SOURCE: RRI Energy
July 30, 2010 07:30 ET
RRI Energy Reports Second Quarter 2010 Results
HOUSTON, TX--(Marketwire - July 30, 2010) - RRI Energy, Inc. (NYSE: RRI)
-- Merger with Mirant to create GenOn Energy expected to close by the end
of the year
-- Significant near-term value creation driven by $150 million annual
cost savings
-- Strengthened balance sheet and enhanced financial flexibility
-- Increased scale and geographic diversity across regions
-- Well positioned to benefit from improvement in market conditions
-- Captured approximately $400 million in additional future forward
capacity revenue
-- Second quarter financial results reflect depressed commodity prices and
weak economic conditions
-- Planned outage investments to improve future operating performance
RRI Energy, Inc. today is reporting open EBITDA of $4 million for the
second quarter of 2010, compared to ($10) million for the second quarter of
2009. The improvement was primarily due to improved energy margins and
capacity prices. The company reported break-even adjusted EBITDA in the
second quarter of 2010, compared to ($78) million in the second quarter of
2009. The improvement was due to the items mentioned above and a reduction
on losses from coal hedges. The free cash flow deficit from continuing
operations during the first half of 2010 improved to $85 million, compared
to $147 million for the first half of 2009.
"Our proposed merger with Mirant Corporation will create significant
near-term value for shareholders while preserving the fundamental value
proposition of a recovery in commodity prices and supply and demand
fundamentals," said Mark Jacobs, president and chief executive officer of
RRI Energy. "We are making excellent progress toward completing the steps
necessary to finalize the merger and expect to close the transaction by the
end of the year. Additionally, during the second quarter the company
captured approximately $400 million in additional future forward capacity
revenue. These revenues, primarily from the PJM assets, represent an
important, stable and visible revenue stream."
During the second quarter of 2010, RRI participated in the PJM RPM base
residual auction for planning year 2013. Planning year 2013 is June 1,
2013 through May 31, 2014. RRI sold approximately 7,100 megawatts of
capacity capturing capacity revenue of approximately $400 million.
Open EBITDA was $29 million for the first six months of 2010, compared to
($4) million for the same period of 2009. Adjusted EBITDA was $32 million
for the first six months of 2010, compared to ($58) million for the same
period of 2009. The improvements were due to the same factors as described
above.
The loss from continuing operations before income taxes for the second
quarter of 2010 was $188 million, compared to $185 million for the second
quarter of 2009. The 2010 reported results include net unrealized losses
from energy derivatives of $66 million and $14 million in merger-related
costs. 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 six
months of 2010 was $402 million, compared to $325 million for the first six
months of 2009. The 2010 reported results include net unrealized gains
from energy derivatives of $61 million, a $17 million charge for western
states and similar settlements, $14 million in merger-related costs and a
$248 million charge for long-lived assets impairments. The reported numbers
for 2009 include net unrealized losses from energy derivatives of $37
million. Operating cash flow from continuing operations was $27 million for
the first half of 2010, compared to ($96) 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 used in continuing operations
-- Free cash flow 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.
Webcast Of Earnings Conference Call
RRI Energy will host its second quarter 2010 earnings conference call
beginning at 8:30 a.m. Eastern Time on Friday, July 30, 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 financing and to complete the merger,
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.
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 or a solicitation of any vote or approval
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, on May 28, 2010,
we filed with the SEC a registration statement on Form S-4 that includes a
preliminary joint proxy statement of us and Mirant and that also
constitutes a preliminary prospectus of us. On July 6, 2010, we amended
these materials. These materials are not yet final and will be further
amended. We and Mirant will distribute the final joint proxy
statement/prospectus to our respective shareholders. We and Mirant urge
investors and shareholders to read the registration statement, and any
other relevant documents filed with the SEC, including the preliminary
joint proxy statement/prospectus that is a part of the registration
statement, and the definitive joint proxy statement/prospectus, when
available, because they contain or will 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."
Participants in The Merger Solicitation
We, Mirant, and our respective directors, executive officers and certain
other members of management and employees may be soliciting proxies from
our and Mirant shareholders in favor of the merger and related matters.
