UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 11-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934.
For the Fiscal Year Ended December 31, 2003
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934.
For the transition period from ______________ to _______________
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Commission file number 1-16455
A. Full title of the plan and the address of the plan, if different from that of
the issuer named below:
Reliant Energy, Inc. Union Savings Plan
P.O. Box 148
Houston, TX 77001-0148
B. Name and issuer of the securities held pursuant to the plan and the address
of its principal executive office:
Reliant Energy, Inc.
1000 Main Street
Houston, TX 77002
RELIANT ENERGY, INC. UNION SAVINGS PLAN
TABLE OF CONTENTS
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REPORTS OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMS
FINANCIAL STATEMENTS:
Statements of Net Assets Available for Benefits as of December 31, 2003 and
2002
Statement of Changes in Net Assets Available for Benefits for the Year Ended
December 31, 2003
Notes to Financial Statements
SUPPLEMENTAL SCHEDULE:
Schedule H, line 4(i) - Schedule of Assets (Held at End of Year), as of
December 31, 2003
The following schedules required by the Department of Labor's regulations are
omitted due to the absence of the conditions under which they are required:
Schedule of Reportable Transactions
Schedule of Nonexempt Transactions
Schedule of Loans or Fixed Income Obligations in Default or Classified as
Uncollectible
Schedule of Leases in Default or Classified as Uncollectible
Schedule of Assets Acquired and Disposed of Within the Plan Year
EXHIBITS:
Consent of Independent Registered Public Accounting Firm - Melton & Melton,
L.L.P. (Exhibit 23.1)
Consent of Independent Registered Public Accounting Firm - Deloitte & Touche
LLP (Exhibit 23.2)
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Trustees and Participants in the
Reliant Energy, Inc. Union Savings Plan:
We have audited the accompanying statement of net assets available for benefits
of the Reliant Energy, Inc. Union Savings Plan (the "Plan") as of December 31,
2003, and the statement of changes in net assets available for benefits for the
year ended December 31, 2003. These financial statements are the responsibility
of the Plan's management. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audit in accordance with standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for benefits of the Plan as of
December 31, 2003, and the changes in net assets available for benefits for the
year ended December 31, 2003 in conformity with accounting principles generally
accepted in the United States of America.
Our audit was conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The accompanying supplemental schedule,
listed in the Table of Contents, is presented for the purpose of additional
analysis and is not a required part of the basic financial statements, but is
supplementary information required by the Department of Labor's Rules and
Regulations for Reporting and Disclosure under the Employee Retirement Income
Security Act of 1974. The supplemental schedule is the responsibility of the
Plan's management. The supplemental schedule has been subjected to the auditing
procedures applied in our audit of the basic financial statements and, in our
opinion, is fairly stated in all material respects in relation to the basic
financial statements taken as a whole.
MELTON & MELTON, L.L.P.
Houston, Texas
June 24, 2004
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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Trustees and Participants in the
Reliant Resources, Inc. Union Savings Plan:
We have audited the accompanying statement of net assets available for benefits
of the Reliant Resources, Inc. Union Savings Plan (the "Plan") as of December
31, 2002. This financial statement is the responsibility of the Plan's
management. Our responsibility is to express an opinion on this financial
statement based on our audit.
We conducted our audit in accordance with standards of the Public Company
Accounting Oversight Board (United States). These standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, such financial statements present fairly, in all material
respects, the net assets available for benefits of the Plan as of December 31,
2002, in conformity with accounting principles generally accepted in the United
States of America.
DELOITTE & TOUCHE LLP
Houston, Texas
June 27, 2003
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RELIANT ENERGY, INC. UNION SAVINGS PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
AS OF DECEMBER 31, 2003 AND 2002
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December 31,
--------------------------------
2003 2002
----------- -----------
ASSETS:
Investments, at fair value $39,050,197 $19,945,069
Participant Loans 1,046,978 590,443
Contributions Receivable-Employer 407,574 150,275
Contributions Receivable-Participant 67,851 72,735
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NET ASSETS AVAILABLE FOR BENEFITS $40,572,600 $20,758,522
=========== ===========
See notes to financial statements.
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RELIANT ENERGY, INC. UNION SAVINGS PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
FOR THE YEAR ENDED DECEMBER 31, 2003
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ADDITIONS:
Contributions:
Employer $2,264,875
Participant 4,748,448
Investment Income:
Interest 230,250
Dividends 309,890
Net appreciation in fair value of investments 6,208,151
Assets transferred in, net 6,743,127
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Total additions 20,504,741
DEDUCTIONS:
Benefits paid to participants 648,772
Administrative expenses 41,891
-----------
Total deductions 690,663
-----------
NET INCREASE 19,814,078
NET ASSETS AVAILABLE FOR BENEFITS:
BEGINNING OF YEAR 20,758,522
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NET ASSETS AVAILABLE FOR BENEFITS:
END OF YEAR $40,572,600
===========
See notes to financial statements.
