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): JUNE 2, 2003 ------------------------------ CENTERPOINT ENERGY, INC. (Exact name of registrant as specified in its charter) Registrant's telephone number, including area code: (713) 207-1111 ------------------------------
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) ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS. (c) Exhibits. The following exhibits are filed herewith: 99.1 Press release issued June 2, 2003 regarding presentation at the Deutsche Bank Electric Power Conference 99.2 CenterPoint Energy, Inc. slide presentation 99.3 CenterPoint Energy, Inc. external debt slide ITEM 9. REGULATION FD DISCLOSURE. On June 2, 2003, CenterPoint Energy, Inc. ("CenterPoint Energy") announced that it would present at the Deutsche Bank Electric Power Conference on June 11, 2003. A copy of the press release announcing the presentation is attached to this report as Exhibit 99.1. A copy of the slide presentation that CenterPoint Energy expects will be presented to various members of the utility industry and the financial and investment community at the Deutsche Bank Electric Power Conference is attached to this report as Exhibit 99.2. A copy of the slide presentation will also be available on CenterPoint Energy's website, www.centerpointenergy.com. A copy of a slide presenting the external debt balances of CenterPoint Energy that CenterPoint Energy expects will be presented to various members of the financial and investment community from time to time is attached to this report as Exhibit 99.3. A copy of the slide will also be available on CenterPoint Energy, Inc.'s website. The press release, the slide presentation and the external debt slide are being furnished, not filed, pursuant to Regulation FD. Accordingly, the press release, the slide presentation and the external debt slide 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 press release, the slide presentation and the external debt slide is not intended to, and does not, constitute a determination or admission by CenterPoint Energy that the information in the press release, the slide presentation and the external debt slide 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. 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: June 11, 2003 By: /s/ James S. Brian --------------------------------- James S. Brian Senior Vice President and Chief Accounting Officer EXHIBIT INDEX Exhibit Number Exhibit Description - ------- ------------------- 99.1 Press release issued June 2, 2003 regarding presentation at the Deutsche Bank Electric Power Conference 99.2 CenterPoint Energy, Inc. slide presentation 99.3 CenterPoint Energy, Inc. external debt slide
EXHIBIT 99.1 [CENTERPOINT ENERGY LETTERHEAD] CENTERPOINT ENERGY TO PRESENT AT DEUTSCHE BANK ELECTRIC POWER CONFERENCE LIVE VIA WEBCAST ON WEDNESDAY, JUNE 11, 2003, APPROX. 9:30 A.M. EDT HOUSTON - JUNE 2, 2003 - CenterPoint Energy's (NYSE: CNP) president and chief executive officer, David M. McClanahan, will present an overview of the company at the Deutsche Bank 2003 Electric Power Conference on Wednesday, June 11, 2003. The live webcast of the presentation will begin at approximately 9:30 a.m. Eastern time. You are invited to access the presentation on the Internet at www.centerpointenergy.com, in the Investors section. A replay of the presentation will be available approximately one hour after the live webcast, and will be archived on CenterPoint Energy's Web site. CenterPoint Energy, Inc., headquartered in Houston, Texas, is a domestic energy delivery company that includes electric 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 more than $20 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 the Web site at www.CenterPointEnergy.com. - # # # -
EXHIBIT 99.2
