EXHIBIT
NUMBER EXHIBIT DESCRIPTION
- ------- -------------------
99.1 Press Release issued November 9, 2004 regarding
CenterPoint Energy, Inc.'s third quarter 2004 earnings
EXHIBIT 99.1
(CENTERPOINT ENERGY LOGO) For more information contact
MEDIA:
LETICIA LOWE
Phone 713-207-7702
INVESTORS:
MARIANNE PAULSEN
Phone 713-207-6500
FOR IMMEDIATE RELEASE PAGE 1 of 6
- --------------------------------------------------------------------------------
CENTERPOINT ENERGY REPORTS THIRD QUARTER 2004 RESULTS
LOSS REFLECTS WRITE-DOWN OF REGULATORY ASSETS AND LOSS ON
DISPOSAL OF TEXAS GENCO
HOUSTON - NOVEMBER 9, 2004 - CenterPoint Energy, Inc. (NYSE: CNP)
today reported a net loss of $1.1 billion, or $3.66 per diluted share, for the
third quarter of 2004 compared to net income of $182 million, or $0.59 per
diluted share for the same period of 2003.
The net loss for the third quarter of 2004 was primarily related to
two major events. First, the company recorded an $894 million extraordinary
charge to earnings. This charge reflects a write-down of the company's
generation-related regulatory assets resulting from the Public Utility
Commission of Texas' (PUC) deliberations in the proceeding to determine the
company's stranded investment and other true-up amounts filed pursuant to the
Texas electric restructuring law. Second, due to the pending sale of the
company's interest in Texas Genco Holdings, Inc. (NYSE: TGN), the company
recorded a $259 million net loss from discontinued operations and reclassified
the electric generation segment as discontinued operations for all periods
presented. Net income for the third quarter of 2003 included $35 million, or
$0.11 per diluted share, of income from discontinued operations.
Income from continuing operations was $17 million, or $0.05 per
diluted share, for the third quarter of 2004 compared to $147 million, or $0.48
per diluted share, for the third quarter of 2003. The third quarter of 2003
included after-tax income of $144 million, or $0.47 per diluted share, related
to Excess Cost Over Market (ECOM) revenues which terminated as of December 31,
2003, in accordance with the Texas electric restructuring law.
"We're very disappointed in the estimated recovery amount from our
true-up proceeding pending before the Texas Public Utility Commission," said
David M. McClanahan, president and chief executive officer of CenterPoint
Energy. "However, we're pleased that the sale of Texas Genco is progressing
well, and we will de-leverage the company with the proceeds from the sale and
the ultimate securitization of the approved true-up balance. We continue to
execute the strategy that we developed when we formed CenterPoint Energy a
little over two years ago - namely, reducing our debt and optimizing and
enhancing our core energy delivery businesses. We're making good progress."
For the nine months ended September 30, 2004, the company recorded a
net loss of $1 billion, or $3.25 per diluted share, which included a $154
million net loss from discontinued operations resulting from the pending sale of
Texas Genco and the $894
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(CENTERPOINT ENERGY LOGO) For more information contact
MEDIA:
LETICIA LOWE
Phone 713-207-7702
INVESTORS:
MARIANNE PAULSEN
Phone 713-207-6500
FOR IMMEDIATE RELEASE PAGE 2 of 6
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million extraordinary charge to earnings from the write-down of
generation-related regulatory assets. Net income for the same period of 2003 was
$413 million, or $1.35 per diluted share, which included $52 million, or $0.17
per diluted share, of income from discontinued operations.
Income from continuing operations was $43 million, or $0.14 per
diluted share, for the nine months ended September 30, 2004, compared to $362
million, or $1.18 per share for the same period of 2003. The nine months ended
September 30, 2003 included after-tax, ECOM-related income of $296 million, or
$0.97 per diluted share.
THIRD QUARTER 2004 HIGHLIGHTS
TRUE-UP PROCEEDING
On March 31, 2004, the company filed its true-up application with the
PUC, marking one of the final steps in the implementation of the Texas electric
restructuring law. In this application the company is seeking to recover a
true-up balance of $3.7 billion, excluding interest. Although a final order has
not been issued, based on deliberations by the PUC commissioners during six
public meetings, the company estimates that it will recover approximately $2.0
billion of its requested amount, excluding interest which will be recorded once
a final determination has been made by the PUC. Consequently, the company
recorded an $894 million extraordinary loss in the quarter. Once the PUC issues
a final order, the extraordinary loss may be adjusted.
