Exhibit 99.1
KEYSPAN
NEWS
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KeySpan Corporation For Immediate Release
Contacts: Investors Media Relations
George Laskaris Ed Yutkowitz
718.403.2526 718.403.2523
KeySpan Announces Strong Third Quarter Results
Nine Month Core Results 8% Ahead of Last Year
Electric Business Delivers Excellent Reliable Performance
---------------------------------------------------------
Brooklyn, New York, November 4, 2005 - KeySpan Corporation (NYSE: KSE) announced
consolidated GAAP earnings from continuing operations, less preferred stock
dividends, of $0.13 per share or $22.6 million for the third quarter of 2005,
compared to a loss of $0.19 per share or $30.1 million for the same period last
year. These results reflect the strong performance of our core businesses and
exceed consensus. The quarterly results of $0.13 per share were significantly
improved over core earnings of $0.03 per share in 2004. Last year's core results
exclude the impact from non-core operations, asset sales and special items,
detailed in a table at the end of this release. These excellent third quarter
results were driven by the strong performance of the electric services segment,
as well as lower financing costs and efficient expense management.
For the nine month period ended September 30, 2005, KeySpan reported
consolidated GAAP earnings from continuing operations, less preferred stock
dividends, of $275.0 million or $1.63 per share, compared to $345.0 million or
$2.15 per share for the same period last year. Year to date, core operations
realized $1.67 per share, compared to $1.55 per share last year, an increase of
8%.
Discontinued operations, representing the mechanical contracting companies
disposed of in the first quarter of 2005, reflected a loss of $1.8 million or
$0.01 per share for the nine months ended September 30, 2005, compared to a loss
of $86.6 million or $0.54 per share last year.
"I am pleased with the excellent performance of our core gas and electric
businesses. Third quarter performance was driven by the strong results of our
electric business which are up 35% over last year. During this peak summer
period, our generation plants had availability well in excess of 95% as we
experienced weather which was 50% warmer than last year," said Robert B. Catell,
Chairman and Chief Executive Officer. "The organic growth of the gas
distribution business continued unabated with the addition of over 28,000 new
customers and oil-to-gas conversions year-to-date. We are on target to achieve
our new gross profit margin goal of close to $50 million. In addition, the
strength of our balance sheet affords us the opportunity to actively pursue new
investment opportunities."
Segment Highlights
Results in 2005 and 2004 are reported on an Operating Income basis as follows:
- -------------------------------------------------------------- ------------ ------------- ------------ ------------
3rd 3rd YTD YTD
Operating Income / (Loss) [$ millions] Quarter Quarter 2005 2004
-------------------------------------- 2005 2004
- -------------------------------------------------------------- ------------ ------------- ------------ ------------
Gas Distribution (45.5) (23.6) 376.8 391.1
- -------------------------------------------------------------- ------------ ------------- ------------ ------------
Electric Services 149.6 111.2 266.3 226.3
- ----------------------------------------------------------------------------------------- -------------------------
Energy Investments
- -------------------------------------------------------------- ------------ ------------- ------------ ------------
Houston Exploration - 9.8 - 130.8
- -------------------------------------------------------------- ------------ ------------- ------------ ------------
E&P Ceiling Test Writedown - - - (48.2)
- -------------------------------------------------------------- ------------ ------------- ------------ ------------
KeySpan Canada - 1.4 - 12.3
- -------------------------------------------------------------- ------------ ------------- ------------ ------------
Other Energy Investments 4.7 5.2 16.6 13.4
- -------------------------------------------------------------- ------------ ------------- ------------ ------------
Total Energy Investments 4.7 16.4 16.6 108.3
- -------------------------------------------------------------- ------------ ------------- ------------ ------------
Energy Services
- -------------------------------------------------------------- ------------ ------------- ------------ ------------
Energy Services Operations (1.1) (4.9) (6.7) (28.4)
- -------------------------------------------------------------- ------------ ------------- ------------ ------------
Goodwill Impairment - (14.4) - (14.4)
- -------------------------------------------------------------- ------------ ------------- ------------ ------------
Total Energy Services (1.1) (19.3) (6.7) (42.8)
- -------------------------------------------------------------- ------------ ------------- ------------ ------------
Total Operating Segments 107.7 84.7 653.0 682.9
- -------------------------------------------------------------- ------------ ------------- ------------ ------------
Other (4.9) 2.9 (8.3) 14.5
----- --- ----- ----
- -------------------------------------------------------------- ------------ ------------- ------------ ------------
Total Operating Income 102.8 87.6 644.7 697.4
- -------------------------------------------------------------- ------------ ------------- ------------ ------------
Total Operating Income excluding 102.8 90.8 644.7 616.9
sold entities and special items
- -------------------------------------------------------------- ------------ ------------- ------------ ------------
Notes:
- - Operating Income in the Energy Investments segment for 2004 reflects 100%
of KeySpan's interest in Houston Exploration for the five months ended May
31, and four months of equity earnings for KeySpan's 23.5% interest in
Houston Exploration.