Information regarding the persons who may, under the rules of the SEC, be
deemed participants in the solicitation of our and Mirant shareholders in
connection with the proposed merger is contained the preliminary joint
proxy statement/prospectus and will be contained in the definitive joint
proxy statement/prospectus when it becomes available. You can find
information about our executive officers and directors in our definitive
proxy statement filed with the SEC on April 1, 2010. You can find
information about Mirant's executive officers and directors in its
definitive proxy statement filed with the SEC on March 26, 2010 and
supplemented on April 28, 2010. Additional information about our executive
officers and directors and Mirant's executive officers and directors can be
found in the above-referenced Registration Statement on Form S-4. You can
obtain free copies of these documents from us and Mirant as described
above.
RRI Energy, Inc. and Subsidiaries
Consolidated Statements of Operations
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
------------------------ ------------------------
2010 2009 2010 2009
----------- ----------- ----------- -----------
(thousands of dollars, except per share amounts)
Revenues:
Revenues (including
$(56,755), $(21,842),
$49,085 and $(26,130)
unrealized gains
(losses)) $ 400,198 $ 389,777 $ 1,004,908 $ 855,961
----------- ----------- ----------- -----------
Expenses:
Cost of sales
(including $(8,841),
$28,486, $12,422 and
$(10,969) unrealized
gains (losses)) 264,998 280,067 531,799 604,741
Operation and
maintenance 183,204 156,964 343,619 314,110
General and
administrative 35,470 27,645 56,188 56,659
Western states
litigation and
similar settlements - - 17,000 -
Gains on sales of
assets and emission
and exchange
allowances, net (619) (1,241) (1,036) (20,171)
Long-lived assets
impairments - - 247,715 -
Depreciation and
amortization 69,148 67,646 131,468 135,504
----------- ----------- ----------- -----------
Total operating
expense 552,201 531,081 1,326,753 1,090,843
----------- ----------- ----------- -----------
Operating Loss (152,003) (141,304) (321,845) (234,882)
----------- ----------- ----------- -----------
Other Income (Expense):
Debt extinguishments
gains - 844 - 844
Interest expense (36,588) (45,067) (82,629) (91,986)
Interest income 150 721 366 969
Other, net 1,063 (530) 2,623 62
----------- ----------- ----------- -----------
Total other expense (35,375) (44,032) (79,640) (90,111)
----------- ----------- ----------- -----------
Loss from Continuing
Operations Before
Income Taxes (187,378) (185,336) (401,485) (324,993)
Income tax expense
(benefit) (11,232) (81,644) 50,852 (115,520)
----------- ----------- ----------- -----------
Loss from Continuing
Operations (176,146) (103,692) (452,337) (209,473)
Income from
discontinued
operations 4,029 907,258 3,514 861,626
----------- ----------- ----------- -----------
Net Income (Loss) $ (172,117) $ 803,566 $ (448,823) $ 652,153
=========== =========== =========== ===========
Basic/Diluted Earnings
(Loss) Per Share:
Loss from continuing
operations $ (0.50) $ (0.30) $ (1.28) $ (0.60)
Income from
discontinued
operations 0.01 2.59 0.01 2.46
----------- ----------- ----------- -----------
Net income (loss) $ (0.49) $ 2.29 $ (1.27) $ 1.86
=========== =========== =========== ===========
Weighted Average Common
Shares Outstanding (in
thousands):
- Basic 353,473 350,665 353,390 350,577
- Diluted 353,473 350,665 353,390 350,577
Reference is made to RRI Energy, Inc.'s Annual Report
on Form 10-K for the year ended December 31, 2009
RRI Energy, Inc. and Subsidiaries
Results of Operations by Segment
and Adjusted and Open Data
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
---------------------- ----------------------
2010 2009 Change 2010 2009 Change
------ ------ ------ ------ ------ ------
