Dominion Announces Third-Quarter Earnings; Conference Call Scheduled for 10 A.M. EDT Today.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)--Oct. 21, 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) announced today a net loss determined 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). ) for the third-quarter ended Sept. 30, 2003 of $256 million (79 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. ) compared to net income of $430 million ($1.54 per share) for the same period last year. 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 , which are defined as GAAP earnings adjusted for the impact of certain items, were $423 million ($1.30 per share) for the third-quarter, compared to operating earnings of $430 million ($1.54 per share) for the same period in 2002. Third-quarter 2003 operating earnings exclude $80 million (25 cents per share) for restoration expenses related to Hurricane Isabel This article is about the 2003 hurricane; there was also a Tropical Storm Isabel during the 1985 Atlantic hurricane season Hurricane Isabel was the costliest and deadliest hurricane in the 2003 Atlantic hurricane season. , $575 million ($1.77 per share) from the previously announced impairment Impairment 1. A reduction in a company's stated capital. 2. The total capital that is less than the par value of the company's capital stock. Notes: 1. This is usually reduced because of poorly estimated losses or gains. 2. of telecom assets, $21 million (6 cents per share) related to an impairment of Dominion Capital assets capital assets n. equipment, property, and funds owned by a business. (See: capital, capital account) , and $3 million (1 cent per share) related to the buyout Buyout The purchase of a company or a controlling interest of a corporation's shares. Notes: A leveraged buyout is accomplished with borrowed money or by issuing more stock. of a power purchase contract. Third-quarter 2002 GAAP-based earnings and operating earnings were the same. 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 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. Dominion management believes operating earnings provide a more meaningful representation of the company's fundamental earnings power. Thos. E. Capps, chairman, president and chief executive officer, said: "The third quarter presented us with a number of challenges, but we were up to the task and performed well. Hurricane Isabel was by far the worst natural disaster in our company's history and I have never been more proud of our employees and our company. In many cases we literally rebuilt portions of the distribution system from scratch scratch v. scratched, scratch·ing, scratch·es v.tr. 1. To make a thin shallow cut or mark on (a surface) with a sharp instrument. 2. To use the nails or claws to dig or scrape at. and we accomplished all this in about two weeks. "I am also encouraged by our financial performance. In spite of in opposition to all efforts of; in defiance or contempt of; notwithstanding. See also: Spite a 4 cents per share operating earnings impact from hurricane-related lost sales margin and a 3 cent per share charge related to a proposed settlement in the Virginia Virginia, state, United States Virginia, state of the south-central United States. It is bordered by the Atlantic Ocean (E), North Carolina and Tennessee (S), Kentucky and West Virginia (W), and Maryland and the District of Columbia (N and NE). fuel case, Dominion had operating earnings of $1.30 per share. These results are indicative indicative: see mood. of Dominion's strong earnings power." In a September September: see month. 22 news release Dominion announced plans to take an asset impairment charge and intends to put the telecom business up for sale. As stated in that release, the impairment charge does not currently reflect a tax benefit, since recognition of the tax benefit is dependent upon the company's future tax profile and taxable earnings. The company expects fourth-quarter operating earnings per share of $0.95 to $1.05, assuming normal weather. Based on that guidance and year-to-date Year-to-date (YTD) The period beginning at the start of the calendar year up to the current date. operating earnings results, the company expects full year 2003 operating earnings to be between $4.60 and $4.70 per share and 5-percent to 7-percent average annual growth after 2003. In providing operating earnings guidance, Dominion notes that there could be differences between operating and GAAP-based reported earnings for the remainder of 2003 and 2004. Differences beyond those recorded through the third quarter and discussed above have not yet been quantified, and therefore Dominion is not able at this time to provide a corresponding GAAP equivalent for estimated earnings going forward. In other selected highlights Dominion: -- Reached a tentative tentative, adj not final or definite, such as an experimental or clinical finding that has not been validated. settlement of its 2003 fuel case with the Virginia Attorney General's Office of Consumer Counsel, the Virginia State Corporation Commission staff and others; -- Restored electric service to about 1.8 million homes and businesses following the worst natural disaster in the company's history; -- Raised $266 million in cash from the sale of 66 billion cubic feet of natural gas reserves, deliverable through production over four years, to the Texas Municipal Gas Corporation. The sale reduced Dominion's proved reserve base by approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. 