UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): MARCH 8, 2005
------------------------------
CENTERPOINT ENERGY, INC.
(Exact name of registrant as specified in its charter)
TEXAS 1-31447 74-0694415
(State or other jurisdiction (Commission File Number) (IRS Employer
of incorporation) Identification No.)
1111 LOUISIANA
HOUSTON, TEXAS 77002
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (713) 207-1111
------------------------------
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions (see General Instruction A.2. below):
[ ] Written communications pursuant to Rule 425 under the Securities Act
17 CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17
CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
ITEM 2.02. RESULTS OF OPERATIONS AND FINANCIAL CONDITION.
On March 8, 2005, CenterPoint Energy, Inc. ("CenterPoint Energy")
reported fourth quarter and full year 2004 earnings. Certain information
regarding CenterPoint Energy's fourth quarter and full year 2004 earnings is
included in Item 8.01 below. For additional information regarding CenterPoint
Energy's fourth quarter and full year 2004 earnings, please refer to
CenterPoint Energy's press release attached to this report as Exhibit 99.1 (the
"Press Release"), which Press Release is incorporated by reference herein. The
information in the Press Release is being furnished, not filed, pursuant to
Item 2.02. Accordingly, the information in the Press Release will not be
incorporated by reference into any registration statement filed by CenterPoint
Energy under the Securities Act of 1933, as amended, unless specifically
identified therein as being incorporated therein by reference.
ITEM 8.01. OTHER EVENTS.
FOURTH QUARTER AND FULL YEAR 2004 RESULTS
Net income was $100 million, or $0.29 per diluted share, for the
fourth quarter of 2004 compared to $70 million, or $0.21 per diluted share for
the same period of 2003.
Net income for the fourth quarter of 2004 included an extraordinary
loss of $84 million, or $0.23 per diluted share, which reflects a further
write-down of generation-related regulatory assets resulting from CenterPoint
Energy's assessment of the amounts ultimately recoverable as a result of
proceedings before the Texas Public Utility Commission ("PUC"). In addition,
the fourth quarter of 2004 includes $21 million of income or $0.06 per diluted
share, from discontinued operations. The fourth quarter of 2003 included $23
million, or $0.07 per diluted share, of income from discontinued operations.
Income from continuing operations before extraordinary loss for the
fourth quarter of 2004 was $163 million, or $0.46 per diluted share, compared
to $47 million, or $0.14 per diluted share, for the fourth quarter of 2003. The
fourth quarter of 2004 included income of $226 million pretax, or $147 million
after-tax ($0.41 per diluted share) related to interest on certain
generation-related regulatory assets for the period 2002 through 2004 in
accordance with a recent PUC order. The fourth quarter of 2003 included income
of $206 million pretax, or $134 million after-tax ($0.37 per diluted share)
related to Excess Cost Over Market ("ECOM") revenues. ECOM ended on December
31, 2003, in accordance with the Texas electric restructuring law.
For the year ended December 31, 2004, CenterPoint Energy recorded a
net loss of $905 million, or $2.48 per diluted share, which included a $977
million extraordinary loss ($2.72 per diluted share) from the write-down of
generation-related regulatory assets and a $133 million net loss from
discontinued operations ($0.37 per diluted share). Net income for the year
ended December 31, 2003, was $484 million, or $1.46 per diluted share, which
included $75 million, or $0.22 per diluted share, of income from discontinued
operations.
Income from continuing operations before extraordinary loss for the
year ended December 31, 2004, was $206 million, or $0.61 per diluted share,
compared to $409 million, or $1.24 per diluted share, for 2003. Income from
continuing operations for 2004 included income of $226 million pretax, or $147
million after-tax ($0.41 per diluted share) related to interest on certain
generation-related regulatory assets for the period 2002 through 2004. Income
from continuing operations for 2003 included ECOM-related income of $661
million pretax, or $429 million after-tax ($1.27 per diluted share).
ITEM 9.01. FINANCIAL STATEMENTS AND EXHIBITS.
The exhibit listed below is furnished pursuant to Item 2.02 of this
Form 8-K.
(c) Exhibits.
