CenterPoint Energy, Inc.
(Logo: http://www.newscom.com/cgi-bin/prnh/20020930/CNPLOGO )
The company's net income for the third quarter of 2003 was $182 million, or $0.59 per diluted share, compared to a loss of $4.1 billion, or $13.77 per diluted share, for the same period of 2002. During the third quarter of 2002, the company recorded a loss from discontinued operations of $4.3 billion primarily related to the distribution of Reliant Resources, Inc. (RRI) to CenterPoint Energy shareholders on September 30, 2002. RRI's historical results are also reported as discontinued operations.
"I'm pleased to report improved operating results which reflect the continued strong performance of our core operating units and the significant contributions from Texas Genco and the ECOM true-up formula," said David McClanahan, president and chief executive officer of CenterPoint Energy. "I'm also pleased with the progress we continue to make operationally and in executing our strategy.
"We have also further enhanced our financial flexibility and liquidity," said McClanahan. "We continued to access the capital markets during the third quarter, and so far this year we have raised over $3.5 billion. We used these proceeds to repay maturing debt, refinance higher coupon debt, pay down the company's bank facilities and enhance our liquidity."
For the nine months ended September 30, 2003, income from continuing operations before cumulative effect of accounting change was $347 million, or $1.14 per diluted share, compared to $393 million, or $1.32 per diluted share for the same period of 2002.
Net income for the nine months ended September 30, 2003 was $413 million, or $1.35 per diluted share compared to a loss of $3.9 billion, or $12.92 per diluted share for the first nine months of 2002. During the first nine months of 2003, the company recorded a gain of $80 million relating to the implementation of SFAS No. 143, "Accounting for Asset Retirement Obligations" and a $14 million loss from discontinued operations primarily related to the company's planned sale of its energy management services business. The first nine months of 2002 included a loss from discontinued operations of $4.3 billion primarily related the distribution of RRI stock to shareholders.
2003 OUTLOOK
Based on the year-to-date results of the company's core operating units, the significant contributions from Texas Genco and the ECOM true-up formula, and expectations of solid performance for the balance of the year, CenterPoint Energy raised its 2003 guidance for earnings from continuing operations to $1.30-$1.40 per diluted share from its prior guidance of $0.85-$1.00 per diluted share.
THIRD QUARTER HIGHLIGHTS
The company's operating performance and cash flow for the third quarter of 2003 compared to the same period of 2002 were affected by:
-- improved operating income of $118 million from our 81 percent-owned
subsidiary, Texas Genco Holdings, Inc.
The electric transmission & distribution segment reported operating income of $383 million in the third quarter of 2003 consisting of $161 million for the regulated electric transmission & distribution utility and non-cash operating income of $222 million associated with generation-related regulatory assets, or Excess Cost Over Market (ECOM), as described below. For the third quarter of 2002, operating income was $399 million, consisting of $159 million from the regulated electric transmission & distribution utility and non-cash operating income of $240 million associated with ECOM.
The regulated electric transmission & distribution utility continues to benefit from solid customer growth. Revenues increased from the addition of over 50,000 metered customers since September 2002. Operating expenses increased from the comparable period of 2002 as higher pension and employee benefit expenses were partially offset by the absence of certain non-recurring expenses related to the transition to the deregulated market in 2002.
Under the Texas electric restructuring law, a regulated utility may recover, in its 2004 stranded cost true-up proceeding, the difference between market prices received by its affiliated power generation company in the Texas Public Utility Commission (PUC) mandated auctions and the prices used in the ECOM model established by the PUC. During 2002 and 2003, this difference, referred to as ECOM, produces non-cash income and is recorded as a regulatory asset. Beginning in 2004, this ECOM calculation no longer applies. The reduction in ECOM of $18 million from 2002 to 2003 resulted primarily from an increase in capacity auction prices at Texas Genco.
Operating income for the nine months ended September 30, 2003 was $823 million, consisting of $368 million from the regulated electric transmission & distribution utility and non-cash operating income of $455 million from ECOM. This compares to $927 million for the same period of 2002 consisting of $376 million from the regulated electric transmission & distribution utility and non-cash operating income of $551 million from ECOM.
Electric Generation
Texas Genco owns over 14,000 MW of electric generation in Texas and sells capacity, energy, and ancillary services in the Texas electric market, primarily through capacity auctions. It reported operating income of $125 million for the third quarter of 2003 compared to operating income of $7 million for the same period of 2002.
