(Mark One) | |||
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |||
FOR THE FISCAL YEAR ENDED DECEMBER 31, | |||
OR | |||
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |||
Texas | 74-0694415 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |
1111 Louisiana Houston, Texas 77002 (Address and zip code of principal executive offices) | (713) 207-1111 (Registrant’s telephone number, including area code) |
Title of each class | Name of each exchange on which registered | |
Common Stock, $0.01 par value and associated rights to purchase preferred stock | New York Stock Exchange Chicago Stock Exchange |
Large accelerated filer þ | Accelerated filer o | Smaller reporting company o | |
(Do not check if a smaller reporting company) |
CenterPoint Energy Houston Electric, LLC (CenterPoint Houston), which engages in the electric transmission and distribution business in a 5,000-square mile area | ||
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Number Represented | ||||||||||||||||
by Unions or | ||||||||||||||||
Other Collective | ||||||||||||||||
Business Segment | Number | Bargaining Groups | Number | Number Represented by Unions or Other Collective Bargaining Groups | ||||||||||||
Electric Transmission & Distribution | 2,754 | 1,170 | 2,843 | 1,249 | ||||||||||||
Natural Gas Distribution | 4,147 | 1,466 | 3,618 | 1,384 | ||||||||||||
Competitive Natural Gas Sales and Services | 103 | — | 130 | - | ||||||||||||
Interstate Pipelines | 555 | — | 689 | - | ||||||||||||
Field Services | 185 | — | 241 | - | ||||||||||||
Other Operations | 879 | — | 1,289 | - | ||||||||||||
Total | 8,623 | 2,636 | 8,810 | 2,633 | ||||||||||||
Name | Age | Title | ||||
60 | President and Chief Executive Officer and Director | |||||
Scott E. Rozzell | 60 | Executive Vice President, General Counsel and Corporate Secretary | ||||
Gary L. Whitlock | 60 | Executive Vice President and Chief Financial Officer | ||||
C. Gregory Harper | ||||||
45 | Senior Vice President and Group President, | |||||
Thomas R. Standish | 60 | Senior Vice President and Group President |
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construct or acquire new equipment; | ||
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Dividend | ||||||||||||
Market Price | Declared | |||||||||||
High | Low | Per Share(1) | ||||||||||
2005 | ||||||||||||
First Quarter | $ | 0.20 | ||||||||||
January 11 | $ | 10.65 | ||||||||||
March 8 | $ | 12.61 | ||||||||||
Second Quarter | $ | 0.07 | ||||||||||
April 20 | $ | 11.68 | ||||||||||
June 30 | $ | 13.21 | ||||||||||
Third Quarter | $ | 0.07 | ||||||||||
August 8 | $ | 13.04 | ||||||||||
September 16 | $ | 15.13 | ||||||||||
Fourth Quarter | $ | 0.06 | ||||||||||
October 3 | $ | 14.82 | ||||||||||
October 21 | $ | 12.65 | ||||||||||
2006 | ||||||||||||
First Quarter | $ | 0.15 | ||||||||||
January 19 | $ | 13.28 | ||||||||||
March 27 | $ | 11.92 | ||||||||||
Second Quarter | $ | 0.15 | ||||||||||
April 12 | $ | 11.73 | ||||||||||
June 30 | $ | 12.50 | ||||||||||
Third Quarter | $ | 0.15 | ||||||||||
July 3 | $ | 12.55 | ||||||||||
September 1 | $ | 14.55 | ||||||||||
Fourth Quarter | $ | 0.15 | ||||||||||
October 2 | $ | 14.22 | ||||||||||
December 27 | $ | 16.80 |
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Market Price | Dividend | |||||||||||
Declared | ||||||||||||
High | Low | Per Share | ||||||||||
2008 | ||||||||||||
First Quarter | $ | 0.1825 | ||||||||||
January 9 | $ | 16.98 | ||||||||||
March 17 | $ | 13.84 | ||||||||||
Second Quarter | $ | 0.1825 | ||||||||||
April 1 | $ | 14.66 | ||||||||||
May 29 | $ | 17.16 | ||||||||||
Third Quarter | $ | 0.1825 | ||||||||||
August 11 | $ | 16.59 | ||||||||||
September 18 | $ | 13.98 | ||||||||||
Fourth Quarter | $ | 0.1825 | ||||||||||
October 1 | $ | 14.40 | ||||||||||
October 10 | $ | 9.08 | ||||||||||
2009 | ||||||||||||
First Quarter | $ | 0.19 | ||||||||||
February 6 | $ | 14.39 | ||||||||||
March 6 | $ | 8.88 | ||||||||||
Second Quarter | $ | 0.19 | ||||||||||
May 27 | $ | 9.77 | ||||||||||
June 29 | $ | 11.24 | ||||||||||
Third Quarter | $ | 0.19 | ||||||||||
July 9 | $ | 10.78 | ||||||||||
August 26 | $ | 12.83 | ||||||||||
Fourth Quarter | $ | 0.19 | ||||||||||
October 2 | $ | 12.22 | ||||||||||
December 28 | $ | 14.81 |
Year Ended December 31, | ||||||||||||||||||||
2002 | 2003(1) | 2004(2) | 2005(3) | 2006 | ||||||||||||||||
(In millions, except per share amounts) | ||||||||||||||||||||
Revenues | $ | 6,438 | $ | 7,790 | $ | 7,999 | $ | 9,722 | $ | 9,319 | ||||||||||
Income from continuing operations before extraordinary item | 482 | 409 | 205 | 225 | 432 | |||||||||||||||
Discontinued operations, net of tax | (4,402 | ) | 75 | (133 | ) | (3 | ) | — | ||||||||||||
Extraordinary item, net of tax | — | — | (977 | ) | 30 | — | ||||||||||||||
Net income (loss) | $ | (3,920 | ) | $ | 484 | $ | (905 | ) | $ | 252 | $ | 432 | ||||||||
Basic earnings (loss) per common share: | ||||||||||||||||||||
Income from continuing operations before extraordinary item | $ | 1.62 | $ | 1.35 | $ | 0.67 | $ | 0.72 | $ | 1.39 | ||||||||||
Discontinued operations, net of tax | (14.78 | ) | 0.24 | (0.43 | ) | (0.01 | ) | — | ||||||||||||
Extraordinary item, net of tax | — | — | (3.18 | ) | 0.10 | — | ||||||||||||||
Basic earnings (loss) per common share | $ | (13.16 | ) | $ | 1.59 | $ | (2.94 | ) | $ | 0.81 | $ | 1.39 | ||||||||
Diluted earnings (loss) per common share: | ||||||||||||||||||||
Income from continuing operations before extraordinary item | $ | 1.61 | $ | 1.24 | $ | 0.61 | $ | 0.67 | $ | 1.33 | ||||||||||
Discontinued operations, net of tax | (14.69 | ) | 0.22 | (0.37 | ) | (0.01 | ) | — | ||||||||||||
Extraordinary item, net of tax | — | — | (2.72 | ) | 0.09 | — | ||||||||||||||
Diluted earnings (loss) per common share | $ | (13.08 | ) | $ | 1.46 | $ | (2.48 | ) | $ | 0.75 | $ | 1.33 | ||||||||
Cash dividends paid per common share | $ | 1.07 | $ | 0.40 | $ | 0.40 | $ | 0.40 | $ | 0.60 | ||||||||||
Dividend payout ratio from continuing operations | 66 | % | 30 | % | 60 | % | 56 | % | 43 | % | ||||||||||
Return from continuing operations on average common equity | 11.8 | % | 25.7 | % | 14.4 | % | 18.7 | % | 30.3 | % | ||||||||||
Ratio of earnings from continuing operations to fixed charges | 2.03 | 1.81 | 1.43 | 1.51 | 1.77 | |||||||||||||||
At year-end: | ||||||||||||||||||||
Book value per common share | $ | 4.74 | $ | 5.77 | $ | 3.59 | $ | 4.18 | $ | 4.96 | ||||||||||
Market price per common share | 8.01 | 9.69 | 11.30 | 12.85 | 16.58 | |||||||||||||||
Market price as a percent of book value | 169 | % | 168 | % | 315 | % | 307 | % | 334 | % | ||||||||||
Assets of discontinued operations | $ | 4,594 | $ | 4,244 | $ | 1,565 | $ | — | $ | — | ||||||||||
Total assets | 20,635 | 21,461 | 18,096 | 17,116 | 17,633 |
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Year Ended December 31, | ||||||||||||||||||||
2002 | 2003(1) | 2004(2) | 2005(3) | 2006 | ||||||||||||||||
(In millions, except per share amounts) | ||||||||||||||||||||
Short-term borrowings(4) | 347 | 63 | — | — | 187 | |||||||||||||||
Transition bonds, including current maturities | 736 | 717 | 676 | 2,480 | 2,408 | |||||||||||||||
Other long-term debt, including current maturities | 9,260 | 10,222 | 8,353 | 6,427 | 6,592 | |||||||||||||||
Trust preferred securities(5) | 706 | — | — | — | — | |||||||||||||||
Capitalization: | ||||||||||||||||||||
Common stock equity | 12 | % | 14 | % | 11 | % | 13 | % | 15 | % | ||||||||||
Trust preferred securities | 6 | % | — | — | — | — | ||||||||||||||
Long-term debt, including current maturities | 82 | % | 86 | % | 89 | % | 87 | % | 85 | % | ||||||||||
Capitalization, excluding transition bonds: | ||||||||||||||||||||
Common stock equity | 12 | % | 15 | % | 12 | % | 17 | % | 19 | % | ||||||||||
Trust preferred securities | 7 | % | — | — | — | — | ||||||||||||||
Long-term debt, excluding transition bonds, including current maturities | 81 | % | 85 | % | 88 | % | 83 | % | 81 | % | ||||||||||
Capital expenditures, excluding discontinued operations | $ | 566 | $ | 497 | $ | 530 | $ | 719 | $ | 1,121 |
Year Ended December 31, | ||||||||||||||||||||
2005(1)(2) | 2006(2) | 2007(2) | 2008(2) | 2009 | ||||||||||||||||
(In millions, except per share amounts) | ||||||||||||||||||||
Revenues | $ | 9,722 | $ | 9,319 | $ | 9,623 | $ | 11,322 | $ | 8,281 | ||||||||||
Income from continuing operations before extraordinary item | 220 | 427 | 395 | 446 | 372 | |||||||||||||||
Discontinued operations, net of tax | (3 | ) | - | - | - | - | ||||||||||||||
Extraordinary item, net of tax | 30 | - | - | - | - | |||||||||||||||
Net income | $ | 247 | $ | 427 | $ | 395 | $ | 446 | $ | 372 | ||||||||||
Basic earnings (loss) per common share: | ||||||||||||||||||||
Income from continuing operations before extraordinary item | $ | 0.71 | $ | 1.37 | $ | 1.23 | $ | 1.32 | $ | 1.02 | ||||||||||
Discontinued operations, net of tax | (0.01 | ) | - | - | - | - | ||||||||||||||
Extraordinary item, net of tax | 0.10 | - | - | - | - | |||||||||||||||
Basic earnings per common share | $ | 0.80 | $ | 1.37 | $ | 1.23 | $ | 1.32 | $ | 1.02 | ||||||||||
Diluted earnings (loss) per common share: | ||||||||||||||||||||
Income from continuing operations before extraordinary item | $ | 0.66 | $ | 1.31 | $ | 1.15 | $ | 1.30 | $ | 1.01 | ||||||||||
Discontinued operations, net of tax | (0.01 | ) | - | - | - | - | ||||||||||||||
Extraordinary item, net of tax | 0.09 | - | - | - | - | |||||||||||||||
Diluted earnings per common share | $ | 0.74 | $ | 1.31 | $ | 1.15 | $ | 1.30 | $ | 1.01 | ||||||||||
Cash dividends declared per common share | $ | 0.40 | $ | 0.60 | $ | 0.68 | $ | 0.73 | $ | 0.76 | ||||||||||
Dividend payout ratio from continuing operations | 56 | % | 44 | % | 55 | % | 55 | % | 75 | % | ||||||||||
Return from continuing operations on average common equity | 18.2 | % | 29.8 | % | 23.4 | % | 23.3 | % | 16.0 | % | ||||||||||
Ratio of earnings from continuing operations to fixed charges | 1.49 | 1.74 | 1.82 | 2.05 | 1.80 | |||||||||||||||
At year-end: | ||||||||||||||||||||
Book value per common share | $ | 4.21 | $ | 4.98 | $ | 5.61 | $ | 5.84 | $ | 6.74 | ||||||||||
Market price per common share | 12.85 | 16.58 | 17.13 | 12.62 | 14.51 | |||||||||||||||
Market price as a percent of book value | 305 | % | 333 | % | 305 | % | 216 | % | 215 | % | ||||||||||
Total assets | $ | 17,116 | $ | 17,633 | $ | 17,872 | $ | 19,676 | $ | 19,773 | ||||||||||
Short-term borrowings | - | 187 | 232 | 153 | 55 | |||||||||||||||
Transition and system restoration bonds, including current maturities | 2,480 | 2,407 | 2,260 | 2,589 | 3,046 | |||||||||||||||
Other long-term debt, including current maturities | 6,411 | 6,586 | 7,417 | 7,925 | 6,976 | |||||||||||||||
Capitalization: | ||||||||||||||||||||
Common stock equity | 13 | % | 15 | % | 16 | % | 16 | % | 21 | % | ||||||||||
Long-term debt, including current maturities | 87 | % | 85 | % | 84 | % | 84 | % | 79 | % | ||||||||||
Capitalization, excluding transition and system restoration bonds: | ||||||||||||||||||||
Common stock equity | 17 | % | 19 | % | 20 | % | 20 | % | 27 | % | ||||||||||
Long-term debt, excluding transition and system restoration bonds, including current maturities | 83 | % | 81 | % | 80 | % | 80 | % | 73 | % | ||||||||||
Capital expenditures, excluding discontinued operations | $ | 719 | $ | 1,121 | $ | 1,011 | $ | 1,053 | $ | 1,148 |
(1) | Net income for 2005 includes an after-tax extraordinary gain of $30 million ($0.10 and $0.09 per basic and diluted share, respectively) recorded in the first quarter reflecting an adjustment to the extraordinary loss recorded in the last half of 2004 to write down generation-related regulatory assets as a result of the final orders issued by the Texas Utility Commission. |
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Year Ended December 31, | ||||||||||||
2004 | 2005 | 2006 | ||||||||||
Revenues | $ | 7,999 | $ | 9,722 | $ | 9,319 | ||||||
Expenses | 7,135 | 8,783 | 8,274 | |||||||||
Operating Income | 864 | 939 | 1,045 | |||||||||
Gain (Loss) on Time Warner Investment | 31 | (44 | ) | 94 | ||||||||
Gain (Loss) on Indexed Debt Securities | (20 | ) | 49 | (80 | ) | |||||||
Interest and Other Finance Charges | (739 | ) | (670 | ) | (470 | ) | ||||||
Interest on Transition Bonds | (38 | ) | (40 | ) | (130 | ) | ||||||
Return onTrue-Up Balance | 226 | 121 | — | |||||||||
Other Income, net | 20 | 23 | 35 | |||||||||
Income From Continuing Operations Before Income Taxes and Extraordinary Item | 344 | 378 | 494 | |||||||||
Income Tax Expense | 139 | 153 | 62 | |||||||||
Income From Continuing Operations Before Extraordinary Item | 205 | 225 | 432 | |||||||||
Discontinued Operations, net of tax | (133 | ) | (3 | ) | — | |||||||
Income Before Extraordinary Item | 72 | 222 | 432 | |||||||||
Extraordinary Item, net of tax | (977 | ) | 30 | — | ||||||||
Net Income (Loss) | $ | (905 | ) | $ | 252 | $ | 432 | |||||
Basic Earnings (Loss) Per Share: | ||||||||||||
Income From Continuing Operations Before Extraordinary Item | $ | 0.67 | $ | 0.72 | $ | 1.39 | ||||||
Discontinued Operations, net of tax | (0.43 | ) | (0.01 | ) | — | |||||||
Extraordinary Item, net of tax | (3.18 | ) | 0.10 | — | ||||||||
Net Income (Loss) | $ | (2.94 | ) | $ | 0.81 | $ | 1.39 | |||||
Diluted Earnings (Loss) Per Share: | ||||||||||||
Income From Continuing Operations Before Extraordinary Item | $ | 0.61 | $ | 0.67 | $ | 1.33 | ||||||
Discontinued Operations, net of tax | (0.37 | ) | (0.01 | ) | — | |||||||
Extraordinary Item, net of tax | (2.72 | ) | 0.09 | — | ||||||||
Net Income (Loss) | $ | (2.48 | ) | $ | 0.75 | $ | 1.33 | |||||
Year Ended December 31, | ||||||||||||
2007 | 2008 | 2009 | ||||||||||
Revenues | $ | 9,623 | $ | 11,322 | $ | 8,281 | ||||||
Expenses | 8,438 | 10,049 | 7,157 | |||||||||
Operating Income | 1,185 | 1,273 | 1,124 | |||||||||
Gain (Loss) on Marketable Securities | (114 | ) | (139 | ) | 82 | |||||||
Gain (Loss) on Indexed Debt Securities | 111 | 128 | (68 | ) | ||||||||
Interest and Other Finance Charges | (509 | ) | (468 | ) | (513 | ) | ||||||
Interest on Transition and System Restoration Bonds | (123 | ) | (136 | ) | (131 | ) | ||||||
Distribution from AOL Time Warner Litigation Settlement | 32 | - | 3 | |||||||||
Additional Distribution to ZENS Holders | (27 | ) | - | (3 | ) | |||||||
Equity in Earnings of Unconsolidated Affiliates | 16 | 51 | 15 | |||||||||
Other Income, net | 17 | 14 | 39 | |||||||||
Income Before Income Taxes | 588 | 723 | 548 | |||||||||
Income Tax Expense | (193 | ) | (277 | ) | (176 | ) | ||||||
Net Income | $ | 395 | $ | 446 | $ | 372 | ||||||
Basic Earnings Per Share | $ | 1.23 | $ | 1.32 | $ | 1.02 | ||||||
Diluted Earnings Per Share | $ | 1.15 | $ | 1.30 | $ | 1.01 |
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Year Ended December 31, | ||||||||||||||||||||||||
2004 | 2005 | 2006 | Year Ended December 31, | |||||||||||||||||||||
2007 | 2008 | 2009 | ||||||||||||||||||||||
Electric Transmission & Distribution | $ | 494 | $ | 487 | $ | 576 | $ | 561 | $ | 545 | $ | 545 | ||||||||||||
Natural Gas Distribution | 178 | 175 | 124 | 218 | 215 | 204 | ||||||||||||||||||
Competitive Natural Gas Sales and Services | 44 | 60 | 77 | 75 | 62 | 21 | ||||||||||||||||||
Interstate Pipelines | 129 | 165 | 181 | 237 | 293 | 256 | ||||||||||||||||||
Field Services | 51 | 70 | 89 | 99 | 147 | 94 | ||||||||||||||||||
Other Operations | (32 | ) | (18 | ) | (2 | ) | (5 | ) | 11 | 4 | ||||||||||||||
Total Consolidated Operating Income | $ | 864 | $ | 939 | $ | 1,045 | $ | 1,185 | $ | 1,273 | $ | 1,124 | ||||||||||||
Year Ended December 31, | ||||||||||||||||||||||||
2004 | 2005 | 2006 | Year Ended December 31, | |||||||||||||||||||||
2007 | 2008 | 2009 | ||||||||||||||||||||||
Revenues: | ||||||||||||||||||||||||
Electric transmission and distribution utility | $ | 1,446 | $ | 1,538 | $ | 1,516 | $ | 1,560 | $ | 1,593 | $ | 1,673 | ||||||||||||
Transition bond companies | 75 | 106 | 265 | |||||||||||||||||||||
