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): APRIL 29, 2002 RELIANT ENERGY, INCORPORATED (Exact name of registrant as specified in its charter) TEXAS 1-3187 74-0694415 (State or other jurisdiction (Commission File Number) (IRS Employer of incorporation) 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. ANNOUNCEMENT OF FIRST QUARTER 2002 RESULTS On April 29, 2002, Reliant Energy, Incorporated ("Reliant Energy" and, together with its subsidiaries, the "Company") reported first quarter 2002 earnings. For additional information regarding Reliant Energy's first quarter 2002 earnings, please refer to Reliant Energy's press release attached to this report as Exhibit 99.1 (the "Press Release"), which Press Release, other than the information therein under the caption "Outlook for 2002," is incorporated by reference herein. MANAGEMENT CONFERENCE CALL On April 29, 2002, executives of Reliant Energy spoke to the public, as well as various members of the financial and investment community in Houston, Texas regarding Reliant Energy's first quarter 2002 results. A replay of this presentation has been made available on Reliant Energy's web site found at www.reliantenergy.com in the Investors section and will be archived for 14 days after the event. In addition, a replay of the presentation can be accessed until May 6, 2002, 6 p.m. Houston time, by calling (800) 642-1687 (Conference I.D. 3876950) (Domestic) or (706) 645-9291 (Conference I.D. 3876950) (Outside the U.S.). ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS. (c) Exhibits. The following exhibits are filed herewith: 99.1 Press Release issued April 29, 2002 regarding Reliant Energy's first quarter 2002 earnings. ITEM 9. REGULATION FD DISCLOSURE. Reliant Energy incorporates by reference into this Item 9 the information in the Press Release under the caption "Outlook for 2002". The information in Item 9 of this report is being furnished, not filed, pursuant to Regulation FD. Accordingly, the information in Item 9 of this report will not be incorporated by reference into any registration statement filed by Reliant Energy under the Securities Act of 1933, as amended, unless specifically identified therein as being incorporated therein by reference. The furnishing of the information in this report is not intended to, and does not, constitute a determination or admission by Reliant Energy, that the information in this report is material or complete, or that investors should consider this information before making an investment decision with respect to any security of Reliant Energy or any of its affiliates. FORWARD-LOOKING STATEMENTS Some of the statements in this report and the exhibits hereto are "forward- looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Although Reliant Energy believes that the expectations and the underlying assumptions reflected in its forward-looking statements are reasonable, there can be no assurance that these expectations will prove to be correct. Forward-looking statements involve a number of risks and uncertainties, and actual results may differ materially from the results discussed in the forward-looking statements. References in this Current Report to the terms "we," "us" or other similar terms mean the Company. In addition to the matters described in this report and the exhibits hereto, the following are some of the factors that could cause actual results to differ materially from those expressed or implied in Reliant Energy's forward-looking statements: ... state, federal and international legislative and regulatory developments, including deregulation; re-regulation and restructuring of the electric utility industry; and changes in, or application of environmental, siting and other laws and regulations to which we are subject, ... timing of the implementation of our business separation plan, including the receipt of necessary approvals from the Securities and Exchange Commission and an extension relating to a private letter ruling from the Internal Revenue Service, ... the effects of competition, including the extent and timing of the entry of additional competitors in our markets, 2