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RELIANT ENERGY, INC. UNION SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
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1. DESCRIPTION OF THE PLAN
GENERAL - The Reliant Energy, Inc. Union Savings Plan (formerly, the
Reliant Resources, Inc. Union Savings Plan, and changed effective April
26, 2004), (the "Plan") is a defined contribution plan sponsored by
Reliant Energy, Inc. (formerly Reliant Resources, Inc., and changed
effective as of April 26, 2004), (the "Company") covering substantially
all of the eligible union employees of the Company or an affiliate of the
Company (excluding certain groups of bargaining employees of Orion Power
Holdings, Inc. and its subsidiaries) that has adopted the Plan, and whose
employment is covered by a collective bargaining agreement. The following
description of the Plan is provided for general information purposes only.
Participants should refer to the Plan document for a more complete
description of the Plan provisions. The Plan is subject to the provisions
of the Employee Retirement Income Security Act of 1974 ("ERISA").
ELIGIBILITY - Under the provisions of the Plan, represented employees are
eligible to participate in the Plan if provided in the terms of their
respective collective bargaining agreements.
CONTRIBUTIONS - Under the provisions of the Plan, union participants from
the International Brotherhood of Electrical Workers, AFL-CIO, Locals 47,
66, 327, 459 and 777 may elect to contribute on a pre-tax and/or after-tax
basis as permitted under the terms of their respective collective
bargaining agreements. Effective May 1, 2003, union participants from the
Utility Workers Union of America, AFL-CIO, Local 270 became eligible to
participate in the Plan as permitted under the terms of their collective
bargaining agreement. The annual eligible compensation limit for 2003 was
$200,000. Active participants who are, or will be, age 50 or older during
a calendar year are eligible to make additional pre-tax contributions
("Catch-Up Contributions") to the Plan for that year in excess of the
annual pre-tax contribution limit up to a maximum amount permitted by the
Internal Revenue Code (the "Code"). The total amount of participant
pre-tax contributions was limited to $12,000 and $11,000 in 2003 and 2002,
respectively. The maximum Catch-Up Contribution amount was $2,000 and
$1,000 for 2003 and 2002, respectively. The Company makes matching
contributions in accordance with the terms of the participants' respective
collective bargaining agreement. Some collective bargaining agreements
provide for discretionary profit sharing contributions. At December 31,
2003 and 2002, the Plan had a profit sharing contribution receivable of
$380,194 and $117,980, respectively. Plan participants who are eligible
for profit sharing contributions do not have to contribute to the Plan to
receive a profit sharing contribution.
PARTICIPANT ACCOUNTS - Individual accounts are maintained for each Plan
participant. Each participant's account is credited with the participant's
contributions, the Company's matching contributions, allocations of
Company discretionary contributions, if applicable, any rollover
contributions made by the participant and Plan earnings, and charged with
an allocation of administrative expenses. The benefit to which a
participant is entitled is the benefit that can be provided from the
participant's vested account.
INVESTMENTS - Participants direct the investment of their contributions
into various investment options offered by the Plan. Prior to March 12,
2003, Company contributions for certain union participants had to remain
invested in the Reliant Energy Stock Fund until the participant attained
age 55. Effective March 12, 2003, these participants could then transfer
Company contribution amounts invested in the Reliant Energy Stock Fund to
any of the investment funds of the Plan (other than the CenterPoint Energy
Common Stock Fund and Texas Genco Holdings, Inc. common stock).
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VESTING - Participants are fully vested in their contributions as of their
entrance date to the Plan. Participants vest in Company contributions
according to their respective collective bargaining agreements.
PARTICIPANT LOANS - Participants may borrow from their fund accounts up to
a maximum of $50,000 or 50 percent of their account balance, whichever is
less. The loans are secured by the balance in the participant's account
and bear interest at rates commensurate with local prevailing rates as
determined under the Plan. Principal and interest is paid ratably through
payroll deductions.
PAYMENT OF BENEFITS - On termination of service due to death, disability,
or retirement, a participant or beneficiary may elect to receive either a
lump-sum amount equal to the value of the participant's vested interest in
his or her account, or monthly, quarterly, semi-annual or annual
installments not to exceed ten years.
2. SIGNIFICANT ACCOUNTING POLICIES
BASIS OF FINANCIAL PRESENTATION - The accompanying financial statements of
the Plan are prepared under the accrual basis of accounting in conformity
with accounting principles generally accepted in the United States of
America.
