CenterPoint Energy, Inc.
CENTERPOINT ENERGY INC(Form: 8-K, Received: 10/17/2002 12:27:53)      
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported): OCTOBER 17, 2002


CENTERPOINT ENERGY, INC.
(Exact name of registrant as specified in its charter)

           TEXAS                        1-31447                 74-0694415
(State or other jurisdiction     (Commission File Number)      (IRS Employer
     of incorporation)                                       Identification No.)


            1111 LOUISIANA
            HOUSTON, TEXAS                                        77002
(Address of principal executive offices)                        (Zip Code)

Registrant's telephone number, including area code: (713) 207-3000



 
ITEM 5. OTHER EVENTS.

ANNOUNCEMENT OF THIRD QUARTER 2002 RESULTS

On October 17, 2002, CenterPoint Energy, Inc. ("CenterPoint Energy") reported third quarter 2002 earnings. For additional information regarding CenterPoint Energy's third quarter 2002 earnings, please refer to CenterPoint Energy's press release attached to this report as Exhibit 99.1 (the "Press Release"), which Press Release, other than the information therein under the caption "Outlook for 2002 and 2003," is incorporated by reference herein.

MANAGEMENT CONFERENCE CALL

On October 17, 2002, executives of CenterPoint Energy spoke to the public, as well as various members of the financial and investment community in Houston, Texas regarding CenterPoint Energy's third quarter 2002 results. A replay of this presentation has been made available on CenterPoint Energy's web site found at www.centerpointenergy.com in the Investor Relations section and will be archived for 14 days after the event. In addition, a replay of the presentation can be accessed until October 24, 2002, 6 p.m. Houston time, by calling (800) 642-1687 (Conference I.D. 6018429).

 
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.

(c) Exhibits.

The following exhibit is filed herewith:

99.1 Press Release issued October 17, 2002 regarding CenterPoint Energy's third quarter 2002 earnings.

 
ITEM 9. REGULATION FD DISCLOSURE.

CenterPoint Energy incorporates by reference into this Item 9 the information in the Press Release under the caption "Outlook for 2002 and 2003." The information in Item 9 of this report is being furnished, not filed, pursuant to Regulation FD. Accordingly, the information in Item 9 of this report will not be incorporated by reference into any registration statement filed by CenterPoint Energy under the Securities Act of 1933, as amended, unless specifically identified therein as being incorporated therein by reference. The furnishing of the information in this report is not intended to, and does not, constitute a determination or admission by CenterPoint Energy, that the information in this report is material or complete, or that investors should consider this information before making an investment decision with respect to any security of CenterPoint Energy or any of its affiliates.

FORWARD-LOOKING STATEMENTS

Some of the statements in the press release incorporated by reference herein are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those expressed or implied by these statements. In some cases, you can identify our forward-looking statements by the words "anticipates," "believes," "continue," "could," "estimates," "expects," "forecast," "goal," "intends," "may," "objective," "plans," "potential," "predicts," "projection," "should," "will," or other similar words.

We have based our forward-looking statements on our management's beliefs and assumptions based on information available at the time the statements are made. We caution you that assumptions, beliefs, expectations, intentions and projections about future events may and often do vary materially from actual results. Therefore, actual results may differ materially from those expressed or implied by our forward-looking statements. You should not place undue reliance on forward-looking statements. Each forward-looking statement speaks only as of the date of the particular statement, and we undertake no obligation to update or revise publicly any forward-looking statements.

The following list identifies some of the factors that could cause actual results to differ from those expressed or implied by our forward-looking statements:

2


o state, federal and international legislative and regulatory actions or developments, including deregulation, re-regulation and restructuring of the electric utility industry, changes in or application of laws or regulations applicable to other aspects of our business and actions with respect to, among other things:

o approval of stranded costs;

o allowed rates of return;

o rate structures;

o recovery of investments; and

o operation and construction of facilities;

o non-payment for our services due to financial distress of our customers;

o the successful and timely completion of our capital projects;

o industrial, commercial and residential growth in our service territory and changes in market demand and demographic patterns;

o changes in business strategy or development plans;

o unanticipated changes in interest rates or rates of inflation;

o unanticipated changes in operating expenses and capital expenditures;

o weather variations and other natural phenomena;

o commercial bank and financial market conditions, our access to capital, the cost of such capital, receipt of certain approvals under the 1935 Act and the results of our financing and refinancing efforts, including availability of funds in the debt capital markets;

