Dominion Power 2009 Annual Report Download - page 27

2009 Dominion 25
Reconciliation of Operating Earnings (non-GAAP) to Reported Earnings (GAAP)
(Millions, Except Per Share Amounts) 2005 2006 2007 2008 2009
Operating Earnings (non-GAAP)* $ 1,557 $ 1,777 $ 1,674 $ 1,837 $ 1,942
Items excluded from operating earnings (after-tax):
Impairment of gas and oil properties — — — — (281)
Proposed rate settlement — — — — (435)
Net gain on sale of U.S. non-Appalachian
E&P business — — 2,080 (26) —
Charges related to the E&P divestitures — (5) (506) — —
Charges related to early retirement of debt — — (148) — —
Tax benefit (charge) related to the planned sale of
Peoples & Hope — (145) 9 136 —
Net gains (losses) or impairments related to the
decommissioning trusts — (15) (19) (109) 2
Extraordinary item related to the reapplication
of accounting guidance for cost-based regulation — — (158) — —
Impairment of merchant generation assets — — (270) — —
Income (loss) from discontinued operations 6 (150) (8) (2) —
Termination of power purchase and sales contracts (52) — (137) — —
Charges related to hurricanes (375) (11) — — —
Net benefits (charges) related to exiting certain
businesses (27) (20) 52 (23) (6)
Other items (76) (51) (30) 21 65
Total after-tax items (524) (397) 865 (3) (655)
Reported Earnings (GAAP) $ 1,033 $ 1,380 $ 2,539 $ 1,834 $ 1,287
Earnings per common share–diluted:
Operating Earnings* $ 2.26 $ 2.53 $ 2.56 $ 3.16 $ 3.27
Items excluded from operating earnings (0.76) (0.57) 1.32 — (1.10)
Reported Earnings $ 1.50 $ 1.96 $ 3.88 $ 3.16 $ 2.17
* Dominion uses operating earnings as the primary performance measurement of its earnings outlook and results for public communications with analysts and investors.
Dominion management believes operating earnings provide a more meaningful representation of the company’s fundamental earnings power.
Reconciliation of Operating (non-GAAP) Return on Equity to Reported (GAAP) Return on Equity
2008 2009
Millions % Millions %
Common Shareholders’ Equity–13 mos. average $ 9,758 $ 10,921
Operating Earnings–Twelve months ended* 1,837 1,942
Return on average common equity–operating 18.8% 17.8%
Reported Earnings–Twelve months ended 1,834 1,287
Return on average common equity–reported 18.8% 11.8%
* See Reconciliation of Operating Earnings (non-GAAP) to Reported Earnings (GAAP).
Reconciliation of Operating Dividend Payout Ratio (non-GAAP) to Reported Dividend Payout
Ratio (GAAP)
2009
Data Per Common Share %
Total dividends paid per common share $ 1.75
Operating Earnings–Twelve months ended* $ 3.27
Dividend payout ratio–operating 54%
Reported Earnings–Twelve months ended $ 2.17
Dividend payout ratio–reported 81%
* See Reconciliation of Operating Earnings to Reported Earnings.
GAAP Reconciliation of 2010 Operating Earnings Guidance
In providing its full-year 2010 operating earnings guidance the company notes that there could be differences between expected reported
(GAAP) earnings and estimated operating earnings for matters such as, but not limited to, divestitures, changes in accounting principles
or the outcome of the company’s pending Virginia rate case proceedings. With the exception of the Dominion Peoples divestiture,
Dominion management is not able to estimate the impact, if any, of these items on reported earnings. Accordingly, Dominion is not able
to provide a corresponding GAAP equivalent for its operating earnings guidance. At this time, Dominion management expects the Febru-
ary 2010 sale of Dominion Peoples to result in an after-tax loss of approximately $140 million, as well as after-tax expenses of approxi-
mately $50 million that would negatively impact full-year 2010 reported earnings, but would not be included in operating earnings.