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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 Form 10-Q
  þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2007
 or
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 FOR THE TRANSITION PERIOD FROM  TO
 Commission File Number 333-121505
 CenterPoint Energy Transition Bond Company II, LLC
  Delaware(State or other jurisdiction ofincorporation or organization)
    
    59-3790472(I.R.S. Employer Identification Number)1111 Louisiana, Suite 4655B 
Houston, Texas 77002
    
    (713) 207-5222(Address and zip code of 
principal executive offices)
    
    (Registrants telephone number, including
area code)
 The registrant meets the conditions set forth in General Instruction H(1)(a) and (b) of Form
10-Q and is therefore filing this Form 10-Q with the reduced disclosure format.
 þ o
  o o þ
 o þ




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##### 



CenterPoint Energy Transition Bond Company II, LLC
 TABLE OF CONTENTS
 PART I.
    
    FINANCIAL INFORMATIONItem 1. Financial Statements
    
    
    1Statements of Income and Changes in Members Equity
Three Months and Six Months Ended June 30, 2006 and 2007 (unaudited)
    
    
    1Balance Sheets
December 31, 2006 and June 30, 2007 (unaudited)
    
    
    2Statements of Cash Flows
Six Months Ended June 30, 2006 and 2007 (unaudited)
    
    
    3Notes to Unaudited Financial Statements
    
    
    4Item 2. Managements Narrative Analysis of Results of Operations
    
    
    7Item 4. Controls and Procedures
    
    
    8PART II.
    
    OTHER INFORMATIONItem 1A. Risk Factors
    
    
    9Item 6. Exhibits
    
    
    9Semiannual Servicer's CertificateCertification Pursuant to Section 302Certification Pursuant to Section 302Certification Pursuant to Section 906Certification Pursuant to Section 906Items Incorporated by Reference from the Form 10-K
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##### Table of Contents



CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION
    
    
    changes in market demand and demographic patterns;
    
    weather variations and other natural phenomena affecting retail electric customer energy usage;
    
    the operating performance of CenterPoint Energy Houston Electric, LLCs
(CenterPoint Houston) facilities and third-party suppliers of electric energy in
CenterPoint Houstons service territory;
    
    state and federal legislative and regulatory actions or developments, including
deregulation, re-regulation, changes in or application of laws or regulations applicable to
the various aspects of CenterPoint Houstons business;
    
    the accuracy of the servicers forecast of electrical consumption or the payment of transition charges;
    
    non-payment of transition charges by retail electric providers;
    
    the reliability of the systems, procedures and other infrastructure necessary
to operate the retail electric business in CenterPoint Houstons service territory,
including the systems owned and operated by the independent system operator in the Electric
Reliability Council of Texas, Inc.; and
    
    other factors we discuss in Risk Factors in Item 1A of Part I of our Annual
Report on Form 10-K for the year ended December 31, 2006, which is incorporated herein by
reference, and our other Securities and Exchange Commission filings.
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PART I. FINANCIAL INFORMATION
 
 Item 1.
    
    FINANCIAL STATEMENTS
 CENTERPOINT ENERGY TRANSITION BOND COMPANY II, LLC
 
 STATEMENTS OF INCOME
AND CHANGES IN MEMBERS EQUITY
 (Unaudited)
 Three Months Ended June 30,
    
    
    Six Months Ended June 30,2006
    
    
    2007
    
    
    2006
    
    
    2007(in thousands)Revenues:Transition charge revenue
    
    $
    49,604
    
    
    $
    47,904
    
    
    $
    87,721
    
    
    $
    87,551Investment income
    
    
    631
    
    
    
    815
    
    
    
    822
    
    
    
    1,273Total operating revenues
    
    
    50,235
    
    
    
    48,719
    
    
    
    88,543
    
    
    
    88,824Expenses:Interest expense
    
    
    23,636
    
    
    
    22,788
    
    
    
    47,272
    
    
    
    45,784Amortization of transition property
    
    
    25,374
    
    
    
    25,085
    
    
    
    38,944
    
    
    
    41,106Amortization of transition bond discount
and issuance costs
    
    
    560
    
    
    
    502
    
    
    
    1,123
    
    
    
    1,018Administrative and general expenses
    
    
    665
    
    
    
    344
    
    
    
    1,204
    
    
    
    916Total operating expenses
    
    
    50,235
    
    
    
    48,719
    
    
    
    88,543
    
    
    
    88,824Net Income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Members Equity at Beginning of Period
    
    
    9,256
    
    
    
    9,256
    
    
    
    9,256
    
    
    
    9,256Contributed Capital
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Members Equity at End of Period
    
    $
    9,256
    
    
    $
    9,256
    
    
    $
    9,256
    
    
    $
    9,256
  1




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CENTERPOINT ENERGY TRANSITION BOND COMPANY II, LLC
 
 BALANCE SHEETS
 (Unaudited)
 December 31, 2006
    
    
    June 30, 2007(in thousands)ASSETSCurrent Assets:Cash and cash equivalents
    
    $
    90,827
    
    
    $
    72,304Restricted funds
    
    
    33,243
    
    
    
