CenterPoint Energy, Inc.
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Net income for the first quarter of 2003 was $168 million, or $0.56 per diluted share including a gain of $80 million ($0.27 per diluted share) relating to the implementation of Statement of Financial Accounting Standards No. 143, "Accounting for Asset Retirement Obligations", and a $7 million ($0.02 per diluted share) gain from discontinued operations, primarily as a result of the sale of a cogeneration facility in Argentina.
"I'm pleased to report solid financial results for our first quarter of 2004. These results reflect continued improvements in our core operating units combined with a significant profit contribution from Texas Genco," said David McClanahan, president and chief executive officer of CenterPoint Energy. "Our businesses continue to focus on implementing their strategies and enhancing productivity, while we seek a buyer for our 81 percent interest in Texas Genco and complete the process of determining and recovering stranded investment and other true-up amounts."
FIRST QUARTER 2004 HIGHLIGHTS
The company's results for the first quarter of 2004 compared to the same period of 2003 benefited from:
-- improved operating income from Texas Genco of $107 million
-- continued customer growth, with the addition of almost 87,000 metered
electric and gas customers
-- a decrease in interest expense of $33 million
The company's results for the first quarter of 2004 compared to the same period of 2003 were negatively impacted by:
-- the termination of revenues related to Excess Cost Over Market (ECOM)
as of January 1, 2004 compared to ECOM revenues of $132 million
recorded in the first quarter of 2003
-- milder weather in 2004, impacting the quarter by $16 million
-- a charge of $8 million related to staff reductions in the natural gas
distribution business
In addition, cash flow from operations improved substantially in the first quarter of 2004 compared to the same period of 2003.
In the first quarter of 2004, CenterPoint Energy reduced its borrowing costs and enhanced financial flexibility and liquidity by:
-- redeeming $250 million of higher cost trust preferred securities with
proceeds from securities sold in late 2003
-- refinancing higher cost pollution control bonds totaling
approximately $229 million
-- replacing a $100 million receivables facility with a $250 million
receivables facility at the company's natural gas and pipeline and
gathering subsidiary, CenterPoint Energy Resources Corp. (CERC)
-- replacing a one-year $200 million revolving credit facility at CERC
with a three-year $250 million facility
On March 31, 2004, the company filed its true-up application with the Public Utility Commission of Texas (PUC) for $3.8 billion, excluding interest, marking one of the final steps in the implementation of the Texas electric restructuring law. In this application the company is seeking to recover its stranded investment and other true-up amounts in accordance with the statute that was enacted in 1999.
OPERATING INCOME BY SEGMENT DETAILED Electric Transmission & Distribution
The electric transmission & distribution segment reported operating income of $85 million in the first quarter of 2004, consisting of $75 million for the regulated transmission and distribution utility (TDU) and $10 million for the transition bond company, which is an amount sufficient to pay interest on the transition bonds. Operating income for the same period of 2003 totaled $206 million, consisting of $64 million for the TDU, $10 million for the transition bond company and $132 million of non-cash income associated with ECOM. ECOM is recoverable under the Texas electric restructuring law and is included in the company's recently filed true-up application. ECOM is the difference between the market prices received in 2002 and 2003 by its affiliated power generation company in the PUC mandated auctions and the projections for the same periods made previously by the PUC. Beginning in 2004, there is no ECOM contribution to earnings.
The TDU continues to benefit from solid customer growth. Revenues increased in the first quarter of 2004 compared to the same period of 2003 from the addition of 48,000 metered customers since March 2003. This revenue increase was partially offset by milder weather. Higher transmission payments to transmission providers were more than offset by reductions in other operation and maintenance expenses.
Electric Generation
Texas Genco reported operating income of $90 million for the first quarter of 2004, compared to an operating loss of $17 million for the same period of 2003. Revenues continued to benefit from increased prices for baseload products due primarily to strong wholesale electricity prices. Operation and maintenance expenses for the first quarter of 2004 were lower than the prior year. The first quarter of 2004 had lower expenses associated with planned and unplanned outages compared with the same quarter of 2003.
Natural Gas Distribution
The natural gas distribution segment reported operating income of $117 million for the first quarter of 2004 compared to $129 million for the same period of 2003. Continued customer growth, with the addition of over 38,000 customers since March 2003, and higher revenues of $3 million from rate increases were more than offset by milder weather ($10 million) and reduced contribution from the company's competitive commercial and industrial sales business. The quarter also included an $8 million charge for staff reductions related to process improvements, which will benefit future periods. Excluding this charge, operation and maintenance expenses were down by $7 million.
