2016 Q2 Form 10-Q Financial Statement

#000113031016000044 Filed on August 05, 2016

View on sec.gov

Income Statement

Concept 2016 Q2 2015 Q2
Revenue $1.574B $1.532B
YoY Change 2.74% -18.68%
Cost Of Revenue
YoY Change
Gross Profit
YoY Change
Gross Profit Margin
Selling, General & Admin
YoY Change
% of Gross Profit
Research & Development
YoY Change
% of Gross Profit
Depreciation & Amortization $289.0M $239.0M
YoY Change 20.92% -6.64%
% of Gross Profit
Operating Expenses $1.451B $1.347B
YoY Change 7.72% -20.67%
Operating Profit $182.0M $186.0M
YoY Change -2.15% 0.0%
Interest Expense $1.000M -$84.00M
YoY Change -101.19% 281.82%
% of Operating Profit 0.55% -45.16%
Other Income/Expense, Net -$174.0M -$72.00M
YoY Change 141.67% 323.53%
Pretax Income $8.000M $114.0M
YoY Change -92.98% -32.54%
Income Tax $10.00M $37.00M
% Of Pretax Income 125.0% 32.46%
Net Earnings -$2.000M $77.00M
YoY Change -102.6% -28.04%
Net Earnings / Revenue -0.13% 5.03%
Basic Earnings Per Share -$0.01 $0.18
Diluted Earnings Per Share -$0.01 $0.18
COMMON SHARES
Basic Shares Outstanding 430.7M shares 430.2M shares
Diluted Shares Outstanding 430.7M shares 431.7M shares

Balance Sheet

Concept 2016 Q2 2015 Q2
SHORT-TERM ASSETS
Cash & Short-Term Investments $1.008B $1.205B
YoY Change -16.35% 18.72%
Cash & Equivalents $271.0M $245.0M
Short-Term Investments $737.0M $960.0M
Other Short-Term Assets $360.0M $352.0M
YoY Change 2.27% -8.57%
Inventory $283.0M $274.0M
Prepaid Expenses
Receivables $605.0M $640.0M
Other Receivables $16.00M $38.00M
Total Short-Term Assets $2.272B $2.509B
YoY Change -9.45% -0.79%
LONG-TERM ASSETS
Property, Plant & Equipment $11.90B $10.91B
YoY Change 9.05% 9.34%
Goodwill $861.0M $840.0M
YoY Change 2.5% 0.0%
Intangibles
YoY Change
Long-Term Investments $2.536B $4.471B
YoY Change -43.28% -1.02%
Other Assets $147.0M $151.0M
YoY Change -2.65% -6.21%
Total Long-Term Assets $18.74B $20.09B
YoY Change -6.73% 113.48%
TOTAL ASSETS
Total Short-Term Assets $2.272B $2.509B
Total Long-Term Assets $18.74B $20.09B
Total Assets $21.01B $22.60B
YoY Change -7.03% 3.11%
SHORT-TERM LIABILITIES
YoY Change
Accounts Payable $407.0M $367.0M
YoY Change 10.9% -29.29%
Accrued Expenses $119.0M $161.0M
YoY Change -26.09% 19.26%
Deferred Revenue
YoY Change
Short-Term Debt $17.00M $24.00M
YoY Change -29.17% -42.86%
Long-Term Debt Due $763.0M $927.0M
YoY Change -17.69% 30.56%
Total Short-Term Liabilities $2.241B $3.125B
YoY Change -28.29% 3.27%
LONG-TERM LIABILITIES
Long-Term Debt $7.780B $7.614B
YoY Change 2.18% -1.82%
Other Long-Term Liabilities $279.0M $250.0M
YoY Change 11.6% 21.36%
Total Long-Term Liabilities $8.059B $7.864B
YoY Change 2.48% 17.13%
TOTAL LIABILITIES
Total Short-Term Liabilities $2.241B $3.125B
Total Long-Term Liabilities $8.059B $7.864B
Total Liabilities $10.30B $10.99B
YoY Change -6.27% 12.82%
SHAREHOLDERS EQUITY
Retained Earnings -$726.0M $456.0M
YoY Change -259.21% 31.79%
Common Stock $4.000M $4.000M
YoY Change 0.0% 0.0%
Preferred Stock
YoY Change
Treasury Stock (at cost)
YoY Change
Treasury Stock Shares 166.0 shares 166.0 shares
Shareholders Equity $3.397B $4.550B
YoY Change
Total Liabilities & Shareholders Equity $21.01B $22.60B
YoY Change -7.03% 3.11%

Cashflow Statement

Concept 2016 Q2 2015 Q2
OPERATING ACTIVITIES
Net Income -$2.000M $77.00M
YoY Change -102.6% -28.04%
Depreciation, Depletion And Amortization $289.0M $239.0M
YoY Change 20.92% -6.64%
Cash From Operating Activities $424.0M $456.0M
YoY Change -7.02% 37.35%
INVESTING ACTIVITIES
Capital Expenditures -$350.0M -$371.0M
YoY Change -5.66% 14.51%
Acquisitions
YoY Change
Other Investing Activities $152.0M $37.00M
YoY Change 310.81% -294.74%
Cash From Investing Activities -$198.0M -$334.0M
YoY Change -40.72% -2.62%
FINANCING ACTIVITIES
Cash Dividend Paid
YoY Change
Common Stock Issuance & Retirement, Net
YoY Change
Debt Paid & Issued, Net
YoY Change
Cash From Financing Activities -173.0M -111.0M
YoY Change 55.86% -31.48%
NET CHANGE
Cash From Operating Activities 424.0M 456.0M
Cash From Investing Activities -198.0M -334.0M
Cash From Financing Activities -173.0M -111.0M
Net Change In Cash 53.00M 11.00M
YoY Change 381.82% -106.36%
FREE CASH FLOW
Cash From Operating Activities $424.0M $456.0M
Capital Expenditures -$350.0M -$371.0M
Free Cash Flow $774.0M $827.0M
YoY Change -6.41% 26.07%

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us-gaap Fair Value Net Derivative Asset Liability Measured On Recurring Basis Unobservable Inputs Reconciliation Settlements
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CY2016Q2 us-gaap Fair Value Net Derivative Asset Liability Measured On Recurring Basis Unobservable Inputs Reconciliation Settlements
