-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Qd0ikRu0K9sa4aznhh4fX5vtaURoC71H7pFp+IcnMzWpykn8JjblKkQ/LaTnhyyy knxvKux20zr92OfjUrmHiA== 0000795185-97-000005.txt : 19970514 0000795185-97-000005.hdr.sgml : 19970514 ACCESSION NUMBER: 0000795185-97-000005 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19970331 FILED AS OF DATE: 19970513 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: NRG GENERATING U S INC CENTRAL INDEX KEY: 0000795185 STANDARD INDUSTRIAL CLASSIFICATION: COGENERATION SERVICES & SMALL POWER PRODUCERS [4991] IRS NUMBER: 592076187 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-09208 FILM NUMBER: 97601813 BUSINESS ADDRESS: STREET 1: 1221 NICOLLET MALL CITY: MINNEAPOLIS STATE: MN ZIP: 55403 BUSINESS PHONE: 6123735300 MAIL ADDRESS: STREET 1: 1221 NICOLLET MALL CITY: MINNEAPOLIS STATE: MN ZIP: 55403 FORMER COMPANY: FORMER CONFORMED NAME: O BRIEN ENVIRONMENTAL ENERGY INC DATE OF NAME CHANGE: 19920703 FORMER COMPANY: FORMER CONFORMED NAME: OBRIEN ENERGY SYSTEMS INC DATE OF NAME CHANGE: 19910804 10-Q 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ___________ (Mark one) X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1997 OR _ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM TO Commission File Number 1-9208 NRG GENERATING (U.S.) INC. (Exact name of Registrant as Specified in Charter) Delaware 59-2076187 (State or other jurisdiction (I.R.S. Employer of incorporation) Identification No.) ___________ 1221 Nicollet Mall, Suite 610 Minneapolis, Minnesota 55403-2445 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (612) 373-8834 Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PRECEDING FIVE YEARS: Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. X Yes No APPLICABLE ONLY TO CORPORATE ISSUERS: Indicate the number of shares outstanding of each of the issuer's classes of common stock as of the latest practicable date: 6,440,514 shares of Common Stock, $0.01 par value per share, as of May 12, 1997. NRG GENERATING (U.S.) INC. FORM 10-Q March 31, 1997 INDEX Page Part I - Financial Information: Item 1. Financial Statements 2 Consolidated Balance Sheets - March 31, 1997 and December 31, 1996 2 Consolidated Statements of Operations - Three months ended March 31, 1997 and March 31, 1996 3 Consolidated Statements of Cash Flows - Three months ended March 31, 1997 and March 31, 1996 4 Notes to Consolidated Financial Statements 5 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 7 Part II - Other Information Item 6. Exhibits and Reports on Form 8-K 13 Signature 14 Index to Exhibits 15 1 PART 1 FINANCIAL INFORMATION Item 1. FINANCIAL STATEMENTS NRG GENERATING (U.S.) INC. CONSOLIDATED BALANCE SHEETS (Dollars in thousands)
ASSETS March 31, December 31, 1997 1996 (Unaudited) Current assets: Cash and cash equivalents.................................. $ 4,861 $ 3,187 Restricted cash and cash equivalents....................... 10,239 8,174 Accounts receivable, net................................... 12,403 11,920 Receivables from related parties........................... 98 186 Notes receivable, current.................................. 925 1,119 Inventories................................................ 2,674 2,897 Other current assets....................................... 328 992 Total current assets..................................... 31,528 28,475 Property, plant and equipment, net........................... 130,563 132,203 Equipment held for sale...................................... 1,925 2,628 Project development costs.................................... 361 346 Notes receivable, noncurrent................................. - 83 Investments in equity affiliates............................. 3,650 3,653 Deferred financing costs, net................................ 5,429 5,530 Other noncurrent assets...................................... 707 706 Total assets............................................. $ 174,163 $ 173,624
LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable........................................... $ 5,370 $ 6,131 Accounts payable and accrued interest due NRG Energy, Inc.. 1,212 1,256 Current portion of nonrecourse long-term debt.............. 11,097 10,820 Accrued interest payable................................... 1,104 1,104 Prepetition liabilities.................................... 1,025 1,433 Short-term borrowings...................................... 2,079 2,388 Other current liabilities.................................. 3,624 2,852 Total current liabilities................................ 25,511 25,984 Loans due NRG Energy, Inc.................................... 14,388 14,388 Nonrecourse long-term debt, net of current portion........... 147,307 150,311 Deferred income taxes........................................ 