(millions of dollars)
East coal open gross
margin (1) $ 118 $ 84 $ 34 $ 255 $ 210 $ 45
East gas open gross
margin (1) 62 49 13 111 88 23
West open gross margin (1) 18 25 (7) 30 37 (7)
Other open gross margin (1) 8 14 (6) 14 27 (13)
------ ------ ------ ------ ------ ------
Total 206 172 34 410 362 48
Operation and maintenance,
excluding severance (182) (154) (28) (342) (310) (32)
General and administrative,
excluding severance and
merger-related costs (21) (27) 6 (42) (56) 14
Other income (loss), net 1 (1) 2 3 - 3
------ ------ ------ ------ ------ ------
Open EBITDA 4 (10) 14 29 (4) 33
------ ------ ------ ------ ------ ------
Hedges and other items (5) (70) 65 2 (74) 76
Gains on sales of assets
and emission and exchange
allowances, net 1 2 (1) 1 20 (19)
------ ------ ------ ------ ------ ------
Adjusted EBITDA - (78) 78 32 (58) 90
------ ------ ------ ------ ------ ------
Unrealized gains (losses)
on energy derivatives (66) 7 (73) 61 (37) 98
Western states litigation
and similar settlements - - - (17) - (17)
Severance (2) (2) (4) 2 (2) (5) 3
Merger-related costs (3) (14) - (14) (14) - (14)
Long-lived assets
impairments - - - (248) - (248)
Debt extinguishments gains - 1 (1) - 1 (1)
------ ------ ------ ------ ------ ------
EBITDA (82) (74) (8) (188) (99) (89)
------ ------ ------ ------ ------ ------
Depreciation and
amortization (69) (67) (2) (131) (135) 4
Interest expense, net (37) (44) 7 (83) (91) 8
------ ------ ------ ------ ------ ------
Loss from continuing
operations before income
taxes $ (188) $ (185) $ (3) $ (402) $ (325) $ (77)
====== ====== ====== ====== ====== ======
(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
expense.
Reference is made to RRI Energy, Inc.'s Annual Report
on Form 10-K for the year ended December 31, 2009
RRI Energy, Inc. and Subsidiaries
Consolidated Balance Sheets
June 30, December 31,
2010 2009
------------- -------------
(thousands of dollars,
except per share amounts)
ASSETS (Unaudited)
Current Assets:
Cash and cash equivalents $ 563,183 $ 943,440
Restricted cash 2,897 24,093
Accounts and notes receivable, principally
customer, net 155,760 152,569
Inventory 278,382 331,584
Derivative assets 129,973 132,062
Margin deposits 149,000 198,582
Prepayments and other current assets 92,637 86,844
Current assets of discontinued operations
($23,394 and $55,855 of margin deposits) 55,901 108,476
------------- -------------
Total current assets 1,427,733 1,977,650
------------- -------------
Property, plant and equipment, gross 5,933,586 6,330,879
Accumulated depreciation (1,652,470) (1,728,566)
------------- -------------
Property, Plant and Equipment, net 4,281,116 4,602,313
------------- -------------
Other Assets:
Other intangibles, net 293,803 305,913
Derivative assets 45,239 53,138
Prepaid lease 267,942 277,370
Other ($27,648 and $33,793 accounted for
at fair value) 196,572 239,078
Long-term assets of discontinued
operations 3,528 5,232
------------- -------------
Total other assets 807,084 880,731
------------- -------------
Total Assets $ 6,515,933 $ 7,460,694
============= =============
LIABILITIES AND EQUITY
Current Liabilities:
Current portion of long-term debt $ 106 $ 404,505
Accounts payable, principally trade 105,053 142,787
Derivative liabilities 91,973 151,461
Margin deposits 15,064 2,860
Other 184,348 169,898
Current liabilities of discontinued
operations ($0 and $11,000 of margin
deposits) 23,620 58,452
------------- -------------
Total current liabilities 420,164 929,963
------------- -------------
Other Liabilities:
Derivative liabilities 38,793 61,436
Other 284,868 260,547
Long-term liabilities of discontinued
operations 14,165 13,700
------------- -------------
Total other liabilities 337,826 335,683
------------- -------------
Long-term Debt 1,949,717 1,949,771
------------- -------------
Commitments and Contingencies