- - Operating Income in the Energy Investments segment for 2004 reflects 100%
of KeySpan's interest in its Canadian subsidiaries for the three months
ended March 31, and six months of equity earnings for KeySpan's 25%
interest in its Canadian subsidiaries.
Operating income increased by 13% to $102.8 million for the third quarter
compared to last year. The main driver of this quarter's results was the
electric services business, which benefited from excellent reliability of the
generating plants, fuel price spreads, and weather which was 50% warmer than
last year. This helped offset the seasonal losses of the gas distribution
segment. Year to date, operating income was up 5% or $27.8 million to $644.7
million, compared to $616.9 million for the same period last year. This
year-over-year increase was primarily due to the warmer weather, effective
maintenance programs and reliable performance of the generation units, as well
as the added capacity of 250 MW at the New York City Ravenswood generating
station, which went into commercial operation in the second quarter of last
year. In addition, the energy services segment improved due to enhanced profit
margins and lower expenses. These results exclude non-core operations, asset
sales and special items.
2
Key Operating Income Drivers by Segment
o Our Gas Distribution segment, which serves New York City, Long Island and
New England, reported an expected seasonal operating income loss of $45.5
million for the third quarter, compared to a loss of $23.6 million last
year. Year-to-date results of $376.8 million were down $14.3 million or 4%
over the same period last year. These results were impacted by a higher
provision for uncollectible accounts of $8 million for the quarter and $20
million year-to-date, due to substantially higher gas costs and collection
experience. These results also reflect weather which was 1.6% warmer than
last year in New York and 2.3% colder than last year in New England. During
the first nine months of 2005, KeySpan completed more than 28,000 gas
installations, which will add over $31 million in new gross profit margin.
The Company has played a proactive role in hedging gas supply through gas
storage, financial hedges, and long-term transportation contracts, which
should help mitigate the pricing impact on customer bills by approximately
$500 million.
o The Electric Services segment owns and operates generation in the New York
City and Long Island "load pockets" and also manages the Long Island Power
Authority's transmission and distribution system under long-term contracts.
This segment reported operating income of $149.6 million for the third
quarter, an increase of $38.4 million or 35% over the similar period last
year. This result was driven by both weather which was 50% warmer than last
year, as well as higher energy margins, which benefited from the price
differential between the oil and gas fuels used at the Ravenswood
Generating Station. Year-to-date operating income of $266.3 million was up
$40 million over last year, primarily resulting from increased revenues of
$56.3 million due to the warmer summer weather in the third quarter and the
added generation capacity at Ravenswood.
o The Energy Investments segment is comprised of the Company's Seneca Upshur
gas exploration and production operations in West Virginia, as well as
complementary investments in natural gas pipelines, storage, and other
energy-related projects. The operating income for the first nine months of
this year increased by $3.2 million, from $13.4 million to $16.6 million.
