EX-99.1 2 c07419exv99w1.htm EXHIBIT 99.1 Exhibit 99.1
Exhibit 99.1
(RRI ENERGY LOGO)
             
P.O. BOX 3795
  HOUSTON, TEXAS 77253   TEL 832 357 3000   FAX 832 357 5503
     
For more information:
  Dennis Barber, Investor Relations: 832-357-3042
 
  Laurie Fickman, Media Relations: 832-357-7720
 
  www.rrienergy.com
 
   
For immediate release:
  November 3, 2010 
RRI Energy Reports Third Quarter 2010 Results
    Merger with Mirant to create GenOn Energy will create significant near-term value driven by $150 million annual cost savings
    Received stockholder approval from both companies
 
    Entered into revolving credit facility and agreements to borrow $1.925 billion, which will satisfy the financing condition in the merger agreement
    Received FERC approval and NY Public Service Commission clearance
 
    Expect to close by the end of the year
 
    Third quarter financial results improved year-over-year and reflect continued depressed commodity prices and weak economic conditions
 
    Investments to improve equipment performance resulted in 3% reduction in unplanned outage rate compared to Q1
 
    New Castle and Titus power plant non-cash impairments totaling $113 million charged in third quarter
HOUSTON — RRI Energy, Inc. today is reporting open EBITDA of $212 million for the third quarter of 2010, compared to $133 million for the third quarter of 2009. The improvement was primarily due to improved energy margins driven by higher heat rates related to warmer weather in July and early August and improved economic conditions compared to the same period last year. The company reported adjusted EBITDA of $212 million in the third quarter of 2010, compared to $100 million in the third quarter of 2009. The improvement was primarily due to the items mentioned above and a reduction in losses from coal hedges. Free cash flow provided by continuing operations during the first nine months of 2010 was $84 million, compared to a use of cash of ($182) million for the first nine months of 2009. The improvement was primarily a result of improved earnings and lower environmental capital expenditures.
“We have made excellent progress toward completing the steps necessary to finalize our proposed merger with Mirant and expect to close the transaction by the end of the year after we receive clearance from the Department of Justice,” said Mark Jacobs, president and chief executive officer of RRI Energy. “Third quarter financial results and market conditions have improved relative to last year, but still reflect continued depressed commodity prices and weak economic conditions.”

 

1


 

Open EBITDA was $241 million for the first nine months of 2010, compared to $129 million for the same period of 2009. Adjusted EBITDA was $244 million for the first nine months of 2010, compared to $42 million for the same period of 2009. The improvements were due to the same factors as described above, partially offset by increased plant operation and maintenance expenses to improve equipment performance.
Income from continuing operations before income taxes for the third quarter of 2010 was $41 million, compared to a loss from continuing operations of $9 million for the third quarter of 2009. The 2010 reported results include net unrealized gains from energy derivatives of $51 million, $5 million in merger-related costs and a $113 million charge for long-lived assets impairments. The reported numbers for 2009 include net unrealized gains from energy derivatives of $7 million.
The loss from continuing operations before income taxes for the first nine months of 2010 was $361 million, compared to $334 million for the first nine months of 2009. The 2010 reported results include net unrealized gains from energy derivatives of $112 million, a $17 million charge for western states litigation and similar settlements, $19 million in merger-related costs and a $361 million charge for long-lived assets impairments. The reported numbers for 2009 include net unrealized losses from energy derivatives of $30 million and $8 million in severance charges. Operating cash flow from continuing operations was $252 million for the first nine months of 2010, compared to a use of cash of ($275) million for the same period of 2009.
Non-GAAP Financial Measures
This press release and the attached financial tables include the following non-GAAP financial measures:
    EBITDA
 
    Adjusted EBITDA
 
    Open EBITDA
 
    Adjusted cash flow provided by/(used in) continuing operations
 
    Free cash flow provided by/(used in) continuing operations
 
    Open energy gross margin
 
    Other margin
 
    Open gross margin
 
    Total controllable costs
 
    Total controllable costs/MWh
 
    Total controllable costs/MW capacity
 
    Gross debt
 
    Net debt
 
    Operation and maintenance, excluding severance
 
    General and administrative, excluding severance and merger-related costs
A reconciliation of these financial measures and the most directly comparable GAAP measures is included above or in the attached financial tables. Additional information regarding these measures, including a discussion of their usefulness and purpose, is included in the Form 8-K furnished along with this press release. Certain factors that could affect GAAP financial measures are not accessible on a forward-looking basis, but could be material to future reported earnings and cash flows.

