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EXHIBIT 99.1
FOR FURTHER INFORMATION: Sandy Fruhman, Media (713) 207-3123
Randy Burkhalter, Investors (713) 207-3115
FOR IMMEDIATE RELEASE: October 25, 2000
RELIANT ENERGY REPORTS STRONG THIRD-QUARTER EARNINGS
HOUSTON, TX. - Reliant Energy reported third-quarter earnings of $389
million, or $1.36 per basic share, a 37 percent increase compared to adjusted
earnings of $283 million, or $.99 per basic share, for the third quarter of
1999. Strong performance from the company's unregulated domestic wholesale
generation operations and increased customer growth and usage in its regulated
electric service territory were the primary reasons for the substantial increase
in third-quarter earnings.
"Our strong commercial management of generating assets and commercial
gas and power positions in attractive regions of the U.S. has allowed us to
break out of the traditional role of a local energy provider. As markets evolve,
we will continue to build business positions that capitalize on these
strengths," said Steve Letbetter, chairman, president and chief executive
officer of Reliant Energy.
Year-to-date adjusted earnings through September 30, 2000, were $738
million, or $2.59 per basic share, compared to adjusted earnings of $504
million, or $1.77 per basic share, for the same period of 1999.
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SELECTED OPERATING INCOME DETAILED
ELECTRIC OPERATIONS
Reliant Energy HL&P's operating income for the third quarter of 2000
was $500 million, compared to $442 million for the same period of 1999.
Increased customer demand in the Houston metropolitan area and lower
depreciation and amortization expense were the major reasons for the rise.
Firm kilowatt-hour sales for the third quarter of 2000 increased
approximately 5 percent over the same period of 1999. Reliant Energy HL&P has
added more than 47,000 customers in its service territory in the last twelve
months.
WHOLESALE ENERGY
The company's wholesale energy group, which includes unregulated power
generation and gas and power trading and marketing activities in North America,
reported third-quarter operating income of $319 million in 2000, compared to $43
million for the same period of 1999. Gross margins increased by $372 million
over margins for the same period of last year.
The improved performance was primarily due to the expansion of
commercial assets and trading in several regions, as well as higher energy sales
and energy prices due to unique seasonal dynamics in the Western markets.
Increased operating margins were partially offset by higher operating expenses
to support the infrastructure of the expanding wholesale business.
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NATURAL GAS DISTRIBUTION
Reliant Energy's three natural gas distribution companies reported an
operating loss of $15 million for the third quarter of 2000. This compares to an
operating loss of $5 million for the same period of 1999. The primary reasons
for the decline were increased expenses including employee benefits, information
technology and depreciation.
RELIANT ENERGY EUROPE
Reliant Energy Europe contributed operating income of $15 million for
the third quarter of 2000. The company established this business segment, which
consists of its European electric power generation and wholesale energy trading
and marketing operations, in the fourth quarter of 1999.
RELIANT ENERGY LATIN AMERICA
The Reliant Energy Latin America segment did not contribute operating
income for the third quarter of 2000 due primarily to decreased equity earnings
from its investments in Brazil and Colombia. Operating income from this segment
for the third quarter of 1999 was $10 million.
CORPORATE AND OTHER
Reliant Energy's corporate segment, which includes a portion of its
unregulated retail electric and gas operations, its communications business,
eBusiness group and corporate costs, had an operating loss of $70 million for
the third quarter of 2000, compared to an operating loss of $25 million for the
same period last year. This increased loss was due to expenses incurred in
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preparing for retail electric competition in Texas beginning January 2002, costs
associated with exiting certain retail gas markets, and eBusiness and
communications start-up costs.
REPORTED EARNINGS
Reliant Energy's reported earnings for the third quarter of 2000 were
$389 million, or $1.36 per basic share, compared to reported earnings of $1.69
billion, or $5.92 per basic share, for the same period of 1999. Third-quarter
earnings for 1999 include a $1.43 billion non-cash, unrealized accounting gain
on indexed debt securities and the company's investment in Time Warner common
stock, as well as a $19 million loss due to the devaluation of the Brazilian
real.
