11-K

 

 

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

 

FORM 11-K

 

 

(Mark One)

x ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Fiscal Year Ended December 31, 2014

OR

 

¨ TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]

For the transition period from                      to                     

Commission file number 1-31447

 

 

 

A. Full title of the plan and address of the plan, if different from that of the issuer named below:

CenterPoint Energy Savings Plan

 

B. Name of issuer of the securities held pursuant to the plan and the address of its principal executive office:

CenterPoint Energy, Inc.

1111 Louisiana Street

Houston, Texas 77002

 

 

 

CENTERPOINT ENERGY SAVINGS PLAN

TABLE OF CONTENTS

 

Report of Independent Registered Public Accounting Firm

      Page 1   

Financial Statements:

   

Statements of Net Assets Available for Benefits, December 31, 2014 and 2013

      Page 2   

Statement of Changes in Net Assets Available for Benefits for the Year Ended December 31, 2014

      Page 3   

Notes to Financial Statements

      Page 4   

Supplemental Schedule:

   

Schedule H, Line 4i-Schedule of Assets (Held at End of Year) December 31, 2014

      Page 16   

Signature

      Page 18   

Consent of Independent Registered Public Accounting Firm (Exhibit 23)

     Page 19   

Other supplemental schedules required by Section 2520.103-10 of the Department of Labor Rules and Regulations for Reporting and Disclosure under ERISA have been omitted because they are not applicable.

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Participants and Plan Administrator of the CenterPoint Energy Savings Plan:

We have audited the accompanying statements of net assets available for benefits of the CenterPoint Energy Savings Plan (the Plan) as of December 31, 2014 and 2013, and the related statement of changes in net assets available for benefits for the year ended December 31, 2014. These financial statements are the responsibility of Plan management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the auditing standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Plan is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances but not for the purpose of expressing an opinion on the effectiveness of the Plan’s internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by Plan management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the net assets available for benefits of the Plan as of December 31, 2014 and 2013, and the changes in net assets available for benefits for the year ended December 31, 2014 in conformity with accounting principles generally accepted in the United States of America.

The supplemental information of schedule of assets (held at end of year) as of December 31, 2014 has been subjected to audit procedures performed in conjunction with the audit of the Plan’s financial statements. The supplemental information is presented for the purpose of additional analysis and is not a required part of the financial statements but is supplementary information required by the Department of Labor’s (DOL) Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974 (ERISA). The supplemental information is the responsibility of Plan management. Our audit procedures included determining whether the supplemental information reconciles to the financial statements or the underlying accounting and other records, as applicable and performing procedures to test the completeness and accuracy of the information presented in the supplemental information. In forming our opinion on the supplemental information, we evaluated whether the supplemental information, including its form and content, is presented in conformity with the DOL Rules and Regulations for Reporting and Disclosure under ERISA. In our opinion, the supplemental information is fairly stated, in all material respects, in relation to the financial statements as a whole.

/s/ McConnell & Jones LLP

Houston, Texas

June 09, 2015

 

1

CENTERPOINT ENERGY SAVINGS PLAN

STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS

 

     December 31,  
     2014     2013  

ASSETS

     

Investments, at fair value (see Note 3)

    $ 2,044,176,490      $ 1,986,588,466   

Receivables:

     

Notes receivable from participants

      39,555,397        40,395,034   

Dividends and interest

      356,404        209,539   

Participant contributions

      1,238,260        32,134   

Employer contributions

      849,031        329,436   

Pending investment transactions

      7,580,356        186,322   
  

 

 

    

 

 

  

Total receivables

      49,579,448        41,152,465   
  

 

 

    

 

 

  

Total Assets

      2,093,755,938        2,027,740,931   
  

 

 

    

 

 

  

LIABILITIES

     

Pending investment transactions

      —          (165,090 ) 

Other

      (532,132 )      (788,205 ) 
  

 

 

    

 

 

  

Total Liabilities

      (532,132 )      (953,295 ) 
  

 

 

    

 

 

  

NET ASSETS AT FAIR VALUE

      2,093,223,806        2,026,787,636   

Adjustment from fair value to contract value for fully benefit-responsive investment contracts

      (2,544,702 )      (2,212,204 ) 
  

 

 

    

 

 

  

NET ASSETS AVAILABLE FOR BENEFITS

    $ 2,090,679,104      $ 2,024,575,432   
  

 

 

    

 

 

  

See accompanying Notes to Financial Statements.

 

2

CENTERPOINT ENERGY SAVINGS PLAN

STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS

FOR THE YEAR ENDED DECEMBER 31, 2014

 

Investment Income:

   

Net appreciation in fair value of investments (see Note 5)

    $ 92,982,223   

Dividends and interest

      31,536,231   
  

 

 

  

Total Investment Income

      124,518,454   
  

 

 

  

Interest on notes receivable from participants

      1,604,807   

Contributions:

   

Participant

      57,712,053   

Employer

      38,448,223   

Rollover

      3,180,618   
  

 

 

  

Total Contributions

      99,340,894   
  

 

 

  

Expenses:

   

Benefit payments

      155,350,272   

Administrative expenses

      4,010,211   
  

 

 

  

Total Expenses

      159,360,483   
  

 

 

  

INCREASE IN NET ASSETS AVAILABLE FOR BENEFITS

      66,103,672   

NET ASSETS AVAILABLE FOR BENEFITS:

   

BEGINNING OF YEAR

      2,024,575,432   
  

 

 

  

END OF YEAR

    $ 2,090,679,104   
  

 

 

  

See accompanying Notes to Financial Statements.