13,404 13,404 Other noncurrent liabilities................................. 50 50 Total liabilities........................................ 200,660 204,137 Stockholders' equity: Preferred stock, par value $.01, 20,000,000 shares authorized; none issued or outstanding................... - - Common stock, par value $.01, 50,000,000 shares authorized, 6,474,814 shares issued, 6,440,514 shares outstanding as of March 31, 1997 and December 31, 1996, respectively.......................... 64 64 Additional paid-in capital................................. 62,719 62,719 Accumulated deficit........................................ (88,857) (92,944) Other...................................................... (423) (352) Total stockholders' equity (deficit)..................... (26,497) (30,513) Total liabilities and stockholders' equity (deficit)..... $ 174,163 $ 173,624
The accompanying notes are an integral part of these consolidated financial statements. 2 NRG GENERATING (U.S.) INC. CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (Dollars in thousands, except per share amounts)
Three Months Ended March 31, March 31, 1997 1996 REVENUES: Energy................................... $ 12,391 $ 19,133 Equipment, sales and services............ 4,606 6,365 Rental................................... 460 386 Development fees and other............... - 672 Total revenues......................... 17,457 26,556 COST OF REVENUES: Energy................................... 3,160 16,094 Equipment, sales and services............ 3,899 5,550 Rental................................... 383 329 Development fees and other............... - 618 Total cost of revenues................. 7,442 22,591 Gross profit........................... 10,015 3,965 Selling, general and administrative expenses................. 2,253 2,406 Income from operations................. 7,762 1,559 Interest and other income................ 201 1,225 Reorganization costs..................... - (3,268) Interest and debt expense................ (3,537) (4,428) Income (loss) before income taxes...... 4,426 (4,912) Provision for income taxes................ 339 15 Net income (loss)...................... $ 4,087 $ (4,927) Net income (loss) per share............... $ 0.62 $ (1.33) Weighted average shares outstanding....... 6,624 3,712
The accompanying notes are an integral part of these consolidated financial statements. 3 NRG GENERATING (U.S.) INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (Dollars in thousands)
Three Months Ended March 31, March 31, 1997 1996 Cash Flows from Operating Activities: Net income (loss).............................................. $ 4,087 $ (4,927) Adjustments to reconcile net income (loss) to net cash provided by operating activities: Depreciation and amortization................................ 1,872 1,720 Amortization of debt discount and deferred financing costs... 101 109 Bankruptcy professional fees accrued......................... - 3,382 Other, net................................................... 555 30 Changes in operating assets and liabilities: Accounts receivable, net................................... (560) (244) Inventories................................................ 178 326 Receivables from related parties........................... 86 7 Other assets............................................... 626 - Accounts payable and other current liabilities............. 37 (598) Accrued interest payable................................... - 2,451 Net cash provided by operating activities................ 6,982 2,256 Cash Flows from Investing Activities: Capital expenditures........................................... (291) - Proceeds from sale of property and equipment................... 175 - Project development costs...................................... (15) (222) Collections on notes receivable................................ 277 8 (Deposits into) withdrawals from restricted cash accounts, net. (2,065) 311 Other, net..................................................... - (21) Net cash (used in) provided by investing activities...... (1,919) 76 Cash Flows from Financing Activities: Proceeds from NRG Energy, Inc. loans........................... - 300 Repayments of long-term debt................................... (2,715) (2,108) Net (repayments) proceeds of short-term borrowings............. (266) 185 Payments on prepetition liabilities............................ (408) (280) Net cash used in financing activities.................... (3,389) (1,903) Net increase (decrease) in cash and cash equivalents............ 1,674 429 Cash and cash equivalents, beginning of period.................. 3,187 3,132 Cash and cash equivalents, end of period........................ $ 4,861 $ 3,561
Supplemental disclosure of cash flow information: Interest paid during the period............................... $ 3,537 $ 4,428