Transition and system restoration bond companies | 277 | 323 | 340 | |||||||||||||||||||||
Total revenues | 1,521 | 1,644 | 1,781 | 1,837 | 1,916 | 2,013 | ||||||||||||||||||
Expenses: | ||||||||||||||||||||||||
Operation and maintenance | 539 | 618 | 611 | |||||||||||||||||||||
Depreciation and amortization | 248 | 258 | 243 | |||||||||||||||||||||
Operation and maintenance, excluding transition and system restoration bond companies | 652 | 703 | 774 | |||||||||||||||||||||
Depreciation and amortization, excluding transition and system restoration bond companies | 243 | 277 | 277 | |||||||||||||||||||||
Taxes other than income taxes | 203 | 214 | 212 | 223 | 201 | 208 | ||||||||||||||||||
Transition bond companies | 37 | 67 | 139 | |||||||||||||||||||||
Transition and system restoration bond companies | 158 | 190 | 209 | |||||||||||||||||||||
Total expenses | 1,027 | 1,157 | 1,205 | 1,276 | 1,371 | 1,468 | ||||||||||||||||||
Operating Income | $ | 494 | $ | 487 | $ | 576 | $ | 561 | $ | 545 | $ | 545 | ||||||||||||
Operating Income — Electric transmission and distribution utility | 456 | 448 | 450 | |||||||||||||||||||||
Operating Income — Transition bond companies(1) | 38 | 39 | 126 | |||||||||||||||||||||
Operating Income: | ||||||||||||||||||||||||
Electric transmission and distribution operations | $ | 400 | $ | 407 | $ | 414 | ||||||||||||||||||
Competition transition charge | 42 | 5 | - | |||||||||||||||||||||
Transition and system restoration bond companies (1) | 119 | 133 | 131 | |||||||||||||||||||||
Total segment operating income | $ | 494 | $ | 487 | $ | 576 | $ | 561 | $ | 545 | $ | 545 | ||||||||||||
Throughput (ingigawatt-hours (GWh)): | ||||||||||||||||||||||||
Residential | 23,748 | 24,924 | 23,955 | 23,999 | 24,258 | 24,815 | ||||||||||||||||||
Total | 73,632 | 74,189 | 75,877 | 76,291 | 74,840 | 74,579 | ||||||||||||||||||
Average number of metered customers: | ||||||||||||||||||||||||
Number of metered customers at end of period: | ||||||||||||||||||||||||
Residential | 1,639,488 | 1,683,100 | 1,732,656 | 1,793,600 | 1,821,267 | 1,849,019 | ||||||||||||||||||
Total | 1,862,853 | 1,912,346 | 1,968,114 | 2,034,074 | 2,064,854 | 2,094,210 |
(1) | Represents the amount necessary to pay interest on the transition and system restoration bonds. |
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Year Ended December 31, | Year Ended December 31, | |||||||||||||||||||||||
2004 | 2005 | 2006 | 2007 | 2008 | 2009 | |||||||||||||||||||
Revenues | $ | 3,579 | $ | 3,846 | $ | 3,593 | $ | 3,759 | $ | 4,226 | $ | 3,384 | ||||||||||||
Expenses: | ||||||||||||||||||||||||
Natural gas | 2,596 | 2,841 | 2,598 | 2,683 | 3,124 | 2,251 | ||||||||||||||||||
Operation and maintenance | 544 | 551 | 594 | 579 | 589 | 639 | ||||||||||||||||||
Depreciation and amortization | 141 | 152 | 152 | 155 | 157 | 161 | ||||||||||||||||||
Taxes other than income taxes | 120 | 127 | 125 | 124 | 141 | 129 | ||||||||||||||||||
Total expenses | 3,401 | 3,671 | 3,469 | 3,541 | 4,011 | 3,180 | ||||||||||||||||||
Operating Income | $ | 178 | $ | 175 | $ | 124 | $ | 218 | $ | 215 | $ | 204 | ||||||||||||
Throughput (in billion cubic feet (Bcf)): | ||||||||||||||||||||||||
Throughput (in Bcf): | ||||||||||||||||||||||||
Residential | 175 | 160 | 152 | 172 | 175 | 173 | ||||||||||||||||||
Commercial and industrial | 237 | 215 | 224 | 232 | 236 | 233 | ||||||||||||||||||
Total Throughput | 412 | 375 | 376 | 404 | 411 | 406 | ||||||||||||||||||
Average number of customers: | ||||||||||||||||||||||||
Number of customers at end of period: | ||||||||||||||||||||||||
Residential | 2,798,352 | 2,839,947 | 2,883,927 | 2,961,110 | 2,987,222 | 3,002,114 | ||||||||||||||||||
Commercial and industrial | 245,926 | 244,782 | 243,265 | 249,877 | 248,476 | 244,101 | ||||||||||||||||||
Total | 3,044,278 | 3,084,729 | 3,127,192 | 3,210,987 | 3,235,698 | 3,246,215 | ||||||||||||||||||
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Year Ended December 31, | ||||||||||||
2004 | 2005 | 2006 | ||||||||||
Revenues | $ | 2,848 | $ | 4,129 | $ | 3,651 | ||||||
Expenses: | ||||||||||||
Natural gas | 2,778 | 4,033 | 3,540 | |||||||||
Operation and maintenance | 22 | 30 | 30 | |||||||||
Depreciation and amortization | 2 | 2 | 1 | |||||||||
Taxes other than income taxes | 2 | 4 | 3 | |||||||||
Total expenses | 2,804 | 4,069 | 3,574 | |||||||||
Operating Income | $ | 44 | $ | 60 | $ | 77 | ||||||
Throughput (in Bcf): | ||||||||||||
Wholesale — third parties | 228 | 304 | 335 | |||||||||
Wholesale — affiliates | 35 | 27 | 36 | |||||||||
Retail | 141 | 156 | 149 | |||||||||
Pipeline | 76 | 51 | 35 | |||||||||
Total Throughput | 480 | 538 | 555 | |||||||||
Average number of customers: | ||||||||||||
Wholesale | 97 | 138 | 140 | |||||||||
Retail | 5,976 | 6,328 | 6,452 | |||||||||
Pipeline | 172 | 142 | 138 | |||||||||
Total | 6,245 | 6,608 | 6,730 | |||||||||
Year Ended December 31, | ||||||||||||
2007 | 2008 | 2009 | ||||||||||
Revenues | $ | 3,579 | $ | 4,528 | $ | 2,230 | ||||||
Expenses: | ||||||||||||
Natural gas | 3,467 | 4,423 | 2,165 | |||||||||
Operation and maintenance | 31 | 39 | 39 | |||||||||
Depreciation and amortization | 5 | 3 | 4 | |||||||||
Taxes other than income taxes | 1 | 1 | 1 | |||||||||
Total expenses | 3,504 | 4,466 | 2,209 | |||||||||
Operating Income | $ | 75 | $ | 62 | $ | 21 | ||||||
Throughput (in Bcf) | 522 | 528 | 504 | |||||||||
Number of customers at end of period | 7,139 | 9,771 | 11,168 |
46
Year Ended December 31, | Year Ended December 31, | |||||||||||||||||||||||
2004 | 2005 | 2006 | 2007 | 2008 | 2009 | |||||||||||||||||||
Revenues | $ | 368 | $ | 386 | $ | 388 | $ | 500 | $ | 650 | $ | 598 | ||||||||||||
Expenses: | ||||||||||||||||||||||||
Natural gas | 58 | 47 | 31 | 83 | 155 | 97 | ||||||||||||||||||
Operation and maintenance | 131 | 121 | 120 | 125 | 133 | 166 | ||||||||||||||||||
Depreciation and amortization | 36 | 36 | 37 | 44 | 46 | 48 | ||||||||||||||||||
Taxes other than income taxes | 14 | 17 | 19 | 11 | 23 | 31 | ||||||||||||||||||
Total expenses | 239 | 221 | 207 | 263 | 357 | 342 | ||||||||||||||||||
Operating Income | $ | 129 | $ | 165 | $ | 181 | $ | 237 | $ | 293 | $ | 256 | ||||||||||||
Throughput (in Bcf): | ||||||||||||||||||||||||
Transportation | 859 | 914 | 939 | |||||||||||||||||||||
Other | 4 | 2 | 1 | |||||||||||||||||||||
Total Throughput | 863 | 916 | 940 | |||||||||||||||||||||
Transportation throughput (in Bcf) | 1,216 | 1,538 | 1,592 |
47
Year Ended December 31, | Year Ended December 31, | |||||||||||||||||||||||
2004 | 2005 | 2006 | 2007 | 2008 | 2009 | |||||||||||||||||||
Revenues | $ | 92 | $ | 120 | $ | 150 | $ | 175 | $ | 252 | $ | 241 | ||||||||||||
Expenses: | ||||||||||||||||||||||||
Natural gas | (9 | ) | (10 | ) | (10 | ) | (4 | ) | 21 | 51 | ||||||||||||||
Operation and maintenance | 40 | 49 | 59 | 66 | 69 | 77 | ||||||||||||||||||
Depreciation and amortization | 8 | 9 | 10 | 11 | 12 | 15 | ||||||||||||||||||
Taxes other than income taxes | 2 | 2 | 2 | 3 | 3 | 4 | ||||||||||||||||||
Total expenses | 41 | 50 | 61 | 76 | 105 | 147 | ||||||||||||||||||
Operating Income | $ | 51 | $ | 70 | $ | 89 | $ | 99 | $ | 147 | $ | 94 | ||||||||||||
Throughput (in Bcf): | ||||||||||||||||||||||||
Gathering | 321 | 353 | 375 | |||||||||||||||||||||
Gathering throughput (in Bcf) | 398 | 421 | 426 |
Year Ended December 31, | Year Ended December 31, | |||||||||||||||||||||||
2004 | 2005 | 2006 | 2007 | 2008 | 2009 | |||||||||||||||||||
Revenues | $ | 8 | $ | 19 | $ | 15 | $ | 10 | $ | 11 | $ | 11 | ||||||||||||
Expenses | 40 | 37 | 17 | 15 | – | 7 | ||||||||||||||||||
Operating Loss | $ | (32 | ) | $ | (18 | ) | $ | (2 | ) | |||||||||||||||
Operating Income (Loss) | $ | (5 | ) | $ | 11 | $ | 4 |
48
Year Ended December 31, | ||||||||||||||||||||||||
2004 | 2005 | 2006 | Year Ended December 31, | |||||||||||||||||||||
2007 | 2008 | 2009 | ||||||||||||||||||||||
Cash provided by (used in): | ||||||||||||||||||||||||
Operating activities | $ | 736 | $ | 63 | $ | 991 | $ | 774 | $ | 851 | $ | 1,841 | ||||||||||||
Investing activities | 1,466 | 17 | (1,056 | ) | (1,300 | ) | (1,368 | ) | (896 | ) | ||||||||||||||
Financing activities | (2,124 | ) | (171 | ) | 118 | 528 | 555 | (372 | ) |
49
2006 | 2007 | 2008 | 2009 | 2010 | 2011 | |||||||||||||||||||
Electric Transmission & Distribution | $ | 389 | $ | 408 | $ | 406 | $ | 402 | $ | 437 | $ | 435 | ||||||||||||
Natural Gas Distribution | 187 | 208 | 217 | 202 | 207 | 212 | ||||||||||||||||||
Competitive Natural Gas Sales and Services | 18 | 18 | 12 | 12 | 12 | 12 | ||||||||||||||||||
Interstate Pipelines | 437 | 272 | 269 | 45 | 54 | 62 | ||||||||||||||||||
Field Services | 65 | 116 | 86 | 85 | 85 | 85 | ||||||||||||||||||
Other Operations | 25 | 33 | 26 | 21 | 12 | 13 | ||||||||||||||||||
Total | $ | 1,121 | $ | 1,055 | $ | 1,016 | $ | 767 | $ | 807 | $ | 819 | ||||||||||||
2009 | 2010 | 2011 | 2012 | 2013 | 2014 | |||||||||||||||||||
Electric Transmission & Distribution (1) | $ | 428 | $ | 557 | $ | 563 | $ | 488 | $ | 503 | $ | 484 | ||||||||||||
Natural Gas Distribution | 165 | 210 | 237 | 241 | 259 | 248 | ||||||||||||||||||
Competitive Natural Gas Sales and Services | 2 | 6 | 4 | 16 | 5 | 5 | ||||||||||||||||||
Interstate Pipelines | 176 | 171 | 192 | 245 | 164 | 94 | ||||||||||||||||||
Field Services | 348 | 226 | 163 | 126 | 95 | 85 | ||||||||||||||||||
Other Operations | 29 | 38 | 59 | 40 | 30 | 30 | ||||||||||||||||||
Total | $ | 1,148 | $ | 1,208 | $ | 1,218 | $ | 1,156 | $ | 1,056 | $ | 946 |
(1) | Includes expenditures of $94 million in 2009 and capital requirements of $181 million, $172 million, $49 million, $38 million and $34 million in 2010 through 2014, respectively, related to AMS and Intelligent Grid, net of a $200 million grant by the U.S. Department of Energy (DOE). The award is contingent on successful completion of negotiations with the DOE. |
2012 and | ||||||||||||||||||||
Contractual Obligations | Total | 2007 | 2008-2009 | 2010-2011 | thereafter | |||||||||||||||
Transition bond debt, including current portion | 2,407 | 147 | 334 | 397 | 1,529 | |||||||||||||||
Other long-term debt, including current portion | 6,593 | 476 | 513 | 781 | 4,823 | |||||||||||||||
Interest payments — transition bond debt(1) | 867 | 123 | 224 | 187 | 333 | |||||||||||||||
Interest payments — other long-term debt(1) | 4,702 | 419 | 798 | 745 | 2,740 | |||||||||||||||
Capital leases | 1 | — | — | — | 1 | |||||||||||||||
Operating leases(2) | 80 | 22 | 29 | 14 | 15 | |||||||||||||||
Benefit obligations(3) | — | — | — | — | — | |||||||||||||||
Purchase obligations(4) | 181 | 181 | — | — | — | |||||||||||||||
Non-trading derivative liabilities | 221 | 141 | 44 | 36 | — | |||||||||||||||
Other commodity commitments(5) | 3,044 | 922 | 504 | 412 | 1,206 | |||||||||||||||
Total contractual cash obligations | 18,096 | 2,431 | 2,446 | 2,572 | 10,647 | |||||||||||||||
Contractual Obligations | Total | 2010 | 2011-2012 | 2013-2014 | 2015 and thereafter | |||||||||||||||
Transition and system restoration bond debt | $ | 3,046 | $ | 241 | $ | 590 | $ | 565 | $ | 1,650 | ||||||||||
Other long-term debt(1) | 7,668 | 541 | 615 | 2,171 | 4,341 | |||||||||||||||
Interest payments - transition and system restoration bond debt(2) | 834 | 135 | 245 | 187 | 267 | |||||||||||||||
Interest payments - other long-term debt(2) | 3,919 | 433 | 791 | 608 | 2,087 | |||||||||||||||
Short-term borrowings | 55 | 55 | - | - | - | |||||||||||||||
Capital leases | 1 | - | - | - | 1 | |||||||||||||||
Operating leases(3) | 51 | 12 | 22 | 10 | 7 | |||||||||||||||
Benefit obligations(4) | - | - | - | - | - | |||||||||||||||
Purchase obligations(5) | 9 | 9 | - | - | - | |||||||||||||||
Non-trading derivative liabilities | 93 | 51 | 42 | - | - | |||||||||||||||
Other commodity commitments(6) | 2,558 | 439 | 917 | 659 | 543 | |||||||||||||||
Income taxes(7) | - | - | - | - | - | |||||||||||||||
Other | 25 | 7 | 12 | 6 | - | |||||||||||||||
Total contractual cash obligations | $ | 18,259 | $ | 1,923 | $ | 3,234 | $ | 4,206 | $ | 8,896 |
(1) | ZENS obligations are included in the 2015 and thereafter column at their contingent principal amount payable in 2029 of $814 million. These obligations are exchangeable for cash at any time at the option of the holders for 95% of the current value of the reference shares attributable to each ZENS ($300 million at December 31, 2009), as discussed in Note 6 to our consolidated financial statements. |
(2) | We calculated estimated interest payments for long-term debt as follows: for fixed-rate debt and term debt, we calculated interest based on the applicable rates and payment dates; for variable-rate debtand/or non-term debt, we used interest rates in place as of December 31, |
(3) | For a discussion of operating leases, please read Note |
(5) | Represents capital commitments for material in connection with |
(6) | For a discussion of other commodity commitments, please read Note 10(a) to our consolidated financial statements. |
51
(7) | As of December 31, 2009, the liability for uncertain income tax positions was $187 million. However, due to the high degree of uncertainty regarding the timing of potential future cash flows associated with these liabilities, we are unable to make a reasonably reliable estimate of the amount and period in which any such liabilities might be paid. |
52
Date Executed | Company | Type of Facility | Size of Facility | Amount Utilized at February 15, 2010 (1) | Termination Date | ||||||||
June 29, 2007 | CenterPoint Energy | Revolver | $ | 1,156 | $ | 20 | (2) | June 29, 2012 | |||||
June 29, 2007 | CenterPoint Houston | Revolver | 289 | 4 | (2) | June 29, 2012 | |||||||
June 29, 2007 | CERC Corp. | Revolver | 915 | - | June 29, 2012 | ||||||||
October 9, 2009 | CERC | Receivables | 375 | - | October 8, 2010 |
(1) | Based on the debt to earnings before interest, taxes, depreciation and amortization (EBITDA) covenant contained in our $1.2 billion credit facility, we would have been permitted to incur incremental borrowings on a consolidated basis at December 31, 2009 of approximately $1.3 billion. Had the February 2010 amendment to such covenant described below been in effect, we would have been permitted to incur an additional $800 million of borrowings at such time in the event a qualifying disaster occurred. Since amounts advanced under CERC Corp.'s receivables facility are not included in this debt to EBITDA covenant calculation, such amounts are not included in the estimated amounts of permitted incremental borrowings. |
(2) | Represents outstanding letters of credit. |
53
Facility Size at | ||||||||||||||||||||
February 16, | Amount Utilized at | |||||||||||||||||||
Date Executed | Company | Type of Facility | 2007 | February 16, 2007 | Termination Date | |||||||||||||||
March 31, 2006 | CenterPoint Energy | Revolver | $ | 1,200 | $ | 28 | (1) | March 31, 2011 | ||||||||||||
March 31, 2006 | CenterPoint Houston | Revolver | 300 | 4 | (1) | March 31, 2011 | ||||||||||||||
March 31, 2006 | CERC Corp. | Revolver | 550 | 6 | (1) | March 31, 2011 | ||||||||||||||
October 31, 2006 | CERC | Receivables | 375 | 71 | October 30, 2007 |
Moody’s | S&P | Fitch | ||||||||||||||||||||||||
Company/Instrument | Rating | Outlook(1) | Rating | Outlook(2) | Rating | Outlook(3) | ||||||||||||||||||||
CenterPoint Energy Senior Unsecured Debt | Ba1 | Stable | BBB- | Negative | BBB- | Stable | ||||||||||||||||||||
CenterPoint Houston Senior Secured Debt | Positive | Negative | A- | Stable | ||||||||||||||||||||||
CERC Corp. Senior Unsecured Debt | Baa3 | Stable | BBB | Negative | BBB | Stable |
A Moody’s rating outlook is an opinion regarding the likely direction of a rating over the medium term. |
54
(2) | An S&P rating outlook assesses the potential direction of a long-term credit rating over the intermediate to longer term. |
(3) | A |
55
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64
/s/ DAVID M. MCCLANAHAN | |
President and Chief Executive Officer | |
/s/ GARY L. WHITLOCK | |
