Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT PURSUANT
TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
| Date of report (Date of earliest event reported) | November 7, 2005 | |
NRG Energy, Inc.
(Exact Name of Registrant as Specified in Its Charter)
Delaware
(State or Other Jurisdiction of Incorporation)
| 001-15891 | 41-1724239 | |
| (Commission File Number) | (IRS Employer Identification No.) | |
| 211 Carnegie Center | Princeton, NJ 08540 | |
| (Address of Principal Executive Offices) | (Zip Code) | |
609-524-4500
(Registrant’s Telephone Number, Including Area Code)
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following provisions (see General
Instruction A.2. below):
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17
CFR 240.14d-2(b))
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17
CFR 240.13e-4(c))
TABLE OF CONTENTS
| Item 2.02 Results of Operations and Financial Condition | ||||||||
| Item 9.01 Financial Statements and Exhibits | ||||||||
| SIGNATURES | ||||||||
| Exhibit Index | ||||||||
| EX-99.1: PRESS RELEASE | ||||||||
Table of Contents
Item 2.02 Results of Operations and Financial Condition
On November 7, 2005, NRG Energy, Inc. issued a press release announcing its financial results
for the third quarter ended September 30, 2005. A copy of the press release is furnished as
Exhibit 99.1 to this report on Form 8-K and is hereby incorporated by reference.
Item 9.01 Financial Statements and Exhibits
| (c) | Exhibits. |
| Exhibit | ||||
| Number | Document | |||
| 99.1 | Press Release, dated November 7, 2005 |
|||
Table of Contents
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly
caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| NRG Energy, Inc. (Registrant) |
||||
| By: | /s/ TIMOTHY W. J. O'BRIEN | |||
| Timothy W. J. O'Brien | ||||
| Vice President and General Counsel |
||||
Dated: November 7, 2005
Table of Contents
Exhibit 99.1
|
NEWS RELEASE |
FOR IMMEDIATE RELEASE
NRG Energy, Inc. Reports Third Quarter 2005 Results
| • | Strong third quarter operational results driven by the Northeast region | ||
| • | Full year adjusted EBITDA guidance, before mark-to-market (MtM) adjustments, increased from $633 million to $700 million | ||
| • | Domestic MtM unrealized losses on hedges, before tax, for the 2005 third quarter of $173.2 million | ||
| • | Texas Genco acquisition approval process on track for first quarter 2006 close | ||
| • | Reliability-must-run (RMR) extension application filed regarding the Company’s Connecticut assets |
Princeton, NJ; (November 7, 2005)—NRG Energy, Inc. (NYSE: NRG) today reported a net loss of
($26.9) million, or ($0.39) per diluted share for the quarter ended September 30, 2005 compared to
net income of $54.2 million or $0.54 per diluted share for the same period last year. Net income
for the nine months ended September 30, 2005 and 2004 totaled $19.6 million, or $0.07 per diluted
share versus $167.5 million or $1.67 per diluted share. The decrease in the quarter and
year-to-date results versus 2004 is primarily due to unrealized MtM accruals, which are
economically neutral to the Company in that offsetting gains on underlying accrual positions will
be recognized as power is delivered and the hedges settle (see Table1). The year-to-date results
also include $51 million of non-cash expenses related to the reversal of 2004 MtM gains. These
items were partially offset by the strong operating results from our Northeast assets due to higher
energy prices and increased generation, the sale of surplus emission credits, and lower interest
expense. Generation across the portfolio increased 17% as compared to the third quarter 2004,
including a 42% increase in output from our Northeast region.
“Our
stronger commercial results were underpinned by an operating
performance that improved during the quarter and was particularly
strong among our oil and gas plants in the Northeast,” said
David Crane, NRG’s President and Chief Executive Officer.
“While the sharp increase in electricity prices in the forward
market led to mark-to-market losses on our forward hedge positions, I am pleased that our commercial results improved
significantly this quarter on a year-on-year basis.”
Third Quarter and Year-to-Date 2005 Financial Highlights
| • | 42% increase in generation quarter over quarter from Northeast assets; | ||
| • | $263 million and $568 million of adjusted EBITDA for three and nine months ending September 30, 2005, respectively, before $173.2 million and $206.2 million of domestic realized MtM losses, respectively (see Tables A-3 and A-4); | ||
| • | $250 million accelerated share repurchase reducing our outstanding common shares by 6.3 million to 80.7 million, $250 million 3.625% convertible preferred issuance, and $229 million 8% note repurchase; and | ||
| • | 51.9% net debt-to-total capital ratio at September 30, 2005 (see Table A-5). |
Generation from our oil-fired and gas-fired assets increased significantly over 2004 and drove the
overall Company’s generation improvement. Our oil-fired assets increased their generation 327% and
129% for the quarter and year-to-date, respectively, while our New York City gas-fired assets
increased 92% and 96% for the quarter and year-to-date, respectively. Financial results realized by
our Northeast assets improved with higher energy margins due to the steep rise in natural gas and
1
power prices. Additionally, operating results for the quarter included $22 million of gains from
emission credit sales, which represents a portion of our 2005 surplus position. Year-to-date debt
repurchases of $645 million and the 2004 refinancing of our credit facility, drove interest expense
lower versus last year by $20.3 million and $42.9 million for the quarter and year-to-date,
respectively. These improvements were offset by higher purchased energy costs at South Central,
changes to our asset portfolio due to the disposition of assets and expirations of contracts, and
the unrealized MtM losses. Operating and maintenance expense was flat quarter over quarter and $27
million higher year-to-date due to an increased number of planned outages this year versus 2004.
The fuel and energy markets in which the Company transacts, at times experience significant
volatility. During the first half of this year, the Company entered into financial transactions to
lock in forward prices for a significant portion of its expected power generation for the balance
of 2005 and calendar year 2006. While all of these transactions are economic hedges of the
portfolio, 70% of our current portfolio of forward sales are afforded hedge accounting treatment.
During the third quarter, the forward prices for power rose sharply along with the price movements
of natural gas. As a result of prices rising above the levels at which the forward sales were put
in place, the MtM for a portion of the hedges is recorded in operating results at September 30,
2005. Additionally, our hedging activity requires cash and letter of credit collateral support when
prices rise above the hedged prices. Collateral supporting our trading activity was $759 million at
September 30, 2005. The scheduled settlement of the underlying hedges and the reversal of the MtM
losses to income and the return of collateral over the coming quarters are provided in Table 1.
Table 1: Estimated Roll-off Schedule of Domestic Unrealized Pretax (Losses) and Collateral as
of September 30, 2005
| 9 mos | ||||||||||||||||||||||||||||||||
| ended | 2007 & | |||||||||||||||||||||||||||||||
| ($in millions) | 9/30/05 | Q4 2005 | Q1 2006 | Q2 2006 | Q3 2006 | Q4 2006 | beyond | Total | ||||||||||||||||||||||||
Reversal of
Unrealized MtM
losses |
($8.5 | ) | ($42.2 | ) | ($78.3 | ) | ($22.9 | ) | ($35.5 | ) | ($9.4 | ) | ($9.4 | ) | ($206.2 | ) | ||||||||||||||||
Return of Cash and
LOC Collateral |
— | $ | 165.9 | $ | 273.4 | $ | 105.1 | $ | 117.6 | $ | 61.8 | $ | 35.2 | $ | 758.9 | |||||||||||||||||
For 2007 and beyond, we expect to utilize hedging strategies that are option-based with a goal
of establishing a floor on earnings, leaving upside market participation, minimizing MtM swings and
optimizing collateral support of our hedging program. For 2007, we already have locked in a floor
on 30% of our projected on-peak coal generation at current forward prices while preserving the
majority of the Company’s ability to benefit from further upward movement in northeastern
electricity prices.