| Cautionary Statement Regarding Forward-Looking Information From time to time we make statements concerning our expectations, beliefs, plans, objectives, goals, strategies, future events or performance and underlying assumptions and other statements that are not historical facts. These statements 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. You can generally identify our forward-looking statements by the words "anticipate," "believe," "continue," "could," "estimate," "expect," "forecast," "goal," "intend," "may," "objective," "plan," "potential," "predict," "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 to our management 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, we cannot assure you that actual results will not differ materially from those expressed or implied by our forward-looking statements. Some of the factors that could cause actual results to differ from those expressed or implied by our forward-looking statements are described under "Risk Factors" beginning on page 26 in Item 1 and under "Certain Factors Affecting Future Earnings" beginning on page 58 of CenterPoint Energy, Inc.'s Form 10-K for the fiscal year ended December 31, 2002. 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 publicly update or revise any forward-looking statements. |
| AGENDA Company Overview Financial Stability and Liquidity Electric Restructuring and Managing through the Transition Vision and Strategy Post Transition Objectives CenterPoint Energy, Inc. A Diversified and Stable Energy Delivery Company |
| Company Overview |
| Natural Gas Distribution Pipelines & Field Services Focused on regulated domestic energy delivery Electric Generation (81%) To be monetized in 2004 (NYSE: CNP) 3 local distribution companies (LDCs) CenterPoint Energy Arkla CenterPoint Energy Entex CenterPoint Energy Minnegasco Commercial & Industrial Gas Services (C&I) CenterPoint Energy Houston Electric Texas Genco Holdings, Inc. (NYSE:TGN) CenterPoint Energy Gas Transmission Company CenterPoint Energy- Mississippi River Transmission Corp. CenterPoint Energy Field Services, Inc Electric Transmission & Distribution (TDU) |
| Steve Schaeffer (33/33) EVP & Group President Gas Distribution & Sales Scott Rozzell (2/28) EVP, General Counsel & Corporate Secretary Gary Whitlock (2/31) Executive VP & CFO David McClanahan (31/31) President & CEO Marc Kilbride (26/26) VP & Treasurer Marianne Paulsen (2/26) Director Investor Relations David Tees (35/35) President & CEO Texas Genco Tom Standish (21/32) President & COO CenterPoint Energy Houston Electric James Brian (26/32) Senior VP & Chief Accounting Officer Joseph McGoldrick (24/28) Corporate VP Strategic Planning Note: Numbers in parentheses indicate years with company/years of business experience. Wayne Roesler (30/37) VP Regulatory Relations Rufus Scott (18/29) VP & Deputy General Counsel Gary Cerny (23/23) President & COO CenterPoint Energy Minnegasco Dean Liollio (19/25) President & COO CenterPoint Energy Arkla/Entex Georgianna Nichols (20/34) President & COO Houston Gas Operations Wayne Stinnett (20/26) Senior VP C & I Gas Services Management Team: Significant industry and regulatory experience Byron R. Kelley (21/32) President & COO CenterPoint Energy Pipeline Group |
| Low risk, diversified business with large scale Approximately 5 million metered customers Attractive service territories Gulf Coast area among highest electricity consumption in U.S. Houston is nation's 4th largest city with growth above national average Minneapolis/ St. Paul gas usage per customer among highest in country Added over 100,000 metered customers in 2002 Business and geographic diversification reduces economic and regulatory risks Operational synergies across businesses No commodity risk at the electric utility Gas adjustment clauses mitigate fuel price risk at LDCs Strong customer service focus |
| CenterPoint Energy Houston Electric Electric Transmission & Distribution Utility Delivers power in the open ERCOT retail market 5,000 square mile service area in and around Houston Represents 1/3 of ERCOT electricity consumption Approximately 1.8 million metered customers Population growth rate above national average; almost 50,000 metered customers added in 2002 Reputation for reliability and high quality service No commodity risk or supply obligation Regulated by PUC of Texas 11.25% authorized ROE on 40% equity Rate base of $3.3 billion 2002 Operating Income: $400 million (excludes ECOM of $697 million) |
| CenterPoint Energy Resources Corp. Natural Gas Distribution Three LDCs serving 3 million customers in 6 states Entex/Houston Gas: 1.6 million customers Arkla: 700,000 customers Minnegasco: 729,000 customers Over 50,000 metered customers added in 2002 Recognition for reliability and high quality service Gas adjustment clauses mitigate fuel price risk Regulated by various city and state jurisdictions Approximate range of 10 -11% authorized ROEs on 50% equity Approximate combined rate base of $1.5 billion A growing unregulated Commercial and Industrial business 2002 Operating Income: $198 million |
