8-K 1 h95039e8-k.txt FORM 8-K 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 ------------------------------ 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). 2 The effects of the restatement are outlined in the tables below: RELIANT ENERGY MID-ATLANTIC POWER HOLDINGS, LLC AND RELATED COMPANIES

3 RELIANT ENERGY MID-ATLANTIC POWER HOLDINGS, LLC AND RELATED COMPANIES

4 RELIANT ENERGY MID-ATLANTIC POWER HOLDINGS, LLC AND RELATED COMPANIES

5 RELIANT ENERGY MID-ATLANTIC POWER HOLDINGS, LLC AND RELATED COMPANIES

6 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 7

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