 

3

CENTERPOINT ENERGY SAVINGS PLAN

Notes to Financial Statements

December 31, 2014 and 2013

 

1. Description of the Plan

The following description of the CenterPoint Energy Savings Plan (Plan) provides only general information. Participants (as defined below) should refer to the Plan document for a more complete description of the Plan’s provisions. In the case of any discrepancy between this summary and the Plan document, the Plan document will govern.

 

  (a) General

The Plan is a defined contribution plan established in accordance with Sections 401(a) and 401(k) of the Internal Revenue Code of 1986, as amended (IRC) and is subject to the provisions of the Employee Retirement Income Security Act of 1974 (ERISA). Effective January 1, 2009, the Plan is a “safe harbor” 401(k) plan under the IRC, which means it is deemed to satisfy certain deferral and contribution testing requirements.

Participants include all employees of CenterPoint Energy, Inc. (Company or CenterPoint Energy) and those subsidiaries and affiliates of the Company that have adopted the Plan except (a) employees covered by a collective bargaining agreement unless such agreement provides for participation in the Plan, (b) leased employees, (c) independent contractors or (d) non-resident aliens who receive no United States sourced income (Participants).

 

  (b) Contributions

Participants may contribute, on a pre-tax and after-tax basis, up to 50% and 16% of eligible compensation, respectively, not to exceed the Internal Revenue Service (IRS) compensation limit as defined in the Plan. Active Participants age 50 or over may contribute an additional pre-tax contribution not to exceed the IRS limit ($5,500 for 2014); however, the Company generally does not provide the match on such “catch-up” contributions, unless a matching contribution is required to meet the safe harbor plan provisions under the IRC. Participants may also contribute amounts representing rollover eligible distributions from other defined benefit or defined contribution plans, IRC Section 403(b) annuity plans, IRC Section 457 governmental plans or conduit Individual Retirement Accounts that have been holding a distribution from a qualified plan. Participants direct their contributions into the various eligible investment options offered by the Plan.

All new employees are automatically enrolled in the Plan to make pre-tax contributions. An employee who has been automatically enrolled is deemed to have elected to defer pre-tax contributions (Automatic Contribution). The initial pre-tax contribution is three percent of the employee’s eligible compensation on a payroll-period basis. The contribution percentage is increased by an increment of one percent on April 1 in each of the following years until it reaches six percent of compensation on a payroll-period basis.

A notice is provided to all employees who are scheduled to be automatically enrolled in the Plan (Automatic Enrollment Notice). In general, an employee has 30 days after receiving the Automatic Enrollment Notice to elect not to make any pre-tax contributions or choose a different contribution percentage.

Contributions, including all related employer matching contributions, made under the Automatic Contribution provision of the Plan are invested in the default investment fund as defined in the Plan. Employees may elect to change the Automatic Contribution percentage and/or direct the contributions to any of the investment options offered under the Plan at any time after the commencement of the Automatic Contribution. The Company matches 100% of the first six percent of eligible compensation.

Participants may elect to invest all or a portion of their contributions to the Plan in the CenterPoint Energy, Inc. Common Stock Fund (CenterPoint Energy Stock Fund). In addition, Participants may elect to have dividends paid on their investment in the CenterPoint Energy Stock Fund either reinvested in the CenterPoint Energy Stock Fund or paid to them in cash, and they can transfer all or part of their investment in the CenterPoint Energy Stock Fund to the other investment options offered by the Plan. Employer contributions are made in the form of cash and are invested in accordance with Participant elections.

Contributions are subject to certain limitations as set forth under the IRC or the limits set forth in the Plan document.

 

4

CENTERPOINT ENERGY SAVINGS PLAN

Notes to Financial Statements

December 31, 2014 and 2013

 

 

  (c) Investment Options

The Plan offered the following investment funds (Funds) as of December 31, 2014:

 

  •  

Balanced Fund

 

  •  

CenterPoint Energy Stock Fund

 

  •  

Fixed Income Fund

 

  •  

International Equity Fund

 

  •  

Large Company Growth Fund

 

  •  

Large Company Value Fund

 

  •  

S&P 500 Index Fund

 

  •  

Small Company Fund

 

  •  

Stable Value Fund

 

  •  

Vanguard Target Retirement Income Fund

 

  •  

Vanguard Target Retirement 2010 Fund

 

  •  

Vanguard Target Retirement 2015 Fund

 

  •  

Vanguard Target Retirement 2020 Fund

 

  •  

Vanguard Target Retirement 2025 Fund

 

  •  

Vanguard Target Retirement 2030 Fund

 

  •  

Vanguard Target Retirement 2035 Fund

 

  •  

Vanguard Target Retirement 2040 Fund

 

  •  

Vanguard Target Retirement 2045 Fund

 

  •  

Vanguard Target Retirement 2050 Fund

 

  •  

Vanguard Target Retirement 2055 Fund

Upon enrollment in the Plan, Participants may direct contributions, in one percent increments, in any of the investment options. Participants should refer to the Plan prospectus for a detailed description of each Fund.

 

  (d) Participant Accounts

Individual accounts are maintained for each Participant. Each Participant’s account is credited with the Participant’s contributions and with allocations of the Company contributions and Plan earnings. Each Participant’s account is also charged with an allocation of administrative expenses. Allocations are based on Participant account balances. A Participant is entitled to their vested account balance.

 

  (e) Vesting and Forfeitures

Participants are immediately fully vested in all contributions and actual earnings thereon. As a result, there are no forfeitures.

 

  (f) Notes Receivable From Participants

A Participant may borrow against their vested account balance. The maximum amount that a Participant may borrow is the lesser of (a) $50,000, reduced by the excess, if any, of the highest outstanding balance of loans to the Participant from all plans maintained by the Company or an affiliated entity during the one-year period ending on the day before the date on which such loan is made, over the outstanding balance of loans from the Plan on the date on which such loan is made or (b) 50% of the value of the Participant’s vested account balance under the Plan.