Executive Vice President and Chief | |
Financial Officer |
Year Ended December 31, | ||||||||||||
2004 | 2005 | 2006 | ||||||||||
(In millions, | ||||||||||||
except per share amounts) | ||||||||||||
Revenues | $ | 7,999 | $ | 9,722 | $ | 9,319 | ||||||
Expenses: | ||||||||||||
Natural gas | 5,013 | 6,509 | 5,909 | |||||||||
Operation and maintenance | 1,277 | 1,358 | 1,399 | |||||||||
Depreciation and amortization | 490 | 541 | 599 | |||||||||
Taxes other than income taxes | 355 | 375 | 367 | |||||||||
Total | 7,135 | 8,783 | 8,274 | |||||||||
Operating Income | 864 | 939 | 1,045 | |||||||||
Other Income (Expense): | ||||||||||||
Gain (loss) on Time Warner investment | 31 | (44 | ) | 94 | ||||||||
Gain (loss) on indexed debt securities | (20 | ) | 49 | (80 | ) | |||||||
Interest and other finance charges | (739 | ) | (670 | ) | (470 | ) | ||||||
Interest on transition bonds | (38 | ) | (40 | ) | (130 | ) | ||||||
Return ontrue-up balance | 226 | 121 | — | |||||||||
Other, net | 20 | 23 | 35 | |||||||||
Total | (520 | ) | (561 | ) | (551 | ) | ||||||
Income From Continuing Operations Before Income Taxes and Extraordinary Item | 344 | 378 | 494 | |||||||||
Income tax expense | (139 | ) | (153 | ) | (62 | ) | ||||||
Income From Continuing Operations Before Extraordinary Item | 205 | 225 | 432 | |||||||||
Discontinued Operations: | ||||||||||||
Income from Texas Genco, net of tax | 294 | 11 | — | |||||||||
Minority interest on income from Texas Genco | (61 | ) | — | — | ||||||||
Loss on disposal of Texas Genco, net of tax | (366 | ) | (14 | ) | — | |||||||
Total | (133 | ) | (3 | ) | — | |||||||
Income Before Extraordinary Item | 72 | 222 | 432 | |||||||||
Extraordinary item, net of tax | (977 | ) | 30 | — | ||||||||
Net Income (Loss) | $ | (905 | ) | $ | 252 | $ | 432 | |||||
Basic Earnings (Loss) Per Share: | ||||||||||||
Income From Continuing Operations Before Extraordinary Item | $ | 0.67 | $ | 0.72 | $ | 1.39 | ||||||
Discontinued Operations, net of tax | (0.43 | ) | (0.01 | ) | — | |||||||
Extraordinary item, net of tax | (3.18 | ) | 0.10 | — | ||||||||
Net Income (Loss) | $ | (2.94 | ) | $ | 0.81 | $ | 1.39 | |||||
Diluted Earnings (Loss) Per Share: | ||||||||||||
Income From Continuing Operations Before Extraordinary Item | $ | 0.61 | $ | 0.67 | $ | 1.33 | ||||||
Discontinued Operations, net of tax | (0.37 | ) | (0.01 | ) | — | |||||||
Extraordinary item, net of tax | (2.72 | ) | 0.09 | — | ||||||||
Net Income (Loss) | $ | (2.48 | ) | $ | 0.75 | $ | 1.33 | |||||
Year Ended December 31, | ||||||||||||
2007 | 2008 | 2009 | ||||||||||
(In millions, | ||||||||||||
except for share amounts) | ||||||||||||
Revenues | $ | 9,623 | $ | 11,322 | $ | 8,281 | ||||||
Expenses: | ||||||||||||
Natural gas | 5,995 | 7,466 | 4,371 | |||||||||
Operation and maintenance | 1,440 | 1,502 | 1,664 | |||||||||
Depreciation and amortization | 631 | 708 | 743 | |||||||||
Taxes other than income taxes | 372 | 373 | 379 | |||||||||
Total | 8,438 | 10,049 | 7,157 | |||||||||
Operating Income | 1,185 | 1,273 | 1,124 | |||||||||
Other Income (Expense): | ||||||||||||
Gain (loss) on marketable securities | (114 | ) | (139 | ) | 82 | |||||||
Gain (loss) on indexed debt securities | 111 | 128 | (68 | ) | ||||||||
Interest and other finance charges | (509 | ) | (468 | ) | (513 | ) | ||||||
Interest on transition and system restoration bonds | (123 | ) | (136 | ) | (131 | ) | ||||||
Distribution from AOL Time Warner litigation settlement | 32 | - | 3 | |||||||||
Additional distribution to ZENS holders | (27 | ) | - | (3 | ) | |||||||
Equity in earnings of unconsolidated affiliates | 16 | 51 | 15 | |||||||||
Other, net | 17 | 14 | 39 | |||||||||
Total | (597 | ) | (550 | ) | (576 | ) | ||||||
Income Before Income Taxes | 588 | 723 | 548 | |||||||||
Income tax expense | (193 | ) | (277 | ) | (176 | ) | ||||||
Net Income | $ | 395 | $ | 446 | $ | 372 | ||||||
Basic Earnings Per Share | $ | 1.23 | $ | 1.32 | $ | 1.02 | ||||||
Diluted Earnings Per Share | $ | 1.15 | $ | 1.30 | $ | 1.01 |
66
Year Ended December 31, | ||||||||||||
2004 | 2005 | 2006 | ||||||||||
(In millions) | ||||||||||||
Net income (loss) | $ | (905 | ) | $ | 252 | $ | 432 | |||||
Other comprehensive income, net of tax: | ||||||||||||
Minimum pension liability adjustment (net of tax of $197, ($5) and $6) | 367 | (9 | ) | 12 | ||||||||
Net deferred gain from cash flow hedges (net of tax of $31, $9 and $11) | 59 | 17 | 22 | |||||||||
Reclassification of deferred loss (gain) from cash flow hedges realized in net income (net of tax of ($3), $6 and $8) | (7 | ) | 11 | 14 | ||||||||
Reclassification of deferred gain from de-designation of cash flow hedges to over/under recovery of gas cost (net of tax of ($37)) | (68 | ) | — | — | ||||||||
Other comprehensive income (loss) from discontinued operations (net of tax of ($2) and $2) | (4 | ) | 3 | — | ||||||||
Other comprehensive income | 347 | 22 | 48 | |||||||||
Comprehensive income (loss) | $ | (558 | ) | $ | 274 | $ | 480 | |||||
Year Ended December 31, | ||||||||||||
2007 | 2008 | 2009 | ||||||||||
(In millions) | ||||||||||||
Net income | $ | 395 | $ | 446 | $ | 372 | ||||||
Other comprehensive income (loss): | ||||||||||||
Adjustment to pension and other postretirement plans (net of tax of $28, $32 and $2) | 34 | (79 | ) | 7 | ||||||||
Net deferred gain (loss) from cash flow hedges (net of tax of $6, $2 and $-0-) | 11 | (4 | ) | - | ||||||||
Reclassification of deferred gain from cash flow hedges realized in net income (net of tax of $14, $2 and $-0-) | (20 | ) | (4 | ) | - | |||||||
Other comprehensive income (loss) | 25 | (87 | ) | 7 | ||||||||
Comprehensive income | $ | 420 | $ | 359 | $ | 379 |
67
December 31, | December 31, | |||||||||||||||
2005 | 2006 | |||||||||||||||
(In millions) | December 31, 2008 | December 31, 2009 | ||||||||||||||
(In millions) | ||||||||||||||||
ASSETS | ASSETS | |||||||||||||||
Current Assets: | ||||||||||||||||
Cash and cash equivalents | $ | 74 | $ | 127 | $ | 167 | $ | 740 | ||||||||
Investment in Time Warner common stock | 377 | 471 | ||||||||||||||
Investment in marketable securities | 218 | 300 | ||||||||||||||
Accounts receivable, net | 1,098 | 1,017 | 1,009 | 790 | ||||||||||||
Accrued unbilled revenues | 608 | 451 | 541 | 485 | ||||||||||||
Inventory | 382 | 399 | 569 | 327 | ||||||||||||
Non-trading derivative assets | 131 | 98 | 118 | 39 | ||||||||||||
Taxes receivable | 53 | — | ||||||||||||||
Prepaid expense and other current assets | 168 | 432 | 413 | 223 | ||||||||||||
Total current assets | 2,891 | 2,995 | 3,035 | 2,904 | ||||||||||||
Property, Plant and Equipment, net | 8,492 | 9,204 | 10,296 | 10,788 | ||||||||||||
Other Assets: | ||||||||||||||||
Goodwill | 1,709 | 1,709 | 1,696 | 1,696 | ||||||||||||
Regulatory assets | 2,955 | 3,290 | 3,684 | 3,677 | ||||||||||||
Non-trading derivative assets | 104 | 21 | 20 | 15 | ||||||||||||
Investment in unconsolidated affiliates | 345 | 463 | ||||||||||||||
Notes receivable from unconsolidated affiliates | 323 | - | ||||||||||||||
Other | 965 | 414 | 277 | 230 | ||||||||||||
Total other assets | 5,733 | 5,434 | 6,345 | 6,081 | ||||||||||||
Total Assets | $ | 17,116 | $ | 17,633 | $ | 19,676 | $ | 19,773 | ||||||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | LIABILITIES AND SHAREHOLDERS’ EQUITY | |||||||||||||||
Current Liabilities: | ||||||||||||||||
Short-term borrowings | $ | — | $ | 187 | $ | 153 | $ | 55 | ||||||||
Current portion of long-term debt | 339 | 1,198 | ||||||||||||||
Current portion of transition and system restoration bonds long-term debt | 208 | 241 | ||||||||||||||
Current portion of indexed debt | 117 | 121 | ||||||||||||||
Current portion of other long-term debt | 8 | 541 | ||||||||||||||
Indexed debt securities derivative | 292 | 372 | 133 | 201 | ||||||||||||
Accounts payable | 1,161 | 1,010 | 897 | 648 | ||||||||||||
Taxes accrued | 167 | 364 | 189 | 148 | ||||||||||||
Interest accrued | 122 | 159 | 180 | 181 | ||||||||||||
Non-trading derivative liabilities | 43 | 141 | 87 | 51 | ||||||||||||
Accumulated deferred income taxes, net | 385 | 316 | 372 | 406 | ||||||||||||
Other | 505 | 474 | 504 | 445 | ||||||||||||
Total current liabilities | 3,014 | 4,221 | 2,848 | 3,038 | ||||||||||||
Other Liabilities: | ||||||||||||||||
Accumulated deferred income taxes, net | 2,474 | 2,323 | 2,608 | 2,776 | ||||||||||||
Unamortized investment tax credits | 46 | 39 | 24 | 16 | ||||||||||||
Non-trading derivative liabilities | 35 | 80 | 47 | 42 | ||||||||||||
Benefit obligations | 475 | 545 | 849 | 861 | ||||||||||||
Regulatory liabilities | 728 | 792 | 821 | 921 | ||||||||||||
Other | 480 | 275 | 276 | 361 | ||||||||||||
Total other liabilities | 4,238 | 4,054 | 4,625 | 4,977 | ||||||||||||
Long-term Debt | 8,568 | 7,802 | ||||||||||||||
Long-term Debt: | ||||||||||||||||
Transition and system restoration bonds | 2,381 | 2,805 | ||||||||||||||
Other | 7,800 | 6,314 | ||||||||||||||
Total long-term debt | 10,181 | 9,119 | ||||||||||||||
Commitments and Contingencies (Note 10) | ||||||||||||||||
Shareholders’ Equity | 1,296 | 1,556 | 2,022 | 2,639 | ||||||||||||
Total Liabilities and Shareholders’ Equity | $ | 17,116 | $ | 17,633 | $ | 19,676 | $ | 19,773 | ||||||||
68
Year Ended December 31, | ||||||||||||||||||||||||
2004 | 2005 | 2006 | Year Ended December 31, | |||||||||||||||||||||
(In millions) | 2007 | 2008 | 2009 | |||||||||||||||||||||
(In millions) | ||||||||||||||||||||||||
Cash Flows from Operating Activities: | ||||||||||||||||||||||||
Net income (loss) | $ | (905 | ) | $ | 252 | $ | 432 | |||||||||||||||||
Discontinued operations, net of tax | 133 | 3 | — | |||||||||||||||||||||
Extraordinary item, net of tax | 977 | (30 | ) | — | ||||||||||||||||||||
Income from continuing operations and cumulative effect of accounting change | 205 | 225 | 432 | |||||||||||||||||||||
Net income | $ | 395 | $ | 446 | $ | 372 | ||||||||||||||||||
Adjustments to reconcile income from continuing operations to net cash provided by operating activities: | ||||||||||||||||||||||||
Depreciation and amortization | 490 | 541 | 599 | 631 | 708 | 743 | ||||||||||||||||||
Amortization of deferred financing costs | 92 | 77 | 56 | 69 | 29 | 37 | ||||||||||||||||||
Deferred income taxes | 265 | 232 | (234 | ) | - | 487 | 269 | |||||||||||||||||
Tax and interest reserves reductions related to ZENS and ACES settlement | — | — | (107 | ) | ||||||||||||||||||||
Investment tax credit | (7 | ) | (8 | ) | (7 | ) | ||||||||||||||||||
Unrealized loss (gain) on Time Warner investment | (32 | ) | 44 | (94 | ) | |||||||||||||||||||
Unrealized loss (gain) on marketable securities | 114 | 139 | (82 | ) | ||||||||||||||||||||
Unrealized loss (gain) on indexed debt securities | 20 | (49 | ) | 80 | (111 | ) | (128 | ) | 68 | |||||||||||||||
Write-down of natural gas inventory | — | — | 66 | 11 | 30 | 6 | ||||||||||||||||||
Equity in earnings of unconsolidated affiliates, net of distributions | (13 | ) | (51 | ) | (3 | ) | ||||||||||||||||||
Changes in other assets and liabilities: | ||||||||||||||||||||||||
Accounts receivable and unbilled revenues, net | (202 | ) | (456 | ) | 262 | - | (82 | ) | 283 | |||||||||||||||
Inventory | (10 | ) | (115 | ) | (82 | ) | (102 | ) | (109 | ) | 236 | |||||||||||||
Taxes receivable | 35 | (53 | ) | 53 | ||||||||||||||||||||
Accounts payable | 218 | 321 | (269 | ) | (185 | ) | 87 | (237 | ) | |||||||||||||||
Fuel cost over (under) recovery/surcharge | 25 | (129 | ) | 111 | ||||||||||||||||||||
Fuel cost over (under) recovery | (93 | ) | 45 | (5 | ) | |||||||||||||||||||
Non-trading derivatives, net | (40 | ) | (12 | ) | (18 | ) | 11 | (25 | ) | 28 | ||||||||||||||
Margin deposits, net | 12 | 51 | (156 | ) | 65 | (182 | ) | 116 | ||||||||||||||||
Interest and taxes accrued | 81 | (471 | ) | 230 | (33 | ) | (118 | ) | (41 | ) | ||||||||||||||
Net regulatory assets and liabilities | (520 | ) | (192 | ) | 79 | 81 | (366 | ) | - | |||||||||||||||
Clawback payment from RRI | 177 | — | — | |||||||||||||||||||||
Pension contribution | (476 | ) | (75 | ) | — | |||||||||||||||||||
Other current assets | (34 | ) | (14 | ) | (76 | ) | 13 | (27 | ) | 27 | ||||||||||||||
Other current liabilities | (22 | ) | 69 | 18 | (20 | ) | 29 | 6 | ||||||||||||||||
Other assets | 80 | 30 | 43 | (20 | ) | (20 | ) | (1 | ) | |||||||||||||||
Other liabilities | 4 | 67 | 6 | (51 | ) | (8 | ) | 3 | ||||||||||||||||
Other, net | 20 | 18 | (1 | ) | 12 | (33 | ) | 16 | ||||||||||||||||
Net cash provided by operating activities of continuing operations | 381 | 101 | 991 | |||||||||||||||||||||
Net cash provided by (used in) operating activities of discontinued operations | 355 | (38 | ) | — | ||||||||||||||||||||
Net cash provided by operating activities | 736 | 63 | 991 | 774 | 851 | 1,841 | ||||||||||||||||||
Cash Flows from Investing Activities: | ||||||||||||||||||||||||
Capital expenditures | (604 | ) | (693 | ) | (1,007 | ) | (1,114 | ) | (1,020 | ) | (1,160 | ) | ||||||||||||
Proceeds from sale of Texas Genco, including cash retained | 2,947 | 700 | — | |||||||||||||||||||||
Purchase of minority interest of Texas Genco | (326 | ) | (383 | ) | — | |||||||||||||||||||
Decrease (increase) in restricted cash for purchase of minority interest of Texas Genco | (390 | ) | 383 | — | ||||||||||||||||||||
Funds held for purchase of additional shares in South Texas Project | (191 | ) | — | — | ||||||||||||||||||||
Increase in cash of Texas Genco | — | 24 | — | |||||||||||||||||||||
Increase in restricted cash of transition bond companies | — | (12 | ) | (32 | ) | |||||||||||||||||||
Decrease (increase) in restricted cash of transition and system restoration bond companies | (1 | ) | (11 | ) | 26 | |||||||||||||||||||
Decrease (increase) in notes receivable from unconsolidated affiliates | (148 | ) | (175 | ) | 323 | |||||||||||||||||||
Investment in unconsolidated affiliates | (39 | ) | (206 | ) | (115 | ) | ||||||||||||||||||
Other, net | 30 | (2 | ) | (17 | ) | 2 | 44 | 30 | ||||||||||||||||
Net cash provided by (used in) investing activities | 1,466 | 17 | (1,056 | ) | ||||||||||||||||||||
Net cash used in investing activities | (1,300 | ) | (1,368 | ) | (896 | ) | ||||||||||||||||||
Cash Flows from Financing Activities: | ||||||||||||||||||||||||
Increase (decrease) in short-term borrowings, net | (63 | ) | 75 | 187 | 45 | (79 | ) | (98 | ) | |||||||||||||||
Long-term revolving credit facility, net | (1,206 | ) | (236 | ) | (3 | ) | ||||||||||||||||||
Revolving credit facilities, net | 331 | 1,110 | (1,441 | ) | ||||||||||||||||||||
Proceeds from long-term debt | 229 | 3,161 | 324 | 900 | 1,088 | 1,165 | ||||||||||||||||||
Payments of long-term debt | (943 | ) | (3,045 | ) | (229 | ) | (548 | ) | (1,373 | ) | (222 | ) | ||||||||||||
Debt issuance costs | (15 | ) | (21 | ) | (5 | ) | (9 | ) | (26 | ) | (10 | ) | ||||||||||||
Payment of common stock dividends | (123 | ) | (124 | ) | (187 | ) | (218 | ) | (246 | ) | (276 | ) | ||||||||||||
Payment of common stock dividends by subsidiary | (15 | ) | — | — | ||||||||||||||||||||
Proceeds from issuance of common stock, net | 12 | 17 | 27 | 22 | 80 | 504 | ||||||||||||||||||
Other, net | — | 2 | 4 | 5 | 1 | 6 | ||||||||||||||||||
Net cash provided by (used in) financing activities | (2,124 | ) | (171 | ) | 118 | 528 | 555 | (372 | ) | |||||||||||||||
Net Increase (Decrease) in Cash and Cash Equivalents | 78 | (91 | ) | 53 | ||||||||||||||||||||
Net Increase in Cash and Cash Equivalents | 2 | 38 | 573 | |||||||||||||||||||||
Cash and Cash Equivalents at Beginning of Year | 87 | 165 | 74 | 127 | 129 | 167 | ||||||||||||||||||
Cash and Cash Equivalents at End of Year | $ | 165 | $ | 74 | $ | 127 | $ | 129 | $ | 167 | $ | 740 | ||||||||||||
Supplemental Disclosure of Cash Flow Information: | ||||||||||||||||||||||||
Cash Payments: | ||||||||||||||||||||||||
Interest, net of capitalized interest | $ | 759 | $ | 667 | $ | 532 | $ | 572 | $ | 586 | $ | 624 | ||||||||||||
Income taxes (refunds), net | (124 | ) | 351 | 195 | 205 | (84 | ) | (9 | ) | |||||||||||||||
