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November 1, 2006
Dominion Announces Third-Quarter 2006 Earnings
- Company affirms 2006 earnings guidance
- Conference call scheduled for 10 a.m. EST 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 Sept. 30, 2006 of $654 million ($1.85 per
share) compared to net income of $15 million (4 cents per share) for the same
period last year.
Operating earnings for the three months ended Sept. 30, 2006
amounted to $662 million ($1.87 per share) compared to operating earnings of
$373 million ($1.08 per share) for the three months ended Sept. 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.
Thomas F. Farrell II, president and chief executive officer,
said:
“Even after normalizing for our receipt of business
interruption insurance proceeds and mark-to-market gains, our third quarter
operations were outstanding. Our nuclear fleet achieved a 99.9 percent capacity
factor this quarter, excluding a planned refueling outage, and our large utility
coal assets continued their record performance with an equivalent availability
factor of 92.3 percent.
“Dominion Retail has added more customers year to date
than in any other comparable time period. We also broke ground on the Cove Point
expansion in Maryland, a project which will nearly double the send-out and current
storage capacity of the plant upon its completion in 2008.
“While we are fortunate that the hurricane season to
date has been a mild one, we had some damage from Tropical Storm Ernesto in
our electric utility service area. We have recorded a cost of 3 cents per share
in the third quarter and estimate an additional 1-cent per share impact in the
fourth quarter. We are confirming our full-year 2006 operating earnings guidance
of $5.05 to $5.25 per share, although we would expect actual earnings to fall
between the low end of the range and the mid-point, assuming normal weather
in the fourth quarter.”
In providing 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.
Third-quarter 2006 operating earnings compared to 2005
Third-quarter 2006 operating earnings of $1.87 per share compares
to $1.08 per share in the third quarter of 2005. The increase is primarily attributable
to the receipt of business interruption insurance proceeds, lower unrecovered
Virginia fuel expenses, higher contributions from the company’s merchant
generation and producer services businesses, as well as increased gas and oil
production revenue, partially offset by the impact of comparatively milder temperatures
in the electric utility service area, lower sales of emissions allowances, and
restoration expenses following Tropical Storm Ernesto.
Complete details of third-quarter 2006 operating earnings
compared to 2005 can be found on Schedule 5 of this release.
Fourth-quarter 2006 operating earnings assumptions
In the fourth-quarter 2005, Dominion reported GAAP earnings
of 74 cents per share and operating earnings of $1.02 per share. Fourth-quarter
2006 drivers that are expected to compare favorably to fourth-quarter 2005 include
higher contributions from the company’s merchant generation business,
increased gas and oil production and lower unrecovered Virginia fuel expenses.
Expected offsets include lower margins in the E&P business and the absence
of a mark-to-market benefit from hedges de-designated following the 2005 hurricanes.
Dominion’s fourth-quarter 2006 operating earnings assumptions
compared to 2005 can be found on Schedule 6 of this release.
Conference call today
Dominion will host its third-quarter earnings conference call
at 10 a.m. EST on Wednesday, Nov. 1, at which time Dominion management will
discuss third quarter financial results, the status of the company’s strategic
review 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. EST Nov. 1 and lasting until 11 p.m. EST Nov. 8. Domestic callers
may access the recording by dialing (877) 919-4059. International
callers should dial (334) 323-7226. The PIN
for the replay is 91201400. Additionally, a replay of the Web
cast will be available on the company’s investor information page by the
end of the day Nov. 1.
Dominion is one of the nation's largest producers of energy,
with a portfolio of about 28,000 megawatts of generation, about 6.6 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 eleven 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, additional risk exposure associated with
the termination of business interruption and offshore property damage 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.
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