NRG Energy (NRG) 8-K NRG Reports Strong Second Quarter Results; Provides Full-Year Outlook for First Time

EXHIBIT 99.1

NEWS
RELEASE

FOR IMMEDIATE RELEASE

NRG Reports Strong Second Quarter Results; Provides Full-Year Outlook for First Time

MINNEAPOLIS (August 5, 2004)—NRG Energy, Inc. (NYSE: NRG) today reported earnings of $83 million, or $0.83 per diluted share, for the second quarter ended June 30, 2004. This included $14 million or $0.14 per diluted share related to discontinued operations. Earnings from ongoing operations were $69 million, or $0.69 per diluted share.

“Our strong second quarter performance was attributable to our employees maintaining focus on all phases of asset management: plant operations, managing commercial risk, resolving legacy issues, and continuing to pursue transactions which further reduce our balance sheet debt,” said David Crane, NRG’s President and Chief Executive Officer. “Additionally, continued higher natural gas prices supported higher power prices, which improved margins at our coal facilities and helped to offset the impact of unseasonably mild weather during the quarter.”

Second Quarter Financial Highlights:

• $282 million in EBITDA;

• $1.34 billion of liquidity as of June 30; and

• Asset sales resulting in $97 million of cash proceeds and $94 million in balance sheet debt elimination.

The Company reported $282 million of EBITDA and $233 million of Adjusted EBITDA. Adjusted EBITDA excludes certain unusual or nonrecurring items that are listed in the attached EBITDA reconciliation tables.

Operational Summary

During the quarter, NRG benefited from sustained higher natural gas prices, which led to improved energy revenue margin at NRG’s coal-fired facilities. The Company continued to expand its Powder River Basin (PRB) coal conversion program, aimed at substantially reducing sulfur emissions from NRG’s coal-fired plants in New York and Delaware. NRG plant staff focused on preparing for the high-demand summer season with increased seasonal maintenance schedules and continued efforts to improve operations and efficiencies at its facilities.

During the three months ended June 30, 2004, the Company incurred $5.6 million of one-time costs related to its corporate relocation activities, primarily related to employee severance and termination benefits.

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Equity earnings from West Coast Power, a joint venture with Dynegy, were higher than expected due to favorable market conditions, and settlement adjustments. NRG continues to work with Dynegy to secure a replacement contract for the California Department of Water Resources that expires at year-end 2004.

Liquidity and Cash Flow

Liquidity as of June 30, 2004, remains healthy at $1.34 billion as set forth below:

Corporate Liquidity (in millions)	March 31, 2004		June 30, 2004
Unrestricted Cash:
Domestic		665			676
International		169			145
Restricted Cash:
Domestic		90			97
International		52			55
Total Cash		976			973
Letter of Credit Availability		137			118
Revolver Availability		250			250
Total Current Liquidity	$	1,363		$	1,341

Year-to-date cash flow from operations remains strong at $317 million, while net cash flow generated for the first six months was $270 million.

“We continue to make significant progress in selling our noncore assets and gaining flexibility on our balance sheet,” commented Crane.

During the second quarter, NRG completed sales of noncore assets, resulting in $97 million in cash proceeds and $94 million in balance sheet debt reduction. Additionally during the quarter, NRG executed a purchase and sale agreement for its Batesville facility, which is expected to reduce debt further by $292 million and contribute additional cash proceeds of $27 million. In July, FERC approved the transfer of NRG’s McClain assets to OG&E Electric Services that will result in an additional $157 million reduction in balance sheet debt.

Outlook

NRG expects the high fuel price environment to continue through the remainder of the year, notwithstanding the mild weather this summer. NRG expects reported cash flow from operations to be $513 million and reported EBITDA to be approximately $837 million; adjusted cash flow from operations and adjusted EBITDA for 2004 are expected to be $441 million and $850 million, respectively. This outlook assumes normalized weather conditions for the second half of the year and no unusual or unforeseen events or significant changes in foreign exchange rates.

Beyond 2004, NRG continues to operate in an overbuilt and challenging wholesale power generation market. The recent suggestion of an improvement in values for power generation assets, in our opinion, is more reflective of the influx of money into funds seeking to invest in this sector than in any sustained recovery in wholesale electricity prices.