These results were primarily driven by Seneca Upshur operating income and
higher earnings from our investment in the Iroquois pipeline.
o The Energy Services segment includes companies that provide energy related
services to homes and businesses in the New York City and Boston
metropolitan areas. This segment reported an operating loss of $1.1 million
for the third quarter of 2005, a substantial improvement over the loss of
$4.9 million last year. Year-to-date, performance also improved from a loss
of $28.4 million to a loss of $6.7 million. The improved performance
primarily reflects an increase in gross profit margin and lower operating
expenses. These results exclude the 2004 goodwill impairment charge
associated with continuing operations.
3
Financial Update
As a result of the strengthening of the balance sheet, the Company achieved
quarterly interest expense savings of $21 million, which was 24% lower than the
same period last year. KeySpan successfully decreased the level of long-term
debt outstanding at the end of the third quarter of 2005 to $3.9 billion, as
compared to $4.4 billion at the end of last year, a reduction of approximately
$500 million or 11%. This brings the Company's debt-to-total-capitalization
ratio to 49.1%, as compared to 57.4% at the end of 2004, clearly reinforcing its
credit rating and low business risk profile.
The Company declared a quarterly common stock dividend of $0.455 per share, paid
on November 1, 2005, to shareholders of record as of October 12, 2005. This is
the Company's 30th consecutive quarter of paying a dividend, building upon its
long-standing commitment of dividend payments to its shareholders. The annual
dividend rate of $1.82 per share, increased in the first quarter of 2005,
provides a yield to shareholders currently of over 5%.
2005 Earnings Outlook
KeySpan's 2005 earnings guidance remains at $2.30 to $2.40 per share, as
announced in December 2004, excluding special items. This guidance includes the
dilutive effect of the conversion of the MEDS Equity Units in May 2005. The
Company's earnings forecast may vary significantly during the year due to, among
other things, changing energy market conditions and weather.
"The strength and balance of KeySpan's businesses once again allowed us to
achieve a solid performance in this quarter," said Mr. Catell. "Our electric
business performed admirably, and we are delighted with the continued growth in
the gas business despite higher gas prices. We are confident that 2005 will be
another successful year for the Company."
4
Below is a description of the items discussed in this release and a
reconciliation to consolidated earnings.
- -------------------------------------------------- ---------------------------------- -----------------------------------
2005 2004
- -------------------------------------------------- -------------- ------------------- --------------- -------------------
Reconciliation of (millions) Earnings per (millions) Earnings per
GAAP Earnings share share
- -------------------------------------------------- -------------- ------------------- --------------- -------------------
GAAP Earnings for Common Stock $275.0 $1.63 $345.0 $2.15
Year-to-Date
- -------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------- ---------------------------------- -----------------------------------
3rd Quarter 2005 3rd Quarter 2004
Item Description
- -------------------------------------------------- -------------- ------------------- --------------- -------------------
Earnings Contribution from Non-Core
Operations (Houston Expl. & Canada) - - $6.9 $0.04
- -------------------------------------------------- -------------- ------------------- --------------- -------------------
Debt Redemption Premiums - - $(29.3) $(0.18)
- -------------------------------------------------- -------------- ------------------- --------------- -------------------
- - $(12.6) $(0.08)
Goodwill Impairment
- -------------------------------------------------- -------------- ------------------- --------------- -------------------
Total for the 3rd Quarter - - $(35.0) $(0.22)
- -------------------------------------------------- -------------- ------------------- --------------- -------------------
- -------------------------------------------------- ---------------------------------- -----------------------------------
