UNITED STATES OF AMERICA
before the
SECURITIES AND EXCHANGE COMMISSION
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In the Matter of:
CENTERPOINT ENERGY, INC. CERTIFICATE OF
1111 Louisiana NOTIFICATION
Houston, Texas 77002
(70-9895)
PUBLIC UTILITY HOLDING COMPANY ACT OF 1935
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THIS IS TO CERTIFY that, in accordance with the terms and conditions of the
application-declaration, as amended, of CenterPoint Energy, Inc. in the
above-captioned file and the order of the Securities and Exchange Commission
with respect thereto (HCAR No. 27692 (June 30, 2003)) (the "Order"), CenterPoint
Energy, Inc. (the "Company" or "CenterPoint") is reporting the following
information for itself and its subsidiaries for the quarterly period ended June
30, 2003. Unless defined herein, capitalized terms have the meaning given them
in the Application.
1. The sales of any common stock or preferred securities by the Company or
a Financing Subsidiary and the purchase price per share and the market
price per share at the date of the agreement of sale.
None.
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2. The total number of shares of the Company's common stock issued or
issuable pursuant to options granted during the quarter under employee
benefit plans and dividend reinvestment plans, including any employee
benefit plans or dividend reinvestment plans hereafter adopted.
266,110 shares were issued under the Investor's Choice Plan.
4,900 stock options were granted to Company employees at a strike price
of $7.56 under the Company's Long Term Incentive Plan and 31,446 stock
options were granted at a strike price of $8.085. None of the options
granted is currently exercisable.
A total of 2,400 shares of common stock were granted at a grant price
of $7.56 to participants under the Company's Long-Term Incentive Plan
as time-based restricted shares which vest March, 2006, and 12,913
time-based restricted shares, which vest in May 2006, were granted at a
grant price of $8.085. A total of 18,000 shares of time-based
restricted stock, one-third of which will vest annually, were granted
at a grant price of $9.665. Also, a total of 22,970 shares of common
stock were granted to participants under the Long-Term Incentive Plan
as performance-based restricted shares for the 2003-2005 performance
cycle.
3. If the Company's common stock has been transferred to a seller of
securities of a company being acquired, the number of shares so issued,
the value per share and whether the shares are restricted in the hands
of the acquirer.
None.
4. If a guarantee is issued during the quarter, the name of the guarantor,
the name of the beneficiary of the guarantee and the amount, terms and
purpose of the guarantee.
See Exhibit A hereto.
5. The amount and terms of any long-term debt issued by the Company during
the quarter, and the aggregate amount of short-term debt outstanding as
of the end of the quarter, as well as the weighted average interest
rate for such short-term debt as of such date.
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On April 9, 2003, the Company remarketed $175 million aggregate
principal amount of pollution control bonds that it had owned since the
fourth quarter of 2002. Remarketed bonds maturing in 2029 have a
principal amount of $75 million and an interest rate of 8%. Remarketed
bonds maturing in 2018 have a principal amount of $100 million and an
interest rate of 7.75%. Proceeds from the remarketing were used to
repay bank debt.
On May 19, 2003, the Company issued $575 million aggregate principal
amount of convertible senior notes due May 15, 2023 with an interest
rate of 3.75%. Holders may convert each of their notes into shares of
CenterPoint common stock, initially at a conversion rate of 86.3558
shares of common stock per $1,000 principal amount of notes at any time
prior to maturity, under the following circumstances: (1) if the last
reported sale price of CenterPoint common stock for at least 20 trading
days during the period of 30 consecutive trading days ending on the
last trading day of the previous calendar quarter is greater than or
equal to 120% or, following May 15, 2008, 110% of the conversion price
per share of CenterPoint common stock on such last trading day, (2) if
the notes have been called for redemption, (3) during any period in
which the credit ratings assigned to the notes by both Moody's
Investors Service, Inc. and Standard & Poor's Ratings Services, a
division of The McGraw-Hill Companies, are lower than Ba2 and BB,
respectively, or the notes are no longer rated by at least one of these
ratings services or their successors, or (4) upon the occurrence of
specified corporate transactions, including the distribution to all
holders of CenterPoint common stock of certain rights entitling them to
purchase shares of CenterPoint common stock at less than the last
reported sale price of a share of CenterPoint common stock on the
trading day prior to the declaration date of the distribution or the
distribution to all holders of CenterPoint common stock of the
Company's assets, debt securities or certain rights to purchase the
Company's securities, which distribution has a per share value
exceeding 15% of the last reported sale price of a share of CenterPoint
common stock on the trading day immediately preceding the declaration
date for such distribution. The convertible senior notes also have a
contingent interest feature requiring contingent interest to be paid to
holders of notes commencing on or after May 15, 2008, in the event that
the average trading price of a note for the applicable five trading day
period equals or exceeds 120% of the principal amount of the note as of
the day immediately preceding the first day of the applicable six-month
interest period. Contingent interest will be equal to 0.25% of the
average trading price of the note for the applicable five trading day
period. Proceeds from the issuance of the convertible senior notes were
used for the Term Loan Reduction and to repay revolver borrowings under
the Company's bank facility in the amount of $557 million (term loan
reduction) and $0.75 million (revolver reduction).
