Dominion Power 2007 Annual Report Download - page 87

N OTE 11. E ARNINGS P ER S HARE
The following table presents the calculation of our basic and
diluted EPS:
Year Ended December 31, 2007 2006 2005
(millions, except per share amounts)
Income from continuing operations before
extraordinary item and cumulative effect
of change in accounting principle $2,705 $1,530 $1,033
Income (loss) from discontinued
operations, net of tax (8) (150) 6
Extraordinary item, net of tax (158) ——
Cumulative effect of change in accounting
principle, net of tax —— (6)
Net income $2,539 $1,380 $1,033
Basic EPS
Average shares of common stock
outstanding—basic 650.8 699.5 684.6
Income from continuing operations before
extraordinary item and cumulative effect
of change in accounting principle $ 4.15 $ 2.19 $ 1.51
Income (loss) from discontinued
operations (0.01) (0.22) 0.01
Extraordinary item (0.24) ——
Cumulative effect of change in accounting
principle —— (0.01)
Net income $ 3.90 $ 1.97 $ 1.51
Diluted EPS
Average shares of common stock
outstanding 650.8 699.5 684.6
Net effect of potentially dilutive
securities(1) 4.4 3.7 4.3
Average shares of common stock
outstanding—diluted 655.2 703.2 688.9
Income from continuing operations before
extraordinary item and cumulative effect
of change in accounting principle $ 4.13 $ 2.17 $ 1.50
Income (loss) from discontinued
operations (0.01) (0.21) 0.01
Extraordinary item (0.24) ——
Cumulative effect of change in accounting
principle —— (0.01)
Net income $ 3.88 $ 1.96 $ 1.50
(1) Potentially dilutive securities consist of options, restricted stock and con-
tingently convertible senior notes. 2006 potentially dilutive securities also
included equity-linked securities and 2005 potentially dilutive securities
also included shares that were issuable under a forward equity sale
agreement.
Potentially dilutive securities with the right to purchase
approximately 2 million and 6 million average common shares for
the years ended December 31, 2006 and 2005, respectively, were
not included in the respective period’s calculation of diluted EPS
because the exercise or purchase prices included in those instru-
ments were greater than the average market price of the common
shares. There were no such anti-dilutive securities outstanding for
the year-ended December 31, 2007.
N OTE 12. I NVESTMENT S ECURITIES
We hold marketable debt and equity securities in nuclear decom-
missioning trust funds, retained interests from prior securitiza-
tions of financial assets and subordinated notes related to certain
collateralized debt obligations, all of which are classified as avail-
able for sale. In addition, we hold marketable debt and equity
securities, which are classified as trading, in rabbi trusts associated
with certain deferred compensation plans.
Available-for-sale securities as of December 31, 2007 and
2006 are summarized below. There were no unrealized losses
included in AOCI as of December 31, 2007 or 2006.
Fair
Value
Total
Unrealized
Gains
(millions)
2007
Equity securities $1,784 $486
Debt securities 1,047 33
Total $2,831 $519(1)
2006
Equity securities $1,753 $456
Debt securities 1,003 15
Total $2,756 $471(2)
(1) Included in AOCI and regulatory liabilities as discussed in Note 2.
(2) Included in AOCI in our Consolidated Balance Sheet.
Debt securities backed by mortgages and loans do not have
stated contractual maturities, as borrowers have the right to call or
repay obligations with or without call or prepayment penalties.
DCI held $38 million of these debt securities at December 31,
2006. During 2007, DCI recognized impairment losses of $27
million ($16 million after-tax) due to changes in market valu-
ations. DCI also sold three of the residual trusts in 2007. DCI
still owns six residual trusts with no book basis at December 31,
2007.
The fair value of all other debt securities at December 31,
2007, by contractual maturity are as follows:
Amount
(millions)
Due in one year or less $77
Due after one year through five years 291
Due after five years through ten years 296
Due after ten years 383
Total $1,047
Presented below is selected information regarding our invest-
ment securities. In determining realized gains and losses, the cost
of these securities was determined on a specific identification basis.
Year Ended December 31, 2007 2006 2005
(millions)
Available-for-sale securities:
Proceeds from sales $916 $1,025 $754
Realized gains(1) 100 90 46
Realized losses(1) 144 77 49
Trading securities:
Net unrealized gain (loss) (3) 96
(1) Includes realized gains and losses recorded to a regulatory liability in
2007, as discussed in Note 2.
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