 

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Webcast Of Earnings Conference Call
RRI Energy will host its third quarter 2010 earnings conference call beginning at 10:00 a.m. Eastern Time on Wednesday, November 3, 2010. The conference call will be webcast live with audio and slides at www.rrienergy.com in the Investor Relations section. A replay of the call can be accessed approximately two hours after the call’s completion.
About RRI Energy, Inc.
RRI Energy, Inc. (NYSE:RRI) based in Houston, provides electricity to wholesale customers in the United States. The company is one of the largest independent power producers in the nation with more than 14,000 megawatts of power generation capacity across the United States. These strategically located generating assets use natural gas, fuel oil and coal. RRI routinely posts all important information on its web site at www.rrienergy.com.
Forward-Looking Statements
This news release contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements are statements that contain projections, estimates or assumptions about our revenues, income, capital structure and other financial items, our plans and objectives for future operations or about our future economic performance, possible transactions, dispositions, financings or offerings, and our view of economic and market conditions. In many cases you can identify forward-looking statements by terminology such as “anticipate,” “estimate,” “believe,” “think”, “continue,” “could,” “intend,” “may,” “plan,” “potential,” “predict,” “should,” “will,” “expect,” “objective,” “projection,” “forecast,” “goal,” “guidance,” “outlook,” “effort,” “target” and other similar words. However, the absence of these words does not mean that the statements are not forward-looking.
Actual results may differ materially from those expressed or implied by forward-looking statements as a result of many factors or events, including, but not limited to, statements about the benefits of the proposed merger involving us and Mirant Corporation, including our future financial position and operating results and the expected timing or ability to obtain necessary approvals and satisfy conditions to complete the merger and the related financings, legislative, regulatory and/or market developments, the outcome of pending or threatened lawsuits, regulatory or tax proceedings or investigations, the effects of competition or regulatory intervention, financial and economic market conditions, access to capital, the timing and extent of changes in law and regulation (including environmental), commodity prices, prevailing demand and market prices for electricity, capacity, fuel and emission allowances, weather conditions, operational constraints or outages, fuel supply or transmission issues, hedging ineffectiveness and other factors we discuss or refer to in the “Risk Factors” sections of our most recent Annual Report on Form 10-K and Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission (SEC). Our filings and other important information are also available on the Investor Relations page of our website at www.rrienergy.com.
Each forward-looking statement speaks only as of the date of the particular statement and we undertake no obligation to update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.

 

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Additional Information and Where To Find It
This news release does not constitute an offer to sell or the solicitation of an offer to buy any securities nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. In connection with the proposed merger between us and Mirant, we filed with the SEC a registration statement on Form S-4 that includes a joint proxy statement of us and Mirant and that also constitutes a prospectus of us. The registration statement was declared effective by the SEC on September 13, 2010. We and Mirant urge investors and shareholders to read the registration statement, and any other relevant documents filed with the SEC, including the joint proxy statement/prospectus that is a part of the registration statement, because they contain important information. You may obtain copies of all documents filed with the SEC regarding this transaction, free of charge, at the SEC’s website (www.sec.gov). You may also obtain these documents, free of charge, from our website (www.rrienergy.com) under the tab “Investor Relations” and then under the heading “Company Filings.” You may also obtain these documents, free of charge, from Mirant’s website (www.mirant.com) under the tab “Investor Relations” and then under the heading “SEC Filings.”
###

 

4


 

RRI Energy, Inc. and Subsidiaries
Consolidated Statements of Operations
(Unaudited)
                                 
    Three Months Ended September 30,     Nine Months Ended September 30,  
    2010     2009     2010     2009  
    (thousands of dollars, except per share amounts)  
 
                               
Revenues:
                               
Revenues (including $49,536, $(25,095), $98,621 and $(51,225) unrealized gains (losses))
  $ 697,556     $ 507,179     $ 1,702,464     $ 1,363,140  
 
                       
 
                               
Expenses:
                               
Cost of sales (including $856, $31,826, $13,278 and $20,857 unrealized gains)
    305,616       267,632       837,415       872,373  
Operation and maintenance
    116,196       114,457       459,815       428,567  
General and administrative
    20,215       23,686       76,403       80,345  
Western states litigation and similar settlements
                17,000        
Gains on sales of assets and emission and exchange allowances, net
    (664 )     (1,013 )     (1,700 )     (21,184 )
Long-lived assets impairments
    112,856             360,571        
Depreciation and amortization
    64,968       67,724       196,436       203,228  
 
                       
Total operating expense
    619,187       472,486       1,945,940       1,563,329  
 
                       
Operating Income (Loss)
    78,369       34,693       (243,476 )     (200,189 )
 
                       
Other Income (Expense):
                               
Debt extinguishments gains (losses)
          (103 )           741  
Interest expense
    (39,568 )     (44,614 )     (122,197 )     (136,600 )
Interest income
    126       407       492       1,376  
Other, net
    2,040       880       4,663       942  
 
                       
Total other expense
    (37,402 )     (43,430 )     (117,042 )     (133,541 )
 
                       
 
                               
Income (Loss) from Continuing Operations Before Income Taxes
    40,967       (8,737 )     (360,518 )     (333,730 )
Income tax expense (benefit)
    18,805       9,532       69,657       (105,988 )
 
                       
 
                               
Income (Loss) from Continuing Operations
    22,162       (18,269 )     (430,175 )     (227,742 )
Income from discontinued operations
    664       2,841       4,178       864,467  
 
                       
Net Income (Loss)
  $ 22,826     $ (15,428 )   $ (425,997 )   $ 636,725  
 
                       
 
                               
Basic and Diluted Earnings (Loss) Per Share:
                               
Income (loss) from continuing operations
  $ 0.06     $ (0.05 )   $ (1.22 )   $ (0.65 )
Income from discontinued operations
          0.01       0.01       2.46  
 
                       
Net income (loss)
  $ 0.06     $ (0.04 )   $ (1.21 )   $ 1.81  
 
                       
 
                               
Weighted Average Common Shares Outstanding (in thousands):
                               