2nd Quarter 2005 2nd Quarter 2004
- -------------------------------------------------- -------------- ------------------- --------------- -------------------
Earnings Contribution from Non-Core Operations
(Houston Expl. & Canada) - - $22.7 $0.14
- -------------------------------------------------- -------------- ------------------- --------------- -------------------
Sale of Houston Exploration (31%) - - $150.1 $0.94
- -------------------------------------------------- -------------- ------------------- --------------- -------------------
Deferred Tax Provision on Remaining
Houston Exploration investment - - $(44.1) $(0.28)
- -------------------------------------------------- -------------- ------------------- --------------- -------------------
Sale of KeySpan Canada - - $10.1 $0.06
- -------------------------------------------------- -------------- ------------------- --------------- -------------------
Ceiling Test Writedown in E&P - - $(31.1) $(0.19)
- -------------------------------------------------- -------------- ------------------- --------------- -------------------
Total for the 2nd Quarter - - $107.7 $0.67
- -------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------- ---------------------------------- -----------------------------------
1st Quarter 2005 1st Quarter 2004
- -------------------------------------------------- -------------- ------------------- --------------- -------------------
Earnings Contribution from Non-Core
Operations (Houston Expl. & Canada) - - $23.8 $0.15
- -------------------------------------------------- -------------- ------------------- --------------- -------------------
Debt Redemption Premiums $(6.8) $(0.04) - -
- -------------------------------------------------- -------------- ------------------- --------------- -------------------
Total for the 1st Quarter $(6.8) $(0.04) $23.8 $0.15
- -------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------- -------------- ------------------- --------------- -------------------
Total for Year-to-Date $(6.8) $(0.04) $96.4 $0.60
- -------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------- -------------- ------------------- --------------- -------------------
Earnings Year-to-Date
excluding above Items $281.8 $1.67 $248.6 $1.55
- -------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------- -------------- ------------------- --------------- -------------------
Discontinued Operations (YTD for
Energy Services mechanical $(1.8) $(0.01) $(86.6) $(0.54)
contracting companies)
- -------------------------------------------------- -------------- ------------------- --------------- -------------------
5
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Investors are invited to listen to the KeySpan Corporation 2005 3rd Quarter
Earnings Conference Call on:
Friday, November 4, 2005, at 10:30 AM (EST)
Live Dial-In Number: 888-552-7850
International Dial-In Number: (706) 645-9166
Replay will begin two hours after completion of the call until 11/9/05 Replay
Dial In: 800-642-1687
International Replay: 706-645-9291
Conference ID: 9563648
Audio webcast available at http://investor.keyspanenergy.com
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A member of the Standard & Poor's 500 Index, KeySpan Corporation (NYSE:KSE) is
the largest distributor of natural gas in the Northeast, operating regulated gas
utilities in New York, Massachusetts, and New Hampshire that serve 2.6 million
customers. These customer-focused businesses are complemented by a portfolio of
service companies that offer energy-related products, services, and solutions to
homes and businesses. KeySpan is also the largest electric generator in New York
State, with approximately 6,650 megawatts of generating capacity that provides
power to 1.1 million customers of the Long Island Power Authority (LIPA) on Long
Island and supplies approximately 25 percent of New York City's capacity needs.
KeySpan also operates LIPA's transmission and distribution system under contract
to LIPA. In addition to these assets, KeySpan has strategic investments in
pipeline transportation, distribution, storage, and production. KeySpan has
headquarters in Brooklyn, New England, and Long Island. For more information,
visit KeySpan's web site at www.keyspanenergy.com.
