CenterPoint Energy Reports Second Quarter 2005 Earnings
HOUSTON, Aug 08, 2005 /PRNewswire-FirstCall via COMTEX/ -- CenterPoint Energy, Inc. (NYSE: CNP) today reported net income of $54 million, or $0.16 per diluted share, for the second quarter of 2005 compared to $57 million, or $0.19 per diluted share, for the same period of 2004.
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Net income for the second quarter of 2005 included an extraordinary gain of $30 million, or $0.08 per diluted share, reflecting an adjustment to the extraordinary loss recorded in the second half of 2004 to write-down generation-related regulatory assets as a result of the final orders issued by the Public Utility Commission of Texas (PUC). In addition, net income for the second quarter of 2005 included a loss of $3 million, or $0.01 per diluted share, from discontinued operations compared to income of $60 million, or $0.20 per diluted share, from discontinued operations for the second quarter of 2004.
Income from continuing operations before extraordinary item for the second quarter of 2005 was $27 million, or $0.09 per diluted share, compared to a loss of $3 million, or $0.01 per diluted share, for the second quarter of 2004. The second quarter of 2005 included after-tax income of $23 million, or $0.06 per diluted share, related to interest on the company's authorized true- up balance.
"Our core energy delivery businesses had another quarter of solid operating and financial performance," said David M. McClanahan, president and chief executive officer of CenterPoint Energy. "We continue to make good progress towards enhancing the performance of each of our core businesses and positioning them for the future. I am also pleased that a final order from the Texas Public Utility Commission will allow us to begin recovering a portion of our stranded cost true-up balance through a competition transition charge to be implemented in the fall."
For the six months ended June 30, 2005, net income was $121 million, or $0.35 per diluted share, compared to $131 million, or $0.42 per diluted share, for the same period of 2004. Net income for the six months ended June 30, 2005, included the extraordinary gain of $30 million, or $0.08 per diluted share, reflecting the adjustment to the extraordinary loss discussed above. In addition, net income for the six months ended June 30, 2005, included a loss of $3 million, or $0.01 per diluted share, from discontinued operations compared to income of $105 million, or $0.34 per diluted share, from discontinued operations for the same period of 2004.
Income from continuing operations before extraordinary item for the six months ended June 30, 2005, was $94 million, or $0.28 per diluted share, compared to $26 million, or $0.08 per diluted share, for the same period of 2004. The six months ended June 30, 2005, included after-tax income of $45 million, or $0.13 per diluted share, related to interest on the company's authorized true-up balance.
OPERATING INCOME BY SEGMENT DETAILED
Electric Transmission & Distribution
The electric transmission & distribution segment reported operating income of $122 million in the second quarter of 2005, consisting of $113 million for the regulated electric transmission & distribution utility (TDU) and $9 million for the transition bond company, which is an amount sufficient to pay interest on the transition bonds. Operating income for the second quarter of 2004 totaled $127 million, consisting of $118 million for the TDU and $9 million for the transition bond company.
The TDU's revenues continued to benefit from solid customer growth, with over 48,000 metered customers added since June 30, 2004. Revenues also increased from favorable weather, increased usage and higher transmission cost recovery. Operation and maintenance expenses for the second quarter of 2004 reflected the impact of a $15 million partial reversal of a reserve related to the final fuel reconciliation of the formerly integrated electric utility. Excluding this impact, operation and maintenance expenses were $13 million greater than the prior year primarily due to higher tree trimming and transmission costs. Reduced pension expenses partially offset other expense increases. Taxes other than income taxes increased primarily due to higher state and local taxes.
Operating income for the six months ended June 30, 2005, was $202 million, consisting of $184 million for the TDU and $18 million for the transition bond company. Operating income for the same period of 2004 totaled $212 million, consisting of $193 million for the TDU and $19 million for the transition bond company.
Natural Gas Distribution
The natural gas distribution segment reported operating income of $19 million for the second quarter of 2005, compared to $23 million for the same period of 2004. The impacts of rate increases, continued customer growth with the addition of nearly 47,000 customers since June 30, 2004, and higher income from the company's competitive natural gas sales business were offset by decreased throughput. Operation and maintenance expenses remained flat in the second quarter of 2005 compared to the same period of 2004, primarily due to a decrease in benefit and pension expenses and the capitalization of previously incurred restructuring expenses as allowed by a recent regulatory order, which offset other expense increases. Depreciation expense increased in the quarter compared to the prior year due to higher plant balances.