Non-cash transactions: | ||||||||||||||||||||||||
Increase in accounts payable related to capital expenditures | — | 35 | 113 | |||||||||||||||||||||
Accounts payable related to capital expenditures | 75 | 96 | 84 |
69
2004 | 2005 | 2006 | |||||||||||||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | Shares | Amount | 2007 | 2008 | 2009 | |||||||||||||||||||||||||||||||
(In millions of dollars and shares) | Shares | Amount | Shares | Amount | Shares | Amount | |||||||||||||||||||||||||||||||||
(In millions of dollars and shares) | |||||||||||||||||||||||||||||||||||||||
Preference Stock, none outstanding | — | $ | — | — | $ | — | — | $ | — | - | $ | - | - | $ | - | - | $ | - | |||||||||||||||||||||
Cumulative Preferred Stock, $0.01 par value; authorized 20,000,000 shares, none outstanding | — | — | — | — | — | — | - | - | - | - | - | - | |||||||||||||||||||||||||||
Common Stock, $0.01 par value; authorized 1,000,000,000 shares | |||||||||||||||||||||||||||||||||||||||
Balance, beginning of year | 306 | 3 | 308 | 3 | 310 | 3 | 314 | 3 | 323 | 3 | 346 | 3 | |||||||||||||||||||||||||||
Issuances related to benefit and investment plans | 2 | — | 2 | — | 4 | — | 2 | - | 6 | - | 7 | - | |||||||||||||||||||||||||||
Issuances related to convertible debt conversions | 7 | - | 17 | - | - | - | |||||||||||||||||||||||||||||||||
Issuances related to public offerings | - | - | - | - | 38 | 1 | |||||||||||||||||||||||||||||||||
Balance, end of year | 308 | 3 | 310 | 3 | 314 | 3 | 323 | 3 | 346 | 3 | 391 | 4 | |||||||||||||||||||||||||||
AdditionalPaid-in-Capital | |||||||||||||||||||||||||||||||||||||||
Balance, beginning of year | — | 2,868 | — | 2,891 | — | 2,931 | 2,977 | 3,046 | 3,158 | ||||||||||||||||||||||||||||||
Cumulative effect of adoption of convertible debt pronouncement (See Note 2(o)) | 23 | - | - | ||||||||||||||||||||||||||||||||||||
Balance, beginning of year (as adjusted) | 3,000 | 3,046 | 3,158 | ||||||||||||||||||||||||||||||||||||
Issuances related to benefit and investment plans | — | 23 | — | 40 | — | 46 | 46 | 112 | 86 | ||||||||||||||||||||||||||||||
Issuances related to public offerings, net of issuance costs | - | - | 427 | ||||||||||||||||||||||||||||||||||||
Balance, end of year | — | 2,891 | — | 2,931 | — | 2,977 | 3,046 | 3,158 | 3,671 | ||||||||||||||||||||||||||||||
Unearned ESOP stock | |||||||||||||||||||||||||||||||||||||||
Balance, beginning of year | (1 | ) | (3 | ) | — | — | — | — | |||||||||||||||||||||||||||||||
Issuances related to benefit plan | 1 | 3 | — | — | — | — | |||||||||||||||||||||||||||||||||
Balance, end of year | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||
Accumulated Deficit | |||||||||||||||||||||||||||||||||||||||
Balance, beginning of year | (700 | ) | (1,728 | ) | (1,600 | ) | (1,355 | ) | (1,194 | ) | (1,008 | ) | |||||||||||||||||||||||||||
Net income (loss) | (905 | ) | 252 | 432 | |||||||||||||||||||||||||||||||||||
Common stock dividends — $0.40 per share in 2004 and 2005, and $0.60 per share in 2006 | (123 | ) | (124 | ) | (187 | ) | |||||||||||||||||||||||||||||||||
Cumulative effect of adoption of convertible debt pronouncement (See Note 2(o)) | (18 | ) | - | - | |||||||||||||||||||||||||||||||||||
Cumulative effect of change in accounting principle (see Note 2(p)) | - | (15 | ) | - | |||||||||||||||||||||||||||||||||||
Balance, beginning of year (as adjusted) | (1,373 | ) | (1,209 | ) | (1,008 | ) | |||||||||||||||||||||||||||||||||
Net income | 395 | 446 | 372 | ||||||||||||||||||||||||||||||||||||
Cumulative effect of uncertain tax positions standard | 2 | - | - | ||||||||||||||||||||||||||||||||||||
Common stock dividends - $0.68 per share in 2007, $0.73 per share in 2008, and $0.76 per share in 2009 | (218 | ) | (245 | ) | (276 | ) | |||||||||||||||||||||||||||||||||
Balance, end of year | (1,728 | ) | (1,600 | ) | (1,355 | ) | (1,194 | ) | (1,008 | ) | (912 | ) | |||||||||||||||||||||||||||
Accumulated Other Comprehensive Loss | |||||||||||||||||||||||||||||||||||||||
Balance, end of year: | |||||||||||||||||||||||||||||||||||||||
SFAS No. 158 incremental effect | — | — | (79 | ) | |||||||||||||||||||||||||||||||||||
Minimum pension liability adjustment | (6 | ) | (15 | ) | (3 | ) | |||||||||||||||||||||||||||||||||
Adjustment to pension and postretirement plans | (48 | ) | (127 | ) | (120 | ) | |||||||||||||||||||||||||||||||||
Net deferred gain (loss) from cash flow hedges | (51 | ) | (23 | ) | 13 | 4 | (4 | ) | (4 | ) | |||||||||||||||||||||||||||||
Other comprehensive loss from discontinued operations | (3 | ) | — | — | |||||||||||||||||||||||||||||||||||
Total accumulated other comprehensive loss, end of year | (60 | ) | (38 | ) | (69 | ) | (44 | ) | (131 | ) | (124 | ) | |||||||||||||||||||||||||||
Total Shareholders’ Equity | $ | 1,106 | $ | 1,296 | $ | 1,556 | $ | 1,811 | $ | 2,022 | $ | 2,639 | |||||||||||||||||||||||||||
CenterPoint Energy Houston Electric, LLC (CenterPoint Houston), which engages in the electric transmission and distribution business | ||
71
Weighted Average | ||||||||||||||||||||||||
Weighted Average | Useful Lives | December 31, | ||||||||||||||||||||||
Useful Lives | December 31, | (Years) | 2008 | 2009 | ||||||||||||||||||||
(Years) | 2005 | 2006 | (In millions) | |||||||||||||||||||||
(In millions) | ||||||||||||||||||||||||
Electric transmission & distribution | 39 | $ | 6,463 | $ | 6,823 | |||||||||||||||||||
Natural gas distribution | 30 | 2,740 | 2,875 | |||||||||||||||||||||
Competitive natural gas sales and services | 25 | 27 | 53 | |||||||||||||||||||||
Electric Transmission & Distribution | 27 | $ | 7,256 | $ | 7,325 | |||||||||||||||||||
Natural Gas Distribution | 31 | 3,266 | 3,436 | |||||||||||||||||||||
Competitive Natural Gas Sales and Services | 26 | 67 | 69 | |||||||||||||||||||||
Interstate Pipelines | 53 | 1,520 | 1,943 | 58 | 2,334 | 2,524 | ||||||||||||||||||
Field Services | 52 | 367 | 429 | 51 | 601 | 931 | ||||||||||||||||||
Other property | 30 | 441 | 444 | 26 | 482 | 485 | ||||||||||||||||||
Total | 11,558 | 12,567 | 14,006 | 14,770 | ||||||||||||||||||||
Accumulated depreciation and amortization: | ||||||||||||||||||||||||
Electric transmission & distribution | (2,386 | ) | (2,566 | ) | ||||||||||||||||||||
Natural gas distribution | (391 | ) | (462 | ) | ||||||||||||||||||||
Competitive natural gas sales and services | (5 | ) | (9 | ) | ||||||||||||||||||||
Electric Transmission & Distribution | 2,652 | 2,737 | ||||||||||||||||||||||
Natural Gas Distribution | 708 | 825 | ||||||||||||||||||||||
Competitive Natural Gas Sales and Services | 11 | 13 | ||||||||||||||||||||||
Interstate Pipelines | (144 | ) | (176 | ) | 182 | 223 | ||||||||||||||||||
Field Services | (23 | ) | (31 | ) | 28 | 27 | ||||||||||||||||||
Other property | (117 | ) | (119 | ) | 129 | 157 | ||||||||||||||||||
Total accumulated depreciation and amortization | (3,066 | ) | (3,363 | ) | 3,710 | 3,982 | ||||||||||||||||||
Property, plant and equipment, net | $ | 8,492 | $ | 9,204 | $ | 10,296 | $ | 10,788 | ||||||||||||||||
Natural Gas Distribution | $ | 746 | ||
Interstate Pipelines | 579 | |||
Competitive Natural Gas Sales and Services | 339 | |||
Field Services | 25 | |||
Other Operations | 20 | |||
Total | $ | 1,709 | ||
72
Natural Gas Distribution | $ | 746 | ||
Interstate Pipelines | 579 | |||
Competitive Natural Gas Sales and Services | 335 | |||
Field Services | 25 | |||
Other Operations | 11 | |||
Total | $ | 1,696 |
December 31, | ||||||||
2005 | 2006 | |||||||
(In millions) | ||||||||
Recoverable electric generation-related regulatory assets(1) | $ | 332 | $ | 304 | ||||
Securitized regulatory asset | 2,420 | 2,285 | ||||||
Unamortized loss on reacquired debt | 91 | 85 | ||||||
Pension and postretirement related regulatory asset(2) | — | 483 | ||||||
Other long-term regulatory assets/liabilities | 46 | 38 | ||||||
Subtotal | 2,889 | 3,195 | ||||||
Estimated removal costs | (662 | ) | (697 | ) | ||||
Total | $ | 2,227 | $ | 2,498 | ||||
December 31, | ||||||||
2008 | 2009 | |||||||
(In millions) | ||||||||
Securitized regulatory asset (1) | $ | 2,430 | $ | 2,886 | ||||
Unrecognized equity return | (207 | ) | (232 | ) | ||||
Unamortized loss on reacquired debt | 73 | 67 | ||||||
Hurricane Ike restoration cost (1) | 435 | 5 | ||||||
Pension and postretirement-related regulatory asset | 848 | 781 | ||||||
Other long-term regulatory assets(2) | 105 | 170 | ||||||
Total regulatory assets (1) | 3,684 | 3,677 | ||||||
Estimated removal costs | 779 | 818 | ||||||
Other long-term regulatory liabilities | 42 | 103 | ||||||
Total regulatory liabilities | 821 | 921 | ||||||
Total regulatory assets and liabilities, net | $ | 2,863 | $ | 2,756 |
(1) |
(2) |
73
2007 | 2008 | 2009 | ||||||||||
Depreciation expense | $ | 455 | $ | 478 | $ | 496 | ||||||
Amortization expense | 176 | 230 | 247 | |||||||||
Total depreciation and amortization expense | $ | 631 | $ | 708 | $ | 743 |
2004 | 2005 | 2006 | ||||||||||
Depreciation expense | $ | 415 | $ | 432 | $ | 440 | ||||||
Amortization expense | 75 | 109 | 159 | |||||||||
Total depreciation and amortization expense | $ | 490 | $ | 541 | $ | 599 | ||||||
December 31, | ||||||||
2005 | 2006 | |||||||
(In millions) | ||||||||
Materials and supplies | $ | 88 | $ | 94 | ||||
Natural gas | 294 | 305 | ||||||
Total inventory | $ | 382 | $ | 399 | ||||
December 31, | ||||||||
2008 | 2009 | |||||||
(In millions) | ||||||||
Materials and supplies | $ | 128 | $ | 138 | ||||
Natural gas | 441 | 189 | ||||||
Total inventory | $ | 569 | $ | 327 |
75
(l) Investments in Other |
76
Before | Change due | After | ||||||||||
Adoption of | to | Adoption of | ||||||||||
SFAS No. 158 | SFAS No. 158 | SFAS No. 158 | ||||||||||
Other Assets: | ||||||||||||
Regulatory asset | $ | 17 | $ | 466 | $ | 483 | ||||||
Other | 616 | (507 | ) | 109 | ||||||||
Current Liabilities: | ||||||||||||
Other | — | 15 | 15 | |||||||||
Other Liabilities: | ||||||||||||
Accumulated deferred taxes, net | (2 | ) | (64 | ) | (66 | ) | ||||||
Benefit obligations | 288 | 87 | 375 | |||||||||
Shareholders’ Equity: | ||||||||||||
Accumulated other comprehensive loss | (3 | ) | (79 | ) | (82 | ) |
(p) |
78
Year Ended | ||||
December 31, | ||||
2004 | ||||
Net loss as reported | $ | (905 | ) | |
Add: Total stock-based employee compensation expense as recorded, net of related tax effects | 5 | |||
Less: Total stock-based employee compensation expense determined under fair value based method for all awards, net of related tax effects | (9 | ) | ||
Pro-forma net loss | $ | (909 | ) | |
Basic Loss Per Share: | ||||
As reported | $ | (2.94 | ) | |
Pro-forma | $ | (2.95 | ) | |
Diluted Loss Per Share: | ||||
As reported | $ | (2.48 | ) | |
Pro-forma | $ | (2.49 | ) |
Expected life in years | 5 | |||||||
Interest rate | 3.02 | % | ||||||
Volatility | 27.23 | % | ||||||
Expected common stock dividend | $ | 0.40 |
79
Outstanding Options | ||||||||||||||||
Year Ended December 31, 2006 | ||||||||||||||||
Remaining Average | ||||||||||||||||
Shares | Weighted-Average | Contractual | Aggregate Intrinsic | |||||||||||||
(Thousands) | Exercise Price | Life (Years) | Value (Millions) | |||||||||||||
Outstanding at December 31, 2005 | 13,667 | 16.05 | ||||||||||||||
Forfeited or expired | (2,306 | ) | 12.38 | |||||||||||||
Exercised | (1,788 | ) | 14.90 | |||||||||||||
Outstanding at December 31, 2006 | 9,573 | 17.15 | 3.7 | $ | 35 | |||||||||||
Exercisable at December 31, 2006 | 9,007 | 17.54 | 3.5 | 32 | ||||||||||||
Non-Vested Options | ||||||||
Year Ended December 31, 2006 | ||||||||
Weighted-Average | ||||||||
Shares | Grant Date | |||||||
(Thousands) | Fair Value | |||||||
Outstanding at December 31, 2005 | 1,859 | $ | 1.79 | |||||
Vested | (1,244 | ) | 1.76 | |||||
Forfeited or expired | (49 | ) | 1.81 | |||||
Outstanding at December 31, 2006 | 566 | 1.86 | ||||||
Outstanding Options Year Ended December 31, 2009 | |||||||||||||||
Shares (Thousands) | Weighted-Average Exercise Price | Remaining Average Contractual Life (Years) | Aggregate Intrinsic Value (Millions) | ||||||||||||
Outstanding at December 31, 2008 | 5,856 | $ | 17.67 | ||||||||||||
Expired | (573 | ) | 18.28 | ||||||||||||
Cancelled | (295 | ) | 25.63 | ||||||||||||
Exercised | (475 | ) | 9.23 | ||||||||||||
Outstanding at December 31, 2009 | 4,513 | 17.95 | 1.9 | $ | 14 | ||||||||||
Exercisable at December 31, 2009 | 4,513 | 17.95 | 1.9 | 14 |
Outstanding and Non-Vested Shares | ||||||||||||||||
Year Ended December 31, 2006 | ||||||||||||||||
Remaining Average | Weighted-Average | |||||||||||||||
Shares | Contractual Life | Aggregate Intrinsic | Grant Date | |||||||||||||
(Thousands) | (Years) | Value (Millions) | Fair Value | |||||||||||||
Outstanding at December 31, 2005 | 1,560 | $ | 9.30 | |||||||||||||
Granted | 910 | 13.05 | ||||||||||||||
Forfeited | (78 | ) | 12.73 | |||||||||||||
Vested and released to participants | (689 | ) | 5.72 | |||||||||||||
Outstanding at December 31, 2006 | 1,703 | 1.5 | $ | 19 | 12.60 | |||||||||||
Outstanding and Non-Vested Shares Year Ended December 31, 2009 | |||||||||||||||
Shares (Thousands) | Weighted-Average Grant Date Fair Value | Remaining Average Contractual Life (Years) | Aggregate Intrinsic Value (Millions) | ||||||||||||
Outstanding at December 31, 2008 | 2,102 | $ | 15.37 | ||||||||||||
Granted | 1,219 | 12.42 | |||||||||||||
Forfeited or cancelled | (222 | ) | 13.25 | ||||||||||||
Vested and released to participants | (516 | ) | 13.08 | ||||||||||||
Outstanding at December 31, 2009 | 2,583 | 14.62 | 1.2 | $ | 28 |
Outstanding and Non-Vested Units | ||||||||||||||||
Year Ended December 31, 2006 | ||||||||||||||||
Weighted-Average | Remaining Average | |||||||||||||||
Units | Grant Date | Contractual Life | Aggregate Intrinsic | |||||||||||||
(Thousands) | Fair Value | (Years) | Value (Millions) | |||||||||||||
Outstanding at December 31, 2005 | 34 | $ | 100.00 | |||||||||||||
Forfeited | (2 | ) | 100.00 | |||||||||||||
Vested and released to participants | (1 | ) | 100.00 | |||||||||||||
Outstanding at December 31, 2006 | 31 | 100.00 | — | $ | 2 | |||||||||||
Outstanding and Non-Vested Shares | ||||||||||||||||
Year Ended December 31, 2006 | ||||||||||||||||
Weighted-Average | Remaining Average | |||||||||||||||
Shares | Grant Date | Contractual Life | Aggregate Intrinsic | |||||||||||||
(Thousands) | Fair Value | (Years) | Value (Millions) | |||||||||||||
Outstanding at December 31, 2005 | 969 | $ | 8.88 | |||||||||||||
Granted | 292 | 12.96 | ||||||||||||||
Forfeited | (24 | ) | 12.09 | |||||||||||||
Vested and released to participants | (484 | ) | 6.11 | |||||||||||||
Outstanding at December 31, 2006 | 753 | 12.14 | 1.2 | $ | 12 | |||||||||||
Outstanding and Non-Vested Stock Shares Year Ended December 31, 2009 | |||||||||||||||
Shares (Thousands) | Weighted-Average Grant Date Fair Value | Remaining Average Contractual Life (Years) | Aggregate Intrinsic Value (Millions) | ||||||||||||
Outstanding at December 31, 2008 | 789 | $ | 15.33 | ||||||||||||
Granted | 460 | 12.30 | |||||||||||||
Forfeited or cancelled | (9 | ) | 14.02 | ||||||||||||
Vested and released to participants | (289 | ) | 13.73 | ||||||||||||
Outstanding at December 31, 2009 | 951 | 14.36 | 1.3 | $ | 14 |
Year Ended December 31, | ||||||||||||
2007 | 2008 | 2009 | ||||||||||
Performance awards | $ | 18.20 | $ | 15.40 | $ | 12.42 | ||||||
Stock awards | 18.29 | 15.09 | 12.30 |
Year Ended December 31, | ||||||||||||
2004 | 2005 | 2006 | ||||||||||
Options | $ | 1.86 | $ | — | $ | — | ||||||
Performance units | 100.00 | — | — | |||||||||
Performance shares | — | 12.13 | 13.05 | |||||||||
Stock awards | 10.95 | 12.25 | 12.96 |
Year Ended December 31, | ||||||||||||
2004 | 2005 | 2006 | ||||||||||
(In millions) | ||||||||||||
Options exercised | $ | 3 | $ | 8 | $ | 10 | ||||||
Performance shares | 7 | 5 | 10 | |||||||||
Stock awards | — | — | 7 |
Year Ended December 31, | ||||||||||||
2007 | 2008 | 2009 | ||||||||||
(In millions) | ||||||||||||
Stock options exercised | $ | 13 | $ | 2 | $ | 2 | ||||||