Pipelines and Gathering
The pipelines and gathering segment reported operating income of $45 million for the first quarter of 2004 compared to $43 million for the same period of 2003. The improvement is primarily due to an increase in throughput and enhanced services related to our gas gathering operations. Operation and maintenance expenses increased primarily due to spending related to pipeline integrity and higher employee-related costs.
Other Operations
The company's other operations reported an operating loss of $2 million for the first quarter of 2004. Operating income for the same period of 2003 was zero.
WEBCAST OF EARNINGS CONFERENCE CALL
CenterPoint Energy's management will host an earnings conference call on Thursday, April 22, 2004, at 10:30 a.m. Central time. Interested parties may listen to a live, audio broadcast of the conference call at www.CenterPointEnergy.com/investors/events . A replay of the call can be accessed approximately two hours after the completion of the call, and will be archived on the web site for at least one year.
The management of Texas Genco, the company's 81 percent-owned subsidiary, will host an earnings conference call on Thursday, April 22, 2004, at 9 a.m. Central time. Interested parties may listen to a live, audio broadcast of the conference call at www.txgenco.com/investor.html . A replay of the call can be accessed approximately two hours after the completion of the call, and will be archived on the Web site for at least one year.
CenterPoint Energy, Inc., headquartered in Houston, Texas, is a domestic energy delivery company that includes electric transmission & distribution, natural gas distribution and sales, interstate pipeline and gathering operations, and more than 14,000 megawatts of power generation in Texas, of which nearly 3,000 megawatts are currently in mothball status. The company serves nearly five million metered customers primarily in Arkansas, Louisiana, Minnesota, Mississippi, Oklahoma, and Texas. Assets total over $21 billion. With more than 11,000 employees, CenterPoint Energy and its predecessor companies have been in business for more than 130 years. For more information, visit the Web site at www.CenterPointEnergy.com .
This news release includes forward-looking statements. Actual events and results may differ materially from those projected. The statements in this news release regarding future financial performance and results of operations and other statements that are not historical facts are forward-looking statements. Factors that could affect actual results include the timing and impact of future regulatory and legislative decisions, effects of competition, weather variations, changes in CenterPoint Energy's or its subsidiaries' business plans, financial market conditions, the timing and extent of changes in commodity prices, particularly natural gas, the impact of unplanned facility outages and other factors discussed in CenterPoint Energy's and its subsidiaries' Form 10-Ks for the period ended December 31, 2003 and other filings with the Securities and Exchange Commission.
CenterPoint Energy, Inc. and Subsidiaries
Statements of Consolidated Income
(Thousands of Dollars)
(Unaudited)
Quarter Ended March 31,
2004 2003
Revenues:
Electric Transmission & Distribution $329,150 $447,403
Electric Generation 439,129 358,587
Natural Gas Distribution 2,131,332 2,044,751
Pipelines and Gathering 102,403 109,108
Other Operations 2,889 8,930
Eliminations (45,716) (68,611)
Total 2,959,187 2,900,168
Expenses:
Fuel and cost of gas sold 1,942,258 1,859,145
Purchased power 8,270 11,994
Operation and maintenance 410,612 412,876
Depreciation and amortization 156,587 152,282
Taxes other than income taxes 106,245 102,844
Total 2,623,972 2,539,141
Operating Income 335,215 361,027
Other Income (Expense):
Loss on Time Warner investment (24,453) (48,474)
Gain on indexed debt securities 27,014 42,703
Interest and other finance charges (194,752) (228,044)
Interest on transition bonds (9,674) (9,848)
Other - net 1,824 3,159
Total (200,041) (240,504)
Income from Continuing Operations Before
Income Taxes, Minority Interest and
Cumulative Effect of Accounting Change 135,174 120,523
Income Tax Expense (49,997) (41,109)
Minority Interest (11,590) 2,066
Income from Continuing Operations Before
Cumulative Effect of Accounting Change 73,587 81,480
Discontinued Operations:
Loss from Other Operations, net of tax --- (462)
Gain on disposal of Other Operations,
net of tax --- 7,342
Total --- 6,880
Cumulative Effect of Accounting
Change, net of minority interest and tax --- 80,072
Net Income Attributable to Common
Shareholders $73,587 $168,432
Reference is made to the Notes to the Consolidated Financial Statements
contained in the Annual Report on Form 10-K of CenterPoint Energy, Inc.
