Dominion Power 2003 Annual Report Download - page 83

81.Dominion 2003
There were no options granted in 2003. The fair value of the
options granted in 2002 and 2001 was estimated on the dates
of grant using the Black-Scholes option pricing model with the
following weighted-average assumptions:
2002 2001
Expected dividend yield 4.17% 4.22%
Expected volatility 22.67% 22.19%
Risk free interest rate 4.38% 5.15%
Contractual life 10 years 10 years
Expected life 6years 6years
The following table provides certain information about stock options outstanding as of December 31, 2003:
Options Outstanding Options Exercisable
Weighted-
average Weighted- Weighted-
Remaining average average
Exercise Shares Contractual Exercise Shares Exercise
Price Outstanding Life Price Exercisable Price
(thousands) (years) (thousands)
$ 0-$19.99 2 5.0 $19.10 2 $19.10
$20-$30.99 34 4.9 $24.33 34 $24.33
$31-$40.99 33 6.0 $39.25 33 $39.25
$41-$50.99 4,623 5.9 $43.35 4,363 $42.92
$51-$60.99 9,273 5.1 $59.88 4,862 $59.87
$61-$69 4,579 7.4 $65.22 2,310 $65.49
Total 18,544 5.9 $56.97 11,604 $54.44
During 2003, 2002 and 2001, respectively, Dominion
granted approximately 402,000 shares, 14,000 shares, and
341,000 shares of restricted stock with weighted-average fair val-
ues of $56.08, $60.62 and $63.49.
21. Dividend Restrictions
The 1935 Act and related regulations issued by the SEC impose
restrictions on the transfer and receipt of funds by a registered
holding company from its subsidiaries, including a general prohi-
bition against loans or advances being made by the subsidiaries
to benefit the registered holding company. Under the 1935 Act,
registered holding companies and their subsidiaries may pay div-
idends only from retained earnings, unless the SEC specifically
authorizes payments from other capital accounts. Dominion
received dividends from its subsidiaries of $1.1 billion, $945 mil-
lion and $806 million in 2003, 2002 and 2001, respectively.
At December 31, 2003, Dominion’s consolidated subsidiaries
had approximately $8.9 billion in capital accounts other than
retained earnings, representing capital stock, additional paid in
capital and accumulated other comprehensive income. Dominion
Resources, Inc. had approximately $9.5 billion in capital
accounts other than retained earnings at December 31, 2003.
Generally, such amounts are not available for the payment of div-
idends by affected subsidiaries, or by Dominion itself, without
specific authorization by the SEC.
In response to a Dominion request, the SEC granted relief in
2000, authorizing payment of dividends by CNG from other
capital accounts to Dominion in amounts up to $1.6 billion, repre-
senting CNG’s retained earnings prior to Dominion’s acquisition
of CNG. Furthermore, Dominion submitted a similar request to
the SEC in 2002, seeking relief from this restriction in regard to
its subsidiary into which Louis Dreyfus was merged. The applica-
tion requests relief up to approximately $303 million, represent-
ing Louis Dreyfus’ retained earnings prior to Dominion’s
acquisition of Louis Dreyfus. Dominion’s ability to pay dividends
on its common stock at declared rates was not impacted by the
restrictions discussed above during 2003, 2002 and 2001.