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Earnings Conference Call

On August 5, NRG will host a conference call at 9 a.m. Eastern to discuss these results. To access the live webcast and accompanying slide presentation, log on to NRG’s website at http://www.nrgenergy.com and click on “Investors.” To participate in the call, dial 877.407.8035. International callers should dial 201.689.8035. Participants should dial in or log on approximately five minutes prior to the scheduled start time.

The call will be available for replay shortly after completion of the live event on the “Investors” section of the NRG website.

About NRG

NRG Energy, Inc. owns and operates a diverse portfolio of power-generating facilities, primarily in the United States. Its operations include baseload, intermediate, peaking, and cogeneration facilities, thermal energy production and energy resource recovery facilities.

Safe Harbor Disclosure

This news release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Such forward-looking statements are subject to certain risks, uncertainties and assumptions and include, but are not limited to, expected earnings, future growth and financial performance, and typically can be identified by the use of words such as “expect,” “estimate,” “anticipate,” “forecast,” “plan,” “believe” and similar terms. Although NRG believes that its expectations are reasonable, it can give no assurance that these expectations will prove to have been correct, and actual results may vary materially. Factors that could cause actual results to differ materially from those contemplated above include, among others, general economic conditions, hazards customary in the power industry, weather conditions, foreign exchange rates, competition in wholesale power markets, the volatility of energy and fuel prices, failure of customers to perform under contracts, changes in the wholesale power markets and related government regulation, the condition of capital markets generally, our ability to access capital markets, unanticipated outages at our generation facilities, our ability to convert facilities to burn western coal, our substantial indebtedness and the possibility that we may incur additional indebtedness, adverse results in current and future litigation, the willingness of counterparties to negotiate new contracts in California, and the amount of proceeds from asset sales.

NRG undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. The adjusted EBITDA guidance is an estimate as of today’s date, August 5, 2004 and is based on assumptions believed to be reasonable as of this date. NRG expressly disclaims any current intention to update such guidance. The foregoing review of factors that could cause NRG’s actual results to differ materially from those contemplated in the forward-looking statements included in this news release should be considered in connection with information regarding risks and uncertainties that may affect NRG’s future results included in NRG’s filings with the Securities and Exchange Commission at www.sec.gov.

# # #

More information on NRG is available at www.nrgenergy.com

Contacts:

Meredith Moore	Katy Sullivan
Media Relations	Investor Relations
612.373.8892	612.373.8875

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NRG ENERGY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)

	Reorganized			Predecessor			Reorganized			Predecessor
	NRG			Company			NRG			Company
	Three Months						Six Months
	Ended						Ended
	June 30,			June 30,			June 30,			June 30,
	2004			2003			2004			2003
	(In thousands)
Operating Revenues
Revenues from majority-owned operations	$	573,674		$	441,599		$	1,173,992		$	936,609
Operating Costs and Expenses
Cost of majority-owned operations		353,750			381,845			735,801			759,432
Depreciation and amortization		53,168			63,768			108,174			122,906
General, administrative and development		45,837			39,147			82,329			87,663
Corporate relocation charges		5,645			—			6,761			—
Reorganization charges		(2,661	)		6,334			3,589			6,334
Restructuring and impairment charges		1,676			269,631			1,676			291,767
Total operating costs and expenses		457,415			760,725			938,330			1,268,102
Operating Income/(Loss)		116,259			(319,126	)		235,662			(331,493	)
Other Income (Expense)
Minority interest in earnings of consolidated subsidiaries		(201	)		—			(709	)		—
Equity in earnings of unconsolidated affiliates		46,101			46,857			63,814			92,486
Write downs and gains/(losses) on sales of equity method investments		1,205			(132,436	)		(533	)		(149,027	)
Other income, net		8,052			(7,953	)		11,708			3,542
Interest expense		(66,225	)		(92,087	)		(159,371	)		(260,761	)
Total other expense		(11,068	)		(185,619	)		(85,091	)		(313,760	)
Income/(Loss) From Continuing Operations Before Income Taxes		105,191			(504,745	)		150,571			(645,253	)
Income Tax Expense		36,322			4,305			50,602			37,342
Income/(Loss) From Continuing Operations		68,869			(509,050	)		99,969			(682,595	)
Income/(Loss) on Discontinued Operations, net of Income Taxes		14,155			(99,351	)		13,290			61,562
Net Income/(Loss)	$	83,024		$	(608,401	)	$	113,259		$	(621,033	)
Weighted Average Number of Common Shares Outstanding — Diluted		100,478						100,214
Income From Continuing Operations per Weighted Average Common Share — Diluted	$	0.69					$	1.00
Income From Discontinued Operations per Weighted Average Common Share — Diluted		0.14						0.13
Net Income per Weighted Average Common Shares — Diluted	$	0.83					$	1.13

