Dominion Announces Record First-Quarter Earnings.Energy Editors/Business Editors RICHMOND Richmond, cities, United States Richmond. 1 City (1990 pop. 87,425), Contra Costa co., W Calif., on San Pablo Bay, an inlet of San Francisco Bay; inc. 1905. , Va.--(BUSINESS WIRE)--April 16, 2003 Dominion dominion, power to rule, or that which is subject to rule. Before 1949 the term was used officially to describe the self-governing countries of the Commonwealth of Nations—e.g., Canada, Australia, or India. (NYSE NYSE See: New York Stock Exchange :D): -- Company reaffirms earnings guidance for 2003 and long-term Long-term Three or more years. In the context of accounting, more than 1 year. long-term 1. Of or relating to a gain or loss in the value of a security that has been held over a specific length of time. Compare short-term. growth outlook -- Conference call scheduled for 10 a.m. EDT EDT abbr. Eastern Daylight Time EDT Eastern Daylight Time EDT n abbr (US) (= Eastern Daylight Time) → hora de verano de Nueva York EDT today Dominion (NYSE: D) announced today consolidated operating earnings Operating Earnings Profits after subtracting expenses such as marketing, cost of goods sold, administration and general operating costs from revenue. Notes: Tax and interest expenses are not subtracted - operating earnings are synonymous with EBIT (earnings before for the first quarter ended March 31, 2003, of $471 million ($1.52 per share), compared with operating earnings of $322 million ($1.20 per share) for the same period in 2002. This represents a 27 percent year-over-year increase in operating earnings per share. First-quarter earnings prepared in accordance Accordance is Bible Study Software for Macintosh developed by OakTree Software, Inc.[] As well as a standalone program, it is the base software packaged by Zondervan in their Bible Study suites for Macintosh. with Generally Accepted Accounting Principles The standard accounting rules, regulations, and procedures used by companies in maintaining their financial records. Generally accepted accounting principles (GAAP) provide companies and accountants with a consistent set of guidelines that cover both broad accounting (GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). ), or reported earnings, were $508 million ($1.64 per share) compared to $322 million ($1.20 per share) last year. This represents a 37 percent increase in earnings per share. While reported earnings were higher than operating earnings in the first quarter of 2003, Dominion management believes that the company's operating earnings figure, or reported earnings adjusted for certain items described below, provides a more meaningful representation of the company's fundamental earnings power. Dominion utilizes operating earnings as the primary performance measurement for external communications with analysts and investors regarding its earnings outlook and results. Internally, Dominion uses operating earnings to measure performance against budget, to report to the Dominion Board of Directors and for the company's profit sharing profit sharing, arrangement by which employees receive, in addition to their wages, a share of the net profits of a business. The purpose is to give them an incentive to increase their output through enhanced morale, less wasteful use of materials, better care of plan. Specific items excluded from operating earnings The net impact of the following items, all shown on an after-tax basis After-tax basis The comparison basis used to analyze the net after-tax returns on a corporate taxable bond and a municipal tax-free bond. , are included in reported earnings, but are excluded from operating earnings: a $180 million gain (58 cents per share Cents per share The amount of a mutual fund's dividend or capital gains distributions that a shareholder will receive for each share owned. ) representing the cumulative effect of a change in accounting principle from adoption of SFAS SFAS Statement of Financial Accounting Standards SFAS Special Forces Assessment and Selection SFAS Student Financial Aid Services SFAS Sport Fishing Association of Singapore SFAS Safety Features Actuation System SFAS Statewide Fixed Assets System No. 143, Accounting for Asset Retirement Obligations Asset Retirement Obligations provide for future disposal of assets as required by SFAS 143 [1]. Firms must recognize the ARO liability in the period it was acquired, generally acquisition. ; a $67 million charge (22 cents per share) representing the cumulative effect of a change in accounting principle from rescission The abrogation of a contract, effective from its inception, thereby restoring the parties to the positions they would have occupied if no contract had ever been formed. By Agreement of EITF EITF Emerging Issues Task Force EITF Edinburgh International Television Festival EITF Europe International Taekwon-Do Federation Issue No. 98-10, Accounting for Contracts Involved in Energy Trading and Risk Management Activities; a $59 million charge (18 cents per share) resulting from refinancings and impairments at Dominion Fiber Ventures, LLC (Logical Link Control) See "LANs" under data link protocol. LLC - Logical Link Control ; and a $17 million charge (6 cents per share) for severance The act of dividing, or the state of being divided. The term severance has unique meanings in different branches of the law. Courts use the term in both civil and criminal litigation in two ways: first, when dividing a lawsuit into two or more parts, and second, when costs related to workforce reductions announced in January January: see month. . Thos. E. Capps, chairman, president and chief executive officer, said: "Dominion's first-quarter financial performance was spectacular. Dominion produced record first-quarter earnings and is in solid position to achieve full-year operating earnings per share of $4.60 to $4.80 in 2003 and 5 to 7 percent growth going-forward. Operating cash flow Operating cash flow Earnings before depreciation minus taxes. Measures the cash generated from operations, not counting capital spending or working capital requirements. more than doubled to nearly $900 million compared to about $400 million in the first quarter of last year and the company is on track to produce more than $3 billion in operating cash flow this year, compared to $2.4 billion in 2002." In reaffirming operating earnings guidance of $4.60 to $4.80 per share, Dominion notes that there could be differences between operating and reported earnings for the remainder of 2003. At this time, Dominion management is not aware of any known and estimable es·ti·ma·ble adj. 1. Possible to estimate: estimable assets; an estimable distance. 