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): JULY 25, 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 SECOND QUARTER 2002 RESULTS
On July 25, 2002, Reliant Energy, Incorporated ("Reliant Energy")
reported second quarter 2002 earnings. For additional information regarding
Reliant Energy's second 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 July 25, 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 second 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 Investor Relations section and will be archived for
25 days after the event. In addition, a replay of the presentation can be
accessed until August 2, 2002, 6 p.m. Houston time, by calling (800)
642-1687 (Conference I.D. 4836766).
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(c) Exhibits.
The following exhibit is filed herewith:
99.1 Press Release issued July 25, 2002 regarding Reliant
Energy's second 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 Reliant Energy.
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'
forward-looking statements:
o 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,
o the timing of the implementation of our business separation plan,
o the effects of competition, including the extent and timing of the
entry of additional competitors in our markets,
2
o industrial, commercial and residential growth in our service
territories,
o our pursuit of potential business strategies, including acquisitions or
dispositions of assets or the development of additional power
generation facilities,
o 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,
o the timing and extent of changes in commodity prices, particularly
natural gas, and interest rates,
o weather variations and other natural phenomena,
o political, legal, regulatory and economic conditions and developments
in the United States and in foreign countries in which we operate,
including the effects of fluctuations in foreign currency exchange
rates,
o financial market conditions and the results of our financing efforts,
o the performance of our projects, and
o 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: July 25, 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 July 25, 2002 regarding Reliant Energy's
second quarter 2002 earnings.
5
EXHIBIT 99.1
FOR FURTHER INFORMATION: Sandy Fruhman, Media (713) 207-3123
Marianne Paulsen, Investors (713) 207-6500
Melanie Trent, Investors (713) 207-8351
FOR IMMEDIATE RELEASE: July 25, 2002
RELIANT ENERGY REPORTS SECOND QUARTER 2002 EARNINGS
HOUSTON, TX. - Reliant Energy, Incorporated (NYSE: REI) today reported
net income for the second quarter of 2002, of $236 million, or $0.79 per diluted
share, compared to net income of $316 million, or $1.08 per diluted share, for
the second quarter of 2001. Reliant Energy's earnings reflect its approximately
83 percent interest in Reliant Resources (NYSE: RRI).
The decrease in net income for the second quarter of 2002 was largely
driven by an earnings decline in the company's wholesale energy segment due to
less favorable market conditions, somewhat offset by increases in earnings in
the company's retail energy, European energy and natural gas distribution
segments. Results for the second quarter of 2002 also reflected increased
interest expense and a negative impact related to the ZENS securities.
For the six months ended June 30, 2002, Reliant Energy reported income
before the cumulative effect of accounting change of $461 million, or $1.55 per
diluted share, compared to $517 million, or $1.78 per diluted share, for the
same period of 2001. The decrease for this period was largely driven by the
factors discussed above.
"The company and our industry have faced many challenges in recent
months," said Steve Letbetter, chairman, president and chief executive officer.
"We remain focused on the effective operation of our businesses, and in the
quarter, our retail electric business in Houston and our regulated natural gas
distribution operations performed very well. However, weak wholesale market
conditions negatively impacted our results."
SUMMARY OF TWO NEW REPORTABLE BUSINESS SEGMENTS
This year, Reliant Energy started reporting two new reportable business
segments, electric transmission & distribution and electric generation, instead
of the former electric operations segment. With the opening of the Texas market
to retail electric competition in January, generation and retail electric sales
were deregulated. Retail electric sales are now reported as the retail energy
segment of Reliant Resources and the previously regulated generation operations
in Texas are being reported in the new segment, electric generation.
- more -
The electric transmission and distribution segment reports results from
two sources, including the regulated transmission and distribution operations as
well as the impacts of generation-related stranded costs recoverable by the
regulated utility. This segment also reports the impact of some regulated
electric utility operations resulting from the transition to a restructured
electric market in Texas.
As a result of the implementation of deregulation and the subsequent
new segments, there are no meaningful comparisons for these segments against
prior periods.
EBIT BY SEGMENT DETAILED
ELECTRIC TRANSMISSION & DISTRIBUTION
The electric transmission & distribution segment reported EBIT
(earnings before interest and taxes) of $277 million for the second quarter of
2002. This reflected EBIT of $107 million for the regulated electric
transmission and distribution business and non-cash EBIT of $170 million
associated with certain generation-related regulatory assets (ECOM, or Excess
Cost Over Market, true-up) recorded pursuant to the Texas restructuring law.