- Basic
    353,520       351,561       353,434       350,908  
- Diluted
    353,705       351,561       353,434       350,908  
Reference is made to RRI Energy, Inc.’s Annual Report
on Form 10-K for the year ended December 31, 2009

 

1


 

RRI Energy, Inc. and Subsidiaries
Results of Operations by Segment
and Adjusted and Open Data
(Unaudited)
                                                 
    Three Months Ended September 30,     Nine Months Ended September 30,  
    2010     2009     Change     2010     2009     Change  
    (millions of dollars)  
 
                                               
East coal open gross margin (1)
  $ 172     $ 100     $ 72     $ 427     $ 310     $ 117  
East gas open gross margin (1)
    85       67       18       196       155       41  
West open gross margin (1)
    71       81       (10 )     101       118       (17 )
Other open gross margin (1)
    14       19       (5 )     28       46       (18 )
 
                                   
Total
    342       267       75       752       629       123  
 
                                               
Operation and maintenance, excluding severance
    (116 )     (114 )     (2 )     (458 )     (424 )     (34 )
General and administrative, excluding severance and merger-related costs
    (16 )     (21 )     5       (58 )     (77 )     19  
Other income (loss), net
    2       1       1       5       1       4  
 
                                   
Open EBITDA
    212       133       79       241       129       112  
 
                                   
 
                                               
Hedges and other items
  (1 )   (34 )   33     1     (108 )   109  
Gains on sales of assets and emission and exchange allowances, net
    1       1             2       21       (19 )
 
                                   
Adjusted EBITDA
  212     100     112     244     42     202  
 
                                   
 
                                               
Unrealized gains (losses) on energy derivatives
    51       7       44       112       (30 )     142  
Western states litigation and similar settlements
                      (17 )           (17 )
Severance (2)
          (3 )     3       (2 )     (8 )     6  
Merger-related costs (3)
    (5 )           (5 )     (19 )           (19 )
Long-lived assets impairments
    (113 )           (113 )     (361 )           (361 )
Debt extinguishments gains
                            1       (1 )
 
                                   
EBITDA
  145     104     41     (43 )   5     (48  )
 
                                   
 
                                               
Depreciation and amortization
    (65 )     (68 )     3       (196 )     (203 )     7  
Interest expense, net
    (39 )     (45 )     6       (122 )     (136 )     14  
 
                                   
Income (loss) from continuing operations before income taxes
  $ 41     $ (9 )   $ 50     $ (361 )   $ (334 )   $ (27 )
 
                                   
     
(1)  
Segment profitability measure consists of open energy gross margin and other margin.
 
(2)  
Includes severance classified in operation and maintenance and general and administrative expenses.
 
(3)  
Includes merger-related costs classified in general and administrative.
Reference is made to RRI Energy, Inc.’s Annual Report
on Form 10-K for the year ended December 31, 2009

 

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RRI Energy, Inc. and Subsidiaries
Consolidated Balance Sheets
                 
    September 30, 2010     December 31, 2009  
    (thousands of dollars, except per share amounts)  
    (Unaudited)  
ASSETS
               
Current Assets:
               
Cash and cash equivalents
  $ 781,097     $ 943,440  
Restricted cash
    6,930       24,093  
Accounts and notes receivable, principally customer, net
    124,054       152,569  
Inventory
    280,612       331,584  
Derivative assets
    175,146       132,062  
Margin deposits
    124,953       198,582  
Prepayments and other current assets
    86,404       86,844  
Current assets of discontinued operations ($14,823 and $55,855 of margin deposits)
    40,641       108,476  
 
           
Total current assets
    1,619,837       1,977,650  
 
           
Property, plant and equipment, gross
    5,766,852       6,330,879  
Accumulated depreciation
    (1,644,285 )     (1,728,566 )
 
           
Property, Plant and Equipment, net
    4,122,567       4,602,313  
 
           
 
               
Other Assets:
               
Other intangibles, net
    290,977       305,913  
Derivative assets
    51,488       53,138  
Prepaid lease
    285,772       277,370  
Other ($27,655 and $33,793 accounted for at fair value)
    198,165       239,078  
Long-term assets of discontinued operations
    3,230       5,232  
 
           
Total other assets
    829,632       880,731  
 
           
Total Assets
  $ 6,572,036     $ 7,460,694  
 
           
 
               
LIABILITIES AND EQUITY
               
Current Liabilities:
               
Current portion of long-term debt
  $ 108     $ 404,505  
Accounts payable, principally trade
    99,346       142,787  
Derivative liabilities
    88,714       151,461  
Margin deposits
    33,479       2,860  
Other
    233,318       169,898  
Current liabilities of discontinued operations ($0 and $11,000 of margin deposits)
    14,891       58,452  
 
           
Total current liabilities
    469,856       929,963  
 
           
 
               
Other Liabilities:
               
Derivative liabilities
    35,964       61,436  
Other
    265,069       260,547  
Long-term liabilities of discontinued operations
    13,315       13,700  
 
           
Total other liabilities
    314,348       335,683  
 
           
Long-term Debt
    1,949,689       1,949,771  
 
           
Commitments and Contingencies
               
Temporary Equity Stock-based Compensation
    7,303       6,890  
 
           
Stockholders’ Equity:
               