“The coordinated transactions we recently entered into with respect to our 2007 position are
indicative of the broader array of tools we intend to use to forward hedge our baseload assets
while preserving the ability of those assets to benefit from the upside in commodity prices,” said Crane.
2
Regional Segment Review of Results
Table 2: Three Months Income from Continuing Operations before Taxes and Adjusted EBITDA by region
| ($in millions) | Income from Continuing | Adjusted EBITDA | ||||||||||||||
| Operations before Taxes | ||||||||||||||||
Three months ending |
9/30/05 | 9/30/04 | 9/30/05 | 9/30/04 | ||||||||||||
Northeast (1) |
$ | 4.1 | $ | 87.8 | $ | 25.1 | $ | 109.5 | ||||||||
South Central |
$ | (8.4 | ) | $ | 14.4 | $ | 5.7 | $ | 30.4 | |||||||
Australia |
$ | 2.3 | $ | 2.3 | $ | 14.4 | $ | 9.0 | ||||||||
Western |
$ | 6.0 | $ | 18.2 | $ | 6.0 | $ | 47.2 | ||||||||
Other North America |
$ | (1.0 | ) | $ | (19.0 | ) | $ | 7.2 | $ | 38.5 | ||||||
Other International |
$ | 22.9 | $ | 26.7 | $ | 24.7 | $ | 34.1 | ||||||||
Alternative Energy, Non-generation,
and Other |
$ | (54.1 | )(2) | $ | (72.5 | )(3) | $ | 6.7 | $ | 2.2 | ||||||
Total |
$ | (28.2 | ) | $ | 57.9 | $ | 89.8 | $ | 270.9 | |||||||
| (1) | Includes MtM loss of $172.4 million and $4.8 million in 2005 and 2004, respectively. | |
| (2) | Includes interest expense of $34.7 million and interest income. | |
| (3) | Includes interest expense of $79.1 million and interest income. |
Table 3: Nine Months Income from Continuing Operations before Taxes and Adjusted EBITDA by region
| ($in millions) | Income from Continuing | Adjusted EBITDA | ||||||||||||||
| Operations before Taxes | ||||||||||||||||
Nine months ending |
9/30/05 | 9/30/04 | 9/30/05 | 9/30/04 | ||||||||||||
Northeast (1) |
$ | 75.9 | $ | 231.5 | $ | 138.4 | $ | 303.5 | ||||||||
South Central |
$ | (5.9 | ) | $ | 42.3 | $ | 39.4 | $ | 92.0 | |||||||
Australia |
$ | 18.8 | $ | 10.4 | $ | 49.8 | $ | 60.2 | ||||||||
Western |
$ | 15.2 | $ | 42.8 | $ | 15.6 | $ | 135.5 | ||||||||
Other North America |
$ | (13.7 | ) | $ | (31.6 | ) | $ | 8.6 | $ | 67.4 | ||||||
Other International |
$ | 91.4 | $ | 67.3 | $ | 74.0 | $ | 72.4 | ||||||||
Alternative Energy, Non-generation,
and Other |
$ | (153.5 | )(2) | $ | (155.4 | )(3) | $ | 36.4 | $ | 25.7 | ||||||
Total |
$ | 28.2 | $ | 207.3 | $ | 362.2 | $ | 756.7 | ||||||||
| (1) | Includes MtM loss of $205.8 million and $0.6 million in 2005 and 2004, respectively. | |
| (2) | Includes interest expense of $124.2 million and interest income. | |
| (3) | Includes interest expense of $171.7 million, the $38.5 million CL&P settlement and interest income. |
Northeast: Our New York City gas-fired assets and dual fuel-fired assets across the region were
able to take advantage of higher average power prices, and improved spark and liquid spreads.
Excluding the MtM losses of $172.4 million and $205.8 million for the three and nine months ended
September 30, 2005, respectively, this region showed a favorable increase versus 2004. This was due
to a steep increase in power prices and a 42% increase in generation. With respect to 2006 and
beyond, on November 1, 2005, the Company filed an application for the extension of the
reliability-must-run status of its Middletown, Montville, and Devon (Connecticut) plants with the
Federal Energy Regulatory Commission (FERC). The Company expects FERC to act upon the application
within 60 days.
3
South Central: Due to hotter than normal weather in the third quarter, coop and long term customer
load demand was strong with 2.7 million megawatt hours delivered to customers, an increase of 9.5%
over 2004. Consequently, South Central was required to purchase more energy to meet its contract
load requirements. With on-peak power prices 85.7% higher coupled with increased demand and higher
forced outage rates versus the third quarter of 2004, South Central incurred $58.4 million more in
purchased energy costs. The quarter-on-quarter results also reflect the impact of third quarter
2004’s mild weather, which generally provided favorable financial results for South Central.
Australia: Generation was higher by 2.9% due to increased output from Playford and an outage in the
third quarter of 2004. Higher maintenance cost at the Playford station, and lower pool prices this
quarter versus the third quarter of 2004 offset this increase. For the nine months ended September
30, 2005, the region experienced unseasonably mild weather and weak pool prices in the first
quarter which drove the unfavorable results versus last year. Higher generation helped offset weak
pool prices, with generation increasing 5.0% over generation levels from the first nine months of
2004.
Western: Lower results are primarily attributable to the
expirations at the end of 2004 of the
California Department of Water Resources (CDWR) contract and the Red
Bluff RMR agreement. With respect to 2006, WCP has been notified by the California Independent
System Operator (CAISO) that effective January 1, 2006, Encina unit 4 and El Segundo units 3 and 4
will not be relisted as RMR qualifying facilities. A tolling agreement for the total capacity of
the El Segundo plant has been executed with a major load serving entity for the period May 2006
through April 2008. With the loss of RMR designation, the CAISO no longer has the right to call on
the facility as a reliability resource. The Red Bluff and Chowchilla facilities have received
capacity contracts for the period April 1, 2006 through December 31, 2007.
Liquidity and Capital Resources
Liquidity at September 30, 2005 decreased 44% and 56% from June 30, 2005 and December 31, 2004, respectively. The decreases were primarily attributable to:
Liquidity at September 30, 2005 decreased 44% and 56% from June 30, 2005 and December 31, 2004, respectively. The decreases were primarily attributable to:
| • | $645 million in par value debt repurchased year-to-date | ||
| • | $250 million of stock repurchased during the third quarter | ||
| • | $598.1 million in cash collateral posted during 2005 bringing total cash collateral to $631.4 million |
These declines were partially offset by the issuance of $250 million of perpetual preferred shares
and $105.2 million of asset sale proceeds and cash flow from operations.
