UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM U-13-60/A AMENDMENT NO. 1 TO ANNUAL REPORT FOR THE PERIOD BEGINNING JANUARY 1, 2004 AND ENDING DECEMBER 31, 2004 TO THE U.S. SECURITIES AND EXCHANGE COMMISSION OF CENTERPOINT ENERGY SERVICE COMPANY, LLC (Exact Name of Reporting Company) A Subsidiary Service Company ("Mutual" or "Subsidiary") Date of Incorporation January 1, 2004 State or Sovereign Power under which Incorporated or Organized: Texas Location of Principal Executive Offices of Reporting Company: Houston, TX Name, title, and address of officer to whom correspondence concerning this report should be addressed: Vice President and Walter L. Fitzgerald Controller 1111 Louisiana, Houston, Texas 77002 (Name) (Title) (Address) Name of Principal Holding Company Whose Subsidiaries are served by Reporting Company: CENTERPOINT ENERGY INC.
CenterPoint Energy Service Company, LLC's Form U-13-60 for the period beginning January 1, 2004 and ending December 31, 2004, filed on May 2, 2005 with the Securities and Exchange Commission is hereby amended and restated to read as follows: INSTRUCTIONS FOR USE OF FORM U-13-60 1. TIME OF FILING. --Rule 94 provides that on or before the first day of May in each calendar year, each mutual service company and each subsidiary service company as to which the Commission shall have made a favorable finding pursuant to Rule 88, and every service company whose application for approval or declaration pursuant to Rule 88 is pending shall file with the Commission an annual report on Form U-13-60 and in accordance with the Instructions for that form. 2. NUMBER OF COPIES. --Each annual report shall be filed in duplicate. The company should prepare and retain at least one extra copy for itself in case correspondence with reference to the report becomes necessary. 3. PERIOD COVERED BY REPORT. --The first report filed by any company shall cover the period from the date the Uniform System of Accounts was required to be made effective as to that company under Rules 82 and 93 to the end of that calendar year. Subsequent reports should cover a calendar year. 4. REPORT FORMAT. --Reports shall be submitted on the forms prepared by the Commission. If the space provided on any sheet of such form is inadequate, additional sheets may be inserted of the same size as a sheet of the form or folded to each size. 5. MONEY AMOUNTS DISPLAYED. --All money amounts required to be shown in financial statements may be expressed in whole dollars, in thousands of dollars or in hundred thousands of dollars, as appropriate and subject to provisions of Regulation S-X (210.3-01(b)). 6. DEFICITS DISPLAYED. --Deficits and other like entries shall be indicated by the use of either brackets or a parenthesis with corresponding reference in footnotes. (Regulation S-X,210.3-01(c)) 7. MAJOR AMENDMENTS OR CORRECTIONS. --Any company desiring to amend or correct a major omission or error in a report after it has been filed with the Commission shall submit an amended report including only those pages, schedules, and entries that are to be amended or corrected. A cover letter shall be submitted requesting the Commission to incorporate the amended report changes and shall be signed by a duly authorized officer of the company. 8. DEFINITIONS. --Definitions contained in Instruction 01-8 to the Uniform System of Accounts for Mutual Service Companies and Subsidiary Service Companies, Public Utility Holding Company Act of 1935, as amended February 2, 1979 shall be applicable to words or terms used specifically within this Form U-13-60. 9. ORGANIZATION CHART. --The service company shall submit with each annual report a copy of its current organization chart. 10. METHODS OF ALLOCATION. --The service company shall submit with each annual report a listing of the currently effective methods of allocation being used by the service company and on file with the Securities and Exchange Commission pursuant to the Public Utility Holding Company Act of 1935. 11. ANNUAL STATEMENT OF COMPENSATION FOR USE OF CAPITAL BILLED. --The service company shall submit with each annual report a copy of the annual statement supplied to each associate company in support of the amount of compensation for use of capital billed during the calendar year. Page 2 of 52
LISTING OF SCHEDULES AND ANALYSIS OF ACCOUNTS SCHEDULE OR PAGE DESCRIPTION OF SCHEDULES AND ACCOUNTS ACCOUNT NUMBER NUMBER ------------------------------------- -------------- ------ Comparative Balance Sheets Schedule I 4-5 Service Company Property Schedule II 6 Accumulated Provision for Depreciation and Amortization of Service Company Property Schedule III 7 Investments Schedule IV 8 Accounts Receivable from Associate Companies Schedule V 9-10 Fuel Stock Expenses Undistributed Schedule VI 11 Stores Expense Undistributed Schedule VII 11 Miscellaneous Current and Accrued Assets Schedule VIII 12 Miscellaneous Deferred Debits Schedule IX 12 Research, Development, or Demonstration Expenditures Schedule X 13 Proprietary Capital Schedule XI 14 Long-Term Debt Schedule XII 15 Current and Accrued Liabilities Schedule XIII 16 Notes to Financial Statements Schedule XIV 17-22 Comparative Statement of Income Schedule XV 23 Analysis of Billing - Associate Companies Account 457 24 Analysis of Billing - Nonassociate Companies Account 458 25 Analysis of Charges for Service - Associate and Nonassociate Companies Schedule XVI 26 Schedule of Expense by Department or Service Function Schedule XVII 27-34 Departmental Analysis of Salaries Account 920 35-36 Outside Services Employed Account 923 37-41 Employee Pensions and Benefits Account 926 42 General Advertising Expenses Account 930.1 43 Miscellaneous General Expenses Account 930.2 44 Rents Account 931 44 Taxes Other Than Income Taxes Account 408 45 Donations Account 426.1 46 Other Deductions Account 426.5 47 Notes to Statements of Income Schedule XVIII 48 LISTING OF INSTRUCTIONAL FILING REQUIREMENTS Organization Chart Methods of Allocation 49 Annual Statement of Compensation for Use of Capital Billed 50-51 Signature Clause 52 Page 3 of 52
ANNUAL REPORT OF CENTERPOINT ENERGY SERVICE COMPANY, LLC SCHEDULE I-COMPARATIVE BALANCE SHEET (thousands of dollars) Give balance sheet of the Company as of December 31 of the current and prior year. AS OF DECEMBER 31, ------------------ ACCOUNT ASSETS AND OTHER DEBITS 2004 2003 - ------- ----------------------- -------- ---- SERVICE COMPANY PROPERTY 101 Service company property (Schedule II) $160,653 $-- 107 Construction work in progress (Schedule II) 3,857 -- -------- --- Total Property 164,510 -- 108 Less accumulated provision for depreciation and amortization of service company property (Schedule III) (56,268) -- -------- --- Net Service Company Property 108,242 -- INVESTMENTS 123 Investments in associate companies (Schedule IV) -- -- 124 Other Investments (Schedule IV) -- -- -------- --- Total Investments -- -- CURRENT AND ACCRUED ASSETS 131 Cash 1,117 -- 134 Special deposits -- -- 135 Working funds -- -- 136 Temporary cash investments (Schedule IV) -- -- 141 Notes receivable 95 -- 143 Accounts receivable 4,714 -- 144 Accumulated provision for uncollectible accounts -- -- 146 Accounts receivable from associate companies (Schedule V) 57,847 -- 152 Fuel stock expenses undistributed (Schedule VI) -- -- 154 Materials and supplies -- -- 163 Stores expense undistributed (Schedule VII) -- -- 165 Prepayments 4,215 -- 174 Miscellaneous current and accrued assets (Schedule VIII) -- -- -------- --- Total Current and Accrued Assets 67,988 -- DEFERRED DEBITS 181 Unamortized debt expense -- -- 184 Clearing accounts (3,282) -- 186 Miscellaneous deferred debits (Schedule IX) 17,263 -- 188 Research, development, or demonstration expenditures (Schedule X) -- -- 190 Accumulated deferred income taxes 26,687 -- -------- --- Total Deferred Debits 40,668 -- -------- --- TOTAL ASSETS AND OTHER DEBITS $216,898 $-- ======== === Page 4 of 52
AS OF DECEMBER 31, ----------------- ACCOUNT LIABILITIES AND PROPRIETARY CAPITAL 2004 2003 - ------- ----------------------------------- -------- ---- PROPRIETARY CAPITAL 201 Common stock issued (Schedule XI) $ 1 $-- 211 Miscellaneous paid-in-capital (Schedule XI) 34,091 -- 215 Appropriated retained earnings (Schedule XI) -- -- 216 Unappropriated retained earnings (Schedule XI) 5,493 -- -------- --- Total Proprietary Capital 39,585 -- LONG-TERM DEBT 223 Advances from associate companies (Schedule XII) -- -- 224 Other long-term debt (Schedule XII) 2,613 -- 225 Unamortized premium on long-term debt -- -- 226 Unamortized discount on long-term debt-debit -- -- -------- --- Total Long-Term Debt 2,613 -- CURRENT AND ACCRUED LIABILITIES 231 Notes Payable -- -- 232 Accounts Payable 14,590 -- 233 Notes payable to associate companies (Schedule XIII) 29,102 -- 234 Accounts payable to associate companies (Schedule XIII) 10,145 -- 236 Taxes accrued (31,259) -- 237 Interest accrued 67 -- 238 Dividends declared -- -- 241 Tax collections payable 731 -- 242 Miscellaneous current and accrued liabilities (Schedule XIII) 19,982 -- -------- --- Total Current and Accrued Liabilities 43,358 -- DEFERRED CREDITS 253 Other deferred credits 131,342 -- 255 Accumulated deferred investment tax credits -- -- -------- --- Total Deferred Credits 131,342 -- 282 ACCUMULATED DEFERRED INCOME TAXES -- -- -------- --- TOTAL LIABILITIES AND PROPRIETARY CAPITAL $216,898 $-- ======== === Page 5 of 52
ANNUAL REPORT OF CENTERPOINT ENERGY SERVICE COMPANY, LLC For the Year Ended December 31, 2004 SCHEDULE II-SERVICE COMPANY PROPERTY (thousands of dollars) Balance at Retirements Balance at Beginning or Other Close of Description of Year Additions Sales Changes Year - ----------- ---------- --------- ----------- ------- ---------- Service Company Property ACCOUNT 301 Organization $ -- $ -- $ -- $ -- $ -- 303 Miscellaneous Intangible Plant 42,476 8,398 -- -- 50,874 304 Land and Land Rights 46 -- -- -- 46 305 Structures and Improvements -- 10 -- -- 10 306 Leasehold Improvements 197 -- -- -- 197 307 Equipment (2) 81,503 5,594 (344) 219 86,972 308 Office Furniture and Equipment 23,021 83 (442) (219) 22,443 309 Automobiles, Other Vehicles and Related Garage Equipment 111 -- -- -- 111 310 Aircraft and Airport Equipment -- -- -- -- -- 311 Other Service Company Property -- -- -- -- -- -------- ------- -------- ----- -------- Subtotal Plant In Service 147,354 14,085 (786) -- 160,653 -------- ------- -------- ----- -------- 107 Construction Work In Progress 8,260 9,681 (14,084) -- 3,857 -------- ------- -------- ----- -------- TOTAL $155,614 $23,766 $(14,870) $ -- $164,510 ======== ======= ======== ===== ======== (1) Provide an explanation of those changes considered material: N/A (2) Subaccounts are required for each class of equipment owned. The service company shall provide a listing by subaccount of equipment additions during the year and the balance at the close of the year: Balance at Additions Close of Year --------- ------------- Communication Equipment ............................ $ 8 $ 7,405 Computer Equipment ................................. 5,497 78,348 Miscellaneous Equipment ............................ 89 1,219 ------ ------- $5,594 $86,972 ====== ======= (3) Describe other service company property: None (4) Describe construction work in progress: Computer software and hardware and office equipment and furniture. Page 6 of 52
ANNUAL REPORT OF CENTERPOINT ENERGY SERVICE COMPANY, LLC For the Year Ended December 31, 2004 SCHEDULE III-ACCUMULATED PROVISION FOR DEPRECIATION AND AMORTIZATION OF SERVICE COMPANY PROPERTY (thousands of dollars) Balance at Additions Beginning of Charged to Other Changes Balance at Close Description Year Account 403 Retirements Add (Deduct) of Year - ----------- ------------ ----------- ----------- ------------- ---------------- Account 301 Organization $ -- $ -- $ -- $ -- $ -- 303 Miscellaneous Intangible Plant (12,997) (4,818) -- 144 (17,671) 304 Land and Land Rights -- -- -- -- -- 305 Structures and Improvements -- -- -- -- -- 306 Leasehold Improvements (162) (28) -- -- (190) 307 Equipment (31,750) (7,101) 344 -- (38,507) 308 Office Furniture and Equipment 930 (753) 187 (175) 189 309 Automobiles, Other Vehicles and Related Garage Equipment (86) (3) -- -- (89) 310 Aircraft and Airport Equipment -- -- -- -- -- 311 Other Service Company Property -- -- -- -- -- -------- -------- ---- ----- -------- TOTAL $(44,065) $(12,703) $531 $ (31) $(56,268) ======== ======== ==== ===== ======== (1) Provide an explanation of those changes considered material: None Page 7 of 52
