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Reliant Unit Restates Its Earnings

July 06, 2002|From Associated Press

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 revenue by more than $7.8 billion.

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

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

In addition to the round-trip trades, the company's revenue also was 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.

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 revenue to $13.79 billion in 1999, $28.26 billion in 2000 and $40.81 billion in 2001.

The Houston-based company disclosed the round-trip trades in May.

Shares of Reliant Energy Inc., of which Reliant Resources is a subsidiary, rose 24 cents to $16.05 on the New York Stock Exchange, where shares of Reliant Resources gained 3 cents to close at $8.68.

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