UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2004
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM --------- TO -------------.
------------------------------
Commission file number 1-31449
TEXAS GENCO HOLDINGS, INC.
(Exact name of registrant as specified in its charter)
TEXAS 76-0695920
(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.)
1111 LOUISIANA (713) 207-1111
HOUSTON, TEXAS 77002 (Registrant's telephone number, including area code)
(Address and zip code of principal executive offices)
------------------------------
Indicate by check mark whether the registrant: (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [ ]
Indicate by check mark whether the registrant is an accelerated filer
(as defined in Rule 12b-2 of the Exchange Act). Yes [X] No [ ]
As of May 1, 2004, Texas Genco Holdings, Inc., (Texas Genco) had
80,000,000 shares of common stock outstanding, including 64,764,240 shares which
were held by Utility Holding, LLC, a wholly owned subsidiary of CenterPoint
Energy, Inc.
TEXAS GENCO HOLDINGS, INC.
QUARTERLY REPORT ON FORM 10-Q
FOR THE QUARTER ENDED MARCH 31, 2004
TABLE OF CONTENTS
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements.......................................................... 1
Statements of Consolidated Income
Three Months Ended March 31, 2003 and 2004 (unaudited)........................... 1
Consolidated Balance Sheets
December 31, 2003 and March 31, 2004 (unaudited)................................. 2
Statements of Consolidated Cash Flows
Three Months Ended March 31, 2003 and 2004 (unaudited)........................... 3
Notes to Unaudited Consolidated Financial Statements............................... 4
Item 2. Management's Discussion and Analysis of Financial Condition and Results of
Operations......................................................................... 8
Item 3. Quantitative and Qualitative Disclosures About Market Risk.................... 13
Item 4. Controls and Procedures....................................................... 14
PART II. OTHER INFORMATION
Item 1. Legal Proceedings............................................................. 15
Item 6. Exhibits and Reports on Form 8-K.............................................. 15
i
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION
From time to time we make statements concerning our expectations,
beliefs, plans, objectives, goals, strategies, future events or performance and
underlying assumptions and other statements that are not historical facts. These
statements are "forward-looking statements" within the meaning of the Private
Securities Litigation Reform Act of 1995. Actual results may differ materially
from those expressed or implied by these statements. You can generally identify
our forward-looking statements by the words "anticipate," "believe," "continue,"
"could," "estimate," "expect," "forecast," "goal," "intend," "may," "objective,"
"plan," "potential," "predict," "projection," "should," "will," or other similar
words.
We have based our forward-looking statements on our management's
beliefs and assumptions based on information available to our management at the
time the statements are made. We caution you that assumptions, beliefs,
expectations, intentions and projections about future events may and often do
vary materially from actual results. Therefore, we cannot assure you that actual
results will not differ materially from those expressed or implied by our
forward-looking statements.
The following are some of the factors that could cause actual results
to differ materially from those expressed or implied in our forward-looking
statements:
- state and federal legislative and regulatory actions or
developments, including deregulation, re-regulation and
restructuring of the Electric Reliability Council of Texas
(ERCOT) market; and changes in, or application of,
environmental or other laws or regulations to which we are
subject;
- the timing and extent of changes in commodity prices,
particularly natural gas;
- the effects of competition, including the extent and timing of
the entry of additional competitors in the ERCOT market;
- the results of our capacity auctions;
- weather variations and other natural phenomena;
- commercial bank and financial market conditions, and our
access to capital and credit;
- non-payment of our services due to financial distress of our
customers, including Reliant Energy, Inc. (formerly named
Reliant Resources, Inc.) (RRI); and
- other factors we discuss in "Risk Factors" beginning on page
18 of the Texas Genco Holdings, Inc. Annual Report on Form
10-K for the year ended December 31, 2003.
Additional risk factors are described in other documents we file with
the Securities and Exchange Commission.
You should not place undue reliance on forward-looking statements. Each
forward-looking statement speaks only as of the date of the particular
statement.
ii
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
TEXAS GENCO HOLDINGS, INC.
STATEMENTS OF CONSOLIDATED INCOME
(THOUSANDS OF DOLLARS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
THREE MONTHS ENDED
MARCH 31,
-------------------------
2003 2004
---------- ----------
REVENUES ............................................................ $ 358,587 $ 439,129
---------- ----------
EXPENSES:
Fuel costs ........................................................ 207,989 186,315
Purchased power ................................................... 11,994 8,270
Operation and maintenance ......................................... 105,350 101,327
Depreciation and amortization ..................................... 39,079 40,369
Taxes other than income taxes ..................................... 11,291 12,256
---------- ----------
Total ........................................................ 375,703 348,537
---------- ----------
OPERATING INCOME (LOSS) ............................................. (17,116) 90,592
OTHER INCOME ........................................................ 200 388
INTEREST EXPENSE .................................................... (2,803) (26)
---------- ----------
INCOME (LOSS) BEFORE INCOME TAXES AND CUMULATIVE EFFECT OF ACCOUNTING
CHANGE .......................................................... (19,719) 90,954
INCOME TAX BENEFIT (EXPENSE) ........................................ 8,837 (30,062)
---------- ----------
INCOME (LOSS) BEFORE CUMULATIVE EFFECT OF ACCOUNTING CHANGE ......... (10,882) 60,892
CUMULATIVE EFFECT OF ACCOUNTING CHANGE, NET OF TAX .................. 98,910 --
---------- ----------
NET INCOME .......................................................... $ 88,028 $ 60,892
========== ==========
BASIC AND DILUTED EARNINGS PER SHARE:
Income (Loss) Before Cumulative Effect of Accounting Change ......... $ (0.14) $ 0.76
Cumulative Effect of Accounting Change, net of tax .................. 1.24 --
---------- ----------
Net Income .......................................................... $ 1.10 $ 0.76
========== ==========
See Notes to the Company's Interim Financial Statements
1
TEXAS GENCO HOLDINGS, INC.