| CenterPoint Energy Resources Corp. Natural Gas Pipelines and Gathering Two FERC-regulated pipelines: CenterPoint Energy Gas Transmission Company CenterPoint Energy - Mississippi River Transmission Corporation An unregulated gas gathering subsidiary CenterPoint Energy Field Services, Inc. Strategically located at the center of the nation's gas transportation infrastructure Steady and consistent earnings and cash flow 2002 Operating Income: $153 million |
| Texas Genco Electric Generation CAPACITY BY FUEL TYPE (MW) 2,470 1,612 770 9,323 Gas Nuclear Lignite Coal CAPACITY BY DISPATCH TYPE (MW) 2003 Diluted EPS Guidance: $1.10-$1.30* Net generating capacity of 14,175 MW located in the ERCOT market Attractive, low-cost, solid fuel base-load portfolio Flexible, load following gas fleet *as of April 24, 2003 and not updated |
| Financial Stability and Liquidity |
| Recent transactions provide stability and liquidity February 2003: Amended $3.85 billion bank credit facility Extended term to mid-2005, beyond expected Texas Genco monetization and stranded costs recovery Eliminated $1.2 billion in mandatory payments in 2003 Dividend capped at an annual $.40 per share during life of facility Allowed access to capital markets on reasonable terms March - May 2003: Raised almost $3 billion through the capital markets $1,150 million issued at CenterPoint Energy, Inc. used primarily to reduce parent credit facility $962 million issued at CenterPoint Energy Houston Electric used to call higher cost debt, repay a debt maturity and repay intercompany debt part of which was used to reduce parent credit facility $762 million issued at CenterPoint Energy Resources Corporation (CERC) used to partially refinance upcoming maturity and to repay an expiring revolving credit facility Established a $200 million revolving credit facility at CERC Reduced $3.85 billion credit facility by $1 billion to $2.85 billion Eliminated vesting of warrants and further potential dividend restriction Provides current liquidity |
| Electric Restructuring and Managing through the Transition |
| 2005 2004 Texas Adopts Restructuring Legislation CNP evolution to a stable regulated business Expect to securitize stranded costs Expect to monetize Texas Genco RRI IPO RRI Spin-off 09/30/02 2002 2001 2000 1999 2003 Reliant Energy Total estimated to be in excess of $5 billion 19% Public Distribution of Texas Genco (NYSE: TGN) $749MM Securitization of Regulatory Assets (NYSE: CNP) |
| De-leveraging through monetization of Texas Genco Texas Genco expected to be monetized in 2004 January 2003 distribution of 19% of Texas Genco common stock allows for market valuation for stranded costs recovery proceeding Reliant Resources, Inc. (RRI) has the option to purchase CenterPoint's remaining ownership RRI's option period is from January 10, 2004 through January 24, 2004 Purchase price is calculated using the highest consecutive 30 day average closing stock price during the 120 trading days immediately preceding January 10, 2004 To the extent a premium is included in the valuation made by the Public Utility Commission of Texas, a control premium of up to 10% may be added Management is developing contingency plans to monetize Texas Genco should RRI not exercise its purchase option |
| De-leveraging through recovery of stranded costs Texas Electric Restructuring Law Established clear mechanism for recovery and securitization of stranded costs First round of securitization provided for recovery of our generation-related regulatory assets Successfully completed in October 2001 with the issuance of $749 million of Transition Bonds The 2004 true-up sets the stage for the second round of securitization - the four key components are: Regulatory book value of generation assets at year end 2001 (including redirected depreciation and excess mitigation) plus subsequent environmental commitments through May 2003 less market value of Texas Genco determined based on "partial stock valuation" method* ECOM recorded in 2002-2003 Fuel under-recovery for the period from August 1, 1997 through January 30, 2002 "Price to beat" clawback (to be reimbursed to us by Reliant Resources) Proceeds from stranded costs recovery and sale of TGN will be used to reduce debt *Current total market value of Texas Genco is approximately $1.7 billion based on June 6, 2003 TGN stock price of $21.11 without consideration of any control premium |