Year-to-date reported earnings through September 30, 2000, were $746
million, or $2.62 per basic share, compared to earnings of $1.55 billion, or
$5.45 per basic share, for the same period of 1999. Year-to-date reported
earnings for 2000 include a $7 million extraordinary gain from the early
extinguishment of debt. For the same period of 1999, there was a non-cash,
unrealized accounting gain on indexed debt securities and the company's
investment in Time Warner common stock of $1.17 billion, as well as a $114
million loss due to the devaluation of the Brazilian real.
EARNINGS CONFERENCE CALL
Reliant Energy has scheduled its third-quarter 2000 earnings conference
call for Wednesday, October 25, 2000, at 10 a.m. central daylight time.
Interested parties may listen to a live audio broadcast of the conference call
at www.reliantenergy.com/investing. Parties may also listen to an online replay
that will follow within two hours after completion of the call.
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The webcast requires listeners to have a multimedia computer with
speakers and RealPlayer installed. Please visit the website at least 15 minutes
before the scheduled broadcast to register for the event and go through the
Pre-event System Test, which will allow individuals to download and install any
necessary audio software.
FORM 8-K
For further details related to the third-quarter 2000 earnings release,
refer to the company's current report on form 8-K, which was filed today with
the Securities and Exchange Commission.
Reliant Energy (NYSE: REI), based in Houston, Texas, is an
international energy services and energy delivery company with approximately $20
billion in annual revenue and assets totaling more than $28 billion. The company
has a wholesale energy trading and marketing business that ranks among the top
five in the U.S. in combined electricity and natural gas volumes and has a
presence in most of the major power regions of the U.S. It also has power
generation and wholesale trading and marketing operations in Western Europe. The
company has nearly 27,000 megawatts of power generation in operation in the U.S.
and Western Europe and has announced acquisitions and development projects that
will add nearly 4,000 megawatts. Reliant Energy also has marketing and
distribution operations serving nearly four million electricity and natural gas
customers in the U.S., interests in power distribution operations in Latin
America, and a communications business serving the Houston area.
* * * *
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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, 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.
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Reliant Energy, Incorporated and Subsidiaries
Statements of Consolidated Income
(Thousands of Dollars)
(Unaudited)
<TABLE>
<CAPTION>
Quarter Ended Nine Months Ended
September 30, September 30,
---------------------------- ----------------------------
2000 1999 2000 1999
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Revenues:
Electric Operations $ 1,827,027 $ 1,496,596 $ 4,195,248 $ 3,513,144
Wholesale Energy 6,775,735 2,908,119 12,411,075 5,854,052
Natural Gas Distribution 771,588 500,432 2,406,621 1,780,887
Interstate Pipelines 70,295 70,024 223,519 202,246
Reliant Energy Europe 129,302 -- 415,306 --
Reliant Energy Latin America 20,971 34,126 51,355 26,273
Other 80,046 46,443 300,225 180,616
Eliminations (152,237) (108,548) (482,033) (309,294)
------------ ------------ ------------ ------------
Total Revenues 9,522,727 4,947,192 19,521,316 11,247,924
------------ ------------ ------------ ------------
Expenses:
Fuel and cost of gas sold 3,901,470 1,564,652 9,176,654 4,634,247
Purchased power 3,808,783 2,062,679 6,001,305 3,315,667
Operation and maintenance 595,423 454,587 1,641,063 1,278,798
Taxes other than income taxes 144,898 113,643 372,124 340,800
Depreciation and amortization 295,174 257,343 712,644 705,337
------------ ------------ ------------ ------------
