SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): MARCH 15, 2002
------------------------------
RELIANT ENERGY MID-ATLANTIC POWER HOLDINGS, LLC
(Exact name of registrant as specified in its charter)
DELAWARE 333-51464 52-2154847
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
1111 LOUISIANA
HOUSTON, TEXAS 77002
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (713) 207-3000
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ITEM 5. OTHER EVENTS.
Reliant Energy Mid-Atlantic Power Holdings, LLC, together with its affiliates
and subsidiaries (collectively, REMA) is providing information concerning a
required restatement of its Quarterly Reports on Form 10-Q (Interim Financial
Statements) for the quarters ended June 30, 2001 and September 30, 2001. As a
result, the previously issued Interim Financial Statements for these periods
should not be relied upon.
DISCUSSION OF ACCOUNTING RESTATEMENT:
A subsidiary of Reliant Resources, Inc. (Reliant Resources) entered into
derivative transactions on behalf of REMA which, on an aggregated basis at
inception, had positive fair value. For the 2001 period, the contracts resulted
in net cash outflows which will be more than offset through contractually
increased net cash inflows in 2002. REMA accounted for these contracts as cash
flow hedges of forecasted transactions pursuant to Statement of Financial
Accounting Standards No. 133, "Accounting for Derivative Instruments and Hedging
Activities," as amended. REMA initially accounted for these contracts by
recognizing the fair value of the derivative as an asset or liability and
recognizing the corresponding amount in accumulated other comprehensive income.
As cash flow hedges, the amount recognized in accumulated other comprehensive
income would have been recognized in earnings when the forecasted transactions
occur.
On February 5, 2002, Reliant Resources announced that it was restating its
earnings for the second and third quarters of 2001. The restatement relates to a
correction in accounting treatment for a series of four structured transactions
that were inappropriately accounted for as cash flow hedges for the period May
2001 through September 2001. The derivative transactions mentioned above were
part of the four structured transactions that gave rise to the Reliant Resources
restatement. As a result, REMA reevaluated its accounting for the derivative
transactions entered into on its behalf by the subsidiary of Reliant Resources.
REMA now believes these derivative transactions should have been recorded as a
capital contribution of a non-trading derivative asset that had positive fair
value at inception. Therefore, REMA has now recorded these transactions as a
capital contribution resulting in the elimination of previously recorded
accumulated other comprehensive income and the reversal of previously recognized
losses related to these derivative transactions. In addition, in contemplation
of one of the structured transactions referred to above, in August 2001, a
subsidiary of Reliant Resources, on behalf of REMA, entered into forward
contracts to buy and sell natural gas, a portion of which was inappropriately
recorded in the fourth quarter of 2001. REMA has also eliminated previously
recorded accumulated other comprehensive income recognized in connection with
these transactions as of September 30, 2001.
As a result, REMA's Interim Financial Statements as of June 30, 2001 and
September 30, 2001, will be restated from amounts previously reported to
appropriately account for the transactions described above. Therefore, REMA will
report a decrease in net loss as compared to net loss shown in the previously
reported Interim Financial Statements filed on Form 10-Q for the quarter ended
June 30, 2001 of $16.3 million and an increase in net income as compared to net
income shown in the previously reported Interim Financial Statements filed on
Form 10-Q for the quarter ended September 30, 2001 of $17.8 million.
For additional information regarding the foregoing transactions, reference is
made to the Current Report on Form 8-K of Reliant Resources, dated the date here
of and filed concurrently herewith (File No. 1-16455).
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The effects of the restatement are outlined in the tables below:
RELIANT ENERGY MID-ATLANTIC POWER HOLDINGS, LLC AND RELATED COMPANIES
<Table>
<Caption>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, 2001 JUNE 30, 2001
----------------------------- ----------------------------
AS PREVIOUSLY AS PREVIOUSLY
AS RESTATED REPORTED AS RESTATED REPORTED
----------- ------------ ----------- -------------
(IN THOUSANDS)
Revenues .......................... $ 134,085 $ 134,085 $ 279,936 $ 279,936
Expenses:
Fuel ......................... 40,221 68,084 86,129 113,992
Other expenses ............... 81,563 81,563 155,405 155,405
--------- --------- --------- ---------
Total ...................... 121,784 149,647 241,534 269,397
--------- --------- --------- ---------
Operating Income (Loss) ........... 12,301 (15,562) 38,402 10,539
Other Expense, net ................ (21,198) (21,198) (41,565) (41,565)
Income Tax Benefit ................ 3,678 15,255 1,178 12,755
--------- --------- --------- ---------
Net Loss .......................... $ (5,219) $ (21,505) $ (1,985) $ (18,271)
========= ========= ========= =========
</Table>
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RELIANT ENERGY MID-ATLANTIC POWER HOLDINGS, LLC AND RELATED COMPANIES
<Table>
<Caption>
JUNE 30, 2001
------------------------------
AS PREVIOUSLY
AS RESTATED REPORTED
------------------------------
(IN THOUSANDS)
ASSETS
CURRENT ASSETS:
Non-trading derivative assets ........................................ $ 362,156 $ 365,496
Other ................................................................ 167,093 167,093
------------ ------------
Total current assets .......................................... 529,249 532,589
PROPERTY, PLANT AND EQUIPMENT, NET ..................................... 855,617 855,617
OTHER ASSETS:
Non-trading derivative assets ........................................ 394,901 411,638
Other ................................................................ 275,079 275,079
------------ ------------
Total other assets ............................................ 669,980 686,717
------------ ------------
TOTAL ASSETS .................................................. $ 2,054,846 $ 2,074,923
============ ============
LIABILITIES AND MEMBER'S EQUITY
CURRENT LIABILITIES:
Non-trading derivative liabilities ................................... $ 256,440 $ 253,115
Deferred income taxes, net ........................................... 37,668 40,437
Other ................................................................ 229,972 229,972
------------ ------------
Total current liabilities ..................................... 524,080 523,524
OTHER LIABILITIES:
Deferred income taxes, net ........................................... 50,481 57,683
Non-trading derivative liabilities ................................... 284,371 283,776
Other ................................................................ 43,518 43,518
------------ ------------
Total other liabilities ....................................... 378,370 384,977
------------ ------------
SUBORDINATED NOTE PAYABLE TO AFFILIATE ................................. 838,000 838,000
------------ ------------
MEMBER'S EQUITY:
Common stock (no par value 1,000 shares authorized, 1,000 issued and
outstanding) ....................................................... -- --
Capital contributions ................................................ 194,463 111,678
Retained earnings .................................................... 79,231 62,945
Accumulated other comprehensive income ............................... 40,702 153,799
------------ ------------
Total member's equity ......................................... 314,396 328,422
------------ ------------
TOTAL LIABILITIES AND MEMBER'S EQUITY ......................... $ 2,054,846 $ 2,074,923
============ ============
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RELIANT ENERGY MID-ATLANTIC POWER HOLDINGS, LLC AND RELATED COMPANIES
<Table>
<Caption>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, 2001 SEPTEMBER 30, 2001
---------------------------- ----------------------------
AS PREVIOUSLY AS PREVIOUSLY
AS RESTATED REPORTED AS RESTATED REPORTED
------------ ------------- ----------- -------------
(IN THOUSANDS)
Revenues .......................... $249,925 $247,720 $529,861 $527,656
Expenses:
Fuel ......................... 61,568 90,764 147,697 204,756
Other expenses ............... 70,491 70,491 225,896 225,896
-------- -------- -------- --------
Total ...................... 132,059 161,255 373,593 430,652
-------- -------- -------- --------
Operating Income .................. 117,866 86,465 156,268 97,004
Other Expense, net ................ (23,166) (23,166) (64,731) (64,731)
Income Tax Expense ................ (40,876) (27,242) (39,698) (14,487)
-------- -------- -------- --------
Net Income ........................ $ 53,824 $ 36,057 $ 51,839 $ 17,786
======== ======== ======== ========
</Table>
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RELIANT ENERGY MID-ATLANTIC POWER HOLDINGS, LLC AND RELATED COMPANIES
<Table>
<Caption>
SEPTEMBER 30, 2001
---------------------------------
AS PREVIOUSLY
AS RESTATED REPORTED
---------------------------------
(IN THOUSANDS)
ASSETS
CURRENT ASSETS:
Non-trading derivative assets ........................................ $ 663,460 $ 672,947
Other ................................................................ 285,395 285,395
------------ ------------
Total current assets .......................................... 948,855 958,342
PROPERTY, PLANT AND EQUIPMENT, NET ..................................... 849,966 849,966
OTHER ASSETS:
Non-trading derivative assets ........................................ 384,990 394,455
Other ................................................................ 368,855 368,855
------------ ------------
Total other assets ............................................ 753,845 763,310
------------ ------------
TOTAL ASSETS .................................................. $ 2,552,666 $ 2,571,618
============ ============
LIABILITIES AND MEMBER'S EQUITY
CURRENT LIABILITIES:
Non-trading derivative liabilities ................................... $ 479,536 $ 570,950
Deferred income taxes, net ........................................... 72,314 36,701
Other ................................................................ 390,491 390,491
------------ ------------
Total current liabilities ..................................... 942,341 998,142
OTHER LIABILITIES:
Deferred income taxes, net ........................................... 75,696 79,355
Non-trading derivative liabilities ................................... 232,543 232,987
Other ................................................................ 43,786 43,786
------------ ------------
Total other liabilities ....................................... 352,025 356,128
------------ ------------
SUBORDINATED NOTE PAYABLE TO AFFILIATE ................................. 838,003 838,003
------------ ------------
MEMBER'S EQUITY:
Common stock (no par value 1,000 shares authorized, 1,000 issued and
outstanding) ....................................................... -- --
Capital contributions ................................................ 215,037 111,678
Retained earnings .................................................... 133,055 99,002
Accumulated other comprehensive income ............................... 72,205 168,665
------------ ------------
Total member's equity ......................................... 420,297 379,345
------------ ------------
TOTAL LIABILITIES AND MEMBER'S EQUITY ........................ $ 2,552,666 $ 2,571,618
============ ============
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
RELIANT ENERGY MID-ATLANTIC POWER
HOLDINGS, LLC
Date: March 15, 2002 By: /s/ MICHAEL L. JINES
Michael L. Jines
Vice President and Assistant Secretary
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