8-KOther Events

CENTERPOINT ENERGY INC 8-K Report (Nov 8, 2002)

Filed November 8, 2002For Securities:CNP

Summary

CenterPoint Energy, Inc. (CNP) filed an 8-K on November 8, 2002, reporting on two key events. Firstly, the company announced its transmission and distribution subsidiary, CenterPoint Energy Houston Electric, LLC, successfully secured a new $1.310 billion senior secured credit facility. This financing strengthens the subsidiary's liquidity and financial flexibility. Secondly, the report addresses a trading matter involving Reliant Resources, Inc. (RRI), a former subsidiary. RRI disclosed accounting issues related to natural gas financial swap transactions that impacted its reported net income in 2000 and 2001. While RRI determined a restatement was not required after discussions with auditors and the SEC, CenterPoint Energy also concluded, based on its own auditors' advice, that no restatement of its prior period financial statements is necessary regarding these RRI activities. Investors should note that CenterPoint Energy has since distributed all of its RRI shares.

Key Highlights

  • 1CenterPoint Energy Houston Electric, LLC secured a new $1.310 billion senior secured credit facility.
  • 2The new credit facility is effective as of November 8, 2002.
  • 3The report addresses accounting issues at former subsidiary Reliant Resources, Inc. (RRI) related to natural gas financial swap transactions.
  • 4RRI's disclosed trading matter resulted in a $13 million impact (decrease in 2000, increase in 2001) to its net income.
  • 5Both RRI and CenterPoint Energy have concluded, after consulting with auditors and the SEC (for RRI), that a restatement of prior financial statements is not required.
  • 6CenterPoint Energy distributed all of its shares of RRI common stock to its shareholders on September 30, 2002.
  • 7The filing includes a cautionary note regarding forward-looking statements and potential material differences in actual results.

Frequently Asked Questions

The new $1.310 billion senior secured credit facility obtained by CenterPoint Energy Houston Electric, LLC, strengthens the financial position and liquidity of the company's transmission and distribution subsidiary. This provides greater financial flexibility for its operations and potential future investments.

Reliant Resources, Inc. (RRI), a former subsidiary of CenterPoint Energy, identified accounting errors related to four natural gas financial swap transactions. These transactions were improperly recorded and had the effect of decreasing RRI's net income by approximately $13 million in 2000 and increasing it by the same amount in 2001.

No, CenterPoint Energy has concluded, based on discussions with its external auditors, that a restatement of its prior period financial statements is not required. RRI also determined, after consulting with its auditors and the SEC staff, that a restatement was not necessary.

CenterPoint Energy distributed all of its shares of Reliant Resources, Inc. common stock to its shareholders on September 30, 2002. This means RRI is no longer a subsidiary of CenterPoint Energy.