EX-99 2 d640187dex99.htm EX-99 EX-99

Dominion Energy, Inc.

Consolidated Statements of Income *

Unaudited (GAAP Based)

(millions, except per share amounts)

 

     Three Months Ended     Year Ended  
     December 31,     December 31,  
     2017     2016     2017     2016  

Operating Revenue

      $3,210       $3,086       $12,586       $11,737  
  

 

 

    

 

 

    

 

 

    

 

 

  

Operating Expenses

         

Electric fuel and other energy-related purchases

      590       542       2,301       2,333  

Purchased (excess) electric capacity

      14       (8 )      6       99  

Purchased gas

      260       207       701       459  

Other operations and maintenance

      709       931       2,875       3,064  

Depreciation, depletion and amortization

      484       447       1,905       1,559  

Other taxes

      149       148       668       596  
  

 

 

    

 

 

    

 

 

    

 

 

  

Total operating expenses

      2,206       2,267       8,456       8,110  
  

 

 

    

 

 

    

 

 

    

 

 

  

Income from operations

      1,004       819       4,130       3,627  
  

 

 

    

 

 

    

 

 

    

 

 

  

Other income

      (84 )      61       165       250  

Interest and related charges

      300       295       1,205       1,010  
  

 

 

    

 

 

    

 

 

    

 

 

  

Income from continuing operations including noncontrolling interests before income tax expense (benefit)

      620       585       3,090       2,867  

Income tax expense (benefit)

      (713 )      94       (30 )      655  
  

 

 

    

 

 

    

 

 

    

 

 

  

Income from continuing operations including noncontrolling interests

      1,333       491       3,120       2,212  
  

 

 

    

 

 

    

 

 

    

 

 

  

Noncontrolling interests

      21       34       121       89  
  

 

 

    

 

 

    

 

 

    

 

 

  

Net Income attributable to Dominion

      $1,312       $457       $2,999       $2,123  
  

 

 

    

 

 

    

 

 

    

 

 

  

Reported earnings per common share - diluted

      $2.04       $0.73       $4.72       $3.44  
  

 

 

    

 

 

    

 

 

    

 

 

  

Average shares outstanding, diluted

      643.9       627.1       636.0       617.1  

 

* The notes contained in Dominion Energy’s most recent quarterly report on Form 10-Q or annual report on Form 10-K are an integral part of the Consolidated Financial Statements.

Schedule 1 - Segment Reported and Operating Earnings

Unaudited

 

(millions, except earnings per share)    Three months ended December 31,  
     2017     2016     Change  

REPORTED EARNINGS 1

      $1,312       $457       $855  

Pre-tax loss (income) 2

      207       256       (49 ) 

Income tax 2

      (934 )      (95 )      (839 ) 
  

 

 

    

 

 

    

 

 

  

Adjustments to reported earnings

      (727 )      161       (888 ) 
  

 

 

    

 

 

    

 

 

  

OPERATING EARNINGS

      $585       $618       $(33 ) 
  

 

 

    

 

 

    

 

 

  

By segment:

       

Power Delivery4

      141       121       20  

Power Generation4

     311       331       (20 ) 

Gas Infrastructure3, 4

      285       243       42  

Corporate and Other

      (152 )      (77 )      (75 ) 
  

 

 

    

 

 

    

 

 

  
     $585       $618       $(33 ) 
  

 

 

    

 

 

    

 

 

  

Earnings Per Share (EPS):

       

REPORTED EARNINGS 1

      $2.04       $0.73       $1.31  

Adjustments to reported earnings (after tax)

      (1.13 )      0.26       (1.39 ) 
  

 

 

    

 

 

    

 

 

  

OPERATING EARNINGS

      $0.91       $0.99       $(0.08 ) 
  

 

 

    

 

 

    

 

 

  

By segment:

       

Power Delivery

      0.22       0.19       0.03  

Power Generation

      0.48       0.53       (0.05 ) 

Gas Infrastructure3

      0.44       0.39       0.05  

Corporate and Other

      (0.23 )      (0.12 )      (0.11 ) 
  

 

 

    

 

 

    

 

 

  
     $0.91       $0.99       $(0.08 ) 
  

 

 

    

 

 

    

 

 

  

Common Shares Outstanding (average, diluted)