99.1 Press Release issued March 8, 2005 regarding CenterPoint Energy, Inc.'s
fourth quarter and full year 2004 earnings.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
CENTERPOINT ENERGY, INC.
Date: March 8, 2005 By: /s/ James S. Brian
---------------------------
James S. Brian
Senior Vice President and
Chief Accounting Officer
EXHIBIT INDEX
EXHIBIT
NUMBER EXHIBIT DESCRIPTION
- ------ -------------------
99.1 Press Release issued March 8, 2005 regarding CenterPoint
Energy, Inc.'s fourth quarter and full year 2004 earnings
EXHIBIT 99.1
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CENTERPOINT ENERGY REPORTS FOURTH QUARTER AND
FULL YEAR 2004 EARNINGS
HOUSTON, TX - MARCH 8, 2005 - CenterPoint Energy, Inc. (NYSE: CNP)
today reported net income of $100 million, or $0.29 per diluted share, for the
fourth quarter of 2004 compared to $70 million, or $0.21 per diluted share for
the same period of 2003.
Net income for the fourth quarter of 2004 included an extraordinary
loss of $84 million, or $0.23 per diluted share, which reflects a further
write-down of generation-related regulatory assets resulting from the company's
assessment of the amounts ultimately recoverable as a result of proceedings
before the Texas Public Utility Commission (PUC). In addition, the fourth
quarter of 2004 includes $21 million, or $0.06 per diluted share, of income
from discontinued operations. The fourth quarter of 2003 included $23 million,
or $0.07 per diluted share, of income from discontinued operations.
Income from continuing operations before extraordinary loss for the
fourth quarter of 2004 was $163 million, or $0.46 per diluted share, compared
to $47 million, or $0.14 per diluted share, for the fourth quarter of 2003. The
fourth quarter of 2004 included income of $226 million pre-tax, or $147 million
after-tax ($0.41 per diluted share) related to interest on certain
generation-related regulatory assets for the period 2002 through 2004 in
accordance with a recent PUC order. The fourth quarter of 2003 included income
of $206 million pre-tax, or $134 million after-tax ($0.37 per diluted share)
related to Excess Cost Over Market (ECOM) revenues. ECOM ended on December 31,
2003, in accordance with the Texas electric restructuring law.
For the year ended December 31, 2004, the company recorded a net loss
of $905 million, or $2.48 per diluted share, which included a $977 million
extraordinary loss ($2.72 per diluted share) from the write-down of
generation-related regulatory assets and a $133 million net loss from
discontinued operations ($0.37 per diluted share). Net income for the year
ended December 31, 2003, was $484 million, or $1.46 per diluted share, which
included $75 million, or $0.22 per diluted share, of income from discontinued
operations.
Income from continuing operations before extraordinary loss for the
year ended December 31, 2004, was $206 million, or $0.61 per diluted share,
compared to $409 million, or $1.24 per diluted share, for 2003. Income from
continuing operations for 2004 included income of $226 million pre-tax, or $147
million after-tax ($0.41 per diluted share) related to interest on certain
generation-related regulatory assets for the period 2002 through 2004. Income
from continuing operations for 2003 included ECOM-related income of $661
million pre-tax, or $429 million after-tax ($1.27 per diluted share).
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"Although we were very disappointed with the amount of our
generation-related assets that the PUC authorized us to recover, I am very
pleased with our overall progress and accomplishments in 2004," said David M.
McClanahan, president and chief executive officer of CenterPoint Energy. "2004
was a year of significant milestones for our company. We sold our power
generation business for over $2.9 billion and significantly reduced our
indebtedness, an important strategic objective for our company. We completed a
contentious regulatory proceeding and are moving ahead with the appeal process.
Each of our core energy delivery businesses performed exceptionally well,
achieving excellent financial results while continuing to make operational
improvements to better serve our customers.
"With these major events coming to a close, our attention this year
will be to continue to reduce the company's indebtedness and enhance the
business performance of our core operations and to look for opportunities to
accelerate our growth in a disciplined manner," continued McClanahan.
