HOUSTON (CNNMoney.com) - In his second day of cross examination, Enron's former chief executive Jeffrey Skilling's carefully maintained composure began to show signs of wear Tuesday as he fielded tough questions from the government over the way in which Enron met earnings targets.

By afternoon, as government prosecutor Sean Berkowitz accused Skilling of directing his lieutenants to dip into Enron's reserves in order to meet or beat earnings estimates, and showed e-mails and reserve account charts to back up his point, Skilling became increasingly agitated.

Former Enron CEO Jeffrey Skilling

Former CEO Kenneth Lay

Special Reportfull coverage Skilling gets 24 years Lessons from Enron: Just say 'sorry' Skilling's possible new home Skilling sentence likely to be a long one Meet the players Find out who you might have seen at the Enron trial, how they got involved, and what they're doing now. Launch gallery

"Mr. Berkowitz, you're misinterpreting this chart," Skilling said, looking frustrated. But he finally lost his composure when Berkowitz showed a portion from a transcript of a speech by Arthur Levitt that said that if a financial report can't be explained to the average person, it isn't appropriate.

As Berkowitz allowed the message to sink in with jurors, it was clear he was trying to inform the jury that Enron's complex financial reports were there to mask inappropriate activities at the company.

Skilling looked increasingly upset as he read the transcript and when Berkowitz said "let's move on," Skilling jumped forward in his seat and angrily said "let's not move on."

He heatedly tried to explain that the reserve charts shown by the prosecution weren't finalized financial reports but rather a mid-quarter estimate of how much reserves Enron expected to have and therefore it wasn't appropriate to present them as evidence that Enron dipped into reserves to bolster earnings.

Berkowitz, who maintained his calm through Skilling's outburst, said "I know that you at times overreact to people who are critical, but if you could, just let me ask the questions and move along, Mr. Skilling."

Skilling made a sarcastic face but said nothing as he struggled to control his emotions

Earlier in the day, Skilling sparred with Berkowitz as the prosecution presented documents from Enron's own risk management group that warned that 50 percent of Enron's investment portfolio contained underperforming assets. The risk group concluded that there was "intense pressure to close deals" that may have created "extraordinary risk" for Enron.

The government contends that Enron tried to hide the losses from risky investments in a series of financial hedging instruments called Raptors, which ultimately weakened the company and factored into its implosion in December 2001.

But Skilling said the government was misrepresenting the strength of Enron's investment portfolio by only highlighting underperforming assets. He said it was common for a company to have some weak assets, but the fact that 50 percent of its investments were above expectations showed that Enron was in a solid position.

"It's like looking at baseball rankings and only looking at the two bottom-ranked teams," Skilling said. "Look at some of the top teams."

"Isn't this after-the-fact rationalization?" Berkowitz asked dryly.

"It's not an after-the-fact rationalization. Mr. Berkowitz, I'm talking about the actual performance of the portfolio. By definition, underperforming assets are underperforming assets," Skilling responded.

Skilling said the documents his own risk group presented showed the company's attention to detail and caution. He added that he never heard anything or interpreted anything from the documents that would indicate that Enron was doing "anything inconsistent with the role of a corporation, which is to take risks."

"The documents will speak for what they were telling you themselves," Berkowitz said. "I guess so," Skilling retorted.

Skilling went on to deny that the company's Raptors transactions, which used shares of Enron stock as a cushion to hedge some of the company's assets, were created in anticipation that the assets would result in sharp losses that could put pressure on Enron's earnings.

"You don't buy life insurance because you think you're going to die," Skilling said, trying to explain the reason for the hedge. "You buy life insurance because there's a chance you might die. You buy it to protect your kids."

Skilling denied that he had been told by other Enron executives that the stock price of one of the technology investments hedged in Raptors was expected to decline sharply.

"You know that's not true," Berkowitz challenged Skilling, causing the defendant to get riled up on the stand and claim that no one could have predicted whether a stock was going to go up or down in the marketplace.

"Mr. Berkowitz, this is just not reasonable," Skilling declared heatedly. "This is just..." and he threw his hands up in the air at a loss for words.

Skilling also denied that Enron had ever manipulated its earnings figures in the fourth quarter of 1999 in order to meet analyst expectations. He took issue with the testimony of former investor relations executives Mark Koenig and Paula Rieker that said he and former accounting chief Richard Causey had encouraged the company to boost its earnings by a penny in order to meet revised analyst estimates.

"I not only have no recollection but I'm not sure that happened," Skilling said, although he conceded under Berkowitz' questioning that there was always a chance that it was possible and he didn't remember.

He added that it wasn't always inappropriate for a company to target certain earnings numbers – as he did in the second quarter of 2000 in which he told executives to "shoot for 34 cents a share." But he said he never directed anyone to change the earnings figures for the quarter.

"You knew that when you told Mr. Causey that you wanted to shoot for 34 cents, he'd get that money out of reserves?" Berkowitz asked. "No," Skilling answered firmly.

Late in the afternoon, Berkowitz questioned Skilling on whether he told Kenneth Rice, the former head of the company's troubled broadband unit, to meet earnings targets in 2001 because the company's international assets "were returning nada." Rice testified in February that he told Skilling he couldn't meet those targets.

Skilling said he couldn't recall such a meeting -- a phrase he has used frequently throughout this testimony -- but conceded that he does use the term "nada."

But Skilling continued to deny that he misled the public about the company's broadband unit, saying he had high hopes for the division's bandwidth intermediation business in 2000 and 2001 and "thought there was a good chance" the broadband unit would hit its earnings target for the year.

Skilling's cross-examination comes after he spent four days on the stand for the defense, taking sympathetic questions from his lead attorney, Daniel Petrocelli. Skilling's testimony ranged from professorial explanations to self-deprecating humor to righteous indignation as he responded to accusations made by 22 government witnesses, many of whom are ex-Enron employees who cut deals with the government in exchange for their testimony.

At the end of day, Berkowitz said he hoped to finish his cross-examination by the end of Wednesday. The defense will then have its chance to redirect.

Skilling faces 28 charges of conspiracy, fraud and insider trading while his co-defendant, Kenneth Lay, who is expected to take the stand later in the trial, faces six counts of conspiracy and fraud.

Legal experts say the defendants could face 20 to 30 years behind bars if convicted of the charges. Lay will also face an additional trial for bank fraud once jurors begin deliberations on the current trial.

Enron was once the seventh-largest corporation in the U.S. It declared bankruptcy in December 2001, costing 4,000 employees their jobs and resulting in billions in losses for investors.

_______________

How Skilling screwed up on Monday.

For complete coverage of the Enron trial, click here.