Operating income for the six months ended June 30, 2005, was $158 million compared to $140 million for the same period of 2004.
Pipelines and Gathering
The pipelines and gathering segment reported operating income of $52 million for the second quarter of 2005 compared to $42 million for the same period of 2004. The improvement in operating income for the quarter, largely driven by continuing favorable market dynamics, resulted primarily from higher operating margins in the pipeline business driven by increased demand for transportation and ancillary services. In addition, the company's core gas gathering operations benefited from increased throughput and demand for its services.
Operating income for the six months ended June 30, 2005, was $116 million compared to $87 million for the same period of 2004.
Other Operations
The company's other operations reported an operating loss of $7 million for the second quarter of 2005 compared to an operating loss of $6 million for the same period of 2004.
The operating loss for the six months ended June 30, 2005, was $14 million compared to an operating loss of $13 million for the same period of 2004.
PARTIAL RECOVERY OF TRUE-UP BALANCE
On July 14, 2005, the company received an order from the PUC allowing it to impose a competition transition charge (CTC) on retail electric providers to collect a portion of its approved true-up balance totaling approximately $570 million over 14 years, plus interest at an annual rate of 11.075 percent. Based on the accrual of interest provided for in the CTC order, the company expects that this amount will increase to approximately $600 million by the end of the third quarter, which is when the CTC is expected to be implemented. The CTC order also allows the company to collect approximately $24 million of rate case expenses over three years. The company cannot implement the CTC until the PUC takes final action on the motions for rehearing.
NEW CREDIT FACILITY
In June 2005, the company's natural gas distribution, pipelines and gathering operations subsidiary, CenterPoint Energy Resources, Corp. (CERC), closed on a five-year, $400 million revolving bank credit facility, replacing a three-year, $250 million facility due to mature in 2007. The new facility has a fully drawn cost of LIBOR plus 65 basis points at existing credit ratings, versus LIBOR plus 150 basis points for the facility it replaced.
WEBCAST OF EARNINGS CONFERENCE CALL
CenterPoint Energy's management will host an earnings conference call on Monday, August 8, 2005, at 10:30 a.m. Central time or 11:30 a.m. Eastern time. Interested parties may listen to a live, audio broadcast of the conference call at http://www.CenterPointEnergy.com/investors/events . A replay of the call can be accessed approximately two hours after the completion of the call, and will be archived on the web site for at least one year.
CenterPoint Energy, Inc., headquartered in Houston, Texas, is a domestic energy delivery company that includes electric transmission & distribution, natural gas distribution and sales, interstate pipeline and gathering operations. The company serves nearly five million metered customers primarily in Arkansas, Louisiana, Minnesota, Mississippi, Oklahoma, and Texas. Assets total approximately $16 billion. With more than 9,000 employees, CenterPoint Energy and its predecessor companies have been in business for more than 130 years. For more information, visit the Web site at http://www.CenterPointEnergy.com .
This news release includes forward-looking statements. Actual events and results may differ materially from those projected. The statements in this news release regarding future financial performance and results of operations and other statements that are not historical facts are forward-looking statements. Factors that could affect actual results include the timing and outcome of the true-up proceeding and any legal proceedings related thereto, the timing and impact of future regulatory and legislative decisions, effects of competition, weather variations, changes in CenterPoint Energy's or its subsidiaries' business plans, financial market conditions, the timing and extent of changes in commodity prices, particularly natural gas, the impact of unplanned facility outages and other factors discussed in CenterPoint Energy's and its subsidiaries' Form 10-Ks for the period ended December 31, 2004, Form 10-Qs for the periods ended March 31, 2005 and June 30, 2005, and other filings with the Securities and Exchange Commission.