... industrial, commercial and residential growth in our service territories, ... our pursuit of potential business strategies, including acquisitions or dispositions of assets or the development of additional power generation facilities, ... state, federal and other rate regulations in the United States and in foreign countries in which we operate or into which we might expand our operations, ... the timing and extent of changes in commodity prices, particularly natural gas, ... weather variations and other natural phenomena, ... political, legal and economic conditions and developments in the United States and in foreign countries in which we operate or into which we might expand our operations, including the effects of fluctuations in foreign currency exchange rates, ... financial market conditions and the results of our financing efforts, ... ramifications from the bankruptcy filing of Enron Corp., ... any direct or indirect effect on our business resulting from the September 11, 2001 terrorist attacks or any similar incidents or responses to such incidents, ... the performance of our projects, and ... other factors we discuss in our other filings with the SEC. The words "anticipate," "estimate," "believe," "continue," "could," "intend," "may," "plan," "potential," "predict," "should," "will," "expect," "objective," "projection," "forecast," "goal" and other similar words are intended to identify Reliant Energy's forward-looking statements. 3
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, INCORPORATED Date: April 29, 2002 By: /s/ MARY P. RICCIARDELLO --------------------------- Mary P. Ricciardello Senior Vice President and Chief Accounting Officer 4
EXHIBIT INDEX EXHIBIT NUMBER EXHIBIT DESCRIPTION - ------- ----------------------- 99.1 Press Release issued April 29, 2002 regarding Reliant Energy's first quarter 2002 earnings. 5
EXHIBIT 99.1 FOR FURTHER INFORMATION: Sandy Fruhman, Media (713) 207-3123 Marianne Paulsen, Investors (713) 207-6500 Dennis Barber, Investors (713) 207-3042 FOR IMMEDIATE RELEASE: April 29, 2002 RELIANT ENERGY REPORTS FIRST QUARTER 2002 EARNINGS HOUSTON, TX. - Reliant Energy, Incorporated (NYSE: REI) today reported net income for the first quarter of 2002, of $225 million, or $0.76 per diluted share, compared to net income of $262 million, or $0.90 per diluted share, for the first quarter of 2001. Reliant Energy's earnings reflect its approximately 83 percent interest in Reliant Resources (NYSE: RRI). In the 2001 period, there were two unusual items which included a $62 million after-tax, non-cash gain from the implementation of Statement of Financial Accounting Standards (SFAS) No. 133, "Accounting for Derivative Instruments and Hedging Activities", and a $65 million after-tax, non-cash charge related to the redesign of benefit plans for employees of Reliant Resources. The decrease in net income for the first quarter of 2002, was largely driven by a decline in earnings from the company's wholesale energy segment due to less favorable market conditions somewhat offset by earnings in the retail energy segment. In addition, milder weather in the 2002 period negatively impacted earnings from the natural gas distribution segment. Results for the first quarter of 2002 also reflected the benefit of reduced interest expense partially offset by a negative impact related to the ZENS securities. On January 1, 2002, the company discontinued amortizing goodwill in accordance with SFAS No. 142, "Goodwill and Other Intangible Assets". During the first quarter of 2001, $21 million of goodwill amortization expense was recognized. "This has been a very productive first quarter with the successful implementation of retail electric competition in the Texas market," said Steve Letbetter, chairman, president and chief executive officer. "Our business units handled this transition very well and effectively implemented their strategies for the restructured environment. Our performance, while negatively affected by weather, a weaker economy and unfavorable market conditions, remained solid." EARNINGS BEFORE INTEREST AND TAXES BY SEGMENT DETAILED ELECTRIC OPERATIONS During 2001, the company's electric operations segment reflected the regulated electric utility business, including generation, transmission and distribution, and retail electric sales. As of January 1, 2002, with the opening of the Texas market to full retail electric competition, generation and retail sales were deregulated. Retail electric sales involve the sale of electricity and related services to end users of electricity and were included as part of the bundled regulated
