Dominion Power 2001 Annual Report Download - page 60

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Divestitures
As of December 31, 2001, Dominion had substantially com-
pleted its strategy to exit the core operating businesses of DCI as
required by the SEC under the 1935 Act. See Note 8 for charges
recognized in connection with the DCI exit strategies. In 2000,
Dominion sold $600 million of commercial loans and trans-
ferred $223 million of outstanding commercial loan commit-
ments. As discussed in Note 13, Dominion securitized a
substantial portion of the remainder of its financial subsidiaries’
commercial loans in CLO and CDO transactions in 2000 and
2001. As of December 31, 2001, Dominion held commercial
and other loans receivable of $106 million, net of allowances for
loan losses, and $268 million of CLO and CDO-related
retained interests. At December 31, 2000, Dominion held CLO
and CDO-related retained interests of $159 million.
In 2001, Dominion sold Saxon Capital and recognized an
after-tax loss of $25 million. Under the terms of the sale,
Dominion received $116 million in cash, a $25 million note and
a non-controlling equity interest that was subsequently sold for
$25 million. In addition, Dominion retained approximately
$300 million in retained interests related to prior mortgage loan
securitizations. Dominion held $269 million and $347 million
of retained interests from mortgage loan securitizations at
December 31, 2001 and 2000, respectively.
In 2000, Dominion completed the sales of VNG and CNG
International’s Argentine assets for $678 million. As these enti-
ties were classified as net assets held for sale, the sales did not
result in any gain or loss. Also in 2000, Dominion completed
the sale of its interest in Corby Power Limited for $78 million,
resulting in an after-tax gain of $13 million.
During 1999 and 2000, Dominion sold its interests in gen-
eration capacity located in Latin America for $405 million.
Dominion recognized an impairment loss of $21 million, after
taxes, associated with these investments in 1999.
Restructuring and Acquisition-Related Activities
2001 Restructuring Costs
In the fourth quarter of 2001, after completing the transition
period for fully integrating Dominion’s existing organization
and operations, management initiated a focused review of
Dominion’s combined operations. The objective of this review
was to identify any activities or resources which were no longer
Note 7
Note 6 necessary when the post-CNG acquisition transition period
had ended. As a result, Dominion recognized $105 million
of restructuring costs which included employee severance and
termination benefits and the abandonment of leased office space
no longer needed. In addition, restructuring charges included
approximately $46 million related to departing employees for
modifications of stock options, special termination benefits
and losses related to the settlement of the related nonqualified
pension obligation and plan curtailment attributable to reduc-
tions in expected future years of service of plan participants.
See Notes 25 and 26.
Under the restructuring plan, Dominion identified approx-
imately 340 salaried positions to be eliminated and recorded
$42 million in employee severance-related costs. As of Decem-
ber 31, 2001, 12 positions had been eliminated. Severance
payments were based on the individual’s base salary and years
of service at the time of termination.
Restructuring and related costs for the year ended
December 31, 2001 were as follows:
(millions)
Severance and related costs $42
Nonqualified plan benefits, settlement and other costs 46
Lease termination and restructuring 13
Other, net 4
Total restructuring costs 105
Severance liability at December 31, 2001(1) 42
Lease termination liability at December 31, 2001 $10
(1) Amount paid during the fourth quarter of 2001 was not material.
2000 Restructuring and Acquisition-Related Activities
During 2000, Dominion incurred charges associated with the
divestiture of certain businesses and the implementation of a
restructuring plan for the operations of Dominion and its sub-
sidiaries. The divestitures and restructuring plans were driven
by certain requirements associated with the CNG acquisition
and a focus on operations in the region that begins at the Mid-
America Interconnected Network (MAIN) and extends north-
eastward through Maine (MAIN-to-Maine). The restructuring
plan included an involuntary severance program, a voluntary
early retirement program (ERP) and a transition plan to consoli-
date operations after the CNG acquisition.
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