SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
/X/ QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1995
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from _______________ to _______________
Commission file number 1-8489
DOMINION RESOURCES, INC.
(Exact name of registrant as specified in its charter)
VIRGINIA 54-1229715
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
901 EAST BYRD STREET, RICHMOND, VIRGINIA 23219
(Address of principal executive offices) (Zip Code)
Registrant's telephone number (804) 775-5700
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports) and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No _____
At September 30, 1995, the latest practicable date for determina-
tion, 175,615,059 shares of common stock, without par value, of
the registrant were outstanding.<PAGE>
DOMINION RESOURCES, INC.
INDEX
Page
Number
PART I. Financial Information
Item 1. Consolidated Financial Statements
Consolidated Statements of Income - Three 3-4
and Nine Months Ended September 30, 1995
and 1994
Consolidated Balance Sheets - September 30, 1995 5-7
and December 31, 1994
Consolidated Statements of Cash Flows 8-9
Nine Months Ended September 30, 1995 and 1994
Notes to Consolidated Financial Statements 10-16
Item 2. Management's Discussion and Analysis 17-25
PART II. Other Information
Item 1. Legal Proceedings 26
Item 5. Other Information 27
Virginia Power:
Rates
Competition
Sources of Power
Item 6. Exhibits and Reports on Form 8-K 29
<PAGE>
DOMINION RESOURCES, INC.
PART I. FINANCIAL INFORMATION
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
Three Months Ended Nine Months Ended
September 30, September 30,
1995 1994 1995 1994
Millions, except per share amounts
Operating revenues and income:
Electric $1,276.6 $1,151.2 $3,324.0 $3,243.5
Nonutility 68.4 58.6 193.1 242.9
1,345.0 1,209.8 3,517.1 3,486.4
Operating expenses:
Fuel, net 289.3 254.1 769.8 743.5
Purchased power capacity,
net 187.5 176.5 518.2 507.0
Other operations 168.2 177.3 507.9 493.4
Maintenance 62.1 62.2 202.6 203.3
Restructuring 30.6 36.6
Depreciation and
amortization 136.6 132.0 407.2 403.0
Other taxes 72.0 71.0 207.0 216.3
946.3 873.1 2,649.3 2,566.5
Operating Income 398.7 336.7 867.8 919.9
Other income 3.9 1.5 8.7 7.7
Income before fixed charges
and Federal income taxes 402.6 338.2 876.5 927.6
Fixed charges:
Interest charges, net 96.0 93.0 287.4 275.5
Preferred dividends of
Virginia Power 11.5 10.7 34.9 31.1
107.5 103.7 322.3 306.6
Income before provision for
Federal income taxes 295.1 234.5 554.2 621.0
Provision for Federal income
taxes 97.2 73.2 169.7 182.1<PAGE>
DOMINION RESOURCES, INC.
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
(CONTINUED)
Three Months Ended Nine Months Ended
September 30, September 30,
1995 1994 1995 1994
Millions, except per share amounts
Net income $197.9 $161.3 $384.5 $438.9
Average Common Stock 174.3 171.1 173.2 169.7
Earnings per common share $ 1.14 $ 0.94 $ 2.22 $ 2.59
Dividends paid per common
share $ 0.645 $ 0.635 $ 1.935 $ 1.905
__________________
The accompanying notes are an integral part of the Consolidated
Financial Statements.
<PAGE>
DOMINION RESOURCES, INC.
CONSOLIDATED BALANCE SHEETS
ASSETS
(UNAUDITED)
September 30, December 31,
1995 1994*
(Millions)
Current assets:
Cash and cash equivalents $ 296.6 $ 146.7
Trading securities 95.9 110.8
Customer accounts receivable, net 378.2 202.7
Other accounts receivable 98.5 83.2
Accrued unbilled revenues 118.9 97.4
Accrued taxes 43.5
Materials and supplies:
Plant and general 190.6 186.6
Fossil fuel 75.1 122.9
Other 105.3 136.2
1,402.6 1,086.5
Investments 1,335.3 1,160.1
Property, plant and equipment 15,994.0 15,415.4
Less accumulated depreciation
and amortization 5,622.3 5,170.0
10,371.7 10,245.4
Deferred charges and other assets:
Regulatory assets 830.5 871.0
Other 205.0 199.2
1,035.5 1,070.2
Total assets $14,145.1 $13,562.2
The accompanying notes are an integral part of the Consolidated
Financial Statements.
* The Balance Sheet at December 31, 1994 has been taken from the
audited Consolidated Financial Statements at that date.<PAGE>
DOMINION RESOURCES, INC.
CONSOLIDATED BALANCE SHEETS
LIABILITIES AND SHAREHOLDERS' EQUITY
(UNAUDITED)
September 30, December 31,
1995 1994*
Current liabilities: (Millions)
Securities due within one year $ 467.8 $ 399.1
Short-term debt 66.9 146.0
Accounts payable, trade 325.1 343.5
Accrued interest 112.7 106.3
Accrued taxes 145.2
Accrued payrolls 83.7 59.5
Customer deposits 54.8 55.0
Provision for rate refunds 12.2
Other 110.8 115.8
1,367.0 1,237.4
Long-term debt:
Utility 3,936.4 3,910.4
Nonrecourse - nonutility 694.8 640.2
Other 254.5 160.0
4,885.7 4,710.6
Deferred credits and other liabilities:
Deferred income taxes 1,654.3 1,613.6
Investment tax credits 276.5 289.2
Deferred fuel expenses 54.9 51.5
Other 311.4 257.7
2,297.1 2,212.0
Total liabilities 8,549.8 8,160.0
Virginia Power obligated mandatorily
redeemable preferred securities
of subsidiary trust** 135.0
Preferred stock:
Virginia Power stock subject to
mandatory redemption 180.0 222.1
Virginia Power stock not subject to
mandatory redemption 509.0 594.0
Common shareholders' equity:
Common stock - no par 3,260.8 3,157.6
Retained earnings 1,500.5 1,455.2
Allowance on available-for-sale
securities (11.1) (47.8)
Other 21.1 21.1
4,771.3 4,586.1
Total liabilities & shareholders'
equity $14,145.1 $13,562.2
DOMINION RESOURCES, INC.
CONSOLIDATED BALANCE SHEETS
LIABILITIES AND SHAREHOLDERS' EQUITY
(UNAUDITED)
(CONTINUED)
The accompanying notes are an integral part of the Consolidated
Financial Statements.
* The Balance Sheet at December 31, 1994 has been taken from
the audited Consolidated Financial Statements at that date.