Performance awards | 3 | 6 | 7 | |||||||||
Stock awards | 4 | 5 | 4 |
81
82
Year Ended December 31, | ||||||||||||||||||||||||||||
2004 | 2005 | 2006 | ||||||||||||||||||||||||||
Pension | Postretirement | Pension | Postretirement | Pension | Postretirement | |||||||||||||||||||||||
Benefits | Benefits | Benefits | Benefits | Benefits | Benefits | |||||||||||||||||||||||
(In millions) | ||||||||||||||||||||||||||||
Service cost | $ | 41 | $ | 4 | $ | 35 | $ | 2 | $ | 37 | $ | 2 | ||||||||||||||||
Interest cost | 106 | 31 | 99 | 27 | 101 | 26 | ||||||||||||||||||||||
Expected return on plan assets | (103 | ) | (13 | ) | (137 | ) | (12 | ) | (143 | ) | (12 | ) | ||||||||||||||||
Amortization of prior service cost | (9 | ) | 6 | (7 | ) | 2 | (7 | ) | 2 | |||||||||||||||||||
Amortization of net (gain) loss | 47 | — | 46 | — | 50 | — | ||||||||||||||||||||||
Amortization of transition obligation | — | 7 | — | 7 | — | 7 | ||||||||||||||||||||||
Curtailment | — | 17 | — | — | — | — | ||||||||||||||||||||||
Benefit enhancement | 4 | 2 | — | — | 8 | 1 | ||||||||||||||||||||||
Other | — | — | — | 1 | — | — | ||||||||||||||||||||||
Net periodic cost | $ | 86 | $ | 54 | $ | 36 | $ | 27 | $ | 46 | $ | 26 | ||||||||||||||||
Above amounts include the following net periodic cost related to discontinued operations | $ | 11 | $ | 20 | $ | — | $ | — | $ | — | $ | — | ||||||||||||||||
Year Ended December 31, | ||||||||||||||||||||||||
2007 | 2008 | 2009 | ||||||||||||||||||||||
Pension Benefits | Postretirement Benefits | Pension Benefits | Postretirement Benefits | Pension Benefits | Postretirement Benefits | |||||||||||||||||||
(In millions) | ||||||||||||||||||||||||
Service cost | $ | 37 | $ | 2 | $ | 31 | $ | 1 | $ | 25 | $ | 1 | ||||||||||||
Interest cost | 100 | 26 | 101 | 27 | 113 | 28 | ||||||||||||||||||
Expected return on plan assets | (149 | ) | (12 | ) | (147 | ) | (12 | ) | (98 | ) | (9 | ) | ||||||||||||
Amortization of prior service cost (credit) | (7 | ) | - | (8 | ) | 3 | 3 | 3 | ||||||||||||||||
Amortization of net loss | 34 | 3 | 23 | - | 68 | - | ||||||||||||||||||
Amortization of transition obligation | - | 7 | - | 7 | - | 7 | ||||||||||||||||||
Benefit enhancement | - | - | 1 | - | - | - | ||||||||||||||||||
Net periodic cost | $ | 15 | $ | 26 | $ | 1 | $ | 26 | $ | 111 | $ | 30 |
December 31, | ||||||||||||||||||||||||||||||||||||||||||||||||
2004 | 2005 | 2006 | ||||||||||||||||||||||||||||||||||||||||||||||
Pension | Postretirement | Pension | Postretirement | Pension | Postretirement | December 31, | ||||||||||||||||||||||||||||||||||||||||||
Benefits | Benefits | Benefits | Benefits | Benefits | Benefits | 2007 | 2008 | 2009 | ||||||||||||||||||||||||||||||||||||||||
Pension Benefits | Postretirement Benefits | Pension Benefits | Postretirement Benefits | Pension Benefits | Postretirement Benefits | |||||||||||||||||||||||||||||||||||||||||||
Discount rate | 6.25 | % | 6.25 | % | 5.75 | % | 5.75 | % | 5.70 | % | 5.70 | % | 5.85 | % | 5.85 | % | 6.40 | % | 6.40 | % | 6.90 | % | 6.90 | % | ||||||||||||||||||||||||
Expected return on plan assets | 9.00 | 8.50 | 8.50 | 8.00 | 8.50 | 8.00 | 8.50 | 7.60 | 8.50 | 7.60 | 8.00 | 7.05 | ||||||||||||||||||||||||||||||||||||
Rate of increase in compensation levels | 4.10 | — | 4.60 | — | 4.60 | — | 4.60 | - | 4.60 | - | 4.60 | - |
December 31, | ||||||||||||||||
2005 | 2006 | |||||||||||||||
Pension | Postretirement | Pension | Postretirement | |||||||||||||
Benefits | Benefits | Benefits | Benefits | |||||||||||||
(In millions) | ||||||||||||||||
Change in Benefit Obligation | ||||||||||||||||
Benefit obligation, beginning of year | $ | 1,791 | $ | 535 | $ | 1,830 | $ | 467 | ||||||||
Service cost | 35 | 2 | 37 | 2 | ||||||||||||
Interest cost | 99 | 27 | 101 | 26 | ||||||||||||
Participant contributions | — | 5 | — | 6 | ||||||||||||
Benefits paid | (116 | ) | (38 | ) | (161 | ) | (42 | ) | ||||||||
Actuarial loss (gain) | 21 | (65 | ) | (39 | ) | (3 | ) | |||||||||
Plan amendment | — | — | — | 8 | ||||||||||||
Medicare reimbursement | — | — | — | 4 | ||||||||||||
Benefit enhancement | — | 1 | 8 | 1 | ||||||||||||
Benefit obligation, end of year | 1,830 | 467 | 1,776 | 469 | ||||||||||||
Change in Plan Assets | ||||||||||||||||
Plan assets, beginning of year | 1,657 | 156 | 1,729 | 154 | ||||||||||||
Employer contributions | 85 | 24 | 7 | 27 | ||||||||||||
Participant contributions | — | 5 | — | 6 | ||||||||||||
Benefits paid | (116 | ) | (38 | ) | (161 | ) | (42 | ) | ||||||||
Actual investment return | 103 | 7 | 231 | 13 | ||||||||||||
Plan assets, end of year | 1,729 | 154 | 1,806 | 158 | ||||||||||||
Funded status, end of year | (101 | ) | (313 | ) | 30 | (311 | ) | |||||||||
Unrecognized actuarial loss | 747 | 36 | — | — | ||||||||||||
Unrecognized prior service cost | (47 | ) | 12 | — | — | |||||||||||
Unrecognized transition obligation | — | 58 | — | — | ||||||||||||
Net amount recognized | $ | 599 | $ | (207 | ) | $ | 30 | $ | (311 | ) | ||||||
84
December 31, | ||||||||||||||||
2008 | 2009 | |||||||||||||||
Pension Benefits | Postretirement Benefits | Pension Benefits | Postretirement Benefits | |||||||||||||
(In millions, except for actuarial assumptions) | ||||||||||||||||
Change in Benefit Obligation | ||||||||||||||||
Benefit obligation, beginning of year | $ | 1,645 | $ | 437 | $ | 1,710 | $ | 426 | ||||||||
Service cost | 31 | 1 | 25 | 1 | ||||||||||||
Interest cost | 101 | 27 | 113 | 28 | ||||||||||||
Participant contributions | - | 5 | - | 6 | ||||||||||||
Benefits paid | (123 | ) | (38 | ) | (111 | ) | (42 | ) | ||||||||
Actuarial gain (loss) | (59 | ) | (10 | ) | 129 | 29 | ||||||||||
Plan amendment | 114 | - | - | - | ||||||||||||
Medicare reimbursement | - | 4 | - | 2 | ||||||||||||
Benefit enhancement | 1 | - | - | - | ||||||||||||
Benefit obligation, end of year | 1,710 | 426 | 1,866 | 450 | ||||||||||||
Change in Plan Assets | ||||||||||||||||
Fair Value of plan assets, beginning of year | 1,792 | 161 | 1,276 | 135 | ||||||||||||
Employer contributions | 8 | 27 | 20 | 28 | ||||||||||||
Participant contributions | - | 5 | - | 6 | ||||||||||||
Benefits paid | (123 | ) | (38 | ) | (111 | ) | (42 | ) | ||||||||
Actual investment return | (401 | ) | (20 | ) | 247 | 19 | ||||||||||
Fair value of plan assets, end of year | 1,276 | 135 | 1,432 | 146 | ||||||||||||
Funded status, end of year | $ | (434 | ) | $ | (291 | ) | $ | (434 | ) | $ | (304 | ) | ||||
Amounts Recognized in Balance Sheets | ||||||||||||||||
Current liabilities-other | $ | (9 | ) | $ | (10 | ) | $ | (9 | ) | $ | (9 | ) | ||||
Other liabilities-benefit obligations | (425 | ) | (281 | ) | (425 | ) | (295 | ) | ||||||||
Net liability, end of year | $ | (434 | ) | $ | (291 | ) | $ | (434 | ) | $ | (304 | ) | ||||
Actuarial Assumptions | ||||||||||||||||
Discount rate | 6.90 | % | 6.90 | % | 5.70 | % | 5.70 | % | ||||||||
Expected return on plan assets | 8.00 | 7.05 | 8.00 | 7.05 | ||||||||||||
Rate of increase in compensation levels | 4.60 | - | 4.60 | - | ||||||||||||
Healthcare cost trend rate assumed for the next year | - | 6.50 | - | 7.50 | ||||||||||||
Prescription drug cost trend rate assumed for the next year | - | 12.00 | - | 8.00 | ||||||||||||
Rate to which the cost trend rate is assumed to decline (the ultimate trend rate) | - | 5.50 | - | 5.50 | ||||||||||||
Year that the healthcare rate reaches the ultimate trend rate | - | 2011 | - | 2014 | ||||||||||||
Year that the prescription drug rate reaches the ultimate trend rate | - | 2014 | - | 2015 |
December 31, 2005 2006 Pension Postretirement Pension Postretirement Benefits Benefits Benefits Benefits (In millions) Other assets-other $ 655 $ — $ 109 $ — Current liabilities-other — — (7 ) (8 ) Other liabilities-benefit obligations (79 ) (207 ) (72 ) (303 ) Shareholders’ equity-accumulated other comprehensive loss 23 — — — Net asset (liability), end of year $ 599 $ (207 ) $ 30 $ (311 ) Discount rate 5.70 % 5.70 % 5.85 % 5.85 % Expected return on plan assets 8.50 8.00 8.50 7.60 Rate of increase in compensation levels 4.60 — 4.60 — Healthcare cost trend rate assumed for the next year — 9.00 — 7.00 Prescription drug cost trend rate assumed for the next year — — — 13.00 Rate to which the cost trend rate is assumed to decline (the ultimate trend rate) — 5.50 — 5.50 Year that the rate reaches the ultimate trend rate — 2011 — 2014
December 31, | ||||||||||||||||||||||||||||||||
2005 | 2006 | |||||||||||||||||||||||||||||||
Pension | Postretirement | Pension | Postretirement | December 31, | ||||||||||||||||||||||||||||
Benefits | Benefits | Benefits | Benefits | 2008 | 2009 | |||||||||||||||||||||||||||
(In millions) | Pension Benefits | Postretirement Benefits | Pension Benefits | Postretirement Benefits | ||||||||||||||||||||||||||||
(In millions) | ||||||||||||||||||||||||||||||||
Unrecognized actuarial loss | $ | 26 | $ | — | $ | 128 | $ | 8 | $ | 181 | $ | 5 | $ | 162 | $ | 15 | ||||||||||||||||
Unrecognized prior service cost | (3 | ) | — | (7 | ) | 16 | 17 | 11 | 16 | 9 | ||||||||||||||||||||||
Unrecognized transition obligation | — | — | — | 4 | - | 3 | - | 3 | ||||||||||||||||||||||||
Net amount recognized in other comprehensive income | $ | 23 | $ | — | $ | 121 | $ | 28 | ||||||||||||||||||||||||
Net amount recognized in accumulated other comprehensive loss | $ | 198 | $ | 19 | $ | 178 | $ | 27 |
Pension Benefits | Postretirement Benefits | |||||||
Net loss (gain) | $ | (34 | ) | $ | 10 | |||
Amortization of net loss | 15 | - | ||||||
Prior service credit | (2 | ) | (4 | ) | ||||
Amortization of prior service credit (cost) | 1 | 2 | ||||||
Total recognized in comprehensive income | $ | (20 | ) | $ | 8 |
Pension | Postretirement | |||||||
Benefits | Benefits | |||||||
Unrecognized actuarial loss | $ | 9 | $ | — | ||||
Unrecognized prior service cost (credit) | (1 | ) | 2 | |||||
Amounts in comprehensive income to be recognized in net periodic cost in 2007 | $ | 8 | $ | 2 | ||||
85
Pension Benefits | Postretirement Benefits | |||||||
Unrecognized actuarial loss | $ | 13 | $ | - | ||||
Unrecognized prior service cost | 1 | 2 | ||||||
Amounts in comprehensive income to be recognized in net periodic cost in 2010 | $ | 14 | $ | 2 |
December 31, | December 31, | |||||||||||||||||||||||
2005 | 2006 | 2008 | 2009 | |||||||||||||||||||||
(In millions) | Pension Qualified | Pension Non-qualified | Pension Qualified | Pension Non-qualified | ||||||||||||||||||||
(In millions) | ||||||||||||||||||||||||
Accumulated benefit obligation | $ | 79 | $ | 78 | $ | 1,622 | $ | 86 | $ | 1,770 | $ | 94 | ||||||||||||
Projected benefit obligation | 81 | 79 | 1,624 | 86 | 1,772 | 94 | ||||||||||||||||||
Plan assets | — | — | ||||||||||||||||||||||
Fair value of plan assets | 1,276 | - | 1,432 | - |
1% | 1% | |||||||||||||||
Increase | Decrease | |||||||||||||||
(In millions) | 1% Increase | 1% Decrease | ||||||||||||||
(In millions) | ||||||||||||||||
Effect on the postretirement benefit obligation | $ | 21 | $ | 18 | $ | 17 | $ | 15 | ||||||||
Effect on total of service and interest cost | 1 | 1 | 1 | 1 |
December 31, | ||||||||||||||||
2005 | 2006 | |||||||||||||||
Pension | Postretirement | Pension | Postretirement | |||||||||||||
Benefits | Benefits | Benefits | Benefits | |||||||||||||
Domestic equity securities | 48 | % | 27 | % | 50 | % | 28 | % | ||||||||
Global equity securities | 10 | — | 11 | — | ||||||||||||
International equity securities | 11 | 9 | 10 | 11 | ||||||||||||
Debt securities | 30 | 64 | 27 | 61 | ||||||||||||
Real estate | 1 | — | 1 | — | ||||||||||||
Cash | — | — | 1 | — | ||||||||||||
Total | 100 | % | 100 | % | 100 | % | 100 | % | ||||||||
Pension Benefits | Postretirement Benefits | |||||||
Domestic equity securities | ||||||||
% | % | |||||||
Global equity securities | 7-13 | % | ||||||
International equity securities | % | 4-14 | % | |||||
Debt securities | % | 60-70 | % | |||||
Real estate | 0-5 | % | ||||||
Cash | 0-2 | % | 0-2 | % |
Fair Value Measurements at December 31, 2009 (in millions) | ||||||||||||||||
Total | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | |||||||||||||
Cash | $ | 11 | $ | 11 | $ | - | $ | - | ||||||||
Common collective trust funds (1) | 733 | - | 733 | - | ||||||||||||
Corporate Bonds: | ||||||||||||||||
Investment grade or above | 193 | - | 192 | 1 | ||||||||||||
High yield | 2 | - | 2 | |||||||||||||
Equity securities: | ||||||||||||||||
International companies | 162 | 160 | 2 | - | ||||||||||||
U.S. companies | 96 | 96 | - | - | ||||||||||||
Securities received as collateral | 114 | 114 | - | - | ||||||||||||
U.S. government back agencies bonds | 55 | 55 | - | - | ||||||||||||
U.S. treasuries | 50 | 50 | - | - | ||||||||||||
Mortgage backed securities | 39 | - | 39 | - | ||||||||||||
Asset backed securities | 27 | - | 24 | 3 | ||||||||||||
Municipal bonds | 22 | 2 | 20 | - | ||||||||||||
Mutual funds (2) | 21 | 21 | - | - | ||||||||||||
International government bonds | 12 | - | 12 | - | ||||||||||||
Real estate | 9 | - | - | 9 | ||||||||||||
Obligation to return securities received as collateral | (114 | ) | (114 | ) | - | - | ||||||||||
Total | $ | 1,432 | $ | 395 | $ | 1,024 | $ | 13 |
(1) | 30% of the amount invested in common collective trust funds is in fixed income securities, 31% is in U.S. equities and 39% is in international equities. |
(2) | 48% of the amount invested in mutual funds is in fixed income securities and 52% is in U.S. equities. |
Level 3 Investments | ||||||||||||||||
Year Ended December 31, 2009 (in millions) | ||||||||||||||||
Corporate bonds | Asset backed securities | Real estate | Total | |||||||||||||
Balance, beginning of year | $ | 1 | $ | 3 | $ | 14 | $ | 18 | ||||||||
Unrealized gains/(losses) relating to instruments still held at the reporting date | - | - | (5 | ) | (5 | ) | ||||||||||
Balance, end of year | $ | 1 | $ | 3 | $ | 9 | $ | 13 |
Fair Value Measurements at December 31, 2009 (in millions) | ||||||||||||||||
Total | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Observable Input (Level 2) | Significant Unobservable Inputs (Level 3) | |||||||||||||
Mutual funds (1) | $ | 146 | $ | 146 | $ | - | $ | - | ||||||||
Total | $ | 146 | $ | 146 | $ | - | $ | - |
(1) | 65% of the amount invested in mutual funds is in fixed income securities, 26% is in U.S. equities and 9% is in international equities. |
Postretirement Benefit Plan | ||||||||||||
Medicare | ||||||||||||
Pension | Benefit | Subsidy | ||||||||||
Benefits | Payments | Receipts | ||||||||||
2007 | $ | 119 | $ | 33 | $ | (4 | ) | |||||
2008 | 124 | 35 | (4 | ) | ||||||||
2009 | 129 | 36 | (4 | ) | ||||||||
2010 | 131 | 38 | (5 | ) | ||||||||
2011 | 132 | 40 | (5 | ) | ||||||||
2012-2016 | 691 | 216 | (29 | ) |
Postretirement Benefit Plan | ||||||||||||
Pension Benefits | Benefit Payments | Medicare Subsidy Receipts | ||||||||||
2010 | $ | 136 | $ | 33 | $ | (4 | ) | |||||
2011 | 138 | 35 | (5 | ) | ||||||||
2012 | 142 | 36 | (5 | ) | ||||||||
2013 | 145 | 38 | (6 | ) | ||||||||
2014 | 144 | 39 | (6 | ) | ||||||||
2015-2019 | 743 | 216 | (38 | ) |
87
88
Year Ended December 31, | ||||||||
2004 | 2005 | |||||||
Texas Genco net income (loss) as reported | $ | (99 | ) | $ | 10 | |||
Adjustment for Texas Genco loss on sale of fossil assets, net of tax(1) | 426 | — | ||||||
Texas Genco net income as adjusted for loss on sale of fossil assets | 327 | 10 | ||||||
Adjustment for general corporate overhead reclassification, net of tax(2) | 13 | 1 | ||||||
Adjustment for interest expense reclassification, net of tax(3) | (46 | ) | — | |||||
Adjusted income from discontinued operations of Texas Genco, net of tax | 294 | 11 | ||||||
Minority interest in discontinued operations of Texas Genco | (61 | ) | — | |||||
Income from discontinued operations of Texas Genco, net of tax and minority interest | 233 | 11 | ||||||
Loss on sale of Texas Genco, net of tax | (214 | ) | (4 | ) | ||||
Loss offsetting Texas Genco’s earnings, net of tax | (152 | ) | (10 | ) | ||||
Loss on disposal of Texas Genco, net of tax | (366 | ) | (14 | ) | ||||
