Consolidated Statements of Oper
Consolidated Statements of Operations (USD $) | |||
In Thousands, except Per Share data | 12 Months Ended
Dec. 31, 2009 | 12 Months Ended
Dec. 31, 2008 | 12 Months Ended
Dec. 31, 2007 |
Revenues: | |||
Revenues (including $(44,170), $(1,151) and $31,662 unrealized gains (losses)) (including $0, $253,001 and $127,083 from affiliates) | $1,824,839 | $3,393,900 | $3,202,528 |
Expenses: | |||
Cost of sales (including $65,961, $(7,405) and $(25,113) unrealized gains (losses)) (including $0, $71,568 and $42,645 from affiliates) | 1,129,249 | 1,913,689 | 2,040,769 |
Operation and maintenance | 550,253 | 595,262 | 642,406 |
General and administrative | 100,745 | 121,173 | 134,488 |
Western states litigation and similar settlements | 0 | 37,467 | 22,000 |
Gains on sales of assets and emission and exchange allowances, net | (21,913) | (92,202) | (25,699) |
Goodwill and long-lived assets impairments | 210,771 | 304,859 | 0 |
Depreciation and amortization | 269,191 | 312,642 | 398,691 |
Total operating expense | 2,238,296 | 3,192,890 | 3,212,655 |
Operating Income (Loss) | (413,457) | 201,010 | (10,127) |
Other Income (Expense): | |||
Income of equity investment, net | 605 | 1,198 | 4,686 |
Debt extinguishments losses | (7,501) | (2,257) | (113,522) |
Other, net | (248) | 4,727 | 4 |
Interest expense | (186,296) | (199,590) | (262,410) |
Interest income | 2,516 | 21,178 | 19,638 |
Total other expense | (190,924) | (174,744) | (351,604) |
Income (Loss) from Continuing Operations Before Income Taxes | (604,381) | 26,266 | (361,731) |
Income tax expense (benefit) | (125,349) | 136,532 | (160,100) |
Loss from Continuing Operations | (479,032) | (110,266) | (201,631) |
Income (loss) from discontinued operations | 881,844 | (629,409) | 566,738 |
Net Income (Loss) | $402,812 | ($739,675) | $365,107 |
Basic Earnings (Loss) per Share: | |||
Loss from continuing operations | -1.36 | -0.32 | -0.59 |
Income (loss) from discontinued operations | 2.51 | -1.81 | 1.66 |
Net income (loss) | 1.15 | -2.13 | 1.07 |
Diluted Earnings (Loss) per Share: | |||
Loss from continuing operations | -1.36 | -0.32 | -0.59 |
Income (loss) from discontinued operations | 2.51 | -1.81 | 1.66 |
Net income (loss) | 1.15 | -2.13 | 1.07 |
1_Consolidated Statements of Op
Consolidated Statements of Operations (Parentheticals) (USD $) | |||
In Thousands | 12 Months Ended
Dec. 31, 2009 | 12 Months Ended
Dec. 31, 2008 | 12 Months Ended
Dec. 31, 2007 |
Consolidated Statements of Operations (Parentheticals) [Abstract] | |||
Unrealized gains (losses) included in revenues | ($44,170) | ($1,151) | $31,662 |
Revenue from affiliates included in revenues | 0 | 253,001 | 127,083 |
Unrealized gains (losses) included in cost of sales | 65,961 | (7,405) | (25,113) |
Cost of sales from affiliates included in cost of sales | $0 | $71,568 | $42,645 |
Consolidated Balance Sheets
Consolidated Balance Sheets (USD $) | ||
In Thousands | Dec. 31, 2009
| Dec. 31, 2008
|
Current Assets: | ||
Cash and cash equivalents | $943,440 | $1,004,367 |
Restricted cash | 24,093 | 2,721 |
Accounts and notes receivable, principally customer, net | 152,569 | 249,871 |
Inventory | 331,584 | 314,999 |
Derivative assets | 132,062 | 161,340 |
Margin deposits | 198,582 | 32,676 |
Investment in and receivables from Channelview, net | 0 | 58,703 |
Prepayments and other current assets | 86,844 | 124,449 |
Current assets of discontinued operations ($55,855 and $295,477 of margin deposits) | 108,476 | 2,506,340 |
Total current assets | 1,977,650 | 4,455,466 |
Property, Plant and Equipment, net | 4,602,313 | 4,819,789 |
Other Assets: | ||
Other intangibles, net | 305,913 | 380,554 |
Derivative assets | 53,138 | 78,879 |
Prepaid lease | 277,370 | 273,374 |
Other ($33,793 and $29,012 accounted for at fair value) | 239,078 | 219,552 |
Long-term assets of discontinued operations | 5,232 | 494,781 |
Total other assets | 880,731 | 1,447,140 |
Total Assets | 7,460,694 | 10,722,395 |
Current Liabilities: | ||
Current portion of long-term debt and short-term borrowings | 404,505 | 12,517 |
Accounts payable, principally trade | 142,787 | 156,604 |
Derivative liabilites | 151,461 | 202,206 |
Margin deposits | 2,860 | 93,000 |
Other | 169,898 | 199,026 |
Current liabilities of discontinued operations ($11,000 and $0 of margin deposits) | 58,452 | 2,375,895 |
Total current liabilities | 929,963 | 3,039,248 |
Other Liabilities: | ||
Derivative liabilities | 61,436 | 140,493 |
Other | 260,547 | 272,079 |
Long-term liabilities of discontinued operations | 13,700 | 873,190 |
Total other liabilities | 335,683 | 1,285,762 |
Long-term Debt | 1,949,771 | 2,610,737 |
Commitments and Contingencies | ||
Temporary Equity Stock-based Compensation | 6,890 | 9,004 |
Stockholders' Equity: | ||
Preferred stock; par value $0.001 per share (125,000,000 shares authorized; none outstanding) | 0 | 0 |
Common stock; par value $0.001 per share (2,000,000,000 shares authorized; 352,785,985 and 349,812,537 issued) | 114 | 111 |
Additional paid-in capital | 6,259,248 | 6,238,639 |
Accumulated deficit | (1,972,389) | (2,375,201) |
Accumulated other comprehensive loss | (48,586) | (85,905) |
Total stockholders' equity | 4,238,387 | 3,777,644 |
Total Liabilities and Equity | $7,460,694 | $10,722,395 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parentheticals) (USD $) | ||
In Thousands, except Share data | Dec. 31, 2009
| Dec. 31, 2008
|
Consolidated Balance Sheets (Parentheticals) [Abstract] | ||
Margin deposit assets in discontinued operations | $55,855 | $295,477 |
Investments accounted for at fair value | 33,793 | 29,012 |
Margin deposit liabilities in discontinued operations | $11,000 | $0 |
Preferred stock par value per share | 0.001 | 0.001 |
Preferred stock shares authorized | 125,000,000 | 125,000,000 |
Preferred stock shares outstanding | 0 | 0 |
Common stock par value per share | 0.001 | 0.001 |
Common stock shares authorized | 2,000,000,000 | 2,000,000,000 |
Common stock shares issued | 352,785,985 | 349,812,537 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows (USD $) | |||
In Thousands | 12 Months Ended
Dec. 31, 2009 | 12 Months Ended
Dec. 31, 2008 | 12 Months Ended
Dec. 31, 2007 |
Cash Flows from Operating Activities: | |||
Net income (loss) | $402,812 | ($739,675) | $365,107 |
(Income) loss from discontinued operations | (881,844) | 629,409 | (566,738) |
Loss from Continuing Operations | (479,032) | (110,266) | (201,631) |
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | |||
Goodwill and long-lived assets impairments | 210,771 | 304,859 | 0 |
Depreciation and amortization | 269,191 | 312,642 | 398,691 |
Deferred income taxes | (120,646) | 99,930 | (153,344) |
Net changes in energy derivatives | (21,285) | 8,556 | (6,549) |
Amortization of deferred financing costs | 7,086 | 6,653 | 9,213 |
Debt extinguishments losses | 7,501 | 2,257 | 113,522 |
Gains on sales of assets and emission and exchange allowances, net | (21,913) | (92,202) | (25,699) |
Western states litigation and similar settlements | 0 | 3,467 | 0 |
Other, net | (13,121) | (10,486) | 6,342 |
Changes in other assets and liabilities: | |||
Accounts and notes receivable, net | 108,985 | 9,978 | (40,630) |
Changes in notes, receivables and payables with affiliate, net | 43 | 3,687 | (13,078) |
Inventory | (14,711) | (31,862) | (21,863) |
Margin deposits, net | (256,046) | 199,370 | 285,641 |
Net derivative assets and liabilities | (32,460) | 3,049 | (8,253) |
Western states litigation and similar settlements payments | (3,449) | 0 | (35,000) |
Accounts payable | (12,776) | (48,470) | (19,771) |
Other current assets | 12,269 | 1,969 | 2,559 |
Other assets | (6,466) | 10,207 | (12,633) |
Taxes payable / receivable | (6,883) | 24,325 | (9,166) |
Other current liabilities | (11,157) | 10,091 | (56,011) |
Other liabilities | (7,417) | (4,327) | (8,810) |
Net cash provided by (used in) continuing operations from operating activities | (391,516) | 703,427 | 203,530 |
Net cash provided by (used in) discontinued operations from operating activities | 585,045 | (520,732) | 558,213 |
Net cash provided by operating activities | 193,529 | 182,695 | 761,743 |
Cash Flows from Investing Activities: | |||
Capital expenditures | (189,511) | (278,757) | (174,589) |
Proceeds from sale of assets, net | 35,931 | 526,956 | 82,075 |
Proceeds from sales of emission and exchange allowances | 19,180 | 42,458 | 6,815 |
Purchases of emission allowances | (22,711) | (60,986) | (91,923) |
Restricted cash | (4,620) | 530 | (6,326) |
Other, net | 3,750 | 6,562 | 6,045 |
Net cash provided by (used in) continuing operations from investing activities | (157,981) | 236,763 | (177,903) |
Net cash provided by (used in) discontinued operations from investing activities | 311,800 | (20,128) | (747) |
Net cash provided by (used in) investing activities | 153,819 | 216,635 | (178,650) |
Cash Flows from Financing Activities: | |||
Proceeds from long-term debt | 0 | 0 | 1,300,000 |
Payments of long-term debt | (254,980) | (57,704) | (1,535,887) |
Increase in short-term borrowings and revolving credit facilities, net | 0 | 0 | 6,554 |
Payments of financing costs | 0 | 0 | (31,245) |