ANNUAL REPORT OF CENTERPOINT ENERGY SERVICE COMPANY, LLC For the Year Ended December 31, 2004 SCHEDULE IV--INVESTMENTS (thousands of dollars) INSTRUCTIONS: Complete the following schedule concerning investments. Under Account 124, "Other Investments", state each investment separately, with description, including the name of issuing company, number of shares or principal amount, etc. Under Account 136, "Temporary Cash Investments", list each investment separately. Balance at Balance at Beginning of Year Close of Year ----------------- ------------- Description Acct 123 - Investment in Associated Companies $-- $-- Acct 124 - Other Investments -- -- Acct 136 - Temporary Cash Investments -- -- --- --- TOTAL $-- $-- === === Page 8 of 52
ANNUAL REPORT OF CENTERPOINT ENERGY SERVICE COMPANY, LLC For the Year Ended December 31, 2004 SCHEDULE V-ACCOUNTS RECEIVABLE FROM ASSOCIATE COMPANIES (thousands of dollars) INSTRUCTIONS: Complete the following schedule listing accounts receivable from each associate company. Where the service company has provided accommodation or convenience payments for associate companies, a separate listing of total payments for each associate company by subaccount should be provided. Balance at Balance at Description Beginning of Year Close of Year ----------- ----------------- ------------- Account 146 - Accounts Receivable from Associate Companies CenterPoint Energy Houston Electric, LLC $-- $14,675 CenterPoint Energy Resources Corp -- 3 CenterPoint Energy Mississippi River Transmission -- 234 CenterPoint Energy Gas Transmission Co. -- 2,187 CenterPoint Energy Pipeline Services Inc. -- 172 CenterPoint Energy Field Services, Inc. -- 370 CenterPoint Energy Funding Company -- 39 CenterPoint Energy Properties, Inc. -- 1,789 CenterPoint Energy Arkla -- 3,140 CenterPoint Energy Minnegasco -- 2,994 CenterPoint Energy Marketing, Inc. -- 737 CenterPoint Energy Entex -- 7,222 CenterPoint Energy Alternative Fuels Inc. -- 3 CenterPoint Energy, Inc. -- 17,096 Texas Genco Holdings, Inc. -- 625 CNP Avco Holdings, Inc. -- 5,877 Texas Genco, LP -- 684 --- ------- TOTAL $-- $57,847 === ======= Page 9 of 52
ANNUAL REPORT OF CENTERPOINT ENERGY SERVICE COMPANY, LLC For the Year Ended December 31, 2004 SCHEDULE V-ACCOUNTS RECEIVABLE FROM ASSOCIATE COMPANIES (thousands of dollars) INSTRUCTIONS: Complete the following schedule listing accounts receivable from each associate company. Where the service company has provided accommodation or convenience payments for associate companies, a separate listing of total payments for each associate company by subaccount should be provided. Analysis of Convenience or Accommodation Payments: Total Payments - -------------------------------------------------- -------------- CenterPoint Energy Houston Electric, LLC $16,701 CenterPoint Energy Resources Corp. 1,284 CenterPoint Energy Mississippi River Transmission 704 CenterPoint Energy MRT Services 1 CenterPoint Energy Gas Transmission Co. 3,245 CenterPoint Energy Pipeline Services Inc. 516 CenterPoint Energy Field Services, Inc. 474 CenterPoint Energy Transition Bond Co., LLC 15 Arkla Industries 1 CenterPoint Energy Intrastate Pipeline 153 CenterPoint Energy Properties, Inc. 3,509 CenterPoint Energy Products, Inc. 12 CenterPoint Energy Arkla 2,560 CenterPoint Energy Minnegasco 1,753 CenterPoint Energy Gas Services, Inc. 2,790 CenterPoint Energy Entex 5,774 CenterPoint Energy Alternative Fuels Inc. 17 CenterPoint Energy Power Systems, Inc. 5 CenterPoint Energy, Inc 1,365 Texas Genco II, LP 7,786 Texas Genco GP, LLC 135 Texas Genco Holdings, Inc. 122 ------- Total Payments $48,922 ======= Page 10 of 52
ANNUAL REPORT OF CENTERPOINT ENERGY SERVICE COMPANY, LLC For the Year Ended December 31, 2004 SCHEDULE VI--FUEL STOCK EXPENSES UNDISTRIBUTED (thousands of dollars) INSTRUCTIONS: Report the amount of labor and expenses incurred with respect to fuel stock expenses during the year and indicate amount attributable to each associate company. Under the section headed "Summary" list below give an overall report of the fuel functions performed by the service company. Description Labor Expense Total ----------- ----- ------- ----- Account 152-Fuel Stock Expenses Undistributed $-- $-- $-- --- --- --- TOTAL $-- $-- $-- === === === Summary: None SCHEDULE VII--STORES EXPENSE UNDISTRIBUTED INSTRUCTIONS: Report the amount of labor and expenses incurred with respect to stores expenses during the year and indicate amount attributable to each associate company. Description Labor Expense Total ----------- ----- ------- ----- Account 163-Stores Expenses Undistributed $-- $-- $-- --- --- --- TOTAL $-- $-- $-- === === === Page 11 of 52
ANNUAL REPORT OF CENTERPOINT ENERGY SERVICE COMPANY, LLC For the Year Ended December 31, 2004 SCHEDULE VIII--MISCELLANEOUS CURRENT AND ACCRUED ASSETS (thousands of dollars) INSTRUCTIONS: Provide detail of items in this account. Items less than $10,000 may be grouped, showing the number of items in each group. Balance at Balance at Beginning Close Description Of Year Of Year ----------- ---------- ---------- Account 174-Miscellaneous Current and Accrued Assets $-- $-- --- --- TOTAL $-- $-- === === SCHEDULE IX--MISCELLANEOUS DEFERRED DEBITS (thousands of dollars) INSTRUCTIONS: Provide detail of items in this account. Items less than $10,000 may be grouped by class showing the number of items in each class. Balance at Balance at Description Beginning of Year Close of Year ----------- ----------------- ------------- Account 186 - Miscellaneous Deferred Debits Cash surrender value associated with Corp Life Insurance Policy $ 8,064 $ 8,775 Cash collateral for performance bonds 3,200 3,200 Workers compensation loss deposit fund 133 133 Working capital fund - Relocation Services 150 150 Long-term receivable from associated companies CenterPoint Energy Mississippi River Transmission Service Company -- 1 CenterPoint Energy Arkla Industries Inc. -- 1 CenterPoint Energy Marketing, Inc. 203 7 CenterPoint Energy Intrastate Pipeline 55 1,376 CenterPoint Energy Louisiana Transmission Division of Entex 44 264 CenterPoint Energy Resources Corp. -- 64 CenterPoint Energy Utility Holding, LLC 1,463 2,725 Other 567 567 ------- ------- Total $13,879 $17,263 ======= ======= Page 12 of 52
ANNUAL REPORT OF CENTERPOINT ENERGY SERVICE COMPANY, LLC For the Year Ended December 31, 2004 SCHEDULE X--RESEARCH, DEVELOPMENT OR DEMONSTRATION EXPENDITURES (thousands of dollars) INSTRUCTIONS: Provide a description of each material research, development, or demonstration project which incurred costs by the service corporation during the year. Balance at Balance at Description Beginning of Year Close of Year ----------- ----------------- ------------- Account 188-Research, Development, or Demonstration Expenditures $-- $-- --- --- TOTAL $-- $-- === === Page 13 of 52
ANNUAL REPORT OF CENTERPOINT ENERGY SERVICE COMPANY, LLC For the Year Ended December 31, 2004 SCHEDULE XI--PROPRIETARY CAPITAL (thousands of dollars, except per share data) Account Number of Shares Par or Stated Outstanding No. Close of Period Number Class of Stock Authorized Value Per Share of Shares Total Amount - ------- ------------------- ---------------- --------------- --------------- --------------- 201 Common Stock Issued 1,000 $1.00 1,000 $1 INSTRUCTIONS: Classify amounts in each account with a brief explanation, disclosing the general nature of transactions which give rise to the amounts. Description Amount ----------- ------- 211 Miscellaneous paid-in-capital Contributions from CenterPoint Energy, Inc. $34,091 215 Appropriated retained earnings ------- $34,091 ======= INSTRUCTIONS: Give particulars concerning net income or (loss) during the year, distinguishing between compensation for the use of capital owned or net loss remaining from servicing nonassociates per the General Instructions of the Uniform System of Accounts. For dividends paid during the year in cash or otherwise, provide rate percentage, amount of dividend, date declared and date paid. Balance at Beginning Net Income or Dividends Balance at Description of Year (Loss) Paid Close of Year ----------- -------------------- ------------- --------- ------------- 216 Unappropriated Retained Earnings $-- $5,493 $-- $5,493 Note: Net income is due to the following: Compensation for the use of capital to associate companies $ 9,015 Compensation for the use of capital to nonassociate companies 418 Interest on debt to associate companies (1,719) Miscellaneous income 633 Income taxes 4,284 Provision for deferred income taxes (7,138) ------- Net Income $ 5,493 ======= Page 14 of 52
ANNUAL REPORT OF CENTERPOINT ENERGY SERVICE COMPANY, LLC For the Year Ended December 31, 2004 SCHEDULE XII--LONG-TERM DEBT (thousands of dollars) INSTRUCTIONS: Advances from associate companies should be reported separately for advances on notes and advances on open accounts. Names of associate companies from which advances were received shall be shown under the class and series of obligation column. For Account 224 -- Other long-term debt provide the name of creditor company or organization, terms of the obligation, date of maturity, interest rate, and the amount authorized and outstanding. Term of Obligation Beginning Balance At Balance At Name of Class & Series Date of Interest Amount Beginning Deductions Close Creditor of Obligation Maturity Rate Authorized of Year Additions (1) of Year ----------- ------------------ -------- -------- ---------- --------- ---------- ---------- ---------- Account 223-Advances from Associate Companies $ -- $ -- $ -- $ -- $ -- Account 224-Other IBM Credit Long-Term Debt Corporation 3yr Capital Lease Feb 2006 4.14% $ 7,326 $4,644 $ -- $2,770 $1,874 IBM Credit Corporation 3yr Capital Lease Apr 2006 7.52% 3,673 2,736 -- 1,997 739 IBM Credit Corporation 3yr Capital Lease May 2005 5.89% 3,097 370 -- 370 -- ------- -------- ----- ------ ------ TOTAL $14,096 $7,750 $ -- $5,137 $2,613 ======= ======== ===== ====== ====== (1) Give an explanation of deductions: Scheduled payments on capital leases Page 15 of 52
ANNUAL REPORT OF CENTERPOINT ENERGY SERVICE COMPANY, LLC For the Year Ended December 31, 2004 SCHEDULE XIII--CURRENT AND ACCRUED LIABILITIES (thousands of dollars) INSTRUCTIONS: Provide balance of notes and accounts payable to each associate company. Give description and amount of miscellaneous current and accrued liabilities. Items less than $10,000 may be grouped, showing the number of items in each group. Balance at Beginning of Balance at Close Year of Year ------------ ---------------- Account 233 Notes Payable to Associate Companies CenterPoint Energy, Inc. $ -- $29,102 ------ ------- TOTAL $ -- $29,102 ====== ======= Account 234 Accounts Payables to Associate Companies CenterPoint Energy Houston Electric, LLC $ -- $ 520 CenterPoint Energy Resources Corp. -- 131 CenterPoint Energy Mississippi River Transmission -- 25 CenterPoint Energy Gas Transmission Co. -- 65 CenterPoint Energy Pipeline Services Inc. -- 177 CenterPoint Energy Field Services, Inc. -- 7 CenterPoint Energy Funding Company -- 27 CenterPoint Energy Properties, Inc. -- 2,010 CenterPoint Energy Arkla -- 63 CenterPoint Energy Minnegasco -- 106 CenterPoint Energy Marketing, Inc. -- 29 CenterPoint Energy Entex -- 162 CenterPoint Energy, Inc. -- 6,000 Texas Genco Holdings, Inc. -- 817 Texas Genco, LP -- 6 ------ ------- TOTAL $ -- $10,145 ====== ======= Account 242 Miscellaneous Current and Accrued Liabilities Accrued Audit fees $ -- $ 1,307 Accrued Salaries / Payroll -- 1,011 Accrued Employee Benefits -- 723 Accrued Annual Incentive Compensation -- 10,875 Capital Lease Obligations-Current -- 5,138 Other -- 928 ------ ------- TOTAL $ -- $19,982 ====== ======= Page 16 of 52
