Reliant Energy Reports Strong First-Quarter Earnings

Apr 16, 2001, 01:00 ET from Reliant Energy

    HOUSTON, April 16 /PRNewswire/ -- Reliant Energy today reported
 first-quarter 2001 adjusted earnings of $274 million, or $.94 per diluted
 share, compared to $134 million, or $.47 per share, for the first quarter of
 2000.  Adjusted earnings per share doubled compared to a year ago due to the
 strong performance from the company's wholesale energy segment and improved
 results from its natural gas distribution companies and its pipelines and
 gathering segment.
     (Photo:  http://www.newscom.com/cgi-bin/prnh/20000309/DATH030 )
     "We are pleased to report a quarter of outstanding performance for our
 shareholders," said Steve Letbetter, chairman, president and chief executive
 officer of Reliant Energy.  "We are particularly pleased with the results from
 our wholesale energy business, which continues to perform well in a
 competitive environment.  In a few short years, we've built a substantial
 wholesale energy merchant business that has grown rapidly and gained a
 sizeable presence in five key regions of the U.S.  We are proud of these
 accomplishments.  Our regulated businesses also performed well in the first
 quarter, with increased operating income from our natural gas distribution
 segment and pipelines and gathering operations.  These businesses continue to
 produce solid earnings and cash flows."
 
                           OPERATING INCOME DETAILED
 
     Electric Operations
     Reliant Energy HL&P's operating income for the first quarter of 2001 was
 $186 million, down from $202 million for the same period of 2000.  The decline
 was primarily due to increased operating expenses and increased taxes,
 partially offset by strong demand from residential and commercial customers
 and reduced depreciation and amortization expense.
 
     Wholesale Energy
     The company's wholesale energy segment produced first-quarter operating
 income of $216 million, compared to an operating loss of $22 million for the
 first quarter of 2000.  Gross margins for the wholesale group rose by
 $343 million from the same quarter of last year.  This increase was primarily
 due to increased revenues from energy and ancillary services, the addition of
 our Mid-Atlantic assets and strong commercial and operational performance in
 other regions.  These results were partially offset by higher general and
 administrative and emissions expenses and a $38 million provision taken
 against receivable balances related to energy sales in the West region.
 
     Natural Gas Distribution
     Operating income for the company's natural gas distribution segment
 increased 29 percent to $135 million for the first quarter of 2001, compared
 to $105 million for the first quarter of 2000.  The substantial rise was
 largely due to improved margins from cooler weather, partially offset by
 increased operating expenses.
 
     Pipelines and Gathering
     The company's pipelines and gathering segment produced first-quarter
 operating income of $39 million, up from $32 million for the same period last
 year.  Improved margins from both the pipelines and gas gathering businesses
 contributed to the rise in operating income.
 
     European Energy
     The company's European energy segment reported operating income of
 $18 million for the first quarter of 2001, compared to $33 million for the
 same period of 2000.  The decline was largely due to a decrease in gross
 margins resulting from competition in the wholesale market, which began
 January 1, 2001.  Increased margins from ancillary services and district
 heating partially offset the decline.
 
     Other Operations
     The company's other operations segment, which includes its unregulated
 retail electric operations, its communications business, its eBusiness group
 and corporate costs, reported an adjusted operating loss of $33 million for
 the first quarter of 2001, compared to an operating loss of $9 million for the
 same period last year.  The decline resulted primarily from the timing of
 certain legal expenses as well as costs related to the company's
 communications operations.
     In anticipation of the spin-off of its unregulated businesses, the company
 incurred a $101 million pre-tax, non-cash charge related to the redesign of
 its benefits plans.  Including this charge, the reported operating loss for
 this segment was $134 million.
 
                               REPORTED EARNINGS
 
     Reliant Energy's reported earnings for the first quarter of 2001 were
 $262 million, or $.90 per diluted share, reflecting a $7 million, after-tax
 loss on the disposal of discontinued operations in Latin America, a
 $62 million after-tax, non-cash gain from the implementation of SFAS No. 133,
 "Accounting for Derivative Instruments and Hedging Activities" and a
 $65 million after-tax, non-cash charge relating to the redesign of the
 company's benefits for employees of the company's unregulated businesses as
 discussed above.  This compares to reported earnings of $133 million, or
 $.47 per share, for the first quarter of 2000, which includes a $1 million
 loss from discontinued operations in Latin America.
 
