HOUSTON, March 15, 2002 — Reliant Energy Inc. Friday reported net income for the year ended Dec. 31, 2001, of $980 million, or $3.35 per diluted share, compared to net income of $447 million, or $1.56 per diluted share, for 2000.
Reliant Energy’s subsidiary, Reliant Resources Inc., reported earnings of $557 million, or $2.01 per diluted share, for the year ended December 31, 2001.
Reliant Energy’s earnings reflect its approximately 83 percent interest in Reliant Resources, Inc. For the fourth quarter of 2001, reported net income was $46 million, or $.16 per diluted share, compared to a reported net loss of $299 million, or a loss of $1.04 per diluted share, for the fourth quarter of 2000.
In the 2001 and 2000 periods, there were a number of unusual items. Giving effect to these items, adjusted diluted earnings per share were $3.41 for the year 2001 and $0.19 for the fourth quarter 2001. This compares to adjusted diluted earnings per share of $2.92 for the year 2000 and $0.25 for the fourth quarter 2000.
In addition to these items, the company took charges related to the Enron bankruptcy of $0.18 and $0.17 during the year and the fourth quarter 2001, respectively, on a diluted per share, net of tax, basis.
The increase in net income for the year ended December 31, 2001, was largely driven by improved performance from the company’s wholesale and retail energy segments, partially offset by a decline in operating income from the electric operations segment due to milder weather and reduced customer usage during the second half of 2001.
Operating income from the European energy segment also decreased during 2001. The company’s interest expense declined in 2001 compared to the prior year resulting from decreased levels of borrowing and lower interest rates.
Restatement of earnings for second and third quarters of 2001
The company announced on Feb.5, 2002, that earnings for the second and third quarters of 2001 would be restated. Revised earnings for the second quarter are $316 million, or $1.08 per diluted share, and for the third quarter are $355 million, or $1.21 per diluted share.
The net effect of the restatement is the recording of an additional $108 million of net income for the first nine months of 2001. The restatement relates to a correction in accounting treatment for a series of structured transactions that were inappropriately accounted for as cash flow hedges for the period of May 2001 through September 2001. These transactions should have been accounted for as derivatives with changes in fair value recognized in the company’s income statement.
Information regarding these transactions is available in the company’s report on Form 8-K filed March 15 with the Securities and Exchange Commission.