The accompanying notes are an integral part of these consolidated financial statements. 4 NRG GENERATING (U.S.) INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) MARCH 31, 1997 (Dollars in thousands) 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES NRG Generating (U.S.) Inc. ("NRGG" or the "Company") and its subsidiaries develop and own cogeneration projects which produce electricity and thermal energy for sale to industrial and commercial users and public utilities. In addition, the Company, through its subsidiaries, sells and rents power generation, cogeneration and standby/peak shaving equipment and services. Basis of Presentation The consolidated financial statements include the accounts of all majority-owned subsidiaries of the Company. All significant intercompany investments, accounts and transactions have been eliminated. The investments in and the operating results of companies in which the Company has an ownership of 50% or less are included in the financial statements on the basis of the equity method of accounting. The accompanying unaudited consolidated financial statements and notes should be read in conjunction with the Company's Report on Form 10-K for the fiscal year ended December 31, 1996. In the opinion of management, the consolidated financial statements reflect all adjustments necessary for a fair presentation of the interim periods presented. Results of operations for an interim period may not give a true indication of results for the year. Net Income (Loss) Per Share Net income (loss) per share is calculated by dividing net income (loss) by the weighted average number of shares of common stock and common stock equivalents outstanding during each period. Common stock equivalents result from dilutive stock options and restricted stocks computed using the treasury stock method. In March 1997, the Financial Accounting Standards Board issued Statement No. 128, "Earnings Per Share" ("FAS No. 128"). FAS No. 128 applies to entities with publicly held common stock or potential common stock and is effective for financial statements issued for periods ending after December 15, 1997. Under FAS No. 128 the presentation of primary earnings per share is replaced with a presentation of basic earnings per share. FAS No. 128 requires dual presentation of basic and diluted earnings per share for entities with complex capital structures. Basic earnings per share includes no dilution and is computed by dividing net income (loss) available to common stockholders by the weighted average number of common shares outstanding for the period. Diluted earnings per share reflects the potential dilution of securities that could share in the earnings of an entity, similar to fully diluted earnings per share. Management believes the adoption of FAS No. 128 will not have a material effect on the financial statements. 5 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) MARCH 31, 1997 (Dollars in thousands) 2. LOANS DUE NRG ENERGY, INC. The March 31, 1997 loan balance of $14,388 due to NRG Energy, Inc. ("NRG Energy") has a maturity date of April 30, 2001. 3. PROVISION FOR INCOME TAXES No provision for federal income taxes has been recorded since the Company has net federal operating loss carryforwards which have not been recognized in prior periods. 6 Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The information contained in this Item 2 updates, and should be read in conjunction with, the information set forth in Part II, Item 7, of the Company's Report on Form 10-K for the fiscal year ended December 31, 1996. Capitalized terms used in this Item 2 which are not defined herein have the meaning ascribed to such terms in the Notes to the Company's financial statements included in Part I, Item 1 of this Report on Form 10-Q. All dollar amounts set forth in this Item 2 are in thousands. General NRG Generating (U.S.) Inc. is engaged primarily in the business of developing, owning and operating cogeneration projects which produce electricity and thermal energy for sale under long-term contracts with industrial and commercial users and public utilities. In addition to its energy business, the Company sells and rents power generation and cogeneration equipment through subsidiaries located in the United States and the United Kingdom. In its role as a developer and owner of energy projects, the Company has developed the following projects in which it currently has an ownership interest: (a) The 52 megawatt ("MW") Newark Boxboard Project (the "Newark Project"), located in Newark, New Jersey, began operations in November 1990 and is owned by the Company's wholly-owned subsidiary NRG Generating (Newark) Cogeneration Inc. ("Newark"); (b) The 122 MW E.I. du Pont Parlin Project (the "Parlin Project"), located in Parlin, New Jersey, began operations in June 1991 and is owned by the Company's wholly-owned subsidiary NRG Generating (Parlin) Cogeneration Inc. ("Parlin"); and (c) The 22 MW Philadelphia Cogeneration Project (the "Philadelphia Project"), located in Philadelphia, Pennsylvania, began operations in May 1993. The Company also owns a one-third interest in the Grays Ferry Cogeneration Partnership (the "Grays Ferry Partnership") which owns a 150 MW cogeneration project (the "Grays Ferry Project"), located in Philadelphia, Pennsylvania. The Grays Ferry Project is currently under construction with commercial operation currently expected to occur in December 1997. The Company also is currently evaluating a number of prospective projects for the purpose of determining whether to make an investment. The Company's power purchase agreements ("PPAs") with utilities have typically contained, and may in the future contain, price provisions which in part are linked to the utilities' cost of generating electricity. In addition, the Company's fuel supply prices, with respect to future projects, may be fixed in some cases or may be linked to fluctuations in energy prices. These circumstances can result in high volatility in gross profit margins and reduced operating income, either of which could have a material adverse effect on the Company's 7 financial position or results of operations. Effective April 30, 1996, the Company renegotiated its PPAs with Jersey Central Power and Light Company ("JCP&L"), the primary electricity purchaser from its Newark and Parlin Projects. Under the amended PPAs, JCP&L is responsible for all fuel supply and delivery. Under the prior PPAs the Company was responsible for such costs which were reflected in energy revenues and costs. The Company believes that this change in the PPAs will reduce volatility in gross margins by eliminating the Company's exposure to fluctuations in the price of natural gas. Although energy revenues as well as the cost of energy revenues will decline under the amended PPAs, the Company does not expect the changes made to the PPAs to have a material impact on its operating gross margins, over time. However, there can be no assurance that any of the foregoing steps will improve or maintain gross profit margins in the future. Both the Newark and Parlin Projects were previously certified as qualifying facilities ("QFs") by the Federal Energy Regulatory Commission ("FERC") under the Public Utility Regulatory Policies Act of 1978 ("PURPA"). The effect of QF status is generally to exempt a project's owners from relevant provisions of the Federal Power Act, the Public Utility Holding Company Act of 1935 ("PUHCA"), and state utility-type regulation. However, as permitted under the terms of its renegotiated PPAs, Parlin has chosen to file rates with FERC as a public utility under the Federal Power Act. The effect of this filing was to relinquish the Parlin Project's claim to QF status. The FERC approved Parlin's rates effective April 30, 1996 and has determined Parlin to be an exempt wholesale generator ("EWG"). As an EWG, Parlin is exempt from PUHCA, and the ownership of Parlin by the Company does not subject the Company to regulation under PUHCA. Finally, as a seller of power exclusively at wholesale, Parlin is not generally subject to state regulation and, in any case, the Company believes that Parlin complies with all applicable requirements of state utility law. In addition to the energy business, the Company sells and rents power generation and cogeneration equipment and provides related services. The Company operates its equipment sales, rentals and services business principally through two subsidiaries. In the United States, the equipment sales, rentals and services business operates under the name of O'Brien Energy Services Company ("OES"). NRG Generating Limited, a wholly-owned United Kingdom subsidiary, is the holding company for a number of subsidiaries that operate in the United Kingdom under the common name of Puma ("Puma"). Revenues Energy revenues for the first quarter 1997 of $12,391 decreased from first quarter 1996 revenues of $19,133. Energy revenues primarily reflect billings associated with the Parlin and Newark Projects and the Company's Philadelphia Water Department standby project. First quarter 1996 also included revenues associated with landfill gas operations which the Company sold April 30, 1996. The decrease in energy revenues in the quarter ended March 31, 1997 as compared to the same period one year ago was primarily attributable to the amended PPAs affecting both Parlin and Newark. 