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May 3, 2006
Dominion Announces First Quarter 2006 Earnings
- Company affirms 2006 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, 2006, of $534 million ($1.53 per
share) compared to net income of $429 million ($1.25 per share) for the same
period last year.
Operating earnings for the three months ended March 31, 2006,
were $567 million ($1.63 per share) compared to operating earnings of $492 million
($1.44 per share) for the three months ended March 31, 2005. Operating earnings
are defined as GAAP earnings adjusted for certain items.
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 2006 and 2005 GAAP earnings but excluded from operating earnings
can be found on Schedules 1, 2 and 3 of this release.
Tom Farrell, president and chief executive officer, said:
"We are very pleased with our first quarter results.
After normalizing for warmer-than-normal weather in our utility service areas,
and the mark-to-market benefit on de-designated hedges, operating earnings exceeded
our internal expectations. This is largely due to the higher-than-expected oil
production in the Gulf of Mexico.
"In anticipation of continued operating excellence and
the expected full recovery of our Gulf of Mexico gas and oil operations, we
are affirming our full-year operating earnings guidance of $5.05 to $5.25 per
share."
In affirming 2006 operating earnings guidance, the company
notes that there could be differences between expected GAAP and operating earnings
for matters such as, but not limited to, divestitures or changes in accounting
principles. Dominion management is not able to estimate the impact, if any,
of these items on GAAP earnings. Accordingly, Dominion is not able to provide
a corresponding GAAP equivalent for operating earnings guidance.
First-quarter 2006 results compared to guidance assumptions
While Dominion’s first-quarter 2006 results exceeded
internal expectations, largely due to higher-than-expected oil production in
the Gulf of Mexico, differences between actual and expected commodity prices
and weather affected certain aspects of the company’s business in a generally
offsetting manner. Lower-than-expected natural gas prices had a favorable effect
on Virginia fuel expenses, variable gas and oil production costs, and the mark-to-market
valuation of remaining de-designated hedges. However, lower-than-expected natural
gas prices had an unfavorable effect on unhedged natural gas sales revenue.
Warmer-than-normal weather had a favorable effect on Virginia fuel expenses
but an unfavorable effect on electric and natural gas utility sales.
Complete details of first-quarter 2006 results compared to
guidance assumptions can be found on Schedule 4 of this release.
First-quarter 2006 operating earnings compared to 2005
First-quarter 2006 operating earnings of $1.63 per share compares
to $1.44 per share in the first quarter of 2005. The increase is primarily attributable
to increased oil production and gas and oil prices, higher contributions from
the company’s merchant generation and producer services businesses, and
a mark-to-market benefit from hedges de-designated following the 2005 hurricanes.
These benefits were partially offset by warmer-than-normal weather in the company’s
electric and natural gas utility service areas, higher Virginia fuel expenses
and the absence of business interruption insurance proceeds recorded in the
first quarter of 2005.
Complete details of first-quarter 2006 operating earnings
compared to 2005 can be found on Schedule 5 of this release.
Second-quarter 2006 operating earnings assumptions
In the second-quarter 2005, Dominion recorded operating earnings
of 99 cents per share and GAAP earnings of 97 cents per share. Second-quarter
2006 drivers that compare favorably to second-quarter 2005 include higher expected
natural gas and oil production and prices and the absence of a scheduled refueling
outage at Millstone. Favorable drivers in the second quarter of 2005 not expected
to recur in 2006 include business interruption insurance proceeds from Hurricane
Ivan and gains from the sale of excess emissions allowances.
Dominion’s second-quarter 2006 operating earnings assumptions
compared to 2005 can be found on Schedule 6 of this release.
May 22 analyst meeting
Dominion will host an analyst meeting at The Fairmont Copley
Plaza Hotel in Boston on Monday, May 22, at which management will provide preliminary
guidance for its 2007 and 2008 earnings and cash flow with supporting drivers
and assumptions. Individuals interested in attending the meeting that begins
at 9:00 a.m. EDT should register at http://www.dom.com/investors/rsvp.jsp
or contact investor relations at (804) 819-2155. The presentation and question
and answer period that follows will be Web cast.
Conference call today
Dominion will host its first-quarter earnings conference call
at 10 a.m. EDT on Wednesday, May 3, at which time Dominion management will discuss
first quarter financial results.
Domestic callers should dial (866) 710-0179.
The passcode for the conference call is "Dominion." International
callers should dial (334) 323-9871. Participants should dial
in 10 to 15 minutes prior to the scheduled start time. Members of the media
also are invited to listen.
A live Web cast of the conference call will be available on
the company’s investor information page at http://www.dom.com/investors/.
A replay of the conference call will be available beginning
about 1 p.m. EDT May 3 and lasting until 11 p.m. EDT May 10. Domestic callers
may access the recording by dialing (877) 919-4059. International
callers should dial (334) 323-7226. The PIN
for the replay is 17824085. Additionally, a replay of the Web
cast will be available on the company’s investor information page by the
end of the day May 3.
Dominion is one of the nation's largest producers of energy,
with a portfolio of about 28,100 megawatts of generation, about 6.3 trillion
cubic feet equivalent of proved natural gas reserves and 7,800 miles of natural
gas transmission pipeline. Dominion also operates the nation's largest underground
natural gas storage system with about 950 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 http://www.dom.com/.
This release contains forward-looking statements including
our expectations for 2006 financial results that are subject to various risks
and uncertainties. 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 timing of the closing dates of acquisitions or divestitures, realization
of and timing of the receipt of expected business interruption insurance proceeds
and decreased availability of business interruption insurance on commercially
reasonable terms, estimates of future market conditions, estimates of proved
and unproved reserves, the company’s ability to meet its natural gas and
oil production forecasts, the behavior of other market participants, and the
effects of hurricanes on our operations, oil and gas production and realized
prices. 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, transitional issues related
to 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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