CenterPoint Energy Inc. and indirect subsidiary CenterPoint Energy Resources Corp. (CERC) said Friday some transactions involving purchases and sales of natural gas within the gas distribution segment were overstated by $520 million in 2004 and by $430 million in the first nine months of 2005. The companies said the overstatements resulted from not properly eliminating consolidation of the two entities’ financial statements, and the affected results will be restated.

“We take any accounting errors very seriously,” said CFO Gary L. Whitlock. “However, it is very important for the public to understand that our natural gas sales volumes were properly reported and that these errors had no effect on the companies’ previously reported operating income, net income, earnings per share or cash flow.”

In reviewing various qualitative materiality factors contained in the Securities and Exchange Commission’s Staff Accounting Bulletin No. 99, the companies further determined these errors “did not mask a change in earnings or other trends, hide a failure to meet analysts’ consensus expectations for the companies, change a loss into income or vice versa, affect the companies’ compliance with regulatory requirements, affect the companies’ compliance with loan covenants or other contractual requirements, involve concealment of an unlawful transaction, or have the effect of increasing compensation for any officer or employee.”

As a result of the accounting errors, the audit committee of CenterPoint Energy’s board of directors concurred with management’s conclusions to restate the previously issued consolidated financial statements for 2004 through the filing of amended Forms 10-K and to restate the previously issued consolidated financial statements for the first three quarters of 2005 through the filing of amended Forms 10-Q.

The amended filings are expected to be made by the end of the year. CenterPoint Energy also said it is reviewing the design and effectiveness of its internal control and disclosure processes and will implement appropriate revisions before the end of this month.

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