service prior to 2002. Retail electric sales are now reported as the retail energy segment of Reliant Resources. Beginning in 2002, Reliant Energy will report two new segments for what was the former electric operations segment: . Electric Generation, and . Electric Transmission and Distribution The previously regulated generation operations in Texas are being reported in the new electric generation segment. The electric transmission and distribution segment will report results from two sources. This segment includes the regulated electric transmission and distribution operations, which recovers the cost of its service through an energy delivery charge, as well as impacts of generation-related stranded costs recoverable by the regulated utility. As a result of the implementation of deregulation and the corresponding new segments, there are no meaningful comparisons for these segments against prior periods. Although the company's retail sales are now conducted by Reliant Resources, retail customers remained regulated customers of Reliant Energy HL&P through the date of their first meter reading in 2002. Sales during this transition period produced EBIT (earnings before interest and taxes) of $14 million in the first quarter of 2002, reflected in the electric operations segment. The company expects to incur transition expenses during the remainder of the year and a substantial portion of these earnings is expected to be offset. ELECTRIC GENERATION The new electric generation segment is comprised of over 14,000 MW of electric generation located entirely in the state of Texas, and will be called Texas Genco after the company's restructuring. This segment reported a $52 million loss before interest and taxes for the first quarter of 2002. ELECTRIC TRANSMISSION & DISTRIBUTION The new electric transmission & distribution segment reported EBIT of $245 million for the first quarter of 2002. This reflected EBIT of $104 million for the regulated electric transmission and distribution business, and EBIT of $141 million associated with certain generation-related regulatory assets (ECOM, or Exess Cost Over Market, true-up) recorded pursuant to the Texas restructuring law as explained below. Under the deregulation law, each power generator that is unbundled from an integrated electric utility in Texas has an obligation to conduct state-mandated capacity auctions of 15 percent of its capacity. In addition, under a master separation agreement between Reliant Energy
and Reliant Resources, Texas Genco is contractually obligated to auction all capacity in excess of the state-mandated capacity auctions. The auctions conducted periodically between September 2001 and March 2002 were consummated at prices below those assumed by the Texas Public Utility Commission's ECOM model. Under the Texas restructuring law, a regulated utility may recover any difference between market prices received through the auction process and the Texas Public Utility Commission's earlier estimates of those market prices. This difference, recorded as a regulatory asset, produced the $141 million of EBIT in the first quarter of 2002. In the transmission and distribution business, throughput declined 5 percent compared to the first quarter of 2001 due to reduced energy delivery in the industrial sector. Customer growth was strong with an addition of 7,000 metered customers since December 2001, or approximately 2 percent growth on an annualized basis. NATURAL GAS DISTRIBUTION The natural gas distribution segment reported EBIT of $110 million for the first quarter of 2002 compared to EBIT of $137 million for the same period of 2001. The amount of goodwill amortization expense recognized in the first quarter of 2001 was $8 million. Usage in the natural gas distribution segment declined 10 percent in the first quarter of 2002 compared to the same period in 2001. This decline was due to milder weather compared to the 2001 period as well as to reduced consumption. PIPELINES AND GATHERING EBIT for the pipelines and gathering segment declined slightly to $38 million for the first quarter of 2002 compared to $39 million for the same period of 2001. The amount of goodwill amortization expense recognized in the first quarter of 2001 was $4 million. WHOLESALE ENERGY Earnings before interest and taxes for the wholesale energy segment were $114 million in the first quarter of 2002, compared to $229 million in the same period of 2001. The decrease was primarily due to less favorable market conditions, which resulted in lower operating margins from trading and