** As described in Note (h) to NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS, the 8.05% Junior Subordinated Notes totaling
$139.2 million principal amount, constitute 100% of the
Trust's assets.<PAGE>
DOMINION RESOURCES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
Nine Months Ended
September 30
1995 1994
(Millions)
Cash flows from operating activities:
Net income $ 384.5 $ 438.9
Adjustments to reconcile net income to
net cash:
Unremitted earnings of subsidiary (9.0)
Depreciation and amortization 467.7 453.8
Deferred income taxes 33.1 62.1
Investment tax credits, net (12.7) (12.7)
Allowance for other funds used
during construction (5.4) (3.9)
Deferred fuel expenses 3.4 (29.0)
Deferred capacity expenses 10.1 42.4
Restructuring 27.0
Non-cash return on terminated
construction projects (6.5) (7.9)
Gain on sale of trust units (8.7) (49.0)
Changes in assets and liabilities:
Accounts receivable (90.2) (8.4)
Accrued unbilled revenues 16.9 25.1
Materials and supplies 43.9 2.4
Accounts payable, trade (26.4) 3.4
Accrued interest and taxes 130.5 56.6
Provision for rate refunds (12.2) (97.7)
Other changes 13.0 (27.8)
Net cash flows from operating activities 968.0 839.3
Cash flows from (to) financing activities:
Issuance of common stock 119.1 151.2
Issuance of long-term debt:
Utility 240.0 264.0
Nonrecourse-nonutility 109.7 119.2
Preferred securities of subsidiary trust 135.0
Issuance (repayment) of short-term debt (68.7) (114.6)
Repayment of long-term debt and
preferred stock (226.1) (190.0)
Common dividend payments (335.3) (323.6)
Other 27.2 19.5
Net cash flows from (to) financing
activities 0.9 (74.3)
<PAGE>
DOMINION RESOURCES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(CONTINUED)
Nine Months Ended
September 30,
1995 1994
(Millions)
Cash flows (used in) investing activities:
Capital expenditures-(excluding
AFC-other funds) $(552.8) $(466.0)
Investments in marketable securities (15.4) (146.7)
Sale of accounts receivable (110.0) (130.0)
Sale of trust units 16.4 128.4
Other (157.2) (203.0)
Net cash flows (used in) investing
activities (819.0) (817.3)
Increase (Decrease) in cash and
cash equivalents 149.9 (52.3)
Cash and cash equivalents at beginning
of period 146.7 102.0
Cash and cash equivalents at end of
period $ 296.6 $ 49.7
Supplementary cash flows information:
Cash paid during the period for:
Interest (net of interest capitalized) $ 282.7 $ 275.5
Income taxes 71.0 112.8
Non-cash transactions from investing
and financing activities:
Exchange of available-for-sale
securities $ 12.3 $ 11.8
The accompanying notes are an integral part of the Consolidated
Financial Statements.<PAGE>
DOMINION RESOURCES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(a) In the opinion of Dominion Resources' management, the
accompanying unaudited Consolidated Financial Statements
contain all adjustments, consisting only of normal recurring
accruals, necessary to present fairly the financial position
as of September 30, 1995, the results of operations for the
three-month and nine-month periods ended September 30, 1995
and 1994, and cash flows for the nine-month periods ended
September 30, 1995 and 1994.
These Consolidated Financial Statements should be read in
conjunction with the Consolidated Financial Statements and
notes thereto included in the Dominion Resources Annual Report
on Form 10-K for the year ended December 31, 1994.
Certain amounts in the 1994 Consolidated Financial Statements
have been reclassified to conform to the 1995 presentation.
The results of operations for the interim periods are not
necessarily indicative of the results to be expected for the
full year.
(b) Common Stock
At September 30, 1995, there were 300,000,000 shares of common
stock authorized of which 175,615,059 were issued and
outstanding. Common shareholders' equity at September 30,
1995 also includes $4.7 million for amounts received under the
Stock Purchase Plan for Customers of Virginia Power and the
Automatic Dividend Reinvestment and Stock Purchase Plan for
which shares have not yet been issued. Common shares issued
during the referenced periods were as follows:
Three Months Ended Nine Months Ended
September 30, September 30,
1995 1994 1995 1994
Automatic Dividend
Reinvestment and
Stock Purchase Plan 815,185 784,602 2,189,532 2,297,697
Customer Stock Purchase
Plan 1,371,765 1,300,776 1,371,765 1,300,776
Employee Savings Plan 92,363 100,404 92,363 580,775
Stock Repurchase and
Retirement (308,500) (685,500)
Other 209,027 493 241,850 38,547
Total Shares 2,179,840 2,186,275 3,210,010 4,217,755
<PAGE>
DOMINION RESOURCES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
(c) Long-Term Incentive Plan
On February 24, 1995, the Organization and Compensation
Committee of the Board of Directors of Dominion Resources
awarded participants 25,320 shares of restricted common stock
at the award price of $37.625 per share. The stock has a one
to three-year vesting period. For the nine-month period ended
September 30, 1995, 8,586 shares of previously restricted
stock was issued.
For the nine-month period ended September 30, 1995, no common
shares were issued associated with exercised stock options
from previous awards. As of September 30, 1995, options from
11,076 shares were exercisable from previous awards.
(d) Preferred Stock - Virginia Power
As of September 30, 1995, there were 2,217,319 and 5,940,140
issued and outstanding shares of preferred stock subject to
mandatory redemption and preferred stock not subject to
mandatory redemption, respectively. There are a total of
10,000,000 authorized shares of Virginia Power's preferred
stock.
<PAGE>
DOMINION RESOURCES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
(e) Provision for Federal Income Taxes
Total Federal income tax expense differs from the amount
computed by applying the statutory Federal income tax rate to
pre-tax income for the following reasons:
Three Months Ended Nine Months Ended
September 30, September 30,
1995 1994 1995 1994
Computation of Provision (Millions)
for Federal Income Tax:
Pre-tax income $295.1 $234.5 $554.2 $621.0
Tax at statutory federal
income tax rate of 35%
applied to pre-tax income 103.3 82.1 194.0 217.3
Changes in federal income
taxes resulting from:
Preferred dividends
of Virginia Power 4.0 3.7 12.2 10.9
Nonconventional fuel credit (6.4) (6.8) (20.1) (24.9)
Ratable amortization of
investment tax credits (4.2) (4.2) (12.7) (12.7)
Other, net 0.5 (1.6) (3.7) (8.5)
Provision for Federal
Income Taxes $97.2 $ 73.2 $169.7 $ 182.1
Effective Tax Rate 32.9% 31.2% 30.6% 29.3%
(f) Contingencies
Virginia Power
Nuclear Insurance
The Price-Anderson Act limits the public liability of an owner
of nuclear power plants to $8.9 billion for a single nuclear
incident. Virginia Power is a member of certain insurance
programs that provide coverage for property damage to members'
nuclear generating plants, replacement power and liability in
the event of a nuclear incident. Virginia Power may be
subject to retrospective premiums in the event of major
incidents at nuclear units owned by covered utilities
(including Virginia Power). For additional information, see
Note O to NOTES TO CONSOLIDATED FINANCIAL STATEMENTS included
in the Company's Annual Report on Form 10-K for the year ended
December 31, 1994.<PAGE>
DOMINION RESOURCES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
Dominion Energy
Dominion Cogen, Inc., is a wholly owned subsidiary of Dominion
Energy with an investment interest in Clear Lake cogeneration
plant near Houston, Texas. Under terms of the investment
agreement, Dominion Resources must provide contingent equity
support to Dominion Energy. While management believes that
the possibility of such support is remote, Dominion Resources
could be required to insure that Dominion Energy has
sufficient funds to meet its guarantee of $57.2 million.
Dominion Energy has general partnership interests in certain
of its energy ventures. Accordingly, Dominion Energy may be
called upon to fund future operation of these investments to
the extent operating cash flow is insufficient.
(g) Lines of Credit
Dominion Resources and its subsidiaries have lines of credit
agreements that provide for maximum borrowings of $575.8
million. At September 30, 1995, $109.6 million had been
borrowed under such agreements. In addition, these credit
agreements supported $254.5 million of Dominion Resources'
commercial paper and $90.7 million of nonrecourse commercial
paper issued by Dominion Resources' subsidiaries which was
outstanding at September 30, 1995. A total of $344.5 million
of the commercial paper is classified as long-term debt since
it is supported by revolving credit agreements that have
expiration dates extending beyond one year.