                      WEBCAST OF EARNINGS CONFERENCE CALL
 
     Reliant Energy has scheduled its first-quarter 2001 earnings conference
 call for Monday, April 16, 2001, at 10 a.m. Central Time.  Interested parties
 may listen to a live audio broadcast of the conference call at
 www.reliantenergy.com/investors .  Parties may also listen to an online replay
 that will follow within two hours after completion of the call.
     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 download and install any
 necessary audio software.
 
                                    FORM 8-K
 
     For further details related to the first-quarter 2001 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 $38 billion in
 annual revenue and assets totaling more than $30 billion.  The company has
 more than 23,000 megawatts of power generation in operation in the U.S. and is
 one of only three companies to rank among both the five largest power
 marketers and the five largest natural gas marketers in the nation.  The
 company also has wholesale trading and marketing operations and more than
 3,400 megawatts of power generation in Western Europe.  Reliant Energy's
 retail marketing and distribution operations serve nearly four million
 electricity and natural gas customers in the U.S., and its Internet
 infrastructure and communications company serves business customers in Texas.
 
     This news release 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 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.
 
 
                 Reliant Energy, Incorporated and Subsidiaries
                       Statements of Consolidated Income
                             (Thousands of Dollars)
                                  (Unaudited)
 
                                                    Quarter Ended March 31,
                                                    2001              2000
 
     Revenues:
       Electric Operations                       $1,389,766          $947,102
       Wholesale Energy                           9,593,024         2,155,720
       Natural Gas Distribution                   2,322,694         1,050,931
       Pipelines and Gathering                      130,427            89,774
       European Energy                              247,879           150,153
       Other Operations                              31,648            16,323
       Eliminations                                (431,117)         (196,997)
     Total Revenues                              13,284,321         4,213,006
 
     Expenses:
       Fuel and cost of gas sold                  7,667,139         2,332,589
       Purchased power                            4,107,623           784,934
       Operation and maintenance                    715,014           464,948
       Taxes other than income taxes                139,688           110,565
       Depreciation and amortization                195,054           178,616
         Total                                   12,824,518         3,871,652
     Operating Income                               459,803           341,354
 
     Other Income (Expense):
       Unrealized gain on AOL Time Warner
        investment                                  137,082         1,523,683
       Unrealized loss on indexed debt
        securities                                 (135,047)       (1,523,625)
       Income of equity investment of
        unconsolidated subsidiaries                  12,778               485
       Other -- net                                  35,608            20,401
     Total                                           50,421            20,944
 
     Interest and Other Charges:
       Interest                                     177,952           160,054
       Distribution on trust preferred
      securities                                     13,900            13,892
         Total                                      191,852           173,946
 
     Income from Continuing Operations
      Before Income Taxes,
     Cumulative Effect of Accounting
      Change and Preferred Dividends                318,372           188,352
 
     Income Tax Expense                             110,150            54,536
 
     Income from Continuing Operations
      Before Cumulative Effect of
      Accounting Change and
     Preferred Dividends                            208,222           133,816
     Loss from Discontinued Operations,
      net of tax of ($1,400)                             --              (663)
     Loss on Disposal of Discontinued
      Operations, net of tax of ($1,640)             (7,294)               --
     Cumulative Effect of Accounting
      Change, net of tax of $33,205                  61,666                --
     Income Before Preferred Dividends              262,594           133,153
 
     Preferred Dividends                                 97                97
     Net Income Attributable to Common
      Stockholders                                 $262,497          $133,056
 
 
    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.
 
