DOMINION RESOURCES ANNOUNCES SECOND-QUARTER OPERATING EARNINGS OF 55 CENTS PER SHARE

Transcription

1 DOMINION RESOURCES ANNOUNCES SECOND-QUARTER OPERATING EARNINGS OF 55 CENTS PER SHARE Operating earnings exclude special charges of $238 million Year-to-date earnings 16 percent higher than prior year Company increases 2001 earnings target by 25 cents per share RICHMOND, Va., July 20, 2000 Dominion (NYSE: D) today announced unaudited consolidated operating earnings for the second quarter ended, 2000 of $132 million (55 cents per share), compared to operating earnings of $120 million (63 cents per share) for the same period in Dominion s recent merger with Consolidated Natural Gas Company has resulted in a change in the company s expected earnings profile, giving the company higher first-quarter, fourth-quarter and full-year results, but lower second and third quarter results. Year-to-date operating earnings are 16 percent higher than last year, at $1.56 versus $1.34 per share. Thos. E. Capps, president and chief executive officer, said: We are very pleased with our continued strong financial performance. We are well on track to meet our full-year operating earnings target of around $3.30, and we are raising our 2001 operating earnings target by 25 cents per share. We expect operating earnings to increase to about $3.80 per share in 2001 and grow 8 percent to 10 percent annually thereafter. If our earnings momentum continues to build, we could see further upside to these revised expectations. Principal drivers of the improved earnings outlook include strong gas and oil prices, lower fixed electric production costs, and electricity and natural gas production growth, partially offset by higher interest expense. Second-quarter operating earnings exclude special non-cash after-tax charges of $184 million associated with asset write-downs at Dominion Capital. The company is required to divest its financial services business as a result of the acquisition of Consolidated Natural Gas. In addition, second-quarter operating earnings exclude restructuring and merger-related after-tax costs of $54 million associated with early retirement and severance costs. Capps said: These charges substantially mark the last of Dominion s merger-related transition costs. We enter the second half of this year positioned to generate solid compound annual double-digit earnings growth through at least 2002.

2 Strong Cash Earnings Under purchase accounting for the CNG acquisition, earnings reflect a non-cash expense representing the amortization of goodwill. Second-quarter earnings before goodwill were 65 cents per share. Capps said: I believe investors should also focus on cash earnings, because it s cash that we use to pay dividends and to reinvest in the company to fuel earnings growth. Earnings Breakdown by Operating Segment Dominion Energy, the company s electric generation and gas pipeline business segment, contributed $90 million (38 cents per share) to second-quarter 2000 operating earnings, up from $45 million (24 cents per share) in the second quarter of The increase in Dominion Energy s second-quarter 2000 earnings is primarily attributable to the addition of CNG s operations, warmer-than-normal weather and strong customer growth in the company s electric service areas, and lower capacity expenses resulting from the expiration of third-party generation contracts, partially offset by a lower quarterover-quarter earnings contribution from the wholesale energy marketing operations. Dominion Delivery, the company s electric and gas distribution and customer service segment, contributed $46 million (19 cents per share) to second-quarter operating earnings, compared to $43 million (22 cents per share) in the second quarter of The change is primarily due to warmer-than-normal weather and customer growth in the company s electric service areas, partially offset by the addition of CNG s gas distribution operations. Dominion Exploration & Production, the company s gas and oil exploration and production unit, earned $66 million (28 cents per share) in the second quarter of 2000, up from $12 million (6 cents per share) in the prior-year period. The increase is primarily attributable to higher gas and oil prices and the addition of CNG Producing Company. Dominion Capital, the company s financial services subsidiary, earned $6 million (3 cents per share) in the second quarter of 2000, compared to $22 million (12 cents per share) in the prior-year period. Lower earnings contributions from the financial services units reflect lower securitization gains, higher interest expense and higher operating expenses, partially offset by higher interest income and higher fee income. Secondquarter operating earnings exclude the special charges related to asset writedowns. Capps said: The divestiture of Dominion Capital is progressing. We ve agreed to sell the asset management division of First Dominion Capital to DLJ Asset Management Group. We are currently in negotiations to divest other financial services assets.