The electric transmission and distribution business recovers the cost
of its service through an energy delivery charge. This business benefited from
growth in residential demand in the second quarter of 2002 compared to the same
period of last year, partially offset by an anticipated decline in deliveries to
industrial customers resulting from a move to self-generation. Metered electric
customers, totaling 1.75 million at the end of the second quarter of 2002,
continue to grow at an annualized rate of 2 percent.
Under the Texas restructuring law, a regulated utility may recover as
part of its stranded investment any difference between auction market prices and
the market prices used in the Texas Public Utility Commission's ECOM model. This
difference, which is recorded as a regulatory asset, produced the $170 million
of non-cash EBIT for the ECOM true-up in the second quarter of 2002.
Although the company's retail electric 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 of $14 million in the first quarter of
2002, which is reflected in this segment. In the second quarter of 2002,
additional costs of $7 million associated with transitioning to a competitive
marketplace were incurred. The company expects to continue to incur transition
costs during the remainder of the year, which the company anticipates will
substantially offset the EBIT recorded in the first quarter.
ELECTRIC GENERATION
The 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 $26
million loss before interest and taxes for the second quarter of 2002.
- more -
NATURAL GAS DISTRIBUTION
The natural gas distribution segment reported EBIT of $14 million for
the second quarter of 2002 compared to a loss before interest and taxes of $41
million for the same period of 2001. The amount of goodwill amortization expense
recognized in the second quarter of 2001 was approximately $8 million. A
significant improvement in bad debt expense in the second quarter of 2002
compared to the high levels of bad debt experienced in the same period last year
contributed to the operating improvement. Also contributing to the
quarter-over-quarter EBIT increase were changes in estimates of unbilled
revenues and deferred gas costs, which negatively impacted the second quarter of
2001.
PIPELINES AND GATHERING
EBIT for the pipelines and gathering segment increased to $41 million
for the second quarter of 2002 compared to $34 million for the same period of
2001. The amount of goodwill amortization expense recognized in the second
quarter of 2001 was approximately $4 million.
WHOLESALE ENERGY
EBIT for the wholesale energy segment was $31 million in the second
quarter of 2002, compared to $298 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 activities and power
generation operations. Other factors affecting the decrease include: charges in
connection with the cancellation of power plant development projects; increased
depreciation expense related to ownership of the Orion assets and a write-off
due to closure of a power plant in Pennsylvania; increased operation and
maintenance expense primarily related to ownership of the Orion assets and an
increase in a reserve for anticipated refunds to be ordered by the FERC relating
to California operations.
RETAIL ENERGY
The company's retail energy segment produced EBIT of $205 million in
the second quarter of 2002, compared to a loss of $2 million in the second
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. These increased sales were partially offset by increased overhead, gross
receipts taxes, marketing and bad debt expense.
EUROPEAN ENERGY
The European energy segment produced EBIT of $105 million in the second
quarter of 2002, compared to $62 million in the 2001 period. This increase was
primarily the result of a one-time net gain of $109 million due to amendments to
two power supply contracts. Results for 2001 reflected efficiency and energy
payments from NEA, the coordinating body for the Dutch electric generating
sector prior to the start of wholesale competition, and the valuation of the
company's interest in NEA, which was recorded as equity income in 2001.
- more -
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 second quarter of 2002
of $15 million. This compares to a loss before interest and taxes of $25 million
for the same period of 2001.
GOODWILL AND OTHER INTANGIBLE ASSETS
On January 1, 2002, the company discontinued amortizing goodwill in
accordance with SFAS No. 142, "Goodwill and Other Intangible Assets". The
amounts of goodwill amortization expense that were recognized in 2001 were $21
million and $42 million for the quarter and six months ended June 30,
respectively. During the second quarter, the company completed the evaluation of
goodwill for its regulated operations units, the natural gas distribution and
pipeline and gathering units. The evaluation concluded that no impairment was
required to be recognized for these units. The analysis of impairment for the
goodwill associated with its European operations has concluded that an
impairment does exist. However, the quantification of the impairment has not
been finalized. Upon completion of the quantification, the impairment will be
recorded as a cumulative effect of a change in accounting principle as of
January 1, 2002.
OUTLOOK FOR 2002
After the spin-off of Reliant Resources, CenterPoint Energy will
include primarily the regulated businesses reported under the electric
transmission and distribution, natural gas distribution and pipelines and
gathering segments. CenterPoint Energy will also include the Texas power
generation assets, reported under the electric generation segment, until at
least 2004 when Reliant Resources has an option to purchase these assets.
