Reliant Energy, Incorporated
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.
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.
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.
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., 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.
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 http://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. 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 http://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 Six Months Ended
June 30, 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
Distribution Generation Eliminations
Quarter Ended June 30,
2002
Results of Operations:
Operating Revenues:
Operating revenues $368 $414 $4
ECOM true-up 170 --- ---
Total Revenues 538 414 4
Operating Expenses:
Fuel and purchased power 5 299 4
Operation and maintenance 130 79 ---
Depreciation and amortization 66 39 ---
Taxes other than income 63 26 ---
Total 264 443 4
Operating Income (Loss) 274 (29) ---
Non-operating Income:
Other non-operating income 3 3 ---
3 3 ---
Earnings Before Interest and Taxes $277 $(26) $---
Electric
Total Operations
Quarter Ended June 30, % Diff
2002 2001 Fav/(Unfav)
Results of Operations:
Operating Revenues:
Operating revenues $786 $1,523 (48%)
ECOM true-up 170 --- ---
Total Revenues 956 1,523 (37%)
Operating Expenses:
Fuel and purchased power 308 721 57%
Operation and maintenance 209 224 7%
Depreciation and amortization 105 129 19%
Taxes other than income 89 107 17%
Total 711 1,181 40%
Operating Income (Loss) 245 342 (28%)
Non-operating Income:
Other non-operating income 6 12 (50%)
6 12 (50%)
Earnings Before Interest and Taxes $251 $354 (29%)
Electric
Transmission & Electric
Distribution Generation Eliminations
Six Months Ended June 30,
2002
Results of Operations:
Operating Revenues:
Operating revenues $810 $739 $(56)
ECOM true-up 311 --- ---
Total Revenues 1,121 739 (56)
Operating Expenses:
Fuel and purchased power 81 528 (56)
Operation and maintenance 270 174
Depreciation and amortization 130 79 ---
Taxes other than income 112 39 ---
Total 593 820 (56)
Operating Income (Loss) 528 (81) ---
Non-operating Income:
Other non-operating income 8 3 ---
8 3 ---
Earnings Before Interest and Taxes $536 $(78) $---
Electric
Total Operations
Six Months Ended June 30, % Diff
2002 2001 Fav/(Unfav)
Results of Operations:
Operating Revenues:
Operating revenues $1,493 $2,913 (49%)
ECOM true-up 311 --- ---
Total Revenues 1,804 2,913 (38%)
Operating Expenses:
Fuel and purchased power 553 1,507 63%
Operation and maintenance 444 472 6%
Depreciation and amortization 209 208 ---
Taxes other than income 151 198 24%
Total 1,357 2,385 43%
Operating Income (Loss) 447 528 (15%)
Non-operating Income:
Other non-operating income 11 25 (56%)
11 25 (56%)
Earnings Before Interest and Taxes $458 $553 (17%)
Electric Operations Operating
Data: Quarter Ended June 30,
Actual MWH Delivered 2002 2001
Residential 6,295,795 5,784,467 9%
Commercial 4,788,531 4,540,104 5%
Industrial 6,432,125 8,507,181 (24%)
Other 37,222 380,873 (90%)
Total 17,553,673 19,212,625 (9%)
Weather (average for service area):
Percentage of normal:
Cooling degree days 108% 100% 8%
Heating degree days 33% 30% 3%
Average number of metered
customers:
Residential 1,539,193 1,514,566 2%
Commercial 209,956 206,744 2%
Industrial 1,814 1,771 2%
Other --- 28 (100%)
Total 1,750,963 1,723,109 2%
Physical Electric Generation
Power Sales (MWH) 14,669,572 N/A
Electric Operations Operating
Data: Six Months Ended June 30,
Actual MWH Delivered 2002 2001
Residential 10,769,260 9,735,625 11%
Commercial 8,763,779 8,508,706 3%
