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(Mark One)
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þ
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2014
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o
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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FOR THE TRANSITION PERIOD FROM __________________ TO __________________
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Texas
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74-0694415
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(State or other jurisdiction of incorporation or organization)
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(I.R.S. Employer Identification No.)
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1111 Louisiana
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Houston, Texas 77002
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(713) 207-1111
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(Address and zip code of principal executive offices)
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(Registrant’s telephone number, including area code
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Large accelerated filer
þ
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Accelerated filer
o
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Non-accelerated filer
o
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Smaller reporting company
o
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(Do not check if a smaller reporting company)
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PART I.
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FINANCIAL INFORMATION
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Item 1.
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Three Months Ended March 31, 2014 and 2013 (unaudited)
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Three Months Ended March 31, 2014 and 2013 (unaudited)
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March 31, 2014 and December 31, 2013 (unaudited)
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Three Months Ended March 31, 2014 and 2013 (unaudited)
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Item 2.
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Item 3.
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Item 4.
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PART II.
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OTHER INFORMATION
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Item 1.
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Item 1A.
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Item 5.
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Item 6.
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•
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state and federal legislative and regulatory actions or developments affecting various aspects of our businesses (including the businesses of Enable Midstream Partners, LP (Enable), including, among others, energy deregulation or re-regulation, pipeline integrity and safety, health care reform, financial reform, tax legislation and actions regarding the rates charged by our regulated businesses;
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•
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state and federal legislative and regulatory actions or developments relating to the environment, including those related to global climate change;
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•
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timely and appropriate rate actions that allow recovery of costs and a reasonable return on investment;
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•
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the timing and outcome of any audits, disputes and other proceedings related to taxes;
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•
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problems with construction, implementation of necessary technology or other issues with respect to major capital projects that result in delays or in cost overruns that cannot be recouped in rates;
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•
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industrial, commercial and residential growth in our service territories and changes in market demand, including the effects of energy efficiency measures and demographic patterns;
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•
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the timing and extent of changes in commodity prices, particularly natural gas and natural gas liquids (NGLs), and the effects of geographic and seasonal commodity price differentials
;
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•
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weather variations and other natural phenomena, including the impact of severe weather events on operations and capital;
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•
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any direct or indirect effects on our facilities, operations and financial condition resulting from terrorism, cyber-attacks, data security breaches or other attempts to disrupt our businesses or the businesses of third parties, or other catastrophic events;
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•
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the impact of unplanned facility outages;
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•
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timely and appropriate regulatory actions allowing securitization or other recovery of costs associated with any future hurricanes or natural disasters;
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•
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changes in interest rates or rates of inflation;
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•
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commercial bank and financial market conditions, our access to capital, the cost of such capital, and the results of our financing and refinancing efforts, including availability of funds in the debt capital markets;
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•
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actions by credit rating agencies;
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•
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effectiveness of our risk management activities;
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•
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inability of various counterparties to meet their obligations to us;
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•
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non-payment for our services due to financial distress of our customers;
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•
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the ability of GenOn Energy, Inc. (formerly known as RRI Energy, Inc., Reliant Energy, Inc. and Reliant Resources, Inc.), a wholly owned subsidiary of NRG Energy, Inc. (NRG), and its subsidiaries to satisfy their obligations to us, including indemnity obligations, or obligations in connection with the contractual arrangements pursuant to which we are their guarantor;
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•
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the ability of retail electric providers (REPs), including REP affiliates of NRG, Energy Future Holdings Corp. and Just Energy Group, Inc., to satisfy their obligations to us and our subsidiaries;
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•
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the outcome of litigation brought by or against us;
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•
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our ability to control costs;
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•
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the investment performance of our pension and postretirement benefit plans;
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•
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our potential business strategies, including restructurings, joint ventures and acquisitions or dispositions of assets or businesses, which we cannot assure you will be completed or will have the anticipated benefits to us;
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•
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acquisition and merger activities involving us or our competitors;
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•
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future economic conditions in regional and national markets and their effect on sales, prices and costs;
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•
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the performance of Enable, the amount of cash distributions we receive from Enable, and the value of our interest in Enable, and factors that may have a material impact on such performance, cash distributions and value, including certain of the factors specified above and:
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◦
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the integration of the operations of the businesses we contributed to Enable with those contributed by OGE Energy Corp. (OGE) and affiliates of ArcLight Capital Partners, LLC (ArcLight);
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◦
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the achievement of anticipated operational and commercial synergies and expected growth opportunities, and the successful implementation of its business plan;
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◦
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competitive conditions in the midstream industry, and actions taken by Enable's customers and competitors, including the extent and timing of the entry of additional competition in the markets served by Enable;
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◦
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the timing and extent of changes in the supply of natural gas and associated commodity prices, particularly prices of natural gas and NGLs, the competitive effects of the available pipeline capacity in the regions served by Enable, and the effects of geographic and seasonal commodity price differentials, including the effects of these circumstances on re-contracting available capacity on Enable's interstate pipelines;
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◦
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the demand for natural gas, NGLs and transportation and storage services;
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◦
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changes in tax status;
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◦
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access to growth capital; and
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◦
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the availability and prices of raw materials for current and future construction projects; and
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•
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other factors we discuss in “Risk Factors” in Item 1A of Part I of our Annual Report on Form 10-K for the year ended
December 31, 2013
, which is incorporated herein by reference, and in Item 1A of Part II of this Quarterly Report on Form 10-Q and other reports we file from time to time with the Securities and Exchange Commission.
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Three Months Ended
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March 31,
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2014
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2013
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Revenues
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$
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3,163
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$
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2,388
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Expenses:
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Natural gas
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2,043
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1,224
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Operation and maintenance
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479
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484
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Depreciation and amortization
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235
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240
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Taxes other than income taxes
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111
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108
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Total
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2,868
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2,056
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Operating Income
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295
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332
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Other Income (Expense):
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Gain (loss) on marketable securities
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(30
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74
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Gain (loss) on indexed debt securities
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43
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(51
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)
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Interest and other finance charges
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(84
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(98
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)
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Interest on transition and system restoration bonds
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(30
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(35
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)
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Equity in earnings of unconsolidated affiliates, net
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91
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5
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Other, net
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9
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6
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Total
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(1
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(99
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)
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Income Before Income Taxes
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294
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233
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Income tax expense
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109
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86
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Net Income
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$
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185
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$
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147
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Basic Earnings Per Share
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$
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0.43
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$
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0.34
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Diluted Earnings Per Share
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$
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0.43
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$
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0.34
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Dividends Declared Per Share
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$
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0.2375
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$
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0.2075
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Weighted Average Shares Outstanding, Basic
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429
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428
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Weighted Average Shares Outstanding, Diluted
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431
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430
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Three Months Ended
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March 31,
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2014
