Dominion reaffirms 2002 earnings target


RICHMOND, Va., Sept. 16, 2002 — Dominion on Monday reaffirmed its earnings per share outlook for the full-year 2002 of between $4.90 and $4.95 per share, representing an increase of about 18 percent over 2001 operating earnings of $4.17 per share and 15 percent compound annual growth since 1998.

Dominion also said that because of unforeseeable developments, it expects 2003 earnings to be flat to up 4 percent over 2002 earnings.

Reasons for the reduced outlook include:

“- plans to further strengthen the company’s balance sheet and debt coverage ratios as a result of changes in ratings agency requirements, which is expected to reduce 2003 earnings by as much as 17 cents per share
“- increased security costs at our six nuclear units
“- a higher expected level of pension expense
“- expenses associated with new accounting for asset retirement obligations as a result of a new accounting standard, FAS 143
“- costs associated with joining PJM
“- lengthened nuclear outages as a result of a recent NRC directive related to vessel head inspections
“- flat trading and marketing earnings over the expected level in 2002

These impacts are partially offset by certain positive factors including higher oil and gas prices and the State Line and Cove Point acquisitions.

Thos. E. Capps, chairman, president and chief executive officer of Dominion said: “While we are disappointed that we are modestly reducing the earnings outlook for 2003, we are pleased that Dominion’s integrated business model has enabled it to withstand the temporary cyclical downturn in market conditions and other factors that have more severely affected most of our peers. Much of the reduction in the outlook is due to non-cash items, such as accounting for asset retirement obligations. Cash flow remains strong and we expect to generate about $2.5 billion in net cash flow from operating activities in 2002 and from $2.8 to $3.0 billion in 2003.”

The biggest single factor impacting the 2003 outlook is the planned issuance of additional equity and equity-equivalent securities in 2003 to strengthen the balance sheet.

Capps said: “We have always told our investors that Dominion is committed to maintaining its strong investment grade credit ratings. Our investors, both debt and equity, have told us this is very important to them as well. Through this move to strengthen the balance sheet, Dominion will be in a position to increase the earnings and cash flow growth after 2003. Through a combination of solid earnings growth and the common stock dividend, Dominion will be able to continue delivering the strong level of total shareholder return our owners deserve and have come to expect.”

Dominion is currently conducting its normal annual budgeting and planning cycle and plans to provide details of the revised earnings outlook during the third quarter earnings conference call, scheduled for October 17.

Dominion has a diversified and integrated energy portfolio consisting of nearly 24,000 megawatts of generation, 5.7 trillion cubic feet equivalent of natural gas reserves, 7,600 miles of natural gas transmission pipeline and 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 franchise natural gas and electric customers in five states and nearly one million unregulated retail customers in eight states. In addition, Dominion owns a managing equity interest in Dominion Fiber Ventures LLC, owner of Dominion Telecom. For more information about Dominion, visit the company’s web site at www.dom.com.

SOURCE: Dominion

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The Clarion Energy Content Team is made up of editors from various publications, including POWERGRID International, Power Engineering, Renewable Energy World, Hydro Review, Smart Energy International, and Power Engineering International. Contact the content lead for this publication at Jennifer.Runyon@ClarionEvents.com.

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