Dominion Announces 2001 Earnings Expectations
and Earnings Conference Call Details
2001 earnings will
meet or exceed expectations of $4.15 per share
Company will take
fourth-quarter special charges of $348 million
Earnings conference
call scheduled for Thursday, January 24, at 10 a.m., ET
RICHMOND, Va. – Dominion (NYSE: D) announced today that 2001
operating earnings, excluding special charges, are expected to meet or slightly
exceed analyst expectations of $4.15 per share. The company also reaffirmed
2002 earnings guidance of $4.90 to $4.95 per share.
Special Charges
The company expects to take after-tax charges of approximately
$348 million in the fourth quarter of 2001, created by its estimated Enron exposure
($97 million), write-down of Dominion Capital assets ($183 million) and restructuring
charges associated with a senior management restructuring initiative announced
in November and other restructuring costs ($68 million).
The Enron charge is related to credit exposure on past energy
sales to Enron for which payment has not yet been received ($6 million) and
the impaired value of forward natural gas contracts with Enron ($91 million).
This is a non-cash charge. The fourth quarter charge substantially eliminates
any further Enron related earnings exposure going-forward. Post-Enron, Dominion
has hedged more than 60 percent of its expected 2002 gas volumes and has hedged
about 40 percent of its expected 2003 gas volumes at prices significantly above
current market prices. For this reason and others, including cost-cutting, the
Six Sigma program, and strong underlying growth in the company’s core energy
businesses, Dominion is positioned to exceed the consensus analyst estimate
of $4.89 per share in 2002 and to grow earnings thereafter at an average annual
rate of 10 percent.
Thos. E. Capps, chairman, president and chief executive officer
of Dominion, said: “The Enron bankruptcy was the industry’s equivalent of a
‘thousand year flood’. The flood waters are receding. As a result of some very
costly but important lessons learned, the industry will be financially stronger
overall. However, the Enron collapse has set in motion and accelerated a badly
needed weeding-out process in the industry. The strong will get stronger while
the weak will get weaker. A handful of financially strong, asset-heavy and integrated
industry leaders, including Dominion, are already benefiting from a ‘flight
to quality’ as energy users seek out suppliers they know they can count on to
be there when the energy is needed. Most recently, Dominion’s contract to supply
the energy needs of the United Illuminating Company is an example of the value
Dominion’s shareholders are capturing as a result of the Enron failure.”
The Dominion Capital charge is related to a write-down of
the value of Dominion Capital assets and increased loan loss reserves. When
Dominion completed its merger with CNG in January 2000, it became a registered
company under the Public Utility Holding Company Act of 1935 (PUHCA). PUHCA
prohibits registered companies from engaging in businesses not functionally
related to the energy business. To comply with PUHCA, Dominion had to divest
Dominion Capital, its financial services business, within a defined period which
happened to overlap a recession. Since completion of the CNG merger, Dominion
has made significant progress toward fully divesting Dominion Capital. Dominion
anticipates no further Dominion Capital asset write-downs or loan loss reserve
adjustments under existing market conditions.
Capps said: “We have conducted a rigorous review of all of
our assets, with a particular focus on non-core assets. There were significant
fourth quarter events that led to a decline in consumer and business confidence
and triggered an impairment of Dominion Capital assets. This write-down reduces
the book values of our Dominion Capital assets to a level we believe reflects
a realistic estimate of the value we expect to ultimately realize. The adjusted
values should allow us to pursue liquidation without negatively impacting earnings
or the balance sheet going forward.”
Further details regarding fourth quarter and full-year 2001
earnings and the 2002 earnings outlook will be provided during the January 24
earnings conference call.
January 24 Earnings Conference Call
Dominion will host a conference call for investors at 10
a.m. ET on Thursday, January 24. Dominion management will review fourth-quarter
and full-year 2001 earnings to be released that morning. Members of the media
are also invited to listen.
Domestic investors who wish to participate in the conference
call should dial 800-314-7867. International investors should call 719-219-0214.
The confirmation number required to join the call is 533654. Participants
should dial in 5 to 10 minutes prior to the scheduled start time.
A live web cast of the conference call will be available
on the company’s investor information page at www.dom.com/investors.
A tape recording of the conference call will be available
from approximately 1 p.m. ET January 24 through 11 p.m. ET January 29. Domestic
investors may access the recording by dialing 888-203-1112. International
callers should dial 719-457-0820 to access the recording. The access
code for the replay is also 533654. A replay of the conference call also
will be available on the company’s investor information home page by the end
of the day on January 24.
Dominion is one of the nation's largest producers of energy,
with a production capability of more than 3 trillion British thermal unit of
energy per day. Dominion has a diversified and integrated energy portfolio consisting
of 22,000-megawatts of generation, 4.6 trillion cubic feet equivalent of natural
gas reserves, 7,600 miles of natural gas transmission pipeline and the nation's
largest underground natural gas storage system with more than 950 billion cubic
feet of storage capacity. Dominion also serves 3.8 million franchise natural
gas and electric customers in five states. In addition, Dominion 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.
