8-K

 

 

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): February 26, 2014

 

 

CENTERPOINT ENERGY, INC.

(Exact name of registrant as specified in its charter)

 

 

 

Texas   1-31447   74-0694415

(State or other jurisdiction

of incorporation)

 

(Commission

File Number)

 

(IRS Employer

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 7.01. REGULATION FD DISCLOSURE.

On February 26, 2014, CenterPoint Energy, Inc. (“CenterPoint Energy”) reported fourth quarter and full year 2013 earnings. For additional information regarding CenterPoint Energy’s 2013 earnings, please refer to the supplemental materials which are being posted on CenterPoint Energy’s website and are attached to this report as Exhibit 99.1 (the “Supplemental Materials”), which Supplemental Materials are incorporated by reference herein. The information in the Supplemental Materials is being furnished, not filed, pursuant to Regulation FD. Accordingly, the information in the Supplemental Materials 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.

 

ITEM 9.01. FINANCIAL STATEMENTS AND EXHIBITS.

The exhibit listed below is furnished pursuant to Item 7.01 of this Form 8-K.

 

  (d) Exhibit.

 

99.1    Supplemental Materials regarding CenterPoint Energy, Inc.’s 2013 earnings.


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: February 26, 2014   By:  

/s/ Christopher J. Arntzen

    Christopher J. Arntzen
    Vice President, Deputy General Counsel and Assistant Corporate Secretary


EXHIBIT INDEX

 

EXHIBIT

NUMBER

  

EXHIBIT DESCRIPTION

99.1    Supplemental Materials regarding CenterPoint Energy, Inc.’s 2013 earnings.
EX-99.1
The Benefits of a Diversified Electric & Natural Gas Portfolio
NYSE: CNP
CenterPointEnergy.com
Full Year 2013 Earnings
Supplemental Materials
February 26, 2014
Exhibit 99.1


February 26, 2014
2
Year End 2013 Supplemental Materials
Cautionary Statement Regarding
Forward-Looking
Information
We have based our forward-looking statements on our management's beliefs and assumptions based
on information currently 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 include the timing and impact of future regulatory, legislative and IRS
decisions, financial market conditions, future market conditions, and other factors described in
CenterPoint Energy, Inc.’s Form 10-K for the period ended December 31, 2013, under “Risk Factors”
and “Management’s Discussion and Analysis of Financial Condition and Results of Operations - Certain
Factors Affecting Future Earnings”, and in other filings with the SEC by CenterPoint Energy. 
You should not place undue reliance on forward-looking statements.  Each forward-looking statement
speaks only as of the date of this presentation, and we undertake no obligation to publicly update or
revise any forward-looking statements except as required by law.
This presentation contains 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.


February 26, 2014
3
Year End 2013 Supplemental Materials
Scott M. Prochazka named President and CEO
Total shareholder return of 24.7% compared to S&P 500 Utility Index of 13.2%
Strong financial and operational performances from our utility businesses
Sustained strong economic activity with the addition of approximately 45,000 customers and
continued
3
rd
party
interest
in
access
to
our
transmission
rights-of-way
for
our
electric
utility
Rate changes and cost management efforts led to one of the strongest overall performances for
our natural gas utilities
Invested nearly $1.2 billion in our utility operations, up 22 percent from 2012, to address
increasing demands associated with system safety, reliability, growth and ongoing maintenance
Formed
Enable
Midstream
Partners
with
contribution
of
Interstate
Pipelines
and
Field
Services businesses
On-going ownership interest in Enable Midstream is expected to provide attractive investment
returns and cash flows
Consolidated
external
debt
reduction
of
approximately
$1
billion
resulting
in
savings
of
approximately $71 million of annualized interest expense, excluding securitization bonds
Increased dividend 14.5% in January 2014, resulting  in 9 consecutive years of dividend
growth
2013 Year Highlights


2013 Financial Results
Midstream Operating Income moved to Equity Income on May 1, 2013
2012
CEHE, Gas Operations, CES and Other Op Income
Field Services, Interstate Pipelines Op Income
($, millions)
Transition & Restoration Bond Company Op Income
Includes $252
CES Goodwill
Impairment
As reported, 12 months ended December 31
Waskom Gas Processing Company
South East Supply Header, LLC 
Enable Midstream Partners, LLC
Operating
Income
Equity Income
For the full year 2012, CenterPoint Energy held a
50% interest in the Southeast Supply Header, LLC
(SESH)
On July 31, 2012 CenterPoint Energy Field Services
acquired the remaining 50% interest in Waskom Gas
Processing; earnings were reported as operating
income effective August 1, 2012
On May 1, 2013, CenterPoint Energy formed Enable
Midstream Partners, which includes  CenterPoint
Energy’s former Interstate Pipelines and Field
Services segments and a 24.95% interest in SESH
Effective May 1, 2013 midstream operations are
reported as Equity Income as part of CenterPoint
Energy’s midstream investment segment
For the four months ended April 30, 2013,
CenterPoint Energy maintained 50% ownership
interest in SESH and its results are reported as
Equity Income
For the eight months May 1 to December 31, 2013,
CenterPoint Energy retained 25.05% ownership
interest in SESH and its results are reported as
Equity Income
$
February 26, 2014
4
Year End 2013 Supplemental Materials