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2013
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Net income
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$
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185
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$
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147
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Other comprehensive income:
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Adjustment related to pension and other postretirement plans (net of tax of $1 and $2)
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1
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3
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Total
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1
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3
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Comprehensive income
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$
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186
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$
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150
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March 31,
2014 |
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December 31,
2013 |
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Current Assets:
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Cash and cash equivalents ($149 and $207 related to VIEs, respectively)
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$
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379
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$
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208
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Investment in marketable securities
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737
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767
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Accounts receivable, less bad debt reserve of $35 and $28, respectively ($69 and $60 related to VIEs, respectively)
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1,142
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851
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Accrued unbilled revenues
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343
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398
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Natural gas inventory
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26
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140
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Materials and supplies
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146
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145
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Non-trading derivative assets
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24
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24
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Prepaid expenses and other current assets ($42 and $41 related to VIEs, respectively)
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158
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125
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Total current assets
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2,955
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2,658
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Property, Plant and Equipment:
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Property, plant and equipment
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14,368
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14,138
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Less: accumulated depreciation and amortization
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4,605
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4,545
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Property, plant and equipment, net
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9,763
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9,593
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Other Assets:
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Goodwill
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840
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840
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Regulatory assets ($3,084 and $3,179 related to VIEs, respectively)
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3,635
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3,726
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Notes receivable - affiliated companies
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363
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363
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Non-trading derivative assets
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9
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10
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Investment in unconsolidated affiliates
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4,540
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4,518
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Other
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159
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162
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Total other assets
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9,546
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9,619
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Total Assets
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$
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22,264
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$
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21,870
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March 31,
2014 |
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December 31,
2013 |
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Current Liabilities:
|
|
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|
||||
Short-term borrowings
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$
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—
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$
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43
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Current portion of VIE transition and system restoration bonds long-term debt
|
362
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|
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354
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Indexed debt
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145
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|
|
143
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Indexed debt securities derivative
|
412
|
|
|
455
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Accounts payable
|
802
|
|
|
689
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|
||
Taxes accrued
|
220
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|
|
184
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|
||
Interest accrued
|
107
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|
|
124
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Non-trading derivative liabilities
|
17
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|
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17
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Accumulated deferred income taxes, net
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629
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608
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Other
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365
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|
402
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Total current liabilities
|
3,059
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|
|
3,019
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||||
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Other Liabilities:
|
|
|
|
|
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Accumulated deferred income taxes, net
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4,528
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|
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4,542
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Non-trading derivative liabilities
|
2
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|
|
4
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Benefit obligations
|
802
|
|
|
802
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|
||
Regulatory liabilities
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1,200
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|
|
1,152
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Other
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203
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|
|
205
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Total other liabilities
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6,735
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|
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6,705
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Long-term Debt:
|
|
|
|
|
|
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VIE transition and system restoration bonds
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2,908
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|
|
3,046
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Other
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5,148
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|
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4,771
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|
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Total long-term debt
|
8,056
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|
|
7,817
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Commitments and Contingencies (Note 12)
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Shareholders’ Equity:
|
|
|
|
|
|
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Common stock (429,748,467 shares and 428,798,446 shares outstanding, respectively)
|
4
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|
|
4
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|
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Additional paid-in capital
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4,158
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|
|
4,157
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Retained earnings
|
341
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|
|
258
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Accumulated other comprehensive loss
|
(89
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)
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(90
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)
|
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Total shareholders’ equity
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4,414
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|
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4,329
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||||
Total Liabilities and Shareholders’ Equity
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$
|
22,264
|
|
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$
|
21,870
|
|
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Three Months Ended March 31,
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||||||
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2014
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2013
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Cash Flows from Operating Activities:
|
|
|
|
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Net income
|
$
|
185
|
|
|
$
|
147
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|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
||||
Depreciation and amortization
|
235
|
|
|
240
|
|
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Amortization of deferred financing costs
|
7
|
|
|
8
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Deferred income taxes
|
4
|
|
|
57
|
|
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Unrealized loss (gain) on marketable securities
|
30
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|
|
(74
|
)
|
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Unrealized loss (gain) on indexed debt securities
|
(43
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)
|
|
51
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|
||
Equity in earnings of unconsolidated affiliates, net of distributions
|
(22
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)
|
|
4
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|
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Pension contributions
|
(3
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)
|
|
(8
|
)
|
||
Changes in other assets and liabilities:
|
|
|
|
||||
Accounts receivable and unbilled revenues, net
|
(253
|
)
|
|
(66
|
)
|
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Inventory
|
113
|
|
|
119
|
|
||
Taxes receivable
|
—
|
|
|
(3
|
)
|
||
Accounts payable
|
128
|
|
|
(33
|
)
|
||
Fuel cost recovery
|
(27
|
)
|
|
105
|
|
||
Non-trading derivatives, net
|
—
|
|
|
7
|
|
||
Margin deposits, net
|
1
|
|
|
12
|
|
||
Interest and taxes accrued
|
19
|
|
|
(76
|
)
|
||
Net regulatory assets and liabilities
|
27
|
|
|
39
|
|
||
Other current assets
|
20
|
|
|
8
|
|
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Other current liabilities
|
(55
|
)
|
|
(32
|
)
|
||
Other assets
|
9
|
|
|
1
|
|
||
Other liabilities
|
13
|
|
|
15
|
|
||
Other, net
|
(8
|
)
|
|
12
|
|
||
Net cash provided by operating activities
|
380
|
|
|
533
|
|
||
|
|
|
|
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Cash Flows from Investing Activities:
|
|
|
|
|
|
||
Capital expenditures
|
(301
|
)
|
|
(271
|
)
|
||
Decrease (increase) in restricted cash of transition and system restoration bond companies
|
(2
|
)
|
|
1
|
|
||
Other, net
|
(13
|
)
|
|
(4
|
)
|
||
Net cash used in investing activities
|
(316
|
)
|
|
(274
|
)
|
||
|
|
|
|
||||
Cash Flows from Financing Activities:
|
|
|
|
|
|
||
Decrease in short-term borrowings, net
|
(43
|
)
|
|
(38
|
)
|
||
Proceeds from (payment of) commercial paper, net
|
(118
|
)
|
|
61
|
|
||
Proceeds from long-term debt
|
600
|
|
|
—
|
|
||
Payments of long-term debt
|
(231
|
)
|
|
(612
|
)
|
||
Cash paid for debt retirement
|
(1
|
)
|
|
—
|
|
||
Debt issuance costs
|
(5
|
)
|
|
—
|
|
||
Payment of common stock dividends
|
(102
|
)
|
|
(89
|
)
|
||
Proceeds from issuance of common stock, net
|
1
|
|
|
1
|
|
||
Other, net
|
6
|
|
|
17
|
|
||
Net cash provided by (used in) financing activities
|
107
|
|
|
(660
|
)
|
||
|
|
|
|
||||
Net Increase (Decrease) in Cash and Cash Equivalents
|
171
|
|
|
(401
|
)
|
||
Cash and Cash Equivalents at Beginning of Period
|
208
|
|
|
646
|
|
||
Cash and Cash Equivalents at End of Period
|
$
|
379
|
|
|
$
|
245
|
|
|
|
|
|
||||
Supplemental Disclosure of Cash Flow Information:
|
|
|
|
|
|||
Cash Payments:
|
|
|
|
|
|||
Interest, net of capitalized interest
|
$
|
122
|
|
|
$
|
147
|
|
Income tax refunds, net
|
(1
|
)
|
|
(3
|
)
|
||
Non-cash transactions:
|
|
|
|
||||
Accounts payable related to capital expenditures
|
59
|
|
|
92
|
|
(1)
|
Background and Basis of Presentation
|
•
|
CenterPoint Energy Houston Electric, LLC (CenterPoint Houston), which engages in the electric transmission and distribution business in the Texas Gulf Coast area that includes the city of Houston; and
|
•
|
CenterPoint Energy Resources Corp. (CERC Corp. and, together with its subsidiaries, CERC), which owns and operates natural gas distribution systems (Gas Operations). A wholly owned subsidiary of CERC Corp. offers variable and fixed-price physical natural gas supplies primarily to commercial and industrial customers and electric and gas utilities. As of March 31, 2014, CERC Corp. also owned approximately
58.3%
of the limited partner interests in Enable, which owns, operates and develops natural gas and crude oil infrastructure assets. Following the completion of Enable's initial public offering on April 16, 2014, CERC Corp. owns approximately
54.7%
of the limited partner interests in Enable.
|
(2)
|
New Accounting Pronouncements
|
(3)
|
Employee Benefit Plans
|
|
Three Months Ended March 31,
|
||||||||||||||
|
2014
|
|
2013
|
||||||||||||
|
Pension
Benefits
(1)
|
|
Postretirement
Benefits
|
|
Pension
Benefits
(1)
|
|
Postretirement
Benefits
|
||||||||
|
(in millions)
|
||||||||||||||
Service cost
|
$
|
10
|
|
|
$
|
—
|
|
|
$
|
11
|
|
|
$
|
—
|
|
Interest cost
|
25
|
|
|
6
|
|
|
23
|
|
|
5
|
|
||||
Expected return on plan assets
|
(31
|
)
|
|
(2
|
)
|
|
(34
|
)
|
|
(2
|
)
|
||||
Amortization of prior service credit
|
3
|
|
|
—
|
|
|
2
|
|
|
—
|
|
||||
Amortization of net loss
|
11
|
|
|
—
|
|
|
16
|
|
|
2
|
|
||||
Amortization of transition obligation
|
—
|
|
|
1
|
|
|
—
|
|
|
2
|
|
||||
Net periodic cost
|
$
|
18
|
|
|
$
|
5
|
|
|
$
|
18
|
|
|
$
|
7
|
|
(1)
|
Net periodic cost in these tables is before considering amounts subject to overhead allocations for capital expenditure projects or for amounts subject to deferral for regulatory purposes.