Wholesale electricity prices were much higher in 2003 due to substantially higher natural gas prices which led to increased capacity auction revenues for Texas Genco's baseload products. Energy revenues also increased, which more than offset an increase in fuel costs. Operation and maintenance expenses increased by $2 million due to higher pension and employee benefit expenses and costs associated with unplanned outages at Unit 1 of the South Texas Project nuclear facility and at Unit 8 of the W. A. Parish coal plant, which were partially offset by a reduction in technical support costs. Both units were returned to full service during the quarter. Texas Genco estimated that the added cost of replacement energy associated with the unplanned outages negatively impacted gross margin by approximately $35 million for the quarter. Texas Genco also indicated that some level of unplanned outages can be expected in the business.
Operating income for the nine months ended September 30, 2003 was $158 million, compared to an operating loss of $74 million for the same period of 2002.
Natural Gas Distribution
The natural gas distribution segment reported an operating loss of $5 million for the third quarter of 2003 compared to the prior year's third quarter operating loss of $4 million. Due to seasonal impacts, operating results for the third quarter are typically the weakest of the year.
Continued customer growth and higher revenues from rate increases implemented in 2002 did not completely offset higher expenses primarily related to increased pension and employee benefit expenses, depreciation and other taxes. In addition, the costs associated with a receivables facility, which was modified in November 2002, reduced operating income by $2 million, whereas prior to the amendment, these costs were included in interest expense.
Operating income for the nine months ended September 30, 2003 was $146 million, compared to $114 million for the same period of 2002.
Pipelines and Gathering
The pipelines and gathering segment reported operating income of $39 million in the third quarter of 2003 compared to $43 million for the same period of 2002. The decline was primarily related to higher pension, employee benefit and other miscellaneous expenses.
Operating income for the nine months ended September 30, 2003 was $124 million, compared to $119 million for the same period of 2002.
Other Operations
The company's other operations reported operating income for the third quarter of 2003 of $7 million compared to an operating loss of $14 million for the same period of 2002. Operating income for the nine months ended September 30, 2003 was $5 million, compared to an operating loss of $13 million for the same period of 2002.
WEBCAST OF EARNINGS CONFERENCE CALL
CenterPoint Energy's management will host an earnings conference call on Tuesday Oct. 21, 2003, 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 Tuesday Oct. 21, 2003, 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. The company serves nearly five million metered customers primarily in Arkansas, Louisiana, Minnesota, Mississippi, Missouri, Oklahoma, and Texas. Assets total approximately $20 billion. CenterPoint Energy became the new holding company for the regulated operations of the former Reliant Energy, Incorporated in August 2002. With more than 11,000 employees, CenterPoint
Energy and its predecessor companies have been in business for more than 130 years.
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-Qs for the quarterly period ended June 30, 2003 and other filings with the Securities and Exchange Commission.
CenterPoint Energy, Inc. and Subsidiaries
Statements of Consolidated Operations
(Thousands of Dollars)
(Unaudited)
Quarter Ended Nine Months Ended
September 30, September 30,
----------------------- -----------------------
2003 2002 2003 2002
---------- --------- ---------- -----------
Revenues:
Electric Transmission &
Distribution $653,438 $660,342 $1,582,613 $1,756,744
Electric Generation 657,363 526,388 1,594,461 1,265,683
Natural Gas Distribution 897,392 680,917 3,912,719 2,657,512
Pipelines and Gathering 89,083 87,448 319,907 281,799
Other Operations 7,615 6,740 25,867 20,686
Eliminations (54,673) (45,048) (194,281) (189,824)
Total 2,250,218 1,916,787 7,241,286 5,792,600
Expenses:
Fuel and cost of gas