USE OF ESTIMATES - The preparation of financial statements in conformity
with accounting principles generally accepted in the United States of
America requires management to make estimates and assumptions that affect
the reported amounts of assets, liabilities, and changes therein, as of
the date of the financial statements. Actual results could differ from
those estimates.
MARKET RISK - The Plan provides for investments in various investment
securities, including CenterPoint Energy, Inc. and Texas Genco Holdings,
Inc. (closed to new investment) and the Company common stock, that are
exposed to certain risks such as interest rate, credit, and overall market
volatility. Due to the level of risk, changes in the value of investment
securities could occur in the near term, and these changes could
materially affect the amounts reported in the statements of net assets
available for benefits.
ADMINISTRATIVE EXPENSES - Administrative expenses of the Plan are paid by
either the Plan or the Plan's sponsor as provided in the Plan document.
PAYMENT OF BENEFITS - Benefits are recorded when paid.
INVESTMENT VALUATION AND INCOME RECOGNITION - The Plan's investments are
stated at fair value. Shares of registered investment companies are valued
at quoted market prices which represent the net asset value of shares held
by the Plan at the end of the year. Units of the Vanguard Retirement
Savings Trust are valued at net asset value at the end of the year, which
approximates fair value. The common stock funds are valued at the year-end
unit closing price (comprised of the year-end market price plus uninvested
cash position). Participant loans are valued at cost which approximates
fair value.
Purchases and sales of investments are recorded on a trade-date basis.
Interest income is accrued when earned. Dividend income is recorded on the
ex-dividend date. Capital gain distributions are included in dividend
income.
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3. ASSETS TRANSFERRED INTO THE PLAN
Effective January 1, 2004, certain bargaining employees who participated
in the Orion Power Holdings, Inc. Savings Plan (the "Orion Plan") became
participants in the Plan. These employees' account balances in the Orion
Plan, which totaled approximately $6.9 million, were transferred into the
Plan on December 31, 2003.
4. INVESTMENTS
Plan assets are held at Vanguard Fiduciary Trust Company (the "Trustee").
The following presents investments that represent 5% or more of the Plan's
net assets.
December 31,
---------------------------
2003 2002
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MUTUAL FUNDS:
Columbia Small Cap Fund, Inc. $2,400,590 $1,075,577
Fidelity Securities Fund: Fidelity Dividend
Growth Fund 3,098,821 1,719,319
Neuberger Berman Genesis Trust 3,973,340 2,379,855
PIMCO Funds: Pacific Investment Management
Series: Total Return Fund 2,072,367 1,945,620
Vanguard 500 Index Fund Investor Shares 3,655,612 1,230,317
Vanguard Growth Equity Fund 3,388,200 1,577,847
Vanguard LifeStrategy Moderate Growth Fund 2,236,487 1,253,173
COMMON/COLLECTIVE TRUST FUNDS:
Vanguard Retirement Savings Trust 6,318,996 3,906,857
COMMON STOCK FUNDS:
Reliant Energy Common Stock Fund 3,614,922 1,369,353
During 2003, the Plan's investments, including gains and losses on
investments bought and sold, as well as held during the year, appreciated
in value as follows:
Mutual funds $ 4,064,455
Common stocks 2,143,696
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$ 6,208,151
=============
5. PLAN TERMINATION
Although it has not expressed any intention to do so, the Company has the
right under the Plan to discontinue its contributions at any time and to
terminate the Plan subject to the provisions of ERISA. In the event of a
plan termination, participants would become 100 percent vested in their
accounts.
6. RELATED PARTY TRANSACTIONS
The Plan invests in shares of mutual funds managed by an affiliate of the
Trustee, as well as in shares of common stock of the Company. The Plan
also provides for loans to participants. Transactions in such investments
qualify as party-in-interest transactions which are exempt from the
prohibited transaction rules.
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7. TAX STATUS
The Plan obtained its latest determination letter dated August 29, 2003,
in which the Internal Revenue Service stated that the Plan, as then
designed, was in compliance with the applicable requirements of the Code.
The Plan has been amended since receiving the determination letter.
However, the plan administrator believes that the Plan is currently
designed and being operated in compliance with the applicable requirements
of the Code. Therefore, no provision for income taxes has been included in
the Plan's financial statements.
8. SUBSEQUENT EVENTS
Effective January 1, 2004, union participants from the International
Brotherhood of Electrical Workers, AFL-CIO, Local 97 ("Local 97") became
eligible to participate in the Plan as permitted under the terms of their
collective bargaining agreement.