(h) Virginia Power Obligated Mandatorily Redeemable Preferred
Securities of Subsidiary Trust.
In the third quarter 1995, Virginia Power established Virginia
Power Capital Trust I (VP Capital Trust). VP Capital Trust
sold 5,400,000 shares of Preferred Securities for $135
million, representing preferred beneficial interests and 97%
beneficial ownership in the assets held by VP Capital Trust.
Virginia Power issued $139.2 million of its 1995 Series A,
8.05% Junior Subordinated Notes (the Notes) in exchange for
the $135 million realized from the sale of the Preferred
Securities and $4.2 million of common securities of VP Capital
Trust. <PAGE>
DOMINION RESOURCES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
The common securities represent the remaining 3% beneficial
ownership interest in the assets held by VP Capital Trust.
The Notes constitute 100% of VP Capital Trust's assets.
The Notes are due September 30, 2025, but may be extended up
to an additional ten years, subject to satisfying certain
conditions. However, Virginia Power may redeem the Notes on
or after September 30, 2000, under certain circumstances. The
Preferred Securities are subject to mandatory redemption upon
repayment of the Notes at maturity or earlier redemption. At
redemption, each Preferred Security shall be entitled to
receive a liquidation amount of $25 plus accrued and unpaid
distributions, including any interest thereon.
(i) Restructuring Charges
In March 1995, Virginia Power announced the implementation
phase of its Vision 2000 program. During this phase, Virginia
Power began reviewing operations with the objective of
outsourcing services where economical and appropriate and re-
engineering the remaining functions to streamline operations.
The re-engineering process is resulting in decentralization,
reorganization and downsizing for portions of Virginia Power's
operations. As part of this process, Virginia Power is
reevaluating its utilization of capital resources in
operations of the company to identify further opportunities
for operational efficiencies through outsourcing or re-
engineering of its processes.
In May 1995, Virginia Power established a comprehensive
involuntary severance package for salaried employees who lose
their positions as a result of these initiatives. Virginia
Power is recognizing the costs associated with employee
terminations in accordance with the Emerging Issues Task Force
Consensus No. 94-3 as management identifies the positions to
be eliminated. Severance payments will be made over a period
not to exceed twenty months. As of September 30, 1995,
management had decided to eliminate 486 positions, for which
a liability of $29.6 million has been recorded. The
recognition of severance costs resulted in a charge to
operations in the second and third quarter of $.7 million and
$28.9 million, respectively. At September 30, 1995, 256 <PAGE>
DOMINION RESOURCES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
employees have been terminated and severance payments totaling
$2.6 million have been paid. Virginia Power estimates that
these staffing reductions will result in annual savings, net
of outsourcing costs, in the range of $20 million to $25
million. These savings will be reflected in lower
construction expenditures as well as lower operation and
maintenance expenses.
As part of the restructuring, Virginia Power is evaluating its
long-term purchased power contracts and negotiating
modifications to their terms, including cancellations, where
it is determined to be economically advantageous to do so.
Virginia Power also negotiated settlements with several other
parties to terminate their rights to sell power to Virginia
Power. During the first and second quarter of 1995, the cost
of contract cancellations and negotiated settlements was $3
million. Based on contract terms and estimated quantities of
power that would have otherwise been delivered, the
cancellation of these contracts and rights to sell power to
Virginia Power has the effect of reducing its future purchased
power costs, including energy payments, by up to $19 million
annually.
Restructuring charges of $30.6 million and $36.6 million for
the three months and nine months, respectively, ended
September 30, 1995, included severance costs, purchase power
contract cancellation and negotiated settlement costs,
consultant fees and other costs incurred directly as a result
of the Vision 2000 initiatives. The Vision 2000 review of
operations is ongoing. At this time, Virginia Power
management cannot estimate the restructuring costs yet to be
incurred.
<PAGE>
DOMINION RESOURCES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
(j) Rates
Virginia
On September 19, 1995, Virginia Power filed an application to
revise its annual fuel factor. Virginia Power proposed that
the present fuel factor be decreased by $97.1 million. The
Staff of the Virginia Commission proposed certain adjustments,
which Virginia Power did not oppose, resulting in a
recommended reduction of $107.3 million. A hearing was
completed on October 30, 1995, and on October 31, 1995 the
Virginia Commission approved the reduction of $107.3 million
effective November 1, 1995.
North Carolina
Virginia Power filed an application with the North Carolina
Commission on September 15, 1995, for a $1.3 million annual
increase in fuel rates. A hearing is scheduled for November
21, 1995.
<PAGE>
DOMINION RESOURCES, INC.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
Item 2. Management's Discussion and Analysis
Dominion Resources - Consolidated
Financial Condition
Earnings Per Share
Three Months Ended Nine Months Ended
September 30, September 30,
1995 1994 1995 1994
Virginia Power $1.09 $0.91 $2.08 $2.18
Nonutility 0.05 0.03 0.14 0.41
Consolidated $1.14 $0.94 $2.22 $2.59
For the third quarter of 1995, nonutility earnings per share
increased 2 cents when compared to the same period last year.
Dominion Capital, Inc.'s joint venture in First Source
Financial, a commercial lending company, was the primary
reason for the increased nonutility earnings. Virginia
Power's earnings of $1.09 per share for the third quarter of
1995 were up 18 cents over the third quarter of 1994. This
increased is due to increased kilowatt-hour sales in its
service territory reflecting the warmer weather experienced
during the summer of 1995.
For the nine months ended September 30, 1995, Dominion
Resources' consolidated earnings were $2.22 per share as
compared to $2.59 for the same period last year. Virginia
Power's earnings decreased 10 cents per share primarily as a
result of costs associated with restructuring and workforce
reductions. The primary reason for the nonutility earnings
decrease during the nine months ended September 30, 1995 when
compared to the same period in 1994 is the 17-cent gain from
the sale of the Black Warrior Trust units included in the
second quarter of 1995.
Dividends
On October 21, 1995, the board of directors of Dominion
Resources declared a quarterly common stock dividend of $0.645
per share, payable December 20, to holders of record at the
close of business December 1, 1995.
<PAGE>
DOMINION RESOURCES, INC.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
(CONTINUED)
Financing Activities
Common Stock Issuance
Dominion Resources issued 3,210,010 shares of common stock
primarily through its Automatic Dividend Reinvestment and
Stock Purchase Plan, Customer Stock Purchase Plan, and
Employee Savings Plan including the repurchase of 685,500
shares on the open market (see Note (b) to NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS) during the nine-month
period ended September 30, 1995.
The proceeds from issuance of common stock are invested on a
short-term basis by Dominion Resources and generally utilized
to provide equity capital to its subsidiaries within the same
calendar year as the issuance of the common stock.
Virginia Power
Liquidity and Capital Resources
Cash Flows From Operations
As detailed in the Statements of Cash Flows, cash flow from
operating activities for the nine-month period ended September
30, 1995 increased $102.9 million, as compared to the nine-
month period ended September 30, 1994, primarily as a result
of normal operations.