 

5

CENTERPOINT ENERGY SAVINGS PLAN

Notes to Financial Statements

December 31, 2014 and 2013

 

The loans are secured by the pledge of a portion of the Participant’s right, title and value of the Participant’s vested account balance under the Plan as determined immediately after the loans are made. The minimum loan amount is $500. Loans may be repaid over a period of up to five years and are subject to a $50 origination fee. Interest rates are fixed at the prime rate listed in The Wall Street Journal for the first of each month in which the loan is requested plus one percent. Loan transactions are treated as a transfer to (from) the investment fund from (to) notes receivable from participants.

 

  (g) Payment of Benefits

Upon termination of employment, a Participant whose account exceeds $1,000 may elect, upon written request at any time, to receive a distribution in a single lump-sum payment or fixed monthly, quarterly, semi-annual or annual installments over a period of ten years or less. Such distributions are generally paid in the form of cash; however, if the Participant has investments in the CenterPoint Energy Stock Fund, the Participant may elect an in-kind distribution of the Participant’s account balance in the CenterPoint Energy Stock Fund.

Generally, to the extent a Participant has not requested a distribution by the time he or she reaches age 70 1/2, required minimum distributions will be made consistent with the terms and conditions of the Plan and the requirements of the IRC. Immediate lump-sum distributions are made for accounts which do not exceed $1,000.

A Participant who is under age 59 1/2 may make a withdrawal from amounts attributable to after-tax contributions and, if applicable, rollover contributions in the Plan and associated earnings. If a Participant who is under age 59 1/2 and has less than five years of service withdraws matched after-tax contributions, the Participant will be suspended from Plan participation for six months. A Participant who is age 59 1/2 or older may make unlimited withdrawals from pre-tax contributions, after-tax contributions, vested portion of prior Plan accounts, rollover account and any associated earnings.

The Plan allows active participants under age 59 1/2 to apply for a “hardship” withdrawal from amounts attributable to the pre-tax contributions (not including any earnings and gains thereon) in accordance with Plan provisions. Participants are not permitted to make any pre-tax or after-tax contributions for a period of six months immediately following a hardship withdrawal.

 

  (h) Administration

The assets of the Plan are held in trust by The Northern Trust Company (Trustee). Aon Hewitt is the recordkeeper for the Plan. The Benefits Committee of CenterPoint Energy, Inc. (Committee), appointed by the Board of Directors of the Company, is the Plan Administrator (Plan Administrator). The Committee retains an independent investment consultant to provide investment advice with respect to the Funds other than the CenterPoint Energy Stock Fund.

 

  (i) Termination of the Plan

Although it has not expressed any intent to do so, the Company may terminate the Plan at any time subject to the provisions of ERISA and must give written notice to the Trustee.

 

2. Summary of Accounting Policies

 

  (a) Basis of Accounting and Use of Estimates

The financial statements of the Plan are prepared on the accrual basis of accounting in conformity with generally accepted accounting principles in the United States of America (GAAP). The preparation of the Plan financial statements in conformity with GAAP requires the Plan Administrator to make estimates and assumptions that affect the reported amounts of net assets available for benefits at the date of the financial statements and the changes in net assets available for benefits during the reporting period and, when applicable, disclosures of contingent assets and liabilities at the date of the financial statements. Actual results could differ from those estimates.

 

6

CENTERPOINT ENERGY SAVINGS PLAN

Notes to Financial Statements

December 31, 2014 and 2013

 

 

  (b) New Accounting Standards

In May 2015, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2015-07, Fair Value Measurement (Topic 820): Disclosures for Investments in Certain Entities That Calculate Net Asset Value per Share (or Its Equivalent). ASU 2015-07 removes the requirement to include investments in the fair value hierarchy for which fair value is measured using the net asset value per share practical expedient under Accounting Standards Codification (ASC) 820. ASU 2015-07 is effective for the Plan retrospectively for the year ending December 31, 2016 with early adoption permitted. Plan management is currently evaluating the impact of the pending adoption of ASU 2015-07 on the Plan’s financial statements.

 

  (c) Investment Valuation and Income Recognition

The investments in all Funds of the Plan are reported at fair value. Fair value is the price that would be received upon the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Investments are reflected at fair value in the financial statements, except for fully benefit-responsive investment contracts which are stated at contract value. Security transactions are recorded as of the trade date. Interest income is recorded on the accrual basis. Dividends are recorded as of the ex-dividend date.

Investment contracts held by a defined contribution plan are required to be reported at fair value; however, contract value is the relevant measurement attributed for that portion of the net assets available for benefits, because it represents the amount Participants would receive if they were to initiate permitted transactions under the terms of the Plan. The Statement of Net Assets Available for Benefits presents the fair value of the investment contracts, as well as the adjustment of the fully benefit-responsive contracts from fair value to contract value. The Statement of Changes in Net Assets Available for Benefits is prepared on a contract-value basis.

 

  (d) Notes Receivable From Participants

Notes receivable from participants are measured at their unpaid principal balance plus any accrued but unpaid interest. Delinquent participant notes are reclassified as distributions based upon the terms of the Plan. Interest income on notes receivable from participants is recorded when it is earned.

 

  (e) Payment of Benefits

Benefits are recorded when paid.

 

  (f) Plan Expenses

Direct Plan expenses such as trustee, recordkeeping, auditing and investment management fees and certain general administrative expenses are paid from the Plan assets. These expenses are shown as a separate component in the Statement of Changes in Net Assets Available for Plan Benefits. Plan expenses other than the aforementioned items are included as a component of investment gains and losses and reported on Schedule C of Form 5500 as indirect compensation.