Payments of debt extinguishments expenses | (4,778) | (1,017) | (72,779) |
Proceeds from issuances of stock | 11,245 | 13,570 | 41,317 |
Net cash used in continuing operations from financing activities | (248,513) | (45,151) | (292,040) |
Net cash used in discontinued operations from financing activities | (260,707) | 0 | 0 |
Net cash used in financing activities | (509,220) | (45,151) | (292,040) |
Net Change in Cash and Cash Equivalents, Total Operations | (161,872) | 354,179 | 291,053 |
Less: Net Change in Cash and Cash Equivalents, Discontinued Operations | (100,945) | (126,118) | 92,066 |
Cash and Cash Equivalents at Beginning of Period, Continuing Operations | 1,004,367 | 524,070 | 325,083 |
Cash and Cash Equivalents at End of Period, Continuing Operations | 943,440 | 1,004,367 | 524,070 |
Supplemental Disclosure of Cash Flow Information: | |||
Interest paid (net of amounts capitalized) for continuing operations | 194,355 | 205,956 | 299,379 |
Income taxes paid (net of income tax refunds) for continuing operations | $2,330 | $12,312 | $2,833 |
Consolidated Statements of Stoc
Consolidated Statements of Stockholders' Equity and Comprehensive Income (Loss) (USD $) | ||||||||||
In Thousands | Additional Paid In Capital
| Accumulated Deficit
| Benefits Actuarial Net Gain (Loss)
| Benefits Net Prior Service Costs
| Common Stock
| Unrealized Gain (Loss) on Available-For-Sale Securities
| Deferred Derivative Gains (Losses)
| Total Accumulated Other Comprehensive Income (Loss)
| Discontinued Operations Accumulated Other Comprehensive Income (Loss)
| Total
|
Stockholders' equity at Dec. 31, 2006 | $6,174,665 | ($2,026,316) | ($15,463) | ($10,869) | $99 | $0 | ($178,402) | ($204,734) | $6,159 | $3,949,873 |
Adjustment to initially apply FIN 48 | (468) | 25,683 | 25,215 | |||||||
Balance after initial adjustment to apply FIN 48 | 6,174,197 | (2,000,633) | (15,463) | (10,869) | 99 | 0 | (178,402) | (204,734) | 6,159 | 3,975,088 |
Net income (loss) | 365,107 | 365,107 | ||||||||
Distributions to CenterPoint Energy, Inc. | (2,487) | (2,487) | ||||||||
Warrants | 43 | 1 | 44 | |||||||
Transactions under stock plans | 43,659 | 6 | 43,665 | |||||||
Conversion of convertible senior subordinated notes to common stock | 100 | 100 | ||||||||
Other comprehensive income (loss): | ||||||||||
Deferred gain from cash flow hedges, net of tax | 3,225 | 3,225 | 3,225 | |||||||
Reclassification of net deferred loss from cash flow hedges into net income / loss, net of tax | 93,933 | 93,933 | (5,030) | 88,903 | ||||||
Reclassification of benefits net prior service costs into net income / loss, net of tax | 1,308 | 1,308 | 1,308 | |||||||
Reclassification of benefits actuarial net loss into net income / loss, net of tax | 356 | 356 | 356 | |||||||
Deferred benefits, net of tax | 1,725 | 1,725 | 1,725 | |||||||
Stockholders' equity at Dec. 31, 2007 | 6,215,512 | (1,635,526) | (13,382) | (9,561) | 106 | 0 | (81,244) | (104,187) | 1,129 | 4,477,034 |
Net income (loss) | (739,675) | (739,675) | ||||||||
Warrants | 2,070 | 5 | 2,075 | |||||||
Transactions under stock plans | 19,039 | 19,039 | ||||||||
Conversion of convertible senior subordinated notes to common stock | 2,018 | 2,018 | ||||||||
Other comprehensive income (loss): | ||||||||||
Reclassification of net deferred loss from cash flow hedges into net income / loss, net of tax | 32,605 | 32,605 | (1,129) | 31,476 | ||||||
Reclassification of benefits net prior service costs into net income / loss, net of tax | 961 | 961 | 961 | |||||||
Reclassification of benefits actuarial net loss into net income / loss, net of tax | 188 | 188 | 188 | |||||||
Deferred benefits, net of tax | (20,111) | (810) | (20,921) | (20,921) | ||||||
Unrealized gain on available for sale securities, net of tax | 5,449 | 5,449 | 5,449 | |||||||
Stockholders' equity at Dec. 31, 2008 | 6,238,639 | (2,375,201) | (33,305) | (9,410) | 111 | 5,449 | (48,639) | (85,905) | 0 | 3,777,644 |
Net income (loss) | 402,812 | 402,812 | ||||||||
Transactions under stock plans | 20,609 | 3 | 20,612 | |||||||
Other comprehensive income (loss): | ||||||||||
Reclassification of net deferred loss from cash flow hedges into net income / loss, net of tax | 14,791 | 14,791 | 14,791 | |||||||
Reclassification of benefits net prior service costs into net income / loss, net of tax | 6,046 | 6,046 | 6,046 | |||||||
Reclassification of benefits actuarial net loss into net income / loss, net of tax | 2,977 | 2,977 | 2,977 | |||||||
Deferred benefits, net of tax | 10,091 | 351 | 10,442 | 10,442 | ||||||
Unrealized gain on available for sale securities, net of tax | 3,063 | 3,063 | 3,063 | |||||||
Stockholders' equity at Dec. 31, 2009 | $6,259,248 | ($1,972,389) | ($20,237) | ($3,013) | $114 | $8,512 | ($33,848) | ($48,586) | $0 | $4,238,387 |
2_Consolidated Statements of St
Consolidated Statements of Stockholders' Equity and Comprehensive Income (Loss) (Parentheticals) (USD $) | ||||
In Thousands | Benefits Actuarial Net Gain (Loss)
| Benefits Net Prior Service Costs
| Unrealized Gain (Loss) on Available-For-Sale Securities
| Deferred Derivative Gains (Losses)
|
Consolidated Statements of Stockholders' Equity and Comprehensive Income (Loss) (Parentheticals) [Abstract] | ||||
Tax related to deferred gain from cash flow hedges | $3,000 | |||
Tax related to reclassification of net deferred loss from cash flow hedges into net income / loss | 58,000 | |||
Tax related to reclassification of benefits net prior service cost into net income / loss | 0 | |||
Tax related to reclassification of benefits actuarial net loss into net income / loss | 0 | |||
Tax related to deferred benefits actuarial net gain / loss | 0 | |||
Consolidated Statements of Stockholders' Equity and Comprehensive Income (Loss) (Parentheticals) [Abstract] | ||||
Tax related to reclassification of net deferred loss from cash flow hedges into net income / loss | 20,000 | |||
Tax related to reclassification of benefits net prior service cost into net income / loss | 0 | |||
Tax related to reclassification of benefits actuarial net loss into net income / loss | 0 | |||
Tax related to deferred benefits actuarial net gain / loss | 1,000 | |||
Tax related to deferred benefits net prior service costs | 1,000 | |||
Tax related to unrealized gain on available for sale securities | 3,000 | |||
Consolidated Statements of Stockholders' Equity and Comprehensive Income (Loss) (Parentheticals) [Abstract] | ||||
Tax related to reclassification of net deferred loss from cash flow hedges into net income / loss | 11,000 | |||
Tax related to reclassification of benefits net prior service cost into net income / loss | 0 | |||
Tax related to reclassification of benefits actuarial net loss into net income / loss | 0 | |||
Tax related to deferred benefits actuarial net gain / loss | 0 | |||
Tax related to deferred benefits net prior service costs | 1,000 | |||
Tax related to unrealized gain on available for sale securities | $2,000 |
Background and Basis of Present
Background and Basis of Presentation | |
12 Months Ended
Dec. 31, 2009 USD / shares | |
Background and Basis of Presentation | |
Background and Basis of Presentation | (1) Background and Basis of Presentation Background. RRI Energy refers to RRI Energy, Inc. and we, us and our refer to RRI Energy, Inc. and its consolidated subsidiaries. We provide energy, capacity, ancillary and other energy services to wholesale customers in competitive energy markets in the United States through our ownership and operation of and contracting for power generation capacity. Our business consists of four reportable segments. See note 20. RRI Energy, a Delaware corporation, was formed in August 2000 by CenterPoint Energy, Inc. (CenterPoint) (known as Reliant Energy, Incorporated at the time) in connection with the planned separation of its regulated and unregulated operations. CenterPoint transferred substantially all of its unregulated businesses to us. In May2001, Reliant Energy became a publicly traded company and in September2002, CenterPoint distributed its remaining ownership of our common stock to its shareholders. We sold our retail business in three transactions occurring in December2008, May2009 and December2009. We began reporting this business as discontinued operations in the first quarter of 2009. In connection with the Texas retail sale, we changed our name to RRI Energy, Inc. from Reliant Energy, Inc. effective May 2, 2009. See note23. Basis of Presentation. All significant intercompany transactions have been eliminated. Channelview. In August 2007, four of our whollyowned subsidiaries, Reliant Energy Channelview LP (Channelview LP), Reliant Energy Channelview (Texas) LLC, Reliant Energy Channelview (Delaware) LLC and Reliant Energy Services Channelview LLC (collectively, Channelview), filed for reorganization under Chapter11 of the Bankruptcy Code. As Channelview was subject to the supervision of the bankruptcy court, we deconsolidated Channelviews financial results beginning August20, 2007, and began reporting our investment in Channelview using the cost method. The Channelview plant was sold in July 2008. Channelview emerged from bankruptcy in October 2009 at which time we reconsolidated the entities. See note22. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | |
12 Months Ended
Dec. 31, 2009 USD / shares | |
Summary of Significant Accounting Policies | |
Summary of Significant Accounting Policies | (2) Summary of Significant Accounting Policies (a) Use of Estimates and Market Risk and Uncertainties. Management makes estimates and assumptions to prepare financial statements in conformity with accounting principles generally accepted in the United States of America (GAAP) that affect: the reported amounts of assets, liabilities and equity the reported amounts of revenues and expenses our disclosure of contingent assets and liabilities at the date of the financial statements Actual results could differ from those estimates. We evaluate our estimates and assumptions on an ongoing basis using historical experience and other factors, including the current economic environment, which we believe to be reasonable under the circumstances. We adjust such estimates and assumptions when facts and circumstances dictate. We have evaluated subsequent events for recording and disclosure to February 25, 2010, the date the financial statements were issued. Our critical accounting estimates include: (a)fair value of derivative assets and liabilities; (b)recoverability and fair value of longlived assets; (c)loss contingencies and (d)deferred tax assets, valuation allowances and tax liabilities. We are subject to various risks inherent in doing business. See notes 2(c), 2(d), 2(e), 2(f), 2(g), 2(l), 2(m), 2(n), 2(o), 2(p), 3, 4, 5, 6, 7, 10, 11, 12, 13, 14, 15, 16, 17, 21, 22 and 23. (b) Principles of Consolidation. We include our accounts and those of our whollyowned subsidiaries in our consolidated financial statements, excluding Channelview during its deconsolidation from August2007 through October 2009. We do not consolidate three power generating facilities (see note15(a)), which are under operating leases, or a 50% equity investment in a cogeneration plant. (c) Revenues. Power Generation Revenues. We record gross revenues from the sales of power and other energy services under the accrual method. Electric power and other energy services are sold at marketbased prices through existing power exchanges or third party contracts. Energy sales and services that have been delivered but not billed by period end are estimated. During 2009, 2008 and 2007, we recorded $922 million, $2.1 billion and $2.1billion, respectively, in power generation revenues. Capacity Revenues. We record gross revenues from the sales of capacity under the accrual method. These sales are sold at marketbased prices primarily through the RPM auction market in PJM. We also sell in MISO, Cal ISO and other markets where we enter into agreements with counterparties. Sales that have been delivered but not billed by period end are estimated. During 2009, 2008 and 2007, we recorded $536million, $455million and $268million, respectively, in capacity revenues. Natural Gas Sales Revenues. We record gross revenues from the sales of natural gas under the accrual method. These sales are sold at marketbased prices through third party contracts or related party affiliates. Sales that have been delivered but not billed by period end are estimated. During 2009, 2008 and 2007, we recorded $381million, $948million and $994million, respectively, in natural gas sales revenues. ( |
Related Party Transactions
Related Party Transactions | |
12 Months Ended
Dec. 31, 2009 USD / shares | |
Related Party Transactions | |
Related Party Transactions | (3) Related Party Transactions Indemnities and Releases. As part of our separation from CenterPoint, we agreed to indemnify our former parent company for liabilities associated with the business we acquired. See notes14(d), 15(b) and 16(c). |
Long-Lived Assets Impairments
Long-Lived Assets Impairments | |
12 Months Ended
Dec. 31, 2009 USD / shares | |
Long-Lived Assets Impairments | |
Long-Lived Assets Impairments | (4) LongLived Assets Impairments We periodically evaluate the recoverability of our long-lived assets (property, plant and equipment and intangible assets), which involves significant judgment and estimates, when there are certain indicators (see below) that the carrying value of these assets may not be recoverable. As of December31, 2009, we had $4.9billion of longlived assets. This estimate affects all segments, which hold 99% of our total net property, plant and equipment and net intangible assets. Our East Coal segment holds the largest portion of our net property, plant and equipment and net intangible assets at 59% of our consolidated total. See notes2(g) and 5. We evaluate our long-lived assets when events or changes in circumstances indicate that the carrying value of such assets may not be recoverable. Examples of such events or changes in circumstances are: a significant decrease in the market price of a long-lived asset a significant adverse change in the manner an asset is being used or its physical condition an adverse action by a regulator or legislature or an adverse change in the business climate an accumulation of costs significantly in excess of the amount originally expected for the construction or acquisition of an asset a current-period loss combined with a history of losses or the projections of future losses a change in our intent about an asset from an intent to hold to a greater than 50% likelihood that an asset will be sold or disposed of before the end of its previously estimated useful life When we believe an impairment condition may have occurred, we are required to estimate the undiscounted future cash flows associated with a long-lived asset or group of long-lived assets at the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities for long-lived assets that are expected to be held and used. Each plant (including its property, plant and equipment and intangible assets) was determined to be its own group. The determination of impairment is a two-step process, the first of which involves comparing the undiscounted cash flows to the carrying value of the asset. If the carrying value exceeds the undiscounted cash flows, the fair value of the asset must be determined. The fair value of an asset is the price that would be received from a sale of the asset in an orderly transaction between market participants at the measurement date. Quoted market prices in active markets are the best evidence of fair value and are used as the basis for the measurement, when available. In the absence of quoted prices for identical or similar assets, fair value is estimated using various internal and external valuation methods. These methods include discounted cash flow analyses and reviewing available information on comparable transactions. Key Assumptions. The following summarizes some of the most significant estimates and assumptions used in evaluating our plant level undiscounted cash flows. The ranges for the fundamental view assumptions are to account for variability by year and region. December 31, 2009 Undiscounted Cash Flo |
Intangible Assets
Intangible Assets | |
12 Months Ended
Dec. 31, 2009 USD / shares | |
Intangible Assets | |
Intangible Assets | (5) Intangible Assets (a) Goodwill. The following table shows the changes in goodwill for 2008 (in millions): As of January 1, 2008...................................................................................................................................... $ 327 Goodwill impairment..................................................................................................................................... (305) Other changes............................................................................................................................................... (22)(1) As of December 31, 2008................................................................................................................................ $ _______________ (1) Relates to the sale of our Channelview plant in July2008 ($5million) and the sale of our Bighorn plant in October2008 ($17million). See notes21 and 22. As of December31, 2009 and 2008, we had $39million and $47million, respectively, of goodwill that is deductible for United States income tax purposes in future periods. We tested goodwill for impairment on an annual basis in April (through 2008), and more often if events or circumstances indicated there may have been impairment. We historically (through the second quarter of 2009) had two reporting segments: wholesale energy and retail energy. Goodwill impairment testing was performed at the reporting unit level, which was consistent with our reporting segments. We continually assessed whether any indicators of impairment existed, which required a significant amount of judgment. Such indicators may have included a sustained significant decline in our share price and market capitalization; a decline in our expected future cash flows; a significant adverse change in legal factors or in the business climate; unanticipated competition; overall weaknesses in our industry; and slower growth rates. Any adverse change in these factors could have had a significant impact on the recoverability of goodwill and could have had a material impact on our consolidated financial statements. During April 2008, we tested goodwill for impairment and determined that no impairments existed. During the third and fourth quarters of 2008, given adverse changes in the business climate and the credit markets, our market capitalization being lower than our book value during all of the fourth quarter and extending into 2009, our review of strategic alternatives to enhance stockholder value and reductions in our expected near-term cash flows from operations, we reviewed our goodwill for impairment. We concluded that no goodwill impairments occurred as of September30, 2008. As discussed below, as of December31, 2008, we concluded that our historical wholesale energy segments goodwill of $305million was impaired. Goodwill was reviewed for impairments based on a twostep test. In the first step, we compared the fair value of each reporting unit with its net book value. We applied judgment in determining the fair value of our reporting units for purposes of performing our goodwill impairment tests because |
