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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): JANUARY 26, 2001
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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
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RELIANT ENERGY RESOURCES CORP.
(Exact name of registrant as specified in its charter)
DELAWARE 1-13265 76-0511406
(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
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This combined current report on Form 8-K is separately filed by Reliant
Energy, Incorporated (Reliant Energy) and Reliant Energy Resources Corp. (RERC).
Information contained herein under "Natural Gas Distribution" and "Pipelines and
Gathering" and relating to natural gas and wholesale power sales under
"Wholesale Energy", which information relates to RERC, is filed by Reliant
Energy and separately by RERC on its own behalf. RERC makes no representation as
to information relating to Reliant Energy (except as it may relate to RERC) and
its subsidiaries, or any other affiliate of Reliant Energy. References herein to
the businesses and operations of Reliant Energy include the businesses and
operations of Reliant Energy's subsidiaries, including RERC.
ITEM 9. REGULATION FD DISCLOSURE.
RELIANT ENERGY'S EARNINGS
Reliant Energy reported adjusted earnings for the year 2000 of $838
million, or $2.94 per basic share. This compares to $508 million, or $1.78 per
basic share, for 1999. Strong performance from the company's unregulated
wholesale energy businesses, increased customer demand in its regulated electric
service territory and decreased depreciation and amortization expense from
electric operations were the primary reasons for the substantial rise in
adjusted earnings.
Adjusted earnings for the fourth quarter of 2000 were $73 million, or
$0.25 per basic share, compared to $73 million, or $0.26 per basic share, for
the same period of 1999. Strong performance from the company's unregulated
domestic wholesale energy operations and its electric operations segment, due to
increased customer growth and electricity usage as well as decreased
depreciation expense were offset by increases in expenses related to the
preparation for retail competition in Texas and in the company's communications
and eBusiness operations. In addition, the company recorded reserves, which
include a $39 million provision taken against receivable balances related to
energy sales in California.
As of December 1, 2000, Reliant Energy began reporting the results of
the Reliant Energy Latin America segment as discontinued operations. All
financial information related to this segment is reported as discontinued
operations on a comparative basis.
Reliant Energy has moved the financial results of its gathering
operations (Reliant Energy Field Services, Inc.) from the wholesale energy
segment to the pipelines and gathering segment. In addition, the financial
results of its unregulated retail marketing of natural gas have been moved from
the other operations segment to the natural gas distribution segment. These
movements were made to more closely align financial results to the management of
these businesses.
The following table identifies the differences between reported
earnings and adjusted earnings mentioned above.
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2000 RESULTS*
(MILLIONS OF DOLLARS, EXCEPT PER SHARE AMOUNTS)
Quarter Ended Year Ended
December 31, December 31,
----------------------- -----------------------
EARNINGS 2000 1999 2000 1999
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Net (loss) income, as reported $ (299) $ (73) $ 447 $ 1,482
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Loss (earnings) from discontinued operations 146 (37) 172 9
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Loss on disposal of discontinued operations 159 -- 159 --
--------- --------- --------- ---------
Net unrealized loss (gain) on indexed debt
securities & Time Warner investment 67 -- 67 (1,166)
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Extraordinary loss (gain) -- 183 (7) 183
--------- --------- --------- ---------
Adjusted Earnings $ 73 $ 73 $ 838 $ 508
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EARNINGS PER BASIC SHARE
--------- --------- --------- ---------
(Loss) income per basic share, as reported $ (1.04) $ (.26) $ 1.57 $ 5.20
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Loss (earnings) from discontinued operations .51 (.13) .61 .03
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Loss on disposal of discontinued operations .55 -- .56 --
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Net unrealized loss (gain) on indexed debt securities & Time
Warner investment .23 -- .23 (4.09)
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Extraordinary loss (gain) -- .65 (.03) .64
--------- --------- --------- ---------
Basic EPS, adjusted $ .25 $ .26 $ 2.94 $ 1.78
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Weighted average basic shares (000)** 286,088 284,427 284,652 285,040
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* Immaterial rounding differences exist in this summarized schedule.
** On December 31, 2000, Reliant Energy had 286,464,709 shares of common stock
outstanding for financial reporting purposes.
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OPERATING INCOME (LOSS) BY SEGMENT
Three Months Ended Year Ended
(In millions) December 31, December 31,
2000 1999 2000 1999
-------- -------- -------- --------
Electric Operations $ 203 $ 144 $ 1,230 $ 981
Wholesale Energy 16 (14) 482 27
Natural Gas Distribution 64 57 113 158
Pipelines and Gathering 38 35 137 131
European Energy 17 32 89 32
Other Operations (90) (16) (172) (71)
------- ------- ------- -------
Total Operating Income $ 248 $ 238 $ 1,879 $ 1,258
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ELECTRIC OPERATIONS
Operations Data
Three Months Ended Year Ended
GWh Sales December 31, December 31,
------------------ Percent ------------------ Percent
2000 1999 Change 2000 1999 Change
------ ------ ------- ------ ------ -------
Residential 4,760 4,250 12% 22,727 21,144 7%
Commercial 4,069 3,826 6% 17,594 16,616 6%
Industrial - Firm 6,574 6,436 2% 27,707 26,020 6%
Industrial - Interruptible 1,309 1,040 26% 5,542 5,460 2%
Other (1) 318 662 (52%) 1,724 2,884 (40%)
------ ------ ------ ------
Total 17,030 16,214 5% 75,294 72,124 4%
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(1) Includes municipals, public utilities, off-system and ancillary services
sales.