marketing, power generation, and ancillary services, partially offset by the contribution from the Orion Power Holdings acquisition, which closed in February. The segment also had increased operations and maintenance expenses and higher depreciation expense, primarily due to the Orion Power acquisition, as well as lower equity income from an investment in the El Dorado Energy plant in Nevada. The quarterly earnings comparison reflects a $38 million reserve relating to our California receivables taken in the first quarter of 2001, as well as a release and adjustment of California receivables reserves totaling $33 million in the first quarter of 2002. The segment also had lower emissions expense in the first quarter of 2002. The Orion Power operations contributed $33 million of EBIT for the quarter. EUROPEAN ENERGY The European energy segment produced EBIT of $18 million in the first quarter of 2002, compared to $21 million in the 2001 comparable period. The decrease was primarily a result of reduced power generation margins, lower ancillary services and district heating revenues and increased plant outages in the first quarter of 2002. Partially offsetting these factors were a $19 million net gain recognized in fuel expense related to the change in valuation of our stranded cost contracts, improved trading margins and lower amortization expense. RETAIL ENERGY The company's retail energy segment produced EBIT of $48 million in the first quarter of 2002, compared to a loss of $3 million in the first quarter of 2001. The Texas retail electricity market opened to full competition in January 2002. At that time, the retail energy segment began serving approximately 1.7 million electricity customers in the greater Houston, Texas area. OTHER OPERATIONS The company's other operations, which include its thermal systems, power systems, new ventures businesses, various real estate used in business operations, remaining operations in Latin America and unallocated corporate costs, reported a loss before interest and taxes for the first quarter of 2002 of $13 million. This compares to a loss before interest and taxes of $131 million for the same period of 2001. The 2001 results include a $101 million non-cash charge
related to the redesign of benefit plans for employees of the company's unregulated businesses in anticipation of the spin-off of Reliant Resources. OUTLOOK FOR 2002 After the spin-off of Reliant Resources, CenterPoint Energy will include primarily the regulated businesses of electric transmission and distribution, natural gas distribution and pipelines and gathering. CenterPoint Energy will also include the Texas power generation assets until at least 2004 when Reliant Resources has an option to purchase these assets. Reliant Resources provides competitive energy services activities including nonregulated power generation, wholesale energy trading and marketing, retail energy services and wholesale energy in Europe. Assuming completion of the spin-off of Reliant Resources, 2002 earnings per share for the segments that will comprise CenterPoint Energy are expected to be in the range of $1.17 to $1.22, excluding its prior interests in Reliant Resources. Reliant Resources, Inc. (NYSE: RRI), which completed its initial public offering of approximately 20 percent of its shares in May 2001, expects to achieve earnings of $1.80 to $2.00 per share. WEBCAST OF EARNINGS CONFERENCE CALL Reliant Energy has scheduled its first quarter 2002 earnings conference call for Monday April 29, 2002, at 1:30 p.m. Central time. Interested parties may listen to a live audio broadcast of the conference call at www.reliantenergy.com/investors. A replay of the call can be accessed approximately two hours after the completion of the call. Reliant Energy, based in Houston, Texas, is an international energy services and energy delivery company with approximately $42 billion in annual revenue and total assets exceeding $35 billion. The company has nearly 31,000 megawatts of power generation in operation in the U.S. and is one of the largest marketers of both power and natural gas in North America. The company also has wholesale trading and marketing operations and nearly 3,500 megawatts of power generation in Western Europe. Reliant Energy's retail marketing and distribution operations serve nearly five million electricity and natural gas customers in the U.S. More information on Reliant Energy can be found on its web site www.reliantenergy.com. ***** This news release includes forward-looking statements. Actual events and results may differ materially from those projected. Factors that could affect actual results include the timing and impact of future regulatory and legislative decisions, effects of competition, weather variations, changes in Reliant Energy's business plans, financial market conditions and other factors discussed in Reliant Energy's filings with the Securities and Exchange Commission. - # # # -
