CenterPoint Energy 2010 Annual Report Download - page 68

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46
• the outcome of litigation brought by or against us;
• our ability to control costs;
• the investment performance of our pension and postretirement benefit plans;
• our potential business strategies, including restructurings, acquisitions or dispositions of assets or
businesses, which we cannot assure will be completed or will have the anticipated benefits to us;
• acquisition and merger activities involving us or our competitors; and
• other factors we discuss under ―Risk Factors‖ in Item 1A of this report and in other reports we file from
time to time with the Securities and Exchange Commission.
CONSOLIDATED RESULTS OF OPERATIONS
All dollar amounts in the tables that follow are in millions, except for per share amounts.
Year Ended December 31,
2008
2009
2010
Revenues ...................................................................................................................................
$ 11,322
$ 8,281
$ 8,785
Expenses ....................................................................................................................................
10,049
7,157
7,536
Operating Income ......................................................................................................................
1,273
1,124
1,249
Gain (Loss) on Marketable Securities .......................................................................................
(139)
82
67
Gain (Loss) on Indexed Debt Securities ....................................................................................
128
(68)
(31)
Interest and Other Finance Charges ...........................................................................................
(468)
(513)
(481)
Interest on Transition and System Restoration Bonds ...............................................................
(136)
(131)
(140)
Equity in Earnings of Unconsolidated Affiliates .......................................................................
51
15
29
Other Income, net ......................................................................................................................
14
39
12
Income Before Income Taxes ....................................................................................................
723
548
705
Income Tax Expense .................................................................................................................
(277)
(176)
(263)
Net Income ..............................................................................................................................
$ 446
$ 372
$ 442
Basic Earnings Per Share ...........................................................................................................
$ 1.32
$ 1.02
$ 1.08
Diluted Earnings Per Share........................................................................................................
$ 1.30
$ 1.01
$ 1.07
2010 Compared to 2009
Net Income. We reported net income of $442 million ($1.07 per diluted share) for 2010 compared to
$372 million ($1.01 per diluted share) for the same period in 2009. The increase in net income of $70 million was
primarily due to a $125 million increase in operating income, a $37 million decrease in the loss on our indexed debt
securities, a $32 million decrease in interest expense due to lower levels of debt, excluding transition and system
restoration bond-related interest expense, and a $14 million increase in equity in earnings of unconsolidated
affiliates, which were partially offset by an $87 million increase in income tax expense, a $27 million decrease in
Other Income, net primarily due to the $23 million of carrying costs related to Hurricane Ike restoration costs in
2009, a $15 million decrease in the gain on our marketable securities and a $9 million increase in interest expense on
transition and system restoration bonds.
Income Tax Expense. Our 2010 effective tax rate of 37.3% differed from the 2009 effective tax rate of 32.1%
primarily due to the settlement in 2009 of our federal income tax return examinations for tax years 2004 and 2005
and a reduction in state income taxes in 2009 related to adjustments in prior years’ state estimates. The 2010
effective tax rate included the effects of remeasuring accumulated deferred income taxes associated with the
restructuring of certain subsidiaries in December 2010 (decrease in income tax expense of $24 million) as well as a
change in tax law upon the enactment in March 2010 of the Patient Protection and Affordable Care Act and the
related Health Care and Education Reconciliation Act of 2010 (increase in income tax expense of $21 million). In