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us-gaap Fair Value Net Derivative Asset Liability Measured On Recurring Basis Unobservable Inputs Reconciliation Settlements
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0 USD
us-gaap Fair Value Net Derivative Asset Liability Measured On Recurring Basis Unobservable Inputs Reconciliation Transfers Into Level3
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0 USD
CY2016Q2 us-gaap Fair Value Net Derivative Asset Liability Measured On Recurring Basis Unobservable Inputs Reconciliation Transfers Into Level3
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0 USD
us-gaap Fair Value Net Derivative Asset Liability Measured On Recurring Basis Unobservable Inputs Reconciliation Transfers Into Level3
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5000000 USD
CY2015Q2 us-gaap Fair Value Net Derivative Asset Liability Measured On Recurring Basis Unobservable Inputs Reconciliation Transfers Out Of Level3
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0 USD
CY2016Q2 us-gaap Fair Value Net Derivative Asset Liability Measured On Recurring Basis Unobservable Inputs Reconciliation Transfers Out Of Level3
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0 USD
us-gaap Fair Value Net Derivative Asset Liability Measured On Recurring Basis Unobservable Inputs Reconciliation Transfers Out Of Level3
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1000000 USD
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us-gaap Income Loss From Continuing Operations Before Income Taxes Extraordinary Items Noncontrolling Interest
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us-gaap Income Loss From Equity Method Investments
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us-gaap Income Loss From Equity Method Investments
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us-gaap Income Tax Expense Benefit
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us-gaap Increase Decrease In Over Under Energy Recovery
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us-gaap Increase Decrease In Regulatory Assets And Liabilities
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us-gaap Increase Decrease In Restricted Cash
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us-gaap Marketable Securities Gain Loss
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us-gaap Marketable Securities Unrealized Gain Loss Excluding Other Than Temporary Impairments
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us-gaap Net Cash Provided By Used In Investing Activities Continuing Operations
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us-gaap Operating Income Loss
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us-gaap Other Comprehensive Income Defined Benefit Plans Adjustment Net Of Tax Portion Attributable To Parent
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us-gaap Other Comprehensive Income Defined Benefit Plans Tax Portion Attributable To Parent
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us-gaap Other Comprehensive Income Loss Derivatives Qualifying As Hedges Net Of Tax
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us-gaap Other Comprehensive Income Loss Net Of Tax Portion Attributable To Parent
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us-gaap Other Comprehensive Income Loss Net Of Tax Portion Attributable To Parent
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us-gaap Other Comprehensive Income Loss Pension And Other Postretirement Benefit Plans Adjustment Before Reclassification Adjustments And Tax
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us-gaap Other Comprehensive Income Loss Reclassification Adjustment From Aoci Pension And Other Postretirement Benefit Plans For Net Gain Loss Before Tax
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us-gaap Other Operating Activities Cash Flow Statement
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us-gaap Payments Of Debt Issuance Costs
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us-gaap Payments Of Dividends Common Stock
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us-gaap Payments To Acquire Businesses Gross
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us-gaap Payments To Acquire Investments
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us-gaap Payments To Acquire Productive Assets
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us-gaap Proceeds From Equity Method Investment Dividends Or Distributions Return Of Capital
