CenterPoint Energy 2004 Annual Report Download

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2004 ANNUAL REPORT
2004
A YEAR OF MILESTONES

Table of contents

  • Page 1
    2004 A Y E A R O F M I L E S T O N E S 2 0 0 4 A N N U A L R E P O RT

  • Page 2
    ... in Texas Genco for $2.9 billion. With proceeds from the sale, we began paying down debt. Recovering the amounts due the company under the 1999 Texas Electric Restructuring Law was another important part of the original plan for CenterPoint Energy. However, the PUC granted our electric transmission...

  • Page 3

  • Page 4
    ...five million metered electric and natural gas distribution customers in Arkansas, Louisiana, Minnesota, Mississippi, Oklahoma and Texas. Assets total about $17 billion after the sale of our subsidiary, Texas Genco. With more than 9,000 employees, CenterPoint Energy and its predecessor companies have...

  • Page 5
    ...2004 (In Millions Of Dollars Except Per Share Amounts) Revenues Operating Income Income From Continuing Operations (1) Per Share of Common Stock: Income From Continuing Operations, Basic (1) Income From Continuing Operations, Diluted (1) Book Value - Year End Market Price - Year End Common Dividend...

  • Page 6
    ... this vision when CenterPoint Energy delivers world-class performance to four key stakeholder groups beginning with you, our shareholders, but also including our Milton Carroll, left, Chairman of the Board, and David McClanahan, President and Chief Executive Officer customers, our employees and the...

  • Page 7
    ... April 2005 by selling our investment in the South Texas Project nuclear power plant Sale of Texas Genco and our electric subsidiary "true-up" proceeding 2004 was a watershed year. Since CenterPoint Energy was created in 2002 as a regulated utility company with a significant amount of debt, we have...

  • Page 8
    ...nearly 47,000 new metered customers and met system reliability goals after establishing an aggressive special program to cut outage times. Our natural gas delivery and gas marketing operations also had their best year, raising operating income by $20 The sale of our power generation subsidiary and...

  • Page 9
    ...in areas that complement our core energy delivery business. However, we will pursue these opportunities only when we believe they will create sustainable shareholder value. David M. McClanahan President and Chief Executive Officer The CenterPoint Energy management team is committed to achieving our...

  • Page 10
    ... 17,000 New Customers MINNEAPOLI S C HI C AGO S T. LOUI S WI C HITA LITTLE R O C K LAWTON OXFO R D TYLE R S H R EVEPO R T GULFPO R T/ BILOXI Inset photo: Key finance executives, Brenda Cauthen, VP Audit Services, Jim Brian, Senior VP and Chief Accounting Officer, and Walter Fitzgerald, VP and...

  • Page 11
    ... PROGRESS CenterPoint Energy is committed to providing shareholders a well-managed company dedicated to paying competitive dividends and building shareholder value. As described on the inside front cover of this report, we are focused on using proceeds from the sale of Texas Genco and the...

  • Page 12
    ... area accounted for most of the approximately 17,000 new customers in Minnesota, where we serve 750,000 customers. We also added gas distribution customers in Little Rock, Ark., Shreveport, La., suburban Jackson, Miss., and the corridor between Austin and San Antonio, Texas. CenterPoint Energy...

  • Page 13
    ... Fort Bend Service Center near Houston, stands ready to serve customers. In April 2005, we received approval from the Texas Railroad Commission for a $2 million base rate increase for unincorporated areas in Texas. In November of 2004, we filed a request with the Arkansas Public Service Commission...

  • Page 14
    ... and Maintenance Technician, uncoils piping at a construction site in New Braunfels, Texas. control costs and continue to make improvements in their overall performance. Targeting new customers for growth While we continue to experience strong customer growth in many of our service territories...

  • Page 15
    ... with our current customers offer us new and continuing opportunities to grow our field services operations. for Longhorn Partners Pipeline, LP; modernizing our Ada Storage compression facilities; completing our Integrity Management Plan; and developing a strategic workforce plan to ensure that...