CenterPoint Energy, Inc. and Subsidiaries
Statements of Consolidated Income
(Thousands of Dollars)
(Unaudited)
Quarter Ended Six Months Ended
June 30, June 30,
--------------------- ---------------------
2005 2004 2005 2004
---------- --------- --------- ----------
Revenues:
Electric Transmission &
Distribution $414,057 $375,250 $759,051 $705,563
Natural Gas Distribution 1,429,692 1,244,985 3,759,924 3,376,317
Pipelines and Gathering 125,015 113,397 245,796 215,800
Other Operations 4,010 2,891 10,689 5,780
Eliminations (40,518) (36,141) (81,396) (75,260)
Total 1,932,256 1,700,382 4,694,064 4,228,200
Expenses:
Natural gas 1,192,626 1,010,613 3,140,962 2,772,490
Operation and maintenance 324,776 297,638 637,847 613,480
Depreciation and amortization 135,837 120,074 265,610 236,292
Taxes other than income taxes 92,705 86,176 187,366 180,164
Total 1,745,944 1,514,501 4,231,785 3,802,426
Operating Income 186,312 185,881 462,279 425,774
Other Income (Expense):
Gain (loss) on Time Warner
investment (18,177) 15,581 (59,291) (8,872)
Gain (loss) on indexed debt
securities 23,819 (17,891) 63,348 9,123
Interest and other finance
charges (179,652) (188,984) (352,992) (371,957)
Interest on transition bonds (9,077) (9,547) (18,297) (19,221)
Return on true-up balance 35,475 --- 69,557 ---
Other - net 6,936 12,425 10,748 13,932
Total (140,676) (188,416) (286,927) (376,995)
Income (Loss) from Continuing
Operations Before Income Taxes
and Extraordinary Item 45,636 (2,535) 175,352 48,779
Income Tax Expense (17,931) (191) (80,995) (22,607)
Income (Loss) from Continuing
Operations Before
Extraordinary Item 27,705 (2,726) 94,357 26,172
Discontinued Operations:
Income (Loss) from Texas
Genco, net of tax (2,988) 75,636 10,685 131,922
Minority Interest related to
Texas Genco, net of tax --- (15,258) --- (26,855)
Loss on Disposal of Texas
Genco, net of tax (735) --- (13,972) ---
Total (3,723) 60,378 (3,287) 105,067
Income Before Extraordinary
Item 23,982 57,652 91,070 131,239
Extraordinary Item, net of tax 30,441 --- 30,441 ---
Net Income $54,423 $57,652 $121,511 $131,239
Reference is made to the Notes to the Consolidated Financial Statements
contained in the Annual Report on Form 10-K of CenterPoint Energy, Inc.
CenterPoint Energy, Inc. and Subsidiaries
Selected Data From Statements of Consolidated Income
(Thousands of Dollars, Except Per Share Amounts)
(Unaudited)
Quarter Ended Six Months Ended
June 30, June 30,
------------------ ------------------
2005 2004 2005 2004
-------- -------- ------- -------
Basic Earnings Per
Common Share:
Income (Loss) from
Continuing Operations $0.09 $(0.01) $0.30 $0.09
Income (Loss) from
Discontinued Operations (0.01) 0.20 (0.01) 0.34
Extraordinary Item,
net of tax 0.10 --- 0.10 ---
Net Income $0.18 $0.19 $0.39 $0.43
Diluted Earnings Per Common
Share:
Income from Continuing
Operations $0.09 $(0.01) $0.28 $0.08
Income (Loss) from
Discontinued Operations (0.01) 0.20 (0.01) 0.34
Extraordinary Item, net of
tax 0.08 --- 0.08 ---
Net Income $0.16 $0.19 $0.35 $0.42
Dividends Declared per
Common Share $0.07 (A) $0.10 $0.27 (A) $0.20
Weighted Average Common
Shares Outstanding (000):
- Basic 309,098 307,250 308,786 306,631
- Diluted 361,436 309,638 361,076 308,977
Operating Income (Loss) by
Segment
Electric Transmission &
Distribution:
Transmission & Distribution
Operations $113,190 $117,822 $183,799 $193,129
Transition Bond Company 8,932 9,498 18,015 19,106
Total Electric Transmission
& Distribution 122,122 127,320 201,814 212,235
Natural Gas Distribution 19,038 22,775 158,531 139,399
Pipelines and Gathering 52,079 42,236 116,110 87,092
Other Operations (6,927) (6,450) (14,176) (12,952)
Total $186,312 $185,881 $462,279 $425,774
(A) On January 26, 2005, the Company's board of directors declared a
dividend of $0.10 per share of common stock payable on March 10, 2005
to shareholders of record as of the close of business on
February 16, 2005. On March 3, 2005, the Company's board of
directors declared a dividend of $0.10 per share of common stock
payable on March 31, 2005 to shareholders of record as of the close
of business on March 16, 2005. This additional first quarter
dividend was declared in lieu of the regular second quarter dividend
to address technical restrictions that might limit the Company's
ability to pay a regular dividend during the second quarter of this
year. On June 2, 2005, the Company's board of directors declared a
dividend of $0.07 per share of common stock payable on June 30, 2005
to shareholders of record as of the close of business on June 15,
2005.
