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 21, 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 7. FINANCIAL STATEMENTS AND EXHIBITS. (c) Exhibits. The following exhibit is filed herewith: 99.1 CenterPoint Energy, Inc. Slide Presentation ITEM 9. REGULATION FD DISCLOSURE. A copy of a slide presentation that CenterPoint Energy, Inc. expects will be presented to various members of the utility industry and the financial and investment community at the 37th Annual Edison Electric Institute Financial Conference is attached to this report as Exhibit 99.1. A copy of the slide presentation will also be available on CenterPoint Energy's website, www.centerpointenergy.com. The slide presentation is being furnished, not filed, pursuant to Regulation FD. Accordingly, the slide presentation 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 slide presentation is not intended to, and does not, constitute a determination or admission by CenterPoint Energy that the information in the slide presentation 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. Some of the statements in the slide presentation 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. In addition to the matters described in the slide presentation, 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: 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; 2
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.; 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. 3
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 21, 2002 By: /s/ James S. Brian ----------------------------- James S. Brian Senior Vice President and Chief Accounting Officer 4
EXHIBIT INDEX
| 37th Annual EEI Financial Conference October, 2002 www.CenterPointEnergy.com |
| Special Note Regarding Forward-Looking Statements |
| David M. McClanahan President and Chief Executive Officer Gary L. Whitlock Executive Vice President and Chief Financial Officer Marianne Paulsen Director, Investor Relations 2 |
| Monetization of Texas Genco (NYSE: TGN) 2005 2004 2001 1999 2000 REI's Separation Plan Approved Texas Adopts Restructuring Legislation Transition Timeline RRI IPO Energy Merchant Energy Delivery Public Flotation Of Texas Genco (19% Spin-off) 2003 2002 RRI Spin-off Stranded Costs Securitization (NYSE: CNP) |
| CenterPoint Energy - Investment Highlights Large-scale, diversified business focused on regulated energy delivery 4.8 million metered distribution customers in 6 states Balanced mix of electric and natural gas assets Attractive service territories; diversified economic and regulatory risk Lower risk profile compared to other combination gas/electric companies In new Texas market the transmission and distribution utility (TDU) has no electric commodity obligation or provider of last resort (POLR) risk Low gas commodity risk exposure at gas Local Distribution Companies (LDCs) Consistent, predictable earnings and cash flow Texas law provides return on generation assets through Excess Cost Over Market (ECOM) provision Clear path to full recovery of generation investment and deleveraging of balance sheet Focused on near-term improvement of existing businesses |
| Business Focus on Energy Delivery Local Natural Gas Distribution Pipelines & Gathering Electric Transmission & Distribution Generation Assets CenterPoint Houston Electric CenterPoint Arkla CenterPoint Entex CenterPoint Minnegasco CenterPoint Gas Marketing CenterPoint Gas Transmission Mississippi River Transmission Corp. CenterPoint Field Services Texas Genco (TGN) To be monetized in 2004 (CNP) |
| Depth of Management Expertise Steve Schaeffer (32/32) Executive VP Regulatory & Governmental Relations Scott Rozzell (1/27) Executive VP General Counsel Gary Whitlock (1/30) Executive VP & CFO David McClanahan (30/30) President & CEO Marc Kilbride (25/25) VP & Treasurer Marianne Paulsen (1/25) Director Investor Relations To be Named President CenterPoint Energy Pipeline Group David Tees (34/34) President Texas Genco Tom Standish (20/31) President CenterPoint Energy Houston James Brian (25/31) Senior VP Chief Accounting Officer Joseph McGoldrick (23/27) Corporate VP Strategic Planning Rufus Scott (17/28) VP Deputy General Counsel Note: Numbers in parentheses indicate years with company/years of business experience. Wayne Roesler (29/36) VP Regulatory Relations Gary Cerny (22/22) President CenterPoint Energy Minnegasco Dean Liollio (18/24) President CenterPoint Energy Arkla/Entex Wayne Stinnett (19/25) Senior VP Gas Resources Group Management team with extensive electric and gas industry experience |
| Electric Transmission & Distribution Texas market restructured 1/1/02 1.8 million metered distribution customers High growth Houston/Gulf Coast service territory No electric commodity price risk Reputation for reliability and high quality service $1.3 billion invested during last 5 years Exceeds regulatory reliability standards 2001 EEI "Emergency Response Award" 11.25% authorized ROE Electric TDU |
| Natural Gas Distribution 3 million metered distribution customers in six states 5% of nationwide total gas distribution High growth, diverse service territories Low gas price exposure Aggressively seeking rate adjustments $42 million rate increases approved in 2002 $14 million rate increase application pending in Oklahoma Relatively new infrastructure Greater than 50% constructed after 1980 Industry leading customer satisfaction ratings 85% customer satisfaction at Minnegasco in 2001 Gas LDC |
