10-QPeriod: Q3 FY2010

DOMINION ENERGY, INC Quarterly Report for Q3 Ended Sep 30, 2010

Filed October 29, 2010For Securities:D

Summary

Dominion Energy, Inc. (D) reported its third-quarter and year-to-date financial results for the period ending September 29, 2010. The company saw a slight decrease in net income attributable to Dominion for the third quarter of 2010 compared to the same period in 2009, largely due to lower margins from merchant generation and the absence of earnings from divested Appalachian E&P operations, partially offset by favorable weather impacts on electric utility operations. For the year-to-date period, Dominion reported a significant increase in net income, driven primarily by a substantial gain on the sale of its Appalachian E&P operations and lower impairment charges. This positive performance was somewhat tempered by charges related to workforce reductions and a loss on the sale of Peoples. The company continues to manage its business through strategic divestitures and operational adjustments, with a focus on its regulated utility operations and energy infrastructure.

Financial Highlights

48 data points
Beta

Revenue

$3.95B

Net Income

$575.00M

14.6% Net Margin

EPS (Diluted)

$0.98

Total Assets

$42.23B

Cash & Equivalents

$446.00M

Free Cash Flow

-$3.69B

Financial Statements
Beta
Revenue$3.95B
Operating Expenses$2.83B
Operating Income$1.12B
Net Income$575.00M
EPS (Basic)$0.98
EPS (Diluted)$0.98
Shares Outstanding (Basic)585.00M
Shares Outstanding (Diluted)586.40M

Key Highlights

  • 1Net income attributable to Dominion decreased by 3% ($19 million) to $575 million for the third quarter of 2010 compared to $594 million in the prior year. Diluted EPS decreased to $0.98 from $1.00.
  • 2Year-to-date net income attributable to Dominion increased significantly by 94% ($1.214 billion) to $2.510 billion in 2010, primarily driven by a $2.467 billion gain on the sale of Appalachian E&P operations.
  • 3Operating revenue for Dominion increased by $320 million to $3.950 billion in the third quarter of 2010, largely due to higher electric utility operations driven by weather and rate adjustments.
  • 4Virginia Power reported a 21% increase in net income to $380 million for the third quarter of 2010, driven by favorable weather and rate adjustment clauses, partially offset by workforce reduction charges.
  • 5Dominion completed the sale of substantially all of its Appalachian E&P operations in April 2010 for approximately $3.5 billion, resulting in a significant after-tax gain.
  • 6The company repurchased approximately 21.4 million shares of its common stock for about $900 million during the first nine months of 2010, utilizing proceeds from asset sales.
  • 7Dominion and Virginia Power have entered into new, substantial credit facilities totaling $3.5 billion and $500 million, respectively, to ensure liquidity and support operations.

Frequently Asked Questions

For the third quarter of 2010, Dominion's net income attributable to Dominion decreased slightly. Key unfavorable factors included lower margins from merchant generation operations and the absence of earnings from divested Appalachian E&P operations. Favorable drivers included the positive impact of warmer weather on electric utility operations and the absence of a loss from discontinued operations of Peoples.

The sale of substantially all of Dominion's Appalachian E&P operations in April 2010 was a major event. It generated approximately $3.5 billion in proceeds, resulting in a significant after-tax gain of approximately $1.4 billion for the year-to-date period. This sale also contributed to the decrease in current quarter earnings due to the absence of these operations' contribution.

Virginia Power's net income increased in the third quarter of 2010, driven by favorable weather and rate adjustment clauses. However, workforce reduction charges partially offset this. Regulatory matters include ongoing proceedings with the FERC concerning transmission costs and updates on fuel expenses and generation riders with the Virginia Commission. The company is also exploring the construction of a third nuclear unit at North Anna, pending various regulatory approvals.

Dominion and Virginia Power utilize short-term borrowings for working capital and capital expenditures. They also have access to capital markets for long-term funding through debt and equity issuances. Significant recent activities include the formation of new, large credit facilities totaling $3.5 billion for Dominion and $500 million for Virginia Power, providing ample liquidity. Additionally, Dominion utilized proceeds from asset sales for common stock repurchases and debt reduction.