Certain statements contained herein are forward-looking statements, which
reflect numerous assumptions and estimates and involve a number of risks and
uncertainties. For these statements, we claim the protection of the safe harbor
for forward-looking statements provided by the Private Securities Litigation
Reform Act of 1995. There are possible developments that could cause our actual
results to differ materially from those forecasted or implied in the
forward-looking statements. You are cautioned not to place undue reliance on
these forward-looking statements, which are current only as of the date of this
filing. We disclaim any intention or obligation to update or revise any
forward-looking statements, whether as a result of new information, future
events or otherwise. Among the factors that could cause actual results to differ
materially are: general economic conditions, especially in the Northeast United
States; available sources and costs of fuel; volatility of energy prices in a
deregulated market environment as well as in the source of natural gas and fuel
used to generate electricity; potential write-down of the carrying value of our
investment in certain unregulated subsidiaries and natural gas properties when
natural gas prices are depressed or if we have significant downward revisions in
our estimated proved gas reserves; federal and state regulatory initiatives that
increase competition, threaten cost and investment recovery and impact rate
structure; our ability to successfully reduce our cost structures;
implementation of new accounting standards; the degree to which we develop
unregulated business ventures, as well as federal and state regulatory policies
affecting our ability to retain and operate those business ventures; our ability
to identify and make complementary acquisitions, as well as the successful
integration of those acquisitions; inflationary trends and interest rates; and
risks detailed from time to time in reports and other documents filed by us with
the Securities and Exchange Commission.
6
KaySpan Corporation
Consolidated Statement of Income
- ------------------------------------------------------------------------------------------------------------------------------------
Three Months Ended Sept. 30, Nine Months Ended Sept. 30,
(In Millions of Dollars, Except Per Share Amounts) 2005 2004 2005 2004
- ------------------------------------------------------------------------------------------------------------------------------------
Revenues
Gas Distribution $ 629.6 $ 419.2 $ 3,476.1 $ 3,023.4
Electric Services 619.9 503.9 1,488.9 1,296.8
Energy Services 45.4 43.7 134.1 129.7
Houston Exploration - - - 268.1
Energy Investments 8.2 8.8 27.0 46.0
------------------------------------------------------------------------------
Total Revenues 1,303.1 975.5 5,126.1 4,763.9
------------------------------------------------------------------------------
Operating Expenses
Purchased gas for resale 395.7 186.6 2,206.1 1,776.3
Fuel and purchased power 254.6 176.0 546.9 408.0
Operations and maintenance 364.3 344.8 1,143.3 1,143.1
Depreciation, depletion and amortization 92.1 107.2 295.8 467.4
Operating taxes 97.1 89.5 303.0 302.1
------------------------------------------------------------------------------
Total Operating Expenses 1,203.8 904.1 4,495.1 4,096.9
Income from equity investments 2.5 16.2 12.5 30.3
Sale of assets 1.0 - 1.2 -
------------------------------------------------------------------------------
Operating Income 102.8 87.6 644.7 697.4
------------------------------------------------------------------------------
Other Income and (Deductions)
Interest charges (67.4) (88.3) (200.1) (260.8)
Gain on sale of investments - - 4.1 172.9
Cost of debt redemption - (45.9) (20.9) (45.9)
Minority interest (0.2) - (0.3) (37.0)
Other (3.6) 4.1 9.7 25.9
------------------------------------------------------------------------------
Total Other Income and (Deductions) (71.2) (130.1) (207.5) (144.9)
------------------------------------------------------------------------------
Income Taxes
Current (25.8) (171.8) 119.0 (7.6)
Deferred 34.7 158.1 41.0 210.8
------------------------------------------------------------------------------
Total Income Taxes 9.0 (13.7) 160.0 203.2
------------------------------------------------------------------------------