Reliant Energy, Incorporated and Subsidiaries Statements of Consolidated Income (Thousands of Dollars) (Unaudited) Quarter Ended March 31, ------------------------------------ 2002 2001 ------------------------------------ Revenues: Electric Operations $ 158,725 $ 1,389,766 Electric Generation 325,655 - Electric Transmission & Distribution 466,027 - Wholesale Energy 5,603,864 9,593,024 Natural Gas Distribution 1,179,873 2,322,694 Pipelines and Gathering 91,943 130,427 European Energy 535,001 247,879 Retail Energy 978,708 27,237 Other Operations 2,793 29,666 Eliminations (615,576) (431,117) ------------------------------------ Total 8,727,013 13,309,576 ------------------------------------ Expenses: Fuel and cost of gas sold 3,552,950 7,682,104 Purchased power 3,657,367 4,107,623 Operation and maintenance 654,032 722,320 Taxes other than income taxes 125,705 140,304 Depreciation and amortization 219,690 196,659 Other 745 2,305 ------------------------------------ Total 8,210,489 12,851,315 ------------------------------------ Operating Income 516,524 458,261 ------------------------------------ Other (Expense) Income: Unrealized (loss) gain on AOL Time Warner investment (217,597) 137,082 Unrealized gain (loss) on indexed debt securities 203,233 (135,047) Income from equity investment of unconsolidated subsidiaries 3,784 12,606 Interest (154,056) (178,062) Distribution on trust preferred securities (13,899) (13,900) Minority Interest (a) (16,433) 291 Other - net 17,617 27,415 ------------------------------------ Total (177,351) (149,615) ------------------------------------ Income Before Income Taxes, Cumulative Effect of Accounting Change and Preferred Dividends 339,173 308,646 Income Tax Expense 113,821 107,718 ------------------------------------ Income Before Cumulative Effect of Accounting Change and Preferred Dividends 225,352 200,928 Cumulative Effect of Accounting Change, net of tax - 61,666 ------------------------------------ Income Before Preferred Dividends 225,352 262,594 Preferred Dividends - 97 ------------------------------------ Net Income Attributable to Common Stockholders $ 225,352 $ 262,497 ==================================== Reference is made to the Notes to the Consolidated Financial Statements contained in the Annual Report of Reliant Energy, Incorporated. (a) Included in minority interest expense for the quarter ended March 31, 2002 is $16.5 million of minority interest expense related to approximately 17% minority ownership of Reliant Resources, Inc. and its subsidiaries.
Reliant Energy, Incorporated and Subsidiaries Selected Data From Statements of Consolidated Income (Thousands of Dollars, Except Per Share Amounts) (Unaudited) Quarter Ended March 31, ------------------------- 2002 2001 ------------------------- Basic Earnings Per Common Share Income before cumulative effect of accounting change $ 0.76 $ 0.69 Cumulative effect of accounting change, net of tax - 0.22 Net income attributable to common stockholders $ 0.76 $ 0.91 Diluted Earnings Per Common Share Income before cumulative effect of accounting change $ 0.76 $ 0.69 Cumulative effect of accounting change, net of tax - 0.21 Net income attributable to common stockholders $ 0.76 $ 0.90 Dividends per Common Share $ 0.375 $ 0.375 Weighted Average Common Shares Outstanding (000): - Basic 296,222 287,336 - Diluted 297,166 290,173 EBIT BY SEGMENT Electric Operations $ 14,258 $ 198,666 Electric Generation (51,746) - Electric Transmission & Distribution 244,704 - Natural Gas Distribution 109,675 137,425 Pipelines and Gathering 37,694 38,524 Wholesale Energy 114,105 229,051 European Energy 18,075 21,378 Retail Energy 48,573 (3,074) Other Operations (12,555) (130,817) Eliminations/other 778 9,164 ------------------------ Total $523,561 $ 500,317 ======================== Reference is made to the Notes to the Consolidated Financial Statements contained in the Annual Report of Reliant Energy, Incorporated.