Total Discontinued Operations of Texas Genco | $ | (133 | ) | $ | (3 | ) | ||
89
90
91
92
93
94
95
Fair Value of Derivative Instruments | ||||||||||
December 31, 2009 | ||||||||||
Total derivatives not designated as hedging instruments | Balance Sheet Location | Derivative Assets Fair Value (2) (3) | Derivative Liabilities Fair Value (2) (3) | |||||||
(in millions) | ||||||||||
Commodity contracts (1) | Current Assets | $ | 46 | $ | (7 | ) | ||||
Commodity contracts (1) | Other Assets | 16 | (1 | ) | ||||||
Commodity contracts (1) | Current Liabilities | 20 | (123 | ) | ||||||
Commodity contracts (1) | Other Liabilities | 1 | (86 | ) | ||||||
Indexed debt securities derivative | Current Liabilities | - | (201 | ) | ||||||
Total | $ | 83 | $ | (418 | ) |
(1) | Commodity contracts are subject to master netting arrangements and are presented on a net basis in the Consolidated Balance Sheets. This netting can cause derivative assets to be ultimately presented in a (liability) account on the Consolidated Balance Sheets. Likewise, derivative (liabilities) could be presented in an asset account. |
(2) | The fair value shown for commodity contracts is comprised of derivative gross volumes totaling 674 billion cubic feet (Bcf) or a net 152 Bcf long position. Of the net long position, basis swaps constitute 71 Bcf and volumes associated with price stabilization activities of the Natural Gas Distribution business segment comprise 51 Bcf. |
(3) | The net of total non-trading derivative assets and liabilities is a $39 million liability as shown on CenterPoint Energy’s Consolidated Balance Sheets, and is comprised of the commodity contracts derivative assets and liabilities separately shown above offset by collateral netting of $95 million. |
Income Statement Impact of Derivative Activity | ||||||
Total derivatives not designated as hedging instruments | Income Statement Location | Year Ended December 31, 2009 | ||||
(in millions) | ||||||
Commodity contracts | Gains (Losses) in Revenue | $ | 102 | |||
Commodity contracts (1) | Gains (Losses) in Expense: Natural Gas | (255 | ) | |||
Indexed debt securities derivative | Gains (Losses) in Other Income (Expense) | (68 | ) | |||
Total | $ | (221 | ) |
(1) | The Gains (Losses) in Expense: Natural Gas includes $(181) million of costs associated with price stabilization activities of the Natural Gas Distribution business segment that will be ultimately recovered through purchased gas adjustments. |
December 31, 2005 | December 31, 2006 | |||||||||||||||
Investment | Investment | |||||||||||||||
Grade(1) | Total | Grade(1) | Total | |||||||||||||
Energy marketers | $ | 24 | $ | 25 | $ | 22 | $ | 27 | ||||||||
Financial institutions | 208 | 208 | 51 | 51 | ||||||||||||
Other | — | 2 | 45 | 41 | ||||||||||||
Total | $ | 232 | $ | 235 | $ | 118 | $ | 119 | ||||||||
December 31, 2008 | December 31, 2009 | |||||||||||||||
Investment Grade(1) | Total | Investment Grade(1) | Total | |||||||||||||
Energy marketers | $ | 8 | $ | 9 | $ | 6 | $ | 6 | ||||||||
Financial institutions | 4 | 4 | 2 | 4 | ||||||||||||
Retail end users (2) | 5 | 125 | 1 | 44 | ||||||||||||
Total | $ | 17 | $ | 138 | $ | 9 | $ | 54 |
(1) |
96
(2) | Retail end users represent commercial and industrial customers who have contracted to fix the price of a portion of their physical gas requirements for future periods. |
Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | Netting Adjustments (1) | Balance as of December 31, 2008 | ||||||||||||||||
(in millions) | ||||||||||||||||||||
Assets | ||||||||||||||||||||
Corporate equities | $ | 218 | $ | - | $ | - | $ | - | $ | 218 | ||||||||||
Investments, including money market funds | 70 | - | - | - | 70 | |||||||||||||||
Derivative assets | 8 | 155 | 49 | (74 | ) | 138 | ||||||||||||||
Total assets | $ | 296 | $ | 155 | $ | 49 | $ | (74 | ) | $ | 426 | |||||||||
Liabilities | ||||||||||||||||||||
Indexed debt securities derivative | $ | - | $ | 133 | $ | - | $ | - | $ | 133 | ||||||||||
Derivative liabilities | 44 | 244 | 107 | (261 | ) | 134 | ||||||||||||||
Total liabilities | $ | 44 | $ | 377 | $ | 107 | $ | (261 | ) | $ | 267 |
(1) | Amounts represent the impact of legally enforceable master netting agreements that allow CenterPoint Energy to settle positive and negative positions and also include cash collateral of $187 million posted with the same counterparties. |
Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | Netting Adjustments (1) | Balance as of December 31, 2009 | ||||||||||||||||
(in millions) | ||||||||||||||||||||
Assets | ||||||||||||||||||||
Corporate equities | $ | 301 | $ | - | $ | - | $ | - | $ | 301 | ||||||||||
Investments, including money market funds | 41 | - | - | - | 41 | |||||||||||||||
Derivative assets | 1 | 77 | 5 | (29 | ) | 54 | ||||||||||||||
Total assets | $ | 343 | $ | 77 | $ | 5 | $ | (29 | ) | $ | 396 | |||||||||
Liabilities | ||||||||||||||||||||
Indexed debt securities derivative | $ | - | $ | 201 | $ | - | $ | - | $ | 201 | ||||||||||
Derivative liabilities | 12 | 194 | 11 | (124 | ) | 93 | ||||||||||||||
Total liabilities | $ | 12 | $ | 395 | $ | 11 | $ | (124 | ) | $ | 294 |
(1) | Amounts represent the impact of legally enforceable master netting agreements that allow CenterPoint Energy to settle positive and negative positions and also include cash collateral of $95 million posted with the same counterparties. |
Fair Value Measurements Using Significant Unobservable Inputs (Level 3) | ||||||||
Derivative assets and liabilities, net | ||||||||
Year Ended December 31, | ||||||||
2008 | 2009 | |||||||
(in millions) | ||||||||
Beginning balance | $ | (3 | ) | $ | (58 | ) | ||
Total unrealized gains or (losses): | ||||||||
Included in earnings | (11 | ) | (1 | ) | ||||
Included in regulatory assets | (10 | ) | (16 | ) | ||||
Purchases, sales, other settlements, net | (35 | ) | 69 | (1) | ||||
Net transfers into Level 3 | 1 | - | ||||||
Ending balance | $ | (58 | ) | $ | (6 | ) | ||
The amount of total gains for the period included in earnings attributable to the change in unrealized gains or losses relating to assets still held at the reporting date | $ | 7 | $ | 1 |
(1) | Purchases, sales, other settlements, net include a $41 million loss and a $66 million gain in 2008 and 2009, respectively, associated with price stabilization activities of CenterPoint Energy’s Natural Gas Distribution business segment. |
TW Securities | Debt Component of ZENS | Derivative Component of ZENS | ||||||||||||||||||||||
Debt | Derivative | |||||||||||||||||||||||
TW | Component | Component | ||||||||||||||||||||||
Investment | of ZENS | of ZENS | ||||||||||||||||||||||
Balance at December 31, 2003 | $ | 390 | $ | 105 | $ | 321 | ||||||||||||||||||
Balance at December 31, 2006 | $ | 471 | $ | 111 | $ | 372 | ||||||||||||||||||
Accretion of debt component of ZENS | — | 2 | — | - | 20 | - | ||||||||||||||||||
Loss on indexed debt securities | — | — | 20 | |||||||||||||||||||||
Gain on TW Common | 31 | — | — | |||||||||||||||||||||
Balance at December 31, 2004 | 421 | 107 | 341 | |||||||||||||||||||||
Accretion of debt component of ZENS | — | 2 | — | |||||||||||||||||||||
2% interest paid | - | (17 | ) | - | ||||||||||||||||||||
Gain on indexed debt securities | — | — | (49 | ) | - | - | (111 | ) | ||||||||||||||||
Loss on TW Common | (44 | ) | — | — | (114 | ) | - | - | ||||||||||||||||
Balance at December 31, 2005 | 377 | 109 | 292 | |||||||||||||||||||||
Balance at December 31, 2007 | 357 | 114 | 261 | |||||||||||||||||||||
Accretion of debt component of ZENS | — | 2 | — | - | 20 | - | ||||||||||||||||||
2% interest paid | - | (17 | ) | - | ||||||||||||||||||||
Gain on indexed debt securities | - | - | (128 | ) | ||||||||||||||||||||
Loss on TW Common | (139 | ) | - | - | ||||||||||||||||||||
Balance at December 31, 2008 | 218 | 117 | 133 | |||||||||||||||||||||
Accretion of debt component of ZENS | - | 21 | - | |||||||||||||||||||||
2% interest paid | - | (17 | ) | - | ||||||||||||||||||||
Loss on indexed debt securities | — | — | 80 | - | - | 68 | ||||||||||||||||||
Gain on TW Common | 94 | — | — | |||||||||||||||||||||
Balance at December 31, 2006 | $ | 471 | $ | 111 | $ | 372 | ||||||||||||||||||
Gain on TW Securities | 82 | - | - | |||||||||||||||||||||
Balance at December 31, 2009 | $ | 300 | $ | 121 | $ | 201 |
December 31, | December 31, | |||||||||||||||||||||||||||||||
2005 | 2006 | |||||||||||||||||||||||||||||||
Long-Term | Current(1) | Long-Term | Current(1) | December 31, 2008 | December 31, 2009 | |||||||||||||||||||||||||||
(In millions) | Long-Term | Current(1) | Long-Term | Current(1) | ||||||||||||||||||||||||||||
(In millions) | ||||||||||||||||||||||||||||||||
Short-term borrowings: | ||||||||||||||||||||||||||||||||
CERC Corp. receivables facility | $ | — | $ | — | $ | — | $ | 187 | $ | - | $ | 78 | $ | - | $ | - | ||||||||||||||||
Inventory financing | - | 75 | - | 55 | ||||||||||||||||||||||||||||
Total short-term borrowings | - | 153 | - | 55 | ||||||||||||||||||||||||||||
Long-term debt: | ||||||||||||||||||||||||||||||||
CenterPoint Energy: | ||||||||||||||||||||||||||||||||
ZENS(2) | $ | — | $ | 109 | $ | — | $ | 111 | - | 117 | - | 121 | ||||||||||||||||||||
Senior notes 5.875% to 7.25% due 2008 to 2015 | 600 | — | 600 | — | ||||||||||||||||||||||||||||
Convertible senior notes 2.875% to 3.75% due 2023 to 2024(3) | 830 | — | — | 830 | ||||||||||||||||||||||||||||
Pollution control bonds 5.60% to 6.70% due 2012 to 2027(4) | 151 | — | 151 | — | ||||||||||||||||||||||||||||
Pollution control bonds 4.70% to 8.00% due 2011 to 2030(5) | 1,046 | — | 1,046 | — | ||||||||||||||||||||||||||||
Bank loans and commercial paper due 2006 to 2010(6) | 3 | — | — | — | ||||||||||||||||||||||||||||
Junior subordinated debentures payable to affiliate 8.257% due 2037(7) | 103 | — | — | 103 | ||||||||||||||||||||||||||||
Senior notes 5.95% to 7.25% due 2010 to 2018 | 950 | - | 750 | 200 | ||||||||||||||||||||||||||||
Pollution control bonds 4.00% due 2015(3) | 151 | - | 151 | - | ||||||||||||||||||||||||||||
Pollution control bonds 4.70% to 8.00% due 2011 to 2030(4)(5) | 871 | - | 581 | 290 | ||||||||||||||||||||||||||||
Bank loans due 2012(6) | 264 | - | - | - | ||||||||||||||||||||||||||||
Other | 12 | 1 | - | 7 | ||||||||||||||||||||||||||||
CenterPoint Houston: | ||||||||||||||||||||||||||||||||
First mortgage bonds 9.15% due 2021 | 102 | — | 102 | — | 102 | - | 102 | - | ||||||||||||||||||||||||
General mortgage bonds 5.60% to 6.95% due 2013 to 2033 | 1,262 | — | 1,262 | — | ||||||||||||||||||||||||||||
Pollution control bonds 3.625% to 5.60% due 2012 to 2027(8) | 229 | — | 229 | — | ||||||||||||||||||||||||||||
Transition Bonds 3.84% to 5.63% due 2006 to 2019 | 2,407 | 73 | 2,260 | 147 | ||||||||||||||||||||||||||||
General mortgage bonds 5.60% to 7.00% due 2013 to 2033 | 1,262 | - | 1,762 | - | ||||||||||||||||||||||||||||
Pollution control bonds 3.625% to 5.60% due 2012 to 2027(7) | 229 | - | 229 | - | ||||||||||||||||||||||||||||
System restoration bonds 1.833% to 4.243% due 2010 to 2022 | - | - | 645 | 20 | ||||||||||||||||||||||||||||
Transition Bonds 4.192% to 5.63% due 2010 to 2020 | 2,381 | 208 | 2,160 | 221 | ||||||||||||||||||||||||||||
Bank loans due 2012(6) | 251 | - | - | - | ||||||||||||||||||||||||||||
CERC Corp.: | ||||||||||||||||||||||||||||||||
Convertible subordinated debentures 6.00% due 2012 | 63 | 6 | 56 | 7 | 44 | 7 | - | 44 | ||||||||||||||||||||||||
Senior notes 5.95% to 7.875% due 2007 to 2014 | 1,772 | 148 | 2,097 | — | ||||||||||||||||||||||||||||
Senior notes 5.95% to 7.875% due 2011 to 2037 | 2,747 | - | 2,747 | - | ||||||||||||||||||||||||||||
Bank loans due 2012(6) | 926 | - | - | - | ||||||||||||||||||||||||||||
Other | 2 | 3 | 1 | — | 1 | - | 1 | - | ||||||||||||||||||||||||
Unamortized discount and premium(9) | (2 | ) | — | (2 | ) | — | (10 | ) | - | (9 | ) | - | ||||||||||||||||||||
Total long-term debt | 8,568 | 339 | 7,802 | 1,198 | 10,181 | 333 | 9,119 | 903 | ||||||||||||||||||||||||
Total debt | $ | 8,568 | $ | 339 | $ | 7,802 | $ | 1,385 | $ | 10,181 | $ | 486 | $ | 9,119 | $ | 958 | ||||||||||||||||
(1) | Includes amounts due or exchangeable within one year of the date noted. |
(2) |
(3) | ||
These series of debt are secured by first mortgage bonds of CenterPoint Houston. |
(4) | $527 million of these series of debt is secured by general mortgage bonds of CenterPoint Houston. |
(5) | In January 2010, CenterPoint Energy purchased $290 million principal amount of pollution control bonds issued on its behalf at 101% of their principal amount. |
(6) | Classified as long-term debt because the termination dates of the facilities under which the funds were borrowed are more than one year from the date noted. |
(7) |
99
These series of debt are secured by general mortgage bonds of CenterPoint Houston. |
(8) | In January 2010, pursuant to a notice of redemption dated December 11, 2009, CERC redeemed all of its outstanding 6% convertible subordinated debentures due in 2012. |
(9) | Debt acquired in business acquisitions is adjusted to fair market value as of the acquisition date. Included in long-term debt is additional unamortized premium related to fair value adjustments of long-term debt of |
and |
December 31, 2008 | December 31, 2009 | |||||||
CenterPoint Energy credit facility borrowings | $ | 264 | $ | - | ||||
CenterPoint Houston credit facility borrowings | 251 | - | ||||||
CERC Corp. credit facility borrowings | 926 | - | ||||||
Total credit facility borrowings | $ | 1,441 | $ | - |
100
101
Aggregate Liquidation | Distribution | Mandatory | ||||||||||||||||
Amounts as of | Rate/ | Redemption | ||||||||||||||||
December 31, | Interest | Date/ | ||||||||||||||||
Trust | 2005 | 2006 | Rate | Maturity Date | Junior Subordinated Debentures | |||||||||||||
(In millions) | ||||||||||||||||||
HL&P Capital Trust II | $ | 100 | $ | 100 | 8.257 | % | February 2037 | 8.257% Junior Subordinated | ||||||||||
Deferrable Interest Debentures Series B |
102
Year Ended December 31, | ||||||||||||
2004 | 2005 | 2006 | ||||||||||
(In millions) | ||||||||||||
Current: | ||||||||||||
Federal | $ | (130 | ) | $ | (74 | ) | $ | 373 | ||||
State | 11 | 2 | 37 | |||||||||
Total current | (119 | ) | (72 | ) | 410 | |||||||
Deferred: | ||||||||||||
Federal | 264 | 208 | (362 | ) | ||||||||
State | (6 | ) | 17 | 14 | ||||||||
Total deferred | 258 | 225 | (348 | ) | ||||||||
Income tax expense | $ | 139 | $ | 153 | $ | 62 | ||||||
103
Year Ended December 31, | ||||||||||||
2007 | 2008 | 2009 | ||||||||||
(In millions) | ||||||||||||
Current income tax expense (benefit): | ||||||||||||
Federal | $ | 161 | $ | (221 | ) | $ | (103 | ) | ||||
State | 32 | 11 | 10 | |||||||||
Total current expense (benefit) | 193 | (210 | ) | (93 | ) | |||||||
Deferred income tax expense (benefit): | ||||||||||||
Federal | 47 | 437 | 251 | |||||||||
State | (47 | ) | 50 | 18 | ||||||||
Total deferred expense | - | 487 | 269 | |||||||||
Total income tax expense | $ | 193 | $ | 277 | $ | 176 |
Year Ended December 31, | ||||||||||||
2004 | 2005 | 2006 | ||||||||||
(In millions) | ||||||||||||
Income from continuing operations before income taxes and extraordinary loss | $ | 344 | $ | 378 | $ | 494 | ||||||
Federal statutory rate | 35 | % | 35 | % | 35 | % | ||||||
Income taxes at statutory rate | 120 | 132 | 173 | |||||||||
Net addition (reduction) in taxes resulting from: | ||||||||||||
State income taxes, net of valuation allowances and federal income tax benefit | 3 | 13 | 33 | |||||||||
Amortization of investment tax credit | (8 | ) | (8 | ) | (8 | ) | ||||||
Excess deferred taxes | (4 | ) | (3 | ) | (3 | ) | ||||||
Deferred tax asset write-off | 19 | — | — | |||||||||
Increase (decrease) in tax reserve | 7 | 32 | (118 | ) | ||||||||
Other, net | 2 | (13 | ) | (15 | ) | |||||||
Total | 19 | 21 | (111 | ) | ||||||||
Income tax expense | $ | 139 | $ | 153 | $ | 62 | ||||||
Effective rate | 40.4 | % | 40.6 | % | 12.6 | % |
104