Reference is made to the Notes to the Consolidated Financial Statements
contained in the Annual Report on Form 10-K of CenterPoint Energy, Inc.
CenterPoint Energy, Inc. and Subsidiaries
Results of Operations by Segment
(Millions of Dollars)
(Unaudited)
Electric Transmission & Distribution
------------------------------------------
Quarter Ended Six Months Ended
June 30, % Diff June 30, % Diff
-------------- Fav/ ----------- Fav/
2005 2004 (Unfav) 2005 2004 (Unfav)
------- ------ ------- ----- ----- -------
Results of Operations:
Electric transmission and
distribution revenues $388 $357 9% $711 $672 6%
Electric transmission and
distribution expenses:
Operation and maintenance 153 125 (22%) 291 258 (13%)
Depreciation and amortization 64 63 (2%) 128 123 (4%)
Taxes other than income taxes 58 51 (14%) 108 98 (10%)
Total electric transmission
and distribution expenses 275 239 (15%) 527 479 (10%)
Operating Income - Electric
transmission and distribution
utility 113 118 (4%) 184 193 (5%)
Operating Income - Transition
bond company 9 9 --- 18 19 (5%)
Total Segment Operating Income $122 $127 (4%) $202 $212 (5%)
Electric Transmission
& Distribution Quarter Ended Six Months Ended
Operating Data: June 30, June 30,
--------------------- ---------------------
Actual MWH Delivered 2005 2004 2005 2004
---------- --------- ---------- ----------
Residential 6,593,895 5,800,958 14% 10,735,559 10,202,783 5%
Total 18,956,313 18,545,202 2% 34,782,627 34,065,288 2%
Weather (average for
service area):
Percentage of normal:
Cooling degree
days 103% 100% 3% 105% 100% 5%
Heating degree
days 47% 100% (53%) 76% 86% (10%)
Average number of
metered customers:
Residential 1,675,573 1,634,202 3% 1,668,447 1,628,074 2%
Total 1,904,090 1,856,846 3% 1,895,556 1,849,762 2%
Reference is made to the Notes to the Consolidated Financial Statements
contained in the Annual Report on Form 10-K of CenterPoint Energy, Inc.