3 In addition to the sale of its financial services business, Dominion is in the process of divesting other non-strategic assets. Earlier this month, Dominion agreed to sell the Argentine natural gas and electricity assets acquired through its merger with CNG to Sempra Energy International for $145 million. In June 2000, the company agreed to sell its 80 percent interest in a British power station to PowerGen plc. for $80 million. In April, Dominion completed the sale of its Latin American generation businesses to Duke Energy International for $405 million. The company s only remaining international interests are in an Australian natural gas transmission company, which will be divested. As part of its merger with CNG, Dominion has also agreed to sell its Virginia Natural Gas utility to AGL Resources Inc. for $500 million to $550 million. In total, the company expects to raise through the divestiture of non-strategic assets more than $1.5 billion, which will be used to reduce debt. Legal Entity Results While Dominion has restructured its daily operations as described above, assets remain wholly owned by its legal subsidiaries, Virginia Power, Consolidated Natural Gas and Dominion Energy, pending full implementation of electric and gas deregulation legislation in the company s service areas. Second-quarter 2000 operating earnings for Virginia Power, the company s electric utility, were 50 cents per share, up from 47 cents per share in the second quarter of Second-quarter 2000 earnings for Consolidated Natural Gas, the company s gas utility, were 19 cents per share. Dominion Energy, the company s independent power and natural gas subsidiary, earned 7 cents per share, up from 6 cents per share last year. This release contains forward-looking statements 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 and the behavior of other market participants. Other factors include, but are not limited to, weather conditions, economic conditions in the company s service territory, fluctuations in energy-related commodity prices, conversion activity and other uncertainties. Other risk factors are detailed from time to time in the company s Securities & Exchange Commission filings. ### Media Contacts: Mark G. Lazenby (804) Hunter A. Applewhite (804) Analyst Contacts: Thomas P. Wohlfarth (804) Suzette M. S. Mata (804) Joseph G. O Hare (804)

4 Dominion Resources Inc. Preliminary Earnings Report - Restructured Operations June 2000 ($ in millions, except earnings per share) 2nd Quarter Ended 6 Months Ended * 1999 Operating Revenues & Income $ 2,056 $ 1,315 $ 4,128 $ 2,608 Earnings: Dominion Energy $ 90 $ 45 $ 199 $ 116 Dominion Delivery 46 $ Dominion Exploration & Production 66 $ 12 *** *** Dominion Capital 6 $ Corporate & Other** (77) $ (3) (120) (4) OPERATING EARNINGS (EXCLUDING SPECIAL ITEMS) $ 132 $ 120 $ 359 $ 258 Special Items (see Note 2) (238) - (324) (255) REPORTED NET INCOME $ (106) $ 120 $ 35 $ 3 Common Shares Outstanding (average, diluted) Earnings Per Share (EPS): Dominion Energy $ 0.38 $ 0.24 $ 0.86 $ 0.60 Dominion Delivery Dominion Exploration & Production *** *** Dominion Capital Corporate & Other** (0.33) (0.01) (0.52) (0.02) OPERATING EPS (EXCLUDING SPECIAL ITEMS) $ 0.55 $ 0.63 $ 1.56 $ 1.34 Special Items (see Note 2) (1.00) - (1.41) (1.32) REPORTED EPS $ (0.45) $ 0.63 $ 0.15 $ 0.02 Note 1: Goodwill (noncash expense) included in operating earnings $ (23) $ (36) Note 2: Special Items Pre-tax Write-off of regulatory assets & liabilities $ (452) Write-down of Dominion Capital assets $ (292) $ (292) Restructuring & merger-related charges $ (88) $ (220) After-tax Write-off of regulatory assets & liabilities $ (255) Write-down of Dominion Capital assets $ (184) $ (184) Restructuring & merger-related charges $ (54) $ (140) EPS impact Write-off of regulatory assets & liabilities $ (1.32) Write-down of Dominion Capital assets $ (0.77) $ (0.80) Restructuring & merger-related charges $ (0.23) $ (0.61) * Including CNG as of 1/28/00 ** Includes goodwill, interest and Corby *** Restated for adoption of full-cost accounting method Note: Figures may not add due to rounding 4