8 Revenues recognized at Parlin and Newark were $6,289 and $5,094 for the first quarter 1997 and $10,207 and $7,786 for the first quarter 1996, respectively. The decreases were primarily due to the amended PPAs. Energy revenues from the Company's Philadelphia Water Department standby facility project for the first quarter 1997 of $1,008 increased from first quarter 1996 revenues of $990. Energy revenues from the Company's landfill gas projects for the first quarter 1996 were $150. On April 30, 1996, the landfill gas projects were sold to NRG Energy, Inc. Equipment sales and services revenues for the first quarter 1997 of $4,606 decreased from first quarter 1996 revenues of $6,365. The revenue decrease in the quarter ended March 31, 1997 from the comparable quarter one year ago is primarily attributable to the sale of the Company's American Hydrotherm business in December 1996. OES equipment sales and services revenues for the first quarter 1997 of $1,288 increased from first quarter 1996 revenues of $1,010. The increase is primarily due to higher sales volume. As noted above, American Hydrotherm, which had revenues of $1,473 for the first quarter 1996, was sold in December 1996. Puma equipment sales and services revenues for the first quarter 1997 of $3,318 decreased from first quarter 1996 revenues of $3,882. The decrease was primarily due to the unfavorable impact of foreign currency rates in some of its Asian markets. Rental revenues for the first quarter 1997 of $460 increased from first quarter 1996 revenues of $386. The increase was due primarily to higher sales volume. There were no development fees and other revenues for the first quarter 1997 compared to $672 for the first quarter 1996. The decrease is primarily attributable to the Company's assignment of contract rights for the sale of gas to the Artesia Cogeneration partnership. These contract rights were assigned in January 1997 to NRG Energy. This transaction was approved by the Independent Committee of the Board of Directors. Costs and Expenses Cost of energy revenues for the first quarter 1997 of $3,160 decreased from first quarter 1996 costs of $16,094. The decrease was primarily the result of the amended PPAs in which JCP&L began assuming the cost of fuel for the Parlin and Newark facilities. Cost of equipment sales and services for the first quarter 1997 of $3,899 decreased from first quarter 1996 costs of $5,550. The decrease was primarily due to lower costs from the Puma operations and the sale of American Hydrotherm. Cost of rental revenues for the first quarter 1997 of $383 increased from first quarter 1996 costs of $329. The increase was primarily due to increased sales volume. 9 There were no cost of development fees and other for the first quarter 1997 compared to $618 for the first quarter 1996. The decrease is primarily attributable to the Company's assignment of contract rights for the sale of gas to the Artesia Cogeneration partnership. The Company's gross profit for the first quarter 1997 of $10,015 (57.4% of sales) increased from the first quarter 1996 gross profit of $3,965 (14.9% of sales). The gross profit increase is primarily attributable to results from the energy segment, including particularly, fluctuations in the recovery of fuel costs through energy revenues under the Parlin and Newark Project PPAs in effect until April 30, 1996. Selling, General and Administrative Expenses Selling, general and administrative expenses ("SG&A") for the first quarter 1997 of $2,253 decreased from first quarter 1996 SG&A expenses of $2,406. The reduction is due to lower payroll costs and reduced insurance expenses. Interest and Other Income Interest and other income for the first quarter 1997 of $201 decreased from first quarter 1996 interest and other income of $1,225. The decrease was primarily attributable to a one time gain of $1,000 in the quarter ended March 31, 1996 for the admission of a third partner into the Grays Ferry Partnership. During the first quarter 1997 the Company recognized a gain from the sale of its interest in a development project in Pakistan. This gain was offset by a loss on the sale of unused equipment. Reorganization Costs Reorganization costs represent all costs incurred after filing for bankruptcy that relate to the Company's reorganization and restructuring efforts. Reorganization costs for the quarter ended March 31, 1996 were $3,268. These costs consist primarily of professional and administrative fees and expenses. Interest and Debt Expense Interest and debt expense for the first quarter 1997 of $3,537 decreased from first quarter 1996 interest and debt expense of $4,428. The decrease was due primarily to post-petition interest on prepetition liabilities included in the quarter ended March 31, 1996. In addition, the average interest rate was lower in the quarter ended March 31, 1997 than in the comparable period one year ago due to the refinancing of the Newark and Parlin Projects. Income Taxes The provision for income taxes for the quarter ended March 31, 1997 relates primarily to state income taxes on earnings of the Company's subsidiaries. 