<PAGE>
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.
<PAGE>
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
<PAGE>
PART 1
FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS
NRG GENERATING (U.S.) INC.
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
<TABLE>
<CAPTION>
ASSETS
March 31, December 31,
1997 1996
(Unaudited)
<S> <C> <C>
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
</TABLE>
<TABLE>
<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY
<S> <C> <C>
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
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
2
<PAGE>
NRG GENERATING (U.S.) INC.
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
(Dollars in thousands, except per share amounts)
<TABLE>
<CAPTION>
Three Months Ended
March 31, March 31,
1997 1996
<S> <C> <C>
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
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
3
<PAGE>
NRG GENERATING (U.S.) INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
(Dollars in thousands)
<TABLE>
<CAPTION>
Three Months Ended
March 31, March 31,
1997 1996
<S> <C> <C>
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
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
Supplemental disclosure of cash flow information:
Interest paid during the period............................... $ 3,537 $ 4,428
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
4
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
Exhibit 11
NRG GENERATING (U. S.) INC.
Computation of Earnings Per Common Share
(Dollars in thousands, except per share amounts)
<TABLE>
<CAPTION>
Three Months Ended
March 31, March 31,
1997 1996
<S> <C> <C>
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)
<FN>
(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.
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND> 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
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> Dec-31-1997
<PERIOD-END> Mar-31-1997
<CASH> 4,861
<SECURITIES> 0
<RECEIVABLES> 10,239
<ALLOWANCES> 0
<INVENTORY> 2,674
<CURRENT-ASSETS> 31,528
<PP&E> 132,488
<DEPRECIATION> 0
<TOTAL-ASSETS> 174,163
<CURRENT-LIABILITIES> 25,511
<BONDS> 0
<COMMON> 64
0
0
<OTHER-SE> (26,561)
<TOTAL-LIABILITY-AND-EQUITY> 174,163
<SALES> 17,457
<TOTAL-REVENUES> 17,457
<CGS> 7,442
<TOTAL-COSTS> 7,442
<OTHER-EXPENSES> 2,052
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 3,537
<INCOME-PRETAX> 4,426
<INCOME-TAX> 339
<INCOME-CONTINUING> 4,087
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4,087
<EPS-PRIMARY> 0.62
<EPS-DILUTED> 0.62
</TABLE>