Reliant Resources provides competitive energy services including non-regulated
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, revised
its earnings guidance for 2002 from a range of $1.80 to $2.00 per share to a
range of $1.65 to $1.85 per share. This revision is primarily due to continued
weakness in wholesale market conditions in the U.S. and Europe, partially offset
by stronger performance in Reliant Resources' retail operations.
Reliant Energy and Reliant Resources continue to have constructive
discussions with their banks regarding refinancing alternatives and expect
acceptable results will be achieved.
Reliant Energy remains committed to the spin-off of Reliant Resources
and continues to believe it is the right strategic step for both companies. Each
company is well positioned for success in its respective market sector.
Additionally, as separate entities, the companies will have better access to
capital than as a combined company.
- more -
WEBCAST OF EARNINGS CONFERENCE CALL
Reliant Energy has scheduled its second quarter 2002 earnings
conference call for Thursday, July 25, 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 (NYSE: REI), based in Houston, Texas, is an
international energy services and energy delivery company. The company has
nearly 31,000 megawatts of power generation in operation in the U.S. and nearly
3,500 megawatts of power generation in Western Europe. Reliant Energy's retail
marketing and distribution operations serve approximately four million
electricity and natural gas customers in the U.S. More information on Reliant
Energy can be found on its web site at 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 June 30, Six Months Ended June 30,
---------------------------- ----------------------------
2002 2001 2002 2001
------------ ------------ ------------ ------------
Revenues:
Electric Operations $ -- $ 1,522,773 $ -- $ 2,912,539
Electric Transmission & Distribution 537,628 -- 1,121,388 --
Electric Generation 413,648 -- 739,295 --
Wholesale Energy 6,494,618 7,659,501 12,009,233 16,019,610
Natural Gas Distribution 796,722 888,626 1,976,595 3,211,320
Pipelines and Gathering 102,408 95,653 194,351 226,080
European Energy 640,479 276,528 1,175,480 524,407
Retail Energy 1,425,390 36,132 2,404,099 63,369
Other Operations 7,155 29,206 9,948 58,872
Eliminations (627,605) (215,783) (1,196,203) (646,900)
------------ ------------ ------------ ------------
Total 9,790,443 10,292,636 18,434,186 22,369,297
------------ ------------ ------------ ------------
Expenses:
Fuel and cost of gas sold 4,886,360 5,022,191 8,447,738 12,703,440
Purchased power 3,127,956 3,660,649 6,693,625 6,536,212
Operation and maintenance 732,568 624,243 1,386,600 1,346,563
Taxes other than income taxes 164,142 142,732 289,847 283,036
Depreciation and amortization 257,816 226,332 477,506 422,991
Other 2 6,019 747 8,324
------------ ------------ ------------ ------------
Total 9,168,844 9,682,166 17,296,063 21,300,566
------------ ------------ ------------ ------------
Operating Income 621,599 610,470 1,138,123 1,068,731
------------ ------------ ------------ ------------
Other (Expense) Income:
Unrealized (loss) gain on AOL Time Warner investment (230,214) 330,901 (447,811) 467,983
Unrealized gain (loss) on indexed debt securities 218,723 (329,185) 421,956 (464,232)
Income from equity investment of unconsolidated subsidiaries 5,524 51,572 9,308 64,177
Interest (205,239) (150,343) (359,295) (328,405)
Distribution on trust preferred securities (13,850) (13,899) (27,749) (27,799)
Minority Interest (a) (30,594) (34,103) (47,027) (33,813)
Other - net 18,096 33,993 35,713 61,409
------------ ------------ ------------ ------------
Total (237,554) (111,064) (414,905) (260,680)
------------ ------------ ------------ ------------
Income Before Income Taxes, Cumulative Effect of
Accounting Change and Preferred Dividends 384,045 499,406 723,218 808,051
Income Tax Expense 148,400 183,045 262,221 290,763
------------ ------------ ------------ ------------
Income Before Cumulative Effect of Accounting Change
and Preferred Dividends 235,645 316,361 460,997 517,288
Cumulative Effect of Accounting Change, net of tax -- (47) -- 61,619
------------ ------------ ------------ ------------
Income Before Preferred Dividends 235,645 316,314 460,997 578,907
Preferred Dividends -- 98 -- 195
------------ ------------ ------------ ------------
Net Income Attributable to Common Stockholders $ 235,645 $ 316,216 $ 460,997 $ 578,712
============ ============ ============ ============
Reference is made to the Notes to the Consolidated Financial Statements
contained in the Amended Annual Report on Form 10-K/A of Reliant
Energy, Incorporated.