o actions by rating agencies;

o legal and administrative proceedings and settlements;

o changes in tax laws;

o significant changes in our relationship with our employees, including the availability of qualified personnel and the potential adverse effects if labor disputes or grievances were to occur;

o significant changes in critical accounting policies material to us;

o acts of terrorism or war, including any direct or indirect effect on our business resulting from terrorist attacks such as occurred on September 11, 2001 or any similar incidents or responses to those incidents;

o the availability and price of insurance;

o the outcome of the pending securities lawsuits against Reliant Energy, Incorporated and Reliant Resources, Inc.;

o the outcome of the SEC investigation relating to the treatment in our consolidated financial statements of certain activities of Reliant Resources, Inc.;

3

o the reliability of the systems, procedures and other infrastructure necessary to operate the retail electric business in our service territory, including the systems owned and operated by the independent system operator in the Electric Reliability Council of Texas, Inc.;

o political, legal, regulatory and economic conditions and developments in the United States; and

o other factors discussed in our filings with the SEC.

4

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

CENTERPOINT ENERGY, INC.


Date:  October 17, 2002               By: /s/ James S. Brian
                                          ----------------------------------
                                          James S. Brian
                                          Senior Vice President and
                                          Chief Accounting Officer


5


                                  EXHIBIT INDEX

EXHIBIT
NUMBER      EXHIBIT DESCRIPTION
-------     -------------------
99.1        Press Release issued October 17, 2002 regarding CenterPoint Energy's
            third quarter 2002 earnings.

6

 


 
EXHIBIT 99.1

FOR FURTHER INFORMATION: Leticia Lowe, Media (713) 207-7702 Marianne Paulsen, Investors (713) 207-6500

FOR IMMEDIATE RELEASE: October 17, 2002

CENTERPOINT ENERGY REPORTS STRONG THIRD QUARTER 2002 EARNINGS

HOUSTON, TX. - CenterPoint Energy, Inc. (NYSE: CNP), the new holding company for the regulated operations of the former Reliant Energy, Incorporated, today reported income from continuing operations before the cumulative effect of accounting change of $161 million, or $0.54 per diluted share for the third quarter of 2002. For the same period of 2001, and prior to the full implementation of the Texas electric restructuring law, income from continuing operations before the cumulative effect of accounting change was $183 million, or $0.63 per diluted share. Continuing operations for both the 2002 and 2001 periods exclude the earnings of Reliant Resources, Inc. (NYSE: RRI), which was spun off to CenterPoint Energy shareholders on September 30, 2002.

The decrease in income from continuing operations for the third quarter of 2002 reflects the fundamental change in the company's electric operations as a result of the Texas electric restructuring law. The other segments of the company reported operating improvements, including the natural gas distribution and pipeline and gathering operations. Results for the third quarter of 2002 also reflected higher interest expense than the third quarter of 2001. On January 1, 2002, the company discontinued amortizing goodwill in accordance with SFAS No. 142, "Goodwill and Other Intangible Assets". During the third quarter of 2001, $12 million of goodwill amortization expense was recognized.

For the nine months ended September 30, 2002, CenterPoint Energy reported income from continuing operations before the cumulative effect of accounting change of $394 million, or $1.32 per diluted share. For the same period of 2001, income from continuing operations before the cumulative effect of accounting change was $427 million, or $1.46 per diluted share. The year-over-year comparison for this period was impacted by the same factors discussed above. The amount of goodwill amortization expense that was recognized for the first nine months of 2001 was $37 million.

"We are pleased to report another excellent quarter as our employees continued to focus on effectively operating our portfolio of regulated businesses," said David McClanahan, president and chief executive officer. "We will continue to build upon our strong business fundamentals and execute our strategy of building America's leading energy delivery company."

SUMMARY OF TWO NEW REPORTABLE BUSINESS SEGMENTS

With the opening of the Texas market to retail electric competition in January 2002, generation and retail electric sales were deregulated. Retail electric sales are no longer included in the company's operations. Pursuant to these changes, CenterPoint Energy started reporting two new business segments, electric generation


and electric transmission and distribution. The previously regulated generation operations in Texas are reported in the electric generation segment. The electric transmission and distribution segment includes results from regulated transmission and distribution operations as well as the impact of generation-related stranded costs recoverable by the regulated utility.