2. Deserving of esteem; admirable: an estimable young professor. differences beyond those recorded in the first quarter and discussed above. Capps said: "All of Dominion's core operating units operating unit A type of operating company that engages in transactions with outsiders and that is owned by another business. For example, in 1995 the stockholders of Capital Cities/ABC approved a $19 billion merger with the Walt Disney Company, whereupon performed very well. However, the biggest drivers of first-quarter financial performance were colder weather, which drove significant increases in demand for our gas and electric products and services, and strong natural gas prices, which helped not only our E&P business, but also the Dominion Energy Clearinghouse clearinghouse Institution established by firms engaged in similar activities to enable them to offset transactions with one another in order to limit payment settlements to net balances. . Earnings were strong despite a 4-cent per share negative mark-to-market Mark-to-market Adjustment of the book value or collateral value of a security to reflect current market value. impact related to the corporate hedge, which effectively will reverse over the course of the year in combination with physical gas sales." In other first-quarter highlights Dominion: -- Completed the North Anna Unit 2 vessel head replacement, becoming the first U.S. company to successfully complete a nuclear vessel head replacement; -- Received NRC NRC abbr. 1. National Research Council 2. Nuclear Regulatory Commission Noun 1. NRC - an independent federal agency created in 1974 to license and regulate nuclear power plants license renewals for the North Anna and Surry Not to be confused with Surrey. Surry may refer to:
nuclear units, extending the operating lives of those units for twenty years TWENTY YEARS. The lapse of twenty years raises a presumption of certain facts, and after such a time, the party against whom the presumption has been raised, will be required to prove a negative to establish his rights. 2. ; -- Served an additional 40,000 franchise gas and electric utility customers compared to the same period last year, transporting and delivering nearly 20 million megawatt-hours of electricity and more than 166 billion cubic feet of natural gas to the company's 3.9 million franchise customers during the quarter; -- Added nearly 300,000 unregulated Adj. 1. unregulated - not regulated; not subject to rule or discipline; "unregulated off-shore fishing" regulated - controlled or governed according to rule or principle or law; "well regulated industries"; "houses with regulated temperature" 2. retail gas and electric customers to the Dominion Retail unit, increasing the unregulated retail customer base to 1.1 million since the first quarter of 2002; -- Issued more than $2 billion of debt, most of which replaces existing debt, capturing the benefits of the lowest interest rates and corporate bond spreads in recent history; and, -- Continued industry leading drilling program by completing more than 250 net wells in the first quarter. First-quarter operating earnings breakdown by segment For comparison purposes, 2002 segment results have been restated to reflect the transfer of the electric transmission operations from Dominion Delivery to Dominion Energy. Dominion Energy contributed $275 million (89 cents per share) to first-quarter 2003 earnings compared to $156 million (58 cents per share) in the first quarter of 2002. The increase in Dominion Energy's first-quarter 2003 earnings resulted primarily from customer growth and cooler weather in the electric franchise area, performance of the Dominion Energy Clearinghouse and Millstone millstone Either of two flat, round stones used for grinding grain to make flour. The stationary bottom stone is carved with shallow grooved channels that radiate from the centre. The upper stone rotates horizontally, and has a central hole through which grain is poured. , and the impact related to corporate hedges of natural gas production, partially offset by a change in the allocation The apportionment or designation of an item for a specific purpose or to a particular place. In the law of trusts, the allocation of cash dividends earned by a stock that makes up the principal of a trust for a beneficiary usually means that the dividends will be treated as of electric franchise base revenues and share dilution Dilution A reduction in earnings per share of common stock that occurs through the issuance of additional shares or the conversion of convertible securities. Notes: Adding to the number of shares outstanding reduces the value of holdings of existing shareholders. . Dominion Delivery earned $158 million (51 cents per share) in its first quarter compared to $132 million (49 cents per share) for the same period in 2002. The increase in Dominion Delivery's first-quarter earnings is primarily attributable attributable emanating from or