CenterPoint Energy, Inc. and Subsidiaries
Selected Data From Statements of Consolidated Income
(Thousands of Dollars, Except Per Share Amounts)
(Unaudited)
Quarter Ended
March 31,
2004 2003
Basic Earnings Per Common Share:
Income from Continuing Operations before
Cumulative Effect of Accounting Change $0.24 $0.27
Discontinued Operations:
Loss from Other Operations, net of tax --- ---
Gain on Disposal of Other
Operations, net of tax --- 0.02
Cumulative Effect of Accounting Change,
net of minority interest and tax --- 0.27
Net Income Attributable to Common Shareholders $0.24 $0.56
Diluted Earnings Per Common Share:
Income from Continuing Operations before
Cumulative Effect of Accounting Change $0.24 $0.27
Discontinued Operations:
Loss from Other Operations, net of tax --- ---
Gain on Disposal of Other
Operations, net of tax --- 0.02
Cumulative Effect of Accounting
Change, net of minority interest and tax --- 0.27
Net Income Attributable to Common Shareholders $0.24 $0.56
Dividends Declared per Common Share $0.10 $0.10
Weighted Average Common Shares
Outstanding (000):
- Basic 306,012 301,664
- Diluted 308,151 303,278
Operating Income (Loss) by Segment
Electric Transmission & Distribution:
Transmission & Distribution Operations $75,285 $63,894
Transition Bond Company 9,608 9,744
ECOM True-up --- 131,963
Total Electric Transmission
& Distribution 84,893 205,601
Electric Generation 90,592 (17,116)
Natural Gas Distribution 116,611 129,561
Pipelines and Gathering 44,856 42,893
Other Operations (1,737) 88
Total $335,215 $361,027
Reference is made to the Notes to the Consolidated Financial Statements
contained in the Annual Report on Form 10-K of CenterPoint Energy, Inc.
CenterPoint Energy, Inc. and Subsidiaries
Results of Operations by Segment
(Millions of Dollars)
(Unaudited)
Electric Transmission & Distribution
Quarter Ended
March 31, % Diff
2004 2003 Fav/(Unfav)
Results of Operations:
Revenues:
Electric revenues $314 $303 4%
ECOM revenues --- 132 ---
Transition bond revenues 15 13 15%
Total Revenues 329 448 (27%)
Expenses:
Operation and maintenance 132 133 1%
Depreciation and amortization 60 62 3%
Taxes other than income taxes 47 44 (7%)
Transition bond expenses 5 3 (67%)
Total 244 242 (1%)
Operating Income $85 $206 (59%)
Electric Transmission & Distribution Quarter Ended
Operating Data: March 31,
Actual MWH Delivered 2004 2003
Residential 4,401,825 4,558,195 (3%)
Total 15,520,086 14,787,976 5%
Weather (average for service area):
Percentage of normal:
Heating degree days 85% 112% (27%)
Average number of metered customers:
Residential 1,621,945 1,577,114 3%
Commercial and Industrial 220,731 221,109 ---
Total 1,842,676 1,798,223 2%
Electric Generation
Quarter Ended % Diff
March 31,
2004 2003 Fav/(Unfav)
Results of Operations:
Revenues 439 359 22%
Expenses:
Fuel 187 208 10%
Purchased power 8 12 33%
Operation and maintenance 102 106 4%
Depreciation and amortization 40 39 (3%)
Taxes other than income taxes 12 11 (9%)
Total 349 376 7%
Operating Income (Loss) $90 $(17) 629%
Electric Generation Operating Data:
Sales (MWH) 10,720,778 9,276,344 16%
Generation (MWH) 10,149,190 8,994,753 13%
Reference is made to the Notes to the Consolidated Financial Statements
contained in the Annual Report on Form 10-K of CenterPoint Energy, Inc.
CenterPoint Energy, Inc. and Subsidiaries
Results of Operations by Segment
(Millions of Dollars)
(Unaudited)
Natural Gas Distribution
Quarter Ended
March 31, % Diff
2004 2003 Fav/(Unfav)
Results of Operations:
Revenues $2,131 $2,045 4%
Expenses:
Natural gas 1,790 1,694 (6%)
Operation and maintenance 149 148 (1%)
Depreciation and amortization 35 33 (6%)
Taxes other than income taxes 40 41 2%
Total 2,014 1,916 (5%)
Operating Income $117 $129 (9%)
Natural Gas Distribution Operating Data:
Throughput data in BCF
Residential 85 94 (10%)
Commercial and Industrial 83 89 (7%)
Non-rate regulated Commercial
and Industrial 139 129 8%
Elimination (10) (15) 33%
Total Throughput 297 297 ---
Weather (average for service area)
Percentage of normal:
Heating degree days 96% 106% (10%)
Average number of customers:
Residential 2,808,058 2,770,060 1%
Commercial and Industrial 250,064 247,767 1%
Non-rate regulated Commercial and
Industrial 6,190 5,219 19%
Total 3,064,312 3,023,046 1%
Pipelines and Gathering
Quarter Ended % Diff
March 31,
2004 2003 Fav/(Unfav)
Results of Operations:
Revenues $102 $109 (6%)
Expenses:
Natural gas 9 21 57%
Operation and maintenance 33 30 (10%)
Depreciation and amortization 11 11 ---
Taxes other than income taxes 4 4 ---
Total 57 66 14%
Operating Income $45 $43 5%
Pipelines and Gathering Operating Data:
Throughput data in BCF
Natural Gas Sales 2 4 (50%)
Transportation 270 268 1%
Gathering 75 72 4%
Elimination (2) (2) ---
Total Throughput 345 342 1%
Reference is made to the Notes to the Consolidated Financial Statements
contained in the Annual Report on Form 10-K of CenterPoint Energy, Inc.
