Vectren 2008 Annual Report Download - page 31

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29
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
FINANCIAL CONDITION
In this discussion and analysis, the Company analyzes contributions to consolidated earnings and earnings per share
from its Utility Group and Nonutility Group separately since each operates independently requiring distinct
competencies and business strategies, offers different energy and energy related products and services, and
experiences different opportunities and risks. Nonutility Group operations are discussed below as primary
operations, other operations, and synfuel-related results. Primary nonutility operations denote areas of
management’s forward looking focus. Tax laws authorizing tax credits for the production of certain synthetic fuels
expired on December 31, 2007.
Per share earnings contributions of the Utility Group, Nonutility Group, and Corporate and Other are presented.
Such per share amounts are based on the earnings contribution of each group included in Vectren’s consolidated
results divided by Vectren’s basic average shares outstanding during the period. The earnings per share of the
groups do not represent a direct legal interest in the assets and liabilities allocated to the groups, but rather represent
a direct equity interest in Vectren Corporation's assets and liabilities as a whole. These non-gaap measures are used
by management to evaluate the performance of individual businesses. Accordingly management believes these
measures are useful to investors in understanding each business’ contribution to consolidated earnings per share and
analyzing period to period changes.
The Utility Group generates revenue primarily from the delivery of natural gas and electric service to its
customers. The primary source of cash flow for the Utility Group results from the collection of customer bills and
the payment for goods and services procured for the delivery of gas and electric services. The activities of and
revenues and cash flows generated by the Nonutility Group are closely linked to the utility industry, and the results
of those operations are generally impacted by factors similar to those impacting the overall utility industry. In
addition, there are other operations, referred to herein as Corporate and Other, that include unallocated corporate
expenses such as advertising and charitable contributions, among other activities.
The Company has in place a disclosure committee that consists of senior management as well as financial
management. The committee is actively involved in the preparation and review of the Company’s SEC filings.
The following discussion and analysis should be read in conjunction with the consolidated financial statements and
notes thereto.
Executive Summary of Consolidated Results of Operations
(In millions, except per share data) 2008 2007 2006
Net income 129.0$ 143.1$ 108.8$
Attributed to:
Utility Group 111.1$ 106.5$ 91.4$
Nonutility Group 18.9 37.0 18.1
Corporate & Other (1.0) (0.4) (0.7)
Basic earnings per share 1.65$ 1.89$ 1.44$
Attributed to:
Utility Group 1.42$ 1.40$ 1.21$
Nonutility Group 0.24 0.49 0.24
Corporate & Other (0.01) - (0.01)
Year Ended December 31,
Results
For the year ended December 31, 2008, earnings were $129.0 million, or $1.65 per share, compared to $143.1
million, or $1.89 per share in 2007, and $108.8 million, or $1.44 per share, in 2006.