      643.9       627.1    
(millions, except earnings per share)    Twelve months ended December 31,  
     2017     2016     Change  

REPORTED EARNINGS 1

      $2,999       $2,123       $876  

Pre-tax loss (income) 2

      235       359       (124 ) 

Income tax 2

      (945 )      (135 )      (810 ) 
  

 

 

    

 

 

    

 

 

  

Adjustments to reported earnings

      (710 )      224       (934 ) 
  

 

 

    

 

 

    

 

 

  

OPERATING EARNINGS

      $2,289       $2,347       $(58 ) 
  

 

 

    

 

 

    

 

 

  

By segment:

       

Power Delivery

      531       484       47  

Power Generation

      1,181       1,397       (216 ) 

Gas Infrastructure3

      898       726       172  

Corporate and Other

      (321 )      (260 )      (61 ) 
  

 

 

    

 

 

    

 

 

  
     $2,289       $2,347       $(58 ) 
  

 

 

    

 

 

    

 

 

  

Earnings Per Share (EPS):

       

REPORTED EARNINGS 1

      $4.72       $3.44       $1.28  

Adjustments to reported earnings (after tax)

      (1.12 )      0.36       (1.48 ) 
  

 

 

    

 

 

    

 

 

  

OPERATING EARNINGS

      $3.60       $3.80       $(0.20 ) 
  

 

 

    

 

 

    

 

 

  

By segment:

       

Power Delivery

      0.83       0.78       0.05  

Power Generation

      1.86       2.26       (0.40 ) 

Gas Infrastructure3

      1.41       1.18       0.23  

Corporate and Other

      (0.50 )      (0.42 )      (0.08 ) 
  

 

 

    

 

 

    

 

 

  
     $3.60       $3.80       $(0.20 ) 
  

 

 

    

 

 

    

 

 

  

Common Shares Outstanding (average, diluted)

      636.0       617.1    

 

1)  Determined in accordance with Generally Accepted Accounting Principles (GAAP).
2)  Adjustments to reported earnings are included in Corporate and Other segment reported GAAP earnings. Refer to Schedules 2 and 3 for details, or find “GAAP Reconciliation” in the Earnings Release Kit on Dominion Energy’s website at www.dominionenergy.com/investors.
3)  Includes Dominion Energy Questar effective September 2016.
4)  In connection with its corporate rebranding, Dominion Energy changed the names of its principal operating segments to Power Delivery, Power Generation and Gas Infrastructure from Dominion Virginia Power, Dominion Generation and Dominion Energy, respectively.

Schedule 2 - Reconciliation of 2017 Operating Earnings to Reported Earnings

2017 Earnings (Twelve months ended December 31, 2017)

The $235 million pre-tax net effect of the adjustments included in 2017 reported earnings, but excluded from operating earnings, is primarily related to the following items:

 

  •   $158 million of impairment charges associated with our equity method investments in wind-powered generation facilities.

 

  •   $72 million of transaction and transition costs, primarily associated with the Dominion Energy Questar combination.

 

  •   $46 million net gain related to our investments in nuclear decommissioning trust funds.

The 2017 Tax Reform Act reduced the corporate income tax rate from 35% to 21%. Dominion Energy recognized $851 million of tax benefits resulting from the re-measurement of deferred income taxes to the new corporate income tax rate.

 

(millions, except per share amounts)

    1Q17     2Q17     3Q17     4Q17     YTD 2017 2  

Reported earnings

      $632       $390       $665       $1,312       $2,999  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Adjustments to reported earnings 1:

           

Pre-tax loss (income)

      (31 )      47       12       207       235  

Income tax

      10       (16 )      (5 )      (934 )      (945 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  
     (21 )      31       7       (727 )      (710 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Operating earnings

      $611       $421       $672       $585       $2,289  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Common shares outstanding (average, diluted)

      628.1       629.2       642.5       643.9       636.0  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Reported earnings per share

      $1.01       $0.62       $1.03       $2.04       $4.72  

Adjustments to reported earnings (after-tax)

      (0.04 )      0.05       0.01       (1.13 )      (1.12 ) 

Operating earnings per share

      $0.97       $0.67       $1.04       $0.91       $3.60  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

 

1)  Adjustments to reported earnings are reflected in the following table:

 

     1Q17     2Q17     3Q17     4Q17     YTD 2017  

Pre-tax loss (income):

