as discontinued operations in the third quarter of 2004, and all prior periods were restated accordingly. The filing also includes the 2004 discontinued operations classifications for PERC, Cobee, LSP Energy and Hsin Yu.
What are the main sources of ongoing legal and regulatory risk?
The filing identifies California wholesale electricity litigation and investigations involving West Coast Power, a 50%-owned joint venture, including FERC refund proceedings and a CFTC natural gas index settlement. It also describes New York Department of Environmental Conservation enforcement at Huntley and Dunkirk, a Niagara Mohawk station service dispute with exposure that could exceed $35 million, and turbine termination claims from GE and Siemens. The company states it cannot predict the outcome of several of these matters.
What liquidity commitments did the company describe for 2004?
The company expected to receive up to $640.0 million from Xcel Energy in three installments, of which $288.0 million was paid in February 2004, with a further $352.0 million due April 30, 2004. It planned to distribute $515.0 million to creditors from those proceeds. It estimated $265 million to $360 million may be required for PMI margin and collateral needs, and capital expenditures of approximately $113.8 million for 2004.
Who is the independent auditor and what changed?
PricewaterhouseCoopers LLP audited the 2003 financial statements and their reports are included in this filing. PricewaterhouseCoopers informed the company it would not stand for re-election for the year ending December 31, 2004. In May 2004 the audit committee engaged KPMG LLP as independent auditor, and stockholders ratified that appointment at the 2004 annual meeting on August 4, 2004.
04—Continue