Reliant Energy HL&P's operating income increased 25% for the year ended
December 31, 2000 compared to the same period in 1999. The increase of $249
million was primarily attributed to a decrease in depreciation and amortization
expense ($160 million), strong non-fuel revenue growth ($132 million) and a
favorable weather comparison ($45 million). These were partially offset by
additional transmission cost of service ($31 million), increased operations and
maintenance expenses ($22 million) and increased other taxes ($32 million). The
increase in other taxes included an assessment for the System Benefit Fund
(partially offset by a decrease in property taxes) and increased franchise taxes
and fees. The System Benefit Fund was established by the Texas electric
deregulation law (Senate Bill 7) to provide funding for (a) programs to assist
low-income electric customers, (b) customer education, and (c) school funding
loss mechanism. Reliant Energy HL&P amortized $329 million of the impairment of
its electric plant during 2000. For the year, weather
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margin was favorable compared to normal ($85 million). During 2000, Reliant
Energy HL&P added over 44,000 new customers (2.6%).
Reliant Energy HL&P's operating income for the fourth quarter of 2000
was $203 million compared to $144 million for the same period in 1999. The
increase was due to continued strong non-fuel revenue growth ($30 million), a
favorable weather comparison ($19 million) and a decrease in depreciation
expense ($39 million). The operating income increase was partially offset by an
increase in other taxes ($14 million), which included an assessment for the
System Benefit Fund (partially offset by a decrease in property taxes),
increased franchise fees, and increased operations and maintenance expenses ($5
million). Reliant Energy HL&P amortized $47 million of the impairment of its
electric plant during the fourth quarter of 2000. Weather margin during the
quarter was favorable compared to normal ($12 million).
WHOLESALE ENERGY
Operations Data
Three Months Ended Year Ended
December 31, December 31,
------------------ Percent ------------------- Percent
2000 1999 Change 2000 1999 Change
------ ------ ------- ------- ------- -------
Natural Gas Sales Volumes (Bcf) 740 503 47% 2,509 1,820 38%
Wholesale Power Sales (GWh) 63,383 32,697 94% 181,088 104,916 73%
Unregulated Power Generation:
Capacity and Energy Sales (GWh) 6,401 2,576 148% 21,789 8,527 156%
The wholesale energy segment includes domestic and Canadian trading and
marketing of natural gas, electric power and other commodities to wholesale
markets by Reliant Energy Services, Inc. and the domestic unregulated portion of
power generation by Reliant Energy Power Generation, Inc. Please note that the
gathering of natural gas from the wellhead by Reliant Energy Field Services,
Inc. has been reclassified into the pipelines and gathering segment for all
reported periods.
Operating income was $482 million for the year ended December 31, 2000
compared to $27 million in 1999. The group also reported equity income, which is
included in other income, of $43 million for 2000, compared to an equity loss of
$1 million in 1999. Additional operations in the Mid-Atlantic, Mid-Continent and
Southwest regions, as well as higher energy sales and prices contributed to the
increase over 1999. These were partially offset by higher general and
administrative expenses to support generation and commercial activities,
increased development costs, and reserves which include a $39 million provision
taken against receivable balances related to energy sales in California.
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The company's wholesale energy group reported an increase of $30
million in fourth quarter operating income and $10 million in fourth quarter
equity income from the same period in 1999, primarily due to the same factors
described above.
NATURAL GAS DISTRIBUTION
Operation Data in Bcf
Three Months Ended Year Ended
December 31, December 31,
------------------ Percent ------------------ Percent
2000 1999 Change 2000 1999 Change
------ ------ ------- ------ ------ -------
Residential & Commercial Sales 118.3 86.3 37% 318.1 285.9 11%
Industrial Sales 17.1 12.9 33% 54.9 52.8 4%
Transportation 12.7 13.0 (2%) 50.3 46.9 7%
Retail 101.0 100.0 1% 431.0 400.0 8%
------ ------ ------ ------
Total Throughput 249.1 212.2 17% 854.3 785.6 9%
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Three Months Ended Year Ended
December 31, December 31,
------------------ Percent ------------------ Percent
2000 1999 Change 2000 1999 Change
------ ------ ------- ------- ------- -------
Heating Degree Days
Actual 5,597 3,439 63% 11,879 10,360 15%
Normal 4,680 4,710 (1%) 12,258 12,372 (1%)
Percent Change to Normal 20% (27%) (3%) (16%)
Please note that the natural gas distribution segment includes the
company's unregulated retail marketing of natural gas for all reported periods.