Year Ended December 31, | ||||||||||||
2007 | 2008 | 2009 | ||||||||||
(In millions) | ||||||||||||
Income before income taxes | $ | 588 | $ | 723 | $ | 548 | ||||||
Federal statutory income tax rate | 35 | % | 35 | % | 35 | % | ||||||
Expected federal income tax expense | 206 | 253 | 192 | |||||||||
Increase (decrease) in tax expense resulting from: | ||||||||||||
State income tax expense (benefit), net of federal income tax | (10 | ) | 40 | 18 | ||||||||
Amortization of investment tax credit | (8 | ) | (7 | ) | (7 | ) | ||||||
Tax basis balance sheet adjustments | 25 | - | - | |||||||||
Increase (decrease) in settled and uncertain income tax positions | (20 | ) | 8 | (5 | ) | |||||||
Other, net | - | (17 | ) | (22 | ) | |||||||
Total | (13 | ) | 24 | (16 | ) | |||||||
Total income tax expense | $ | 193 | $ | 277 | $ | 176 | ||||||
Effective tax rate | 32.8 | % | 38.4 | % | 32.1 | % |
December 31, | ||||||||||||||||
2005 | 2006 | December 31, | ||||||||||||||
(In millions) | 2008 | 2009 | ||||||||||||||
(In millions) | ||||||||||||||||
Deferred tax assets: | ||||||||||||||||
Current: | ||||||||||||||||
Allowance for doubtful accounts | $ | 20 | $ | 17 | $ | 15 | $ | 10 | ||||||||
Non-trading derivative assets, net | 16 | — | ||||||||||||||
Deferred gas costs | 13 | 7 | ||||||||||||||
Other | 1 | - | ||||||||||||||
Total current deferred tax assets | 36 | 17 | 29 | 17 | ||||||||||||
Non-current: | ||||||||||||||||
Loss carryforwards | 26 | 27 | ||||||||||||||
Deferred gas costs | 59 | 60 | ||||||||||||||
Loss and credit carryforwards | 36 | 42 | ||||||||||||||
Employee benefits | — | 186 | 360 | 366 | ||||||||||||
Other | 102 | 56 | 57 | 51 | ||||||||||||
Total non-current deferred tax assets before valuation allowance | 187 | 329 | 453 | 459 | ||||||||||||
Valuation allowance | (21 | ) | (22 | ) | (5 | ) | (5 | ) | ||||||||
Total non-current deferred tax assets | 166 | 307 | ||||||||||||||
Total deferred tax assets, net | 202 | 324 | ||||||||||||||
Total non-current deferred tax assets, net of valuation allowance | 448 | 454 | ||||||||||||||
Total deferred tax assets, net of valuation allowance | 477 | 471 | ||||||||||||||
Deferred tax liabilities: | ||||||||||||||||
Current: | ||||||||||||||||
Unrealized gain on indexed debt securities | 348 | 217 | $ | 373 | $ | 366 | ||||||||||
Unrealized gain on TW Common | 73 | 109 | ||||||||||||||
Non-trading derivative liabilities, net | — | 7 | ||||||||||||||
Unrealized gain on TW securities | 28 | 57 | ||||||||||||||
Total current deferred tax liabilities | 421 | 333 | 401 | 423 | ||||||||||||
Non-current: | ||||||||||||||||
Depreciation | 1,432 | 1,370 | 1,679 | 1,887 | ||||||||||||
Regulatory assets, net | 1,076 | 1,173 | 1,319 | 1,298 | ||||||||||||
Employee benefits | 52 | — | ||||||||||||||
Other | 80 | 87 | 58 | 45 | ||||||||||||
Total non-current deferred tax liabilities | 2,640 | 2,630 | 3,056 | 3,230 | ||||||||||||
Total deferred tax liabilities | 3,061 | 2,963 | 3,457 | 3,653 | ||||||||||||
Accumulated deferred income taxes, net | $ | 2,859 | $ | 2,639 | $ | 2,980 | $ | 3,182 | ||||||||
December 31, | ||||||||||||
2007 | 2008 | 2009 | ||||||||||
(In millions) | ||||||||||||
Balance, beginning of year | $ | 72 | $ | 82 | $ | 117 | ||||||
Tax Positions related to prior years: | ||||||||||||
Additions | 28 | 20 | 56 | |||||||||
Reductions | (20 | ) | (2 | ) | (25 | ) | ||||||
Tax Positions related to current year: | ||||||||||||
Additions | 4 | 17 | 56 | |||||||||
Settlements | (2 | ) | — | (17 | ) | |||||||
Balance, end of year | $ | 82 | $ | 117 | $ | 187 |
105
2007 | $ | 22 | ||
2008 | 18 | |||
2009 | 11 | |||
2010 | 8 | |||
2011 | 6 | |||
2012 and beyond | 15 | |||
Total | $ | 80 | ||
2010 | $ | 12 | ||
2011 | 13 | |||
2012 | 9 | |||
2013 | 6 | |||
2014 | 4 | |||
2015 and beyond | 7 | |||
Total | $ | 51 |
107
108
109
110
111
112
113
December 31, 2005 | December 31, 2006 | |||||||||||||||||||||||||||||||
Carrying | Fair | Carrying | Fair | |||||||||||||||||||||||||||||
Amount | Value | Amount | Value | December 31, 2008 | December 31, 2009 | |||||||||||||||||||||||||||
(In millions) | Carrying Amount | Fair Value | Carrying Amount | Fair Value | ||||||||||||||||||||||||||||
(in millions) | ||||||||||||||||||||||||||||||||
Financial liabilities: | ||||||||||||||||||||||||||||||||
Long-term debt (excluding capital leases) | $ | 8,794 | $ | 9,277 | $ | 8,889 | $ | 9,573 | ||||||||||||||||||||||||
Long-term debt | $ | 10,396 | $ | 9,875 | $ | 9,900 | $ | 10,413 |
For the Year Ended December 31, | ||||||||||||
2004 | 2005 | 2006 | ||||||||||
(In millions, except per share and share amounts) | ||||||||||||
Basic earnings (loss) per share calculation: | ||||||||||||
Income from continuing operations before extraordinary item | $ | 205 | $ | 225 | $ | 432 | ||||||
Loss from discontinued operations, net of tax | (133 | ) | (3 | ) | — | |||||||
Extraordinary item, net of tax | (977 | ) | 30 | — | ||||||||
Net income (loss) | $ | (905 | ) | $ | 252 | $ | 432 | |||||
Weighted average shares outstanding | 307,185,000 | 309,349,000 | 311,826,000 | |||||||||
Basic earnings (loss) per share: | ||||||||||||
Income from continuing operations before extraordinary item | $ | 0.67 | $ | 0.72 | $ | 1.39 | ||||||
Loss from discontinued operations, net of tax | (0.43 | ) | (0.01 | ) | — | |||||||
Extraordinary item, net of tax | (3.18 | ) | 0.10 | — | ||||||||
Net income (loss) | $ | (2.94 | ) | $ | 0.81 | $ | 1.39 | |||||
Diluted earnings (loss) per share calculation: | ||||||||||||
Net income (loss) | $ | (905 | ) | $ | 252 | $ | 432 | |||||
Plus: Income impact of assumed conversions: | ||||||||||||
Interest on 3.75% contingently convertible senior notes | 14 | 9 | — | |||||||||
Interest on 6.25% convertible trust preferred securities | — | — | — | |||||||||
Total earnings effect assuming dilution | $ | (891 | ) | $ | 261 | $ | 432 | |||||
Weighted average shares outstanding | 307,185,000 | 309,349,000 | 311,826,000 | |||||||||
Plus: Incremental shares from assumed conversions: | ||||||||||||
Stock options(1) | 1,203,000 | 1,241,000 | 974,000 | |||||||||
Restricted stock | 1,447,000 | 1,851,000 | 1,553,000 | |||||||||
2.875% convertible senior notes | — | — | 1,625,000 | |||||||||
3.75% convertible senior notes | 49,655,000 | 33,587,000 | 8,800,000 | |||||||||
6.25% convertible trust preferred securities | 16,000 | — | — | |||||||||
Weighted average shares assuming dilution | 359,506,000 | 346,028,000 | 324,778,000 | |||||||||
Diluted earnings (loss) per share: | ||||||||||||
Income from continuing operations before extraordinary item | $ | 0.61 | $ | 0.67 | $ | 1.33 | ||||||
Loss from discontinued operations, net of tax | (0.37 | ) | (0.01 | ) | — | |||||||
Extraordinary item, net of tax | (2.72 | ) | 0.09 | — | ||||||||
Net income (loss) | $ | (2.48 | ) | $ | 0.75 | $ | 1.33 | |||||
For the Year Ended December 31, | ||||||||||||
2007 | 2008 | 2009 | ||||||||||
(In millions, except per share and share amounts) | ||||||||||||
Basic earnings per share calculation: | ||||||||||||
Net income | $ | 395 | $ | 446 | $ | 372 | ||||||
Weighted average shares outstanding | 320,480,000 | 336,387,000 | 365,229,000 | |||||||||
Basic earnings per share | $ | 1.23 | $ | 1.32 | $ | 1.02 | ||||||
Diluted earnings per share calculation: | ||||||||||||
Net income | $ | 395 | $ | 446 | $ | 372 | ||||||
Weighted average shares outstanding | 320,480,000 | 336,387,000 | 365,229,000 | |||||||||
Plus: Incremental shares from assumed conversions: | ||||||||||||
Stock options(1) | 1,059,000 | 760,000 | 451,000 | |||||||||
Restricted stock | 1,928,000 | 1,772,000 | 2,001,000 | |||||||||
2.875% convertible senior notes | 291,000 | - | - | |||||||||
3.75% convertible senior notes | 18,749,000 | 4,636,000 | - | |||||||||
Weighted average shares assuming dilution | 342,507,000 | 343,555,000 | 367,681,000 | |||||||||
Diluted earnings per share | $ | 1.15 | $ | 1.30 | $ | 1.01 |
115
(1) | Options to purchase |
Year Ended December 31, 2005 | ||||||||||||||||
First | Second | Third | Fourth | |||||||||||||
Quarter | Quarter | Quarter | Quarter | |||||||||||||
(In millions, except per share amounts) | ||||||||||||||||
Revenues | $ | 2,595 | $ | 1,842 | $ | 2,073 | $ | 3,212 | ||||||||
Operating income | 276 | 186 | 225 | 252 | ||||||||||||
Income from continuing operations | 67 | 27 | 50 | 81 | ||||||||||||
Discontinued operations, net of tax | — | (3 | ) | — | — | |||||||||||
Extraordinary item, net of tax | — | 30 | — | — | ||||||||||||
Net income | $ | 67 | $ | 54 | $ | 50 | $ | 81 | ||||||||
Basic earnings per share:(1) | ||||||||||||||||
Income from continuing operations | $ | 0.22 | $ | 0.09 | $ | 0.16 | $ | 0.26 | ||||||||
Discontinued operations, net of tax | — | (0.01 | ) | — | — | |||||||||||
Extraordinary item, net of tax | — | 0.10 | — | — | ||||||||||||
Net income | $ | 0.22 | $ | 0.18 | $ | 0.16 | $ | 0.26 | ||||||||
Diluted earnings per share:(1) | ||||||||||||||||
Income from continuing operations | $ | 0.20 | $ | 0.09 | $ | 0.15 | $ | 0.25 | ||||||||
Discontinued operations, net of tax | — | (0.01 | ) | — | — | |||||||||||
Extraordinary item, net of tax | — | 0.08 | — | — | ||||||||||||
Net income | $ | 0.20 | $ | 0.16 | $ | 0.15 | $ | 0.25 | ||||||||
Year Ended December 31, 2008 | ||||||||||||||||
First Quarter | Second Quarter | Third Quarter | Fourth Quarter | |||||||||||||
(In millions, except per share amounts) | ||||||||||||||||
Revenues | $ | 3,363 | $ | 2,670 | $ | 2,515 | $ | 2,774 | ||||||||
Operating income | 336 | 297 | 337 | 303 | ||||||||||||
Net income | 122 | 101 | 136 | 87 | ||||||||||||
Basic earnings per share(1) | $ | 0.37 | $ | 0.30 | $ | 0.40 | $ | 0.25 | ||||||||
Diluted earnings per share(1) | $ | 0.36 | $ | 0.30 | $ | 0.39 | $ | 0.25 |
116
Year Ended December 31, 2006 First Second Third Fourth Quarter Quarter Quarter Quarter (In millions, except per share amounts) Revenues $ 3,077 $ 1,843 $ 1,935 $ 2,464 Operating income 306 220 284 235 Net income 88 194 83 67 Basic earnings per share:(1) Net income $ 0.28 $ 0.62 $ 0.27 $ 0.21 Diluted earnings per share:(1) Net income $ 0.28 $ 0.61 $ 0.26 $ 0.20
Year Ended December 31, 2009 | ||||||||||||||||
First Quarter | Second Quarter | Third Quarter | Fourth Quarter | |||||||||||||
(In millions, except per share amounts) | ||||||||||||||||
Revenues | $ | 2,766 | $ | 1,640 | $ | 1,576 | $ | 2,299 | ||||||||
Operating income | 285 | 253 | 287 | 299 | ||||||||||||
Net income | 67 | 86 | 114 | 105 | ||||||||||||
Basic earnings per share(1) | $ | 0.19 | $ | 0.24 | $ | 0.31 | $ | 0.27 | ||||||||
Diluted earnings per share(1) | $ | 0.19 | $ | 0.24 | $ | 0.31 | $ | 0.27 |
(1) | Quarterly earnings per common share are based on the weighted average number of shares outstanding during the quarter, and the sum of the quarters may not equal annual earnings per common share. |
117
Revenues | ||||||||||||||||||||||||||||
from | Depreciation | Operating | Extraordinary | Expenditures | ||||||||||||||||||||||||
External | Intersegment | and | Income | Item, | Total | for Long-Lived | ||||||||||||||||||||||
Customers | Revenues | Amortization | (Loss) | net of tax | Assets | Assets | ||||||||||||||||||||||
As of and for the year ended December 31, 2004: | ||||||||||||||||||||||||||||
Electric Transmission and Distribution | $ | 1,521 | (1) | $ | — | $ | 284 | $ | 494 | $ | 977 | $ | 8,783 | $ | 235 | |||||||||||||
Natural Gas Distribution | 3,577 | 2 | 141 | 178 | — | 4,083 | 196 | |||||||||||||||||||||
Competitive Natural Gas Sales and Services | 2,593 | (2) | 255 | 2 | 44 | — | 964 | 1 | ||||||||||||||||||||
Interstate Pipelines | 239 | 129 | 36 | 129 | — | 2,164 | 39 | |||||||||||||||||||||
Field Services | 67 | 25 | 8 | 51 | — | 451 | 34 | |||||||||||||||||||||
Other | 2 | 6 | 19 | (32 | ) | — | 2,794 | (3) | 25 | |||||||||||||||||||
Discontinued Operations | — | — | — | — | — | 1,565 | 74 | |||||||||||||||||||||
Reconciling Eliminations | — | (417 | ) | — | — | — | (2,708 | ) | — | |||||||||||||||||||
Consolidated | $ | 7,999 | $ | — | $ | 490 | $ | 864 | $ | 977 | $ | 18,096 | $ | 604 | ||||||||||||||
As of and for the year ended December 31, 2005: | ||||||||||||||||||||||||||||
Electric Transmission and Distribution | $ | 1,644 | (1) | $ | — | $ | 322 | $ | 487 | $ | (30 | ) | $ | 8,227 | $ | 281 | ||||||||||||
Natural Gas Distribution | 3,837 | 9 | 152 | 175 | — | 4,612 | 249 | |||||||||||||||||||||
Competitive Natural Gas Sales and Services | 3,884 | (2) | 245 | 2 | 60 | — | 1,849 | 12 | ||||||||||||||||||||
Interstate Pipelines | 255 | 131 | 36 | 165 | — | 2,400 | 118 | |||||||||||||||||||||
Field Services | 91 | 29 | 9 | 70 | — | 529 | 38 | |||||||||||||||||||||
Other | 11 | 8 | 20 | (18 | ) | — | 2,202 | (3) | 21 | |||||||||||||||||||
Discontinued Operations | — | — | — | — | — | — | 9 | |||||||||||||||||||||
Reconciling Eliminations | — | (422 | ) | — | — | — | (2,703 | ) | — | |||||||||||||||||||
Consolidated | $ | 9,722 | $ | — | $ | 541 | $ | 939 | $ | (30 | ) | $ | 17,116 | $ | 728 | |||||||||||||
As of and for the year ended December 31, 2006: | ||||||||||||||||||||||||||||
Electric Transmission and Distribution | $ | 1,781 | (1) | $ | — | $ | 379 | $ | 576 | $ | — | $ | 8,463 | $ | 389 | |||||||||||||
Natural Gas Distribution | 3,582 | 11 | 152 | 124 | — | 4,463 | 187 | |||||||||||||||||||||
Competitive Natural Gas Sales and Services | 3,572 | (2) | 79 | 1 | 77 | — | 1,501 | 18 | ||||||||||||||||||||
Interstate Pipelines | 255 | 133 | 37 | 181 | — | 2,738 | 437 | |||||||||||||||||||||
Field Services | 119 | 31 | 10 | 89 | — | 608 | 65 | |||||||||||||||||||||
Other | 10 | 5 | 20 | (2 | ) | — | 2,047 | (3) | 25 | |||||||||||||||||||
Reconciling Eliminations | — | (259 | ) | — | — | — | (2,187 | ) | — | |||||||||||||||||||
Consolidated | $ | 9,319 | $ | — | $ | 599 | $ | 1,045 | $ | — | $ | 17,633 | $ | 1,121 | ||||||||||||||
Revenues from External Customers | Intersegment Revenues | Depreciation and Amortization | Operating Income (Loss) | Total Assets | Expenditures for Long-Lived Assets | |||||||||||||||||||
As of and for the year ended December 31, 2007: | ||||||||||||||||||||||||
Electric Transmission & Distribution | $ | 1,837 | (1) | $ | - | $ | 398 | $ | 561 | $ | 8,358 | $ | 401 | |||||||||||
Natural Gas Distribution | 3,749 | 10 | 155 | 218 | 4,332 | 191 | ||||||||||||||||||
Competitive Natural Gas Sales and Services | 3,534 | 45 | 5 | 75 | 1,221 | 7 | ||||||||||||||||||
Interstate Pipelines(2) | 357 | 143 | 44 | 237 | 3,007 | 308 | ||||||||||||||||||
Field Services(3) | 136 | 39 | 11 | 99 | 669 | 74 | ||||||||||||||||||
Other | 10 | - | 18 | (5 | ) | 1,956 | (4) | 30 | ||||||||||||||||
Reconciling Eliminations | - | (237 | ) | - | - | (1,671 | ) | - | ||||||||||||||||
Consolidated | $ | 9,623 | $ | - | $ | 631 | $ | 1,185 | $ | 17,872 | $ | 1,011 | ||||||||||||
As of and for the year ended December 31, 2008: | ||||||||||||||||||||||||
Electric Transmission & Distribution | $ | 1,916 | (1) | $ | - | $ | 460 | $ | 545 | $ | 8,880 | $ | 481 | (5) | ||||||||||
Natural Gas Distribution | 4,217 | 9 | 157 | 215 | 4,961 | 214 | ||||||||||||||||||
Competitive Natural Gas Sales and Services | 4,488 | 40 | 3 | 62 | 1,315 | 8 | ||||||||||||||||||
Interstate Pipelines(2) | 477 | 173 | 46 | 293 | 3,578 | 189 | ||||||||||||||||||
Field Services(3) | 213 | 39 | 12 | 147 | 826 | 122 | ||||||||||||||||||
Other | 11 | - | 30 | 11 | 2,185 | (4) | 39 | |||||||||||||||||
Reconciling Eliminations | - | (261 | ) | - | - | (2,069 | ) | - | ||||||||||||||||
Consolidated | $ | 11,322 | $ | - | $ | 708 | $ | 1,273 | $ | 19,676 | $ | 1,053 | ||||||||||||
As of and for the year ended December 31, 2009: | ||||||||||||||||||||||||
Electric Transmission & Distribution | $ | 2,013 | (1) | $ | - | $ | 480 | $ | 545 | $ | 9,755 | $ | 428 | (5) | ||||||||||
Natural Gas Distribution | 3,374 | 10 | 161 | 204 | 4,535 | 165 | ||||||||||||||||||
Competitive Natural Gas Sales and Services | 2,215 | 15 | 4 | 21 | 1,176 | 2 | ||||||||||||||||||
Interstate Pipelines(2) | 456 | 142 | 48 | 256 | 3,484 | 176 | ||||||||||||||||||
