|
August 3, 2006
Dominion Announces
Second-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 June 30, 2006 of $161 million (46 cents per
share) compared to net income of $332 million (97 cents per share) for the same
period last year.
Operating earnings for the three months ended June 30, 2006
amounted to $295 million (84 cents per share) compared to operating earnings
of $340 million (99 cents per share) for the three months ended June 30, 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:
“The first six months of the year reflect operational
strength across all of our businesses. Of note, our large coal units achieved
the highest year-to-date capacity factor on record of 84.3 percent. Throughput
in our wet gas system is up approximately 7 percent year to date. Virginia’s
service territory continues to prosper, and our electric new connects grew 2.5
percent compared to the same period last year.
“Last year’s second quarter included business
interruption insurance income that did not recur in the second quarter of this
year. After normalizing for the receipt of insurance income, our quarterly operating
earnings compared favorably to last year’s second quarter.
“In looking to the second half of the year, we have
reached an agreement in principle on our outstanding business interruption insurance
claims for Katrina and Rita. We anticipate recognizing the income in the third
quarter. Additionally, we are revising our 2006 gas and oil production forecast
upward, partially reflecting the early return of our production following the
hurricanes.
“With our solid second-quarter performance, our expected
receipt of business interruption insurance income in the third quarter and our
revised production estimate, 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.
Second-quarter 2006 operating earnings compared to 2005
Second-quarter 2006 operating earnings of 84 cents per share
compares to 99 cents per share in the second quarter of 2005. The decrease is
primarily attributable to the absence of business interruption insurance income
and lower sales of excess emissions allowances, partially offset by higher contributions
from the company’s merchant generation business.
Complete details of second-quarter 2006 operating earnings
compared to 2005 can be found on Schedule 5 of this release.
Third-quarter 2006 operating earnings assumptions
In the third-quarter 2005, Dominion reported operating earnings
of $1.08 per share. Third-quarter 2006 drivers that are expected to compare
favorably to third-quarter 2005 include recovery of business interruption insurance
income, higher contributions from the company’s merchant generation business
and lower unrecovered Virginia fuel expenses. Partial offsets include an expected
return to normal weather in the electric utility service area, lower sales of
excess emissions allowances and a scheduled refueling outage at our Kewaunee
power station.
Dominion’s third-quarter 2006 operating earnings assumptions
compared to 2005 can be found on Schedule 6 of this release.
Conference call today
Dominion will host its second-quarter earnings conference
call at 10 a.m. EDT on Thursday, Aug. 3, at which time Dominion management will
discuss second quarter financial results, the status of the company’s
business interruption insurance claims and other matters of interest to the
financial community.
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 Aug. 3 and lasting until 11 p.m. EDT Aug. 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 91365780. Additionally, a replay of the Web
cast will be available on the company’s investor information page by the
end of the day Aug. 3.
Dominion is one of the nation's largest producers of energy,
with a portfolio of about 28,000 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 one of the nation's largest
underground natural gas storage systems with about 950 billion cubic feet of
storage capacity and serves retail energy customers in ten states. For more
information about Dominion, visit the company's Web site at http://www.dom.com/.
This release contains certain forward-looking statements
including our earnings guidance for 2006 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 fluctuations in energy-related commodity prices, including changes in
the cost of fuel for our regulated electric business, the timing of the closing
dates of acquisitions or divestitures, realization of and timing of the receipt
of expected business interruption insurance proceeds, additional risk exposure
associated with the termination of business interruption, offshore property
damage and other insurance related to our exploration and production operations
and our inability to replace such 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, gas and oil production and realized prices. Other factors include,
but are not limited to, weather conditions, governmental regulations, economic
conditions in the company's service area, risks of operating businesses in regulated
industries that are subject to changing regulatory structures, changes to regulated
gas and electric rates collected by Dominion, 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.
###
|