1 percent; -- Added 545 megawatts of natural gas-fired gas-fired adj → de gas gas-fired adj → au gaz gas-fired adj (heater etc) → Gas- generation at Possum Point power station; -- Reactivated Cove Point Liquified Natural Gas facility; and -- Was awarded a competitive bid to supply electric service to about 250,000 residential customers in PECO PECO Países da Europa Central e Oriental (Portugal) PECO Philadelphia Electric Company PECO Public Education Capital Outlay PECO Pelagic Cormorant (phalacrocorax pelagicus) Energy's Philadelphia-area service territory. Third-quarter operating earnings breakdown breakdown /break·down/ (brak´doun) 1. the act or process of ceasing to function. 2. an often sudden collapse in health. 3. loss of self-control. by segment 2002 segment results have been restated for comparison purposes to reflect the transfer of the electric transmission operations from Dominion Delivery to Dominion Energy. Dominion Energy earned $296 million (91 cents per share) in the third quarter compared to $297 million ($1.06 per share) in the third quarter of 2002. The change resulted primarily from milder weather in the electric sales area, lost electric sales margin from Hurricane Isabel, settlement of the Virginia fuel case, 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, lower contribution from 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. , 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. , partially offset by customer growth, Millstone's contribution, and the effect of corporate hedges on natural gas production. Dominion Delivery earned $80 million (25 cents per share) in the third quarter compared to $87 million (31 cents per share) for the third quarter 2002. The change is primarily attributable attributable emanating from or pertaining to attribute. attributable proportion see attributable risk (below). attributable risk to milder weather in the electric and gas franchise areas, lost electric sales margin from Hurricane Isabel, performance of the telecommunications Communicating information, including data, text, pictures, voice and video over long distance. See communications. business, and share dilution, partially offset by customer growth and a change in the allocation of electric franchise base revenues. Dominion Exploration & Production (E&P) earned $98 million (30 cents per share) in the third quarter compared to $90 million (32 cents per share) in the third quarter of 2002. The benefit of higher average realized prices was 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. Corporate segment impact on third quarter 2003 operating earnings, including Dominion Capital, was negative $51 million (16 cents per share) compared to negative $44 million (15 cents per share) in the third quarter of 2002. The change is attributable to higher expenses partially offset by share dilution. The corporate segment's third quarter 2003 earnings impact under GAAP was negative $730 million ($2.25 per share). Corporate segment operating earnings exclude $80 million (25 cents per share) for restoration expenses related to Hurricane Isabel, $575 million ($1.77 per share) from the previously announced impairment of telecom assets, $21 million (6 cents per share) related to an impairment of Dominion Capital assets, and $3 million (1 cent per share) related to the buyout of a power purchase contract. Third-quarter 2002 GAAP-based earnings and operating earnings were the same. Conference call for investors / media Dominion will host a conference call for investors today at 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 to discuss third-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. Additionally, a reconciliation of measures prepared in accordance with GAAP versus non-GAAP measures can be found on the company's investor information page under "GAAP Reconciliation". A replay of the conference call will be available from approximately 11 a.m. EDT October October: see month. 21 through 11 p.m. EST P.M. also p.m. or p.m. abbr. post meridiem Usage Note: By definition, 12 a.m. October 28. 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 3098673. A replay of the conference call also will be available on the company's investor information page by the end of the day October 21. Dominion is one of the nation's largest producers of energy, with an energy portfolio of more than 24,000 megawatts of generation, 6.2 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 5.3 million retail energy customers in nine states. 