| RRI Option exercise period 01/10-01/24 True-up Filing1 TGN valuation period begins: True-up Filing minus 120 trading days True-up Rate Adjustment expected PUC Final Order expected Issue Securitization Bonds 1) Assumes a PUC filing date of January 12, 2004 per PUC proposed rule Transition timeline 2005 2003 2004 Repay $1.31 billion to Berkshire Hathaway/CSFB Financing Order expected Expected close of TGN sale Reduce debt Reduce debt J u n e |
| Vision and Strategy |
| To Be Recognized As America's Leading Energy Delivery Company...and More What Our Vision Means Our Vision We define success as being viewed by all of our key stakeholders as a leading energy delivery company Shareholders Customers Communities Employees We are focused on the U.S. energy delivery businesses Focus on the continental U.S. market Focus on regulated energy delivery businesses We act as one company, CenterPoint Energy We will pursue value enhancing growth Participate in industry consolidation when and as appropriate Explore businesses complementary to our energy delivery focus, e.g., gas gathering and unregulated C&I gas services " ... Recognized ..." "... and More" "... Company..." Our vision is simple and focused, and provides clear direction for our strategy "... America's... Energy Delivery... " |
| Leverage scale and synergies Refine business model and remove barriers between business units Implement common processes Create a single, high performance culture Demand accountability Recognize our 130-year history Our strategy is reflected in three simple phrases: One Company, Get It Right and Grow 2003 2002 2005 2004 Grow 2006 One Company Get It Right Use best practices to achieve top quartile efficiency and operating performance Implement process-driven operational excellence Achieve high levels of service reliability and customer satisfaction Execute our regulatory plan to recover stranded costs and strengthen our balance sheet Focus on domestic energy delivery Expand existing core businesses Build and expand complementary and synergistic businesses Add new energy delivery businesses Participate in joint ventures and alliances that create shareholder value |
| Business/financial objectives during transition Maximize returns: Ensure gas LDCs are earning allowed rates of return Capture growth in existing service territories Implement productivity improvements company-wide Optimize cash flow Prioritize and defer discretionary capital expenditures through disciplined commitment review process Adopt common business models and take advantage of company scale to optimize operation & maintenance expenditures Strengthen balance sheet Monetize Texas Genco Securitize stranded costs Reduce debt |
| Post Transition Objectives |
| Post transition financial objectives: 2006 and beyond Earn at or above current EPS levels by: Replacing ECOM and Texas Genco earnings reduce interest expense achieve allowed return and above average LDC growth through rate relief and efficiency improvements capture organic growth in core businesses increase profitability of pipeline and field services and C & I business implement productivity improvements company-wide grow through complementary expansion Target dividend pay-out of 50 - 70% of sustainable earnings Strengthen balance sheet Aggressive working capital and capital expenditure management Optimize debt levels and capital structure Achieve and maintain investment grade ratings |
| Large-scale, diversified regulated domestic energy delivery business Mix of electric and natural gas assets Stable earnings and cash flow Attractive service territories Diversified economic and regulatory position Gulf Coast and Minneapolis/St. Paul among nation's highest growth and consumption Low risk, regulated businesses No electric commodity obligation at TDU No Provider of Last Resort risk at the TDU Low commodity risk exposure at gas LDCs Clear path to recovery of generation investment and de-leveraging of balance sheet Well-run core businesses focused on regulated domestic energy delivery Specific strategies and performance objectives implemented Growth opportunities will evolve as we delever and execute our strategy Why CenterPoint Energy? Low risk, diversified business with large scale |
