Xcel Energy 2002 Annual Report Download - page 85

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22. summarized quarterly financial data (unaudited)
Subsequent to the issuance of Xcel Energy’s financial statements for the quarter ended Sept. 30, 2002, NRG’s management determined
that the accounting for certain transactions required revision.
NRG determined that it had misapplied the provisions of SFAS No. 144 related to asset grouping in connection with the review
for impairment of its long-lived assets during the quarter ended Sept. 30, 2002. SFAS No. 144 requires that for purposes of testing
recoverability, assets be grouped at the lowest level for which identifiable cash flows are largely independent of the cash flows of
other assets. NRG recalculated the asset impairment tests in accordance with SFAS No. 144 using the appropriate asset grouping for
independent cash flows for each generation facility. As a result, NRG concluded that asset impairments should have been recorded
for two projects known as Bayou Cove Peaking Power LLC and Somerset Power LLC. Since NRG concluded that the “triggering
events” that led to the impairment charge were experienced in the third quarter of 2002, the asset impairments related to these projects
should have been recorded as of Sept. 30, 2002. NRG calculated the asset impairment charges for Bayou Cove Peaking Power LLC
and Somerset Power LLC to be $126.5 million and $49.3 million, respectively.
In connection with NRG’s year-end audit, two additional items were found to be inappropriately recorded as of Sept. 30, 2002. These
items included the inappropriate treatment of interest rate swap transactions as cash flow hedges and the decrease in the value of a bond
remarketing option from the original price paid by NRG. The error correction for the interest rate swaps resulted in the recording of
additional income of $61.6 million as of Sept. 30, 2002. The recognition of the decrease in the value of the remarketing option resulted
in a charge to income of $15.9 million as of Sept. 30, 2002.
A summary of the significant effects of the restatement, including the impact of fourth quarter discontinued operations decisions, on
Xcel Energy’s consolidated statements of operations for the three and nine months ended Sept. 30, 2002, is as follows:
As Previously Reported As Restated
Three Months Nine Months Three Months Nine Months
(Thousands of dollars, except per share amounts) Ended Ended Ended Ended
Consolidated Statements of Operations
Revenue $ 2,473,331 $ 7,070,824 $ 2,473,331 $ 7,070,824
Operating income (1,948,725) (1,334,201) (2,140,418) (1,525,894)
Income (loss) from continuing operations (1,496,959) (1,317,413) (1,627,039) (1,447,493)
Discontinued operations – income (loss) (577,001) (565,741) (577,001) (565,741)
Net income (loss) (2,073,960) (1,883,154) (2,204,040) (2,013,234)
Earnings (loss) available for common shareholders (2,075,020) (1,886,334) (2,205,100) (2,016,414)
Earnings (loss) per share from continuing operations – basic and diluted $ (3.77) $ (3.51) $ (4.10) $ (3.85)
Earnings (loss) per share discontinued operations – basic and diluted $ (1.45) $ (1.50) $ (1.45) $ (1.50)
Earnings per share – basic and diluted $ (5.22) $ (5.01) $ (5.55) $ (5.35)
During the fourth quarter of 2002, NRG determined that it had inadvertently offset its investment in Jackson County, Miss., bonds in
the amount of $155.5 million against long-term debt of the same amount owed to the County. This resulted in an understatement of
NRG’s assets and liabilities by $155.5 million as of Sept. 30, 2002. In addition, the restatement for Bayou Cove Peaking LLC and
Somerset Power LLC impairments reduced the previously reported net property, plant and equipment balance by $175.8 million.
The restatement for the interest rate swaps had no impact on total shareholder’s equity and the restatement for the remarketing
option reduced other assets by $15.9 million.
Summarized quarterly unaudited financial data is as follows:
Quarter Ended
March 31, 2002 June 30, 2002 Sept. 30, 2002 Dec. 31, 2002
(a) (a) (a) (d) (a)
(Thousands of dollars, except per share amounts) As Restated
Revenue(c) $2,370,584 $2,226,909 $ 2,473,331 $2,453,548
Operating income (loss) 298,977 315,548 (2,140,418) 93,562
Income (loss) from continuing operations 93,929 85,617 (1,627,039) (213,877)
Discontinued operations – income (loss) 9,575 1,685 (577,001) 9,120
Net income (loss) 103,504 87,302 (2,204,040) (204,757)
Earnings (loss) available for common shareholders 102,444 86,242 (2,205,100) (205,818)
Earnings (loss) per share from continuing operations – basic and diluted $ 0.26 $ 0.22 $ (4.10) $ (0.54)
Earnings (loss) per share discontinued operations – basic and diluted $ 0.03 $ – $ (1.45) $ 0.02
Earnings (loss) per share total – basic and diluted $ 0.29 $ 0.22 $ (5.55) $ (0.52)
notes to consolidated financial statements
xcel energy inc. and subsidiaries page 99