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Dominion News Releases
January 28, 2000
Dominion Resources Announces 9.5 Percent Increase in 1999
Operating Earnings Per Share
RICHMOND, Va. – Dominion Resources Inc. (NYSE: D) today announced
unaudited consolidated operating earnings for the 12 months ended December 31,
1999 of $575 million ($3.01 per share), a 9.5 percent increase in earnings per
share over prior-year earnings of $536 million ($2.75 per share).
Operating earnings for 1999 exclude a one-time, non-cash
charge of $255 million ($1.33 per share) created by an accounting change resulting
from a Virginia law, effective July 1, 1999, which establishes a timeline for
competition among electric generators; and a one-time, after-tax charge of $21
million (11 cents per share) related to the sale of the company’s Latin American
power generation businesses. Operating earnings for 1999 also exclude transition
costs of $4 million (2 cents per share) associated with the company’s merger
with Consolidated Natural Gas Company. The Dominion/CNG merger is expected to
close today.
Operating results for 1998 exclude a non-recurring, after-tax
charge of $201 million ($1.03 per share) associated with Virginia Power’s rate
case settlement, and a one-time after-tax gain of $200.7 million ($1.03 per
share) from the sale in July of East Midlands Electricity.
Thos. E. Capps, chairman, president and chief executive officer,
said:
"It is powerfully symbolic to announce continued strong
growth in operating earnings on the very day we close our historic merger with
CNG. In 1999, we completed the groundwork necessary to grow and prosper as the
nation’s premier electric power and natural gas provider. We worked with Virginia
legislators to establish a plan for electric industry deregulation that is beneficial
to both our customers and our shareholders. We began divesting non-core assets
and re-deploying proceeds into our focused energy business. We initiated a transforming
merger with Consolidated Natural Gas and started the work of combining our two
companies. Today we will celebrate the completion of that combination.
"Our work has just begun. As we begin operations as
a new company entering a new century, we will continue to build on this solid
foundation to maximize value for our owners. We are bullish about our company’s
ability to grow earnings 8 to 10 percent annually. Combined with our annual
dividend payment of $2.58 per share, we believe this growth rate will translate
into a long-term annual total shareholder return in excess of 15 percent."
Full Year Results
Virginia Power, the company’s principal subsidiary, earned
$448 million ($2.34 per share), a 15-percent increase in earnings per share
over 1998 operating earnings of $395 million ($2.03 per share). Operating earnings
for 1999 exclude a non-recurring charge of $1.33 per share associated with an
accounting change resulting from a new Virginia law affecting electric generators.
1998 results exclude a non-recurring charge of $1.03 per share associated with
the company’s rate settlement.
Capps said: "Virginia Power’s excellent performance
in 1999 clearly reflects the company’s fundamental financial and operational
strengths. A final $50 million rate reduction resulting from the 1998 Virginia
rate case proceeding, a mild weather impact of approximately $42 million (net
of tax) and extraordinary restoration costs totaling more than $22 million (net
of tax) following Hurricanes Floyd and Dennis and the most severe ice storm
in the history of our service area were offset by strong customer growth and
consistently solid results in key areas such as our wholesale power marketing
operations."
Dominion Energy, the company’s independent power and natural
gas subsidiary, earned $63 million (33 cents per share) in 1999, up from $57
million (29 cents per share) in 1998. Results for 1999 exclude a non-recurring
loss of 11 cents per share on the sale of the company’s Latin American generation
businesses. Dominion Energy’s results reflect strong earnings growth from its
oil and gas operations and commencement of operations at its 600-megawatt gas-fired
Elwood facility in Illinois, partially offset by a lower earnings contribution
from foreign operations.
Dominion Capital, the financial services subsidiary, earned
$78 million (41 cents per share) in 1999, up from $59 million (30 cents per
share) in 1998. Continued growth in all three of its core financial services
businesses was responsible for the rise.
Capps said: "Dominion Capital continues to be a hard-working
member of our family and outperform its peer companies. The company’s solid
portfolio of diversified operating units has grown earnings by more than 30
percent annually since 1995 and has captured significant positions in specialized
lending markets."
Dominion Resources previously announced plans to divest Dominion
Capital.
Fourth-Quarter Results
Consolidated operating earnings for the fourth quarter ended
December 31, 1999 were $69 million (37 cents per share), compared to operating
earnings of $54 million (28 cents per share) in the fourth quarter of 1998.
Fourth-quarter 1999 earnings exclude a one-time after-tax loss of $3 million
(2 cents per share) on the sale of the company’s Latin American generation businesses
and CNG merger transition costs of $4 million (2 cents per share).
In the fourth quarter, Virginia Power earned $26 million
(14 cents per share), down from $36 million (19 cents per share) for the same
period in 1998. The decline included lower results from the wholesale power
marketing business and lower rates resulting from the 1998 Virginia rate case
settlement.
Dominion Energy contributed $11 million (6 cents per share)
to fourth quarter operating earnings, up from $9 million (5 cents per share)
last year. The 1999 figure excludes a non-recurring loss of 2 cents per share
on the sale of Dominion Energy’s foreign operations. The increase in fourth
quarter 1999 earnings is due primarily to higher oil and gas production volume
and prices, partially offset by a lower earnings contribution from its foreign
and domestic electric generation operations and higher information technology
expenses at the corporate level.
Dominion Capital contributed $35 million (19 cents per share),
up from $3 million (1 cent per share) in the fourth quarter of 1998. Higher
net interest income, higher fee income and higher mortgage securitization gains
at the company's core segments were the main drivers of the strong quarter-over-quarter
growth. Operating results for real estate and other non-core segments also rose
in the fourth quarter of 1999.
Results by Operational Segment
Pro forma 1999 operating earnings for Dominion Resources’
operating units as structured under a major reorganization plan which took effect
May 1, 1999 were $292 million ($1.53 per share) for Dominion Generation, up
from $262 million ($1.34 per share) in 1998; and $175 million (92 cents per
share) for Virginia Power, up from $168 million (86 cents per share) in 1998.
Pro forma Dominion Energy – Oil and Gas earnings were $43 million (22 cents
per share), up from $22 million (12 cents per share) in 1998.
Fourth-quarter pro forma operating earnings for Dominion
Generation were $3 million (2 cents per share), compared to $17 million (9 cents
per share) in the fourth quarter of 1998. Pro forma operating earnings for Virginia
Power were $24 million (13 cents per share), virtually unchanged from pro forma
fourth-quarter 1998 earnings of $25 million (13 cents per share). Pro forma
Dominion Energy – Oil and Gas earnings were $10 million (5 cents per share),
up from $3 million (2 cents per share) in the prior-year period.
Dominion Resources’ restructuring plan organized the company’s
businesses into five operating units:
- Dominion Generation: combined generation operations of
Virginia Power and Dominion Energy;
- Virginia Power: customer service and regulated transmission
and distribution operations of Virginia Power;
- Dominion Energy – Oil and Gas: gas and oil operations
of Dominion Energy;
- Dominion Capital: financial services operations;
- Dominion Resources: holding company and Corby Power (UK)
operations.
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.)
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Mark G. Lazenby (804) 819-2042
Hunter A. Applewhite (804) 819-2043
Analyst Contacts:
Thomas P. Wohlfarth (804) 819-2150
Suzette M. S. Mata (804) 819-2154
Joseph G. O'Hare (804) 819-2156
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