| Always There. |
| Appendix |
| 2002 Performance TDU TGN LDCs Pipelines Other East 400 -133 198 153 14 697 Total 2002 Operating Income: $1,329 Electric Transmission & Distribution ECOM Electric Generation Natural Gas Distribution Pipelines & Gathering Other/ Eliminations ($ in millions, except per share amounts) * includes distribution on Trust Preferred Securities ** reflects certain reclassifications subsequent to December 31, 2002 pursuant to SFAS Nos. 144 and 145; See CenterPoint Energy, Inc May 12, 2003 Form 8-K |
| Reconciliation of 2002 Operating Income to EBIT and EBIT to Income from Continuing Operations* * See CenterPoint Energy, Inc May 12, 2003 Form 8-K for certain reclassifications subsequent to December 31, 2002 pursuant to SFAS Nos. 144 and 145 ** Includes $697 million of ECOM |
| 2003 Q1 Results and 2003 Guidance TDU TGN LDCs Pipelines Other East 74 -17 130 43 -2 132 2003 annualized dividend: $0.40/share 2003 Diluted EPS Guidance: $0.85-$1.00*** Electric Generation Natural Gas Distribution Pipelines & Gathering ($ in millions, except per share amounts) ECOM Electric Transmission & Distribution Other/ Eliminations * includes distribution on Trust Preferred Securities ** before cumulative effect of accounting change *** as of April 24, 2003 and not updated Total 2003 1Q Operating Income: $360 |
| Reconciliation of 1st Quarter 2003 Operating Income to EBIT and EBIT to Income from Continuing Operations before Cumulative Effect of Accounting Change * Includes $132 million of ECOM |
| Stranded Costs Illustrative Calculation (Note: Illustrates calculation methodology only. Actual values will not be determined until time of stranded costs filing in early 2004) |
Exhibit 99.3
External Debt and Trust Preferred Securities of
CenterPoint Energy, Inc. and its Subsidiaries
May 31, 2003
(in millions)
| CenterPoint Energy, Inc. ZENS $105 (1) Convertible Senior Notes 575 Senior Notes 400 Collateralized Pollution Control Bonds First Mortgage Bond Collateral 397 (2) General Mortgage Bond Collateral 527 (2) Uncollateralized Pollution Control Bonds 519 Bank Loans 2,423 (3) Total $4,946 Utility Holding, LLC CenterPoint Energy Resources Corp. (formerly Reliant Energy Resources Corp.) Debentures / Notes $2,222 Convertible Subordinated Debentures 79 Note Payable 36 (4) Bank Loans 0 (5) Total $2,337 Off Balance Sheet Receivables Facility 79 (6) CenterPoint Energy Houston Electric, LLC (formerly Reliant Energy, Incorporated) First Mortgage Bonds $102 General Mortgage Bonds 962 Collateralized Term Loan 1,310 (7) Total $2,374 Texas Genco Holdings, Inc. International Texas Genco GP, LLC Texas Genco LP, LLC HL&P Capital Trust I / HL&P Capital Trust II / REI Trust I Trust Preferred Securities $725 Texas Genco, LP NorAm Financing I Trust Preferred Securities $0.4 Gas Pipelines CenterPoint Energy Transition Bond Company, LLC Transition Bonds $729 Debt (excl. Transition Bonds and ZENS) $9,552 Transition Bonds 729 ZENS (linked to AOL stock) 105 Subtotal 10,386 Trust Preferred Securities 725 Total Debt and Trust Preferred Securities $11,111 TOTALS |
| (1) | Principal amount on which 2% interest is paid is $840 million. Debt component is $105 million. | |
| (2) | The collateralized pollution control bonds (aggregating $924 million are obligations of CenterPoint Energy, Inc. However, CenterPoint Energy Houston Electric, LLC has issued first mortgage bonds aggregating $397 million and general mortgage bonds aggregating $527 million as collateral for the CenterPoint Energy, Inc. obligations. | |
| (3) | Borrowings under $2.846 billion bank facility. | |
| (4) | Non-interest bearing obligation to a former affiliate related to monies previously advanced to CenterPoint Energy Resources Corp. by a third party and for which the former affiliate remains obligated. Payable in June 2005. | |
| (5) | Borrowings under $200 million bank facility. | |
| (6) | Advances under $150 million receivables facility; advances are not reflected as debt on the balance sheet. | |
| (7) | Loan is collateralized by general mortgage bonds. | |
| (8) | Amounts shown exclude unamortized discount and premium. |