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31,
|
||||||
|
|
2014
|
|
2013
|
||||
|
|
Pension and Postretirement Plans
|
||||||
|
|
(in millions)
|
||||||
Beginning Balance
|
|
$
|
(88
|
)
|
|
$
|
(132
|
)
|
Amounts reclassified from accumulated other comprehensive income:
|
|
|
|
|
||||
Prior service cost (1)
|
|
—
|
|
|
1
|
|
||
Actuarial gains (1)
|
|
2
|
|
|
4
|
|
||
Total reclassifications from accumulated other comprehensive income
|
|
2
|
|
|
5
|
|
||
Tax expense
|
|
(1
|
)
|
|
(2
|
)
|
||
Net current period other comprehensive income
|
|
1
|
|
|
3
|
|
||
Ending Balance
|
|
$
|
(87
|
)
|
|
$
|
(129
|
)
|
(1)
|
These accumulated other comprehensive components are included in the computation of net periodic cost.
|
(4)
|
Regulatory Accounting
|
(5)
|
Derivative Instruments
|
(a)
|
Non-Trading Activities
|
(b)
|
Derivative Fair Values and Income Statement Impacts
|
Fair Value of Derivative Instruments
|
||||||||||
|
|
|
|
March 31, 2014
|
||||||
Total derivatives not designated
as hedging instruments
|
|
Balance Sheet
Location
|
|
Derivative
Assets
Fair Value
|
|
Derivative
Liabilities
Fair Value
|
||||
|
|
|
|
(in millions)
|
||||||
Natural gas derivatives (1) (2)
|
|
Current Assets: Non-trading derivative assets
|
|
$
|
29
|
|
|
$
|
4
|
|
Natural gas derivatives (1) (2)
|
|
Other Assets: Non-trading derivative assets
|
|
11
|
|
|
2
|
|
||
Natural gas derivatives (1) (2)
|
|
Current Liabilities: Non-trading derivative liabilities
|
|
1
|
|
|
18
|
|
||
Natural gas derivatives (1) (2)
|
|
Other Liabilities: Non-trading derivative liabilities
|
|
—
|
|
|
2
|
|
||
Indexed debt securities derivative
|
|
Current Liabilities
|
|
—
|
|
|
412
|
|
||
Total
|
|
$
|
41
|
|
|
$
|
438
|
|
(1)
|
The fair value shown for natural gas contracts is comprised of derivative gross volumes totaling
547
billion cubic feet (Bcf) or a net
92
Bcf long position. Of the net long position, basis swaps constitute
91
Bcf.
|
(2)
|
Natural gas contracts are presented on a net basis in the Condensed Consolidated Balance Sheets. Natural gas contracts are subject to master netting arrangements. This netting applies to all undisputed amounts due or past due and causes derivative assets (liabilities) to be ultimately presented net in a liability (asset) account within the Condensed Consolidated Balance Sheets. The net of total non-trading derivative assets and liabilities was a
$14 million
asset as shown on CenterPoint Energy’s Condensed Consolidated Balance Sheets (and as detailed in the table below), and was comprised of the natural gas contracts derivative assets and liabilities separately shown above, offset by collateral netting of
$(1) million
.
|
Offsetting of Natural Gas Derivative Assets and Liabilities
|
||||||||||||
|
|
March 31, 2014
|
||||||||||
|
|
Gross Amounts
Recognized (1)
|
|
Gross Amounts Offset in the Consolidated Balance Sheets
|
|
Net Amount Presented in the Consolidated Balance Sheets (2)
|
||||||
|
|
(in millions)
|
||||||||||
Current Assets: Non-trading derivative assets
|
|
$
|
30
|
|
|
$
|
(6
|
)
|
|
$
|
24
|
|
Other Assets: Non-trading derivative assets
|
|
11
|
|
|
(2
|
)
|
|
9
|
|
|||
Current Liabilities: Non-trading derivative liabilities
|
|
(22
|
)
|
|
5
|
|
|
(17
|
)
|
|||
Other Liabilities: Non-trading derivative liabilities
|
|
(4
|
)
|
|
2
|
|
|
(2
|
)
|
|||
Total
|
|
$
|
15
|
|
|
$
|
(1
|
)
|
|
$
|
14
|
|
(1)
|
Gross amounts recognized include some derivative assets and liabilities that are not subject to master netting arrangements.
|
(2)
|
The derivative assets and liabilities on the Consolidated Balance Sheets exclude accounts receivable or accounts payable that, should they exist, could be used as offsets to these balances in the event of a default.
|
Fair Value of Derivative Instruments
|
||||||||||
|
|
|
|
December 31, 2013
|
||||||
Total derivatives not designated
as hedging instruments
|
|
Balance Sheet
Location
|
|
Derivative
Assets
Fair Value
|
|
Derivative
Liabilities
Fair Value
|
||||
|
|
|
|
(in millions)
|
||||||
Natural gas derivatives (1) (2) (3)
|
|
Current Assets: Non-trading derivative assets
|
|
$
|
28
|
|
|
$
|
4
|
|
Natural gas derivatives (1) (2)
|
|
Other Assets: Non-trading derivative assets
|
|
10
|
|
|
—
|
|
||
Natural gas derivatives (1) (2)
|
|
Current Liabilities: Non-trading derivative liabilities
|
|
4
|
|
|
21
|
|
||
Natural gas derivatives (1) (2)
|
|
Other Liabilities: Non-trading derivative liabilities
|
|
1
|
|
|
5
|
|
||
Indexed debt securities derivative
|
|
Current Liabilities
|
|
—
|
|
|
455
|
|
||
Total
|
|
$
|
43
|
|
|
$
|
485
|
|
(1)
|
The fair value shown for natural gas contracts is comprised of derivative gross volumes totaling
607
Bcf or a net
46
Bcf long position. Of the net long position, basis swaps constitute
99
Bcf.
|
(2)
|
Natural gas contracts are presented on a net basis in the Condensed Consolidated Balance Sheets. Natural gas contracts are subject to master netting arrangements. This netting applies to all undisputed amounts due or past due and causes derivative assets (liabilities) to be ultimately presented net in a liability (asset) account within the Condensed Consolidated Balance Sheets. The net of total non-trading derivative assets and liabilities was a
$13 million
asset as shown on CenterPoint Energy’s Condensed Consolidated Balance Sheets (and as detailed in the table below), and was comprised of the natural gas contracts derivative assets and liabilities separately shown above, offset by collateral netting of less than
$1 million
.
|
(3)
|
The
$28 million
Derivative Current Asset includes
$1 million
related to physical forwards purchased from Enable.
|
Offsetting of Natural Gas Derivative Assets and Liabilities
|
||||||||||||
|
|
December 31, 2013
|
||||||||||
|
|
Gross Amounts
Recognized (1)
|
|
Gross Amounts Offset in the Consolidated Balance Sheets
|
|
Net Amount Presented in the Consolidated Balance Sheets (2)
|
||||||
|
|
(in millions)
|
||||||||||
Current Assets: Non-trading derivative assets
|
|
$
|
32
|
|
|
$
|
(8
|
)
|
|
$
|
24
|
|
Other Assets: Non-trading derivative assets
|
|
11
|
|
|
(1
|
)
|
|
10
|
|
|||
Current Liabilities: Non-trading derivative liabilities
|
|
(25
|
)
|
|
8
|
|
|
(17
|
)
|
|||
Other Liabilities: Non-trading derivative liabilities
|
|
(5
|
)
|
|
1
|
|
|
(4
|
)
|
|||
Total
|
|
$
|
13
|
|
|
$
|
—
|
|
|
$
|
13
|
|
(1)
|
Gross amounts recognized include some derivative assets and liabilities that are not subject to master netting arrangements.
|
(2)
|
The derivative assets and liabilities on the Consolidated Balance Sheets exclude accounts receivable or accounts payable that, should they exist, could be used as offsets to these balances in the event of a default.
|
Income Statement Impact of Derivative Activity
|
||||||||||
|
|
|
|
Three Months Ended March 31,
|
||||||
Total derivatives not designated
as hedging instruments
|
|
Income Statement Location
|
|
2014
|
|
2013
|
||||
|
|
|
|
(in millions)
|
||||||
Natural gas derivatives
|
|
Gains (Losses) in Revenue
|
|
$
|
(101
|
)
|
|
$
|
(14
|
)
|
Natural gas derivatives (1)
|
|
Gains (Losses) in Expense: Natural Gas
|
|
110
|
|
|
16
|
|
||
Indexed debt securities derivative
|
|
Gains (Losses) in Other Income (Expense)
|
|
43
|
|
|
(51
|
)
|
||
Total
|
|
$
|
52
|
|
|
$
|
(49
|
)
|
(1)
|
The Gains (Losses) in Expense: Natural Gas includes
$2 million
during the three months ended
March 31, 2014
related to physical forwards purchased from Enable.
|
|
|
|
|
|
|
|
(c)
|
Credit Risk Contingent Features
|
(6)
|
Fair Value Measurements
|
|
Quoted Prices in
Active Markets
for Identical Assets
(Level 1)
|
|
Significant Other
Observable
Inputs
(Level 2)
|
|
Significant
Unobservable
Inputs
(Level 3)
|
|
Netting
Adjustments
(1)
|
|
Balance
as of
March 31, 2014
|
||||||||||
|
|
|
|
|
|||||||||||||||
|
(in millions)
|
||||||||||||||||||
Assets
|
|
|
|
|
|
|
|
|
|
||||||||||
Corporate equities
|
$
|
740
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
740
|
|
Investments, including money
market funds
|
63
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
63
|
|
|||||
Natural gas derivatives
|
4
|
|
|
32
|
|
|
5
|
|
|
(8
|
)
|
|
33
|
|
|||||
Total assets
|
$
|
807
|
|
|
$
|
32
|
|
|
$
|
5
|
|
|
$
|
(8
|
)
|
|
$
|
836
|
|
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Indexed debt securities derivative
|
$
|
—
|
|
|
$
|
412
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
412
|
|
Natural gas derivatives
|
1
|
|
|
20
|
|
|
5
|
|
|
(7
|
)
|
|
19
|
|
|||||
Total liabilities
|
$
|
1
|
|
|
$
|
432
|
|
|
$
|
5
|
|
|
$
|
(7
|
)
|
|
$
|
431
|
|
(1)
|
Amounts represent the impact of legally enforceable master netting arrangements that allow CenterPoint Energy to settle positive and negative positions and also include cash collateral of
$(1) million
posted with the same counterparties.