Table 4: Corporate Liquidity
| ($ in millions) | 9/30/05 | 6/30/051 | 12/31/041 | |||||||||
Unrestricted Cash: |
||||||||||||
Domestic |
$ | 409 | $ | 493 | $ | 921 | ||||||
International |
95 | 330 | 189 | |||||||||
Restricted Cash: |
||||||||||||
Domestic |
73 | 66 | 54 | |||||||||
International |
19 | 21 | 59 | |||||||||
Total Cash |
$ | 596 | $ | 910 | $ | 1,223 | ||||||
Letter of Credit |
23 | 172 | 193 | |||||||||
Availability |
||||||||||||
Revolver Availability |
70 | 150 | 150 | |||||||||
Total Current
Liquidity |
$ | 689 | $ | 1,232 | $ | 1,566 | ||||||
| 1 | These amounts have not been reclassified for discontinued operations. |
4
Texas Genco Transaction:
As previously announced, on September 30, 2005, we entered into an agreement to purchase Texas
Genco for a total purchase price of approximately $5.8 billion for the stock of Texas Genco which
includes the assumption by the Company of approximately $2.5 billion of indebtedness. The Company
expects to finance the acquisition and refinance the $2.5 billion in debt assumed in the
acquisition through a combination of a new senior secured credit facility, an unsecured high yield
notes offering and the sale of common and preferred equity securities in the public markets.
Since announcing the planned acquisition of Texas Genco, the Company and Texas Genco filed an
application with the Nuclear Regulatory Commission seeking consent to the indirect transfer of
control of Texas Genco’s 44% ownership interest in the South Texas Nuclear Project. Applications
for approval of the acquisition also have been filed with FERC in accordance with Federal Power
Act, the Federal Trade Commission and the Department of Justice under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976 and the Public Utility Commission of Texas has been notified.
The Company continues to work toward a first quarter 2006 transaction close date.
Outlook
The Company expects the high and volatile commodity price environment that has existed over the
past several months as the direct or indirect result of extreme weather, production disruptions in
the Gulf of Mexico and the general tightening of the supply-demand balance for wholesale
electricity across all of our domestic regions to persist for the balance of 2005 and into 2006. As
a result of the generally projected positive impact of these external factors on the unhedged
portion of our domestic portfolio, and our success in achieving our 2005 internal financial
objectives from FORNRG, we are increasing our full-year 2005 guidance for adjusted EBITDA
(excluding MtM) from $633 million to $700 million. In
addition, due to the impact of the $426 million in collateral
postings during the third quarter, we are modifying our full-year 2005 cash flow from
operations guidance from $419 million to $109 million (see Table 5).
Table 5: 2005 Reconciliation of Adjusted EBITDA Guidance ($ in million)
| August 2005 | November 2005 | |||||||
| guidance1 | guidance1 | |||||||
Adjusted EBITDA, net of MtM |
$ | 633 | $ | 700 | ||||
Add back domestic unrealized MtM losses |
33 | $ | 156 | |||||
Adjusted EBITDA with MtM losses |
$ | 600 | $ | 544 | ||||
Interest Payments |
(225 | ) | (235 | ) | ||||
Income Tax |
(13 | ) | (14 | ) | ||||
Other Funds Used by Operations |
104 | 221 | ||||||
Working Capital Changes |
(47 | ) | (407 | ) | ||||
Cash flow from Operations |
$ | 419 | $ | 109 | ||||
| 1 | EBITDA guidance includes $51 million of non-cash expenses related to the reversal of 2004 MtM gains. |
Earnings Conference Call
On November 7, 2005, NRG will host a conference call at 9:00 a.m. eastern to discuss these results.
To access the live webcast and accompanying slide presentation, log on to NRG’s website at
http://www.nrgenergy.com and click on “Investors.” To participate in the call, dial 877.407.8035.
International callers should dial 201.689.8035. Participants should dial in or log on approximately
five minutes prior to the scheduled start time.
5
The call will be available for replay shortly after completion of the live event on the “Investors”
section of the NRG website.
About NRG
NRG Energy, Inc. owns and operates a diverse portfolio of power-generating facilities, primarily in
the Northeast, South Central and Western regions of the United States. Its operations include
baseload, intermediate, peaking, and cogeneration facilities, thermal energy production and energy
resource recovery facilities. NRG also has ownership interests in international generating
facilities in Australia and Germany.
Safe Harbor Disclosure
This news release contains forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Such forward-looking
statements are subject to certain risks, uncertainties and assumptions and include, but are not
limited to, expected earnings, future growth and financial performance, expected benefits, results
and timing of the Texas Genco acquisition, and typically can be identified by the use of words such
as “will,” “expect,” “estimate,” “anticipate,” “forecast,” “plan,” “believe” and similar terms.
Although NRG believes that its expectations are reasonable, it can give no assurance that these
expectations will prove to have been correct, and actual results may vary materially. Factors that
could cause actual results to differ materially from those contemplated above include, among
others, general economic conditions, hazards customary in the power industry, weather conditions,
competition in wholesale power markets, the volatility of energy and fuel prices, failure of
customers to perform under contracts, changes in the wholesale power markets and related government
regulation, the condition of capital markets generally, our ability to access capital markets,
unanticipated outages at our generation facilities, our ability to convert facilities to use
western coal successfully, adverse results in current and future litigation, the inability to
implement value enhancing improvements to plant operations and company-wide processes and the
timing of and the ability to complete the Texas Genco acquisition and failure to realize expected
benefits of the acquisition.
NRG undertakes no obligation to update or revise any forward-looking statements, whether as a
result of new information, future events or otherwise. The adjusted EBITDA guidance is an estimate
as of today’s date, November 7, 2005 and is based on assumptions believed to be reasonable as of
this date. NRG expressly disclaims any current intention to update such guidance. The foregoing
review of factors that could cause NRG’s actual results to differ materially from those
contemplated in the forward-looking statements included in this news release should be considered
in connection with information regarding risks and uncertainties that may affect NRG’s future
results included in NRG’s filings with the Securities and Exchange Commission at www.sec.gov.