 
                          Reliant Energy, Incorporated
              Selected Data From Statements of Consolidated Income
                (Thousands of Dollars, Except Per Share Amounts)
                                  (Unaudited)
 
                                                       Quarter Ended March 31,
                                                       2001              2000
     As Reported:
 
     Basic Earnings Per Common Share
     Income from continuing operations
      before cumulative effect of
      accounting change                               $0.72             $0.47
     Loss on disposal of discontinued
      operations, net of tax                         $(0.03)            $  --
     Cumulative effect of accounting
      change, net of tax                              $0.22             $  --
     Net income attributable to common
      stockholders                                    $0.91             $0.47
 
     Diluted Earnings Per Common Share
     Income from continuing operations
      before cumulative effect of
      accounting change                               $0.72             $0.47
     Loss on disposal of discontinued
      operations, net of tax                         $(0.03)            $  --
     Cumulative effect of accounting
      change, net of tax                              $0.21             $  --
     Net income attributable to common
      stockholders                                    $0.90             $0.47
 
     Dividends per Common Share                      $0.375            $0.375
 
          Weighted Average Common Shares
           Outstanding (000):
     - Basic                                        287,336           283,078
     - Diluted                                      290,173           284,251
 
 
     As Adjusted for Unusual and Other
      Charges:
 
     Net Income Attributable to Common
      Stockholders                                 $262,497          $133,056
 
     Unusual and other charges, after tax:
     Loss from discontinued operations                   --               663
     Loss on disposal of discontinued
      operations                                      7,294                --
     Cumulative effect of accounting
      change                                        (61,666)               --
     Curtailment and related enhancement
      of benefit plans                               65,396                --
 
     Adjusted Earnings                             $273,521          $133,719
 
     Adjusted Basic Earnings Per Common Share         $0.95             $0.47
     Adjusted Diluted Earnings Per Common Share       $0.94             $0.47
 
     Operating Income (Loss) by Segment (in millions)
 
     Electric Operations                               $186              $202
     Wholesale Energy                                   216               (22)
     Natural Gas Distribution                           135               105
     Pipelines and Gathering                             39                32
     European Energy                                     18                33
     Other Operations                                  (134)               (9)
 
     Total                                             $460              $341
 
 

SOURCE Reliant Energy
    HOUSTON, April 16 /PRNewswire/ -- Reliant Energy today reported
 first-quarter 2001 adjusted earnings of $274 million, or $.94 per diluted
 share, compared to $134 million, or $.47 per share, for the first quarter of
 2000.  Adjusted earnings per share doubled compared to a year ago due to the
 strong performance from the company's wholesale energy segment and improved
 results from its natural gas distribution companies and its pipelines and
 gathering segment.
     (Photo:  http://www.newscom.com/cgi-bin/prnh/20000309/DATH030 )
     "We are pleased to report a quarter of outstanding performance for our
 shareholders," said Steve Letbetter, chairman, president and chief executive
 officer of Reliant Energy.  "We are particularly pleased with the results from
 our wholesale energy business, which continues to perform well in a
 competitive environment.  In a few short years, we've built a substantial
 wholesale energy merchant business that has grown rapidly and gained a
 sizeable presence in five key regions of the U.S.  We are proud of these
 accomplishments.  Our regulated businesses also performed well in the first
 quarter, with increased operating income from our natural gas distribution
 segment and pipelines and gathering operations.  These businesses continue to
 produce solid earnings and cash flows."
 
                           OPERATING INCOME DETAILED
 
     Electric Operations
     Reliant Energy HL&P's operating income for the first quarter of 2001 was
 $186 million, down from $202 million for the same period of 2000.  The decline
 was primarily due to increased operating expenses and increased taxes,
 partially offset by strong demand from residential and commercial customers
 and reduced depreciation and amortization expense.
 
     Wholesale Energy
     The company's wholesale energy segment produced first-quarter operating
 income of $216 million, compared to an operating loss of $22 million for the
 first quarter of 2000.  Gross margins for the wholesale group rose by
 $343 million from the same quarter of last year.  This increase was primarily
 due to increased revenues from energy and ancillary services, the addition of
 our Mid-Atlantic assets and strong commercial and operational performance in
 other regions.  These results were partially offset by higher general and
 administrative and emissions expenses and a $38 million provision taken
 against receivable balances related to energy sales in the West region.
 
