Dominion Power 2007 Annual Report Download - page 83

Pro Forma Condensed Consolidated Statement of Income
Year Ended December 31, 2007
As Reported
Less: E&P
Dispositions
Pro Forma
Adjustments
Pro Forma
Results
(millions, except per share amounts)
Operating Revenue $15,674 $ 1,318 $ — $14,356
Operating Expenses
Electric fuel and energy
purchases 3,511 — — 3,511
Purchased electric
capacity 439 — — 439
Purchased gas 2,766 68 — 2,698
Other energy-related
commodity purchases 252 — — 252
Other operations and
maintenance 4,854 1,097 (8)(1) 3,749
Gain on sale of U.S.
non-Appalachian E&P
business (3,635) (3,635) — —
Depreciation, depletion
and amortization 1,368 431 — 937
Other taxes 552 82 — 470
Total operating
expenses 10,107 (1,957) (8) 12,056
Income from operations 5,567 3,275 8 2,300
Other income 102 1 — 101
Interest and related charges 1,175 — (234)(1)
(153)(2) 788
Income from continuing
operations before income
tax expense and minority
interest 4,494 3,276 395 1,613
Income tax expense 1,783 1,446 153(3) 490
Minority interest 6— —6
Income from continuing
operations $ 2,705 $ 1,830 $ 242 $ 1,117
Earnings Per Share
Income from continuing
operations—Basic $ 4.15 — — $ 1.93
Income from continuing
operations—Diluted $ 4.13 — — $ 1.91
Weighted average shares
outstanding—Basic 650.8 — (71.5)(4) 579.3
Weighted average shares
outstanding—Diluted 655.2 — (71.5)(4) 583.7
(1) Represents the removal of non-recurring expenses associated with the
completion of our debt tender offer in July 2007, using a portion of the
proceeds from the disposition of our non-Appalachian E&P operations.
(2) Represents the prorated decrease in interest expense resulting from the
repayment of $3.4 billion in debt with a portion of the proceeds from the
disposition of our non-Appalachian E&P operations. This amount is
comprised of $2.5 billion in long term debt retired in connection with
our debt tender offer completed in July 2007; $500 million of bank debt
incurred at our CNG subsidiary which was repaid prior to the merger of
that subsidiary with and into Dominion, effective June 30, 2007; $200
million of senior notes originally issued by our subsidiary Dominion
Oklahoma Texas Exploration & Production, Inc., which were redeemed
in June 2007 and $200 million of trust preferred securities originally
issued by Dominion CNG Capital Trust I, which were redeemed in
July 2007.
(3) Reflects the income tax effects of the pro forma adjustments associated
with the disposition of our non-Appalachian E&P operations based on
the weighted-average statutory rates for all jurisdictions that would have
applied during the period.
(4) Reflects the prorated impact of our equity tender offer discussed in Note
21. We purchased approximately 115.5 million shares at a price of
$45.50 per share, with a portion of the proceeds received from the dis-
position.
Nonrecurring Items Related to the Dispositions
Certain nonrecurring items resulting from the disposition of our
non-Appalachian E&P operations have not been reflected in the
accompanying Condensed Pro Forma Consolidated Statements of
Income. See Costs Associated with Disposal of Non-Appalachian
E&P Operations in Note 6.
N OTE 8. O PERATING R EVENUE
Our operating revenue consists of the following:
Year Ended December 31, 2007 2006 2005
(millions)
Electric sales:
Regulated $ 6,044 $ 5,451 $ 5,543
Nonregulated 3,099 2,528 3,044
Gas sales:
Regulated 1,174 1,397 1,763
Nonregulated 3,238 3,524 4,182
Other energy-related commodity sales 846 1,939 2,005
Gas transportation and storage 1,031 943 899
Other 242 515 373
Total operating revenue $15,674 $16,297 $17,809
N OTE 9. I NCOME T AXES
Details of income tax expense for continuing operations were as
follows:
Year Ended December 31, 2007 2006 2005
(millions)
Current:
Federal $2,875 $195 $420
State 217 139 103
Total current 3,092 334 523
Deferred:
Federal (1,283) 536 86
State (15) 73 (19)
Total deferred (1,298) 609 67
Amortization of deferred investment tax
credits (11) (16) (17)
Total income tax expense $1,783 $927 $573
For continuing operations, the statutory U.S. federal income tax
rate reconciles to the effective income tax rate as follows:
Year Ended December 31, 2007 2006 2005
U.S. statutory rate 35.0% 35.0% 35.0%
Increases (reductions) resulting from:
Goodwill—sale of U.S. non-Appalachian E&P
business 5.6 ——
Recognition of deferred taxes—stock of
subsidiaries held for sale (0.2) 5.9 —
State taxes, net of federal benefit 3.1 5.8 3.6
Valuation allowances (2.8) (6.6) 1.0
Domestic production activities deduction (0.5) (0.1) —
Amortization of investment tax credits (0.2) (0.5) (0.8)
Employee stock ownership plan deduction (0.3) (0.5) (0.8)
Employee pension and other benefits (0.2) (0.3) (1.2)
Other, net 0.2 (1.1) (1.1)
Effective tax rate 39.7% 37.6% 35.7%
Dominion 2007 Annual Report 81