# # #
More information on NRG is available at www.nrgenergy.com
Contacts:
| Meredith Moore | Nahla Azmy | |||
| Media Relations | Investor Relations | |||
| 609.524.4522 | 609.524.4526 | |||
| Jay Mandel | Katy Sullivan | |||
| Media Relations | Investor Relations | |||
| 609.524.4525 | 609.524.4527 |
6
NRG ENERGY, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
| Three Months | Nine Months | |||||||||||||||
| Ended | Ended | |||||||||||||||
| September 30, | September 30, | September 30, | September 30, | |||||||||||||
| 2005 | 2004 | 2005 | 2004 | |||||||||||||
| (In thousands, except for per share amounts) | ||||||||||||||||
Operating Revenues |
||||||||||||||||
Revenues from majority-owned operations |
$ | 765,316 | $ | 604,632 | $ | 1,942,828 | $ | 1,770,669 | ||||||||
Operating Costs and Expenses |
||||||||||||||||
Cost of majority-owned operations |
668,373 | 379,855 | 1,555,737 | 1,112,479 | ||||||||||||
Depreciation and amortization |
48,802 | 51,060 | 144,317 | 158,603 | ||||||||||||
General, administrative and development |
47,185 | 54,031 | 149,641 | 135,673 | ||||||||||||
Other charges |
— | — | — | — | ||||||||||||
Corporate relocation charges |
1,740 | 5,713 | 5,651 | 12,474 | ||||||||||||
Reorganization items |
— | (5,245 | ) | — | (1,656 | ) | ||||||||||
Impairment charges |
6,000 | 40,507 | 6,223 | 42,183 | ||||||||||||
Total operating costs and expenses |
772,100 | 525,921 | 1,861,569 | 1,459,756 | ||||||||||||
Operating Income/(Expense) |
(6,784 | ) | 78,711 | 81,259 | 310,913 | |||||||||||
Other Income (Expense) |
||||||||||||||||
Minority interest in earnings of consolidated subsidiaries |
(13 | ) | (18 | ) | (36 | ) | (18 | ) | ||||||||
Equity in earnings of unconsolidated affiliates |
29,077 | 53,373 | 82,501 | 117,187 | ||||||||||||
Write downs and gains/(losses) on sales of equity method investments |
4,333 | (13,524 | ) | 15,894 | (14,057 | ) | ||||||||||
Other income, net |
9,956 | 5,478 | 43,208 | 17,145 | ||||||||||||
Refinancing expense |
(19,012 | ) | — | (44,036 | ) | (30,417 | ) | |||||||||
Interest expense |
(45,791 | ) | (66,110 | ) | (150,598 | ) | (193,463 | ) | ||||||||
Total other expense |
(21,450 | ) | (20,801 | ) | (53,067 | ) | (103,623 | ) | ||||||||
Income/(Loss) From Continuing Operations Before Income Taxes |
(28,234 | ) | 57,910 | 28,192 | 207,290 | |||||||||||
Income Tax Expense |
8,511 | 14,559 | 21,201 | 65,136 | ||||||||||||
Income/(Loss) From Continuing Operations |
(36,745 | ) | 43,351 | 6,991 | 142,154 | |||||||||||
Income from discontinued operations, net of income taxes |
9,864 | 10,870 | 12,612 | 25,326 | ||||||||||||
Net Income/(Loss) |
(26,881 | ) | 54,221 | 19,603 | 167,480 | |||||||||||
Preference stock dividends |
4,200 | — | 12,272 | — | ||||||||||||
Income/(Loss) Available for Common Stockholders |
$ | (31,081 | ) | $ | 54,221 | $ | 7,331 | $ | 167,480 | |||||||
Weighted Average Number of Common Shares Outstanding — Basic |
83,529 | 100,101 | 85,860 | 100,066 | ||||||||||||
Income/(Loss) From Continuing Operations per Weighted Average
Common Share — Basic |
$ | (0.51 | ) | $ | 0.43 | $ | (0.08 | ) | $ | 1.42 | ||||||
Income From Discontinued Operations per Weighted Average Common
Share — Basic |
0.12 | 0.11 | 0.15 | 0.25 | ||||||||||||
Income/(Loss) Available for Common Stockholders per Weighted Average
Common Share — Basic |
$ | (0.39 | ) | $ | 0.54 | $ | 0.07 | $ | 1.67 | |||||||
Weighted Average Number of Common Shares Outstanding — Diluted |
83,529 | 100,616 | 85,860 | 100,328 | ||||||||||||
Income/(Loss) From Continuing Operations per Weighted Average
Common Share — Diluted |
$ | (0.51 | ) | $ | 0.43 | $ | (0.08 | ) | $ | 1.42 | ||||||
Income From Discontinued Operations per Weighted Average Common
Share — Diluted |
0.12 | 0.11 | 0.15 | 0.25 | ||||||||||||
Income/(Loss) Available for Common Stockholders per Weighted Average
Common Share — Diluted |
$ | (0.39 | ) | $ | 0.54 | $ | 0.07 | $ | 1.67 | |||||||
7
NRG ENERGY, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
CONDENSED CONSOLIDATED BALANCE SHEETS
| September 30, | December 31, | |||||||
| 2005 | 2004 | |||||||
| (unaudited) | ||||||||
| (In thousands) | ||||||||
ASSETS |
||||||||
Current Assets |
||||||||
Cash and cash equivalents |
$ | 504,336 | $ | 1,103,678 | ||||
Restricted cash |
91,508 | 109,633 | ||||||
Accounts receivable, less allowance for doubtful accounts of $3,280 and $6,591 |
308,839 | 269,611 | ||||||
Current portion of notes receivable |
24,934 | 85,447 | ||||||
Income taxes receivable |
31,237 | 37,484 | ||||||
Inventory |
203,547 | 248,010 | ||||||
Derivative instruments valuation |
451,545 | 79,759 | ||||||
Prepayments and other current assets |
129,289 | 135,520 | ||||||
Collateral on deposit in support of energy risk management activities |
631,436 | 33,325 | ||||||
Deferred income taxes |
44,832 | — | ||||||
Current assets — discontinued operations |
— | 15,821 | ||||||
Total current assets |
2,421,503 | 2,118,288 | ||||||
Property, plant and equipment, net of accumulated depreciation of $346,886 and $205,928 |
3,226,714 | 3,329,000 | ||||||
Other Assets |
||||||||
Equity investments in affiliates |
651,412 | 734,950 | ||||||
Notes receivable, less current portion, less reserve for uncollectible notes of $0 and $8,196 |
712,020 | 804,450 | ||||||
Intangible assets, net |
268,897 | 294,350 | ||||||
Derivative instruments valuation |
31,973 | 41,787 | ||||||
Funded letter of credit |
350,000 | 350,000 | ||||||
Other non-current assets |
132,848 | 111,574 | ||||||
Non-current assets — discontinued operations |
— | 45,884 | ||||||
Total other assets |
2,147,150 | 2,382,995 | ||||||
Total Assets |
$ | 7,795,367 | $ | 7,830,283 | ||||
LIABILITIES AND STOCKHOLDERS’ EQUITY |
||||||||
Current Liabilities |
||||||||
Current portion of long-term debt and capital leases |
$ | 176,024 | $ | 511,258 | ||||
Accounts payable |
152,968 | 171,722 | ||||||
Derivative instruments valuation |
973,143 | 16,772 | ||||||
Deferred income taxes |
— | 334 | ||||||
Other bankruptcy settlement |
175,945 | 175,576 | ||||||
Accrued expenses and other current liabilities |
389,396 | 209,367 | ||||||
Current liabilities — discontinued operations |
— | 2,912 | ||||||
Total current liabilities |
1,867,476 | 1,087,941 | ||||||
Other Liabilities |
||||||||
Long-term debt and capital leases |
2,866,374 | 3,212,596 | ||||||
Deferred income taxes |
103,199 | 134,580 | ||||||