As a result of the implementation of deregulation, there are no meaningful comparisons for these segments against prior periods.

EBIT BY SEGMENT DETAILED

ELECTRIC TRANSMISSION AND DISTRIBUTION

The electric transmission and distribution segment reported earnings before interest and taxes (EBIT) of $407 million for the third quarter of 2002, reflecting seasonal demand. The $407 million of EBIT was comprised of $167 million for the regulated electric transmission and distribution business and non-cash EBIT of $240 million associated with generation-related regulatory assets, or Excess Cost Over Market (ECOM), as described below.

The electric transmission and distribution business recovers the cost of its service through an energy delivery charge. This business benefited from growth in residential demand in the third quarter of 2002 compared to the same period of last year, partially offset by an anticipated decline in deliveries to industrial customers resulting from a move to self-generation. Metered customers, totaling 1.77 million at the end of the third quarter of 2002, continue to grow at a healthy annualized rate of 2 percent.

Under the Texas restructuring law, a regulated utility may recover as part of its stranded investment any difference between market prices received by its affiliated power generation company and the market prices used in the Texas Public Utility Commission's ECOM model. This difference, which is recorded as a regulatory asset, produced $240 million of non-cash EBIT in the third quarter of 2002.

ELECTRIC GENERATION

The electric generation segment is comprised of over 14,000 MW of electric generation located entirely in the state of Texas. With the restructuring of the company into CenterPoint Energy, Inc. on August 31, 2002, these assets were transferred to a separate subsidiary called Texas Genco. This segment reported EBIT of $7 million for the third quarter of 2002. The company expects to distribute to its shareholders approximately 19 percent of the common stock of Texas Genco in a taxable distribution in late 2002 or early 2003.

NATURAL GAS DISTRIBUTION

The natural gas distribution segment reported a loss before interest and taxes of less than $1 million for the third quarter of 2002 compared to a loss before interest and taxes of $20 million for the same period of 2001. The amount of goodwill amortization expense recognized in the third quarter of 2001 was approximately $8 million for this segment. A significant reduction in bad debt expense in the third quarter of 2002 compared to the high levels of bad debt experienced in the same period last year contributed to the improvement in operating results.


PIPELINES AND GATHERING

EBIT for the pipelines and gathering segment continued to produce consistent and stable margins and increased to $43 million for the third quarter of 2002 compared to $34 million for the same period of 2001. The amount of goodwill amortization expense recognized in the third quarter of 2001 was approximately $4 million.

OTHER OPERATIONS

The company's other continuing operations reported a loss before interest and taxes for the third quarter of 2002 of $8 million compared to a loss of $26 million for the same period of 2001. This change is primarily attributable to a $5 million net gain in the third quarter of 2002 compared to a $9 million net loss in the same period of 2001 related to the company's indexed debt securities and investment in AOL Time Warner.

ACCOUNTING TREATMENT OF THE SPIN-OFF OF RELIANT RESOURCES

On September 30, 2002, the company distributed its investment in Reliant Resources to CenterPoint Energy shareholders. In accounting for this distribution, the company wrote down its $5 billion investment in RRI to its then fair value of $847 million. This write-down will be reported as a non-cash charge in discontinued operations. The company also reduced additional paid-in-capital for the $847 million fair value to record the distribution as a return of capital. RRI's historical results will be reported as discontinued operations.

OUTLOOK FOR 2002 AND 2003

CenterPoint Energy has previously provided earnings guidance within a range of $1.17 to $1.22 per diluted share for 2002. The company is increasing its 2002 earnings guidance to a range of $1.30 to $1.35 per diluted share. This increase takes into consideration the company's strong performance to date, the expectation of low seasonal demand for electricity and somewhat stronger seasonal demand for natural gas during the fourth quarter, higher borrowing costs, inherent uncertainties regarding additional financings expected during the remainder of the year and other variables associated with its businesses.

For 2003, the company expects to achieve continued strong operating performance. However, higher borrowing costs and pension-related increases are expected to negatively impact the company's results. Although the company is not prepared to provide more specific guidance, CenterPoint Energy currently expects that its 2003 diluted earnings per share will be below our previous 2002 guidance.