    33,674Transition charge receivable
    
    
    24,411
    
    
    
    31,815Current Assets
    
    
    148,481
    
    
    
    137,793Intangible transition property
    
    
    1,746,421
    
    
    
    1,705,315Unamortized debt issuance costs
    
    
    10,439
    
    
    
    9,448Total Assets
    
    $
    1,905,341
    
    
    $
    1,852,556LIABILITIES AND MEMBERS EQUITYCurrent Liabilities:Current portion of long-term debt
    
    $
    86,864
    
    
    $
    89,992Accrued interest
    
    
    39,019
    
    
    
    37,980Customer deposits
    
    
    23,743
    
    
    
    24,176Fees payable to servicer
    
    
    1,143
    
    
    
    464Current Liabilities
    
    
    150,769
    
    
    
    152,612Long-term debt:Transition bonds, net of unamortized discount
    
    
    1,745,316
    
    
    
    1,690,688Total Liabilities
    
    
    1,896,085
    
    
    
    1,843,300Members Equity:Contributed capital
    
    
    9,256
    
    
    
    9,256Retained earnings
    
    
    
    
    
    
    Total Members Equity
    
    
    9,256
    
    
    
    9,256Total Liabilities and Members Equity
    
    $
    1,905,341
    
    
    $
    1,852,556
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CENTERPOINT ENERGY TRANSITION BOND COMPANY II, LLC
 
 STATEMENTS OF CASH FLOWS
 (Unaudited)
 Six Months Ended June 30,2006
    
    
    2007(in thousands)Cash Flows from Operating Activities:Net income
    
    $
    
    
    
    $
    Adjustments for non-cash items:Amortization of transition property
    
    
    38,944
    
    
    
    41,106Amortization of transition bond discount and issuance costs
    
    
    1,123
    
    
    
    1,018Changes in other assets and liabilities:Transition charge receivable
    
    
    (23,728
    )
    
    
    (7,404
    )Other current liabilities
    
    
    (1,460
    )
    
    
    Accrued interest
    
    
    47,272
    
    
    
    (1,039
    )Customer deposits
    
    
    6,113
    
    
    
    433Fees payable to servicer
    
    
    1,229
    
    
    
    (679
    )Net cash provided by operating activities
    
    
    69,493
    
    
    
    33,435Cash Flows from Investing Activities:Restricted funds
    
    
    (6,337
    )
    
    
    (431
    )Net cash used in investing activities
    
    
    (6,337
    )
    
    
    (431
    )Cash Flows from Financing Activities:Payments of long-term debt
    
    
    
    
    
    
    (51,527
    )Net cash used in financing activities
    
    
    
    
    
    
    (51,527
    )Net Increase (Decrease) in Cash and Cash Equivalents
    
    
    63,156
    
    
    
    (18,523
    )Cash and Cash Equivalents, Beginning of Period
    
    
    1,461
    
    
    
    90,827Cash and Cash Equivalents, End of Period
    
    $
    64,617
    
    
    $
    72,304Supplemental Disclosure of Cash Flow Information:Cash Payments:Interest
    
    $
    
    
    
    $
    46,823
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CENTERPOINT ENERGY TRANSITION BOND COMPANY II, LLC
 
 NOTES TO UNAUDITED FINANCIAL STATEMENTS
 (1) Background and Basis of Presentation
 General.
 Background.
 Basis of Presentation.
  Amortization.
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(2) Transition Charges
  2006
    
    2007January
    
    $
    402
    
    
    $
    13,525February
    
    
    8,525
    
    
    
    12,489March
    
    
    13,257
    
    
    
    14,582April
    
    
    11,862
    
    
    
    12,956May
    
    
    12,589
    
    
    
    13,322June
    
    
    16,704
    
    
    
    12,987July
    
    
    16,302August
    
    
    19,329September
    
    
    18,528October
    
    
    18,118November
    
    
    17,263December
    
    
    13,646
 (3) Cash and Cash Equivalents/Restricted Funds
  
    
    The General Subaccount is comprised of collections of transition charges
remitted to the trustees administrative agent by the servicer with respect to the
transition bonds. These amounts accumulate in the General Subaccount until they are
transferred from the General Subaccount on each transition bond payment date. The General
Subaccount had a balance of $67.5 million at June 30, 2007.
    
    The Excess Funds Subaccount is maintained for the purpose of holding any
collected transition charges and earnings on amounts in the collection account (other than
earnings on amounts allocated to the Capital Subaccount) not otherwise used on the payment
dates of the transition bonds for payment of principal, interest, fees or expenses, or for
funding the Capital Subaccount. The Excess Funds Subaccount had a balance of $4.8 million
at June 30, 2007.
    