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us-gaap Proceeds From Equity Method Investment Dividends Or Distributions Return Of Capital
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us-gaap Proceeds From Issuance Of Long Term Debt
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us-gaap Proceeds From Sale And Maturity Of Marketable Securities
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us-gaap Revenues
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us-gaap Revenues
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us-gaap Taxes Excluding Income And Excise Taxes
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198000000 USD
CY2016Q2 us-gaap Taxes Excluding Income And Excise Taxes
TaxesExcludingIncomeAndExciseTaxes
94000000 USD
us-gaap Taxes Excluding Income And Excise Taxes
TaxesExcludingIncomeAndExciseTaxes
195000000 USD
CY2015Q4 us-gaap Taxes Payable Current
TaxesPayableCurrent
158000000 USD
CY2016Q2 us-gaap Taxes Payable Current
TaxesPayableCurrent
92000000 USD
CY2015Q4 us-gaap Treasury Stock Shares
TreasuryStockShares
166 shares
CY2016Q2 us-gaap Treasury Stock Shares
TreasuryStockShares
166 shares
CY2015Q4 us-gaap Unamortized Debt Issuance Expense
UnamortizedDebtIssuanceExpense
44000000 USD
CY2016Q2 us-gaap Unamortized Debt Issuance Expense
UnamortizedDebtIssuanceExpense
43000000 USD
CY2015Q4 us-gaap Unbilled Receivables Current
UnbilledReceivablesCurrent
279000000 USD
CY2016Q2 us-gaap Unbilled Receivables Current
UnbilledReceivablesCurrent
178000000 USD
CY2015Q2 us-gaap Utilities Operating Expense Maintenance Operations And Other Costs And Expenses
UtilitiesOperatingExpenseMaintenanceOperationsAndOtherCostsAndExpenses
488000000 USD
us-gaap Utilities Operating Expense Maintenance Operations And Other Costs And Expenses
UtilitiesOperatingExpenseMaintenanceOperationsAndOtherCostsAndExpenses
986000000 USD
CY2016Q2 us-gaap Utilities Operating Expense Maintenance Operations And Other Costs And Expenses
UtilitiesOperatingExpenseMaintenanceOperationsAndOtherCostsAndExpenses
513000000 USD
us-gaap Utilities Operating Expense Maintenance Operations And Other Costs And Expenses
UtilitiesOperatingExpenseMaintenanceOperationsAndOtherCostsAndExpenses
1034000000 USD
CY2015Q2 us-gaap Weighted Average Number Of Diluted Shares Outstanding
WeightedAverageNumberOfDilutedSharesOutstanding
431733000 shares
us-gaap Weighted Average Number Of Diluted Shares Outstanding
WeightedAverageNumberOfDilutedSharesOutstanding
431594000 shares
CY2016Q2 us-gaap Weighted Average Number Of Diluted Shares Outstanding
WeightedAverageNumberOfDilutedSharesOutstanding
430653000 shares
us-gaap Weighted Average Number Of Diluted Shares Outstanding
WeightedAverageNumberOfDilutedSharesOutstanding
432973000 shares
CY2015Q2 us-gaap Weighted Average Number Of Shares Outstanding Basic
WeightedAverageNumberOfSharesOutstandingBasic
430235000 shares
us-gaap Weighted Average Number Of Shares Outstanding Basic
WeightedAverageNumberOfSharesOutstandingBasic
430096000 shares
CY2016Q2 us-gaap Weighted Average Number Of Shares Outstanding Basic
WeightedAverageNumberOfSharesOutstandingBasic
430653000 shares
us-gaap Weighted Average Number Of Shares Outstanding Basic
WeightedAverageNumberOfSharesOutstandingBasic
430530000 shares
us-gaap Description Of New Accounting Pronouncements Not Yet Adopted
DescriptionOfNewAccountingPronouncementsNotYetAdopted
<div style="font-family:Times New Roman;font-size:10pt;"><div style="line-height:120%;text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;font-weight:bold;text-transform:default;">New Accounting Pronouncements</font><font style="font-family:inherit;font-size:10pt;font-weight:bold;"> </font></div><div style="line-height:120%;text-align:justify;text-indent:24px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br clear="none"/></font></div><div style="line-height:120%;text-align:justify;text-indent:24px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">In</font><font style="font-family:inherit;font-size:10pt;color:#252525;"> February 2015, the FASB issued ASU No. 2015-02,&#160;</font><font style="font-family:inherit;font-size:10pt;color:#252525;font-style:italic;">Consolidation (Topic 810): Amendments to the Consolidation </font><font style="font-family:inherit;font-size:10pt;font-style:italic;">Analysis</font><font style="font-family:inherit;font-size:10pt;"> (ASU 2015-02).&#160;ASU 2015</font><font style="font-family:inherit;font-size:10pt;color:#252525;">-02 changes the analysis that reporting organizations must perform to evaluate whether they should consolidate certain legal entities, such as limited partnerships.