Temporary Equity Stock-based Compensation 6,287 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;
353,426,741 and 352,785,985 issued) 114 114
Additional paid-in capital 6,267,849 6,259,248
Accumulated deficit (2,421,212) (1,972,389)
Accumulated other comprehensive loss (44,812) (48,586)
------------- -------------
Total stockholders' equity 3,801,939 4,238,387
------------- -------------
Total Liabilities and Equity $ 6,515,933 $ 7,460,694
============= =============
Reference is made to RRI Energy, Inc.'s Annual Report
on Form 10-K for the year ended December 31, 2009
RRI Energy, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
(Unaudited)
Six Months Ended June 30,
--------------------------
2010 2009
------------ ------------
(thousands of dollars)
Cash Flows from Operating Activities:
Net income (loss) $ (448,823) $ 652,153
Income from discontinued operations (3,514) (861,626)
------------ ------------
Loss from continuing operations (452,337) (209,473)
Adjustments to Reconcile Net Income (Loss) to
Net Cash Provided by Operating Activities:
Depreciation and amortization 131,468 135,504
Deferred income taxes 50,220 (115,850)
Net changes in energy derivatives (58,911) 37,099
Gains on sales of assets and emission and
exchange allowances, net (1,036) (20,171)
Western states litigation and similar
settlements 17,000 -
Long-lived assets impairments 247,715 -
Amortization of deferred financing costs 3,447 3,497
Other, net (1,051) 8,245
Changes in other assets and liabilities:
Accounts and notes receivable, net (843) 126,059
Inventory 50,419 12,610
Margin deposits, net 61,786 (50,402)
Net derivative assets and liabilities (629) (21,965)
Accounts payable (19,416) (7,453)
Other current assets (4,448) 2,529
Other assets 2,373 9,073
Taxes payable/receivable (2,101) (4,936)
Other current liabilities 1,171 (4,207)
Other liabilities 2,015 3,322
------------ ------------
Net cash provided by (used in) continuing
operations from operating activities 26,842 (96,519)
Net cash provided by discontinued
operations from operating activities 26,131 508,602
------------ ------------
Net cash provided by operating activities 52,973 412,083
------------ ------------
Cash Flows from Investing Activities:
Capital expenditures (49,898) (114,964)
Proceeds from sales of assets, net 7,193 35,931
Proceeds from sales of emission and exchange
allowances 123 19,175
Purchases of emission allowances - (5,662)
Restricted cash 4,546 (57)
Other, net 3,300 1,500
------------ ------------
Net cash used in continuing operations from
investing activities (34,736) (64,077)
Net cash provided by (used in) discontinued
operations from investing activities (4,402) 299,004
------------ ------------
Net cash provided by (used in) investing
activities (39,138) 234,927
------------ ------------
Cash Flows from Financing Activities:
Payments of long-term debt (399,809) (44,780)
Proceeds from issuances of stock 1,890 2,309
------------ ------------
Net cash used in continuing operations
from financing activities (397,919) (42,471)
Net cash used in discontinued operations
from financing activities - (225,300)
------------ ------------
Net cash used in financing activities (397,919) (267,771)
------------ ------------
Net Change in Cash and Cash Equivalents, Total
Operations (384,084) 379,239
Less: Net Change in Cash and Cash Equivalents,
Discontinued Operations (3,827) (103,359)
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 $ 563,183 $ 1,486,965
============ ============
Free Cash Flow Reconciliation
(Unaudited)
Six Months Ended June 30,
--------------------------
2010 2009
------------ ------------
(millions of dollars)
Operating cash flow from continuing operations $ 27 $ (96)
Change in margin deposits, net (62) 50
------------ ------------
Adjusted cash flow used in continuing
operations (35) (46)