 

7

CENTERPOINT ENERGY SAVINGS PLAN

Notes to Financial Statements

December 31, 2014 and 2013

 

 

3. Fair Value Measurements

FASB ASC 820, Fair Value Measurements and Disclosures establishes a framework for measuring fair value as it relates to financial assets and liabilities and to non-financial assets and liabilities measured at fair value on a recurring basis. That framework provides a three-level valuation hierarchy based upon observable and unobservable inputs, with preference given to observable inputs. The three levels of the fair value hierarchy under FASB ASC 820 are described below:

 

Level 1

    Inputs are unadjusted quoted prices in active markets for identical assets or liabilities;

Level 2

    Inputs, other than quoted prices included in Level 1, are observable either directly or indirectly. Level 2 inputs include quoted prices for similar instruments in active markets, and inputs other than quoted prices that are observable for the assets or liabilities; and

Level 3

    Inputs are unobservable for the asset or liability, and include situations where there is little, if any, market activity for the asset or liability. Unobservable inputs reflect the Plan’s judgments about the assumptions market participants would use in pricing the asset or liability since limited market data exists. Unobservable inputs are based on the best information available in the circumstances, which might include the Plan’s own data.

Following is a description of the valuation methodologies used for assets measured at fair value. There have been no changes in the methodologies used at December 31, 2014 and 2013:

 

Common stocks

    Valued at the closing price reported on the active market in which the individual securities are traded.

Mutual funds

    Valued at the net asset value of shares held by the Plan. The share value is based on the market quoted price at the end of the day.

Common or collective

trust funds

    Valued at the net asset value of units held by the Plan, and generally, include the use of significant observable inputs in determining the unit value.

The methods described above may produce a fair value calculation that may not be indicative of net realizable value or reflective of future fair values. Furthermore, while the Plan believes its valuation methods are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different fair value measurement at the reporting date.

 

8

CENTERPOINT ENERGY SAVINGS PLAN

Notes to Financial Statements

December 31, 2014 and 2013

 

The following tables set forth by level, within the fair value hierarchy, the Plan’s investments at fair value as of December 31, 2014 and 2013:

 

     Investments at Fair Value as of December 31, 2014  
     Level 1      Level 2      Level 3      Total  

Mutual funds

         

Fixed Income Fund

    $ 163,521,727       $ —         $                 —         $ 163,521,727   

Large Company Growth Fund

      74,628,011         —           —           74,628,011   

Large Company Value Fund

      77,848,529         —           —           77,848,529   

International Equity Fund

      34,772,580         —           —           34,772,580   

Balanced Fund

      33,462,603         —           —           33,462,603   
  

 

 

     

 

 

     

 

 

     

 

 

  

Total mutual funds

      384,233,450         —           —           384,233,450   

Common or collective trust funds

         

Target Date Retirement Funds

      —           404,990,892         —           404,990,892   

Stable Value Fund

      —           249,345,053         —           249,345,053   

S&P 500 Index Fund

      —           209,261,382         —           209,261,382   

Balanced Fund

      —           75,722,610         —           75,722,610   

Large Company Growth Fund

      —           73,260,127         —           73,260,127   

International Equity Fund

      —           57,170,393         —           57,170,393   

Large Company Value Fund

      —           62,001,856         —           62,001,856   

Fixed Income Fund

      —           67,139,112         —           67,139,112   

Small Company Fund

      —           36,437,399         —           36,437,399   

CenterPoint Energy Stock Fund

      —           1,518,744         —           1,518,744   

Short Term Investment Fund

      —           665,556         —           665,556   
  

 

 

     

 

 

     

 

 

     

 

 

  

Total common or collective trust funds

      —           1,237,513,124         —           1,237,513,124   

Common stocks

         

Company Common Stock Fund

      409,970,549         —           —           409,970,549   

Small Company Fund

      12,459,367         —           —           12,459,367   
  

 

 

     

 

 

     

 

 

     

 

 

  

Total common stocks

      422,429,916         —           —           422,429,916   
  

 

 

     

 

 

     

 

 

     

 

 

  

Total investments at fair value

    $ 806,663,366       $ 1,237,513,124       $ —         $ 2,044,176,490   
  

 

 

     

 

 

     

 

 

     

 

 

  

 

9

CENTERPOINT ENERGY SAVINGS PLAN

Notes to Financial Statements

December 31, 2014 and 2013

 

 

    
     Investments at Fair Value as of December 31, 2013  
     Level 1      Level 2      Level 3      Total  

Mutual funds

         

Fixed Income Fund

    $ 170,047,901       $ —         $                 —         $ 170,047,901   

Large Company Growth Fund

      77,832,676         —           —           77,832,676   

Large Company Value Fund

      69,414,846         —           —           69,414,846   

International Equity Fund

      37,300,144         —           —           37,300,144   

Balanced Fund

      31,996,142         —           —           31,996,142   
  

 

 

     

 

 

     

 

 

     

 

 

  

Total mutual funds

      386,591,709         —           —           386,591,709   

Common or collective trust funds

         

Target Date Retirement Funds

      —           337,498,585         —           337,498,585   

Stable Value Fund

      —           260,525,269         —           260,525,269   

S&P 500 Index Fund

      —           206,358,659         —           206,358,659   

Balanced Fund

      —           79,272,146         —           79,272,146   

Large Company Growth Fund

      —           68,375,264         —           68,375,264   

International Equity Fund

      —           62,473,480         —           62,473,480   

Large Company Value Fund

      —           61,159,854         —           61,159,854   

Fixed Income Fund

      —           37,741,974         —           37,741,974   

Small Company Fund

      —           32,199,913         —           32,199,913   

CenterPoint Energy Stock Fund

      —           7,832,019         —           7,832,019   

Short Term Investment Fund

      —           3,464,124         —           3,464,124   
  

 