FULL YEAR AND FOURTH QUARTER 2004 HIGHLIGHTS
SALE OF GENERATION ASSETS
In July 2004, the company announced a transaction in which Texas Genco
LLC (formerly known as GC Power Acquisition LLC), an entity owned in equal
parts by affiliates of The Blackstone Group, Hellman & Friedman LLC, Kohlberg
Kravis Roberts & Co. L.P. and Texas Pacific Group, agreed to acquire the
company's generation assets. In December, the first step of the transaction,
the sale of the fossil assets, was completed, with CenterPoint Energy receiving
$2.231 billion in cash.
In the final step of the transaction, expected to take place in the
first half of 2005 following Nuclear Regulatory Commission approval, Texas
Genco LLC will acquire the company's nuclear generating assets. At that
closing, CenterPoint Energy will receive a cash payment of $700 million.
TRUE-UP PROCEEDING
In March 2004, the company filed its true-up application with the PUC
to recover its stranded costs and other generation-related assets, marking one
of the final steps in the implementation of the Texas electric restructuring
law. In its application, the company was seeking to recover a true-up balance
of $3.7 billion, excluding interest. In December 2004, the PUC issued a final
order authorizing recovery of $2.3 billion, including interest through
- more -
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August 31, 2004, subject to upward adjustments to reflect the accrual of
interest and payments of Excess Mitigation Credits after August 31, 2004 and a
downward adjustment to reflect the benefit of certain deferred taxes as
determined by the PUC. The company had recorded an $894 million extraordinary
loss in the third quarter of 2004 based on deliberations by the PUC
commissioners during six public meetings. This estimated loss was adjusted in
the fourth quarter of 2004 by an additional $84 million based on the company's
assessment of the amounts ultimately recoverable. The company and other parties
appealed certain rulings in the final order to the Texas state courts.
On December 2, 2004, the company filed for a financing order to issue
transition bonds to securitize all or a part of its authorized true-up balance.
On March 9, the PUC is expected to issue its order allowing the company to
securitize approximately $1.8 billion and requiring that the benefit of
deferred taxes be reflected as a reduction in the Competition Transition Charge
(CTC). Depending on market conditions and the impact of possible appeals of the
financing order, the company anticipates completing a transition bond offering
later this year.
In addition, the company filed an application with the PUC for a CTC
to recover the portion of its adjusted true-up balance that it is not allowed
to securitize. Under the PUC's rules, the CTC is expected to provide the
company a return on the non-securitized true-up balance. Hearings in this
proceeding are scheduled for April 2005.
OTHER FINANCIAL HIGHLIGHTS
o Reduced debt by nearly $2 billion in 2004
o Repaid the term component ($915 million) of the company's $2.34 billion
credit facility
o Permanently reduced the $1.425 billion revolver component of the
company's $2.34 billion credit facility to $750 million
o Redeemed $375 million of trust preferred securities
o Restructured the company's credit facilities in the first quarter of 2005 to
reduce interest costs, extend maturities and improve terms
o Replaced the $750 million parent company revolving credit facility with
a $1 billion, five-year revolving credit facility, with an interest rate
of LIBOR + 100 basis points
o Established a $200 million, five-year revolving credit facility at
CenterPoint Energy Houston Electric (CEHE), the company's electric
transmission and distribution subsidiary, with an interest rate of LIBOR
+ 75 basis points
o Established a $1.31 billion secured revolving credit backstop facility
at CEHE, with an interest rate of LIBOR + 75 basis points, to be used
only if necessary to repay the $1.31 billion term loan at CEHE, due in
November 2005, if sufficient transition bonds have not been issued by
that date
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o Contributed $476 million to the pension plan, which effectively
o Brought plan assets and accumulated benefit obligation into balance
o Added $350 million to shareholders' equity by adjusting minimum pension
liability
o Is expected to save approximately $40 million in pension expense in 2005
OPERATING INCOME BY SEGMENT DETAILED
ELECTRIC TRANSMISSION & DISTRIBUTION
The electric transmission & distribution segment generated operating
income of $104 million in the fourth quarter of 2004, consisting of $95 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. Results for the fourth 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 fourth quarter of 2003 totaled $197 million, consisting of $69 million for
the TDU, $9 million for the transition bond company and $206 million of
non-cash income associated with ECOM, partially offset by an $87 million
reserve related to the final fuel reconciliation of the formerly integrated
utility.