CenterPoint Energy, Inc. and Subsidiaries
Results of Operations by Segment
(Millions of Dollars)
(Unaudited)
Natural Gas Distribution
---------------------------------------------------
Quarter Ended Six Months Ended
June 30, % Diff June 30, % Diff
----------------- Fav/ -------------- Fav/
2005 2004 (Unfav) 2005 2004(Unfav)
-------- ----- ------- ------ ----- ------
Results of Operations:
Revenues $1,430 $1,245 15% $3,760 $3,376 11%
Expenses:
Natural gas 1,213 1,027 (18%) 3,188 2,816 (13%)
Operation
and maintenance 133 133 --- 273 283 4%
Depreciation
and amortization 39 35 (11%) 77 70 (10%)
Taxes other than
income taxes 26 27 4% 64 67 4%
Total 1,411 1,222 (15%) 3,602 3,236 (11%)
Operating Income $19 $23 (17%) $158 $140 13%
Natural Gas Distribution
Operating Data:
Throughput data in BCF
Residential 21 21 --- 98 106 (8%)
Commercial and Industrial 43 49 (12%) 120 132 (9%)
Non-rate regulated 148 167 (11%) 331 306 8%
Elimination (29) (63) 54% (78) (73) (7%)
Total Throughput 183 174 5% 471 471 ---
Weather (average for
service area)
Percentage of normal:
Heating degree days 86% 92% (6%) 91% 96% (5%)
Average number
of customers:
Residential 2,833,773 2,793,297 1% 2,842,645 2,802,379 1%
Commercial
and Industrial 246,032 242,111 2% 247,429 244,388 1%
Non-rate regulated 6,533 6,265 4% 6,522 6,228 5%
Total 3,086,338 3,041,673 1% 3,096,596 3,052,995 1%
Pipelines and Gathering
------------------------------------------
Quarter Ended Six Months Ended
June 30, % Diff June 30, % Diff
-------------- Fav/ ------------- Fav/
2005 2004 (Unfav) 2005 2004 (Unfav)
------- ------ ------ ------ ------ ------
Results of Operations:
Revenues $125 $113 11% $246 $216 14%
Expenses:
Natural gas 18 18 --- 25 28 11%
Operation and maintenance 40 37 (8%) 74 70 (6%)
Depreciation and amortization 11 11 --- 22 22 ---
Taxes other than income taxes 4 5 20% 9 9 ---
Total 73 71 (3%) 130 129 (1%)
Operating Income $52 $42 24% $116 $87 33%
Pipelines and Gathering
Operating Data:
Throughput data in BCF
Natural Gas Sales 3 4 (25%) 4 7 (43%)
Transportation 230 207 11% 501 477 5%
Gathering 87 79 10% 170 154 10%
Elimination (2) (3) 33% (3) (5) 40%
Total Throughput 318 287 11% 672 633 6%
Reference is made to the Notes to the Consolidated Financial Statements
contained in the Annual Report on Form 10-K of CenterPoint Energy, Inc.
CenterPoint Energy, Inc. and Subsidiaries
Results of Operations by Segment
(Millions of Dollars)
(Unaudited)
Other Operations
-------------------------------------------
Quarter Ended Six Months Ended
June 30, % Diff June 30, % Diff
-------------- Fav/ -------------- Fav/
2005 2004 (Unfav) 2005 2004(Unfav)
------- ------ ----- -------- ----- ------
Results of Operations:
Revenues $4 $3 33% $11 $6 83%
Expenses 11 9 (22%) 25 19 (32%)
Operating Loss $(7) $(6) (17%) $(14) $(13) (8%)
Capital Expenditures by Segment
(Millions of Dollars)
(Unaudited)
Quarter Ended Six Months Ended
June 30, June 30,
2005 2004 2005 2004
Capital Expenditures by Segment
Electric Transmission & Distribution $87 $52 $142 $94
Natural Gas Distribution 56 43 96 80
Pipelines and Gathering 31 9 53 24
Other Operations 5 7 10 12
Total $179 $111 $301 $210
Interest Expense Detail
(Millions of Dollars)
(Unaudited)
Quarter Ended Six Months Ended
June 30, June 30,
-------------- ----------------
2005 2004 2005 2004
----- ------ ------ -------
Interest Expense Detail
Amortization of Deferred Financing
Cost $19 $22 $39 $44
Capitalization of Interest Cost (1) (1) (2) (2)
Transition Bond Interest Expense 9 9 18 18
Other Interest Expense 161 168 316 331
Total Interest Expense 188 198 371 391
Amortization of Deferred Financing
Cost
Reclassified to Discontinued
Operations --- 1 --- 2
Other Interest Reclassified to
Discontinued Operations --- 11 --- 22
Total Interest Reclassified to
Discontinued Operations (A) --- 12 --- 24
Interest Expense Incurred by
Discontinued Operations --- --- 1 ---
Total Expense in Discontinued
Operations --- 12 1 24
Total Interest Expense Incurred $188 $210 $372 $415
(A) In accordance with Emerging Issues Task Force Issue No. 87-24
Allocation of Interest to Discontinued Operations", in 2004, we have
reclassified interest to discontinued operations of Texas Genco based
on net proceeds received from the sale of Texas Genco of
$2.5 billion, and have applied the proceeds to the amount of debt
assumed to be paid down in 2004 according to the terms of the
respective credit facilities in effect for that period. In periods
where only the term loan was assumed to be repaid, the actual
interest paid was reclassified. In periods where a portion of the
revolver was assumed to be repaid, the percentage of that portion of
the revolver to the total outstanding balance was calculated, and
that percentage was applied to the actual interest paid in those
periods to compute the amount of interest reclassified.