February 26, 2014
5
Year End 2013 Supplemental Materials
Electric Transmission & Distribution Utility
2013 Operating Income Drivers
43%
($, millions)
Higher 
transmission
related
revenues, net
of costs billed
by other
transmission
providers
Growth
Higher
right-of-way
revenue
Lower usage
primarily due
to weather,
net of winter
weather
hedge
Lower
True-up
related
equity return
Higher O&M,
including
employee,
contractor
and
insurance
related
expenses
Higher
Depreciation
Higher Taxes,
mostly
property
*
Excludes operating income from transition and system restoration bonds of $147 million in 2012 and $133 million in 2013
2013
2012
$


February 26, 2014
6
Year End 2013 Supplemental Materials
Electric Transmission & Distribution Utility
Capital Expenditures Expectations
($, millions)
2013A
2014E
2015E
2016E
2017E
2018E
Transmission
45%
34%
42%
37%
29%
28%
Distribution
49%
61%
55%
60%
66%
67%


February 26, 2014
7
Year End 2013 Supplemental Materials
Electric Transmission & Distribution Utility
Rights-of-Way Revenue
$
($, millions)


February 26, 2014
8
Year End 2013 Supplemental Materials
Natural Gas Utilities
2013 Operating Income Drivers
($, millions)
Increased
revenues,
due to a
return to
more
normal
weather in
2013 vs.
2012, net
of weather
hedge and
WNA
Higher O&M,
Employee &
Contractor
related
expenses
Higher O&M,
Bad Debt
Higher
Depreciation
Higher
Taxes,
mostly
property
Rate
Increases
2012
2013
Growth
$


February 26, 2014
9
Year End 2013 Supplemental Materials
Natural Gas Utilities
Capital Expenditures Expectations
($, millions)
$
Note: Annual mechanisms reduce the recovery lag time versus traditional rate cases.
Capital Recovery Method
2013A
2014E
2015E
2016E
2017E
2018E
Annual Mechanisms
48%
45%
50%
32%
51%
53%
Rate Cases
52%
55%
50%
68%
49%
47%


CenterPoint Energy Services
2013 Operating Income Drivers
($, millions)
*  Excludes 2012’s $252 Goodwill Impairment Charge
2013
2012
Mark-to-Market Accounting
$(2)
$(16)
Goodwill Impairment Charge
$0
$252
2012
$
Higher base
margin
2012
divestiture 
of non-
strategic
business
Positive
impact of
mark-to-
market
accounting
Lower O&M
2013
2013 exit
non-strategic
assets
10
February 26, 2014
Year End 2013 Supplemental Materials


February 26, 2014
Year End 2013 Supplemental Materials
Debt and Capitalization Ratio
Excluding transition and system restoration bonds
*  The transition and system restoration bonds are non-recourse to CenterPoint Energy and CenterPoint Energy Houston Electric and are serviced through
collections of separate charges which are held in trust.
** The debt component reflected on the financial statements was $138 million as of December 31, 2012, and $143 million as of December 31, 2013.  The
principal amount on which 2% interest is paid was $840 million as of December 31, 2012, and $828 million as of December 31, 2013.  The contingent
principal amount was $784 million as of December 31, 2012, and $763 million as of December 31, 2013.
($, millions)
11
December 31,
December 31,
2013
2012
Short-term Debt:
Short-term borrowings
43
$        
38
$        
Current portion of transition and system restoration bonds*
354
447
Indexed debt (ZENS)**
143
138
Current portion of other long-term debt
-
815
Long-term Debt:
Transition and system restoration bonds*
3,046
3,400
Other
4,771
4,957
Total Debt
8,357
$   
9,795
$  
Less:  Transition and system restoration bonds (including current portion)*
3,400
3,847
Total Debt, excluding transition and system restoration bonds
4,957
$   
5,948
$  
Total Shareholders' Equity
4,329
$   
4,301
$  
Total Capitalization, excluding transition and system restoration bonds
9,286
$   
10,249
$
Total Debt/Total Capitalization, excluding transition and system
restoration bonds
53.4%
58.0%


Credit Metrics and Ratings
(1) General mortgage bonds and first mortgage bonds.
(a) Moody's rating outlook is an opinion regarding the likely direction of a  rating over the medium term.
(b) S&P rating outlook assesses the potential direction of a long-term credit rating over the intermediate to longer term.
Total Debt / EBITDA*
FFO / Total Debt*
Rating
Outlook
a
Rating
Outlook
b
Rating
Outlook
c
CenterPoint Energy (Senior Unsecured)
Baa1
Stable
BBB+
Stable
BBB
Stable
CEHE (Senior Secured)
(1)
A1
Stable
A
Stable
A
Stable
CERC (Senior Unsecured)
Baa2
Stable
A-
Stable
BBB
Stable
Moody’s
S&P
Fitch
Credit Ratings
February 26, 2014
12
Year End 2013 Supplemental Materials
(c)
Fitch
rating
outlook
encompasses
a
one-
to
two-year
horizon
as
to
the
likely
ratings
direction.
*
Calculated
per
the
company’s
interpretation
of
S&P’s
revised
methodology.
In
2013,
S&P
revised
their
methodology.
S&P’s
calculations
may
vary.