(a) Included in minority interest is $30.6 million and $47.1 million of minority
interest expense for the quarter and six months ended June 30, 2002,
respectively, and $34.4 million of minority interest expense for the quarter and
six months ended June 30, 2001, 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 Six Months Ended
June 30, June 30,
---------------------------- ----------------------------
2002 2001 2002 2001
------------ ------------ ------------ ------------
Basic Earnings Per Common Share
Income before cumulative effect of accounting change $ 0.79 $ 1.09 $ 1.55 $ 1.79
Cumulative effect of accounting change, net of tax -- -- -- 0.22
Net income attributable to common stockholders $ 0.79 $ 1.09 $ 1.55 $ 2.01
Diluted Earnings Per Common Share
Income before cumulative effect of accounting change $ 0.79 $ 1.08 $ 1.55 $ 1.78
Cumulative effect of accounting change, net of tax -- -- -- 0.21
Net income attributable to common stockholders $ 0.79 $ 1.08 $ 1.55 $ 1.99
Dividends per Common Share $ 0.375 $ 0.375 $ 0.750 $ 0.750
Weighted Average Common Shares Outstanding (000):
- Basic 297,696 289,743 296,963 288,546
- Diluted 298,471 292,737 297,934 291,400
EBIT BY SEGMENT
Electric Operations $ -- $ 354,381 $ -- $ 553,047
Electric Transmission & Distribution 276,990 -- 535,952 --
Electric Generation (26,228) -- (77,974) --
Natural Gas Distribution 14,553 (40,995) 124,228 96,430
Pipelines and Gathering 41,371 33,926 79,065 72,450
Wholesale Energy 31,163 297,800 145,268 526,851
European Energy 104,813 62,084 122,888 83,462
Retail Energy 205,394 (1,806) 253,967 (4,880)
Other Operations (15,000) (24,514) (27,555) (155,331)
Eliminations/other 672 16,875 1,450 26,039
------------ ------------ ------------ ------------
Total $ 633,728 $ 697,751 $ 1,157,289 $ 1,198,068
============ ============ ============ ============
Reference is made to the Notes to the Consolidated Financial Statements
contained in the Amended Annual Report on Form 10-K/A of Reliant
Energy, Incorporated.
Reliant Energy, Incorporated and Subsidiaries
Results of Operations by Segment
(Millions of Dollars)
(Unaudited)
ELECTRIC
TRANSMISSION ELECTRIC ELECTRIC
& DISTRIBUTION GENERATION ELIMINATIONS TOTAL OPERATIONS
---------------------------------------------------------- ------------ ------------
Quarter Ended June 30,
------------------------------------------------------------------------- % Diff
2002 2001 Fav/(Unfav)
---------------------------------------------------------- ------------ ------------
RESULTS OF OPERATIONS:
Operating Revenues:
Operating revenues $ 368 $ 414 $ 4 $ 786 $ 1,523 (48)%
ECOM true-up 170 -- -- 170 -- --
------------ ------------ ------------ ------------ ------------
Total Revenues 538 414 4 956 1,523 (37)%
------------ ------------ ------------ ------------ ------------
Operating Expenses:
Fuel and purchased power 5 299 4 308 721 57%
Operation and maintenance 130 79 -- 209 224 7%
Depreciation and amortization 66 39 -- 105 129 19%
Taxes other than income 63 26 -- 89 107 17%
------------ ------------ ------------ ------------ ------------
Total 264 443 4 711 1,181 40%
------------ ------------ ------------ ------------ ------------
Operating Income (Loss) 274 (29) -- 245 342 (28)%
------------ ------------ ------------ ------------ ------------
Non-operating Income:
Other non-operating income 3 3 -- 6 12 (50)%
------------ ------------ ------------ ------------ ------------
3 3 -- 6 12 (50)%
------------ ------------ ------------ ------------ ------------
Earnings Before Interest and Taxes $ 277 $ (26) $ -- $ 251 $ 354 (29)%
============ ============ ============ ============ ============
ELECTRIC
TRANSMISSION ELECTRIC ELECTRIC
& DISTRIBUTION GENERATION ELIMINATIONS TOTAL OPERATIONS
