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Aug 06, 2004

Texas Genco Reports Improved Second Quarter 2004 Results

HOUSTON, Aug. 6 /PRNewswire-FirstCall/ -- Texas Genco Holdings, Inc. (NYSE: TGN), an 81 percent-owned subsidiary of CenterPoint Energy, Inc. (NYSE: CNP), today reported net income of $80 million, or $1.00 per share, for the second quarter of 2004 compared to $33 million, or $0.42 per share, for the same period of 2003.

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For the six months ended June 30, 2004, net income was $141 million, or $1.76 per share, compared to income of $22 million, or $0.28 per share, for the same period of 2003 before the effect of an accounting change in that period. Net income for the six months ended June 30, 2003, was $121 million, or $1.52 per share, including a non-cash gain of $99 million ($1.24 per share) from the adoption of Statement of Financial Accounting Standards No. 143, "Accounting for Asset Retirement Obligations".

"I'm very pleased to report a significant improvement in our second quarter earnings compared to last year primarily due to higher wholesale electricity prices for our baseload products and more available baseload capacity this quarter," said David Tees, president and chief executive officer of Texas Genco. "Our fleet of solid fuel baseload generating capacity operated well during the quarter, and I'm very proud of our employees who continue to do what they do best -- run efficient, safe and reliable plants."

Texas Genco reported higher operating income of $69 million for the second quarter of 2004 compared to the same period of 2003, due primarily to higher prices for baseload products. Operation and maintenance expenses for the second quarter of 2004 were lower than the prior year resulting primarily from lower expenses associated with planned and unplanned outages.

On July 21, 2004, CenterPoint Energy and Texas Genco announced a definitive agreement for GC Power Acquisition LLC, a newly formed entity owned in equal parts by affiliates of The Blackstone Group, Hellman & Friedman LLC, Kohlberg Kravis Roberts & Co. L.P. and Texas Pacific Group, to acquire Texas Genco for approximately $3.65 billion in cash. The transaction, subject to customary regulatory approvals, will be accomplished in two steps. The first step, expected to be completed in the fourth quarter of 2004, involves Texas Genco's purchase of the 19 percent of its shares owned by the public for $47 per share, followed by GC Power Acquisition's purchase of a Texas Genco unit that will be formed to own its coal, lignite and gas-fired generation plants. In the second step of the transaction, expected to take place in the first quarter of 2005 following receipt of approval by the Nuclear Regulatory Commission, GC Power Acquisition will complete the acquisition of Texas Genco, the principal remaining asset of which will then be Texas Genco's interest in the South Texas Project nuclear facility. Total cash proceeds to CenterPoint Energy from both steps of the transaction will be approximately $2.9 billion, or $45.25 per share for its 81 percent interest in Texas Genco.

In connection with the transaction, Texas Genco entered into a master power purchase and sale agreement under which the company has sold forward a substantial quantity of its remaining available baseload capacity through 2008. The company's obligations under the power purchase agreement will continue regardless of whether the transaction is completed.


The managements of CenterPoint Energy and Texas Genco will host an earnings conference call on Friday, August 6, 2004, at 10:30 a.m. Central time. Interested parties may listen to a live, audio broadcast of the conference call at , or at . A replay of the call can be accessed approximately two hours after the completion of the call, and will be archived on CenterPoint Energy's web site for at least one year.

Texas Genco Holdings, Inc., based in Houston, Texas, is one of the largest wholesale electric power generating companies in the United States with over 14,000 megawatts of generation capacity, of which approximately 2,500 megawatts are currently in mothball status. It sells electric generation capacity, energy and ancillary services in one of the nation's largest power markets, the Electric Reliability Council of Texas (ERCOT). Texas Genco has one of the most diversified generation portfolios in Texas, using natural gas, oil, coal, lignite, and uranium fuels. The company owns and operates 60 generating units at 11 electric power-generating facilities and owns a 30.8 percent interest in a nuclear generating plant. Texas Genco currently is a majority-owned subsidiary of CenterPoint Energy, Inc. For more information, visit our web site at .

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 impact of future regulatory and legislative decisions, successful consummation and timing of the sale of Texas Genco, effects of competition, weather variations, changes in Texas Genco's business plans, financial market conditions, the timing and extent of changes in commodity prices, particularly natural gas, the impact of unplanned plant outages and other factors discussed in Texas Genco's Form 10-K for the period ended December 31, 2003, Form 10-Q for the period ended March 31, 2004 and other filings with the Securities and Exchange Commission.