ANNUAL REPORT OF CENTERPOINT ENERGY SERVICE COMPANY, LLC For the Year Ended December 31, 2004 SCHEDULE XIV -- NOTES TO FINANCIAL STATEMENTS INSTRUCTIONS: The space below is provided for important notes regarding the financial statements or any account thereof. Furnish particulars as to any significant contingent assets or liabilities existing at the end of the year. Notes relating to financial statements shown elsewhere in this report may be indicated here by reference. (1) BACKGROUND AND BASIS OF PRESENTATION (a) BACKGROUND CenterPoint Energy Service Company, LLC (CESC or the Company) is an indirect wholly owned subsidiary of CenterPoint Energy, Inc. (CenterPoint Energy). CESC was formed on January 1, 2004 and certain assets were transferred to CESC from the parent company upon formation of CESC. CESC is the service company for CenterPoint Energy and its subsidiaries. CESC provides administrative and service functions involving system-wide coordination, strategy and compliance functions to CenterPoint Energy and its subsidiaries, at cost, pursuant to service agreements approved by the Securities and Exchange Commission (SEC) under the Public Utility Holding Company Act of 1935 (PUHCA), as amended. As of December 31, 2004, the majority of CESC's services are provided primarily to two indirect wholly owned subsidiaries of CenterPoint Energy: - CenterPoint Energy Houston Electric, LLC (CenterPoint Houston), which engages in the electric transmission and distribution business in a 5,000-square mile area of the Texas Gulf Coast that includes Houston; and - CenterPoint Energy Resources Corp. (CERC Corp., and, together with its subsidiaries, CERC), which owns gas distribution systems. The operations of its local distribution companies are conducted through three unincorporated divisions: Houston Gas, Minnesota Gas and Southern Gas Operations. Through wholly owned subsidiaries, CERC owns two interstate natural gas pipelines and gas gathering systems, provides various ancillary services, and offers variable and fixed price physical natural gas supplies to commercial and industrial customers and natural gas distributors. In July 2004, CenterPoint Energy announced its agreement to sell its majority owned subsidiary, Texas Genco Holdings, Inc. (Texas Genco), to 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. On December 15, 2004, Texas Genco completed the sale of its fossil generation assets (coal, lignite and gas-fired plants) to Texas Genco LLC for $2.813 billion in cash. Following the sale, Texas Genco distributed $2.231 billion in cash to CenterPoint Energy. Texas Genco's principal remaining asset is its ownership interest in a nuclear generating facility. The final step of the transaction, the merger of Texas Genco with a subsidiary of Texas Genco LLC in exchange for an additional cash payment to the Company of $700 million was completed on April 13, 2005, following the receipt of approval by the Nuclear Regulatory Commission. (2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (A) USE OF ESTIMATES. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. (B) LONG-LIVED ASSETS The Company records property, plant and equipment at historical cost. The Company expenses repair and maintenance costs as incurred. The Company periodically evaluates long-lived assets, including property, plant and equipment and specifically identifiable intangibles when events or changes in circumstances indicate that the carrying value of these assets may not be recoverable. The Page 17 of 52
determination of whether an impairment has occurred is based on an estimate of undiscounted cash flows attributable to the assets, as compared to the carrying value of the assets. (C) DEPRECIATION AND AMORTIZATION EXPENSE Depreciation is computed using the straight-line method based on economic lives. Depreciation expense for 2004 was $12.7 million. (D) INCOME TAXES The Company is included in the consolidated income tax returns of CenterPoint Energy. The Company calculates its income tax provision on a separate return basis under a tax sharing agreement with CenterPoint Energy. Pursuant to the tax sharing agreement with CenterPoint Energy, in 2004 the Company received an allocation of CenterPoint Energy's tax benefits totaling $3.8 million. The Company uses the liability method of accounting for deferred income taxes and measures deferred income taxes for all significant income tax temporary differences. Current federal and certain state income taxes are payable to or receivable from CenterPoint Energy. For additional information regarding income taxes, see Note 5. (E) STOCK -BASED COMPENSATION The Company uses the intrinsic method of accounting for its stock-based compensation. Effective January 1, 2005, the Company adopted Statement of Financial Accounting Standards (SFAS) No. 123 (Revised 2004), "Share-Based Payment" (SFAS 123(R)) using the modified prospective transition method. Under this method, the Company records compensation expense at fair value for all awards it grants after the date it adopts the standard. In addition, the Company is required to record compensation expense at fair value (as previous awards continue to vest) for the unvested portion of previously granted stock option awards that were outstanding as of the date of adoption. Pre-adoption awards of time-based restricted stock and performance-based restricted stock will continue to be expensed using the guidance contained in Accounting Principles Board Opinion No. 25. The adoption of SFAS 123(R) did not have a material impact on the Company's results of operations, financial condition or cash flows. (3) EQUITY At December 31, 2004, CESC has 1,000 authorized shares of capital stock at a par value of $1.00 per share. As of December 31, 2004, all shares of common stock were issued and held by CenterPoint Energy. (4) RELATED PARTY TRANSACTIONS From time to time, the Company has receivables from, or payables to, CenterPoint Energy or its subsidiaries. DECEMBER 31, 2004 -------------- (IN THOUSANDS) Accounts receivable from affiliates............................ $ 57,847 Accounts payable to affiliates................................. (10,145) -------- Accounts receivable/(payable)-- affiliated companies, net...... $ 47,702 ======== Short-term notes payable-- affiliated companies................ $(29,102) ======== Long-term accounts receivable-- affiliated companies .......... $ 3,577 ======== Long-term accounts payable-- affiliated companies ............. $ (441) ======== Long-term notes receivable-- affiliated companies ............. $ 861 ======== For the years ended December 31, 2004, the Company had net interest income (expense) related to affiliate borrowings of $(1) million. The 1935 Act generally prohibits borrowings by CenterPoint Energy from its subsidiaries, including the Company, either through the money pool or otherwise. The company provides corporate services to CenterPoint Energy and its subsidiaries. The costs of services have been charged directly to CenterPoint Energy and its subsidiaries using methods that management believes are reasonable. These methods include negotiated usage rates, dedicated asset assignment and proportionate corporate formulas based on assets, operating expenses and employees. These charges are not necessarily indicative of what would have been incurred had CenterPoint Energy and its subsidiaries not been an affiliates. Amounts charged to CenterPoint Energy and its subsidiaries for these services were $244 million in 2004. Page 18 of 52
(5) INCOME TAXES The Company's current and deferred components of income tax expense are as follows: YEAR ENDED DECEMBER 31, 2004 ----------------------- (IN THOUSANDS) Current Federal............................................ $(4,284) ------- Total current................................... (4,284) ------- Deferred Federal............................................ 7,138 ------- Total deferred.................................. 7,138 ------- Income tax expense.................................... $ 2,854 ======= A reconciliation of the federal statutory income tax rate to the effective income tax rate is as follows: YEAR ENDED DECEMBER 31, 2004 ----------------------- (IN THOUSANDS) Income from continuing operations before income taxes....................................... $8,347 Federal statutory rate............................. 35% ------ Income tax expense at statutory rate.................. 2,921 Increase (decrease) in tax resulting from: Other, net......................................... (67) ------ Income tax expense.................................... $2,854 ====== Effective Rate........................................ 34.2% Following are the Company's tax effects of temporary differences between the carrying amounts of assets and liabilities in the financial statements and their respective tax bases: YEAR ENDED DECEMBER 31, 2004 ----------------------- (IN THOUSANDS) Deferred tax assets: Non-current: Employee benefits............................... $ 50,520 Other........................................... 3,591 -------- Total deferred tax assets.................... 54,111 -------- Deferred tax liabilities: Non-current: Depreciation.................................... (27,424) -------- Total deferred tax liabilities............... (27,424) -------- Accumulated deferred income taxes, net....... $ 26,687 ======== The Company is included in the consolidated income tax returns of CenterPoint Energy. (6) EMPLOYEE BENEFIT PLANS (A) INCENTIVE COMPENSATION PLANS The Company participates in CenterPoint Energy's long-term incentive plans (LICPs) that provide for the issuance of stock-based incentives, including performance shares, performance-based units, restricted shares and stock options to director's, officers and key employees. Performance-based shares, performance-based units and restricted shares are granted to employees without cost to the participants. The performance shares and units vest within three years after the grant date based upon the performance of the Company over a three-year cycle. The restricted shares vest at various times ranging from one-year to at the end of a three-year period. Upon vesting, the shares are issued to the plan participants. The Company recorded compensation expense of $5 million related to long-term incentive compensation plans. Included in "Other Page 19 of 52
Deferred Credits" in the accompanying Balance Sheet at December 31, 2004 was $9 million relating to incentive compensation plans. (B) PENSION PLANS Substantially all of the Company's employees participate in CenterPoint Energy's qualified non-contributory pension plan. Under the cash balance formula, participants accumulate a retirement benefit based upon 4% of eligible earnings and accrued interest. Prior to 1999, the pension plan accrued benefits based on years of service, final average pay and covered compensation. As a result, certain employees participating in the plan as of December 31, 1998 are eligible to receive the greater of the accrued benefit calculated under the prior plan through 2008 or the cash balance formula. CenterPoint Energy's funding policy is to review amounts annually in accordance with applicable regulations in order to achieve adequate funding of projected benefit obligations. Pension expense is allocated to the Company based on covered employees. This calculation is intended to allocate pension costs in the same manner as a separate employer plan. Assets of the plan are not segregated or restricted by CenterPoint Energy's participating subsidiaries. The Company recognized pension expense of $11 million for 2004. In addition to the plan, the Company participates in CenterPoint Energy's non-qualified benefit restoration plan, which allows participants to retain the benefits to which they would have been entitled under the non-contributory pension plan except for federally mandated limits on these benefits or on the level of compensation on which these benefits may be calculated. The expense associated with the non-qualified pension plan was $5 million in 2004. (C) SAVINGS PLAN The Company participates in CenterPoint Energy's qualified savings plan, which includes a cash or deferred arrangement under Section 401(k) of the Internal Revenue Code of 1986, as amended (the Code) and an Employee Stock Ownership Plan (ESOP) under Section 4975(e)(7) of the Code. Under the plan, participating employees may contribute a portion of their compensation, on a pre-tax or after-tax basis, generally up to a maximum of 16% of compensation. CenterPoint Energy matches 75% of the first 6% of each employee's compensation contributed. CenterPoint Energy may contribute an additional discretionary match of up to 50% of the first 6% of each employee's compensation contributed. These matching contributions are fully vested at all times. CenterPoint Energy allocates to the Company the savings plan benefit expense related to the Company's employees. Savings plan benefit expense was $5 million for 2004. In addition to the plan, the Company participates in CenterPoint Energy's non-qualified savings restoration plan, which allows participants to retain the benefits to which they would have been entitled under the qualified savings plan except for federally mandated limits on these benefits. The expense associated with the non-qualified savings restoration plan was less than $1 million in 2004. (D) POSTRETIREMENT BENEFITS The Company's employees participate in CenterPoint Energy's plans which provide certain health care and life insurance benefits for retired employees on a contributory and non-contributory basis. Employees become eligible for these benefits if they have met certain age and service requirements at retirement, as defined in the plans. Under plan amendments effective in early 1999, health care benefits for future retirees were changed to limit employer contributions for medical coverage. Such benefit costs are accrued over the active service period of employees. Page 20 of 52