Derivatives and Hedging Activit
Derivatives and Hedging Activities | |
12 Months Ended
Dec. 31, 2009 USD / shares | |
Derivatives and Hedging Activities | |
Derivatives and Hedging Activities | (6) Derivatives and Hedging Activities We use derivative instruments to manage operational or market constraints and to increase return on our generation assets. See note2(e). As of December31, 2009 and 2008, we do not have any designated cash flow hedges. Amounts included in accumulated other comprehensive loss are: December 31, 2009 At the End of the Period Expected to be Reclassified into Results of Operations in Next 12 Months (in millions) Dedesignated cash flow hedges, net of tax(1) (2).................................. $ 34 $ 14 ________________ (1) No component of the derivatives gain or loss was excluded from the assessment of effectiveness. (2) During 2009, 2008 and 2007, $0 was recognized in our results of operations as a result of the discontinuance of cash flow hedges because it was probable that the forecasted transaction would not occur. As of December31, 2009, our commodity derivative assets and liabilities include amounts for non-trading and trading activities as follows: Derivative Assets Derivative Liabilities Net Derivative Assets (Liabilities) Current Long-Term Current Long-Term (in millions) Nontrading...................... $ 66 $ 53 $ (105) $ (61) $ (47) Trading............................. 66 (47) 19 Total derivatives....... $ 132 $ 53 $ (152) $ (61) $ (28) We have the following derivative commodity contracts outstanding as of December31, 2009: Notional Volumes(2) Commodity Unit(1) Current Longterm (in millions) Power.............................................................................. MWh (5) (6) Capacity energy............................................................ MWh (2) (1) Natural gas(3)................................................................. MMBTU (3) 24 Natural gas basis.......................................................... MMBTU (5) Coal................................................................................. MMBTU 122 176 ________________ (1) MWh is megawatt hours and MMBTU is million British thermal units. (2) Negative amounts indicate net forward sales. (3) Includes current and longterm volumes related to purchases of put options. The income (loss) associated with our energy derivatives during 2009 is: Derivatives not Designated as Hedging Instruments(1) Revenues Cost of Sales (in millions) Non-Trading Commodity Contracts: Unrealized(2)......................................................................................................... $ (44) $ 77 Realized(3) (4) (5)..................................................................................................... 371 (217) .. Total non-trading............................................................................................ $ 327 $ (140) Trading Commodity Contracts: |
Debt
Debt | |
12 Months Ended
Dec. 31, 2009 USD / shares | |
Debt | |
Debt | (7) Debt (a) Overview. December 31, 2009 2008 Weighted Average Stated Interest Rate(1) Long-term Current Weighted Average Stated Interest Rate(1) Long-term Current (in millions, except interest rates) Facilities, Bonds and Notes: RRI Energy: Senior secured revolver due 2012.................... 1.98% $ $ 3.18% $ $ Senior secured notes due 2014........................ 6.75 279 6.75 498 (2) Senior unsecured notes due 2014.................... 7.625 575 7.625 575 Senior unsecured notes due 2017.................... 7.875 725 7.875 725 Subsidiary Obligations: Orion Power Holdings, Inc. senior notes due 2010(unsecured)......................................... 12.00 400 12.00 400 PEDFA(3) fixed-rate bonds due 2036.............. 6.75 371 6.75 408 (4) .. Total facilities, bonds and notes............... 1,950 400 2,606 Other: Adjustment to fair value of debt(5)..................... 5 4 13 Total other debt........................................ 5 4 13 ......... Total debt........................................... $ 1,950 $ 405 $ 2,610 (6) $ 13 _______________ (1) The weighted average stated interest rates are as of December31, 2009 or 2008. (2) Excludes $169 million classified as discontinued operations. See note 23. (3) PEDFA is the Pennsylvania Economic Development Financing Authority. These bonds were issued for our Seward plant. (4) Excludes $92 million classified as discontinued operations. See note 23. (5) Debt acquired in the acquisition of Orion Power Holdings, Inc. (Orion Power Holdings) and subsidiaries (Orion Power) was adjusted to fair value as of the acquisition date. Included in interest expense is amortization of $12million, $11 million and $11million for valuation adjustments for debt during 2009, 2008 and 2007, respectively. (6) Excludes $261 million classified as discontinued operations. See note 23. Amounts borrowed and available for borrowing under our revolving credit agreements as of December31, 2009 are: Total Committed Credit Drawn Amount Letters of Credit Unused Amount (in millions) RRI Energy senior secured revolver due 2012............ $ 500 $ $ $ 500 RRI Energy letter of credit facility due 2014................ 250 81 169 Total............................................................................ $ 750 $ $ 81 $ 669 Debt maturities as of December31, 2009 are: RRI Energy RRI Energy Consolidated (in millions) 2010................................................................................................................. $ $ 400 2011................................................................................................................. |
Stockholders' Equity
Stockholders' Equity | |
1/1/2009 - 12/31/2009
USD / shares | |
Stockholders' Equity | |
Stockholders' Equity | (8) Stockholders Equity The following describes our capital stock activity: Common Stock (shares in thousands) As of January 1, 2007................................................................................................................................... 337,623 Issued to benefit plans............................................................................................................................. 5,562 Issued for warrants.................................................................................................................................... 1,384 Issued for converted debt........................................................................................................................ 11 As of December 31, 2007.............................................................................................................................. 344,580 Issued to benefit plans............................................................................................................................. 1,064 Issued for warrants.................................................................................................................................... 3,958 Issued for converted debt........................................................................................................................ 211 As of December 31, 2008.............................................................................................................................. 349,813 Issued to benefit plans............................................................................................................................. 2,973 As of December 31, 2009.............................................................................................................................. 352,786 |
Earnings
Earnings (Loss) Per Share | |
12 Months Ended
Dec. 31, 2009 USD / shares | |
Earnings (Loss) Per Share | |