Cash Flows From (to) Financing Activities
Cash (to) financing activities was as follows:
Nine Months Ended September 30,
1995 1994
(Millions)
Mortgage bonds $ 200.0 164.0
Preferred securities of
subsidiary trust 135.0
Medium-term notes 40.0 100.0
Repayment of long-term debt
and preferred stock (246.6) (202.0)
Dividend payments (330.3) (326.1)
Other (9.0) 7.8
Total $(210.9) $(256.3)<PAGE>
DOMINION RESOURCES, INC.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
(CONTINUED)
Financing activities for the first nine months of 1995
resulted in a net cash outflow of $210.9 million. In the
first quarter of 1995, Virginia Power sold $200 million of
First and Refunding Mortgage Bonds (Bonds) with an annual
stated interest rate of 8.25%, the proceeds of which were used
primarily to replace first quarter mandatory debt maturities
totaling $185 million ($180 million of Bonds and $5 million of
Medium-Term Notes).
In the second quarter of 1995, Virginia Power sold $40 million
of Medium-Term Notes with an annual stated interest rate of
6.35%, the proceeds of which were used to meet a portion of
its capital requirements. Also during the quarter, Virginia
Power retired, through mandatory debt maturities, $56.6
million of Bonds and $5 million of Medium-Term Notes.
The proceeds from the Sale of Preferred Securities (see Note
(h) to NOTES TO CONSOLIDATED FINANCIAL STATEMENTS) were
invested on a short-term basis and then on October 2, 1995
were used to redeem 450,000 shares of Virginia Power's $7.20
Dividend Preferred Stock, 417,319 shares of the $7.30 Dividend
Preferred Stock, and 400,000 shares of the $7.45 Dividend
Preferred Stock and for other capital requirements.
During the second quarter of 1995, Virginia Power filed two
shelf registration statements with the Securities and Exchange
Commission, one for $500 million of First and Refunding
Mortgage Bonds and the other for $200 million of Medium-Term
Notes, Series F, which combine to provide Virginia Power with
$700 million in unused capital resources. Virginia Power
intends to issue securities from time to time to meet capital
requirements.
Additionally, a total of $300 million under Virginia Power's
commercial paper program may be outstanding at any point in
time. The commercial paper program is supported by a $300
million revolving credit facility which replaced the Inter-
Company Credit Agreement with Dominion Resources, Inc.
Proceeds from the sale of commercial paper are primarily used
to finance working capital for operations. As of September
30, 1995, no amount was outstanding under the program.
<PAGE>
DOMINION RESOURCES, INC.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
(CONTINUED)
Cash (used in) investing activities was as follows:
Nine Months Ended September 30,
1995 1994
(Millions)
Utility plant expenditures $ (394.0) $(387.3)
Nuclear fuel (46.0) (52.1)
Nuclear decommissioning
contributions (19.5) (18.3)
Pollution control project
funds 5.1 5.2
Sale of accounts receivable (110.0) (130.0)
Other (13.0) (12.2)
Total $ (577.4) $(594.7)
Investing activities for the first nine months of 1995
resulted in a net cash outflow of $577.4 million primarily due
to $394 million of construction expenditures and $46 million
of nuclear fuel expenditures. Of the construction
expenditures, approximately $224.5 million was spent on
transmission and distribution projects, $113.7 million on
power production projects, and $29.3 million on new generating
facilities.
Clover Unit 1, a pulverized coal-fired unit that is part of a
two-unit facility jointly owned with Old Dominion Electric
Cooperative, began commercial operation on October 7, 1995.
The unit is rated at 416 MW (both summer and winter) and
Virginia Power's fifty percent ownership share was completed
at an approximate cost of $288 million. Virginia Power's
annual depreciation and operation and maintenance expenses are
estimated to be in the range of $12 million to $14 million.
Results of Operations
Balance available for Common Stock increased for the three-
month period ended September 30, 1995, as compared to the same
period in 1994, primarily as a result of the warmer weather
experienced during the summer of 1995, partially offset by
restructuring costs recognized during the period.
Balance available for Common Stock decreased for the nine-
month period ended September 30, 1995, as compared to the same
period in 1994, primarily as a result of restructuring costs
recognized during the period.
<PAGE>
DOMINION RESOURCES, INC.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
(CONTINUED)
Operating Revenues
Operating revenues changed primarily due to the following:
Three Months EndedNine Months Ended
September 30, September 30,
1995 vs. 1994 1995 vs. 1994
(Millions)
Customer growth $ 19.8 $ 67.1
Weather 57.8 (39.1)
Change in base revenues 10.2 29.5
Fuel cost recovery 2.9 8.8
Other, net 6.0 (2.1)
Total retail 96.7 64.2
Sales for resale 6.4 4.7
Other operating revenues 22.3 11.6
Total revenue $125.4 $ 80.5
Customer kilowatt-hour sales changed as follows:
Three Months Ended Nine Months Ended
September 30, September 30,
1995 vs. 1994 1995 vs. 1994
Residential 11.1% (0.4)%
Commercial 6.0 1.3
Industrial 2.1 4.5
Public authorities 4.7 1.7
Total retail sales 7.0 1.2
Resale 24.7 5.4
Total sales 8.8 1.7
The increase in kilowatt-hour retail sales for the three-month
period ended September 30, 1995, as compared to the same
period in 1994, reflects the warmer weather experienced during
the summer of 1995. For the quarter ended September 30, 1995,
as compared to the same period in 1994, cooling degree days
were 12.9 percent higher.
The increase in kilowatt-hour retail sales for the nine-month
period ended September 30, 1995, as compared to the same
period in 1994, is primarily due to increased customer growth
and the warmer weather experienced during the summer of 1995,
partially offset by the milder weather experienced in the
first six months of 1995.
<PAGE>
DOMINION RESOURCES, INC.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
(CONTINUED)
The increase in sales for resale for the three- and nine-month
periods ended September 30, 1995, as compared to the same
periods in 1994, was primarily due to warmer weather
experienced by other utilities in surrounding regions during
the summer of 1995 and increased marketing efforts by Virginia
Power.
Fuel, net
Fuel, net increased for the three-month period ended September
30, 1995, as compared to the same period in 1994, primarily
due to increased generation necessitated by higher sales.
Operation - Other and Maintenance
Operation - other and maintenance expenses decreased for the
three-month period ended September 30, 1995, as compared to
the same period in 1994, primarily as a result of 1994 payroll
and voluntary separation costs for those employees who elected
to terminate service with Virginia Power under the 1994 Early
Retirement and Voluntary Separation Programs and a decrease in
the level of nuclear operation and maintenance expense in
1995, partially offset by the operation and maintenance
expenses associated with the North Branch Power Station
acquired by Virginia Power in December 1994.
Operation - other and maintenance expenses decreased for the
nine-month period ended September 30, 1995, as compared to the
same period in 1994. Expenses during the 1994 period included
1994 payroll and voluntary separation costs for those
employees who elected to terminate service with Virginia Power
under the 1994 Early Retirement and Voluntary Separation
Programs, offset in part by recognition of insurance policy-
holder distributions. Expenses during the 1995 period
reflected a decrease in payroll costs in commercial operations
due to reduced staffing levels and weather-related overtime,
partially offset by the operation and maintenance expenses
associated with the North Branch Power Station and increased
nuclear outage costs.
Restructuring
As of September 30, 1995, no material savings have been
realized due to recently implemented, 1995 involuntary
staffing reductions. See Note (i) to NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS for a discussion of Virginia Power's
DOMINION RESOURCES, INC.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
(CONTINUED)
restructuring activities under its Vision 2000 program.
