UNITED STATES 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): November 8, 2004 ------------------------------ 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) 207-1111 ------------------------------ Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below): |_| Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |_| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |_| Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |_| Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
ITEM 8.01 OTHER EVENTS. Exhibit 99.1 to this Current Report on Form 8-K, which is incorporated by reference herein, includes unaudited pro forma condensed consolidated financial statements prepared to reflect the effect of CenterPoint Energy, Inc.'s sale of its interest in Texas Genco Holdings, Inc. ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS. (c) Exhibits. 99.1 Unaudited Pro Forma Condensed Consolidated Financial Statements 2
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: November 8, 2004 By: /s/ James S. Brian ------------------------------------- James S. Brian Senior Vice President and Chief Accounting Officer 3
EXHIBIT INDEX Exhibit Number Exhibit Description ------- ------------------- 99.1 Unaudited Pro Forma Condensed Consolidated Financial Statements 4
Exhibit 99.1 INTRODUCTION TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS On July 21, 2004, CenterPoint Energy, Inc. (the Company or CenterPoint Energy) and Texas Genco Holdings, Inc. (Texas Genco) entered into a definitive transaction agreement pursuant to which Texas Genco has agreed to be acquired in a multi-step transaction by GC Power Acquisition LLC (GC Power Acquisition), a newly formed entity owned in equal parts by investment funds affiliated with The Blackstone Group, Hellman & Friedman LLC, Kohlberg, Kravis Roberts & Co. L.P. and Texas Pacific Group, for approximately $3.65 billion in cash. The Company intends to use the anticipated net after-tax proceeds it will receive from the transaction of approximately $2.5 billion primarily to pay down outstanding debt, including senior debt under its bank credit facility that is secured in part by the Company's 81% ownership interest in Texas Genco, and for other general corporate purposes, including additional pension contributions. The following unaudited pro forma condensed consolidated balance sheet has been prepared to reflect the effect of the sale of Texas Genco as described above on the CenterPoint Energy financial statements as if the sale had occurred on June 30, 2004. The following unaudited pro forma condensed consolidated financial statements of income for each of the three years in the period ended December 31, 2003 and the six months ended June 30, 2004 have been prepared to reflect the transaction as of the beginning of the earliest period presented. The unaudited pro forma condensed consolidated financial statements do not purport to present CenterPoint Energy's actual results of operations as if the transaction described above had occurred at the beginning of each period, as applicable, nor are they necessarily indicative of CenterPoint Energy's financial position or results of operations that may be achieved in the future. The unaudited pro forma condensed consolidated financial statements should be read in conjunction with CenterPoint Energy's consolidated financial statements and related notes and "Management's Discussion and Analysis of Financial Condition and Results of Operations" included in the Annual Report on Form 10-K of CenterPoint Energy for the year ended December 31, 2003, and the Quarterly Reports on Form 10-Q of CenterPoint Energy for the quarterly periods ended March 31, 2004 and June 30, 2004.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET JUNE 30, 2004 CENTERPOINT ENERGY, INC. HISTORICAL TEXAS GENCO PRO FORMA PRO FORMA BALANCE HOLDINGS, INC. ADJUSTMENTS BALANCE --------------- -------------- -------------- -------------- (IN MILLIONS) Cash and cash equivalents............................... $ 281 $ 185 $ 1,543(b) $ 1,639 Investment in Time Warner common stock.................. 380 -- -- 380 Accounts and notes receivable, net...................... 701 107 14(a) 608 Inventories............................................. 378 168 -- 210 Prepaid expenses and other current assets............... 290 3 37(a) 324 -------------- -------------- -------------- -------------- Total current assets.................................. 