Earnings (Loss) Per Share | (9) Earnings (Loss) Per Share The amounts used in the basic and diluted earnings (loss) per common share computations are the same. 2009 2008 2007 (in millions) Loss from continuing operations (basic and diluted)....... $ (479) $ (110) $ (202) 2009 2008 2007 (shares in thousands) Weighted average shares outstanding (basic and diluted).................................................................................. 351,396 347,823 342,467 We excluded the following items from diluted earnings (loss) per common share due to the antidilutive effect: 2009 2008 2007 (shares in thousands, dollars in millions) Shares excluded from the calculation of diluted earnings/loss per share..................................................... 537 (1) 5,290 (2) 10,234 (2) Shares excluded from the calculation of diluted earnings/loss per share because the exercise price exceeded the average market price.................................. 4,729 (3) 2,270 (3) 2,005 (3) _______________ (1) Primarily includes stock options and restricted stock. (2) Primarily includes stock options and warrants. (3) Includes stock options. |
Stock-Based Incentive Plans
Stock-Based Incentive Plans | |
12 Months Ended
Dec. 31, 2009 USD / shares | |
Stock-Based Incentive Plans | |
Stock-Based Incentive Plans | (10) StockBased Incentive Plans Overview of Plans. The Compensation Committee of the Board of Directors administers our stockbased incentive plans. The RRI Energy, Inc. 2002 LongTerm Incentive Plan and the RRI Energy, Inc. 2002Stock Plan permit us to grant various stockbased incentive awards to officers, key employees and directors. Awards may include stock options, stock appreciation rights, restricted stock, restricted stock units, performance awards, cash awards and stock awards. As of December31, 2009, 37million shares are authorized for issuance under our stockbased incentive plans. No more than 25% of these shares can be granted as stockbased awards other than options. We have generally issued new shares when stock options are exercised and for other equitybased awards. Summary. Compensation costs related to sharebased transactions are recognized in the financial statements based on estimated fair values at the grant dates. We did not capitalize any stockbased compensation costs as an asset during 2009, 2008 and 2007. Our compensation expense for our stockbased incentive plans was: 2009 2008 2007 (in millions) Stock-based incentive plans compensation expense (pretax)................................................................................. $ 9 $ 9 $ 20 Income tax impact (before impact of the valuation allowances).......................................................................... $ (2) $ (2) $ (7) We use the alternative method to calculate excess tax benefits available to absorb tax deficiencies. Valuation Data. Below is the description of the methods used to estimate the fair value of our various awards. Timebased stock options................................. BlackScholes optionpricing model value on the grant date Timebased restricted stock(1).......................... Market price of our common stock on the grant date Timebased cash units(2)................................... Market price of our common stock on each reporting measurement date Performancebased options(3)........................... BlackScholes optionpricing model value on each reporting measurement date until accounting grant date Marketbased cash units(2)............................... Monte Carlo simulation valuation model value on each reporting measurement date Employee stock purchase plan......................... BlackScholes optionpricing model value on the first day of the offering period ________________ (1) Restricted stock and restricted stock units are referred to as restricted stock. (2) These are liabilityclassified awards. (3) No awards were granted during 2009, 2008 and 2007. TimeBased Stock Options. We grant timebased stock options to officers, key employees and directors at an exercise price equal to the market value of our common stock on the grant date. Generally, options vest 33.33% per year for three years and have a term of 10 years. Compensation expense is measured at fair value on the grant date, net of estimated forfeitures, and expensed on a straightline basis over th |
Pension and Postretirement Bene
Pension and Postretirement Benefits | |
12 Months Ended
Dec. 31, 2009 USD / shares | |
Pension and Postretirement Benefits | |
Pension and Postretirement Benefits | (11) Pension and Postretirement Benefits Benefit Plans. We sponsor multiple defined benefit pension plans. We provide subsidized postretirement benefits to some bargaining employees but generally do not provide them to nonbargaining employees. Our benefit obligations and funded status are: Pension Postretirement Benefits 2009 2008 2009 2008 (in millions) Change in Benefit Obligations Beginning of year............................ $ 103 $ 98 $ 81 $ 78 Service cost...................................... 5 6 1 1 Interest cost..................................... 6 5 4 4 Benefits paid.................................... (5) (4) (2) (1) Settlements(1)................................... (2) Plans amendments/adjustments... 1 1 (3) 2 Actuarial (gain) loss....................... 4 (1) (7) (3) Special termination benefits.......... 2 1 End of year....................................... $ 116 $ 103 $ 75 $ 81 Change in Plans Assets Beginning of year............................ $ 54 $ 75 $ $ Employer contributions.................. 20 6 2 1 Benefits paid.................................... (5) (4) (2) (1) Effect of settlements(1).................... (2) Actual investment return............... 12 (21) End of year....................................... $ 81 $ 54 $ $ Funded status...................................... $ (35) $ (49) $ (75) $ (81) ______________ (1) Settlement during 2008 relates to termination of the Channelview plan. See note21. Amounts recognized in our consolidated balance sheets are: Pension Postretirement Benefits December 31, December 31, 2009 2008 2009 2008 (in millions) Current liabilities....................................... $ $ $ (4) $ (3) Noncurrent liabilities................................ (35) (49) (71) (78) Net amount recognized..................... $ (35) $ (49) $ (75) $ (81) The accumulated benefit obligation for all pension plans was $110million and $94million as of December31, 2009 and 2008, respectively. All pension plans have accumulated benefit obligations in excess of plan assets. Net periodic benefit costs are: Pension Postretirement Benefits 2009 2008 2007 2009 2008 2007 (in millions) Service cost.............................................. $ 5 $ 6 $ 6 $ 1 $ 1 $ 2 Interest cost............................................. 6 5 5 4 4 4 Expected return on plan assets............. (4) (5) (4) Adjustment to annual expense.............. 2 |
Savings Plan
Savings Plan | |
12 Months Ended
Dec. 31, 2009 USD / shares | |
Savings Plan | |
Savings Plan | (12) Savings Plan We have employee savings plans under Sections401(a) and 401(k) of the Internal Revenue Code. Our savings plans benefit expense, including the matching contributions of generally up to 6% and discretionary contributions, was $16million, $18million and $17million during 2009, 2008 and 2007, respectively. We sponsor nonqualified deferred compensation plans for key and highly compensated employees. Our obligations under these plans were $33million and related rabbi trust investments were $21million as of December31, 2009 and 2008. |
Collective Bargaining Agreement
Collective Bargaining Agreements | |
12 Months Ended
Dec. 31, 2009 USD / shares | |
Collective Bargaining Agreements | |
Collective Bargaining Agreements | (13) Collective Bargaining Agreements As of December31, 2009, approximately 45% of our employees are subject to collective bargaining agreements. Approximately 25% of our employees are subject to collective bargaining agreements that will expire in 2010. We intend to negotiate the renewal of these agreements. |
Income Taxes
Income Taxes | |
12 Months Ended
Dec. 31, 2009 USD / shares | |
Income Taxes | |
Income Taxes | (14) Income Taxes (a) Summary. Our income tax expense (benefit) is: 2009 2008 2007 (in millions) Current: Federal...................................................................................... $ (7) $ 7 $ State.......................................................................................... 2 29 (7) Total current..................................................................... (5) 36 (7) Deferred: Federal...................................................................................... (103) 57 (127) State.......................................................................................... (17) 43 (26) Total deferred................................................................... (120) 100 (153) Income tax expense (benefit) from continuing operations............................................................................................... $ (125) $ 136 $ (160) Income tax expense (benefit) from discontinued operations............................................................................ $ 410 $ (263) $ 295 A reconciliation of the federal statutory income tax rate to the effective income tax rate for our continuing operations is: 2009 2008 2007 Federal statutory rate............................................................. (35)% 35% (35)% Additions (reductions) resulting from: Federal tax uncertainties.................................................... 2 (2) Federal valuation allowance(1)........................................... 16 67 (7) State income taxes, net of federal income taxes.............. (1) (2) 180 (3) (4) Goodwill impairment........................................................... 201 Other, net.............................................................................. (1) 35 (4) 4 Effective rate........................................................................... (21)% 520% (44)% _______________ (1) Our changes to the federal valuation allowance are recorded at RRI Energy, Inc. (2) Of this percentage, $32 million (5%) relates to an increase in our state valuation allowances. (3) Of this percentage, $36 million (142%) relates to an increase in our state valuation allowances. (4) Of this percentage, $6 million (23%) relates to write-off of book goodwill due to the sale of our Bighorn plant in October 2008. December 31, 2009 2008 (in millions) Deferred tax assets: Current: Derivative liabilities, net................................................................................ $ 10 $ 18 Employee benefits.......................................................................................... 4 3 Federal valuation allowance........................................................... |
