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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): OCTOBER 25, 2000
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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.
(Resources Corp.). Information contained herein under "Natural Gas Distribution"
and "Interstate Pipelines" and relating to gas sales and gathering volumes and
wholesale power sales under "Wholesale Energy," which information relates to
Resources Corp., is filed by Reliant Energy and separately by Resources Corp. on
its own behalf. Resources Corp. makes no representation as to information
relating to Reliant Energy (except as it may relate to Resources Corp.) 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 Resources Corp.
ITEM 9. REGULATION FD DISCLOSURE.
RELIANT ENERGY'S EARNINGS
Reliant Energy reported third quarter earnings of $389 million, or
$1.36 per basic share, 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 increase in third quarter earnings.
The company reported earnings for the third quarter of 1999 of $1.69
billion, or $5.92 per basic share. Reported earnings for this period included a
$1.43 billion non-cash, unrealized accounting gain on indexed debt securities
and an investment in Time Warner common stock, as well as a $19 million loss due
to the devaluation of the Brazilian real.
Reliant Energy's 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. Reported
earnings for the same period of 2000 were $746 million, or $2.62 per basic
share, compared to reported earnings of $1.55 billion, or $5.45 per basic share,
for 1999. A $7 million extraordinary gain from the early extinguishment of debt
was included in reported earnings for 2000. For the same period of 1999, there
was a non-cash, unrealized accounting gain on indexed debt securities and the
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. For additional
information regarding Reliant Energy's third quarter earnings, please refer to
Reliant Energy's press release filed with this current report as Exhibit 99.1,
which press release is incorporated herein by reference.
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2000 RESULTS*
(MILLIONS OF DOLLARS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
Quarter Ended Year to Date
September 30, September 30,
--------------------- ------------------------
EARNINGS 2000 1999 2000 1999
-------- --------- --------- ----------- ---------
<S> <C> <C> <C> <C>
Net Income, As Reported $ 389 $ 1,690 $ 746 $ 1,555
Devaluation of the Brazilian Real -- 19 -- 114
Net Unrealized Gain on Indexed Debt Securities & Time Warner
Investment -- (1,426) -- (1,166)
Extraordinary Gain -- (7) --
Adjusted Earnings 389 283 738 504
EARNINGS PER BASIC SHARE
Earnings Per Basic Share, As Reported 1.36 5.92 2.62 5.45
Devaluation of the Brazilian Real -- .07 -- .40
Net Unrealized Gain on Indexed Debt Securities & Time Warner
Investment -- (5.00) -- (4.09)
Extraordinary Gain -- -- (.03) --
Basic EPS, Adjusted 1.36 0.99 2.59 1.77
Weighted Average Basic Shares (000)** 285,183 285,287 284,170 285,247
</TABLE>
* Immaterial rounding differences exist in this summarized schedule.
** On September 30, 2000, Reliant Energy had 285,862,004 shares of common stock
outstanding for financial reporting purposes.
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OPERATING INCOME (LOSS) BY SEGMENT
<TABLE>
<CAPTION>
Three Months Ended Year to Date
(In millions) September 30, September 30,
2000 1999 2000 1999
----------------------- ----------------------
<S> <C> <C> <C> <C>
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 Operating Income $ 777 $ 494 $ 1,618 $ 973
========= ========= ========= =========
</TABLE>
ELECTRIC OPERATIONS
Operations Data
<TABLE>
<CAPTION>
Three Months Ended Year to Date
GWh Sales September 30, September 30,
--------------------- Percent --------------------- Percent
2000 1999 Change 2000 1999 Change
--------- --------- --------- --------- --------- --------
<S> <C> <C> <C> <C> <C> <C>
Residential 8,534 7,744 10% 17,967 16,895 6%
Commercial 5,291 4,982 6% 13,526 12,790 6%
Industrial - Firm 6,847 6,782 1% 21,132 19,584 8%
Industrial - Interruptible 1,550 1,817 (15%) 4,232 4,420 (4%)
Other (1) 381 551 (31%) 1,407 2,220 (37%)
--------- --------- --------- ---------
Total 22,603 21,876 3% 58,264 55,909 4%
========= ========= ========= =========
</TABLE>
(1) Includes municipals, public utilities, off-system and ancillary services
sales.
