Dominion Resources Announces 15-Percent Increase
in Third-Quarter Per-Share Operating Earnings
Posts $1.31 Versus $1.14 in Prior-Year
Period, Reaffirms 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 third quarter ended September
30, 1999 of $250 million ($1.31 per share), a 15-percent increase in earnings
per share over prior-year earnings of $224 million ($1.14 per share).
Thos. E. Capps, chairman, president and chief executive officer,
said the company is in a solid position to meet its full-year operating earnings
per share target of $2.95 to $3.00 for 1999 and 8- to 10-percent annualized
earnings growth thereafter.
Operating earnings for the third quarter of 1999 exclude
a one-time, after-tax charge of $18 million (9 cents per share) related to the
pending sale of the company’s Latin American power generation businesses. Operating
earnings for the third quarter of 1998 exclude a one-time, after-tax gain of
$201 million ($1.03 per share) realized from the July 1998 sale of East Midlands
Electricity, a power distribution and supply company in the United Kingdom.
The divestiture of these international assets reflects the company’s strategic
emphasis on domestic electric power and natural gas markets in the Midwest,
Mid-Atlantic and Northeast regions of the United States. The company expects
to receive approximately $400 million in after-tax cash proceeds from the sale
of the Latin American assets. The proceeds will be used principally to repurchase
stock and fund other immediately accretive investment opportunities.
Capps said: "In Latin America we learned up close, first
hand and in person how to run profitable generation businesses in competitive
power markets that have been operating for many years. We delivered consistent
profits to our shareholders and reliable, efficient supply to our customers.
We are exiting Latin America with a broader worldview, a better understanding
of the true nature of competitive energy markets, and an eagerness to put these
lessons to use at home as the U.S. transitions to a competitive market."
Virginia Power, Dominion Resources’ principal subsidiary,
earned $226.5 million ($1.18 per share), up $29.5 million from operating earnings
of $197 million ($1.00 per share) last year. Power restoration and clean-up
costs associated with hurricanes Dennis and Floyd negatively impacted operating
earnings by approximately $17 million (9 cents per share).
"Higher electricity sales resulting from hotter-than-normal
weather in July and August, strong performance by the energy marketing business,
and the fundamental financial and operational strengths of the business helped
offset the impact of the two hurricanes and a lower rate structure resulting
from the final phase of our 1998 rate settlement," Capps said.
Dominion Energy, the independent power and natural gas subsidiary,
earned $23 million (12 cents per share) in the third quarter of 1999, compared
to operating earnings of $18 million (9 cents per share) in the third quarter
of 1998. Third- quarter 1999 earnings reflect higher gas and oil production
and the commencement of commercial operations at the 600-megawatt gas-fired
Elwood facility in Illinois, partially offset by higher information technology
expenses at the corporate level.
Dominion Capital, the financial services subsidiary, earned
$7 million (4 cents per share), down from $10 million (5 cents per share) for
the same period last year. Quarter-versus-quarter earnings at Dominion Capital’s
core operations (Saxon Mortgage, First Dominion Capital, First Source Financial
and Cambrian) increased $5 million, or 3 cents per share. Earnings growth at
the core businesses was offset by a loss of $5.8 million (3 cents per share)
on the sale of part of Dominion Capital’s ownership interest in Catalyst Old
River Hydroelectric LP in Vidalia, La., and other operating losses.
Capps said: "We are very pleased with the continued earnings
momentum reflected in our third-quarter results, particularly in light of the
challenges presented by hurricanes Dennis and Floyd. I am proud of our employees
who worked tirelessly in difficult conditions to restore power to the hundreds
of thousands of customers affected. We have great energy assets which promise
to deliver superior service to our customers and value to our shareholders,
but in the end it’s all about people. The key to our success is our wonderful
employees."
The outlook for Dominion Resources is bright. With the Virginia
SCC approval behind us, we are moving rapidly toward closing our merger with
Consolidated Natural Gas to become the nation’s premier, fully integrated electric
and gas energy company."
Operational Restructuring Results
A major reorganization plan that took effect May 1 restructured
Dominion Resources’ business segments into five operating units: Dominion Generation,
Virginia Power (transmission and distribution operations), Dominion Energy –
Oil & Gas, Dominion Capital and Dominion Resources (holding company). Under
the restructuring plan, pro-forma third-quarter operating earnings for Dominion
Generation were $174 million (91 cents per share), up from $135 million (69
cents per share) in the third-quarter of 1998. Pro-forma earnings for Virginia
Power were $63 million (33 cents per share), compared to $73 million (37 cents
per share) last year. Dominion Energy — Oil & Gas earnings totaled $12 million
(6 cents per share), up from $7 million (4 cents per share) for the comparable
period in 1998.
Capps said: "These organizational changes are a direct result
of both the merger and 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 Virginia Power 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.
(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 Securities & Exchange Commission filings.)