CONSOLIDATED BALANCE SHEETS
(THOUSANDS OF DOLLARS)
(UNAUDITED)
DECEMBER 31, MARCH 31,
------------ ------------
2003 2004
------------ ------------
ASSETS
CURRENT ASSETS:
Cash ......................................................................... $ 33 $ 309
Short-term investments ....................................................... 44,525 --
Short-term note receivable - affiliated companies, net ....................... -- 52,155
Customer accounts receivable ................................................. 78,122 62,257
Accounts receivable, other ................................................... 3,716 3,231
Materials and supplies ....................................................... 92,409 88,631
Fuel stock ................................................................... 77,283 80,219
Prepaid expenses and other current assets .................................... 2,304 3,427
------------ ------------
Total current assets .................................................... 298,392 290,229
------------ ------------
PROPERTY, PLANT AND EQUIPMENT:
Property, plant and equipment ................................................ 9,834,904 9,858,770
Less accumulated depreciation and amortization ............................... (5,709,309) (5,757,149)
------------ ------------
Property, plant and equipment, net ......................................... 4,125,595 4,101,621
------------ ------------
OTHER ASSETS:
Nuclear decommissioning trust ................................................ 189,182 201,310
Other ........................................................................ 26,462 26,198
------------ ------------
Total other assets ...................................................... 215,644 227,508
------------ ------------
TOTAL ASSETS ......................................................... $ 4,639,631 $ 4,619,358
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable - affiliated companies, net ................................. $ 7,802 $ 4,175
Accounts payable, fuel ....................................................... 68,747 74,656
Accounts payable, other ...................................................... 40,165 34,235
Taxes and interest accrued ................................................... 107,605 51,315
Deferred capacity auction revenue ............................................ 86,853 82,318
Other ........................................................................ 17,579 16,289
------------ ------------
Total current liabilities ............................................... 328,751 262,988
------------ ------------
OTHER LIABILITIES:
Accumulated deferred income taxes, net ....................................... 844,545 838,717
Unamortized investment tax credit ............................................ 150,533 147,649
Nuclear decommissioning reserve .............................................. 187,997 190,394
Benefit obligations .......................................................... 18,399 19,804
Accrued reclamation costs .................................................... 6,000 6,110
Other ........................................................................ 70,245 79,643
------------ ------------
Total other liabilities ................................................. 1,277,719 1,282,317
------------ ------------
COMMITMENTS AND CONTINGENCIES (NOTE 4)
SHAREHOLDERS' EQUITY:
Common stock (80,000,000 shares outstanding at December 31, 2003 and March 31,
2004, respectively) ........................................................ 1 1
Additional paid-in capital ................................................... 2,917,444 2,917,444
Retained earnings ............................................................ 115,716 156,608
------------ ------------
Total shareholders' equity .............................................. 3,033,161 3,074,053
------------ ------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY ........................... $ 4,639,631 $ 4,619,358
============ ============
See Notes to the Company's Interim Financial Statements
2
TEXAS GENCO HOLDINGS, INC.
STATEMENTS OF CONSOLIDATED CASH FLOWS
(THOUSANDS OF DOLLARS)
(UNAUDITED)
THREE MONTHS ENDED MARCH 31,
----------------------------
2003 2004
---------- ----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income .................................................. $ 88,028 $ 60,892
Cumulative effect of accounting change ...................... (98,910) --
---------- ----------
Income (loss) before cumulative effect of accounting change . (10,882) 60,892
Adjustments to reconcile income (loss) before cumulative
effect of accounting change to net cash provided by (used
in) operating activities:
Depreciation and amortization ............................ 39,079 40,369
Fuel-related amortization ................................ 6,535 6,916
Amortization of deferred financing costs ................. -- 274
Deferred income taxes .................................... (4,971) (3,342)
Investment tax credit .................................... (3,037) (2,884)
Changes in other assets and liabilities:
Accounts receivable .................................... (8,512) 16,350
Taxes receivable ....................................... (830) --
Inventory .............................................. (15,226) 842
Accounts payable ....................................... 9,750 (21)
Accounts payable, affiliate ............................ (10,989) (3,627)
Taxes and interest accrued ............................. (29,563) (56,290)
Accrued reclamation costs .............................. 3,805 110
Benefit obligations .................................... 338 1,405
Deferred revenue from capacity auctions ................ (1,877) (4,535)
Other current assets ................................... 1,319 (1,123)
Other current liabilities .............................. (6,229) (1,290)
Other long-term assets ................................. 808 (164)
Other long-term liabilities ............................ (6,448) (2,819)
---------- ----------
Net cash provided by (used in) operating activities . (36,930) 51,063
---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures and other .............................. (44,340) (23,051)
Increase in note receivable, affiliate ...................... -- (52,155)
---------- ----------
Net cash used in investing activities ............... (44,340) (75,206)
---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Payment of common stock dividends ........................... (20,000) (20,000)
Debt issuance costs ......................................... -- (106)
Increase in short-term notes payables, affiliate ............ 102,099 --
---------- ----------
Net cash provided by (used in) financing activities . 82,099 (20,106)
---------- ----------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS .......... 829 (44,249)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD .............. 578 44,558
---------- ----------
CASH AND CASH EQUIVALENTS AT END OF PERIOD .................... $ 1,407 $ 309
========== ==========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash Payments:
Interest .................................................... $ 2,099 $ 436
Income taxes ................................................ -- 7,056
See Notes to the Company's Interim Financial Statements
3
TEXAS GENCO HOLDINGS, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
(1) BACKGROUND AND BASIS OF PRESENTATION
General. Included in this Quarterly Report on Form 10-Q (Form 10-Q) of
Texas Genco Holdings, Inc. (Texas Genco or the Company) are the Company's
consolidated interim financial statements and notes (Interim Financial
Statements) including its wholly owned subsidiaries. The Interim Financial
Statements are unaudited, omit certain financial statement disclosures and
should be read with the Annual Report on Form 10-K of Texas Genco for the year
ended December 31, 2003 (Texas Genco Form 10-K).
Background. The Company is an 81% owned subsidiary of CenterPoint
Energy, Inc. (CenterPoint Energy). CenterPoint Energy is subject to regulation
by the Securities and Exchange Commission (SEC) as a "registered holding
company" under the Public Utility Holding Company Act of 1935, as amended (1935
Act). In October 2003, the Federal Energy Regulatory Commission (FERC) granted
exempt wholesale generator status to Texas Genco, LP, the Company's wholly owned
subsidiary that owns and operates its electric generating plants. As a result,
the Company is exempt from substantially all provisions of the 1935 Act as long
as Texas Genco, LP remains an exempt wholesale generator. SEC approval would be
required, however, for CenterPoint Energy to issue and sell securities for the
purpose of funding the Company's operations, or for CenterPoint Energy to
guarantee the Company's securities. Also, SEC policy precludes the Company from
borrowing from CenterPoint Energy's utility subsidiaries.