Preferred stock; par value $0.001 per share (125,000,000 shares authorized; none outstanding)
           
Common stock; par value $0.001 per share (2,000,000,000 shares authorized; 353,432,149 and 352,785,985 issued)
    114       114  
Additional paid-in capital
    6,268,528       6,259,248  
Accumulated deficit
    (2,398,386 )     (1,972,389 )
Accumulated other comprehensive loss
    (39,416 )     (48,586 )
 
           
Total stockholders’ equity
    3,830,840       4,238,387  
 
           
Total Liabilities and Equity
  $ 6,572,036     $ 7,460,694  
 
           
Reference is made to RRI Energy, Inc.’s Annual Report
on Form 10-K for the year ended December 31, 2009

 

3


 

RRI Energy, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
(Unaudited)
                 
    Nine Months Ended September 30,  
    2010     2009  
    (thousands of dollars)  
Cash Flows from Operating Activities:
               
Net income (loss)
  $ (425,997 )   $ 636,725  
Income from discontinued operations
    (4,178 )     (864,467 )
 
           
Loss from continuing operations
    (430,175 )     (227,742 )
Adjustments to Reconcile Net Income (Loss) to Net Cash Provided by Operating Activities:
               
Depreciation and amortization
    196,436       203,228  
Deferred income taxes
    67,566       (106,923 )
Net changes in energy derivatives
    (107,469 )     30,748  
Gains on sales of assets and emission and exchange allowances, net
    (1,700 )     (21,184 )
Western states litigation and similar settlements
    17,000        
Long-lived assets impairments
    360,571        
Amortization of deferred financing costs
    5,220       5,405  
Other, net
    (7,426 )     (1,392 )
Changes in other assets and liabilities:
               
Accounts and notes receivable, net
    29,411       117,255  
Inventory
    48,189       (1,399 )
Margin deposits, net
    104,248       (239,903 )
Net derivative assets and liabilities
    (2,358 )     (26,816 )
Western states litigation and similar settlement payments
          (3,449 )
Accounts payable
    (23,814 )     (9,111 )
Other current assets
    361       7,817  
Other assets
    (17,165 )     (19,858 )
Taxes payable/receivable
    773       (3,479 )
Other current liabilities
    23,726       36,779  
Other liabilities
    (10,911 )     (15,719 )
 
           
Net cash provided by (used in) continuing operations from operating activities
    252,483       (275,743 )
Net cash provided by discontinued operations from operating activities
    34,586       534,275  
 
           
Net cash provided by operating activities
    287,069       258,532  
 
           
Cash Flows from Investing Activities:
               
Capital expenditures
    (64,041 )     (157,750 )
Proceeds from sales of assets, net
    8,385       35,931  
Proceeds from sales of emission and exchange allowances
    139       19,180  
Purchases of emission allowances
    (270 )     (7,624 )
Other, net
    4,863       2,998  
 
           
Net cash used in continuing operations from investing activities
    (50,924 )     (107,265 )
Net cash provided by (used in) discontinued operations from investing activities
    (4,402 )     313,775  
 
           
Net cash provided by (used in) investing activities
    (55,326 )     206,510  
 
           
Cash Flows from Financing Activities:
               
Payments of long-term debt
    (399,809 )     (59,413 )
Proceeds from issuances of stock
    1,899       4,584  
 
           
Net cash used in continuing operations from financing activities
    (397,910 )     (54,829 )
Net cash used in discontinued operations from financing activities
          (260,707 )
 
           
Net cash used in financing activities
    (397,910 )     (315,536 )
 
           
Net Change in Cash and Cash Equivalents, Total Operations
    (166,167 )     149,506  
Less: Net Change in Cash and Cash Equivalents, Discontinued Operations
    (3,824 )     (100,197 )
Cash and Cash Equivalents at Beginning of Period, Continuing Operations
    943,440       1,004,367  
 
           
Cash and Cash Equivalents at End of Period, Continuing Operations
  $ 781,097     $ 1,254,070  
 
           
Free Cash Flow Reconciliation
(Unaudited)
                 
    Nine Months Ended September 30,  
    2010     2009  
    (millions of dollars)  
 
               
Operating cash flow from continuing operations
  $ 252     $ (275 )
Change in margin deposits, net
    (104 )     240  
 
           
Adjusted cash flow provided by (used in) continuing operations
    148       (35 )
 
           
Capital expenditures
    (64 )     (158 )
Proceeds from sales of emission and exchange allowances
          19  
Purchases of emission allowances
          (8 )
 
           
Free cash flow provided by (used in) continuing operations
  $ 84     $ (182 )
 
           
Reference is made to RRI Energy, Inc.’s Annual Report
on Form 10-K for the year ended December 31, 2009

 

4


 

RRI Energy, Inc. and Subsidiaries
Power Generation Operational and Financial Data
(Unaudited)
                                                 
    Three Months Ended September 30,     Nine Months Ended September 30,  
    2010     2009     Change     2010     2009     Change  
    (in millions)     (in millions)  
East Coal
                                               
Open energy gross margin (1)
  $ 113     $ 43     $ 70     $ 269     $ 178     $ 91  
Other margin (2)
    59       57       2       158       132       26  
 
                                   
Open gross margin (3) (4)
  $ 172     $ 100     $ 72     $ 427     $ 310     $ 117  
 