------------ ------------
Capital expenditures (50) (115)
Proceeds from sales of emission and exchange
allowances - 19
Purchases of emission allowances - (5)
------------ ------------
Free cash flow used in continuing operations $ (85) $ (147)
============ ============
Reference is made to RRI Energy, Inc.'s Annual Report
on Form 10-K for the year ended December 31, 2009
RRI Energy, Inc. and Subsidiaries
Power Generation Operational and Financial Data
(Unaudited)
Three Months Ended June 30, Six Months Ended June 30,
---------------------------- ----------------------------
2010 2009 Change 2010 2009 Change
-------- -------- -------- -------- -------- --------
(in millions) (in millions)
East Coal
Open energy
gross
margin(1) $ 68 $ 43 $ 25 $ 156 $ 135 $ 21
Other
margin(2) 50 41 9 99 75 24
-------- -------- -------- -------- -------- --------
Open gross
margin(3)(4) $ 118 $ 84 $ 34 $ 255 $ 210 $ 45
======== ======== ======== ======== ======== ========
East Gas
Open energy
gross
margin(1) $ 10 $ 5 $ 5 $ 10 $ 6 $ 4
Other
margin(2) 52 44 8 101 82 19
-------- -------- -------- -------- -------- --------
Open gross
margin(3)(4) $ 62 $ 49 $ 13 $ 111 $ 88 $ 23
======== ======== ======== ======== ======== ========
West
Open energy
gross
margin(1) $ - $ 8 $ (8) $ - $ 9 $ (9)
Other
margin(2) 18 17 1 30 28 2
-------- -------- -------- -------- -------- --------
Open gross
margin(3)(4) $ 18 $ 25 $ (7) $ 30 $ 37 $ (7)
======== ======== ======== ======== ======== ========
Other
Open energy
gross
margin(1) $ - $ - $ - $ - $ - $ -
Other
margin(2) 8 14 (6) 14 27 (13)
-------- -------- -------- -------- -------- --------
Open gross
margin(3)(4) $ 8 $ 14 $ (6) $ 14 $ 27 $ (13)
======== ======== ======== ======== ======== ========
Total
Open energy
gross
margin(1) $ 78 $ 56 $ 22 $ 166 $ 150 $ 16
Other
margin(2) 128 116 12 244 212 32
-------- -------- -------- -------- -------- --------
Open gross
margin(4) $ 206 $ 172 $ 34 $ 410 $ 362 $ 48
======== ======== ======== ======== ======== ========
Total margin
capture
factor(5) 83.6% 86.7% -3.1% 83.0% 85.9% -2.9%
Three Months Ended June 30, Six Months Ended June 30,
2010 2009 Change 2010 2009 Change
-------- -------- -------- -------- -------- --------
Generation
(GWh)(6):
East Coal 4,704.9 4,682.3 22.6 10,078.3 9,768.0 310.3
East Gas 694.4 477.8 216.6 787.4 634.1 153.3
West 5.3 97.0 (91.7) 26.5 225.1 (198.6)
Other 37.5 62.3 (24.8) 37.5 62.3 (24.8)
-------- -------- -------- -------- -------- --------
Total 5,442.1 5,319.4 122.7 10,929.7 10,689.5 240.2
======== ======== ======== ======== ======== ========
Open Energy
Unit Margin
($/MWh)(7):
East Coal $ 14.45 $ 9.18 $ 5.27 $ 15.48 $ 13.82 $ 1.66
East Gas 14.40 10.46 3.94 12.70 9.46 3.24
West - 82.47 (82.47) - 39.98 (39.98)
Other - - - - - -
-------- -------- -------- -------- -------- --------
Weighted
average
total $ 14.33 $ 10.53 $ 3.80 $ 15.19 $ 14.03 $ 1.16
======== ======== ======== ======== ======== ========
(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
RRI Energy, Inc. and Subsidiaries
Total Controllable Costs Metrics
(Unaudited)
Efficiency Measures - Total Controllable Costs
Three Months Ended Six Months Ended
June 30, June 30,
---------------------- ----------------------
2010 2009 2010 2009
---------- ---------- ---------- ----------
(in millions, except per MWh and per MW data)
Operation and maintenance,
excluding severance(1) $ 182 $ 154 $ 342 $ 310
REMA lease expense (15) (15) (30) (30)
General and administrative,
excluding severance and
merger-related costs (1) 21 27 42 56
Maintenance capital
expenditures 14 16 20 35
---------- ---------- ---------- ----------
Total Controllable Costs $ 202 $ 182 $ 374 $ 371
========== ========== ========== ==========
TWh generation 5.4 5.3 10.9 10.7
Total Controllable
Costs/MWh $ 37 $ 34 $ 34 $ 35
MW capacity (2) 14,581 14,563 14,581 14,563