Basis of Presentation. The Interim Financial Statements include the
operations of Texas Genco Holdings, Inc. and its subsidiaries, which manage and
operate the Company's electric generation operations.
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America (GAAP) requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and liabilities at
the date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from those
estimates.
The Company's Interim Financial Statements reflect all normal recurring
adjustments that are, in the opinion of management, necessary to present fairly
the financial position and results of operations for the respective periods.
Amounts reported in the Company's Statements of Consolidated Income are not
necessarily indicative of amounts expected for a full-year period due to the
effects of, among other things, (a) seasonal variations in energy consumption,
(b) timing of maintenance and other expenditures and (c) acquisitions and
dispositions of assets and other interests.
Note 2(f) (Long-Lived Assets and Intangibles) and Note 8 (Commitments
and Contingencies) to the consolidated annual financial statements included in
the Texas Genco Form 10-K relate to certain contingencies. These notes, as
updated herein, are incorporated herein by reference.
For information regarding certain environmental matters and legal
proceedings, see Note 4 to the Interim Financial Statements.
(2) NEW ACCOUNTING PRONOUNCEMENTS
In January 2003, the Financial Accounting Standards Board (FASB) issued
FASB Interpretation No. (FIN) 46 "Consolidation of Variable Interest Entities,
an Interpretation of Accounting Research Bulletin No. 51" (FIN 46). FIN 46
requires certain variable interest entities to be consolidated by the primary
beneficiary of the entity if the equity investors in the entity do not have the
characteristics of a controlling financial interest or do not have sufficient
equity at risk for the entity to finance its activities without additional
subordinated financial support from other parties. On December 24, 2003, the
FASB issued a revision to FIN 46 (FIN 46-R). For special-purpose entities
(SPE's) created before February 1, 2003, the Company applied the provisions of
FIN 46 or FIN 46-R as of
4
December 31, 2003. The revised FIN 46-R is effective for all other entities for
financial periods ending after March 15, 2004. The Company evaluated two
purchase power contracts with qualifying facilities as defined in the Public
Utility Regulatory Policies Act of 1978 and concluded that it was not required
to consolidate the entities that own the qualifying facilities.
On December 23, 2003, the FASB issued Statement of Financial Accounting
Standards (SFAS) No. 132 (Revised 2003), "Employer's Disclosures about Pensions
and Other Postretirement Benefits" (SFAS No. 132 (R)) which increases the
existing disclosure requirements by requiring more details about pension plan
assets, benefit obligations, cash flows, benefit costs and related information.
Companies are required to segregate plan assets by category, such as debt,
equity and real estate, and to provide certain expected rates of return and
other informational disclosures. SFAS No. 132 (R) also requires companies to
disclose various elements of pension and postretirement benefit costs in
interim-period financial statements for quarters beginning after December 15,
2003. The Company has adopted the disclosure requirements of SFAS No. 132 (R) in
Note 5 to these Interim Financial Statements.
In December 2003, Congress passed the Medicare Prescription Drug,
Improvement and Modernization Act of 2003 (the Act) which will become effective
in 2006. The Act contains incentives for the Company, if it continues to provide
prescription drug benefits for its retirees, through the provision of a
non-taxable reimbursement to the Company of specified costs. The Company has
many different alternatives available under the Act, and, until clarifying
regulations are issued with respect to the Act, the Company is unable to
determine the financial impact the Act will have on the Company. On January 12,
2004, the FASB issued FASB Staff Position (FSP) FAS 106-1, "Accounting and
Disclosure Requirements Related to the Medicare Prescription Drug, Improvement
and Modernization Act of 2003 (FAS 106-1)." In accordance with FSP FAS 106-1,
the Company's postretirement benefits obligations and net periodic
postretirement benefit cost in the financial statements and accompanying notes
do not reflect the effects of the legislation. Specific authoritative guidance
on the accounting for the legislation is pending, and that guidance, when
issued, may require the Company to change previously reported information.
(3) RELATED PARTY TRANSACTIONS AND MAJOR CUSTOMERS
As of December 31, 2003 and March 31, 2004, the Company had net
accounts payable to affiliates of $8 million and $4 million, respectively.
As of March 31, 2004, the Company had short-term notes receivable from
affiliates of $52 million, which represented funds invested in CenterPoint
Energy's money pool for unregulated subsidiaries.
During the three months ended March 31, 2003 and 2004, the sales and
services by the Company to Reliant Energy, Inc., (formerly named Reliant
Resources, Inc.) (RRI) and its subsidiaries totaled $244 million and $254
million, respectively. During the three months ended March 31, 2003 and 2004,
there were no sales and services by the Company to CenterPoint Energy and its
affiliates. During the three months ended March 31, 2003 and 2004, the sales and
services by the Company to another major customer, totaled $38 million and $83
million, respectively.
During the three months ended March 31, 2003 and 2004, purchases of
natural gas by the Company from CenterPoint Energy and its affiliates were $5
million and $6 million, respectively.
CenterPoint Energy provides some corporate services to the Company. The
costs of services have been directly charged to the Company using methods that
management believes are reasonable. These methods include negotiated usage
rates, dedicated asset assignment, and proportionate corporate formulas based on
assets, operating expenses and employees. These charges are not necessarily
indicative of what would have been incurred had the Company not been an
affiliate. Amounts charged to the Company for these services were $10 million
and $6 million for the three months ended March 31, 2003 and 2004, respectively,
and are included primarily in operation and maintenance expenses.
5
(4) COMMITMENTS AND CONTINGENCIES
Clean Air Standards. The 1999 Texas Electric Choice Law (Texas electric
restructuring law) and regulations adopted by the Texas Commission on
Environmental Quality (TCEQ) in 2001 require substantial reductions in emission
of oxides of nitrogen (NOx) from electric generating units. The Company is
currently installing cost-effective controls at its generating plants to comply
with these requirements. Through March 31, 2004, the Company has invested $679
million for NOx emission control, and plans to make additional expenditures of
up to approximately $116 million during the remainder of 2004 through 2007.
Further revisions to these NOx requirements may result from the EPA's ongoing
review of these TCEQ rules and from the TCEQ's future rules, expected by 2007,
implementing more stringent federal eight-hour ozone standards.