WEBCAST OF EARNINGS CONFERENCE CALL

CenterPoint Energy has scheduled its third quarter 2002 earnings conference call for Thursday, October 17, 2002, at 1:30 p.m. Central time. Interested parties may listen to a live audio broadcast of the conference call at www.centerpointenergy.com/investors. A replay of the call can be accessed approximately two hours after the completion of the call.

CenterPoint Energy, Inc., headquartered in Houston, Texas, is a domestic energy delivery company that includes electricity transmission and distribution, natural gas distribution and sales,


interstate pipeline and gathering operations, and more than 14,000 megawatts of power generation in Texas. The company serves nearly five million customers primarily in Arkansas, Louisiana, Minnesota, Mississippi, Missouri, Oklahoma, and Texas. Assets total nearly $19 billion. CenterPoint Energy became the new holding company for the regulated operations of the former Reliant Energy, Incorporated in August 2002.

With more than 11,000 employees, CenterPoint Energy and its predecessor companies have been in business for more than 130 years. For more information, visit our Web site at www.centerpointenergy.com.

*****

This news release includes forward-looking statements. Actual events and results may differ materially from those projected. Factors that could affect actual results include the timing and impact of future regulatory and legislative decisions, effects of competition, weather variations, changes in CenterPoint Energy's business plans, financial market conditions, ability to raise needed capital and other factors discussed in the company's filings with the Securities and Exchange Commission.

- # # # -


CenterPoint Energy, Inc. and Subsidiaries Statements of Consolidated Income
(Thousands of Dollars)

(Unaudited)




                                                Quarter Ended September 30,               Nine Months Ended September 30,
                                       -------------------------------------------   ------------------------------------------
                                              2002                   2001                   2002                   2001
                                       -------------------    --------------------   --------------------   -------------------
Revenues:
  Electric Operations                  $                -     $         1,608,014    $                 -    $         4,520,553
  Electric Transmission &
    Distribution                                  660,342                       -              1,756,744                      -
  Electric Generation                             526,388                       -              1,265,683                      -
  Natural Gas Distribution                        680,917                 607,905              2,657,512              3,819,225
  Pipelines and Gathering                          87,448                  91,605                281,799                317,685
  Other Operations                                  6,940                  23,198                 15,767                 76,033
  Eliminations                                    (39,163)                (30,654)              (171,939)               (85,180)
                                       ------------------     -------------------   --------------------    -------------------
    Total                                       1,922,872               2,300,068              5,805,566              8,648,316
                                       ------------------     -------------------   --------------------    -------------------

Expenses:
  Fuel and cost of gas sold                       813,197                 832,798              2,718,872              4,288,686
  Purchased power                                  34,955                 229,109                 87,906              1,005,426
  Operation and maintenance                       388,375                 444,674              1,155,011              1,311,201
  Taxes other than income taxes                    94,734                 142,424                312,872                415,636
  Depreciation and amortization                   160,473                 216,277                460,675                531,792
                                       ------------------     -------------------   --------------------    -------------------
    Total                                       1,491,734               1,865,282              4,735,336              7,552,741
                                       ------------------     -------------------   --------------------    -------------------
Operating Income                                  431,138                 434,786              1,070,230              1,095,575
                                       ------------------     -------------------   --------------------    -------------------

Other (Expense) Income:
  Loss on AOL Time Warner investment              (82,189)               (512,447)              (530,000)               (44,464)
  Gain on indexed debt securities                  86,622                 503,077                508,578                 38,845
  Interest                                       (170,234)               (141,266)              (427,870)              (422,374)
  Distribution on trust preferred
    securities                                    (13,898)                (13,900)               (41,647)               (41,699)
  Other - net                                       3,220                  11,382                 22,305                 44,328
                                       ------------------     -------------------   --------------------    -------------------
    Total                                        (176,479)               (153,154)              (468,634)              (425,364)
                                       ------------------     -------------------   --------------------    -------------------

Income from Continuing Operations
 Before Income Taxes and Cumulative
 Effect of Accounting Change                      254,659                 281,632                601,596                670,211

Income Tax Expense                                 93,208                  98,562                207,345                242,714
                                       ------------------     -------------------   --------------------    -------------------

Income from Continuing Operations
  Before Cumulative Effect of
  Accounting Change                    $          161,451     $           183,070   $            394,251    $           427,497
                                       ==================     ===================   ====================    ===================

Reference is made to the Notes to the Consolidated Financial Statements contained in the Amended Annual Report on Form 10-K/A of Reliant Energy, Incorporated.


