Dominion Announces First-Quarter 2013 Earnings

RICHMOND, Va., April 25, 2013 /PRNewswire/ -- Dominion (NYSE: D) today announced unaudited reported earnings determined in accordance with Generally Accepted Accounting Principles (GAAP) for the three months ended March 31, 2013, of $495 million ($0.86 per share), compared to $494 million ($0.86 per share) for the same period in 2012.  

Operating earnings for the three months ended March 31, 2013, amounted to $476 million ($0.83 per share), compared to originally reported operating earnings of $486 million ($0.85 per share) for the same period in 2012.  Operating earnings are defined as reported (GAAP) earnings adjusted for certain items. 

Dominion uses operating earnings as the primary performance measurement of its earnings guidance 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 and other purposes. Dominion management believes operating earnings provide a more meaningful representation of the company's fundamental earnings power.  

The principal difference between GAAP earnings and operating earnings for the quarter is related to our investments in nuclear decommissioning trust funds. 

Business segment results and detailed descriptions of items included in 2013 and 2012 reported 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:

"Our first-quarter results came in below the midpoint of our guidance range of $0.80 to $0.95 reflecting the impact of higher than normal storm and service restoration activity, the delayed in-service date of our Natrium processing plant, lower merchant generation margins and lower than expected electric sales.  Despite the challenging quarter, we remain committed to delivering 5 percent to 6 percent earnings per share growth this year.

"Our long-term growth plan continued to progress at our Dominion Virginia Power and Generation business segments, with both making strides on numerous projects that will provide the foundation for expected future earnings growth. 

"We also achieved several milestones in our Cove Point LNG liquefaction project. With the signing of 20-year Terminal Service Agreements with two companies, the capacity of the project is fully subscribed. We also executed an Engineering, Procurement, and Construction (EPC) agreement for the liquefaction facilities and submitted our application to the Federal Energy Regulatory Commission.  Subject to receipt of regulatory approvals, we expect to begin construction in 2014, with an in-service date in 2017.

First-quarter 2013 operating earnings compared to 2012

The decrease in first-quarter 2013 operating earnings per share as compared to originally reported first-quarter 2012 operating earnings per share is primarily attributable to lower merchant generation margins, higher than expected storm and service restoration costs, and lower contributions from unregulated retail energy marketing operations.  Positive factors for the quarter were higher weather-related sales in our service territory, higher revenues related to our gas transmission growth projects, and the benefit from our contribution of assets to the Blue Racer Midstream joint venture.

Details of first-quarter 2013 operating earnings as compared to 2012 can be found on Schedule 4 of this release.

Second-quarter 2013 and full-year 2013 operating earnings guidance

Dominion expects second-quarter 2013 operating earnings in the range of 60 cents per share to 70 cents per share as compared to second-quarter 2012 operating earnings of 59 cents per share.  Positive factors for the second-quarter of 2013 compared to the same period of the prior year include an expected return to normal weather in our electric service territory, higher rate adjustment clause revenues and anticipated growth in our electric service territory and higher revenues related to our gas transmission growth projects. Negative factors for the quarter include a planned refueling outage at Millstone Power Station and lower contributions from unregulated retail energy marketing operations.  GAAP earnings for the second quarter of 2012 were 45 cents per share.  A reconciliation between operating and GAAP earnings for the second quarter of 2012 can be found on Schedule 3 of this release.

Amounts for 2012 have been recast to reflect results for Brayton Point and Kincaid generating stations as discontinued operations.  However, Dominion uses originally reported 2012 amounts prior to recast to calculate operating earnings growth targets as well as for comparison to 2012 and 2013 operating earnings and statistics.

In providing its second-quarter and full-year 2013 operating earnings guidance, the company notes that there could be differences between expected reported earnings and estimated 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 aggregate impact, if any, of these items on reported earnings, other than those as set forth on Schedule 2 – Reconciliation of 2013 Operating Earnings to Reported Earnings on page 8 of the 1Q13 Earnings Release Kit. Accordingly, the company is not able to provide a corresponding GAAP equivalent for its operating earnings guidance.

