PG&E 2009 Annual Report Download - page 80

composed of at least 52% equity on average each year from
2008 through 2010. These requirements are considered to
be restrictions on the payment of dividends since neither
company can declare dividends if the resulting decrease in
retained earnings would cause the ratio of consolidated
total debt to consolidated capitalization to exceed 65% or
the Utility’s capital structure to fall below 52% equity.
Based on the calculation of these ratios for each company,
no amount of PG&E Corporation’s retained earnings and
$2.5 billion of the Utility’s retained earnings were restricted
at December 31, 2009.
In addition, the Utility was required to maintain at least
$6.6 billion of its net assets as equity in order to maintain
the capital structure of at least 52% equity at December 31,
2009. As a result, $6.6 billion of the Utility’s net assets are
restricted and may not be transferred to PG&E Corporation
in the form of cash dividends.
NOTE 7: PREFERRED STOCK
PG&E CORPORATION
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 to date.
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 specifies that 5,784,825
shares of the $25 par value preferred stock authorized are
designated as nonredeemable preferred stock without
mandatory redemption provisions. All remaining shares of
preferred stock may be issued as redeemable or
nonredeemable preferred stock.
The following table summarizes the Utility’s issued and
outstanding preferred stock without mandatory redemption
provisions at December 31, 2009 and 2008:
(in millions, except share
amounts and redemption price) Shares Outstanding Redemption Price Balance
Nonredeemable $25 par
value preferred stock
5.00% Series 400,000 $ 10
5.50% Series 1,173,163 30
6.00% Series 4,211,662 105
Total nonredeemable
preferred stock 5,784,825 $145
Redeemable $25 par value
preferred stock
4.36% Series 418,291 $25.75 $ 11
4.50% Series 611,142 26.00 15
4.80% Series 793,031 27.25 20
5.00% Series 1,778,172 26.75 44
5.00% Series A 934,322 26.75 23
Total redeemable preferred
stock 4,534,958 $113
Holders of the Utility’s nonredeemable preferred stock
have rights to annual dividends ranging from $1.25 to
$1.50 per share. The Utility’s redeemable preferred stock is
subject to redemption at the Utility’s option, in whole or
in part, if the Utility pays the specified redemption price
plus accumulated and unpaid dividends through the
redemption date. At December 31, 2009, annual dividends
on redeemable preferred stock ranged from $1.09 to $1.25
per share.
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, 2009, 2008, and 2007, the
Utility paid $14 million of dividends on preferred stock
without mandatory redemption provisions. On
December 16, 2009, the Board of Directors of the Utility
declared a cash dividend on its outstanding series of
preferred stock totaling $4 million that was paid on
February 15, 2010 to preferred shareholders of record on
January 29, 2010. 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 specified for the class and series.
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