Commitments
Commitments | |
12 Months Ended
Dec. 31, 2009 USD / shares | |
Commitments | |
Commitments | (15) Commitments (a) Lease Commitments. REMA Leases. One of our subsidiaries, REMA, entered into saleleaseback transactions, under operating leases that are nonrecourse to us. We lease 16.45% and 16.67% interests in the Conemaugh and Keystone facilities, respectively. The leases expire in 2034 and we expect to make payments through 2029. We also lease a 100% interest in the Shawville facility. This lease expires in 2026 and we expect to make payments through that date. At the expiration of these leases, there are several renewal options related to fair market value. REMALLCs subsidiaries guarantee the lease obligations and we have pledged the equity interests in these subsidiaries as collateral. We provide credit support for REMAs lease obligations in the form of letters of credit under the June2007 credit facilities. See note7. During 2009, 2008 and 2007, we made lease payments under these leases of $63million, $62million and $65million, respectively. As of December31, 2009 and 2008, we have recorded a prepaid lease of $59million in other current assets and $277million and $273million, respectively, in longterm assets. REMA operates the Conemaugh and Keystone facilities under agreements that could terminate annually with one years notice and received fees of $9million, $9million and $10million during 2009, 2008 and 2007, respectively. These fees, which are recorded in operation and maintenance expense, are primarily to cover REMAs administrative support costs of providing these services. REMAs lease documents restrict its ability to, among other actions, (a)encumber assets, (b)enter into business combinations or divest assets, (c)incur additional debt, (d)pay dividends or subordinated obligations, (e)enter into some transactions with affiliates or (f)materially change its business. As of December31, 2009, REMA was limited by the covenant restricting dividends and the payment of subordinated obligations. Tolling Agreements. As of December31, 2009, we have a tolling arrangement on the Vandolah facility that extends through 2012. This arrangement, which qualifies as an operating lease, entitles us to purchase and dispatch electric generating capacity. We paid $36million, $36million and $39million in tolling payments during 2009, 2008 and 2007, respectively, related to this tolling arrangement and one that expired in 2007. Office Space Lease. In 2003, we entered into a longterm operating lease for our corporate headquarters. The lease expires in 2018 and is subject to two fiveyear renewal options. Cash Obligations Under Operating Leases. Our projected cash obligations under non-cancelable longterm operating leases as of December31, 2009 are: REMA Leases Other(1)(2) Total (in millions) 2010........................................................................................... $ 52 $ 64 $ 116 2011........................................................................................... 63 63 126 2012........................................................................................... 56 35 91 2013............................... |
Contingencies
Contingencies | |
12 Months Ended
Dec. 31, 2009 USD / shares | |
Contingencies | |
Contingencies | (16) Contingencies We are party to many legal and governmental proceedings, some of which may involve substantial amounts. Unless otherwise noted, we cannot predict the outcome of the matters described below. (a) Pending Natural Gas Litigation. We are party to eight lawsuits, several of which are class action lawsuits, in state and federal courts in Kansas, Missouri, Nevada, Tennessee and Wisconsin. These lawsuits relate to alleged conduct to increase natural gas prices in violation of antitrust and similar laws. The lawsuits seek treble or punitive damages, restitution and/or expenses. The lawsuits also name a number of unaffiliated energy companies as parties. In January2009, the Circuit Court of Jackson County, Missouri dismissed the case filed by the Missouri Public Service Commission for lack of standing to bring the action and the Missouri Court of Appeals has affirmed the dismissal. An appeal to the Missouri Supreme Court was filed in December2009. (b) Environmental Matters. New Source Review Matters. The United States Environmental Protection Agency (EPA)and various states are investigating compliance of coal-fueled electric generating plants with the pre-construction permitting requirements of the Clean Air Act known as New Source Review. In 2000 and 2001, we responded to the EPAs information requests related to five of our plants, and in December2007, we received supplemental requests for two of those plants. In September2008, we received an EPA request for information related to two additional plants and in October2009, we received supplemental requests for those two plants. The EPA agreed to share information relating to its investigations with state environmental agencies. In January2009, we received a Notice of Violation (NOV)from the EPA alleging that past work at our Shawville, Portland and Keystone generation facilities violated the agencys regulations regarding New Source Review. In December2007, the New Jersey Department of Environmental Protection (NJDEP)filed suit against us in the United States District Court in Pennsylvania, alleging that New Source Review violations occurred at one of our power plants located in Pennsylvania. The suit seeks installation of best available control technologies for each pollutant, to enjoin us from operating the plant if it is not in compliance with the Clean Air Act and civil penalties. The suit also names three past owners of the plant as defendants. In March2009, the Connecticut Department of Environmental Protection became an intervening party to the suit. We believe that the projects listed by the EPA and the projects subject to the NJDEP suit were conducted in compliance with applicable regulations. However, any final finding that we violated the New Source Review requirements could result in significant capital expenditures associated with the implementation of emissions reductions on an accelerated basis and possible penalties. Most of these work projects were undertaken before our ownership of those facilities. We believe we are indemnified by or have the right to seek indemnification from the prior owners for certain losses and expenses that we may incur from activit |
Settlements and Other Charges
Settlements and Other Charges | |
12 Months Ended
Dec. 31, 2009 USD / shares | |
Settlements and Other Charges | |
Settlements and Other Charges | (17) Settlements and Other Charges Western States Litigation and Similar Settlements. Natural Gas Cases. In December2006, we reached a settlement of the 12 class action natural gas cases pending in state court in California. The settlement required us to pay $35million, which we expensed during 2006 and paid during 2007. The settlement does not include similar cases filed by individual plaintiffs and cases filed in jurisdictions other than California, which we continue to vigorously defend. In May2008, we signed a memorandum of understanding to settle the 16 cases comprising the Californiabased gas index litigation, including the case brought by the Los Angeles Department of Water and Power. In November2008, a definitive settlement agreement was signed. Following court approval of the settlement in December, the related settlement payment was paid. The charges associated with this settlement were expensed and paid during 2008 and totaled $34million. In September 2009, a finaljudgment dismissing the five California-related cases pending in federal court in Nevada was entered for $3million. The charges incurred in connection with the settlement were expensed in the third quarter of 2008 and paid in the third quarter of 2009. This settlement resolved all of the remaining California gas cases. Criminal ProceedingRRI Energy Services. In March2007, RRI Energy Services, Inc. entered into a Deferred Prosecution Agreement in resolution of its April2004 indictment for alleged violations of the Commodity Exchange Act, wire fraud and conspiracy charges. As part of the agreement, RRI Energy Services, Inc. paid and expensed a $22million penalty in March2007. The agreement expired in March 2009. |
