PG&E 2008 Annual Report Download - page 113

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Dividends on all Utility preferred stock are cumulative.
All shares of preferred stock have voting rights and an
equal preference in dividend and liquidation rights. During
the years ended December 31, 2008, 2007, and 2006, the
Utility paid approximately $14 million of dividends on
preferred stock without mandatory redemption provisions.
On December 17, 2008, the Board of Directors of the Utility
declared a cash dividend on its outstanding series of pre-
ferred stock totaling approximately $3 million that was paid
on February 15, 2009 to shareholders of record on January 30,
2009. Upon liquidation or dissolution of the Utility, holders
of preferred stock would be entitled to the par value of
such shares plus all accumulated and unpaid dividends,
as specifi ed for the class and series.
NOTE 9: EARNINGS PER SHARE
Earnings per common share (“EPS”) is calculated utilizing
the “two-class” method, by dividing the sum of distributed
earnings to common shareholders and undistributed earnings
allocated to common shareholders by the weighted average
number of common shares outstanding during the period.
In applying the “two-class” method, undistributed earnings
are allocated to both common shares and participating
securities. PG&E Corporation’s Convertible Subordinated
Notes are entitled to receive pass-through dividends and
meet the criteria of a participating security. All PG&E
Corporation’s participating securities participate on a 1:1
basis with shares of common stock.
PG&E Corporation applies the treasury stock method of
refl ecting the dilutive effect of outstanding stock-based com-
pensation in the calculation of diluted EPS in accordance
with SFAS No. 128, “Earnings Per Share” (“SFAS No. 128”).
Under SFAS No. 128, PG&E Corporation is required to
assume that shares underlying stock options, other stock-
based compensation, and warrants are issued and that
the proceeds received by PG&E Corporation from exercise
of these options and warrants are assumed to be used to
purchase common shares at the average market price during
the reported period. The incremental shares, the difference
between the number of shares assumed issued upon exercise
and the number of shares assumed purchased is included
in weighted average common shares outstanding for the
purpose of calculating diluted EPS.
NOTE 8: PREFERRED STOCK
PG&E Corporation has authorized 85 million shares
of preferred stock, which may be issued as redeemable or
nonredeemable preferred stock. No preferred stock of PG&E
Corporation has been issued.
UTILITY
The Utility has authorized 75 million shares of $25 par
value preferred stock and 10 million shares of $100 par value
preferred stock. The Utility specifi es that 5,784,825 shares
of the $25 par value preferred stock authorized are desig-
nated as nonredeemable preferred stock without mandatory
redemption provisions. The remainder of the 75 million
shares of $25 par value preferred stock and the 10 million
shares of $100 par value preferred stock may be issued as
redeemable or nonredeemable preferred stock.
At December 31, 2008 and 2007, the Utility had issued
and outstanding 5,784,825 shares of nonredeemable $25 par
value preferred stock without mandatory redemption provi-
sions. Holders of the Utility’s 5.0%, 5.5%, and 6.0% series
of nonredeemable $25 par value preferred stock have rights
to annual dividends ranging from $1.25 to $1.50 per share.
At December 31, 2008 and 2007, the Utility had issued
and outstanding 4,534,958 shares of redeemable $25 par
value preferred stock without mandatory redemption provi-
sions. The Utility’s redeemable $25 par value preferred stock
is subject to redemption at the Utility’s option, in whole
or in part, if the Utility pays the specifi ed redemption
price plus accumulated and unpaid dividends through the
redemption date. At December 31, 2008, annual dividends
ranged from $1.09 to $1.25 per share and redemption
prices ranged from $25.75 to $27.25 per share.
The last of the Utility’s redeemable $25 par value preferred
stock with mandatory redemption provisions was redeemed
on May 31, 2005. Currently the Utility does not have any
shares of the $100 par value preferred stock with or without
mandatory redemption provisions outstanding.