  • Page 16
    COMMITTED TO CUSTOMERS Clockwise from top left, Linemen Nick White left, and James Candelari ride high at a Houston freeway construction site; Scott O'Brien at Houston's H.O. Clarke Service Center and Dante Evans, who helped restore power in Florida after Hurricane Ivan caused damage that included ...

  • Page 17
    ... Florida and Alabama, who found themselves without power following four devastating hurricanes. monthly targets designed to reduce allowable outage time a little each month so we could still meet our original goal by the end of the year. With hard work by everyone in service restoration, we reached...

  • Page 18
    COMMITTED TO CUSTOMERS Angel Dominguez reads meters in Houston. Randy Draper, Gas Gathering Technician at the Haughton, La., office, checks a storage tank. number of gas outages and the time customers were without service. There were 1,271 customers affected by gas outages in 2004, totaling 6,103...

  • Page 19
    ... costs and expect to realize future savings through reduced cable cuts and buried line locator expenses. to receive timely electric service. The new system now identifies instances in which there are multiple service Also, along with the rest of the Texas retail electric market, CenterPoint Energy...

  • Page 20
    ... Arkansas, Louisiana, Mississippi, Oklahoma and Texas, we completed a major organizational restructuring program in 2004 without operational disruptions. This allowed us to reduce the number of payment centers across the service territory, centralize customer call center operations in Shreveport, La...

  • Page 21
    ... Our customer satisfaction results in 2004 were mostly positive, with high and improving scores in our gas operations, but lower scores in our electric operations. CenterPoint Energy's goal for all areas of our company remains top-quartile performance. In the J.D. Power and Associates (JDPA) annual...

  • Page 22
    ...satisfaction in Pipelines and Field Services. The results of the independent Mastio Customer Satisfaction Survey showed significant improvements for both our interstate pipelines, CenterPoint Energy Gas Transmission Company (CEGT) and CenterPoint EnergyMississippi River Transmission Corporation (MRT...

  • Page 23
    ... launched CNP University, providing employees access to career development resources and opportunities. • We stopped using our heritage names, Arkla, Entex and Minnegasco. • We launched our "On the Spot" ad campaign, leveraging safety, marketing and service messages to define CenterPoint Energy...

  • Page 24
    ... and H.O. Clarke Service Area Manager, Marie Bogan listen as Lineman Carlos Pereda recounts experiences on the job in Houston. Inset photo: Human Resources employees, from left, Alice Otchere, Director; Dinny Tan, Payroll Tax Accountant; Patricia Frank, Director; Ira Winsten, Director; Anthony...

  • Page 25
    ...and individual managers and supervisors conduct and document periodic on-site safety inspections. Safety initiatives and training, such as our online safety training Web sites, are regularly updated to help improve the safety of our employees. We track vehicular incident and lost time incident rates...

  • Page 26
    .... Our management team is carefully reviewing the suggestions made by employees and will develop and implement plans to make the suggested changes. Employee Development - Employee Surveys - every opinion counts We recognize the critical role employees play in ensuring CenterPoint Energy's success...

  • Page 27
    ... Analyst in Shreveport, La. Dick Walker, Gathering Technician, works in Waskom, La. Ray Robbins, Gathering Technician, stays in touch at the Sligo Plant in Haughton, La. Glenn Lea is a Construction & Maintenance Technician in New Braunfels, Texas. CenterPoint Energy's employees are also...

  • Page 28
    ..., Service Consultant, and Donna Novak, Field Service Representative, repair a home in Houston; inset: Volunteers clear away debris during a "Trash Bash" clean-up near Galveston, Texas; and, at left, Janie Norton and Julie Beitler, Engineering Systems, help restore native plants at the Dakota Peak...

  • Page 29
    ...one of CenterPoint Energy's core values. Our employees take the initiative to make a difference in other people's lives through volunteer efforts, with a special focus on education and economic development. Pancake Supper to help fund eye care and educational summer camps. In Brazoria County, Texas...

  • Page 30
    ... qualified procurement dollars, excluding fuel and certain other expenses. Additionally, our economic development department worked with 16 companies to expand or relocate to our Houston service area, bringing 2,251 new jobs and adding $6 billion to the area's economy. nonprofit organizations to...