Net postretirement benefit cost includes the following components: YEAR ENDED DECEMBER 31, 2004 ----------------------- (IN THOUSANDS) Service cost--benefits earned during the period....... $ 465 Interest cost on projected benefit obligation......... 2,091 Expected return on plan assets........................ -- Net amortization...................................... 1,424 ------ Net postretirement benefit cost....................... $3,980 ====== The Company used the following assumptions to determine net postretirement benefit costs: YEAR ENDED DECEMBER 31, 2004 ----------------------- (IN THOUSANDS) Discount rate......................................... 6.25% Following are reconciliations of the Company's beginning and ending balances of its postretirement benefit plans benefit obligation, plan assets and funded status for 2004. YEAR ENDED DECEMBER 31, 2004 ----------------------- (IN THOUSANDS) CHANGE IN BENEFIT OBLIGATION Accumulated benefit obligation, beginning of year..... $ 32,234 Service cost.......................................... 465 Interest cost......................................... 2,091 Benefits paid......................................... (2,126) Participant contributions............................. 582 Plan amendment........................................ 215 Actuarial loss........................................ 11,325 ------- Accumulated benefit obligation, end of year........... $ 44,786 ======= CHANGE IN PLAN ASSETS Plan assets, beginning of year........................ $ -- Benefits paid......................................... (2,126) Participant contributions............................. 582 Employer contributions................................ 1,544 ------- Plan assets, end of year.............................. $ -- ======= RECONCILIATION OF FUNDED STATUS Funded status......................................... $(44,786) Unrecognized transition obligation.................... 8,841 Unrecognized prior service cost....................... 4,048 Unrecognized actuarial loss........................... 10,485 ------- Net amount recognized................................. $(21,412) ======= AMOUNTS RECOGNIZED IN BALANCE SHEETS Benefit obligations................................... $(21,412) ------- Net amount recognized at end of year.................. $(21,412) ======= ACTUARIAL ASSUMPTIONS Discount rate......................................... 5.75% Healthcare cost trend rate assumed for the next year.......................................... 9.75% Rate to which the cost trend rate is assumed to decline (ultimate trend rate)...................... 5.5% Year that the rate reaches the ultimate trend rate.... 2011 Measurement date used to determine plan obligations and assets............................. December 31, 2004 Assumed health care cost trend rates have a significant effect on the reported amounts for the Company's postretirement benefit plans. A 1% change in the assumed healthcare cost trend rate would have the following effects: 1% 1% INCREASE DECREASE -------- -------- (IN THOUSANDS) Effect on total of service and interest cost.............. $ 30 $ 26 Effect on the postretirement benefit obligation........... 730 618 Page 21 of 52
The Company expects to contribute $2 million to its postretirement benefit plan in 2005. The following benefit payments are expected to be paid by the postretirement benefit plan: POSTRETIREMENT BENEFITS ----------------------- (IN THOUSANDS) 2005.................................................. $1,544 2006.................................................. 1,621 2007.................................................. 1,702 2008.................................................. 1,787 2009.................................................. 1,876 2010-2014............................................. 9,849 (E) POSTEMPLOYMENT BENEFITS The Company participates in CenterPoint Energy's plan which provides postemployment benefits for former or inactive employees, their beneficiaries and covered dependents, after employment but before retirement (primarily health care and life insurance benefits for participants in the long-term disability plan). Postemployment benefits costs were less than $1 million in 2004. Included in "Other Deferred Credits" in the accompanying Consolidated Balance Sheets at December 31, 2004 was $2 million relating to postemployment benefits. (F) OTHER NON-QUALIFIED PLANS The Company participates in CenterPoint Energy's deferred compensation plans that provide benefits payable to directors, officers and certain key employees or their designated beneficiaries at specified future dates, upon termination, retirement or death. Benefit payments are made from the general assets of the Company. During 2004, the Company recorded benefit expense relating to these programs of $7 million each year. Included in "Other Deferred Credits" in the accompanying Consolidated Balance Sheets at December 31, 2004 was $73 million relating to deferred compensation plans. (F) OTHER EMPLOYEE MATTERS As of December 31, 2004, the Company had 934 full-time employees. Of these employees, none are covered by collective bargaining agreements. 8) ESTIMATED FAIR VALUE OF FINANCIAL INSTRUMENTS The fair values of financial instruments are estimated to be approximately equivalent to carrying amounts. Page 22 of 52
ANNUAL REPORT OF CENTERPOINT ENERGY SERVICE COMPANY, LLC For the Year Ended December 31, 2004 SCHEDULE XV - COMPARATIVE STATEMENT OF INCOME (thousands of dollars) CURRENT PRIOR ACCOUNT DESCRIPTION YEAR YEAR - ------- ----------- -------- ----- INCOME 457 Services rendered to associate companies $290,900 $-- 458 Services rendered to nonassociate companies 5,589 -- 421 Miscellaneous income and loss 863 -- -------- --- Total Income 297,352 -- EXPENSES 920 Salaries and wages 90,207 -- 921 Office supplies and expenses 21,715 -- 922 Administrative expenses transferred - credit (2,483) -- 923 Outside services employed 80,002 -- 924 Property insurance 29 -- 925 Injuries and damages 7,894 -- 926 Employee pensions and benefits 44,141 -- 928 Regulatory commission expenses -- -- 930.1 General advertising expenses 2,482 -- 930.2 Miscellaneous general expenses 4,584 -- 931 Rents 15,894 -- 932 Maintenance of structures and equipment 35 -- 935 Maintenance of general plant -- -- 403 Depreciation and amortization expense 12,703 -- 408 Taxes other than income taxes 7,899 -- 409 Income taxes (4,284) -- 410 Provision for deferred income taxes 7,138 -- 411 Provision for deferred income taxes - credit -- -- 411.5 Investment tax credit -- -- 426.1 Donations 1,056 -- 426.5 Other deductions 469 -- 427 Interest on long-term debt 659 -- 430 Interest on debt to associate companies 1,719 -- 431 Other interest expense -- -- -------- --- Total Expenses 291,859 -- -------- --- NET INCOME $ 5,493 $-- ======== === Page 23 of 52
ANNUAL REPORT OF CENTERPOINT ENERGY SERVICE COMPANY, LLC For the Year Ended December 31, 2004 ANALYSIS OF BILLING ASSOCIATE COMPANIES--ACCOUNT 457 (thousands of dollars) DIRECT INDIRECT COMPENSATION TOTAL COSTS COSTS FOR USE OF AMOUNT NAME OF ASSOCIATE COMPANY CHARGED CHARGED CAPITAL BILLED - ------------------------- -------- -------- ------------ -------- CenterPoint Energy Houston Electric, LLC $ 83,532 $ 27,639 $5,167 $116,338 CenterPoint Energy Entex 35,018 8,869 1,228 45,115 CenterPoint Energy Arkla 13,406 5,356 451 19,213 CenterPoint Energy Minnegasco 11,697 6,856 974 19,527 CenterPoint Energy Gas Transmission Co. 11,322 4,617 673 16,612 Texas Genco, LP 10,568 15,711 465 26,744 CenterPoint Energy, Inc. 4,735 27,456 19 32,210 CenterPoint Energy Gas Services, Inc. 3,932 2,973 10 6,915 CenterPoint Energy Properties, Inc. 3,040 342 21 3,403 CenterPoint Energy Resources Corp. 1,190 -- 1 1,191 Texas Genco Holdings, Inc. 673 -- -- 673 CenterPoint Energy Field Services, Inc. 662 1,217 6 1,885 CenterPoint Energy Mississippi River Trans. 588 2 -- 590 CenterPoint Energy Pipeline Services Inc. 436 2 -- 438 CenterPoint Energy Alternative Fuels Inc. 25 -- -- 25 CenterPoint Energy Power Systems, Inc. 6 -- -- 6 CenterPoint Energy Illinois Gas Transmission Co. 4 -- -- 4 National Furnace Company 3 -- -- 3 CenterPoint Energy Products, Inc. 2 -- -- 2 CenterPoint Energy Pine Pipeline Acquisit. Co. 2 -- -- 2 CenterPoint Energy Funding Company 2 -- -- 2 Arkansas/Louisiana Finance Corp. 2 -- -- 2 -------- -------- ------ -------- Total $180,845 $101,040 $9,015 $290,900 ======== ======== ====== ======== Page 24 of 52
ANNUAL REPORT OF CENTERPOINT ENERGY SERVICE COMPANY, LLC For the Year Ended December 31, 2004 ANALYSIS OF BILLING NONASSOCIATE COMPANIES--ACCOUNT 458 (thousands of dollars) INSTRUCTIONS: Provide a brief description of the services rendered to each nonassociate company. DIRECT INDIRECT COMPENSATION TOTAL COSTS COSTS FOR USE OF AMOUNT NAME OF NONASSOCIATE COMPANY CHARGED CHARGED CAPITAL BILLED - ---------------------------- ------- -------- ------------ ------ Reliant Resources $4,431 $-- $403 $4,834 Texas Genco, LP 726 -- 15 741 Akin Gump 10 -- -- 10 Veolia Water North America 2 -- -- 2 Trinity Water, Oil & Gas 1 -- -- 1 Advantech Solutions 1 -- -- 1 ------ --- ---- ------ Total $5,171 $-- $418 $5,589 ====== === ==== ====== Services provided to Reliant Resources: 1. Bill Printing 2. Bill Insert 3. Check Printing 4. Investor Services 5. Facility Management 6. Communication Services 7. Wellness Activity Center Services provided to Texas Genco, LP (nonassociate company as of December 15, 2004) 1. Property & General Accounting 2. Cash Management 3. Compensation & Benefits 4. Accounts Payable 5. Mail Services 6. Records Management 7. Bank Reconciliation 8. Check Disbursements 9. Remittance Processing 10. Facility Management 11. Information Technology Services Services provided to Akin Gump: 1. Wellness Activity Center Services provided to Veolia Water North America, Trinity Water Oil & Gas, and Advantech Solutions: 1. Communication Services Page 25 of 52