Supplemental Guarantor Informat
Supplemental Guarantor Information | |
12 Months Ended
Dec. 31, 2009 USD / shares | |
Supplemental Guarantor Information | |
Supplemental Guarantor Information | (18) Supplemental Guarantor Information Our whollyowned subsidiaries are either (a)full or unconditional guarantors, jointly and severally or (b)nonguarantors of the senior secured notes. The primary guarantors are: RRI Energy California Holdings, LLC; RRI Energy Northeast Holdings, Inc.; RRI Energy Power Generation, Inc. and RRI Energy Services, Inc. The primary nonguarantors are: Orion Power and REMA. Some of RRI Energys subsidiaries have effective restrictions on their ability to pay dividends or make intercompany loans and advances under their financing arrangements or other third party agreements. The amounts of restricted net assets of RRI Energys consolidated subsidiaries as of December31, 2009 are approximately $2.5billion. These restrictions are on the net assets of Orion Power, REMA and Channelview. During2009, 2008 and 2007, RRI Energy received cash distributions from RERH Holdings, LLC of $395million, $215million and $437million, respectively. RERH Holdings, LLC was the holding company of our former retail business and was sold in May 2009. Condensed Consolidating Statements of Operations. 2009 RRI Energy Guarantors Non-Guarantors Adjustments(1) Consolidated (in millions) Revenues................................................... $ $ 1,810 $ 868 $ (853) $ 1,825 Cost of sales.............................................. 1,397 578 (846) 1,129 Operation and maintenance....................... 178 378 (6) 550 General and administrative........................ 10 92 (1) 101 Western states litigation and similar settlements............................................ Gains on sales of assets and emission and exchange allowances, net....................... (18) (4) (22) Longlived assets impairments................... 91 120 211 Depreciation and amortization.................. 130 139 269 Total..................................................... 1,788 1,303 (853) 2,238 Operating income (loss)............................ 22 (435) (413) Income of equity investment, net.............. 1 1 Loss of equity investments of consolidated subsidiaries............................................. (309) (88) 397 Debt extinguishments losses...................... (6) (2) (8) Interest expense........................................ (144) (28) (14) (186) Interest income......................................... 2 2 Interest income (expense) affiliated companies, net....................................... 72 (10) (62) Total other expense............................... (385) (127) (76) 397 (191) Loss from continuing operations before income taxes.......................................... (385) (105) (511) 397 (60 |
Unaudited Quarterly Information
Unaudited Quarterly Information | |
12 Months Ended
Dec. 31, 2009 USD / shares | |
Unaudited Quarterly Information | |
Unaudited Quarterly Information | (19) Unaudited Quarterly Information 2009 First Quarter Second Quarter Third Quarter Fourth Quarter (in millions, except per share amounts) Revenues................................................................ $ 466 $ 390 $ 507 $ 462 Loss from continuing operations....................... (106) (103) (19) (251) Income (loss) from discontinued operations.... (45) 906 4 17 Net income (loss).................................................. (151) 803 (15) (234) Basic Earnings (Loss) Per Share: Loss from continuing operations.................... $ (0.30) $ (0.30) $ (0.05) $ (0.71) Income (loss) from discontinued operations. (0.13) 2.59 0.01 0.05 Net income (loss)............................................ $ (0.43) $ 2.29 $ (0.04) $ (0.66) Diluted Earnings (Loss) Per Share: Loss from continuing operations.................... $ (0.30) $ (0.30) $ (0.05) $ (0.71) Income (loss) from discontinued operations. (0.13) 2.59 0.01 0.05 Net income (loss)............................................ $ (0.43) $ 2.29 $ (0.04) $ (0.66) 2008 First Quarter Second Quarter Third Quarter Fourth Quarter (in millions, except per share amounts) Revenues................................................................ $ 880 $ 1,014 $ 960 $ 540 Income (loss) from continuing operations........ 13 82 93 (298) Income (loss) from discontinued operations.... 364 277 (1,131) (140) Net income (loss).................................................. 377 359 (1,038) (438) Basic Earnings (Loss) Per Share: Income (loss) from continuing operations..... $ 0.04 $ 0.24 $ 0.27 $ (0.85) Income (loss) from discontinued operations. 1.05 0.79 (3.24) (0.40) Net income (loss)............................................ $ 1.09 $ 1.03 $ (2.97) $ (1.25) Diluted Earnings (Loss) Per Share: Income (loss) from continuing operations..... $ 0.04 $ 0.23 $ 0.26 $ (0.85) Income (loss) from discontinued operations. 1.03 0.78 (3.19) (0.40) Net income (loss)............................................ $ 1.07 $ 1.01 $ (2.93) $ (1.25) Variances in revenues and cost of sales from quarter to quarter were primarily due to (a)seasonal fluctuations in demand for electric energy and energy services and (b)changes in energy commodity prices, including unrealized gains/losses on energy derivatives. During2009, we incurred $22million in unrealized gains on energy derivatives ($44million loss in the first quarter, $7million gain in the second quarter, $7million gain in the third quarter and $52mil |
Reportable Segments
Reportable Segments | |
12 Months Ended
Dec. 31, 2009 USD / shares | |
Reportable Segments | |
Reportable Segments | (20) Reportable Segments Segments. Following the sale of our Texas retail business and commencing in the third quarter of 2009, we have four reportable segments: East Coal, East Gas, West and Other. The East Gas, West and Other segments consist primarily of gas plants while the East Coal segment is our coal plants. We have recast our 2008 and 2007 data and presented our new segment information in this note on a consistent basis for 2009, 2008 and 2007. Each of our generation plants is an operating segment and based on similar economic and other characteristics, we have aggregated them into these four reportable segments. The key earnings drivers we use for internal performance reporting and external communication exhibit how each segment has similar economic characteristics. Key earnings drivers include economic generation (amount of time our plants are economical to operate), commercial capacity factor (generation as a percentage of economic generation), unit margin and other margin. All plants are impacted by supply and demand. Our coal plants (East Coal) are further impacted by gas/coal spreads (the added difference between the price of natural gas and the price of coal). Accordingly, we have aggregated the plants by fuel type and further by geographic region. In each of our segments, we sell electricity, capacity, ancillary and other energy services from our plants in hourahead, dayahead and forward markets in bilateral and independent system operator markets. All products and services are related to the generation and availability of power, consisting of (a) power generation and capacity revenues and (b) natural gas sales revenues. Open Gross Margin. Our segment profitability measure is open gross margin. Open gross margin consists of (a)open energy gross margin and (b)other margin. Open gross margin excludes hedges and other items and unrealized gains/losses on energy derivatives. Open energy gross margin is calculated using the dayahead and realtime market power sales prices received by the plants less market-based delivered fuel costs. Open energy gross margin is (a)(i)economic generation multiplied by (ii)commercial capacity factor (which equals generation) multiplied by (b)open energy unit margin. Economic generation is estimated generation at 100% plant availability based on an hourly analysis of when it is economical to generate based on the price of power, fuel, emission allowances and variable operating costs. Economic generation can vary depending on the comparison of market prices to our cost of generation. It will decrease if there are fewer hours when market prices exceed the cost of generation. It will increase if there are more hours when market prices exceed the cost of generation. Other margin represents power purchase agreements, capacity payments, ancillary services revenues and selective commercial strategies relating to optimizing our assets. Items Excluded from Open Gross Margin. We have two primary items that are excluded from our segment measure of open gross margin: (a) hedges and other items and (b) unrealized gains/losses on energy derivatives. Each of these items is included in our consolidated reven |