On May 27, 2003, the Company issued $400 million aggregate principal
amount of senior notes composed of $200 million principal amount of
5-year notes with an
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interest rate of 5.875% and $200 million principal amount of 12-year
notes with an interest rate of 6.85%. Proceeds in the amount of $397
million were used to reduce the term loan component of the Company's
bank facility.
On May 28, 2003, the Company granted the banks a security interest in
its 81% stock ownership of Texas Genco. Granting the security interest
in the stock of Texas Genco eliminated a 25 basis point increase in the
borrowing costs under the bank facility that would have been effective
after May 28, 2003. The security interest is to be released at the time
of the sale of Texas Genco.
In July 2003, the Company remarketed two series of insurance-backed
pollution control bonds aggregating $150.9 million, reducing the
interest rate from 5.8% to 4%. Of the total amount of bonds remarketed,
$92.0 million mature on August 1, 2015 and $58.9 million mature on
October 15, 2015.
None of the Company's debt is classified as short-term debt.
6. The amount and terms of any long-term debt issued by any Utility
Subsidiary during the quarter, and the aggregate amount of short-term
debt outstanding as of the end of the quarter, as well as the weighted
average interest rate for such short-term debt as of such date.
On April 14, 2003, CenterPoint Energy Resources Corp. ("GasCo") issued
$112 million aggregate principal amount of 7.875% senior unsecured
notes due in 2013. A portion of the proceeds were used to refinance
$360 million aggregate principal amount of GasCo's 6 3/8% Term Enhanced
ReMarketable Securities ("TERMS") and to pay costs associated with the
refinancing.
On May 23, 2003, CenterPoint Energy Houston Electric, LLC (the "T&D
Utility") issued $200 million aggregate principal amount of 20-year
general mortgage bonds with an interest rate of 5.6%. Proceeds were
used to redeem, on July 1, 2003, $200 million aggregate principal
amount of the T&D Utility's 7.5% first mortgage bonds due 2023 at
103.51% of their principal amount. Funds for the redemption were
deposited in trust on May 23, 2003, and the first mortgage bonds were
legally extinguished.
As of June 30, 2003, GasCo had a revolving credit facility that
provided for an aggregate of $200 million in committed credit. As of
June 30, 2003, this revolving credit facility was not utilized. This
revolving credit facility terminates on March 23, 2004.
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Rates for borrowings under this facility, including the facility fee,
are LIBOR plus 250 basis points based on current credit ratings and the
applicable pricing grid. The revolving credit facility contains various
business and financial covenants.
For the aggregate amount of short-term debt outstanding as of the end
of the quarter for the Utility Subsidiaries, as well as the weighted
average interest rate for such short-term debt as of such date, see
Exhibit E hereto.
7. The amount and terms of any financings consummated by any Non-Utility
Subsidiary that are not exempt under Rule 52 under the Public Utility
Holding Company Act, as amended.
None.
8. The notional amount and principal terms of any Hedge Instruments or
Anticipatory Hedges entered into during the quarter and the identity of
the other parties thereto.
None.
9. The name, parent company and amount of equity in any intermediate
subsidiary during the quarter and the amount and terms of any
securities issued by such subsidiaries during the quarter.
The name, parent company and amount of equity in any intermediate
subsidiaries has been previously disclosed. There were no securities
issued by such subsidiaries during the quarter.
10. The information required by a Certificate of Notification on Form
U-6B-2.
Not applicable.
11. The amount and terms of any other securities issued under the authority
sought herein during the quarter.
None.
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12. Consolidated balance sheets for the Company and/or a Utility Subsidiary
as of the end of the quarter and separate balance sheets as of the end
of the quarter for each company that has engaged in jurisdictional
financing transactions during the quarter.
See Exhibit B hereto. See also the Quarterly Report on Form 10-Q filed
by the Company on August 13, 2003 (File No. 1-31447), the Quarterly
Report on Form 10-Q filed by CenterPoint Energy Resources Corp. on
August 13, 2003 (File No. 1-13265), the Quarterly Report on Form 10-Q
filed by CenterPoint Energy Houston Electric, LLC on August 14, 2003
(File No. 1-3187), and the Quarterly Report on Form 10-Q filed by Texas
Genco Holdings, Inc. on August 13, 2003 (File No. 1-31449), all of
which are incorporated herein by reference.
13. A table showing, as of the end of the quarter, the dollar and
percentage components of the capital structure of the Company on a
consolidated basis and of each Utility Subsidiary.