  • Page 31
    ... odor of natural gas could save their lives. "Trees make our communities more livable," wrote The National Arbor Day Foundation when it named CenterPoint Energy a Tree Line USA Utility in recognition of our "national leadership in caring for trees while meeting service objectives." Tree Line USA is...

  • Page 32
    ... President of MEShannon & Associates, Inc., a corporate financial advisory services and investments company in Houston. He served as Chairman of the Board and Chief Administrative and Financial Officer of Ecolab, Inc., a Fortune 500 specialty chemical company. He has been a CenterPoint Energy board...

  • Page 33
    ... Senior Vice President CenterPoint Energy Gas Services Other Corporate Officers James S. Brian, 57 Senior Vice President and Chief Accounting Officer Preston Johnson, Jr., 49 Senior Vice President Human Resources and Shared Services Jeff W. Bonham, 42 Vice President Government Relations Brenda...

  • Page 34
    ..., the company's Annual Report on Form 10-K for the year ended Dec. 31, 2004, by writing or calling CenterPoint Energy Investor Services at 1-888-468-3020. Additional investor information can be found on the inside back cover of this report and on our Web site, www.CenterPointEnergy.com/investors...

  • Page 35
    ... change Discontinued operations, net of tax Extraordinary loss, net of tax Cumulative effect of accounting change, net of tax Diluted earnings (loss) per common share Cash dividends paid per common share Dividend payout ratio from continuing operations Return from continuing operations on average...

  • Page 36
    ... of SFAS No. 143, "Accounting for Asset Retirement Obligations" ($80 million after-tax gain, or $0.26 and $0.24 earnings per basic and diluted share, respectively), which is included in discontinued operations related to Texas Genco. 2004 net income includes an after-tax extraordinary loss of $977...

  • Page 37
    ...2004 (In thousands, except per share amounts) Revenues Expenses: Natural gas Other operating expenses Depreciation and amortization Total Operating Income Other Income (Expense) Income From Continuing Operations Before Income Taxes and Extraordinary Loss Income Tax... in the Company's Form 10-K. 35

  • Page 38
    ...2004 Net income (loss) Other comprehensive income (loss), net of tax: Minimum pension liability adjustment Other comprehensive income (loss) from continuing operations Other comprehensive income (loss) from discontinued operations... to the Consolidated Financial Statements in the Company's Form 10-K.

  • Page 39
    ... D AT E D B A L A N C E S H E E T S December 31, 2003 (In thousands) 2004 ASSETS Current Assets: Cash and cash equivalents Other current assets Current assets of discontinued operations Total current assets Property, Plant and Equipment, net Other Assets: Goodwill, net Regulatory assets Other non...

  • Page 40
    ... W S Year Ended December 31, 2002 2003 (In thousands) 2004 Cash Flows from Operating Activities: Net income (loss) Discontinued operations, net of tax Extraordinary loss, net of tax Income from continuing operations Adjustments to reconcile income from continuing operations to net cash provided by...

  • Page 41
    ...I T Y 2002 Shares Amount Shares 2003 Amount Shares 2004 Amount (In thousands of dollars and shares) Common Stock, $0.01 par value; authorized 1,000,000,000 shares Balance, beginning of year Issuances related to benefit and investment plans Balance, end of year Additional Paid-in-Capital Balance...

  • Page 42
    ... of the Sarbanes-Oxley Act of 2002 as Exhibits 31.1 and 31.2 to its annual report on Form 10-K. In addition, following its annual meeting in 2004, CenterPoint Energy submitted its CEO certification to the New York Stock Exchange pursuant to Section 303A.12(a) of the NYSE's Listed Company's Manual.

  • Page 43
    ... Energy Investor's Choice Plan. You also can enroll in Investor's Choice online at: www.netstockdirect.com. The Investor's Choice Plan provides easy, inexpensive options, including direct purchase and sale of CenterPoint Energy common stock; dividend reinvestment; statement-based accounting...

  • Page 44
    1111 Louisiana Street, Houston, TX 77002