     Natural Gas Distribution
     Operating income for the company's natural gas distribution segment
 increased 29 percent to $135 million for the first quarter of 2001, compared
 to $105 million for the first quarter of 2000.  The substantial rise was
 largely due to improved margins from cooler weather, partially offset by
 increased operating expenses.
 
     Pipelines and Gathering
     The company's pipelines and gathering segment produced first-quarter
 operating income of $39 million, up from $32 million for the same period last
 year.  Improved margins from both the pipelines and gas gathering businesses
 contributed to the rise in operating income.
 
     European Energy
     The company's European energy segment reported operating income of
 $18 million for the first quarter of 2001, compared to $33 million for the
 same period of 2000.  The decline was largely due to a decrease in gross
 margins resulting from competition in the wholesale market, which began
 January 1, 2001.  Increased margins from ancillary services and district
 heating partially offset the decline.
 
     Other Operations
     The company's other operations segment, which includes its unregulated
 retail electric operations, its communications business, its eBusiness group
 and corporate costs, reported an adjusted operating loss of $33 million for
 the first quarter of 2001, compared to an operating loss of $9 million for the
 same period last year.  The decline resulted primarily from the timing of
 certain legal expenses as well as costs related to the company's
 communications operations.
     In anticipation of the spin-off of its unregulated businesses, the company
 incurred a $101 million pre-tax, non-cash charge related to the redesign of
 its benefits plans.  Including this charge, the reported operating loss for
 this segment was $134 million.
 
                               REPORTED EARNINGS
 
     Reliant Energy's reported earnings for the first quarter of 2001 were
 $262 million, or $.90 per diluted share, reflecting a $7 million, after-tax
 loss on the disposal of discontinued operations in Latin America, a
 $62 million after-tax, non-cash gain from the implementation of SFAS No. 133,
 "Accounting for Derivative Instruments and Hedging Activities" and a
 $65 million after-tax, non-cash charge relating to the redesign of the
 company's benefits for employees of the company's unregulated businesses as
 discussed above.  This compares to reported earnings of $133 million, or
 $.47 per share, for the first quarter of 2000, which includes a $1 million
 loss from discontinued operations in Latin America.
 
                      WEBCAST OF EARNINGS CONFERENCE CALL
 
     Reliant Energy has scheduled its first-quarter 2001 earnings conference
 call for Monday, April 16, 2001, at 10 a.m. Central Time.  Interested parties
 may listen to a live audio broadcast of the conference call at
 www.reliantenergy.com/investors .  Parties may also listen to an online replay
 that will follow within two hours after completion of the call.
     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 download and install any
 necessary audio software.
 
                                    FORM 8-K
 
     For further details related to the first-quarter 2001 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 $38 billion in
 annual revenue and assets totaling more than $30 billion.  The company has
 more than 23,000 megawatts of power generation in operation in the U.S. and is
 one of only three companies to rank among both the five largest power
 marketers and the five largest natural gas marketers in the nation.  The
 company also has wholesale trading and marketing operations and more than
 3,400 megawatts of power generation in Western Europe.  Reliant Energy's
 retail marketing and distribution operations serve nearly four million
 electricity and natural gas customers in the U.S., and its Internet
 infrastructure and communications company serves business customers in Texas.
 
     This news release 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 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.
 
 
                 Reliant Energy, Incorporated and Subsidiaries
                       Statements of Consolidated Income
                             (Thousands of Dollars)
                                  (Unaudited)
 
                                                    Quarter Ended March 31,
                                                    2001              2000
 
     Revenues:
       Electric Operations                       $1,389,766          $947,102
       Wholesale Energy                           9,593,024         2,155,720
       Natural Gas Distribution                   2,322,694         1,050,931
       Pipelines and Gathering                      130,427            89,774
       European Energy                              247,879           150,153
       Other Operations                              31,648            16,323
       Eliminations                                (431,117)         (196,997)
     Total Revenues                              13,284,321         4,213,006
 
