CenterPoint Energy 2008 Annual Report Download - page 111

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89
Income. During 2006, 2007 and 2008, the Company recorded a gain (loss) of $94 million, $(114) million and
$(139) million, respectively, on the Company’s investment in TW Common. During 2006, 2007 and 2008, the
Company recorded a gain (loss) of $(80) million, $111 million and $128 million, respectively, associated with the
fair value of the derivative component of the ZENS obligation. Changes in the fair value of the TW Common held
by the Company are expected to substantially offset changes in the fair value of the derivative component of the
ZENS.
The following table sets forth summarized financial information regarding the Company’s investment in TW
Common and the Company’s ZENS obligation (in millions).
TW
Investment
Debt
Component
of ZENS
Derivative
Component
of ZENS
Balance at December 31, 2005 ................................
$ 377
$ 109
$ 292
Accretion of debt component of ZENS ................................
—
19
—
2% interest paid ................................................................
—
(17)
—
Loss on indexed debt securities ................................
—
—
80
Gain on TW Common ................................
94
—
—
Balance at December 31, 2006 ................................
471
111
372
Accretion of debt component of ZENS ................................
—
20
—
2% interest paid ................................................................
—
(17)
—
Gain on indexed debt securities ................................
—
—
(111)
Loss on TW Common ................................
(114)
—
—
Balance at December 31, 2007 ................................
357
114
261
Accretion of debt component of ZENS ................................
—
20
—
2% interest paid ................................................................
—
(17)
—
Gain on indexed debt securities ................................
—
—
(128)
Loss on TW Common ................................
(139)
—
—
Balance at December 31, 2008 ................................
$ 218
$ 117
$ 133
(7) Equity
(a) Capital Stock
CenterPoint Energy has 1,020,000,000 authorized shares of capital stock, comprised of 1,000,000,000 shares of
$0.01 par value common stock and 20,000,000 shares of $0.01 par value preferred stock.
(b) Shareholder Rights Plan
The Company has a Shareholder Rights Plan that states that each share of its common stock includes one
associated preference stock purchase right (Right) which entitles the registered holder to purchase from the
Company a unit consisting of one-thousandth of a share of Series A Preference Stock. The Rights, which expire on
December 11, 2011, are exercisable upon some events involving the acquisition of 20% or more of the Company’s
outstanding common stock. Upon the occurrence of such an event, each Right entitles the holder to receive common
stock with a current market price equal to two times the exercise price of the Right. At any time prior to becoming
exercisable, the Company may repurchase the Rights at a price of $0.005 per Right. There are 700,000 shares of
Series A Preference Stock reserved for issuance upon exercise of the Rights.