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): JULY 5, 2002
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RELIANT RESOURCES, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 1-16455 76-0655566
(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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ITEM 5. OTHER EVENTS.
Reliant Resources, Inc. (Reliant Resources) is filing this Current
Report on Form 8-K concurrently with the filing of its amended Annual Report on
Form 10-K/A for its fiscal year ended December 31, 2001 (2001 10-K/A) in order
to provide updated information regarding certain investigations, litigation and
governmental proceedings involving Reliant Resources.
Reliant Resources is party to numerous lawsuits and regulatory
proceedings relating to its trading and marketing activities, including (i)
certain same-day commodity trading transactions in which it engaged in 1999,
2000 and 2001 involving purchases and sales with the same counterparty for the
same volume at substantially the same price (round trip trades), as more fully
described in Note 1 to its consolidated financial statements included in the
2001 10-K/A, (ii) a series of four structured transactions engaged in by Reliant
Resources that were inaccurately accounted for as cash flow hedges for the
period May 2001 through September 2001 (structured transactions), as more fully
described in Reliant Resources' March 15, 2002 Current Report on Form 8-K, and
(iii) its activities in the California wholesale market. In addition, various
state and federal governmental agencies have commenced investigations relating
to such activities. These lawsuits, proceedings and investigations are currently
the subject of intense, highly-charged media and political attention. Their
ultimate outcome cannot be predicted at this time. Additional information
regarding certain of these matters is set forth below.
In June 2002, Reliant Resources was advised by the Securities and
Exchange Commission (SEC) that it had issued a formal order in connection with
its investigation of Reliant Resources' financial reporting, internal controls
and related matters. Reliant Resources understands the investigation is focused
on its round trip trades and structured transactions. These matters were
previously the subject of an informal inquiry by the SEC. The SEC's formal order
is also addressed to Reliant Energy, Incorporated (Reliant Energy), which owns
approximately 83% of Reliant Resources' outstanding common stock. Reliant
Resources and Reliant Energy are cooperating with the SEC staff.
As part of the Commodity Futures Trading Commission's (CFTC) industry
wide investigation, the CFTC has subpoenaed documents and requested information
on Reliant Resources' natural gas and power trading activities, including the
round trip trades, occurring since January 1, 1999. Reliant Resources is
cooperating with the CFTC staff.
In connection with the Federal Energy Regulatory Commission (FERC)
industry wide investigation into potential manipulation of electric and natural
gas prices in the West region for the period January 1, 2000 forward, Reliant
Resources has provided information to the FERC about its trading activities in
the Western United States during 2000 and 2001. Reliant Resources is cooperating
with the FERC.
Reliant Resources has received subpoenas from United States Attorneys
requesting documents pertaining to the round trip trades, and anticipates
investigations of energy trading activities by Reliant Resources and numerous
other companies that parallel those of the SEC, the CFTC and the FERC. Reliant
Resources is cooperating with the offices of the United States Attorneys that
have issued the subpoenas.
In May and June 2002, ten class action lawsuits were filed on behalf of
purchasers of securities of Reliant Resources and/or Reliant Energy. Also,
Reliant Resources is aware that at least one additional class action lawsuit has
been filed in July 2002. Reliant Resources and several of its executive officers
are named as defendants. Reliant Energy is also named as a defendant in three of
the lawsuits. Two of the lawsuits also name as defendants the underwriters of
Reliant Resources' initial public offering that closed in May 2001. One of those
two lawsuits also names Reliant Resources' and Reliant Energy's independent
auditors as a defendant. The dates of filing of these lawsuits are as follows:
two lawsuits on May 15, 2002; two lawsuits on May 16, 2002; one lawsuit on May
17, 2002; one lawsuit on May 20, 2002; one lawsuit on May 21, 2002; one lawsuit
on May 23, 2002; one lawsuit on June 19, 2002; one lawsuit on June 20, 2002; and
one lawsuit on July 1, 2002. Ten of the lawsuits were filed in the United States
District Court, Southern District of Texas, Houston Division. One lawsuit was
filed in the United States District Court, Eastern District of Texas, Texarkana
Division.
The complaints allege that the defendants overstated the revenues of
Reliant Resources by including transactions involving the purchase and sale of
commodities with the same counterparty at the same price and that Reliant
Resources improperly accounted for certain other transactions, among other
things. The complaints seek monetary damages and, in one of the lawsuits
rescission, on behalf of a putative class. In eight of the lawsuits, the
putative class is composed of persons who purchased or otherwise acquired
Reliant Resources and/or Reliant Energy securities during specified class
periods. The three lawsuits that include Reliant Energy as a named defendant
were also filed on behalf of purchasers of securities of Reliant Resources
and/or Reliant Energy during specified class periods.
Additionally, in May and June 2002, four class action lawsuits were
filed on behalf of purchasers of securities of Reliant Energy. Reliant Energy
and several of its executive officers are named as defendants. The dates of
filing of the four lawsuits are as follows: one on May 16, 2002; one on May 21,
2002; one on June 13, 2002; and one on June 17, 2002. The lawsuits were filed in
the United States District Court, Southern District of Texas, Houston Division.
The complaints allege that the defendants violated federal securities laws by
issuing false and misleading statements to the public. The plaintiffs allege
that the defendants made false and misleading statements as part of an alleged
scheme to artificially inflate trading volumes and revenues by including
transactions involving the purchase and sale of commodities with the same
counterparty at the same price, to spin-off Reliant Resources to avoid exposure
to Reliant Resources' liabilities and to cause the price of Reliant Resources'
stock to rise artificially, among
other things. The complaints seek monetary damages on behalf of persons who
purchased Reliant Energy securities during specified class periods.
In May 2002, three class action lawsuits were filed on behalf of
participants in various employee benefits plans sponsored by Reliant Energy.
Reliant Energy and its directors are named as defendants in all of the lawsuits.
Reliant Resources is named as a defendant in two of the lawsuits. The lawsuits
were filed on May 29, 2002, May 30, 2002, and May 31, 2002. All of the lawsuits
were filed in the United States District Court, Southern District of Texas,
Houston Division. The complaints allege that the defendants breached their
fiduciary duties to various employee benefits plans sponsored by Reliant Energy,
in violation of the Employee Retirement Income Security Act. The plaintiffs
allege that the defendants permitted the plans to purchase or hold securities
issued by Reliant Energy when it was imprudent to do so, including after the
prices for such securities became artificially inflated because of alleged
securities fraud engaged in by the defendants. The complaints seek monetary
damages for losses suffered by a putative class of plan participants whose
accounts held Reliant Energy or Reliant Resources securities, as well as
equitable relief in the form of restitution.
In May 2002, a derivative action was filed against the directors and
independent auditors of Reliant Resources. The lawsuit was filed on May 17,
2002, in the 269th Judicial District, Harris County, Texas. The petition alleges
that the defendants breached their fiduciary duties to Reliant Resources. The
shareholder plaintiff alleges that the defendants caused Reliant Resources to
conduct its business in an imprudent and unlawful manner, including allegedly
failing to implement and maintain an adequate internal accounting control
system, engaging in transactions involving the purchase and sale of commodities
with the same counterparty at the same price, and disseminating materially
misleading and inaccurate information regarding Reliant Resources' revenue and
trading volume. The petition seeks monetary damages on behalf of Reliant
Resources.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(c) Exhibits.
None.
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 RESOURCES, INC.
Date: July 5, 2002 By: /s/ Hugh Rice Kelly
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Hugh Rice Kelly
Senior Vice President, General Counsel
and Corporate Secretary