5 Dominion Resources Inc. Preliminary Earnings Report - Legal Entity Basis June 2000 ($ in millions, except earnings per share) 2nd Quarter Ended 6 Months Ended * 1999 Operating Revenues & Income $ 2,056 $ 1,315 $ 4,128 $ 2,608 Earnings: Virginia Power $ 120 $ 89 $ 252 $ 195 Consolidated Natural Gas Dominion Energy *** *** Dominion Capital Corporate & Other** (56) (3) (93) (4) OPERATING EARNINGS (EXCLUDING SPECIAL ITEMS) $ 132 $ 120 $ 359 $ 258 Special Items (see Note 2) (238) - (324) (255) REPORTED NET INCOME $ (106) $ 120 $ 35 $ 3 Common Shares Outstanding (average, diluted) Earnings Per Share (EPS): Virginia Power $ 0.50 $ 0.47 $ 1.10 $ 1.01 Consolidated Natural Gas Dominion Energy *** *** Dominion Capital Corporate & Other** (0.24) (0.01) (0.41) (0.02) OPERATING EPS (EXCLUDING SPECIAL ITEMS) $ 0.55 $ 0.63 $ 1.56 $ 1.34 Special Items (see Note 2) (1.00) - (1.41) (1.32) REPORTED EPS $ (0.45) $ 0.63 $ 0.15 $ 0.02 Note 1: Goodwill (noncash expense) included in operating earnings $ (23) $ (36) Note 2: Special Items Pre-tax Write-off of regulatory assets & liabilities $ (452) Write-down of Dominion Capital assets $ (292) $ (292) Restructuring & merger-related charges $ (88) $ (220) After-tax Write-off of regulatory assets & liabilities $ (255) Write-down of Dominion Capital assets $ (184) $ (184) Restructuring & merger-related charges $ (54) $ (140) EPS impact Write-off of regulatory assets & liabilities $ (1.32) Write-down of Dominion Capital assets $ (0.77) $ (0.80) Restructuring & merger-related charges $ (0.23) $ (0.61) * Including CNG as of 1/28/00 ** Includes goodwill, interest and Corby *** Restated for adoption of full-cost accounting method Note: Figures may not add due to rounding 5

6 Dominion Resources Inc. Selected Statistical Information June 2000 REGULATED ELECTRICITY SALES 2nd Qtr Ended 6 Months Ended Increase Percent Increase Percent (Decrease) Change 2000* 1999 (Decrease) Change (MWhrs) Residential 5,386,792 4,956, , % 12,253,327 11,545, , % Commercial 5,655,479 5,275, , % 11,010,489 10,343, , % Industrial 2,925,439 2,752, , % 5,576,303 5,233, , % Public authorities 2,305,234 2,191, , % 4,465,269 4,340, , % Total retail 16,272,944 15,175,248 1,097, % 33,305,388 31,462,602 1,842, % Wholesale - sales for resale 1,005, ,174 62, % 2,429,478 2,159, , % Total sales 17,278,051 16,117,422 1,160, % 35,734,866 33,621,899 2,112, % Degree Days Cooling - Actual Normal Heating - Actual ,182 2,224 - Normal ,422 2,413 REGULATED GAS DISTRIBUTION OPERATIONS Gas Sales (MMcf) Residential 22,992 72,099 Commercial 6,175 21,057 Industrial 393 1,137 Wholesale Total Sales 29,812 94,706 Heating Degree Days Actual 637 2,264 Normal 699 2,649 Gas Throughput (Bcf) Sales Transportation Total * Gas figures reflect CNG contribution as of 1/28/00. 6