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NRG ENERGY, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (REORGANIZED COMPANY)
(Unaudited)

	June 30,			December 31,
	2004			2003
	(In thousands)
ASSETS
Current Assets
Cash and cash equivalents	$	820,876		$	551,223
Restricted cash		151,673			116,067
Accounts receivable — trade, less allowance for doubtful accounts of $322 and $0		313,649			201,908
Xcel Energy settlement receivable		—			640,000
Current portion of notes receivable — affiliates		1,917			200
Current portion of notes receivable		123,060			65,141
Taxes receivable		14,824			—
Inventory		203,672			194,926
Derivative instruments valuation		11,670			772
Prepayments and other current assets		229,961			222,178
Current deferred income taxes		961			1,850
Current assets — discontinued operations		56,955			119,574
Total current assets		1,929,218			2,113,839
Property, Plant and Equipment
In service		3,935,915			3,885,465
Under construction		104,794			139,171
Total property, plant and equipment		4,040,709			4,024,636
Less accumulated depreciation		(119,487	)		(11,800	)
Net property, plant and equipment		3,921,222			4,012,836
Other Assets
Equity investments in affiliates		677,684			737,998
Notes receivable, less current portion — affiliates		122,539			130,152
Notes receivable, less current portion		612,118			691,444
Intangible assets, net of accumulated amortization of $34,404 and $5,212		356,068			432,361
Debt issuance costs, net of accumulated amortization of $4,992 and $454		63,038			74,337
Derivative instruments valuation		53,474			59,907
Funded letter of credit		250,000			250,000
Other assets		116,129			123,145
Non-current assets — discontinued operations		451,785			618,968
Total other assets		2,702,835			3,118,312
Total Assets	$	8,553,275		$	9,244,987

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NRG ENERGY, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (REORGANIZED COMPANY)
(Unaudited)

	June 30,		December 31,
	2004		2003
	(In thousands)
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities
Current portion of long-term debt and capital leases	$	96,385	$	801,229
Short-term debt		17,826		19,019
Accounts payable — trade		137,033		158,683
Accounts payable — affiliates		6,372		7,040
Accrued taxes		—		16,095
Accrued property, sales and other taxes		16,136		22,322
Accrued salaries, benefits and related costs		33,072		19,331
Accrued interest		20,038		8,982
Derivative instruments valuation		20,979		429
Creditor pool obligation		25,000		540,000
Other bankruptcy settlement		221,283		220,000
Other current liabilities		113,773		102,861
Current liabilities — discontinued operations		23,121		110,190
Total current liabilities		731,018		2,026,181
Other Liabilities
Long-term debt and capital leases		3,922,417		3,327,782
Deferred income taxes		144,522		149,493
Postretirement and other benefit obligations		110,842		105,946
Derivative instruments valuation		159,567		153,503
Other long-term obligations		473,247		480,938
Noncurrent liabilities — discontinued operations		469,911		558,884
Total non-current liabilities		5,280,506		4,776,546
Total Liabilities		6,011,524		6,802,727
Minority Interest		5,673		5,004
Commitments and Contingencies
Stockholders’ Equity
Serial Preferred Stock; 10,000,000 shares authorized, none issued and outstanding at June 30, 2004 and December 31, 2003		—		—
Common stock; $.01 par value; 500,000,000 shares authorized; 100,006,798 shares at June 30, 2004 and 100,000,000 shares at December 31, 2003 issued and outstanding		1,000		1,000
Additional paid-in capital		2,410,751		2,403,429
Retained earnings		124,284		11,025
Accumulated other comprehensive income		43		21,802
Total stockholders’ equity		2,536,078		2,437,256
Total Liabilities and Stockholders’ Equity	$	8,553,275	$	9,244,987