Total 8,745,748 4,452,904 17,903,790 10,274,849
------------ ------------ ------------ ------------
Operating Income 776,979 494,288 1,617,526 973,075
------------ ------------ ------------ ------------
Other Income (Expense):
Unrealized gain on Time Warner investment 40,000 1,816,105 242,928 1,816,105
Unrealized (loss) gain on indexed debt securities (40,000) 406,717 (242,870) 6,778
Other - net 37,762 12,667 87,334 38,695
------------ ------------ ------------ ------------
Total 37,762 2,235,489 87,392 1,861,578
------------ ------------ ------------ ------------
Interest and Other Charges:
Interest 186,289 116,176 536,780 368,759
Distribution on trust preferred securities 13,754 14,652 40,458 38,433
------------ ------------ ------------ ------------
Total 200,043 130,828 577,238 407,192
------------ ------------ ------------ ------------
Income Before Income Taxes, Extraordinary Item
and Preferred Dividends 614,698 2,598,949 1,127,680 2,427,461
Income Tax Expense 225,635 908,862 388,978 872,304
------------ ------------ ------------ ------------
Income Before Extraordinary Item and
Preferred Dividends 389,063 1,690,087 738,702 1,555,157
Extraordinary Item, net of tax -- -- 7,445 --
------------ ------------ ------------ ------------
Income Before Preferred Dividends 389,063 1,690,087 746,147 1,555,157
Preferred Dividends 97 97 292 292
------------ ------------ ------------ ------------
Net Income Attributable to Common Stockholders $ 388,966 $ 1,689,990 $ 745,855 $ 1,554,865
============ ============ ============ ============
</TABLE>
Reference is made to the Notes to the Consolidated Financial Statements
contained in the Annual Report of Reliant Energy, Incorporated.
The information furnished is given in response to your request for
information concerning Reliant Energy, Incorporated and not in connection with
any sale or offer for sale of, or solicitation of an offer to buy, any
securities.
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Reliant Energy, Incorporated
Selected Data From Statements of Consolidated Income
(Thousands of Dollars, Except Per Share Amounts)
(Unaudited)
<TABLE>
<CAPTION>
Quarter Ended Nine Months Ended
September 30, September 30,
-------------------------- --------------------------
2000 1999 2000 1999
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
AS REPORTED:
Basic Earnings Per Common Share
Extraordinary Item, net of tax $ -- $ -- $ 0.03 $ --
Net Income Attributable to Common Stockholders $ 1.36 $ 5.92 $ 2.62 $ 5.45
Diluted Earnings Per Common Share
Extraordinary Item, net of tax $ -- $ -- $ 0.03 $ --
Net Income Attributable to Common Stockholders $ 1.34 $ 5.90 $ 2.60 $ 5.43
Dividends per Common Share $ 0.375 $ 0.375 $ 1.125 $ 1.125
Weighted Average Common Shares Outstanding (000):
- Basic 285,183 285,287 284,170 285,247
- Diluted 289,599 286,414 286,828 286,537
AS ADJUSTED FOR UNUSUAL AND OTHER CHARGES:
Net Income Attributable to Common Stockholders $ 388,966 $ 1,689,990 $ 745,855 $ 1,554,865
Unusual and other charges, after tax:
Extraordinary item -- -- (7,445) --
Net unrealized gain on indexed debt securities and
Time Warner investment -- (1,425,700) -- (1,165,740)
Brazilian devaluation -- 18,968 -- 114,441
----------- ----------- ----------- -----------
Adjusted Earnings $ 388,966 $ 283,258 $ 738,410 $ 503,566
=========== =========== =========== ===========
Adjusted Basic Earnings Per Common Share $ 1.36 $ 0.99 $ 2.59 $ 1.77
Adjusted Diluted Earnings Per Common Share $ 1.34 $ 0.99 $ 2.57 $ 1.76
OPERATING INCOME (LOSS) BY SEGMENT (IN MILLIONS)
Electric Operations $ 500 $ 442 $ 1,027 $ 837
Wholesale Energy 319 43 481 53
Natural Gas Distribution (15) (5) 82 101
Interstate Pipelines 28 29 84 84
Reliant Energy Europe 15 -- 72 --
Reliant Energy Latin America -- 10 (16) (53)
Corporate (70) (25) (112) (49)
----------- ----------- ----------- -----------
Total $ 777 $ 494 $ 1,618 $ 973
=========== =========== =========== ===========
</TABLE>
FOR ADDITIONAL INFORMATION PLEASE CONTACT:
Randy Burkhalter
(713) 207-3115
Dennis Barber
(713) 207-3042
