Vectren 2008 Annual Report Download - page 92

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rate, less a 35 basis point fixed spread, and 2) structured quarterly decreases to the forward sale price that align with
expected Company dividend payments.
Vectren transferred the proceeds to Utility Holdings, and Utility Holdings used the proceeds to repay short-term
debt obligations incurred primarily to fund its capital expenditure program. The proceeds received were recorded
as an increase to Common Stock in Common Shareholders’ Equity and are presented in the Statement of Cash
Flows as a financing activity.
Authorized, Reserved Common and Preferred Shares
At December 31, 2008 and 2007, the Company was authorized to issue 480.0 million shares of common stock and
20.0 million shares of preferred stock. Of the authorized common shares, approximately 5.6 million shares at
December 31, 2008 and 6.3 million shares at December 31, 2007, were reserved by the board of directors for
issuance through the Company’s share-based compensation plans, benefit plans, and dividend reinvestment plan.
At December 31, 2008, and 2007, there were 393.4 million and 396.4 million, respectively, of authorized shares of
common stock and all authorized shares of preferred stock, available for a variety of general corporate purposes,
including future public offerings to raise additional capital and for facilitating acquisitions.
Shareholder Rights Agreement
The Company’s board of directors previously adopted a Shareholder Rights Agreement (Rights Agreement). As
part of the Rights Agreement, the board of directors declared a dividend distribution of one right for each
outstanding Vectren common share. Each right entitles the holder to purchase from Vectren one share of common
stock at a price of $65.00 per share (subject to adjustment to prevent dilution). The rights become exercisable 10
days following a public announcement that a person or group of affiliated or associated persons (Vectren Acquiring
Person) has acquired beneficial ownership of 15 percent or more of the outstanding Vectren common shares (or a
10 percent acquirer who is determined by the board of directors to be an adverse person), or 10 days following the
announcement of an intention to make a tender offer or exchange offer, the consummation of which would result in
any person or group becoming a Vectren Acquiring Person. The Vectren Shareholder Rights Agreement expires
October 21, 2009 and is not expected to be renewed.
12. Earnings Per Share
Basic earnings per share is computed by dividing net income available to common shareholders by the weighted-
average number of common shares outstanding for the period. Diluted earnings per share assumes that stock
options and an equity forward contract are converted into common shares using the treasury stock method and
restricted shares are converted into common shares using the contingently issuable shares method, to the extent the
effect would be dilutive. See Note 10 regarding the settlement of the equity forward contract.
The following table illustrates the basic and dilutive earnings per share calculations for the three years ended
December 31, 2008:
(In millions, except per share data) 2008 2007 2006
Numerator:
Numerator
f
or
b
as
i
c an
d
dil
ute
d
EP
S
- Net
i
ncome
129
.
0
$
143
.
1
$
108
.
8
$
Denominator:
Denominator for basic EPS - Weighted average
common shares outstanding 78.3 75.9 75.7
Equity forward dilution effect 0.1 0.1 -
Conversion of stock options and lifting of
restrictions on issued restricted stock 0.5 0.6 0.5
Denominator for diluted EPS - Adjusted weighted
average shares outstanding and assumed
convers
i
ons outstan
di
ng 7
8
.
9
7
6
.
6
7
6
.
2
Basic earnings per share 1.65$ 1.89$ 1.44$
Diluted earnings per share 1.63$ 1.87$ 1.43$
Year Ended December 31,
For the years ended December 31, 2008, 2007, and 2006, all options were dilutive.