</font><font style="font-family:inherit;font-size:10pt;">&#160;The changes include, among others, modification of the evaluation of whether limited partnerships and similar legal entities are VIEs or voting interest entities and elimination of the presumption that a general partner should consolidate a limited partnership. ASU 2015-02 does not amend the related party guidance for situations in which power is shared between two or more entities that hold interests in a VIE. CenterPoint Energy adopted ASU 2015-02 on January 1, 2016, which CenterPoint Energy determined did not have a material impact on its financial position, results of operations, cash flows and disclosures.</font></div><div style="line-height:120%;text-align:justify;text-indent:24px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br clear="none"/></font></div><div style="line-height:120%;text-align:justify;text-indent:24px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">In April 2015, the FASB issued ASU No. 2015-03, </font><font style="font-family:inherit;font-size:10pt;font-style:italic;">Interest-Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Cost </font><font style="font-family:inherit;font-size:10pt;">(ASU 2015-03)</font><font style="font-family:inherit;font-size:10pt;font-style:italic;">. </font><font style="font-family:inherit;font-size:10pt;">ASU 2015-03 requires that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. The recognition and measurement guidance for debt issuance costs are not affected by ASU 2015-03. CenterPoint Energy adopted ASU 2015-03 retrospectively on January 1, 2016, which resulted in a reduction of other long-term assets, indexed debt and total long-term debt on its Condensed Consolidated Balance Sheets. CenterPoint Energy had debt issuance costs, excluding amounts related to credit facility arrangements, of </font><font style="font-family:inherit;font-size:10pt;">$43 million</font><font style="font-family:inherit;font-size:10pt;"> and </font><font style="font-family:inherit;font-size:10pt;">$44 million</font><font style="font-family:inherit;font-size:10pt;"> as of </font><font style="font-family:inherit;font-size:10pt;">June&#160;30, 2016</font><font style="font-family:inherit;font-size:10pt;"> and December 31, 2015, respectively. </font></div><div style="line-height:120%;text-align:justify;text-indent:24px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br clear="none"/></font></div><div style="line-height:120%;text-align:justify;text-indent:24px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">In May 2015, the FASB issued ASU No. 2015-07, </font><font style="font-family:inherit;font-size:10pt;font-style:italic;">Fair Value Measurement (Topic 820): Disclosures for Investments in Certain Entities That Calculate Net Asset Value per Share (or Its Equivalent)</font><font style="font-family:inherit;font-size:10pt;"> (ASU 2015-07). ASU 2015-07 removes the requirement to categorize within the fair value hierarchy investments for which fair values are measured at NAV using the practical expedient. Entities will be required to disclose the fair value of investments measured using the NAV practical expedient so that financial statement users can reconcile amounts reported in the fair value hierarchy table to amounts reported on the balance sheet. CenterPoint Energy adopted ASU 2015-07 on January 1, 2016, which will have an impact on its employee benefit plan disclosures, beginning with its annual report on Form 10-K for the year ended December 31, 2016. This standard did not have an impact on CenterPoint Energy&#8217;s financial position, results of operations or cash flows.</font></div><div style="line-height:120%;text-align:justify;text-indent:24px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br clear="none"/></font></div><div style="line-height:120%;text-align:justify;text-indent:24px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">In September 2015, the FASB issued ASU No. 2015-16, </font><font style="font-family:inherit;font-size:10pt;font-style:italic;">Business Combinations (Topic 805): Simplifying the Accounting for Measurement-Period Adjustments</font><font style="font-family:inherit;font-size:10pt;"> (ASU 2015-16). ASU 2015-16 eliminates the requirement for an acquirer in a business combination to account for measurement-period adjustments retrospectively. Instead, an acquirer would recognize a measurement-period adjustment during the period in which the amount of the adjustment is determined. CenterPoint Energy adopted ASU 2015-16 on January 1, 2016, which did not have an impact on its financial position, results of operations or cash flows.