Derivative instruments valuation |
198,554 | 148,445 | ||||||
Out-of-market contracts |
302,639 | 318,664 | ||||||
Other non-current liabilities |
190,897 | 187,438 | ||||||
Non-current liabilities — discontinued operations |
— | 47,759 | ||||||
Total non-current liabilities |
3,661,663 | 4,049,482 | ||||||
Total Liabilities |
5,529,139 | 5,137,423 | ||||||
Minority Interest |
869 | 696 | ||||||
3.625% Convertible Perpetual Preferred Stock; $.01 par value; 10,000,000 shares authorized, 250,000
shares issued and outstanding (at liquidation value, net of issuance costs) |
246,191 | — | ||||||
Commitments and Contingencies |
||||||||
Stockholders’ Equity |
||||||||
4% Convertible Perpetual Preferred Stock; $.01 par value; 10,000,000 shares authorized, 420,000
issued and outstanding (at liquidation value, net of issuance costs) |
406,155 | 406,359 | ||||||
Common Stock; $.01 par value; 500,000,000 shares authorized; 80,701,198 and 87,041,935 outstanding |
1,000 | 1,000 | ||||||
Additional paid-in capital |
2,427,322 | 2,417,021 | ||||||
Retained earnings |
203,973 | 196,642 | ||||||
Less treasury stock, at cost — 19,346,788 and 13,000,000 shares |
(663,529 | ) | (405,312 | ) | ||||
Accumulated other comprehensive income/(loss) |
(355,753 | ) | 76,454 | |||||
Total stockholders’ equity |
2,019,168 | 2,692,164 | ||||||
Total Liabilities and Stockholders’ Equity |
$ | 7,795,367 | $ | 7,830,283 | ||||
8
NRG ENERGY, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
| Nine Months Ended | ||||||||
| September 30, | ||||||||
| 2005 | 2004 | |||||||
| (In thousands) | ||||||||
Cash Flows from Operating Activities |
||||||||
Net income |
$ | 19,603 | $ | 167,480 | ||||
Adjustments to reconcile net income to net cash provided by/(used in) operating activities |
||||||||
Distributions in
excess of/(less than) equity in earnings of unconsolidated
affiliates |
1,100 | (13,703 | ) | |||||
Depreciation and amortization |
145,076 | 164,872 | ||||||
Reserve for note and interest receivable |
(98 | ) | 4,572 | |||||
Amortization of debt issuance costs and debt discount |
7,651 | 22,813 | ||||||
Write-off of deferred financing costs/(debt premium) |
(7,701 | ) | 15,312 | |||||
Deferred income taxes |
(53,605 | ) | 67,655 | |||||
Minority interest |
899 | 1,961 | ||||||
Unrealized (gains)/losses on derivatives |
252,256 | (33,232 | ) | |||||
Asset impairment |
6,223 | 42,183 | ||||||
Write downs and (gains)/losses on sales of equity method investments |
(15,894 | ) | 14,057 | |||||
Gain on TermoRio settlement |
(13,532 | ) | — | |||||
Gain on sale of discontinued operations |
(10,735 | ) | (29,924 | ) | ||||
Amortization of power contracts and emission credits |
16,118 | 42,822 | ||||||
Amortization of unearned equity compensation |
8,404 | 10,533 | ||||||
Collateral deposit payments in support of energy risk management activities |
(598,111 | ) | (28,783 | ) | ||||
Cash (used)/provided by changes in other working capital, net of disposition affects |
128,544 | 146,803 | ||||||
Net Cash (Used)/Provided by Operating Activities |
(113,802 | ) | 595,421 | |||||
Cash Flows from Investing Activities |
||||||||
Proceeds on sale of equity method investments |
69,575 | 29,693 | ||||||
Proceeds on sale of discontinued operations |
35,658 | 246,498 | ||||||
Return of capital from (investments in) equity method investments and projects |
1,333 | (672 | ) | |||||
Decrease in notes receivable, net |
100,354 | 36,609 | ||||||
Capital expenditures |
(45,518 | ) | (78,293 | ) | ||||
Increase/(decrease) in restricted cash and trust funds, net |
17,915 | (23,029 | ) | |||||
Net Cash Provided by Investing Activities |
179,317 | 210,806 | ||||||
Cash Flows from Financing Activities |
||||||||
Payment of dividends to preferred stockholders |
(12,272 | ) | — | |||||
Repayment of minority interest obligations |
(3,581 | ) | — | |||||
Accelerated share repurchase payment, net |
(250,717 | ) | — | |||||
Issuance of 3.625% Preferred Stock, net |
246,126 | — | ||||||
Deferred debt issuance costs |
(1,539 | ) | (8,497 | ) | ||||
Issuance expense of 4% Preferred Stock |
(204 | ) | — | |||||
Net borrowings under revolving credit facility |
80,000 | — | ||||||
Proceeds from issuance of long-term debt, net |
249,139 | 531,207 | ||||||
Principal payments on short and long-term debt |
(979,379 | ) | (750,343 | ) | ||||
Net Cash Used by Financing Activities |
(672,427 | ) | (227,633 | ) | ||||
Change in Cash from Discontinued Operations |
8,051 | (26,486 | ) | |||||
Effect of Exchange Rate Changes on Cash and Cash Equivalents |
(481 | ) | (2,507 | ) | ||||
Net Increase (Decrease) in Cash and Cash Equivalents |
(599,342 | ) | 549,601 | |||||
Cash and Cash Equivalents at Beginning of Period |
1,103,678 | 549,181 | ||||||
Cash and Cash Equivalents at End of Period |
$ | 504,336 | $ | 1,098,782 | ||||
9
NRG ENERGY, INC. AND SUBSIDIARIES
Reconciliation of NonGAAP Financial Measures
Reconciliation of NonGAAP Financial Measures
Appendix Table A-1: Adjusted Net Income Reconciliation
The following table summarizes the calculation of adjusted net income and
provides a reconciliation to GAAP net income/(loss), including per share
amounts.
| Three Months Ended | Three Months Ended | |||||||||||||||
| Diluted | ||||||||||||||||
| (Dollars in thousands, except per share amounts) | 09/30/2005 | Diluted EPS | 09/30/2004 | EPS | ||||||||||||
Net Income (Loss) |
$ | (26,881 | ) | $ | (0.39 | ) | $ | 54,221 | $ | 0.54 | ||||||
Plus: |
||||||||||||||||
Income from discontinued operations, net of tax |
(9,864 | ) | (0.12 | ) | (10,870 | ) | (0.11 | ) | ||||||||
Corporate relocation charges, net of tax |
1,052 | 0.01 | 3,454 | 0.03 | ||||||||||||
Reorganization items, net of tax |
— | — | (3,171 | ) | (0.03 | ) | ||||||||||
Impairment charge, net of tax |
3,627 | 0.04 | 24,486 | 0.24 | ||||||||||||
Write down of note receivable, net of tax |
— | — | 2,764 | 0.03 | ||||||||||||
Write downs and (gains)/losses on sales of equity
method investments, net of tax |
(2,619 | ) | (0.03 | ) | 8,175 | 0.08 | ||||||||||
Adjusted Net Income (Loss) |
$ | (34,685 | ) | $ | (0.48 | ) | $ | 79,059 | $ | 0.79 | ||||||
Note: Diluted EPS in 2005 is after adjusting for preferred stock dividends
Appendix Table A-2: Adjusted Net Income Reconciliation
The following table summarizes the calculation of adjusted net income and
provides a reconciliation to GAAP net income/(loss), including per share
amounts.