10 Net Income (Loss) Per Share Net income (loss) per share is calculated by dividing net income (loss) by the weighted average shares of common stock and common stock equivalents outstanding. Fully dilutive net income (loss) per share is not presented because conversion of any common stock equivalents does not have a material dilutive effect on reported net income (loss) per share. Weighted average shares increased significantly for the quarter ended March 31, 1997 from the quarter ended March 31, 1996 primarily due to the purchase of 2,710 common shares by NRG Energy on April 30, 1996. Liquidity and Capital Resources In May 1996, the Company's wholly-owned subsidiaries Newark and Parlin entered into a Credit Agreement (the "Credit Agreement") which established provisions for a $155,000 fifteen-year loan (of which $149,149 was outstanding at March 31, 1997) and a $5,000 five-year debt service reserve line of credit. The interest rate on the outstanding principal is variable based on, at the option of Newark and Parlin, LIBOR plus a 1.125% margin or a defined base rate plus a 0.375% margin, with nominal margin increases in the sixth and eleventh year. Concurrent with the Credit Agreement, Newark and Parlin entered into an interest rate swap agreement with respect to 50% of the principal amount outstanding under the Credit Agreement. This interest rate swap agreement fixes the interest rate on the 50% portion of the principal amount outstanding at 6.9% plus the margin. NRG Energy has provided additional loan commitments to the Company. A $10,000 loan agreement negotiated between NRG Energy and NRGG Schuylkill Cogeneration, Inc. (formerly known as O'Brien (Schuylkill) Cogeneration, Inc.) ("NSC"), a wholly-owned subsidiary, provides funding, if needed, for an NSC capital contribution obligation to the Grays Ferry Partnership. NSC owns a one-third partnership interest in the Grays Ferry Project currently under construction. In March 1996, the partnership entered into a credit agreement with Chase Manhattan Bank N.A. to finance the project. The credit agreement obligates each of the project's three partners to make a $10,000 capital contribution prior to the commercial operation of the facility, which is anticipated to occur by the end of 1997. In addition, there remains $13,615 in available borrowings from NRG Energy under the terms of a loan agreement to provide funding for any bankruptcy obligation shortfalls. At March 31, 1997, loans of $14,388 remained outstanding to NRG Energy under another loan agreement. The Company and NRG Energy have entered into a Co-Investment Agreement pursuant to which NRG Energy has agreed to offer to the Company ownership interests in certain power projects which are initially developed by NRG Energy or with respect to which NRG Energy has entered into a binding acquisition agreement with a third party. If any eligible project reaches certain contract milestones (which include the execution of a binding PPA and fuel supply agreement and the completion of a feasibility and engineering study) by April 30, 2003, NRG Energy has agreed to offer to sell to the Company all of NRG Energy's ownership interest in such project. Eligible projects include, with certain limited exceptions, any proposed or existing electric power plant within the United States NRG Energy initially develops or in which NRG Energy proposes to acquire an ownership interest. NRG Energy is obligated under the Co-Investment Agreement to offer to 11 the Company, during the three year period ending on April 30, 1999, projects with an aggregate equity value of at least $60,000,000 or a minimum of 150 net MW. To facilitate the Company's ability to acquire ownership interests which may be offered pursuant to its Co-Investment Agreement, NRG Energy has agreed to finance the Company's purchase of such ownership interests in projects offered to the Company pursuant to the Co- Investment Agreement at commercially competitive terms to the extent funds are unavailable to the Company on comparable terms from other sources. Any such financing provided by NRG Energy under the terms of the Co-Investment Agreement is required to be recourse to the Company and secured by a lien on the ownership interest acquired. Such financing also is required to be repaid from the net proceeds received by the Company from offerings of equity or debt securities of the Company (when market conditions permit such offerings to be made on favorable terms) after taking into account the working capital and other cash requirements of the Company as determined by its Board of