Asbestos. The Company has been named, along with numerous others, as a
defendant in several lawsuits filed by a large number of individuals who claim
injury due to exposure to asbestos while working at sites along the Texas Gulf
Coast. Most of these claimants have been workers who participated in
construction of various industrial facilities, including power plants, and some
of the claimants have worked at locations owned by the Company. The Company
anticipates that additional claims like those received may be asserted in the
future and intends to continue vigorously contesting claims which it does not
consider to have merit.
Texas Antitrust Action. In July 2003, Texas Commercial Energy filed a
lawsuit against Reliant Energy, Incorporated (Reliant Energy), RRI, Reliant
Electric Solutions, LLC, several other RRI subsidiaries and a number of other
participants in the Electric Reliability Council of Texas (ERCOT) power market
in federal court in Corpus Christi, Texas. The plaintiff, a retail electricity
provider in the Texas market served by ERCOT, alleges that the defendants
conspired to illegally fix and artificially increase the price of electricity in
violation of state and federal antitrust laws and committed fraud and negligent
misrepresentation. The lawsuit seeks damages in excess of $500 million,
exemplary damages, treble damages, interest, costs of suit and attorneys' fees.
In February 2004, this complaint was amended to add CenterPoint Energy and
CenterPoint Energy Houston Electric, LLC (CenterPoint Houston), as successors to
Reliant Energy, and Texas Genco, LP as defendants. The plaintiff's principal
allegations have previously been investigated by the Texas Utility Commission
and found to be without merit. CenterPoint Energy and the Company believe the
plaintiff's allegations are without merit and will seek their dismissal.
Nuclear Insurance. The Company and the other owners of the South Texas
Project maintain nuclear property and nuclear liability insurance coverage as
required by law and periodically review available limits and coverage for
additional protection. The owners of the South Texas Project currently maintain
$2.75 billion in property damage insurance coverage, which is above the legally
required minimum, but is less than the total amount of insurance currently
available for such losses.
Under the Price Anderson Act, the maximum liability to the public of
owners of nuclear power plants was $10.8 billion as of March 31, 2004. Owners
are required under the Price Anderson Act to insure their liability for nuclear
incidents and protective evacuations. The Company and the other owners currently
maintain the required nuclear liability insurance and participate in the
industry retrospective rating plan under which the owners of the South Texas
Project are subject to maximum retrospective assessments in the aggregate per
incident of up to $100.6 million per reactor. The owners are jointly and
severally liable at a rate not to exceed $10 million per incident per year.
There can be no assurance that all potential losses or liabilities
associated with the South Texas Project will be insurable, or that the amount of
insurance will be sufficient to cover them. Any substantial losses not covered
by insurance would have a material effect on the Company's financial condition,
results of operations and cash flows.
Nuclear Decommissioning. CenterPoint Houston contributed $2.9 million
in 2003 to trusts established to fund the Company's share of the decommissioning
costs for the South Texas Project, and expects to contribute $2.9 million in
2004. There are various investment restrictions imposed upon the Company by the
Public Utility Commission of Texas and the United States Nuclear Regulatory
Commission (NRC) relating to the Company's nuclear decommissioning trusts. The
Company and CenterPoint Energy have each appointed two members to the Nuclear
Decommissioning Trust Investment Committee which establishes the investment
policy of the trusts and oversees the investment of the trusts' assets. The
securities held by the trusts for decommissioning costs had an estimated fair
value of $201 million as of March 31, 2004, of which approximately 36% were
fixed-rate debt
6
securities and the remaining 64% were equity securities. In July 1999, an
outside consultant estimated the Company's portion of decommissioning costs to
be approximately $363 million. While the funding levels currently exceed minimum
NRC requirements, no assurance can be given that the amounts held in trust will
be adequate to cover the actual decommissioning costs of the South Texas
Project. Such costs may vary because of changes in the assumed date of
decommissioning and changes in regulatory requirements, technology and costs of
labor, materials and equipment. Pursuant to the Texas electric restructuring
law, costs associated with nuclear decommissioning that have not been recovered
as of January 1, 2002, will continue to be subject to cost-of-service rate
regulation and will be included in a charge to transmission and distribution
customers of CenterPoint Houston or its successor.
Joint Operating Agreement with City of San Antonio. The Company has a
joint operating agreement with the City Public Service Board of San Antonio to
share savings from the joint dispatching of each party's generating assets.
Dispatching the two generating systems jointly results in savings of fuel and
related expenses due to a more efficient utilization of each party's lowest cost
resources. The two parties currently share equally the savings resulting from
joint dispatch. The agreement terminates in 2009.
(5) EMPLOYEE BENEFIT PLANS
The Company's employees participate in CenterPoint Energy's
postretirement benefit plan. Net periodic cost in each of the three month
periods ended March 31, 2003 and 2004 was $1 million. The Company previously
disclosed in its financial statements for the year ended December 31, 2003, that
it expected to contribute $1 million to its postretirement benefits plan in
2004. As of March 31, 2004, $0.3 million has been contributed.
7
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The following discussion and analysis should be read in combination with the
Company's Interim Financial Statements and notes contained in this Form 10-Q.
OVERVIEW
We are a wholesale electric power generating company that owns 60
generating units at 11 electric power generation facilities located in Texas. We
also own a 30.8% interest in the South Texas Project Electric Generating Station
(South Texas Project), a nuclear generating station with two 1,250 megawatt (MW)
nuclear generating units. As of March 31, 2004, the aggregate net generating
capacity of our portfolio of assets was 14,153 megawatts (MW), of which 2,988 MW
of gas-fired capacity was then mothballed. In May 2004, 403 MW will return to
service. The remaining 2,585 MW of gas-fired capacity that is currently
mothballed will remain mothballed through April 2005. We sell electric
generation capacity, energy and ancillary services in the Electric Reliability
Council of Texas (ERCOT) market, which is the largest power market in the State
of Texas and encompasses the majority of the population centers in the State of
Texas. ERCOT facilitates reliable grid operations for approximately 85% of the
demand for power in the state.
