01—Abstract
Summary
Summary of the 10-K/A filed June 30, 2003. Cited figures are marked; the original filing is the authoritative source.
PG&E Corporation and Pacific Gas and Electric Company filed Amendment No. 3 to their joint 2002 Annual Report on Form 10-K/A to revise Note 6 of the consolidated financial statements.
The revision reduced 2002 operating revenues in the PG&E NEG discontinued operations table from $1,289 million to $822 milliona, and cost of commodity sales and fuel from $993 million to $526 million, due to a misclassification of offsetting items. The filing states this did not change the Consolidated Statements of Operations, Balance Sheets, or Cash Flows. The amendment also corrects sections on utility operations, cash flows, results of operations, market risk, and notes 1 and 6.
The substantive content of the 2002 report is severe financial distress. PG&E NEG is in default on recourse debt and guaranteed equity commitments of about $2.9 billionb, and another $2.5 billion of non-recourse subsidiary debt is in default. PG&E NEG recorded pre-tax charges of about $3.9 billion in 2002 and expects substantial additional charges in 2003.
The filing states PG&E NEG may be forced into bankruptcy if restructuring is not reached, and that PG&E Corporation does not expect NEG's liquidity constraints to affect its own or the Utility's financial condition. The Utility remains in Chapter 11 (filed April 6, 2001), with a Utility Plan and a competing CPUC/OCC Plan before the Bankruptcy Court. PG&E Corporation reported a 2002 net loss of $874 millionc, compared with net income of $1,099 million in 2001.
The auditor's report includes a going-concern explanatory paragraph for both PG&E Corporation and the Utility. Management states the Utility believes cash and equivalents of $3.3 billiond at year-end 2002 will provide liquidity through 2003.
02—Key points
Key Highlights
- 2002 net loss of $874 million for PG&E Corporation, versus net income of $1,099 million in 2001
- PG&E NEG in default on about $2.9 billion of recourse debt and guaranteed equity commitments, plus about $2.5 billion of non-recourse subsidiary debt; pre-tax charges of about $3.9 billion in 2002, with more expected in 2003
- Utility remains in Chapter 11 bankruptcy; Utility Plan (claims paid in full with interest) competes with CPUC/OCC Plan, and Bankruptcy Court confirmation trial began November 2002
- Auditor's report includes going-concern explanatory paragraphs for both PG&E Corporation and the Utility
- Revision to Note 6 reduced 2002 PG&E NEG discontinued operations revenues from $1,289 million to $822 million, with no change to the primary financial statements
- PG&E Corporation's $720 million credit agreement is secured by Utility common stock, and PG&E Corporation issued $280 million of 9.50% convertible subordinated notes due 2010
03—Questions
Frequently Asked Questions
Why was this amended filing made?
Management discovered a misclassification of certain offsetting revenues and expenses within PG&E NEG's discontinued operations after the 2002 financial statements were issued. Note 6 was revised: 2002 operating revenues fell from $1,289 million to $822 million, and cost of commodity sales and fuel fell from $993 million to $526 million. The filing states the consolidated statements of operations, balance sheets, and cash flows were not changed.
Does PG&E NEG's financial distress threaten PG&E Corporation or the Utility?
The filing states that PG&E Corporation does not expect PG&E NEG's liquidity constraints to affect its own financial condition or the Utility's. However, if NEG's lenders exercise default remedies or financial commitments are not restructured, NEG and certain subsidiaries may be forced into proceedings under the U.S. Bankruptcy Code. PG&E Corporation's credit agreement also limits how much cash it can provide to NEG.
What is the status of the Utility's bankruptcy?
The Utility filed under Chapter 11 on April 6, 2001, and operates as a debtor-in-possession. The Utility Plan would restructure the Utility into a retail distribution company and realign generation, transmission and gas transportation under federal regulators, with creditors paid in full with interest. A competing CPUC/OCC Plan would keep current CPUC regulation. The Bankruptcy Court had not yet confirmed either plan as of the filing.
What was PG&E Corporation's 2002 financial performance?
PG&E Corporation reported a 2002 net loss of $874 million and a loss from continuing operations of $57 million, compared with net income of $1,099 million in 2001. Total operating revenues were $12,495 million, and the net loss reflects $2,767 million of impairments, write-offs, and other charges, mostly at PG&E NEG.
04—Continue