----------------------------------------------------------- ------------ ------------
Six Months Ended June 30,
-------------------------------------------------------------------------- % Diff
2002 2001 Fav/(Unfav)
----------------------------------------------------------- ------------ ------------
RESULTS OF OPERATIONS:
Operating Revenues:
Operating revenues $ 810 $ 739 $ (56) $ 1,493 $ 2,913 (49)%
ECOM true-up 311 -- -- 311 -- --
------------ ------------ ------------ ------------ ------------
Total Revenues 1,121 739 (56) 1,804 2,913 (38)%
------------ ------------ ------------ ------------ ------------
Operating Expenses:
Fuel and purchased power 81 528 (56) 553 1,507 63%
Operation and maintenance 270 174 -- 444 472 6%
Depreciation and amortization 130 79 -- 209 208 --
Taxes other than income 112 39 -- 151 198 24%
------------ ------------ ------------ ------------ ------------
Total 593 820 (56) 1,357 2,385 43%
------------ ------------ ------------ ------------ ------------
Operating Income (Loss) 528 (81) -- 447 528 (15)%
------------ ------------ ------------ ------------ ------------
Non-operating Income:
Other non-operating income 8 3 -- 11 25 (56)%
------------ ------------ ------------ ------------ ------------
8 3 -- 11 25 (56)%
------------ ------------ ------------ ------------ ------------
Earnings Before Interest and Taxes $ 536 $ (78) $ -- $ 458 $ 553 (17)%
============ ============ ============ ============ ============
ELECTRIC OPERATIONS OPERATING DATA: Quarter Ended June 30, Six Months Ended June 30,
------------------------ -------------------------
ACTUAL MWH DELIVERED 2002 2001 2002 2001
---------- ---------- ---------- ----------
Residential 6,295,795 5,784,467 9% 10,769,260 9,735,625 11%
Commercial 4,788,531 4,540,104 5% 8,763,779 8,508,706 3%
Industrial 6,432,125 8,507,181 (24)% 12,769,728 15,945,397 (20)%
Other 37,222 380,873 (90)% 79,371 677,376 (88)%
---------- ---------- ---------- ----------
Total 17,553,673 19,212,625 (9)% 32,382,138 34,867,104 (7)%
========== ========== ========== ==========
WEATHER (AVERAGE FOR SERVICE AREA):
Percentage of normal:
Cooling degree days 108% 100% 8% 108% 102% 6%
Heating degree days 33% 30% 3% 100% 106% (6)%
AVERAGE NUMBER OF METERED CUSTOMERS:
Residential 1,539,193 1,514,566 2% 1,535,499 1,510,260 2%
Commercial 209,956 206,744 2% 209,690 205,630 2%
Industrial 1,814 1,771 2% 1,837 1,753 5%
Other -- 28 (100)% 3 28 (89)%
---------- ---------- ---------- ----------
Total 1,750,963 1,723,109 2% 1,747,029 1,717,671 2%
========== ========== ========== ==========
PHYSICAL ELECTRIC GENERATION
POWER SALES (MWH) 14,669,572 N/A 26,472,871 N/A
Reference is made to the Notes to the Consolidated Financial Statements
contained in the Amended Annual Report on Form 10-K/A of Reliant
Energy, Incorporated.
------------------------
Reliant Energy, Incorporated and Subsidiaries
Results of Operations by Segment
(Millions of Dollars)
(Unaudited)
NATURAL GAS DISTRIBUTION
-----------------------------------------------------------------------------------------
Quarter Ended June 30, Six Months Ended June 30,
-------------------------- % Diff -------------------------- % Diff
2002 2001 Fav/(Unfav) 2002 2001 Fav/(Unfav)
----------- ----------- ----------- ----------- ----------- -----------
RESULTS OF OPERATIONS:
Operating Revenues $ 797 $ 888 (10)% $ 1,977 $ 3,211 (38)%
Operating Expenses:
Natural gas 603 725 17% 1,488 2,702 45%
Operation and maintenance 125 148 16% 256 281 9%
Depreciation and amortization 32 37 14% 62 73 15%
Other operating expenses 25 25 -- 53 67 21%
----------- ----------- ----------- -----------
Total 785 935 16% 1,859 3,123 40%
----------- ----------- ----------- -----------
Operating Income (Loss) 12 (47) -- 118 88 34%