                                   
 
                                               
East Gas
                                               
Open energy gross margin (1)
  $ 27     $ 12     $ 15     $ 37     $ 18     $ 19  
Other margin (2)
    58       55       3       159       137       22  
 
                                   
Open gross margin (3) (4)
  $ 85     $ 67     $ 18     $ 196     $ 155     $ 41  
 
                                   
 
 
West
                                               
Open energy gross margin (1)
  $ 7     $ 3     $ 4     $ 7     $ 12     $ (5 )
Other margin (2)
    64       78       (14 )     94       106       (12 )
 
                                   
Open gross margin (3) (4)
  $ 71     $ 81     $ (10 )   $ 101     $ 118     $ (17 )
 
                                   
 
                                               
Other
                                               
Open energy gross margin (1)
  $ 3     $     $ 3     $ 3     $     $ 3  
Other margin (2)
    11       19       (8 )     25       46       (21 )
 
                                   
Open gross margin (3) (4)
  $ 14     $ 19     $ (5 )   $ 28     $ 46     $ (18 )
 
                                   
 
                                               
Total
                                               
Open energy gross margin (1)
  $ 150     $ 58     $ 92     $ 316     $ 208     $ 108  
Other margin (2)
    192       209       (17 )     436       421       15  
 
                                   
Open gross margin (4)
  $ 342     $ 267     $ 75     $ 752     $ 629     $ 123  
 
                                   
Total margin capture factor (5)
    92.1 %     94.8 %     -2.7 %     87.0 %     89.5 %     -2.5 %
                                                 
    Three Months Ended September 30,     Nine Months Ended September 30,  
    2010     2009     Change     2010     2009     Change  
 
                                               
Generation (GWh) (6):
                                               
East Coal
    5,513.9       4,943.5       570.4       15,592.3       14,711.6       880.7  
East Gas
    904.3       1,004.1       (99.8 )     1,691.7       1,638.4       53.3  
West
    168.3       272.7       (104.4 )     194.8       497.7       (302.9 )
Other
    356.6       11.6       345.0       394.0       73.9       320.1  
 
                                   
Total
    6,943.1       6,231.9       711.2       17,872.8       16,921.6       951.2  
 
                                   
 
Open Energy Unit Margin ($/MWh) (7):
                                               
East Coal
  $ 20.49     $ 8.70     $ 11.79     $ 17.25     $ 12.10     $ 5.15  
East Gas
    29.86       11.95       17.91       21.87       10.99       10.88  
West
    41.59       11.00       30.59       35.93       24.11       11.82  
Other
    8.41             8.41       7.61             7.61  
 
                                   
Weighted average total
  $ 21.60     $ 9.31     $ 12.29     $ 17.68     $ 12.29     $ 5.39  
 
                                   
     
(1)  
Open energy gross margin is calculated using the day-ahead and real-time market power sales prices received by the plants less market-based delivered fuel costs.
 
(2)  
Other margin represents power purchase agreements, capacity payments, ancillary services revenues and selective commercial strategies relating to optimizing our assets.
 
(3)  
Segment profitability measure.
 
(4)  
This figure excludes the effects of hedges and other items and unrealized gains/losses on energy derivatives.
 
(5)  
Total margin capture factor is calculated by dividing open gross margin generated by the plants by the total available open gross margin, assuming 100% availability.
 
(6)  
Excludes generation related to power purchase agreements.
 
(7)  
Represents open energy gross margin divided by generation.
Reference is made to RRI Energy, Inc.’s Annual Report
on Form 10-K for the year ended December 31, 2009

 

5


 

RRI Energy, Inc. and Subsidiaries
Total Controllable Costs Metrics
(Unaudited)
Efficiency Measures — Total Controllable Costs
                                 
    Three Months Ended September 30,     Nine Months Ended September 30,  
    2010     2009     2010     2009  
    (in millions, except per MWh and per MW data)  
 
                               
Operation and maintenance, excluding severance (1)
  $ 116     $ 114     $ 458     $ 424  
REMA lease expense
    (15 )     (15 )     (45 )     (45 )
General and administrative, excluding severance and merger-related costs (1)
    16       21       58       77  
Maintenance capital expenditures
    4       10       24       45  
 
                       
Total Controllable Costs
  $ 121     $ 130     $ 495     $ 501  
 
                       
 
                               
TWh generation
    6.9       6.2       17.9       16.9  
 
                               
Total Controllable Costs/MWh
  $ 18     $ 21     $ 28     $ 30  
 
                               
MW capacity (2)
    14,586       14,563       14,586       14,563  
 
                               
Total Controllable Costs ($ thousands)/MW capacity
  $ 8.3     $ 8.9     $ 33.9     $ 34.4  
Reconciliation
                                 
    Three Months Ended September 30,     Nine Months Ended September 30,  
    2010     2009     2010     2009  
    (in millions, except per MWh and per MW data)  
 
                               
Operation and maintenance (O&M)
  $ 116     $ 115     $ 460     $ 429  
General and administrative (G&A)
    21       23       77       80  
Capital expenditures
    14       43       64       158  
 
                       
Total operation and maintenance, general and administrative and capital expenditures
  $ 151     $ 181     $ 601     $ 667  
 
                       
 