Virginia Power will incur additional restructuring charges in
the fourth quarter of 1995 and 1996. However, the amount of
restructuring charges yet to be incurred is not known at this
time. Furthermore, because of its review of its operations
has not been completed, the amount of savings ultimately to be
realized cannot be estimated at this time. The savings will
ultimately be reflected in lower construction expenditures as
well as lower operation and maintenance expenses.
As a regulated utility, Virginia Power provides service to its
customers at rates based on its cost of operations and an
opportunity to earn a return on its shareholder's investment.
From time to time, Virginia Power reviews its cost of
providing regulated services and files such information with
certain regulatory commissions having jurisdiction. Virginia
Power or the regulatory commissions may initiate proceedings
to review rates charged to Virginia Power jurisdictional
customers. The incurrence of restructuring charges and the
savings resulting therefrom in subsequent periods are elements
of its cost of operations. Accordingly, Vision 2000 costs and
related savings will be considered in any future review of the
Virginia Power overall regulatory cost of service.
Income Taxes - Operating
Income taxes-operating increased for the three-month period
ended September 30, 1995, as compared to the same period in
1994, primarily as a result of higher income subject to tax.
Regulatory Assets
Under Statement of Financial Accounting Standards (SFAS) No.
71, Accounting for the Effects of Certain Types of Regulation,
certain expenses normally reflected in income are deferred on
the balance sheet as regulatory assets and are recognized in
income as the related amounts are included in rates and
recovered from customers. The incurred costs underlying these
regulatory assets may represent expenditures by Virginia Power
or may represent the recognition of liabilities that
ultimately will be settled at some time in the future.
For some of those regulatory assets representing past
expenditures that are not included in Virginia Power's
rate base or used to adjust its capital structure, Virginia
Power is not allowed to earn a return on the unrecovered
DOMINION RESOURCES, INC.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
(CONTINUED)
balance. Of the $830.5 million of regulatory assets at
September 30, 1995, approximately $132 million represent past
expenditures that are effectively excluded from rate base by
the Virginia State Corporation Commission that has primary
jurisdiction over Virginia Power's rates. However, of that
amount approximately $109 million represent the present value
of amounts to be recovered through future rates for North Anna
Unit 3 project termination costs. Those costs are reported
pursuant to SFAS No. 90, Regulated Enterprises - Accounting
for Abandonments and Disallowances of Plant Costs, and thus
reflect a reduction in actual dollars to be recovered through
future rates for the time value of money. Virginia Power does
not earn a return on the remaining $23 million of regulatory
assets, effectively excluded from rate base, to be recovered
over various recovery periods up to 23 years, depending on the
nature of the deferred costs.
Future Issues
Competition
In reference to the plans of the City of Falls Church,
Virginia, to pursue the establishment of a municipal electric
system (for additional information see Part II - Other
Information - Virginia Power Competition) Virginia Power will
not experience a material loss of load, revenues or net income
should a municipal electric system be created.
Accounting Standards
In March 1995, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards (SFAS) No. 121,
Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to Be Disposed Of, which must be adopted by
the Company by January 1, 1996. This statement requires the
Company to review long-lived assets for impairment whenever
events or changes in circumstances indicate that the carrying
amount of an asset may not be recoverable and requires rate-
regulated companies to write-off regulatory assets against
earnings whenever those assets no longer meet the criteria for
recognition of a regulatory asset as defined by SFAS No. 71,
Accounting for the Effects of Certain Type of Regulation.
Based on the Company's current operating environment, adoption
of SFAS No. 121 is not expected to have a material impact on
its financial statements.
DOMINION RESOURCES, INC.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
(CONTINUED)
Dominion Resources and its Nonutility Subsidiaries
Liquidity and Capital Resources
During the first nine months of 1995, Dominion Resources'
nonutility subsidiaries expended $135.4 million of their
estimated $166.0 million capital requirements.
Results of Operations
Nonutility earnings increased 2 cents per share for the third
quarter of 1995 when compared to the same period in 1994.
This increase is mainly attributable to Dominion Capital,
Inc.'s joint venture in First Source Financial, a commercial
lending company.
For the nine-month period ended September 30, 1995, non-
utility earnings per share decreased when compared to the nine
months ended September 30, 1994. The primary reason for this
decline is due to the 17-cent gain from the sale of the Black
Warrior Trust units included in the second quarter of 1994.
Commitments and Contingencies
For additional information on commitment and contingencies,
see Note (f) to NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
<PAGE>
DOMINION RESOURCES, INC.
PART II. - OTHER INFORMATION
Item 1. Legal Proceedings
In reference to the lawsuit filed by Dominion Energy,
Inc.(DEI) and Dominion Cogen D.C., Inc. (DCDC) and others
against the District of Columbia and officials thereof, on
August 4, 1995 the court dismissed the complaint against the
individual defendants. On August 18, 1995, the District of
Columbia served a counterclaim consisting of six counts on
DEI, DCDC and the other plaintiffs. One count alleges damages
in restitution of $2.2 million, and each of the other counts
alleges compensatory damages of $500,000 and punitive damages
of $20 million. DEI and DCDC have moved to dismiss the
Counterclaim and have replied to defendants' response to that
motion. In addition, the District of Columbia has moved for
a substantial extension of discovery, and the plaintiffs have
opposed this request.
In reference to the proceeding before the Virginia State
Corporation Commission (the Virginia Commission) into the
holding company structure and the relationship between
Dominion Resources and Virginia Power, on September 29, 1995
Dominion Resources and Virginia Power each filed its Response
to the Final Report of the Commission's Staff dated April 12,
1995. The Staff will supply its final response by December
15, 1995. With regards to the CSX Transportation, Inc. coal
transportation contract, negotiations concluded on August 10,
1995 with the execution of a contract amendment.
In reference to the allegations by Barbara Margulis concerning
conduct of certain of Dominion Resources' directors and
officers, including conduct relating to a coal transportation
contract between Virginia Power and CSX Transportation, based
upon the recommendation of a special investigatory committee
appointed by the Board, which determined that there was no
basis for a proceeding against its directors and officers, the
matter has been settled and Ms. Margulis has delivered a
release of Dominion Resources and its directors and officers.
DOMINION RESOURCES, INC.
PART II. - OTHER INFORMATION
(CONTINUED)
Virginia Power
In reference to the arbitration between Virginia Power and
Smith Cogeneration of Virginia, Inc., the parties have agreed
to a settlement and on October 24, 1995, the Virginia
Commission dismissed the proceeding.
In reference to the lawsuit field against Virginia Power by
Doswell Limited Partnership (Doswell), on September 21, 1995
the Virginia Supreme Court granted Doswell's appeal and both
parties are preparing briefs for an early 1996 oral argument.
Item 5. Other Information
Virginia Power
Virginia Power's strategic planning initiative, called Vision
2000, has moved into the active implementation phase in many
areas of the company (for additional information on Vision
2000, See Note (i) to NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS and Restructuring under Item 2. MANAGEMENT'S
DISCUSSION AND ANALYSIS).