</font></div><div style="line-height:120%;text-align:justify;text-indent:24px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br clear="none"/></font></div><div style="line-height:120%;text-align:justify;text-indent:24px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">In January 2016, the FASB issued ASU No. 2016-01, </font><font style="font-family:inherit;font-size:10pt;font-style:italic;">Financial Instruments-Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities</font><font style="font-family:inherit;font-size:10pt;"> (ASU 2016-01). ASU 2016-01 requires equity investments that do not result in consolidation and are not accounted for under the equity method to be measured at fair value and to recognize any changes in fair value in net income unless the investments qualify for the new practicability exception. It does not change the guidance for classifying and measuring investments in debt securities and loans. ASU 2016-01 also changes certain disclosure requirements and other aspects related to recognition and measurement of financial assets and financial liabilities. ASU 2016-01 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2017. CenterPoint Energy is currently assessing the impact that this standard will have on its financial position, results of operations, cash flows and disclosures.</font></div><div style="line-height:120%;text-align:justify;text-indent:24px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br clear="none"/></font></div><div style="line-height:120%;text-align:justify;text-indent:24px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">In February 2016, the FASB issued ASU No. 2016-02, </font><font style="font-family:inherit;font-size:10pt;font-style:italic;">Leases (Topic 842) </font><font style="font-family:inherit;font-size:10pt;">(ASU 2016-02).&#160;ASU 2016-02 provides a comprehensive new lease model that requires lessees to recognize assets and liabilities for most leases and would change certain aspects of lessor accounting. ASU 2016-02 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018, </font><font style="font-family:inherit;font-size:10pt;color:#252525;">with early adoption permitted.</font><font style="font-family:inherit;font-size:10pt;"> CenterPoint Energy is currently assessing the impact that this standard will have on its financial position, results of operations, cash flows and disclosures.</font></div><div style="line-height:120%;text-align:justify;text-indent:24px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br clear="none"/></font></div><div style="line-height:120%;text-align:justify;text-indent:24px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">In March 2016, the FASB issued ASU No. 2016-05, </font><font style="font-family:inherit;font-size:10pt;font-style:italic;">Derivatives and Hedging (Topic 815): Effect of Derivative Contract Novation on Existing Hedge Accounting Relationships</font><font style="font-family:inherit;font-size:10pt;"> (ASU 2016-05). ASU 2016-05 clarifies that a change in the counterparty to a derivative instrument that has been designated as the hedging instrument in an existing hedging relationship would not, in and of itself, be considered a termination of the derivative instrument or a change in a critical term of the hedging relationship. This clarification applies to both cash flow and fair value hedging relationships. CenterPoint Energy adopted ASU 2016-05 prospectively in the first quarter of 2016, which did not have an impact on its financial position, results of operations, cash flows and disclosures.</font></div><div style="line-height:120%;text-align:justify;text-indent:24px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br clear="none"/></font></div><div style="line-height:120%;text-align:justify;text-indent:24px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">In March, April, and May 2016, the FASB issued ASU No. 2016-08, </font><font style="font-family:inherit;font-size:10pt;font-style:italic;">Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations</font><font style="font-family:inherit;font-size:10pt;"> (ASU 2016-08), ASU No. 2016-10, </font><font style="font-family:inherit;font-size:10pt;font-style:italic;">Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing</font><font style="font-family:inherit;font-size:10pt;"> (ASU 2016-10), and ASU No. 2016-12, </font><font