|
|
Quoted Prices in
Active Markets
for Identical Assets
(Level 1)
|
|
Significant Other
Observable
Inputs
(Level 2)
|
|
Significant
Unobservable
Inputs
(Level 3)
|
|
Netting
Adjustments
(1)
|
|
Balance
as of
December 31, 2013
|
||||||||||
|
|
|
|
|
|||||||||||||||
|
(in millions)
|
||||||||||||||||||
Assets
|
|
|
|
|
|
|
|
|
|
||||||||||
Corporate equities
|
$
|
770
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
770
|
|
Investments, including money
market funds
|
61
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
61
|
|
|||||
Natural gas derivatives (2)
|
5
|
|
|
33
|
|
|
5
|
|
|
(9
|
)
|
|
34
|
|
|||||
Total assets
|
$
|
836
|
|
|
$
|
33
|
|
|
$
|
5
|
|
|
$
|
(9
|
)
|
|
$
|
865
|
|
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Indexed debt securities derivative
|
$
|
—
|
|
|
$
|
455
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
455
|
|
Natural gas derivatives
|
1
|
|
|
27
|
|
|
2
|
|
|
(9
|
)
|
|
21
|
|
|||||
Total liabilities
|
$
|
1
|
|
|
$
|
482
|
|
|
$
|
2
|
|
|
$
|
(9
|
)
|
|
$
|
476
|
|
(1)
|
Amounts represent the impact of legally enforceable master netting arrangements that allow CenterPoint Energy to settle positive and negative positions and also include cash collateral of less than
$1 million
posted with the same counterparties.
|
(2)
|
The (Level 2) Natural gas derivative assets of
$33 million
includes
$1 million
related to physical forwards purchased from Enable.
|
|
Fair Value Measurements Using Significant
Unobservable Inputs (Level 3)
|
||||||
|
Derivative assets and liabilities, net
|
||||||
|
Three Months Ended March 31,
|
||||||
|
2014
|
|
2013
|
||||
|
(in millions)
|
||||||
Beginning balance
|
$
|
3
|
|
|
$
|
2
|
|
Total gains (losses)
|
(2
|
)
|
|
2
|
|
||
Total settlements
|
1
|
|
|
(1
|
)
|
||
Transfers into Level 3
|
$
|
(1
|
)
|
|
$
|
—
|
|
Ending balance (1)
|
$
|
1
|
|
|
$
|
3
|
|
The amount of total gains (losses) for the period included in earnings attributable to the change in unrealized gains or losses relating to assets still held at the reporting date
|
$
|
(2
|
)
|
|
$
|
2
|
|
(1)
|
CenterPoint Energy did not have significant Level 3 purchases, sales or transfers out of Level 3 during the three months ended
March 31, 2014
or
2013
.
|
|
March 31, 2014
|
|
December 31, 2013
|
||||||||||||
|
Carrying
Amount |
|
Fair
Value |
|
Carrying
Amount
|
|
Fair
Value
|
||||||||
|
(in millions)
|
||||||||||||||
Financial assets:
|
|
|
|
|
|
|
|
||||||||
Notes receivable - affiliated companies
|
$
|
363
|
|
|
$
|
365
|
|
|
$
|
363
|
|
|
$
|
363
|
|
Financial liabilities:
|
|
|
|
|
|
|
|
||||||||
Long-term debt
|
$
|
8,418
|
|
|
$
|
9,066
|
|
|
$
|
8,171
|
|
|
$
|
8,670
|
|
|
|
March 31,
2014 |
|
December 31, 2013
|
||||
|
|
(in millions)
|
||||||
Enable
|
|
$
|
4,340
|
|
|
$
|
4,319
|
|
SESH
|
|
200
|
|
|
199
|
|
||
Total
|
|
$
|
4,540
|
|
|
$
|
4,518
|
|
|
|
Three Months Ended March 31,
|
||||||
|
|
2014
|
|
2013
|
||||
|
|
(in millions)
|
||||||
Enable
|
|
$
|
88
|
|
|
$
|
—
|
|
SESH (1)
|
|
3
|
|
|
5
|
|
||
Total
|
|
$
|
91
|
|
|
$
|
5
|
|
(1)
|
On May 1, 2013, CERC contributed a
24.95%
interest in SESH to Enable, leaving CERC with a
25.05%
interest in SESH.
|
Operating revenues
|
|
$
|
1,002
|
|
Cost of sales, excluding depreciation and amortization
|
|
633
|
|
|
Operating income
|
|
162
|
|
|
Net income attributable to Enable
|
|
149
|
|
|
|
|
|
||
CenterPoint Energy's approximate 58.3% interest
|
|
$
|
87
|
|
Basis difference accretion gain
|
|
1
|
|
|
CenterPoint Energy's approximate 58.3% interest, net
|
|
$
|
88
|
|
Current assets
|
|
$
|
500
|
|
Non-current assets
|
|
10,758
|
|
|
Current liabilities
|
|
1,039
|
|
|
Non-current liabilities
|
|
2,002
|
|
|
Non-controlling interest
|
|
34
|
|
|
Enable partners' capital
|
|
8,183
|
|
|
|
|
|
||
CenterPoint Energy's approximate 58.3% interest, net
|
|
$
|
4,773
|
|
CenterPoint Energy's basis difference
|
|
(433
|
)
|
|
CenterPoint Energy's investment in Enable
|
|
$
|
4,340
|
|
Basis difference attributable to goodwill as of Closing Date (1)
|
|
$
|
229
|
|
Basis difference to be accreted over 30 years as of Closing Date
|
|
210
|
|
|
Total basis difference as of Closing Date
|
|
439
|
|
|
|
|
|
||
Accumulated accretion of basis difference as of March 31, 2014
|
|
(6
|
)
|
|
CenterPoint Energy's basis difference in Enable as of March 31, 2014
|
|
$
|
433
|
|
(1)
|
This difference related to CenterPoint Energy’s proportionate share of Enable’s goodwill arising from Enable's acquisition of Enogex, and therefore will not be recognized by CenterPoint Energy.
|
(8)
|
Goodwill
|
Natural Gas Distribution
|
$
|
746
|
|
Energy Services
|
83
|
|
|
Other Operations
|
11
|
|
|
Total
|
$
|
840
|
|
(9)
|
Capital Stock
|
(10)
|
Short-term Borrowings and Long-term Debt
|
(a)
|
Short-term Borrowings
|
(b)
|
Long-term Debt
|
|
|
|
March 31, 2014
|
|
December 31, 2013
|
||||||||||||||||||||||
|
Size of
Facility |
|
Loans
|
|
Letters
of Credit |
|
Commercial
Paper |
|
Loans
|
|
Letters
of Credit |
|
Commercial
Paper |
||||||||||||||
CenterPoint Energy
|
$
|
1,200
|
|
|
$
|
—
|
|
|
$
|
6
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
6
|
|
|
$
|
—
|
|
CenterPoint Houston
|
300
|
|
|
—
|
|
|
4
|
|
|
—
|
|
|
—
|
|
|
4
|
|
|
—
|
|
|||||||
CERC Corp.