                               
Total Controllable Costs
  $ 121     $ 130     $ 495     $ 501  
REMA lease expense in operation and maintenance
    15       15       45       45  
Severance included in operation and maintenance
          1       2       5  
Severance included in general and administrative
          2             3  
Merger-related costs included in general and administrative
    5             19        
Environmental capital expenditures
    10       25       32       91  
Capitalized interest
          8       8       22  
 
                       
Total operation and maintenance, general and administrative and capital expenditures
  $ 151     $ 181     $ 601     $ 667  
 
                       
 
                               
TWh generation
    6.9       6.2       17.9       16.9  
 
                               
Total O&M, G&A and capital expenditures/MWh
  $ 22     $ 29     $ 34     $ 39  
 
                               
MW capacity (2)
    14,586       14,563       14,586       14,563  
Total O&M, G&A and capital expenditures ($ thousands)/MW capacity
  $ 10.4     $ 12.4     $ 41.2     $ 45.8  
     
(1)  
Excludes (a) severance charges incurred in connection with (i) repositioning the company in connection with the sale of our retail business and (ii) implementing our plant-specific operating model, classified in operation and maintenance and general and administrative and (b) merger-related costs classified in general and administrative. Merger-related costs include financial advisory fees, legal costs, stock-based compensation expense related to the modification of our stock options and other merger-related expenses.
 
(2)  
MW capacity changed from September 30, 2009 to September 30, 2010 as a result of MW re-ratings that occurred during the fourth quarter of 2009 and third quarter of 2010.
Reference is made to RRI Energy, Inc.’s Annual Report
on Form 10-K for the year ended December 31, 2009

 

6


 

RRI Energy, Inc. and Subsidiaries
East Coal
(Unaudited)
                                                 
    Net Generating     Heat Rate     Q3 Total Margin Capture Factor     Q3 Generation (GWh)  
Unit Name   Capacity (MW)     (MMBtu/MWh)     2010     2009     2010     2009  
 
                                               
Cheswick
    565       10.0       83.8 %     90.8 %     674.1       810.5  
Conemaugh (1)
    281       9.4       95.8 %     95.2 %     543.9       471.3  
Elrama
    460       11.3       82.9 %     89.3 %     181.1       32.5  
Keystone (1)
    284       9.5       94.4 %     92.9 %     587.0       508.5  
Portland
    401       9.8       88.8 %     85.7 %     599.5       501.1  
Seward
    525       9.6       94.4 %     87.8 %     1,050.1       1,010.3  
Shawville (1)
    597       10.3       85.9 %     93.8 %     571.3       503.3  
Titus
    243       10.8       94.7 %     93.5 %     236.4       191.9  
Avon Lake
    763       9.3       87.8 %     89.3 %     704.8       690.1  
New Castle
    333       10.6       92.6 %     96.1 %     246.5       146.5  
Niles
    244       10.5       77.5 %     89.5 %     119.2       77.5  
 
                                     
East Coal Total
    4,696               89.4 %     90.5 %     5,513.9       4,943.5  
 
                                     
                                                 
    Net Generating     Heat Rate     Q3 YTD Total Margin Capture Factor     Q3 YTD Generation (GWh)  
Unit Name   Capacity (MW)     (MMBtu/MWh)     2010     2009     2010     2009  
 
                                               
Cheswick
    565       10.0       70.0 %     81.8 %     1,735.1       2,050.6  
Conemaugh (1)
    281       9.4       92.8 %     96.2 %     1,453.5       1,496.9  
Elrama
    460       11.3       80.7 %     82.8 %     464.8       278.9  
Keystone (1)
    284       9.5       95.3 %     88.6 %     1,698.8       1,432.0  
Portland
    401       9.8       76.8 %     84.8 %     1,306.4       1,693.7  
Seward
    525       9.6       81.6 %     71.0 %     2,732.7       2,377.0  
Shawville (1)
    597       10.3       84.2 %     90.1 %     2,154.2       1,654.7  
Titus
    243       10.8       90.0 %     93.6 %     636.5       765.1  
Avon Lake
    763       9.3       83.4 %     88.9 %     2,351.4       2,313.2  
New Castle
    333       10.6       93.3 %     88.6 %     656.2       449.8  
Niles
    244       10.5       74.5 %     70.8 %     402.7       199.7  
 
                                     
East Coal Total
    4,696               82.8 %     84.5 %     15,592.3       14,711.6  
 
                                     
     
(1)  
The Company leases a 100% interest in the Shawville plant, a 16.67% interest in the Keystone plant and a 16.45% interest in the Conemaugh plant under facility lease agreements, which expire in 2026, 2034 and 2034, respectively. The table includes our net share of capacity for the coal units of these plants.
Reference is made to RRI Energy, Inc.’s Annual Report
on Form 10-K for the year ended December 31, 2009

 

7


 

RRI Energy, Inc. and Subsidiaries
East Gas
(Unaudited)
                                                 
    Net
Generating
    Heat Rate     Q3 Total Margin Capture Factor     Q3 Generation (GWh)  
Unit Name   Capacity (MW)     (MMBtu/MWh)     2010     2009     2010     2009  
 