The TDU's revenues continued to benefit from solid customer growth
with nearly 47,000 metered customers added since December 31, 2003. Weather
also positively impacted revenue in the fourth quarter of 2004. Excluding the
$87 million fuel reserve recorded in the prior year's fourth quarter, operation
and maintenance expenses were essentially the same as the prior year's fourth
quarter.
Operating income for the year ended December 31, 2004 was $494
million, consisting of $441 million for the TDU, $38 million for the transition
bond company, and a $15 million partial reversal of the fuel reserve. Operating
income for 2003 totaled $1.0 billion, consisting of $408 million for the TDU,
$38 million for the transition bond company and $661 million of non-cash income
associated with ECOM, partially offset by the $87 million fuel reserve noted
above.
In 2004, the TDU benefited from continued customer growth, lower
employee-related costs and the proceeds from a land sale, partially offset by
milder weather and decreased usage, and higher transmission costs.
NATURAL GAS DISTRIBUTION
The natural gas distribution segment reported operating income of $85
million for the fourth quarter of 2004, compared to $56 million for the same
period of 2003. Revenue increases from the impact of rate increases and
favorable weather and a higher contribution from the company's competitive
commercial and industrial sales business were partially offset by higher
operating expenses in the fourth quarter of 2004. The fourth quarter of 2003
included the negative impact of a change in the estimate of margins earned on
unbilled revenues.
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- -------------------------------------------------------------------------------
Operating income for the year ended December 31, 2004 was $222 million
compared to $202 million for 2003. Rate increases and customer growth of over
45,000 since December of 2003 contributed to the increase in revenues, while
weather impacted the year negatively. Higher operating expenses, partially due
to organizational restructuring costs and higher depreciation and property
taxes, somewhat offset the revenue increase.
PIPELINES AND GATHERING
The pipelines and gathering segment reported operating income of $57
million for the fourth quarter of 2004 compared to $34 million for the same
period of 2003. The improvement in operating income for the quarter resulted
primarily from increased throughput, favorable commodity prices and increased
ancillary services, partially offset by higher litigation costs.
Operating income for the year ended December 31, 2004, was $180
million compared to $158 million for 2003. The improvement in operating income
for the year resulted primarily from the same items cited for the quarter,
partially offset by higher litigation costs and pipeline integrity
expenditures.
OTHER OPERATIONS
The company's other operations reported an operating loss of $15
million for the fourth quarter of 2004 compared to a loss of $9 million for the
same period of 2003.
The operating loss for the year ended December 31, 2004, was $32
million compared to a loss of $25 million for 2003.
OTHER
Interest expense incurred for the fourth quarter of 2004 was $228
million compared to $230 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 $34 million for the fourth quarter of
2004 and $20 million for the same period of 2003, interest expense related to
continuing operations was $194 million in 2004 and $210 million in 2003.
Interest expense incurred for the year ended December 31, 2004, was
$849 million compared to $942 million for the same period of 2003. After
reflecting the reclassification of interest expense to discontinued operations
and interest incurred by discontinued operations of $72 million for the year
ended December 31, 2004, and $201 million for the same period of 2003, interest
expense related to continuing operations was $777 million for 2004 and $741
million for the same period of 2003.
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The company adopted EITF Issue No. 04-8, "Accounting Issues Related to
Certain Features of Contingently Convertible Debt and the Effect on Diluted
Earnings Per Share" (EITF 04-8) effective December 31, 2004. EITF 04-8 requires
certain contingently convertible debt instruments with a market price trigger
to be treated the same as traditional convertible debt instruments for earnings
per share (EPS) purposes. The contingently convertible debt instruments are
taken into consideration in the calculation of diluted EPS using the
"if-converted" method. The impact on the company's diluted EPS from continuing
operations for the years ended December 31, 2003, and 2004 related to its $575
million contingently convertible notes was a decrease of $0.10 per share and
$0.05 per share, respectively. The company is considering alternatives for
decreasing this dilutive effect, including an exchange offer.