|
600
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
118
|
|
|||||||
Total
|
$
|
2,100
|
|
|
$
|
—
|
|
|
$
|
10
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
10
|
|
|
$
|
118
|
|
(11)
|
Income Taxes
|
(12)
|
Commitments and Contingencies
|
(a)
|
Natural Gas Supply Commitments
|
(b)
|
Legal, Environmental and Other Regulatory Matters
|
(c)
|
Guarantees
|
(13)
|
Earnings Per Share
|
|
Three Months Ended March 31,
|
||||||
|
2014
|
|
2013
|
||||
|
(in millions, except share and per share amounts)
|
||||||
Net income
|
$
|
185
|
|
|
$
|
147
|
|
|
|
|
|
||||
Basic weighted average shares outstanding
|
429,163,000
|
|
|
427,961,000
|
|
||
Plus: Incremental shares from assumed conversions:
|
|
|
|
|
|
||
Stock options
|
—
|
|
|
100,000
|
|
||
Restricted stock
|
1,396,000
|
|
|
1,611,000
|
|
||
Diluted weighted average shares
|
430,559,000
|
|
|
429,672,000
|
|
||
|
|
|
|
||||
Basic earnings per share:
|
|
|
|
|
|
||
Net income
|
$
|
0.43
|
|
|
$
|
0.34
|
|
|
|
|
|
||||
Diluted earnings per share:
|
|
|
|
|
|
||
Net income
|
$
|
0.43
|
|
|
$
|
0.34
|
|
(14)
|
Reportable Business Segments
|
|
For the Three Months Ended March 31, 2014
|
|
|
|
||||||||||||
|
Revenues from
External Customers |
|
Net
Intersegment Revenues |
|
Operating
Income (Loss) |
|
Total Assets
as of March 31, 2014 |
|
||||||||
Electric Transmission & Distribution
|
$
|
629
|
|
(1)
|
$
|
—
|
|
|
$
|
105
|
|
|
$
|
9,874
|
|
|
Natural Gas Distribution
|
1,478
|
|
|
9
|
|
|
162
|
|
|
5,104
|
|
|
||||
Energy Services
|
1,052
|
|
|
32
|
|
|
26
|
|
|
1,053
|
|
|
||||
Midstream Investments
(2)
|
—
|
|
|
—
|
|
|
—
|
|
|
4,540
|
|
|
||||
Other Operations
|
4
|
|
|
—
|
|
|
2
|
|
|
3,183
|
|
(3)
|
||||
Eliminations
|
—
|
|
|
(41
|
)
|
|
—
|
|
|
(1,490
|
)
|
|
||||
Consolidated
|
$
|
3,163
|
|
|
$
|
—
|
|
|
$
|
295
|
|
|
$
|
22,264
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
For the Three Months Ended March 31, 2013
|
|
|
|
||||||||||||
|
Revenues from
External Customers |
|
Net
Intersegment Revenues |
|
Operating
Income (Loss) |
|
Total Assets
as of December 31, 2013 |
|
||||||||
Electric Transmission & Distribution
|
$
|
532
|
|
(1)
|
$
|
—
|
|
|
$
|
84
|
|
|
$
|
9,605
|
|
|
Natural Gas Distribution
|
1,043
|
|
|
8
|
|
|
139
|
|
|
4,976
|
|
|
||||
Energy Services
|
588
|
|
|
9
|
|
|
7
|
|
|
895
|
|
|
||||
Interstate Pipelines
|
92
|
|
|
40
|
|
|
52
|
|
|
—
|
|
|
||||
Field Services
|
130
|
|
|
11
|
|
|
53
|
|
|
—
|
|
|
||||
Midstream Investments
(2)
|
—
|
|
|
—
|
|
|
—
|
|
|
4,518
|
|
|
||||
Other Operations
|
3
|
|
|
—
|
|
|
(3
|
)
|
|
3,026
|
|
(3)
|
||||
Eliminations
|
—
|
|
|
(68
|
)
|
|
—
|
|
|
(1,150
|
)
|
|
||||
Consolidated
|
$
|
2,388
|
|
|
$
|
—
|
|
|
$
|
332
|
|
|
$
|
21,870
|
|
|
(1)
|
Sales to affiliates of NRG in the
three
months ended
March 31, 2014
and
2013
represented approximately
$166 million
and
$144 million
, respectively, of CenterPoint Houston’s transmission and distribution revenues. Sales to affiliates of Energy Future Holdings Corp. in the
three
months ended
March 31, 2014
and
2013
represented approximately
$40 million
and
$36 million
, respectively, of CenterPoint Houston’s transmission and distribution revenues.
|
(2)
|
Midstream Investments reported equity earnings of
$88 million
from Enable and
$3 million
of equity earnings from CenterPoint Energy’s retained interest in SESH for the three months ended
March 31, 2014
. Included in total assets of Midstream Investments as of
March 31, 2014
and
December 31, 2013
is
$4,340 million
and
$4,319 million
, respectively, related to CenterPoint Energy’s investment in Enable and
$200 million
and
$199 million
, respectively, related to CenterPoint Energy’s retained interest in SESH.
|
(3)
|
Included in total assets of Other Operations as of
March 31, 2014
and
December 31, 2013
are pension and other postemployment related regulatory assets of
$616 million
and
$627 million
, respectively.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(15)
|
Subsequent Events
|
Item 2.
|
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS OF CENTERPOINT ENERGY, INC. AND SUBSIDIARIES
|
|
Three Months Ended March 31,
|
||||||
|
2014
|
|
2013
|
||||
Revenues
|
$
|
3,163
|
|
|
$
|
2,388
|
|
Expenses
|
2,868
|
|
|
2,056
|
|
||
Operating Income
|
295
|
|
|
332
|
|
||
Interest and Other Finance Charges
|
(84
|
)
|
|
(98
|
)
|
||
Interest on Transition and System Restoration Bonds
|
(30
|
)
|
|
(35
|
)
|
||
Equity in Earnings of Unconsolidated Affiliates, net
|
91
|
|
|
5
|
|
||
Other Income, net
|
22
|
|
|
29
|
|
||
Income Before Income Taxes
|
294
|
|
|
233
|
|
||
Income Tax Expense
|
109
|
|
|
86
|
|
||
Net Income
|
$
|
185
|
|
|
$
|
147
|
|
|
|
|
|
||||
Basic Earnings Per Share
|
$
|
0.43
|
|
|
$
|
0.34
|
|
|
|
|
|
||||
Diluted Earnings Per Share
|
$
|
0.43
|
|
|
$
|
0.34
|
|
|
Three Months Ended March 31,
|
||||||
|
2014
|
|
2013
|
||||
Electric Transmission & Distribution
|
$
|
105
|
|
|
$
|
84
|
|
Natural Gas Distribution
|
162
|
|
|
139
|
|
||
Energy Services
|
26
|
|
|
7
|
|
||
Interstate Pipelines
|
—
|
|
|
52
|
|
||
Field Services
|
—
|
|
|
53
|
|
||
Other Operations
|
2
|
|
|
(3
|
)
|
||
Total Consolidated Operating Income
|
$
|
295
|
|
|
$
|
332
|
|
|
Three Months Ended March 31,
|
||||||
|
2014
|
|
2013
|
||||
Revenues:
|
|
|
|
||||
Electric transmission and distribution utility
|
$
|
502
|
|
|
$
|
421
|
|
Transition and system restoration bond companies
|
127
|
|
|
111
|
|
||
Total revenues
|
629
|
|
|
532
|
|
||
Expenses:
|
|
|
|
|
|
||
Operation and maintenance, excluding transition and system restoration bond companies
|
288
|
|
|
238
|
|
||
Depreciation and amortization, excluding transition and system restoration bond companies
|
81
|
|
|
79
|
|
||
Taxes other than income taxes
|
58
|
|
|
55
|
|
||
Transition and system restoration bond companies
|
97
|
|
|
76
|
|
||
Total expenses
|
524
|
|
|
448
|
|
||
Operating Income
|
$
|
105
|
|
|
$
|
84
|
|
|
|
|
|
||||
Operating Income:
|
|
|
|
|
|
||
Electric transmission and distribution utility
|
$
|
75
|
|
|
$
|
49
|
|
Transition and system restoration bond companies (1)
|
30
|
|
|
35
|
|
||
Total segment operating income
|
$
|
105
|
|
|
$
|
84
|
|
|
|
|
|
||||
Throughput (in gigawatt-hours (GWh)):
|
|
|
|
|
|
||
Residential
|
5,282
|
|
|
4,558
|
|
||
Total
|
17,719
|
|
|
16,361
|
|
||
|
|
|
|
||||
Number of metered customers at end of period:
|
|
|
|
|
|
||
Residential
|
1,994,506
|
|
|
1,953,947
|
|
||
Total
|
2,257,065
|
|
|
2,211,481
|
|
(1)
|
Represents the amount necessary to pay interest on the transition and system restoration bonds.