| Nine Months Ended | Nine Months Ended | |||||||||||||||
| Diluted | ||||||||||||||||
| (Dollars in thousands, except per share amounts) | 09/30/2005 | Diluted EPS | 09/30/2004 | EPS | ||||||||||||
Net Income |
$ | 19,603 | $ | 0.07 | $ | 167,480 | $ | 1.67 | ||||||||
Plus: |
||||||||||||||||
Income from discontinued operations, net of tax |
(12,612 | ) | (0.15 | ) | (25,326 | ) | (0.25 | ) | ||||||||
Corporate relocation charges, net of tax |
3,416 | 0.04 | 7,541 | 0.08 | ||||||||||||
Reorganization items, net of tax |
— | — | (1,001 | ) | (0.01 | ) | ||||||||||
Impairment charges, net of tax |
3,762 | 0.04 | 25,500 | 0.25 | ||||||||||||
FERC-authorized settlement with CL&P, net of tax |
— | — | (23,279 | ) | (0.23 | ) | ||||||||||
Proceeds received on Crockett contingency, net of tax |
(2,138 | ) | (0.02 | ) | — | — | ||||||||||
Gain on TermoRio settlement, net of tax |
(8,180 | ) | (0.10 | ) | — | — | ||||||||||
Write down of note receivable, net of tax |
— | — | 2,764 | 0.03 | ||||||||||||
Write downs and (gains)/losses on sales of equity
method investments, net of tax |
(2,811 | ) | (0.03 | ) | 8,497 | 0.08 | ||||||||||
Adjusted Net Income (Loss) |
$ | 1,040 | $ | (0.15 | ) | $ | 162,176 | $ | 1.62 | |||||||
Note: Diluted EPS in 2005 is after adjusting for preferred stock dividends
10
Appendix Table A-3: Three Month EBITDA Reconciliation
The following table summarizes the calculation of EBITDA and provides a reconciliation to net income/(loss):
| Three Months Ended | Three Months Ended | |||||||
| 09/30/2005 | 09/30/2004 | |||||||
Net Income (Loss): |
$ | (26,881 | ) | $ | 54,221 | |||
Plus: |
||||||||
Income Tax Expense |
8,511 | 14,559 | ||||||
Interest Expense |
43,191 | 60,312 | ||||||
Amortization and Write Downs of Finance Costs |
1,372 | 2,380 | ||||||
Amortization of Debt Discount/Premium |
1,228 | 3,418 | ||||||
Refinancing Expense |
19,012 | — | ||||||
Depreciation Expense |
48,802 | 51,060 | ||||||
WCP CDWR Contract Amortization |
— | 28,098 | ||||||
Amortization of Power Contracts |
(2,337 | ) | 3,715 | |||||
Amortization of Emission Credits |
3,318 | 4,920 | ||||||
EBITDA |
96,216 | 222,683 | ||||||
Income from Discontinued Operations |
(9,864 | ) | (10,870 | ) | ||||
Corporate Relocation Charges |
1,740 | 5,713 | ||||||
Reorganization items |
— | (5,245 | ) | |||||
Impairment charges |
6,000 | 40,507 | ||||||
Write down of Note Receivable |
— | 4,572 | ||||||
Write Downs, (Gain)/Loss on Sales of Equity Investments |
(4,333 | ) | 13,524 | |||||
Adjusted EBITDA |
$ | 89,759 | $ | 270,884 | ||||
Appendix Table A-4: Nine Month EBITDA Reconciliation
The following table summarizes the calculation of EBITDA and provides a reconciliation to net income/(loss):
| Nine Months Ended | Nine Months Ended | |||||||
| 09/30/2005 | 09/30/2004 | |||||||
Net Income (Loss): |
$ | 19,603 | $ | 167,480 | ||||
Plus: |
||||||||
Income Tax Expense |
21,201 | 65,136 | ||||||
Interest Expense |
143,062 | 175,825 | ||||||
Amortization and Write Downs of Finance Costs |
4,220 | 6,917 | ||||||
Amortization of Debt Discount/Premium |
3,316 | 10,721 | ||||||
Refinancing Expenses |
44,036 | 30,417 | ||||||
Depreciation Expense |
144,317 | 158,603 | ||||||
WCP CDWR Contract Amortization |
— | 89,704 | ||||||
Amortization of Power Contracts |
6,485 | 29,294 | ||||||
Amortization of Emission Credits |
9,634 | 14,838 | ||||||
EBITDA |
395,874 | 748,935 | ||||||
Income from Discontinued Operations |
(12,612 | ) | (25,326 | ) | ||||
Corporate Relocation Charges |
5,651 | 12,474 | ||||||
Reorganization items |
— | (1,656 | ) | |||||
Impairment charges |
6,223 | 42,183 | ||||||
FERC-authorized Settlement with CL&P |
— | (38,509 | ) | |||||
Gain on Crockett |
(3,536 | ) | — | |||||
Gain on TermoRio Settlement |
(13,532 | ) | — | |||||
Write down of Note Receivable |
— | 4,572 | ||||||
Write Downs, (Gain)/Loss on Sales of Equity Investments |
(15,894 | ) | 14,057 | |||||
Adjusted EBITDA |
$ | 362,174 | $ | 756,730 | ||||
11
Appendix Table A-5: Net Debt to Capital Reconciliation
The following table summarizes the calculation of Net Debt to Capital:
Numerator |
Gross Debt | $ | 3,042,398 | |||
| Total Cash | 595,844 | |||||
| Net Debt | 2,446,554 | |||||
Denominator |
Net Debt | 2,446,554 | ||||
| Mezzanine Preferred | 246,191 | |||||
| Book Value of Equity | 2,019,168 | |||||
| Capital | 4,711,913 | |||||
Net Debt to Capital |
51.9 | % | ||||
Appendix Table A-6: Third Quarter 2005 Regional EBITDA Reconciliation
The following table summarizes the calculation of EBITDA and provides a reconciliation to net income/(loss):
| South | Other | Other | Alt. | |||||||||||||||||||||||||||||||||
| Three months ending September 30, 2005 | Northeast | Central | Western | NA | Australia | Int'l | Energy | Non-Gen | Corp | |||||||||||||||||||||||||||
Net Income (Loss): |
4,157 | (8,352 | ) | 5,941 | (2,608 | ) | 2,296 | 17,255 | 11,731 | 10,167 | (67,468 | ) | ||||||||||||||||||||||||
Plus: |
||||||||||||||||||||||||||||||||||||
Income Tax Expense/(Benefit) |
14 | — | 45 | 709 | (41 | ) | 5,606 | 424 | 1,527 | 227 | ||||||||||||||||||||||||||
Interest Expense |
(23 | ) | 1,742 | — | 3,640 | 2,897 | 948 | 52 | 2,192 | 31,743 | ||||||||||||||||||||||||||
Amortization and Write Downs of Finance Costs |
— | — | — | — | 22 | — | — | 5 | 1,345 | |||||||||||||||||||||||||||
Amortization of Debt (Discount)/Premium |
— | 607 | — | 1,232 | — | — | — | (230 | ) | (381 | ) | |||||||||||||||||||||||||
Debt Extinguishment |
— | — | — | — | — | — | — | — | 19,012 | |||||||||||||||||||||||||||
Depreciation Expense |
18,643 | 15,284 | 30 | 1,670 | 7,117 | 906 | 1.320 | 2,744 | 1,088 | |||||||||||||||||||||||||||
Amortization of Power Contract |
— | (4,521 | ) | — | — | 2,123 | — | — | 61 | — | ||||||||||||||||||||||||||
Amortization of Emission Credits |
2.341 | 977 | — | — | — | — | — | — | — | |||||||||||||||||||||||||||
EBITDA |
