CenterPoint Energy 2009 Annual Report Download - page 67

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45
CONSOLIDATED RESULTS OF OPERATIONS
All dollar amounts in the tables that follow are in millions, except for per share amounts.
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 S
y
stem Restoration Bonds...............................
.
(123) (136) (131)
Distribution from AOL Time Warner Litigation Settlement.....................
.
32
—
3
Additional Distribution to ZENS Holders .................................................
.
(27)
—
(3)
Equit
y
in Earnin
g
s of Unconsolidated Affiliates.......................................
.
16 51 15
Other Income, ne
t
......................................................................................
.
17 14 39
Income Before Income Taxes ....................................................................
.
588 723 548
Income Tax Expense .................................................................................
.
(193) (277) (176)
N
et Income ..............................................................................................
.
$ 395 $ 446 $ 372
Basic Earnings Per Share ...........................................................................
.
$ 1.23 $ 1.32 $ 1.02
Diluted Earnin
g
s Per Share ........................................................................
.
$ 1.15 $ 1.30 $ 1.01
2009 Compared to 2008
Net Income. We reported net income of $372 million ($1.01 per diluted share) for 2009 compared to
$446 million ($1.30 per diluted share) for the same period in 2008. The decrease in net income of $74 million was
primarily due to a $149 million decrease in operating income, a $45 million increase in interest expense due
primarily to higher interest rates and higher levels of debt during 2009, excluding transition and system restoration
bond-related interest expense, a $36 million decrease in equity in earnings of unconsolidated affiliates and a
$196 million decrease in the gain on our indexed debt securities. These decreases in net income were partially offset
by a $101 million decrease in income tax expense, a $221 million increase in the gain on our marketable securities,
$23 million of carrying costs related to Hurricane Ike restoration costs included in Other Income, net and a
$5 million decrease in interest expense on transition and system restoration bonds.
Income Tax Expense. Our 2009 effective tax rate of 32.1% differed from the 2008 effective tax rate of 38.4%
primarily due to the settlement of our federal income tax return examinations for tax years 2004 and 2005 and a
reduction in state income taxes related to adjustments in prior years’ state estimates. For more information, see Note
9 to our consolidated financial statements.
2008 Compared to 2007
Net Income. We reported net income of $446 million ($1.30 per diluted share) for 2008 compared to
$395 million ($1.15 per diluted share) for the same period in 2007. The increase in net income of $51 million was
primarily due to an $88 million increase in operating income, a $41 million decrease in interest expense, excluding
transition bond-related interest expense, a $35 million increase in equity in earnings of unconsolidated affiliates
related primarily to SESH and a $17 million increase in the gain on our indexed debt securities. These increases in
net income were partially offset by an $84 million increase in income tax expense, a $25 million increase in the loss
on our Time Warner investment and a $13 million increase in interest expense on transition bonds.
Income Tax Expense. Our 2008 effective tax rate of 38.4% differed from the 2007 effective tax rate of 32.8%
primarily as a result of revisions to the Texas State Franchise Tax Law (Texas margin tax), which was reported as an
operating expense prior to 2008 and is now being reported as an income tax for CenterPoint Houston, and a Texas
state tax examination in 2007.