Reliant Energy, Incorporated and Subsidiaries Results of Operations by Segment (Millions of Dollars) (Unaudited) ELECTRIC ELECTRIC ELECTRIC TRANSMISSION & OPERATIONS GENERATION DISTRIBUTION ELIMINATIONS --------------------------------------------------------- Quarter Ended March 31, --------------------------------------------------------- 2002 --------------------------------------------------------- RESULTS OF OPERATIONS: Operating Revenues: Operating revenues $ 159 $ 326 $325 $ (101) ECOM true-up - - 141 - ----- ----- ---- ----------- Total Revenues 159 326 466 (101) ----- ----- ---- ----------- Operating Expenses: Fuel and purchased power 76 229 - (60) Operation and maintenance 59 96 122 (41) Depreciation and amortization - 40 64 - Taxes other than income 10 13 40 - ----- ----- ---- ----------- Total 145 378 226 (101) ----- ----- ---- ------------ Operating Income 14 (52) 240 - ----- ----- ---- ----------- Non-operating Income: Other non-operating income - - 5 - ----- ----- ---- ----------- - - 5 - ----- ----- ---- ----------- Earnings Before Interest and Taxes $ 14 $ (52) $245 $ - ===== ===== ==== =========== ELECTRIC TOTAL OPERATIONS -------------------------------------- Quarter Ended March 31, % Diff 2002 2001 Fav/(Unfav) ---------- ---------- ----------- RESULTS OF OPERATIONS: Operating Revenues: Operating revenues $ 709 $ 1,390 (49%) ECOM true-up 141 - - ---------- ---------- Total Revenues 850 1,390 (39%) ---------- ---------- Operating Expenses: Fuel and purchased power 245 786 69% Operation and maintenance 236 248 5% Depreciation and amortization 104 79 (32%) Taxes other than income 63 91 31% ---------- ---------- Total 648 1,204 46% ---------- ---------- Operating Income 202 186 9% ---------- ---------- Non-operating Income: Other non-operating income 5 13 (62%) ---------- ---------- 5 13 (62%) ---------- ---------- Earnings Before Interest and Taxes $ 207 $ 199 4% ========== ========== Quarter Ended March 31, -------------------------------------- 2002 2001 ---------- ---------- ELECTRIC OPERATIONS OPERATING DATA: ACTUAL MWH DELIVERED Residential 4,473,465 3,951,158 13% Commercial 3,975,248 3,968,602 - Industrial 6,337,603 7,438,216 (15%) Other 42,149 296,503 (86%) ---------- ---------- Total 14,828,465 15,654,479 (5%) ========== ========== WEATHER (AVERAGE FOR SERVICE AREA): Percentage of normal: Cooling degree days 106% 100% 6% Heating degree days 108% 110% (2%) AVERAGE NUMBER OF METERED CUSTOMERS: Residential 1,531,806 1,505,954 2% Commercial 209,424 204,516 2% Industrial 1,860 1,736 7% Other - 28 (100%) ---------- ---------- Total 1,743,090 1,712,234 2% ========== ========== PHYSICAL ELECTRIC GENERATION POWER SALES (MWH) 12,634,635 N/A Reference is made to the Notes to the Consolidated Financial Statements contained in the Annual Report of Reliant Energy, Incorporated.
Reliant Energy, Incorporated and Subsidiaries Results of Operations by Segment (Millions of Dollars) (Unaudited) NATURAL GAS DISTRIBUTION -------------------------------------------- Quarter Ended March 31, --------------------------- % Diff 2002 2001 Fav/(Unfav) -------------------------------------------- RESULTS OF OPERATIONS: Operating Revenues $ 1,180 $ 2,323 (49%) Operating Expenses: Natural gas 885 1,977 55% Operation and maintenance 131 133 2% Depreciation and amortization 30 36 17% Other operating expenses 28 42 33% ---------- ---------- Total 1,074 2,188 51% ---------- ---------- Operating Income 106 135 (21%) ---------- ---------- Non-operating Income Other Non-operating Income 4 2 100% ---------- ---------- 4 2 100% ---------- ---------- Earnings