<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
(MARK ONE)
( X ) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1994
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 (IRS EMPLOYER IDENTIFICATION NO.)
INCORPORATION OR ORGANIZATION)
901 EAST BYRD STREET
RICHMOND, VIRGINIA 23261-6532
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
(804) 775-5700
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
TITLE OF EACH CLASS NAME OF EACH EXCHANGE ON WHICH REGISTERED
Common Stock, no par value New York Stock Exchange
SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:
NONE:
(TITLE OF CLASS)
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 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
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. ( X )
The aggregate market value of voting stock held by nonaffiliates of the
registrant was $6,558,572,914 at January 31, 1995, based on the closing price of
the Common Stock on such date, as reported on the composite tape by The Wall
Street Journal.
Indicate the number of shares outstanding of each of the registrant's
classes of common stock, as of the latest practicable date.
CLASS OUTSTANDING AT JANUARY 31, 1995
Common Stock, no par value 172,028,142
DOCUMENTS INCORPORATED BY REFERENCE:
(a) Portions of the 1994 Annual Report to Shareholders for the fiscal year ended
December 31, 1994 are incorporated by reference in Parts I, II and IV
hereof.
(b) Portions of the 1995 Proxy Statement, dated March 16, 1995, are incorporated
by reference in Part III hereof.
<PAGE>
DOMINION RESOURCES, INC.
<TABLE>
<CAPTION>
ITEM PAGE
NUMBER NUMBER
<S> <C> <C>
PART I
1. Business
The Company............................................................................................... 1
Capital Requirements and Financing Program................................................................ 2
Capital Requirements...................................................................................... 2
Construction and Nuclear Fuel Expenditures................................................................ 2
Financing Program......................................................................................... 2
Rates..................................................................................................... 3
Virginia Power............................................................................................ 3
Regulation................................................................................................ 4
Virginia Power Sources of Power........................................................................... 6
Virginia Power Sources of Energy Used and Fuel Costs...................................................... 7
Interconnections.......................................................................................... 9
Future Sources of Power................................................................................... 9
Competition............................................................................................... 10
Conservation and Load Management.......................................................................... 10
2. Properties................................................................................................ 10
3. Legal Proceedings......................................................................................... 11
4. Submission of Matters to a Vote of Security Holders....................................................... 12
Executive Officers of the Registrant...................................................................... 13
PART II
5. Market for the Registrant's Common Stock and Related Shareholder Matters.................................. 14
6. Selected Financial Data................................................................................... 14
7. Management's Discussion and Analysis...................................................................... 14
8. Financial Statements and Supplementary Data............................................................... 14
9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure...................... 14
PART III
10. Directors and Executive Officers of the Registrant........................................................ 14
11. Executive Compensation.................................................................................... 14
12. Security Ownership of Certain Beneficial Owners and Management............................................ 14
13. Certain Relationships and Related Transactions............................................................ 14
PART IV
14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K.......................................... 15
</TABLE>
<PAGE>
PART I
ITEM 1. BUSINESS
THE COMPANY
Dominion Resources, Inc. (Dominion Resources), organized in 1983, has its
principal office at 901 East Byrd Street, Richmond, Virginia 23219, telephone
(804) 775-5700. The principal assets of Dominion Resources are its investments
in its subsidiaries.
At December 31, 1994, Dominion Resources owned all of the outstanding
common stock of its subsidiaries: Dominion Capital, Inc. (Dominion Capital);
Dominion Energy, Inc. (Dominion Energy) and Virginia Electric and Power Company
(Virginia Power), its largest subsidiary.
Dominion Capital, which was established as a subsidiary of Dominion
Resources in 1985, provides financial services to the holding company and other
nonutility subsidiaries and also uses its own assets to make equity and
fixed-income investments. The principal assets of Dominion Capital are a 50%
limited partnership interest in a Louisiana hydroelectric project, investments
in marketable securities, and Rincon Securities Inc., a Dominion Capital
subsidiary which holds a diversified portfolio of preferred stocks. Dominion
Capital also has investments in affordable housing, real estate and leases.
Dominion Financing, Inc., another subsidiary of Dominion Capital, is engaged in
the issuance of medium-term notes to finance a portion of Dominion Capital's
activities. In 1994, Dominion Lands, Inc. (Dominion Lands), formerly a direct
subsidiary of Dominion Resources, became a subsidiary of Dominion Capital to
consolidate its residential projects with other company real estate ventures.
Dominion Lands was established in 1986 and is involved in joint venture
real estate development projects in Virginia and North Carolina. It also holds
properties in those states for future development or sale. Dominion Lands began
to market its first three projects in the fourth quarter of 1990: Harborside, a
condominium townhouse development on the Potomac River in Old Town, Alexandria,
Virginia; Governor's Land, a 1,400-acre residential community near Williamsburg,
Virginia, and Uwharrie Point, a 900-acre lake resort and second-home development
near Charlotte, North Carolina. Dominion Lands has not invested in commercial
real estate projects such as office buildings and retail developments. It has,
instead, pursued development of amenity-oriented communities offering
recreational and residential life styles.
Dominion Energy was established as a subsidiary of Dominion Resources in
1987 and is active in a number of partnerships to develop nonutility electric
power generation projects outside the territory served by Virginia Power.
Dominion Energy is involved in projects in six states, Argentina and Belize,
which total approximately 2,031 Mw. Projects in operation throughout 1994 in
which Dominion Energy has an interest include three gas-fueled projects totaling
1,290 Mw owned by Enron/Dominion Cogen Corporation, two geothermal projects in
California, a solar project in California, four small hydroelectric projects in
New York, a waste coal-fueled project in West Virginia, a wood- and coal-fueled
project in Maine, a hydroelectric and a gas-fired project in Argentina and two
gas-fired projects in California. During 1991, Dominion Energy announced its
plans to develop a 25 Mw run-of-river hydroelectric project in Belize which
began construction in 1992. This facility is scheduled to begin commercial
operation in the summer of 1995. Dominion Energy also participates in
partnerships to acquire and develop natural gas reserves. In 1994, it added 82
billion cubic feet (BCFE) of natural gas reserves. Production from company
holdings in 1994 totaled 36 BCFE. In connection with the establishment in 1994
of the Dominion Resources Black Warrior Trust, Dominion Energy sold 63 BCFE of
natural gas reserves. By the end of 1994, Dominion Energy held 325 BCFE in
natural gas reserves.
For additional information on the nonutility businesses, see NONUTILITY
ISSUES under FUTURE ISSUES in MANAGEMENT'S DISCUSSION AND ANALYSIS OF OPERATIONS
on page 23 of the 1994 Annual Report to Shareholders. For additional information
on significant corporate governance issues and changes in the composite of the
Boards of Directors of Dominion Resources and Virginia Power see Item 3. LEGAL
PROCEEDINGS and Item 10. DIRECTORS AND OFFICERS OF THE REGISTRANT.
Dominion Resources is currently exempt from registration as a holding
company under the Public Utility Holding Company Act of 1935 (1935 Act).
Virginia Electric and Power Company, incorporated in 1909, Dominion
Resources' largest subsidiary, is a regulated public utility engaged in the
generation, transmission, distribution and sale of electric energy within a
30,000 square mile area in Virginia and northeastern North Carolina. It
transacts business under the name VIRGINIA POWER in Virginia and under the name
NORTH CAROLINA POWER in North Carolina. It sells electricity to retail customers
(including governmental agencies) and to wholesale customers such as rural
electric cooperatives and municipalities. The Virginia service area comprises
about 65%
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of Virginia's total land area but accounts for over 80% of its population. As
used herein, the term "Virginia Power" shall be deemed to refer to the entirety
of Virginia Electric and Power Company, including, without limitation, its
Virginia and North Carolina operations.
Virginia Power has nonexclusive franchises or permits for electric
operations in substantially all cities and towns now served. It also has
certificates of convenience and necessity from the Virginia State Corporation
Commission (the Virginia Commission) for service in all territory served at
retail in Virginia. The North Carolina Utilities Commission (the North Carolina
Commission) has assigned territory to Virginia Power for substantially all of
its retail service outside certain municipalities in North Carolina.
Virginia Power strives to operate its generating facilities in accordance
with prudent utility industry practices and in conformity with applicable
statutes, rules and regulations. Like other electric utilities, Virginia Power's
generating facilities are subject to unanticipated or extended outages for
repairs, replacements or modifications of equipment or otherwise to comply with
regulatory requirements. Such outages may involve significant expenditures not
previously budgeted, including replacement energy costs. See NUCLEAR under
REGULATION below and NUCLEAR OPERATIONS AND FUEL SUPPLY under VIRGINIA POWER
SOURCES OF ENERGY USED AND FUEL COSTS.
Dominion Resources and its subsidiaries had 10,789 employees as of December
31, 1994.
CAPITAL REQUIREMENTS AND FINANCING PROGRAM
CAPITAL REQUIREMENTS
See MANAGEMENT'S DISCUSSION AND ANALYSIS OF CASH FLOWS AND FINANCIAL
CONDITION on pages 27 and 28 of the 1994 Annual Report to Shareholders.
CONSTRUCTION AND NUCLEAR FUEL EXPENDITURES
Virginia Power's estimated construction and nuclear fuel expenditures,
including Allowance for Funds Used During Construction (AFC), for the three-year
period 1995-1997, total $1.9 billion. It has adopted a 1995 budget for
construction and nuclear fuel expenditures as set forth below:
<TABLE>
<CAPTION>
ESTIMATED 1995
EXPENDITURES
(MILLIONS)
<S> <C>
New Generating Facilities:
Clover Unit 1 and Unit 2............................................................ $ 52
Other Production:
North Anna Unit 2 steam generator replacement....................................... 70
Clean Air Act....................................................................... 25
Other............................................................................... 90
General Support Facilities............................................................ 56
Transmission.......................................................................... 59
Distribution.......................................................................... 262
Nuclear Fuel.......................................................................... 59
Total Construction Requirements and Nuclear Fuel.................................... 673
AFC................................................................................... 11
Total Expenditures.................................................................. $684
</TABLE>
FINANCING PROGRAM
See MANAGEMENT'S DISCUSSION AND ANALYSIS OF OPERATIONS and MANAGEMENT'S
DISCUSSION AND ANALYSIS OF CASH FLOWS AND FINANCIAL CONDITION on pages 19
through 28 of the 1994 Annual Report to Shareholders.
2
<PAGE>
RATES
VIRGINIA POWER
Virginia Power was subject to rate regulation in 1994 as follows:
<TABLE>
<CAPTION>
1994
PERCENT PERCENT
OF OF
REVENUES KWH SALES
<S> <C> <C> <C>
Virginia retail:
Non-Governmental customers.................... Virginia Commission 78% 73%
Governmental customers........................ Negotiated Agreements 11 12
North Carolina retail........................... North Carolina Commission 4 4
Wholesale:
Requirements -- Sales for Resale.............. Federal Energy Regulatory 5 8
Commission (FERC)
Non-Requirements -- Sales for Resale.......... FERC 2 3
100% 100%
</TABLE>
Substantially all of Virginia Power's electric sales are subject to
recovery of changes in fuel costs either through fuel adjustment factors or
periodic adjustments to base rates, each of which requires prior regulatory
approval.
Each of these jurisdictions has the authority to disallow recovery of costs
it determines to be excessive or imprudently incurred. Various cost items may be
reviewed on occasion, including costs of constructing or modifying facilities,
on-going purchases of capacity or providing replacement power during generating
unit outages.
The principal rate proceedings in which Virginia Power was involved in 1994
are described below by jurisdiction. Rate relief obtained by Virginia Power is
frequently less than requested.
VIRGINIA
On February 3, 1994, the Virginia Commission entered its Final Order in
Virginia Power's 1992 rate case, approving an increase in annual revenues of
$241.9 million. Refunds of $129.2 million (representing the amount recovered
under interim rates in excess of the rates finally approved, with interest) were
completed by the end of April. The Commission also approved continuation of
deferral accounting to recover purchased power capacity costs, allowed inclusion
of salary incentive pay in the cost of service, accepted Virginia Power's
calculation of postretirement benefits other than pensions, allowed rate base to
be updated to November 30, 1992, and recommended a return on equity in the range
of 10.5% to 11.5% with rates to be based on 11.4% to reflect superior operating
performance of Virginia Power's generating units. The Commission disapproved
proposed changes in Virginia Power's line extension policy and a proposed
increase in its summer/winter rate differential, and it disallowed from recovery
through rates the gross receipts tax component of capacity payments under
certain previously executed power purchase contracts. The Commission directed
Virginia Power, the Commission's Staff and other interested parties to explore
the concept of expanding the generating unit performance program to include
purchases of capacity and to present testimony on that issue in Virginia Power's
next rate case. Virginia Power and several non-utility generators that will be
adversely affected by the ruling that disallowed rate recovery of the gross
receipts tax component of purchased power costs appealed that ruling to the
Virginia Supreme Court. On January 13, 1995, the Court issued its Opinion
affirming the Virginia Commission's decision. On January 23, 1995, Virginia
Power and the other appellants filed Motions of Intent to Seek Rehearing.
On January 31, 1994, a hearing before a Hearing Examiner was held on
Virginia Power's application requesting approval of Schedule DEF -- Dispersed
Energy Facility, a rate schedule that would allow Virginia Power to respond to
the request of an industrial or commercial customer to build and operate a
generating facility at its business location and to sell to that customer all of
the electricity and associated steam from that facility under a long-term
contract. On June 23, 1994, the Hearing Examiner recommended approval on an
experimental basis (see COMPETITION below).
On January 10, 1994, a hearing was held before a Hearing Examiner on
Virginia Power's application to revise its Schedule 19 (rates to be paid to
small qualifying facilities), which sought, among other things, approval of (a)
limiting the schedule's applicability to facilities of 100 Kw or less and (b)
postponing the commencement of capacity payments until the capacity is needed by
Virginia Power. On April 25, 1994, the Hearing Examiner issued his Report
recommending approval of
3
<PAGE>
these and other features of Virginia Power's application, and on July 1, 1994,
the Commission entered its Final Order accepting the Examiner's recommendation
as to these and most other issues.
On September 19, 1994, Virginia Power filed with the Virginia Commission an
application for a $25 million increase in the fuel factor. A hearing was held on
October 28, 1994, and the Commission approved an increase of $9.9 million
effective November 1, 1994.
Virginia Power filed an application with the Virginia Commission on
December 21, 1994, seeking approval, on an experimental basis, to implement a
real time pricing (RTP) option for its industrial customers with loads in excess
of 10 Mw. Under this option, all or a portion of an industrial customer's load
growth would be supplied at projected incremental hourly production costs,
adjusted for line losses and taxes, plus a margin of 0.6 cents per Kwh, and a
marginal cost-based Generation Capacity Adder and a Transmission Capacity Adder
would be applicable during those hours when the Virginia Power system is
approaching its forecasted annual peak demand. Up to 20% of an industrial
customer's existing load could be served on an RTP basis if the customer
executes a five-year contract for such service.
COUNTY AND MUNICIPAL
On January 30, 1995, Virginia Power reached agreement on the terms of a
three-year contract governing rates for county and municipal customers in
Virginia, which will continue through June 30, 1997. This contract resulted in a
decrease of $25.5 million in annual base revenue from the previous contract and
became effective July 1, 1994, with base rates remaining constant through the
term of the contract.
NORTH CAROLINA
In Virginia Power's 1992 rate case before the North Carolina Commission,
the Commission disallowed recovery of certain capacity costs paid to a
cogenerator and a portion of the compensation of certain Virginia Power
officers. Virginia Power appealed the Commission's Order on those issues, and on
December 9, 1994, the North Carolina Supreme Court affirmed the disallowance of
each by the Commission. Virginia Power filed a Motion for Rehearing on January
13, 1995.
Virginia Power filed an application with the North Carolina Commission on
September 9, 1994 for a $1.5 million increase in fuel rates. A hearing was held
on November 8, 1994, and the increase was approved on December 19, 1994.
On December 22, 1994, Virginia Power filed an application with the North
Carolina Commission for approval of Self-Generation Deferral Rates that are a
part of an Energy Agreement between North Carolina Power and Weyerhaeuser. The
Energy Agreement involves the use of a negotiated pricing structure which will
result in the deferral of the installation of additional self-generation
facilities by Weyerhaeuser.
REGULATION
GENERAL
In a wide variety of matters in addition to rates, Virginia Power is
presently subject to regulation by the Virginia Commission and the North
Carolina Commission, the Environmental Protection Agency (EPA), Department of
Energy (DOE), Nuclear Regulatory Commission (NRC), FERC, the Army Corps of
Engineers, and other federal, state and local authorities. Compliance with
numerous laws and regulations increases Virginia Power's operating and capital
costs by requiring, among other things, changes in the design and operation of
existing facilities and changes or delays in the location, design, construction
and operation of new facilities. The commissions regulating Virginia Power's
rates have historically permitted recovery of such costs.
Virginia Power may not construct, or incur financial commitments for
construction of, any substantial generating facilities or large capacity
transmission lines without the prior approval of state and federal governmental
agencies having jurisdiction over various aspects of its business. Such
approvals relate to, among other things, the environmental impact of such
activities, the relationship of such activities to the need for providing
adequate utility service and the design and operation of proposed facilities.
Various provisions of the Energy Policy Act of 1992 (Energy Act) that could
affect Virginia Power include those provisions encouraging the development of
nonutility generation, giving FERC authority to order transmission access for
wholesale transactions, requiring higher energy efficiency and alternative fuels
use, restructuring of nuclear plant licensing procedures, and requiring state
regulatory authorities to give full rate treatment for the effects of
conservation and demand
4
<PAGE>
management programs, including the effects of reduced sales. While the full
impact of the Energy Act on Virginia Power cannot at this time be quantified, it
is likely, over time, to be significant. See COMPETITION below and COMPETITION
in UTILITY ISSUES in FUTURE ISSUES under MANAGEMENT'S DISCUSSION AND ANALYSIS OF
OPERATIONS on pages 21 and 22 of the 1994 Annual Report to Shareholders.
ENVIRONMENTAL
From time to time, Virginia Power may be identified as a potentially
responsible party (PRP) with respect to a Superfund site. EPA (or a state) can
either (a) allow such a party to conduct and pay for a remedial investigation
and feasibility study and remedial action or (b) conduct the remedial
investigation and action and then seek reimbursement from the parties. Each
party can be held jointly, severally and strictly liable for all costs, but the
parties can then bring contribution actions against each other and seek
reimbursement from their insurance companies. As a result of the Superfund Act
or other laws or regulations regarding the remediation of waste, Virginia Power
may be required to expend amounts on remedial investigations and actions.
Although Virginia Power is not currently aware of any sites or events including
those sites currently identified likely to result in significant liabilities,
such amounts, in the future, could be significant.
Permits under the Clean Water Act and state laws have been issued for all
of Virginia Power's steam generating stations now in operation. Such permits are
subject to reissuance and continuing review.
Virginia Power is subject to the Clean Air Act (Air Act), which provides
the statutory basis for ambient air quality standards. In order to maintain
compliance with such standards and reduce the impact of emissions on ambient air
quality, Virginia Power may be required to incur significant additional
expenditures in constructing new facilities or in modifying existing facilities.
Virginia Power has installed a scrubber at its Mt. Storm Unit 3 Power Station.
This scrubber began operation on October 31, 1994. The cost of this scrubber and
related equipment was $147 million. Virginia Power is presently conducting
studies leading to the compliance plan for Phase II of the Clean Air Act, which
may involve the installation of two additional scrubbers, the addition of
nitrogen oxide controls and other methods for compliance. The present estimate
for the total capital cost for compliance, assuming the installation of three
scrubbers, nitrogen oxide controls and emission monitoring instrumentation, is
$481 million (1992 dollars). Annual incremental compliance costs for operation,
maintenance and fuel costs are estimated to be $128 million. These cost
estimates may change upon completion of the study effort now underway.
Virginia Power continues to work with the West Virginia Office of Air
Quality concerning opacity requirements applicable to the Mt. Storm Power
Station.
For additional information on ENVIRONMENTAL MATTERS, see Note O to the
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS of the 1994 Annual Report to
Shareholders.
NUCLEAR
All aspects of the operation and maintenance of Virginia Power's nuclear
power stations are regulated by the NRC. Operating licenses issued by the NRC
are subject to revocation, suspension or modification, and operation of a
nuclear unit may be suspended if the NRC determines that the public interest,
health or safety so requires.
From time to time, the NRC adopts new requirements for the operation and
maintenance of nuclear facilities. In many cases, these new regulations require
changes in the design, operation and maintenance of existing nuclear facilities.
If the NRC adopts such requirements in the future, it could result in
substantial increases in the cost of operating and maintaining Virginia Power's
nuclear generating units.
WINTER PEAK
Due to record cold weather on January 19, 1994, Virginia Power reached a
record winter peak of 14,877 Mw, which exceeded the prior record of 13,478 Mw
that had been established one day earlier.
5
<PAGE>
VIRGINIA POWER SOURCES OF POWER
VIRGINIA POWER GENERATING UNITS
<TABLE>
<CAPTION>
TYPE SUMMER
YEARS OF CAPABILITY
NAME OF STATION, UNITS AND LOCATION INSTALLED FUEL MW
<S> <C> <C> <C>
Nuclear:
Surry Units 1 & 2, Surry, Va..................................................... 1972-73 Nuclear 1,562
North Anna Units 1 & 2, Mineral, Va.............................................. 1978-80 Nuclear 1,787(a)
Total nuclear stations........................................................ 3,349
Fossil Fuel:
Steam:
Bremo Units 3 & 4, Bremo Bluff, Va............................................ 1950-58 Coal 227
Chesterfield Units 3-6, Chester, Va........................................... 1952-69 Coal 1,250
Mt. Storm Units 1-3, Mt. Storm, W. Va......................................... 1965-73 Coal 1,596
Chesapeake Units 1-4, Chesapeake, Va.......................................... 1953-62 Coal 595
Possum Point Units 3 & 4, Dumfries, Va........................................ 1955-62 Coal 322
Yorktown Units 1 & 2, Yorktown, Va............................................ 1957-59 Coal 326
Possum Point Units 1, 2, & 5, Dumfries, Va.................................... 1948-75 Oil 929
Yorktown Unit 3, Yorktown, Va................................................. 1974 Oil & Gas 720
North Branch Unit 1, Bayard, W. Va............................................ 1994(b) Waste Coal 74
Combustion Turbines:
35 units (8 locations)........................................................... 1967-90 Oil & Gas 1,019
Combined Cycle:
Chesterfield Units 7 & 8, Chester, Va............................................ 1990-92 Oil & Gas 397
Total fossil stations......................................................... 7,455
Hydroelectric:
Gaston Units 1-4, Roanoke Rapids, N.C............................................ 1963 Conventional 225
Roanoke Rapids Units 1-4, Roanoke Rapids, N.C.................................... 1955 Conventional 96
Other............................................................................ 1930-87 Conventional 3
Bath County Units 1-6, Warm Springs, Va.......................................... 1985 Pumped Storage 1,260(c)
Total hydro stations.......................................................... 1,584
Total Company generating unit capability...................................... 12,388
NET UTILITY PURCHASES.............................................................. 830
NON-UTILITY GENERATION............................................................. 3,244
Total Capability.............................................................. 16,462
</TABLE>
(a) Includes an undivided interest of 11.6 percent (207 Mw) owned by Old
Dominion Electric Cooperative (ODEC).
(b) On December 30, 1994, Virginia Power acquired the North Branch 80 Mw
(nominal rating) waste coal power station located in Bayard, West Virginia in
Grant County.
(c) Reflects Virginia Power's 60 percent undivided ownership interest in the
2,100 Mw station. A 40 percent undivided interest in the facility is owned by
Allegheny Generating Company, a subsidiary of Allegheny Power System, Inc.
(APS).
Virginia Power's highest one-hour integrated service area summer peak
demand was 13,366 Mw on July 29, 1993, and the highest one-hour integrated
winter peak demand was 14,877 Mw on January 19, 1994.
6
<PAGE>
VIRGINIA POWER SOURCES OF ENERGY USED AND FUEL COSTS
The average fuel cost of system energy output is shown below:
<TABLE>
<CAPTION>
MILLS PER KILOWATT-HOUR
1994 1993 1992
<S> <C> <C> <C>
Nuclear............................. 4.89 4.60 4.67
Coal................................ 14.61 14.69 14.87
Oil................................. 23.00 26.55 26.61
Purchased power, net................ 23.99 24.54 25.94
Other............................... 25.46 24.35 24.45
Average fuel cost................... 14.02 14.42 13.84
</TABLE>
System energy output is shown below:
<TABLE>
<CAPTION>
ESTIMATED ACTUAL
1995 1994 1993 1992
<S> <C> <C> <C> <C>
Nuclear(*).......................... 28% 34 % 31 % 35 %
Coal................................ 42 36 39 41
Oil................................. 1 3 3 2
Purchased power, net................ 26 23 23 19
Other............................... 3 4 4 3
100% 100 % 100 % 100 %
</TABLE>
(*) Excludes ODEC's 11.6 percent ownership interest in the North Anna Power
Station (see Note E to the NOTES TO CONSOLIDATED FINANCIAL STATEMENTS in the
1994 Annual Report to Shareholders).
NUCLEAR OPERATIONS AND FUEL SUPPLY
In 1994, Virginia Power's four nuclear units achieved a combined capacity
factor of 86.7 percent.
The North Anna Unit 2 steam generator replacement project is scheduled to
begin at the end of the first quarter of 1995 at a total estimated Company cost
of $110 million.
Virginia Power utilizes both long-term contracts and spot purchases to
support its needs for nuclear fuel. Virginia Power's nuclear fuel supply and
related services are expected to be adequate to support current and planned
nuclear generation requirements. Virginia Power continually evaluates worldwide
market conditions in order to obtain an adequate nuclear fuel supply. Current
agreements, inventories and market availability should support planned fuel
cycles throughout the remainder of the 1990s.
On-site spent nuclear fuel storage at the Surry Power Station is adequate
for Virginia Power's needs through 1998 when, in accordance with the Nuclear
Waste Policy Act, the DOE is to begin acceptance of spent fuel for disposal.
Should acceptance be delayed, incremental dry storage facilities will be added
under the existing storage license. North Anna Power Station will require an
interim spent fuel storage facility in the late 1990's and Virginia Power plans
to submit a license application to the NRC in 1995 for such a facility at North
Anna.
