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May 4, 2005
Dominion Announces First Quarter 2005 Earnings
- Company reaffirms 2005 earnings guidance
- Conference call scheduled for 10 a.m. EDT today
RICHMOND, Va. - Dominion (NYSE: D) announced today unaudited
net income determined in accordance with Generally Accepted Accounting Principles
(GAAP) for the three months ended March 31, 2005, of $429 million ($1.25 per
share) compared to net income of $437 million ($1.34 per share) for the same
period last year.
Operating earnings, which are defined as GAAP earnings adjusted
for certain items, were $492 million ($1.44 per share) for the three months
ended March 31, 2005, compared to operating earnings of $448 million ($1.37
per share) for the same period in 2004.
Dominion uses operating earnings as the primary performance
measurement of its earnings outlook and results for public communications with
analysts and investors. Dominion also uses operating earnings internally for
budgeting, reporting to the board of directors and for the company’s annual
incentive plan. Dominion management believes operating earnings provide a more
meaningful representation of the company’s fundamental earnings power.
Business segment results and detailed descriptions of items
included in 2005 and 2004 GAAP earnings but excluded from operating earnings
can be found on Schedules 1, 2 and 3 of this release.
Thos. E. Capps, chairman and chief executive officer, said:
“The first quarter was the latest witness to the strength
in diversity of our assets. We were able to absorb the impact of some production
delays with improved performance in other areas. We are pleased to have delivered
operating earnings in the upper end of our guidance and reaffirm full-year operating
earnings guidance of $5.00 to $5.10 per share as we continue our focus on delivering
on 2005 expectations one quarter at a time.”
In providing operating earnings guidance, Dominion management
is not aware of differences between expected 2005 operating earnings and GAAP
earnings beyond those recorded in the first quarter. The corresponding GAAP
equivalent for 2005 earnings per share guidance is $4.81 to $4.91 per share.
First-quarter 2005 operating earnings compared to guidance
Dominion’s operating earnings of $1.44 per share came
in near the top of the company’s operating earnings guidance range of
$1.35 to $1.45 per share. Key drivers were the earlier-than-planned closing
on the Dominion New England asset acquisition; the positive effect of establishing
regulatory assets in connection with the North Carolina rate case settlement;
higher contributions from the company’s Producer Services business; higher-than-expected
sales in our franchise service areas due to cooler-than-normal weather, and
the benefit of higher-than-forecasted oil prices at Dominion Exploration &
Production (E&P). These positive effects were partially offset by production
delays in the Gulf of Mexico and the resulting impact from the discontinuance
of hedge accounting on the delayed volumes; higher-than-planned unrecoverable
fuel expenses at Dominion Virginia Power; and the write-off of certain start-up
and integration costs associated with joining the PJM regional transmission
organization.
Complete details of first-quarter 2005 results compared to
company guidance can be found on Schedule 4 of this release.
First-quarter 2005 operating earnings compared to 2004
First-quarter 2005 operating earnings of $1.44 per share compares
to $1.37 per share in the first quarter of 2004. The increase is primarily attributable
to the acquisition of Dominion New England; higher natural gas and oil prices
at E&P; higher contributions from the company’s Producer Services
business as well as Dominion Retail; the favorable impact of the North Carolina
rate case settlement; and lower purchased-power capacity expenses. These positives
were partially offset by higher expenses at E&P, primarily due to the discontinuance
of hedge accounting for certain oil hedges, including subsequent changes in
fair value of those hedges; and an increase in unrecoverable fuel expenses at
Dominion Virginia Power.
Complete details of first-quarter 2005 operating earnings
compared to 2004 can be found on Schedule 5 of this release.
Second-quarter 2005 operating earnings guidance
Dominion expects second-quarter 2005 operating earnings in
the range of 73 cents to 85 cents per share. This compares to 81 cents per share
in the second quarter of 2004. Drivers that compare favorably to 2004 include
contributions from Dominion New England; higher commodity prices at E&P;
higher margins from the company’s Producer Services business; customer
growth; and the effect of the second-quarter 2004 write-off of Virginia fuel
expenses incurred in the first quarter of 2004 that had been deferred. Expected
offsets include a return to normal weather; the effects of favorable second-quarter
2004 items at E&P not expected to recur in the second quarter of 2005, such
as gains on oil options and a positive tax adjustment; higher expenses at E&P;
and the effect of an unplanned outage at the Millstone power station.
In providing second-quarter 2005 operating earnings guidance,
Dominion management is not aware of differences between operating earnings and
GAAP earnings. Therefore the corresponding GAAP equivalent for second-quarter
2005 earnings per share guidance also is 73 cents to 85 cents per share.
Complete details of Dominion’s second-quarter 2005 guidance
can be found on the company’s Web site at www.dom.com/investors/.
May 4 earnings conference call
Dominion will host a conference call at 10:00 a.m. EDT today,
when management will discuss details of first-quarter 2005 earnings, preliminary
earnings estimates for 2006 through 2008, and other issues of interest to the
financial community. Members of the media also are invited to listen.
Domestic callers who wish to participate in the conference
call should dial 888-243-3836. International callers should
dial 973-935-2096. Participants should dial in 10 to 15 minutes
prior to the scheduled start time.
A live Web cast of the conference call will be available on
the company’s Web site at www.dom.com/investors/.
A replay of the conference call will be available from approximately
1 p.m. EDT, May 4, until 11 p.m. EDT, May 11. Domestic investors may access
the recording by dialing 877-519-4471. International callers
should dial 973-341-3080 to access the recording. The PIN
for the conference call replay is 5958467. Additionally, a
replay of the Web cast will be available on the company’s investor information
page by the end of the day May 4.
Dominion is one of the nation's largest producers of energy,
with a portfolio of about 28,100 megawatts of generation, about 6 trillion cubic
feet equivalent of proved natural gas reserves and 7,900 miles of natural gas
transmission pipeline. Dominion also operates the nation's largest underground
natural gas storage system with more than 965 billion cubic feet of storage
capacity and serves retail energy customers in nine states. For more information
about Dominion, visit the company's Web site at www.dom.com.
This release contains forward-looking statements including
our expectations for 2005 earnings and for future growth 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 the receipt of approvals for and timing
of the closing dates of pending acquisitions, realization of expected business
interruption insurance proceeds, 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, governmental
regulations, economic conditions in the company's service area, fluctuations
in energy-related commodity prices, including changes in the cost of fuel for
our regulated electric business, risks of operating businesses in regulated
industries that are subject to changing regulatory structures, changes to regulated
gas and electric rates recoverable by Dominion including future recovery of
fuel costs, the transfer of control over electric transmission facilities to
a regional transmission organization, changes to rating agency requirements
and ratings, changing financial accounting standards, trading counter-party
credit risks, risks related to energy trading and marketing, and other uncertainties.
Other risk factors are detailed from time to time in Dominion’s most recent
quarterly report on Form 10-Q or annual report on Form 10-K filed with the Securities
& Exchange Commission.
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