    The Capital Subaccount received a deposit of approximately $9.3 million (0.5%
of the initial principal amount of the transition bonds) on the date of issuance of the
transition bonds. CenterPoint Houston contributed this amount to the Company. If amounts
available in the General and Excess Funds Subaccounts are not sufficient on any payment
date to make scheduled payments on the transition bonds and payments of certain fees and
expenses, the trustees administrative agent will draw on amounts in the Capital
Subaccount. As of June 30, 2007, the Capital Subaccount had a balance of $9.5 million and
is classified as Restricted Funds in the Balance Sheets.
  (4) Long-Term Debt
  5




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Scheduled
    
    
    
    Interest
    
    AmountTranche
    
    Final Payment Date
    
    Final Maturity Date
    
    Rate
    
    (in millions)A-1
    
    February 1, 2009
    
    February 1, 2011
    
    
    4.84
    %
    
    $
    180A-2
    
    August 1, 2012
    
    August 1, 2014
    
    
    4.97
    %
    
    
    368A-3
    
    February 1, 2014
    
    August 1, 2015
    
    
    5.09
    %
    
    
    252A-4
    
    August 1, 2017
    
    August 1, 2019
    
    
    5.17
    %
    
    
    519A-5
    
    August 1, 2019
    
    August 1, 2020
    
    
    5.302
    %
    
    
    4621,781Less: Current Maturities (scheduled payments)
    
    
    (90
    )Total Long-Term Debt, net
    
    $
    1,691
  Tranche A-1
    
    Tranche A-2
    
    Tranche A-3
    
    Tranche A-4
    
    Tranche A-5Scheduled
    
    Actual
    
    Scheduled
    
    Actual
    
    Scheduled
    
    Actual
    
    Scheduled
    
    Actual
    
    Scheduled
    
    ActualAugust 1, 2006
    
    $
    18,565
    
    
    $
    18,565
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    February 1, 2007
    
    
    51,527
    
    
    
    51,527
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
 (5) Related Party Transactions and Major Customers
 Related Party Transactions.
 Major Customers.
 6




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Item 2. MANAGEMENTS NARRATIVE ANALYSIS OF RESULTS OF OPERATIONS
         7




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Item 4. CONTROLS AND PROCEDURES
   8




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PART II. OTHER INFORMATION
 
 Item 1A. Risk Factors
  
 Item 6. Exhibits
   Report or Registration
    
    SEC File orExhibit Number
    
    Description
    
    Statement
    
    Registration Number
    
    Exhibit References4.1
    
    Amended and Restated Certificate of Formation of CenterPoint Energy Transition Bond Company II, LLC
    
    Current Report on Form 8-K filed with the SEC on December 16, 2005
    
    333-121505
    
    3.14.2
    
    Amended and
Restated Limited Liability Company Agreement of CenterPoint Energy Transition Bond Company II, LLC
    
    Current Report on
Form 8-K filed with
the SEC on December
16, 2005
    
    333-121505
    
    3.2+10.1
    
    Semiannual
Servicers
Certificate, dated
as of July 31,
2007, as to the
transition bond
balances, the
balances of the
collection account
and its sub-accounts, and
setting forth transfers and
payments to be made
on the August 1,
2007 payment date+31.1
    
    Section 302
Certification of
Gary L. Whitlock+31.2
    
    Section 302
Certification of
Marc Kilbride+32.1
    
    Section 906
Certification of
Gary L. Whitlock+32.2
    
    Section 906
Certification of
Marc Kilbride+99.1
    
    Items incorporated
by reference from
the CenterPoint
Energy Transition
Bond Company II,
LLC Form 10-K.
Item 1A Risk
Factors.
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SIGNATURES
  CENTERPOINT ENERGY TRANSITION BOND COMPANY II, LLC
 By:
    /s/ James S. BrianJames S. BrianSenior Vice President and Chief Accounting Officer  10




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EXHIBIT INDEX
  Report or Registration
    
    SEC File orExhibit Number
    
    Description
    
    Statement
    
    Registration Number
    
    Exhibit References4.1
    
    Amended and Restated Certificate of Formation of CenterPoint Energy Transition Bond Company II, LLC
    
    Current Report on Form 8-K filed with the SEC on December 16, 2005
    
    333-121505
    
    3.14.2
    
    Amended and
Restated Limited Liability Company Agreement of CenterPoint Energy Transition Bond Company II, LLC
    
    Current Report on
Form 8-K filed with
the SEC on December
16, 2005
    
    333-121505
    
    3.2+10.1
    
    Semiannual
Servicers
Certificate, dated
as of July 31,
2007, as to the
transition bond
balances, the
balances of the
collection account
and its sub-accounts, and
setting forth transfers and
payments to be made
on the August 1,
2007 payment date+31.1
    
    Section 302
Certification of
Gary L. Whitlock+31.2
    
    Section 302
Certification of
Marc Kilbride+32.1
    
    Section 906
Certification of
Gary L. Whitlock+32.2
    
    Section 906
Certification of
Marc Kilbride+99.1
    
    Items incorporated
by reference from
the CenterPoint
Energy Transition
Bond Company II,
LLC Form 10-K.
Item 1A Risk
Factors.