We are an 81% owned subsidiary of CenterPoint Energy, Inc. (CenterPoint
Energy). CenterPoint Energy has expressed its intention to monetize its 81%
interest in us in 2004 and has engaged a financial advisor to assist it in that
pursuit. CenterPoint Energy is a registered public utility holding company under
the Public Utility Holding Company Act of 1935, as amended (1935 Act). The 1935
Act and related rules and regulations impose a number of restrictions on the
activities of CenterPoint Energy and its subsidiaries. In October 2003, the
Federal Energy Regulatory Commission (FERC) granted exempt wholesale generator
(EWG) status to Texas Genco, LP, our wholly owned subsidiary that owns and
operates our electric generating plants. As a result, we are exempt from
substantially all provisions of the 1935 Act. We will remain exempt for so long
as Texas Genco, LP remains an EWG. Securities and Exchange Commission (SEC)
approval would be required, however, for CenterPoint Energy to issue and sell
securities for the purpose of funding our operations, or for CenterPoint Energy
to guarantee our securities. Also, SEC policy precludes us from borrowing from
CenterPoint Energy's utility subsidiaries.
EXECUTIVE SUMMARY
1ST QUARTER 2004 HIGHLIGHTS
In the first quarter of 2004, we reported net income of $61 million
($0.76 per diluted share) as compared to a loss of $11 million ($0.14 per
diluted share) in the first quarter of 2003 before the cumulative effect of an
accounting change. The improvement was primarily related to higher capacity
revenue for base-load products driven by continued high natural gas prices.
Operation and maintenance expenses decreased due to a reduction in planned and
unplanned outages in the first quarter of 2004 compared to the first quarter of
2003. Net income for the first quarter of 2003 included a $99 million after-tax
($152 million pre-tax) non-cash gain ($1.24 per diluted share) from the adoption
of Statement of Financial Accounting Standards (SFAS) No. 143, "Accounting for
Asset Retirement Obligations" (SFAS No. 143) as further discussed below under "
-- Consolidated Results of Operations."
2004 OUTLOOK
In our capacity auctions held through March 2004, we have sold forward
approximately 94% of our available base-load capacity for 2004, representing
over $830 million of capacity revenue under contract. In addition, we have sold
gas-fired and non-firm base-load capacity bringing the total 2004 contracted
capacity revenues to over $1.03 billion. In total, we have now sold 87% of our
total available capacity for 2004. Available base-load capacity is defined as
our total base-load capacity less planned outages and less 750 megawatts of
operating reserves. For 2005, we have sold forward approximately 66% of our
available base-load capacity, which represents over $560 million of contracted
base-load capacity revenue. In addition, we have sold non-firm base-load
capacity bringing the total 2005 contracted capacity revenues to over $620
million. In May and July 2004, we plan to conduct additional auctions in which
we will offer the remaining portion of our 2004 available capacity and
additional 2005 available capacity. Studies are underway to determine
longer-term strategies, including selling capacity through contractual
8
agreements as well as auctions and evaluating financial hedging policies. In
addition to capacity sales, we have sold approximately $10 million of surplus
emission allowances, including $4 million sold in the first quarter of 2004, and
will evaluate future sales as opportunities develop. Financial performance in
2004 and beyond is highly dependent on continued strong wholesale electricity
prices, as well as the operating performance of our base-load generating units.
In December 2003, one of the three auxiliary standby diesel generators
for Unit 2 at the South Texas Project failed during a routine test. The Nuclear
Regulatory Commission allowed continued operation of Unit 2 while repairs to the
generator were made. Repairs were completed and the generator was successfully
tested and returned to service during the refueling outage which ended in late
April. Also during the outage, an inspection of the Unit 2 reactor vessel bottom
found no evidence of leaks as were found and repaired on Unit 1 in 2003.
In March 2004, AEP Central Texas Company (AEP), one of our co-owners in
the South Texas Project, notified us that it has received an offer by a third
party to purchase its entire 25.2 percent ownership interest in the South Texas
Project for $332.6 million, subject to certain adjustments at closing. Under the
terms of the agreements among the owners of the South Texas Project, we and each
of the other two co-owners have the right to purchase AEP's interest for the
cash price offered by the third party. To exercise the right of first refusal,
we must give notice to AEP within three months of their notice to us. If more
than one owner elects to purchase all or a portion of the interest being sold,
the interest will be prorated among the owners seeking to purchase AEP's
interest in proportion to their ownership interests in the South Texas Project.
We are currently evaluating the offer received, but have not made a decision
whether to exercise our rights.
9
CONSOLIDATED RESULTS OF OPERATIONS
The following table sets forth our consolidated results of operations
for the three months ended March 31, 2003 and 2004, followed by a discussion of
our consolidated results of operations.
THREE MONTHS ENDED
MARCH 31,
-------------------------------
2003 2004
-------------- -------------
(IN THOUSANDS, EXCEPT PER SHARE
AND MWH DATA)
REVENUES ............................................................ $ 358,587 $ 439,129
------------ ------------
EXPENSES:
Fuel costs ........................................................ 207,989 186,315
Purchased power ................................................... 11,994 8,270
Operation and maintenance ......................................... 105,350 101,327
Depreciation and amortization ..................................... 39,079 40,369
Taxes other than income taxes ..................................... 11,291 12,256
------------ ------------
Total ........................................................ 375,703 348,537
------------ ------------
OPERATING INCOME (LOSS) ............................................. (17,116) 90,592
OTHER INCOME ........................................................ 200 388
INTEREST EXPENSE .................................................... (2,803) (26)
------------ ------------
INCOME (LOSS) BEFORE INCOME TAXES AND CUMULATIVE EFFECT OF ACCOUNTING
CHANGE .......................................................... (19,719) 90,954
INCOME TAX BENEFIT (EXPENSE) ........................................ 8,837 (30,062)
------------ ------------
INCOME (LOSS) BEFORE CUMULATIVE EFFECT OF ACCOUNTING CHANGE ......... (10,882) 60,892
CUMULATIVE EFFECT OF ACCOUNTING CHANGE, NET OF TAX .................. 98,910 --
------------ ------------
NET INCOME .......................................................... $ 88,028 $ 60,892
============ ============
BASIC AND DILUTED EARNINGS PER SHARE:
Income (Loss) Before Cumulative Effect of Accounting Change ....... $ (0.14) $ 0.76
Cumulative Effect of Accounting Change, net of tax ................ 1.24 --
------------ ------------
Net Income ........................................................ $ 1.10 $ 0.76
============ ============
Sales (MWH) ...................................................... 9,276,344 10,720,778
Generation (MWH) ................................................. 8,994,753 10,149,190
THREE MONTHS ENDED MARCH 31, 2004 COMPARED TO THREE MONTHS ENDED MARCH 31, 2003
In the first quarter of 2004, we reported net income of $61 million
($0.76 per diluted share) as compared to a loss of $11 million ($0.14 per
diluted share) in the first quarter of 2003 before the cumulative effect of an
accounting change. Revenues increased $80 million in the first quarter of 2004
as compared to the same period in 2003 due to higher capacity revenue for
base-load products driven by continued high natural gas prices. Most of these
base-load products were sold in capacity auctions held when natural gas prices
were higher than when we sold our capacity for 2003. Additionally, the sale of
surplus air emission allowances contributed $4 million to the increase in
revenues. Fuel and purchased power costs declined $25 million in the first
quarter of 2004 as compared to the same period in 2003 reflecting the increase
in availability of our lower-cost base-load units in 2004, lower gas prices in
2004 and lower demand for gas-fired generation products. Operation and
maintenance expenses decreased $4 million primarily due to a reduction in
planned and unplanned outages in the first quarter of 2004 as compared to the
same period in 2003.