$ | 25,132 | $ | 5,737 | $ | 6,016 | $ | 4,643 | $ | 14,414 | $ | 24,715 | $ | 13,527 | $ | 16,466 | $ | (14,434 | ) | |||||||||||||||||
Income from Discontinued Operations |
— | — | — | 871 | — | — | (10,735 | ) | — | — | ||||||||||||||||||||||||||
Corporate Relocation charges |
6 | 4 | — | — | — | — | — | — | 1,730 | |||||||||||||||||||||||||||
Impairment charges |
— | — | — | 6,000 | — | — | — | — | — | |||||||||||||||||||||||||||
Write Down and (Gain)/Losses on Sales of
Equity Method Investments |
— | — | — | (4,333 | ) | — | — | — | — | — | ||||||||||||||||||||||||||
Adjusted EBITDA |
$ | 25,138 | $ | 5,741 | $ | 6,016 | $ | 7,181 | $ | 14,414 | $ | 24,715 | $ | 2,792 | $ | 16,466 | $ | (12,704 | ) | |||||||||||||||||
12
Appendix Table A-7: Third Quarter 2004 Regional EBITDA Reconciliation
The following table summarizes the calculation of EBITDA and provides a reconciliation to net income/(loss):
| South | Other | Other | ||||||||||||||||||||||||||||||||||
| Three months ending September 30, 2004 | Northeast | Central | Western | NA | Australia | Int'l | Alt. Energy | Non-Gen | Corp | |||||||||||||||||||||||||||
Net Income (Loss): |
87,821 | 14,407 | 18,425 | (7,702 | ) | 4,117 | 24,244 | 3,181 | 4,040 | (94,312 | ) | |||||||||||||||||||||||||
Plus: |
||||||||||||||||||||||||||||||||||||
Income Tax Expense/(Benefit) |
— | — | (245 | ) | 384 | (1,861 | ) | 2,422 | (2,028 | ) | 3,410 | 12,477 | ||||||||||||||||||||||||
Interest Expense |
35 | 1,716 | — | 7,652 | (2,966 | ) | 6,712 | 398 | 2,311 | 44,454 | ||||||||||||||||||||||||||
Amortization and Write Downs of Finance Costs |
— | — | — | — | — | — | — | — | 2,380 | |||||||||||||||||||||||||||
Amortization of Debt Discount/Premium |
— | 636 | — | 3,936 | (308 | ) | — | (2 | ) | (260 | ) | (584 | ) | |||||||||||||||||||||||
Refinancing Expenses |
— | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||
Depreciation Expense |
18,190 | 15,658 | 197 | 5,005 | 5,179 | 732 | 1,301 | 2,717 | 2,081 | |||||||||||||||||||||||||||
WCP CDWR Contract Amortization |
— | — | 28,098 | — | — | — | — | — | — | |||||||||||||||||||||||||||
Amortization of Power Contract |
— | (4,333 | ) | 763 | 2,199 | 4,872 | — | — | 214 | — | ||||||||||||||||||||||||||
Amortization of Emission Credits |
3,325 | 1,595 | — | — | — | — | — | — | — | |||||||||||||||||||||||||||
EBITDA |
$ | 109,371 | $ | 29,679 | $ | 47,238 | $ | 11,474 | $ | 9,033 | $ | 34,110 | $ | 2,850 | $ | 12,432 | $ | (33,504 | ) | |||||||||||||||||
Income from Discontinued Operations |
— | — | — | (11,724 | ) | — | — | (3,540 | ) | — | 4,394 | |||||||||||||||||||||||||
Corporate Relocation charges |
3 | — | — | — | — | — | — | — | 5,710 | |||||||||||||||||||||||||||
Reorganization items |
(134 | ) | 11 | — | (34 | ) | — | — | — | 272 | (5,360 | ) | ||||||||||||||||||||||||
Impairment charges |
247 | 740 | — | 24,520 | — | — | — | — | 15,000 | |||||||||||||||||||||||||||
Bad Debt Expense |
— | — | — | 4,572 | — | — | — | — | — | |||||||||||||||||||||||||||
Write Downs and (Gain)/Loss on Sales of Equity
Investments |
— | — | — | 9,694 | — | — | 3,830 | — | — | |||||||||||||||||||||||||||
Adjusted EBITDA |
$ | 109,487 | $ | 30,430 | $ | 47,238 | $ | 38,502 | $ | 9,033 | $ | 34,110 | $ | 3,140 | $ | 12,704 | $ | (13,760 | ) | |||||||||||||||||
Appendix Table A-8: Nine Months 2005 Regional EBITDA Reconciliation
The following table summarizes the calculation of EBITDA and provides a reconciliation to net income/(loss):
| South | Other | Other | Alt. | |||||||||||||||||||||||||||||||||
| Nine months ending September 30, 2005 | Northeast | Central | Western | NA | Australia | Int'l | Energy | Non-Gen | Corp | |||||||||||||||||||||||||||
Net Income (Loss): |
75,897 | (5,863 | ) | 15,109 | (13,734 | ) | 16,689 | 77,961 | 15,389 | 17,703 | (179,548 | ) | ||||||||||||||||||||||||
Plus: |
||||||||||||||||||||||||||||||||||||
Income Tax Expense |
14 | — | 70 | 1,864 | 2,089 | 13,389 | 840 | 2,080 | 855 | |||||||||||||||||||||||||||
Interest Expense |
73 | 5,226 | — | 10,707 | 9,572 | 5,180 | 215 | 6,697 | 105,392 | |||||||||||||||||||||||||||
Amortization
and Write Downs of Finance Costs |
— | — | — | — | 50 | — | — | 15 | 4,155 | |||||||||||||||||||||||||||
Amortization of Debt Discount/Premium |
— | 1,807 | — | 3,664 | (193 | ) | — | — | (696 | ) | (1,266 | ) | ||||||||||||||||||||||||
Refinancing Expense |
— | — | — | — | (9,783 | ) | — | — | — | 53,819 | ||||||||||||||||||||||||||
Depreciation Expense |
55,834 | 45,511 | 425 | 5,014 | 19,829 | 2,560 | 3,954 | 8,223 | 2,967 | |||||||||||||||||||||||||||
Amortization of Power Contract |
— | (10,419 | ) | — | 4,862 | 11,553 | — | — | 489 | — | ||||||||||||||||||||||||||
Amortization of Emission Credits |
6,554 | 3,080 | — | — | — | — | — | — | — | |||||||||||||||||||||||||||
EBITDA |
$ | 138,372 | $ | 39,342 | $ | 15,604 | $ | 12,377 | $ | 49,806 | $ | 99,090 | $ | 20,398 | $ | 34,511 | $ | (13,626 | ) | |||||||||||||||||
Income from Discontinued Operations |
— | — | — | (1,877 | ) | — | — | (10,735 | ) | — | — | |||||||||||||||||||||||||
Corporate Relocation charges |
18 | 6 | — | — | — | — | — | — | 5,627 | |||||||||||||||||||||||||||
Impairment charges |
— | — | — | 6,000 | — | — | 223 | — | — | |||||||||||||||||||||||||||
Gain on TermoRio |
— | — | — | — | — | (13,532 | ) | — | — | — | ||||||||||||||||||||||||||
Gain on Crockett |
— | — | — | (3,536 | ) | — | — | — | — | — | ||||||||||||||||||||||||||
Write Down
and (Gains)/ Losses on Sales of Equity Method Investments
|
— | — | — | (4,333 | ) | — | (11,561 | ) | — | — | — | |||||||||||||||||||||||||
Adjusted EBITDA |
$ | 138,390 | $ | 39,348 | $ | 15,604 | $ | 8,631 | $ | 49,806 | $ | 73,997 | $ | 9,886 | $ | 34,511 | $ | (7,999 | ) | |||||||||||||||||
Appendix Table A-9: Nine Months 2004 Regional EBITDA Reconciliation
The following table summarizes the calculation of EBITDA and provides a reconciliation to net income/(loss):
13