Industrial 12,769,728 15,945,397 (20%)
Other 79,371 677,376 (88%)
Total 32,382,138 34,867,104 (7%)
Weather (average for service area):
Percentage of normal:
Cooling degree days 108% 102% 6%
Heating degree days 100% 106% (6%)
Average number of metered
customers:
Residential 1,535,499 1,510,260 2%
Commercial 209,690 205,630 2%
Industrial 1,837 1,753 5%
Other 3 28 (89%)
Total 1,747,029 1,717,671 2%
Physical Electric Generation
Power Sales (MWH) 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, % Diff
2002 2001 Fav/(Unfav)
Results of Operations:
Operating Revenues $797 $888 (10%)
Operating Expenses:
Natural gas 603 725 17%
Operation and maintenance 125 148 16%
Depreciation and amortization 32 37 14%
Other operating expenses 25 25 ---
Total 785 935 16%
Operating Income (Loss) 12 (47) ---
Non-operating Income
Other Non-operating Income 2 6 (67%)
2 6 (67%)
Earnings Before Interest and Taxes $14 $(41) ---
Natural Gas Distribution Operating
Data:
Throughput data in BCF
Residential and Commercial 49 37 32%
Industrial Sales 13 12 8%
Transportation 13 11 18%
Retail 96 107 (10%)
Total Throughput 171 167 2%
Weather (average for service area)
Percentage of normal:
Heating degree days 114% 87% 27%
Average number of customers:
Residential 2,720,237 2,674,434 2%
Commercial and Industrial Sales 249,131 241,876 3%
Total 2,969,368 2,916,310 2%
Natural Gas Distribution
Six Months Ended June 30, % Diff
2002 2001 Fav/(Unfav)
Results of Operations:
Operating Revenues $1,977 $3,211 (38%)
Operating Expenses:
Natural gas 1,488 2,702 45%
Operation and maintenance 256 281 9%
Depreciation and amortization 62 73 15%
Other operating expenses 53 67 21%
Total 1,859 3,123 40%
Operating Income (Loss) 118 88 34%
Non-operating Income
Other Non-operating Income 6 8 (25%)
6 8 (25%)
Earnings Before Interest and Taxes $124 $96 29%
Natural Gas Distribution Operating
Data:
Throughput data in BCF
Residential and Commercial 181 189 (4%)
Industrial Sales 24 23 4%
Transportation 28 26 8%
Retail 217 239 (9%)
Total Throughput 450 477 (6%)
Weather (average for service area)
Percentage of normal:
Heating degree days 99% 104% (5%)
Average number of customers:
Residential 2,722,974 2,685,857 1%
Commercial and Industrial Sales 249,670 243,917 2%
Total 2,972,644 2,929,774 1%
Pipelines and Gathering
Quarter % Diff Six Months % Diff
Ended June 30, Fav/ Ended June 30, Fav/
2002 2001 (Unfav) 2002 2001 (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 Six Months Ended
June 30, % Diff June 30, % Diff
Fav/ Fav/
2002 2001 (Unfav) 2002 2001 (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 Six Months Ended
June 30, % Diff June 30, % Diff
Fav/ Fav/
2002 2001 (Unfav) 2002 2001 (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 (A):
Residential 8,449
Small commercial 6,043
Large commercial,
industrial and
institutional 11,275
Total 25,767
(A) 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 Six Months Ended
June 30, June 30,
% Diff % Diff
Fav/ Fav/
2002 2001 (Unfav) 2002 2001 (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 Six Months Ended
June 30, 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
To view a graph showing Reliant Resources' Combined Wholesale, Retail and European VAR go to http://www.reliant.com/files/230052_europeanvargraph.pdf.
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.
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SOURCE: Reliant Energy, Incorporated
CONTACT: media, Sandy Fruhman, +1-713-207-3123, or investors, Marianne
Paulsen, +1-713-207-6500, or Melanie Trent, +1-713-207-8351, all of Reliant
Energy, Incorporated
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