In connection with the adoption of SFAS No. 143, we completed an
assessment of the applicability and implications of SFAS No. 143. As a result of
the assessment, we identified retirement obligations for nuclear decommissioning
at the South Texas Project and for lignite mine operations at the Jewett mine
supplying the Limestone electric generation facility. The net difference between
the amounts determined under SFAS No. 143 and the previous method of accounting
for estimated mine reclamation costs was $37 million and has been recorded as a
cumulative effect of accounting change. Upon adoption of SFAS No. 143, we
reversed $115 million of previously recognized removal costs as a cumulative
effect of accounting change. The first quarter 2003 results include a $99
million after-tax ($152 million pre-tax) non-cash gain ($1.24 per diluted share)
from the adoption of SFAS No. 143.
10
RELATED PARTY TRANSACTIONS
We have entered into a number of agreements with CenterPoint Energy
that govern our interim and ongoing relationships with CenterPoint Energy,
including providing various interim services to us. Pursuant to the requirements
of the 1935 Act, CenterPoint Energy has formed a service company through which
these services are delivered. For information regarding our agreements and other
relationships with CenterPoint Energy, please read Note 3 to our Interim
Financial Statements and "Management's Discussion and Analysis of Financial
Condition and Results of Operations - Related Party Transactions" in the Texas
Genco Form 10-K.
CERTAIN FACTORS AFFECTING FUTURE EARNINGS
For information on other developments, factors and trends that may have
an impact on our future earnings, please read "Management's Discussion and
Analysis of Financial Condition and Results of Operations -- Certain Factors
Affecting Future Earnings" in Item 7 of Part II of the Texas Genco Form 10-K and
"Risk Factors" in Item 1 of Part I of the Texas Genco Form 10-K, each of which
is incorporated herein by reference.
LIQUIDITY AND CAPITAL RESOURCES
HISTORICAL CASH FLOWS
The net cash provided by/used in our operating, investing and financing
activities for the three months ended March 31, 2003 and 2004 is as follows (in
millions):
THREE MONTHS ENDED MARCH 31,
----------------------------
2003 2004
---- ----
Cash provided by (used in):
Operating activities ... $(37) $ 51
Investing activities ... (44) (75)
Financing activities ... 82 (20)
CASH PROVIDED BY OPERATING ACTIVITIES
Net cash provided by operating activities increased $88 million for the
three months ended March 31, 2004 as compared to the same period in 2003
primarily as a result of higher capacity auction prices, which were driven by
continued high natural gas prices.
CASH USED IN INVESTING ACTIVITIES
Net cash used in investing activities increased $31 million for the
three months ended March 31, 2004 as compared to the same period in 2003.
Capital expenditures decreased $21 million primarily related to a reduction in
NOx emissions control expenditures. Notes receivable from affiliates increased
$52 million due to funds invested in CenterPoint Energy's money pool for
unregulated subsidiaries as of March 31, 2004.
CASH PROVIDED BY FINANCING ACTIVITIES
Cash provided by financing activities decreased $102 million for the
three months ended March 31, 2004 as compared to the same period in 2003. We had
borrowed this amount from CenterPoint Energy in the first quarter of 2003.
FUTURE SOURCES AND USES OF CASH
Our liquidity and capital requirements will be affected by our:
- capital requirements related to environmental compliance and
other projects;
- dividend policy;
11
- debt service requirements; and
- working capital requirements.
As of March 31, 2004, we had investments of $52 million in CenterPoint
Energy's money pool for unregulated subsidiaries.
In December 2003, Texas Genco, LP, one of our subsidiaries, entered
into a 364-day $75 million bank credit facility with a seven-bank syndicate.
Proceeds from the revolving credit facility will be used to meet ongoing working
capital requirements and for general corporate purposes. Borrowings under the
facility may be made at the London interbank offered rate (LIBOR) plus 150 basis
points. The facility is secured by a series of first mortgage bonds in an
aggregate principal amount of $75 million under a First Mortgage Indenture (the
Mortgage) dated December 23, 2003 between JPMorgan Chase Bank, as trustee, and
Texas Genco, LP. All of our real and tangible properties, subject to certain
exclusions, are currently subject to the lien of the Mortgage. Under the terms
of the facility, if CenterPoint Energy ceases to own, directly or indirectly, at
least a 50% voting and economic interest in Texas Genco, LP, an event of default
will occur and any borrowings thereunder may become immediately due and payable.
We believe that our cash flows from operations and our external borrowing
capability will be sufficient to meet the operational needs of our business for
the next twelve months. As of March 31, 2004, there were no borrowings
outstanding under the revolving credit facility.
CenterPoint Energy's $2.3 billion bank facility limits our incurrence
of indebtedness for borrowed money to an aggregate principal amount not to
exceed $250 million outstanding at any time and requires that proceeds from the
sale of any material portion of our assets, proportionate to CenterPoint
Energy's ownership interest in us and subject to certain other requirements, be
used to prepay indebtedness under such credit facility. Our new credit facility
also limits our incurrence of additional secured indebtedness for borrowed money
to a maximum of $175 million aggregate principal amount. Although we are not
contractually bound by the limitations in CenterPoint Energy's bank facility, we
expect that CenterPoint Energy would likely cause its representatives on our
board of directors to direct our business so as not to breach the terms of its
facility.