           

Impairments of equity method investments

            158       158  

Merger-related transaction & transition costs

      3       20       16       33       72  

Net gain on NDT funds

      (34 )      (3 )      (4 )      (5 )      (46 ) 

Other

        30         21       51  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  
     ($31 )      $47       $12       $207       $235  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Income tax expense (benefit):

           

Tax effect of above adjustments to reported earnings *

      10       (16 )      (5 )      (83 )      (94 ) 

Re-measurement of Deferred Tax Balances **

            (851 )      (851 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  
     $10       ($16 )      ($5 )      ($934 )      ($945 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

 

* Income taxes for individual pre-tax items include current and deferred taxes using a transactional effective tax rate. For interim reporting purposes, such amounts may be adjusted in connection with the calculation of the Company’s year-to-date income tax provision based on its estimated annual effective tax rate.
** Federal tax reform, enacted in December 2017, reduced the corporate income tax rate from 35% to 21%, effective 1/1/2018. Deferred taxes are required to be measured at the enacted rate in effect when they are expected to reverse. As a result, deferred taxes were re-measured to the 21% rate. For regulated entities, where the reduction in deferred taxes is expected to be recovered or refunded in future rates, the adjustment was recorded to a regulatory asset or liability instead of income tax expense.

 

2)  YTD EPS may not equal sum of quarters due to share count differences

Schedule 3 - Reconciliation of 2016 Reported Earnings to Operating Earnings

2016 Earnings (Twelve months ended December 31, 2016)

The $359 million pre-tax net effect of the adjustments included in 2016 reported earnings, but excluded from operating earnings, is primarily related to the following items:

 

  •   $197 million additional charge associated with the asset retirement obligations for ash ponds and landfills at certain utility generation facilities to comply with the EPA coal combustion residuals rule.

 

  •   $74 million of transaction and transition costs associated with the Dominion Energy Questar combination, which was completed in September 2016.

 

  •   $65 million charge associated with an organizational design initiative and primarily comprised of employee severance benefits.

 

  •   $23 million of restoration costs associated with Hurricane Matthew affecting our electric utility service territories.

 

(millions, except per share amounts)

    1Q16     2Q16     3Q16     4Q16     YTD 2016 2  

Reported earnings

      $524       $452       $690       $457       $2,123  

Adjustments to reported earnings 1:

           

Pre-tax loss (income)

      67       (12 )      48       256       359  

Income tax

      (19 )      1       (22 )      (95 )      (135 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  
     48       (11 )      26       161       224  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Operating earnings

      $572       $441       $716       $618       $2,347  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Common shares outstanding (average, diluted)

      598.2       617.0       626.0       627.1       617.1  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Reported earnings per share

      $0.88       $0.73       $1.10       $0.73       $3.44  

Adjustments to reported earnings (after-tax)

      0.08       (0.02 )      0.04       0.26       0.36  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Operating earnings per share

      $0.96       $0.71       $1.14       $0.99       $3.80  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

 

1)  Adjustments to reported earnings are reflected in the following table:

 

     1Q16     2Q16     3Q16     4Q16     YTD 2016  

Pre-tax loss (income):

           

Future ash ponds and landfill closure costs

            197       197  

Questar transaction and transition costs

      2       5       53       14       74  

Organizational design initiative

      70       (5 )          65  

Hurricane Matthew costs

            23       23  

Other items

      (5 )      (12 )      (5 )      22       0  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  
     $67       ($12 )      $48       $256       $359  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Income tax expense (benefit):

           

Tax effect of above adjustments to reported earnings *

      (19 )      1       (10 )      (95 )      (123 ) 

Divestiture tax settlement

          (12 )        (12 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  
     ($19 )      $1       ($22 )      ($95 )      ($135 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

 

* Income taxes for individual pre-tax items include current and deferred taxes using a transactional effective tax rate. For interim reporting purposes, such amounts may be adjusted in connection with the calculation of the Company’s year-to-date income tax provision based on its estimated annual effective tax rate.