CenterPoint Energy, Inc. and Subsidiaries
Results of Operations by Segment
(Millions of Dollars)
(Unaudited)
Other Operations
Quarter Ended % Diff
March 31,
2004 2003 Fav/(Unfav)
Results of Operations:
Revenues $3 $9 (67%)
Expenses 5 9 44%
Operating Income (Loss) $(2) $--- ---
Capital Expenditures by Segment
(Millions of Dollars)
(Unaudited)
Quarter Ended
March 31,
2004 2003
Capital Expenditures by Segment
Electric Transmission & Distribution: $42 $47
Electric Generation 24 45
Natural Gas Distribution 37 30
Pipelines and Gathering 15 21
Other Operations 5 ---
Total $123 $143
CenterPoint Energy, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(Thousands of Dollars)
(Unaudited)
March 31, 2004 December 31, 2003
ASSETS
Current Assets:
Cash and cash equivalents $206,467 $131,480
Other current assets 1,743,865 2,141,225
Total current assets 1,950,332 2,272,705
Property, Plant and Equipment, net 11,790,051 11,811,536
Other Assets:
Goodwill, net 1,740,510 1,740,510
Regulatory assets 4,945,277 4,930,793
Other non-current assets 633,374 621,120
Total other assets 7,319,161 7,292,423
Total Assets $21,059,544 $21,376,664
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Current portion of transition bond
long-term debt $43,099 $41,189
Short-term borrowings and current
portion of other long-term debt 122,108 184,234
Other current liabilities 2,039,405 2,292,913
Total current liabilities 2,204,612 2,518,336
Other Liabilities:
Accumulated deferred income taxes,
net and investment tax credit 3,250,063 3,222,308
Regulatory liabilities 1,331,355 1,358,030
Other non-current liabilities 1,550,930 1,555,459
Total other liabilities 6,132,348 6,135,797
Long-term Debt:
Transition bond 659,762 675,665
Other 10,046,251 10,107,399
Total long-term debt 10,706,013 10,783,064
Minority Interest in Consolidated
Subsidiaries 186,691 178,910
Shareholders' Equity 1,829,880 1,760,557
Total Liabilities and
Shareholders' Equity $21,059,544 $21,376,664
Reference is made to the Notes to the Consolidated Financial Statements
contained in the Annual Report on Form 10-K of CenterPoint Energy, Inc.
CenterPoint Energy, Inc. and Subsidiaries
Condensed Statements of Consolidated Cash Flows
(Thousands of Dollars)
(Unaudited)
Three Months Ended March 31,
2004 2003
Cash Flows from Operating Activities:
Net income attributable to common
shareholders $73,587 $168,432
Discontinued operations, net of tax --- (6,880)
Income from continuing operations
and cumulative effect
of accounting change 73,587 161,552
Adjustments to reconcile income
from continuing operations to net
cash provided by operating activities:
Depreciation and amortization 186,349 197,656
Deferred income taxes and
investment tax credit 12,300 97,603
Cumulative effect of accounting
change, net --- (80,072)
Changes in net regulatory assets
and liabilities (54,965) (198,022)
Changes in other assets and liabilities 154,413 (172,723)
Other, net 21,136 (296)
Net Cash Provided by Operating Activities 392,820 5,698
Net Cash Used in Investing Activities (127,598) (146,297)
Net Cash Provided by (Used in)
Financing Activities (190,235) 121,465
Net Cash Provided by Discontinued Operations --- 19,322
Net Increase in Cash and Cash
Equivalents 74,987 188
Cash and Cash Equivalents at
Beginning of Period 131,480 304,281
Cash and Cash Equivalents at End of Period $206,467 $304,469
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