SALE OF TEXAS GENCO
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
certain 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 subsidiary that
will then own Texas Genco's coal, lignite and gas-fired generation plants. In
the second step of the transaction, expected to take place in the first half of
2005 following Nuclear Regulatory Commission approval, 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 for its 81 percent interest in Texas Genco.
After-tax proceeds are estimated to be approximately $2.5 billion.
-more-
(CENTERPOINT ENERGY LOGO) For more information contact
MEDIA:
LETICIA LOWE
Phone 713-207-7702
INVESTORS:
MARIANNE PAULSEN
Phone 713-207-6500
FOR IMMEDIATE RELEASE PAGE 3 of 6
- --------------------------------------------------------------------------------
OPERATING INCOME BY SEGMENT DETAILED
Electric Transmission & Distribution
The electric transmission & distribution segment reported operating
income of $178 million in the third quarter of 2004, consisting of $169 million
for the regulated transmission and distribution utility (TDU) and $9 million for
the transition bond company, which is an amount sufficient to pay interest on
the transition bonds. Results for the third quarter of 2004 do not include any
revenues related to ECOM which terminated as of December 31, 2003 in accordance
with the Texas electric restructuring law. Operating income for the same period
of 2003 totaled $383 million, consisting of $151 million for the TDU, $10
million for the transition bond company and $222 million of non-cash income
associated with ECOM.
The TDU continues to benefit from solid customer growth as nearly
51,000 metered customers were added since September 2003. Increased operation
and maintenance expenses from environmental remediation costs and increased
transmission payments were more than offset by a land sale.
Operating income for the nine months ended September 30, 2004, was
$390 million, consisting of $361 million for the TDU and $29 million for the
transition bond company. Operating income for the same period of 2003 totaled
$823 million, consisting of $339 million for the TDU, $29 million for the
transition bond company and $455 million of non-cash income associated with
ECOM.
NATURAL GAS DISTRIBUTION
The natural gas distribution segment reported an operating loss of $2
million for the third quarter of 2004 compared to an operating loss of $5
million for the same period of 2003. Due to seasonal impacts, operating results
for the third quarter in this segment are typically the weakest of the year.
Continued customer growth, with the addition of over 45,000 customers
since September 2003, and higher revenues from rate increases more than offset
increased operating expenses.
Operating income for the nine months ended September 30, 2004, was
$137 million, compared to $146 million for the same period of 2003.
-more-
(CENTERPOINT ENERGY LOGO) For more information contact
MEDIA:
LETICIA LOWE
Phone 713-207-7702
INVESTORS:
MARIANNE PAULSEN
Phone 713-207-6500
FOR IMMEDIATE RELEASE PAGE 4 of 6
- --------------------------------------------------------------------------------
PIPELINES AND GATHERING
The pipelines and gathering segment reported operating income of $35
million for the third quarter of 2004 compared to $39 million for the same
period of 2003. Increased transportation and gas gathering margins were more
than offset by higher operation and maintenance expenses primarily related to
pipeline integrity expenditures and litigation settlement costs.
Operating income for the nine months ended September 30, 2004 was
$123 million compared to $124 million for the same period of 2003.
OTHER OPERATIONS
The company's other operations reported an operating loss of $4
million for the third quarter of 2004 compared to operating income of $1 million
for the same period of 2003.
The operating loss for the nine months ended September 30, 2004, was
$17 million compared to an operating loss of $16 million for the same period of
2003.
OTHER
Interest expense incurred for the third quarter of 2004 was $206
million compared to $238 million for the same period of 2003. In accordance with
Emerging Issues Task Force Issue No. 87-24, "Allocation of Interest to
Discontinued Operations", the company reclassified interest to discontinued
operations of Texas Genco according to the terms for debt repayment in the
respective credit facilities in effect for each period. After reflecting the
reclassification of interest expense to discontinued operations and interest
incurred by discontinued operations of $14 million for the third quarter of 2004
and $54 million for the same period of 2003, interest expense related to
continuing operations was $192 million in 2004 and $184 million in 2003.