 

2)  YTD EPS may not equal sum of quarters due to rounding or share count differences

Schedule 4 - Reconciliation of 4Q17 Earnings to 4Q16

 

Unaudited    Three Months Ended     Twelve Months Ended  
(millions, except EPS)    December 31,     December 31,  
     2017 vs. 2016     2017 vs. 2016  
     Increase / (Decrease)     Increase /(Decrease)  

Reconciling Items

    Amount     EPS     Amount     EPS  

Change in reported earnings (GAAP)

      $855       $1.31       $876       $1.28  

Change in Pre-tax loss (income) 1

      (49 )        (124 )   

Change in Income tax 1

      (839 )        (810 )   
  

 

 

    

 

 

    

 

 

    

 

 

  

Adjustments to reported earnings

      ($888 )      ($1.39 )      ($934 )      ($1.48 ) 
  

 

 

    

 

 

    

 

 

    

 

 

  

Change in consolidated operating earnings

      ($33 )      ($0.08 )      ($58 )      ($0.20 ) 
  

 

 

    

 

 

    

 

 

    

 

 

  

Power Delivery

         

Regulated electric sales:

         

Weather

      $5       $0.01       ($14 )      ($0.02 ) 

Other

      3       0.01       15       0.02  

FERC Transmission equity return

      1       0.00       14       0.02  

Storm damage and service restoration

      (3 )      (0.01 )      14       0.02  

Other

      14       0.03       18       0.03  

Share dilution

      —         (0.01 )      —         (0.02 ) 
  

 

 

    

 

 

    

 

 

    

 

 

  

Change in contribution to operating earnings

      $20       $0.03       $47       $0.05  

Power Generation

         

Regulated electric sales:

         

Weather

      $9       $0.01       ($36 )      ($0.06 ) 

Other

      5       0.01       32       0.05  

Merchant generation margin

      (19 )      (0.03 )      (28 )      (0.05 ) 

Outage costs

      (21 )      (0.03 )      (22 )      (0.03 ) 

Renewable energy investment tax credits

      54       0.08       (133 )      (0.21 ) 

Depreciation

      (9 )      (0.01 )      (46 )      (0.07 ) 

Electric capacity

      (12 )      (0.02 )      58       0.09  

Interest expense (project level solar)

      (4 )      (0.01 )      (15 )      (0.02 ) 

Other

      (23 )      (0.04 )      (26 )      (0.04 ) 

Share dilution

      —         (0.01 )      —         (0.06 ) 
  

 

 

    

 

 

    

 

 

    

 

 

  

Change in contribution to operating earnings

      ($20 )      ($0.05 )      ($216 )      ($0.40 ) 

Gas Infrastructure

         

Dominion Energy Questar combination2

      $0       $0.00       $184       $0.30  

Farmout transaction

      6       0.01       13       0.02  

Transportation and storage growth projects

      8       0.01       29       0.04  

Noncontrolling interests

      (3 )      (0.01 )      (30 )      (0.05 ) 

Cove Point import contracts

      (27 )      (0.04 )      (86 )      (0.14 ) 

Other

      58       0.09       62       0.10  

Share dilution

      —         (0.01 )      —         (0.04 ) 
  

 

 

    

 

 

    

 

 

    

 

 

  

Change in contribution to operating earnings

      $42       $0.05       $172       $0.23  

Corporate and Other

         

Renewable energy investment tax credits

      ($90 )      ($0.14 )      $0       $0.00  

Interest expense and other

      15       0.03       (61 )      (0.08 ) 
  

 

 

    

 

 

    

 

 

    

 

 

  

Change in contribution to operating earnings

      ($75 )      ($0.11 )      ($61 )      ($0.08 ) 
  

 

 

    

 

 

    

 

 

    

 

 

  

Change in consolidated operating earnings

      ($33 )      ($0.08 )      ($58 )      ($0.20 ) 

Change in adjustments included in reported earnings1

      $888       $1.39       $934       $1.48  
  

 

 

    

 

 

    

 

 

    

 

 

  

Change in consolidated reported earnings

      $855       $1.31       $876       $1.28  
  

 

 

    

 

 

    

 

 

    

 

 

  

 

1)  Adjustments to reported earnings are included in Corporate and Other segment reported GAAP earnings. Refer to Schedules 2 and 3 for details, or find “GAAP Reconciliation” in the Earnings Release Kit on Dominion Energy’s website at www.dominionenergy.com/investors.
2)  Excludes financing impact of Dominion Energy Questar combination.

Note: Figures may not add due to rounding