 

     

 

 

     

 

 

     

 

 

  

Total common or collective trust funds

      —           1,156,901,287         —           1,156,901,287   

Common stocks

         

Company Common Stock Fund

      417,934,751         —           —           417,934,751   

Small Company Fund

      25,160,719         —           —           25,160,719   
  

 

 

     

 

 

     

 

 

     

 

 

  

Total common stocks

      443,095,470         —           —           443,095,470   
  

 

 

     

 

 

     

 

 

     

 

 

  

Total investments at fair value

    $ 829,687,179       $ 1,156,901,287       $ —         $ 1,986,588,466   
  

 

 

     

 

 

     

 

 

     

 

 

  

 

10

CENTERPOINT ENERGY SAVINGS PLAN

Notes to Financial Statements

December 31, 2014 and 2013

 

 

4. Fair Value of Investments in Entities that Use Net Asset Value

The following tables set forth a summary of the Plan’s investments with a reported Net Asset Value (NAV) as of December 31, 2014 and 2013:

 

     Fair Value Estimated Using Net Asset Value per Share
December 31, 2014		  
     Fair Value      Unfunded
Commitment		      Redemption
Frequency		      Redemption
Notice
Period		  

Northern Trust Collective Short Term Investment Fund(1)

    $ 14,276,069       $ —           Daily         Same Day   

BlackRock Equity Index Fund(2)

      251,751,734         —           Daily         (12 ) 

BlackRock Russell 1000 Growth Index Fund(3)

      73,260,127         —           Daily         (12 ) 

BlackRock Russell 1000 Value Index Fund(4)

      62,001,856         —           Daily         (12 ) 

BlackRock Russell 2000 Index Fund(5)

      22,221,470         —           Daily         (12 ) 

BlackRock MSCI ACWI Ex-US Index Fund(6)

      22,503,960         —           Daily         (12 ) 

GSAM Various Term Funds(7)

      205,705,512         —           Daily         (13 ) 

Loomis Sayles Int. Gov’t/Credit Fund(7)

      15,930,767         —           Daily         (14 ) 

Mellon EB Daily Liquidity Aggregate Bond Index Fund(8)

      67,139,112         —           Daily         (15 ) 

Prudential Core Conservative Intermediate Bond Fund(7)

      15,976,198         —           Daily         (16 ) 

Thornburg International Equity Fund(9)

      51,303,218         —           Daily         (17 ) 

Vanguard Target Date Retirement Funds(10)

      404,990,893         —           Daily         (18 ) 

Wellington Small Cap Opportunities Portfolio(11)

      30,452,208         —           Daily         (19 ) 
     Fair Value Estimated Using Net Asset Value per Share
December 31, 2013		  
     Fair Value      Unfunded
Commitment		      Redemption
Frequency		      Redemption
Notice
Period		  

Northern Trust Collective Short Term Investment Fund(1)

    $ 26,365,362       $ —           Daily         Same Day   

BlackRock Equity Index Fund(2)

      252,903,122         —           Daily         (12 ) 

BlackRock Russell 1000 Growth Index Fund(3)

      68,375,264         —           Daily         (12 ) 

BlackRock Russell 1000 Value Index Fund(4)

      61,159,854         —           Daily         (12 ) 

BlackRock Russell 2000 Index Fund(5)

      31,460,170         —           Daily         (12 ) 

BlackRock MSCI ACWI Ex-US Index Fund(6)

      26,511,374         —           Daily         (12 ) 

GSAM Various Term Funds(7)

      214,465,604         —           Daily         (13 ) 

Loomis Sayles Int. Gov’t/Credit Fund(7)

      16,233,896         —           Daily         (14 ) 

Mellon EB Daily Liquidity Aggregate Bond Index Fund(8)

      37,741,974         —           Daily         (15 ) 

Prudential Core Conservative Intermediate Bond Fund(7)

      15,496,294         —           Daily         (16 ) 

Thornburg International Equity Fund(9)

      53,220,697         —           Daily         (17 ) 

Vanguard Target Date Retirement Funds(10)

      337,498,584         —           Daily         (18 ) 

Wellington Small Cap Opportunities Portfolio(11)

      15,469,092         —           Daily         (19 ) 

 

11

CENTERPOINT ENERGY SAVINGS PLAN

Notes to Financial Statements

December 31, 2014 and 2013

 

 

(1)

The fund is composed of high-grade money market instruments with short maturities. The objective is to provide an investment vehicle for cash reserves while offering a competitive rate of return. The fund uses high quality securities with the emphasis on providing liquidity for redemption of units on any business day while preserving the principal. Within quality, maturity and sector diversification guidelines, investments are made in those securities with the most attractive yields.

(2)

This fund seeks to match the performance of the S&P 500 Index by investing in stocks that make up the index. The S&P 500 Index is an unmanaged, market-weighted index that consists of the 500 largest publicly traded companies and is considered representative of the broad U.S. stock market.

(3)

The investment objective is to track the performance of the Russell 1000 Growth Index by investing in a diversified sample of stocks that make up the index which is comprised of the large-cap growth segment of the U.S. equities with higher price-to-book value ratios and higher forecasted growth values.

(4)

The investment objective is to track the performance of the Russell 1000 Value Index by investing in a diversified sample of stocks that make up the index which is comprised of the large-cap value segment of the U.S. equities with lower price-to-book value ratios and lower forecasted growth values.

(5)

The investment objective is to track the performance of the Russell 2000 Index by investing in a diversified sample of stocks that make up the index which is comprised of the 2000 smallest companies in the Russell 3000 Index.

