Dominion Power 2003 Annual Report Download - page 8

Download and view the complete annual report

Please find page 8 of the 2003 Dominion Power annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 104

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104

5.00
2.50
0
2.58
Dividend is more than
covered by regulated/
tariff-based earnings
Hedged unregulated earnings
provide additional coverage 61% from
regulated/
tariff-based
Unhedged
Unregulated
Hedged
Unregulated
Regulated
Tariff-based
*Net income plus depreciation, depletion and amortization of operating
segments excluding the Corporate segment
Based on Non-GAAP Financial Measures
See page 24.
VEPCO-Reg
42%
CNG-Reg
19%
CNG/DEI-E&P
33%
DEI-Non Reg
6%
Stable, Well-Covered Dividend
Dollars Per Share
Dividend Operating Cash Flow Sources*2003
Operating
Earnings
6.Dominion 2003
25
20
15
10
5
0
20.8
15.9 16.9
Market Capitalization
Billions of Dollars
As of December 31
20032001
16.5
2000 2002
Our GAAP earnings include a $750 million charge
recorded in 2003 as a result of a disappointing write-
down at our telecommunications unit. They also include a
$180 million gain created by an accounting change in
the treatment of asset retirement obligations, a gain we
also excluded from operating earnings. With these and
certain items detailed on page 24, we reported GAAP
earnings of $1.00, down about 79 percent from GAAP
earnings of $4.82 a year earlier.
A 21.4-Percent Total Return
In 2003, we delivered a total return of 21.4 percent,
exceeding past-year targets of 15 percent. This includes
a 16.2-percent increase in our share price, which closed
the year at $63.83, up from $54.90 a year earlier. And
it also includes your annual dividend of $2.58 per share,
a 4-percent yield at year-end.
Our dividend payout — illustrated on a GAAP basis
on page 24, but about 57 percent of operating earnings
at current levels — totaled more than $800 million last
year. We’ve paid out more than 300 consecutive divi-
dends over the last 70 years.
Through recent market turmoil, I’ve made a special
point to assure you that our existing dividend rate is
secure. It remains secure. Only our board of directors
can determine whether or when to increase it. Many fac-
tors influence the board’s decision and management’s
recommendations. Ultimately, any decision hinges entirely
on whether we can invest this cash for the long term at
returns higher than our cost of capital. We compare these
opportunities with the alternatives of repurchasing shares
or raising the dividend.
Promoting Management Focus on
Sustained Long-Term Results
How company executives are rewarded is an important
corporate governance issue today.
At Dominion, we pay officers and middle manage-
ment to strike a reasonable balance between making
their annual earnings and productivity goals and sound