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Reliant restates revenues, expenses in SEC filing
Associated Press | July 5, 2002

Posted on 07/06/2002 12:08:25 AM PDT by HAL9000

Reliant Resources Inc. restated its earnings Friday for a three-year period during which the company said it engaged in trades that artificially inflated its revenues by more than $7.8 billion.

In its filing with the Securities and Exchange Commission Friday, Reliant said "round trip trades" the company engaged in during 1999, 2000 and 2001 should not have been reflected in its revenues or expenses. The trades added $6.4 billion to the company's revenues during that period.

Federal regulators are investigating Reliant and numerous other energy companies for the so-called round trip trades, in which electricity is bought and sold at the same quantity and price to inflate revenue and trading volume.

"The personnel who effected these transactions apparently did so with the sole objective of increasing volumes," the Reliant filing said.

In addition to the round-trip trades, the company's revenues also were inflated by nearly $1.5 billion because of how it accounted for four other energy contracts. Reliant described these deals as swaps, but said each had a legitimate business purpose and was expected to increase future cash flow.

Reliant previously reported $15.2 billion in revenue in 1999, $29.3 billion in 2000 and $46.2 billion in 2001.

On Friday, the company restated its revenues to $13.79 billion in 1999, $28.26 billion in 2000 and $40.81 billion in 2001.

It also restated its expenses for the same three-year period decreasing its expenses from $13.9 billion to $12.5 billion in 1999; $27.5 billion to $26.4 billion in 2000 and $44.2 billion to $38.3 billion in 2001.

The company said since the trades involved the same volume and the same price, they did not affect reported cash flows, operating income or net income.

The Houston-based company disclosed the round trip trades in May and said it suspended such activity and would review how it accounted for the transactions.

In its SEC filing Friday, Reliant said in September, when the company's third quarter results are released, it will begin reporting all energy trading and marketing activities on a net basis.

Reliant Energy Inc., of which Reliant Resources is a subsidiary, was trading up 24 cents to close at $16.05 per share Friday on the New York Stock Exchange, where shares of Reliant Resources gained 3 cents to close at $8.68.



TOPICS: Business/Economy; News/Current Events; US: Texas
KEYWORDS: reliant

1 posted on 07/06/2002 12:08:25 AM PDT by HAL9000
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