CenterPoint Energy, Inc. and Subsidiaries Selected Data From Statements of Consolidated Income
(Thousands of Dollars, Except Per Share Amounts)

(Unaudited)


                                                                   Quarter Ended                  Nine Months Ended
                                                                   September 30,                    September 30,
                                                        -------------------------------       -----------------------------
                                                             2002              2001              2002                2001
                                                        -------------        ----------        ---------         ----------
Basic Earnings Per Common Share -
 Continuing Operations
  Income from continuing operations
   before cumulative effect of
   accounting change                                    $        0.54        $    0.63        $     1.32         $     1.48

Diluted Earnings Per Common Share -
 Continuing Operations
  Income from continuing operations
   before cumulative effect of
   accounting change                                    $        0.54        $    0.63        $     1.32         $     1.46

Dividends per Common Share                              $       0.160        $   0.375        $    0.910         $    1.125

Weighted Average Common Shares Outstanding (000):
  - Basic                                                     298,794          290,318           297,580            289,143
  - Diluted                                                   299,629          292,212           298,608            291,832


EBIT BY SEGMENT

  Electric Operations                                   $           -        $ 454,722        $        -         $1,007,769
  Electric Transmission & Distribution                        406,727                -           942,679                  -
  Electric Generation                                           7,146                -           (70,828)                 -
  Natural Gas Distribution                                       (506)         (20,291)          123,722             76,139
  Pipelines and Gathering                                      43,164           34,507           122,229            106,957
  Other Operations                                             (8,303)         (26,307)          (30,304)           (45,088)
  Eliminations/other                                           (9,437)          (5,833)          (16,385)           (11,493)
                                                        -------------        ---------        ----------         ----------

    Total                                               $     438,791        $ 436,798        $1,071,113         $1,134,284
                                                        =============        =========        ==========         ==========

Reference is made to the Notes to the Consolidated Financial Statements contained in the Amended Annual Report on Form 10-K/A of Reliant Energy, Incorporated.


CenterPoint Energy, Inc. and Subsidiaries Results of Operations by Segment
(Millions of Dollars)

(Unaudited)

                                               ELECTRIC
                                            TRANSMISSION &    ELECTRIC                                 ELECTRIC
                                             DISTRIBUTION    GENERATION   ELIMINATION     TOTAL       OPERATIONS
                                            -------------------------------------------------------- ------------- -----------
                                                                     Quarter Ended September 30,
                                            ----------------------------------------------------------------------   % Diff
                                                                       2002                               2001     Fav/(Unfav)
                                            -------------------------------------------------------- ------------- -----------
RESULTS OF OPERATIONS:
Operating Revenues:
  Operating revenues                         $        420   $       526   $         -   $       946   $     1,608      (41%)
  ECOM true-up                                        240             -             -           240             -         -
                                            -------------- ------------- ------------- ------------- -------------
    Total Revenues                                    660           526             -         1,186         1,608      (26%)
                                            -------------- ------------- ------------- ------------- -------------
Operating Expenses:
  Fuel and purchased power                              -           372             -           372           634       41%
  Operation and maintenance                           130            98             -           228           255       11%
  Depreciation and amortization                        75            39             -           114           161       29%
  Taxes other than income                              56            10             -            66           115       43%
                                            -------------- ------------- ------------- ------------- -------------
    Total                                             261           519             -           780         1,165       33%
                                            -------------- ------------- ------------- ------------- -------------
Operating Income                                      399             7             -           406           443       (8%)

Non-operating Income                                    8             -             -             8            12      (33%)
                                            -------------- ------------- ------------- ------------- -------------
Earnings Before Interest and Taxes           $        407   $         7   $         -   $       414   $       455       (9%)
                                            ============== ============= ============= ============= =============
                                               ELECTRIC
                                            TRANSMISSION &    ELECTRIC                                 ELECTRIC
                                             DISTRIBUTION    GENERATION   ELIMINATION     TOTAL       OPERATIONS
                                            -------------------------------------------------------- ------------- -----------
                                                                 Nine Months Ended September 30,
                                            ----------------------------------------------------------------------   % Diff
                                                                       2002                               2001     Fav/(Unfav)
                                            -------------------------------------------------------- ------------- -----------
RESULTS OF OPERATIONS:
Operating Revenues:
  Operating revenues                         $      1,206   $     1,266   $       (56)  $     2,416   $     4,521      (47%)
  ECOM true-up                                        551             -             -           551             -         -
                                            -------------- ------------- ------------- ------------- -------------
    Total Revenues                                  1,757         1,266           (56)        2,967         4,521      (34%)
                                            -------------- ------------- ------------- ------------- -------------
Operating Expenses:
  Fuel and purchased power                             56           901           (56)          901         2,132       58%
  Operation and maintenance                           401           272             -           673           736        9%
  Depreciation and amortization                       204           118             -           322           369       13%
  Taxes other than income                             168            49             -           217           313       31%
                                            -------------- ------------- ------------- ------------- -------------
    Total                                             829         1,340           (56)        2,113         3,550       40%
                                            -------------- ------------- ------------- ------------- -------------
Operating Income (Loss)                               928           (74)            -           854           971      (12%)