Earnings (loss) from continuing operations 22.6 (28.8) 277.2 349.3
Discontinued Operations
Loss from discontinued operations, net of tax - (87.0) (4.1) (86.6)
Gain on disposal, net of tax - - 2.3 -
------------------------------------------------------------------------------
Loss from discontinued operations - (87.0) (1.8) (86.6)
------------------------------------------------------------------------------
Net Income (loss) 22.6 (115.8) 275.4 262.7
Preferred stock dividend requirements - 1.3 2.2 4.3
------------------------------------------------------------------------------
Earnings (loss) for Common Stock $ 22.6 $ (117.1) $ 273.2 $ 258.4
==============================================================================
Basic Earnings (loss) Per Share:
Continuing Operations,
less preferred stock dividends $ 0.13 $ (0.19) $ 1.63 $ 2.15
Discontinued Operations - (0.54) (0.01) (0.54)
------------------------------------------------------------------------------
Basic Earnings (loss) Per Share $ 0.13 $ (0.73) $ 1.62 $ 1.61
==============================================================================
Diluted Earnings (loss) Per Share
Continuing Operations,
less preferred stock dividends $ 0.13 $ (0.19) $ 1.62 $ 2.14
Discontinued Operations - (0.54) (0.01) (0.54)
------------------------------------------------------------------------------
Diluted Earnings (loss) Per Share $ 0.13 $ (0.73) $ 1.61 $ 1.60
==============================================================================
Average Common Shares Outstanding (000) 174,332 160,357 168,465 160,139
Average Common Shares Outstanding - Diluted (000) 175,238 161,346 169,403 161,091
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7
Segment Information
Three Months Ended September 30, 2005
(In Millions of Dollars)
Total
(In Millions of Dollars, Gas Electric Energy Energy Operating Recon- Total
Except Per Share Amounts) Distribution Services Investments Services Segments ciliations Consolidation
- ------------------------------------------------------------------------------------------------------------------------------------
Unaffiliated Revenues 629.6 619.9 8.2 45.4 1,303.1 - 1,303.1
Intersegment Revenues - - 3.7 1.7 5.4 (5.4) -
----------------------------------------------------------------------------------------------------
629.6 619.9 11.9 47.1 1,308.5 (5.4) 1,303.1
----------------------------------------------------------------------------------------------------
Operation Expenses
Purchased Gas 399.8 (0.3) - - 399.5 (3.8) 395.7
Purchased Fuel - 254.5 0.1 - 254.6 - 254.6
Operations and Maintenance 162.9 150.6 6.9 45.9 366.3 (2.0) 364.3
Depreciation, Depletion and
Amortization 63.5 21.5 1.7 1.9 88.6 3.5 92.1
Operating Taxes 48.9 45.1 1.0 0.4 95.4 1.7 97.1
----------------------------------------------------------------------------------------------------
Total Operating Expenses 675.1 471.3 9.7 48.2 1,204.4 (0.6) 1,203.8
----------------------------------------------------------------------------------------------------
Income From Equity Investments - - 2.5 - 2.5 - 2.5
Gain (Loss) on Sale of Assets - 1.0 - - 1.0 - 1.0
----------------------------------------------------------------------------------------------------
Operating Income (45.5) 149.6 4.7 (1.1) 107.7 (4.9) 102.8
====================================================================================================
8
Segment Information
Three Months Ended September 30, 2004
(In Millions of Dollars)
Energy Investments
--------------------------
Total
(In Millions of Dollars, Gas Electric Houston Other Energy Operating Recon- Total
Except Per Share Amounts) Distribution Services Exploration Investments Services Segments ciliations Consolidation
- ------------------------------------------------------------------------------------------------------------------------------------
Unaffiliated Revenues 419.2 503.9 8.7 43.7 975.5 975.5
Intersegment Revenues - - - 1.3 2.9 4.2 (4.2) -
------------------------------------------------------------------------------------------------------
419.2 503.9 - 10.0 46.6 979.7 (4.2) 975.5
------------------------------------------------------------------------------------------------------
Operation Expenses
Purchased Gas 186.6 - - - - 186.6 - 186.6
Purchased Fuel - 175.9 - 0.1 - 176.0 - 176.0