Total Controllable Costs
($ thousands)/
MW capacity $ 13.9 $ 12.5 $ 25.6 $ 25.5
Reconciliation
Three Months Ended Six Months Ended
June 30, June 30,
---------------------- ----------------------
2010 2009 2010 2009
---------- ---------- ---------- ----------
(in millions, except per MWh and per MW data)
Operation and maintenance
(O&M) $ 184 $ 157 $ 344 $ 314
General and administrative
(G&A) 35 28 56 57
Capital expenditures 32 60 50 115
---------- ---------- ---------- ----------
Total operation and
maintenance, general and
administrative and
capital expenditures $ 251 $ 245 $ 450 $ 486
========== ========== ========== ==========
Total Controllable Costs $ 202 $ 182 $ 374 $ 371
REMA lease expense in
operation and maintenance 15 15 30 30
Severance included in
operation and maintenance 2 3 2 4
Severance included in
general and administrative - 1 - 1
Merger-related costs
included in general and
administrative 14 - 14 -
Environmental capital
expenditures 12 37 22 66
Capitalized interest 6 7 8 14
---------- ---------- ---------- ----------
Total operation and
maintenance, general and
administrative and
capital expenditures $ 251 $ 245 $ 450 $ 486
========== ========== ========== ==========
TWh generation 5.4 5.3 10.9 10.7
Total O&M, G&A and capital
expenditures/MWh $ 46 $ 46 $ 41 $ 45
MW capacity (2) 14,581 14,563 14,581 14,563
Total O&M, G&A and capital
expenditures ($ thousands)/
MW capacity $ 17.2 $ 16.8 $ 30.9 $ 33.4
(1) Excludes severance charges incurred in connection with (a)
repositioning the company in connection with the sale of our retail
business and (b) implementing our plant-specific operating model. We
also exclude merger-related costs classified in general and
administrative, including 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 June 30, 2009 to June 30, 2010 as a result of
MW re-ratings that occurred during the fourth quarter of 2009.
Reference is made to RRI Energy, Inc.'s Annual Report
on Form 10-K for the year ended December 31, 2009
RRI Energy, Inc. and Subsidiaries
East Coal
(Unaudited)
Q2 Total Margin Q2 Generation
Net Capture Factor (GWh)
Generating Heat Rate ---------------- -----------------
Unit Name Capacity (MW) (MMBtu/MWh) 2010 2009 2010 2009
------------- ----------- ----------- ------- ------- -------- --------
Cheswick 560 10.0 47.1% 62.5% 303.0 478.6
Conemaugh (1) 281 9.4 86.4% 94.5% 377.9 477.2
Elrama 460 11.3 79.1% 81.3% 142.6 168.5
Keystone (1) 284 9.5 98.7% 81.8% 597.7 424.3
Portland 401 9.8 61.4% 89.2% 273.6 598.6
Seward 525 9.6 87.0% 76.1% 1,027.6 785.5
Shawville (1) 597 10.3 87.4% 78.9% 831.2 422.3
Titus 243 10.8 87.9% 88.4% 170.7 241.5
Avon Lake 763 9.3 77.6% 97.7% 738.3 881.0
New Castle 333 10.6 93.0% 83.5% 145.6 175.3
Niles 244 10.5 62.1% 48.5% 96.7 29.5
----------- ------- ------- -------- --------
East Coal Total 4,691 78.3% 81.1% 4,704.9 4,682.3
=========== ======= ======= ======== ========
Q2 YTD Total Margin Q2 YTD Generation
Net Capture Factor (GWh)
Generating Heat Rate ---------------- -----------------
Unit Name Capacity (MW) (MMBtu/MWh) 2010 2009 2010 2009
------------- ----------- ----------- ------- ------- -------- --------
Cheswick 560 10.0 60.9% 77.6% 1,061.0 1,240.2
Conemaugh (1) 281 9.4 90.9% 96.6% 909.5 1,025.6
Elrama 460 11.3 78.7% 79.7% 283.7 246.4
Keystone (1) 284 9.5 95.7% 86.8% 1,111.8 923.5
Portland 401 9.8 69.2% 84.4% 706.9 1,192.5
Seward 525 9.6 73.4% 64.3% 1,682.6 1,366.7
Shawville (1) 597 10.3 83.5% 88.7% 1,582.9 1,151.4
Titus 243 10.8 87.3% 93.6% 400.1 573.1
Avon Lake 763 9.3 80.6% 88.7% 1,646.6 1,623.1
New Castle 333 10.6 93.9% 83.7% 409.7 303.3
Niles 244 10.5 72.5% 57.1% 283.5 122.2
----------- ------- ------- -------- --------
East Coal Total 4,691 78.7% 81.9% 10,078.3 9,768.0
=========== ======= ======= ======== ========
(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 of
these plants.