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 counter-party credit risks, risks related to energy trading and marketing, costs associated with successfully executing the company's exit from the telecommunications business, estimation estimation In mathematics, use of a function or formula to derive a solution or make a prediction. Unlike approximation, it has precise connotations. In statistics, for example, it connotes the careful selection and testing of a function called an estimator. of the total cost of Hurricane Isabel, including the portion of such cost that will be capitalized Capitalized Recorded in asset accounts and then depreciated or amortized, as is appropriate for expenditures for items with useful lives longer than one year. and the portion that will be expensed, 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
September 2003
(millions, except earnings per share)
3rd Quarter 9 Months
Ended Ended
September 30 September 30
2003 2002 2003 2002
-------- ------- ------- -------
Operating Revenues & Income $2,857 $2,545 $9,077 $7,512
======== ======= ======= =======
Earnings:
Dominion Energy $296 $297 (b) $747 $641 (b)
Dominion Delivery 80 87 (b) 291 274 (b)
Dominion Exploration &
Production 98 90 299 271
Corporate, Dominion Capital &
Other (51) (44) (178) (162)
-------- ------- ------- -------
OPERATING EARNINGS (Excluding
Specific Items) $423 $430 $1,159 $1,024
======== ======= ======= =======
Specific items (a) (679) - (667) -
REPORTED NET INCOME (LOSS) $(256) $430 $492 $1,024
======== ======= ======= =======
Common Shares Outstanding
(average, basic) 322.8 278.3 315.3 274.2
Common Shares Outstanding
(average, diluted) 324.2 279.7 316.7 276.1
Earnings Per Share (EPS):
Dominion Energy $0.91 $1.06 (b) $2.36 $2.32 (b)
Dominion Delivery 0.25 0.31 (b) 0.92 0.99 (b)
Dominion Exploration &
Production 0.30 0.32 0.94 0.98
Corporate, Dominion Capital &
Other (0.16) (0.15) (0.56) (0.58)
-------- ------- ------- -------
OPERATING EPS (Excluding
Specific Items) $1.30 $1.54 $3.66 $3.71
======== ======= ======= =======
Specific items (a) (2.09) - (2.10) -
REPORTED EPS $(0.79) $1.54 $1.56 $3.71
======== ======= ======= =======
(a) Detail of specific items excluded from operating earnings
After-tax
Dominion Telecom impairment $(575) $(575)
Hurricane Isabel $(80) $(80)
Financial service asset
impairment $(21) $(21)
NUG buyout $(3) $(3)
Impairment of assets held for
sale $(25)
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
Dominion Telecom impairment $(1.77) $(1.82)
Hurricane Isabel $(0.25) $(0.25)
Financial service asset
impairment $(0.06) $(0.06)
NUG buyout $(0.01) $(0.01)
Impairment of assets held for
sale $(0.08)
Accounting change -
Asset Retirement Obligations $0.57
Accounting change -
Energy Trading and
Risk Mgmt Activities $(0.21)
Dominion Fiber Ventures -
consent and tender of DFV notes $(0.11)
Dominion Fiber Ventures -
impairment and equity earnings $(0.07)
Severance costs $(0.06)
(b) Amounts restated for transfer of Dominion's electric transmission
operations from Dominion Delivery to Dominion Energy effective
January 1, 2003.
Dominion
Preliminary 3rd 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 (233) (24)
(-79 cents per share 3Q'03 vs.
$1.54 per share 3Q'02 reported)
($1.30 per share 3Q'03 vs.
$1.54 per share 3Q'02
operating)
Dominion Energy
(91 cents per share 3Q'03
vs. $1.06 per share 3Q'02)
Customer growth 3 3
Weather (12) (12)
Lost margin due to
Hurricane Isabel (3) (3)
Fuel case settlement (3) (3)
Allocation of Virginia
Power base revenue (5) (5)
Energy Clearinghouse (2) (2)
Corporate hedges 6 6
Millstone 11 11
Other 5 5
Share dilution (15) (15)
---- ----
Dominion Energy Total (15) (15)
Dominion Delivery
(25 cents per share 3Q'03 vs.
31 cents per share 3Q'02)
Customer growth 1 1
Weather - electric (5) (5)
Allocation of Virginia
Power base revenue 5 5
Lost margin due to
Hurricane Isabel (1) (1)
Telecommunications business (2) (2)
Share dilution (4) (4)
---- ----
Dominion Delivery Total (6) (6)
Dominion E&P
(30 cents per share 3Q'03 vs.
32 cents per share 3Q'02)
Average realized prices 13 13
Production (1) (1)
DD&A Rate (2) (2)
O&M expense (3) (3)
Production tax credits
(Section 29) (4) (4)
Share dilution (5) (5)
---- ----
Dominion E&P Total (2) (2)
Corporate, Dominion Capital
& Other
(-$2.25 per share 3Q'03 vs.
-15 cents per share 3Q'02 reported)
(-16 cents per share 3Q'03 vs.
-15 cents per share 3Q'02 operating)
Expenses and share dilution (1) (1)
----
Specific items excluded
from operating earnings (c) (209)
----
Corporate, Dominion Capital
& Other Total (210) (1)
(c) See Dominion's third quarter earnings release for details of
specific items excluded from operating earnings, or find "GAAP
Reconciliation" on Dominion's web site at
www.dom.com/investors.
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