Operations and Maintenance 148.8 153.7 - 6.9 49.0 358.4 (13.6) 344.8
Depreciation, Depletion
and Amortization 63.4 21.6 - 2.0 16.5 103.5 3.7 107.2
Operating Taxes 44.0 41.5 - 0.8 0.4 86.7 2.8 89.5
------------------------------------------------------------------------------------------------------
Total Operating Expenses 442.8 392.7 - 9.8 65.9 911.2 (7.1) 904.1
------------------------------------------------------------------------------------------------------
Income From Equity
Investments - - 9.8 6.4 - 16.2 - 16.2
------------------------------------------------------------------------------------------------------
Operating Income (23.6) 111.2 9.8 6.6 (19.3) 84.7 2.9 87.6
======================================================================================================
9
Segment Information
Nine Months Ended September 30, 2005
(In Millions of Dollars)
Total
(In Millions of Dollars, Gas Electric Energy Energy Operating Recon- Total
Except Per Share Amounts) Distribution Services Investments Services Segments ciliations Consolidation
- ------------------------------------------------------------------------------------------------------------------------------------
Unaffiliated Revenues 3,476.1 1,488.9 27.0 134.1 5,126.1 - 5,126.1
Intersegment Revenues - 4.6 3.7 7.9 16.2 (16.2) -
---------------------------------------------------------------------------------------------------
3,476.1 1,493.5 30.7 142.0 5,142.3 (16.2) 5,126.1
---------------------------------------------------------------------------------------------------
Operation Expenses
Purchased Gas 2,214.9 (0.5) - - 2,214.4 (8.3) 2,206.1
Purchased Fuel - 546.5 0.4 - 546.9 - 546.9
Operations and Maintenance 519.7 480.8 18.6 141.8 1,160.9 (17.7) 1,143.3
Depreciation, Depletion
and Amortization 207.4 67.5 4.9 5.7 285.5 10.3 295.8
Operating Taxes 157.3 133.9 2.8 1.2 295.2 7.8 303.0
---------------------------------------------------------------------------------------------------
Total Operating Expenses 3,099.3 1,228.2 26.7 148.7 4,502.9 (7.9) 4,495.1
---------------------------------------------------------------------------------------------------
Income From Equity Investments - - 12.5 - 12.5 - 12.5
Gain (Loss) on Sale of Assets - 1.0 0.1 - 1.2 - 1.2
---------------------------------------------------------------------------------------------------
Operating Income 376.8 266.3 16.6 (6.7) 653.0 (8.3) 644.7
===================================================================================================
10
Segment Information
Nine Months Ended September 30, 2004
(In Millions of Dollars)
Energy Investments
------------------------
Total
(In Millions of Dollars, Gas Electric Houston Other Energy Operating Recon- Total
Except Per Share Amounts) Distribution Services Exploration Investments Services Segments ciliations Consolidation
- ------------------------------------------------------------------------------------------------------------------------------------
Unaffiliated Revenues 3,023.4 1,296.8 268.1 46.0 129.7 4,763.9 - 4,763.9
Intersegment Revenues - - - 3.8 8.3 12.2 (12.2) -
-----------------------------------------------------------------------------------------------------
3,023.4 1,296.8 268.1 49.8 138.0 4,776.1 (12.2) 4,763.9
-----------------------------------------------------------------------------------------------------
Operation Expenses
Purchased Gas 1,776.3 - - - - 1,776.3 - 1,776.3
Purchased Fuel - 407.6 - 0.4 - 408.0 - 408.0
Operations and Maintenance 489.4 472.9 40.0 29.1 159.1 1,190.5 (47.4) 1,143.1
Depreciation, Depletion
and Amortization 207.1 65.6 104.6 58.0 20.5 455.8 11.6 467.4
Operating Taxes 159.4 124.4 5.6 2.3 1.2 292.9 9.2 302.1
-----------------------------------------------------------------------------------------------------
Total Operating Expenses 2,632.3 1,070.5 150.2 89.8 180.8 4,123.5 (26.7) 4,096.9
-----------------------------------------------------------------------------------------------------
Income From Equity Investments - - 12.9 17.4 - 30.3 - 30.3
-----------------------------------------------------------------------------------------------------
Operating Income 391.1 226.3 130.8 (22.5) (42.8) 682.9 14.5 697.4
=====================================================================================================
11