DISCONTINUED OPERATIONS
Due to the sale of the company's generation assets, the electric
generation segment was reclassified as discontinued operations in the third
quarter of 2004. As a result of the sale, the company recorded a $214 million
loss in 2004 and an additional after-tax loss of $152 million offsetting the
company's 81 percent interest in the 2004 earnings of this segment. Until the
sale is complete, the company's interest in any earnings will be offset by an
increased loss on the pending sale. Income from the generation operations
presented in discontinued operations was $233 million for 2004 and $91 million
for 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.
WEBCAST OF EARNINGS CONFERENCE CALL
CenterPoint Energy's management will host an earnings conference call
on Tuesday, March 8, 2005, at 9:00 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 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, and an electric generation business that the company is
under a contract to sell. The company serves nearly five million metered
customers primarily in Arkansas, Louisiana, Minnesota, Mississippi, Oklahoma,
and Texas. Assets total approximately $17 billion after giving effect to the
first step in the sale of the company's generation assets. 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
www.CenterPointEnergy.com.
*****
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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 generation operations,
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-K's for the period ended December 31, 2003, Form
10-Q's for the periods ended March 31, 2004, June 30, 2004 and September 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 December 31, Twelve Months Ended December 31,
-------------------------- ---------------------------------
2004 2003 2004 2003
---------- ---------- ----------- -----------
Revenues:
Electric Transmission & Distribution $ 371,822 $ 541,624 $ 1,521,105 $ 2,124,237
Natural Gas Distribution 2,159,328 1,522,584 6,684,193 5,435,303
Pipelines and Gathering 127,138 87,043 450,808 406,950
Other Operations (673) 1,507 7,699 27,374
Eliminations (40,066) (35,669) (153,377) (204,183)
---------- ---------- ----------- -----------
Total 2,617,549 2,117,089 8,510,428 7,789,681
---------- ---------- ----------- -----------
Expenses:
Natural gas 1,823,772 1,224,262 5,524,451 4,297,914
Operation and maintenance 348,336 423,997 1,276,892 1,334,271
Depreciation and amortization 127,822 115,024 489,642 465,571
Taxes other than income taxes 86,333 75,623 355,648 336,512
---------- ---------- ----------- -----------
Total 2,386,263 1,838,906 7,646,633 6,434,268
---------- ---------- ----------- -----------
Operating Income 231,286 278,183 863,795 1,355,413
---------- ---------- ----------- -----------
Other Income (Expense) :
Gain on Time Warner investment 71,625 62,323 31,592 105,820
Loss on indexed debt securities (63,472) (57,963) (20,232) (96,473)
Interest and other finance charges (184,675) (200,784) (739,333) (701,891)
Interest on transition bonds (9,251) (9,701) (37,967) (39,196)
Return on true-up balance 226,324 - 226,324 -
Other - net 4,599 (21,684) 19,842 (9,838)
---------- ---------- ----------- -----------
Total 45,150 (227,809) (519,774) (741,578)
---------- ---------- ----------- -----------
Income from Continuing Operations Before
Income Taxes and Extraordinary Loss 276,436 50,374 344,021 613,835
Income Tax Expense (113,525) (3,365) (138,306) (205,064)
---------- ---------- ----------- -----------
Income from Continuing Operations Before
Extraordinary Loss 162,911 47,009 205,715 408,771
---------- ---------- ----------- -----------
Discontinued Operations:
Income from Texas Genco, net of tax 53,338 34,078 294,027 138,658
Minority Interest related to Texas Genco,
net of tax (12,687) (8,847) (61,394) (47,646)
Loss on Disposal of Texas Genco, net of tax (19,589) - (365,716) -
Loss from Other Operations, net of tax - (597) - (2,674)
Loss on Disposal of Other Operations, net of tax - (1,356) - (13,442)
---------- ---------- ----------- -----------
Total 21,062 23,278 (133,083) 74,896
---------- ---------- ----------- -----------
Income Before Extraordinary Loss 183,973 70,287 72,632 483,667
---------- ---------- ----------- -----------
Extraordinary Loss, net of tax (83,718) - (977,336) -
---------- ---------- ----------- -----------
Net Income (Loss) $ 100,255 $ 70,287 $ (904,704) $ 483,667
========== ========== =========== ===========
Reference is made to the Notes to the Consolidated Financial Statements
contained in the Current Report on Form 8-K of CenterPoint Energy, Inc.
dated December 7, 2004.