ANNUAL REPORT OF CENTERPOINT ENERGY SERVICE COMPANY, LLC For the Year Ended December 31, 2004 SCHEDULE XVI--ANALYSIS OF CHARGES FOR SERVICE--ASSOCIATE AND NONASSOCIATE COMPANIES (thousands of dollars) INSTRUCTIONS: Total cost of service will equal for associate and nonassociate companies the total amount billed under their separate analysis of billing schedules. Nonassociate Associate Company Charges Company Charges Total Charges for Services ---------------------------- ------------------------ ---------------------------- Direct Indirect Direct Indirect Direct Indirect Account Description of Items Cost Cost Total Cost Cost Total Cost Cost Total - ------- -------------------- -------- -------- -------- ------ -------- ------ -------- -------- -------- 920 Salaries and wages $ 52,087 $ 35,505 $ 87,592 $2,615 $-- $2,615 $ 54,702 $ 35,505 $ 90,207 921 Office supplies and expenses 17,374 3,872 21,246 469 -- 469 17,843 3,872 21,715 922 Administrative expenses transferred - credit (2,483) -- (2,483) -- -- -- (2,483) -- (2,483) 923 Outside services employed 56,315 22,784 79,099 903 -- 903 57,218 22,784 80,002 924 Property insurance 16 13 29 -- -- -- 16 13 29 925 Injuries and damages 2,749 5,114 7,863 31 -- 31 2,780 5,114 7,894 926 Employee pensions and benefits 17,629 26,201 43,830 311 -- 311 17,940 26,201 44,141 928 Regulatory commission expenses -- -- -- -- -- -- -- -- -- 930.1 General advertising expenses 1,611 866 2,477 5 -- 5 1,616 866 2,482 930.2 Miscellaneous general expenses 3,285 1,295 4,580 4 -- 4 3,289 1,295 4,584 931 Rents 11,179 4,246 15,425 469 -- 469 11,648 4,246 15,894 932 Maintenance of structures and equipment 19 16 35 -- -- -- 19 16 35 935 Maintenance of general plant -- -- -- -- -- -- -- -- -- 403 Depreciation and amortization expense 12,017 350 12,367 336 -- 336 12,353 350 12,703 408 Other taxes-non-inc 7,926 (36) 7,890 9 -- 9 7,935 (36) 7,899 409 Income taxes -- -- -- -- -- -- -- -- -- 410 Provision for deferred income taxes -- -- -- -- -- -- -- -- -- 411 Provision for deferred income taxes - credit -- -- -- -- -- -- -- -- -- 411.5 Investment tax credit -- -- -- -- -- -- -- -- -- 426.1 Donations 285 770 1,055 1 -- 1 286 770 1,056 426.5 Other deductions 425 44 469 -- -- -- 425 44 469 427 Interest on long-term debt 641 -- 641 18 -- 18 659 -- 659 430 Interest on debt to associate companies -- -- -- -- -- -- -- -- -- 431 Other interest expense -- -- -- -- -- -- -- -- -- 421 Miscellaneous income and loss (230) -- (230) -- -- -- (230) -- (230) -------- -------- -------- ------ --- ------ -------- -------- -------- Subtotal $180,845 $101,040 $281,885 $5,171 $-- $5,171 $186,016 $101,040 $287,056 ======== ======== ======== ====== === ====== ======== ======== ======== Compensation for use of capital 9,015 -- 9,015 418 -- 418 9,433 -- 9,433 -------- -------- -------- ------ --- ------ -------- -------- -------- Total $189,860 $101,040 $290,900 $5,589 $-- $5,589 $195,449 $101,040 $296,489 ======== ======== ======== ====== === ====== ======== ======== ======== Page 26 of 52
ANNUAL REPORT OF CENTERPOINT ENERGY SERVICE COMPANY, LLC For the Year Ended December 31, 2004 SCHEDULE XVII-SCHEDULE OF EXPENSE BY DEPARTMENT OR SERVICE FUNCTION (thousands of dollars) INSTRUCTIONS: Indicate each department or service function. (See Instruction 01-3 General Structure of Accounting System: Uniform System of Accounts). Department or Service Function ------------------------------------------------- Account Description of Items Total Amount Overhead Executive Mgmt Services - ------- -------------------- ------------ -------- ----------------------- 920 Salaries and wages $ 90,207 $ (626) $3,182 921 Office supplies and expenses 21,715 (619) 628 922 Administrative expenses transferred - credit (2,483) (2,483) -- 923 Outside services employed 80,002 11,170 406 924 Property insurance 29 -- -- 925 Injuries and damages 7,894 64 -- 926 Employee pensions and benefits 44,141 43,740 -- 928 Regulatory commission expenses -- -- -- 930.1 General advertising expenses 2,482 -- -- 930.2 Miscellaneous general expenses 4,584 1,296 -- 931 Rents 15,894 303 276 932 Maintenance of structures and equipment 35 -- -- 935 Maintenance of general plant -- -- -- 403 Depreciation and amortization expense 12,703 71 -- 408 Other taxes-non-inc 7,899 7,748 -- 409 Income taxes (4,284) (4,284) -- 410 Provision for deferred income taxes 7,138 7,138 -- 411 Provision for deferred income taxes - credit -- -- -- 411.5 Investment tax credit -- -- -- 426.1 Donations 1,056 -- 593 426.5 Other deductions 469 -- -- 427 Interest on long-term debt 659 -- -- 430 Interest on debt to associate companies 1,719 1,719 -- 431 Other interest expense -- -- -- -------- ------- ------ Total $291,859 $65,237 $5,085 ======== ======= ====== Page 27 of 52
ANNUAL REPORT OF CENTERPOINT ENERGY SERVICE COMPANY, LLC For the Year Ended December 31, 2004 SCHEDULE XVII-SCHEDULE OF EXPENSE BY DEPARTMENT OR SERVICE FUNCTION (thousands of dollars) INSTRUCTIONS: Indicate each department or service function. (See Instruction 01-3 General Structure of Accounting System: Uniform System of Accounts). Department or Service Function ----------------------------------- Account Description of Items Aviation Communications Legal - ------- -------------------- -------- -------------- ------- 920 Salaries and wages $ 218 $1,424 $ 5,981 921 Office supplies and expenses 38 1,263 788 922 Administrative expenses transferred - credit -- -- -- 923 Outside services employed 147 838 29,213 924 Property insurance -- -- (1) 925 Injuries and damages 35 -- (32) 926 Employee pensions and benefits -- -- -- 928 Regulatory commission expenses -- -- -- 930.1 General advertising expenses -- 2,394 -- 930.2 Miscellaneous general expenses -- 40 1,112 931 Rents 11 421 591 932 Maintenance of structures and equipment -- -- -- 935 Maintenance of general plant -- -- -- 403 Depreciation and amortization expense -- 30 42 408 Other taxes-non-inc 19 -- -- 409 Income taxes -- -- -- 410 Provision for deferred income taxes -- -- -- 411 Provision for deferred income taxes - credit -- -- -- 411.5 Investment tax credit -- -- -- 426.1 Donations -- 121 21 426.5 Other deductions -- -- -- 427 Interest on long-term debt -- -- -- 430 Interest on debt to associate companies -- -- -- 431 Other interest expense -- -- -- ------- ------ ------- Total $ 468 $6,531 $37,715 ======= ====== ======= Page 28 of 52
ANNUAL REPORT OF CENTERPOINT ENERGY SERVICE COMPANY, LLC For the Year Ended December 31, 2004 SCHEDULE XVII-SCHEDULE OF EXPENSE BY DEPARTMENT OR SERVICE FUNCTION (thousands of dollars) INSTRUCTIONS: Indicate each department or service function. (See Instruction 01-3 General Structure of Accounting System: Uniform System of Accounts). Department or Service Function -------------------------------------------------------- Account Description of Items Government Affairs Regulatory Information Technology - ------- -------------------- ------------------ ---------- ---------------------- 920 Salaries and wages $1,182 $ 3,677 $30,432 921 Office supplies and expenses 33 574 14,995 922 Administrative expenses transferred -- -- -- 923 Outside services employed 553 9,810 16,268 924 Property insurance -- -- -- 925 Injuries and damages -- -- -- 926 Employee pensions and benefits -- -- (6) 928 Regulatory commission expenses -- -- -- 930.1 General advertising expenses -- 9 -- 930.2 Miscellaneous general expenses 51 514 1 931 Rents -- 737 5,841 932 Maintenance of structures and equipment -- -- 11 935 Maintenance of general plant -- -- -- 403 Depreciation and amortization expense -- -- 11,103 408 Other taxes-non-inc -- -- 140 409 Income taxes -- -- -- 410 Provision for deferred income taxes -- -- -- 411 Provision for deferred income taxes - credit -- -- -- 411.5 Investment tax credit -- -- -- 426.1 Donations 131 8 -- 426.5 Other deductions 438 31 -- 427 Interest on long-term debt -- -- 659 430 Interest on debt to associate companies -- -- -- 431 Other interest expense -- -- -- ------ ------- ------- Total $2,388 $15,360 $79,444 ====== ======= ======= Page 29 of 52
ANNUAL REPORT OF CENTERPOINT ENERGY SERVICE COMPANY, LLC For the Year Ended December 31, 2004 SCHEDULE XVII-SCHEDULE OF EXPENSE BY DEPARTMENT OR SERVICE FUNCTION (thousands of dollars) INSTRUCTIONS: Indicate each department or service function. (See Instruction 01-3 General Structure of Accounting System: Uniform System of Accounts). Department or Service Function ---------------------------------- Account Description of Items Human Resources Payroll Audit - ------- -------------------- --------------- ------- ------ 920 Salaries and wages $ 9,211 $713 $1,169 921 Office supplies and expenses 658 30 183 922 Administrative expenses transferred - credit -- -- -- 923 Outside services employed 1,364 8 -- 924 Property insurance -- -- -- 925 Injuries and damages -- -- -- 926 Employee pensions and benefits 304 (7) 4 928 Regulatory commission expenses -- -- -- 930.1 General advertising expenses 20 -- -- 930.2 Miscellaneous general expenses -- -- -- 931 Rents 1,954 1 -- 932 Maintenance of structures and equipment 8 -- -- 935 Maintenance of general plant -- -- -- 403 Depreciation and amortization expense 63 -- -- 408 Other taxes-non-inc 8 (59) -- 409 Income taxes -- -- -- 410 Provision for deferred income taxes -- -- -- 411 Provision for deferred income taxes - credit -- -- -- 411.5 Investment tax credit -- -- -- 426.1 Donations 119 -- -- 426.5 Other deductions -- -- -- 427 Interest on long-term debt -- -- -- 430 Interest on debt to associate companies -- -- -- 431 Other interest expense -- -- -- ------- ---- ------ Total $13,709 $686 $1,356 ======= ==== ====== Page 30 of 52
ANNUAL REPORT OF CENTERPOINT ENERGY SERVICE COMPANY, LLC For the Year Ended December 31, 2004 SCHEDULE XVII-SCHEDULE OF EXPENSE BY DEPARTMENT OR SERVICE FUNCTION (thousands of dollars) INSTRUCTIONS: Indicate each department or service function. (See Instruction 01-3 General Structure of Accounting System: Uniform System of Accounts). Department or Service Function --------------------------------------------------------------- Financial Accounting Account Description of Items & Reporting Property Accounting Revenue Accounting - ------- -------------------- -------------------- ------------------- ------------------ 920 Salaries and wages $3,688 $2,038 $4,564 921 Office supplies and expenses 151 44 99 922 Administrative expenses transferred - credit -- -- -- 923 Outside services employed 178 45 3 924 Property insurance -- -- -- 925 Injuries and damages -- -- -- 926 Employee pensions and benefits 5 10 26 928 Regulatory commission expenses -- -- -- 930.1 General advertising expenses -- -- -- 930.2 Miscellaneous general expenses -- -- -- 931 Rents 5 1 24 932 Maintenance of structures and equipment -- -- -- 935 Maintenance of general plant -- -- -- 403 Depreciation and amortization expense 362 -- -- 408 Other taxes-non-inc -- 5 -- 409 Income taxes -- -- -- 410 Provision for deferred income taxes -- -- -- 411 Provision for deferred income taxes - credit -- -- -- 411.5 Investment tax credit -- -- -- 426.1 Donations -- -- -- 426.5 Other deductions -- -- -- 427 Interest on long-term debt -- -- -- 430 Interest on debt to associate companies -- -- -- 431 Other interest expense -- -- -- ------ ------ ------ Total $4,389 $2,143 $4,716 ====== ====== ====== Page 31 of 52
ANNUAL REPORT OF CENTERPOINT ENERGY SERVICE COMPANY, LLC For the Year Ended December 31, 2004 SCHEDULE XVII-SCHEDULE OF EXPENSE BY DEPARTMENT OR SERVICE FUNCTION (thousands of dollars) INSTRUCTIONS: Indicate each department or service function. (See Instruction 01-3 General Structure of Accounting System: Uniform System of Accounts). Department or Service Function ------------------------------------------------ Account Description of Items Tax Investor Relations Strategic Planning - ------- -------------------- ------ ------------------ ------------------ 920 Salaries and wages $1,998 $ 394 $2,798 921 Office supplies and expenses 305 -- 151 922 Administrative expenses transferred - credit -- -- -- 923 Outside services employed 743 37 277 924 Property insurance -- -- -- 925 Injuries and damages -- -- -- 926 Employee pensions and benefits -- -- -- 928 Regulatory commission expenses -- -- -- 930.1 General advertising expenses -- -- -- 930.2 Miscellaneous general expenses 1 602 9 931 Rents -- -- -- 932 Maintenance of structures and equipment -- 1 3 935 Maintenance of general plant -- -- -- 403 Depreciation and amortization expense 1 -- 13 408 Other taxes-non-inc 6 -- -- 409 Income taxes -- -- -- 410 Provision for deferred income taxes -- -- -- 411 Provision for deferred income taxes - credit -- -- -- 411.5 Investment tax credit -- -- -- 426.1 Donations 1 -- 1 426.5 Other deductions -- -- -- 427 Interest on long-term debt -- -- -- 430 Interest on debt to associate companies -- -- -- 431 Other interest expense -- -- -- ------ ------ ------ Total $3,055 $1,034 $3,252 ====== ====== ====== Page 32 of 52