Non-operating Income                                   15             3             -            18            37      (51%)

                                            -------------- ------------- ------------- ------------- -------------
Earnings (Loss) Before Interest and Taxes    $        943   $       (71)  $         -   $       872   $     1,008      (13%)
                                            ============== ============= ============= ============= =============


ELECTRIC OPERATIONS OPERATING DATA:          Quarter Ended September 30,             Nine Months Ended September 30,
                                            ----------------------------             -------------------------------
ACTUAL MWH DELIVERED                            2002           2001                        2002          2001
                                            -------------- -------------               ------------- -------------
Residential                                     7,966,132     7,709,623            3%    18,735,392    17,445,248        7%
Commercial                                      5,147,531     5,232,239           (2%)   13,911,310    13,740,945        1%
Industrial                                      7,766,084     7,908,002           (2%)   20,535,812    23,853,399      (14%)
Other                                              36,856        99,475          (63%)      116,227       776,851      (85%)
                                            -------------- -------------               ------------- -------------
  Total                                        20,916,603    20,949,339             -    53,298,741    55,816,443       (5%)
                                            ============== =============               ============= =============
WEATHER (AVERAGE FOR SERVICE AREA):
Percentage of normal:
  Cooling degree days                                 98%           96%            2%          102%           99%        3%
  Heating degree days                                   -             -             -           99%          106%       (7%)

AVERAGE NUMBER OF METERED CUSTOMERS:
  Residential                                   1,549,909     1,523,521            2%     1,540,302     1,514,680        2%
  Commercial                                      214,858       208,535            3%       211,413       206,598        2%
  Industrial                                        1,822         1,773            3%         1,832         1,760        4%
  Other                                                 -            22         (100%)            2            26      (92%)
                                            -------------- -------------               ------------- -------------
    Total                                       1,766,589     1,733,851            2%     1,753,549     1,723,064        2%
                                            ============== =============               ============= =============

PHYSICAL ELECTRIC GENERATION POWER SALES (MWH) 15,475,590       N/A                      41,922,693       N/A


Reference is made to the Notes to the Consolidated Financial Statements contained in the Amended Annual Report on Form 10-K/A of Reliant Energy, Incorporated.
CenterPoint Energy, Inc. and Subsidiaries Results of Operations by Segment
(Millions of Dollars)

(Unaudited)

                                                                        NATURAL GAS DISTRIBUTION
                                              ------------------------------------------------------------------------------------
                                               Quarter Ended September 30,              Nine Months Ended September 30,
                                              ----------------------------   % Diff     ------------------------------- % Diff
                                                  2002           2001      Fav/(Unfav)       2002           2001      Fav/(Unfav)
                                              ---------------------------- -----------   ---------------------------- ------------
RESULTS OF OPERATIONS:
Operating Revenues                             $       681    $       608         12%     $      2,658   $     3,819       (30%)
Operating Expenses:
  Natural gas                                          509            437        (16%)           1,997         3,139        36%
  Operation and maintenance                            125            139         10%              381           420         9%
  Depreciation and amortization                         32             37         14%               94           110        15%
  Taxes other than income                               19             20          5%               72            88        18%
                                              -------------  -------------               -------------- -------------
    Total                                              685            633         (8%)           2,544         3,757        32%
                                              -------------  -------------               -------------- -------------
Operating Income (Loss)                                 (4)           (25)        84%              114            62        84%

Non-operating Income                                     4              5        (20%)              10            14       (29%)
                                              -------------  -------------               -------------- -------------
Earnings (Loss) Before Interest and Taxes      $         -    $       (20)          -     $        124   $        76        63%
                                              =============  =============               ============== =============