pertaining to attribute. attributable proportion see attributable risk (below). attributable risk to customer growth, cooler weather in the electric and gas franchise areas and a change in the allocation of electric franchise base revenues, partially offset by other expenses, performance of the telecommunications Communicating information, including data, text, pictures, voice and video over long distance. See communications. business and share dilution. Dominion Exploration & Production (E&P) contributed $106 million (34 cents per share) to first-quarter 2003 earnings, up from $88 million (33 cents per share) in the first quarter of 2002. The increase in Dominion E&P's first-quarter earnings is primarily attributable to higher average realized prices partially offset by higher expenses, the expiration EXPIRATION. Cessation; end. As, the expiration of, a lease, of a contract, or statute. 2. In general, the expiration of a contract puts an end to all the engagements of the parties, except to those which arise from the non- fulfillment of obligations created of Section 29 production tax credits and share dilution. The operating earnings contribution of the corporate segment, including Dominion Capital, was negative $68 million (22 cents per share) for the quarter, compared to negative $54 million (20 cents per share) in the first quarter of 2002. The change in the corporate segment's operating earnings contribution is attributable to reduced earnings of Dominion Capital partially offset by share dilution. The reported earnings contribution of the corporate segment was negative $31 million (10 cents per share) for the first quarter of 2003, as compared to negative $54 million (20 cents per share) in the first quarter of 2002. The change in the corporate segment's contribution to reported earnings is attributable to the factors noted above, plus the following after-tax af·ter-tax also af·ter·tax adj. Relating to or being that which remains after payment, especially of income taxes: after-tax profits. items which impacted the first quarter of 2003, as compared to the same period last year: a $180 million gain (58 cents per share) representing the cumulative effect of a change in accounting principle from adoption of SFAS No. 143; a $67 million charge (22 cents per share) representing the cumulative effect of a change in accounting principle from rescission of EITF Issue No. 98-10; a $59 million charge (18 cents per share) from specific items related to Dominion Fiber Ventures, LLC; and a $17 million charge (6 cents per share) related to severance costs for workforce reductions announced in January. Conference call for investors / media Dominion will host a conference call for investors today at 10 a.m. EDT to discuss first-quarter earnings in detail. Members of the media are also invited to listen. Domestic investors who wish to participate in the conference call should dial 877-241-5946. International investors should call 706-643-0540. Participants should dial in 5 to 10 minutes prior to the scheduled start time. A live web cast of the conference call will be available on the company's investor information page at www.dom.com/investors. A replay of the conference call will be available from approximately 11 a.m. EDT April 16 through 11 p.m. EDT April 23. Domestic investors may access the recording by dialing 800-642-1687. International callers should dial 706-645-9291 to access the recording. The conference ID for the replay is 9631248. A replay of the conference call also will be available on the company's investor information home page by the end of the day April 16. Dominion is one of the nation's largest producers of energy, with an energy portfolio of about 24,000 megawatts of generation, 6.1 trillion One thousand times one billion, which is 1, followed by 12 zeros, or 10 to the 12th power. See space/time. (mathematics) trillion - In Britain, France, and Germany, 10^18 or a million cubed. In the USA and Canada, 10^12. 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 960 billion cubic feet of storage capacity and serves 5 million retail energy customers in nine states. In addition, Dominion owns a managing equity interest in Dominion Fiber Ventures LLC, owner of Dominion Telecom. For more information about Dominion, visit the company's web site at www.dom.com. This release contains forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. including our expectations for 2003 earnings and for future annual growth rates Growth Rates The compounded annualized rate of growth of a company's revenues, earnings, dividends, or other figures. Notes: Remember, historically high growth rates don't always mean a high rate of growth looking into the future. 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 estimates of future market conditions, estimates of proved and unproved reserves and the behavior of other market participants The term market participant is used in United States constitutional law to describe a U.S. State which is acting as a producer or supplier of a marketable good or service. When a state is acting in such a role, it may permissibly discriminate against non-residents. . Other factors include, but are not limited to, weather conditions, economic conditions in the company's service area, fluctuations in energy-related commodity prices, changes to rating agency requirements and ratings, changing financial accounting standards, trading counterparty Counterparty The other participant, including intermediaries, in a swap or contract. credit risks, risks related to energy trading and marketing, risks associated with successfully executing the telecommunications business plan and other uncertainties. Other risk factors are detailed from time to time in the company's Securities & Exchange Commission filings.
Dominion Resources Inc.
