- Second-quarter GAAP earnings of 51 cents per share, operating earnings of 50 cents per share
- Company raises 2009 operating earnings outlook to $3.30 to $3.45 per share
- Company tightens 2008 operating earnings guidance to $3.10 to $3.15 per share
- Conference call scheduled for 10 a.m. EDT today
RICHMOND, Va., July 31 /PRNewswire-FirstCall/ -- Dominion (NYSE: D) today
announced unaudited net income determined in accordance with Generally
Accepted Accounting Principles (GAAP) for the three months ended June 30,
2008, of $298 million (51 cents per share) compared to a loss of $530 million
(76 cents per share) for the same period in 2007.
Operating earnings for the three months ended June 30, 2008, amounted to
$289 million (50 cents per share) compared to operating earnings of $310
million (44 cents per share) for the same period in 2007. 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
2008 and 2007 GAAP earnings but excluded from operating earnings can be found
on Schedules 1, 2 and 3 of this release.
Thomas F. Farrell II, chairman, president and chief executive officer,
said:
'This quarter was notable not only for our excellent operational results
but also for our continued success in implementing our major strategic
initiatives. We obtained approval to begin construction of our coal and
biomass plant in Southwest Virginia; we reached an agreement to sell drilling
rights for a portion of our Marcellus acreage in Appalachia; and we also
announced our intent to construct a pipeline from the Appalachian basin to
markets on the East Coast. These actions position us to achieve our expected
future earnings growth and remain a leader in energy infrastructure.
'In consideration of our year-to-date operating earnings and our limited
sensitivity to commodity price changes, we are comfortable in tightening our
2008 operating earnings guidance range per share from $3.05 to $3.15 to $3.10
to $3.15.
'We are also raising our 2009 operating earnings outlook per share from
$3.25 to $3.40 to $3.30 to $3.45. This change reflects expected positive
impacts of sale of Marcellus shale drilling rights and higher margins from our
generation business. We reiterate our expected annual operating earnings per
share growth rate of at least 6 percent.'
Second-quarter 2008 operating earnings compared to guidance
Second-quarter 2008 operating earnings of 50 cents per share compare to
guidance of 47 cents to 52 cents per share. Drivers that compared favorably
to guidance include contributions from the generation and gas transmission
businesses, warmer-than-normal weather in the company's electric utility
service area and contributions from Dominion Retail. Factors that compared
negatively to guidance include storm restoration-related expenses in the
company's electric utility service area; lower contributions from the producer
services business; and certain state tax impacts.
Second-quarter 2008 operating earnings compared to 2007
The increase in second-quarter 2008 operating earnings per share as
compared to 2007 is primarily attributable to the absence of unrecovered
Virginia fuel expenses due to the deferral of fuel expenses in excess of
current period recovery; higher margins from the merchant generation business;
higher volumes and realized prices from the company's remaining E&P
operations, including volumes associated with reacquired overriding royalty
interests arising from the volumetric production payment agreements terminated
in 2007; lower interest expense; and accretion due to share repurchases in
2007. These positives were partially offset by the absence of earnings
resulting from the divestiture of the majority of the company's U.S. E&P
operations and an increase in outage costs within the generation business.
Complete details of second-quarter 2008 operating earnings compared to
2007 can be found on Schedule 4 of this release.
Third-quarter 2008 operating earnings guidance
Dominion expects third-quarter 2008 operating earnings in the range of 87
cents to 92 cents per share. This compares to operating earnings of 86 cents
per share in the third quarter of 2007. Drivers expected to compare favorably
to 2007 include higher contributions from its merchant generation business;
growth in electric utility sales; higher volumes and realized prices for the
company's remaining E&P operations, including volumes associated with
reacquired overriding royalty interests arising from the volumetric production
payment agreements terminated in 2007; and accretion due to share repurchases
in 2007.
Expected offsets include a return to normal weather in its electric
utility service area; higher maintenance and depreciation expenses in the
company's electric and gas utility businesses; and the impact of certain state
income tax legislation enacted in July 2008. Complete details of the company's
third-quarter 2008 guidance can be found in Dominion's second-quarter 2008
Earnings Release Kit published this morning on Dominion's Web page under
Financial Modeling, Earnings Release Kits at http://www.dom.com/investors/.
In providing its third-quarter, full year 2008 and full year 2009
operating earnings outlook, the company notes that there will be differences
between expected 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 second-quarter earnings conference call at 10 a.m.
EDT on Thursday, July 31. Dominion management will discuss second-quarter
2008 financial results, third-quarter 2008 guidance 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.
EDT July 31 and lasting until 11 p.m. EDT August 7. Domestic callers may
access the recording by dialing (877) 919-4059. International callers should
dial (334) 323-7226. The PIN for the replay is 12697117. Additionally, a
replay of the Webcast will be available on the company's investor information
page by the end of the day July 31.
Dominion is one of the nation's largest producers and transporters of
energy, with a portfolio of approximately 27,000 megawatts of generation, 1.1
trillion cubic feet equivalent of proved natural gas and oil reserves, 14,000
miles of natural gas transmission, gathering and storage pipeline and 6,000
miles of electric transmission lines.