Directors. Except for the historical information contained within this Management's Discussion and Analysis of Financial Condition and Results of Operations, the accompanying consolidated financial statements, and the Notes to Consolidated Financial Statements, the matters reflected or discussed in this report which relate to the Company's beliefs, expectations, plans, future estimates and the like are forward-looking statements that involve risks and uncertainties including but not limited to: business conditions and growth in the general economy; regulatory and other legal developments affecting the markets in which the Company operates and changes in environmental laws; volatility in gross margins caused by seasonal factors that cannot be controlled by the Company; competitive factors, such as price pressures and other factors which may make it more difficult for the Company to secure future projects and may increase project development costs and/or reduce operating margins; the success of the Company's business partners, including its energy customers and fuel suppliers; the successful completion of the Grays Ferry Project; the successful completion and addition of new energy projects and the various other factors including without limitation those discussed in this report and the Company's Report on Form 10-K for the fiscal year ended December 31, 1996 entitled "Item 1. Business - Risk Factors." Such factors may cause the Company's actual results to differ materially from those discussed herein and in forward-looking statements made herein. 12 PART II OTHER INFORMATION ITEM 6 Exhibits and Reports on Form 8-K (a) Exhibits The "Index to Exhibits" following the signature page is incorporated herein by reference. (b) Reports on Form 8-K The following Reports on Form 8-K were filed by the registrant during the fiscal quarter ended March 31, 1997: 1. Current Report on Form 8-K dated February 7, 1997, reporting information under Item 5. 2. Current Report on Form 8-K dated April 7, 1997, reporting information under Item 5. 13 SIGNATURE 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 GENERATING (U.S.), INC. Registrant Date: May 13, 1997 By: /s/ Timothy P. Hunstad Timothy P. Hunstad Vice President and Chief Financial Officer (Principal Financial Officer and Duly Authorized Officer) 14 INDEX TO EXHIBITS 3.1 Amended and Restated Certificate of Incorporation of the Company filed as Exhibit 3.1 to the Company's Current Report on Form 8-K dated April 30, 1996 and incorporated herein by this reference. 3.2 Bylaws of the Company filed as Exhibit 3.2 to the Company's Current Report on Form 8-K dated April 30, 1996 and incorporated herein by this reference. 11 Computation of Earnings Per Common Share 27 Financial Data Schedule (for SEC filing purposes only) 15 EX-11 2 EXHIBIT 11 Exhibit 11 NRG GENERATING (U. S.) INC. Computation of Earnings Per Common Share (Dollars in thousands, except per share amounts)
Three Months Ended March 31, March 31, 1997 1996 Net income (loss) applicable to common shares: Net income (loss) $ 4,087 $ (4,927) Primary: Shares for common and common share equivalent earnings (loss) per share (1): Weighted average number of common shares outstanding 6,440,514 3,711,657 Dilutive effect of outstanding stock options and warrants 183,844 0 6,624,358 3,711,657 Net income (loss) per common share and common share equivalents $ 0.62 $ (1.33) Fully Diluted: Shares for common and common share equivalent earnings (loss) per share (2): Weighted average number of common shares outstanding 6,440,514 3,711,657 Dilutive effect of outstanding stock options and warrants 183,844 0 6,624,358 3,711,657 Net income (loss) per common share and common share equivalents $ 0.62 $ (1.33) (1) Outstanding stock options, warrants and shares issuable under employee stock purchase plans are converted to common share equivalents by the treasury stock method using the average market price of the Company's shares during each period. (2) Outstanding stock options, warrants and shares issuable under employee stock purchase plans are converted to common share equivalents by the treasury stock method using the greater of the average market price or the period-end market price of the Company's shares during each period.
EX-27 3 ARTICLE 5 - FINANCIAL DATA SCHEDULE FOR FIRST QUARTER OF FISCAL YEAR 1997 OF NRG GENERATING (U. S.) INC.
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE REGISTRANT'S FINANCIAL STATEMENTS FOR ITS FIRST QUARTER OF FISCAL YEAR 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS 3-MOS Dec-31-1997 Mar-31-1997 4,861 0 10,239 0 2,674 31,528 132,488 0 174,163 25,511 0 64 0 0 (26,561) 174,163 17,457 17,457 7,442 7,442 2,052 0 3,537 4,426 339 4,087 0 0 0 4,087 0.62 0.62
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