Preliminary Earnings Report - Operating Segments
March 2003
(millions, except earnings per share)
1st Quarter Ended
March 31
2003 2002
------- -------
Operating Revenues & Income $3,568 $2,634
======= =======
Earnings:
Dominion Energy $ 275 $ 156 (2)
Dominion Delivery 158 132 (2)
Dominion Exploration & Production 106 88
Corporate, Dominion Capital & Other (68) (54)
------- -------
OPERATING EARNINGS (Excluding Specific Items) $ 471 $ 322
======= =======
Specific items (1) 37 -
REPORTED NET INCOME $ 508 $ 322
======= =======
Common Shares Outstanding (average, diluted) 309.7 269.0
Earnings Per Share (EPS):
Dominion Energy $ 0.89 $ 0.58 (2)
Dominion Delivery 0.51 0.49 (2)
Dominion Exploration & Production 0.34 0.33
Corporate, Dominion Capital & Other (0.22) (0.20)
------- -------
OPERATING EPS (Excluding Specific Items) $ 1.52 $ 1.20
======= =======
Specific items (1) 0.12 -
REPORTED EPS $ 1.64 $ 1.20
======= =======
(1) Detail of specific items excluded from operating earnings
Pre-tax
Accounting change - Asset Retirement
Obligations $ 293
Accounting change - Energy Trading and
Risk Mgmt Activities $ (110)
Dominion Fiber Ventures - consent and
tender of DFV notes $ (57)
Dominion Fiber Ventures - impairment and
equity earnings $ (44)
Severance costs $ (29)
After-tax
Accounting change - Asset Retirement
Obligations $ 180
Accounting change - Energy Trading and
Risk Mgmt Activities $ (67)
Dominion Fiber Ventures - consent and
tender of DFV notes $ (35)
Dominion Fiber Ventures - impairment and
equity earnings $ (24)
Severance costs $ (17)
EPS impact
Accounting change - Asset Retirement
Obligations $ 0.58
Accounting change - Energy Trading and
Risk Mgmt Activities $(0.22)
Dominion Fiber Ventures - consent and
tender of DFV notes $(0.11)
Dominion Fiber Ventures - impairment and
equity earnings $(0.07)
Severance costs $(0.06)
(2) Amounts restated for transfer of Dominion's electric transmission
operations from Dominion Delivery to Dominion Energy effective
January 1, 2003.
Dominion
Preliminary 1st Quarter Variance Reconciliation (unaudited)
2003 vs. 2002 2003 vs. 2002
Reported Earnings Operating Earnings
Quarter-vs.-Quarter Quarter-vs.-Quarter
Variance Variance
Reconciling Items (cents per share) (cents per share)
------------------
Dominion Total 44 32
($1.64 per share 1Q'03 vs.
$1.20 per share 1Q'02 reported)
($1.52 per share 1Q'03 vs.
$1.20 per share 1Q'02 operating)
Dominion Energy
(89 cents per share 1Q'03 vs.
58 cents per share 1Q'02)
Customer growth 2 2
Weather 17 17
Allocation of Virginia Power base
revenue (4) (4)
Energy Clearinghouse 18 18
Corporate hedges 6 6
Millstone 6 6
Other (1) (1)
Share dilution (13) (13)
-------- --------
Dominion Energy Total 31 31
Dominion Delivery
(51 cents per share 1Q'03 vs.
49 cents per share 1Q'02)
Customer growth 1 1
Weather - electric 7 7
Weather - gas 9 9
Allocation of Virginia Power
base revenue 4 4
Telecommunications business (3) (3)
O&M expenses (8) (8)
Share dilution (8) (8)
-------- --------
Dominion Delivery Total 2 2
Dominion E&P
(34 cents per share 1Q'03 vs.
33 cents per share 1Q'02)
Average realized prices 21 21
O&M expense (9) (9)
Production tax credits (Section 29) (3) (3)
Other (3) (3)
Share dilution (5) (5)
-------- --------
Dominion E&P Total 1 1
Corporate, Dominion Capital & Other
(-10 cents per share 1Q'03 vs.
-20 cents per share 1Q'02 reported)
(-22 cents per share 1Q'03 vs.
-20 cents per share 1Q'02 operating)
Dominion Capital (5) (5)
Share dilution 3 3
--------
Accounting change -
Asset Retirement Obligations 58
Accounting change - Energy Trading
and Risk Mgmt Activities (22)
Dominion Fiber Ventures - consent
and tender of DFV notes (11)
Dominion Fiber Ventures -
impairment and equity earnings (7)
Severance costs (6)
--------
Corporate, Dominion Capital &
Other Total 10 (2)
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