Rates
Virginia
On September 18, 1995, the Virginia Commission established a
proceeding to review and consider Commission policy regarding
restructuring of and competition in the electric utility
industry. The Commission stated that it intends to fully
consider reliability, continuity and stability of rates,
fairness to all customers, fairness to investors, and whether
truly competitive markets that are in the public interest can
be developed. It directed the Commission's Staff to
investigate the emerging issues in the electric utility
industry and prepare a report of its findings and
recommendations on or before March 29, 1996. All interested
parties may file written comments and requests for oral
argument in response to the Staff Report on or before May 30,
1996.
DOMINION RESOURCES, INC.
PART II. - OTHER INFORMATION
(CONTINUED)
In reference to Virginia Power's 1992 rate case before the
Virginia Commission, on October 2, 1995 the United States
Supreme Court denied the Writ of Certiorari sought by a group
of industrial cogenerators.
For additional information see Rates-Virginia, Note (j) to
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
North Carolina
See Rates-North Carolina, Note (j) to NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS.
Competition
In reference to Virginia Power's declaratory judgment
proceeding before the Virginia Commission against the City of
Falls Church, Virginia, in which Virginia Power seeks a
declaration that the City's plans to pursue the establishment
of a municipal electric system would be illegal unless
approved by the Commission, pursuant to the Virginia
Commission's order of August 4, 1995, the Commission's Staff
filed a memorandum on August 31, 1995 supporting Virginia
Power's Motion for Summary Judgment. The City did not respond
to the Motion.
If the City prevails and forms a municipal electric system,
Mwh sales by customer class will decrease as follows:
Residential 36,000
Commercial 67,000
Industrial 0
Other 5,000
Total 108,000
No other city has communicated to Virginia Power any interest
informing a municipal electric system.
Sources of Power
On October 7, 1995, Clover Power Station Unit 1 began
commercial operation, (for additional information, see
Liquidity and Capital Resources under MANAGEMENT'S DISCUSSION
AND ANALYSIS).<PAGE>
DOMINION RESOURCES, INC.
PART II - OTHER INFORMATION
(CONTINUED)
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
10(i)* - Amendment to Employment Agreement dated April 12,
1995 made as of September 15, 1995 between Dominion
Resources and Thos. E. Capps (filed herewith).
10(ii)* - Amendment to Employment Agreement dated April 12,
1995 made as of September 15, 1995 between Virginia
Power and James T. Rhodes (filed herewith).
11 - Statement re: computation of per share earnings (included
in this Form 10-Q on page 4)
27 - Financial Data Schedule (filed herewith)
* Indicates management contract or compensatory plan or
arrangement.
(b) Report on Form 8-K.
None
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
DOMINION RESOURCES, INC.
Registrant
BY JAMES L. TRUEHEART
James L. Trueheart
Vice President and Controller
(Principal Accounting Officer)
November 7, 1995
<PAGE>
Exhibit 10(i)
AMENDMENT
TO
EMPLOYMENT AGREEMENT
This AMENDMENT (the "September 1995 Amendment") to the
Employment Agreement dated as of April 12, 1995 (the "April 1995
Employment Agreement") between DOMINION RESOURCES, INC. (the
"Company") and THOS. E. CAPPS (the "Executive") is made as of
September 15, 1995.
RECITALS:
The Board of Directors of the Company (the "Board of
Directors") recognizes that outstanding management of the Company
is essential to advancing the best interests of the Company, its
shareholders and its subsidiaries. The Board of Directors has
and continues to believe that it is particularly important to
have stable, excellent management. The Board of Directors
believes that the continued services of the Executive are
essential to preserve consistent management of the Company at the
present time. Therefore, the Executive and the Board of
Directors have agreed that the term of employment of the
Executive should be extended under the April 1995 Employment
Agreement until July 31, 1999. To accomplish this, the
Organization and Compensation Committee of the Board of Directors
has recommended, and the Board of Directors has approved, certain
amendments to the April 1995 Employment Agreement. All terms in
this Amendment that are defined in the April 1995 Employment
Agreement have the meaning provided therein, unless otherwise
specified in this Amendment.
NOW, THEREFORE, in consideration of the foregoing, the
parties agree as follows:
1. Section 1 of the April 1995 Employment Agreement is
replaced with the following:
"1. Employment. The Company will employ the
Executive, and the Executive will continue in the
employment of the Company, as Chief Executive Officer
of the Company for the period beginning on the date of
this Agreement and ending July 31, 1999 (the "Term of
this Agreement") and as President of the Company from a
date determined by the Board of Directors after the
date of the September 1995 Amendment until July 31,
1999, according to the terms of this Agreement."
2. Section 2 of the April 1995 Employment Agreement is
amended by adding the following sentence at the end:
"From a date determined by the Board of Directors after the
date of the September 1995 Amendment until July 31, 1999,
the Executive shall also be President of the Company and
will perform such executive duties as are commensurate with
his position as President."
3. Section 5(a) is amended by changing the title of the
section to "Completion Benefits" and by replacing the phrase "the
Term of this Agreement, and terminates his employment at the end
of the Term of this Agreement" with the phrase "July 31, 1996."
4. Section 5(a)(i) is amended by replacing the phrase "the
Executive's annual salary during his final year of employment" in
the first sentence with the phrase "the Executive's highest rate
of annual salary in effect at any time during his final year of
employment."
5. Section 5(a)(iv) of the April 1995 Employment Agreement
is amended by replacing the phrase "July 31, 1996" each place it
appears with the phrase "the date of termination of his
employment".
6. Section 5(a)(v) of the April 1995 Employment Agreement
is amended by replacing the phrase "August 1, 1996" with the
phrase "the day following the date of termination of his
employment."
7. Sections 5(b) and 5(b)(i) of the April 1995 Employment
Agreement are replaced with the following:
"(b) In addition to the foregoing, if the Executive
continues in the employment of the Company through July 31,
1996, the Executive will receive upon his termination of
employment with the Company a single lump sum cash payment
equal to the present value of the annual base salary and
annual cash incentive awards (computed as described below)
that the Executive is projected to receive for employment in
the period from August 1, 1996 until August 12, 1997 (i.e.,
the end of the term of the 1994 Employment Agreement). The
lump sum will be computed as follows:
(i) For purposes of this calculation, the annual
base salary that the Executive is projected to receive
for employment from August 1, 1996 until August 12,
1997 will be calculated at the highest annual base
salary rate in effect for the Executive during the
three-year period ending on July 31, 1996. For
purposes of this calculation, the annual cash incentive
awards that the Executive is projected to receive for
employment from August 1, 1996 until August 12, 1997
will be calculated at a rate equal to the highest
annual cash incentive award paid to the Executive
during the three-year period ending on July 31, 1996.
Salary and bonus that the Executive elected to defer
will be taken into account for purposes of this
Agreement without regard to the deferral."
8. Sections 6(a) and 6(b) of the April 1995 Employment
Agreement are amended to read as follows:
"6. Termination of Employment.
(a) During the Term of this Agreement, the
Company may terminate the Executive's employment only for
Cause. During the Term of this Agreement, the Executive may
voluntarily terminate employment under the circumstances
described in clauses (i)-(v) of this subsection (a). After
July 31, 1998, the Executive may voluntarily terminate
employment under the circumstance described in clause (vi)
of this subsection (a). If the Executive's employment is
terminated for Cause on or before July 31, 1996, he will be
entitled only to the benefits described in Section 6(b)(ii).