For details regarding nuclear insurance and certain related contingent
liabilities as well as a NRC rule that requires proceeds from certain insurance
policies to be used first to pay stabilization and decontamination expenses, see
Note O to the NOTES TO CONSOLIDATED FINANCIAL STATEMENTS in the 1994 Annual
Report to Shareholders.
FOSSIL FUEL SUPPLY
Virginia Power's fossil fuel mix consists of coal, oil and natural gas. In
1994, Virginia Power consumed approximately 10.0 million tons of coal. As with
nuclear fuel, Virginia Power utilizes both long-term contracts and spot
purchases to support its needs. Virginia Power presently anticipates that
sufficient coal supplies at reasonable prices will be available for the
remainder of the 1990s. Current projections for an adequate supply of oil remain
favorable, barring unusual international events or extreme weather conditions
which could affect both price and supply.
Virginia Power uses natural gas as needed throughout the year for two
combined cycle units and at several combustion turbine units. For winter usage
at the combined cycle sites, gas is purchased and stored during the summer and
fall and
7
<PAGE>
consumed during the colder months when gas supplies are not available at
favorable prices. Virginia Power has firm transportation contracts for the
delivery of gas to the combined cycle units. Current projections indicate gas
supplies will be available for the next several years.
PURCHASES AND SALES OF POWER
Virginia Power relies on purchases of power to meet a portion of its
capacity requirements. Virginia Power also makes economy purchases of power from
other utility systems when it is available at a cost lower than Virginia Power's
own generation costs.
Under contracts effective January 1, 1985, Virginia Power agreed to
purchase 400 Mw of electricity annually through 1999 from Hoosier Energy Rural
Electric Cooperative, Inc. (Hoosier), and agreed to purchase 500 Mw of
electricity annually during 1987-99 from certain operating subsidiaries of
American Electric Power Company, Inc. (AEP).
On November 26, 1991, Virginia Power and ODEC signed an agreement whereby
Virginia Power will provide ODEC 300 Mw of firm capacity and associated energy
from January 1, 1993, until the commercial operation of Clover Unit 1 (currently
scheduled for April 1995) or December 31, 1995, whichever occurs first. Virginia
Power will also provide 100 Mw of firm capacity and associated energy from the
commercial operation of Clover Unit 1 until the commercial operation of Clover
Unit 2 (currently scheduled for April 1996) or December 31, 1996, whichever
occurs first.
Virginia Power has a diversity exchange agreement with APS under which APS
delivers 200 Mw to Virginia Power in the summer and Virginia Power delivers 200
Mw to APS in the winter.
On June 28, 1994, FERC accepted a Power Sales Tariff filed by Virginia
Power on March 8, 1994 and revised on May 27, 1994. This tariff allows the
Company to resell the 400 Mw Hoosier allotment to other eligible purchasers and
also allows Virginia Power to sell system and emergency power.
Virginia Power also has 75 nonutility power purchase contracts with a
combined dependable summer capacity of 3,506 Mw. Of this amount, 3,244 Mw were
operational at the end of 1994 with the balance scheduled to come on-line
through 1997 (see NONUTILITY GENERATION OF VIRGINIA POWER under FUTURE SOURCES
OF POWER and Note O to the NOTES TO CONSOLIDATED FINANCIAL STATEMENTS in the
1994 Annual Report to Shareholders).
8
<PAGE>
INTERCONNECTIONS
Virginia Power maintains major interconnections with Carolina Power and
Light Company, AEP, APS and the utilities in the Pennsylvania-New
Jersey-Maryland Power Pool. Through this major transmission network, Virginia
Power has arrangements with these utilities for coordinated planning, operation,
emergency assistance and exchanges of capacity and energy.
On March 23, 1990, Virginia Power and Appalachian Power Company (Apco) (an
operating unit of AEP) announced an agreement to increase the ability to
exchange electricity between the two companies through the construction of major
transmission facilities. The proposed construction will consist of 212 miles of
new transmission lines and related substation improvements. The transmission
additions will include 116 miles of 765 Kv line to be constructed by Apco and
102 miles of 500 Kv line to be constructed by Virginia Power. Completion of the
project, expected to be in service in the year 2000, will take three to four
years after all final regulatory approvals have been obtained. A Hearing
Examiner of the Virginia Commission has issued reports dated December 2, 1993
and January 24, 1994, recommending Commission approval of the Apco and Company
lines, respectively, and both applications are before the Commission for final
decision. About 79 miles of the Apco line would be located in West Virginia
where regulatory approval must also be obtained. Virginia Power has stated that
it would not build its 500 Kv line unless Apco is authorized to build its 765 Kv
line and unless certain other regional transmission facilities are constructed
or the Virginia Power contractual rights to use the regional transmission
network are amended.
FUTURE SOURCES OF POWER
Virginia Power presently anticipates that system load growth will require
approximately 1,100 Mw of additional capacity during the 1990s. Virginia Power
has and will pursue capacity acquisition plans to provide that capacity and
maintain a high degree of service reliability. This capacity may be built, owned
and operated by others and sold to Virginia Power under a competitive bid
process pursuant to Commission rules or may be built by Virginia Power if it
determines it can build capacity at a lower overall cost. Virginia Power also
pursues conservation and demand-side management (see CONSERVATION AND LOAD
MANAGEMENT below and CAPITAL REQUIREMENTS under MANAGEMENT'S DISCUSSION AND
ANALYSIS OF CASH FLOWS AND FINANCIAL CONDITION on page 28 of the 1994 Annual
Report to Shareholders).
In May 1990, Virginia Power entered into an agreement with ODEC, under
which Virginia Power purchased a 50 percent undivided ownership interest in a
782 Mw coal-fired power station to be constructed near Clover, Virginia in
Halifax County. Virginia Power will operate the Clover Power Station after it is
completed. The cost of Virginia Power's 50 percent ownership interest is
expected to be approximately $533 million. The project is on schedule and
Virginia Power's share of costs incurred through December 31, 1994 amounted to
$450 million. Construction on Unit 1 is presently 98% complete and construction
on Unit 2 is 54% complete.
In Virginia Power's proceeding seeking approval of the Virginia Commission
for a 75 mile 500 Kv transmission line from the Clover Power Station to the
Carson Substation in Dinwiddie County, Virginia, the Commission approved the
line in its Order Granting Application on May 11, 1994. A protestant group has
appealed that Order to the Virginia Supreme Court. Initial briefs of all parties
have been filed. Oral argument is expected to be scheduled during the first
quarter of 1995 and a decision of the Court is likely before mid-1995.
Virginia Power's continuing program to meet future capacity requirements is
summarized in the following table:
VIRGINIA POWER OWNED GENERATION
<TABLE>
<CAPTION>
SUMMER
CAPABILITY EXPECTED
NAME OF UNITS MW IN-SERVICE DATE
<S> <C> <C>
Clover Power Station:
Unit 1 391* April 1995
Unit 2 391* April 1996
</TABLE>
* Includes the 50 percent undivided ownership interest of ODEC. See Note E to
the NOTES TO CONSOLIDATED FINANCIAL STATEMENTS in the 1994 Annual Report to
Shareholders.
9
<PAGE>
VIRGINIA POWER NONUTILITY GENERATION
<TABLE>
<CAPTION>
NUMBER OF
PROJECTS MW
<S> <C> <C>
Projects Operational 65 3,244
Projects Financed 3 241
Unfinanced Projects 7 21
Total Contracts 75 3,506
</TABLE>
COMPETITION
Competition is playing an increasingly important role in Virginia Power's
business both in terms of source of power supply available to Virginia Power and
alternative choices for customers meeting their energy needs. Both forms of
competition have increased as a result of changing federal and state
governmental regulations, technological developments, rising costs of
constructing generating facilities and availability of alternative energy
sources. The creation of exempt wholesale generators by the Energy Act and their
existence in the market for electric sales may have an impact on Virginia
Power's plans for the construction or purchase of electric capacity and energy.
In addition, the Energy Act gives FERC broad power to require utilities to
provide transmission access to others. Exempt wholesale generators and other
power suppliers may seek, and FERC may require, access to the transmission
systems of investor-owned utilities, including Virginia Power's system.
Several of Virginia Power's industrial customers are seeking means of
reducing their expenses for power through self-generation and other
alternatives. Virginia Power is having discussions with these customers and has
proposed a regulatory initiative in Virginia that would enable it to provide
on-site generation for such customers (see VIRGINIA under RATES). Virginia Power
has undertaken cost-cutting measures to maintain its position as a low-cost
producer of electricity and has pursued a strategic planning initiative, called
Vision 2000, to encourage innovative approaches to serving traditional markets
and to prepare appropriate methods by which to serve future markets. In
furtherance of these initiatives, Virginia Power has established its nuclear and
fossil and hydroelectric operations as separate business units, has proposed
innovative pricing arrangements for incremental industrial loads in Virginia and
North Carolina, has executed long-term contracts with key wholesale customers
and has begun to provide an array of energy services to its customers.
Potential competition also exists for Virginia Power's sales to its
cooperative and municipal customers. Virginia Power entered into discussions in
early 1993 with the City of Falls Church, Virginia, where it has approximately
4,100 customers, for the renewal of its franchise that expired on March 26,
1993. Before agreement on a new franchise, the City announced on October 12,
1994, that it would pursue the establishment of a municipal electric system or a
municipal purchasing agent and passed an ordinance purporting to extend Virginia
Power's franchise until March 26, 1997. The City issued an "Informal Request for
Power Supply Proposal" to other electric suppliers on October 13, 1994 to
determine the interest in providing power to the City. On January 11, 1995, the
City sent to Virginia Power a formal Request for Transmission Service pursuant
to Sections 211(a) and 213(a) of the Federal Power Act. Virginia Power,
consistent with the state and federal law, will still attempt to negotiate a new
long-term franchise with the City while responding as required to the City's
request for transmission services.
CONSERVATION AND LOAD MANAGEMENT
Virginia Power is committed to integrated resource planning and has
developed a detailed analysis procedure in which effective demand-side and
supply-side options are both considered in order to determine the least cost
method to satisfy the customers' needs. Demand-side programs are selected
annually at Virginia Power through an integrated resource planning process which
directly compares the stream of costs and benefits from supply-side and
demand-side options. This process ensures the ultimate selection of a
demand-side package which reduces the need for additional capacity while
efficiently using Virginia Power's existing generation facilities.
All portions of the 1994 Annual Report to Shareholders, for the fiscal year
ended December 31, 1994, filed herein as Exhibit 13, referenced in this Item 1.
BUSINESS, are hereby incorporated herein by reference.
ITEM 2. PROPERTIES
Dominion Resources owns the building at One James River Plaza, Richmond,
Virginia, in which Virginia Power has its principal offices. Dominion Resources'
other assets consist primarily of its investments in its subsidiaries, which
invest in various enterprises and assets, as described in THE COMPANY under Item
1. BUSINESS above. See also VIRGINIA POWER GENERATING UNITS under VIRGINIA POWER
SOURCES OF POWER under Item 1. BUSINESS.
10
<PAGE>
ITEM 3. LEGAL PROCEEDINGS
From time to time, Virginia Power may be in violation of or in default
under orders, statutes, rules or regulations relating to protection of the
environment, compliance plans imposed upon or agreed to by Virginia Power or
permits issued by various local, state and federal agencies for the construction
or operation of facilities. There may be pending from time to time
administrative proceedings involving violations of state or federal
environmental regulations that Virginia Power believes are not material with
respect to it and for which its aggregate liability for fines or penalties will
not exceed $100,000. There are no material agency enforcement actions or citizen
suits pending or, to Virginia Power's present knowledge, threatened against
Virginia Power.
Virginia Power is involved in an arbitration with Smith Cogeneration of
Virginia, Inc. (SCV) before the Virginia Commission concerning the terms of the
purchase of power from two 158 megawatt generating units to be developed by SCV.
The arbitrator has submitted his Report to the Commission recommending that the
parties enter into a contract containing terms that would require Virginia Power
to pay what it considers to be excessive amounts for the power to be purchased.
The parties have been given until March 31, 1995 to file comments on the
arbitrator's report.
Virginia Power and Doswell Limited Partnership (Doswell) have been unable
to agree on the calculation of a Fixed Fuel Transportation Charge to be paid to
Doswell under a purchased power contract. Doswell filed suit in the Circuit
Court of the City of Richmond alleging breach of contract and actual and
constructive fraud and seeking damages of not less than $75 million. The issues
of actual and constructive fraud were dismissed from the case, with prejudice,
leaving only the contract claim, which reduced alleged damages to approximately
$19 million. On March 2, 1995, the Court announced its verdict in favor of
Virginia Power.
On February 23, 1994, Virginia Power filed with the Virginia Commission a
Petition for Declaratory Judgment seeking a declaration that an arrangement
proposed by E.I. DuPont de Nemours & Company (DuPont) and LG&E Power, Inc.
(LG&E) for a partnership between those two companies to furnish energy services
to DuPont in Virginia Power's service territory is illegal under Virginia law.
DuPont filed a Motion to dismiss for lack of jurisdiction, to which Virginia
Power responded. Prior to any action by the Commission, DuPont and LG&E
announced that they had terminated their negotiations, and the Commission has
directed the parties to comment on whether the proceeding should be dismissed.
On January 13, 1995, Virginia Power filed its response stating that the case
should not be dismissed in the absence of a clear statement on the record by
both DuPont and LG&E that each has abandoned the power partnering concept in
Virginia Power's service territory. DuPont renewed its Motion to Dismiss and the
Commission entered its dismissal order on January 24, 1995.
On November 1, 1993, Dominion Energy, a wholly-owned subsidiary of Dominion
Resources and Dominion Cogen D.C., Inc. (DCDC), a wholly-owned subsidiary of
Dominion Energy, filed suit in the United States District Court for the District
of Columbia (the District), against its mayor, and several officials of the
District, alleging that the failure of the District to issue a building permit
for a cogeneration project on the campus of Georgetown University has deprived
Dominion Energy, DCDC and other plaintiffs of their constitutional rights to due
process of law and constitutes tortious interference with their contract rights
and with their prospective economic advantage. The other plaintiffs are Tristar
Georgetown General Corporation (TGGC) and Tristar Georgetown Limited
Corporation. DCDC and TGGC are general partners in Georgetown Cogeneration L.P.
The lawsuit alleges compensatory damages of $40 million and punitive damages of
$40 million. The defendants have filed Motions to Dismiss to which the
plaintiffs have responded, and numerous motions relating to discovery have been
filed. On March 1, 1995, the Court denied the defendants' motion to dismiss the
case in its entirety, denied in part and granted in part the motion to dismiss
the District of Columbia council members as defendants, and denied in part and
granted in part motions for protective orders and to compel discovery. As a
result, the action will proceed against all defendants except one member of
council, and discovery is scheduled to close on July 1, 1995.
A dispute over corporate governance issues between Dominion Resources and
Virginia Power arose in 1994. On June 17, 1994, Dominion Resources and Virginia
Power received an order from the Virginia Commission (the 1994 Order) that,
among other things, initiated an investigation into the affiliate relationships
and corporate governance issues between Dominion Resources and Virginia Power
(the First Proceeding). The text of the 1994 Order was set forth in Dominion
Resources' Current Report on Form 8-K of June 17, 1994. Between June and August
1994, Dominion Resources and Virginia Power made various filings with the
Commission, and the Commission issued several procedural orders, in connection
with the First Proceeding. A description of those filings and orders is set
forth in Dominion Resources' Quarterly Report on Form 10-Q for the period ending
June 30, 1994.
On or around August 5, 1994, Dominion Resources received a letter from a
purported shareholder, Barbara Margulis, demanding that Dominion Resources
commence a suit against certain of its directors and officers for conduct
related to the corporate governance issues addressed in the 1994 Order. By
letter dated October 19, 1994 Ms. Margulis clarified her earlier letter to limit
it to certain defined matters including conduct relating to the renegotiation of
a coal transportation contract
11
<PAGE>
between Virginia Power and CSX Transportation. The Board appointed a special
committee of directors to investigate these allegations, and that investigation
is ongoing.
On August 15, 1994, Dominion Resources, Virginia Power and their respective
directors entered into a Settlement Agreement resolving certain of the disputed
corporate governance issues. The terms of that settlement are summarized in the
Dominion Resources' Current Report on Form 8-K of August 17, 1994. Pursuant to
the Settlement Agreement, Dominion Resources and Virginia Power filed a Joint
Motion to Dismiss certain of the corporate governance issues from the First
Proceeding. The Commission denied that Motion on August 24, 1994, continued the
First Proceeding, and instituted a new proceeding (the Second Proceeding) into
the holding company structure and the relationship between Dominion Resources
and Virginia Power. The Commission stated that the Second Proceeding would be an
"investigation directed not at averting a crisis or penalizing past conduct, but
toward protecting the public interest in the future." The Commission directed
its Staff to conduct an investigation and file an interim report on or before
December 1, 1994.
On December 1, 1994, the Staff of the Virginia Commission and its
consultants filed an Interim Report in the Second Proceeding. That Report is
included in Dominion Resources' Current Report on Form 8-K of December 5, 1994.
The Interim Report made numerous recommendations for Commission involvement in
matters of corporate governance, corporate structure, affiliate service
arrangements, and operating relationships between Dominion Resources and
Virginia Power, and suggested certain financial constraints on Dominion
Resources and new regulatory authority for the Commission. Many of these
suggestions were far-reaching. On December 21, 1994, Dominion Resources and
Virginia Power filed a Joint Response to the Interim Report, in which they
accepted some of the recommendations and urged that the corporate governance
structure established by the Settlement Agreement continue while they considered
the other recommendations in the course of a strategic planning effort by
Dominion Resources.
On January 23, 1995, the Staff of the Virginia Commission issued a report
in the Second Proceeding on its investigation of a coal transportation contract
between Virginia Power and CSX Transportation. The Staff's report concluded that
Dominion Resources improperly pressured Virginia Power to renegotiate the
contract, and recommended that approximately $11 million ($8.3 million Virginia
jurisdictional) of the coal transportation costs incurred under the contract
from 1991 through May 31, 1994 be disallowed in determining Virginia Power's
rates. The Staff's report further recommended that any future transportation
costs that it identified as excess be disallowed over the remainder of the
contract, which expires on May 31, 2000.
Virginia Power has recorded a regulatory liability of $10.5 million at
December 31, 1994. Virginia Power currently estimates that the total amount
called into question by the Virginia Commission Staff report is a net present
value of $60 million ($100 million over the life of the contract). On February
1, 1995, without admitting any imprudence, fault or liability, and believing
that their relationship with the Commission would be enhanced, Dominion
Resources and Virginia Power filed a motion in the Second Proceeding offering to
refund to Virginia Power customers $8.3 million in settlement of these issues
regarding transportation rates.
During the 1995 session of the Virginia General Assembly, the Virginia
Commission caused legislation to be introduced that addressed the Commission's
authority to intervene in disputes involving public utilities owned by separate
holding companies. That legislation was opposed by Dominion Resources. On
February 20, 1995, the proposed legislation was withdrawn and Dominion
Resources, Virginia Power and the Virginia Commission Staff consented to an
order that is included in Dominion Resources' Current Report on Form 8-K of
February 21, 1995. Under this order, which will be effective until July 2, 1996,
Dominion Resources must obtain the Commission's approval before taking steps
such as removing Virginia Power's board members or officers or changing Virginia
Power's articles of incorporation or by-laws. Although the order imposes for a
period of time significant restrictions on the ability of Dominion Resources to
select the Board and management of its subsidiary, Dominion Resources and
Virginia Power agreed to the order in the interest of enhancing relations with
the Virginia Commission and achieving the purposes of the Settlement Agreement.
Disagreements between the companies have arisen from time to time since the
Settlement Agreement was executed. On February 28, 1995, upon recommendation of
a Joint Committee created under the Settlement Agreement, the Boards of Dominion
Resources and Virginia Power took further action to enhance cooperation between
the two companies and their relationship with the Virginia Commission. Among
other things, the Boards expanded the authority of the Joint Committee to act
for the Boards on issues presented to it by the chief executives of the
companies. Each Board directed corporate officials and employees of its company
to cooperate fully with the Joint Committee in resolution of issues acted on by
the Committee and to support actions taken by the Committee. In connection with
these initiatives, the chief executive officers of both companies made known
their intentions to retire in July 1996 and the Boards directed the development
of executive succession plans for each company. Also, the Dominion Resources
Board received the resignations of directors Bruce C. Gottwald and John W. Snow
and the Virginia Power Board received the resignations of directors William W.
Berry and Frank S. Royal, and both Boards voted to reduce their size by two
members.
12
<PAGE>
At this time, Dominion Resources is unable to predict the ultimate
resolution of these matters or their effect on the Company.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
EXECUTIVE OFFICERS OF THE REGISTRANT
<TABLE>
<CAPTION>
NAME AND AGE BUSINESS EXPERIENCE PAST FIVE YEARS
<S> <C>
Thos. E. Capps (59) Chairman of the Board of Directors and Chief Executive Officer from August 16,
1994 to date; Chairman of the Board of Directors, President and Chief
Executive Officer of Dominion Resources from December 30, 1992 to August 16,
1994; President and Chief Executive Officer of Dominion Resources and Vice
Chairman of the Virginia Electric and Power Company Board of Directors from
May 1, 1990 to December 30, 1992; President and Chief Operating Officer of
Dominion Resources and Vice Chairman of the Virginia Electric and Power
Company Board of Directors prior to May 1, 1990.
James T. Rhodes (53) President and Chief Executive Officer of Virginia Electric and Power Company.
Tyndall L. Baucom (53) President and Chief Operating Officer of Dominion Resources from August 16,
1994 to date; Senior Vice President of Dominion Resources prior to August 16,
1994.
Paul J. Bonavia (43) Senior Vice President and General Counsel from January 1, 1995 to date; Vice
President and General Counsel of Dominion Resources from February 1, 1994 to
January 1, 1995; Vice President-Regulation of Virginia Power from September 1,
1992 to February 1, 1994; Vice President and General Counsel of Dominion
Resources from June 3, 1991 to September 1, 1992; Partner in the law firm of
Steel, Hector and Davis, Miami, Florida, prior to June 3, 1991.
Thomas N. Chewning (49) Senior Vice President from October 1, 1994 to date; Vice President of Dominion
Resources from November 15, 1992 to October 1, 1994; Vice President, Treasurer
and Corporate Secretary of Virginia Power from October 1, 1991 to November 15,
1992; Vice President and Treasurer, Dominion Energy, Inc.; Vice President and
Treasurer, Dominion Lands, Inc. and Vice President-Administration, Dominion
Capital, Inc., prior to October 1, 1991; Assistant Treasurer, Dominion
Resources, prior to March 1, 1990.
David L. Heavenridge (48) Senior Vice President of Dominion Resources from March 1, 1994 to date; Senior
Vice President and Controller of Dominion Resources from April 1, 1992 to
March 1, 1994; Vice President and Controller of Dominion Resources prior to
April 1, 1992.
Linwood R. Robertson (55) Senior Vice President-Finance, Treasurer and Corporate Secretary, January 1,
1995 to date; Vice President-Finance and Treasurer of Dominion Resources from
March 1, 1994 to January 1, 1995; Vice President, Treasurer and Assistant
Corporate Secretary of Dominion Resources prior to March 1, 1994.
Donald T. Herrick, Jr. (51) Vice President of Dominion Resources.
Everard Munsey (61) Vice President Public Policy of Dominion Resources.
James L. Trueheart (43) Vice President and Controller of Dominion Resources from March 1, 1994 to
date; Assistant Controller of Dominion Resources from March 15, 1991 to March
1, 1994; Assistant Controller of Virginia Power prior to March 15, 1991.
</TABLE>
13
<PAGE>
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND
RELATED SHAREHOLDER MATTERS
Dominion Resources common stock is listed on the New York Stock Exchange
and at December 31, 1994 there were 235,062 registered common shareholders of
record. Quarterly information concerning stock prices and dividends is contained
on page 43 of the 1994 Annual Report to Shareholders, for the fiscal year ended
December 31, 1994, in Note P to the NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
which is filed herein as Exhibit 13, is hereby incorporated herein by reference.
ITEM 6. SELECTED FINANCIAL DATA
This information is contained under the caption "Selected Consolidated
Financial Data" on page 17 of the 1994 Annual Report to Shareholders, for the
fiscal year ended December 31, 1994, filed herein as Exhibit 13, is hereby
incorporated herein by reference.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS
This information is contained under the caption "Management's Discussion
and Analysis of Operations" on pages 19 through 23 and "Management's Discussion
and Analysis of Cash Flows and Financial Condition" on pages 27 and 28 of the
1994 Annual Report to Shareholders, for the fiscal year ended December 31, 1994,
filed herein as Exhibit 13, is hereby incorporated herein by reference.
ITEM 8. FINANCIAL STATEMENT AND SUPPLEMENTARY DATA
This information is contained in the CONSOLIDATED FINANCIAL STATEMENTS on
pages 18, 24 through 26. Notes to the NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
on pages 29 through 44 and related report thereon of Deloitte & Touche LLP,
independent auditors, appearing on page 45 of the 1994 Annual Report to
Shareholders, for the fiscal year ended December 31, 1994, filed herein as
Exhibit 13, is hereby incorporated herein by reference.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Information regarding the Directors of Dominion Resources contained on
pages 4 through 6 of the 1995 Proxy Statement, File No. 1-8489, dated March 16,
1995 is hereby incorporated herein by reference. The information concerning the
executive officers of Dominion Resources required by this Item is incorporated
by reference to the section in Part I hereof entitled "EXECUTIVE OFFICERS OF THE
REGISTRANT." The information regarding the Settlement Agreement and certain
changes in the composite of the Board of Directors of Dominion Resources,
contained on pages 2 through 4 in the 1995 Proxy Statement, is hereby
incorporated herein by reference.
ITEM 11. EXECUTIVE COMPENSATION
The information regarding executive and director compensation contained on
pages 16 through 25 of the 1995 Proxy Statement is hereby incorporated herein by
reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information concerning stock ownership by directors and executive
officers contained on page 8 of the 1995 Proxy Statement is hereby incorporated
herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information contained on page 9 of the 1995 Proxy Statement under the
caption "COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION" and on
pages 26 and 27 of the 1995 Proxy Statement concerning certain transactions and
relationships of Dominion Resources and its subsidiaries with its executive
officers and directors is hereby incorporated herein by reference.
14
<PAGE>
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
A. The following documents are filed as part of this Form 10-K. The
Consolidated Financial Statements are incorporated herein by reference and are
found on the pages noted.
1. FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
1994
ANNUAL REPORT
TO SHAREHOLDERS
(PAGE)
<S> <C>
Report of Independent Auditors 45
Consolidated Statements of Income and Retained Earnings
for the years ended December 31, 1994, 1993 and 1992 18
Consolidated Balance Sheets at December 31, 1994 and 1993 24-25
Consolidated Statements of Cash Flows for the years ended
December 31, 1994, 1993 and 1992 26
Notes to Consolidated Financial Statements 29-43
</TABLE>
2. EXHIBITS
<TABLE>
<S> <C>
3(i) - Articles of Incorporation as in effect May 4, 1987 (Exhibit 3(i), Form 10-K for the fiscal year ended
December 31, 1993, File No. 1-8489, incorporated by reference).
3(ii) - Bylaws as in effect on September 21, 1994 (filed herewith).
4(i) - See Exhibit 3(i) above.
4(ii) - Indenture of Mortgage of Virginia Electric and Power Company, dated November 1, 1935, as supplemented and
modified by fifty-eight Supplemental Indentures (Exhibit 4(ii), Form 10-K for the fiscal year ended
December 31, 1985, File No. 1-2255, incorporated by reference); Fifty-Ninth Supplemental Indenture
(Exhibit 4(ii), Form 10-Q for the quarter ended March 31, 1986, File No. 1-2255, incorporated by
reference); Sixtieth Supplemental Indenture (Exhibit 4(ii), Form 10-Q for the quarter ended September 30,
1986, File No. 1-2255, incorporated by reference); Sixty-First Supplemental Indenture (Exhibit 4(ii), Form
10-Q for the quarter ended June 30, 1987, File No. 1-2255, incorporated by reference); Sixty-Second
Supplemental Indenture (Exhibit 4(ii), Form 8-K, dated November 3, 1987, File No. 1-2255, incorporated by
reference); Sixty-Third Supplemental Indenture (Exhibit 4(i), Form 8-K, dated June 8, 1988, File No.
1-2255, incorporated by reference); Sixty-Fourth Supplemental Indenture (Exhibit 4(i), Form 8-K, dated
February 8, 1989, File No. 1-2255, incorporated by reference); Sixty-Fifth Supplemental Indenture (Exhibit
4(i), Form 8-K, dated June 22, 1989, File No. 1-2255, incorporated by reference); Sixty-Sixth Supplemental
Indenture, (Exhibit 4(i), Form 8-K, dated February 27, 1990, File No. 1-2255, incorporated by reference);
Sixty-Seventh Supplemental Indenture (Exhibit 4(i), Form 8-K, dated April 2, 1991, File No. 1-2255,
incorporated by reference); Sixty-Eighth Supplemental Indenture, (Exhibit 4(i)), Sixty-Ninth Supplemental
Indenture, (Exhibit 4(ii)) and Seventieth Supplemental Indenture, (Exhibit 4(iii), Form 8-K, dated
February 25, 1992, File No. 1-2255, incorporated by reference); Seventy-First Supplemental Indenture
(Exhibit 4(i)) and Seventy-Second Supplemental Indenture, (Exhibit 4(ii), Form 8-K, dated July 7, 1992,
File No. 1-2255, incorporated by reference); Seventy-Third Supplemental Indenture, (Exhibit 4(i), Form
8-K, dated August 6, 1992, File No. 1-2255, incorporated by reference); Seventy-Fourth Supplemental
Indenture (Exhibit 4(i), Form 8-K, dated February 10, 1993, File No. 1-2255, incorporated by reference);
Seventy-Fifth Supplemental Indenture, (Exhibit 4(i), Form 8-K, dated April 6, 1993, File No. 1-2255,
incorporated by reference); Seventy-Sixth Supplemental Indenture, (Exhibit 4(i), Form 8-K, dated April 21,
1993, File No. 1-2255, incorporated by reference); Seventy-Seventh Supplemental Indenture, (Exhibit 4(i),
Form 8-K, dated June 8, 1993, File No. 1-2255, incorporated by reference); Seventy-Eighth Supplemental
Indenture, (Exhibit 4(i), Form 8-K, dated August 10, 1993, File No. 1-2255, incorporated by reference);
Seventy-Ninth Supplemental Indenture, (Exhibit 4(i), Form 8-K, dated August 10, 1993, File No. 1-2255,
incorporated by reference); Eightieth Supplemental Indenture, (Exhibit 4(i), Form 8-K, dated October 12,
1993, File No. 1-2255, incorporated by reference); Eighty-First Supplemental Indenture,
</TABLE>
15
<PAGE>
<TABLE>
<S> <C>
(Exhibit 4(iii), Form 10-K for the fiscal year ended December 31, 1993, File No. 1-2255, incorporated by
reference); Eighty-Second Supplemental Indenture, (Exhibit 4(i), Form 8-K, dated January 18, 1994, File
No. 1-2255, incorporated by reference) and Eighty-Third Supplemental Indenture (Exhibit 4(i), Form 8-K,
dated October 19, 1994, File No. 1-2255, incorporated by reference).
4(iii) - Indenture, dated April 1, 1985, between Virginia Electric and Power Company and Crestar Bank (formerly
United Virginia Bank) (Exhibit 4(iv), Form 10-K for the fiscal year ended December 31, 1993, File No.
1-2255, incorporated by reference).
4(iv) - Indenture, dated as of June 1, 1986, between Virginia Electric and Power Company and Chemical Bank
(Exhibit 4(v), Form 10-K for the fiscal year ended December 31, 1993, File No. 1-2255, incorporated by
reference).
4(v) - Indenture, dated April 1, 1988, between Virginia Electric and Power Company and Chemical Bank, as
supplemented and modified by a First Supplemental Indenture, dated August 1, 1989, (Exhibit 4(vi), Form
10-K for the fiscal year ended December 31, 1993, File No. 1-2255, incorporated by reference).
4(vi) - Dominion Resources agrees to furnish to the Commission upon request any other instrument with respect to
long-term debt as to which the total amount of securities authorized thereunder does not exceed 10% of
Dominion Resources' total assets.
10(i) - Operating Agreement, dated June 17, 1981, between Virginia Electric and Power Company and Monongahela
Power Company, the Potomac Edison Company, West Penn Power Company, and Allegheny Generating Company
(Exhibit 10(vi), Form 10-K for the fiscal year ended December 31, 1983, File No. 1-8489, incorporated by
reference).
10(ii) - Purchase, Construction and Ownership Agreement, dated as of December 28, 1982 but amended and restated on
October 17, 1983, between Virginia Electric and Power Company and Old Dominion Electric Cooperative
(Exhibit 10(viii), Form 10-K for the fiscal year ended December 31, 1983, File No. 1-8489, incorporated by
reference).
10(iii) - Interconnection and Operating Agreement, dated as of December 28, 1982 as amended and restated on October
17, 1983, between Virginia Electric and Power Company and Old Dominion Electric Cooperative (Exhibit
10(ix), Form 10-K for the fiscal year ended December 31, 1983, File No. 1-8489, incorporated by
reference).
10(iv) - Nuclear Fuel Agreement, dated as of December 28, 1982 as amended and restated on October 17, 1983, between
Virginia Electric and Power Company and Old Dominion Electric Cooperative (Exhibit 10(x), Form 10-K for
the fiscal year ended December 31, 1983, File No. 1-8489, incorporated by reference).
10(v) - Inter-Company Credit Agreement, dated July 1, 1986, as amended and restated December 31, 1992 between
Dominion Resources and Virginia Electric and Power Company (Exhibit 10(v), Form 10-K for the fiscal year
ended December 31, 1993, File No. 1-8489, incorporated by reference).
10(vi) - Inter-Company Credit Agreement, dated December 20, 1985, as modified on August 21, 1987, between Dominion
Resources and Dominion Capital, Inc. (Exhibit 10(vi), Form 10-K for the fiscal year ended December 31,
1993, File No. 1-8489, incorporated by reference).
10(vii) - Inter-Company Credit Agreement, dated October 1, 1987 as amended and restated as of May 1, 1988 between
Dominion Resources and Dominion Energy, Inc. (Exhibit 10(vii), Form 10-K for the fiscal year ended
December 31, 1993, File No. 1-8489, incorporated by reference).
10(viii) - Inter-Company Credit Agreement, dated as of September 1, 1988 between Dominion Resources and Dominion
Lands, Inc. (Exhibit 10(viii), Form 10-K for the fiscal year ended December 31, 1993, File No. 1-8489,
incorporated by reference).
10(ix) - Form of Amended and Restated Articles of Partnership in Commendam of Catalyst Old River Hydroelectric
Limited Partnership, by and between Catalyst Vidalia Corporation and Dominion Capital, Inc. effective as
of August 24, 1990 (Exhibit 10(xii) Form 10-K for the fiscal year ended December 31, 1990, File No.
1-8489, incorporated by reference).
10(x) - Supplemental Funding Agreement, dated as of August 24, 1990, by and among Dominion Capital, Inc., Catalyst
Old River Hydroelectric Limited Partnership and First National Bank of Commerce
</TABLE>
16
<PAGE>
<TABLE>
<S> <C>
(Exhibit 10(xiii) Form 10-K for the fiscal year ended December 31, 1990, File No. 1-8489, incorporated by
reference).
10(xi) - Credit Agreement, dated December 1, 1985, between Virginia Electric and Power Company and Old Dominion
Electric Cooperative (Exhibit 10(xix), Form 10-K for the fiscal year ended December 31, 1985, File No.
1-8489, incorporated by reference).
10(xii) - Agreement for Northern Virginia Services, dated as of November 1, 1985, between Potomac Electric Power
Company and Virginia Electric and Power Company (Exhibit 10(xxi), Form 10-K for the fiscal year ended
December 31, 1985, File No. 1-8489, incorporated by reference).
10(xiii) - Purchase, Construction and Ownership Agreement, dated May 31, 1990, between Virginia Electric and Power
Company and Old Dominion Electric Cooperative (Exhibit 10(xi), Form 10-K for the fiscal year ended
December 31, 1990, File No. 1-2255, incorporated by reference).
10(xiv) - Operating Agreement, dated May 31, 1990, between Virginia Electric and Power Company and Old Dominion
Electric Cooperative (Exhibit 10(xii), Form 10-K for the fiscal year ended December 31, 1990, File No.
1-2255, incorporated by reference).
10(xv) - Coal-Fired Unit Turnkey Contract (Volume 1), dated April 6, 1989, and the United 2 Amendment (Volume 1),
dated May 31, 1990 between Virginia Electric and Power Company and Old Dominion Electric Cooperative,
Westinghouse, Black & Veatch, Combustion Engineering and H. B. Zachry (Volumes 2-11 contain technical
specifications) (Exhibit 10(xiii), Form 10-K for the fiscal year ended December 31, 1990, File No. 1-2255,
incorporated by reference).
10(xvi) - Receivables Purchase Agreement, dated as of December 11, 1991, between Virginia Electric and Power Company
and Dynamic Funding Corporation (Exhibit 10(xv), Form 10-K for the fiscal year ended December 31, 1991,
File No. 1-2255, incorporated by reference).
10(xvii) - Trust Agreement of Dominion Resources Black Warrior Trust, dated May 31, 1994, among Dominion Black
Warrior Basin, Inc., Dominion Resources, Inc., Mellon Bank (DE) National Association and Nationsbank of
Texas, N.A. (Exhibit 3.1, Amendment No. 1 to Registration Statement, File No. 33-53513, filed June 1,
1994, incorporated by reference).
10(xviii) - First Amendment of Trust Agreement of Dominion Resources Black Warrior Trust, dated June 27, 1994, among
Dominion Black Warrior Basin, Inc., Dominion Resources, Inc., Mellon Bank (DE) National Association and
Nationsbank of Texas, N.A. (Exhibit 10(ii), Form 10-Q for the quarter ended June 30, 1994, File No.
1-8489, incorporated by reference).
10(xix)* - Dominion Resources, Inc. Directors' Deferred Compensation Plan, effective July 1, 1986 (Exhibit 10(xx),
Form 10-K for the fiscal year ended December 31, 1988, File No. 1-8489, incorporated by reference).
10(xx)* - Dominion Resources, Inc. Performance Achievement Plan, effective January 1, 1986, as amended and restated
effective February 19, 1988 (Exhibit 10(xxi), Form 10-K for the fiscal year ended December 31, 1988, File
No. 1-8489, incorporated by reference).
10(xxi)* - Dominion Resources, Inc. Executive Supplemental Retirement Plan, effective January 1, 1981 as amended and
restated effective October 22, 1988 (Exhibit 10(xxii), Form 10-K for the fiscal year ended December 31,
1988, File No. 1-8489, incorporated by reference), amended and restated June 15, 1990 (Exhibit 10(xxiv),
Form 10-K for the fiscal year ended December 31, 1990, File No. 1-8489, incorporated by reference).
10(xxii)* - Arrangements with certain executive officers regarding additional credited years of service for retirement
and retirement life insurance purposes (Exhibit 10(xxv), Form 10-K for the fiscal year ended December 31,
1991, File No. 1-8489, incorporated by reference).
10(xxiii)* - Dominion Resources, Inc.'s Cash Incentive Plan as adopted December 20, 1991 (Exhibit 10(xxii), Form 10-K
for the fiscal year ended December 31, 1991, File No. 1-8489, incorporated by reference).
10(xxiv)* - Dominion Resources, Inc. Long-Term Incentive Plan, effective April 17, 1987 (1987 Proxy Statement, File
No. 1-8489, incorporated by reference).
10(xxv)* - Form of Employment Continuity Agreement for elected officers of Virginia Power (Exhibit 10(xxviii), Form
10-K for the fiscal year ended December 31, 1986, File No. 1-8489, incorporated by reference), amended May
15, 1987 (Exhibit 10(xxviii), Form 10-K for the fiscal year ended December 31, 1988, File No. 1-8489,
incorporated by reference).
</TABLE>
17
<PAGE>
<TABLE>
<S> <C>
10(xxvi)* - Form of Employment Continuity Agreement for certain officers of Dominion Resources (filed herewith)
10(xxvii)* - Dominion Resources, Inc. Retirement Benefit Funding Plan, effective June 29, 1990 (Exhibit 10(xxxiii),
Form 10-K for the fiscal year ended December 31, 1990, File No. 1-8489, incorporated by reference).
10(xxviii)* - Dominion Resources, Inc. Retirement Benefit Restoration Plan as adopted effective January 1, 1991 (Exhibit
10(xxvii), Form 10-K for the fiscal year ended December 31, 1992, File No. 1-8489, incorporated by
reference).
10(xxvix)* - Dominion Resources, Inc. Executives' Deferred Compensation Plan, effective January 1, 1994 (Exhibit
10(xxviii), Form 10-K for the fiscal year ended December 31, 1993, File No. 1-8489, incorporated by
reference).
10(xxx)* - Employment Agreement dated August 12, 1994 between Dominion Resources and Thos. E. Capps (filed herewith).
10(xxxi)* - Employment Agreement dated February 6, 1995 between Dominion Resources and Tyndall L. Baucom (filed
herewith).
10(xxxii)* - Employment Agreement dated June 30, 1994 between Virginia Power and James T. Rhodes (filed herewith).
10(xxxiii)* - Form of three year Employment Agreement between Dominion Resources and Paul J. Bonavia, David L.
Heavenridge and certain other executive officers of Dominion Resources (filed herewith).
10(xxxiv)* - Form of two year Employment Agreement between Dominion Resources and certain executive officers (filed
herewith).
11 - Computation of Earnings Per Share of Common Stock Assuming Full Dilution (filed herewith).
13 - Portions of the 1994 Annual Report to Shareholders for the fiscal year ended December 31, 1994 (filed
herewith).
22 - Subsidiaries of the Registrant (filed herewith).
23(i) - Consent of Hunton & Williams (filed herewith).
23(ii) - Consent of Jackson & Kelly (filed herewith).
23(iii) - Consent of Deloitte & Touche LLP (filed herewith).
27 - Financial Data Schedule (filed herewith).
</TABLE>
* Indicates management contract or compensatory plan or arrangement.
B. Report of Form 8-K
Dominion Resources filed a report on Form 8-K, dated December 5, 1994,
reporting the release by the Staff of the Virginia State Corporation Commission
(the Staff) of a report filed December 1, 1994 entitled "Staff Investigation of
Corporate Relationships, Affiliate Arrangements, and Financial and
Diversification Issues of Dominion Resources, Inc. and Virginia Power."
Dominion Resources filed a report on Form 8-K, dated February 21, 1995
reporting the entry of a Consent Order by the Virginia State Corporation
Commission (the Commission) on the joint motion of Dominion Resources, Virginia
Power and the Staff and the withdrawal by Delegate Clinton Miller of certain
legislation introduced by Delegate Miller in the 1995 Virginia General Assembly
at the request of the Commission.
18
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
By: THOS. E. CAPPS
(Thos. E. Capps, Chairman of the
Board of Directors
and Chief Executive Officer)
Date: MARCH 8, 1995
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the 8th day of March, 1995.
<TABLE>
<CAPTION>
SIGNATURE TITLE
<S> <C>
JOHN B. ADAMS, JR. Director
John B. Adams, Jr.
TYNDALL L. BAUCOM President (Chief Operating Officer)
Tyndall L. Baucom and Director
JOHN B. BERNHARDT Director
John B. Bernhardt
THOS. E. CAPPS Chairman of the Board of Directors
Thos. E. Capps (Chief Executive Officer)
and Director
Director
Bruce C. Gottwald
BENJAMIN J. LAMBERT, III Director
Benjamin J. Lambert, III
RICHARD L. LEATHERWOOD Director
Richard L. Leatherwood
HARVEY L. LINDSAY, JR. Director
Harvey L. Lindsay, Jr.
K. A. RANDALL Director
K. A. Randall
WILLIAM T. ROOS Director
William T. Roos
</TABLE>
19
<PAGE>
<TABLE>
<CAPTION>
SIGNATURE TITLE
<S> <C>
FRANK S. ROYAL Director
Frank S. Royal
JUDITH B. SACK Director
Judith B. Sack
Director
Richard L. Sharp
S. DALLAS SIMMONS Director
S. Dallas Simmons
Director
John W. Snow
ROBERT H. SPILMAN Director
Robert H. Spilman
LINWOOD R. ROBERTSON Senior Vice President
Linwood R. Robertson (Chief Financial Officer)
J. L. TRUEHEART Vice President and Controller
J. L. Trueheart (Principal Accounting Officer)
</TABLE>
20
DOMINION RESOURCES, INC.
FINANCIAL SECTION
OF THE
1994
ANNUAL REPORT
TO
SHAREHOLDERS
(Incorporated by Reference)
Exhibit 3(ii)
BYLAWS
of
DOMINION RESOURCES, INC.
__________
As amended effective September 21, 1994
<PAGE>
TABLE OF CONTENTS
Article Page
I Name . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
II Shareholders' Meetings . . . . . . . . . . . . . . . . . . . . . .1
III Annual Meeting . . . . . . . . . . . . . . . . . . . . . . . . . .1
IV Special Meetings . . . . . . . . . . . . . . . . . . . . . . . . .1
V Notice of Shareholders' Meetings and Voting Lists . . . . . . . . 2
VI Waiver of Notice . . . . . . . . . . . . . . . . . . . . . . . . .3
VII Quorum . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3
VIII Proxy and Voting . . . . . . . . . . . . . . . . . . . . . . . . .3
IX Board of Directors . . . . . . . . . . . . . . . . . . . . . . . .4
X Powers of Directors. . . . . . . . . . . . . . . . . . . . . . . .5
XI Executive and Other Committees . . . . . . . . . . . . . . . . . .5
XII Meetings of Directors and Quorum . . . . . . . . . . . . . . . . .6
XIII Action Without a Meeting . . . . . . . . . . . . . . . . . . . . .7
XIV Officers . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7
XV Eligibility of Officers. . . . . . . . . . . . . . . . . . . . . .8
XVI Duties and Authority of Chairman of the Board of Directors,
President and Others . . . . . . . . . . . . . . . . . . . . . . .8
XVII Vice Presidents. . . . . . . . . . . . . . . . . . . . . . . . . .8
XVIII Corporate Secretary. . . . . . . . . . . . . . . . . . . . . . . .9
XIX Treasurer. . . . . . . . . . . . . . . . . . . . . . . . . . . . .9
XX Controller . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
XXI Resignations and Removals. . . . . . . . . . . . . . . . . . . . 10
XXII Vacancies. . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
XXIII Certificates for Shares. . . . . . . . . . . . . . . . . . . . . 11
XXIV Transfer of Shares . . . . . . . . . . . . . . . . . . . . . . . 11
XXV Record Date. . . . . . . . . . . . . . . . . . . . . . . . . . . 12
XXVI Voting of Shares Held. . . . . . . . . . . . . . . . . . . . . . 12
XXVII Bonds, Debentures and Notes Issued Under an Indenture. . . . . . 13
XXVIII Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
XXIX Emergency Bylaws . . . . . . . . . . . . . . . . . . . . . . . . 13
XXX Shareholder Proposals. . . . . . . . . . . . . . . . . . . . . . 15
XXXI Control Share Acquisitions . . . . . . . . . . . . . . . . . . . 16
<PAGE>
BYLAWS
OF
DOMINION RESOURCES, INC.
ARTICLE I.
Name.
The name of the Corporation is Dominion Resources, Inc.
ARTICLE II.
Shareholders' Meetings.
All meetings of the Shareholders shall be held at such place, within or
without of the Commonwealth, as provided in the notice of the meeting given
pursuant to Article V. If the Chairman of the Board of Directors determines
that the holding of any meeting at the place named in the notice might be
hazardous, he may cause it to be held at some other place deemed by him
suitable and convenient, upon arranging notice to Shareholders who attend at
the first place and reasonable opportunity for them to proceed to the new
place.
ARTICLE III.
Annual Meeting.
The Annual Meeting of the Shareholders shall be held on the third Friday
in April in each year if not a legal holiday, and if a legal holiday then on
the next succeeding Friday not a legal holiday. In the event that such Annual
Meeting is omitted by oversight or otherwise on the date herein provided for,
the Board of Directors shall cause a meeting in lieu thereof to be held as
soon thereafter as conveniently may be, and any business transacted or
elections held at such meeting shall be as valid as if transacted or held at
the Annual Meeting. Such subsequent meeting shall be called in the same
manner as provided for Special Shareholders' Meetings.
ARTICLE IV.
Special Meetings.
Special Meetings of the Shareholders shall be held whenever called by the
Chairman of the Board of Directors, the President, or a majority of the
Directors. Special Meetings of the Shareholders may also be held following the
accrual or termination of voting rights of the Preferred Stock, whenever
requested to be called in the manner provided in the Articles of
Incorporation.
ARTICLE V.
Notice of Shareholders' Meetings and Voting Lists.
Written notice stating the place, day and hour of each Shareholders'
Meeting and the purpose or purposes for which the meeting is called shall be
given not less than 10 nor more than 60 days before the date of the meeting,
or such longer period as is specified below, by, or at the direction of, the
Board of Directors or its Chairman, the President or any Vice President or the
Corporate Secretary or any Assistant Corporate Secretary, by mail, to each
Shareholder of record entitled to vote at the meeting, at his or her
registered address and the person giving such notice shall make affidavit in
relation thereto. Such notice shall be deemed to be given when deposited in
the United States mails addressed to the Shareholder at his address as it
appears on the stock transfer books, with postage thereon prepaid.
Notice of a Shareholders' Meeting to act on an amendment of the Articles
of Incorporation, on a plan of merger or share exchange, on a proposed
dissolution of the Corporation, or on a proposed sale, lease or exchange, or
other disposition, of all, or substantially all, of the property of the
Corporation otherwise than in the usual and regular course of business, shall
be given not less than 25 nor more than 60 days before the date of the
meeting. Any notice of a Shareholders' Meeting to act on an amendment of the
Articles of Incorporation or a plan of merger or share exchange or a proposed
sale, lease or exchange, or other disposition of all, or substantially all, of
the property of the Corporation otherwise than in the usual and regular course
of business shall be accompanied by a copy of the proposed amendment or plan
of merger or exchange or agreement effecting the disposition of assets.
Any meeting at which all Shareholders having voting power in respect of
the business to be transacted thereat are present, either in person or by
proxy, or of which those not present waive notice in writing, whether before
or after the meeting, shall be a legal meeting for the transaction of business
notwithstanding that notice has not been given as herein before provided.
The officer or agent having charge of the share transfer books of the
Corporation shall make, at least 10 days before each meeting of Shareholders,
a complete list of the Shareholders entitled to vote at such meeting or any
adjournment thereof, with the address of and number of shares held by each.
The list shall be arranged by voting group and within each voting group by
class or series of shares. Such list, for a period of 10 days prior to such
meeting, shall be kept on file at the principal place of business of the
Corporation. Any person who shall have been a Shareholder of record for at
least 6 months immediately preceding his demand or who shall be the holder of
record of at least 5% of all the outstanding shares of the Corporation, upon
demand stating with reasonable particularity the purpose thereof, shall have
the right to inspect such list, in person, for any proper purpose if such list
is directly connected with such purpose, during usual business hours within
the period of 10 days prior to the meeting. Such list shall also be produced
at the time and place of the meeting and shall be subject to the inspection of
any Shareholder during the whole time of the meeting for the purposes thereof.
ARTICLE VI.
Waiver of Notice.
Notice of any Shareholders' Meeting may be waived by any Shareholder,
whether before or after the date of the meeting. Such waiver of notice shall
be in writing, signed by the Shareholder and delivered to the Corporate
Secretary. Any Shareholder who attends a meeting shall be deemed to have
waived objection to lack of notice or defective notice of the meeting, unless
the Shareholder at the beginning of the meeting objects to holding the meeting
or transacting business at the meeting and shall be deemed to have waived
objection to consideration of a particular matter at the meeting that is not
within the purpose or purposes described in the meeting notice, unless the
Shareholder objects to considering the matter when it is presented.
ARTICLE VII.
Quorum.
At any meeting of the Shareholders, a majority in number of votes of all
the shares issued and outstanding having voting power in respect of the
business to be transacted thereat, represented by such Shareholders of record
in person or by proxy, shall constitute a quorum, but a lesser interest may
adjourn any meeting from time to time and the meeting may be held as adjourned
without further notice. When a quorum is present at any meeting, a majority
vote represented thereat shall decide any question brought before such
meeting, unless the question is one upon which by express provision of law or
of the Articles of Incorporation or of these Bylaws a larger or different vote
is required, in which case such express provision shall govern and control the
decision of such question. The provisions of this Article are, however,
subject to the provisions of the Articles of Incorporation.
ARTICLE VIII.
Proxy and Voting.
