CenterPoint Energy, Inc.
(Logo: http://www.newscom.com/cgi-bin/prnh/20020930/CNPLOGO )
"The mild weather that we experienced in the first quarter, along with higher natural gas prices, had a negative impact on our electric and natural gas distribution businesses. However, I am pleased that the contributions of our other businesses, primarily driven by the solid performance of our pipelines and field services and competitive natural gas segments, and a significant reduction in interest expense, enabled us to report improved first quarter financial results," said David M. McClanahan, president and chief executive officer of CenterPoint Energy.
OPERATING INCOME BY SEGMENT DETAILED Electric Transmission & Distribution
The electric transmission & distribution segment generated operating income of $110 million in the first quarter of 2006, consisting of $78 million for the regulated electric transmission & distribution utility (TDU) and $32 million for the transition bond companies, which is an amount sufficient to pay interest on the transition bonds. Operating income for the first quarter of 2005 totaled $80 million, consisting of $71 million for the TDU and $9 million for the transition bond company.
Revenues increased in the first quarter of 2006 primarily as a result of the competition transition charge (CTC) implemented in September 2005. Revenue increases from the addition of nearly 67,000 metered customers since March 2005, were more than offset by milder weather and decreased usage. Excluding the impact of the transition bond company, operating expenses remained essentially unchanged. Increases in transmission costs, franchise fees and costs associated with staff reductions were offset by gains realized from the sale of land.
Natural Gas Distribution
The natural gas distribution segment reported operating income of $103 million for the first quarter of 2006, compared to $123 million for the same period of 2005. Revenue increases from the implementation of rate increases along with the addition of nearly 42,000 customers since March 2005 were more than offset by the effects of record warm weather in most of our service territories and decreased usage resulting from higher natural gas prices. Operating expenses increased largely due to higher bad debt expense, also associated with higher natural gas prices, and costs associated with staff reductions.
Competitive Natural Gas Sales and Services
The competitive natural gas sales and services segment reported operating income of $25 million for the first quarter of 2006, compared to $16 million for the same period of 2005. The increase was primarily attributable to higher natural gas sales to utilities and favorable basis differentials across the pipeline capacity that the company controls, partially offset by a write- down of inventory to the lower of cost or market.
Pipelines and Field Services
The pipelines and field services segment reported operating income of $73 million for the first quarter of 2006 compared to $64 million for the same period of 2005. This segment's businesses continue to benefit from favorable dynamics in the markets for natural gas gathering and transportation services along the Gulf Coast and Mid-Continent regions where they operate. Within this segment, the pipeline business achieved higher operating income ($49 million vs. $48 million) resulting from increased demand for transportation resulting from basis differentials across the system and higher demand for ancillary services. The field services business achieved higher operating income ($24 million vs. $16 million) driven by increased throughput, greater demand for ancillary services and higher commodity prices. In addition, this business recorded equity income of $2 million in the first quarter of 2006 ($1 million for the same period in 2005) from its 50 percent interest in a jointly-owned gas processing plant. These amounts are included in Other -- net under the Other Income (Expense) caption.
Other Operations
The company's other operations reported an operating loss of $5 million for the first quarter of 2006 compared to a loss of $7 million for the same period of 2005.
OTHER FIRST QUARTER 2006 EVENTS
In March, the company closed on three improved bank credit facilities, totaling $2.05 billion, which increased capacity, reduced interest costs, extended maturities and improved terms. The company:
* replaced the $1 billion parent company revolving credit facility with a
$1.2 billion five-year revolving credit facility with a first drawn
interest rate of LIBOR plus 60 basis points;
* replaced the $400 million revolving credit facility at CenterPoint
Energy Resources, Corp., the company's natural gas distribution,
competitive natural gas sales and services and pipelines and field
services subsidiary, with a $550 million, five-year revolving credit
facility with a first drawn interest rate of LIBOR plus 45 basis
points; and
* replaced the $200 million revolving credit facility at CenterPoint
Energy Houston Electric, LLC, the company's electric transmission and
distribution subsidiary, with a $300 million, five-year revolving
credit facility with a first drawn interest rate of LIBOR plus 45 basis
points.