Operating income for the year ended December 31, 2000 declined to $113
million compared to $158 million in 1999. The decline is due to increases in
operating expenses including additional provisions against receivable balances,
benefit expenses and severance/relocation costs. In addition, costs associated
with exiting certain retail gas markets were moved into this segment's results.
The natural gas distribution segment reported operating income of $64
million for the fourth quarter of 2000. This compares to operating income of $57
million for the same period in 1999. The primary reason for the increase was
increased weather margin ($25 million), offset by increased provisions against
receivable balances on a comparative basis and increased benefit expenses and
severance/relocation costs.
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PIPELINES AND GATHERING
Operations Data (Bcf)
Three Months Ended Year Ended
December 31, December 31,
------------------ Percent ------------------ Percent
2000 1999 Change 2000 1999 Change
------ ------ ------- ------- ------- -------
Pipelines 192.2 198.7 (3%) 846.6 836.5 1%
Gathering 75.8 71.9 5% 288.7 269.5 7%
------ ------ ------- -------
Total Throughput 268.0 270.6 (1%) 1,135.3 1,106.0 3%
====== ====== ======= =======
Please note that the pipelines and gathering segment includes natural
gas gathering from the wellhead activities of Reliant Energy Field Services,
Inc. for all reported periods.
Operating income from the pipelines and gathering segment was $137
million for the year ended December 31, 2000 compared to $131 million for the
same period in 1999. Operating income for the fourth quarter of 2000 was $38
million compared to $35 million for the fourth quarter of 1999.
EUROPEAN ENERGY
The European Energy segment reported operating income of $89 million
for the year ended December 31, 2000. The company established this segment in
the fourth quarter of 1999. Included in the 2000 results are various one time
expenses associated with the dissolution of SEP and the restructuring of the
Dutch market, increased expenses associated with building the trading and
marketing infrastructure in Europe and foreign exchange rate losses. SEP, the
Electricity Governing Board, is owned by the four generation companies.
Operating income for the fourth quarter of 2000 was $17 million
compared to $32 million for the same period of 1999. The decline is primarily
attributable to increased expenses associated with building the trading and
marketing infrastructure in Europe and foreign exchange rate losses.
The company's marketing activities in Europe have resulted in forward
power sales totaling approximately 15.5 Twh which was greater than the planned
level of 13.5 Twh for 2001. The previously announced sale of TenneT BV (the
owner of the Dutch high voltage electricity grid) is expected to close in 2001.
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RELIANT ENERGY LATIN AMERICA--DISCONTINUED OPERATIONS
As of December 1, 2000, Reliant Energy began reporting the results of
the Reliant Energy Latin America segment as discontinued operations. By the end
of 2000 the company closed on the sale of its investments in El Salvador,
Brazil, and Colombia. The net after-tax cash proceeds from these sales were
approximately $790 million. Negotiations for the sale of the company's remaining
Latin America interests are progressing, and these transactions are expected to
be complete in 2001. The remaining interests include a cogeneration facility and
a small distribution company, both in Argentina, and a coke calcining plant in
India. The aggregate book value of these interests is approximately $160
million.
OTHER OPERATIONS
Reliant Energy's other operations segment includes its unregulated
retail electric operations, its communications business, its eBusiness group and
corporate costs. For the year ended December 31, 2000, operating losses for the
other operations segment totaled $172 million compared to an operating loss of
$71 million for 1999. This was primarily due to increased expenses incurred in
preparing for retail competition in Texas beginning January 2002, eBusiness and
communications expenses. In addition, the company made a contribution to a
charitable foundation and incurred expenses associated with the acquisition of
naming rights for Houston's new football stadium and the sports, entertainment
and convention complex formerly known as the Astrodomain Complex.
The other operations segment had an operating loss of $90 million for
the fourth quarter of 2000 compared to an operating loss of $16 million for the
same period last year. The factors affecting the decline are the same as those
mentioned above for the year.
This current report includes forward-looking statements, estimates and
projections. Actual events and results may differ materially from those
projected. Factors that could affect actual results include future regulatory
and legislative decisions, weather, risks associated with international
operations, the timetable for closing announced acquisitions, the success in
integrating acquired operations, changes in Reliant Energy's business plans and
other factors discussed in the company's other filings with the Securities and
Exchange Commission.
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ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(c) Exhibits.
The following exhibits are filed herewith:
99.1 Press Release issued January 26, 2001
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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, INCORPORATED
Date: January 26, 2001 By: /s/ MARY P. RICCIARDELLO
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Mary P. Ricciardello
Senior Vice President and
Chief Accounting Officer
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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 RESOURCES CORP.
Date: January 26, 2001 By: /s/ MARY P. RICCIARDELLO
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Mary P. Ricciardello
Senior Vice President
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EXHIBIT INDEX
EXHIBIT
NUMBER DESCRIPTION
- ------ -----------
99.1 Press Release issued January 26, 2001