Dec 19, 2008
- Affirms 2008 annual operating earnings guidance of $3.10 to $3.15 per share
- Declares quarterly dividend increase of nearly 11 percent, reconfirms dividend policy
- Revises 2009 operating earnings outlook to $3.20 to $3.30 per share from $3.30 to $3.45 per share
- Adjusts near-term operating earnings per share growth rates
- Cuts 2009 operating and maintenance expenses and planned capital expenditures
RICHMOND, Va., Dec. 19 /PRNewswire-FirstCall/ -- Dominion today affirmed its 2008 annual operating earnings guidance of $3.10 to $3.15 per share. The board of directors earlier in the week declared a nearly 11 percent dividend increase and reconfirmed the company's dividend policy. The company revised its 2009 operating earnings outlook to $3.20 to $3.30 per share from $3.30 to $3.45 per share as well as its 2009 and 2010 operating earnings per share growth rates.
Dominion now expects an operating earnings per share growth rate of 3-6 percent in 2009 over 2008 earnings; a 4-6 percent growth rate in 2010 over 2009 earnings; and a return to a 6 percent or more growth rate in 2011 and thereafter. The company will discuss its 2009 guidance, 2010 outlook and growth rates in more detail on its anuary 29 fourth-quarter earnings conference call.
Thomas F. Farrell II, chairman, president and chief executive officer, said:
"We are confident in the underlying strength of our business model. However, since our third-quarter earnings call on October 30, increasing costs of capital, projected increases in pension and other benefit costs as well as a continued decline in commodity prices have led us to revisit our previous assumptions. These changes are driven by the macroeconomic situation facing all companies; they are not unique to Dominion.
"Dominion has more-than-adequate liquidity, and we have been able to successfully access the capital markets in recent months. Yet, given the increased interest rates and widespread economic pressures in the marketplace, we find it prudent to conserve cash and lower our financing requirements. For this reason, we plan to selectively reduce 2009 non-fuel operating and maintenance expenses as well as reduce planned capital expenditures by approximately $350 million.
"As we have previously stated, these reductions will not lower our performance levels or safety standards, nor would we expect our future long-term growth rate to be adversely affected.
"Unlike many other areas of the country that are facing negative energy demand, our Virginia service territory is still enjoying growth, albeit at a slower rate. Additionally, we have pre-approved spending on major infrastructure projects in a favorable regulatory environment. And, even with the projected increases in pension and other benefit costs, no contributions to our pension plans are needed any earlier than 2010.
"Therefore, following an expected return to normal economic conditions, we would expect an operating earnings growth rate of 6 percent or more beginning in 2011. Although we are revising our operating earnings growth rates in 2009 and 2010, we are comfortable that our longer-term growth rate reflects the true earnings power of the company."
In affirming its full year 2008 guidance and revising its 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.
On December 17, the board declared a quarterly dividend of 43.75 cents per share of common stock, raising the quarterly dividend by nearly 11 percent, from 39.5 cents per share. The 2009 annual dividend rate is $1.75 per share. Dominion increased its annual dividend 11 percent in 2008 as well. Given the belief in the company's sustainable business model, Dominion's board of directors also reconfirmed the dividend policy set in October 2007 to achieve a 55 percent payout by 2010.
Dividends are payable on March 20, 2009, to shareholders of record February 27, 2009.
This is the 324th consecutive dividend that Dominion or its predecessor company has paid holders of common stock. The company's last quarterly dividend was declared October 24, 2008.
The board of directors of Virginia Electric and Power Company, a subsidiary of Dominion, also declared regular quarterly dividends at the prescribed rates on each of its series of preferred stock. Preferred dividends on the company's fixed-rate preferred stock are payable March 20, 2009, to holders of record at the close of business February 27, 2009.
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. Dominion operates the nation's largest natural gas storage facility with 975 billion cubic feet of storage capacity and serves retail energy customers in 12 states. For more information about Dominion, visit the company's Web site at http://www.dom.com.
This release contains certain forward-looking statements, including our forecasted operating earnings for 2008 and 2009 as well as our projected future long-term growth rates and policy for dividend growth rates, 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, such as fluctuations in energy-related commodity prices, the timing of the closing dates of acquisitions or divestitures, estimates of future market conditions, costs of capital, fluctuations in the value of our pension assets, estimates of proved and unproved reserves, the company's ability to meet its natural gas and oil production forecasts, the timing and receipt of regulatory approvals necessary for planned projects, acquisitions and divestitures, and the ability to complete planned construction or expansion projects as scheduled. Other factors include, but are not limited to, weather conditions, including the effects of hurricanes on operations, the behavior of other market participants, 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, economic conditions in the company'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, trading counter-party credit risks, risks related to energy trading and marketing, adverse outcomes in litigation matters, the receipt of board approval for future increases to the dividend 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 & Exchange Commission.
Web site: http://www.dom.com/