Total interest expense was $188 million and $210 million for the
three months ended June 30, 2005 and 2004, respectively, and $372
million and $415 million for the six months ended June 30, 2005 and
2004, respectively. Interest expense of $12 million for the three
months ended June 30, 2004, and $24 million for the six months ended
June 30, 2004, was reclassified to discontinued operations of Texas
Genco.
Reference is made to the Notes to the Consolidated Financial Statements
contained in the Annual Report on Form 10-K of CenterPoint Energy, Inc.
CenterPoint Energy, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(Thousands of Dollars)
(Unaudited)
June 30, December 31,
2005 2004
ASSETS
Current Assets:
Cash and cash equivalents $408,162 $164,645
Other current assets 1,576,635 2,158,111
Current assets of discontinued operations --- 513,768
Total current assets 1,984,797 2,836,524
Property, Plant and Equipment, net 8,273,291 8,186,393
Other Assets:
Goodwill, net 1,744,252 1,740,510
Regulatory assets 2,928,968 3,349,944
Other non-current assets 958,383 997,428
Non-current assets of discontinued
operations --- 1,051,158
Total other assets 5,631,603 7,139,040
Total Assets $15,889,691 $18,161,957
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Current portion of transition bond
long-term debt $49,352 $46,806
Current portion of other long-term debt 1,748,083 1,789,182
Other current liabilities 1,840,224 2,902,238
Current liabilities of discontinued
operations --- 448,974
Total current liabilities 3,637,659 5,187,200
Other Liabilities:
Accumulated deferred income taxes,
net and investment tax credit 2,522,664 2,468,833
Regulatory liabilities 744,260 1,081,370
Other non-current liabilities 753,072 705,643
Non-current liabilities of
discontinued operations --- 420,393
Total other liabilities 4,019,996 4,676,239
Long-term Debt:
Transition bond 610,462 628,903
Other 6,440,756 6,564,113
Total long-term debt 7,051,218 7,193,016
Shareholders' Equity 1,180,818 1,105,502
Total Liabilities and
Shareholders' Equity $15,889,691 $18,161,957
Reference is made to the Notes to the Consolidated Financial Statements
contained in the Annual Report on Form 10-K of CenterPoint Energy, Inc.
CenterPoint Energy, Inc. and Subsidiaries
Condensed Statements of Consolidated Cash Flows
(Thousands of Dollars)
(Unaudited)
Six Months Ended June 30,
2005 2004
Cash Flows from Operating Activities:
Net income $121,511 $131,239
Discontinued operations, net of tax 3,287 (105,067)
Extraordinary item, net of tax (30,441) ---
Income from continuing operations 94,357 26,172
Adjustments to reconcile income from
continuing operations to net cash
provided by operating activities:
Depreciation and amortization 305,131 279,957
Deferred income taxes and investment
tax credit 44,321 52,943
Changes in net regulatory assets
and liabilities (132,449) (157,728)
Changes in other assets and liabilities (211,379) 253,248
Other, net 6,166 21,045
Net Cash Provided by Operating Activities 106,147 475,637
Net Cash Provided by (Used in)
Investing Activities 397,549 (187,953)
Net Cash Used in Financing Activities (260,179) (278,254)
Net Increase in Cash and Cash Equivalents 243,517 9,430
Cash and Cash Equivalents at
Beginning of Period 164,645 86,922
Cash and Cash Equivalents at End of Period $408,162 $96,352
Reference is made to the Notes to the Consolidated Financial Statements
contained in the Annual Report on Form 10-K of CenterPoint Energy, Inc.
SOURCE CenterPoint Energy, Inc.
media, Leticia Lowe, +1-713-207-7702, or investors, Marianne Paulsen, +1-713-207-6500, both of CenterPoint Energy, Inc.
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