----------- ----------- ----------- -----------
Non-operating Income
Other Non-operating Income 2 6 (67)% 6 8 (25)%
----------- ----------- ----------- -----------
2 6 (67)% 6 8 (25)%
----------- ----------- ----------- -----------
Earnings Before Interest and Taxes $ 14 $ (41) -- $ 124 $ 96 29%
=========== =========== =========== ===========
NATURAL GAS DISTRIBUTION
OPERATING DATA:
THROUGHPUT DATA IN BCF
Residential and Commercial 49 37 32% 181 189 (4)%
Industrial Sales 13 12 8% 24 23 4%
Transportation 13 11 18% 28 26 8%
Retail 96 107 (10)% 217 239 (9)%
----------- ----------- ----------- -----------
Total Throughput 171 167 2% 450 477 (6)%
=========== =========== =========== ===========
WEATHER (AVERAGE FOR SERVICE AREA)
Percentage of normal:
Heating degree days 114% 87% 27% 99% 104% (5)%
AVERAGE NUMBER OF CUSTOMERS:
Residential 2,720,237 2,674,434 2% 2,722,974 2,685,857 1%
Commercial and Industrial Sales 249,131 241,876 3% 249,670 243,917 2%
----------- ----------- ----------- -----------
Total 2,969,368 2,916,310 2% 2,972,644 2,929,774 1%
=========== =========== =========== ===========
PIPELINES AND GATHERING
-----------------------------------------------------------------------------------------
Quarter Ended June 30, Six Months Ended June 30,
-------------------------- % Diff -------------------------- % Diff
2002 2001 Fav/(Unfav) 2002 2001 Fav/(Unfav)
----------- ----------- ----------- ----------- ----------- -----------
RESULTS OF OPERATIONS:
Operating Revenues $ 102 $ 96 6% $ 194 $ 226 (14)%
Operating Expenses:
Natural gas 10 12 17% 17 58 71%
Operation and maintenance 38 31 (23)% 72 59 (22)%
Depreciation and amortization 10 15 33% 20 29 31%
Other operating expenses 5 4 (25)% 9 8 (13)%
----------- ----------- ----------- -----------
Total 63 62 (2)% 118 154 23%
----------- ----------- ----------- -----------
Operating Income 39 34 15% 76 72 6%
----------- ----------- ----------- -----------
Non-operating Income:
Other non-operating income 2 -- -- 3 -- --
----------- ----------- ----------- -----------
2 -- -- 3 -- --
----------- ----------- ----------- -----------
Earnings Before Interest and Taxes $ 41 $ 34 21% $ 79 $ 72 10%
=========== =========== =========== ===========
PIPELINES AND GATHERING
OPERATING DATA:
THROUGHPUT DATA IN BCF
Natural Gas Sales 5 3 67% 10 9 11%
Transportation 205 193 6% 443 439 1%
Gathering 70 77 (9)% 141 147 (4)%
Elimination (1) (1) -- (1) (2) 50%
----------- ----------- ----------- -----------
Total Throughput 279 272 3% 593 593 --
=========== =========== =========== ===========
Reference is made to the Notes to the Consolidated Financial Statements
contained in the Amended Annual Report on Form 10-K/A of Reliant
Energy, Incorporated.
Reliant Energy, Incorporated and Subsidiaries
Results of Operations by Segment
(Millions of Dollars)
(Unaudited)
WHOLESALE ENERGY
-------------------------------------------------------------------------------------
Quarter Ended June 30, Six Months Ended June 30,
------------------------ % Diff ------------------------- % Diff
2002 2001 Fav/(Unfav) 2002 2001 Fav/(Unfav)
---------- ---------- ----------- ---------- ---------- -----------
RESULTS OF OPERATIONS:
Operating Revenues $ 6,495 $ 7,660 (15)% $ 12,009 $ 16,020 (25)%
Operating Expenses:
Fuel and cost of gas sold 3,990 3,952 (1)% 6,543 9,606 32%
Purchased power 2,141 3,239 34% 4,775 5,553 14%
Operation and maintenance 233 146 (60)% 391 279 (40)%
Depreciation and amortization 83 20 (315)% 133 61 (118)%
Other 25 6 (317)% 37 8 (363)%
---------- ---------- ---------- ----------
Total 6,472 7,363 12% 11,879 15,507 23%
---------- ---------- ---------- ----------
Operating Income 23 297 (92)% 130 513 (75)%
---------- ---------- ---------- ----------
Non-operating Income:
Income from equity investments of
unconsolidated subsidiaries 6 1 500% 10 14 (29)%
Other Non-Operating Income 2 -- -- 5 -- --
---------- ---------- ---------- ----------
8 1 700% 15 14 7%
---------- ---------- ---------- ----------
Earnings Before Interest and Taxes $ 31 $ 298 (90)% $ 145 $ 527 (72)%
========== ========== ========== ==========
WHOLESALE ENERGY MARGINS BY COMMODITY:
Gas $ 50 $ 80 (38)% $ 103 $ 159 (35)%
Power 310 383 (19)% 585 689 (15)%
Oil 7 4 75% 6 8 (25)%
Other Commodities (3) 2 -- (3) 5 --
---------- ---------- ---------- ----------
$ 364 $ 469 (22)% $ 691 $ 861 (20)%
========== ========== ========== ==========
WHOLESALE ENERGY MARGINS BY ACTIVITY:
Power Generation $ 315 $ 350 (10)% $ 594 $ 630 (6)%
Trading, Marketing and Risk Management 49 119 (59)% 97 231 (58)%
---------- ---------- ---------- ----------
$ 364 $ 469 (22)% $ 691 $ 861 (20)%
========== ========== ========== ==========
TRADING, MARKETING AND RISK MANAGEMENT
MARGINS REALIZED AND UNREALIZED:
Realized $ 40 $ 26 54% $ 112 $ 127 (12)%
Unrealized 9 93 (90)% (15) 104 --
---------- ---------- ---------- ----------
$ 49 $ 119 (59)% $ 97 $ 231 (58)%
========== ========== ========== ==========
TRADING MARGIN / VAR 7.00 19.83 (65)% 12.13 33.00 (63)%
WHOLESALE ENERGY OPERATING DATA:
Physical natural gas Bcf volume 1,077 720 50% 2,028 1,444 40%
Revenues per Mcf $ 3.58 $ 5.15 (30)% $ 3.13 $ 6.23 (50)%
Physical Wholesale Power Sales (000's MWH) 74,830 61,267 22% 166,303 114,478 45%
Revenues per Mwh $ 35.33 $ 64.08 (45)% $ 33.94 $ 61.30 (45)%
Physical Oil Trading Revenues (000's Bbls) 758 2,861 (74)% 1,658 3,347 (50)%
VALUE AT RISK ANALYSIS:
(Assumes 95% confidence level and primarily a one day holding period using
variance/covariance model)
2002 2001 2002 2001
---- ---- ---- ----
As of June 30, $ 7 $ 8 $ 7 $ 8
Period Ended June 30:
Daily Average 7 6 8 7
Daily High 14 15 17 18
Daily Low 4 2 4 2
Reference is made to the Notes to the Consolidated Financial Statements
contained in the Amended Annual Report on Form 10-K/A of Reliant Energy,
Incorporated.
Reliant Energy, Incorporated and Subsidiaries
Results of Operations by Segment
(Millions of Dollars)
(Unaudited)
EUROPEAN ENERGY
-----------------------------------------------------------------------------------
Quarter Ended June 30, Six Months Ended June 30,
----------------------- % Diff ------------------------- % Diff
2002 2001 Fav/(Unfav) 2002 2001 Fav/(Unfav)
---------- ---------- ----------- ---------- ---------- -----------
RESULTS OF OPERATIONS:
Operating Revenues $ 641 $ 276 132% $ 1,176 $ 524 124%
Operating Expenses:
Fuel and purchased power 488 218 (124)% 959 400 (140)%
Operation and maintenance 36 30 (20)% 69 58 (19)%
Depreciation and amortization 14 19 26% 27 38 29%
Other -- -- -- 2 -- --
---------- ---------- ---------- ----------
Total 538 267 (101)% 1,057 496 (113)%
---------- ---------- ---------- ----------
Operating Income 103 9 1,044% 119 28 325%
---------- ---------- ---------- ----------
Non-operating Income:
Other non-operating income 2 53 (96)% 4 55 (93)%
---------- ---------- ---------- ----------
2 53 (96)% 4 55 (93)%
---------- ---------- ---------- ----------
Earnings Before Interest and Taxes $ 105 $ 62 69% $ 123 $ 83 48%
========== ========== ========== ==========
EUROPEAN ENERGY MARGINS BY ACTIVITY:
Power Generation $ 149 $ 56 166% $ 210 $ 121 74%
Trading, Marketing and Risk Management 4 2 100% 7 3 133%
---------- ---------- ---------- ----------
$ 153 $ 58 164% $ 217 $ 124 75%
========== ========== ========== ==========
TRADING AND RISK MANAGEMENT MARGINS REALIZED
AND UNREALIZED:
Realized $ 1 $ 1 -- $ 4 $ 2 100%
Unrealized 3 1 200% 3 1 200%
---------- ---------- ----------- ---------- ---------- -----------
$ 4 $ 2 100% $ 7 $ 3 133%