Cash Flows From Operations -- Reliant Energy, Inc. (formerly named
Reliant Resources, Inc. (RRI)) as a Significant Customer. To date, we have sold
a substantial portion of our auctioned capacity entitlements to subsidiaries of
RRI. Pursuant to a Master Power Purchase and Sale Agreement with a subsidiary of
RRI related to power sales in the ERCOT market, we have been granted a security
interest in accounts receivable and/or notes associated with the accounts
receivable of certain subsidiaries of RRI to secure up to $250 million in
purchase obligations. For more information regarding the impact that RRI's
financial condition may have on our cash flows, please read "Our Business --
Risk Factors " in Item 1 of the Texas Genco Form 10-K.
Intercompany Borrowings. As a result of Texas Genco, LP's certification
by the FERC as an EWG under the 1935 Act, CenterPoint Energy has established a
money pool in which we, CenterPoint Energy and certain other unregulated
subsidiaries of CenterPoint Energy can participate. Except in an emergency
situation (in which CenterPoint Energy could provide funding pursuant to
applicable SEC rules), CenterPoint Energy would be required to obtain approval
from the SEC to issue and sell securities for purposes of funding our operations
or for CenterPoint Energy to guarantee any of our securities. There is no
assurance that CenterPoint Energy will have sufficient funds to meet our cash
needs.
Pension Plan. As discussed in Note 6(b) to the consolidated annual
financial statements included in the Texas Genco Form 10-K (Texas Genco Notes),
we participate in CenterPoint Energy's qualified non-contributory pension plan
covering substantially all employees. Pension expense for 2004 is estimated to
be $12 million based on an expected return on plan assets of 9.0% and a discount
rate of 6.25% as of December 31, 2003. Future changes in plan asset returns,
assumed discount rates and various other factors related to the pension will
impact our future pension expense and liabilities. We cannot predict with
certainty what these factors will be in the future. Additionally, we expect that
a separate pension plan will be established for us in 2005. If this occurs, we
will receive an allocation of assets from the CenterPoint Energy pension plan
pursuant to rules and regulations under the Employee Retirement Income Security
Act of 1974 and record our pension obligations in accordance with SFAS No. 87,
"Employer's Accounting for Pensions". It is anticipated that a plan established
for us will be under-funded and that such under-funding could be significant.
Changes in interest rates and the market values of the securities
12
held by the CenterPoint Energy pension plan during 2004 could materially,
positively or negatively, change the funding status of a plan established for
us.
OFF-BALANCE SHEET FINANCING
Other than operating leases, we have no off-balance sheet financing
arrangements.
CRITICAL ACCOUNTING POLICIES
A critical accounting policy is one that is both important to the
presentation of our financial condition and results of operations and requires
management to make difficult, subjective or complex accounting estimates. An
accounting estimate is an approximation made by management of a financial
statement element, item or account in the financial statements. Accounting
estimates in our historical consolidated financial statements measure the
effects of past business transactions or events, or the present status of an
asset or liability. The accounting estimates described below require us to make
assumptions about matters that are highly uncertain at the time the estimate is
made. Additionally, different estimates that we could have used or changes in an
accounting estimate that are reasonably likely to occur could have a material
impact on the presentation of our financial condition or results of operations.
The circumstances that make these judgments difficult, subjective and/or complex
have to do with the need to make estimates about the effect of matters that are
inherently uncertain. Estimates and assumptions about future events and their
effects cannot be predicted with certainty. We base our estimates on historical
experience and on various other assumptions that we believe are reasonable under
the circumstances, the results of which form the basis for making judgments.
These estimates may change as new events occur, as more experience is acquired,
as additional information is obtained and as our operating environment changes.
Our significant accounting policies are discussed in Note 2 of the Texas Genco
Notes. We believe the following accounting policy involves the application of
critical accounting estimates. Accordingly, these accounting estimates have been
reviewed and discussed with the audit committee of the board of directors.
IMPAIRMENT OF LONG-LIVED ASSETS
We review the carrying value of our long-lived assets, including
identifiable intangibles, whenever events or changes in circumstances indicate
that such carrying values may not be recoverable. Unforeseen events and changes
in circumstances and market conditions and material differences in the value of
long-lived assets and intangibles due to changes in estimates of future cash
flows, regulatory matters and operating costs could negatively affect the fair
value of our assets and result in an impairment charge.
Fair value is the amount at which the asset could be bought or sold in
a current transaction between willing parties and may be estimated using a
number of techniques, including quoted market prices or valuations by third
parties, present value techniques based on estimates of cash flows, or multiples
of earnings or revenue performance measures. The fair value of the asset could
be different using different estimates and assumptions in these valuation
techniques. Changes in any of these assumptions could result in an impairment
charge.
The fair value of our assets could be materially affected by a change
in the estimated future cash flows for these assets. We estimate future cash
flows using a probability-weighted approach based on the fair value of our
common stock, operating projections and estimates of how long we will retain
these assets.
NEW ACCOUNTING PRONOUNCEMENTS
See Note 2 to the Interim Financial Statements for a discussion of new
accounting pronouncements that affect us.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
INTEREST RATE RISK
As discussed in Note 4 to the Interim Financial Statements, CenterPoint
Energy Houston Electric, LLC (CenterPoint Houston) contributed $2.9 million in
2003 to trusts established to fund our share of the decommissioning costs for
the South Texas Project. The securities held by the trusts for decommissioning
costs had
13
an estimated fair value of $201 million as of March 31, 2004, of which
approximately 36% were debt securities that subject us to risk of loss of fair
value with movements in market interest rates. If interest rates were to
increase by 10% from their levels at March 31, 2004, the fair value of the
fixed-rate debt securities would decrease by approximately $1 million.
EQUITY MARKET VALUE RISK
As discussed above under " -- Interest Rate Risk," CenterPoint Houston
contributes to trusts established to fund our share of the decommissioning costs
for the South Texas Project, which held debt (36%) and equity (64%) securities
as of March 31, 2004. The equity securities expose us to losses in fair value.
If the market prices of the individual equity securities were to decrease by 10%
from their levels at March 31, 2004, the resulting loss in fair value of these
securities would be approximately $13 million.
COMMODITY PRICE RISK
Our gross margins (revenues less fuel and purchase power costs) are
dependent upon the market price for power in the ERCOT market. Our gross margins
are primarily derived from the sale of capacity entitlements associated with our
large, solid fuel base-load generating units, including our Limestone and W.A.