CenterPoint Energy, Inc. and Subsidiaries
Selected Data From Statements of Consolidated Operations
(Thousands of Dollars, Except Per Share Amounts)
(Unaudited)
Quarter Ended Twelve Months Ended
December 31, December 31,
--------------------------- ---------------------------
2004 2003 2004 2003
--------- -------- --------- ----------
Basic Earnings Per Common Share:
Income from Continuing Operations $ 0.53 $ 0.15 $ 0.67 $ 1.35
Income (Loss) from Discontinued Operations 0.07 0.08 (0.43) 0.24
Extraordinary Loss, net of tax (0.27) - (3.18) -
-------- -------- --------- ----------
Net Income (Loss) $ 0.33 $ 0.23 $ (2.94) $ 1.59
======== ======== ========= ==========
Diluted Earnings Per Common Share:
Income from Continuing Operations $ 0.46 $ 0.14 $ 0.61 $ 1.24
Income (Loss) from Discontinued Operations 0.06 0.07 (0.37) 0.22
Extraordinary Loss, net of tax (0.23) - (2.72) -
-------- -------- --------- ----------
Net Income (Loss) $ 0.29 $ 0.21 $ (2.48) $ 1.46
======== ======== ========= ==========
Dividends Declared per Common Share $ 0.10 $ 0.10 $ 0.40 $ 0.40
Weighted Average Common Shares Outstanding (000):
- Basic 307,876 305,666 307,185 303,867
- Diluted 360,205 358,004 359,506 336,965
OPERATING INCOME (LOSS) BY SEGMENT
Electric Transmission & Distribution:
Transmission & Distribution Operations $ 94,506 $ 68,795 $ 441,005 $ 407,696
Transition Bond Company 9,192 9,682 37,697 38,934
ECOM True-up - 205,691 - 660,474
Final Fuel Reconciliation - (86,918) 15,136 (86,918)
-------- -------- --------- ----------
Total Electric Transmission & Distribution 103,698 197,250 493,838 1,020,186
-------- -------- --------- ----------
Natural Gas Distribution 84,825 56,461 222,252 202,250
Pipelines and Gathering 57,363 34,189 179,847 158,386
Other Operations (14,600) (9,717) (32,142) (25,409)
-------- -------- --------- ----------
Total $ 231,286 $ 278,183 $ 863,795 $1,355,413
======== ======== ========= ==========
Reference is made to the Notes to the Consolidated Financial Statements
contained in the Current Report on Form 8-K of CenterPoint Energy, Inc.
dated December 7, 2004.
CenterPoint Energy, Inc. and Subsidiaries
Results of Operations by Segment
(Millions of Dollars)
(Unaudited)
ELECTRIC TRANSMISSION & DISTRIBUTION
----------------------------------------------------------------
Quarter Ended Twelve Months Ended
December 31, December 31,
------------------ % Diff ------------------- % Diff
2004 2003 Fav/(Unfav) 2004 2003 Fav/(Unfav)
------------------ ----------- ------------------- -----------
RESULTS OF OPERATIONS:
Revenues:
Electric revenues $ 351 $ 321 9% $ 1,446 $ 1,400 3%
ECOM revenues - 206 - - 661 -
Transition bond revenues 21 15 40% 75 63 19%
----- ----- ------- -------
Total Revenues 372 542 (31%) 1,521 2,124 (28%)
----- ----- ------- -------
Expenses:
Operation and maintenance 149 238 37% 539 635 15%
Depreciation and amortization 62 62 - 248 246 (1%)
Taxes other than income taxes 45 39 (15%) 203 198 (3%)
Transition bond expenses 12 6 (100%) 37 25 (48%)
----- ----- ------- -------
Total 268 345 22% 1,027 1,104 7%
----- ----- ------- -------
Operating Income $ 104 $ 197 (47%) $ 494 $ 1,020 (52%)
===== ===== ======= =======
Quarter Ended Twelve Months Ended
December 31, December 31,
----------------------- % Diff ------------------------- % Diff
2004 2003 Fav/(Unfav) 2004 2003 Fav/(Unfav)
----------------------- ----------- ------------------------- -----------
ELECTRIC TRANSMISSION & DISTRIBUTION
OPERATING DATA:
ACTUAL MWH DELIVERED
Residential 5,033,574 4,504,187 12% 23,747,996 23,686,937 -
Total 16,997,828 16,044,510 6% 73,631,547 70,814,528 4%
WEATHER (AVERAGE FOR SERVICE AREA):
Percentage of normal:
Cooling degree days 146% 109% 37% 107% 103% 4%
Heating degree days 75% 86% (11%) 82% 101% (19%)
AVERAGE NUMBER OF METERED CUSTOMERS:
Residential 1,656,281 1,612,781 3% 1,639,488 1,594,177 3%
Commercial and Industrial 225,480 220,710 2% 223,365 220,965 1%
--------- --------- --------- ---------
Total 1,881,761 1,833,491 3% 1,862,853 1,815,142 3%
========= ========= ========= =========
Reference is made to the Notes to the Consolidated Financial Statements
contained in the Current Report on Form 8-K of CenterPoint Energy, Inc.