Shareholders of record entitled to vote may vote at any meeting held, in
person or by proxy executed in writing by the Shareholder or by his duly
authorized attorney-in-fact, which shall be filed with the Corporate Secretary
of the meeting before being voted. A proxy shall designate only one person as
proxy, except that proxies executed pursuant to a general solicitation of
proxies may designate one or more persons as proxies. Proxies shall entitle
the holders thereof to vote at any adjournment of the meeting, but shall not
be valid after the final adjournment thereof. No proxy shall be valid after 11
months from its date unless the appointment form expressly provides for a
longer period of validity. Shareholders entitled to vote may also be
represented by an agent personally present, duly designated by power of
attorney, with or without power of substitution, and such power of attorney
shall be produced at the meeting on request. Each holder of record of shares
of any class shall, as to all matters in respect of which shares of any class
have voting power, be entitled to one vote for each share of stock of such
class standing in his name on the books.
ARTICLE IX.
Board of Directors.
A Board of Directors shall be chosen by ballot at the Annual Meeting of
the Shareholders or at any meeting held in lieu thereof as herein before
provided.
Subject to the rights of holders of any class or series of stock having a
preference over the Common Stock as to dividends or upon liquidation,
nominations for the election of Directors shall be made by the Board of
Directors or a committee appointed by the Board of Directors or by any
Shareholder entitled to vote in the election of Directors generally. However,
any Shareholder entitled to vote in the election of Directors generally may
nominate one or more persons for election as Directors at a meeting only if
written notice of such Shareholder's intent to make such nomination or
nominations has been given, either by personal delivery or by United States
mail, postage prepaid, to the Corporate Secretary of the Corporation not later
than 60 days in advance of such meeting (except that, if public disclosure of
the meeting is made less than 70 days prior to the meeting, the notice need
only be received within 10 days following such public disclosure). Each such
notice shall set forth: (a) the name and address of the Shareholder who
intends to make the nomination and of the person or persons to be nominated;
(b) a representation that the Shareholder is a holder of record of stock of
the Corporation entitled to vote at such meeting and intends to appear in
person or by proxy at the meeting to nominate the person or persons specified
in the notice; (c) a description of all arrangements or understandings between
the Shareholder and each nominee and any other person or persons (naming such
person or persons) pursuant to which the nomination or nominations are to be
made by the Shareholder; (d) such other information regarding each nominee
proposed by such Shareholder as would be required to be included in a proxy
statement filed pursuant to the proxy rules of the Securities and Exchange
Commission, had the nominee been nominated, or intended to be nominated, by
the Board of Directors; and (e) the consent of each nominee to serve as a
Director of the Corporation if so elected. The Chairman of the meeting may
refuse to acknowledge the nomination of any person not made in compliance with
the foregoing procedure.
ARTICLE X.
Powers of Directors.
All corporate powers shall be exercised by or under the authority of, and
the business and affairs of the Corporation shall be managed under the
direction of, the Board of Directors, subject to any limitation set forth in
the Articles of Incorporation and so far as this delegation of authority is
not inconsistent with the laws of the Commonwealth of Virginia, with the
Articles of Incorporation or with these Bylaws.
ARTICLE XI.
Executive and Other Committees.
The Board of Directors, by resolution passed by a majority of the whole
Board, may designate two or more of its number to constitute an Executive
Committee. If a quorum is present, the Committee may act upon the affirmative
vote of a majority of the Committee members present. When the Board of
Directors is not in session, the Executive Committee shall have and may
exercise all of the authority of the Board of Directors except that the
Executive Committee shall not (i) approve or recommend to Shareholders action
that Virginia law requires to be approved by Shareholders; (ii) fill vacancies
on the Board of Directors or any of its Committees or elect officers; (iii)
Amend Articles of Incorporation other than as permitted by statute; (iv)
adopt, amend or repeal these Bylaws; (v) approve a plan of merger not
requiring Shareholder approval; (vi) authorize or approve a distribution,
except according to a general formula or method prescribed by the Board of
Directors; or (vii) authorize or approve the issuance or sale or contract for
sale of shares, or determine the designation and relative rights, preferences,
and limitations of a class or series of shares, except that the Board of
Directors may authorize the Executive Committee to do so within limits
specifically prescribed by the Board of Directors. If the Executive Committee
is created for any designated purpose, its authority shall be limited to such
purpose. The Executive Committee shall report its action to the Board of
Directors. Regular and special meetings of the Executive Committee may be
called and held subject to the same requirements with respect to time, place
and notice as are specified in these Bylaws for regular and special meetings
of the Board of Directors. Members of the Executive Committee shall receive
such compensation for attendance at meetings as may be fixed by the Board of
Directors.
The Board of Directors, by resolution passed by a majority of the whole
Board, may designate four of its number to constitute a Nominating Committee
to nominate future members of the Board of Directors. Such Nominating
Committee shall act to ensure that a majority of the membership of the Board
of Directors of the Corporation and Virginia Electric and Power Company will
be comprised of Directors serving on the Boards of Directors of both
Corporations.
The Board of Directors likewise may appoint from their number, from the
directors of affiliated corporations or from officers of the Corporation other
Committees from time to time, the number composing such Committees and the
power conferred upon the same to be subject to the foregoing exceptions for an
Executive Committee but otherwise as determined by vote of the Board of
Directors provided that any Committee empowered to exercise the authority of
the Board of Directors shall be composed only of members of the Board of
Directors. The Board of Directors may designate one or more Directors to
represent the Corporation at meetings of committees of affiliated
corporations. Members of such committees, and Directors so designated, shall
receive such compensation for attendance at meetings as may be fixed by the
Board of Directors.
ARTICLE XII.
Meetings of Directors and Quorum.
Regular Meetings of the Board of Directors may be held at such places
within or without the Commonwealth of Virginia and at such times as the Board
by vote may determine from time to time, and if so determined no notice
thereof need be given. Special Meetings of the Board of Directors may be held
at any time or place either within or without the Commonwealth of Virginia,
whenever called by the Chairman of the Board of Directors, the President, any
Vice President, the Corporate Secretary, or three or more Directors, notice
thereof being given to each Director by the Corporate Secretary or an
Assistant Corporate Secretary, the Directors or the officer calling the
meeting, or at any time without formal notice provided all the Directors are
present or those not present waive notice thereof. Notice of Special
Meetings, stating the time and place thereof, shall be given by mailing the
same to each Director at his residence or business address at least two days
before the meeting, or by delivering the same to him personally or telephoning
or telegraphing the same to him at his residence or business address at least
one day before the meeting, unless, in case of exigency, the Chairman of the
Board of Directors or the President shall prescribe a shorter notice to be
given personally or by telephoning or telegraphing each Director at his
residence or business address.
A written waiver of notice signed by the Director entitled to such
notice, whether before or after the date of the meeting, shall be equivalent
to the giving of such notice. A Director who attends or participates in a
meeting shall be deemed to have waived timely and proper notice of the meeting
unless the Director, at the beginning of the meeting or promptly upon his
arrival, objects to holding the meeting or transacting business at the meeting
and does not thereafter vote for or assent to action taken at the meeting.
A majority of the number of Directors fixed at the time in accordance
with the Bylaws shall constitute a quorum for the transaction of business, but
a lesser number may adjourn any meeting from time to time, and the meeting may
be held without further notice. The foregoing provision is, however, subject
to the Articles of Incorporation. When a quorum is present at any meeting, a
majority of the members present thereat shall decide any question brought
before such meeting, except as otherwise provided by law, by the Articles of
Incorporation, or by these Bylaws.
ARTICLE XIII.
Action Without a Meeting.
Any action required to be taken at a meeting of the Directors, or any
action which may be taken at a meeting of the Directors or of a Committee, may
be taken without a meeting if a consent in writing (which may be in any number
of counterparts), setting forth the action so to be taken, shall be signed by
all of the Directors, or all of the members of the Committee, as the case may
be, either before or after such action is taken. Such consent shall have the
same force and effect as a unanimous vote.
ARTICLE XIV.
Officers.
The officers of the Corporation shall be a President, one or more Vice
Presidents, a Corporate Secretary, a Treasurer and a Controller. The Chairman
of the Board of Directors shall also be an officer unless he is not also a
full-time employee of the Corporation. The officers and the Chairman of the
Board of Directors shall be elected or appointed by the Board of Directors
after each election of Directors by the Shareholders, and a meeting of the
Board of Directors may be held without notice for the purpose of electing
officers following the Annual Meeting of the Shareholders.
The Board of Directors, in its discretion, may appoint one or more
Assistant Corporate Secretaries, one or more Assistant Treasurers, one or more
Assistant Controllers, and such other officers or agents as it may deem
advisable, and prescribe their duties.
ARTICLE XV.
Eligibility of Officers.
The Chairman of the Board of Directors and the President shall be
Directors. Any person may hold more than one office provided, however, that
neither the Corporate Secretary, the Treasurer nor the Controller shall at the
same time hold the office of Chairman of the Board of Directors or President.
ARTICLE XVI.
Duties and Authority of Chairman of the Board
of Directors, President and Others.
The Chairman of the Board of Directors shall preside at the meetings of
the Board of Directors. He may call meetings of the Board of Directors and of
any Committee thereof whenever he deems it necessary. He shall call to order,
and act as chairman of, all meetings of the Shareholders and prescribe rules
of procedure therefor. He shall perform the duties commonly incident to his
office and such other duties as the Board of Directors shall designate from
time to time.
The Board of Directors may designate the Chief Executive Officer of the
Corporation.
In the absence of the Chairman of the Board of Directors, the President
shall perform his duties. The President shall perform the duties commonly
incident to his office and such other duties as the Board of Directors shall
designate from time to time. The Chief Executive Officer, the President and
each Vice President shall have authority to sign certificates for shares of
stock, bonds, deeds and contracts and to delegate such authority in such
manner as may be approved by the Chief Executive Officer or the President.
ARTICLE XVII.
Vice Presidents.
Each Vice President shall perform such duties and have such other powers
as the Board of Directors shall designate from time to time. In the event of
the absence or disability of the President, the duties and powers of the
President shall be performed and exercised by the Vice President designated to
so act by the line of succession provided by the Board of Directors, or if not
so provided by the Board of Directors, in accordance with the following order
of priority:
(a) The Executive Vice Presidents in order of their seniority of first
election to such office, or if two or more shall have been first elected to
such office on the same day, in order of their seniority in age;
(b) The Senior Vice Presidents in order of their seniority of first
election to such office, or if two or more shall have been first elected to
such office on the same day, in order of their seniority in age;
(c) All other Vice Presidents at the principal office of the Corporation
in the order of their seniority of first election to such office or if two or
more shall have been first elected to such office on the same day, the order
of their seniority in age; and
(d) Any other persons that are designated on a list that shall have been
approved by the Board of Directors, such persons to be taken in such order of
priority and subject to such conditions as may be provided in the resolution
approving the list.
ARTICLE XVIII.
Corporate Secretary.
The Corporate Secretary shall keep accurate minutes of all meetings of
the Shareholders, the Board of Directors and the Executive Committee,
respectively, shall perform the duties commonly incident to his office, and
shall perform such other duties and have such other powers as the Board of
Directors shall designate from time to time. The Corporate Secretary shall
have power together with the Chief Executive Officer, the President or a Vice
President, to sign certificates for shares of stock. In his absence an
Assistant Corporate Secretary shall perform his duties.
ARTICLE XIX.
Treasurer.
The Treasurer, subject to the order of the Board of Directors, shall have
the care and custody of the money, funds and securities of the Corporation and
shall have and exercise under the supervision of the Board of Directors, all
the powers and duties commonly incident to his office. He shall deposit all
funds of the Corporation in such bank or banks, trust company or trust
companies or with such firm or firms doing a banking business, as the
Directors shall designate. He may endorse for deposit or collection all
checks, notes, et cetera, payable to the Corporation or to its order, may
accept drafts on behalf of the Corporation, and, together with the Chief
Executive Officer, the President or a Vice President, may sign certificates
for shares of stock.
All checks, drafts, notes and other obligations for the payment of money
except bonds, debentures and notes issued under an indenture shall be signed
either manually or, if and to the extent authorized by the Board of Directors,
through facsimile, by the Treasurer or an Assistant Treasurer or such other
officer or agent as the Board of Directors shall authorize. Checks for the
total amount of any payroll may be drawn in accordance with the foregoing
provisions and deposited in a special fund. Checks upon this fund may be
drawn by such person as the Treasurer shall designate.
ARTICLE XX.
Controller.
The Controller shall keep accurate books of account of the Corporation's
transactions and shall perform such other duties and have such other powers as
the Board of Directors shall designate from time to time.
ARTICLE XXI.
Resignation and Removals.
Any Director or officer may resign at any time by giving written notice
to the Board of Directors, to the Chairman of the Board of Directors, to the
President or to the Corporate Secretary, and any member of any Committee may
resign by giving written notice either as aforesaid or to the Committee of
which he is a member or the chairman thereof. Any officer may resign at any
time by delivering notice to the Corporation. Any such resignation shall take
effect at the time specified therein or, if the time be not specified, upon
receipt thereof; and, unless otherwise specified therein, the acceptance of
such resignation shall not be necessary to make it effective.
The Shareholders, at any meeting called for the purpose, by vote of a
majority of the stock having voting power issued and outstanding, may remove
any Director from office with cause and elect his successor. The Board of
Directors, by vote of a majority of the entire Board, may remove any officer,
agent or member of any Committees with or without cause from office.
ARTICLE XXII.
Vacancies.
If the office of any officer or agent, one or more, becomes vacant by
reason of death, disability, resignation, removal, disqualification or
otherwise, the Directors at the time in office, if a quorum, may, by a
majority vote at a meeting at which a quorum is present, choose a successor or
successors who shall hold office for the unexpired term or until his successor
is duly elected and qualified or his position is eliminated.
ARTICLE XXIII.
Certificates for Shares.
Every Shareholder shall be entitled to a certificate or certificates for
shares of record owned by him in such form as may be prescribed by the Board
of Directors, duly numbered and setting forth the number and kind of shares to
which such Shareholder is entitled. Such certificates shall be signed by the
President or a Vice President and by the Treasurer or an Assistant Treasurer
or the Corporate Secretary or an Assistant Corporate Secretary. The Board of
Directors may also appoint one or more Transfer Agents and/or Registrars for
its stock of any class or classes and may require stock certificates to be
countersigned and/or registered by one or more of such Transfer Agents and/or
Registrars. If certificates for shares are signed, either manually or by
facsimile, engraved or printed, by a Transfer Agent or by a Registrar, the
signatures thereon of the President or a Vice President and the Treasurer or
an Assistant Treasurer or the Corporate Secretary or an Assistant Corporate
Secretary may be facsimiles, engraved or printed. Any provisions of these
Bylaws with reference to the signing of stock certificates shall include, in
cases above permitted, such facsimiles. In case any officer or officers who
shall have signed, or whose facsimile signature or signatures shall have been
used on, any such certificate or certificates shall cease to be such officer
or officers of the Corporation, whether because of death, resignation or
otherwise, before such certificate or certificates shall have been delivered
by the Corporation, such certificate or certificates may nevertheless be
issued and delivered as though the person or persons who signed such
certificate or certificates or whose facsimile signature or signatures shall
have been used thereon had not ceased to be such officer or officers of the
Corporation. Notwithstanding the foregoing, the Board of Directors may
authorize the issue of some or all of the shares of any or all of its classes
or series without certificates. Within a reasonable time after the issue or
transfer of shares without certificates, the Corporation shall send the
Shareholder a written statement of the information required on certificates by
the Virginia Stock Corporation Act or other applicable law.
ARTICLE XXIV.
Transfer of Shares.
Shares may be transferred by delivery of the certificate accompanied
either by an assignment in writing on the back of the certificate or by a
written power of attorney to sell, assign and transfer the same on the books
of the Corporation, signed by the person appearing by the certificate to be
the owner of the shares represented thereby, and shall be transferable on the
books of the Corporation upon surrender thereof so assigned or endorsed. The
person registered on the books of the Corporation as the owner of any shares
shall be entitled exclusively as the owner of such shares, to receive
dividends and to vote in respect thereof. It shall be the duty of every
Shareholder to notify the Corporation of his address.
ARTICLE XXV.
Record Date.
For the purpose of determining the Shareholders entitled to notice of or
to vote at any meeting of Shareholders, or any adjournment thereof, or
entitled to receive payment of any dividend, or in order to make a
determination of Shareholders for any other proper purpose, the Board of
Directors may fix in advance a date as the record date for any such
determination of Shareholders, provided that such date shall not in any case
be more than 70 days prior to the date on which the particular action,
requiring such determination of Shareholders, is to be taken. If no record
date shall be fixed for the determination of Shareholders entitled to notice
of or to vote at a meeting of Shareholders, or for the determination of the
Shareholders entitled to receive payment of a dividend, the date on which
notice of the meeting is mailed or the date on which the resolution of the
Board of Directors declaring such dividend is adopted, as the case may be,
shall be the record date for such determination of Shareholders in such cases.
A determination of Shareholders entitled to notice of or to vote at a
Shareholders' meeting is effective for any adjournment of the meeting unless
the Board of Directors fixes a new record date, which it shall do if the
meeting is adjourned to a date more than 120 days after the date fixed for the
original meeting.
ARTICLE XXVI.
Voting of Shares Held.
Unless the Board of Directors shall otherwise provide, the Chairman of
the Board of Directors, the Chief Executive Officer, the President, any Vice
President, or the Corporate Secretary may from time to time appoint one or
more attorneys-in-fact or agents of the Corporation, in the name and on behalf
of the Corporation, to cast the votes that the Corporation may be entitled to
cast as a shareholder or otherwise in any other corporation, any of whose
stock or securities of which may be held by the Corporation, at meetings of
the holders of any such other corporations, or to consent in writing to any
action by any such other corporation, and may instruct the person or persons
so appointed as to the manner of casting such votes or giving such consent,
and may execute or cause to be executed on behalf of the Corporation such
written proxies, consents, waivers or other instruments as he may deem
necessary or proper in the premises; or either the Chairman of the Board of
Directors, the Chief Executive Officer, the President or the Corporate
Secretary may himself attend any meeting of the shareholders of any such other
corporation and thereat vote or exercise any or all other powers of the
Corporation as the shareholder of such other corporation; provided, however,
that, unless such action has been approved by an affirmative vote of the Board
of Directors, the Corporation, in its capacity as the sole shareholder of
Virginia Electric and Power Company ("Virginia Power"), may not (i) amend
Virginia Power's Articles of Incorporation or Bylaws or (ii) remove any
director of Virginia Power during his or her respective term.
ARTICLE XXVII.
Bonds, Debentures and Notes Issued Under an Indenture.
All bonds, debentures and notes issued under an indenture shall be signed
by the Chief Executive Officer, the President or any Vice President or such
other officer or agent as the Board of Directors shall authorize and by the
Corporate Secretary or any Assistant Corporate Secretary or by the Treasurer
or any Assistant Treasurer or such other officer or agent as the Board of
Directors shall authorize. The signature of any authorized officer of the
Corporation on bonds, debentures and notes authenticated by a corporate
trustee may be made manually or by facsimile.
ARTICLE XXVIII.
Amendments.
Both the Board of Directors and the Shareholders shall have the power to
alter, amend or repeal the Bylaws of the Corporation or to adopt new Bylaws,
but Bylaws enacted by the Shareholders, if expressly so provided, may not be
altered, amended or repealed by the Directors. Notwithstanding the foregoing,
Articles IV and IX of these Bylaws may not be amended, altered, changed or
repealed without the affirmative vote of at least two-thirds of the
outstanding shares of the Corporation entitled to vote.
ARTICLE XXIX.
Emergency Bylaws.
The Emergency Bylaws provided in this Article XXIX shall be operative
during any emergency notwithstanding any different provision in the preceding
Articles of the Bylaws or in the Articles of Incorporation of the Corporation
or in the Virginia Stock Corporation Act. An emergency exists if a quorum of
the Corporation's Board of Directors cannot readily be assembled because of
some catastrophic event. To the extent not inconsistent with these Emergency
Bylaws, the Bylaws provided in the preceding Articles shall remain in effect
during such emergency and upon the termination of such emergency the Emergency
Bylaws shall cease to be operative unless and until another such emergency
shall occur.
During any such emergency:
(a) Any meeting of the Board of Directors may be called by any officer
of the Corporation or by any Director. Notice shall be given by the person
calling the meeting. The notice shall specify the time and place of the
meeting. Notice may be given only to such of the Directors as it may be
feasible to reach at the time and by such means as may be feasible at the
time, including publication or radio. If given by mail, messenger or
telephone, the notice shall be addressed to the Director's address or such
other place as the person giving the notice shall deem most suitable. Notice
shall be similarly given, to the extent feasible, to the other persons
referred to in (b) below. Notice shall be given at least two days before the
meeting if feasible in the judgment of the person giving the notice, but
otherwise shall be given any time before the meeting as the person giving the
notice shall deem necessary.
(b) At any meeting of the Board of Directors, a quorum shall consist of
a majority of the number of Directors fixed at the time by Article IX of the
Bylaws. If the Directors present at any particular meeting shall be fewer
than the number required for such quorum, other persons present, as determined
by the following provisions and in the following order of priority, up to the
number necessary to make up such quorum, shall be deemed Directors for such
particular meeting:
(i) The Executive Vice Presidents in the order of their seniority of
first election to such office, or if two or more shall have been first
elected to such office on the same day, in the order of their seniority
in age;
(ii) The Senior Vice Presidents in the order of their seniority of
first election to such office, or if two or more shall have been first
elected to such office on the same day, in the order of their seniority
in age;
(iii) All other Vice Presidents at the principal office of the
Corporation in the order of their seniority of first election to such
office, or if two or more shall have been first elected to such office on
the same day, in the order of their seniority in age; and
(iv) Any other persons that are designated on a list that shall have
been approved by the Board of Directors before the emergency, such
persons to be taken in such order of priority and subject to such
conditions as may be provided in the resolution approving the list.
(c) The Board of Directors, during as well as before any such emergency,
may provide, and from time to time modify, lines of succession in the event
that during such an emergency any or all officers or agents of the Corporation
for any reason shall be rendered incapable of discharging their duties.
(d) The Board of Directors, before and during any such emergency, may,
effective in the emergency, change the principal office or designate several
alternative principal offices or regional offices, or authorize the officers
so to do.
No officer, Director or employee shall be liable for any action taken in
good faith in accordance with these Emergency Bylaws.
These Emergency Bylaws shall be subject to repeal or change by further
action of the Board of Directors or by action of the Shareholders, except that
no such repeal or change shall modify the provisions of the next preceding
paragraph with regard to action or inaction prior to the time of such repeal
or change. Any such amendment of these Emergency Bylaws may make any further
or different provision that may be practical and necessary for the
circumstances of the emergency.
ARTICLE XXX.
Shareholder Proposals.
To be properly brought before a meeting of Shareholders, business must be
(i) specified in the notice of meeting (or any supplement thereto) given by or
at the direction of the Board of Directors, (ii) otherwise properly brought
before the meeting by or at the direction of the Board of Directors or (iii)
otherwise properly brought before the meeting by a Shareholder. In addition
to any other applicable requirements, for business to be properly brought
before an Annual Meeting by a Shareholder, the Shareholder must have given
timely notice thereof in writing to the Corporate Secretary of the
Corporation. To be timely, a Shareholder's notice must be given, either by
personal delivery or by United States registered or certified mail, postage
prepaid, to the Corporate Secretary of the Corporation not later than 90 days
prior to the date of the anniversary of the immediately preceding Annual
Meeting. A Shareholder's notice to the Corporate Secretary shall set forth as
to each matter the Shareholder proposes to bring before the Annual Meeting (i)
a brief description of the business desired to be brought before the Annual
Meeting, including the complete text of any resolutions to be presented at the
Annual Meeting, with respect to such business, and the reasons for conducting
such business at the meeting, (ii) the name and address of record of the
Shareholder proposing such business, (iii) the class and number of shares of
the Corporation that are beneficially owned by the Shareholder and (iv) any
material interest of the Shareholder in such business. In the event that a
Shareholder attempts to bring business before an Annual Meeting without
complying with the foregoing procedure, the Chairman of the meeting may
declare to the meeting that the business was not properly brought before the
meeting and, if he shall so declare, such business shall not be transacted.
ARTICLE XXXI.
Control Share Acquisitions.
In the event that any acquiring person (an "Acquiring Person") as defined
in Section 13.1-728.1 of the Virginia Stock Corporation Act (the "Act"),
either (i) fails to comply with the provisions of Section 13.1-728.4 of the
Act or (ii) fails to obtain the approval of the Shareholders of the
Corporation at any meeting held pursuant to Section 13.1-728.5, then the
Corporation shall have authority, upon approval by resolution of the Board of
Directors to call for redemption, at anytime within 60 days after the last
acquisition of any such shares by such Acquiring Person or the date of such
meeting, as the case may be, and thereafter to redeem on such date within such
60-day period as may be specified in such resolution (the "Redemption Date")
all shares of Common Stock of the Corporation theretofore acquired by the
Acquiring Person in a control share acquisition (as defined in Section
13.1-728.1 of the Act) and then owned beneficially by such Acquiring Person,
as such number of shares may be either (i) shown on any control share
acquisition statement or any statement or report filed by the Acquiring Person
with the Securities and Exchange Commission under the Securities Exchange Act
of 1934, as amended, or (ii) otherwise determined by the Board of Directors.
The redemption price shall be paid in cash on the Redemption Date against
delivery at the principal office of the Corporation of certificates evidencing
the shares so redeemed.
All determinations by the Board of Directors as to (i) the status of any
person as an Acquiring Person under the Act, (ii) the number of shares of the
Corporation owned by such Acquiring Person, (iii) the timeliness of compliance
by any Acquiring Person within Section 13.1-728.4 of the Act, or (iv) the
interpretation of the Act or this Article if made in good faith, shall be
conclusive and binding on all persons.
Exhibit 10(xxvi)
DOMINION RESOURCES, INC.
EMPLOYMENT CONTINUITY AGREEMENT
Amended and Restated as of August 12, 1994
THIS AGREEMENT is between Dominion Resources, Inc., a Virginia
corporation (the "Company"), and __________________ (the "Executive").
The Company and the Executive have entered into an Employment
Continuity Agreement dated June 1, 1988 and now wish to amend and restate
the Executive's Employment Continuity Agreement as set forth herein.