| South | Other | Other | ||||||||||||||||||||||||||||||||||
| Nine months ending September 30, 2004 | Northeast | Central | Western | NA | Australia | Int'l | Alt. Energy | Non-Gen | Corp | |||||||||||||||||||||||||||
Net Income (Loss): |
231,479 | 42,278 | 42,688 | (17,983 | ) | 12,345 | 67,768 | 7,456 | 56,477 | (275,028 | ) | |||||||||||||||||||||||||
Plus: |
||||||||||||||||||||||||||||||||||||
Income Tax Expense/(Benefit) |
— | — | 92 | 1,103 | (1,967 | ) | 11,872 | (2,020 | ) | 4,036 | 52,020 | |||||||||||||||||||||||||
Interest Expense |
713 | 4,096 | 3 | 22,908 | 8,340 | 3,053 | 414 | 7,227 | 129,071 | |||||||||||||||||||||||||||
Amortization and Write Downs of Finance Costs |
— | — | — | — | — | — | — | — | 6,917 | |||||||||||||||||||||||||||
Amortization of Debt (Discount)/Premium |
— | 1,901 | — | 11,824 | (669 | ) | — | (10 | ) | (815 | ) | (1,510 | ) | |||||||||||||||||||||||
Refinancing expense |
— | — | — | — | — | — | — | — | 30,417 | |||||||||||||||||||||||||||
Depreciation Expense |
54,101 | 47,192 | 602 | 18,915 | 17,190 | 2,069 | 3.979 | 8,570 | 5,985 | |||||||||||||||||||||||||||
WCP CDWR contract amortization |
— | — | 89,704 | — | — | — | — | — | — | |||||||||||||||||||||||||||
Amortization of power contract |
6,374 | (10,993 | ) | 2,407 | 7,182 | 23,682 | — | — | 642 | — | ||||||||||||||||||||||||||
Amortization of emission credits |
10,352 | 4,486 | — | — | — | — | — | — | — | |||||||||||||||||||||||||||
EBITDA |
$ | 303,019 | $ | 88,960 | $ | 135,496 | $ | 43,949 | $ | 58,921 | $ | 84,762 | $ | 9,819 | $ | 76,137 | $ | (52,128 | ) | |||||||||||||||||
(Income)/ Loss from discontinued operations |
— | — | — | (14,699 | ) | — | (12,357 | ) | (2,663 | ) | — | 4,393 | ||||||||||||||||||||||||
Corporate Relocation Charges |
3 | 1 | — | — | — | — | — | — | 12,469 | |||||||||||||||||||||||||||
Reorganization Items |
215 | 664 | — | 117 | — | — | — | 432 | (3,083 | ) | ||||||||||||||||||||||||||
Impairment charges |
247 | 2,416 | — | 24,520 | — | — | — | — | 15,000 | |||||||||||||||||||||||||||
Bad debt expense |
— | — | — | 4,572 | — | — | — | — | — | |||||||||||||||||||||||||||
FERC-authorized settlement with CL&P |
— | — | — | — | — | — | — | (38,509 | ) | — | ||||||||||||||||||||||||||
Write Downs, (Gain)/Loss on Sales of Equity
Investments |
— | — | — | 8,959 | 1,268 | — | 3.830 | — | — | |||||||||||||||||||||||||||
Adjusted EBITDA |
$ | 303,484 | $ | 92,041 | $ | 135,496 | $ | 67,418 | $ | 60,189 | $ | 72,405 | $ | 10,986 | $ | 38,060 | $ | (23,349 | ) | |||||||||||||||||
EBITDA, Adjusted EBITDA and adjusted net income are nonGAAP financial measures. These
measurements are not recognized in accordance with GAAP and should not be viewed as an alternative
to GAAP measures of performance. The presentation of Adjusted EBITDA and adjusted net income should
not be construed as an inference that NRG’s future results will be unaffected by unusual or
non-recurring items.
EBITDA represents net income before interest, taxes, depreciation and amortization. EBITDA is
presented because NRG considers it an important supplemental measure of its performance and
believes debt-holders frequently use EBITDA to analyze operating performance and debt service
capacity. EBITDA has limitations as an analytical tool, and you should not consider it in
isolation, or as a substitute for analysis of our operating results as reported under GAAP. Some of
these limitations are:
| • | EBITDA does not reflect cash expenditures, or future requirements for capital expenditures, or contractual commitments; | ||
| • | EBITDA does not reflect changes in, or cash requirements for, working capital needs; | ||
| • | EBITDA does not reflect the significant interest expense, or the cash requirements necessary to service interest or principal payments, on debts; | ||
| • | Although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and EBITDA does not reflect any cash requirements for such replacements; and | ||
| • | Other companies in this industry may calculate EBITDA differently than NRG does, limiting its usefulness as a comparative measure. |
Because of these limitations, EBITDA should not be considered as a measure of discretionary cash
available to use to invest in the growth of NRG’s business. NRG compensates for these limitations
by relying primarily on our GAAP results and using EBITDA and Adjusted EBITDA only supplementally.
See the statements of cash flow included in the financial statements that are a part of this news
release.
Adjusted EBITDA is presented as a further supplemental measure of operating performance. Adjusted
EBITDA represents EBITDA adjusted for reorganization, restructuring, impairment and corporate
relocation charges, discontinued operations, and write downs and gains or losses on the sales of
equity method investments; factors which we do not consider indicative of future operating
performance. The reader is encouraged to evaluate each adjustment and the reasons NRG considers it
appropriate for supplemental analysis. As an analytical tool, Adjusted EBITDA is subject to all of
the limitations applicable to EBITDA. In addition, in evaluating Adjusted EBITDA, the reader should
be aware that in the future NRG may incur expenses similar to the adjustments in this news release.
14
Similar to Adjusted EBITDA, Adjusted net income represents net income adjusted for reorganization,
restructuring, impairment and corporate relocation charges, discontinued operations, and write
downs and gains or losses on the sales of equity method investments; factors which we do not
consider indicative of future operating performance. The reader is encouraged to evaluate each
adjustment and the reasons NRG considers it appropriate for supplemental analysis. In addition, in
evaluating adjusted net income, the reader should be aware that in the future NRG may incur
expenses similar to the adjustments in this news release.
15