                          Texas Genco Holdings, Inc.
                      Statements of Consolidated Income
                            (Thousands of Dollars)
                                       Quarter              Six Months
                                    Ended June 30,         Ended June 30,
                                  2004        2003        2004        2003
     Revenues                    $552,718    $578,511    $991,847    $937,098
       Fuel                       263,992     349,318     450,307     557,307
       Purchased power             18,098      22,974      26,368      34,968
       Operation and maintenance   98,872     105,301     200,199     210,651
       Depreciation and
        amortization               40,607      39,391      80,976      78,470
       Taxes other than income
        taxes                      12,122      11,483      24,378      22,774
         Total                    433,691     528,467     782,228     904,170
     Operating Income             119,027      50,044     209,619      32,928
     Other Income                   1,667       1,089       2,055       1,289
     Interest Expense                (114)     (2,822)       (140)     (5,625)
     Income Before Income
      Taxes and Cumulative
      Effect of
     Accounting Change            120,580      48,311     211,534      28,592
     Income Tax Expense           (40,464)    (15,018)    (70,526)     (6,181)
     Income Before Cumulative
      Effect of Accounting
      Change                       80,116      33,293     141,008      22,411
     Cumulative Effect of
      Accounting Change, net
      of tax                          ---         ---         ---      98,910
     Net Income                   $80,116     $33,293    $141,008    $121,321
     Basic and Diluted
      Earnings Per Common
       Income Before Cumulative
        Effect of Accounting
        Change                      $1.00       $0.42       $1.76       $0.28
       Cumulative Effect of
        Accounting Change, net
        of tax                        ---         ---         ---        1.24
       Net Income                   $1.00       $0.42       $1.76       $1.52
     Dividends Declared per
      Common Share                  $0.25       $0.25       $0.50       $0.50
     Weighted Average Common
      Shares Outstanding
       - Basic                     80,000      80,000      80,000      80,000
       - Diluted                   80,000      80,000      80,000      80,000
     Capital Expenditures         $13,022     $33,034     $37,082     $77,696
     Operating Data:
       Sales (MWH)             11,962,375  12,517,492  22,683,153  21,793,836
       Generation (MWH)        11,542,226  12,077,631  21,691,416  21,072,384

Reference is made to the Notes to the Consolidated Financial Statements contained in the Annual Report on Form 10-K of Texas Genco Holdings, Inc.

                          Texas Genco Holdings, Inc.
                    Condensed Consolidated Balance Sheets
                            (Thousands of Dollars)
                                                  June 30,        December 31,
                                                    2004              2003
    Current Assets:
      Cash                                             $38               $33
      Short-term investments                       184,522            44,525
      Short-term note receivable-affiliate           1,283               ---
      Inventory                                    167,884           169,692
      Other current assets                         109,109            84,142
          Total current assets                     462,836           298,392
    Property, Plant and Equipment, net           4,094,424         4,125,595
    Other Assets:
      Nuclear decommissioning trust                198,275           189,182
      Other non-current assets                      23,305            26,462
          Total other assets                       221,580           215,644
            Total Assets                        $4,778,840        $4,639,631
    Current Liabilities:
      Accounts payable and other accrued
       liabilities                                $219,174          $224,319
      Deferred capacity auction revenue            109,566            86,853
      Other current liabilities                     13,870            17,579
          Total current liabilities                342,610           328,751
    Other Liabilities:
      Accumulated deferred income taxes,
       net and investment tax credit               981,467           995,078
      Nuclear decommissioning reserve              222,958           187,997
      Other non-current liabilities                 97,636            94,644
          Total other liabilities                1,302,061         1,277,719
    Shareholders' Equity                         3,134,169         3,033,161
          Total Liabilities and
           Shareholders' Equity                 $4,778,840        $4,639,631

Reference is made to the Notes to the Consolidated Financial Statements contained in the Annual Report on Form 10-K of Texas Genco Holdings, Inc.

                          Texas Genco Holdings, Inc.
               Condensed Statements of Consolidated Cash Flows
                            (Thousands of Dollars)
                                                  Six Months Ended June 30,
                                                    2004              2003
    Cash Flows from Operating Activities:
      Net income                                  $141,008          $121,321
      Cumulative effect of accounting
       change, net                                     ---           (98,910)
          Income before cumulative effect
           of accounting change                    141,008            22,411
      Adjustments to reconcile net income
       to net cash provided by operating
        Depreciation and amortization,
         including fuel-related amortization        94,726            88,195
        Deferred income taxes and
         investment tax credit                     (11,126)          (16,194)
        Changes in other assets and
         liabilities                                (6,865)          (22,600)
    Net Cash Provided by Operating
     Activities                                    217,743            71,812
    Cash Flows from Investing Activities:
      Capital expenditures and other               (36,342)          (74,706)
      Increase in note receivable-affiliate         (1,283)              ---
    Net Cash Used in Investing Activities          (37,625)          (74,706)
    Net Cash Provided by (Used in)
     Financing Activities                          (40,116)            2,470
    Net Increase (Decrease) in Cash and
     Cash Equivalents                              140,002              (424)
    Cash and Cash Equivalents at
     Beginning of Period                            44,558               578
    Cash and Cash Equivalents at End of
     Period                                       $184,560              $154

SOURCE Texas Genco Holdings, Inc.

media, Leticia Lowe, +1-713-207-7702, or investors, Marianne
Paulsen, +1-713-207-6500, both of Texas Genco Holdings, Inc.
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