Vectren 2008 Annual Report Download - page 33

Download and view the complete annual report

Please find page 33 of the 2008 Vectren annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 123

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123

31
Other nonutility businesses operated at a loss of $5.9 million in 2008, compared to earnings of $0.3 million in 2007
and a loss of $1.1 million in 2006. Other nonutility businesses include legacy investments, including investments
in commercial real estate and also included the Company’s former investment in SIGECOM, LLC. During 2008,
the Company recorded an impairment charge associated with its commercial real estate investments totaling $10.0
million, $5.9 million after tax, or $0.08 per share. In 2006, the Company sold its investment in SIGECOM, LLC at
a loss of approximately $1.3 million after tax.
In 2007, the last year of synfuel operations, synfuel-related results generated earnings of $6.8 million. Of those
earnings, which do not continue into 2008 and beyond, $3.8 million ($5.8 million on a pre tax basis) was
contributed to the Vectren Foundation. Net of that contribution, synfuel-related results were $3.0 million, or $0.04
per share, in 2007, compared to a loss of $5.3 million, or $0.07 per share, in 2006. In 2006, synfuel-related activity
includes a $5.7 million after tax impairment charge related to the Company’s investment in Pace Carbon Synfuels
LP. The Foundation contribution is included in Other operating expenses in the Consolidated Statements of
Income.
Dividends
Dividends declared for the year ended December 31, 2008 were $1.31 per share compared to $1.27 in 2007 and
$1.23 per share in 2006. In October 2008, the Company’s board of directors increased its quarterly dividend to
$0.335 per share from $0.325 per share. The increase marks the 49th consecutive year Vectren and predecessor
companies’ have increased annual dividends paid.
2009 Ice Storm
On January 27, 2009, a major ice storm in the Company’s southern Indiana territory resulted in an extended
disruption of electricity to approximately 75,000 of the Company’s 141,000 electric customers. Electricity was
restored to substantially all customers within one week. Management estimates the total cost of restoration could
approximate $15 to $20 million, the majority of which is expected to be capitalized as utility plant.
Detailed Discussion of Results of Operations
Following is a more detailed discussion of the results of operations of the Company’s Utility and Nonutility
operations. The detailed results of operations for these operations are presented and analyzed before the
reclassification and elimination of certain intersegment transactions necessary to consolidate those results into the
Company’s Consolidated Statements of Income.