Interest expense incurred for the nine months ended September 30,
2004, was $621 million in 2004 compared to $712 million for the same period of
2003. After reflecting the reclassification of interest expense to discontinued
operations and interest incurred by discontinued operations of $38 million for
the nine months ended September 30, 2004 and $181 million for the same period of
2003, interest expense related to continuing operations was $583 million for
2004 and $531 million for the same period of 2003.
-more-
(CENTERPOINT ENERGY LOGO) For more information contact
MEDIA:
LETICIA LOWE
Phone 713-207-7702
INVESTORS:
MARIANNE PAULSEN
Phone 713-207-6500
FOR IMMEDIATE RELEASE PAGE 5 of 6
- --------------------------------------------------------------------------------
DISCONTINUED OPERATIONS
Due to the pending sale of the company's interest in Texas Genco, the
electric generation segment has been reclassified as discontinued operations in
the third quarter of 2004. As a result of the sale, the company recorded a $253
million loss related to the sale of Texas Genco and an additional loss of $93
million offsetting the company's 81 percent interest in Texas Genco's third
quarter 2004 earnings. Until the sale of Texas Genco is complete, the company's
interest in any Texas Genco earnings will be offset by an increased loss on the
pending sale. Income from Texas Genco presented in discontinued operations was
$87 million for the quarter and $36 million for the same period of 2003. For the
nine months ended September 30, income from Texas Genco presented in
discontinued operations was $192 million for 2004 and $66 million for the same
period of 2003. These operations are presented as discontinued operations in
accordance with SFAS No. 144, "Accounting for the Impairment or Disposal of
Long-Lived Assets", for all periods presented.
FOURTH QUARTER DIVIDEND
The Board of Directors of CenterPoint Energy has not yet taken up the matter of
a cash dividend for the fourth quarter, but is expected to do so at its meeting
later in November.
WEBCAST OF EARNINGS CONFERENCE CALL
The management of CenterPoint Energy will host an earnings conference
call on Tuesday, November 9, 2004, at 10:30 a.m. Central time. Interested
parties may listen to a live, audio broadcast of the conference call at
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 CenterPoint Energy's 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, and more than 14,000 megawatts of power generation in
Texas, of which approximately 2,500 megawatts are currently in mothball status.
The company serves nearly five million metered customers primarily in Arkansas,
Louisiana, Minnesota, Mississippi, Oklahoma, and Texas. Assets total over $19
billion. With more than 11,000 employees, CenterPoint Energy and its predecessor
companies have been in business for more than 130 years. For more information,
visit the Web site at www.CenterPointEnergy.com.
-more-
(CENTERPOINT ENERGY LOGO) For more information contact
MEDIA:
LETICIA LOWE
Phone 713-207-7702
INVESTORS:
MARIANNE PAULSEN
Phone 713-207-6500
FOR IMMEDIATE RELEASE PAGE 6 of 6
- --------------------------------------------------------------------------------
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, successful
consummation and timing of the sale of Texas Genco, 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, 2003, Form 10-Qs for
the periods ended March 31, 2004 and June 30, 2004 and other filings with the
Securities and Exchange Commission.
