Texas Genco Reports Third Quarter 2004 Results; Loss Reflects
Impairment Charge for Pending Sale HOUSTON, Oct. 28
/PRNewswire-FirstCall/ -- Texas Genco Holdings, Inc. (NYSE:TGN), an
81 percent-owned subsidiary of CenterPoint Energy, Inc. (NYSE:CNP),
today reported a net loss of $311 million, or $3.89 per share, for
the third quarter of 2004, which includes an after-tax impairment
charge of $426 million ($649 million pretax) related to the pending
sale of the company's coal, lignite and gas-fired generation
plants. As a result of the signing of the definitive agreement
described below, and in accordance with Statement of Financial
Accounting Standards (SFAS) No. 144, "Accounting for the Impairment
or Disposal of Long-Lived Assets", the company ceased depreciation
on its coal, lignite and gas-fired generation plants at the time
these assets were considered "held for sale". This resulted in a
decrease in depreciation expense of $24 million after tax ($37
million pretax) for the quarter. In accordance with SFAS No. 106,
"Employers' Accounting for Postretirement Benefits Other Than
Pensions", the company also recorded a curtailment expense related
to postretirement benefits of $11 million after tax ($17 million
pretax), which is included in operations and maintenance expense.
Excluding these sale-related impacts, net income for the third
quarter of 2004 was $102 million, or $1.27 per share, compared to
$82 million, or $1.03 per share, for the same period of 2003.
(Logo: http://www.newscom.com/cgi-bin/prnh/20030127/DAM020LOGO )
For the nine months ended September 30, 2004, the company reported
a net loss of $170 million, or $2.13 per share, including the
sale-related impacts described above. Net income for the nine
months ended September 30, 2003, was $204 million, or $2.55 per
share, including a non-cash gain of $99 million ($1.24 per share)
from the adoption of Statement of Financial Accounting Standards
No. 143, "Accounting for Asset Retirement Obligations". Excluding
the sale-related impacts, net income for the nine months ended
September 30, 2004 was $243 million, or $3.03 per share, and income
before the cumulative effect of an accounting change for the same
period of 2003 was $105 million, or $1.31 per share. Excluding the
pre-tax impacts related to the sale noted above, operating income
for the third quarter of 2004 improved by $28 million from the
prior year primarily due to higher wholesale electricity prices for
baseload products and improved availability of baseload units. On
July 21, 2004, CenterPoint Energy and Texas Genco announced a
definitive agreement for GC Power Acquisition LLC, a newly formed
entity owned in equal parts by affiliates of The Blackstone Group,
Hellman & Friedman LLC, Kohlberg Kravis Roberts & Co. L.P.
and Texas Pacific Group, to acquire Texas Genco for approximately
$3.65 billion in cash. The transaction, subject to certain
regulatory approvals, will be accomplished in two steps. The first
step, expected to be completed in the fourth quarter of 2004,
involves Texas Genco's purchase of the 19 percent of its shares
owned by the public for $47 per share, followed by GC Power
Acquisition's purchase of a Texas Genco subsidiary that will then
own Texas Genco's coal, lignite and gas-fired generation plants. In
the second step of the transaction, expected to take place in the
first quarter of 2005 following Nuclear Regulatory Commission
approval, GC Power Acquisition will complete the acquisition of
Texas Genco, the principal remaining asset of which will then be
Texas Genco's interest in the South Texas Project nuclear facility.
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, of which
approximately 2,500 megawatts are currently in mothball status. 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 http://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, successful consummation and timing of the
sale of Texas Genco, 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-K for the period
ended December 31, 2003, Form 10-Qs for the periods ended March 31,
2004 and June 30, 2004 and other filings with the Securities and
Exchange Commission. Texas Genco Holdings, Inc. Statements of
Consolidated Operations (Thousands of Dollars) (Unaudited) Quarter
Ended Nine Months Ended September 30, September 30, 2004 2003 2004
2003 Revenues $637,885 $657,363 $1,629,732 $1,594,461 Expenses:
Fuel 315,644 365,913 765,951 923,220 Purchased power 17,506 20,259
43,874 55,227 Operation and maintenance 118,914 100,353 319,113
311,004 Depreciation and amortization 4,355 40,778 85,331 119,248
Taxes other than income taxes 8,721 5,084 33,099 27,858 Write-down
of assets 649,000 --- 649,000 --- Total 1,114,140 532,387 1,896,368
1,436,557 Operating Income (Loss) (476,255) 124,976 (266,636)
157,904 Other Income 908 489 2,963 1,778 Interest Expense ---
(1,298) (140) (6,923) Income (Loss) Before Income Taxes and
Cumulative Effect of Accounting Change (475,347) 124,167 (263,813)
152,759 Income Tax Benefit (Expense) 164,088 (41,761) 93,562
(47,942) Income (Loss) Before Cumulative Effect of Accounting
Change (311,259) 82,406 (170,251) 104,817 Cumulative Effect of
Accounting Change, net of tax --- --- --- 98,910 Net Income (Loss)
$(311,259) $82,406 $(170,251) $203,727 Basic and Diluted Earnings
Per Common Share: Income (Loss) Before Cumulative Effect of
Accounting Change $(3.89) $1.03 $(2.13) $1.31 Cumulative Effect of
Accounting Change, net of tax --- --- --- 1.24 Net Income (Loss)
$(3.89) $1.03 $(2.13) $2.55 Dividends Declared per Common Share
$0.25 $0.25 $0.75 $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 Capital Expenditures $12,489 $32,151 $49,571 $109,847
Operating Data: Sales (MWH) 13,476,047 14,533,513 36,159,200
36,327,349 Generation (MWH) 13,036,825 13,416,037 34,728,241
34,488,421 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.
http://www.newscom.com/cgi-bin/prnh/20030127/DAM020LOGO
http://photoarchive.ap.org/ DATASOURCE: Texas Genco Holdings, Inc.
CONTACT: media, Leticia Lowe, +1-713-207-7702, or investors,
Marianne Paulsen, +1-713-207-6500, both of Texas Genco Holdings,
Inc. Web site: http://www.txgenco.com/
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