Reports 61 Cents Per
Share, Reaffirms Full-Year Earnings Expectations of $2.95 to $3.00 and Long-Term
Annual Earnings Growth Target of 8 to 10 Percent
RICHMOND, Va. -- Dominion Resources Inc. (NYSE: D) today
announced unaudited consolidated operating earnings for the second quarter ended
June 30, 1999 of $117.4 million (61 cents per share), compared to earnings of
$118.3 million (61 cents per share) for the same period in 1998. Operating earnings
for the second quarter of 1998 exclude a one-time non-recurring after-tax charge
of $201 million ($1.03 per share) associated with Virginia Power’s rate settlement,
and include an earnings contribution of $7 million (4 cents per share) from
East Midlands Electricity, which Dominion Resources sold in July 1998.
Virginia Power, Dominion Resources’ principal subsidiary,
earned $89 million (47 cents per share), up $17 million (10 cents per share)
from operating earnings of $72 million (37 cents per share) in the second quarter
of 1998.
Thos. E. Capps, chairman, president and chief executive officer,
said:
"The continuation of Virginia Power’s earnings growth
trend reflects the company’s fundamental strengths. Diligent cost management,
strong customer growth and solid financial results from the company’s successful
wholesale power marketing operations contributed to the second-quarter performance.
We were able to grow earnings and continue building shareholder value despite
a lower rate structure resulting from the final phase of our 1998 rate settlement
(impact of 2 cents per share), mild weather (impact of 5 cents per share) and
increased costs associated with regularly scheduled generating unit outages."
Dominion Energy, the independent power and natural gas subsidiary,
earned $8 million (4 cents per share) in the second quarter of 1999, down from
$10 million (5 cents per share) for the second quarter of 1998. Dominion Energy’s
earnings were negatively affected by weak hydrological conditions and lower
energy prices related to its foreign operations, lower contributions from its
domestic power operations, and higher information technology expenses at the
corporate level, partially offset by higher gas and oil production.
Dominion Capital, the financial services subsidiary, earned
$22 million (12 cents per share) in the second quarter of 1999, compared to
earnings of $32 million (17 cents per share) for the same period last year.
Second quarter 1998 earnings include operating income of $14 million (7 cents
per share) from exercising warrant positions in the company’s commercial lending
operations.
"The non-utility subsidiaries performed very well in
the second quarter despite difficult year-over-year quarterly earnings comparisons,"
Capps said. "Both companies remain on track to meet our 15 percent annual
growth target."
Capps said Dominion Energy should benefit in the second half
of 1999 from higher commodity prices and production levels, as well as from
full production at the refurbished 1,108-megawatt coal-fired Kincaid generating
facility and the 600-megawatt gas-fired Elwood facility. Dominion Capital should
benefit in the second half from improved financial market conditions compared
to the second half of last year, as well as from the timing of deal flow and
transactions, he added.
"Dominion Resources is poised for an exciting phase
in its history," Capps said. "With shareholder and Pennsylvania PUC
approval behind us and remaining regulatory approvals expected this fall, we
are well on our way to completing our merger with Consolidated Natural Gas by
year-end and becoming the nation’s premier fully integrated electric and gas
energy company.
"We expect to achieve full-year 1999 earnings in the
$2.95 to $3.00 range, and deliver annualized earnings per share growth of 8
to 10 percent from 2000 forward while maintaining our current annual dividend
of $2.58. That kind of strong earnings growth -- coupled with the potential
expansion of our price/earnings multiple and our solid dividend -- will enable
us to generate significant long-term value for our shareholders."
Operational Restructuring Results
Second-quarter 1999 pro-forma operating earnings for Dominion
Resources’ operating units as structured under a major reorganization plan which
took effect May 1 were 26 cents per share for Dominion Generation, up from 24
cents per share in the second quarter of 1998; and 20 cents per share for Virginia
Power, up from 15 cents per share in the second quarter last year. Pro forma
Dominion Gas earnings totaled 5 cents per share, up from 3 cents per share one
year ago.
Dominion Resources’ restructuring plan organizes the company’s
business segments into five operating units:
Dominion Generation –combined generation operations of
the former Virginia Power and former Dominion Energy entities;
Virginia Power – customer service and regulated transmission
and distribution operations of the former Virginia Power entity;
Dominion Gas –gas and oil operations of the former Dominion
Energy entity;
Dominion Capital – financial services operations;
Dominion Resources – holding company and Corby Power (UK)
operations.
Capps said: "These organizational changes are a direct
result of accelerating changes in the energy marketplace. The new business structure
prepares Dominion Resources to benefit fully from its pending merger with Consolidated
Natural Gas and from electric and gas industry deregulation in Virginia and
in other states where the combined company will operate.
"The restructuring provides a natural unification of
Virginia Power’s decades of operating excellence in regulated generation with
Dominion Energy’s 10-plus years of experience in competitive energy markets
throughout the Americas. The new Virginia Power will form the basis of what
will always remain a regulated company and will continue its traditional superior
commitment to fast and efficient customer service."
Generation assets remain wholly owned by the utility and
Dominion Energy, pending full implementation of legislation that creates competition
among electric generators and establishes a comprehensive plan for the transition
to competition in the electric utility industry in Virginia.
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This release contains forward-looking statements
that are subject to various risks and uncertainties. Discussion of factors that
could cause actual results to differ materially from management’s projections,
forecasts, estimates and expectations may include factors that are beyond the
company’s ability to control or estimate precisely, such as estimates of future
market conditions and the behavior of other market participants. Other factors
include, but are not limited to, weather conditions, economic conditions in
the company’s service territory, fluctuations in energy-related commodity prices,
conversion activity and other uncertainties. Other risk factors are detailed
from time to time in the company’s SEC filings.