If the Executive's employment is terminated for Cause after
July 31, 1996, or if the Executive voluntarily terminates
employment pursuant to this Section 6(a), the Executive will
be entitled to receive the benefits described in subsection
(b). Subject to the provisions of this subsection (a), the
Executive may voluntarily terminate employment after (i) the
Executive's base salary is reduced, (ii) the Executive is
not in good faith considered for incentive awards as
described in Section 4(a)(ii), (iii) the Company fails to
provide benefits as required by Section 4(b), (iv) the
Executive's place of employment is relocated to a location
further than 30 miles from Richmond, Virginia, (v) the
Executive's working conditions or management
responsibilities are substantially diminished (other than on
account of the Executive's disability, as defined in Section
7 below), or (vi) the Executive voluntarily terminates
employment on or after August 1, 1998 upon 90 days prior
written notice to the Company and the Committee consents in
writing to such termination. In order for clause (i), (ii),
(iii), (iv) or (v) of this subsection (a) to be effective:
(1) the Executive must give written notice to the Company
indicating that the Executive intends to terminate
employment under this subsection (a), (2) the Executive's
voluntary termination under this subsection must occur
within 60 days after an event described in clause (i), (ii),
(iii), (iv) or (v) of the preceding sentence, or within 60
days after the last in a series of such events, and (3) the
Company must have failed to remedy the event described in
clause (i), (ii), (iii), (iv) or (v), as the case may be,
within 30 days after receiving the Executive's written
notice. If the Company remedies the event described in
clause (i), (ii), (iii), (iv) or (v), as the case may be,
within 30 days after receiving the Executive's written
notice, the Executive may not terminate employment under
this subsection (a) on account of the event specified in the
Executive's notice.
(b) In accordance with the provisions of Section
6(a), the Executive will be entitled to receive the
following benefits determined as of the date of his
termination of employment:
(i) The Executive will receive the benefits
described in Section 5(a)(i), (ii), (iii), (iv) and (v)
above as of the date of his termination of employment.
In addition, the Executive will receive the single lump
sum cash payment described in Section 5(b) of this
Agreement if such payment is not otherwise payable
under the terms of Section 5(b).
(ii) The Executive will be credited with a total
of 30 years of service and will be considered to have
attained age 60 (if he has not already done so) for
purposes of the Company's retirement plans.
(iii) The Executive will be credited with age and
service credit through the end of the Term of this
Agreement for purposes of computing benefits under the
Company's medical and other welfare benefit plans, and
the Company will continue the Executive's coverage
under the Company's welfare benefit plans as if the
Executive remained employed through the end of the Term
of this Agreement. Notwithstanding the foregoing, if
the Company determines that giving such age and service
credit or continued coverage could adversely affect the
tax qualification or tax treatment of a benefit plan,
or otherwise have adverse legal ramifications, the
Company may pay the Executive a lump sum cash amount
that reasonably approximates the after-tax value to the
Executive of such age and service credit and continued
coverage through the end of the Term of this Agreement,
in lieu of giving such credit and continued coverage."
9. The last sentence of Section 6(c) of the April 1995
Employment Agreement is amended to read as follows:
"If the Executive voluntarily terminates employment prior to
the end of the Term of this Agreement for a reason not
described in subsection (a) above or Section 7 below, this
Agreement will immediately terminate and the Executive shall
be entitled to the payment of the benefits under Sections
5(a), 5(b) and 5(c) if the termination occurs after July 31,
1996."
10. The first two sentences of Section 7 of the April 1995
Employment Agreement are deleted and the following new sentences
are added in their place:
"If the Executive becomes disabled (as defined below) during
the Term of this Agreement while he is employed by the
Company, the Executive shall be entitled to receive the
benefits described in Sections 5(a)(i), 5(a)(ii), 5(a)(iii),
5(a)(iv), 5(a)(v), and 6(b)(ii) of this Agreement as of the
date on which he is determined by the Company to be
disabled. If the Executive dies during the Term of this
Agreement while he is employed by the Company, the benefits
described in Sections 5(a)(i), 5(a)(ii), 5(a)(iii),
5(a)(iv), 5(a)(v), and 6(b)(ii) will be provided to the
Executive's beneficiary designated under the terms of the
applicable benefit plan. In addition, if the Executive
becomes disabled or dies on or after August 1, 1996, he or
his beneficiary shall be entitled to the benefits described
in Section 5(b)."
11. Section 8 of the April 1995 Employment Agreement is
amended in its entirety to read as follows:
8. Cause. For purposes of this Agreement, the term
"Cause" means (i) material misappropriation with respect to
the business or assets of the Company, (ii) persistent
refusal or willful failure of the Executive materially to
perform his duties and responsibilities to the Company,
which continues after the Executive receives notice of such
refusal or failure, (iii) conviction of a felony involving
moral turpitude, or (iv) the use of drugs or alcohol that
interferes materially with the Executive's performance of
his duties. The foregoing acts or events will constitute
"Cause" for purposes of this Agreement only to the extent
that they were committed on or after the date of the
September 1995 Amendment."
WITNESS the following signatures.
DOMINION RESOURCES, INC.
By: /s/Kenneth A. Randall
_______________________
Kenneth A. Randall,
Chairman, Organization
and Compensation
Committee
Dated: 9/15/95
/s/Thos. E. Capps
_________________________
Thos. E. Capps
Dated: 9/15/95
<PAGE>
Exhibit 10(ii)
AMENDMENT
TO
EMPLOYMENT AGREEMENT
This AMENDMENT (the "September 1995 Amendment") to the
Employment Agreement dated as of April 21, 1995 (the "April 1995
Employment Agreement") between VIRGINIA ELECTRIC AND POWER
COMPANY (the "Company") and JAMES T. RHODES (the "Executive") is
made as of September 15, 1995.
RECITALS:
The Board of Directors of the Company (the "Board of
Directors") recognizes that outstanding management of the Company
is essential to advancing the best interests of the Company, its
shareholders and its subsidiaries. The Board of Directors has
and continues to believe that it is particularly important to
have stable, excellent management. The Board of Directors
believes that the continued services of the Executive are
essential to preserve consistent management of the Company at the
present time. Therefore, the Executive and the Board of
Directors have agreed that the term of employment of the
Executive should be extended under the April 1995 Employment
Agreement until July 31, 1999. To accomplish this, the
Organization and Compensation Committee of the Board of Directors
has recommended, and the Board of Directors has approved, certain
amendments to the April 1995 Employment Agreement. All terms in
this Amendment that are defined in the April 1995 Employment
Agreement have the meaning provided therein, unless otherwise
specified in this Amendment.
NOW, THEREFORE, in consideration of the foregoing, the
parties agree as follows:
1. Section 1 of the April 1995 Employment Agreement is
amended by replacing the phrase "July 31, 1996" with the phrase
"July 31, 1999".
3. Section 5(a) is amended by changing the title of the
section to "Completion Benefits" and by replacing the phrase "the
Term of this Agreement, and terminates his employment at the end
of the Term of this Agreement" with the phrase "July 31, 1996."
2. Section 5(a)(i) is amended by replacing the phrase "the
Executive's annual salary during his final year of employment" in
the first sentence with the phrase "the Executive's highest rate
of annual salary in effect at any time during his final year of
employment."
3. Section 5(a)(ii) of the April 1995 Employment Agreement
is amended by replacing the phrase "55%" with the phrase "65%".
4. Section 5(a)(iv) of the April 1995 Employment Agreement
is amended by replacing the phrase "July 31, 1996" each place it
appears with the phrase "the date of termination of his
employment".