- ### -
CenterPoint Energy, Inc. and Subsidiaries
Statements of Consolidated Operations
(Thousands of Dollars)
(Unaudited)
Quarter Ended September 30, Nine Months Ended September 30,
----------------------------- -------------------------------
2004 2003 2004 2003
----------- ----------- ----------- -----------
Revenues:
Electric Transmission & Distribution $ 446,130 $ 653,438 $ 1,149,283 $ 1,582,613
Natural Gas Distribution 1,148,548 897,392 4,524,865 3,912,719
Pipelines and Gathering 107,870 89,083 323,670 319,907
Other Operations 2,592 7,615 8,372 25,867
Eliminations (38,051) (39,594) (113,311) (168,514)
----------- ----------- ----------- -----------
Total 1,667,089 1,607,934 5,892,879 5,672,592
----------- ----------- ----------- -----------
Expenses:
Fuel and cost of gas sold 928,189 681,888 3,700,679 3,073,652
Operation and maintenance 317,486 298,814 928,556 910,274
Depreciation and amortization 125,528 119,472 361,820 350,547
Taxes other than income taxes 89,151 90,129 269,315 260,889
----------- ----------- ----------- -----------
Total 1,460,354 1,190,303 5,260,370 4,595,362
----------- ----------- ----------- -----------
Operating Income 206,735 417,631 632,509 1,077,230
----------- ----------- ----------- -----------
Other Income (Expense):
Gain (loss) on Time Warner investment (31,161) (21,207) (40,033) 43,497
Gain (loss) on indexed debt securities 34,117 17,040 43,240 (38,510)
Interest and other finance charges (182,701) (173,822) (554,658) (501,107)
Interest on transition bonds (9,495) (9,811) (28,716) (29,495)
Other - net 1,310 2,688 15,243 11,846
----------- ----------- ----------- -----------
Total (187,930) (185,112) (564,924) (513,769)
----------- ----------- ----------- -----------
Income from Continuing Operations Before
Income Taxes and Extraordinary Loss 18,805 232,519 67,585 563,461
Income Tax Expense (2,174) (85,544) (24,781) (201,699)
----------- ----------- ----------- -----------
Income from Continuing Operations Before
Extraordinary Loss 16,631 146,975 42,804 361,762
----------- ----------- ----------- -----------
Discontinued Operations:
Income from Texas Genco, net of tax 108,768 51,753 240,689 104,580
Minority Interest related to Texas Genco, net of tax (21,852) (15,694) (48,707) (38,799)
Loss on Disposal of Texas Genco, net of tax (346,127) -- (346,127) --
Loss from Other Operations, net of tax -- (1,212) -- (2,077)
Loss on Disposal of Other Operations, net of tax -- (97) -- (12,086)
----------- ----------- ----------- -----------
Total (259,211) 34,750 (154,145) 51,618
----------- ----------- ----------- -----------
Extraordinary Loss, net of tax (893,618) -- (893,618) --
----------- ----------- ----------- -----------
Net Income (Loss) $(1,136,198) $ 181,725 $(1,004,959) $ 413,380
=========== =========== =========== ===========
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 Operations
(Thousands of Dollars, Except Per Share Amounts)
(Unaudited)
Quarter Ended Nine Months Ended
September 30, September 30,
------------------------- ---------------------------
2004 2003 2004 2003
--------- --------- --------- -----------
Basic Earnings Per Common Share:
Income from Continuing Operations $ 0.05 $ 0.48 $ 0.14 $ 1.19
Income (Loss) from Discontinued Operations (0.84) 0.12 (0.50) 0.17
Extraordinary Loss, net of tax (2.90) -- (2.91) --
--------- --------- --------- -----------
Net Income (Loss) $ (3.69) $ 0.60 $ (3.27) $ 1.36
========= ========= ========= ===========
Diluted Earnings Per Common Share:
Income from Continuing Operations $ 0.05 $ 0.48 $ 0.14 $ 1.18
Income (Loss) from Discontinued Operations (0.83) 0.11 (0.50) 0.17
Extraordinary Loss, net of tax (2.88) -- (2.89) --
--------- --------- --------- -----------
Net Income (Loss) $ (3.66) $ 0.59 $ (3.25) $ 1.35
========= ========= ========= ===========
Dividends Declared per Common Share $ 0.10 $ --(1) $ 0.30 $ 0.30
Weighted Average Common Shares Outstanding (000):
- Basic 307,592 305,007 306,954 303,261
- Diluted 310,165 307,345 309,482 305,415
OPERATING INCOME (LOSS) BY SEGMENT
Electric Transmission & Distribution:
Transmission & Distribution Operations $ 168,506 $ 151,466 $ 361,635 $ 338,901
Transition Bond Company 9,399 9,733 28,505 29,252
ECOM True-up -- 221,502 -- 454,783
--------- --------- --------- -----------
Total Electric Transmission & Distribution 177,905 382,701 390,140 822,936
Natural Gas Distribution (1,972) (4,723) 137,427 145,789
Pipelines and Gathering 35,391 38,948 122,484 124,197
Other Operations (4,589) 705 (17,542) (15,692)
--------- --------- --------- -----------
Total $ 206,735 $ 417,631 $ 632,509 $ 1,077,230
========= ========= ========= ===========
(1) A third quarter dividend was declared on June 18, 2003 payable on
September 10, 2003.