ANNUAL REPORT OF CENTERPOINT ENERGY SERVICE COMPANY, LLC For the Year Ended December 31, 2004 SCHEDULE XVII-SCHEDULE OF EXPENSE BY DEPARTMENT OR SERVICE FUNCTION (thousands of dollars) INSTRUCTIONS: Indicate each department or service function. (See Instruction 01-3 General Structure of Accounting System: Uniform System of Accounts). Department or Service Function --------------------------------------- Finance & Office Support Account Description of Items Treasury Services Purchasing - ------- -------------------- --------- -------------- ---------- 920 Salaries and wages $ 7,407 $1,872 $2,895 921 Office supplies and expenses 2,145 75 133 922 Administrative expenses transferred - credit -- -- -- 923 Outside services employed 7,288 429 (52) 924 Property insurance 30 -- -- 925 Injuries and damages 7,827 -- -- 926 Employee pensions and benefits 3 -- -- 928 Regulatory commission expenses -- -- -- 930.1 General advertising expenses -- 1 58 930.2 Miscellaneous general expenses 941 -- 17 931 Rents 3,019 52 -- 932 Maintenance of structures and equipment 10 -- -- 935 Maintenance of general plant -- -- -- 403 Depreciation and amortization expense 49 -- -- 408 Other taxes-non-inc -- -- 1 409 Income taxes -- -- -- 410 Provision for deferred income taxes -- -- -- 411 Provision for deferred income taxes - credit -- -- -- 411.5 Investment tax credit -- -- -- 426.1 Donations 30 -- 31 426.5 Other deductions -- -- -- 427 Interest on long-term debt -- -- -- 430 Interest on debt to associate companies -- -- -- 431 Other interest expense -- -- -- ------- ------ ------ Total $28,749 $2,429 $3,083 ======= ====== ====== Page 33 of 52
ANNUAL REPORT OF CENTERPOINT ENERGY SERVICE COMPANY, LLC For the Year Ended December 31, 2004 SCHEDULE XVII-SCHEDULE OF EXPENSE BY DEPARTMENT OR SERVICE FUNCTION (thousands of dollars) INSTRUCTIONS: Indicate each department or service function. (See Instruction 01-3 General Structure of Accounting System: Uniform System of Accounts). Department or Service Function --------------------------------------------------- Facility Management Account Description of Items Remittance Shared Services & Corporate Security - ------- -------------------- ---------- --------------- -------------------- 920 Salaries and wages $1,652 $1,275 $3,063 921 Office supplies and expenses 55 (148) 134 922 Administrative expenses transferred - credit -- -- -- 923 Outside services employed 434 388 455 924 Property insurance -- -- -- 925 Injuries and damages -- -- -- 926 Employee pensions and benefits 32 6 24 928 Regulatory commission expenses -- -- -- 930.1 General advertising expenses -- -- -- 930.2 Miscellaneous general expenses -- -- -- 931 Rents 328 2,327 3 932 Maintenance of structures and equipment -- -- 2 935 Maintenance of general plant -- -- -- 403 Depreciation and amortization expense -- 964 5 408 Other taxes-non-inc 10 -- 21 409 Income taxes -- -- -- 410 Provision for deferred income taxes -- -- -- 411 Provision for deferred income taxes - credit -- -- -- 411.5 Investment tax credit -- -- -- 426.1 Donations -- -- -- 426.5 Other deductions -- -- -- 427 Interest on long-term debt -- -- -- 430 Interest on debt to associate companies -- -- -- 431 Other interest expense -- -- -- ------ ------ ------ Total $2,511 $4,812 $3,707 ====== ====== ====== Page 34 of 52
ANNUAL REPORT OF CENTERPOINT ENERGY SERVICE COMPANY, LLC For the Year Ended December 31, 2004 DEPARTMENTAL ANALYSIS OF SALARIES-ACCOUNT 920 (thousands of dollars) Number of Personnel Name of Department or Service Function Total Amount Parent Company Other Associates Nonassociates End of Year - -------------------------------------- ------------ -------------- ---------------- ------------- ----------- Executive Management $ 3,182 $ 668 $ 2,514 $ -- 12 Aviation 218 204 14 -- 2 Communications 1,424 107 1,314 3 17 Legal 5,981 138 5,842 1 43 Information Technology 30,432 -- 29,619 813 305 Government Affairs 1,182 -- 1,182 -- 9 Regulatory 3,677 -- 3,677 -- 29 Facilities Management 3,063 6 3,036 21 33 Office Support Services 1,872 4 1,091 777 34 Purchasing & Logistics 2,895 6 2,889 -- 43 Remittance Processing 1,652 3 757 892 24 General Shared Services 1,275 3 1,220 52 19 Payroll 713 3 710 -- 12 Human Resources 9,211 37 9,146 28 84 Audit 1,169 42 1,127 -- 14 Stategic Planning 2,798 101 2,697 -- 22 Investor Relations 394 14 380 -- 3 Financial Accounting & Reporting 3,688 133 3,555 -- 37 Property Accounting 2,038 73 1,965 -- 21 Revenue Accounting 4,564 164 4,400 -- 77 Tax 1,998 72 1,926 -- 20 Finance & Treasury 7,407 267 7,111 29 74 Overhead (626) (626) -- -- 0 ------- ------ ------- ------ --- Total $90,207 $1,419 $86,172 $2,616 934 ======= ====== ======= ====== === Page 35 of 52
ANNUAL REPORT OF CENTERPOINT ENERGY SERVICE COMPANY, LLC For the Year Ended December 31, 2004 OUTSIDE SERVICES EMPLOYED-ACCOUNT 923 (thousands of dollars) INSTRUCTIONS: Provide a breakdown of outside services employed. If the aggregate amounts paid to any one payee and included within one category is less than $25,000, only the aggregate number and amount of all such payments included within the subaccounts need be shown. Provide a subtotal for each type of service. RELATIONSHIP A=Associate FROM WHOM PURCHASED SERVICES PROVIDED NA = NonAssociate AMOUNT ------------------- ----------------- ----------------- ------- Akin Gump Strauss Hauer Legal Services NA $ 241 Andrews & Kurth LLP Legal Services NA 87 Arcadis G&M, Inc Legal Services NA 40 Ashbycrinion LLP Legal Services NA 116 Baker Botts LLP Legal Services NA 16,429 Barnes & Turner Legal Services NA 75 Beckham & Tillman Legal Services NA 49 Blanchard, Walker, O'Quin & Roberts Legal Services NA 548 Booth Ahrens & Werkethin, P.C. Legal Services NA 82 Bowne Of Dallas Legal Services NA 231 Bracewell & Patterson, L.L.P. Legal Services NA 660 Brunini, Grantham,Grower & Hewes Legal Services NA 196 Burgess, Burgess, Burgess Legal Services NA 104 Calvert & Associates Legal Services NA 38 Cannon & Simmons Legal Services NA 26 Clark Thomas & Winters PC Legal Services NA 740 Continental Court Reporters Legal Services NA 33 Crain, Caton & James Legal Services NA 228 Cross Gunter Witherspoon & Galchus Legal Services NA 99 Day Berry & Howard LLP Legal Services NA 62 Dewey Ballentine Legal Services NA 300 Dispute Resolution Management Inc Legal Services NA 62 Edwards & George LLP Legal Services NA 179 Fulbright & Jaworski, LLP Legal Services NA 190 Gibbs & Bruns L.L.P. Legal Services NA 39 Graves, Dougherty, Hearon & Moody Legal Services NA 2,110 Hall Estill Hardwick Gable Golden Legal Services NA 202 Haynes And Boone, LLP Legal Services NA 70 Holland & Hart LLP Legal Services NA 113 Hunton & Williams LLP Legal Services NA 57 Jack R. Newman Legal Services NA 25 Jackson, Sjoberg, McCarthy Legal Services NA 495 Jones Day Legal Services NA 1,715 Landry, Watkins, Repaske & Breaux Legal Services NA 30 Lemle & Kelleher, L.L.P. Legal Services NA 564 Lloyd, Gosselink, Blevins, Rochelle Legal Services NA 59 Page 36 of 52
ANNUAL REPORT OF CENTERPOINT ENERGY SERVICE COMPANY, LLC For the Year Ended December 31, 2004 OUTSIDE SERVICES EMPLOYED-ACCOUNT 923 (thousands of dollars) INSTRUCTIONS: Provide a breakdown of outside services employed. If the aggregate amounts paid to any one payee and included within one category is less than $25,000, only the aggregate number and amount of all such payments included within the subaccounts need be shown. Provide a subtotal for each type of service. RELATIONSHIP A=Associate FROM WHOM PURCHASED SERVICES PROVIDED NA = NonAssociate AMOUNT ------------------- ----------------- ----------------- ------- Locke Liddell & Sapp LLP Legal Services NA 131 Mactec Engineering Legal Services NA 32 Mills,Shirley,Eckel & Bassett Legal Services NA 50 Morgan, Lewis & Bockius, LLP Legal Services NA 52 Ogletree Deakins Nash Smoak Legal Services NA 33 Oppel, Goldberg, & Saenz PLLC Legal Services NA 108 Pendulum Energy Legal Services NA 97 Phelps Dunbar LLP Legal Services NA 92 Platt, Sparks & Associates Legal Services NA 195 Porter & Hedges LLP Legal Services NA 481 Public Strategies Inc Legal Services NA 139 Robert A Webb Legal Services NA 290 Royston Rayzor Vickery Legal Services NA 27 RR Donnelley Receivables, Inc Legal Services NA 89 Russell R Johnson III Legal Services NA 43 Schiff Hardin LLP Legal Services NA 33 Southern International Inc Legal Services NA 74 The Beatty Law Firm PC Legal Services NA 121 Thelen, Reid & Priest LLP Legal Services NA 139 Yetter & Warden Legal Services NA 259 Various (87) Legal Services NA 485 ------- Subtotal: $29,264 ======= 8760 Inc Hardware/Software Maintenance NA $ 27 8E6 Technologies Hardware/Software Maintenance NA 87 Accudata Systems Inc Hardware/Software Maintenance NA 190 Anacomp MultiProdux Division Hardware/Software Maintenance NA 48 Aspect Communications Inc. Hardware/Software Maintenance NA 126 Bentley Systems, Inc. Hardware/Software Maintenance NA 70 Business Objects Hardware/Software Maintenance NA 64 Candle Corporation Hardware/Software Maintenance NA 114 Commerce One Hardware/Software Maintenance NA 41 Computer Associates International Hardware/Software Maintenance NA 70 Compuware Corporation Hardware/Software Maintenance NA 70 D&T CorpTax Hardware/Software Maintenance NA 46 DBA Software Hardware/Software Maintenance NA 25 Diversified Software Systems Hardware/Software Maintenance NA 44 Embarcadero Technologies Inc Hardware/Software Maintenance NA 34 Filenet Corporation Hardware/Software Maintenance NA 83 Page 37 of 52
ANNUAL REPORT OF CENTERPOINT ENERGY SERVICE COMPANY, LLC For the Year Ended December 31, 2004 OUTSIDE SERVICES EMPLOYED-ACCOUNT 923 (thousands of dollars) INSTRUCTIONS: Provide a breakdown of outside services employed. If the aggregate amounts paid to any one payee and included within one category is less than $25,000, only the aggregate number and amount of all such payments included within the subaccounts need be shown. Provide a subtotal for each type of service. RELATIONSHIP A=Associate FROM WHOM PURCHASED SERVICES PROVIDED NA = NonAssociate AMOUNT ------------------- ----------------- ----------------- ------- Fujitsu Network Communications Hardware/Software Maintenance NA 163 Future Com Corporation Hardware/Software Maintenance NA 76 Hewlett-Packard Company Hardware/Software Maintenance NA 29 IBM Corporation Hardware/Software Maintenance NA 5,922 Informatica Corp Hardware/Software Maintenance NA 50 Isogon Corporation Hardware/Software Maintenance NA 26 Itron Inc Hardware/Software Maintenance NA 37 Levi Ray & Shoup Inc Hardware/Software Maintenance NA 45 Lodestar Corporation Hardware/Software Maintenance NA 629 Maverick IT Hardware/Software Maintenance NA 292 Mercury Interactive Corporation Hardware/Software Maintenance NA 67 Microsoft Licensing, GP Hardware/Software Maintenance NA 135 Mitem Corporation Hardware/Software Maintenance NA 51 Mitratech Holdings Inc Hardware/Software Maintenance NA 32 Mobile Data Solutions Inc Hardware/Software Maintenance NA 459 Napersoft Inc Hardware/Software Maintenance NA 56 Native Networks Hardware/Software Maintenance NA 76 Netegrity Inc Hardware/Software Maintenance NA 25 Oce' Printing Systems USA, Inc Hardware/Software Maintenance NA 156 Optura Inc Hardware/Software Maintenance NA 213 Oracle Corporation Hardware/Software Maintenance NA 342 Peregrine Systems, Inc Hardware/Software Maintenance NA 132 Pitney Bowes - Docsense Hardware/Software Maintenance NA 39 Powertax Hardware/Software Maintenance NA 38 SAP America Inc Hardware/Software Maintenance NA 1,350 SAS Institute Inc Hardware/Software Maintenance NA 131 See Beyond Hardware/Software Maintenance NA 251 Software House International Hardware/Software Maintenance NA 267 Spirent Communications Hardware/Software Maintenance NA 38 SPL Worldgroup Inc Hardware/Software Maintenance NA 252 Sun Microsystems Inc Hardware/Software Maintenance NA 140 Sungard Energy Systems Inc Hardware/Software Maintenance NA 597 Velosant LP Hardware/Software Maintenance NA 26 VYSYS Inc Hardware/Software Maintenance NA 55 Various (64) Hardware/Software Maintenance NA 349 ------- Subtotal: $13,685 ======= Page 38 of 52