(6)

The investment objective is to track the performance of the Morgan Stanley Capital International All Country World Ex-U.S. Index by investing in a diversified sample of stocks that make up the index which is comprised of stocks representing approximately 43 country stock markets, excluding the U.S. market while including Canada and the emerging markets.

(7)

These are the short to mid-term fixed income investments of the Stable Value Fund with preservation of principal as the primary investment objective (see Note 5 for information on the Stable Value Fund).

(8)

The investment objective is to track the performance of the Barclays Capital U.S. Aggregate Bond Index by investing in a representative portfolio that matches the industry allocation, quality and duration of such index.

(9)

The investment objective is to seek long-term capital appreciation by investing in a diversified portfolio of international equities that is benchmarked against the Morgan Stanley Capital International Europe, Australasia, and Far East Index.

(10)

These funds invest in funds with a mix of common stocks and fixed income securities using an asset allocation strategy that will become more conservative over time.

(11)

The investment objective is to seek long-term (more than five years) total return in excess of the Russell 2000 Index by focusing on stock selection through bottom-up analysis.

(12)

A redemption resulting from the aggregate daily activities of Participants generally requires same-day notice. A redemption initiated by the Committee requires up to three business days’ notice, depending on the applicable fund. Redemption is generally settled in cash on the business day following the redemption date but may be settled in kind three business days following the redemption date.

(13)

GSAM Stable Value, LLC must provide at least five business days’ notice of redemption. Redemption is generally settled within thirty days of the redemption date and may be settled in kind.

(14)

GSAM Stable Value, LLC must provide at least one business day notice of redemption. Redemption is generally settled on the redemption date.

(15)

Same-day notice is generally permitted for a redemption resulting from the aggregate daily activities of Participants and a redemption initiated by the Committee. Redemption is generally settled on the business day following the redemption date and may be settled in kind.

(16)

GSAM Stable Value, LLC must provide at least five business days’ notice of redemption. Redemption is settled within ten business days of the redemption date and may be settled in kind.

(17)

The Committee must provide at least five business days’ notice of redemption. Redemption is generally settled within ten business days of the redemption date and may be settled in kind. Redemption may be limited to a maximum of the greater of $2,000,000 or five percent of the value of the assets in the Thornburg International Equity Fund.

 

12

CENTERPOINT ENERGY SAVINGS PLAN

Notes to Financial Statements

December 31, 2014 and 2013

 

(18)

A redemption resulting from the aggregate daily activities of Participants generally requires same-day notice and settles on the business day following the redemption date. A redemption initiated by the Committee generally requires same-day notice, settles as soon as practicable and may be settled in kind.

(19)

The Committee must provide at least ten business days’ notice of redemption. A longer notice period may be required. Redemption is settled within a reasonable time following the redemption date and may be settled in kind.

 

5. Investments

The following investments represent five percent or more of the Plan’s net assets available for benefits.

 

     December 31,  
     2014      2013  

Company Common Stock
17,497,676 and 18,029,972 shares, respectively

    $ 409,970,549       $ 417,934,751   

BlackRock Equity Index Fund
6,977,727 and 7,972,617 shares, respectively

      251,751,734         252,903,122   

PIMCO Total Return Fund
13,288,962 and 13,588,106 shares, respectively

      141,660,335         145,256,856   

The Plan has significant holdings of Company common stock. As a result, the values of the Plan’s investments may be materially impacted by the changes in the fair value of this security.

During 2014 the Plan’s investments (including gains and losses on investments bought and sold, as well as held during the year) appreciated in value as follows:

 

Common or collective trust funds

    $ 73,976,684   

Common stocks

      6,651,663   

Mutual funds

      12,353,876   
  

 

 

  

Total investment appreciation

    $ 92,982,223   
  

 

 

  

Stable Value Fund

The Stable Value Fund utilizes synthetic guaranteed investment contracts (Synthetic GICs). A Synthetic GIC includes a wrap contract issued by an insurance company or other financial institution and a portfolio of fixed income assets that are owned by the Stable Value Fund. The wrap contract provides that realized and unrealized gains and losses on the assets covered by the wrap contract are not reflected immediately in the net assets of the Stable Value Fund, but rather are amortized over the duration of the assets or other agreed upon period, through adjustments to the future interest crediting rates. The wrap contract provides a guarantee that all qualified participant withdrawals will occur at contract value which represents contributions made under the contract, plus earnings, less withdrawals made under the contract and administrative expenses.

The crediting rates for Synthetic GICs are reset periodically and are based on the market value of the portfolio of assets covered by the contracts.

During 2014 and 2013, the average yields for the Stable Value Fund were as follows:

 

     2014     2013  

Based on actual earnings

      1.10 %      0.95 % 

Based on the interest rate credited to Participants

      1.30 %      1.19 % 

 

13

CENTERPOINT ENERGY SAVINGS PLAN

Notes to Financial Statements

December 31, 2014 and 2013

 

Wrap contracts provide that withdrawals associated with certain events not in the ordinary course of fund operations may be paid at market rather than contract value. Examples of such circumstances may include significant plan design changes, complete or partial plan terminations, severance programs, early retirement programs, the closing or sale of a subsidiary, bankruptcy of the plan sponsor or the failure of the trust to qualify for exemption from federal income taxes or any required prohibited transaction exemption under ERISA. The Plan Administrator does not believe the occurrence of the above events that would limit the Plan’s ability to conduct transactions with Participants at contract value is probable.

 

6. Risks and Uncertainties

The Plan provides for investments in Company common stock, commingled and mutual funds and other investments. Investments, in general, are exposed to various risks, such as interest rate, credit and overall market volatility risk. Due to the level of risk associated with certain investments, it is reasonably possible that changes in the values of investments will occur in the near term and that such changes could materially affect the amounts reported in the Statements of Net Assets Available for Benefits and Participant account balances. Rates of return will vary, and returns will depend on the market value of the Plan’s investments.