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 Nine Months Ended
September 30, September 30,
------------------------- % Diff ------------------------- % Diff
2004 2003 Fav/(Unfav) 2004 2003 Fav/(Unfav)
------------------------- ----------- ------------------------- -----------
RESULTS OF OPERATIONS:
Revenues:
Electric revenues $ 425 $ 414 3% $ 1,095 $ 1,080 1%
ECOM revenues -- 222 -- -- 455 --
Transition bond revenues 21 18 17% 54 48 13%
---------- ---------- ---------- ----------
Total Revenues 446 654 (32%) 1,149 1,583 (27%)
---------- ---------- ---------- ----------
Expenses:
Operation and maintenance 134 139 4% 390 398 2%
Depreciation and amortization 63 62 (2%) 186 184 (1%)
Taxes other than income taxes 59 62 5% 158 159 1%
Transition bond expenses 12 8 (50%) 25 19 (32%)
---------- ---------- ---------- ----------
Total 268 271 1% 759 760 --
---------- ---------- ---------- ----------
Operating Income $ 178 $ 383 (54%) $ 390 $ 823 (53%)
========== ========== ========== ==========
Quarter Ended Nine Months Ended
September 30, September 30,
------------------------- -------------------------
2004 2003 2004 2003
------------------------- -------------------------
ELECTRIC TRANSMISSION & DISTRIBUTION
OPERATING DATA:
ACTUAL MWH DELIVERED
Residential 8,511,639 8,134,198 5% 18,714,422 19,182,750 (2%)
Total 22,568,431 20,895,879 8% 56,633,719 54,770,018 3%
WEATHER (AVERAGE FOR SERVICE AREA):
Percentage of normal:
Cooling degree days 103% 96% 7% 102% 102% --
Heating degree days N/A N/A -- 86% 111% (25%)
AVERAGE NUMBER OF METERED CUSTOMERS:
Residential 1,645,523 1,600,998 3% 1,633,890 1,587,976 3%
Commercial and Industrial 224,605 220,420 2% 222,661 221,049 1%
---------- ---------- ---------- ----------
Total 1,870,128 1,821,418 3% 1,856,551 1,809,025 3%
========== ========== ========== ==========
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 Nine Months Ended
September 30, September 30,
----------------------- % Diff ------------------------ % Diff
2004 2003 Fav/(Unfav) 2004 2003 Fav/(Unfav)
--------- --------- ---------- --------- --------- ----------
RESULTS OF OPERATIONS:
Revenues $ 1,149 $ 897 28% $ 4,525 $ 3,913 16%
--------- --------- --------- ---------
Expenses:
Natural gas 959 713 (35%) 3,776 3,168 (19%)
Operation and maintenance 133 133 -- 416 417 --
Depreciation and amortization 36 34 (6%) 106 101 (5%)
Taxes other than income taxes 23 22 (5%) 90 81 (11%)
--------- --------- --------- ---------
Total 1,151 902 (28%) 4,388 3,767 (16%)
--------- --------- --------- ---------
Operating Income (Loss) $ (2) $ (5) (60%) $ 137 $ 146 (6%)
========= ========= ========= =========
NATURAL GAS DISTRIBUTION OPERATING DATA:
THROUGHPUT DATA IN BCF
Residential 15 15 -- 121 129 (6%)
Commercial and Industrial 39 39 -- 171 167 2%
Non-rate regulated Commercial and Industrial 113 120 (6%) 419 365 15%
Elimination (32) (24) (33%) (105) (64) (64%)
--------- --------- --------- ---------
Total Throughput 135 150 (10%) 606 597 2%
========= ========= ========= =========
WEATHER (AVERAGE FOR SERVICE AREA)
Percentage of normal:
Heating degree days 61% 101% (40%) 95% 104% (9%)
AVERAGE NUMBER OF CUSTOMERS:
Residential 2,777,212 2,732,165 2% 2,791,722 2,749,571 2%
Commercial and Industrial 242,111 242,503 -- 245,895 245,118 --
Non-rate regulated Commercial and Industrial 6,249 5,569 12% 6,234 5,350 17%
--------- --------- --------- ---------
Total 3,025,572 2,980,237 2% 3,043,851 3,000,039 1%
========= ========= ========= =========
PIPELINES AND GATHERING
--------------------------------------------------------------------------------
Quarter Ended Nine Months Ended
September 30, September 30,
----------------------- % Diff ------------------------ % Diff
2004 2003 Fav/(Unfav) 2004 2003 Fav/(Unfav)