Field Services(3) | 212 | 29 | 15 | 94 | 1,045 | 348 | ||||||||||||||||||
Other | 11 | - | 35 | 4 | 2,261 | (4) | 29 | |||||||||||||||||
Reconciling Eliminations | - | (196 | ) | - | - | (2,483 | ) | - | ||||||||||||||||
Consolidated | $ | 8,281 | $ | - | $ | 743 | $ | 1,124 | $ | 19,773 | $ | 1,148 |
(1) | Sales to subsidiaries of |
118
(2) |
(3) | Field Services recorded equity income of $10 million, $15 million and $8 million for the years ended December 31, 2007, 2008 and 2009, respectively, from its 50% interest in a jointly-owned gas processing plant. These amounts are included in Equity in earnings of unconsolidated affiliates under the Other Income (Expense) caption. Field Services’ investment in the jointly-owned gas processing plant was $30 million, $38 million and $40 million as of December 31, 2007, 2008 and 2009, respectively, and is included in Investment in unconsolidated affiliates. |
(4) | Included in total assets of Other Operations as of December 31, |
Year Ended December 31, | ||||||||||||
2004 | 2005 | 2006 | ||||||||||
(In millions) | ||||||||||||
Revenues by Products and Services: | ||||||||||||
Electric delivery sales | $ | 1,521 | $ | 1,644 | $ | 1,781 | ||||||
Retail gas sales | 4,239 | 4,871 | 4,546 | |||||||||
Wholesale gas sales | 1,526 | 2,410 | 2,331 | |||||||||
Gas transport | 613 | 684 | 550 | |||||||||
Energy products and services | 100 | 113 | 111 | |||||||||
Total | $ | 7,999 | $ | 9,722 | $ | 9,319 | ||||||
(5) | Included in expenditures for long-lived assets of Electric Transmission & Distribution is $145 million and $26 million for 2008 and 2009, respectively, related to Hurricane Ike. Approximately $153 million of distribution related storm restoration costs was reclassified to regulatory assets and was included in the $665 million securitized storm restoration costs as further discussed in Note 3(a). The remaining $18 million of transmission related storm restoration costs is included in plant in service as of December 31, 2009, and is eligible for recovery through the existing mechanisms established to recover transmission costs as further discussed in Note 3(a). |
Year Ended December 31, | ||||||||||||
Revenues by Products and Services: | 2007 | 2008 | 2009 | |||||||||
(In millions) | ||||||||||||
Electric delivery sales | $ | 1,837 | $ | 1,916 | $ | 2,013 | ||||||
Retail gas sales | 4,941 | 6,216 | 4,540 | |||||||||
Wholesale gas sales | 2,196 | 2,295 | 902 | |||||||||
Gas transport | 532 | 756 | 691 | |||||||||
Energy products and services | 117 | 139 | 135 | |||||||||
Total | $ | 9,623 | $ | 11,322 | $ | 8,281 |
119
121
64 | ||||
67 | ||||
68 | ||||
69 | ||||
70 | ||||
71 | ||||
72 |
116 | ||||
117 | ||||
123 |
For the Year Ended December 31, | ||||||||||||||||||||||||
For the Year Ended December 31, | 2007 | 2008 | 2009 | |||||||||||||||||||||
2004 | 2005 | 2006 | (In millions) | |||||||||||||||||||||
(In millions) | ||||||||||||||||||||||||
Equity Income of Subsidiaries | $ | 707 | $ | 425 | $ | 560 | ||||||||||||||||||
Expenses: | ||||||||||||||||||||||||
Operation and Maintenance Expenses | $ | (17 | ) | $ | (12 | ) | $ | (17 | ) | |||||||||||||||
Taxes Other than Income | (4 | ) | 1 | - | ||||||||||||||||||||
Total | (21 | ) | (11 | ) | (17 | ) | ||||||||||||||||||
Other Income (Expense): | ||||||||||||||||||||||||
Interest Income from Subsidiaries | 21 | 15 | 18 | 22 | 12 | 8 | ||||||||||||||||||
Other Income | — | — | 6 | |||||||||||||||||||||
Loss on Disposal of Subsidiary | (366 | ) | (14 | ) | — | |||||||||||||||||||
Other Income (Expense) | 1 | (5 | ) | (2 | ) | |||||||||||||||||||
Gain (Loss) on Indexed Debt Securities | (20 | ) | 49 | (80 | ) | 111 | 128 | (68 | ) | |||||||||||||||
Operation and Maintenance Expenses | (21 | ) | (29 | ) | (19 | ) | ||||||||||||||||||
Depreciation and Amortization | — | — | — | |||||||||||||||||||||
Taxes Other than Income | — | — | (2 | ) | ||||||||||||||||||||
Interest Expense to Subsidiaries | (80 | ) | (61 | ) | (69 | ) | (67 | ) | (38 | ) | (25 | ) | ||||||||||||
Interest Expense | (303 | ) | (204 | ) | (196 | ) | (225 | ) | (162 | ) | (149 | ) | ||||||||||||
Distribution to ZENS Holders | (27 | ) | - | (3 | ) | |||||||||||||||||||
Total | (185 | ) | (65 | ) | (239 | ) | ||||||||||||||||||
Loss Before Income Taxes | (206 | ) | (76 | ) | (256 | ) | ||||||||||||||||||
Income Tax Benefit | 134 | 41 | 214 | 86 | 32 | 113 | ||||||||||||||||||
Extraordinary Item, net of tax | (977 | ) | 30 | — | ||||||||||||||||||||
Net Income (Loss) | $ | (905 | ) | $ | 252 | $ | 432 | |||||||||||||||||
Loss Before Equity in Subsidiaries | (120 | ) | (44 | ) | (143 | ) | ||||||||||||||||||
Equity Income of Subsidiaries | 515 | 490 | 515 | |||||||||||||||||||||
Net Income | $ | 395 | $ | 446 | $ | 372 |
December 31, | ||||||||||||||||
2005 | 2006 | |||||||||||||||
(In millions) | December 31, | |||||||||||||||
2008 | 2009 | |||||||||||||||
(In millions) | ||||||||||||||||
ASSETS | ASSETS | |||||||||||||||
Current Assets: | ||||||||||||||||
Cash and cash equivalents | $ | 1 | $ | — | $ | - | $ | - | ||||||||
Notes receivable — subsidiaries | 460 | 391 | ||||||||||||||
Accounts receivable — subsidiaries | 22 | 271 | ||||||||||||||
Notes receivable - subsidiaries | 82 | 493 | ||||||||||||||
Accounts receivable - subsidiaries | 53 | 72 | ||||||||||||||
Other assets | 3 | 2 | - | 16 | ||||||||||||
Total current assets | 486 | 664 | 135 | 581 | ||||||||||||
Property, Plant and Equipment, net | — | — | ||||||||||||||
Other Assets: | ||||||||||||||||
Investment in subsidiaries | 5,225 | 5,568 | 5,161 | 5,562 | ||||||||||||
Notes receivable — subsidiaries | 172 | 151 | ||||||||||||||
Notes receivable - subsidiaries | 151 | 151 | ||||||||||||||
Other assets | 714 | 573 | 826 | 751 | ||||||||||||
Total other assets | 6,111 | 6,292 | 6,138 | 6,464 | ||||||||||||
Total Assets | $ | 6,597 | $ | 6,956 | $ | 6,273 | $ | 7,045 | ||||||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | LIABILITIES AND SHAREHOLDERS’ EQUITY | |||||||||||||||
Current Liabilities: | ||||||||||||||||
Notes payable — subsidiaries | $ | 5 | $ | 158 | ||||||||||||
Notes payable - subsidiaries | $ | 21 | $ | 306 | ||||||||||||
Current portion of long-term debt | 109 | 941 | 117 | 611 | ||||||||||||
Indexed debt securities derivative | 292 | 372 | 133 | 201 | ||||||||||||
Accounts payable: | ||||||||||||||||
Subsidiaries | 30 | 312 | 40 | 17 | ||||||||||||
Other | 4 | (8 | ) | 3 | 40 | |||||||||||
Taxes accrued | 698 | 726 | 338 | 416 | ||||||||||||
Interest accrued | 26 | 26 | 26 | 29 | ||||||||||||
Other | 22 | 21 | 18 | 1 | ||||||||||||
Total current liabilities | 1,186 | 2,548 | 696 | 1,621 | ||||||||||||
Other Liabilities: | ||||||||||||||||
Accumulated deferred tax liabilities | 328 | 223 | 138 | 122 | ||||||||||||
Benefit obligations | 78 | 71 | 426 | 426 | ||||||||||||
Notes payable — subsidiaries | 923 | 750 | ||||||||||||||
Notes payable - subsidiaries | 750 | 750 | ||||||||||||||
Other | 157 | 12 | 7 | 7 | ||||||||||||
Total non-current liabilities | 1,486 | 1,056 | 1,321 | 1,305 | ||||||||||||
Long-Term Debt | 2,629 | 1,796 | 2,234 | 1,480 | ||||||||||||
Shareholders’ Equity: | ||||||||||||||||
Common stock | 3 | 3 | 3 | 4 | ||||||||||||
Additional paid-in capital | 2,931 | 2,977 | 3,158 | 3,671 | ||||||||||||
Accumulated deficit | (1,600 | ) | (1,355 | ) | (1,008 | ) | (912 | ) | ||||||||
Accumulated other comprehensive loss | (38 | ) | (69 | ) | (131 | ) | (124 | ) | ||||||||
Total shareholders’ equity | 1,296 | 1,556 | 2,022 | 2,639 | ||||||||||||
Total Liabilities and Shareholders’ Equity | $ | 6,597 | $ | 6,956 | $ | 6,273 | $ | 7,045 | ||||||||
For the Year Ended December 31, | ||||||||||||||||||||||||
2004 | 2005 | 2006 | For the Year Ended December 31, | |||||||||||||||||||||
(In millions) | 2007 | 2008 | 2009 | |||||||||||||||||||||
(In millions) | ||||||||||||||||||||||||
Operating Activities: | ||||||||||||||||||||||||
Net income (loss) | $ | (905 | ) | $ | 252 | $ | 432 | |||||||||||||||||
Loss on disposal of subsidiary | 366 | 14 | — | |||||||||||||||||||||
Extraordinary item, net of tax | 977 | (30 | ) | — | ||||||||||||||||||||
Adjusted income | 438 | 236 | 432 | |||||||||||||||||||||
Non-cash items included in net income (loss): | ||||||||||||||||||||||||
Net income | $ | 395 | $ | 446 | $ | 372 | ||||||||||||||||||
Non-cash items included in net income: | ||||||||||||||||||||||||
Equity income of subsidiaries | (707 | ) | (425 | ) | (560 | ) | (515 | ) | (490 | ) | (515 | ) | ||||||||||||
Deferred income tax expense | 155 | 106 | (169 | ) | 52 | 90 | (19 | ) | ||||||||||||||||
Tax and interest reserves reductions related to ZENS and ACES settlement | — | — | (107 | ) | ||||||||||||||||||||
Amortization of debt issuance costs | 70 | 37 | 36 | 50 | 7 | 5 | ||||||||||||||||||
Loss (gain) on indexed debt securities | 20 | (49 | ) | 80 | (111 | ) | (128 | ) | 68 | |||||||||||||||
Changes in working capital: | ||||||||||||||||||||||||
Accounts receivable/(payable) from subsidiaries, net | (6 | ) | 1 | 33 | 20 | (65 | ) | 86 | ||||||||||||||||
Accounts payable | (1 | ) | (1 | ) | (13 | ) | 11 | - | 14 | |||||||||||||||
Other current assets | (5 | ) | (1 | ) | (1 | ) | - | 2 | (16 | ) | ||||||||||||||
Other current liabilities | (290 | ) | (73 | ) | 117 | (50 | ) | (111 | ) | 59 | ||||||||||||||
Common stock dividends received from subsidiaries | 177 | 508 | 227 | 240 | 746 | 109 | ||||||||||||||||||
Pension contribution | (476 | ) | (75 | ) | — | |||||||||||||||||||
Other | 54 | 77 | 18 | 2 | (7 | ) | (1 | ) | ||||||||||||||||
Net cash provided by (used in) operating activities | (571 | ) | 341 | 93 | ||||||||||||||||||||
Net cash provided by operating activities | 94 | 490 | 162 | |||||||||||||||||||||
Investing Activities: | ||||||||||||||||||||||||
Proceeds from sale of Texas Genco | 2,231 | 700 | — | |||||||||||||||||||||
Investments in (distributions from) subsidiaries | 19 | (144 | ) | — | ||||||||||||||||||||
Short-term notes receivable from subsidiaries | 76 | (335 | ) | 69 | 175 | 134 | (411 | ) | ||||||||||||||||
Long-term notes receivable from subsidiaries | 192 | 154 | 21 | |||||||||||||||||||||
Capital expenditures, net | (6 | ) | — | — | ||||||||||||||||||||
Net cash provided by investing activities | 2,512 | 375 | 90 | |||||||||||||||||||||
Net cash provided by (used in) investing activities | 175 | 134 | (411 | ) | ||||||||||||||||||||
Financing Activities: | ||||||||||||||||||||||||
Long-term revolving credit facility, net | (1,205 | ) | (236 | ) | — | |||||||||||||||||||
Commercial paper, net | — | — | (3 | ) | ||||||||||||||||||||
Revolving credit facility, net | 131 | 133 | (264 | ) | ||||||||||||||||||||
Proceeds from long-term debt | 250 | 300 | - | |||||||||||||||||||||
Payments on long-term debt | (889 | ) | — | — | (295 | ) | (907 | ) | - | |||||||||||||||
Debt issuance costs | (1 | ) | (5 | ) | (3 | ) | (2 | ) | (4 | ) | - | |||||||||||||
Common stock dividends paid | (123 | ) | (124 | ) | (187 | ) | (218 | ) | (246 | ) | (276 | ) | ||||||||||||
Proceeds from issuance of common stock, net | — | 17 | 27 | 22 | 80 | 504 | ||||||||||||||||||
Short-term notes payable to subsidiaries | 121 | (122 | ) | 153 | (157 | ) | 20 | 285 | ||||||||||||||||
Long-term notes payable to subsidiaries | 134 | (245 | ) | (171 | ) | |||||||||||||||||||
Net cash used in financing activities | (1,963 | ) | (715 | ) | (184 | ) | ||||||||||||||||||
Net Increase (Decrease) in Cash and Cash Equivalents | (22 | ) | 1 | (1 | ) | |||||||||||||||||||
Net cash provided by (used in) financing activities | (269 | ) | (624 | ) | 249 | |||||||||||||||||||
Net Decrease in Cash and Cash Equivalents | - | - | - | |||||||||||||||||||||
Cash and Cash Equivalents at Beginning of Year | 22 | — | 1 | - | - | - | ||||||||||||||||||
Cash and Cash Equivalents at End of Year | $ | — | $ | 1 | $ | — | $ | - | $ | - | $ | - | ||||||||||||
127
Column A | Column B | Column C | Column D | Column E | Column B | Column C | Column D | Column E | ||||||||||||||||||||||||||||||||
Additions | ||||||||||||||||||||||||||||||||||||||||
Balance at | Charged to | Deductions | Balance at | |||||||||||||||||||||||||||||||||||||
Beginning | Charged | Other | From | End of | ||||||||||||||||||||||||||||||||||||
Description | Balance at Beginning of Period | Additions | Deductions From Reserves (2) | Balance at End of Period | ||||||||||||||||||||||||||||||||||||
of Period | to Income | Accounts(1) | Reserves(2) | Period | Charged to Income | Charged to Other Accounts | ||||||||||||||||||||||||||||||||||
(In millions) | (In millions) | |||||||||||||||||||||||||||||||||||||||
Year Ended December 31, 2006: | ||||||||||||||||||||||||||||||||||||||||
Year Ended December 31, 2009: | ||||||||||||||||||||||||||||||||||||||||
Accumulated provisions: | ||||||||||||||||||||||||||||||||||||||||
Uncollectible accounts receivable | $ | 43 | $ | 35 | $ | — | $ | 45 | $ | 33 | $ | 35 | $ | 36 | $ | - | $ | 47 | $ | 24 | ||||||||||||||||||||
Deferred tax asset valuation allowance | 21 | 1 | — | — | 22 | 5 | - | - | - | 5 | ||||||||||||||||||||||||||||||
Year Ended December 31, 2005: | ||||||||||||||||||||||||||||||||||||||||
Year Ended December 31, 2008: | ||||||||||||||||||||||||||||||||||||||||
Accumulated provisions: | ||||||||||||||||||||||||||||||||||||||||
Uncollectible accounts receivable | $ | 30 | $ | 40 | $ | — | $ | 27 | $ | 43 | $ | 38 | $ | 54 | $ | 3 | $ | 60 | $ | 35 | ||||||||||||||||||||
Deferred tax asset valuation allowance | 20 | 1 | — | — | 21 | 18 | (1 | ) | (12 | ) (1) | - | 5 | ||||||||||||||||||||||||||||
Year Ended December 31, 2004: | ||||||||||||||||||||||||||||||||||||||||
Year Ended December 31, 2007: | ||||||||||||||||||||||||||||||||||||||||
Accumulated provisions: | ||||||||||||||||||||||||||||||||||||||||
Uncollectible accounts receivable | $ | 31 | $ | 27 | $ | — | $ | 28 | $ | 30 | $ | 33 | $ | 45 | $ | - | $ | 40 | $ | 38 | ||||||||||||||||||||
Deferred tax asset valuation allowance | 73 | (67 | ) | 14 | — | 20 | 22 | (4 | ) | - | - | 18 |
(1) |
(2) | Deductions from reserves represent losses or expenses for which the respective reserves were created. In the case of the uncollectible accounts reserve, such deductions are net of recoveries of amounts previously written off. |
129
CENTERPOINT ENERGY, INC.
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities indicated on February
CENTERPOINT ENERGY, INC. EXHIBITS TO THE ANNUAL REPORT ONFORM 10-K For Fiscal Year Ended December 31, INDEX OF EXHIBITS Exhibits included with this report are designated by a cross (†); all exhibits not so designated are incorporated herein by reference to a prior filing as indicated. Exhibits designated by an asterisk (*) are management contracts or compensatory plans or arrangements required to be filed as exhibits to thisForm 10-K by Item 601(b)(10)(iii) ofRegulation S-K. CenterPoint Energy has not filed the exhibits and schedules to Exhibit 2. CenterPoint Energy hereby agrees to furnish supplementally a copy of any schedule omitted from Exhibit 2 to the SEC upon request.
The agreements included as exhibits are included only to provide information to investors regarding their terms. The agreements listed below may contain representations, warranties and other provisions that were made, among other things, to provide the parties thereto with specified rights and obligations and to allocate risk among them, and such agreements should not be relied upon as constituting or providing any factual disclosures about us, any other persons, any state of affairs or other matters.
Pursuant to Item 601(b)(4)(iii)(A) ofRegulation S-K, CenterPoint Energy has not filed as exhibits to thisForm 10-K certain long-term debt instruments, including indentures, under which the total amount of securities authorized does not exceed 10% of the total assets of CenterPoint Energy and its subsidiaries on a consolidated basis. CenterPoint Energy hereby agrees to furnish a copy of any such instrument to the SEC upon request.
(1) Furnished, not filed. 140 |