 

7. Tax Status

The IRS has determined and informed the Company by letter dated September 13, 2013 that the Plan is qualified and the trust fund established is tax-exempt under the appropriate sections of the IRC. Although the Plan has been amended and restated since receiving the determination letter, the Plan Administrator and the Plan sponsor’s counsel believe these amendments have not adversely affected the Plan’s qualified status and the related trust’s tax-exempt status as of the financial statement date.

GAAP requires the Plan Administrator to evaluate tax positions taken by the Plan and recognize a tax liability (or asset) if the Plan has taken an uncertain position that more likely than not would not be sustained upon examination by the IRS. The Plan Administrator has analyzed the tax positions taken by the Plan, and has concluded that as of December 31, 2014 and 2013, there are no uncertain positions taken or expected to be taken that would require recognition of a liability (or asset) or disclosure in the financial statements. The Plan is subject to routine audits by the IRS; however, there are currently no audits for any tax periods in progress. The Plan Administrator believes it is generally no longer subject to income tax examinations for years prior to 2011.

 

8. Related Party Transactions

During 2014, the Plan purchased and sold shares of the Company’s common stock and units of short-term investment funds managed by the Trustee as temporary investments (party-in-interest transactions) as shown below:

 

Purchases

    Company Common Stock    $  207,171,341   
   Northern Trust Collective Short Term Investment Fund      702,714,316   

Sales

    Company Common Stock    $ 220,183,027   
   Northern Trust Collective Short Term Investment Fund      714,643,867   

 

9. Reconciliation of Financial Statements to Form 5500

The following is a reconciliation of Net Assets Available for Benefits per the financial statements to Form 5500:

 

     2014      2013  

Net Assets Available for Benefits per the financial statements

    $ 2,090,679,104       $ 2,024,575,432   

Adjustment from contract value to fair value for fully benefit-responsive contracts

      2,544,702         2,212,204   
  

 

 

     

 

 

  

Net Assets per Form 5500

    $ 2,093,223,806       $ 2,026,787,636   
  

 

 

     

 

 

  

 

14

CENTERPOINT ENERGY SAVINGS PLAN

Notes to Financial Statements

December 31, 2014 and 2013

 

The following is a reconciliation of the Increase in Net Assets Available for Benefits per the financial statements to Form 5500 for the year ended December 31, 2014:

 

Increase in Net Assets Available for Benefits per the financial statements

    $  66,103,672   

Adjustment to reverse fair value adjustment for fully benefit-responsive contracts related to prior year

      (2,212,204 ) 

Adjustment from contract value to fair value for fully benefit-responsive contracts

      2,544,702   
  

 

 

  

Net Income per Form 5500

    $ 66,436,170   
  

 

 

  

 

15

CENTERPOINT ENERGY SAVINGS PLAN

EIN 74-0694415 PLAN 015

SCHEDULE H, LINE 4i

SCHEDULE OF ASSETS (HELD AT END OF YEAR)

DECEMBER 31, 2014

 

(a)   (b)    Identity of issue, borrower, lessor or
        similar party		    (c)    Description of investment including maturity
        date, rate of interest, collateral, par or maturity
        value		    (e)    Current
         value		  
  COMMON OR COLLECTIVE TRUSTS      
 

BLACKROCK

    EQUITY INDEX FUND    $ 251,751,734   
 

BLACKROCK

    MSCI ACWI EX US INDEX FUND      22,503,960   
 

BLACKROCK

    RUSSELL 1000 GROWTH INDEX FUND      73,260,127   
 

BLACKROCK

    RUSSELL 1000 VALUE INDEX FUND      62,001,856   
 

BLACKROCK

    RUSSELL 2000 INDEX FUND      22,221,470   
 

GSAM STABLE VALUE, LLC

    TERM FUND 2014      5,833,745   
 

GSAM STABLE VALUE, LLC

    TERM FUND 2015      35,840,066   
 

GSAM STABLE VALUE, LLC

    TERM FUND 2016      38,002,607   
 

GSAM STABLE VALUE, LLC

    TERM FUND 2017      31,818,323   
 

GSAM STABLE VALUE, LLC

    TERM FUND 2018      35,570,700   
 

GSAM

    INTERMEDIATE CORE FUND      42,936,896   
 

GSAM

    SHORT GOV’T CREDIT FUND      15,703,175   
 

LOOMIS SAYLES

    INTERMEDIATE GOV’T CREDIT FUND      15,930,767   
 

MELLON BANK

    EB DAILY LIQUIDITY AGGREGATE BOND FUND      67,139,112   
*  

NORTHERN TRUST

    SHORT TERM INVESTMENT FUND      14,276,069   
 

PRUDENTIAL

    CORE CONSERVATIVE INTER BOND FUND      15,976,198   
 

THORNBURG INVESTMENT MANAGEMENT

    INTERNATIONAL EQUITY FUND      51,303,218   
 

VANGUARD

    TARGET RETIREMENT 2010 TRUST II FUND      2,967,155   
 

VANGUARD

    TARGET RETIREMENT 2015 TRUST II FUND      32,725,385   
 

VANGUARD

    TARGET RETIREMENT 2020 TRUST II FUND      26,682,554   
 

VANGUARD

    TARGET RETIREMENT 2025 TRUST II FUND      55,144,648   
 

VANGUARD

    TARGET RETIREMENT 2030 TRUST II FUND      20,911,115   
 

VANGUARD

    TARGET RETIREMENT 2035 TRUST II FUND      67,445,456   
 

VANGUARD

    TARGET RETIREMENT 2040 TRUST II FUND      37,874,830   
 

VANGUARD

    TARGET RETIREMENT 2045 TRUST II FUND      74,576,111   
 

VANGUARD

    TARGET RETIREMENT 2050 TRUST II FUND      45,839,214   
 

VANGUARD

    TARGET RETIREMENT 2055 TRUST II FUND      28,836,185   
 

VANGUARD

    TARGET RETIREMENT INCOME TRUST II FUND      11,988,240   
 

WELLINGTON MANAGEMENT

    SMALL CAP OPPORTUNITIES PORTFOLIO      30,452,208   
 

SUBTOTAL

       $ 1,237,513,124   
 

COMMON STOCK

      
 

