10-QPeriod: Q3 FY2002

CENTERPOINT ENERGY INC Quarterly Report for Q3 Ended Sep 30, 2002

Filed November 14, 2002For Securities:CNP

Summary

CenterPoint Energy, Inc. (CNP) reported a significant net loss attributable to common stockholders of $4,124,493,000 ($13.80 per diluted share) for the nine months ended September 30, 2002, a sharp contrast to the net income of $933,688,000 ($3.20 per diluted share) for the same period in 2001. This substantial loss was primarily driven by a $4.3 billion non-cash loss on the disposal of discontinued operations related to the distribution of Reliant Resources common stock on September 30, 2002. Income from continuing operations also saw a decline, falling to $394,251,000 for the nine months ended September 30, 2002, down from $427,497,000 in the prior year period. The company underwent a significant corporate restructuring on August 31, 2002, becoming the holding company for the Reliant Energy group and subsequently distributing its stake in Reliant Resources. Operationally, the company's segments experienced varied performance. Electric Transmission and Distribution showed improved EBIT, while Electric Generation reported a loss. Natural Gas Distribution and Pipelines and Gathering demonstrated growth. The company is navigating the complexities of Texas electric industry deregulation, with significant regulatory assets and liabilities related to stranded costs and future true-up proceedings impacting financial reporting. Liquidity remains a focus, with substantial debt obligations and ongoing credit facility management.

Key Highlights

  • 1Significant net loss of $4.12 billion for the nine months ended September 30, 2002, largely due to a $4.3 billion non-cash loss from the spin-off of Reliant Resources.
  • 2Income from continuing operations decreased to $394 million for the nine months ended September 30, 2002, from $427 million in the prior year.
  • 3The company completed a major corporate restructuring on August 31, 2002, becoming the holding company for the Reliant Energy group.
  • 4Electric Transmission and Distribution segment showed robust EBIT growth, while Electric Generation segment reported a loss.
  • 5Natural Gas Distribution and Pipelines and Gathering segments demonstrated positive operational performance and increased EBIT.
  • 6CenterPoint Energy is managing substantial regulatory assets and liabilities related to the deregulation of the Texas electric industry and future true-up proceedings.
  • 7Liquidity remains a key focus with significant debt obligations, including new credit facilities and substantial maturities in late 2002 and 2003.

Frequently Asked Questions

The primary driver of the $4.12 billion net loss was a $4.3 billion non-cash loss recognized from the disposal of discontinued operations, specifically related to the distribution of Reliant Resources common stock to CenterPoint Energy shareholders on September 30, 2002.

CenterPoint Energy became the holding company on August 31, 2002, as part of a restructuring of Reliant Energy. The financial statements now reflect CenterPoint Energy as the successor entity. The operations of Reliant Resources, distributed to shareholders on September 30, 2002, are presented as discontinued operations for all periods shown in the financial statements.

Deregulation has led to the separation of Electric Transmission and Distribution from Electric Generation segments. While Electric Transmission and Distribution has shown improved performance, including contributions from regulatory assets related to stranded costs, the Electric Generation segment experienced a loss due to market conditions. The company is also managing regulatory assets and liabilities tied to future true-up proceedings, which introduce uncertainty.

The company has access to significant credit facilities and is actively managing its debt. However, there are substantial debt maturities in late 2002 and 2003, including $300 million on November 15, 2002, and a $1.3 billion loan was recently secured by CenterPoint Houston to manage these obligations. Credit rating downgrades could impact borrowing costs and access to capital.