DIVIDEND DECLARATION
On April 28, 2006, CenterPoint Energy's board of directors declared a regular quarterly cash dividend of $0.15 per share of common stock payable on June 9, 2006, to shareholders of record as of the close of business on May 16, 2006.
OUTLOOK FOR 2006
CenterPoint Energy continues to expect diluted earnings per share for 2006 to be in the range of $0.90 to $1.00. This guidance excludes any impacts related to the company's Zero-Premium Exchangeable Subordinated Notes (ZENS) and associated federal income tax consequences due to the uncertainties associated with the resolution of the ongoing dispute with the Internal Revenue Service. This guidance takes into consideration various economic and operational assumptions related to the business segments in which it operates. In particular, the company has made certain assumptions regarding the impact to earnings of various regulatory proceedings but cannot predict the ultimate outcome of any of those proceedings. In providing this guidance, the company has not projected the impact of any potential changes in accounting standards, any impact from acquisitions or divestitures, or the outcomes of pending legal proceedings related to the TDU's true up appeal and the remand of its 2001 unbundled cost of service order.
WEBCAST OF EARNINGS CONFERENCE CALL
CenterPoint Energy's management will host an earnings conference call on Thursday, May 4, 2006, at 10:30 a.m. Central time or 11:30 a.m. Eastern time. Interested parties may listen to a live, audio broadcast of the conference call at http://www.centerpointenergy.com/investors/events . A replay of the call can be accessed approximately two hours after the completion of the call, and will be archived on the Web site for at least one year.
CenterPoint Energy, Inc., headquartered in Houston, Texas, is a domestic energy delivery company that includes electric transmission & distribution, natural gas distribution, competitive natural gas sales and services, and pipeline and field services operations. The company serves more than five million metered customers primarily in Arkansas, Louisiana, Minnesota, Mississippi, Oklahoma, and Texas. Assets total approximately $16 billion. With about 9,000 employees, CenterPoint Energy and its predecessor companies have been in business for more than 130 years. For more information, visit the Web site at http://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 outcome of appeals from the true-up proceedings, the timing and impact of future regulatory, legislative and IRS 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, 2005, and other filings with the Securities and Exchange Commission.
CenterPoint Energy, Inc. and Subsidiaries
Statements of Consolidated Income
(Millions of Dollars)
(Unaudited)
Quarter Ended March 31,
-------------------------
2005 2006
------- -------
Revenues:
Electric Transmission & Distribution $345 $385
Natural Gas Distribution 1,329 1,480
Competitive Natural Gas Sales and
Services 925 1,163
Pipelines and Field Services 121 125
Other Operations 7 4
Eliminations (132) (80)
Total 2,595 3,077
Expenses:
Natural gas 1,781 2,193
Operation and maintenance 313 331
Depreciation and amortization 130 140
Taxes other than income taxes 95 107
Total 2,319 2,771
Operating Income 276 306
Other Income (Expense):
Loss on Time Warner investment (41) (14)
Gain on indexed debt securities 39 10
Interest and other finance charges (173) (115)
Interest on transition bonds (9) (33)
Return on true-up balance 34 ---
Other - net 4 6
Total (146) (146)
Income from Continuing Operations
Before Income Taxes 130 160
Income Tax Expense (63) (72)
Income from Continuing Operations 67 88
Discontinued Operations:
Income from Texas Genco, net of tax 14 ---
Loss on Disposal of Texas Genco, net of tax (14) ---
Total --- ---
Net Income $67 $88
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
