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January 30, 2008
Dominion Announces 2007 Earnings
- Schedules conference call for 10 a.m. EST today
- Provides 2008 operating earnings guidance of $3.05 to $3.15 per share
- Introduces 2009 operating earnings outlook of $3.25 to $3.40 per share
RICHMOND, Va. – Dominion (NYSE: D) today announced unaudited net income determined in accordance with Generally Accepted Accounting Principles (GAAP) for the 12 months ended Dec. 31, 2007 of $2.54 billion ($3.88 per share) compared to net income of $1.38 billion ($1.96 per share) for the same period in 2006.
Operating earnings for the 12 months ended Dec. 31, 2007 amounted to $1.68 billion ($2.56 per share) compared to operating earnings of $1.78 billion ($2.53 per share) for the same period in 2006. 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, for reporting to the board of directors, for the company’s incentive compensation plans and for its targeted dividend payouts. 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 2007 and 2006 GAAP earnings but excluded from operating earnings can be found on Schedules 1, 2 and 3 of this release.
All GAAP earnings, operating earnings and related per share amounts reflect the realignment of our business segments and the November 2007 2-for-1 stock split.
Thomas F. Farrell II, chairman, president and chief executive officer, said:
“We completed the divestiture of our non-Appalachian natural gas and oil exploration and production businesses in 2007, while continuing to deliver exceptional results across the rest of our businesses. We posted impressive results in all business areas, from merchant generation and unregulated retail sales to our regulated electric and gas operations.
“Our newly aligned operating segments, combined with expanded disclosure of earnings drivers detailed in the 2008 Earnings Guidance Kit that will be posted this morning on Dominion’s Web site, will better highlight Dominion’s earnings power and growth prospects. We are providing 2008 operating earnings guidance of $3.05 to $3.15 per share and are confident that we can deliver long-term annual operating earnings per share growth of at least 6 percent after 2008.”
Fourth-quarter earnings
Dominion also announced today unaudited net income determined in accordance with GAAP for the three months ended Dec. 31, 2007, of $299 million (52 cents per share) compared to net income of $31 million (4 cents per share) for the same period last year.
Operating earnings for the three months ended Dec. 31, 2007, were $299 million (52 cents per share) compared to operating earnings of $271 million (38 cents per share) for the three months ended Dec. 31, 2006.
Business segment results and detailed descriptions of items included in 2007 and 2006 GAAP earnings but excluded from operating earnings can be found on Schedules 1, 2 and 3 of this release.
2007 operating earnings compared to 2006
The increase in both fourth-quarter 2007 and full-year 2007 operating earnings per share as compared to 2006 is primarily attributable to higher contributions from the merchant generation business; lower unrecovered Virginia fuel expenses; higher regulated electric sales; lower interest expense; and accretion due to share repurchases. These positives were partially offset by the decrease in earnings resulting from the sale of our non-Appalachian E&P properties; higher outage costs at the company’s generating units; higher salary, wages, and benefits expenses; and other expenses.
Complete details of fourth-quarter and full-year 2007 operating earnings compared to 2006 can be found on Schedule 4 of this release.
2008 operating earnings guidance and 2009 outlook
The company is providing operating earnings guidance of $3.05 to $3.15 per share for the full year 2008 and 89 cents to 94 cents per share for the first quarter of 2008. Additionally, the company is introducing its initial 2009 operating earnings outlook of $3.25 to $3.40 per share.
This morning, at approximately 7:30 a.m. EST, the company will publish detailed guidance for each of the newly realigned operating segments. Complete details of the company’s 2008 guidance can be found on Dominion’s Web page under Financial Modeling, Forecasts and Outlook at http://www.dom.com/investors/.
In providing its 2008 operating earnings guidance and introducing its initial 2009 operating earnings outlook, the company notes that there could be differences between expected 2008 and 2009 GAAP and operating earnings for matters such as, but not limited to, divestitures or changes in accounting principles. At this time, 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 its operating earnings guidance and outlook.
Conference call today
Dominion will host its fourth-quarter earnings conference call at 10 a.m. EST on Wednesday, Jan. 30. Dominion management, including the heads of each business unit, will discuss 2007 financial results, 2008 operating earnings guidance, its 2009 operating earnings outlook 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 minutes to 15 minutes prior to the scheduled start time. Members of the media also are invited to listen.
A live webcast 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 Jan. 30 and lasting until 11 p.m. EST Feb. 6. Domestic callers may access the recording by dialing (877) 919-4059. International callers should dial (334) 323-7226. The PIN for the replay is 64496722. Additionally, a replay of the webcast will be available on the company’s investor information page by the end of the day Jan. 30.
Dominion is one of the nation's largest producers and transporters of energy, with a portfolio of approximately 26,500 megawatts of generation, 14,000 miles of natural gas transmission, gathering and storage pipeline, 6,000 miles of electric transmission lines and 1 Tcfe of proved natural gas and oil reserves. Dominion also owns and operates the nation’s largest underground natural gas storage system with over 970 billion cubic feet of storage capacity and serves retail energy customers in 11 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 forecasted operating earnings for 2008 and 2009 as well as projected future long-term operating earnings growth rates, 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, the timing of the closing dates of acquisitions or divestitures, 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 timing and receipt of regulatory approvals necessary for planned projects, acquisitions and divestitures, and the ability to complete planned construction or expansion projects as scheduled. Other factors include, but are not limited to, weather conditions, including the effects of hurricanes on operations, the behavior of other market participants, state and federal legislative and regulatory developments and changes to environmental and other laws and regulations, including those related to climate change, 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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