dated December 7, 2004.
CenterPoint Energy, Inc. and Subsidiaries
Results of Operations by Segment
(Millions of Dollars)
(Unaudited)
NATURAL GAS DISTRIBUTION
--------------------------------------------------------------------
Quarter Ended Twelve Months Ended
December 31, December 31,
----------------------- % Diff ------------------- % Diff
2004 2003 Fav/(Unfav) 2004 2003 Fav/(Unfav)
----------------------- ----------- ------------------- -----------
RESULTS OF OPERATIONS:
Revenues $ 2,159 $ 1,522 42% $ 6,684 $ 5,435 23%
--------- --------- --------- ---------
Expenses:
Natural gas 1,855 1,260 (47%) 5,631 4,428 (27%)
Operation and maintenance 150 143 (5%) 566 560 (1%)
Depreciation and amortization 37 35 (6%) 143 136 (5%)
Taxes other than income taxes 32 28 (14%) 122 109 (12%)
--------- --------- --------- ---------
Total 2,074 1,466 (41%) 6,462 5,233 (23%)
--------- --------- --------- ---------
Operating Income $ 85 $ 56 52% $ 222 $ 202 10%
========= ========= ========= =========
NATURAL GAS DISTRIBUTION OPERATING DATA:
THROUGHPUT DATA IN BCF
Residential 55 54 2% 175 183 (4%)
Commercial and Industrial 65 71 (8%) 237 238 -
Non-rate regulated Commercial
and Industrial 169 146 16% 579 511 13%
Elimination (37) (32) (16%) (134) (96) (40%)
--------- --------- --------- ---------
Total Throughput 252 239 5% 857 836 3%
========= ========= ========= =========
WEATHER (AVERAGE FOR SERVICE AREA)
Percentage of normal:
Heating degree days 88% 88% - 92% 98% (6%)
AVERAGE NUMBER OF CUSTOMERS:
Residential 2,817,670 2,772,088 2% 2,798,210 2,755,200 2%
Commercial and Industrial 246,581 245,886 - 246,068 245,081 -
Non-rate regulated Commercial
and Industrial 6,274 5,959 5% 6,245 5,503 13%
--------- --------- --------- ---------
Total 3,070,525 3,023,933 2% 3,050,523 3,005,784 1%
========= ========= ========= =========
PIPELINES AND GATHERING
--------------------------------------------------------------------
Quarter Ended Twelve Months Ended
December 31, December 31,
----------------------- % Diff ------------------- % Diff
2004 2003 Fav/(Unfav) 2004 2003 Fav/(Unfav)
----------------------- ----------- ------------------- -----------
RESULTS OF OPERATIONS:
Revenues $ 127 $ 87 46% $ 451 $ 407 11%
--------- --------- --------- ---------
Expenses:
Natural gas 13 - - 46 61 25%
Third party project costs 3 2 (50%) 17 6 (183%)
Operation and maintenance 39 36 (8%) 147 123 (20%)
Depreciation and amortization 11 9 (22%) 44 40 (10%)
Taxes other than income taxes 4 6 33% 17 19 11%
--------- --------- --------- ---------
Total 70 53 (32%) 271 249 (9%)
--------- --------- --------- ---------
Operating Income $ 57 $ 34 68% $ 180 $ 158 14%
========= ========= ========= =========
PIPELINES AND GATHERING OPERATING DATA:
THROUGHPUT DATA IN BCF
Natural Gas Sales 3 - - 11 9 22%
Transportation 201 164 23% 859 794 8%
Gathering 88 73 21% 321 292 10%
Elimination (2) - - (7) (4) (75%)
--------- --------- --------- ---------
Total Throughput 290 237 22% 1,184 1,091 9%
========= ========= ========= =========
Reference is made to the Notes to the Consolidated Financial Statements
contained in the Current Report on Form 8-K of CenterPoint Energy, Inc.