|
|
Three Months Ended March 31,
|
||||||
|
2014
|
|
2013
|
||||
Revenues
|
$
|
1,487
|
|
|
$
|
1,051
|
|
Expenses:
|
|
|
|
||||
Natural gas
|
1,039
|
|
|
656
|
|
||
Operation and maintenance
|
187
|
|
|
170
|
|
||
Depreciation and amortization
|
48
|
|
|
45
|
|
||
Taxes other than income taxes
|
51
|
|
|
41
|
|
||
Total expenses
|
1,325
|
|
|
912
|
|
||
Operating Income
|
$
|
162
|
|
|
$
|
139
|
|
|
|
|
|
||||
Throughput (in billion cubic feet (Bcf)):
|
|
|
|
|
|
||
Residential
|
106
|
|
|
80
|
|
||
Commercial and industrial
|
97
|
|
|
86
|
|
||
Total Throughput
|
203
|
|
|
166
|
|
||
|
|
|
|
||||
Number of customers at end of period:
|
|
|
|
|
|
||
Residential
|
3,103,209
|
|
|
3,072,154
|
|
||
Commercial and industrial
|
248,625
|
|
|
247,067
|
|
||
Total
|
3,351,834
|
|
|
3,319,221
|
|
|
Three Months Ended March 31,
|
||||||
|
2014
|
|
2013
|
||||
Revenues
|
$
|
1,084
|
|
|
$
|
597
|
|
Expenses:
|
|
|
|
||||
Natural gas
|
1,045
|
|
|
578
|
|
||
Operation and maintenance
|
12
|
|
|
11
|
|
||
Depreciation and amortization
|
1
|
|
|
1
|
|
||
Total expenses
|
1,058
|
|
|
590
|
|
||
Operating Income
|
$
|
26
|
|
|
$
|
7
|
|
|
|
|
|
||||
Throughput (in Bcf)
|
184
|
|
|
162
|
|
||
|
|
|
|
||||
Number of customers at end of period
|
17,395
|
|
|
16,934
|
|
|
Three Months Ended March 31, 2013
|
||
Revenues
|
$
|
132
|
|
Expenses:
|
|
||
Natural gas
|
20
|
|
|
Operation and maintenance
|
38
|
|
|
Depreciation and amortization
|
15
|
|
|
Taxes other than income taxes
|
7
|
|
|
Total expenses
|
80
|
|
|
Operating Income
|
$
|
52
|
|
|
|
||
Equity in earnings of unconsolidated affiliates
|
$
|
5
|
|
|
|
||
Transportation throughput (in Bcf)
|
365
|
|
|
Three Months Ended March 31, 2013
|
||
Revenues
|
$
|
141
|
|
Expenses:
|
|
||
Natural gas
|
38
|
|
|
Operation and maintenance
|
32
|
|
|
Depreciation and amortization
|
15
|
|
|
Taxes other than income taxes
|
3
|
|
|
Total expenses
|
88
|
|
|
Operating Income
|
$
|
53
|
|
|
|
||
Gathering throughput (in Bcf)
|
189
|
|
|
Three Months Ended March 31,
|
||||||
|
2014
|
|
2013
|
||||
Revenues
|
$
|
4
|
|
|
$
|
3
|
|
Expenses
|
2
|
|
|
6
|
|
||
Operating Income (Loss)
|
$
|
2
|
|
|
$
|
(3
|
)
|
|
Three Months Ended March 31,
|
||||||
|
2014
|
|
2013
|
||||
|
(in millions)
|
||||||
Cash provided by (used in):
|
|
|
|
||||
Operating activities
|
$
|
380
|
|
|
$
|
533
|
|
Investing activities
|
(316
|
)
|
|
(274
|
)
|
||
Financing activities
|
107
|
|
|
(660
|
)
|
•
|
capital expenditures of approximately
$1.1 billion
;
|
•
|
scheduled principal payments on transition and system restoration bonds of
$224 million
;
|
•
|
contributions to pension plans aggregating approximately $93 million, of which $29 million was contributed in April 2014;
|
•
|
the expected June 2014 redemption of approximately $84 million principal amount of pollution control bonds at 100% of their principal amount; and
|
•
|
dividend payments on CenterPoint Energy common stock and interest payments on debt.
|
Date Executed
|
|
Company
|
|
Size of
Facility
|
|
Amount
Utilized at
April 15, 2014
(1)
|
|
Termination Date
|
||||
September 9, 2011
|
|
CenterPoint Energy
|
|
$
|
1,200
|
|
|
$
|
6
|
|
(2)
|
September 9, 2018
|
September 9, 2011
|
|
CenterPoint Houston
|
|
300
|
|
|
4
|
|
(2)
|
September 9, 2018
|
||
September 9, 2011
|
|
CERC Corp.
|
|
600
|
|
|
—
|
|
|
September 9, 2018
|
(1)
|
Based on the consolidated debt to capitalization covenant in our revolving credit facility and the revolving credit facility of each of CenterPoint Houston and CERC Corp., we would have been permitted to utilize the full capacity of such revolving credit facilities, which aggregated
$2.1 billion
at
March 31, 2014
.
|
(2)
|
Represents outstanding letters of credit.
|
|
|
Moody’s
|
|
S&P
|
|
Fitch
|
||||||
Company/Instrument
|
|
Rating
|
|
Outlook (1)
|
|
Rating
|
|
Outlook (2)
|
|
Rating
|
|
Outlook (3)
|
CenterPoint Energy Senior
Unsecured Debt
|
|
Baa1
|
|
Stable
|
|
BBB+
|
|
Stable
|
|
BBB
|
|
Stable
|
CenterPoint Houston Senior
Secured Debt
|
|
A1
|
|
Stable
|
|
A
|
|
Stable
|
|
A
|
|
Stable
|
CERC Corp. Senior Unsecured
Debt
|
|
Baa2
|
|
Stable
|
|
A-
|
|
Stable
|
|
BBB
|
|
Stable
|
(1)
|
A Moody’s rating outlook is an opinion regarding the likely direction of an issuer’s rating over the medium term.
|
(2)
|
An S&P rating outlook assesses the potential direction of a long-term credit rating over the intermediate to longer term.
|
(3)
|
A Fitch rating outlook encompasses a one- to two-year horizon as to the likely ratings direction.
|
•
|
cash collateral requirements that could exist in connection with certain contracts, including our weather hedging arrangements, and gas purchases, gas price and gas storage activities of our Natural Gas Distribution and Energy Services business segments;
|
•
|
acceleration of payment dates on certain gas supply contracts, under certain circumstances, as a result of increased gas prices and concentration of natural gas suppliers;
|
•
|
increased costs related to the acquisition of natural gas;
|
•
|
increases in interest expense in connection with debt refinancings and borrowings under credit facilities;
|
•
|
various legislative or regulatory actions;
|
•
|
incremental collateral, if any, that may be required due to regulation of derivatives;
|
•
|
the ability of GenOn and its subsidiaries to satisfy their obligations in respect of GenOn’s indemnity obligations to us and our subsidiaries;
|
•
|
the ability of retail electric providers (REPs), including REP affiliates of NRG Energy, Inc., Energy Future Holdings Corp. and Just Energy Group, Inc., to satisfy their obligations to us and our subsidiaries;
|
•
|
slower customer payments and increased write-offs of receivables due to higher gas prices or changing economic conditions;
|
•
|
the outcome of litigation brought by and against us;
|
•
|
contributions to pension and postretirement benefit plans;
|
•
|
restoration costs and revenue losses resulting from future natural disasters such as hurricanes and the timing of recovery of such restoration costs; and
|
•
|
various other risks identified in “Risk Factors” in Item 1A of Part I of our
2013
Form 10-K and in Item 1A of Part II of this Quarterly Report on Form 10-Q.
|
Item 3.
|
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|
Item 4.
|
CONTROLS AND PROCEDURES
|
Item 1.
|
LEGAL PROCEEDINGS
|
Item 1A.
|
RISK FACTORS
|
•
|
the fees and gross margins it realizes with respect to the volume of natural gas, natural gas liquids (NGLs) and crude oil that it handles;
|
•
|
the volume of natural gas, NGLs and crude oil it gathers, compresses, treats, dehydrates, processes, fractionates, transports and stores;
|
Item 5.
|
OTHER INFORMATION
|
Item 6.