Conference call today

Dominion will host its first-quarter earnings conference call at 10 a.m. ET on Thursday, April 25.  Dominion management will discuss its first-quarter financial results 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) 323-9872.  Participants should dial in 10 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, including accompanying slides, and the Earnings Release Kit will be available on the company's investor information page at www.dom.com/investors.

A replay of the conference call will be available beginning about 1 p.m. ET April 25 and lasting until 11 p.m. ET May 2.  Domestic callers may access the recording by dialing (877) 919-4059.  International callers should dial (334) 323-7226.  The PIN for the replay is 34115675.  Additionally, a replay of the webcast will be available on the company's investor information page by the end of the day April 25.

Dominion is one of the nation's largest producers and transporters of energy, with a portfolio of approximately 27,500 megawatts of generation, 11,000 miles of natural gas transmission, gathering and storage pipeline, and 6,300 miles of electric transmission lines.  Dominion operates one of the nation's largest natural gas storage systems with 947 billion cubic feet of storage capacity and serves retail energy customers in 15 states. For more information about Dominion, visit the company's website at www.dom.com.

This release contains certain forward-looking statements, including forecasted operating earnings for second-quarter and full-year 2013 which are subject to various risks and uncertainties.  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, including fluctuations in energy-related commodity prices, estimates of future market conditions, additional competition in the electric industry, changes in the demand for Dominion's services, access to and costs of capital, fluctuations in the value of our pension assets and assets held in our decommissioning trusts, impacts of acquisitions, divestitures, retirements of assets based on asset portfolio reviews, the receipt of regulatory approvals for, and timing of, planned projects, acquisitions and divestitures, and the ability to complete planned construction or expansion projects at all or within the terms and timeframes initially anticipated.  Other factors include, but are not limited to, weather conditions and other events, including the effects of hurricanes, earthquakes, high winds, major storms and changes in water temperatures on operations, the risk associated with the operation of nuclear facilities, unplanned outages of Dominion's generation facilities, state and federal legislative and regulatory developments and changes to environmental and other laws and regulations, including those related to climate change, greenhouse gases and other emissions to which we are subject, political and economic conditions, industrial, commercial and residential growth or decline in Dominion's service area, risks of operating businesses in regulated industries that are subject to changing regulatory structures, changes to regulated gas and electric rates collected by Dominion, changes to rating agency requirements and ratings, changing financial accounting standards, fluctuations in interest rates, changes in federal and state tax laws, employee workforce factors, including collective bargaining, counter-party credit and performance risks, adverse outcomes in litigation matters or regulatory proceedings, the risk of hostile cyber intrusions and other uncertainties.  Other risk factors are detailed from time to time in Dominion's most recent quarterly report on Form 10-Q or annual report on Form 10-K filed with the Securities and Exchange Commission.

Schedule 2 - Reconciliation of 2013 Operating Earnings to Reported Earnings

2013 Earnings (Three months ended March 31, 2013)  

The net effects of the following items, all shown on an after-tax basis, are included in 2013 reported earnings, but are excluded from operating earnings:

• $20 million net gain related to our investments in nuclear decommissioning trust funds.
• $1 million net loss related to other items, including the discontinued operations of two merchant power stations (Brayton Point and Kincaid).

Schedule 3 - Reconciliation of 2012 Operating Earnings to Reported Earnings

2012 Earnings (Twelve months ended December 31, 2012) ³

The net effects of the following items, all shown on an after-tax basis, are included in 2012 reported earnings, but are excluded from operating earnings:

• $1.1 billion net loss, including an impairment charge, associated with certain fossil fuel-fired merchant power stations which Dominion decided to market for sale in the third quarter of 2012.
• $303 million net loss, including impairment charges, primarily resulting from the planned shutdown of our Kewaunee nuclear merchant power station.
• $53 million of restoration costs associated with severe storms affecting our Dominion Virginia Power and Dominion North Carolina Power service territories.
• $22 million net loss from discontinued operations of two merchant power stations (State Line and Salem Harbor) which were sold in 2012.
• $5 million net benefit related to other items.

SOURCE Dominion

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