10-QPeriod: Q2 FY2002

CENTERPOINT ENERGY INC Quarterly Report for Q2 Ended Jun 30, 2002

Filed August 14, 2002For Securities:CNP

Summary

CenterPoint Energy, Inc. (CNP) is presenting its unaudited financial results for the quarterly period ending June 30, 2002. The company is undergoing a significant restructuring, intended to separate its regulated and unregulated businesses into two independent publicly traded entities. This process, expected to be completed by August 31, 2002, will result in CenterPoint Energy becoming the holding company for the former Reliant Energy group, with the regulated utility operations forming the core business. The financial statements reflect minimal operational activity for CenterPoint Energy itself, with the reported net loss primarily attributable to general and administrative expenses related to establishing the corporate structure. The company's balance sheet shows a substantial increase in cash and equity, largely due to a significant capital contribution from its parent, Reliant Energy, which is critical for its ongoing restructuring and operational needs.

Key Highlights

  • 1CenterPoint Energy is in the process of a major corporate restructuring to separate regulated and unregulated businesses, with an expected completion date for the holding company structure by August 31, 2002.
  • 2The reported net loss of $1,069 for the three months and $5,736 for the six months ended June 30, 2002, is primarily due to general and administrative expenses associated with establishing the new corporate entity.
  • 3Total assets significantly increased from $3,000 as of December 31, 2001, to $9,264 as of June 30, 2002, driven by a $12,000 capital contribution from the parent company.
  • 4Cash position improved substantially, rising from $3,000 to $5,275 due to financing activities, specifically the capital infusion from the parent.
  • 5The company is working to comply with the Public Utility Holding Company Act of 1935 (1935 Act) and is seeking authority to divide certain gas distribution businesses to potentially qualify for an exemption from registration.
  • 6Forward-looking statements highlight various risks and uncertainties, including regulatory developments, market conditions, competition, and the successful completion of the business separation plan.

Frequently Asked Questions

As of the June 30, 2002 filing date, CenterPoint Energy, Inc. is primarily a newly formed holding company in the process of restructuring. Its reported net loss stems from general and administrative expenses related to establishing its corporate structure and facilitating a planned separation of regulated and unregulated businesses from its parent, Reliant Energy.

The restructuring plan aims to create two independent, publicly traded companies: one for regulated utility operations (CenterPoint Energy) and another for unregulated businesses (Reliant Resources). This is a requirement related to the deregulation of the Texas electric industry and is expected to be completed by August 31, 2002, with a subsequent distribution of Reliant Resources shares to CenterPoint Energy shareholders.

The $12,000 capital contribution from the parent company, Reliant Energy, is crucial to fund CenterPoint Energy's establishment as a holding company and support its operational and restructuring activities leading up to the separation of businesses and the potential qualification for exemption under the Public Utility Holding Company Act of 1935.

Key risks include potential changes in state and federal regulations (especially concerning deregulation), the timing and success of the business separation plan, competitive pressures in its markets, commodity price volatility (particularly natural gas), financial market conditions, and the successful outcome of various legal and regulatory processes, including those related to the 1935 Act.