Before Interest and Taxes $ 110 $ 137 (20%) ========== ========== NATURAL GAS DISTRIBUTION OPERATING DATA: THROUGHPUT DATA IN BCF Residential and Commercial 132 153 (14%) Industrial Sales 11 11 - Transportation 15 15 - Retail 121 132 (8%) ---------- ---------- Total Throughput 279 311 (10%) ========== ========== WEATHER (AVERAGE FOR SERVICE AREA) Percentage of normal: Heating degree days 98% 106% (8%) AVERAGE NUMBER OF CUSTOMERS: Residential 2,729,517 2,706,175 1% Commercial and Industrial Sales 250,818 259,395 (3%) ---------- ---------- Total 2,980,335 2,965,570 - ========== ========== PIPELINES AND GATHERING -------------------------------------------- Quarter Ended March 31, --------------------------- % Diff 2002 2001 Fav/(Unfav) -------------------------------------------- RESULTS OF OPERATIONS: Operating Revenues $ 92 $ 130 (29%) Operating Expenses: Natural gas 7 45 84% Operation and maintenance 34 28 (21%) Depreciation and amortization 10 14 29% Other operating expenses 4 4 - ---------- ---------- Total 55 91 40% ---------- ---------- Operating Income 37 39 (5%) ---------- ---------- Non-operating Income: Other non-operating income 1 - - ---------- ---------- 1 - - ---------- ---------- Earnings Before Interest and Taxes $ 38 $ 39 (3%) ========== ========== PIPELINES AND GATHERING OPERATING DATA: THROUGHPUT DATA IN BCF Natural Gas Sales 5 6 (17%) Transportation 238 246 (3%) Gathering 71 70 1% Elimination - (1) (100%) ---------- ---------- Total Throughput 314 321 (2%) ========== ========== Reference is made to the Notes to the Consolidated Financial Statements contained in the Annual Report of Reliant Energy, Incorporated.
Reliant Energy, Incorporated and Subsidiaries Results of Operations by Segment (Millions of Dollars) (Unaudited) WHOLESALE ENERGY ------------------------------------------ Year Ended March 31, -------------------------- % Diff 2002 2001 Fav/(Unfav) ------------------------------------------ RESULTS OF OPERATIONS: Operating Revenues $ 5,604 $ 9,593 (42%) Operating Expenses: Fuel and cost of gas sold 2,732 5,654 52% Purchased power 2,545 3,547 28% Operation and maintenance 156 133 (17%) Depreciation and amortization 50 41 (22%) Other 13 2 (550%) -------- ------- Total 5,496 9,377 41% Operating Income (Loss) 108 216 (50%) -------- ------- Non-operating Income: Income from equity investments of unconsolidated subsidiaries 4 13 (69%) Other Non-Operating Income 2 - - -------- ------- 6 13 (54%) -------- ------- Earnings Before Interest and Taxes $ 114 $ 229 (50%) ======== ======= WHOLESALE ENERGY MARGINS BY COMMODITY: Gas $ 53 $ 79 (33%) Power 275 306 (10%) Oil (1) 4 (125%) Other Commodities - 3 (100%) -------- ------- $ 327 $ 392 (17%) ======== ======= WHOLESALE ENERGY MARGINS BY ACTIVITY: Power Generation $ 280 $ 279 - Trading, Marketing and Risk Management 47 113 (58%) -------- ------- $ 327 $ 392 (17%) ======== ======= (116%) 425% (58%) TRADING MARGIN / VAR 5.22 12.56 (58%) WHOLESALE ENERGY OPERATING DATA: Physical natural gas Bcf volume 1,017 767 33% Revenues per Mcf $ 2.45 $ 6.90 (64%) Physical Wholesale Power Sales (000's MWH) 123,774 76,474 62% Revenues per Mwh $ 24.86 $ 56.52 (56%) Physical Oil Trading Revenues (000's Bbls) 900 486 85% CONSOLIDATED VALUE AT RISK ANALYSIS: (Assumes 95% confidence level and primarily a one day holding period using variance/covariance model) 2002 2001 ------ ------ As of March 31, 13 5 Period Ended March 31: Daily Average 9 9 Daily High 17 18 Daily Low 6 4 Reference is made to the Notes to the Consolidated Financial Statements contained in the Annual Report of Reliant Energy, Incorporated.