--------- --------- ---------- --------- --------- ----------
RESULTS OF OPERATIONS:
Revenues $ 108 $ 89 21% $ 324 $ 320 1%
--------- --------- --------- ---------
Expenses:
Natural gas 6 5 (20%) 33 62 47%
Operation and maintenance 52 31 (68%) 122 90 (36%)
Depreciation and amortization 11 10 (10%) 33 31 (6%)
Taxes other than income taxes 4 4 -- 13 13 --
--------- --------- --------- ---------
Total 73 50 (46%) 201 196 (3%)
--------- --------- --------- ---------
Operating Income $ 35 $ 39 (10%) $ 123 $ 124 (1%)
========= ========= ========= =========
PIPELINES AND GATHERING OPERATING DATA:
THROUGHPUT DATA IN BCF
Natural Gas Sales 1 1 -- 8 9 (11%)
Transportation 181 159 14% 658 630 4%
Gathering 79 73 8% 233 219 6%
Elimination -- -- -- (5) (4) (25%)
--------- --------- --------- ---------
Total Throughput 261 233 12% 894 854 5%
========= ========= ========= =========
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 Nine Months Ended
September 30, September 30,
------------------------ % Diff --------------------- % Diff
2004 2003 Fav/(Unfav) 2004 2003 Fav/(Unfav)
--------- --------- ----------- --------- --------- -----------
RESULTS OF OPERATIONS:
Revenues $ 2 $ 8 (75%) $ 8 $ 26 (69%)
Expenses 6 7 14% 25 42 40%
--------- --------- --------- ---------
Operating Income (Loss) $ (4) $ 1 (500%) $ (17) $ (16) (6%)
========= ========= ========= =========
Capital Expenditures by Segment
(Millions of Dollars)
(Unaudited)
Quarter Ended Nine Months Ended
September 30, September 30,
----------------------- -------------------------
2004 2003 2004 2003
--------- --------- --------- ---------
CAPITAL EXPENDITURES BY SEGMENT
Electric Transmission & Distribution $ 79 $ 51 $ 173 $ 156
Natural Gas Distribution 52 65 132 148
Pipelines and Gathering 14 13 38 42
Other Operations 4 -- 16 6
--------- --------- --------- ---------
Total $ 149 $ 129 $ 359 $ 352
========= ========= ========= =========
Interest Expense Detail
(Millions of Dollars)
(Unaudited)
Quarter Ended Nine Months Ended
September 30, September 30,
----------------------- -------------------------
2004 2003 2004 2003
--------- --------- --------- ---------
INTEREST EXPENSE DETAIL
Amortization of Deferred Financing Cost $ 19 $ 16 $ 63 $ 44
Capitalization of Interest Cost (1) (1) (3) (3)
Transition Bond Interest Expense 9 9 28 28
Other Interest Expense 165 160 495 462
--------- --------- --------- ---------
Total Interest Expense 192 184 583 531
--------- --------- --------- ---------
Amortization of Deferred Financing Cost
Reclassified to Discontinued Operations 1 22 3 64
Other Interest Reclassified to
Discontinued Operations 13 31 35 109
--------- --------- --------- ---------
Total Interest Reclassified to
Discontinued Operations (1) 14 53 38 173
Interest Expense Incurred by
Discontinued Operations -- 1 -- 8
--------- --------- --------- ---------
Total Expense in Discontinued Operations 14 54 38 181
--------- --------- --------- ---------
Total Interest Expense Incurred $ 206 $ 238 $ 621 $ 712
========= ========= ========= =========
(1) In 2003, our $3.85 billion credit facility was comprised of a revolver and a
term loan. This facility was amended in October 2003 to a $2.35 billion credit
facility, comprised of a revolver and a term loan. According to the terms of the
$3.85 billion credit facility, any net cash proceeds received from the sale of
Texas Genco were required to be applied to repay borrowings under the credit
facility. According to the terms of the $2.35 billion credit facility, until
such time as the facility has been reduced to $750 million, 100% of any net cash
proceeds received from the sale of Texas Genco are required to be applied to
repay borrowings under the credit facility and reduce the amount available under
the credit facility.