2,030 463 1,594 3,161 -------------- -------------- -------------- -------------- Property, plant and equipment, net...................... 11,795 4,094 399(b) 8,100 -------------- -------------- -------------- -------------- Goodwill, net........................................... 1,741 -- -- 1,741 Regulatory assets....................................... 4,959 -- -- 4,959 Other assets............................................ 627 222 -- 405 -------------- -------------- -------------- -------------- Total other assets.................................... 7,327 222 -- 7,105 -------------- -------------- -------------- -------------- Total Assets...................................... $ 21,152 $ 4,779 $ 1,993 $ 18,366 ============== ============== ============== ============== Current portion of long-term debt....................... $ 208 $ -- $ -- $ 208 Indexed debt securities derivative...................... 312 -- -- 312 Accounts payable........................................ 606 157 14(a) 463 Taxes and interest accrued.............................. 305 62 37(a) 280 Regulatory liabilities.................................. 192 -- -- 192 Accumulated deferred income taxes....................... 347 -- -- 347 Deferred revenues....................................... 114 110 -- 4 Other current liabilities............................... 291 14 -- 277 -------------- -------------- -------------- -------------- Total current liabilities............................. 2,375 343 51 2,083 -------------- -------------- -------------- -------------- Accumulated deferred income taxes and investment tax credit................................................ 3,272 981 174(b) 2,465 Benefit obligations..................................... 876 21 -- 855 Regulatory liabilities.................................. 1,254 -- -- 1,254 Other liabilities....................................... 709 300 -- 409 -------------- -------------- -------------- -------------- Total other liabilities............................... 6,111 1,302 174 4,983 -------------- -------------- -------------- -------------- Long-term Debt.......................................... 10,601 -- (915)(b) 9,686 -------------- -------------- -------------- -------------- Minority Interest in Consolidated Subsidiaries.......... 198 -- (198)(b) -- -------------- -------------- -------------- -------------- Shareholders' Equity.................................... 1,867 3,134 2,881(b) 1,614 -------------- -------------- -------------- -------------- Total Liabilities and Shareholders' Equity........ $ 21,152 $ 4,779 $ 1,993 $ 18,366 ============== ============== ============== ============== See Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements
UNAUDITED PRO FORMA CONDENSED STATEMENT OF CONSOLIDATED INCOME FOR THE SIX MONTHS ENDED JUNE 30, 2004 CENTERPOINT ENERGY, INC. HISTORICAL TEXAS GENCO PRO FORMA PRO FORMA BALANCE HOLDINGS, INC. ADJUSTMENTS BALANCE ----------- -------------- ----------- ---------- (IN MILLIONS, EXCEPT SHARE AND PER SHARE AMOUNTS) Revenues....................................... $ 5,200 $ 992 $ 17(a) $ 4,225 ------------- ------------- -------------- ------------- Expenses: Fuel and cost of gas sold.................... 3,207 450 16(a) 2,773 Purchased power.............................. 26 26 -- -- Operation and maintenance.................... 802 200 11(a)(d) 613 Depreciation and amortization................ 317 81 -- 236 Taxes other than income taxes................ 205 25 -- 180 ------------- ------------- -------------- ------------- Total ..................................... 4,557 782 27 3,802 ------------- ------------- -------------- ------------- Operating Income............................... 643 210 (10) 423 ------------- ------------- -------------- ------------- Other (Expense) Income: Interest and other finance charges........... (415) -- 23(c) (392) Other, net................................... 18 2 -- 16 ------------- ------------- -------------- ------------- Total ..................................... (397) 2 23 (376) ------------- ------------- -------------- ------------- Income from Continuing Operations before Income Taxes and Minority Interest........... 246 212 13 47 Income tax expense .......................... (88) (71) (5)(c)(d) (22) Minority interest ........................... (27) -- 27(b) -- ------------- ------------- -------------- ------------- Income from Continuing Operations.............. $ 131 $ 141 $ 35 $ 25 ============= ============= ============== ============= Basic Earnings Per Share....................... $ 0.43 $ 0.08 ============= ============= Weighted Average Common Shares Outstanding..... 306,631,000 306,631,000 ============= ============= Diluted Earnings Per Share..................... $ 0.42 $ 0.08 ============= ============= Diluted Weighted Average Common Shares Outstanding.................................. 308,977,000 308,977,000 ============= ============= See Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements
UNAUDITED PRO FORMA CONDENSED STATEMENT OF CONSOLIDATED INCOME FOR THE YEAR ENDED DECEMBER 31, 2003 CENTERPOINT ENERGY, INC. HISTORICAL TEXAS GENCO PRO FORMA PRO FORMA BALANCE HOLDINGS, INC. ADJUSTMENTS BALANCE ------------- -------------- -------------- ------------- (IN MILLIONS, EXCEPT SHARE AND PER SHARE AMOUNTS) Revenues............................... $ 9,760 $ 2,002 $ 32(a) $ 7,790 ------------- ------------- -------------- ------------- Expenses: Fuel and cost of gas sold............ 5,367 1,098 29(a) 4,298 Purchased power...................... 73 73 -- -- Operation and maintenance............ 1,716 412 30(a)(d) 1,334 Depreciation and amortization........ 625 159 -- 466 Taxes other than income.............. 375 38 -- 337 ------------- ------------- -------------- ------------- Total ............................. 8,156 1,780 59 6,435 ------------- ------------- -------------- ------------- Operating Income....................... 1,604 222 (27) 1,355 ------------- ------------- -------------- ------------- Other (Expense) Income: Interest and other finance charges... (934) (2) 191(a)(c) (741) Other, net........................... (5) 2 7(a) -- ------------- ------------- -------------- ------------- Total ............................. (939) -- 198 (741) ------------- ------------- -------------- ------------- Income from Continuing Operations before Income Taxes and Minority Interest............................. 665 222 171 614 Income tax expense................... (216) (71) (60)(c)(d) (205) Minority interest.................... (29) -- 29(b) -- ------------- ------------- -------------- ------------- Income from Continuing Operations...... $ 420 $ 151 $ 140 $ 409 ============= ============= ============== ============= Basic Earnings Per Share............... $ 1.38 $ 1.35 ============= ============= Weighted Average Common Shares Outstanding.......................... 303,867,000 303,867,000 ============= ============= Diluted Earnings Per Share............. $ 1.37 $ 1.34 ============= ============= Diluted Weighted Average Common Shares Outstanding.......................... 306,220,000 306,220,000 ============= ============= See Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements
UNAUDITED PRO FORMA CONDENSED STATEMENT OF CONSOLIDATED INCOME FOR THE YEAR ENDED DECEMBER 31, 2002 CENTERPOINT ENERGY, INC. HISTORICAL TEXAS GENCO PRO FORMA PRO FORMA BALANCE HOLDINGS, INC. ADJUSTMENTS BALANCE ------------- -------------- -------------- ------------- (IN MILLIONS, EXCEPT SHARE AND PER SHARE AMOUNTS) Revenues............................... $ 7,898 $ 1,541 $ 81(a) $ 6,438 ------------- ------------- -------------- ------------- Expenses: Fuel and cost of gas sold............ 3,865 990 79(a) 2,954 Purchased power...................... 94 94 -- -- Operation and maintenance............ 1,605 391 28(a)(d) 1,242 Depreciation and amortization........ 614 156 -- 458 Taxes other than income.............. 387 43 -- 344 ------------- ------------- -------------- ------------- Total ............................. 6,565 1,674 107 4,998 ------------- ------------- -------------- ------------- Operating Income (Loss)................ 1,333 (133) (26) 1,440 ------------- ------------- -------------- ------------- Other (Expense) Income: Interest and other finance charges... (764) (26) 26(a)(c) (712) Other, net........................... (2) 3 31(a) 26 ------------- ------------- -------------- ------------- Total ............................. (766) (23) 57 (686) ------------- ------------- -------------- ------------- Income (Loss) from Continuing Operations before Income Taxes....... 567 (156) 31 754 Income tax benefit (expense)......... (198) 63 (11)(c)(d) (272) ------------- ------------- -------------- ------------- Income (Loss) from Continuing Operations........................... $ 369 $ (93) $ 20 $ 482 ============= ============= ============== ============= Basic Earnings Per Share............... $ 1.24 $ 1.62 ============= ============= Weighted Average Common Shares Outstanding.......................... 297,997,000 297,997,000 ============= ============= Diluted Earnings Per Share............. $ 1.23 $ 1.61 ============= ============= Diluted Weighted Average Common Shares Outstanding.......................... 299,644,000 299,644,000 ============= ============= See Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements
UNAUDITED PRO FORMA CONDENSED STATEMENT OF CONSOLIDATED INCOME FOR THE YEAR ENDED DECEMBER 31, 2001 CENTERPOINT ENERGY, INC. HISTORICAL TEXAS GENCO PRO FORMA PRO FORMA BALANCE HOLDINGS, INC. ADJUSTMENTS BALANCE ------------- -------------- -------------- ------------- (IN MILLIONS, EXCEPT SHARE AND PER SHARE AMOUNTS) Revenues............................... $ 10,559 $ 3,411 $ -- $ 7,148 ------------- ------------- -------------- ------------- Expenses: Fuel and cost of gas sold............ 5,085 1,304 -- 3,781 Purchased power...................... 1,223 1,223 -- -- Operation and maintenance............ 1,754 402 22(d) 1,374 Depreciation and amortization........ 663 154 -- 509 Taxes other than income.............. 510 63 -- 447 ------------- ------------- -------------- ------------- Total ............................. 9,235 3,146 22 6,111 ------------- ------------- -------------- ------------- Operating Income....................... 1,324 265 (22) 1,037 ------------- ------------- -------------- ------------- Other (Expense) Income: Interest and other finance charges... (607) (65) (1)(a) (543) Other, net........................... 40 2 1(a) 39 ------------- ------------- -------------- ------------- Total ............................. (567) (63) -- (504) ------------- ------------- -------------- ------------- Income from Continuing Operations before Income Taxes.................. 757 202 (22) 533 Income tax expense................... (258) (74) 8(d) (176) ------------- ------------- -------------- ------------- Income from Continuing Operations...... $ 499 $ 128 $ (14) $ 357 ============= ============= ============== ============= Basic Earnings Per Share............... $ 1.72 $ 1.23 ============= ============= Weighted Average Common Shares Outstanding.......................... 289,776,000 289,776,000 ============= ============= Diluted Earnings Per Share............. $ 1.71 $ 1.22 ============= ============= Diluted Weighted Average Common Shares Outstanding.......................... 292,193,000 292,193,000 ============= ============= See Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (a) Represents previously eliminated intercompany transactions. (b) Reflects net proceeds of $2.5 billion from the sale of Texas Genco and the corresponding paydown of $915 million of term loan debt. Also reflects the elimination of the minority interest in Texas Genco as a result of the sale of Texas Genco. In accordance with Statement of Financial Accounting Standards No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets," CenterPoint Energy recorded an impairment loss of $253 million in connection with the sale transaction, representing the excess of the carrying amount of its investment in Texas Genco over the net proceeds to be received. The Company had previously recorded an impairment of its investment in Texas Genco of $399 million in connection with the distribution of 19% of Texas Genco's outstanding shares of common stock to its shareholders in January 2003. (c) In accordance with Emerging Issues Task Force Issue No. 87-24 "Allocation of Interest to Discontinued Operations", the Company has reclassified interest to discontinued operations of Texas Genco based on net proceeds to be received from the sale of Texas Genco of $2.5 billion, and has applied the proceeds to the amount of debt assumed to be paid down in each respective period according to the terms of the respective credit facilities in effect for those periods. In periods where only the term loan was assumed to be repaid, the actual interest paid was reclassified. In periods where a portion of the revolver was assumed to be repaid, the percentage of that portion of the revolver to the total outstanding balance was calculated, and that percentage was applied to the actual interest paid in those periods. Interest expense of $58 million, $198 million and $23 million was reclassified to discontinued operations of Texas Genco in 2002, 2003 and the six months ended June 30, 2004, respectively. The Company intends to use the remainder of the proceeds for other general corporate purposes, including further pension contributions, and is currently evaluating its alternatives. (d) General corporate overhead previously allocated to Texas Genco from the Company, which will not be eliminated by the sale of Texas Genco, has been reflected as general corporate overhead of CenterPoint Energy in income from continuing operations. The amounts reclassified were $22 million, $27 million and $27 million for 2001, 2002 and 2003, respectively and $10 million for the six months ended June 30, 2004.