Reference is made to RRI Energy, Inc.'s Annual Report
on Form 10-K for the year ended December 31, 2009
RRI Energy, Inc. and Subsidiaries
East Gas
(Unaudited)
Net Heat Q2 Total Margin Q2 Generation
Generating Rate Capture Factor (GWh)
Capacity (MMBtu/ -------------------- -----------------
Unit Name (MW) MWh) 2010 2009 2010 2009
------------- -------- -------- ------- ------- -------- --------
Aurora 878 10.5 NM (1) NM (1) 11.1 9.8
Blossburg 19 14.6 NM (1) NM (1) - -
Brunot Island 289 10.4 NM (1) NM (1) 2.9 3.4
Gilbert 536 11.0 NM (1) NM (1) 1.7 0.5
Glen Gardner 160 14.6 NM (1) NM (1) - -
Hamilton 20 14.8 NM (1) NM (1) - 0.4
Hunterstown 60 14.8 NM (1) NM (1) 1.2 1.1
Hunterstown
CCGT 810 7.0 94.4% 94.8% 675.3 462.2
Mountain 40 14.3 NM (1) NM (1) 1.1 0.2
Orrtanna 20 14.4 NM (1) NM (1) 0.1 -
Portland 169 11.2 NM (1) NM (1) 0.1 -
Sayreville 224 13.8 NM (1) NM (1) 0.6 -
Shawnee 20 14.0 NM (1) NM (1) - -
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) 0.3 -
Warren 68 12.8 NM (1) NM (1) - -
Werner 212 13.8 NM (1) NM (1) - 0.2
Shelby 356 9.8 NM (1) NM (1) - -
-------- ------- ------- -------- --------
East Gas Total 3,957 91.2% 92.1% 694.4 477.8
======== ======= ======= ======== ========
Net Heat Q2 YTD Total Margin Q2 YTD Generation
Generating Rate Capture Factor (GWh)
Capacity (MMBtu/ -------------------- -----------------
Unit Name (MW) MWh) 2010 2009 2010 2009
------------- -------- -------- ------- ------- -------- --------
Aurora 878 10.5 NM (1) NM (1) 11.4 11.1
Blossburg 19 14.6 NM (1) NM (1) 0.3 0.1
Brunot Island 289 10.4 NM (1) NM (1) 4.9 3.4
Gilbert 536 11.0 NM (1) NM (1) 2.4 8.3
Glen Gardner 160 14.6 NM (1) NM (1) 0.1 -
Hamilton 20 14.8 NM (1) NM (1) - 0.5
Hunterstown 60 14.8 NM (1) NM (1) 1.3 1.4
Hunterstown
CCGT 810 7.0 95.3% 94.4% 764.1 603.6
Mountain 40 14.3 NM (1) NM (1) 1.2 1.7
Orrtanna 20 14.4 NM (1) NM (1) 0.1 -
Portland 169 11.2 NM (1) NM (1) 0.1 1.9
Sayreville 224 13.8 NM (1) NM (1) 1.2 1.2
Shawnee 20 14.0 NM (1) NM (1) - -
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) 0.3 0.3
Warren 68 12.8 NM (1) NM (1) - -
Werner 212 13.8 NM (1) NM (1) - 0.6
Shelby 356 9.8 NM (1) NM (1) - -
-------- ------- ------- -------- --------
East Gas Total 3,957 91.4% 92.1% 787.4 634.1
======== ======= ======= ======== ========
(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 of this plant.