Reliant Energy HL&P's operating income for the third quarter of 2000
was $500 million compared to $442 million for the 1999 period. The increase was
due to continued strong non-fuel revenue growth ($61 million), favorable weather
comparison ($12 million) and a decrease in depreciation and amortization expense
($25 million). The increase was partially offset by higher franchise taxes ($12
million), increased operations and maintenance expenses ($8 million) and
additional transmission cost of service ($10 million). Reliant Energy HL&P
amortized $135 million of the impairment of its electric plant during the third
quarter of 2000. Weather during the quarter was warmer than normal ($51
million).
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Reliant Energy HL&P's operating income increased 23% for the nine
months ended September 30, 2000 compared to the same period in 1999. The
increase of $190 million was primarily attributed to a decrease in depreciation
and amortization expense ($121 million), strong non-fuel revenue growth ($115
million) and favorable weather comparison ($26 million). These were partially
offset by additional transmission cost of service ($30 million), increased
operations and maintenance expenses ($17 million) and increased franchise taxes
($17 million). Reliant Energy HL&P amortized $282 million of the impairment of
its electric plant during the first nine months of 2000. For the year, weather
was warmer than normal ($73 million).
Reliant Energy HL&P's business separation plan that was filed with the
Public Utility Commission of Texas is scheduled for hearing on November 8, 2000.
The company believes an approval of the business separation plan may be received
by December 1, 2000 as originally requested, and continues to work with
interested parties toward a possible settlement.
WHOLESALE ENERGY
Operations Data
<TABLE>
<CAPTION>
Three Months Ended Year to Date
September 30, September 30,
--------------------- Percent --------------------- Percent
2000 1999 Change 2000 1999 Change
--------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Natural Gas Sales Volumes (Bcf) 645 433 49% 1,769 1,317 34%
Gathering Volumes (Bcf) 72 69 4% 213 198 8%
--------- --------- --------- ---------
Total (Bcf) 717 502 43% 1,982 1,515 31%
Wholesale Power Sales (GWh) 59,647 43,856 36% 117,705 77,624 52%
Unregulated Power Generation:
Capacity and Energy Sales (GWh) 9,082 3,079 195% 15,916 4,965 221%
</TABLE>
Operating income was $319 million for the third quarter of 2000,
compared to $43 million for the same period in 1999. The largest single
contributor to the increase was the addition of the Mid-Atlantic assets, which
provided about half of the increased earnings. Improvements also came from the
expansion of commercial assets and trading in the Southwest, Midwest and Florida
regions. Additionally, unique seasonal dynamics in the Western markets resulted
in higher energy sales and energy prices. The increased year over year third
quarter performance for assets we owned and operated in the Southwest region
accounted for about one third of our increased operating income. Increases in
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
Operation Data in Bcf
<TABLE>
<CAPTION>
Three Months Ended Year to Date
September 30, September 30,
--------------------- Percent --------------------- Percent
2000 1999 Change 2000 1999 Change
--------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Residential & Commercial Sales 33.9 32.7 4% 199.8 199.7 --
Industrial Sales 12.2 12.9 (5)% 37.8 39.8 (5)%
Transportation 11.0 10.5 5% 37.6 34.0 11%
Retail Major Accounts Sales 101.6 72.7 40% 279.7 230.6 21%
--------- --------- --------- ---------
Total Throughput 158.7 128.8 23% 554.9 504.1 10%
========= ========= ========= =========
</TABLE>
<TABLE>
<CAPTION>
Three Months Ended Year to Date
September 30, September 30,
--------------------- Percent --------------------- Percent
2000 1999 Change 2000 1999 Change
--------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Heating Degree Days
Actual 192 194 (1)% 6,282 6,408 (2)%
Normal 200 200 -- 7,561 7,561 --
Percent Change to Normal (4)% (3)% (17)% (15)%
</TABLE>
The 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.