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NRG ENERGY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)

	Reorganized			Predecessor
	NRG			Company
	Six Months Ended
	June 30
	2004			2003
(In thousands)
Cash Flows from Operating Activities
Net Income/(loss)	$	113,259		$	(621,033	)
Adjustments to reconcile net income/(loss) to net cash provided (used) by operating activities
Distributions in excess of (less than) equity in earnings of unconsolidated affiliates		4,751			(23,943	)
Depreciation and amortization		113,499			145,221
Amortization of debt issuance costs		20,060			11,090
Amortization of debt discount		11,795			—
Deferred income taxes		49,384			36,525
Minority interest		2,089			466
Unrealized (gains)/losses on derivatives		(21,458	)		17,796
Asset impairment		1,676			347,913
Write downs and losses on sales of equity method investments		533			148,841
Gain on sale of discontinued operations		(13,012	)		(218,536	)
Amortization of power contracts and emission credits		34,517			—
Cash provided (used) by changes in certain working capital items, net of acquisition affects		264			179,692
Net Cash Provided by Operating Activities		317,357			24,032
Net Cash Provided by Investing Activities		1,558			27,517
Net Cash Used by Financing Activities		(85,672	)		(33,522	)
Change in Cash from Discontinued Operations		10,822			24,062
Effect of Exchange Rate Changes on Cash and Cash Equivalents		25,588			(93,163	)
Net Increase (Decrease) in Cash and Cash Equivalents		269,653			(51,074	)
Cash and Cash Equivalents at Beginning of Period		551,223			360,860
Cash and Cash Equivalents at End of Period	$	820,876		$	309,786

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NRG ENERGY, INC. AND SUBSIDIARIES
Reconciliation of NonGAAP Financial Measures

Adjusted Net Income Reconciliation

The following table summarizes the calculation of adjusted net income and provides a reconciliation to GAAP net income/(loss), including per share amounts:

	Three Months Ended
	Reorganized						Predecessor
	NRG						NRG
	June 30, 2004			Diluted EPS			June 30, 2003
(Dollars in thousand, except per share amounts)
Net Income (Loss)	$	83,024		$	0.83		$	(608,401	)
Plus:
(Income) Loss from Discontinued Operations, net of tax		(2,257	)		(0.02	)		97,285
(Gain) Loss from Discontinued Operations		(11,898	)		(0.12	)		2,066
Corporate relocation charges, net of tax		3,692			0.04			—
Reorganization items, net of tax		(1,740	)		(0.02	)		4,206
Restructuring and impairment charges, net of tax		1,096			0.01			179,035
FERC-authorized settlement with Connecticut Light and Power, net of tax		(25,085	)		(0.25	)		—
Write downs and (gains)/losses on sales of equity method investments, net of tax		(788	)		0.01			87,937
Adjusted Net Income	$	46,044		$	0.46		$	(237,872	)

EBITDA Reconciliation

The following table summarizes the calculation of EBITDA and provides a reconciliation to net income/(loss):

	Three Months Ended
	Reorganized NRG			Predecessor NRG
	June 30, 2004			June 30, 2003
	(Dollars in thousands)
Net Income / (Loss)	$	83,024		$	(608,401	)
Plus:
Income Tax Expense		36,322			4,305
Interest expense, excluding amortization of debt issuance costs and debt discount/ (premium) noted below		60,210			88,168
Depreciation and amortization		53,168			63,768
WCP CDWR contract amortization (included in equity in earnings of unconsolidated affiliates)		30,638			—
Amortization of power contracts		8,614			—
Amortization of emission credits		3,648			—
Amortization of debt issuance costs and debt discount/(premium)		6,015			3,919
EBITDA	$	281,639		$	(448,241	)
Plus:
(Income) Loss from Discontinued Operations, net of Income taxes		(2,257	)		97,285
(Gain) Loss from Discontinued Operations		(11,898	)		2,066
Corporate relocation charges		5,645			—
Reorganization items		(2,661	)		6,334
Restructuring and impairment charges		1,676			269,631
FERC-authorized settlement with Connecticut Light and Power		(38,357	)		—
Write downs and (gains)/losses on sales of equity method investments		(1,205	)		132,436
Adjusted EBITDA	$	232,582		$	59,511