|
EXHIBITS
|
Exhibit
Number
|
|
Description
|
|
Report or Registration
Statement
|
|
SEC File or
Registration
Number
|
|
Exhibit
Reference
|
3.1
|
|
Restated Articles of Incorporation of CenterPoint Energy
|
|
CenterPoint Energy’s Form 8-K dated July 24, 2008
|
|
1-31447
|
|
3.2
|
3.2
|
|
Amended and Restated Bylaws of CenterPoint Energy
|
|
CenterPoint Energy’s Form 10-K for the year ended December 31, 2010
|
|
1-31447
|
|
3(b)
|
3.3
|
|
Statement of Resolutions Deleting Shares Designated Series A Preferred Stock of CenterPoint Energy
|
|
CenterPoint Energy’s Form 10-K for the year ended December 31, 2011
|
|
1-31447
|
|
3(c)
|
4.1
|
|
Form of CenterPoint Energy Stock Certificate
|
|
CenterPoint Energy’s Registration Statement on Form S-4
|
|
3-69502
|
|
4.1
|
4.2
|
|
$1,200,000,000 Credit Agreement, dated as of September 9, 2011, among CenterPoint Energy, as Borrower, and the banks named therein
|
|
CenterPoint Energy’s Form 8-K dated September 9, 2011
|
|
1-31447
|
|
4.1
|
4.3
|
|
$300,000,000 Credit Agreement, dated as of September 9, 2011, among CenterPoint Houston, as Borrower, and the banks named therein
|
|
CenterPoint Energy’s Form 8-K dated September 9, 2011
|
|
1-31447
|
|
4.2
|
4.4
|
|
$950,000,000 Credit Agreement, dated as of September 9, 2011, among CERC Corp., as Borrower, and the banks named therein
|
|
CenterPoint Energy’s Form 8-K dated September 9, 2011
|
|
1-31447
|
|
4.3
|
4.5
|
|
First Amendment to Credit Agreement, dated as of April 11, 2013, among CenterPoint Energy, as Borrower, and the banks named therein
|
|
CenterPoint Energy’s Form 8-K dated April 11, 2013
|
|
1-31447
|
|
4.1
|
4.6
|
|
First Amendment to Credit Agreement, dated as of April 11, 2013, among CERC Corp., as Borrower, and the banks named therein
|
|
CenterPoint Energy’s Form 8-K dated April 11, 2013
|
|
1-31447
|
|
4.2
|
4.7
|
|
Second Amendment to Credit Agreement, dated as of September 9, 2013, among CenterPoint Energy, as Borrower, and the banks named therein
|
|
CenterPoint Energy’s Form 8-K dated September 9, 2013
|
|
1-31447
|
|
4.1
|
4.8
|
|
First Amendment to Credit Agreement, dated as of September 9, 2013, among CenterPoint Houston, as Borrower, and the banks named therein
|
|
CenterPoint Energy’s Form 8-K dated September 9, 2013
|
|
1-31447
|
|
4.2
|
4.9
|
|
Second Amendment to Credit Agreement, dated as of September 9, 2013, among CERC Corp., as Borrower, and the banks named therein
|
|
CenterPoint Energy’s Form 8-K dated September 9, 2013
|
|
1-31447
|
|
4.3
|
+4.10
|
|
Twenty-Third Supplemental Indenture, dated as of March 17, 2014, to the General Mortgage Indenture, dated as of October 10, 2002, between CenterPoint Houston and the Trustee
|
|
|
|
|
|
|
+4.11
|
|
Officer’s Certificate, dated as of March 17, 2014, setting forth the form, terms and provisions of the Twenty-Third Series of General Mortgage Bonds
|
|
|
|
|
|
|
Exhibit
Number
|
|
Description
|
|
Report or Registration
Statement
|
|
SEC File or
Registration
Number
|
|
Exhibit
Reference
|
10.1
|
|
Second Amended and Restated Agreement of Limited Partnership of Enable Midstream Partners, LP dated as of April 16, 2014
|
|
CenterPoint Energy’s Form 8-K dated April 16, 2014
|
|
1-31447
|
|
10.1
|
10.2
|
|
First Amendment to the Second Amended and Restated Limited Liability Company Agreement of Enable GP, LLC dated as of April 16, 2014
|
|
CenterPoint Energy’s Form 8-K dated April 16, 2014
|
|
1-31447
|
|
10.2
|
+12
|
|
Computation of Ratios of Earnings to Fixed Charges
|
|
|
|
|
|
|
+31.1
|
|
Rule 13a-14(a)/15d-14(a) Certification of Scott M. Prochazka
|
|
|
|
|
|
|
+31.2
|
|
Rule 13a-14(a)/15d-14(a) Certification of Gary L. Whitlock
|
|
|
|
|
|
|
+32.1
|
|
Section 1350 Certification of Scott M. Prochazka
|
|
|
|
|
|
|
+32.2
|
|
Section 1350 Certification of Gary L. Whitlock
|
|
|
|
|
|
|
+101.INS
|
|
XBRL Instance Document
|
|
|
|
|
|
|
+101.SCH
|
|
XBRL Taxonomy Extension Schema Document
|
|
|
|
|
|
|
+101.CAL
|
|
XBRL Taxonomy Extension Calculation Linkbase Document
|
|
|
|
|
|
|
+101.DEF
|
|
XBRL Taxonomy Extension Definition Linkbase Document
|
|
|
|
|
|
|
+101.LAB
|
|
XBRL Taxonomy Extension Labels Linkbase Document
|
|
|
|
|
|
|
+101.PRE
|
|
XBRL Taxonomy Extension Presentation Linkbase Document
|
|
|
|
|
|
|
|
CENTERPOINT ENERGY, INC.
|
|
|
|
|
By:
|
/s/ Walter L. Fitzgerald
|
|
Walter L. Fitzgerald
|
|
Senior Vice President and Chief Accounting Officer
|
|
|
Exhibit
Number
|
|
Description
|
|
Report or Registration
Statement
|
|
SEC File or
Registration
Number
|
|
Exhibit
Reference
|
3.1
|
|
Restated Articles of Incorporation of CenterPoint Energy
|
|
CenterPoint Energy’s Form 8-K dated July 24, 2008
|
|
1-31447
|
|
3.2
|
3.2
|
|
Amended and Restated Bylaws of CenterPoint Energy
|
|
CenterPoint Energy’s Form 10-K for the year ended December 31, 2010
|
|
1-31447
|
|
3(b)
|
3.3
|
|
Statement of Resolutions Deleting Shares Designated Series A Preferred Stock of CenterPoint Energy
|
|
CenterPoint Energy’s Form 10-K for the year ended December 31, 2011
|
|
1-31447
|
|
3(c)
|
4.1
|
|
Form of CenterPoint Energy Stock Certificate
|
|
CenterPoint Energy’s Registration Statement on Form S-4
|
|
3-69502
|
|
4.1
|
4.2
|
|
$1,200,000,000 Credit Agreement, dated as of September 9, 2011, among CenterPoint Energy, as Borrower, and the banks named therein
|
|
CenterPoint Energy’s Form 8-K dated September 9, 2011
|
|
1-31447
|
|
4.1
|
4.3
|
|
$300,000,000 Credit Agreement, dated as of September 9, 2011, among CenterPoint Houston, as Borrower, and the banks named therein
|
|
CenterPoint Energy’s Form 8-K dated September 9, 2011
|
|
1-31447
|
|
4.2
|
4.4
|
|
$950,000,000 Credit Agreement, dated as of September 9, 2011, among CERC Corp., as Borrower, and the banks named therein
|
|
CenterPoint Energy’s Form 8-K dated September 9, 2011
|
|
1-31447
|
|
4.3
|
4.5
|
|
First Amendment to Credit Agreement, dated as of April 11, 2013, among CenterPoint Energy, as Borrower, and the banks named therein
|
|
CenterPoint Energy’s Form 8-K dated April 11, 2013
|
|
1-31447
|
|
4.1
|
4.6
|
|
First Amendment to Credit Agreement, dated as of April 11, 2013, among CERC Corp., as Borrower, and the banks named therein
|
|
CenterPoint Energy’s Form 8-K dated April 11, 2013
|
|
1-31447
|
|
4.2
|
4.7
|
|
Second Amendment to Credit Agreement, dated as of September 9, 2013, among CenterPoint Energy, as Borrower, and the banks named therein
|
|
CenterPoint Energy’s Form 8-K dated September 9, 2013
|
|
1-31447
|
|
4.1
|
4.8
|
|
First Amendment to Credit Agreement, dated as of September 9, 2013, among CenterPoint Houston, as Borrower, and the banks named therein
|
|
CenterPoint Energy’s Form 8-K dated September 9, 2013
|
|
1-31447
|
|
4.2
|
4.9
|
|
Second Amendment to Credit Agreement, dated as of September 9, 2013, among CERC Corp., as Borrower, and the banks named therein
|
|
CenterPoint Energy’s Form 8-K dated September 9, 2013
|
|
1-31447
|
|
4.3
|
+4.10
|
|
Twenty-Third Supplemental Indenture, dated as of March 17, 2014, to the General Mortgage Indenture, dated as of October 10, 2002, between CenterPoint Houston and the Trustee
|
|
|
|
|
|
|
+4.11
|
|
Officer’s Certificate, dated as of March 17, 2014, setting forth the form, terms and provisions of the Twenty-Third Series of General Mortgage Bonds
|
|
|
|
|
|
|
Exhibit
Number
|
|
Description
|
|
Report or Registration
Statement
|
|
SEC File or
Registration
Number
|
|
Exhibit
Reference
|
10.1
|
|
Second Amended and Restated Agreement of Limited Partnership of Enable Midstream Partners, LP dated as of April 16, 2014
|
|
CenterPoint Energy’s Form 8-K dated April 16, 2014
|
|
1-31447
|
|
10.1
|
10.2
|
|
First Amendment to the Second Amended and Restated Limited Liability Company Agreement of Enable GP, LLC dated as of April 16, 2014
|
|
CenterPoint Energy’s Form 8-K dated April 16, 2014
|
|
1-31447
|
|
10.2
|
+12
|
|
Computation of Ratios of Earnings to Fixed Charges
|
|
|
|
|
|
|
+31.1
|
|
Rule 13a-14(a)/15d-14(a) Certification of Scott M. Prochazka
|
|
|
|
|
|
|
+31.2
|
|
Rule 13a-14(a)/15d-14(a) Certification of Gary L. Whitlock
|
|
|
|
|
|
|
+32.1
|
|
Section 1350 Certification of Scott M. Prochazka
|
|
|
|
|
|
|
+32.2
|
|
Section 1350 Certification of Gary L. Whitlock
|
|
|
|
|
|
|
+101.INS
|
|
XBRL Instance Document
|
|
|
|
|
|
|
+101.SCH
|
|
XBRL Taxonomy Extension Schema Document
|
|
|
|
|
|
|
+101.CAL
|
|
XBRL Taxonomy Extension Calculation Linkbase Document
|
|
|
|
|
|
|
+101.DEF
|
|
XBRL Taxonomy Extension Definition Linkbase Document
|
|
|
|
|
|
|
+101.LAB
|
|
XBRL Taxonomy Extension Labels Linkbase Document
|
|
|
|
|
|
|
+101.PRE
|
|
XBRL Taxonomy Extension Presentation Linkbase Document
|
|
|
|
|
|
|
CENTERPOINT ENERGY HOUSTON ELECTRIC, LLC
|
||
|
|
|
|
|
|
Dated: March 13, 2014
|
By:
|
/s/ Walter L. Fitzgerald
|
|
Name:
|
Walter L. Fitzgerald
|
|
Title:
|
Senior Vice President and Chief Accounting Officer
|
|
|
|
|
|
|
|
THE BANK OF NEW YORK MELLON TRUST
|
|
|
COMPANY, NATIONAL ASSOCIATION (successor in
|
|
|
trust to JPMORGAN CHASE BANK), as Trustee
|
|
|
|
|
Dated: March 13, 2014
|
|
|
|
By:
|
/s/ Melonee Young
|
|
Name:
|
Melonee Young
|
|
Title:
|
Vice President
|
|
|
|
|
|
/s/ Wybra A. Holland
|
|
|
Notary Public
|
On March 13, 2014 before me,
|
Cynthia Cerda, Notary Public
|
|
(insert name and title of the officer)
|
Signature
|
/s/ Cynthia Cerda
|
(Seal)
|
|
|
/s/ Walter L. Fitzgerald
|
|
|
Walter L. Fitzgerald
|
|
|
Senior Vice President and Chief Accounting Officer
|
Acknowledged and Received as
|
|
|
of the date first written above
|
|
|
|
|
|
THE BANK OF NEW YORK
|
|
|
MELLON TRUST COMPANY,
|
|
|
NATIONAL ASSOCIATION,
|
|
|
as Trustee
|
|
|
|
|
|
|
|
|
|
|
|
/s/ Melonee Young
|
|
|
Melonee Young
|
|
|
Vice President
|
|
|
|
|
|
Original Interest Accrual Date: March 17, 2014
Stated Maturity: April 1, 2044
Interest Rate: 4.50%
Interest Payment Dates: April 1 and October 1
Regular Record Dates: March 15 and September 15 immediately preceding the respective Interest Payment Date
|
Redeemable: Yes [X] No [ ]
Redemption Date: At any time.