| Pipelines and Gathering 8,200 miles of transmission pipelines transporting over 1 Tcf annually Seven gas storage facilities 4,300 miles of gas gathering pipeline which handles over 310 Bcf annually Stable cash flow and earnings Growing revenues and margins Industry leading customer satisfaction ratings Mississippi River Transmission voted #1 pipeline (a) (a) 2001 Mastio Customer Satisfaction Survey Interstate Gas Pipeline |
| Cyclic/ Portfolio (MW) Base Intermediate Peak Total Gas/Oil - 3,474 354 3,828 Gas 162 4,832 501 5,495 Nuclear 770 - - 770 Lignite 1,612 - - 1,612 Coal 2,470 - - 2,470 5,014 8,306 855 14,175 Texas Genco 14,000 MW of diverse, well-maintained generating assets Highly attractive, low-cost, solid-fuel baseload portfolio Flexible, load-following gas fleet Capacity prices improved in October '02 auctions for '03 sales Texas law provides return on generation assets through ECOM (recorded at the electric utility) Rationalizing costs with recent announcement to mothball 3,400 MW of old gas- fired generation; projected to save $20MM in 2003 |
| Strategic Plan Going Forward CenterPoint has developed a comprehensive strategic plan designed to guide us through the transition and drive business performance as well as help us plan and allocate resources Key Features of the CenterPoint Strategy Focused on energy delivery Driven by external measures of success Recognizes our near term challenges Positions us to grow as we implement standard business model and best practices Three key themes resonate throughout the Company One Company Get it Right Grow |
| 2002 Year-to-date Performance (9/30/2002) EBITDA $1,532 D&A 461 EBIT 1,071 Interest Expense 428 Other 42 Income Taxes 207 Income from Continuing Operations $ 394 EPS $1.32 LDCs Pipelines & Gathering Genco true-up Electric TDU East 0.19 0.11 0.05 0.31 0.34 LDCs Pipelines & Gathering ECOM True-up Electric TDU 2002 Diluted EPS Guidance $1.30-$1.35 2002 YTD EBITDA: 2002 YTD RESULTS ($ in millions, except per share amounts) Total YTD EBITDA: $ 1,532 35% 38% 14% 10% Texas Genco 3% Annualized dividend: $0.64/share |
| CNP Capitalization (Pro Forma for RRI Spin) |
| Near-Term Maximize returns Reduce costs and improve productivity Obtain rate relief at gas LDCs Capture growth in existing service territories Implement new business model for corporate and shared services Optimize cash flow Prioritize and defer discretionary capital expenditures through disciplined commitment review process Adopt common business models and take advantage of company scale Strengthen the balance sheet Monetize Texas Genco Securitize stranded costs Reduce debt Longer-Term Growth through participation in industry consolidation Capitalize on opportunities related to core assets and skills Business/Financial Strategy |
| 2002 vs 2003 Cash Requirements 2002 cash needs driven by the following: Large capital expenditures (nearly $900MM) Negative working capital as factoring agreement terminated Low capacity prices at Texas Genco Full pre-spin common dividend for two quarters Low performance at Arkla 2003 cash needs to be down substantially: Substantially lower capital expenditures (at least $200 million lower) No incremental working capital needs Higher capacity prices at Texas Genco Full year effect of lower dividend Planned improvement at LDCs, TDU and Texas Genco operations |
| Financing Initiatives Successfully negotiated new, one-year facilities totaling $4.7 billion with a 30 bank syndicate on October 10, 2002 Facilities are reduced by $600 million in February, 2003, $450 million in April, 2003 and $600 million in June, 2003 CNP is required to raise $400 million of third party capital to replace maturing debt by November 15, 2002 The Company recognizes the challenge in raising capital in the current market, but remains confident in its ability to execute this plan Longer term, the deleveraging story has not changed: Clear path provided by Texas law Monetization of Texas Genco expected in 2004 Stranded cost securitization expected in late 2004 Combined proceeds to pay down debt Estimated debt/capital ratio of 55 - 60% by 2005 |
| Stranded Cost Illustrative Calculation (Note: Illustrates calculation methodology only. Actual values will not be determined until time of stranded cost filing in early 2004) |
| Why CenterPoint Energy? The company recognizes the challenge in its financing plan, but is highly committed to and focused on its execution As investors begin to see past the liquidity concerns, CenterPoint Energy is a compelling story with business risk among the lowest in the utility sector A large scale energy delivery company with attractive service territories and diversified assets Owns generation until 2004, but is hedged via non-cash return (ECOM) CNP is not a merchant generator or a trader CNP is out of the international business except for small Argentine investment In new Texas market TDU has no electric commodity risk and is not the Provider of Last Resort (POLR) LDCs recover commodity costs through purchased gas adjustment clauses 10 -11+% allowed ROEs In 2004, the deleveraging events allow CNP to significantly strengthen its balance sheet and positions the company for growth |
| 37th Annual EEI Financial Conference October, 2002 www.CenterPointEnergy.com |