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Forecasted Adjusted EBITDA Reconciliation

The following table summarizes the calculation of adjusted EBITDA and provides a reconciliation to forecasted cash flow from operations:

	Reported						Adjusted
$ in millions	Outlook			Adjustment			Outlook
EBITDA		837			13	1		850
Interest Payments		(278	)		15	2		(263	)
Income Tax		(36	)		—			(36	)
Other Cash Used by Operations		(50	)		—			(50	)
Working Capital Changes		(60	)		—			(60	)
Xcel Settlement, net		100			(100	)		—
Cash Flow from Operations		513			( 72	)		441

¹ Adjustments to EBITDA include a $38.5 million reduction for a settlement with CT Light and Power and increases for the following items: losses on discontinued operations of $2 million, corporate relocation charges of $30 million, reorganization and restructuring charges of $5 million and impairment charges and losses on sales of equity investments of $14 million.

² Prepayment penalty from debt refinancing.

EBITDA, Adjusted EBITDA and adjusted net income are nonGAAP financial measures. These measurements are not recognized in accordance with GAAP and should not be viewed as an alternative to GAAP measures of performance. The presentation of Adjusted EBITDA and adjusted net income should not be construed as an inference that NRG’s future results will be unaffected by unusual or non-recurring items.

EBITDA represents net income before interest, taxes, depreciation and amortization. EBITDA is presented because NRG considers it an important supplemental measure of its performance and believes debt-holders frequently use EBITDA to analyze operating performance and debt service capacity. EBITDA has limitations as an analytical tool, and you should not consider it in isolation, or as a substitute for analysis of our operating results as reported under GAAP. Some of these limitations are:

• EBITDA does not reflect cash expenditures, or future requirements for capital expenditures, or contractual commitments;

• EBITDA does not reflect changes in, or cash requirements for, working capital needs;

• EBITDA does not reflect the significant interest expense, or the cash requirements necessary to service interest or principal payments, on debts;

• Although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and EBITDA does not reflect any cash requirements for such replacements; and

• Other companies in this industry may calculate EBITDA differently than NRG does, limiting its usefulness as a comparative measure.

Because of these limitations, EBITDA should not be considered as a measure of discretionary cash available to use to invest in the growth of NRG’s business. NRG compensates for these limitations by

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relying primarily on our GAAP results and using EBITDA and Adjusted EBITDA only supplementally. See the statements of cash flow included in the financial statements that are a part of this press release.

Adjusted EBITDA is presented as a further supplemental measure of operating performance. Adjusted EBITDA represents EBITDA adjusted for reorganization, restructuring, impairment and corporate relocation charges, discontinued operations, and write downs and losses on the sales of equity method investments; factors which we do not consider indicative of future operating performance. The reader is encouraged to evaluate each adjustment and the reasons NRG considers it appropriate for supplemental analysis. As an analytical tool, Adjusted EBITDA is subject to all of the limitations applicable to EBITDA. In addition, in evaluating Adjusted EBITDA, the reader should be aware that in the future NRG may incur expenses similar to the adjustments in this presentation.

Similar to Adjusted EBITDA, Adjusted net income represents net income adjusted for reorganization, restructuring, impairment and corporate relocation charges, discontinued operations, and write downs and losses on the sales of equity method investments; factors which we do not consider indicative of future operating performance. The reader is encouraged to evaluate each adjustment and the reasons NRG considers it appropriate for supplemental analysis. In addition, in evaluating Adjusted net income, the reader should be aware that in the future NRG may incur expenses similar to the adjustments in this presentation.

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