sold 1,033,601 810,679 3,973,604 2,715,299
Purchased power 20,259 34,592 55,227 87,216
Operation and
maintenance 392,172 385,484 1,198,133 1,145,951
Depreciation and
amortization 160,250 160,136 469,794 459,616
Taxes other than
income taxes 95,212 94,565 288,747 311,850
Total 1,701,494 1,485,456 5,985,505 4,719,932
Operating Income 548,724 431,331 1,255,781 1,072,668
Other Income (Expense):
Gain (loss) on AOL Time
Warner investment (21,207) (82,189) 43,497 (530,000)
Gain (loss) on indexed
debt securities 17,040 86,622 (38,510) 508,578
Interest (236,957) (170,270) (676,038) (427,870)
Distribution on trust
preferred securities --- (13,898) (27,797) (41,647)
Other - net 1,919 3,134 6,707 17,922
Total (239,205) (176,601) (692,141) (473,017)
Income from Continuing
Operations Before Income
Taxes, Minority Interest
and Cumulative Effect of
Accounting Change 309,519 254,730 563,640 599,651
Income Tax Expense (110,799) (92,835) (196,254) (206,748)
Minority Interest (15,686) (8) (19,915) (4)
Income from Continuing
Operations Before
Cumulative Effect of
Accounting Change 183,034 161,887 347,471 392,899
Discontinued Operations:
Income from Reliant
Resources, net of tax --- 47,708 --- 82,157
Income (loss) from Other
Operations, net of tax (1,212) (436) (2,077) 1,352
Loss on disposal of
Reliant Resources --- (4,333,652) --- (4,333,652)
Loss on disposal of Other
Operations, net of tax (97) --- (12,086) ---
Total (1,309) (4,286,380) (14,163) (4,250,143)
Cumulative Effect of
Accounting Change, net
of minority interest and
tax --- --- 80,072 ---
Net Income (Loss)
Attributable to Common
Shareholders $181,725 $(4,124,493) $413,380 $(3,857,244)
Reference is made to the Notes to the Consolidated Financial Statements contained in the Current Report on Form 8-K of CenterPoint Energy, Inc. dated
May 12, 2003.
CenterPoint Energy, Inc. and Subsidiaries
Selected Data From Statements of Consolidated Operations
(Thousands of Dollars, Except Per Share Amounts)
(Unaudited)
Quarter Ended Nine Months Ended
September 30, September 30,
------------------- ----------------------
2003 2002 2003 2002
--------- ------- --------- ---------
Basic Earnings Per Common
Share:
Income from Continuing
Operations before
Cumulative Effect
of Accounting Change $0.60 $0.54 $1.15 $1.32
Discontinued Operations:
Income from Reliant
Resources, net of tax --- 0.16 --- 0.28
Income (Loss) from
Other Operations,
net of tax --- --- (0.01) ---
Loss on Disposal of
Reliant Resources --- (14.50) --- (14.56)
Loss on Disposal of
Other Operations, net
of tax --- --- (0.04) ---
Cumulative Effect of
Accounting Change, net
of minority interest
and tax --- --- 0.26 ---
Net Income (Loss)
Attributable to Common
Shareholders $0.60 $(13.80) $1.36 $(12.96)
Diluted Earnings Per
Common Share:
Income from Continuing
Operations before
Cumulative Effect
of Accounting Change $0.60 $0.54 $1.14 $1.32
Discontinued Operations:
Income from Reliant
Resources, net of tax --- 0.16 --- 0.27
Income (Loss) from
Other Operations, net
of tax (0.01) --- (0.01) ---
Loss on Disposal of
Reliant Resources --- (14.47) --- (14.51)
Loss on Disposal of
Other Operations, net
of tax --- --- (0.04) ---
Cumulative Effect of
Accounting Change, net
of minority interest
and tax --- --- 0.26 ---
Net Income (Loss)
Attributable to Common
Shareholders $0.59 $(13.77) $1.35 $(12.92)
Dividends Declared per
Common Share $--- (1) $0.16 $0.30 (1) $0.91
Weighted Average Common
Shares Outstanding (000):
- Basic 305,007 298,794 303,261 297,580
- Diluted 307,345 299,629 305,415 298,608
Operating Income (Loss)
by Segment
Electric Transmission
& Distribution:
Transmission &
Distribution
Operations $161,199 $158,723 $368,153 $376,321
ECOM True-up 221,502 240,325 454,783 551,110
Total Electric
Transmission &
Distribution 382,701 399,048 822,936 927,431
Electric Generation 124,546 6,712 157,474 (74,166)
Natural Gas Distribution (4,705) (3,644) 145,807 114,051
Pipelines and Gathering 39,022 42,826 124,271 118,752
Other Operations 7,160 (13,611) 5,293 (13,400)
Total $548,724 $431,331 $1,255,781 $1,072,668
(1) The third quarter dividend of $0.10 per share was declared on
June 18, 2003 and was paid on September 10, 2003.
Reference is made to the Notes to the Consolidated Financial Statements contained in the Current Report on Form 8-K of CenterPoint Energy, Inc. dated
May 12, 2003.