style="font-family:inherit;font-size:10pt;font-style:italic;">Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients</font><font style="font-family:inherit;font-size:10pt;"> (ASU 2016-12), respectively. ASU 2016-08, ASU 2016-10, and ASU 2016-12 clarify certain aspects of ASU No. 2014-09, </font><font style="font-family:inherit;font-size:10pt;font-style:italic;">Revenue from Contracts with Customers (Topic 606)</font><font style="font-family:inherit;font-size:10pt;"> (ASU 2014-09), which supersedes most current revenue recognition guidance. CenterPoint Energy is currently evaluating the impact that ASU 2016-08, ASU 2016-10, ASU 2016-12, and ASU 2014-09 will have on its financial position, results of operations, cash flows and disclosures and expects to adopt these ASUs on January 1, 2018.</font></div><div style="line-height:120%;text-align:justify;text-indent:24px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br clear="none"/></font></div><div style="line-height:120%;text-align:justify;text-indent:24px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">In March 2016, the FASB issued ASU No. 2016-09, </font><font style="font-family:inherit;font-size:10pt;font-style:italic;">Compensation-Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting</font><font style="font-family:inherit;font-size:10pt;"> (ASU 2016-09). ASU 2016-09 will change the accounting for certain aspects of share-based payments to employees, including the recognition of income tax effects of vested or settled awards in the income statement, instead of within additional paid-in capital. It will also increase the amount an employer can withhold to cover income taxes on awards and still qualify for the exception to liability classification for shares used to satisfy the employer&#8217;s statutory income tax withholding obligations. ASU 2016-09 will allow companies to elect between two different methods to account for forfeitures of share-based payments. ASU 2016-09 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2016, </font><font style="font-family:inherit;font-size:10pt;color:#252525;">with early adoption permitted.</font><font style="font-family:inherit;font-size:10pt;"> CenterPoint Energy is currently assessing the impact that this standard will have on its financial position, results of operations, cash flows and disclosures. </font></div><div style="line-height:120%;text-align:justify;text-indent:24px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br clear="none"/></font></div><div style="line-height:120%;text-align:justify;text-indent:24px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">In June 2016, the FASB issued ASU No. 2016-13, </font><font style="font-family:inherit;font-size:10pt;font-style:italic;">Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments</font><font style="font-family:inherit;font-size:10pt;"> (ASU 2016-13). ASU 2016-13 requires a new model called the CECL model to estimate credit losses for financial assets subject to credit losses and measured at amortized cost and certain off-balance sheet credit exposures. This includes loans, held-to-maturity debt securities, loan commitments, financial guarantees, and net investments in leases, as well as reinsurance and trade receivables. Upon initial recognition of the exposure, the CECL model requires an entity to estimate the credit losses expected over the life of an exposure based on historical information, current information and reasonable and supportable forecasts, including estimates of prepayments. The update also amends the other-than-temporary impairment model for debt securities classified as available-for-sale. ASU 2016-13 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019, with early adoption permitted beginning after December 15, 2018. CenterPoint Energy is currently assessing the impact that this standard will have on its financial position, results of operations, cash flows and disclosures.</font></div><div style="line-height:120%;text-align:justify;text-indent:24px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br clear="none"/></font></div><div style="line-height:120%;text-align:justify;text-indent:24px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">Management believes that other recently issued standards, which are not yet effective, will not have a material impact on CenterPoint Energy&#8217;s consolidated financial position, results of operations or cash flows upon adoption.</font></div><div style="line-height:120%;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br clear="none"/></font></div></div>

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