INTERSTATE PIPELINES
Operations Data (million MMBtu)
<TABLE>
<CAPTION>
Three Months Ended Year to Date
September 30, September 30,
--------------------- Percent --------------------- Percent
2000 1999 Change 2000 1999 Change
--------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Total Throughput 182 201 (9)% 655 637 3%
</TABLE>
Operating income from the Interstate Pipelines segment was $28 million
for the third quarter of 2000 compared to operating income of $29 million in the
third quarter of 1999. Interstate Pipelines' operating income for the nine
months ended September 30, 2000 was $84 million compared to $84 million for the
same period in 1999.
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RELIANT ENERGY EUROPE
The Reliant Energy Europe segment includes N.V. UNA (UNA) and European
wholesale energy trading and marketing start-up operations. The company
established this business segment in the fourth quarter of 1999.
The Reliant Energy Europe segment reported operating income of $15
million for the third quarter of 2000 and $72 million for the nine months ended
September 30, 2000.
The company's marketing activities in Europe have resulted in forward
power sales representing approximately 50% of our 13.5 Twh capability to date.
As market conditions permit, the company will continue such sales.
In October the Dutch government said it would purchase TenneT BV, the
owner of the Dutch high voltage electricity grid, for 2.55 billion guilders.
This is an important step toward dissolving SEP, the Electricity Governing
Board, owned by the four generation companies. In addition, UNA will receive an
allocation (22.5%) of above market gas and power contracts (stranded costs). The
agreement has been reached with the Ministry of Economic Affairs and is subject
to approvals from Parliament and the European Union. The liability associated
with the stranded cost allocation for UNA is expected to be well within the
indemnification provided by UNA's former shareholders to Reliant Energy.
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. After adjusting for the devaluation
of the Brazilian real, operating income from this segment for the third quarter
of 1999 was $29 million.
In October, the company sold its interest in El Salvador Energy
Holdings to a subsidiary of AES Corporation and signed an agreement to sell its
interest in Light Servicos de Eletricidade S.A. (Light) to AES and EDF
International S.A. The sale of Light is expected to close by the end of the
year. In addition, the Company has entered into agreements to transfer its
Colombian interests to Union Fenosa Desarrollo y Accion Exterior, S.A. of Spain.
The transfer is expected to be completed by the end of the year. The aggregate
net proceeds from the closed and pending transactions are expected to be
approximately $800 million, with a book loss of approximately $250 million.
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CORPORATE
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. The decrease was due to expenses incurred in preparing
for retail competition in Texas beginning January 2002, costs associated with
exiting certain retail gas markets and eBusiness and communications startup
costs.
OUTLOOK
The company believes that currently published estimates of adjusted
earnings for 2000, which are from $2.85 to $2.95 per share, establish a
reasonable range. Given unique market circumstances that positively impacted
earnings in 2000, the company expects results for 2001 to be in line with this
year. These results, of course, are subject to the influence of a number of
factors, such as pricing margins in key markets, weather, movements of the Euro
against the U.S. dollar and other conditions related to building the unregulated
businesses.
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.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(c) Exhibits.
The following exhibit is filed herewith:
99.1 Press Release issued October 25, 2000
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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: October 25, 2000 By: /s/ MARY P. RICCIARDELLO
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: October 25, 2000 By: /s/ MARY P. RICCIARDELLO
Mary P. Ricciardello
Senior Vice President
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EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
Number Exhibit Description
------- -------------------
<S> <C>
99.1 Press Release issued October 25, 2000
</TABLE>