CenterPoint Energy, Inc. and Subsidiaries
Results of Operations by Segment
(Millions of Dollars)
(Unaudited)
Electric Transmission & Distribution
----------------------------------------
Quarter Ended September 30, % Diff
---------------------------
2003 2002 Fav/(Unfav)
--------------------------- -----------
Results of Operations:
Operating Revenues:
Electric revenues $432 $420 3%
ECOM true-up 222 240 (8%)
Total Revenues 654 660 (1%)
Operating Expenses:
Fuel and purchased power --- --- ---
Operation and maintenance 139 130 (7%)
Depreciation and amortization 70 75 7%
Taxes other than income 62 56 (11%)
Total 271 261 (4%)
Operating Income $383 $399 (4%)
Electric Transmission &
Distribution Operating Data: Quarter Ended September 30,
----------------------------
Actual MWH Delivered 2003 2002
----------- -------------
Residential 8,134,198 7,966,132 2%
Weather (average for service area):
Percentage of normal:
Cooling degree days 96% 98% (2%)
Heating degree days n/a n/a n/a
Average number of metered
customers:
Residential 1,600,998 1,549,909 3%
Commercial and Industrial 220,420 216,680 2%
Total 1,821,418 1,766,589 3%
Electric Generation
----------------------------------------
Quarter Ended September 30, % Diff
--------------------------- -----------
2003 2002 Fav/(Unfav)
--------------------------- -----------
Results of Operations:
Operating Revenues:
Energy revenues $404 $346 17%
Capacity and other revenues 253 180 41%
Total 657 526 25%
Operating Expenses:
Fuel and purchased power 386 372 (4%)
Operation and maintenance 100 98 (2%)
Depreciation and amortization 41 39 (5%)
Taxes other than income 5 10 50%
Total 532 519 (3%)
Operating Income (Loss) $125 $7 ---
Physical Electric Generation
Power Sales (MWH) 14,533,513 15,475,590 (6%)
Electric Transmission & Distribution
--------------------------------------------
Nine Months Ended September 30, % Diff
-------------------------------
2003 2002 Fav/(Unfav)
------------------------------- -----------
Results of Operations:
Operating Revenues:
Electric revenues $1,128 $1,206 (6%)
ECOM true-up 455 551 (17%)
Total Revenues 1,583 1,757 (10%)
Operating Expenses:
Fuel and purchased power --- 56 100%
Operation and maintenance 398 401 1%
Depreciation and amortization 203 204 ---
Taxes other than income 159 169 6%
Total 760 830 8%
Operating Income $823 $927 (11%)
Electric Transmission &
Distribution Operating Data: Nine Months Ended September 30,
-------------------------------
Actual MWH Delivered 2003 2002
-------------- --------------
Residential 19,182,750 18,735,392 2%
Weather (average for service
area):
Percentage of normal:
Cooling degree days 102% 102% ---
Heating degree days 111% 99% 12%
Average number of metered
customers:
Residential 1,587,976 1,540,302 3%
Commercial and Industrial 221,049 213,245 4%
Total 1,809,025 1,753,547 3%
Electric Generation
-------------------------------------------
Nine Months Ended September 30, % Diff
-------------------------------------------
2003 2002 Fav/(Unfav)
------------------------------ -----------
Results of Operations:
Operating Revenues:
Energy revenues $1,006 $894 13%
Capacity and other revenues 588 372 58%
Total 1,594 1,266 26%
Operating Expenses:
Fuel and purchased power 978 901 (9%)
Operation and maintenance 311 272 (14%)
Depreciation and amortization 119 118 (1%)
Taxes other than income 28 49 43%
Total 1,436 1,340 (7%)
Operating Income (Loss) $158 $(74) 314%
Physical Electric Generation
Power Sales (MWH) 36,327,349 41,922,693 (13%)
Reference is made to the Notes to the Consolidated Financial Statements contained in the Current Report on Form 8-K of CenterPoint Energy, Inc. dated
May 12, 2003.