5. Section 5(a)(v) of the April 1995 Employment Agreement
is amended by replacing the phrase "August 1, 1996" with the
phrase "the day following the date of termination of his
employment".
6. Sections 5(b) and 5(b)(i) of the April 1995 Employment
Agreement are replaced with the following:
"(b) In addition to the foregoing, if the Executive
continues in the employment of the Company through July 31,
1996, the Executive will receive upon his termination of
employment with the Company a single lump sum cash payment
equal to the present value of the annual base salary and
annual cash incentive awards (computed as described below)
that the Executive is projected to receive for employment in
the period from August 1, 1996 until April 21, 1997 (i.e.,
the end of the term of the 1994 Employment Agreement). The
lump sum will be computed as follows:
(i) For purposes of this calculation, the annual
base salary that the Executive is projected to receive
for employment from August 1, 1996 until April 21, 1997
will be calculated at the highest annual base salary
rate in effect for the Executive during the three-year
period ending on July 31, 1996. For purposes of this
calculation, the annual cash incentive awards that the
Executive is projected to receive for employment from
August 1, 1996 until April 21, 1997 will be calculated
at a rate equal to the highest annual cash incentive
award paid to the Executive during the three-year
period ending on July 31, 1996. Salary and bonus that
the Executive elected to defer will be taken into
account for purposes of this Agreement without regard
to the deferral."
7. Sections 6(a) and 6(b) of the April 1995 Employment
Agreement are amended to read as follows:
"6. Termination of Employment.
(a) During the Term of this Agreement, the
Company may terminate the Executive's employment only for
Cause. During the Term of this Agreement, the Executive may
voluntarily terminate employment under the circumstances
described in clauses (i)-(v) of this subsection (a). After
July 31, 1996, the Executive may voluntarily terminate
employment under the circumstance described in clause (vi)
of this subsection (a). If the Executive's employment is
terminated for Cause on or before July 31, 1996, he will be
entitled only to the benefits described in Section 12. If
the Executive's employment is terminated for Cause after
July 31, 1996, or if the Executive voluntarily terminates
employment pursuant to this Section 6(a), the Executive will
be entitled to receive the benefits described in subsection
(b) below. Subject to the provisions of this subsection
(a), the Executive may voluntarily terminate employment
after (i) the Executive's base salary is reduced, (ii) the
Executive is not in good faith considered for incentive
awards as described in Section 4(a)(ii), (iii) the Company
fails to provide benefits as required by Section 4(b), (iv)
the Executive's place of employment is relocated to a
location further than 30 miles from Richmond, Virginia, (v)
the Executive's working conditions or management
responsibilities are substantially diminished (other than on
account of the Executive's disability, as defined in Section
7 below), or (vi) the Executive voluntarily terminates
employment on or after August 1, 1996 upon 90 days prior
written notice to the Company. In order for clause (i),
(ii), (iii), (iv) or (v) of this subsection (a) to be
effective: (1) the Executive must give written notice to
the Company indicating that the Executive intends to
terminate employment under this subsection (a), (2) the
Executive's voluntary termination under this subsection must
occur within 60 days after an event described in clause (i),
(ii), (iii), (iv) or (v) of the preceding sentence, or
within 60 days after the last in a series of such events,
and (3) the Company must have failed to remedy the event
described in clause (i), (ii), (iii), (iv) or (v), as the
case may be, within 30 days after receiving the Executive's
written notice. If the Company remedies the event described
in clause (i), (ii), (iii), (iv) or (v), as the case may be,
within 30 days after receiving the Executive's written
notice, the Executive may not terminate employment under
this subsection (a) on account of the event specified in the
Executive's notice.
(b) In accordance with the provisions of Section
6(a) above, the Executive will be entitled to receive the
following benefits determined as of the date of his
termination of employment:
(i) The Executive will receive the benefits
described in Section 5(a)(i), (ii), (iii), (iv), (v)
and (vi) above as of the date of his termination of
employment. In addition, the Executive will receive
the single lump sum cash payment described in Section
5(b) of this Agreement if such payment is not otherwise
payable under the terms of Section 5(b).
(ii) The Executive will be credited with a total
of 30 years of service and will be considered to have
attained age 60 (if he has not already done so) for
purposes of the Company's retirement plans.
(iii) The Executive will be credited with age and
service credit through the end of the Term of this
Agreement for purposes of computing benefits under the
Company's medical and other welfare benefit plans, and
the Company will continue the Executive's coverage
under the Company's welfare benefit plans as if the
Executive remained employed through the end of the Term
of this Agreement. Notwithstanding the foregoing, if
the Company determines that giving such age and service
credit or continued coverage could adversely affect the
tax qualification or tax treatment of a benefit plan,
or otherwise have adverse legal ramifications, the
Company may pay the Executive a lump sum cash amount
that reasonably approximates the after-tax value to the
Executive of such age and service credit and continued
coverage through the end of the Term of this Agreement,
in lieu of giving such credit and continued coverage."
8. The last sentence of Section 6(c) of the April 1995
Employment Agreement is amended to read as follows:
"If the Executive voluntarily terminates employment prior to
the end of the Term of this Agreement for a reason not
described in subsection (a) above or Section 7 or Section 12
below, this Agreement will immediately terminate, and the
Executive shall be entitled to the payment of the benefits under
Sections 5(a) and 5(b) if the termination occurs after July 31,
1996."
9. The first two sentences of Section 7 of the April 1995
Employment Agreement are deleted and the following new sentences
are added in their place:
"If the Executive becomes disabled (as defined below) during
the Term of this Agreement while he is employed by the
Company, the Executive shall be entitled to receive the
benefits described in Sections 5(a)(i), 5(a)(ii), 5(a)(iii),
5(a)(iv), 5(a)(v), 5(a)(vi), and 6(b)(ii) of this Agreement
as of the date on which he is determined by the Company to
be disabled. If the Executive dies during the Term of this
Agreement while he is employed by the Company, the benefits
described in Sections 5(a)(i), 5(a)(ii), 5(a)(iii),
5(a)(iv), 5(a)(v), 5(a)(vi), and 6(b)(ii) will be provided
to the Executive's beneficiary designated under the terms of
the applicable benefit plan. In addition, if the Executive
becomes disabled or dies on or after August 1, 1996, he or
his beneficiary shall be entitled to the benefit described
in Section 5(b)."
10. Section 8 of the April 1995 Employment Agreement is
amended in its entirety to read as follows:
8. Cause. For purposes of this Agreement, the term
"Cause" means (i) material misappropriation with respect to
the business or assets of the Company, (ii) persistent
refusal or willful failure of the Executive materially to
perform his duties and responsibilities to the Company,
which continues after the Executive receives notice of such
refusal or failure, (iii) conviction of a felony involving
moral turpitude, or (iv) the use of drugs or alcohol that
interferes materially with the Executive's performance of
his duties. The foregoing acts or events will constitute
"Cause" for purposes of this Agreement only to the extent
that they were committed on or after the date of the
September 1995 Amendment."
<PAGE>
WITNESS the following signatures.
VIRGINIA ELECTRIC AND POWER
COMPANY
By: /s/William G. Thomas
________________________
William G. Thomas
Chairman, Organization
and Compensation
Committee
Dated: 9/15/95
/s/James T. Rhodes
________________________
James T. Rhodes
Dated: 9/15/95
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