ANNUAL REPORT OF CENTERPOINT ENERGY SERVICE COMPANY, LLC For the Year Ended December 31, 2004 OUTSIDE SERVICES EMPLOYED-ACCOUNT 923 (thousands of dollars) INSTRUCTIONS: Provide a breakdown of outside services employed. If the aggregate amounts paid to any one payee and included within one category is less than $25,000, only the aggregate number and amount of all such payments included within the subaccounts need be shown. Provide a subtotal for each type of service. RELATIONSHIP A=Associate FROM WHOM PURCHASED SERVICES PROVIDED NA = NonAssociate AMOUNT ------------------- ----------------- ----------------- ------- A-Rocket Moving & Storage Inc Consulting/Outside Services NA $ 104 Accenture LLP Consulting/Outside Services NA 1,095 ADP Investor Communication Services Consulting/Outside Services NA 104 Alliance Strategy Business Consulting/Outside Services NA 400 Art Of Facts Consulting/Outside Services NA 127 Automatic Data Processing Inc Consulting/Outside Services NA 68 Barrington-Wellesley Group Inc Consulting/Outside Services NA 115 Beckham & Tillman Communications Consulting/Outside Services NA 81 Bell & Howell Mail And Messaging Consulting/Outside Services NA 255 Brinks Inc Consulting/Outside Services NA 32 Bruner & Associates Consulting/Outside Services NA 49 Business Consulting Group Of Alvarez & Marsal Consulting/Outside Services NA 100 C M White & Company LLC Consulting/Outside Services NA 67 C.W. Henderson Electric, Inc. Consulting/Outside Services NA 53 Cambridge Energy Research Consulting/Outside Services NA 56 Career Management International Consulting/Outside Services NA 28 Carter & Burgess, Inc. Consulting/Outside Services NA 90 Charles Rivers & Associates Consulting/Outside Services NA 52 Chas P. Young Co Consulting/Outside Services NA 58 Citigroup Consulting/Outside Services NA 10,248 Commercial Audio Video Inc Consulting/Outside Services NA 34 Commercial Furniture Service Consulting/Outside Services NA 32 Computer Financial Consultants Consulting/Outside Services NA 173 Confluential Consulting Consulting/Outside Services NA 42 Continuous & Specialty Product Consulting/Outside Services NA 73 Corporate Express Consulting/Outside Services NA 70 Coyle Kelly Consulting/Outside Services NA 70 Csar Inc Consulting/Outside Services NA 25 CSC Financial Services Group Consulting/Outside Services NA 32 CT Corporation Consulting/Outside Services NA 43 Deloitte & Touche Consulting/Outside Services NA 5,005 Disaster Recovery Services, Inc Consulting/Outside Services NA 63 Don McFarlin Consulting/Outside Services NA 75 Employers Unity, Inc Consulting/Outside Services NA 60 Energy Advisory Group Inc Consulting/Outside Services NA 121 Ernst & Young LLP Consulting/Outside Services NA 237 Financo Inc Consulting/Outside Services NA 39 Frontier Associates LLC Consulting/Outside Services NA 85 Garrison Solutions Inc Consulting/Outside Services NA 75 Gartner Group Consulting/Outside Services NA 252 Geosolutions LLC Consulting/Outside Services NA 105 Gerald W. Tucker Consulting/Outside Services NA 51 Page 39 of 52
ANNUAL REPORT OF CENTERPOINT ENERGY SERVICE COMPANY, LLC For the Year Ended December 31, 2004 OUTSIDE SERVICES EMPLOYED-ACCOUNT 923 (thousands of dollars) INSTRUCTIONS: Provide a breakdown of outside services employed. If the aggregate amounts paid to any one payee and included within one category is less than $25,000, only the aggregate number and amount of all such payments included within the subaccounts need be shown. Provide a subtotal for each type of service. RELATIONSHIP A=Associate FROM WHOM PURCHASED SERVICES PROVIDED NA = NonAssociate AMOUNT ------------------- ----------------- ----------------- ------- Graves, Dougherty, Hearon & Moody Consulting/Outside Services NA 611 Grover Printing Consulting/Outside Services NA 73 H Shoup & Associates Inc Consulting/Outside Services NA 42 Harper And Pearson Company Consulting/Outside Services NA 321 Hay Group, Inc Consulting/Outside Services NA 25 Hewitt Associates LLC Consulting/Outside Services NA 719 Honeywell Consulting/Outside Services NA 53 Huron Consulting Group LLC Consulting/Outside Services NA 42 IBM Corporation Consulting/Outside Services NA 640 Insight Management Partners Inc Consulting/Outside Services NA 57 Interaction Associates Consulting/Outside Services NA 61 Iron Mountain Consulting/Outside Services NA 195 IT Solutions Inc Consulting/Outside Services NA 53 J & B Software Systems Inc Consulting/Outside Services NA 55 J.E. "Buster" Brown Consulting/Outside Services NA 84 Jack Roberts Consulting/Outside Services NA 69 Jackson And Company Consulting/Outside Services NA 27 John T. Jakubik & Associates Consulting/Outside Services NA 141 JP Morgan Chase Bank Consulting/Outside Services NA 6,071 Ka-Tex Constructors, Inc Consulting/Outside Services NA 132 Kennedy Reporting Service Inc Consulting/Outside Services NA 44 Kenneth C. Kern & Associates Consulting/Outside Services NA 80 Kenneth E Jones Consulting/Outside Services NA 27 Lloyd, Gosselink, Blevins, Rochelle Consulting/Outside Services NA 270 Love Envelopes Inc Consulting/Outside Services NA 57 Magee & Magee LLP Consulting/Outside Services NA 249 Mail-Gard Consulting/Outside Services NA 34 Marriott International Consulting/Outside Services NA 40 MBIA Insurance Corp Consulting/Outside Services NA 68 Mellon Investor Services LLC Consulting/Outside Services NA 32 Mercer Human Resource Consulting Consulting/Outside Services NA 58 Michael D. Thompson Consulting/Outside Services NA 32 Mignon McGarry Consulting/Outside Services NA 73 Million Air-Houston Consulting/Outside Services NA 38 Opex Corporation Consulting/Outside Services NA 38 Origin Design Consulting/Outside Services NA 174 PA Consulting Services Inc Consulting/Outside Services NA 115 PC Helps Consulting/Outside Services NA 99 Pearl Meyer & Partners Consulting/Outside Services NA 96 Pioneer Contract Services Inc Consulting/Outside Services NA 56 Pitney Bowes Consulting/Outside Services NA 154 Page 40 of 52
ANNUAL REPORT OF CENTERPOINT ENERGY SERVICE COMPANY, LLC For the Year Ended December 31, 2004 OUTSIDE SERVICES EMPLOYED-ACCOUNT 923 (thousands of dollars) INSTRUCTIONS: Provide a breakdown of outside services employed. If the aggregate amounts paid to any one payee and included within one category is less than $25,000, only the aggregate number and amount of all such payments included within the subaccounts need be shown. Provide a subtotal for each type of service. RELATIONSHIP A=Associate FROM WHOM PURCHASED SERVICES PROVIDED NA = NonAssociate AMOUNT ------------------- ----------------- ----------------- ------- PM Realty Group LP Consulting/Outside Services NA 134 Preng & Associates Consulting/Outside Services NA 155 Pricewaterhouse Cooper LLP Consulting/Outside Services NA 141 Printing Arts Of Houston Consulting/Outside Services NA 64 PSI Group Consulting/Outside Services NA 96 Public Strategies Inc. Consulting/Outside Services NA 192 Rag Printing Inc. Consulting/Outside Services NA 87 Reliant Energy, Inc. Consulting/Outside Services NA 238 Resumix, Inc. Consulting/Outside Services NA 26 RHR International Company Consulting/Outside Services NA 60 S J Bashen Inc Consulting/Outside Services NA 42 SAP America Inc Consulting/Outside Services NA 446 Sargent & Lundy LLC Consulting/Outside Services NA 42 Skillsoft Consulting/Outside Services NA 132 Stacey Hopwood Manela Consulting/Outside Services NA 35 Standard & Poor's Consulting/Outside Services NA 55 Sungard CCS Consulting/Outside Services NA 255 Sungard Recovery Services LP Consulting/Outside Services NA 571 Survcon Inc. Consulting/Outside Services NA 121 Synapse Energy Economics Inc Consulting/Outside Services NA 92 TCS Consultants Inc Consulting/Outside Services NA 45 Tech Systems Inc Consulting/Outside Services NA 193 Texasadmin.com Consulting/Outside Services NA 43 The Bank Of New York Consulting/Outside Services NA 39 The Brattle Group Consulting/Outside Services NA 508 The Depository Trust Co Consulting/Outside Services NA 48 The Hudson Forum, Inc. Consulting/Outside Services NA 217 The Ofis By Powell Consulting/Outside Services NA 43 The Sibley Group Consulting/Outside Services NA 121 Thomson Financial Corporate Consulting/Outside Services NA 32 Tucker & Tucker Consultants Inc Consulting/Outside Services NA 44 Unisource Consulting/Outside Services NA 150 Unisys Corporation Consulting/Outside Services NA 248 Veterans Print Management Consulting/Outside Services NA 76 Walker F Nolan Consulting/Outside Services NA 50 Westex Security Services Consulting/Outside Services NA 187 Willamette Management Associates Consulting/Outside Services NA 33 Xerox Corporation Consulting/Outside Services NA 38 Various (490) Consulting/Outside Services NA 705 ------- Subtotal: $37,053 ======= ------- Total: $80,002 ======= Page 41 of 52
ANNUAL REPORT OF CENTERPOINT ENERGY SERVICE COMPANY, LLC For the Year Ended December 31, 2004 EMPLOYEE PENSION AND BENEFITS--ACCOUNT 926 (thousands of dollars) INSTRUCTIONS: Provide a listing of each pension plan and benefit program provided by the service company. Such listing should be limited to $25,000. DESCRIPTION AMOUNT ----------- ------- Pension $15,810 Medical 7,006 Deferred Compensation 6,585 Savings 5,549 Long-term Incentive Compensation 4,679 Post Retirement Benefits 4,194 Post Employment Benefits 194 Other 124 ------- Total $44,141 ======= Page 42 of 52
ANNUAL REPORT OF CENTERPOINT ENERGY SERVICE COMPANY, LLC For the Year Ended December 31, 2004 GENERAL ADVERTISING EXPENSE-ACCOUNT 930.1 (thousands of dollars) INSTRUCTIONS: Provide a listing of the amount included in Account 930.1, "General Advertising Expenses", classifying the items according to the nature of the advertising and as defined in the account definition. If a particular class includes an amount in excess of $3,000 applicable to a single payee, show separately the name of the payee and the aggregate amount applicable thereto. DESCRIPTION NAME OF PAYEE AMOUNT - ----------- ------------- ------ Advertising Fogarty Klein Monroe $1,761 Advertising KHOU-TV 150 Advertising Chas P. Young Co 108 Advertising Printing Arts of Houston 98 Advertising Radio One of Texas, LP 67 Advertising Make Believe 52 Advertising Network Interstate LLC 44 Advertising Rag Printing Inc. 39 Advertising HotJobs.com 17 Advertising Corporate Express 14 Advertising Houston Photo Imaging 13 Advertising Lopez Negrete 12 Advertising Houston Defender Newspaper 10 Advertising Lindsey Advertising 9 Advertising Houston Apartment Association 9 Advertising African American News 8 Advertising Greater Houston Restaurant 8 Advertising Houston Chronicle 7 Advertising National Yellow Pages Direct 6 Advertising Moore Syndication Inc 5 Advertising CNA Advertising 4 Advertising Houston Sign Company Inc 4 Advertising Freeman 3 Advertising Paramont Printing 3 Advertising Various (41) 31 ------ Total $2,482 ====== Page 43 of 52
ANNUAL REPORT OF CENTERPOINT ENERGY SERVICE COMPANY, LLC For the Year Ended December 31, 2004 MISCELLANEOUS GENERAL EXPENSES--ACCOUNT 930.2 (thousands of dollars) INSTRUCTIONS: Provide a listing of the amount included in Account 930.2, "Miscellaneous General Expenses" classifying such expenses according to their nature. Payments and expenses permitted by Section 321 (b)(2) of the Federal Election Campaign Act, as amended by Public Law 94-283 in 1976 (2 U.S.C. 441 (b)(2)) shall be separately classified. DESCRIPTION AMOUNT ----------- ------ Directors Fees & Expenses $2,361 Shareholder Related Expenses 1,580 Membership Dues 625 Filing Fees 18 ------ Total $4,584 ====== RENTS--ACCOUNT 931 (thousands of dollars) INSTRUCTIONS: Provide a listing of the amount included in Account 931, "Rents", classifying such expenses by major groupings of property, as defined in the account definition of the Uniform System of Accounts. DESCRIPTION AMOUNT ----------- ------- Rent - Office Space $16,088 Rent - Equipment 165 Rent - PCs 96 Rent - Other (455) ------- Total $15,894 ======= Page 44 of 52