                                               
Aurora
    878       10.5     NM (1)   NM (1)     16.5       2.8  
Blossburg
    19       14.6     NM (1)   NM (1)     0.8       2.5  
Brunot Island
    289       10.4     NM (1)   NM (1)     3.9       0.2  
Gilbert
    536       11.0     NM (1)   NM (1)     16.5       4.0  
Glen Gardner
    160       14.6     NM (1)   NM (1)     4.8       0.3  
Hamilton
    20       14.8     NM (1)   NM (1)     0.6       0.1  
Hunterstown
    60       14.8     NM (1)   NM (1)     7.6       0.2  
Hunterstown CCGT
    810       7.0       88.2 %     99.1 %     829.8       990.6  
Mountain
    40       14.3     NM (1)   NM (1)     3.6       0.3  
Orrtanna
    20       14.4     NM (1)   NM (1)     1.1       0.1  
Portland
    169       11.2     NM (1)   NM (1)     3.7       0.7  
Sayreville
    224       13.8     NM (1)   NM (1)     3.2       0.3  
Shawnee
    20       14.0     NM (1)   NM (1)     0.2       0.2  
Shawville (2)
    6       10.2     NM (1)   NM (1)            
Titus
    31       17.4     NM (1)   NM (1)            
Tolna
    39       14.2     NM (1)   NM (1)     2.6       0.2  
Warren
    68       12.8     NM (1)   NM (1)            
Werner
    212       13.8     NM (1)   NM (1)     4.0       0.6  
Shelby
    356       9.8     NM (1)   NM (1)     5.4       1.0  
 
                                     
East Gas Total
    3,957               92.2 %     95.1 %     904.3       1,004.1  
 
                                     
                                                 
    Net
Generating
    Heat Rate     Q3 YTD Total Margin Capture Factor     Q3 YTD Generation (GWh)  
Unit Name   Capacity (MW)     (MMBtu/MWh)     2010     2009     2010     2009  
 
Aurora
    878       10.5     NM (1)   NM (1)     27.9       13.9  
Blossburg
    19       14.6     NM (1)   NM (1)     1.2       2.6  
Brunot Island
    289       10.4     NM (1)   NM (1)     8.9       3.6  
Gilbert
    536       11.0     NM (1)   NM (1)     18.9       12.3  
Glen Gardner
    160       14.6     NM (1)   NM (1)     4.9       0.3  
Hamilton
    20       14.8     NM (1)   NM (1)     0.6       0.6  
Hunterstown
    60       14.8     NM (1)   NM (1)     8.8       1.6  
Hunterstown CCGT
    810       7.0       91.6 %     96.8 %     1,593.9       1,594.2  
Mountain
    40       14.3     NM (1)   NM (1)     4.7       2.0  
Orrtanna
    20       14.4     NM (1)   NM (1)     1.2       0.2  
Portland
    169       11.2     NM (1)   NM (1)     3.8       2.6  
Sayreville
    224       13.8     NM (1)   NM (1)     4.4       1.5  
Shawnee
    20       14.0     NM (1)   NM (1)     0.2       0.2  
Shawville (2)
    6       10.2     NM (1)   NM (1)     0.1       0.1  
Titus
    31       17.4     NM (1)   NM (1)            
Tolna
    39       14.2     NM (1)   NM (1)     2.8       0.5  
Warren
    68       12.8     NM (1)   NM (1)            
Werner
    212       13.8     NM (1)   NM (1)     4.0       1.2  
Shelby
    356       9.8     NM (1)   NM (1)     5.4       1.0  
 
                                     
East Gas Total
    3,957               92.0 %     93.4 %     1,691.7       1,638.4  
 
                                     
     
(1)  
NM is not meaningful.
 
(2)  
The Company leases a 100% interest in the Shawville plant under a facility lease agreement, which expires in 2026. The table includes our net share of capacity for the gas units of this plant.
Reference is made to RRI Energy, Inc.’s Annual Report
on Form 10-K for the year ended December 31, 2009

 

8


 

RRI Energy, Inc. and Subsidiaries
West and Other
(Unaudited)
West
                                                 
    Net Generating     Heat Rate     Q3 Total Margin Capture Factor     Q3 Generation (GWh)  
Unit Name   Capacity (MW)     (MMBtu/MWh)     2010     2009     2010     2009  
 
Coolwater
    622       10.1     NM (1)   NM (1)     10.4       22.8  
Ellwood (2)
    54       13.3     NM (1)   NM (1)            
Etiwanda (2)
    640       10.0     NM (1)   NM (1)            
Mandalay (2)
    560       10.9     NM (1)   NM (1)     55.9       94.0  
Ormond Beach
    1,516       9.6     NM (1)   NM (1)     102.0       155.9  
 
                                     
West Total
    3,392               97.9 %     99.2 %     168.3       272.7  
 
                                     
                                                 
    Net Generating     Heat Rate     Q3 YTD Total Margin Capture Factor     Q3 YTD Generation (GWh)  
Unit Name   Capacity (MW)     (MMBtu/MWh)     2010     2009     2010     2009  
 
                                               
Coolwater
    622       10.1     NM (1)   NM (1)     11.2       38.9  
Ellwood (2)
    54       13.3     NM (1)   NM (1)            
Etiwanda (2)
    640       10.0     NM (1)   NM (1)            
Mandalay (2)
    560       10.9     NM (1)   NM (1)     66.5       208.7  
Ormond Beach
    1,516       9.6     NM (1)   NM (1)     117.1       250.1  
 