CenterPoint Energy, Inc. and Subsidiaries
Results of Operations by Segment
(Millions of Dollars)
(Unaudited)
Natural Gas Distribution
----------------------------------------
Quarter Ended September 30, % Diff
---------------------------
2003 2002 Fav/(Unfav)
--------------------------- -----------
Results of Operations:
Operating Revenues $897 $681 32%
Operating Expenses:
Natural gas 713 509 (40%)
Operation and maintenance 133 125 (6%)
Depreciation and amortization 34 32 (6%)
Taxes other than income 22 19 (16%)
Total 902 685 (32%)
Operating Income (Loss) $(5) $(4) (25%)
Natural Gas Distribution Operating
Data:
Throughput data in BCF
Residential and Commercial 32 35 (9%)
Industrial 12 9 33%
Transportation 10 14 (29%)
Non-rate regulated commercial and
industrial 120 130 (8%)
Total Throughput 174 188 (7%)
Weather (average for service area)
Percentage of normal:
Heating degree days 101% 68% 33%
Average number of customers:
Residential 2,732,165 2,695,432 1%
Commercial and Industrial 247,770 244,631 1%
Total 2,979,935 2,940,063 1%
Pipelines and Gathering
----------------------------------------
Quarter Ended September 30, % Diff
---------------------------
2003 2002 Fav/(Unfav)
----------- ---------- -----------
Results of Operations:
Operating Revenues $89 $88 1%
Operating Expenses:
Natural gas 5 3 (67%)
Operation and maintenance 31 27 (15%)
Depreciation and amortization 10 11 9%
Taxes other than income 4 4 ---
Total 50 45 (11%)
Operating Income $39 $43 (9%)
Pipelines and Gathering Operating
Data:
Throughput data in BCF
Natural Gas Sales 1 1 ---
Transportation 159 192 (17%)
Gathering 73 72 1%
Elimination --- (1) 100%
Total Throughput 233 264 (12%)
Natural Gas Distribution
-------------------------------------------
Nine Months Ended September 30, % Diff
-------------------------------
2003 2002 Fav/(Unfav)
------------------------------- -----------
Results of Operations:
Operating Revenues $3,913 $2,658 47%
Operating Expenses:
Natural gas 3,168 1,997 (59%)
Operation and maintenance 417 381 (9%)
Depreciation and amortization 101 94 (7%)
Taxes other than income 81 72 (13%)
Total 3,767 2,544 (48%)
Operating Income (Loss) $146 $114 28%
Natural Gas Distribution Operating
Data:
Throughput data in BCF
Residential and Commercial 224 216 4%
Industrial 36 33 9%
Transportation 36 42 (14%)
Non-rate regulated commercial and
industrial 365 346 5%
Total Throughput 661 637 4%
Weather (average for service area)
Percentage of normal:
Heating degree days 104% 99% 5%
Average number of customers:
Residential 2,749,571 2,713,793 1%
Commercial and Industrial 250,170 249,013 ---
Total 2,999,741 2,962,806 1%
Pipelines and Gathering
-------------------------------------------
Nine Months Ended September 30, % Diff
------------------------------- -----------
2003 2002 Fav/(Unfav)
------------- ------------- -----------
Results of Operations:
Operating Revenues $320 $282 13%
Operating Expenses:
Natural gas 62 20 (210%)
Operation and maintenance 90 99 9%
Depreciation and amortization 31 31 ---
Taxes other than income 13 13 ---
Total 196 163 (20%)
Operating Income $124 $119 4%
Pipelines and Gathering Operating
Data:
Throughput data in BCF
Natural Gas Sales 9 12 (25%)
Transportation 630 633 ---
Gathering 219 213 3%
Elimination (4) (2) (100%)
Total Throughput 854 856 ---
Reference is made to the Notes to the Consolidated Financial Statements contained in the Current Report on Form 8-K of CenterPoint Energy, Inc. dated
May 12, 2003.
CenterPoint Energy, Inc. and Subsidiaries
Results of Operations by Segment
(Millions of Dollars)
(Unaudited)
Other Operations
---------------------------------------------
Quarter Ended September 30, % Diff
-----------------------------
2003 2002 Fav/(Unfav)
------------ ------------ -------------
Results of Operations:
Operating Revenues $8 $7 14%
Operating Expenses 1 21 95%
Operating Income (Loss) $7 $(14) 150%
Other Operations
---------------------------------------------
Nine Months Ended September 30, % Diff
-------------------------------
2003 2002 Fav/(Unfav)
------------ -------------- ------------
Results of Operations:
Operating Revenues $26 $21 24%
Operating Expenses 21 34 38%
Operating Income (Loss) $5 $(13) 138%
AP Archive: http://photoarchive.ap.org/
PRN Photo Desk,
SOURCE: CenterPoint Energy, Inc.
CONTACT: media, Leticia Lowe, +1-713-207-7702, or investors, Marianne
Paulsen, +1-713-207-6500, both of CenterPoint Energy, Inc.