RICHMOND, Va., Jan. 26, 2001 (BUSINESS WIRE) — Dominion (NYSE: D) today announced unaudited consolidated operating earnings for the 12 months ended December 31, 2000 of $787 million ($3.33 per share), a 10.6 percent increase in earnings per share over prior-year earnings of $577 million ($3.01 per share).
Thos. E. Capps, chairman, president and chief executive officer, said:
“2000 was a superb year for Dominion. The merger with Consolidated Natural Gas Company (CNG) has dramatically transformed us into one of the nation’s largest and most successful diversified energy companies. Dominion is poised for growth in the new energy marketplace currently taking shape. We are targeting 2001 operating earnings of $4.10 per share, a 23 percent increase over 2000 results. We expect to grow operating earnings by 8 percent to 10 percent annually thereafter.”
Operating earnings for 2000 exclude special after-tax charges of $198 million (84 cents per share) in restructuring and merger-related expenses, $186 million (79 cents per share) associated with the write-down of Dominion Capital assets, as well as after-tax gains of $13 million (5 cents per share) from the sale of Corby Power Station and $21 million (9 cents per share) from the cumulative effect of pension accounting changes.
Operating results for 1999 exclude a one-time, non-cash charge of $255 million ($1.33 per share) created by an accounting change resulting from a Virginia law, effective July 1, 1999, which establishes a timeline for competition among electric generators; and a one-time, after-tax charge of $21 million (11 cents per share) related to the sale of the company’s Latin American power generation businesses. Operating earnings for 1999 also exclude transition costs of $4 million (2 cents per share) associated with the company’s merger with Consolidated Natural Gas Company.
Impact of Goodwill amortization expense
Under purchase accounting for the CNG acquisition, earnings reflect an annual non-cash expense representing the amortization of goodwill. Earnings before goodwill were 32 cents higher, or $3.65 per share in 2000.
Capps said: “As solid as book earnings were, cash earnings – earnings excluding goodwill – were even more substantial. Cash earnings are key because it’s cash that we use to pay dividends and to reinvest in the company to fuel earnings growth. We support the recent Financial Accounting Standards Board’s tentative decision to discontinue the amortization of goodwill recorded under purchase accounting. This change in accounting would make the company’s true earnings power more clearly visible to investors.”
Full-year earnings breakdown by operating segment
Dominion Energy, the company’s electric generation and gas pipeline business segment, earned $478 million ($2.02 per share) in 2000, up from 1999 operating earnings of $292 million ($1.53 per share). 1999 results exclude a non-recurring charge of $1.33 per share associated with an accounting change resulting from a new Virginia law affecting electric generators.
Dominion Energy’s results reflect the addition of CNG’s pipeline operations, strong customer growth in the company’s electric service area and lower capacity costs resulting from the expiration of third-party generation contracts, partially offset by the dilutive effect of additional shares following the merger with CNG.
Dominion Delivery, the company’s electric and gas distribution and customer service segment, earned $339 million ($1.43 per share), up from 1999 operating earnings of $175 million (92 cents per share). Dominion Delivery’s results reflect the addition of CNG’s local distribution operations, strong customer growth in the company’s electric service area and lower electric service restoration costs, partially offset by the dilutive effect of additional shares following the merger with CNG.
Dominion Exploration & Production, the company’s gas and oil exploration and production unit, earned $270 million ($1.14 per share) in 2000, up from $44 million (23 cents per share) in the prior-year period. The increase is primarily attributable to higher oil and gas prices and higher production resulting from the addition of CNG Producing Company.
Dominion Capital, the financial services subsidiary, earned $11 million (4 cents per share) in 2000, compared to $78 million (41 cents per share) in 1999. Pursuant to regulatory agreements reached as part of its merger with CNG, Dominion has agreed to divest Dominion Capital. Dominion made significant progress in complying with these agreements in 2000.
Suspension and sale of various operations had an effect on earnings, principally from lower operating income due to commercial lending activities, lower net equity and mortgage lending gains and lower income from Vidalia due to a lower ownership percentage and lower water flow.
Fourth-quarter earnings breakdown by operating segment
Consolidated operating earnings for the fourth quarter ended December 31, 2000 were $144 million (59 cents per share), compared to operating earnings of $65 million (35 cents per share) in the fourth quarter of 1999. Fourth-quarter 2000 earnings exclude after-tax restructuring and merger-related costs of $38 million (15 cents per share). Fourth-quarter 1999 earnings exclude a one-time after-tax loss of $3 million (2 cents per share) on the sale of the company’s Latin American generation businesses and CNG merger transition costs of $4 million (2 cents per share).
Dominion Energy contributed $67 million (27 cents per share) to fourth-quarter 2000 operating earnings, compared to $3 million (2 cents per share) in the fourth quarter of 1999. The change in Dominion Energy’s fourth-quarter 2000 earnings is primarily attributable to the addition of CNG’s pipeline operations and cooler-than-normal weather in the company’s electric service area.
Dominion Delivery earned $79 million (32 cents per share) in the recent fourth quarter, up from $24 million (13 cents per share) for the same period in 1999. The change in Dominion Delivery’s fourth-quarter earnings is primarily attributable to the addition of CNG’s local distribution operations and cooler-than-normal weather in the company’s electric service area.
Dominion Exploration & Production contributed $85 million (35 cents per share), up from $6 million (3 cents per share) in the fourth quarter of 1999. The increase is primarily attributable to higher oil and gas prices and higher production resulting from the addition of CNG Producing Company.
Dominion Capital posted a loss of $1 million (-1 cent per share) for the quarter, down from a contribution of $35 million (19 cents per share) last year. The decrease is primarily from lower operating income from commercial lending activities and lower net equity gains resulting from the suspension and sale of certain operations.
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.
Operating earnings for Virginia Power, the company’s electric utility, were $2.40 per share in 2000, compared to operating earnings of $2.34 per share in 1999. Operating earnings (since the Dominion/CNG merger on January 28, 2000) for Consolidated Natural Gas, the company’s natural gas utility and exploration and production concern, were $1.45 per share. Dominion Energy, the company’s independent power and natural gas subsidiary, earned 36 cents per share in 2000, compared to 33 cents per share last year.
Fourth-quarter 2000 operating earnings for Virginia Power were 25 cents per share, compared to 14 cents per share in the fourth quarter of 1999. Fourth-quarter 2000 operating earnings for Consolidated Natural Gas were 42 cents per share. Dominion Energy earned 10 cents per share in the fourth quarter of 2000, compared to 4 cents per share last year.
Dominion is one of the nation’s largest producers of energy, with a production capability of 2.7 trillion British Thermal Units (BTUs) of energy per day. The company has a power generation portfolio of more than 19,000 megawatts, which is expected to grow to more than 28,000 megawatts by 2005.
Dominion is also one of the largest independent oil and natural gas exploration and production companies in North America, with 2.8 trillion cubic feet equivalent of natural gas reserves, with an annual production capability of over 300 billion cubic feet equivalent of natural gas.
The company has 7,600 miles of interstate natural gas pipeline with a delivery capability of 6.3 billion cubic feet per day. In addition, the company operates the nation’s largest underground natural gas storage system, with more than 950 billion cubic feet of storage capacity.
Dominion also serves 3.8 million retail natural gas and electric customers, and owns a telecommunications business that is expanding its fiber-optic network from its current 35,000 fiber miles (3,600 route miles) to more than 800,000 fiber miles (9,000 route miles). For more information about Dominion, visit the company’s web site at www.dom.com .