                                     
West Total
    3,392               94.3 %     95.1 %     194.8       497.7  
 
                                     
 
Other
                                                 
    Net Generating     Heat Rate     Q3 Total Margin Capture Factor     Q3 Generation (GWh)  
Unit Name   Capacity (MW)     (MMBtu/MWh)     2010     2009     2010     2009  
 
                                               
Choctaw
    800       7.0     NM (1)   NM (1)     356.6       11.6  
Indian River (2)(3)
    587       10.5     NM (1)   NM (1)            
Osceola (2)
    470       11.0     NM (1)   NM (1)            
Sabine (4)
    54       N/A       N/A       N/A       N/A       N/A  
Vandolah (5)
    630       N/A       N/A       N/A       N/A       N/A  
 
                                     
Other Total
    2,541               98.0 %(1)   NM (1)     356.6       11.6  
 
                                     
                                                 
    Net Generating     Heat Rate     Q3 YTD Total Margin Capture Factor     Q3 YTD Generation (GWh)  
Unit Name   Capacity (MW)     (MMBtu/MWh)     2010     2009     2010     2009  
 
                                               
Choctaw
    800       7.0     NM (1)   NM (1)     394.0       72.4  
Indian River (2)(3)
    587       10.5     NM (1)   NM (1)            
Osceola (2)
    470       11.0     NM (1)   NM (1)           1.5  
Sabine (4)
    54       N/A       N/A       N/A       N/A       N/A  
Vandolah (5)
    630       N/A       N/A       N/A       N/A       N/A  
 
                                     
Other Total
    2,541               99.0 %(1)   NM (1)     394.0       73.9  
 
                                     
     
(1)  
NM is not meaningful.
 
(2)  
Excludes generation during periods the unit operated under power purchase agreements.
 
(3)  
This plant was mothballed in January 2010, other than during the third quarter of 2010 where one unit serviced a power purchase agreement.
 
(4)  
We own 50% interest in this plant located in Texas (non-ERCOT) having 108 MW of net generating capacity. An unaffiliated party owns the other 50%. The table includes our net share of capacity of this plant.
 
(5)  
We are party to a tolling agreement entitling us to 100% of the capacity of this Florida plant having 630 MW of net generating capacity. This tolling agreement expires in 2012 and is treated as an operating lease for accounting purposes.
Reference is made to RRI Energy, Inc.’s Annual Report
on Form 10-K for the year ended December 31, 2009

 

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RRI Energy, Inc. and Subsidiaries
Capital Expenditures
(Unaudited)
                                 
    Three Months Ended September 30,     Nine Months Ended September 30,  
    2010     2009     2010     2009  
    (in millions)     (in millions)  
 
                               
Maintenance capital expenditures
  $ 4     $ 10     $ 24     $ 45  
 
                       
Environmental capital expenditures
    10       25       32       91  
Capitalized interest
          8 (1)     8 (2)     22 (1)
 
                       
Total environmental capital expenditures and capitalized interest
    10       33       40       113  
 
                       
Total capital expenditures
  $ 14     $ 43     $ 64     $ 158  
 
                       
     
(1)  
Relates primarily to environmental capital expenditures for SO2 emission reductions at our Cheswick and Keystone plants, which are included in our East Coal segment.
 
(2)  
Relates primarily to environmental capital expenditures for SO2 emission reductions at our Cheswick plant, which is included in our East Coal segment.
Reference is made to RRI Energy, Inc.’s Annual Report
on Form 10-K for the year ended December 31, 2009

 

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RRI Energy, Inc. and Subsidiaries
GAAP Debt, Gross Debt and Net Debt
(Unaudited)
                         
    September 30, 2010     December 31, 2009     Change  
    (in millions)  
 
                       
Senior secured revolver
  $     $     $  
Senior secured notes (1)
    279       279        
Senior unsecured notes
    1,300       1,300        
Orion Power 12% notes (2)
          405       (405 )
PEDFA fixed-rate bonds for Seward plant (1)
    371       371        
 
                 
GAAP Debt
  $ 1,950     $ 2,355     $ (405 )
 
                       
Orion Power 12% notes purchase accounting adjustment
          (5 )     5  
REMA operating leases (off-balance sheet)
    411       423       (12 )
 
                 
Gross Debt
  $ 2,361     $ 2,773     $ (412 )
 
                       
Cash and cash equivalents
    (781 )     (943 )     162  
Restricted cash
    (7 )     (24 )     17  
Net margin deposits and cash collateral
    (137 )(3)     (260 )(4)     123  
 
                 
Net Debt
  $ 1,436     $ 1,546     $ (110 )
 
                 
     
(1)  
Expected to be refinanced in connection with the proposed merger with Mirant.
 
(2)  
Orion Power 12% notes include purchase accounting adjustment of $5 million as of December 31, 2009. This debt was paid off in May 2010.
 
(3)  
Includes $15 million related to discontinued operations and $31 million related to cash collateral.
 
(4)  
Includes $45 million related to discontinued operations and $20 million related to cash collateral.
Reference is made to RRI Energy, Inc.’s Annual Report
on Form 10-K for the year ended December 31, 2009
FOR ADDITIONAL INQUIRIES PLEASE CONTACT:
Dennis Barber
(832) 357-3042

 

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