NOW, THEREFORE, in consideration of the mutual undertakings
contained in this Agreement, the parties agree that the Executive's
Employment Continuity Agreement is hereby amended and restated in its
entirety to read as follows:
The Company's Board of Directors (the "Board") acknowledges that
the Executive's contributions to the past and future growth and success of
the Company have been and will continue to be substantial. As a publicly
held corporation, the Board recognizes that there exists a possibility of a
change in control of the Company. The Board also recognizes that the
possibility of such a change in control may contribute to uncertainty on
the part of senior management and may result in the departure or
distraction of senior management from operating responsibilities.
Outstanding management of the Company is always essential to
advancing the best interests of the Company and its shareholders. In the
event of a threat or occurrence of a bid to acquire or change control of
the Company or to effect a business combination, it is particularly
important that the Company's business be continued with a minimum of
disruption. The Board believes that the objective of securing and
retaining outstanding management will be achieved if the Company's key
management employees are given assurances of employment security so they
will not be distracted by personal uncertainties and risks created by such
circumstances.
The Board believes that such assurances will secure the continued
services of the Company's key operational and management executives in the
performance of both their regular duties and such extra duties as may be
required of them during such periods of uncertainty, enable the Company to
rely on such executives to manage its affairs during any such period with
less concern for their personal risks, and enhance the Company's ability to
attract new key executives as needed.
The Organization and Compensation Committee (the "Committee") of
the Board has recommended, and the Board has approved, entering into
employment agreements with the Company's key management executives in order
to achieve the foregoing objectives; and the Executive is a key management
executive of the Company.
The Company and the Executive enter into this Agreement to induce
the Executive to remain an employee of the Company and to continue to
devote his full energy to the Company's affairs.
1. Employment.
(a) The Company and the Executive hereby agree that the
Executive's employment will continue after this Agreement is effective on
the same terms and conditions of employment as are in effect on the date of
the Agreement.
(b) The Company further agrees that if the Executive is in
the employ of the Company on a Control Change Date, the Company will
continue to employ the Executive, and the Executive will remain in the
employ of the Company, for the period commencing on the Control Change Date
and ending on the third anniversary of such date (the "Employment Period"),
and the Executive will continue to exercise such authority and perform such
executive duties as are commensurate with the authority being exercised and
duties being performed by the Executive immediately before the Control
Change Date. The Executive's services will be performed at the location
where the Executive was employed immediately before the Control Change
Date. If the Company consents, however, the Executive may elect to change
the location of his employment without affecting any of his rights under
this Agreement.
(c) For purposes of this Agreement, a Change in Control
occurs if: (i) after the date of the Agreement, any person, including a
"group" as defined in Section 13(d)(3) of the Securities Exchange Act of
1934, becomes the owner or beneficial owner of Company securities having
20% or more of the combined voting power of the then outstanding Company
securities that may be cast for the election of the Company's directors
(other than as a result of an issuance of securities initiated by the
Company, or open market purchases approved by the Board, as long as the
majority of the Board approving the purchases is the majority at the time
the purchases are made); or (ii) as the direct or indirect result of, or in
connection with, a cash tender or exchange offer, a merger or other
business combination, a sale of assets, a contested election, or any
combination of these transactions, the persons who were directors of the
Company before such transactions cease to constitute a majority of the
Company's Board, or any successor's board, within two years of the last of
such transactions. For purposes of this Agreement, the Control Change Date
is the date on which an event described in (i) or (ii) occurs. If a Change
in Control occurs on account of a series of transactions, the Control
Change Date is the date of the last of such transactions.
2. Compensation and Benefits. During the Employment Period,
the Company will (i) continue to pay the Executive a salary not less than
the salary applicable to the Executive on the Control Change Date, (ii) pay
the Executive bonuses in amounts not less in amount than those paid to the
Executive during the twelve-month period preceding the Control Change Date,
and (iii) continue employee benefit programs as to the Executive at levels
in effect on the Control Change Date (but subject to such reductions as may
be required to maintain such plans in compliance with applicable federal
laws regulating employee benefit programs).
3. Termination of Employment.
(a) The Executive is entitled to receive Continued
Compensation (as defined in subsection (d) below) according to the
remaining provisions of this Section if the Executive's employment with the
Company terminates during the Employment Period because of an event
described in Section 3(b) or 3(c), but subject to Section 3(f). If the
Executive's employment terminates during the Employment Period and an event
described in Section 3(b) or 3(c) has not occurred, this Agreement shall
terminate.
(b) The Executive is entitled to receive Continued
Compensation if the Executive's employment is terminated by the Company
without cause during the Employment Period (cause being limited to the
Executive's acts of theft, embezzlement, fraud, or moral turpitude).
(c) The Executive is entitled to receive Continued
Compensation if the Executive voluntarily terminates employment during the
Employment Period after (i) the Executive does not receive salary
increases, bonuses, and incentive awards comparable in the aggregate to the
salary increases, bonuses, and incentive awards that the Executive received
in prior years or, if greater, that other executives in comparable
positions receive in the current year; or (ii) the Executive's compensation
or employment related benefits are reduced; or (iii) the Executive's
status, titles, offices, places of employment, working conditions, or
management responsibilities are diminished (other than changes in reporting
or management responsibilities to reflect sound practices commonly followed
by enterprises comparable to the Company or required by applicable federal
or state law). The Executive's voluntary termination under this Section
must occur within sixty days after an event described in (i), (ii), or
(iii), or within sixty days after the last in a series of such events.
(d) Continued Compensation will be paid in a lump sum
payment. However, if the Executive requests and the Company (in its sole
discretion) consents, the Executive may receive Continued Compensation in
thirty-six equal monthly installments. If Continued Compensation is paid
in monthly installments, the total Continued Compensation payments will
equal three times the Executive's Base Period Income (as defined in
subsection (e) below). If the Continued Compensation is paid in a lump
sum, the Continued Compensation will equal the present value of the total
payments that would be due under the preceding sentence, using the interest
rate prescribed in section 280G(d)(4) of the Internal Revenue Code of 1986,
as amended (the "Code"). Continued Compensation is due and payable to the
Executive on the later of the fifteenth business day after the Executive's
employment termination or the first day of the month following his
employment termination. At the Company's sole discretion, however, a
Continued Compensation payment may be made on an earlier date. Continued
Compensation is subject to reduction according to Section 3(f).
(e) The Executive's Base Period Income equals the greater
of (i) his average annual base salary and cash incentive bonuses for the
thirty-six full month period (or actual period, if shorter) of employment
preceding the Control Change Date, or (ii) his average annual base salary
and cash incentive bonuses for the thirty-six full month period (or actual
period if shorter) of employment preceding the Executive's employment
termination. For purposes of the preceding sentence, cash amounts received
under the Dominion Resources, Inc. Performance Achievement Plan are not
considered cash incentive bonuses. Amounts of salary and bonus that the
Executive has elected to defer during the relevant period are included in
Base Period Income.
(f) If any payments that the Executive has the right to
receive from the Company (including Continued Compensation payments) or any
affiliated entity or any payments or benefits under any plan maintained by
the Company or any affiliated entity would constitute a "parachute payment"
(as defined in Code section 280G and not governed by terms defined in this
Agreement), all such payments (other than payments described in subsection
(g) below or Section 4) shall be reduced to the largest amount that will
result in no portion of any such payments being subject to the excise tax
imposed by Code section 4999. The determination of any reduction pursuant
to this subsection shall be made by the Company in good faith, before any
such payments are due and payable to the Executive. The payments described
in subsection (g) or Section 4 shall not be reduced pursuant to this
subsection (f), but they shall be taken into account (to the extent that
they are considered "parachute payments") in computing the maximum amount
of other payments that may be made without imposition of the excise tax
under Code section 4999.
(g) In addition to any other payments provided under this
Agreement or any other arrangement between the Company and the Executive,
the Executive is entitled to (i) any benefits that become vested under the
accelerated vesting provisions of the Dominion Resources, Inc. Executive
Supplemental Retirement Plan and any benefits due the Executive as a result
of the exercise of a stock option granted or a restricted stock award made
under the Dominion Resources, Inc. Long-Term Incentive Plan, and (ii) any
payments or benefits due the Executive that are not "parachute payments"
(as defined in Code section 280G), including amounts that the Executive is
entitled to receive under the Company's qualified plans and health care
coverage under the Company's welfare plans for which the Executive pays the
cost.
4. Indemnification.
(a) The Company must pay all legal fees and expenses, if
any, incurred by the Executive in seeking to obtain or enforce any right or
benefit provided by this Agreement, whether successful or not.
(b) In addition, if the excise tax imposed under Code
section 4999 on "excess parachute payments," as defined in Code section
280G, is provoked by (i) any amount paid or payable to or for the benefit
of the Executive under this Section as legal fees and expenses, or (ii) any
benefits that become vested under the accelerated vesting provisions of the
Dominion Resources, Inc. Executive Supplemental Retirement Plan and any
benefits due the Executive as a result of the exercise of a stock option
granted or a restricted stock award made under the Dominion Resources, Inc.
Long-Term Incentive Plan, the Company shall indemnify the Executive and
hold him harmless against all claims, losses, damages, penalties, expenses,
excise taxes, and other taxes that result from the imposition of the excise
tax under Code section 4999 (including, without limitation, any income,
payroll and excise taxes imposed on the amount payable to the Executive to
cover his excise tax under Code section 4999).
5. Administration.
(a) The Committee shall be responsible for the
administration and interpretation of this Agreement on behalf of the
Company. If for any reason a benefit under this Agreement is not paid when
due, the Executive may file a written claim with the Committee. If the
claim is denied or no response is received within 90 days after the filing
(in which case the claim is deemed to be denied), the Executive may appeal
the denial to the Board within 60 days of the denial. The Executive may
request that the Board review the denial, the Executive may review
pertinent documents, and the Executive may submit issues and comments in
writing. A decision on appeal will be made within 60 days after the appeal
is made, unless special circumstances require that the Board extend the
period for another 60 days.
6. Governing Law. This Agreement is construed according to the
laws of the Commonwealth of Virginia.
7. Amendment. This Agreement may not be amended except by the
written agreement of the parties.
8. Binding Effect. The parties agree that this Agreement is
enforceable under the laws of the Commonwealth of Virginia. This Agreement
is binding on the Company, its successors, and assigns and on the Executive
and his personal representatives. If the Company is consolidated or merged
with or into another corporation, or if another entity purchases all or
substantially all of the Company's assets, the surviving or acquiring
corporation shall succeed to the Company's rights and obligations under
this Agreement. This Agreement inures to the benefit of and is enforceable
by the Executive's personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees, and legatees.
If the Executive dies while any amounts are payable under this Agreement,
all such amounts, unless otherwise provided, shall be paid in accordance
with the terms of this Agreement to the Executive's spouse, or if none, to
his devisee, legatee, or other designee or, if there be no such designee,
to his estate.
9. Notice. For purposes of this Agreement, notices and all
other communications must be in writing and are effective when delivered or
mailed by United States registered mail, return receipt requested, postage
prepaid, addressed to the Executive or his personal representatives at his
last known address. All notices to the Company must be directed to the
attention of the Chairman of the Board. Such other addresses may be used
as either party may have furnished to the other in writing. Notices of
change of address are effective only upon receipt.
10. Miscellaneous. No provisions of this Agreement may be
modified, waived, or discharged unless such waiver, modification, or
discharge is agreed to in writing signed by the Executive and the Company.
A waiver of any breach of or compliance with any provisions or condition of
this Agreement is not a waiver of similar or dissimilar provisions or
conditions. The invalidity or unenforceability of any provision of this
Agreement does not affect the validity or enforceability of any other
provision of this Agreement, which remains in full force and effect. This
Agreement may be executed in one or more counterparts, all of which will be
considered one and the same agreement.
11. No Assignment. The Executive may not assign, alienate,
anticipate, or otherwise encumber any rights, duties, or amounts which he
might be entitled to receive under this Agreement. The right to receive
benefits under this Agreement will not give the Executive any proprietary
interest in the Company or any of its assets. Benefits under the Agreement
will be payable from the general assets of the Company, and there will be
no required funding of amounts that may become payable under the Agreement.
The Executive will for all purposes be a general creditor of the Company.
The interest of the Executive under the Agreement will not be subject to
the claims of the Executive's creditors.
12. Term. This Agreement is effective from the date of its
execution by the Company. The Company may not terminate this Agreement for
thirty-six months after it becomes effective. The Agreement automatically
continues in effect from year to year thereafter unless the Company
notifies the Executive in writing thirty days before the end of the initial
thirty-six month period or any anniversary of its execution that the
Agreement will terminate as of that date.
The parties have executed this Agreement dated this _____ day of
__________, 1994.
DOMINION RESOURCES, INC.
By___________________________
_____________________________
_____________________________
Exhibit 10(xxx)
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT (the "Agreement") is made as of August
12, 1994, between DOMINION RESOURCES, INC. (the "Company") and THOS. E.
CAPPS (the "Executive").
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 believes that it is particularly
important to have stable, excellent management at the present time. The
Board of Directors believes that this objective may be achieved by giving
key management employees assurances of financial security for a period of
time, so that they will not be distracted by personal risks and will
continue to devote their full time and best efforts to the performance of
their duties.
The Organization and Compensation Committee of the Board of
Directors (the "Committee") has recommended, and the Board of Directors has
approved, entering into employment agreements with the Company's key
management executives in order to achieve the foregoing objectives. The
Executive is a key management executive of the Company and is a valuable
member of the Company's management team. The Company acknowledges that the
Executive's contributions to the past and future growth and success of the
Company have been and will continue to be substantial. The Company and the
Executive are entering into this Agreement to induce the Executive to
remain an employee of the Company and to continue to devote his full energy
to the Company's affairs. The Executive has agreed to continue to be
employed by the Company under the terms and conditions hereinafter set
forth.
NOW, THEREFORE, in consideration of the foregoing and the mutual
undertakings contained in this Agreement, the parties agree as follows:
1. Employment. The Company will employ the Executive, and the
Executive will continue in the employ of the Company, as Chief Executive
Officer of the Company for the period beginning August 12, 1994 and ending
August 12, 1997 (the "Term of this Agreement"), according to the terms of
this Agreement.
2. Duties. The Company and the Executive agree that, during
the Term of this Agreement, the Executive will be Chief Executive Officer
of the Company and will report directly to the Board of Directors. During
the Term of this Agreement, the Executive will continue to exercise such
authority and perform such executive duties as are commensurate with his
position as Chief Executive Officer. The Executive (i) will devote his
knowledge, skill and best efforts on a full-time basis to performing his
duties and obligations to the Company (with the exception of absences on
account of illness or vacation in accordance with the Company's policies
and civic and charitable commitments not involving a conflict with the
Company's business), and (ii) will comply with the directions and orders of
the Board of Directors of the Company with respect to the performance of
his duties.
3. Effect on Other Agreements. This Agreement sets forth the
entire understanding of the parties with respect to the terms of the
Executive's employment with the Company and its subsidiaries. The existing
Employment Continuity Agreement between the Executive and the Company will
terminate as of the date on which this Agreement is executed. This
Agreement supersedes and replaces the Executive's existing Employment
Continuity Agreement, the letter dated April 21, 1994 to the Executive from
James F. Betts, and any other employment agreements between the Executive
and the Company or a subsidiary (collectively, the "Prior Agreements").
The term "employment agreement" as used in the preceding sentence does not
include any retirement, incentive or benefit plan or program in which the
Executive participates or the credited service agreement described in
Section 5(b). The Executive and the Company agree that, effective as of
the execution of this Agreement, the Executive's Prior Agreements are null
and void.
4. Compensation and Benefits.
(a) During the Term of this Agreement, while the Executive
is employed by the Company, the Company will pay to the Executive the
following salary and incentive awards for services rendered to the Company:
(i) The Company will pay to the Executive an annual
salary in an amount not less than the base salary in effect
for the Executive as of the date on which this Agreement is
executed. The Board of Directors will evaluate the
Executive's performance at least annually and will consider
annual increases in the Executive's salary based on the
Executive's performance.
(ii) The Executive will be entitled to receive
incentive awards based on the Executive's job performance,
if and to the extent that the Board of Directors determines
that the Executive's performance merits payment of an award.
The Board of Directors will make its determination
consistent with the methodology used by the Board of
Directors for compensating its senior management employees.
(b) During the Term of this Agreement, while the Executive
is employed by the Company, the Executive will be eligible to participate
in a similar manner as other senior executives of the Company in retirement
plans, cash and stock incentive plans, fringe benefit plans and other
employee benefit plans and programs provided by the Company for its senior
management employees from time to time.
5. Benefits Upon Completion of the Term of this Agreement.
(a) If the Executive continues in the employment of the
Company through August 12, 1997, the Executive will be entitled to receive
the following additional benefits:
(i) The Executive's retirement benefits under the
Company's Retirement Plan and Benefit Restoration Plan will
be computed based on the greater of (A) the Executive's
annual salary during his final year of employment or (B) the
Executive's final five-year average compensation, as
described in the Company's Retirement Plan. Any
supplemental benefit to be provided under this subsection
(i) will be provided as a supplemental benefit under this
Agreement and will not be provided directly from the
Retirement Plan.
(ii) The Executive's "Final Compensation" under the
Company's Executive Supplemental Retirement Plan (the "SRP")
will be determined by computing the "Incentive Compensation
Amount" as if the Executive's short-term incentive
compensation target award was the unreduced percentage
(which will be at least 45%) of his salary midpoint as
approved by the Committee for the year (for example, for
1993 and 1994, the unreduced percentage was 45% of his
salary midpoint, as compared to the reduced target that was
used for 1993 and 1994 in order to make long-term
compensation a larger part of the Executive's incentive
compensation for those years).
(iii) The benefit under the SRP will continue to be
computed as an equal periodic payment for 120 months,
according to the SRP document. However, this periodic
payment will be payable for the Executive's life (or for 120
payments, if longer).
(iv) The restricted stock held by the Executive as of
August 12, 1997 will become fully vested (that is,
transferable and nonforfeitable) as of that date. The
Executive must satisfy the tax withholding requirements
described in Section 10 with respect to the restricted
stock.
(b) As set forth in the existing credited service agreement
between the Executive and the Company, if the Executive continues in the
employment of the Company until he attains age 60, the Executive will be
credited with a total of 30 years of service upon attainment of age 60 for
purposes of the Company's retirement plans.
6. Termination of Employment.
(a) If the Company terminates the Executive's employment,
other than for Cause (as defined in Section 8 below), during the Term of
this Agreement, the Company will pay the Executive a lump sum payment equal
to the present value of the Executive's annual base salary and annual cash
incentive awards (computed as described below) for the balance of the Term
of this Agreement. The lump sum payment will be computed as follows:
(i) For purposes of this calculation, the Executive's
annual base salary for the balance of the Term of the
Agreement will be calculated at the highest annual base
salary rate in effect for the Executive during the three-
year period preceding his termination of employment. For
purposes of this calculation, the Executive's annual cash
incentive awards for the balance of the Term of the
Agreement will be calculated at a rate equal to the highest
annual cash incentive award paid to the Executive during the
three-year period preceding his termination of employment.
Salary and bonus that the Executive elected to defer will be
taken into account for purposes of this Agreement without
regard to the deferral.
(ii) The salary and incentive award for any partial
year in the Term of this Agreement will be a pro-rated
portion of the annual amount; provided that, if the
Executive has not yet received payment of his annual cash
incentive award for the year in which his employment
terminates, the lump sum payment will be increased to
include a full year's award, in an amount determined
according to clause (i) above, for the year in which the
Executive's employment terminates.
(iii) Present value will be computed by the Company as
of the date of the Executive's termination of employment,
based on a discount rate equal to the applicable Federal
short-term rate, as determined under Section 1274(d) of the
Internal Revenue Code of 1986, as amended (the "Code"),
compounded monthly, in effect on the date on which the
present value is determined.
(iv) The lump sum payment will be paid within 30 days
after the Executive's termination of employment.
(b) If the Company terminates the Executive's employment,
other than for Cause, during the Term of this Agreement, the Executive will
be entitled to receive the following additional benefits determined as of
the date of his termination of employment:
(i) The Executive will receive the retirement benefits
described in Section 5(a)(i), (ii) and (iii) above as of the
date of his termination of employment.
(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 restricted stock held by the Executive at the
time of his termination of employment will become fully
vested (that is, transferable and nonforfeitable) as of the
date of the Executive's termination of employment. The
Executive must satisfy the tax withholding requirements
described in Section 10 with respect to the restricted
stock.
(iv) 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.
(c) If the Executive voluntarily terminates employment
during the Term of this Agreement under circumstances described in this
subsection (c), the Executive will be entitled to receive the benefits
described in subsections (a) and (b) above as if the Company had terminated
the Executive's employment other than for Cause. Subject to the provisions
of this subsection (c), these benefits will be provided if the Executive
voluntarily terminates 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, or (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). In order for this
subsection (c) to be effective: (1) the Executive must give written notice
to the Company indicating that the Executive intends to terminate
employment under this subsection (c), (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 (c) on account
of the event specified in the Executive's notice.
(d) The amounts under this Agreement will be paid in lieu
of severance benefits under any severance plan or program maintained by the
Company. The amounts payable under this Agreement will not be reduced by
any amounts earned by the Executive from a subsequent employer or
otherwise. If the Executive's employment is terminated by the Company for
Cause or if the Executive voluntarily terminates employment for a reason
not described in subsection (c) above or Section 7 below, this Agreement
will immediately terminate.
7. Disability or Death. 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 Section 6(b)(i), (ii) and (iii) 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 Section 6(b)(i), (ii) and (iii) will
be provided to the Executive's beneficiary designated under the terms of
the applicable benefit plan. The foregoing benefits will be provided in
addition to any death, disability and other benefits provided under Company
benefit plans in which the Executive participates. Upon the Executive's
death or disability, the provisions of Sections 1, 2, 4, 5 and 6 of this
Agreement will terminate. The term "disability" means a condition,
resulting from bodily injury or disease, that renders, and for a six
consecutive month period has rendered, the Executive unable to perform any
and every duty pertaining to his employment with the Company. A return to
work of less than 14 consecutive days will not be considered an
interruption in the Executive's six consecutive months of disability.
Disability will be determined by the Company on the basis of medical
evidence satisfactory to the Company.
8. Cause. For purposes of this Agreement, the term "Cause"
means (i) fraud or material misappropriation with respect to the business
or assets of the Company, (ii) persistent refusal or wilful 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) conduct that constitutes disloyalty to the
Company, and that materially harms or has the potential to cause material
harm to the Company, (iv) conviction of a felony or crime involving moral
turpitude, or (v) the use of drugs or alcohol that interferes materially
with the Executive's performance of his duties.
9. Parachute Tax. If the Company determines that any amounts
payable under this Agreement would be subject to the excise tax imposed
under Code Section 4999 on "excess parachute payments", the Company will
compute the after-tax amount that would be payable to the Executive if the
total amounts that are payable to the Executive by the Company, an
affiliate, or a plan of the Company or an affiliate and are considered
"parachute payments" for purposes of Code Section 280G ("Parachute
Payments") were limited to the maximum amount that may be paid to the
Executive under Code Sections 280G and 4999 without imposition of the
excise tax (this after-tax amount is referred to as the "Capped Amount").
The Company will also compute the after-tax amount that would be payable to
the Executive if the total Parachute Payments were payable without regard
to the Code Sections 280G and 4999 limit (this after-tax amount is referred
to as the "Uncapped Amount"). Notwithstanding anything in this Agreement
to the contrary, if the Capped Amount is greater than or equal to 97% of
the Uncapped Amount, then the total benefits and other amounts that are
considered Parachute Payments and are payable to the Executive under this
Agreement will be reduced to the largest amount that will result in no
portion of any such payment being subject to the excise tax imposed by Code
Section 4999. Tax counsel selected by mutual consent of the Company and
the Executive will determine the amount of any such reduction in good
faith. The determination will be made before the payments are due and
payable to the Executive, to the extent possible. The Executive will
determine which payments will be reduced, subject to approval by the
Company (which approval may not be unreasonably withheld). The Executive
will have no right to receive Parachute Payments under this Agreement in
excess of the reduced amount. The calculations under this Section will be
made in a manner consistent with the requirements of Code Sections 280G and
4999, as in effect at the time the calculations are made.
10. Indemnification. The Company will pay all reasonable fees
and expenses, if any, (including, without limitation, legal fees and
expenses) that are incurred by the Executive to enforce this Agreement and
that result from a breach of this Agreement by the Company.
11. Payment of Compensation and Taxes. All amounts payable
under this Agreement (other than restricted stock, which will be paid
according to the terms of the Company's Long-Term Incentive Plan) will be
paid in cash, subject to required income and payroll tax withholdings. No
stock will be issued to the Executive with respect to the vesting of
restricted stock until the Executive has paid to the Company the amount
that must be withheld for applicable income and employment taxes or the
Executive has made provisions satisfactory to the Company for the payment
of such taxes.
12. Administration. The Committee will be responsible for the
administration and interpretation of this Agreement on behalf of the
Company. If for any reason a benefit under this Agreement is not paid when
due, the Executive may file a written claim with the Committee. If the
claim is denied or no response is received within 90 days after the filing
(in which case the claim is deemed to be denied), the Executive may appeal
the denial to the Board of Directors within 60 days of the denial. The
Executive may request that the Board of Directors review the denial, the
Executive may review pertinent documents, and the Executive may submit
issues and comments in writing. A decision on appeal will be made within
60 days after the appeal is made, unless special circumstances require that
the Board of Directors extend the period for another 60 days. If the
Company defaults in an obligation under this Agreement, the Executive makes
a written claim pursuant to the claims procedure described above, and the
Company fails to remedy the default within the claims procedure period,
then all amounts payable to the Executive under this Agreement will become
due and owing.
13. Assignment. The rights and obligations of the Company under
this Agreement will inure to the benefit of and will be binding upon the
successors and assigns of the Company. If the Company is consolidated or
merged with or into another corporation, or if another entity purchases all
or substantially all of the Company's assets, the surviving or acquiring
corporation will succeed to the Company's rights and obligations under this
Agreement. The Executive's rights under this Agreement may not be assigned
or transferred in whole or in part, except that the personal representative
of the Executive's estate (or other beneficiary designated under the terms
of the applicable benefit plan) will receive any amounts payable under this
Agreement after the death of the Executive.
14. Rights Under the Agreement. The right to receive benefits
under the Agreement will not give the Executive any proprietary interest in
the Company or any of its assets. Benefits under the Agreement will be
payable from the general assets of the Company, and there will be no
required funding of amounts that may become payable under the Agreement.
The Executive will for all purposes be a general creditor of the Company.
