CenterPoint Energy 2008 Annual Report Download - page 115

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93
The $255 million principal amount of the 2.875% convertible senior notes was settled in cash and the excess value
due converting holders of $97 million was settled by delivering approximately 5.6 million shares of the Company’s
common stock.
Purchase of Pollution Control Bonds. In April 2008, the Company purchased $175 million principal amount of
pollution control bonds issued on its behalf at 102% of their principal amount. Prior to the purchase, $100 million
principal amount of such bonds had a fixed rate of interest of 7.75% and $75 million principal amount of such bonds
had a fixed rate of interest of 8%. Depending on market conditions, the Company may remarket both series of
bonds, at 100% of their principal amounts, in 2009.
Maturities. The Company’s maturities of long-term debt, capital leases and sinking fund requirements, excluding
the ZENS obligation, are $216 million in 2009, $438 million in 2010, $815 million in 2011, $1.8 billion in 2012 and
$1.5 billion in 2013.
Liens. As of December 31, 2008, CenterPoint Houston’s assets were subject to liens securing approximately
$253 million of first mortgage bonds. Sinking or improvement fund and replacement fund requirements on the first
mortgage bonds may be satisfied by certification of property additions. Sinking fund and replacement fund
requirements for 2006, 2007 and 2008 have been satisfied by certification of property additions. The replacement
fund requirement to be satisfied in 2009 is approximately $170 million, and the sinking fund requirement to be
satisfied in 2009 is approximately $3 million. The Company expects CenterPoint Houston to meet these 2009
obligations by certification of property additions. As of December 31, 2008, CenterPoint Houston’s assets were also
subject to liens securing approximately $2.6 billion of general mortgage bonds which are junior to the liens of the
first mortgage bonds.
(9) Income Taxes
The components of the Company’s income tax expense (benefit) were as follows:
Year Ended December 31,
2006
2007
2008
(In millions)
Current:
Federal ................................................................
$ 373
$ 163
$ (220)
State ................................................................
37
32
11
Total current ................................................................
410
195
(209)
Deferred:
Federal ................................................................
(362)
47
437
State ................................................................
14
(47)
50
Total deferred ................................................................
(348)
—
487
Income tax expense ................................................................
$ 62
$ 195
$ 278
A reconciliation of the federal statutory income tax rate to the effective income tax rate is as follows:
Year Ended December 31,
2006
2007
2008
(In millions)
Income before income taxes ................................................................................................
$ 494
$ 594
$ 725
Federal statutory rate ...............................................................................................................................
35%
35%
35%
Income taxes at statutory rate ................................................................................................
173
208
254
Net addition (reduction) in taxes resulting from:
State income taxes (benefit), net of valuation allowance and federal income tax ...............................
33
(10)
40
Amortization of investment tax credit ................................................................................................
(7)
(8)
(7)
Tax basis balance sheet adjustments ................................................................................................
—
25
—
Increase (decrease) in settled and uncertain income tax positions ................................
(118)
(20)
8
Other, net ................................................................................................................................
(19)
—
(17)
Total ................................................................................................................................
(111)
(13)
24
Income tax expense ................................................................................................................................
$ 62
$ 195
$ 278
Effective income tax rate.........................................................................................................................
12.6%
32.8%
38.4%