ANNUAL REPORT OF CENTERPOINT ENERGY SERVICE COMPANY, LLC For the Year Ended December 31, 2004 TAXES OTHER THAN INCOME TAXES-ACCOUNT 408 (thousands of dollars) INSTRUCTIONS: Provide an analysis of Account 408 "Taxes Other Than Income Taxes". Separate the analysis into two groups: (1) other than U.S. Government taxes, and (2) U.S. Government taxes. Specify each of the various kinds of taxes and show the amounts thereof. Provide a subtotal for each class of tax. Taxes Other Than Income Taxes - Account 408 Kind of Tax Amount ----------- ------ Taxes Other Than U.S Government Taxes: Sales and Use Tax $ 161 Miscellaneous - Severance Taxes (71) Property Taxes 828 State Franchise Taxes 718 ------ Total $1,636 ====== U.S. Government Taxes: Unemployment Taxes $ 407 Social Security Taxes 5,856 ------ Total $6,263 ====== Total $7,899 ====== Page 45 of 52
ANNUAL REPORT OF CENTERPOINT ENERGY SERVICE COMPANY, LLC For the Year Ended December 31, 2004 DONATIONS--ACCOUNT 426.1 (thousands of dollars) INSTRUCTIONS: Provide a listing of the amount included in Account 426.1, "Donations", classifying such expenses by its purpose. The aggregate number and amount of all items of less than $3,000 may be shown in lieu of details. NAME OF RECIPIENT PURPOSE OF DONATION AMOUNT ----------------- ------------------- ------ United Way of the Texas Gulf Coast Contribution - United Way $ 470 International Sports Properties Inc. Contribution - Community 40 Wings Over Houston Contribution - Community 25 Casa de Esperanza Contribution - Community 20 Laredo Hockey Holdings LP Contribution - Community 20 Houston Hispanic Chamber of Commerce Contribution - Community 15 Central Houston, Inc. Contribution - Community 15 Inroads Inc. Contribution - Community 12 Ronald McDonald House Contribution - Community 10 Community Partners Contribution - Community 10 Texas Public Policy Foundation Contribution - Community 10 Texas Association of MBE's Contribution - Community 8 The Empowerment Project - Houston Contribution - Community 6 Texas Association Against Sexual Abuse Contribution - Community 5 State Government Leadership Contribution - Community 5 AWTY International Contribution - Community 5 Executive Service Co. Contribution - Community 5 Senate Hispanic Research Council Contribution - Community 5 Greater Houston Partnership Contribution - Community 5 Citizens To Keep Houston Strong Contribution - Community 5 Inroads/Houston, Inc Contribution - Community 5 Houston Grand Opera Contribution - Community 5 The Barbara Bush Foundation Contribution - Community 5 Center for Legislative Energy Contribution - Community 5 Texas Public Policy Foundation Contribution - Community 5 Envirostudy Int'l Inc. Contribution - Community 5 The Wings Program Contribution - Community 4 FWCP Inc. Contribution - Community 3 Catholic Charities Contribution - Community 3 JINSA Contribution - Community 3 Goodwill Industries of Houston Contribution - Community 3 Texas Association of Appraisal Contribution - Community 1 Kelly School of Business Contribution - Education 15 McCombs School of Business Contribution - Education 12 Communities In Schools Contribution - Education 10 Jesse H Jones School Contribution - Education 5 University of Houston Downtown Contribution - Education 4 Indiana University Foundation Contribution - Education 3 University of Houston - Law Contribution - Education 3 The Cancer League, Inc. Contribution - Health 5 Prevent Blindness Texas Contribution - Health 5 Collaborative for Children Contribution - Youth Development 20 Junior Achievement Contribution - Youth Development 25 Caring for Children Contribution - Youth Development 3 Other 203 ------ $1,056 ====== Page 46 of 52
ANNUAL REPORT OF CENTERPOINT ENERGY SERVICE COMPANY, LLC For the Year Ended December 31, 2004 OTHER DEDUCTIONS--ACCOUNT 426.5 (thousands of dollars) INSTRUCTIONS: Provide a listing of the amount include in Account 426.5, "Other Deductions", classifying such expenses according to their nature. Descriptions Name of Payee Amount - --------------- ------------- ------ State Relations Various $437 Local Relations Various 32 ---- Total $469 ==== Page 47 of 52
ANNUAL REPORT OF XCEL ENERGY SERVICES, INC. For the Year Ended December 31, 2004 SCHEDULE XVIII--NOTES TO STATEMENT OF INCOME INSTRUCTIONS: The space below is provided for important notes regarding the statement of income or any account thereof. Furnish particulars as to any significant increases and services rendered or expenses incurred during the year. Notes related to financial statements shown elsewhere in this report may be indicated here by reference. Also see Notes to Financial Statements on pages 17-22 for additional Notes to Statement of Income. Page 48 of 52
ANNUAL REPORT OF CENTERPOINT ENERGY SERVICE COMPANY, LLC For the Year Ended December 31, 2004 ORGANIZATION CHART (SUMMARY LEVEL) Organization Chart Service Function - --------------------------------------------- ----------------------------------------------------- President & Chief Executive Officer Executive Management Services Aviation Aviation Sr VP-Process Improvement Process Optimization Sr VP & Gas Group President Executive Management Services - Gas Companies VP - Information Technology Information Technology Chief Financial Officer Executive Management Services - Financial Vice President - Audit Audit Services VP - Strategic Planning Strategic Planning, Benchmarking, Financial Planning, Bus Development Investor Relations Investor Relations Chief Risk Officer Risk Control, Commercial Credit, Contract Administration Vice President & Treasurer Treasury Treasury Treasury & Cash Management Investor Services Investor Services Risk Management Risk Management, Insurance Sr VP & Chief Acctg Officer Finance & Accounting Vice President & Controller Financial Acctg & Reporting, Property Acctg, Revenue Acctg Vice President - Tax Local, State, Federal, Property Tax Accounting Systems Financial Accounting Systems & Processes Business Services Business Services Sr VP - Shared Svcs & Human Resources Executive Management Services - Shared Svcs & Human Resources Human Resources Human Resources Compensation & Benefits Compensation & Benefits Payroll Payroll Vice President - Shared Svcs Exec Mgmt Services - Purch, Facility Mgmt, Corp Sec, Office Sup Purchasing & Logistics Purchasing & Logistics Accounts Payable Accounts Payable Facility Management Real Estate & Facility Management Corporate Security Corporate Security Office Support Services Remittance, Disbursements, Graphics, Mail, Record Retention Exec VP - General Counsel & Corp Secretary Executive Mgmt Services - Legal, Regulatory, Gov't Affairs, Comm VP & Deputy General Counsel Legal, Claims VP - Corporate Compliance Corp Ethics & Compliance, Employment Litigation VP - Government Relations State & Local Relations VP - Regulatory Regulatory Policy & Relations VP - Corporate Communications Communications Page 49 of 52
ANNUAL REPORT OF CENTERPOINT ENERGY SERVICE COMPANY, LLC METHODS OF ALLOCATION Operating Expense Ratio - based on operating expense minus fuel and purchased power. This ratio will be determined annually based on annual plan operating expense and will be adjusted for any known and reasonably quantifiable events and will be trued-up at the end of the fiscal year based on actual operating expense. Asset Ratio - based on the total assets minus investments in subsidiaries and goodwill. This ratio will be determined annually based on annual plan assets and will be adjusted for any known and reasonably quantifiable events and will be trued-up at the end of the fiscal year based on twelve month average of actual assets. Cash Flow Ratio - based on operating expense including fuel, purchase power and capital expenditures, less depreciation expense. This ratio will be determined annually based on annual plan cash flow and will be adjusted for any known and reasonably quantifiable events and will be trued-up at the end of the fiscal year based on actual cash flow. Head Count Ratio w/ retirees - based on active and retiree headcount. This ratio will be determined annually based on annual plan head count and will be adjusted for any known and reasonably quantifiable events and will be trued-up at the end of the fiscal year based on actual head count. Head Count Ratio w/o retirees - based on active headcount. This ratio will be determined annually based on annual plan head count and will be adjusted for any known and reasonably quantifiable events and will be trued-up at the end of the fiscal year based on actual head count. Direct Labor Ratio - based on billable hours. This ratio will be determined annually or monthly based billable hours and may be used to allocate, for example, certain support services on the same basis as actual legal services are billed. This ratio will be determined annually based on annual plan billable hours and will be adjusted for any known and reasonably quantifiable events and will be trued-up at the end of the fiscal year based on actual billable hours. Client Unit Usage Ratio - based on the actual unit/usage that is utilized by the applicable Recipients. This factor will be determined annually based on units/usage utilized at the end of the previous fiscal year and may be adjusted for any known and reasonably quantifiable events, or at such time as may be required due to significant changes and will be trued-up at the end of the fiscal year based on actual units/usage utilized. Square Footage Ratio -based on actual square footage used by the applicable Recipients. This factor will be determined annually based on square footage utilized at the end of the previous fiscal year and may be adjusted for any known and reasonably quantifiable events, or at such time as may be required due to significant changes and will be trued-up at the end of the fiscal year based on actual square footage utilized. Composite Ratio - The Service Company utilizes a three-factor allocation formula to allocate corporate governance costs among the business units. That factor utilizes assets (weighted at 40%), gross margin (weighted at 40%) and head count (weighted at 20%). CenterPoint's revenues shall be deemed to include any dividends received from subsidiary companies; CenterPoint's assets shall be deemed to include investments in subsidiary companies and persons who are corporate officers of CenterPoint shall be deemed to be employees of CenterPoint. This ratio will be determined annually based on annual plan gross margin, employees, and assets, and will be adjusted for any known and reasonably quantifiable events and will be trued-up at the end of the fiscal year based on actual gross margin, employees and assets. Page 50 of 52
ANNUAL REPORT OF CENTERPOINT ENERGY SERVICE COMPANY, LLC ANNUAL STATEMENT OF COMPENSATION FOR USE OF CAPITAL BILLED For the Period Ended December 31, 2004 The following annual statement was supplied to each associate company in support of the amount of compensation for use of capital billed during 2004: In accordance with Instruction 01-12 of the Securities and Exchange Commission's Uniform System of Accounts for Mutual Service Companies and Subsidiary Service Companies, CenterPoint Energy Service Company, LLC (CESC) submits the following information on the billing of interest on borrowed funds to associated companies for the year 2004: A. Amount of interest billed to associate companies is contained on page 24, Analysis of Billing. B. The Service Company interest rate is based on the weighted average pre-tax cost of capital. Service Company's assets are assigned to specific services. Interest is billed to the associate companies through a bundled service rate. Page 51 of 52
ANNUAL REPORT OF CENTERPOINT ENERGY SERVICE COMPANY, LLC SIGNATURE CLAUSE Pursuant to the requirements of the Public Utility Holding Company Act of 1935 and the rules and regulations of the Securities and Exchange Commission issued thereunder, the undersigned company has duly caused this report to be signed on its behalf by the undersigned officer thereunto duly authorized. CENTERPOINT ENERGY SERVICE COMPANY, LLC (Name of Reporting Company) By: /s/ Walter L. Fitzgerald ------------------------------------ (Signature of Signing Officer) Walter L. Fitzgerald, Vice President and Controller (Printed Name and Title of Signing Officer) Date: May 13, 2005 Page 52 of 52