Redemption Price: on any date prior to October 1, 2043 at a price equal to the greater of (i) 100% of the principal amount of this Security or the portion hereof to be redeemed or (ii) the sum of the present values of the remaining scheduled payments of principal and interest on this Security or the portion thereof to be redeemed (not including any portion of such payments of interest accrued to the Redemption Date) discounted to the Redemption Date on a semiannual basis at the applicable Treasury Rate plus 15 basis points; plus, in each case, accrued and unpaid interest to the Redemption Date on the principal amount being redeemed; or on or after October 1, 2043, at a price equal to 100% of the principal amount of this Security or the portion thereof to be redeemed plus accrued and unpaid interest to the Redemption Date on the principal amount being redeemed.
|
|
|
|
CENTERPOINT ENERGY HOUSTON ELECTRIC, LLC
|
|
|
|
|
|
|
Attest:
|
|
|
By:
|
|
|
Richard Dauphin
|
|
|
Walter L. Fitzgerald
|
|
Assistant Secretary
|
|
|
Senior Vice President and Chief Accounting Officer
|
(SEAL)
|
|
|
|
CERTIFICATE OF AUTHENTICATION
|
||||
|
||||
This is one of the Securities of the series designated therein referred to in the within-mentioned Indenture.
|
||||
|
|
|
|
|
Date of Authentication:
|
|
, 2014
|
|
|
|
|
|
|
|
|
|
|
THE BANK OF NEW YORK MELLON TRUST
|
|
|
|
|
COMPANY, NATIONAL ASSOCIATION
, as Trustee
|
|
|
|
|
|
|
|
|
|
By:
|
|
|
|
|
|
Melonee Young
|
|
|
|
|
Vice President
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Aggregate Principal
|
|
||
|
|
|
|
|
Amount of Securities
|
|
||
|
Decrease in Aggregate
|
Increase in Aggregate
|
Remaining After
|
|
Notation by
|
|||
Date of
|
|
Principal Amount of
|
Principal Amount of
|
Such Decrease or
|
|
Security
|
||
Adjustment
|
|
Securities
|
|
Securities
|
|
Increase
|
|
Registrar
|
Original Interest Accrual Date: March 17, 2014
Stated Maturity: April 1, 2044
Interest Rate: 4.50%
Interest Payment Dates: April 1 and October 1
Regular Record Dates: March 15 and September 15 immediately preceding the respective Interest Payment Date
|
Redeemable: Yes [X] No [ ]
Redemption Date: At any time.
Redemption Price: on any date prior to October 1, 2043 at a price equal to the greater of (i) 100% of the principal amount of this Security or the portion hereof to be redeemed or (ii) the sum of the present values of the remaining scheduled payments of principal and interest on this Security or the portion thereof to be redeemed (not including any portion of such payments of interest accrued to the Redemption Date) discounted to the Redemption Date on a semiannual basis at the applicable Treasury Rate plus 15 basis points; plus, in each case, accrued and unpaid interest to the Redemption Date on the principal amount being redeemed; or on or after October 1, 2043, at a price equal to 100% of the principal amount of this Security or the portion thereof to be redeemed plus accrued and unpaid interest to the Redemption Date on the principal amount being redeemed.
|
|
|
|
CENTERPOINT ENERGY HOUSTON ELECTRIC, LLC
|
|
|
|
|
|
|
Attest:
|
|
|
By:
|
|
|
Richard Dauphin
|
|
|
Walter L. Fitzgerald
|
|
Assistant Secretary
|
|
|
Senior Vice President and Chief Accounting Officer
|
(SEAL)
|
|
|
|
CERTIFICATE OF AUTHENTICATION
|
||||
|
||||
This is one of the Securities of the series designated therein referred to in the within-mentioned Indenture.
|
||||
|
|
|
|
|
Date of Authentication:
|
|
, 2014
|
|
|
|
|
|
|
|
|
|
|
THE BANK OF NEW YORK MELLON TRUST
|
|
|
|
|
COMPANY, NATIONAL ASSOCIATION
, as Trustee
|
|
|
|
|
|
|
|
|
|
By:
|
|
|
|
|
|
Melonee Young
|
|
|
|
|
Vice President
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Aggregate Principal
|
|
||
|
|
|
|
|
Amount of Securities
|
|
||
|
Decrease in Aggregate
|
Increase in Aggregate
|
Remaining After
|
|
Notation by
|
|||
Date of
|
|
Principal Amount of
|
|
Principal Amount of
|
|
Such Decrease or
|
|
Security
|
Adjustment
|
|
Securities
|
|
Securities
|
|
Increase
|
|
Registrar
|
|
Three Months Ended March 31,
|
||||||
|
2014 (1)
|
|
2013 (1)
|
||||
Net income
|
$
|
185
|
|
|
$
|
147
|
|
Equity in earnings of unconsolidated affiliates, net of distributions
|
(22
|
)
|
|
4
|
|
||
Income taxes
|
109
|
|
|
86
|
|
||
Capitalized interest
|
(3
|
)
|
|
(2
|
)
|
||
|
269
|
|
|
235
|
|
||
|
|
|
|
||||
Fixed charges, as defined:
|
|
|
|
|
|
||
|
|
|
|
||||
Interest
|
114
|
|
|
133
|
|
||
Capitalized interest
|
3
|
|
|
2
|
|
||
Interest component of rentals charged to operating expense
|
1
|
|
|
3
|
|
||
Total fixed charges
|
118
|
|
|
138
|
|
||
|
|
|
|
||||
Earnings, as defined
|
$
|
387
|
|
|
$
|
373
|
|
|
|
|
|
||||
Ratio of earnings to fixed charges
|
3.28
|
|
|
2.70
|
|
(1)
|
Excluded from the computation of fixed charges for the three months ended
March 31, 2014
and
2013
is interest expense of $3 million and interest income of less than $1 million, respectively, which is included in income tax expense.
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
|
/s/ Scott M. Prochazka
|
|
Scott M. Prochazka
|
|
President and Chief Executive Officer
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
|
/s/ Gary L. Whitlock
|
|
Gary L. Whitlock
|
|
Executive Vice President and Chief Financial Officer
|
/s/ Scott M. Prochazka
|
|
Scott M. Prochazka
|
|
President and Chief Executive Officer
|
|
May 1, 2014
|
|
/s/ Gary L. Whitlock
|
|
Gary L. Whitlock
|
|
Executive Vice President and Chief Financial Officer
|
|
May 1, 2014
|
|