CenterPoint Energy 2008 Annual Report Download - page 124

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102
(1) Options to purchase 5,863,907, 3,225,969 and 2,617,772 shares were outstanding for the years ended
December 31, 2006, 2007 and 2008, respectively, but were not included in the computation of diluted
earnings per share because the options’ exercise price was greater than the average market price of the
common shares for the respective years.
All of the 2.875% contingently convertible senior notes and substantially all of the 3.75% contingently
convertible senior notes provided for settlement of the principal portion in cash rather than stock. In accordance
with Emerging Issues Task Force Issue No. 04-8, ―Accounting Issues related to Certain Features of Contingently
Convertible Debt and the Effect on Diluted Earnings Per Share,‖ the portion of the conversion value of such notes
that must be settled in cash rather than stock is excluded from the computation of diluted earnings per share from
continuing operations. The Company included the conversion spread in the calculation of diluted earnings per share
when the average market price of the Company’s common stock in the respective reporting period exceeded the
conversion price. All of the Company’s 2.875% convertible senior notes were either redeemed or surrendered for
conversion in January 2007 and substantially all of the Company’s 3.75% convertible senior notes were submitted
for conversion on or prior to the May 30, 2008 redemption date, as described in Note 8(b), ―Long-term Debt —
Convertible Debt.‖
(13) Unaudited Quarterly Information
Summarized quarterly financial data is as follows:
Year Ended December 31, 2007
First
Quarter
Second
Quarter
Third
Quarter
Fourth
Quarter
(In millions, except per share amounts)
Revenues ................................................................................................
$ 3,106
$ 2,033
$ 1,882
$ 2,602
Operating income................................................................................................
353
242
287
303
Net income ................................................................................................
130
70
91
108
Basic earnings per share(1) ................................................................
$ 0.41
$ 0.22
$ 0.29
$ 0.34
Diluted earnings per share(1) ................................................................
$ 0.38
$ 0.20
$ 0.27
$ 0.32
Year Ended December 31, 2008
First
Quarter
Second
Quarter
Third
Quarter
Fourth
Quarter
(In millions, except per share amounts)
Revenues ................................................................................................
$ 3,363
$ 2,670
$ 2,515
$ 2,774
Operating income................................................................................................
336
297
337
303
Net income ................................................................................................
123
101
136
87
Basic earnings per share(1) ................................................................
$ 0.38
$ 0.30
$ 0.40
$ 0.25
Diluted earnings per share(1) ................................................................
$ 0.36
$ 0.30
$ 0.39
$ 0.25
_________
(1) Quarterly earnings per common share are based on the weighted average number of shares outstanding
during the quarter, and the sum of the quarters may not equal annual earnings per common share. The
Company included the conversion spread related to its contingently convertible senior notes in the
calculation of diluted earnings per share when the average market price of the Company’s common stock in
the respective reporting period exceeds the conversion price. All of the Company’s 2.875% convertible
senior notes were either redeemed or surrendered for conversion in January 2007 and substantially all of
the Company’s 3.75% convertible senior notes were submitted for conversion on or prior to the May 30,
2008 redemption date, as described in Note 8(b), ―Long-term Debt — Convertible Debt.‖
(14) Reportable Business Segments
The Company’s determination of reportable business segments considers the strategic operating units under
which the Company manages sales, allocates resources and assesses performance of various products and services to
wholesale or retail customers in differing regulatory environments. The accounting policies of the business segments
are the same as those described in the summary of significant accounting policies except that some executive benefit