(Millions of Dollars, Except Share and Per Share Amounts)
(Unaudited)
Quarter Ended
March 31,
----------------------------
2005 2006
--------- ---------
Basic Earnings Per Common Share:
Income from Continuing Operations $0.22 $0.28
Income from Discontinued Operations --- ---
Net Income $0.22 $0.28
Diluted Earnings Per Common Share:
Income from Continuing Operations $0.20 $0.28
Income from Discontinued Operations --- ---
Net Income $0.20 $0.28
Dividends Declared per Common Share $0.20 $0.15
Weighted Average Common Shares Outstanding (000):
- Basic 308,470 310,846
- Diluted 360,623 318,593
Operating Income (Loss) by Segment
Electric Transmission & Distribution:
Transmission & Distribution Operations $71 $78
Transition Bond Companies 9 32
Total Electric Transmission & Distribution 80 110
Natural Gas Distribution 123 103
Competitive Natural Gas Sales and Services 16 25
Pipelines and Field Services 64 73
Other Operations (7) (5)
Total $276 $306
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
2005 2006 Fav/(Unfav)
------------ --------- ------------
Results of Operations:
Revenues:
Electric transmission and
distribution utility $323 $331 2%
Transition bond companies 22 54 145%
Total 345 385 12%
Expenses:
Operation and maintenance 138 134 3%
Depreciation and amortization 64 63 2%
Taxes other than income taxes 50 56 (12%)
Transition bond companies 13 22 (69%)
Total 265 275 (4%)
Operating Income - Electric transmission
and distribution utility 71 78 10%
Operating Income - Transition bond
companies 9 32 256%
Total Segment Operating Income $80 $110 38%
Electric Transmission & Distribution Quarter Ended
Operating Data: March 31,
------------------------
Actual MWH Delivered 2005 2006
---------- ----------
Residential 4,141,664 3,986,390 (4%)
Total 15,826,314 15,986,880 1%
Weather (average for service area):
Percentage of normal:
Cooling degree days 126% 137% 11%
Heating degree days 77% 63% (14%)
Average number of metered customers:
Residential 1,661,320 1,717,836 3%
Total 1,887,020 1,950,829 3%
Natural Gas Distribution
-------------------------------------
Quarter Ended
March 31,
----------------------- % Diff
2005 2006 Fav/(Unfav)
------------ --------- ------------
Results of Operations:
Revenues $1,329 $1,480 11%
Expenses:
Natural gas 997 1,146 (15%)
Operation and maintenance 135 150 (11%)
Depreciation and amortization 37 38 (3%)
Taxes other than income taxes 37 43 (16%)
Total 1,206 1,377 (14%)
Operating Income $123 $103 (16%)
Natural Gas Distribution Operating Data:
Throughput data in BCF
Residential 77 67 (13%)
Commercial and Industrial 77 72 (6%)
Total Throughput 154 139 (10%)
Weather (average for service area)
Percentage of normal:
Heating degree days 91% 84% (7%)
Average number of customers:
Residential 2,851,514 2,889,013 1%
Commercial and Industrial 248,826 253,519 2%
Total 3,100,340 3,142,532 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)
Competitive Natural Gas Sales
and Services
-------------------------------------
Quarter Ended
March 31,
----------------------- % Diff
2005 2006 Fav/(Unfav)
------------ --------- ------------
Results of Operations:
Revenues $925 $1,163 26%
Expenses:
Natural gas 902 1,129 (25%)
Operation and maintenance 5 8 (60%)
Depreciation and amortization 1 --- ---
Taxes other than income taxes 1 1 ---
Total 909 1,138 (25%)
Operating Income $16 $25 56%
Competitive Natural Gas Sales and
Services Operating Data:
Throughput data in BCF
Wholesale - third parties 82 89 9%
Wholesale - affiliates 14 11 (21%)
Retail 47 48 2%
Pipeline 19 10 (47%)
Total Throughput 162 158 (2%)
Average number of customers:
Wholesale 136 145 7%
Retail 6,224 6,517 5%
Pipeline 153 147 (4%)
Total 6,513 6,809 5%
Pipelines and Field Services
-------------------------------------
Quarter Ended
March 31,
--------------------- % Diff
2005 2006 Fav/(Unfav)