AAR CORP

    COMMON STOCK    $ 293,774   
 

ALBANY INTL CORP

    COMMON STOCK      436,315   
 

ALEXANDER & BALDWIN INC

    COMMON STOCK      257,742   
 

ALTISOURCE RESIDENTIAL CORP

    COMMON STOCK      317,093   
 

AMBAC FINL GROUP INC

    COMMON STOCK      387,345   
 

B & G FOODS INC

    COMMON STOCK      189,716   
 

BARNES GROUP INC

    COMMON STOCK      275,910   
 

BOB EVANS FARMS INC

    COMMON STOCK      394,086   
  BROOKDALE SR LIVING INC    COMMON STOCK      333,147   

 

16

CENTERPOINT ENERGY SAVINGS PLAN

EIN 74-0694415 PLAN 015

SCHEDULE H, LINE 4i

SCHEDULE OF ASSETS (HELD AT END OF YEAR)

DECEMBER 31, 2014

 

(a)   (b)    Identity of issue, borrower, lessor or
        similar party		    (c)    Description of investment including maturity
        date, rate of interest, collateral, par or maturity
        value		    (e)    Current
         value		  
 

CASEYS GEN STORES INC

    COMMON STOCK      462,890   
*  

CENTERPOINT ENERGY INC

    COMMON STOCK      409,970,549   
 

CHEMTURA CORP

    COMMON STOCK      455,527   
 

CLEARWATER PAPER CORP

    COMMON STOCK      442,833   
 

CNO FINL GROUP INC

    COMMON STOCK      273,195   
 

CORE-MARK HLDG CO INC

    COMMON STOCK      305,934   
 

CUBIC CORP

    COMMON STOCK      199,506   
 

DARLING INGREDIENTS INC

    COMMON STOCK      409,326   
 

ESTERLINE TECHNOLOGIES CORP

    COMMON STOCK      516,044   
 

H & E EQUIP SVCS INC

    COMMON STOCK      253,793   
 

IBERIABANK CORP

    COMMON STOCK      442,601   
 

KULICKE & SOFFA INDS INC

    COMMON STOCK      481,084   
 

MASONITE INTL CORP

    COMMON STOCK      220,641   
 

MEDIA GEN INC

    COMMON STOCK      216,235   
 

MUELLER INDS INC

    COMMON STOCK      427,433   
 

NORTHWEST BANCSHARES INC

    COMMON STOCK      404,656   
 

OMEGA HEALTHCARE INVS INC

    COMMON STOCK      326,430   
 

OMNICELL INC

    COMMON STOCK      195,077   
 

OWENS ILL INC

    COMMON STOCK      406,874   
 

PORTLAND GENERAL ELECTRIC CO

    COMMON STOCK      461,337   
 

PRESTIGE BRANDS HLDGS INC

    COMMON STOCK      527,050   
 

REDWOOD TR INC

    COMMON STOCK      426,899   
 

REX ENERGY CORP

    COMMON STOCK      123,752   
 

SABRA HEALTH CARE REIT INC

    COMMON STOCK      278,037   
 

SENSIENT TECHNOLOGIES CORP

    COMMON STOCK      501,124   
 

STAMPS COM INC

    COMMON STOCK      242,829   
 

TIDEWATER INC

    COMMON STOCK      125,589   
 

UNIFIRST CORP MASS

    COMMON STOCK      447,543   
 

SUBTOTAL

       $ 422,429,916   
 

MUTUAL FUND

      
 

LSV ASSET MANAGEMENT

    VALUE EQUITY FUND    $ 77,848,530   
 

LOOMIS SAYLES

    FIXED INCOME FUND      55,323,994   
 

PIMCO

    TOTAL RETURN FUND      141,660,335   
 

T ROWE PRICE

    INSTITUTIONAL LARGE CAP GROWTH FUND      74,628,011   
 

TEMPLETON INVESTMENTS

    FOREIGN EQUITY SERIES      34,772,580   
 

SUBTOTAL

       $ 384,233,450   
       

 

 

  
 

TOTAL PLAN INVESTMENTS AT FAIR VALUE

       $ 2,044,176,490   
       

 

 

  
*  

NOTES RECEIVABLE FROM PARTICIPANTS

      
  CENTERPOINT ENERGY SAVINGS PLAN    LOANS ISSUED AT INTEREST RATE 4.25% WITH VARIOUS MATURITIES    $ 39,555,397   

 

* PARTY-IN-INTEREST

HISTORICAL COST INFORMATION IN COLUMN (D) IS NOT PRESENTED BECAUSE THE INVESTMENTS DISPLAYED ARE PARTICIPANT-DIRECTED.

 

17

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the trustees (or other persons who administer the Plan) have duly caused this annual report to be signed on its behalf by the undersigned thereunto duly authorized.

 

CENTERPOINT ENERGY SAVINGS PLAN
By  

/s/ Joseph B. McGoldrick

  (Joseph B. McGoldrick, Chairman of the Benefits Committee of CenterPoint Energy, Inc., Plan Administrator)

June 09, 2015

 

18