Parish facilities and our interest in the South Texas Project. The gross margins
generated from payments associated with the capacity of these units are directly
impacted by natural gas prices. Since the fuel costs for our base-load units are
largely fixed under long-term contracts, they are generally not subject to
significant daily and monthly fluctuations. However, the market price for power
in the ERCOT market is directly affected by the price of natural gas. Because
natural gas is the marginal fuel of facilities serving the ERCOT market during
most hours, its price has a significant influence on the price of electric
power. As a result, the price customers are willing to pay for entitlements to
our solid fuel base-load capacity generally rises and falls with natural gas
prices.
ITEM 4. CONTROLS AND PROCEDURES
In accordance with Exchange Act Rules 13a-15 and 15d-15, we carried out
an evaluation, under the supervision and with the participation of management,
including our principal executive officer and principal financial officer, of
the effectiveness of our disclosure controls and procedures as of the end of the
period covered by this report. Based on that evaluation, our principal executive
officer and principal financial officer concluded that our disclosure controls
and procedures were effective as of March 31, 2004 to provide assurance that
information required to be disclosed in our reports filed or submitted under the
Exchange Act is recorded, processed, summarized and reported within the time
periods specified in the Securities and Exchange Commission's rules and forms.
There has been no change in our internal controls over financial
reporting that occurred during the three months ended March 31, 2004 that has
materially affected, or is reasonably likely to materially affect, our internal
controls over financial reporting.
14
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
We are, from time to time, a party to litigation arising in the normal
course of our business, most of which involves contract disputes or claims for
personal injury and property damage incurred in connection with our operations.
For a description of a number of lawsuits involving claims of asbestos exposure
at properties owned by us, please read "Our Business -- Environmental Matters --
Asbestos" in Item 1 of the Texas Genco Form 10-K, which is incorporated herein
by reference. For a description of a lawsuit involving alleged violations of
state and federal antitrust laws, please read "Texas Antitrust Action" in Note 4
to our Interim Financial Statements, which is incorporated herein by reference.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits.
The following exhibits are filed herewith:
Exhibits not incorporated by reference to a prior filing are designated
by a cross (+); all exhibits not so designated are incorporated by
reference to a prior filing as indicated.
SEC FILE
OR
EXHIBIT REGISTRATION EXHIBIT
NUMBER DESCRIPTION REPORT OR REGISTRATION STATEMENT NUMBER REFERENCE
-------- ---------------------------- -------------------------------- ------------ ---------
3.1 -- Amended and Restated Texas Genco Holdings, Inc.'s 1-31449 3.1
Articles of Incorporation ("Texas Genco") Form 10-K
for the year ended December 31,
2002
3.2 -- Amended and Restated Bylaws Texas Genco's Form 10-K for 1-31449 3.2
the year ended December 31, 2002
4.1 -- Specimen Stock Certificate Texas Genco's registration 1-31449 4.1
statement on Form 10
+31.1 -- Rule 13a-14(a)/15d-14(a)
Certification of David G.
Tees
+31.2 -- Rule 13a-14(a)/15d-14(a)
Certification of Gary L.
Whitlock
+32.1 -- Section 1350 Certification
of David G. Tees
+32.2 -- Section 1350 Certification
of Gary L. Whitlock
+99.1 -- Items incorporated by
reference from the Texas
Genco Form 10-K: "Risk
Factors" in Item 1, "Our
Business -- Environmental
Matters -- Asbestos" in Item
1, "Management's Discussion
and Analysis of Financial
Condition and Results of
Operations -- Certain
Factors Affecting Future
Earnings" in Item 7, and
Notes 2(f) and 8 to the
Texas Genco Notes
(b) Reports on Form 8-K.
On January 29, 2004, we filed a Current Report on Form 8-K dated
January 23, 2004 in which we disclosed that Reliant Energy, Inc. (formerly named
Reliant Resources, Inc.) had notified CenterPoint Energy that it would not
exercise its option to purchase CenterPoint Energy's 81% interest in Texas Genco
Holdings, Inc.
15
On February 12, 2004, we filed a Current Report on Form 8-K dated
February 12, 2004 in which we reported certain fourth quarter and full year 2003
earnings information and furnished a press release under Item 12 of that form.
On March 3, 2004, we filed a Current Report on Form 8-K dated March 3,
2004 to furnish under Item 9 of that form a slide presentation we expect will be
presented to various members of the financial and investment community from time
to time.
On April 1, 2004, we filed a Current Report on Form 8-K dated April 1,
2004 to furnish under Item 9 of that form a slide presentation we expect will be
presented to various members of the financial and investment community from time
to time.
On April 22, 2004, we filed a Current Report on Form 8-K dated April
22, 2004, in which we reported certain first quarter 2004 earnings information
and furnished a press release under Item 12 of that form.
16
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
TEXAS GENCO HOLDINGS, INC.
By: /s/ James S. Brian
------------------------------------------
James S. Brian
Senior Vice President and Chief Accounting Officer
Date: May 7, 2004
17
INDEX TO EXHIBITS
Exhibits not incorporated by reference to a prior filing are designated
by a cross (+); all exhibits not so designated are incorporated by
reference to a prior filing as indicated.
SEC FILE
OR
EXHIBIT REGISTRATION EXHIBIT
NUMBER DESCRIPTION REPORT OR REGISTRATION STATEMENT NUMBER REFERENCE
-------- ---------------------------- -------------------------------- ------------ ---------
3.1 -- Amended and Restated Texas Genco Holdings, Inc.'s 1-31449 3.1
Articles of Incorporation ("Texas Genco") Form 10-K
for the year ended December 31,
2002
3.2 -- Amended and Restated Bylaws Texas Genco's Form 10-K for 1-31449 3.2
the year ended December 31, 2002
4.1 -- Specimen Stock Certificate Texas Genco's registration 1-31449 4.1
statement on Form 10
+31.1 -- Rule 13a-14(a)/15d-14(a)
Certification of David G.
Tees
+31.2 -- Rule 13a-14(a)/15d-14(a)
Certification of Gary L.
Whitlock
+32.1 -- Section 1350 Certification
of David G. Tees
+32.2 -- Section 1350 Certification
of Gary L. Whitlock
+99.1 -- Items incorporated by
reference from the Texas
Genco Form 10-K: "Risk
Factors" in Item 1, "Our
Business -- Environmental
Matters -- Asbestos" in Item
1, "Management's Discussion
and Analysis of Financial
Condition and Results of
Operations -- Certain
Factors Affecting Future
Earnings" in Item 7, and
Notes 2(f) and 8 to the
Texas Genco Notes