------------ --------- ------------
Results of Operations:
Revenues $121 $125 3%
Expenses:
Natural gas 7 (4) 157%
Operation and maintenance 34 39 (15%)
Depreciation and amortization 11 12 (9%)
Taxes other than income taxes 5 5 ---
Total 57 52 9%
Operating Income $64 $73 14%
Pipelines and Field Services Operating Data:
Throughput data in BCF
Natural Gas Sales 1 --- ---
Transportation 271 274 1%
Gathering 83 88 6%
Elimination (1) --- ---
Total Throughput 354 362 2%
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
March 31,
----------------------- % Diff
2005 2006 Fav/(Unfav)
------------ --------- ------------
Results of Operations:
Revenues $7 $4 (43%)
Expenses 14 9 36%
Operating Loss $(7) $(5) 29%
Capital Expenditures by Segment
(Millions of Dollars)
(Unaudited)
Quarter Ended
March 31,
---------------------
2005 2006
------- -------
Capital Expenditures by Segment
Electric Transmission & Distribution $55 $79
Natural Gas Distribution 40 40
Competitive Natural Gas Sales and
Services --- 6
Pipelines and Field Services 22 30
Other Operations 5 10
Total $122 $165
Interest Expense Detail
(Millions of Dollars)
(Unaudited)
Quarter Ended
March 31,
---------------------
2005 2006
------- -------
Interest Expense Detail
Amortization of Deferred Financing
Cost $20 $14
Capitalization of Interest Cost (1) (1)
Transition Bond Interest Expense 9 32
Other Interest Expense 154 103
Total Interest Expense $182 $148
Reference is made to the Notes to the Consolidated Financial Statements
contained in the Annual Report on Form 10-K of CenterPoint Energy, Inc.
CenterPoint Energy, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(Millions of Dollars)
(Unaudited)
December 31, March 31,
2005 2006
-------------- -----------
ASSETS
Current Assets:
Cash and cash equivalents $74 $113
Other current assets 2,817 2,075
Total current assets 2,891 2,188
Property, Plant and Equipment, net 8,492 8,571
Other Assets:
Goodwill 1,709 1,709
Regulatory assets 2,955 2,934
Other non-current assets 1,069 1,014
Total other assets 5,733 5,657
Total Assets $17,116 $16,416
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Current portion of transition bond
long-term debt $73 $126
Current portion of other long-term debt 266 519
Other current liabilities 2,675 2,020
Total current liabilities 3,014 2,665
Other Liabilities:
Accumulated deferred income taxes,
net and investment tax credit 2,520 2,484
Regulatory liabilities 728 785
Other non-current liabilities 990 906
Total other liabilities 4,238 4,175
Long-term Debt:
Transition bond 2,407 2,335
Other 6,161 5,896
Total long-term debt 8,568 8,231
Shareholders' Equity 1,296 1,345
Total Liabilities and
Shareholders' Equity $17,116 $16,416
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
(Millions of Dollars)
(Unaudited)
Three Months Ended March 31,
----------------------------
2005 2006
------------ -----------
Cash Flows from Operating Activities:
Net income $67 $88
Discontinued operations, net of tax --- ---
Income from continuing operations 67 88
Adjustments to reconcile income
from continuing operations to net
cash provided by (used in)
operating activities:
Depreciation and amortization 150 154
Deferred income taxes and
investment tax credit 48 4
Changes in net regulatory assets
and liabilities (86) 23
Changes in other assets and
liabilities (363) 23
Other, net 4 23
Net Cash Provided by (Used in)
Operating Activities of Continuing
Operations (180) 315
Net Cash Used in Operating Activities
of Discontinued Operations (22) ---
Net Cash Provided by (Used in)
Operating Activities (202) 315
Net Cash Used in Investing Activities (118) (201)
Net Cash Provided by (Used in)
Financing Activities 460 (75)
Net Increase in Cash and Cash
Equivalents 140 39
Cash and Cash Equivalents at
Beginning of Year 165 74
Cash and Cash Equivalents at End of Year $305 $113
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