NATURAL GAS DISTRIBUTION OPERATING DATA:
THROUGHPUT DATA IN BCF
Residential and Commercial                              35             36         (3%)             216           225        (4%)
Industrial Sales                                         9             13        (31%)              33            36        (8%)
Transportation                                          14             10         40%               42            36        17%
Retail                                                 130            100         30%              346           339         2%
                                              -------------  -------------               -------------- -------------
  Total Throughput                                     188            159         18%              637           636          -
                                              =============  =============               ============== =============
WEATHER (AVERAGE FOR SERVICE AREA)
Percentage of normal:
  Heating degree days                                  68%            99%        (31%)             99%          103%        (4%)

AVERAGE NUMBER OF CUSTOMERS:
  Residential                                    2,695,432      2,651,984          2%        2,713,793     2,679,646         1%
  Commercial and Industrial Sales                  244,631        241,442          1%          249,013       245,446         1%
                                              -------------  -------------               -------------- -------------
    Total                                        2,940,063      2,893,426          2%        2,962,806     2,925,092         1%
                                              =============  =============               ============== =============
                                                                         PIPELINES AND GATHERING
                                              -----------------------------------------------------------------------------------
                                               Quarter Ended September 30,              Nine Months Ended September 30,
                                              ----------------------------  % Diff      ------------------------------- % Diff
                                                  2002           2001      Fav/(Unfav)       2002           2001      Fav/(Unfav)
                                              ---------------------------- -----------  ----------------------------- -----------
RESULTS OF OPERATIONS:
Operating Revenues                             $        88    $        92         (4%)    $        282   $       318       (11%)
Operating Expenses:
  Natural gas                                            3              7         57%               20            65        69%
  Operation and maintenance                             27             31         13%               99            90       (10%)
  Depreciation and amortization                         11             15         27%               31            44        30%
  Taxes other than income                                4              5         20%               13            13          -
                                              -------------  -------------               -------------- -------------
    Total                                               45             58         22%              163           212        23%
                                              -------------  -------------               -------------- -------------
Operating Income                                        43             34         26%              119           106        12%

Non-operating Income                                     -              -           -                3             1       200%
                                              -------------  -------------               -------------- -------------
Earnings Before Interest and Taxes             $        43    $        34         26%     $        122   $       107        14%
                                              =============  =============               ============== =============

PIPELINES AND GATHERING OPERATING DATA:
THROUGHPUT DATA IN BCF
Natural Gas Sales                                        1              2        (50%)              12            11         9%
Transportation                                         192            174         10%              633           613         3%
Gathering                                               72             76         (5%)             213           223        (4%)
Elimination                                             (1)            (1)          -               (2)           (2)         -
                                              -------------  -------------               -------------- -------------
  Total Throughput                                     264            251          5%              856           845         1%
                                              =============  =============               ============== =============

Reference is made to the Notes to the Consolidated Financial Statements contained in the Amended Annual Report on Form 10-K/A of Reliant Energy, Incorporated.
CenterPoint Energy, Inc. and Subsidiaries Results of Operations by Segment
(Millions of Dollars)

(Unaudited)

                                                                        OTHER OPERATIONS
                                        ------------------------------------------------------------------------------------
                                         Quarter Ended September 30,                Nine Months Ended September 30,
                                        ----------------------------   % Diff       ------------------------------ % Diff
                                            2002           2001      Fav/(Unfav)        2002           2001      Fav/(Unfav)
                                        ---------------------------- ---------      ---------------------------- -----------
RESULTS OF OPERATIONS:
Operating Revenues                       $          7   $        23      (70%)       $        16    $        76      (79%)
Operating Expenses                                 21            40       48%                 32            119       73%
                                        -------------- -------------                -------------  -------------
Operating Loss                                    (14)          (17)      18%                (16)           (43)      63%

Non-operating Income (Expense)                      6            (9)     167%                (14)            (2)    (600%)
                                        -------------- -------------                -------------  -------------
Loss Before Interest and Taxes           $         (8)  $       (26)      69%        $       (30)   $       (45)      33%
                                        ============== =============                =============  =============

Reference is made to the Notes to the Consolidated Financial Statements contained in the Amended Annual Report on Form 10-K/A of Reliant Energy, Incorporated.