See Exhibit C hereto.
14. A retained earnings analysis of the Company on a consolidated basis and
of each Utility Subsidiary detailing gross earnings, dividends paid out
of each capital account and the resulting capital account balances at
the end of the quarter.
See Exhibit D hereto.
15. A table showing, as of the end of the quarter, the Money Pool
participants and amount of outstanding borrowings for each.
See Exhibit E hereto.
16. As to each financing subsidiary, (a) the name of the subsidiary; (b)
the value of the Company's investment account in such subsidiary; (c)
the balance sheet account where the investment and the cost of the
investment are booked; (d) the amount invested in the subsidiary by the
Company; (e) the type of corporate entity; (f) the percentage owned by
the Company; (g) the identification of other owners if not 100% owned
by the Company; (h) the purpose of the investment in the subsidiary;
and (i) the amounts and types of securities to be issued by the
subsidiary.
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See Exhibit F hereto. The Company and its subsidiaries may organize and
acquire, directly or indirectly, the common stock or other equity
interests of one or more financing subsidiaries for the purpose of
effecting various financing transactions from time to time through the
Authorization Period. Financing Subsidiaries may be corporations,
trusts, partnerships or other entities created specifically for the
purposes described in the Order. The amount of securities issued by the
Financing Subsidiaries to third parties will count toward the
respective financing limits of its immediate parent. Applicants
anticipate that the Financing Subsidiaries will be wholly-owned
indirect subsidiaries of CenterPoint and fully consolidated for
purposes of financial reporting. Such financing subsidiaries shall be
organized only if, in management's opinion, the creation and
utilization of such financing subsidiary will likely result in tax
savings, increased access to capital markets and/or lower cost of
capital for the Company or its subsidiaries.
17. A confidential exhibit updating CenterPoint's financial projections and
assumptions through 2006.
See Exhibit G hereto.
18. With respect to any internal reorganization of any Subsidiaries during
the quarter, a description of the nature of such reorganization.
None.
19. A report of service transactions among the Company (or any other system
service provider) and the Utility Subsidiaries containing the following
information: (a) a narrative description of the services rendered;
(b) disclosure of the dollar amount of services rendered in (a) above
according to category or department; (c) identification of companies
rendering services described in (a) above and recipient companies,
including disclosure of the allocation of services costs; and
(d) disclosure of the number of the CenterPoint system employees
engaged in rendering services to other CenterPoint system companies on
an annual basis, stated as an absolute and as a percentage of total
employees.
See Exhibit H hereto. Until the formation of a service company,
CenterPoint Energy provides common and shared services for its
subsidiaries through its approximately 1,100 employees (approximately
10% of total employees). Under its cost allocation methodology, which
previously has been submitted to regulators in the various states in
which CenterPoint utility subsidiaries operate, costs incurred directly
for an operating unit are directly charged to that unit at cost. Costs
that cannot be directly charged are allocated to the business units
using appropriate allocators.
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All transactions described herein have been carried out in accordance
with the terms and conditions of and for the purposes represented in the
Application.
CENTERPOINT ENERGY, INC.
By: /s/ Rufus S. Scott
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Rufus S. Scott
Vice President, Deputy General Counsel
and Assistant Corporate Secretary
Dated: August 29, 2003
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Exhibits
Exhibit Description
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Exhibit A CenterPoint Energy, Inc., CenterPoint Energy Resources
Corp. and Texas Genco Holdings, Inc. Guaranties Issued or
Amended During Second Quarter 2003 (filed in connection
herewith with a request for confidential treatment)
Exhibit B Consolidated Balance Sheets for CenterPoint Energy, Inc.
and Subsidiaries, CenterPoint Energy Houston Electric, LLC
and Subsidiaries, CenterPoint Energy Resources Corp. and
Subsidiaries and Texas Genco Holdings, Inc. (as of June 30,
2003) (unaudited)
Exhibit C Capital Structure Chart of CenterPoint Energy, Inc.,
CenterPoint Energy Houston Electric, LLC, CenterPoint
Energy Resources Corp. and Texas Genco Holdings, Inc. as of
June 30, 2003
Exhibit D Retained Earnings Analysis of CenterPoint Energy, Inc.,
CenterPoint Energy Resources Corp., CenterPoint Energy
Houston Electric, LLC and Texas Genco Holdings, Inc.
Exhibit E Money Pool Participants and Outstanding Borrowings as of
June 30, 2003
Exhibit F CenterPoint Energy, Inc. Investments in Financing
Subsidiaries as of June 30, 2003
Exhibit G CenterPoint Consolidated Financials (forecasts through
2007) (filed in connection herewith with a request for
confidential treatment)
Exhibit H Information on Service Transactions between CenterPoint
Energy, Inc. and Utility Subsidiaries (Corporate Services,
Support Services and Information Technology Services)
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