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Dominion News Releases
October 17, 2001
Dominion Announces Third-Quarter Earnings
of $1.37 Per Share
RICHMOND, Va. – Dominion (NYSE: D) today announced unaudited
consolidated earnings for the third quarter ended September 30, 2001 of $344
million ($1.37 per share), compared to operating earnings of $270 million ($1.13
per share) for the same period in 2000. Operating earnings for the third quarter
of 2000 exclude a one-time after-tax gain of $12 million (5 cents per share)
on the sale of Corby Power Station to PowerGen plc and restructuring and merger-related
after-tax costs of $22 million (9 cents per share).
Third-quarter 2001 highlights include:
- Thirty-nine thousand net new delivery customers added;
- Proven gas and oil reserves increased to 3 trillion cubic
feet equivalent (tcfe);
- Announced acquisition of Louis Dreyfus Natural Gas, an
accretive transaction that will boost gas and oil reserves by 60 percent,
to more than 4.6 tcfe;
- Fifty million megawatt-hours and 346 billion cubic feet
of natural gas traded and sold, a 42 percent and 19 percent increase, respectively,
versus prior year.
Thos. E. Capps, chairman, president and chief executive officer,
said:
"The third quarter was outstanding, despite a difficult
business environment. Dominion generated record cash flow from operations and
earnings of $1.1 billion and $344 million, respectively. Dominion’s performance
demonstrates the strength of its well-balanced portfolio of energy businesses."
Earnings Outlook
The company reaffirmed its earnings targets of $4.15 or better
in 2001 and $4.85 to $4.90 in 2002, excluding the addition of Louis Dreyfus
Natural Gas. Dominion’s acquisition of Louis Dreyfus is expected to close by
year-end and add about 5 cents per share to 2002 earnings.
Capps said: "We expect to meet these 2001 and 2002 earnings
goals and then achieve long-term earnings per share growth of 10 percent beyond
2002. We believe Dominion is capable of delivering this kind of earnings growth
because of the fundamental strength of its core businesses, combined with an
intense and relentless focus on cost efficiency, driven by a company-wide implementation
of Six Sigma."
Six Sigma
Dominion is the first gas and electric energy company to
implement Six Sigma enterprise-wide. Six Sigma is the acclaimed business process
improvement methodology that deploys efficiency experts known as "Black
Belts" through all units of a company’s operations and support. It was
extensively and successfully used by retired General Electric Chairman Jack
Welch beginning in 1995. Tom Capps laid the groundwork for implementing Six
Sigma at Dominion more than a year ago when he hired retired Admiral Jay Johnson,
former Chief of Naval Operations, as senior vice president- business excellence
and put him in charge of Six Sigma deployment.
Capps said: "Today, we have nearly completed training
and deploying a team of 125 full-time Black Belts. We’ve identified efficiency
improvements that can and will yield improved processes and lower operating
expenses beginning in 2002. We continue to develop a more entrepreneurial culture
at Dominion, and Six Sigma is playing a critical role. Thanks to the process
improvement methodology, we’re finding even more ways to think — and act — as
entrepreneurs in all that we do. What excites us most is how much untapped potential
there is for efficiency improvement."
Earnings Breakdown by Operating Segment
Dominion Energy, the company’s electric generation and gas
pipeline business segment, contributed $288 million ($1.15 per share) to third-quarter
2001 operating earnings, up from $208 million (87 cents per share) in the third
quarter of 2000. The increase in Dominion Energy’s third-quarter 2001 earnings
is primarily attributable to the addition of the Millstone power station, higher
earnings at the Dominion Energy Clearinghouse, warmer weather in the company’s
electric service area, a reduction in depreciation expenses resulting from the
application for relicensing of the company’s nuclear units in Virginia, and
lower purchased power expenses.
Dominion Delivery, the company’s electric and gas distribution
and customer service segment, contributed $68 million (27 cents per share) to
third-quarter operating earnings, compared to $90 million (37 cents per share)
in the third quarter of 2000. The change in quarter-over-quarter earnings is
primarily attributable to higher taxes and other expenses, partially offset
by customer growth and warmer weather in the company’s electric service area.
Dominion Exploration & Production, the company’s gas
and oil exploration and production unit, earned $78 million (31 cents per share)
in the third quarter of 2001, up from $66 million (28 cents per share) in the
prior-year period. The increase is primarily attributable to higher realized
gas and oil prices, partially offset by higher operating expenses and lower
production.
Dominion Capital reported a loss of $7 million (3 cents per
share) in the third quarter of 2001, compared to income of $3 million (1 cent
per share) in the prior-year period. Operating results from the remaining financial
services assets were lower in the third quarter of 2001 due to the lack of securitization
gains following the sale of Saxon Mortgage and to lower fee and interest income,
partially offset by lower interest expense, lower loan loss reserves and lower
taxes. Operating results from Dominion Capital’s real estate and other non-core
operations were also lower in the third quarter of 2001 primarily due to lower
water flow at the Vidalia hydro facility.
Legal Entity Results
While Dominion has restructured its daily operations as described
above, assets remain wholly owned by its legal subsidiaries, including Virginia
Power, Consolidated Natural Gas and Dominion Energy, pending full implementation
of electric and gas deregulation in the company’s service areas.
Third-quarter 2001 operating earnings for Virginia Power,
the company’s electric utility, were $1.04 per share, compared to $1.07 per
share in the third quarter of 2000.
Third-quarter 2001 operating earnings for Consolidated Natural
Gas, the company’s natural gas utility, were 30 cents per share, up from 27
cents per share in the third quarter of 2000.
Dominion Energy, the company’s independent power and natural
gas subsidiary, earned 41 cents per share, up from 11 cents per share last year.
Conference Call for Investors
Dominion will host a conference call at 11 a.m. ET today
to discuss third-quarter earnings. Domestic investors who wish to participate
should call 800-314-7867. International investors should call 719-219-0214.
The confirmation number required to join the call is 624469. A simultaneous
web cast of the call will be available on Dominion’s investor information home
page at www.dom.com/investors.
Detailed third-quarter financial statements and operating
statistics will also be posted on the investor page of the company’s web site
immediately following the conference call.
A tape recording of the conference call will be available
beginning at approximately 2 p.m. ET, October 17, through 11 p.m., October 22.
Interested investors should use the same phone numbers and access code listed
above to access the replay. A replay of the conference call also will be available
on Dominion’s investor information home page by the end of the day on October
17.
Dominion is one of the nation’s largest producers of energy,
with a production capability of 2.8 trillion British Thermal Units (BTUs) of
energy per day. Its 22,000-megawatt generation portfolio is expected to grow
to more than 28,000 megawatts by 2005. In addition to its existing 3 trillion
cubic feet equivalent of natural gas reserves and more than 300 billion cubic
feet equivalent of annual production, Dominion also owns and operates 7,600
miles of natural gas transmission pipeline with a delivery capability of 6.3
billion cubic feet per day. The company also operates the nation’s largest underground
natural gas storage system with more than 950 billion cubic feet of storage
capacity. Dominion serves nearly 4 million retail natural gas and electric customers
in five states, and owns a managing equity interest in Dominion Fiber Ventures
LLC, owner of Dominion Telecom. For more information about Dominion, visit the
company’s web site at www.dom.com.
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, estimates of proved and unproved reserves and the behavior of other
market participants. Other factors include, but are not limited to, weather
conditions, economic conditions in the company's service area, fluctuations
in energy-related commodity prices, risks associated with successfully executing
the telecommunications business plan and other uncertainties. Other risk factors
are detailed from time to time in the company's Securities & Exchange Commission
filings.
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