Sales of Assets and Emission an
Sales of Assets and Emission and Exchange Allowances | |
12 Months Ended
Dec. 31, 2009 USD / shares | |
Sales of Assets and Emission and Exchange Allowances | |
Sales of Assets and Emission and Exchange Allowances | (21) Sales of Assets and Emission and Exchange Allowances We record gains/losses on sales of assets and emission and exchange allowances on the same line in our consolidated statements of operations. Bighorn Plant. We sold our Bighorn plant (from our West segment) for $500million in October2008 for a gain of $47million. ChannelviewPlant. We sold our Channelview plant (which was deconsolidated in August2007 and came from our Other segment) for $500million in July2008 for a gain of $6million. Emission and Exchange Allowances. We sold emission (primarily SO2) and exchange (CO2) allowances during 2009, 2008 and 2007 for gains of $17million, $38million and $1million, respectively. Property, Plant and Equipment. We sold equipment that was primarily held in storage for $82million during 2007 for gains of $24million. |
Sale of Channelview's Plant and
Sale of Channelview's Plant and the Bankruptcy Filings | |
12 Months Ended
Dec. 31, 2009 USD / shares | |
Sale of Channelview's Plant and Bankruptcy Filings | |
Sale Channelview's Plant and the Bankruptcy Filings | (22) Sale of Channelviews Plant and the Bankruptcy Filings In August2007, Channelview filed voluntary petitions in the United States Bankruptcy Court for the District of Delaware for reorganization under Chapter11 of the Bankruptcy Code. Channelviewfiled for bankruptcy protection to prevent the lenders from exercising their remedies, including foreclosing on the project. The bankruptcy cases were jointly administered, with Channelview managing its business in the ordinary course as debtors-in-possession subject to the supervision of the bankruptcy court. Channelview emerged from bankruptcy in October 2009. In July 2008, Channelview sold its plant and related contracts for $500 million and paid off its secured lenders. During 2008, we recognized a $6 million gain relating to our net investment in and receivables from Channelview and incurrence of sale-related costs (classified in gains (losses) on sales of assets and emission and exchange allowances, net). As of December 31, 2008, our net investment in and receivables from Channelview was $59 million, classified as a current asset. Channelview has distributed funds to us relating primarily to net proceeds from the sale, pre-petition sales of fuel to Channelview and funds from operations. We received $25 million during 2008 and $35 million during 2009. As a result of the bankruptcies, we deconsolidated Channelviews financial results from August2007 through October 2009 and reported our investment in Channelview using the cost method. The following table describes the assets we consolidated upon the emergence from bankruptcy of Channelview: December 31, 2009 (in millions) Restricted cash.............................................................................................................................................. $ 17 (1) Deferred tax assets relating to federal and state net operating loss carryforwards............................ 18 (2) ______________ (1) Of this amount, $10million is payable to a third party and included in accounts payable in our consolidated balance sheet as of December31, 2009. (2) We had assessed our future ability to use these deferred tax assets and had provided a valuation allowance for this amount in our consolidated balance sheet prior to the reconsolidation. See note14. |
Discontinued Operations
Discontinued Operations | |
12 Months Ended
Dec. 31, 2009 USD / shares | |
Discontinued Operations | |
Discontinued Operations | (23) Discontinued Operations (a) Retail Energy Segment. General. On May1, 2009, we sold our Texas retail business to a subsidiary (the buyer) of NRG Energy, Inc. (NRG) for $363million in cash including the value of the net working capital. In connection with the sale, we received net proceeds of $312million during 2009. This sale also included the rights to the Reliant Energy name. Accordingly, we changed our name to RRI Energy, Inc. on May2, 2009. In connection with the sale, the lawsuit against our former retail affiliates related to the termination of the retail working capital facility was dismissed. In connection with the sale transaction, we entered into a twoyear sublease on our corporate office building with the buyer, with sublease rental income totaling $17million over that period. We also entered a one-year transition services agreement with the buyer, which includes terms and conditions for information technology services, accounting services and human resources. PreTax Gain on Sale. We recognized during the second quarter of 2009 a pre-tax gain on this sale of $1.2billion, which is primarily due to the net derivative liability balance of $1.1billion included in the transaction. Federal Valuation Allowance. As a result of the sale, we released $50million of our discontinued federal valuation allowance for deferred tax assets in discontinued operations during the second quarter of 2009. Use of Proceeds and Assumptions Related to Debt, Deferred Financing Costs and Interest Expense on Discontinued Operations. As required by our debt agreements, offers to purchase secured notes and PEDFA bonds at par were made with a portion of the net proceeds. We purchased $261million of the outstanding debt ($169million of the secured notes and $92million of the PEDFA bonds) in 2009. These amounts and activity have been classified in discontinued operations. See note7. We also classified as discontinued operations the related deferred financing costs and interest expense on this debt. We allocated $8 million, $16million and $16million of related interest expense during 2009, 2008 and 2007, respectively, to discontinued operations. Other Retail Energy Segment Discontinued Operations. We sold our commercial, industrial and governmental/institutional (CI) contracts in the PJM (excluding Illinois) and New York areas (collectively, Northeast) in December 2008. We sold our Illinois CI contracts in December 2009 and recognized a pre-tax gain on sale of $12 million. As these were a part of our retail energy segment, we have included the activity in our discontinued operations. (b) Other Discontinued Operations. Subsequent to the sale of our New York plants in February2006, we continue to have (a)property tax and sales and use tax settlements and (b)settlements with the independent system operator. In addition, we periodically record amounts for contingent consideration received for the 2003 sale of our European energy operations. These amounts are classified as discontinued operations in our results of operations and balance sheets, as applicable. (c) All Discontinued Operations. The following summarizes certain financial information of t |
Schedule II-Valuation and Quali
Schedule II-Valuation and Qualifying Accounts | |
12 Months Ended
Dec. 31, 2009 USD / shares | |
Schedule II-Valuation and Qualifying Accounts | |
Schedule II-Valuation and Qualifying Accounts | RRI ENERGY, INC. AND SUBSIDIARIES SCHEDULE IIVALUATION AND QUALIFYING ACCOUNTS 2009, 2008 and 2007 Column A Column B Column C Column D Column E Additions Description Balance at Beginning of Period Charged to Income Charged to Other Accounts(1) Deductions from Reserves(2) Balance at End of Period (in thousands) 2009 Reserves deducted from derivative assets and liabilities(3)................................................. $ (6,425) $ 14,489 $ $ $ 8,064 Reserves for severance..................................... 9,056 (8,371) 685 2008 Reserves deducted from derivative assets and liabilities(3)................................................. $ 6,160 $ (12,427) $ $ (158) $ (6,425) 2007 Reserves deducted from derivative assets(3). $ 10,747 $ (4,428) $ $ (159) $ 6,160 ______________ (1) Represents charges to accumulated other comprehensive income/loss. (2) Deductions from reserves represent losses or expenses for which the respective reserves were created. In the case of the allowance for doubtful accounts, such deductions are net of recoveries of amounts previously written off. (3) See notes 2(d), 2(e) and 6 to our consolidated financial statements. |
Document Information
Document Information | |
12 Months Ended
Dec. 31, 2009 USD / shares | |
Document Information [Line Items] | |
Document Type | 10-K |
Amendment Flag | false |
Document Period End Date | 2009-12-31 |
Entity Information
Entity Information (USD $) | |||
12 Months Ended
Dec. 31, 2009 | Feb. 11, 2010
| Jun. 30, 2009
| |
Entity Information [Line Items] | |||
Entity Registrant Name | RRI ENERGY INC | ||
Entity Central Index Key | 0001126294 | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Well-known Seasoned Issuer | Yes | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Filer Category | Large Accelerated Filer | ||
Entity Public Float | $1,751,959,756 | ||
Entity Listings [Line Items] | |||
Entity Common Stock, Shares Outstanding | 353,270,519 |