Reference is made to RRI Energy, Inc.'s Annual Report
on Form 10-K for the year ended December 31, 2009
RRI Energy, Inc. and Subsidiaries
West and Other
(Unaudited)
West
Net Heat Q2 Total Margin Q2 Generation
Generating Rate Capture Factor (GWh)
Capacity (MMBtu/ ------------------ ---------------
Unit Name (MW) MWh) 2010 2009 2010 2009
--------------- -------- ------- ------ ------ ------- -------
Coolwater 622 10.1 NM (1) NM (1) - 15.4
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) - 47.6
Ormond Beach 1,516 9.6 NM (1) NM (1) 5.3 34.0
-------- ------ ------ ------- -------
West Total 3,392 92.1% 90.0% 5.3 97.0
======== ====== ====== ======= =======
Net Heat Q2 YTD Total Margin Q2 YTD Generation
Generating Rate Capture Factor (GWh)
Capacity (MMBtu/ ------------------ ---------------
Unit Name (MW) MWh) 2010 2009 2010 2009
--------------- -------- ------- ------ ------ ------- -------
Coolwater 622 10.1 NM (1) NM (1) 0.8 16.1
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) 10.6 114.8
Ormond Beach 1,516 9.6 NM (1) NM (1) 15.1 94.2
-------- ------ ------ ------- -------
West Total 3,392 86.6% 87.0% 26.5 225.1
======== ====== ====== ======= =======
Other
Net Heat Q2 Total Margin Q2 Generation
Generating Rate Capture Factor (GWh)
Capacity (MMBtu/ ------------------ ---------------
Unit Name (MW) MWh) 2010 2009 2010 2009
--------------- -------- ------- ------ ------ ------- -------
Choctaw 800 7.0 NM (1) NM (1) 37.5 60.8
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 NM (1) NM (1) 37.5 62.3
======== ====== ====== ======= =======
Net Heat Q2 YTD Total Margin Q2 YTD Generation
Generating Rate Capture Factor (GWh)
Capacity (MMBtu/ ------------------ ---------------
Unit Name (MW) MWh) 2010 2009 2010 2009
--------------- -------- ------- ------ ------ ------- -------
Choctaw 800 7.0 NM (1) NM (1) 37.5 60.8
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 NM (1) NM (1) 37.5 62.3
======== ====== ====== ======= =======
(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.
(4) We own 50% interest in this plant located in Texas (non-ERCOT) having a
net generating capacity of 108 MW. 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
RRI Energy, Inc. and Subsidiaries
Capital Expenditures
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
----------------------- -----------------------
2010 2009 2010 2009
--------- --------- --------- ---------
(in millions) (in millions)
Maintenance capital
expenditures $ 14 $ 16 $ 20 $ 35
--------- --------- --------- ---------
Environmental
capital
expenditures 12 37 22 66
Capitalized
interest 6 (1) 7 (2) 8 (1) 14 (2)
--------- --------- --------- ---------
Total
environmental
capital
expenditures
and capitalized
interest 18 44 30 80
--------- --------- --------- ---------
Total
capital
expenditures $ 32 $ 60 $ 50 $ 115
========= ========= ========= =========
(1) Relates primarily to environmental capital expenditures for SO2
emission reductions at our Cheswick plant, which is included in our
East Coal segment.
(2) Relates primarily to environmental capital expenditures for SO2
emission reductions at our Cheswick and Keystone plants, which are
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
RRI Energy, Inc. and Subsidiaries
GAAP Debt, Gross Debt and Net Debt
(Unaudited)
June 30, December 31,
2010 2009 Change
------------ ------------ ------------
(in millions)
Senior secured revolver $ - $ - $ -
Senior secured notes 279 279 -
Senior unsecured notes 1,300 1,300 -
Orion Power 12% notes (1) - 405 (405)
PEDFA fixed-rate bonds
for Seward plant 371 371 -
------------ ------------ ------------
GAAP Debt $ 1,950 $ 2,355 $ (405)
Orion Power 12% notes
purchase accounting
adjustment - (5) 5
REMA operating leases
(off-balance sheet) 423 423 -
------------ ------------ ------------
Gross Debt $ 2,373 $ 2,773 $ (400)
Cash and cash
equivalents (563) (943) 380
Restricted cash (3) (24) 21
Net margin deposits and
cash collateral (188) (2) (260) (3) 72
------------ ------------ ------------
Net Debt $ 1,619 $ 1,546 $ 73
============ ============ ============
(1) Orion Power 12% notes include purchase accounting adjustment of
$5 million as of December 31, 2009. This debt was paid off in May 2010.
(2) Includes $23 million related to discontinued operations and $31 million
related to cash collateral.
(3) 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