In May 2004, the Company and its subsidiaries entered into a definitive
agreement to divest a portfolio of hydropower generation assets in the New
York region, which employs members of Local 97. The impact of this sale on
the Plan has not been determined; however, management believes that it
will be insignificant to the ongoing operations of the Plan.
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RELIANT ENERGY, INC. UNION SAVINGS PLAN
Schedule H, Line 4(i) - Schedule of Assets (Held at End of Year)
As of December 31, 2003
EIN 76-0655566
PLAN 002
( a ) ( b ) ( c ) ( d ) ( e )
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Description of investment including
Identity of issue, borrower, lessor or maturity date, rate of interest,
similar party collateral, par, or maturity value Cost Current value
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MUTUAL FUNDS:
* American Funds EuroPacific Growth Fund Registered Investment Company (1) $ 903,690
* American Funds: New Perspective Fund Registered Investment Company (1) 1,058,796
* American Funds: The Growth Fund
of America Registered Investment Company (1) 111,769
* Artisan International Fund,
International Shares Registered Investment Company (1) 35,130
* Columbia Small Cap Fund, Inc. Registered Investment Company (1) 2,400,590
* Davis New York Venture Fund, Inc.
Class A Shares Registered Investment Company (1) 38,260
* Dodge & Cox Balanced Fund Registered Investment Company (1) 731,061
* Fidelity Securities Fund:
Fidelity Dividend Growth Fund Registered Investment Company (1) 3,098,821
* Harris Associates Investment Trust:
Oakmark Fund; Class I Registered Investment Company (1) 183,108
* Neuberger Berman Genesis Trust Registered Investment Company (1) 3,973,340
* PIMCO Funds: Pacific Investment
Management Series: Total Return Registered Investment Company (1) 2,072,367
* T. Rowe Price Equity Income Fund
Advisor Class Registered Investment Company (1) 69,564
* T. Rowe Small-Cap Stock Fund --
Advisor Class Registered Investment Company (1) 890,647
* The Gabelli Growth Fund;
Class AAA Shares Registered Investment Company (1) 195,626
* Vanguard 500 Index Fund Investor Shares Registered Investment Company (1) 3,655,612
* Vanguard Capital Opportunity Fund Registered Investment Company (1) 685,295
* Vanguard Growth Equity Fund Registered Investment Company (1) 3,388,200
* Vanguard LifeStrategy Conservative
Growth Fund Registered Investment Company (1) 241,109
* Vanguard LifeStrategy Growth Fund Registered Investment Company (1) 339,053
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RELIANT ENERGY, INC. UNION SAVINGS PLAN
Schedule H, Line 4(i) - Schedule of Assets (Held at End of Year)
As of December 31, 2003 - continued
EIN 76-0655566
PLAN 002
( a ) ( b ) ( c ) ( d ) ( e )
--------------------------------------------------------------------------------------------------------------------------
Description of investment including
Identity of issue, borrower, lessor or maturity date, rate of interest,
similar party collateral, par, or maturity value Cost Current value
--------------------------------------------------------------------------------------------------------------------------
* Vanguard LifeStrategy Moderate Growth Fund Registered Investment Company (1) 2,236,487
* Vanguard PRIMECAP Fund Registered Investment Company (1) 140,565
* Vanguard Total Bond Market Index Fund Registered Investment Company (1) 1,075,709
* Vanguard Total Stock Market Index Fund
Investor Shares Registered Investment Company (1) 171,201
* Vanguard Windsor II Fund Investor Shares Registered Investment Company (1) 427,230
COMMON/COLLECTIVE TRUST FUNDS:
* Vanguard Retirement Savings Trust Common/Collective Trust (1) $ 6,318,996
COMMON STOCK FUNDS:
* CenterPoint Energy Stock Fund Company Stock Fund (1) $ 884,305
* Reliant Energy Common Stock Fund Company Stock Fund (1) 3,614,922
* Texas Genco Stock Company Stock (1) 108,744
* Participant Loans Interest rates between 5.0% - 10.5% 0 $ 1,046,978
------------
Total assets held for investment purposes $ 40,097,175
============
---------------------
* Party in interest.
(1) Cost information has been omitted because all investments are
participant-directed.
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SIGNATURE
THE PLAN. Pursuant to the requirements of the Securities Exchange Act of 1934,
the Benefits Committee of Reliant Energy, Inc. has duly caused this annual
report to be signed on its behalf by the undersigned hereunto duly authorized.
RELIANT ENERGY, INC. UNION SAVINGS PLAN
By /s/ JAMES A. AJELLO
------------------------------
James A. Ajello, Chairman of the
Benefits Committee of Reliant Energy,
Inc., Plan Administrator
June 25, 2004
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