Reliant Energy, Incorporated and Subsidiaries Results of Operations by Segment (Millions of Dollars) (Unaudited) EUROPEAN ENERGY ---------------------------------------- Quarter Ended March 31, ----------------------- % Diff 2002 2001 Fav/(Unfav) ---------------------------------------- RESULTS OF OPERATIONS: Operating Revenues $ 535 $ 248 116% Operating Expenses: Fuel and purchased power 471 182 (159%) Operation and maintenance 35 28 (25%) Depreciation and amortization 13 19 32% Other - 1 100% ------- ------ Total 519 230 (126%) ------- ------ Operating Income 16 18 (11%) ------- ------ Non-operating Income: Other non-operating income 2 3 (33%) ------- ------ 2 3 (33%) ------- ------ Earnings Before Interest and Taxes $ 18 $ 21 (14%) ======= ====== EUROPEAN ENERGY MARGINS BY ACTIVITY: Power Generation $ 61 $ 65 (6%) Trading, Marketing and Risk Management 3 1 200% ------- ------ $ 64 $ 66 (3%) ======= ====== EUROPEAN ENERGY OPERATING DATA: Physical Wholesale Power Sales (000's MWH) 19,644 6,775 190% Revenues per mwh $27.31 $31.48 (13%) RETAIL ENERGY Quarter Ended March 31, ---------------------- 2002 2001 ---------------------- RESULTS OF OPERATIONS: Operating Revenues $ 979 $ 27 Operating Expenses: Natural gas and purchased power 843 - Operation and maintenance 69 28 Depreciation and amortization 5 2 Other 14 - ------- ------ Total 931 30 ------- ------ Operating Income (Loss) 48 (3) ------- ------ Non-operating Income: Other non-operating income - - ------- ------ - - ------- ------ Earnings Before Interest and Taxes $ 48 $ (3) ======= ====== RETAIL ENERGY OPERATING DATA: GWh Sales data (1): Residential 3,155 Small commercial 3,287 Large commercial, industrial and institutional 4,395 ------ Total 10,837 ====== (1) Gigawatt hours Average Number of Customers Residential 1,463 Small commercial 213 Large commercial, industrial and institutional 17 ------ Total 1,693 ====== OTHER OPERATIONS ----------------------------------------- Quarter Ended March 31, ------------------------ % Diff 2002 2001 Fav/(Unfav) ----------------------------------------- RESULTS OF OPERATIONS: Operating Revenues $ 2 $ 30 (93%) Operating Expenses 3 163 98% ------- ------ Operating Loss (1) (133) 99% Non-operating Income: Other non-operating (expense) income (12) 2 (700%) ------- ------ (12) 2 (700%) ------- ------ Earnings Before Interest and Taxes $ (13) $(131) 90% ====== ====== Reference is made to the Notes to the Consolidated Financial Statements contained in the Annual Report of Reliant Energy, Incorporated.
Reliant Energy, Incorporated and Subsidiaries Consolidated Trading Activities (Million of Dollars) (Unaudited) Period Ended March 31, ----------------------- 2002 2001 ----------- ---------- CONSOLIDATED TRADING, MARKETING AND RISK MANAGEMENT MARGINS REALIZED AND UNREALIZED: Realized $(12) $ 102 Unrealized 68 16 ----- ----- $ 56 $ 118 ===== ===== CONSOLIDATED VALUE AT RISK ANALYSIS: (Assumes 95% confidence level and primarily a one day holding period using variance/covariance model) 2002 2001 ------ ------ As of March 31, 22 6 Period Ended March 31: Daily Average 19 9 Daily High 28 18 Daily Low 15 4 [COMBINED WHOLESALE, RETAIL AND EUROPEAN VAR GRAPH FOR 2001 FIRST, SECOND, THIRD AND FOURTH QUARTERS AND 2002 FIRST QUARTER - INTENTIONALLY OMITTED FROM THIS EXHIBIT; SEE ACTUAL EARNINGS RELEASE FOR GRAPH] Reference is made to the Notes to the Consolidated Financial Statements contained in the Annual Report of Reliant Energy, Incorporated.