In accordance with Emerging Issues Task Force Issue No. 87-24 "Allocation of
Interest to Discontinued Operations", we have reclassified interest to
discontinued operations of Texas Genco based on net proceeds to be 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 each respective period according to
the terms of the respective credit facilities in effect for those periods. 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 incurred was $206 million and $238 million for the three
months ended September 30, 2004 and 2003, respectively, and $621 million and
$712 million for the nine months ended September 30, 2004 and 2003,
respectively. After reflecting the reclassification of interest expense to
discontinued operations and interest incurred by discontinued operations of $14
million and $54 million for the three months ended September 30, 2004 and 2003,
respectively, and $38 million and $181 million for the nine months ended
September 30, 2004 and 2003, respectively, interest expense related to
continuing operations was $192 million and $184 million for the three months
ended September 30, 2004 and 2003, respectively, and $583 million and $531
million for the nine months ended September 30, 2004 and 2003, respectively.
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)
September 30, December 31,
2004 2003
------------- ------------
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 20,202 $ 86,922
Other current assets 1,888,084 1,967,944
Current assets of discontinued operations 606,018 301,765
----------- -----------
Total current assets 2,514,304 2,356,631
----------- -----------
PROPERTY, PLANT AND EQUIPMENT, NET 8,122,791 8,084,924
----------- -----------
OTHER ASSETS:
Goodwill, net 1,740,510 1,740,510
Regulatory assets 3,227,201 4,930,793
Other non-current assets 406,639 405,936
Non-current assets of discontinued operations 3,574,598 3,942,296
----------- -----------
Total other assets 8,948,948 11,019,535
----------- -----------
TOTAL ASSETS $19,586,043 $21,461,090
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Current portion of transition bond long-term debt $ 46,806 $ 41,189
Short-term borrowings and current portion of other long-term debt 490,414 182,738
Other current liabilities 1,881,545 2,046,209
Current liabilities of discontinued operations 353,947 332,125
----------- -----------
Total current liabilities 2,772,712 2,602,261
----------- -----------
OTHER LIABILITIES:
Accumulated deferred income taxes, net and investment tax credit 1,907,237 2,227,229
Regulatory liabilities 1,114,515 1,358,030
Other non-current liabilities 1,019,260 1,278,646
Non-current liabilities of discontinued operations 1,461,097 1,277,760
----------- -----------
Total other liabilities 5,502,109 6,141,665
----------- -----------
LONG-TERM DEBT:
Transition bond 628,893 675,665
Other 9,826,790 10,102,269
----------- -----------
Total long-term debt 10,455,683 10,777,934
----------- -----------
MINORITY INTEREST IN DISCONTINUED OPERATIONS 215,953 178,673
SHAREHOLDERS' EQUITY 639,586 1,760,557
----------- -----------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $19,586,043 $21,461,090
=========== ===========
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)
Nine Months Ended September 30,
-------------------------------
2004 2003
----------- -----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $(1,004,959) $ 413,380
Discontinued operations, net of tax 154,145 (51,618)
Extraordinary loss, net of tax 893,618 --
----------- -----------
Income from continuing operations 42,804 361,762
Adjustments to reconcile income from continuing operations to net
cash provided by operating activities:
Depreciation and amortization 424,993 394,947
Deferred income taxes and investment tax credit 99,556 313,151
Changes in net regulatory assets and liabilities (253,335) (667,796)
Changes in other assets and liabilities 8,017 (155,956)
Other, net 17,268 22,507
----------- -----------
NET CASH PROVIDED BY OPERATING ACTIVITIES 339,303 268,615
NET CASH USED IN INVESTING ACTIVITIES (352,864) (350,956)
NET CASH USED IN FINANCING ACTIVITIES (113,811) (230,227)
NET CASH PROVIDED BY DISCONTINUED OPERATIONS 60,652 43,264
----------- -----------
NET DECREASE IN CASH AND CASH EQUIVALENTS (66,720) (269,304)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 86,922 303,704
----------- -----------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 20,202 $ 34,400
=========== ===========
Reference is made to the Notes to the Consolidated Financial Statements
contained in the Annual Report on Form 10-K of CenterPoint Energy, Inc.