dated December 7, 2004.
CenterPoint Energy, Inc. and Subsidiaries
Results of Operations by Segment
(Millions of Dollars)
(Unaudited)
OTHER OPERATIONS
--------------------------------------------------------------------
Quarter Ended Twelve Months Ended
December 31, December 31,
----------------------- % Diff ------------------------ % Diff
2004 2003 Fav/(Unfav) 2004 2003 Fav/(Unfav)
----------------------- ----------- ------------------------ -----------
RESULTS OF OPERATIONS:
Revenues $ (1) $ 2 (150%) $ 8 $ 28 (71%)
Expenses 14 11 (27%) 40 53 25%
--------- --------- --------- ---------
Operating Loss $ (15) $ (9) (67%) $ (32) $ (25) (28%)
========= ========= ========= =========
Capital Expenditures by Segment
(Millions of Dollars)
(Unaudited)
Quarter Ended Twelve Months Ended
December 31, December 31,
----------------------- --------------------------
2004 2003 2004 2003
----------------------- --------------------------
CAPITAL EXPENDITURES BY SEGMENT
Electric Transmission & Distribution $ 62 $ 62 $ 235 $ 218
Natural Gas Distribution 65 51 197 199
Pipelines and Gathering 35 24 73 66
Other Operations 9 8 25 14
--------- --------- --------- ---------
Total $ 171 $ 145 $ 530 $ 497
========= ========= ========= =========
Interest Expense Detail
(Millions of Dollars)
(Unaudited)
Quarter Ended Twelve Months Ended
December 31, December 31,
----------------------- --------------------------
2004 2003 2004 2003
----------------------- --------------------------
INTEREST EXPENSE DETAIL
Amortization of Deferred
Financing Cost $ 29 $ 29 $ 92 $ 73
Capitalization of Interest Cost (1) (1) (4) (4)
Transition Bond Interest Expense 9 10 37 38
Other Interest Expense 157 172 652 634
--------- --------- --------- ---------
Total Interest Expense 194 210 777 741
========= ========= ========= =========
Amortization of Deferred Financing Cost
Reclassified to Discontinued
Operations 16 14 19 78
Other Interest Reclassified to
Discontinued Operations 18 11 53 120
--------- --------- --------- ---------
Total Interest Reclassified to
Discontinued Operations (1) 34 25 72 198
Interest Expense Incurred by
Discontinued Operations - (5) - 3
--------- --------- --------- ---------
Total Expense in Discontinued
Operations 34 20 72 201
========= ========= ========= =========
Total Interest Expense Incurred $ 228 $ 230 $ 849 $ 942
(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. In the fourth quarter of 2004, we reduced borrowings under our
credit facility by $1.574 billion.
Total interest expense was $228 million and $230 million for the three months
ended December 31, 2004 and 2003, respectively, and $849 million and $942
million for the year ended December 31, 2004 and 2003, respectively. Interest
expense of $34 million and $25 million for the three months ended December 31,
2004 and 2003, respectively, and interest expense of $72 million and $198
million for the year ended December 31, 2004 and 2003, respectively, was
reclassified to discontinued operations of Texas Genco.
Reference is made to the Notes to the Consolidated Financial Statements
contained in the Current Report on Form 8-K of CenterPoint Energy, Inc.
dated December 7, 2004.