========== ========== =========== ========== ========== ===========
EUROPEAN ENERGY OPERATING DATA:
Physical Wholesale Power Sales (000's MWH) 23,850 9,679 146% 43,494 16,262 167%
Revenues per mwh $ 26.08 $ 25.62 2% $ 26.53 $ 27.68 (4)%
RETAIL ENERGY
----------------------------------------------------
Quarter Ended June 30, Six Months Ended June 30,
------------------------ -------------------------
2002 2001 2002 2001
---------- ---------- ---------- ----------
RESULTS OF OPERATIONS:
Operating Revenues $ 1,425 $ 36 $ 2,404 $ 63
Operating Expenses:
Natural gas and purchased power 1,099 -- 1,941 --
Operation and maintenance 96 37 165 66
Depreciation and amortization 6 2 11 4
Other 19 -- 33 --
---------- ---------- ---------- ----------
Total 1,220 39 2,150 70
---------- ---------- ---------- ----------
Operating Income (Loss) 205 (3) 254 (7)
---------- ---------- ---------- ----------
Non-operating Income:
Other non-operating income -- 1 -- 2
---------- ---------- ---------- ----------
-- 1 -- 2
---------- ---------- ---------- ----------
Earnings Before Interest and Taxes $ 205 $ (2) $ 254 $ (5)
========== ========== ========== ==========
TRADING MARGINS REALIZED AND UNREALIZED:
Realized $ 79 $ -- $ 85 $ --
Unrealized (13) 11 (8) 15
---------- ---------- ---------- ----------
$ 66 $ 11 $ 77 $ 15
========== ========== ========== ==========
RETAIL ENERGY OPERATING DATA:
GWh Sales data(1):
Residential 8,449
Small commercial 6,043
Large commercial, industrial and institutional 11,275
----------
Total 25,767
==========
(1) Gigawatt hours
Average Number of Customers (in thousands)
Residential 1,440
Small commercial 213
Large commercial, industrial and institutional 18
----------
Total 1,671
==========
OTHER OPERATIONS
-------------------------------------------------------------------------------------
Quarter Ended June 30, Six Months Ended June 30,
------------------------ % Diff ------------------------- % Diff
2002 2001 Fav/(Unfav) 2002 2001 Fav/(Unfav)
---------- ---------- ----------- ---------- ---------- -----------
RESULTS OF OPERATIONS:
Operating Revenues $ 7 $ 29 (76)% $ 10 $ 59 (83)%
Operating Expenses 12 49 76% 15 212 93%
---------- ---------- ---------- ----------
Operating Loss (5) (20) 75% (5) (153) 97%
Non-operating Income:
Other non-operating (expense) income (10) (5) (100)% (23) (3) (667)%
---------- ---------- ---------- ----------
(10) (5) (100)% (23) (3) (667)%
---------- ---------- ---------- ----------
Earnings Before Interest and Taxes $ (15) $ (25) 40% $ (28) $ (156) 82%
========== ========== ========== ==========
Reference is made to the Notes to the Consolidated Financial Statements
contained in the Amended Annual Report on Form 10-K/A of Reliant Energy,
Incorporated.
Reliant Energy, Incorporated and Subsidiaries
Consolidated Trading Activities
(Million of Dollars)
(Unaudited)
Quarter Ended June 30, Six Months Ended June 30,
------------------------ -------------------------
2002 2001 2002 2001
---------- ---------- ---------- ----------
CONSOLIDATED TRADING, MARKETING AND RISK
MANAGEMENT MARGINS REALIZED AND UNREALIZED:
Realized $ 120 $ 27 $ 201 $ 129
Unrealized (1) 105 (20) 120
---------- ---------- ---------- ----------
$ 119 $ 132 $ 181 $ 249
========== ========== ========== ==========
CONSOLIDATED VALUE AT RISK ANALYSIS:
(Assumes 95% confidence level and primarily a one
day holding period using variance/covariance model)
As of June 30, $ 20 $ 9 $ 20 $ 9
Period Ended June 30:
Daily Average 17 7 18 8
Daily High 29 16 29 18
Daily Low 13 3 13 3
COMBINED WHOLESALE, RETAIL AND EUROPEAN VAR
[CHART]
Reference is made to the Notes to the Consolidated Financial Statements
contained in the Amended Annual Report on Form 10-K/A of Reliant Energy,
Incorporated.