The interest of the Executive under the Agreement cannot be assigned,
anticipated, sold, encumbered or pledged and will not be subject to the
claims of the Executive's creditors.
15. Notice. For purposes of this Agreement, notices and all
other communications must be in writing and are effective when delivered or
mailed by United States registered mail, return receipt requested, postage
prepaid, addressed to the Executive or his personal representative at his
last known address. All notices to the Company must be directed to the
attention of the Chairman of the Committee. Such other addresses may be
used as either party may have furnished to the other in writing. Notices
of change of address are effective only upon receipt.
16. Miscellaneous. This instrument contains the entire
agreement of the parties. To the extent not governed by federal law, this
Agreement will be construed in accordance with the laws of the Commonwealth
of Virginia, without reference to its conflict of laws rules. No
provisions of this Agreement may be modified, waived or discharged unless
such waiver, modification or discharge is agreed to in writing and the
writing is signed by the Executive and the Company. A waiver of any breach
of or compliance with any provision or condition of this Agreement is not a
waiver of similar or dissimilar provisions or conditions. The invalidity
or unenforceability of any provision of this Agreement will not affect the
validity or enforceability of any other provision of this Agreement, which
will remain in full force and effect. This Agreement may be executed in
one or more counterparts, all of which will be considered one and the same
agreement.
WITNESS the following signatures.
DOMINION RESOURCES, INC.
By: /s/ John W. Snow
John W. Snow,
Chairman, Organization and
Compensation Committee
Dated: 8-24-94
/s/ Thos. E. Capps
Thos. E. Capps
Dated: 8-24-94
Exhibit 10(xxxi)
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT (the "Agreement") is made as of
February 6, 1995, between DOMINION RESOURCES, INC. (the "Company") and
TYNDALL L. BAUCOM (the "Executive").
RECITALS:
The Board of Directors of Dominion Resources, Inc. (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 believes that this objective
may be achieved by giving key management employees assurances of financial
security for a period of time, so that they will not be distracted by
personal risks and will continue to devote their full time and best efforts
to the performance of their duties.
To accomplish this purpose, the Company and the Executive entered
into an employment agreement as of August 12, 1994 (the "August, 1994
Employment Agreement"). The Executive is now serving as President of the
Company and has assumed substantial additional responsibilities. The
Organization and Compensation Committee of the Board of Directors (the
"Committee") has recommended, and the Board of Directors has approved,
entering into a new employment agreement with the Executive, which shall
replace the Executive's August, 1994 Employment Agreement. The Company
acknowledges that the Executive's contributions to the past and future
growth and success of the Company have been and will continue to be
substantial. The Company and the Executive are entering into this
Agreement to induce the Executive to remain an employee of the Company and
to continue to devote his full energy to the Company's affairs. The
Executive has agreed to continue to be employed by the Company under the
terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the foregoing and the mutual
undertakings contained in this Agreement, the parties agree as follows:
1. Employment. The Company will employ the Executive, and the
Executive will continue in the employment of the Company, as an executive
of the Company, for the period beginning August 12, 1994 and ending March
1, 1997 (the "Term of this Agreement"), according to the terms of this
Agreement.
2. Duties. The Company and the Executive agree that, during
the Term of this Agreement, the Executive will serve in a senior management
position with the Company. The Executive (i) will devote his knowledge,
skill and best efforts on a full-time basis to performing his duties and
obligations to the Company (with the exception of absences on account of
illness or vacation in accordance with the Company's policies and civic and
charitable commitments not involving a conflict with the Company's
business), and (ii) will comply with the directions and orders of the Board
of Directors and Chief Executive Officer of the Company with respect to the
performance of his duties.
3. Effect on Other Agreements. This Agreement sets forth the
entire understanding of the parties with respect to the Executive's
employment with the Company. The August, 1994 Employment Agreement and the
Employment Continuity Agreement between the Executive and the Company will
terminate as of the date on which this Agreement is executed. This
Agreement supersedes and replaces the Executive's August, 1994 Employment
Agreement, the Executive's Employment Continuity Agreement, and any other
employment agreements between the Executive and the Company (collectively,
the "Prior Agreements"). The term "employment agreement" as used in the
preceding sentence does not include any retirement, incentive or benefit
plan or program in which the Executive participates or any credited service
agreement under which the Executive receives years of service credit for
retirement plan purposes. The Executive and the Company agree that,
effective as of the execution of this Agreement, the Executive's Prior
Agreements are null and void.
4. Affiliates. Employment by an Affiliate of the Company or a
successor to the Company will be considered employment by the Company for
purposes of this Agreement, and termination of employment with the Company
means termination of employment with the Company and all its Affiliates and
successors. The term "Company" as used in this Agreement will be deemed to
include Affiliates and successors. For purposes of this Agreement, the
term "Affiliate" means the subsidiaries of Dominion Resources, Inc. and
other entities under common control with Dominion Resources, Inc.
5. Compensation and Benefits.
(a) During the Term of this Agreement, while the Executive
is employed by the Company, the Company will pay to the Executive the
following salary and incentive awards for services rendered to the Company:
(i) The Company will pay to the Executive an annual
salary in an amount not less than the base salary in effect
for the Executive as of the beginning of the Term of this
Agreement. The Board of Directors will evaluate the
Executive's performance at least annually and will consider
annual increases in the Executive's salary based on the
Executive's performance.
(ii) The Executive will be entitled to receive
incentive awards if and to the extent that the Board of
Directors determines that the Executive's performance merits
payment of an award. The Board of Directors will make its
determination consistent with the methodology used by the
Company for compensating its senior management employees.
If the Executive is employed by an Affiliate or a successor (as described
in Section 4), the term "Board of Directors" as used in this Section 5(a)
and in Section 7(a)(iii) means the Board of Directors of the Executive's
employer.
(b) During the Term of this Agreement, while the Executive
is employed by the Company, the Executive will be eligible to participate
in a similar manner as other senior executives of the Company in retirement
plans, cash and stock incentive plans, fringe benefit plans and other
employee benefit plans and programs provided by the Company for its senior
management employees from time to time.
6. Benefits Upon Completion of the Term of this Agreement. If
the Executive continues in the employment of the Company through March 1,
1997, the Executive will be entitled to receive the following additional
benefits:
(a) The Executive will receive from the Company a lump sum
completion bonus equal to 25% of the base salary and annual cash
incentive awards paid to the Executive during the Term of this
Agreement (including the cash incentive award for the 1996 fiscal
year, even if payment is postponed beyond March 1, 1997). Under
this provision, the Executive's completion bonus payable with
respect to incentive awards will be based on the Executive's
1994, 1995 and 1996 fiscal year cash incentive awards, which are
to be paid in February, 1995, 1996 and 1997, respectively.
Salary and incentive awards that the Executive has elected to
defer will be taken into account for purposes of this Agreement
without regard to the deferral. Payment will be made within 30
days after March 1, 1997.
(b) The Executive's retirement benefits under the Company's
Retirement Plan and Benefit Restoration Plan will be computed
based on the greater of (i) the Executive's annual salary during
his final year of employment or (ii) the Executive's final five-
year average compensation, as described in the Company's
Retirement Plan. Any supplemental benefit to be provided under
this subsection (b) will be provided as a supplemental benefit
under this Agreement and will not be provided directly from the
Retirement Plan.
(c) The Executive's retirement and supplemental retirement
benefits under the Company's plans will be computed as if the
Executive had attained age 60 and completed at least 30 years of
service.
7. Termination of Employment.
(a) If the Company terminates the Executive's employment,
other than for Cause (as defined in Section 9 below), during the Term of
this Agreement, the Company will pay the Executive a lump sum payment equal
to the present value of the Executive's annual base salary and annual cash
incentive awards (computed as described below) for the balance of the Term
of this Agreement. The lump sum payment will be computed as follows:
(i) For purposes of this calculation, the Executive's
annual base salary for the balance of the Term of the
Agreement will be calculated at the highest annual base
salary rate in effect for the Executive during the three-
year period preceding his termination of employment. For
purposes of this calculation, the Executive's annual cash
incentive awards for the balance of the Term of the
Agreement will be calculated at a rate equal to the highest
annual cash incentive award paid to the Executive during the
three-year period preceding his termination of employment.
Salary and incentive awards that the Executive elected to
defer will be taken into account for purposes of this
Agreement without regard to the deferral.
(ii) The salary and incentive award for any partial
year in the Term of this Agreement will be a pro-rated
portion of the annual amount.
(iii) If the Executive has not yet received an annual
cash incentive award for the year in which his employment
terminates, the lump sum payment will be increased to
include a pro-rated award for the portion of the year
preceding the Executive's termination of employment. If the
Executive has not yet received payment of his annual cash
incentive award for the year preceding his termination of
employment, the lump sum payment will be increased to
include an award for the year preceding the Executive's
termination of employment. The incentive award for the year
or portion of the year preceding the Executive's termination
of employment will be determined according to clause (i)
above, unless the Board of Directors made a good faith final
determination of the amount of the applicable incentive
award pursuant to Section 5(a)(ii) before the Executive's
termination of employment. If the Board of Directors made
such a determination, the applicable incentive award will be
computed according to the Board of Directors' determination.
(iv) Present value will be computed by the Company as
of the date of the Executive's termination of employment,
based on a discount rate equal to the applicable Federal
short-term rate in effect on the date as of which the
present value is determined, as determined under Section
1274(d) of the Code, compounded monthly.
(v) The lump sum payment will be paid within 30 days
after the Executive's termination of employment.
(b) If the Company terminates the Executive's employment,
other than for Cause, during the Term of this Agreement, the Executive will
be entitled to receive the following additional benefits determined as of
the date of his termination of employment:
(i) The Executive will receive a lump sum payment
equal to the present value of the completion bonus described
in Section 6(a) that would be payable to the Executive if he
remained an employee through the Term of this Agreement.
For purposes of this calculation, the Executive's base
salary for the balance of the Term of this Agreement will be
calculated at a rate equal to the highest annual base salary
paid to the Executive during the three-year period preceding
his termination of employment. For purposes of this
calculation, the Executive's annual cash incentive awards
that would be paid during the balance of the Term of this
Agreement will be calculated at a rate equal to the highest
annual cash incentive award paid to the Executive during the
three-year period preceding his termination of employment;
provided that if the Executive has not yet received payment
of his annual cash incentive award for the year preceding
his termination of employment, the award for that year will
be determined as described in the last two sentences of
subsection (a)(iii) above. Payment will be made within 30
days after the Executive's termination of employment.
Present value will be computed as of the date of the
Executive's termination of employment, based on the interest
rate described in subsection (a).
(ii) The Executive will receive the enhanced retirement
benefits and age and service credit described in Sections
6(b) and (c) above as of the date of his termination of
employment.
(iii) Any outstanding restricted stock that would become
vested (that is, transferable and nonforfeitable) if the
Executive remained an employee through the Term of this
Agreement will become vested as of the date of the
Executive's termination of employment (or as of the date
described in the next sentence, if applicable). In
addition, if the Company has agreed to award the Executive
restricted stock at the end of a performance period, subject
to the Company's achievement of performance goals, and the
date as of which the restricted stock is to become vested
falls within the Term of this Agreement, the stock will be
awarded and become vested at the end of the performance
period if and to the extent that the performance goals are
met. The Executive must satisfy the tax withholding
requirements described in Section 11 with respect to the
restricted stock.
(iv) 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
pension, medical and other benefit plans, and the Company
will continue the Executive's coverage under the Company's
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.
(c) If the Executive voluntarily terminates employment with
the Company during the Term of this Agreement under circumstances described
in this subsection (c), the Executive will be entitled to receive the
benefits described in subsections (a) and (b) above as if the Company had
terminated the Executive's employment other than for Cause. Subject to the
provisions of this subsection (c), these benefits will be provided if the
Executive voluntarily terminates employment after (i) the Company reduces
the Executive's base salary, (ii) the Executive is not in good faith
considered for incentive awards as described in Section 5(a)(ii), (iii) the
Company fails to provide benefits as required by Section 5(b), (iv) the
Company relocates the Executive's place of employment to a location further
than 30 miles from Richmond, Virginia, (v) the Company demotes the
Executive to a position that is not a senior management position (other
than on account of the Executive's disability, as defined in Section 8
below) or (vi) the Company restructures the Executive's position such that
the Chief Executive Officer of Virginia Electric and Power Company no
longer reports to the Executive, thereby rendering the Executive's current
position unnecessary, and does not offer the Executive another senior
management position. For this purpose, a "senior management position"
means the position of Chief Executive Officer, Chief Operating Officer or
President of Dominion Resources, Inc. ("DRI"), the position of President of
a subsidiary of DRI, or a position that reports directly to the Chief
Executive Officer or Chief Operating Officer of DRI or to the President of
a DRI subsidiary. In order for this subsection (c) to be effective: (1)
the Executive must give written notice to the Company indicating that the
Executive intends to terminate employment under this subsection (c), (2)
the Executive's voluntary termination under this subsection must occur
within 60 days after the Executive knows or reasonably should know of an
event described in clause (i), (ii), (iii), (iv), (v) or (vi) above, 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), (v) or (vi), 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), (v) or (vi), as the case
may be, within 30 days after receiving the Executive's written notice, the
Executive may not terminate employment under this subsection (c) on account
of the event specified in the Executive's notice.
(d) The amounts under this Agreement will be paid in lieu
of severance benefits under any severance plan or program maintained by the
Company. The amounts payable under this Agreement will not be reduced by
any amounts earned by the Executive from a subsequent employer or
otherwise. If the Executive's employment is terminated by the Company for
Cause or if the Executive voluntarily terminates employment for a reason
not described in subsection (c) above or Section 8 below, this Agreement
will immediately terminate without liability on the part of the Company.
8. Disability or Death. 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 Section 7(b)(i), (ii) and (iii) 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 Section 7(b)(i), (ii) and (iii) will
be provided to the personal representative of the Executive's estate or to
the beneficiary designated under the terms of the applicable benefit plan,
in the case of a plan benefit. The foregoing benefits will be provided in
addition to any death, disability and other benefits provided under Company
benefit plans in which the Executive participates. Upon the Executive's
death or disability, the provisions of Sections 1, 2, 5, 6 and 7 (except as
provided above) of this Agreement will terminate. The term "disability"
means a condition, resulting from bodily injury or disease, that renders,
and for a six consecutive month period has rendered, the Executive unable
to perform substantially the duties pertaining to his employment with the
Company. A return to work of less than 14 consecutive days will not be
considered an interruption in the Executive's six consecutive months of
disability. Disability will be determined by the Company on the basis of
medical evidence satisfactory to the Company.
9. Cause. For purposes of this Agreement, the term "Cause"
means (i) fraud or material misappropriation with respect to the business
or assets of the Company, (ii) persistent refusal or wilful failure of the
Executive to perform substantially his duties and responsibilities to the
Company, which continues after the Executive receives notice of such
refusal or failure, (iii) conduct that constitutes disloyalty to the
Company, and that materially harms or has the potential to cause material
harm to the Company, (iv) conviction of a felony or crime involving moral
turpitude, or (v) the use of drugs or alcohol that interferes materially
with the Executive's performance of his duties.
10. Parachute Tax. If the Company determines that any amounts
payable under this Agreement would be subject to the excise tax imposed
under Code Section 4999 on "excess parachute payments", the Company will
compute the after-tax amount that would be payable to the Executive if the
total amounts that are payable to the Executive by the Company or a plan of
the Company and are considered "parachute payments" for purposes of Code
Section 280G ("Parachute Payments") were limited to the maximum amount that
may be paid to the Executive under Code Sections 280G and 4999 without
imposition of the excise tax (this after-tax amount is referred to as the
"Capped Amount"). The Company will also compute the after-tax amount that
would be payable to the Executive if the total Parachute Payments were
payable without regard to the Code Sections 280G and 4999 limit (this
after-tax amount is referred to as the "Uncapped Amount"). Notwithstanding
anything in this Agreement to the contrary, if the Capped Amount is greater
than or equal to 97% of the Uncapped Amount, then the total benefits and
other amounts that are considered Parachute Payments and are payable to the
Executive under this Agreement will be reduced to the largest amount that
will result in no portion of any such payment being subject to the excise
tax imposed by Code Section 4999. Tax counsel selected by mutual consent
of the Company and the Executive will determine the amount of any such
reduction in good faith. The determination will be made before the
payments are due and payable to the Executive, to the extent possible. The
Executive will determine which payments will be reduced, subject to
approval by the Company (which approval may not be unreasonably withheld).
The Executive will have no right to receive Parachute Payments under this
Agreement in excess of the reduced amount. The calculations under this
Section will be made in a manner consistent with the requirements of Code
Sections 280G and 4999, as in effect at the time the calculations are made.
11. Indemnification. The Company will pay all reasonable fees
and expenses, if any, (including, without limitation, legal fees and
expenses) that are incurred by the Executive to enforce this Agreement and
that result from a breach of this Agreement by the Company.
12. Payment of Compensation and Taxes. All amounts payable
under this Agreement (other than restricted stock, which will be paid
according to the terms of the Company's Long-Term Incentive Plan) will be
paid in cash, subject to required income and payroll tax withholdings. No
unrestricted stock will be issued to the Executive with respect to the
vesting of restricted stock until the Executive has paid to the Company the
amount that must be withheld for applicable income and employment taxes or
the Executive has made provisions satisfactory to the Company for the
payment of such taxes.
13. Administration. The Committee will be responsible for the
administration and interpretation of this Agreement on behalf of the
Company. If for any reason a benefit under this Agreement is not paid when
due, the Executive may file a written claim with the Committee. If the
claim is denied or no response is received within 90 days after the filing
(in which case the claim is deemed to be denied), the Executive may appeal
the denial to the Board of Directors within 60 days of the denial. The
Executive may request that the Board of Directors review the denial, the
Executive may review pertinent documents, and the Executive may submit
issues and comments in writing. A decision on appeal will be made within
60 days after the appeal is made, unless special circumstances require that
the Board of Directors extend the period for another 60 days. If the
Company defaults in an obligation under this Agreement, the Executive makes
a written claim pursuant to the claims procedure described above, and the
Company fails to remedy the default within the claims procedure period,
then all amounts payable to the Executive under this Agreement will become
immediately due and owing.
14. Assignment. The rights and obligations of the Company under
this Agreement will inure to the benefit of and will be binding upon the
successors and assigns of the Company. If the Company is consolidated or
merged with or into another corporation, or if another entity purchases all
or substantially all of the Company's assets, the surviving or acquiring
corporation will succeed to the Company's rights and obligations under this
Agreement. The Executive's rights under this Agreement may not be assigned
or transferred in whole or in part, except that the personal representative
of the Executive's estate will receive any amounts payable under this
Agreement after the death of the Executive.
15. Rights Under the Agreement. The right to receive benefits
under the Agreement will not give the Executive any proprietary interest in
the Company or any of its assets. Benefits under the Agreement will be
payable from the general assets of the Company, and there will be no
required funding of amounts that may become payable under the Agreement.
The Executive will for all purposes be a general creditor of the Company.
The interest of the Executive under the Agreement cannot be assigned,
anticipated, sold, encumbered or pledged and will not be subject to the
claims of the Executive's creditors.
16. Notice. For purposes of this Agreement, notices and all
other communications must be in writing and are effective when delivered or
mailed by United States registered mail, return receipt requested, postage
prepaid, addressed to the Executive or his personal representative at his
last known address. All notices to the Company must be directed to the
attention of the Chairman of the Committee. Such other addresses may be
used as either party may have furnished to the other in writing. Notices
of change of address are effective only upon receipt.
17. Miscellaneous. This instrument contains the entire
agreement of the parties. To the extent not governed by federal law, this
Agreement will be construed in accordance with the laws of the Commonwealth
of Virginia, without reference to its conflict of laws rules. No
provisions of this Agreement may be modified, waived or discharged unless
such waiver, modification or discharge is agreed to in writing and the
writing is signed by the Executive and the Company. A waiver of any breach
of or compliance with any provision or condition of this Agreement is not a
waiver of similar or dissimilar provisions or conditions. The invalidity
or unenforceability of any provision of this Agreement will not affect the
validity or enforceability of any other provision of this Agreement, which
will remain in full force and effect. This Agreement may be executed in
one or more counterparts, all of which will be considered one and the same
agreement.
WITNESS the following signatures.
DOMINION RESOURCES, INC.
By:__________________________
Thos. E. Capps,
Chief Executive Officer
Dated:___________________
_____________________________
Tyndall L. Baucom
Dated:___________________
Exhibit 10(xxxii)
June 30, 1994
Dr. J. T. Rhodes
President & CEO
Virginia Power
Dear Jim:
As you know, the Board of Directors of Virginia Electric and Power
Company (the Company) voted on June 3, 1994, to ratify the letter agreement
you and james F. Betts reached in April regarding your employment with the
Company. paragraphs (1), (2) and (3) below memorialize those modifications to
the terms of your employment with the Company.
Additionally, the Special Committee of the Board of Directors on June
29, 1994, approved certain additional terms for your continued employment with
the Company. Set forth in paragraphs (4) and (5) below are those additional
provisions, which are comparable to those the Special Committee determined to
be appropriate for all other officers of the Company.
(1) You will report to James F. Betts in his capacity as
Vice-Chairman of Dominion Resources, Inc. (DRI).
(2) The DRI and Virginia Power Boards will give serious consideration
to electing you Chairman of the Virginia Power Board in October.
(3) You have agreed to remain at Virginia Power as President and
Chief executive Officer for at least three years (until April 21, 1997).
However, if Tom Capps does not retire at age 60 or by the end of 1995, you
will be free to retire at any time after April 21, 1996. In either event, you
will be able to retire with benefits at least equal to those that were
available to you under the 1994 Early Retirement Program>
(4) Should you be terminated prior to April 21, 1997, for any reason
other than cause (after a good faith determination by the Board of Directors
of Virginia Power), then the Company will pay to you the amount (as detailed
in Attachment A) that you would have otherwise received in base salary and
incentive compensation through April 21, 1997, as if you had remained employed
until that date. In the event of your termination without cause, the Company
will also pay to you a special severance benefit equal to (i) your then annual
base salary, or at your election (ii) the retirement and other severance
benefits you would have been eligible to receive as a participant in the 1994
Early Retirement Program.
(5) if you continue in the employment of the Company until April 21,
1997, you shall be entitled to receive on the date you retire or leave the
employment of the Company for any reason after April 21, 1997, a special
severance benefit equal to (i) your then annual base salary, or at your option
(ii) the retirement and other severance benefits you would have been eligible
to receive as a participant in the 1994 Early Retirement program. This special
severance benefit shall be paid in addition to and shall not diminish any
rights that you may be entitled to receive under the benefit plans of Dominion
Resources, Inc. or the Company.
Please acknowledge by signing a copy of this letter and returning it
to me. We will then make this document a part of your permanent file.
If you have any questions, please let me know.
Sincerely,
/s/John B. Adams, Jr.
John B. Adams, Jr.
Chairman, O&C Committee
Virginia Power Board of
Directors
Attachment
Acknowledged:
/s/ J. T. Rhodes
J. T. Rhodes
Date:
6/30/94
(signed fax 6/30/94)
<PAGE>
ATTACHMENT A
If you are terminated for any reason other than for cause, the company will
pay you the following:
1. Base salary which you would have earned from the date of termination
until April 21, 1997. This number will be computed by dividing the annual base
salary at time of termination by 12 and multiplying by the number of whole or
partial months between the date of termination and April 21, 1997. The base
salary used in this calculation shall not be less than your highest base salary
on or after April 21, 1994.
2. Potential annual incentive award from date of termination until April
21, 1997. This number will be computed by dividing the Success Sharing target
award in effect for you at time of termination by 12 and multiplying by the
number of whole or partial months between the end of the most recently completed
plan year and April 21, 1997. Payment of this amount shall cancel your rights to
any other Success Sharing payments for the same time period. The target award
used in this calculation shall not be less than the highest target award in
effect for you on or after April 21, 1994.
3. Potential long term incentive award until April 21, 1997. The total
number of hypothetical shares (at 100% goal accomplishment) of Dominion
Resources, Inc. stock granted in all cycles of the Performance Achievement Plan
which were active on the date of termination will be multiplied by the closing
price of the stock on the day of termination. This amount will be paid to you in
dollars. Payment of this amount will cancel your rights to any additional
payments in cash or stock from these active cycles.
Exhibit 10(xxxiii)
3-Year Agreement
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT (the "Agreement") is made as of August
12, 1994, between DOMINION RESOURCES, INC. (the "Company") and
____________________ (the "Executive").
RECITALS:
The Board of Directors of Dominion Resources, Inc. (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 believes that it is
particularly important to have stable, excellent management at the present
time. The Board of Directors believes that this objective may be achieved
by giving key management employees assurances of financial security for a
period of time, so that they will not be distracted by personal risks and
will continue to devote their full time and best efforts to the performance
of their duties.
The Organization and Compensation Committee of the Board of
Directors (the "Committee") has recommended, and the Board of Directors has
approved, entering into employment agreements with the Company's key
management executives in order to achieve the foregoing objectives. The
Executive is a key management executive of the Company and is a valuable
member of the Company's management team. The Company acknowledges that the
Executive's contributions to the past and future growth and success of the
Company have been and will continue to be substantial. The Company and the
Executive are entering into this Agreement to induce the Executive to
remain an employee of the Company and to continue to devote his full energy
to the Company's affairs. The Executive has agreed to continue to be
employed by the Company under the terms and conditions hereinafter set
forth.
NOW, THEREFORE, in consideration of the foregoing and the mutual
undertakings contained in this Agreement, the parties agree as follows:
1. Employment. The Company will employ the Executive, and the
Executive will continue in the employment of the Company, as an executive
of the Company, for the period beginning August 12, 1994 and ending August
12, 1997 (the "Term of this Agreement"), according to the terms of this
Agreement.
2. Duties. The Company and the Executive agree that, during
the Term of this Agreement, the Executive will serve in a senior management
position with the Company. The Executive (i) will devote his knowledge,
skill and best efforts on a full-time basis to performing his duties and
obligations to the Company (with the exception of absences on account of
illness or vacation in accordance with the Company's policies and civic and
charitable commitments not involving a conflict with the Company's
business), and (ii) will comply with the directions and orders of the Board
of Directors and Chief Executive Officer of the Company with respect to the
performance of his duties.