     Expenses:
       Fuel and cost of gas sold                  7,667,139         2,332,589
       Purchased power                            4,107,623           784,934
       Operation and maintenance                    715,014           464,948
       Taxes other than income taxes                139,688           110,565
       Depreciation and amortization                195,054           178,616
         Total                                   12,824,518         3,871,652
     Operating Income                               459,803           341,354
 
     Other Income (Expense):
       Unrealized gain on AOL Time Warner
        investment                                  137,082         1,523,683
       Unrealized loss on indexed debt
        securities                                 (135,047)       (1,523,625)
       Income of equity investment of
        unconsolidated subsidiaries                  12,778               485
       Other -- net                                  35,608            20,401
     Total                                           50,421            20,944
 
     Interest and Other Charges:
       Interest                                     177,952           160,054
       Distribution on trust preferred
      securities                                     13,900            13,892
         Total                                      191,852           173,946
 
     Income from Continuing Operations
      Before Income Taxes,
     Cumulative Effect of Accounting
      Change and Preferred Dividends                318,372           188,352
 
     Income Tax Expense                             110,150            54,536
 
     Income from Continuing Operations
      Before Cumulative Effect of
      Accounting Change and
     Preferred Dividends                            208,222           133,816
     Loss from Discontinued Operations,
      net of tax of ($1,400)                             --              (663)
     Loss on Disposal of Discontinued
      Operations, net of tax of ($1,640)             (7,294)               --
     Cumulative Effect of Accounting
      Change, net of tax of $33,205                  61,666                --
     Income Before Preferred Dividends              262,594           133,153
 
     Preferred Dividends                                 97                97
     Net Income Attributable to Common
      Stockholders                                 $262,497          $133,056
 
 
    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.
 
 
                          Reliant Energy, Incorporated
              Selected Data From Statements of Consolidated Income
                (Thousands of Dollars, Except Per Share Amounts)
                                  (Unaudited)
 
                                                       Quarter Ended March 31,
                                                       2001              2000
     As Reported:
 
     Basic Earnings Per Common Share
     Income from continuing operations
      before cumulative effect of
      accounting change                               $0.72             $0.47
     Loss on disposal of discontinued
      operations, net of tax                         $(0.03)            $  --
     Cumulative effect of accounting
      change, net of tax                              $0.22             $  --
     Net income attributable to common
      stockholders                                    $0.91             $0.47
 
     Diluted Earnings Per Common Share
     Income from continuing operations
      before cumulative effect of
      accounting change                               $0.72             $0.47
     Loss on disposal of discontinued
      operations, net of tax                         $(0.03)            $  --
     Cumulative effect of accounting
      change, net of tax                              $0.21             $  --
     Net income attributable to common
      stockholders                                    $0.90             $0.47
 
     Dividends per Common Share                      $0.375            $0.375
 
          Weighted Average Common Shares
           Outstanding (000):
     - Basic                                        287,336           283,078
     - Diluted                                      290,173           284,251
 
 
     As Adjusted for Unusual and Other
      Charges:
 
     Net Income Attributable to Common
      Stockholders                                 $262,497          $133,056
 
     Unusual and other charges, after tax:
     Loss from discontinued operations                   --               663
     Loss on disposal of discontinued
      operations                                      7,294                --
     Cumulative effect of accounting
      change                                        (61,666)               --
     Curtailment and related enhancement
      of benefit plans                               65,396                --
 
     Adjusted Earnings                             $273,521          $133,719
 
     Adjusted Basic Earnings Per Common Share         $0.95             $0.47
     Adjusted Diluted Earnings Per Common Share       $0.94             $0.47
 
     Operating Income (Loss) by Segment (in millions)
 
     Electric Operations                               $186              $202
     Wholesale Energy                                   216               (22)
     Natural Gas Distribution                           135               105
     Pipelines and Gathering                             39                32
     European Energy                                     18                33
     Other Operations                                  (134)               (9)
 
     Total                                             $460              $341
 
 SOURCE  Reliant Energy

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