February 26, 2014
13
Year End 2013 Supplemental Materials
Liquidity
Available Liquidity ($MM)
Amount Utilized
Amount Unutilized
at 2/14/2014
at 2/14/2014
CenterPoint Energy
Revolver
1,200
$    
6
$                     
1,194
$                 
CEHE
Revolver
300
$       
4
$                     
296
$                    
CERC
Revolver
600
$       
-
$                  
600
$                    
Total Facilities
2,100
$    
10
$                   
2,090
$                 
104
$                    
2,194
$                 
Total Available Liquidity
Bank Facilities
Type
Size
Temporary Investments
Investments in Money Market Funds


Estimated Amortization for Pre-Tax Equity Earnings
Associated
with
the
Recovery
of
Certain
Qualified
Cost
and
Storm
Restoration
Costs
the pre-tax equity return recognized by
CenterPoint Energy, Inc. (CenterPoint Energy)
during each of the years 2005 through 2013
related to CenterPoint Energy Houston Electric,
LLC’s (CEHE) recovery of certain qualified costs
or storm restoration costs, as applicable,
pursuant to the past issuance of transition bonds
by CenterPoint Energy Transition Bond
Company II, LLC (Transition BondCo II) and
CenterPoint Energy Transition Bond Company
III, LLC (Transition BondCo III) or CenterPoint
Energy Transition Bond Company IV, LLC
(Transition BondCo IV) or system restoration
bonds by CenterPoint Energy Restoration Bond
Company, LLC (System Restoration BondCo),
as applicable and
the estimated pre-tax equity return currently
expected to be recognized in each of the years
2014 through 2024 related to CEHE’s recovery
of certain qualified costs or storm restoration
costs, as applicable, pursuant to the past
issuance of transition bonds by Transition
BondCo II, Transition BondCo III or Transition
BondCo IV or system restoration bonds by
System Restoration BondCo, as applicable.
The amounts reflected for 2014 through 2024 are based on CenterPoint Energy’s estimates as of December  31, 2013. However, the equity returns to be recognized in future periods with
respect to each series of transition or system restoration bonds, as applicable, will be periodically subject to adjustment based on tariff adjustments for any overcollections or
undercollections of transition charges or system restoration charges, as applicable. The equity return amounts reflected in the table are reported in the financial statements of CenterPoint
Energy and CenterPoint Energy Houston Electric as revenues from electric transmission and distribution utility.
The return associated with the equity earnings was
predetermined at the time of the recovery
authorization. Thus, it is not a measure of the
business’s operating performance.
As of December 31, 2013
February 26, 2014
14
Year End 2013 Supplemental Materials
TBC II
TBC III
TBC IV
SRBC
Total
2005
213,804
$       
-
$               
-
$                 
-
$               
213,804
$       
2006
6,644,004
-
-
-
6,644,004
2007
7,140,194
-
-
-
7,140,194
2008
6,673,765
4,743,048
-
-
11,416,813
2009
7,279,677
6,074,697
-
95,841
13,450,215
2010
9,071,326
5,745,580
-
2,657,384
17,474,290
2011
9,902,590
6,994,650
-
2,840,737
19,737,977
2012
9,717,059
6,837,290
27,873,514
2,473,992
46,901,855
2013
10,383,183
7,251,470
24,082,419
2,235,567
43,952,639
2014
10,181,329
8,086,631
29,318,866
2,651,149
50,237,975
2015
11,664,668
8,347,851
28,800,136
2,689,677
51,502,332
2016
12,552,207
8,915,234
29,613,821
2,823,299
53,904,562
2017
13,492,992
9,551,669
30,264,175
2,972,822
56,281,657
2018
14,500,296
10,257,427
31,182,774
3,143,769
59,084,265
2019
8,232,954
10,607,493
32,235,549
3,339,656
54,415,652
2020
-
922,924
33,302,867
3,534,938
37,760,730
2021
-
-
34,551,734
3,733,470
38,285,204
2022
-
-
35,917,932
2,262,251
38,180,183
2023
-
-
37,343,525
-
37,343,525
2024
-
-
30,297,799
-
30,297,799
137,650,048
$
94,335,964
$
404,785,110
$
37,454,553
$
674,225,675
$
The table provides 
1)
2)