3. Effect on Other Agreements.
(a) The Board of Directors recognizes that the Executive
has an Employment Continuity Agreement with the Company, which provides
benefits under certain circumstances in the event of a change in control of
the Company. Notwithstanding anything in this Agreement to the contrary,
if the Executive's employment terminates for any reason after a change in
control and payments are to be made to the Executive under the Executive's
Employment Continuity Agreement: (i) the Executive will not receive
payments under this Agreement as a result of his termination of employment
for any reason, except that the Executive will receive the completion bonus
described in Section 6 or Section 7(b)(i), whichever is applicable, if the
Executive is entitled to receive the completion bonus under the terms of
this Agreement, (ii) after payment of any completion bonus and any other
amounts due the Executive under this Agreement, this Agreement will
terminate without liability on the part of the Company, and (iii) if and to
the extent that any payments made under this Agreement are considered
"parachute payments" for purposes of Section 280G of the Internal Revenue
Code of 1986, as amended (the "Code"), the payments will be taken into
account in determining the amount to be paid to the Executive under the
Employment Continuity Agreement, according to the terms of the Employment
Continuity Agreement. If a change of control occurs and the Executive is
not entitled to receive payments under the Executive's Employment
Continuity Agreement, this Agreement will continue in effect according to
its terms.
(b) Except as provided above, this Agreement sets forth the
entire understanding of the parties with respect to the Executive's
employment with the Company. The Executive and the Company agree that,
effective as of the execution of this Agreement, any prior employment
agreements between the Executive and the Company (other than the
Executive's Employment Continuity Agreement) are null and void. The term
"employment agreement" as used in the preceding sentence does not include
any retirement, incentive or benefit plan or program in which the Executive
participates or any credited service agreement under which the Executive
receives years of service credit for retirement plan purposes.
4. Affiliates. Employment by an Affiliate of the Company or a
successor to the Company will be considered employment by the Company for
purposes of this Agreement, and termination of employment with the Company
means termination of employment with the Company and all its Affiliates and
successors. The term "Company" as used in this Agreement will be deemed to
include Affiliates and successors. For purposes of this Agreement, the
term "Affiliate" means the subsidiaries of Dominion Resources, Inc. and
other entities under common control with Dominion Resources, Inc.
5. Compensation and Benefits.
(a) During the Term of this Agreement, while the Executive
is employed by the Company, the Company will pay to the Executive the
following salary and incentive awards for services rendered to the Company:
(i) The Company will pay to the Executive an annual
salary in an amount not less than the base salary in effect
for the Executive as of the date on which this Agreement is
executed. The Board of Directors will evaluate the
Executive's performance at least annually and will consider
annual increases in the Executive's salary based on the
Executive's performance.
(ii) The Executive will be entitled to receive
incentive awards if and to the extent that the Board of
Directors determines that the Executive's performance merits
payment of an award. The Board of Directors will make its
determination consistent with the methodology used by the
Company for compensating its senior management employees.
If the Executive is employed by an Affiliate or a successor (as described
in Section 4), the term "Board of Directors" as used in this Section 5(a)
and in Section 7(a)(iii) means the Board of Directors of the Executive's
employer.
(b) During the Term of this Agreement, while the Executive
is employed by the Company, the Executive will be eligible to participate
in a similar manner as other senior executives of the Company in retirement
plans, cash and stock incentive plans, fringe benefit plans and other
employee benefit plans and programs provided by the Company for its senior
management employees from time to time.
6. Completion Bonus. If the Executive continues in the
employment of the Company through August 12, 1997, the Executive will
receive from the Company a lump sum bonus equal to 25% of the base salary
paid to the Executive during the Term of this Agreement. Salary that the
Executive has elected to defer will be taken into account for purposes of
this Agreement without regard to the deferral. Payment will be made within
30 days after August 12, 1997.
7. Termination of Employment.
(a) If the Company terminates the Executive's employment,
other than for Cause (as defined in Section 9 below), during the Term of
this Agreement, the Company will pay the Executive a lump sum payment equal
to the present value of the Executive's annual base salary and annual cash
incentive awards (computed as described below) for the balance of the Term
of this Agreement. The lump sum payment will be computed as follows:
(i) For purposes of this calculation, the Executive's
annual base salary for the balance of the Term of the
Agreement will be calculated at the highest annual base
salary rate in effect for the Executive during the three-
year period preceding his termination of employment. For
purposes of this calculation, the Executive's annual cash
incentive awards for the balance of the Term of the
Agreement will be calculated at a rate equal to the highest
annual cash incentive award paid to the Executive during the
three-year period preceding his termination of employment.
Salary and bonus that the Executive elected to defer will be
taken into account for purposes of this Agreement without
regard to the deferral.
(ii) The salary and incentive award for any partial
year in the Term of this Agreement will be a pro-rated
portion of the annual amount.
(iii) If the Executive has not yet received an annual
cash incentive award for the year in which his employment
terminates, the lump sum payment will be increased to
include a pro-rated award for the portion of the year
preceding the Executive's termination of employment. If the
Executive has not yet received payment of his annual cash
incentive award for the year preceding his termination of
employment, the lump sum payment will be increased to
include an award for the year preceding the Executive's
termination of employment. The incentive award for the year
or portion of the year preceding the Executive's termination
of employment will be determined according to clause (i)
above, unless the Board of Directors made a good faith final
determination of the amount of the applicable incentive
award pursuant to Section 5(a)(ii) before the Executive's
termination of employment. If the Board of Directors made
such a determination, the applicable incentive award will be
computed according to the Board of Directors' determination.
(iv) Present value will be computed by the Company as
of the date of the Executive's termination of employment,
based on a discount rate equal to the applicable Federal
short-term rate in effect on the date as of which the
present value is determined, as determined under Section
1274(d) of the Code, compounded monthly.
(v) The lump sum payment will be paid within 30 days
after the Executive's termination of employment.
(b) If the Company terminates the Executive's employment,
other than for Cause, during the Term of this Agreement, the Executive will
be entitled to receive the following additional benefits determined as of
the date of his termination of employment:
(i) The Executive will receive a lump sum payment
equal to the present value of the completion bonus described
in Section 6 that would be payable to the Executive if he
remained an employee through the Term of this Agreement.
For purposes of this calculation, the Executive's base
salary for the balance of the Term of this Agreement will be
calculated at a rate equal to the highest annual base salary
paid to the Executive during the three-year period preceding
his termination of employment. Payment will be made within
30 days after the Executive's termination of employment.
Present value will be computed as of the date of the
Executive's termination of employment, based on the interest
rate described in subsection (a).
(ii) Any outstanding restricted stock that would become
vested (that is, transferable and nonforfeitable) if the
Executive remained an employee through the Term of this
Agreement will become vested as of the date of the
Executive's termination of employment (or as of the date
described in the next sentence, if applicable). In
addition, if the Company has agreed to award the Executive
restricted stock at the end of a performance period, subject
to the Company's achievement of performance goals, and the
date as of which the restricted stock is to become vested
falls within the Term of this Agreement, the stock will be
awarded and become vested at the end of the performance
period if and to the extent that the performance goals are
met. The Executive must satisfy the tax withholding
requirements described in Section 11 with respect to the
restricted stock.
(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
pension, medical and other benefit plans, and the Company
will continue the Executive's coverage under the Company's
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.
(c) If the Executive voluntarily terminates employment with
the Company during the Term of this Agreement under circumstances described
in this subsection (c), the Executive will be entitled to receive the
benefits described in subsections (a) and (b) above as if the Company had
terminated the Executive's employment other than for Cause. Subject to the
provisions of this subsection (c), these benefits will be provided if the
Executive voluntarily terminates employment after (i) the Company reduces
the Executive's base salary, (ii) the Executive is not in good faith
considered for incentive awards as described in Section 5(a)(ii), (iii) the
Company fails to provide benefits as required by Section 5(b), (iv) the
Company relocates the Executive's place of employment to a location further
than 30 miles from Richmond, Virginia, or (v) the Company demotes the
Executive to a position that is not a senior management position (other
than on account of the Executive's disability, as defined in Section 8
below). For this purpose, a "senior management position" means the
position of Chief Executive Officer or Chief Operating Officer of Dominion
Resources, Inc. ("DRI"), the position of President of a subsidiary of DRI,
or a position that reports directly to the Chief Executive Officer or Chief
Operating Officer of DRI or to the President of a DRI subsidiary. In order
for this subsection (c) to be effective: (1) the Executive must give
written notice to the Company indicating that the Executive intends to
terminate employment under this subsection (c), (2) the Executive's
voluntary termination under this subsection must occur within 60 days after
the Executive knows or reasonably should know of an event described in
clause (i), (ii), (iii), (iv) or (v) above, 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 (c) on account of the event specified in the
Executive's notice.
(d) The amounts under this Agreement will be paid in lieu
of severance benefits under any severance plan or program maintained by the
Company (subject to Section 3 above). The amounts payable under this
Agreement will not be reduced by any amounts earned by the Executive from a
subsequent employer or otherwise. If the Executive's employment is
terminated by the Company for Cause or if the Executive voluntarily
terminates employment for a reason not described in subsection (c) above or
Section 8 below, this Agreement will immediately terminate without
liability on the part of the Company.
8. Disability or Death. 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 Section 7(b)(i) and (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 Section 7(b)(i) and (ii) will be provided to the
personal representative of the Executive's estate. The foregoing benefits
will be provided in addition to any death, disability and other benefits
provided under Company benefit plans in which the Executive participates.
Upon the Executive's death or disability, the provisions of Sections 1, 2,
5, 6 and 7 of this Agreement will terminate. The term "disability" means a
condition, resulting from bodily injury or disease, that renders, and for a
six consecutive month period has rendered, the Executive unable to perform
substantially the duties pertaining to his employment with the Company. A
return to work of less than 14 consecutive days will not be considered an
interruption in the Executive's six consecutive months of disability.
Disability will be determined by the Company on the basis of medical
evidence satisfactory to the Company.
9. Cause. For purposes of this Agreement, the term "Cause"
means (i) fraud or material misappropriation with respect to the business
or assets of the Company, (ii) persistent refusal or wilful failure of the
Executive to perform substantially his duties and responsibilities to the
Company, which continues after the Executive receives notice of such
refusal or failure, (iii) conduct that constitutes disloyalty to the
Company, and that materially harms or has the potential to cause material
harm to the Company, (iv) conviction of a felony or crime involving moral
turpitude, or (v) the use of drugs or alcohol that interferes materially
with the Executive's performance of his duties.
10. Indemnification. The Company will pay all reasonable fees
and expenses, if any, (including, without limitation, legal fees and
expenses) that are incurred by the Executive to enforce this Agreement and
that result from a breach of this Agreement by the Company.
11. Payment of Compensation and Taxes. All amounts payable
under this Agreement (other than restricted stock, which will be paid
according to the terms of the Company's Long-Term Incentive Plan) will be
paid in cash, subject to required income and payroll tax withholdings. No
unrestricted stock will be issued to the Executive with respect to the
vesting of restricted stock until the Executive has paid to the Company the
amount that must be withheld for applicable income and employment taxes or
the Executive has made provisions satisfactory to the Company for the
payment of such taxes.
12. Administration. The Committee will be responsible for the
administration and interpretation of this Agreement on behalf of the
Company. If for any reason a benefit under this Agreement is not paid when
due, the Executive may file a written claim with the Committee. If the
claim is denied or no response is received within 90 days after the filing
(in which case the claim is deemed to be denied), the Executive may appeal
the denial to the Board of Directors within 60 days of the denial. The
Executive may request that the Board of Directors review the denial, the
Executive may review pertinent documents, and the Executive may submit
issues and comments in writing. A decision on appeal will be made within
60 days after the appeal is made, unless special circumstances require that
the Board of Directors extend the period for another 60 days. If the
Company defaults in an obligation under this Agreement, the Executive makes
a written claim pursuant to the claims procedure described above, and the
Company fails to remedy the default within the claims procedure period,
then all amounts payable to the Executive under this Agreement will become
immediately due and owing.
13. Assignment. The rights and obligations of the Company under
this Agreement will inure to the benefit of and will be binding upon the
successors and assigns of the Company. If the Company is consolidated or
merged with or into another corporation, or if another entity purchases all
or substantially all of the Company's assets, the surviving or acquiring
corporation will succeed to the Company's rights and obligations under this
Agreement. The Executive's rights under this Agreement may not be assigned
or transferred in whole or in part, except that the personal representative
of the Executive's estate will receive any amounts payable under this
Agreement after the death of the Executive.
14. Rights Under the Agreement. The right to receive benefits
under the Agreement will not give the Executive any proprietary interest in
the Company or any of its assets. Benefits under the Agreement will be
payable from the general assets of the Company, and there will be no
required funding of amounts that may become payable under the Agreement.
The Executive will for all purposes be a general creditor of the Company.
The interest of the Executive under the Agreement cannot be assigned,
anticipated, sold, encumbered or pledged and will not be subject to the
claims of the Executive's creditors.
15. Notice. For purposes of this Agreement, notices and all
other communications must be in writing and are effective when delivered or
mailed by United States registered mail, return receipt requested, postage
prepaid, addressed to the Executive or his personal representative at his
last known address. All notices to the Company must be directed to the
attention of the Chairman of the Committee. Such other addresses may be
used as either party may have furnished to the other in writing. Notices
of change of address are effective only upon receipt.
16. Miscellaneous. This instrument contains the entire
agreement of the parties. To the extent not governed by federal law, this
Agreement will be construed in accordance with the laws of the Commonwealth
of Virginia, without reference to its conflict of laws rules. No
provisions of this Agreement may be modified, waived or discharged unless
such waiver, modification or discharge is agreed to in writing and the
writing is signed by the Executive and the Company. A waiver of any breach
of or compliance with any provision or condition of this Agreement is not a
waiver of similar or dissimilar provisions or conditions. The invalidity
or unenforceability of any provision of this Agreement will not affect the
validity or enforceability of any other provision of this Agreement, which
will remain in full force and effect. This Agreement may be executed in
one or more counterparts, all of which will be considered one and the same
agreement.
WITNESS the following signatures.
DOMINION RESOURCES, INC.
By:__________________________
Thos. E. Capps,
Chief Executive Officer
Dated:___________________
_____________________________
_______________________
Dated:___________________
Exhibit 10(xxxiv)
2-Year Agreement
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT (the "Agreement") is made as of August
12, 1994, between DOMINION RESOURCES, INC. (the "Company") and
____________________ (the "Executive").
RECITALS:
The Board of Directors of Dominion Resources, Inc. (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 believes that it is
particularly important to have stable, excellent management at the present
time. The Board of Directors believes that this objective may be achieved
by giving key management employees assurances of financial security for a
period of time, so that they will not be distracted by personal risks and
will continue to devote their full time and best efforts to the performance
of their duties.
The Organization and Compensation Committee of the Board of
Directors (the "Committee") has recommended, and the Board of Directors has
approved, entering into employment agreements with the Company's key
management executives in order to achieve the foregoing objectives. The
Executive is a key management executive of the Company and is a valuable
member of the Company's management team. The Company acknowledges that the
Executive's contributions to the past and future growth and success of the
Company have been and will continue to be substantial. The Company and the
Executive are entering into this Agreement to induce the Executive to
remain an employee of the Company and to continue to devote his full energy
to the Company's affairs. The Executive has agreed to continue to be
employed by the Company under the terms and conditions hereinafter set
forth.
NOW, THEREFORE, in consideration of the foregoing and the mutual
undertakings contained in this Agreement, the parties agree as follows:
1. Employment. The Company will employ the Executive, and the
Executive will continue in the employment of the Company, as an executive
of the Company, for the period beginning August 12, 1994 and ending August
12, 1996 (the "Term of this Agreement"), according to the terms of this
Agreement.
2. Duties. The Company and the Executive agree that, during
the Term of this Agreement, the Executive will serve in a senior management
position with the Company. The Executive (i) will devote his knowledge,
skill and best efforts on a full-time basis to performing his duties and
obligations to the Company (with the exception of absences on account of
illness or vacation in accordance with the Company's policies and civic and
charitable commitments not involving a conflict with the Company's
business), and (ii) will comply with the directions and orders of the Board
of Directors and Chief Executive Officer of the Company with respect to the
performance of his duties.
3. Effect on Other Agreements.
(a) The Board of Directors recognizes that the Executive
has an Employment Continuity Agreement with the Company, which provides
benefits under certain circumstances in the event of a change in control of
the Company. Notwithstanding anything in this Agreement to the contrary,
if the Executive's employment terminates for any reason after a change in
control and payments are to be made to the Executive under the Executive's
Employment Continuity Agreement: (i) the Executive will not receive
payments under this Agreement as a result of his termination of employment
for any reason, except that the Executive will receive the completion bonus
described in Section 6 or Section 7(b)(i), whichever is applicable, if the
Executive is entitled to receive the completion bonus under the terms of
this Agreement, (ii) after payment of any completion bonus and any other
amounts due the Executive under this Agreement, this Agreement will
terminate without liability on the part of the Company, and (iii) if and to
the extent that any payments made under this Agreement are considered
"parachute payments" for purposes of Section 280G of the Internal Revenue
Code of 1986, as amended (the "Code"), the payments will be taken into
account in determining the amount to be paid to the Executive under the
Employment Continuity Agreement, according to the terms of the Employment
Continuity Agreement. If a change of control occurs and the Executive is
not entitled to receive payments under the Executive's Employment
Continuity Agreement, this Agreement will continue in effect according to
its terms.
(b) Except as provided above, this Agreement sets forth the
entire understanding of the parties with respect to the Executive's
employment with the Company. The Executive and the Company agree that,
effective as of the execution of this Agreement, any prior employment
agreements between the Executive and the Company (other than the
Executive's Employment Continuity Agreement) are null and void. The term
"employment agreement" as used in the preceding sentence does not include
any retirement, incentive or benefit plan or program in which the Executive
participates or any credited service agreement under which the Executive
receives years of service credit for retirement plan purposes.
4. Affiliates. Employment by an Affiliate of the Company or a
successor to the Company will be considered employment by the Company for
purposes of this Agreement, and termination of employment with the Company
means termination of employment with the Company and all its Affiliates and
successors. The term "Company" as used in this Agreement will be deemed to
include Affiliates and successors. For purposes of this Agreement, the
term "Affiliate" means the subsidiaries of Dominion Resources, Inc. and
other entities under common control with Dominion Resources, Inc.
5. Compensation and Benefits.
(a) During the Term of this Agreement, while the Executive
is employed by the Company, the Company will pay to the Executive the
following salary and incentive awards for services rendered to the Company:
(i) The Company will pay to the Executive an annual
salary in an amount not less than the base salary in effect
for the Executive as of the date on which this Agreement is
executed. The Board of Directors will evaluate the
Executive's performance at least annually and will consider
annual increases in the Executive's salary based on the
Executive's performance.
(ii) The Executive will be entitled to receive
incentive awards if and to the extent that the Board of
Directors determines that the Executive's performance merits
payment of an award. The Board of Directors will make its
determination consistent with the methodology used by the
Company for compensating its senior management employees.
If the Executive is employed by an Affiliate or a successor (as described
in Section 4), the term "Board of Directors" as used in this Section 5(a)
and in Section 7(a)(iii) means the Board of Directors of the Executive's
employer.
(b) During the Term of this Agreement, while the Executive
is employed by the Company, the Executive will be eligible to participate
in a similar manner as other senior executives of the Company in retirement
plans, cash and stock incentive plans, fringe benefit plans and other
employee benefit plans and programs provided by the Company for its senior
management employees from time to time.
6. Completion Bonus. If the Executive continues in the
employment of the Company through August 12, 1996, the Executive will
receive from the Company a lump sum bonus equal to 25% of the base salary
paid to the Executive during the Term of this Agreement. Salary that the
Executive has elected to defer will be taken into account for purposes of
this Agreement without regard to the deferral. Payment will be made within
30 days after August 12, 1996.
7. Termination of Employment.
(a) If the Company terminates the Executive's employment,
other than for Cause (as defined in Section 9 below), during the Term of
this Agreement, the Company will pay the Executive a lump sum payment equal
to the present value of the Executive's annual base salary and annual cash
incentive awards (computed as described below) for the balance of the Term
of this Agreement. The lump sum payment will be computed as follows:
(i) For purposes of this calculation, the Executive's
annual base salary for the balance of the Term of the
Agreement will be calculated at the highest annual base
salary rate in effect for the Executive during the three-
year period preceding his termination of employment. For
purposes of this calculation, the Executive's annual cash
incentive awards for the balance of the Term of the
Agreement will be calculated at a rate equal to the highest
annual cash incentive award paid to the Executive during the
three-year period preceding his termination of employment.
Salary and bonus that the Executive elected to defer will be
taken into account for purposes of this Agreement without
regard to the deferral.
(ii) The salary and incentive award for any partial
year in the Term of this Agreement will be a pro-rated
portion of the annual amount.
(iii) If the Executive has not yet received an annual
cash incentive award for the year in which his employment
terminates, the lump sum payment will be increased to
include a pro-rated award for the portion of the year
preceding the Executive's termination of employment. If the
Executive has not yet received payment of his annual cash
incentive award for the year preceding his termination of
employment, the lump sum payment will be increased to
include an award for the year preceding the Executive's
termination of employment. The incentive award for the year
or portion of the year preceding the Executive's termination
of employment will be determined according to clause (i)
above, unless the Board of Directors made a good faith final
determination of the amount of the applicable incentive
award pursuant to Section 5(a)(ii) before the Executive's
termination of employment. If the Board of Directors made
such a determination, the applicable incentive award will be
computed according to the Board of Directors' determination.
(iv) Present value will be computed by the Company as
of the date of the Executive's termination of employment,
based on a discount rate equal to the applicable Federal
short-term rate in effect on the date as of which the
present value is determined, as determined under Section
1274(d) of the Code, compounded monthly.
(v) The lump sum payment will be paid within 30 days
after the Executive's termination of employment.
(b) If the Company terminates the Executive's employment,
other than for Cause, during the Term of this Agreement, the Executive will
be entitled to receive the following additional benefits determined as of
the date of his termination of employment:
(i) The Executive will receive a lump sum payment
equal to the present value of the completion bonus described
in Section 6 that would be payable to the Executive if he
remained an employee through the Term of this Agreement.
For purposes of this calculation, the Executive's base
salary for the balance of the Term of this Agreement will be
calculated at a rate equal to the highest annual base salary
paid to the Executive during the three-year period preceding
his termination of employment. Payment will be made within
30 days after the Executive's termination of employment.
Present value will be computed as of the date of the
Executive's termination of employment, based on the interest
rate described in subsection (a).
(ii) Any outstanding restricted stock that would become
vested (that is, transferable and nonforfeitable) if the
Executive remained an employee through the Term of this
Agreement will become vested as of the date of the
Executive's termination of employment (or as of the date
described in the next sentence, if applicable). In
addition, if the Company has agreed to award the Executive
restricted stock at the end of a performance period, subject
to the Company's achievement of performance goals, and the
date as of which the restricted stock is to become vested
falls within the Term of this Agreement, the stock will be
awarded and become vested at the end of the performance
period if and to the extent that the performance goals are
met. The Executive must satisfy the tax withholding
requirements described in Section 11 with respect to the
restricted stock.
(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
pension, medical and other benefit plans, and the Company
will continue the Executive's coverage under the Company's
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.
(c) If the Executive voluntarily terminates employment with
the Company during the Term of this Agreement under circumstances described
in this subsection (c), the Executive will be entitled to receive the
benefits described in subsections (a) and (b) above as if the Company had
terminated the Executive's employment other than for Cause. Subject to the
provisions of this subsection (c), these benefits will be provided if the
Executive voluntarily terminates employment after (i) the Company reduces
the Executive's base salary, (ii) the Executive is not in good faith
considered for incentive awards as described in Section 5(a)(ii), (iii) the
Company fails to provide benefits as required by Section 5(b), (iv) the
Company relocates the Executive's place of employment to a location further
than 30 miles from Richmond, Virginia, or (v) the Company demotes the
Executive to a position that is not a senior management position (other
than on account of the Executive's disability, as defined in Section 8
below). For this purpose, a "senior management position" means the
position of Chief Executive Officer or Chief Operating Officer of Dominion
Resources, Inc. ("DRI"), the position of President of a subsidiary of DRI,
or a position that reports directly to the Chief Executive Officer or Chief
Operating Officer of DRI or to the President of a DRI subsidiary. In order
for this subsection (c) to be effective: (1) the Executive must give
written notice to the Company indicating that the Executive intends to
terminate employment under this subsection (c), (2) the Executive's
voluntary termination under this subsection must occur within 60 days after
the Executive knows or reasonably should know of an event described in
clause (i), (ii), (iii), (iv) or (v) above, 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 (c) on account of the event specified in the
Executive's notice.
(d) The amounts under this Agreement will be paid in lieu
of severance benefits under any severance plan or program maintained by the
Company (subject to Section 3 above). The amounts payable under this
Agreement will not be reduced by any amounts earned by the Executive from a
subsequent employer or otherwise. If the Executive's employment is
terminated by the Company for Cause or if the Executive voluntarily
terminates employment for a reason not described in subsection (c) above or
Section 8 below, this Agreement will immediately terminate without
liability on the part of the Company.
8. Disability or Death. 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 Section 7(b)(i) and (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 Section 7(b)(i) and (ii) will be provided to the
personal representative of the Executive's estate. The foregoing benefits
will be provided in addition to any death, disability and other benefits
provided under Company benefit plans in which the Executive participates.
Upon the Executive's death or disability, the provisions of Sections 1, 2,
5, 6 and 7 of this Agreement will terminate. The term "disability" means a
condition, resulting from bodily injury or disease, that renders, and for a
six consecutive month period has rendered, the Executive unable to perform
substantially the duties pertaining to his employment with the Company. A
return to work of less than 14 consecutive days will not be considered an
interruption in the Executive's six consecutive months of disability.
Disability will be determined by the Company on the basis of medical
evidence satisfactory to the Company.
9. Cause. For purposes of this Agreement, the term "Cause"
means (i) fraud or material misappropriation with respect to the business
or assets of the Company, (ii) persistent refusal or wilful failure of the
Executive to perform substantially his duties and responsibilities to the
Company, which continues after the Executive receives notice of such
refusal or failure, (iii) conduct that constitutes disloyalty to the
Company, and that materially harms or has the potential to cause material
harm to the Company, (iv) conviction of a felony or crime involving moral
turpitude, or (v) the use of drugs or alcohol that interferes materially
with the Executive's performance of his duties.
10. Indemnification. The Company will pay all reasonable fees
and expenses, if any, (including, without limitation, legal fees and
expenses) that are incurred by the Executive to enforce this Agreement and
that result from a breach of this Agreement by the Company.
