(TEXAS GENCO LETTERHEAD)
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TEXAS GENCO REPORTS STRONG 3RD QUARTER 2003 RESULTS
COMPANY RAISES 2003 EPS ESTIMATE AND PROVIDES INITIAL 2004 EARNINGS GUIDANCE
HOUSTON - OCTOBER 21, 2003 - Texas Genco Holdings, Inc. (NYSE: TGN), an
81 percent-owned subsidiary of CenterPoint Energy, Inc. (NYSE: CNP), today
reported net income of $82 million, or $1.03 per share for the quarter ended
September 30, 2003, compared to net income of $3 million, or $0.04 per share,
for the same period of 2002.
The company raised its full-year 2003 earnings per share estimate to
$1.50-$1.60 from its prior expectation of achieving the high end of $1.10-$1.30
per share. This revised earnings guidance reflects the strong year-to-date
results, the higher capacity auction prices contracted for the remainder of the
year and the return to service of two baseload generating units.
The company also indicated that it currently has in excess of $700
million of capacity revenues under contract for 2004, including approximately 70
percent of its available baseload capacity. Taking these forward sales into
consideration, the company provided initial 2004 earnings guidance of
$2.75-$3.25 per share. However, the company emphasized that a portion of these
forward sales occurred when natural gas prices were higher than current natural
gas prices. Since baseload capacity product prices are influenced significantly
by natural gas prices, future period revenues will be highly dependent on
natural gas prices.
"Our earnings improvement this quarter was again driven by higher
wholesale electricity prices in our market," said David Tees, president and
chief executive officer of Texas Genco. "I am also very pleased that two of our
solid fuel baseload generating units were returned to service in the quarter,"
stated Tees. "I'm very proud of our employees who worked diligently to return
these units to service safely and in a minimal amount of time. Our entire
workforce remains focused on doing what they do best -- running efficient, safe
and reliable plants."
Wholesale electricity prices were much higher in 2003 due to
substantially higher natural gas prices which led to increased capacity auction
revenues for the company's baseload products. Energy revenues also increased,
which more than offset an increase in fuel costs. Operation and maintenance
expenses increased by $2 million due to higher pension and employee benefit
expenses and costs associated with unplanned outages at Unit 1 of the South
Texas Project nuclear facility and at Unit 8 of the W. A. Parish coal plant,
which were partially offset by a reduction in technical support costs. Both
units were returned to full service during the quarter. The company estimated
that the added cost of replacement energy associated with the unplanned outages
negatively impacted gross margin by approximately $35 million for the quarter.
The company also indicated that some level of unplanned outages can be expected
in the business.
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(TEXAS GENCO LETTERHEAD)
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For the nine months ended September 30, 2003, income before cumulative
effect of accounting change was $105 million, or $1.31 per share, compared to a
loss of $50 million, or $0.62 per share for the same period of 2002. Net income
was $204 million, or $2.55 per share which reflects the benefit from the
cumulative effect of accounting change of $99 million, or $1.24 per share, from
the implementation of SFAS No. 143, "Accounting for Asset Retirement
Obligations." This compares to a net loss of $50 million, or $0.62 per share,
for the same period of 2002.
WEBCAST OF EARNINGS CONFERENCE CALL
The management of Texas Genco will host an earnings conference call on
Tuesday, Oct. 21, 2003, at 9 a.m. Central time. Interested parties may listen to
a live, audio broadcast of the conference call at www.txgenco.com/investor.html.
A replay can be accessed approximately two hours after the completion of the
call, and will be archived on the web site for at least one year.
Texas Genco Holdings, Inc., based in Houston, Texas, is one of the
largest wholesale electric power generating companies in the United States with
over 14,000 megawatts of generation capacity. It sells electric generation
capacity, energy and ancillary services in one of the nation's largest power
markets, the Electric Reliability Council of Texas (ERCOT). Texas Genco has one
of the most diversified generation portfolios in Texas, using natural gas, oil,
coal, lignite, and uranium fuels. The company owns and operates 60 generating
units at 11 electric power-generating facilities and owns a 30.8 percent
interest in a nuclear generating plant. Texas Genco currently is a
majority-owned subsidiary of CenterPoint Energy, Inc. For more information,
visit our web site at www.txgenco.com.
This news release includes forward-looking statements. Actual events
and results may differ materially from those projected. The statements in this
news release regarding future financial performance and results of operations
and other statements that are not historical facts are forward-looking
statements. Factors that could affect actual results include the timing and
impact of future regulatory and legislative decisions, effects of competition,
weather variations, changes in Texas Genco's business plans, financial market
conditions, the timing and extent of changes in commodity prices, particularly
natural gas, the impact of unplanned plant outages and other factors discussed
in Texas Genco's Form 10-Q for the quarterly period ended June 30, 2003 and
other filings with the Securities and Exchange Commission.
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Texas Genco Holdings, Inc.
Statements of Consolidated Operations
(Thousands of Dollars)
(Unaudited)
<Table>
<Caption>
Quarter Ended September 30, Nine Months Ended September 30,
----------------------------- -------------------------------
2003 2002 2003 2002
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Revenues:
Energy revenues $ 404,553 $ 346,855 $ 1,006,719 $ 893,664
Capacity and other revenues 252,810 179,533 587,742 372,019
------------ ------------ ------------ ------------
Total 657,363 526,388 1,594,461 1,265,683
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Expenses:
Fuel costs 365,913 337,581 923,220 813,805
Purchased power 20,259 34,593 55,227 87,217
Operation and maintenance 100,783 98,604 311,434 272,219
Depreciation and amortization 40,778 38,836 119,248 117,768
Taxes other than income taxes 5,084 10,062 27,858 48,840
------------ ------------ ------------ ------------
Total 532,817 519,676 1,436,987 1,339,849
------------ ------------ ------------ ------------
Operating Income (Loss) 124,546 6,712 157,474 (74,166)
Other Income 919 434 2,208 3,338
Interest Expense (1,298) (8,331) (6,923) (24,282)
------------ ------------ ------------ ------------
Income (Loss) Before Income Taxes and Cumulative
Effect of Accounting Change 124,167 (1,185) 152,759 (95,110)
Income Tax Benefit (Expense) (41,761) 4,483 (47,942) 45,422
------------ ------------ ------------ ------------
Income (Loss) Before Cumulative Effect of Accounting Change 82,406 3,298 104,817 (49,688)
Cumulative Effect of Accounting Change, net of tax -- -- 98,910 --
------------ ------------ ------------ ------------
Net Income (Loss) Attributable to Common Shareholders $ 82,406 $ 3,298 $ 203,727 $ (49,688)
============ ============ ============ ============
Basic and Diluted Earnings Per Common Share:
Income (Loss) Before Cumulative Effect of Accounting Change $ 1.03 $ 0.04 $ 1.31 $ (0.62)
Cumulative Effect of Accounting Change, net of tax -- -- 1.24 --
------------ ------------ ------------ ------------
Net Income (Loss) Attributable to Common Shareholders $ 1.03 $ 0.04 $ 2.55 $ (0.62)
============ ============ ============ ============
Dividends Declared per Common Share $ 0.25 $ -- $ 0.75 $ --
Weighted Average Common Shares Outstanding (000):
- Basic 80,000 80,000 80,000 80,000
- Diluted 80,000 80,000 80,000 80,000
Physical Electric Generation Power Sales (MWH) 14,533,513 15,475,590 36,327,349 41,922,693
</Table>
Reference is made to the Notes to the Consolidated Financial Statements
contained in the Annual Report on Form 10-K of Texas Genco Holdings, Inc.