11. Payment of Compensation and Taxes. All amounts payable
under this Agreement (other than restricted stock, which will be paid
according to the terms of the Company's Long-Term Incentive Plan) will be
paid in cash, subject to required income and payroll tax withholdings. No
unrestricted stock will be issued to the Executive with respect to the
vesting of restricted stock until the Executive has paid to the Company the
amount that must be withheld for applicable income and employment taxes or
the Executive has made provisions satisfactory to the Company for the
payment of such taxes.
12. Administration. The Committee will be responsible for the
administration and interpretation of this Agreement on behalf of the
Company. If for any reason a benefit under this Agreement is not paid when
due, the Executive may file a written claim with the Committee. If the
claim is denied or no response is received within 90 days after the filing
(in which case the claim is deemed to be denied), the Executive may appeal
the denial to the Board of Directors within 60 days of the denial. The
Executive may request that the Board of Directors review the denial, the
Executive may review pertinent documents, and the Executive may submit
issues and comments in writing. A decision on appeal will be made within
60 days after the appeal is made, unless special circumstances require that
the Board of Directors extend the period for another 60 days. If the
Company defaults in an obligation under this Agreement, the Executive makes
a written claim pursuant to the claims procedure described above, and the
Company fails to remedy the default within the claims procedure period,
then all amounts payable to the Executive under this Agreement will become
immediately due and owing.
13. Assignment. The rights and obligations of the Company under
this Agreement will inure to the benefit of and will be binding upon the
successors and assigns of the Company. If the Company is consolidated or
merged with or into another corporation, or if another entity purchases all
or substantially all of the Company's assets, the surviving or acquiring
corporation will succeed to the Company's rights and obligations under this
Agreement. The Executive's rights under this Agreement may not be assigned
or transferred in whole or in part, except that the personal representative
of the Executive's estate will receive any amounts payable under this
Agreement after the death of the Executive.
14. Rights Under the Agreement. The right to receive benefits
under the Agreement will not give the Executive any proprietary interest in
the Company or any of its assets. Benefits under the Agreement will be
payable from the general assets of the Company, and there will be no
required funding of amounts that may become payable under the Agreement.
The Executive will for all purposes be a general creditor of the Company.
The interest of the Executive under the Agreement cannot be assigned,
anticipated, sold, encumbered or pledged and will not be subject to the
claims of the Executive's creditors.
15. Notice. For purposes of this Agreement, notices and all
other communications must be in writing and are effective when delivered or
mailed by United States registered mail, return receipt requested, postage
prepaid, addressed to the Executive or his personal representative at his
last known address. All notices to the Company must be directed to the
attention of the Chairman of the Committee. Such other addresses may be
used as either party may have furnished to the other in writing. Notices
of change of address are effective only upon receipt.
16. Miscellaneous. This instrument contains the entire
agreement of the parties. To the extent not governed by federal law, this
Agreement will be construed in accordance with the laws of the Commonwealth
of Virginia, without reference to its conflict of laws rules. No
provisions of this Agreement may be modified, waived or discharged unless
such waiver, modification or discharge is agreed to in writing and the
writing is signed by the Executive and the Company. A waiver of any breach
of or compliance with any provision or condition of this Agreement is not a
waiver of similar or dissimilar provisions or conditions. The invalidity
or unenforceability of any provision of this Agreement will not affect the
validity or enforceability of any other provision of this Agreement, which
will remain in full force and effect. This Agreement may be executed in
one or more counterparts, all of which will be considered one and the same
agreement.
WITNESS the following signatures.
DOMINION RESOURCES, INC.
By:__________________________
Thos. E. Capps,
Chief Executive Officer
Dated:___________________
_____________________________
______________________
Dated:___________________
EXHIBIT 11
Dominion Resources, Inc.
Computation of Earnings Per Share of Common Stock
Assuming Full Dilution
<TABLE>
Years
(Million, Except Per Share Amounts)
1994 1993 1992
<S> <C> <C> <C>
Income before cumulative effect
of a change in accounting principle $478.2 $516.6 $428.9
Cumulative effect on prior years of
changing the method of accounting of
income taxes 15.6
------ ------ ------
Consolidated net income (1) $478.2 $516.6 $444.5
====== ====== ======
Adjustments to average common shares:
Shares of common stock -average shares
outstanding 170.3 165.7 161.1
Plus: Additional shares assuming conversion
of installments received on Stock Purchase
Plan for Customers of Virginia Power at
average market value (2) .0 .6 .5
------ ------ ------
Adjusted average common shares $170.3 $166.3 $161.6
====== ====== ======
Earnings per share before cumulative
effect of a change in accounting principle $ 2.81 $ 3.11 $ 2.75
Cumulative effect on prior years of changing
the method of accounting for income taxes .10
------- ------- -------
$ 2.81 $ 3.11 $ 2.75
======= ======= =======
Notes: (1) See the Consolidated Statements of Income.
(2) Based on the following date:
1994 1993 1992
Installments received on Stock Purchase
Plan for Customers of Virginia Power at
year-end $ 0.0 $ 26.8 $ 19.7
Average market per common share $ 40.13 $ 43.88 $ 37.56
</TABLE>
Exhibit 13
CONSOLIDATED FINANCIAL HIGHLIGHTS
<TABLE>
Percent
1994 1993 Change
<S> <C> <C> <C>
Operating results (millions)
Operating revenues and income $4,491.1 $ 4,433.9 1.3
Operating income 1,038.2 1,127.3 (7.9)
Net income 478.2 516.6 (7.4)
Data per common share
Earnings $2.81 $3.12 (9.9)
Dividends paid 2.55 2.48 (2.8)
Market value (year-end) 36.00 45.38 (20.7)
Book value (year-end) 26.60 26.38
Financial position at December 31
Assets (millions) $13,562.2 $13,349.5
Capitalization (millions) 9,787.5 9,474.9
Capitalization ratios(1):
Long-term debt and capital lease obligations 45% 44%
Preferred stock 8% 9%
Common equity 47% 47%
Other statistics
Return on average common equity 10.6% 12.2%
Market to book value (year-end) 135.3% 172.0%
Common stock price range 453/8-347/8 491/2-381/4
Common shares outstanding--average (thousands) 170,316 165,697
Common shares outstanding--at year-end
(thousands) 172,408 168,123
Number of registered common shareholders
(year-end) 235,062 223,668
Number of employees 10,789 12,057
</TABLE>
(1) Excludes nonrecourse-nonutility financings and short-term debt.
<PAGE>
SELECTED CONSOLIDATED FINANCIAL DATA
<TABLE>
1994 1993 1992 1991 1990 1989
<S> <C> <C> <C> <C> <C> <C>
(MILLIONS, EXCEPT PER SHARE AMOUNTS
AND PERCENTAGES)
Revenues and other income $ 4,491.1 $ 4,433.9 $ 3,791.1 $ 3,785.7 $ 3,532.5 $ 3,661.7
Income before cumulative effect of
a change in accounting principle $ 478.2 $ 516.6 $ 428.9 $ 459.9 $ 445.7 $ 410.7
Cumulative effect on prior years of
changing the method of accounting
for income taxes 15.6
Net income $ 478.2 $ 516.6 $ 444.5 $ 459.9 $ 445.7 $ 410.7
Total assets $13,562.2 $13,349.5 $12,615.1 $11,201.4 $10,990.9 $11,033.5
Long-term debt and preferred stock
subject to mandatory redemption $ 4,934.2 $ 4,976.7 $ 4,667.4 $ 4,668.2 $ 4,697.3 $ 4,865.5
Common stock data:
Earnings per share before cumulative effect
of a change in accounting principle $ 2.81 $ 3.12 $ 2.66 $ 2.94 $ 2.92 $ 2.76
Cumulative effect on prior years of changing
the method of accounting for income taxes .10
Earnings per share $ 2.81 $ 3.12 $ 2.76 $ 2.94 $ 2.92 $ 2.76
Dividends paid per share $ 2.55 $ 2.48 $ 2.40 $ 2.32 $ 2.23 $ 2.15
Market value per share at year-end 36.00 45.38 39.50 38.00 31.25 31.67
Book value per share at year-end 26.60 26.38 25.21 24.41 23.41 22.67
Return on equity--average 10.6% 12.2% 11.2% 12.4% 12.6% 12.5%
Payout ratio 90.7% 79.5% 87.0% 78.9% 76.4% 77.9%
Price/earnings ratio at year-end 12.8 14.5 14.3 12.9 10.7 11.5
Outstanding shares of common stock
--average 170.3 165.7 161.1 156.5 152.5 148.8
--actual (year-end) 172.4 168.1 163.8 158.8 154.8 150.9
Capitalization:*
Long-term debt $ 4,384.1 $ 4,219.5 $ 4,111.8 $ 4,025.6 $ 4,105.2 $ 4,260.7
Preferred stock 816.1 819.5 845.6 761.7 775.9 807.5
Common equity 4,586.1 4,435.9 4,131.3 3,877.8 3,623.9 3,420.7
Total capitalization $ 9,786.3 $ 9,474.9 $ 9,088.7 $ 8,665.1 $ 8,505.0 $ 8,488.9
*Capitalization excludes:
Nonrecourse-nonutility financing $ 727.1 $ 726.8 $ 593.4 $ 545.7 $ 494.8 $ 442.3
Short-term debt $ 146.0 $ 262.8 $ 125.2 $ 154.0 $ 142.4 $ 119.1
Property, plant and equipment:
Electric utility $13,896.6 $13,376.1 $12,930.6 $12,397.7 $11,822.4 $11,184.5
Nuclear fuel 817.2 814.1 754.6 766.4 732.9 684.6
Gas 181.4
Other 701.6 724.5 451.4 213.4 108.8 86.6
Total 15,415.4 14,914.7 14,136.6 13,377.5 12,664.1 12,137.1
Less accumulated depreciation,
depletion and amortization 5,170.0 4,802.1 4,459.5 4,110.5 3,725.5 3,415.0
Net property, plant and equipment $10,245.4 $10,112.6 $ 9,677.1 $ 9,267.0 $ 8,938.6 $ 8,722.1
CWIP included in property,
plant and equipment $ 828.2 $ 913.1 $ 840.9 $ 736.1 $ 691.7 $ 752.5
</TABLE>
<PAGE>
CONSOLIDATED STATEMENTS OF INCOME
AND RETAINED EARNINGS
<TABLE>
FOR THE YEARS ENDED DECEMBER 31, 1994 1993 1992
(MILLIONS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C>
Operating revenues and income:
Electric utility $4,170.8 $4,187.3 $3,679.6
Nonutility 320.3 246.6 111.5
Total operating revenues and income 4,491.1 4,433.9 3,791.1
Operating expenses:
Fuel, net 973.0 959.5 917.9
Purchased power capacity, net 669.4 646.1 348.8
Other operation 739.6 647.8 526.4
Maintenance 263.2 279.5 280.6
Depreciation, depletion and amortization 533.1 509.5 450.2
Other taxes 274.6 264.2 238.0
Total operating expenses 3,452.9 3,306.6 2,761.9
Operating income 1,038.2 1,127.3 1,029.2
Other income 13.5 15.1 22.7
Income before fixed charges and
federal income taxes 1,051.7 1,142.4 1,051.9
Fixed charges:
Interest charges, net 360.3 373.5 373.7
Preferred dividends of Virginia Power 42.2 42.1 45.7
Total fixed charges 402.5 415.6 419.4
Income before provision for federal income taxes 649.2 726.8 632.5
Provision for federal income taxes 171.0 210.2 203.6
Income before cumulative effect of a change
in accounting principle 478.2 516.6 428.9
Cumulative effect on prior years of changing
the method of accounting for income taxes 15.6
Net income $ 478.2 $ 516.6 $ 444.5
Retained earnings, January 1 1,417.8 1,319.1 1,267.7
Common dividends and other deductions:
Dividends (434.7) (411.2) (386.9)
Other deductions (6.1) (6.7) (6.2)
Retained earnings, December 31 $1,455.2 $1,417.8 $1,319.1
Average common shares outstanding 170.3 165.7 161.1
Earnings per share before cumulative
effect of a change in accounting principle $ 2.81 $ 3.12 $ 2.66
Cumulative effect on prior years of
changing the method of accounting
for income taxes .10
Earnings per common share $ 2.81 $ 3.12 $ 2.76
Dividends paid per common share $ 2.55 $ 2.48 $ 2.40
</TABLE>
The accompanying notes are an integral part of the Consolidated Financial
Statements.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF OPERATIONS:
(Unaudited)
OVERVIEW
Dominion Resources achieved earnings of $478.2 million in 1994, or $2.81 per
average common share, compared with earnings of $516.6 million in 1993, or $3.12
per share. Virginia Power contributed $2.38 per share in 1994, down 44 cents
from $2.82 per share in 1993. Dominion Resources' non-utility businesses
contributed 43 cents per share in 1994, up 13 cents from 30 cents per share in
1993.
EPS
1994 Change 1993 Change 1992
Virginia Power $2.38 (15.6)% $2.82 7.2% $2.63
Nonutility $0.43 43.3% $0.30 130.8% $0.13
Consolidated $2.81 (9.9)% $3.12 13.0% $2.76
NET INCOME
1994 Change 1993 Change 1992
(millions)
Net income $478.2 (7.4)% $516.6 16.2% $444.5
Avg. shares 170.3 2.8% 165.7 2.9% 161.1
Return on equity 10.6% 12.2% 11.2%
The 1994 results were affected by a number of factors described below:
VIRGINIA POWER:
EARNINGS IMPACTS INCLUDED:
- --decrease in base revenues;
- --decrease in kilowatt-hour (kwh) sales from residential customers; and
- --increase in other operating expenses attributable to a workforce reduction
cost, which reduced earnings by 16 cents per share (see Note N).
These negative earnings impacts were somewhat offset by the reduction in
interest charges and the utility's continued commitment to controlling costs
wherever possible without impacting the safety, adequacy and reliability of its
electric service.
NONUTILITY BUSINESSES:
EARNINGS IMPACTS INCLUDED:
- --increase in income from Dominion Energy attributable to the sale of the Black
Warrior Trust units, which increased earnings by 17 cents per share in the
second quarter of 1994.
This was partially offset by the lower revenues from the Vidalia
hydroelectric plant when compared with extraordinary water flows experienced in
1993.
VIRGINIA POWER
VIRGINIA POWER'S OPERATING RESULTS
Virginia Power in 1994 recognized a net cost of $41.6 million associated with
voluntary separation and early retirement packages accepted by about 1,400
employees (see Note N). In addition, lower base revenues when compared with 1993
contributed to a decrease in the balance for common in 1994.
Virginia Power's balance for common increased by $43.1 million in 1993
primarily because of warmer than normal weather as compared to more moderate
weather in 1992.
1994 Change 1993 Change 1992
(millions)
Revenues $4,170.8 (0.4)% $4,187.3 13.8% $3,679.6
Operating expenses 3,216.4 3.1% 3,120.4 15.8% 2,695.8
Balance for common 404.9 (13.3)% 466.9 10.2% 423.8
VIRGINIA POWER'S OPERATING REVENUES
Revenues decreased in 1994 primarily because of lower base revenues for Virginia
jurisdictional and County and Municipal customers. In February 1994, Virgina
Power received a final order from the Virginia Commission in its 1992 base rate
case that lowered the allowed return on equity to 11.4%.
In 1993 Virginia Power's revenues increased primarily due to increases in
kilowatt-hour sales and in base revenues. Unit sales increased primarily due to
warmer summer weather in 1993. Operating revenues also rose because of an
increase of 47.3% in sales to wholesale customers, primarily due to the sale of
firm capacity and associated energy to Old Dominion Electric Cooperative (ODEC).
OPERATING REVENUES:
Increase (decrease)
from prior year
1994 1993
(millions)
Operating revenues:
Kwh sales $ 22.5 $333.5
Change in base revenues (35.0) 230.7
Fuel cost recovery (7.9) (55.2)
Other 3.9 (1.3)
Total $(16.5) $507.7
During 1994, Virginia Power had 46,741 new connections to its system compared to
43,014 in 1993. This growth in the service area results in an overall increase
in kilowatt-hour sales. However, sales decreased in the large, weather-sensitive
residential segment.
KILOWATT-HOUR SALES
1994 Change 1993 Change 1992
(millions)
Residential 21,621 (1.0)% 21,846 9.3% 19,984
Commercial 18,665 0.8% 18,526 4.7% 17,693
Industrial 10,371 5.4% 9,840 4.5% 9,419
Other 7,950 (0.3)% 7,971 5.3% 7,569
Total retail 58,607 0.7% 58,183 6.4% 54,665
Wholesale 7,134 4.1% 6,853 47.3% 4,652
Total sales 65,741 1.1% 65,036 9.6% 59,317
The increase in kilowatt-hour sales in 1994 as compared to 1993 reflects the
extreme weather experienced in January 1994, partially offset by lower sales
during the second half of 1994 because of milder weather. The number of actual
cooling degree days in 1994 was 5.7% above the normal number of cooling degree
days, and the number of actual heating degree days was 3.8% below the number of
normal heating degree days.
The increase in kilowatt-hour sales in 1993 compared to 1992 reflects the
warmer than normal summer weather in 1993 compared to the moderate weather in
1992. The number of actual cooling degree days in 1993 was 10% above the number
of normal cooling degree days, and the number of actual heating degree days was
1.2% above the number of normal heating degree days.
The increase in sales to wholesale customers in 1993 compared to 1992 was
primarily attributable to the sale of firm capacity and associated energy to
ODEC. Under the terms of the agreement signed November 26, 1991, Virginia Power
is committed to sell up to 300Mw of capacity to ODEC through the commercial
operation date of Clover Power Station.
VIRGINIA POWER'S OPERATING EXPENSES
(excluding federal income taxes)
1994 Change 1993 Change 1992
(millions)
Fuel, net $ 973.0 1.4% $ 959.5 4.5% $ 917.9
Purchased power capacity, net 669.4 3.6% 646.1 85.2% 348.8
Other operation 577.4 9.8% 525.7 10.0% 477.7
Maintenance 263.2 (5.8)% 279.5 (0.4)% 280.6
Depreciation/amortization 480.7 3.8% 462.9 5.8% 437.6
Taxes, other than income 252.7 2.4% 246.7 5.8% 233.2
Total $3,216.4 3.1% $3,120.4 15.8% $2,695.8
Other operation and maintenance expenses in 1994 actually decreased 7by
approximately 1%, excluding $41.6 million related to costs associated with the
early retirement and voluntary separation programs offered by the company in
1994 (see Note N).
Total fuel and purchased power expenses in 1993 increased compared to 1992 as
a result of higher sales in 1993 and a decrease in nuclear generation because of
scheduled outages in 1993. The increased sales, the reduced generation from the
nuclear units, and the increased use of purchased power resulted in higher
overall fuel costs.
Purchased power capacity expenses in 1993 increased compared to 1992
primarily due to the recovery of expenses deferred in 1992. Virginia Power
implemented deferral accounting for certain capacity expenses in 1992.
Other operation expenses increased in 1993 because of the implementation of
Statement of Financial Accounting Standards (SFAS) No. 106, "Employers'
Accounting for Postretirement Benefits Other Than Pensions," which increased
expenses associated with the accrual of other postretirement benefits.
NONUTILITY
NONUTILITY OPERATING RESULTS
The nonutility companies increased net income in 1994 by 47.7% because of
Dominion Energy's sale of the Black Warrior Trust units. The sale of the units,
which hold royalty interests in proven, developed natural gas properties,
provided a net gain of $28.9 million in the second quarter of 1994.
Earnings in 1993 for nonutility operations increased from 1992 because of
higher revenues from Dominion Capital's Vidalia hydroelectric plant created by
higher water flow and increased income from Dominion Energy's natural gas
operations.
1994 Change 1993 Change 1992
(millions)
Revenues $320.3 29.9% $246.6 121.2% $111.5
Operating expenses 233.4 28.7% 181.4 63.4% 111.0
Net income 73.4 47.7% 49.7 140.1% 20.7
NONUTILITY OPERATING REVENUES
The 1994 revenue increase was attributable to the sale of the Black Warrior
Trust units, partially offset by lower revenues from the Vidalia hydroelectric
plant when compared with extraordinary water flows experienced in 1993.
The 1993 revenue increase came from greater production of natural gas. Annual
production in 1993 rose to 33.7 billion cubic feet (BCFE) compared to 9.2 BCFE
in 1992. Revenues from Vidalia increased over 1992 revenue levels primarily
because of higher water flows.
NONUTILITY OPERATING EXPENSES
The increase in 1994 operating expenses was consistent with revenue increases.
The 1993 operating expenses of the nonutility companies increased with the
addition of the Cerros Colorados hydroelectric power station in Argentina and
the higher production at oil and gas businesses.
CONSOLIDATED NON-OPERATING ITEMS
INCOME TAXES
Income taxes decreased in 1994 compared to 1993 primarily because of decreased
pre-tax book income from the utility. This was partially offset by a tax
increase from the nonutility companies because of the sale of the Black Warrior
Trust units. The nonutility companies recorded tax credits of $36.6 million in
1994. They were primarily generated from investments in low- income housing
projects and natural gas production activities.
Income taxes increased in 1993 because of an increase in pre-tax book income
and an increase in the federal income tax rate from 34% to 35%. The nonutility
companies recorded tax credits of $36.1 million in 1993.
INTEREST CHARGES
Interest charges decreased in 1994 as a result of the utility's reduction of
$10.6 million in the interest accrued for prior years on certain tax
obligations, and the utility's refinancing activities in current and prior
years.
FUTURE ISSUES
UTILITY ISSUES
REGULATORY POLICY: Regulatory policy continues to be of fundamental importance
to Virginia Power. Recently and in the near-term future, the cost of purchased
capacity constitutes the largest category of increased costs requiring rate
relief. The Virginia Commission has authorized rates providing for the current
recovery of the ongoing levels of capacity payments. Moreover, the Commission
has established and reaffirmed deferral accounting that is intended to ensure
dollar for dollar recovery of reasonably incurred capacity costs.
COMPETITION: Virginia Power will continue to be affected by the developing
competitive market in wholesale power. Under the Energy Policy Act of 1992, any
participant in the wholesale market can obtain a FERC order to provide
transmission services, under certain conditions.
FERC has completed an industrywide formal inquiry aimed at reforming the
pricing of transmission services. Virginia Power was an active participant in
that inquiry. FERC is also encouraging the development of regional transmission
groups (RTGs) in which transmission-owning utilities and transmission users
would jointly plan facilities and administer the provision of transmission
services. It is too early to determine what effects reformed transmission
pricing and the development of RTGs could have on the company.
At present, competition for retail customers is limited. It arises primarily
from the ability of certain business customers to relocate among utility service
territories, to substitute other energy sources for electric power and to
generate their own electricity. The Energy Policy Act bans federal orders of
transmission service to ultimate customers. Broader retail competition that
would allow customers to choose among electric suppliers has been the subject of
intense debate in federal and state forums. If such competition were to develop,
it would have the potential to shift costs among customer classes and to create
significant transitional costs. Certain state actions that affect retail
competition may be preempted by federal law.
Potential competition also exists for Virginia Power's sales to its
cooperative and municipal customers. However, nearly all of this service is
under contracts with multi-year notice provisions. To date, Virginia Power has
not experienced any material loss of load, revenues or net income due to
competition for its customers. The utility believes it has a strong capability
to meet future competition.
In accordance with SFAS No. 71, "Accounting for the Effects of Certain Types
of Regulation," the company's financial statements reflect assets and costs
based on current cost-based ratemaking regulations. Continued accounting under
SFAS No. 71 requires that the following criteria be met:
a) A utility's rates for regulated services provided to its customers are
established by, or are subject to approval by, an independent third-party
regulator;
b) The regulated rates are designed to recover specific costs of providing
the regulated services or products; and
c) In view of the demand for the regulated services and the level of
competition, direct and indirect, it is reasonable to assume that rates set at
levels that will recover a utility's costs can be charged to and collected from
customers. This criterion requires consideration of anticipated changes in
levels of demand or competition during the recovery period for any capitalized
costs.
A utility's operations or portion of operations can cease to meet these
criteria for various reasons, including a change in the method of regulation or
a change in the competitive environment for regulated services. A utility whose
operations or portion of operations cease to meet these criteria should
discontinue application of SFAS No. 71 and write off any regulatory assets and
liabilities for those operations that no longer meet the requirements of SFAS
No. 71. The company's operations currently satisfy the SFAS No. 71 criteria.
However, if events or circumstances should change so that those criteria are no
longer satisfied, management believes that a material adverse effect on the
company's results of operations and financial position may result.
ENVIRONMENTAL MATTERS: Virginia Power is subject to rising costs resulting
from a steadily increasing number of federal, state and local laws and
regulations designed to protect human health and the environment. These laws and
regulations affect future planning and existing operations. They can result in
increased capital, operating and other costs as a result of remediation,
containment and monitoring obligations of Virginia Power. These costs have been
historically recovered through the ratemaking process; however, should material
costs be incurred and not recovered through rates, Virginia Power's results of
operations and financial condition could be adversely impacted.
Virginia Power incurred expenses of $67.3 million, $72.2 million and $65.2
million (including depreciation) during 1994, 1993 and 1992, respectively, for
environmental protection facilities and expects these expenses to be
approximately $64.3 million in 1995. In addition, capital expenditures to limit
or monitor hazardous substances were $4 million, $3.6 million and $6.6 million
for 1994, 1993 and 1992, respectively. The amount estimated for 1995 for these
expenditures is $33.1 million.
The Clean Air Act, as amended in 1990, requires Virginia Power to reduce its
emissions of sulfur dioxide and nitrogen oxides. Beginning in 1995, the sulfur
dioxide reduction program is based on the issuance of a limited number of sulfur
dioxide emission allowances, each of which may be used as a permit to emit one
ton of sulfur dioxide into the atmosphere or may be sold to someone else. The
program is administered by the Environmental Protection Agency (EPA). Virginia
Power is assessing the economic reasonableness of constructing two additional
scrubbers at its Mt. Storm Power Station or acquiring allowances as a means of
maintaining compliance with the Air Act's standards.
The Virginia Water Control Board adopted water quality standards for toxic
pollutants pursuant to the Clean Water Act. The standards became effective April
20, 1992 and will be applicable to Virginia Power as Virginia Pollution
Discharge Elimination System Permits are reissued. Virginia Power is studying
the potential impact of the standards and cannot presently determine whether or
to what extent changes to facilities or operating procedures might ultimately be
required, but incremental compliance costs could be significant.
Permits under the Clean Water Act and state laws have been issued for all of
Virginia Power's steam generating stations now in operation. Such permits are
subject to reissuance and continuing review.
ELECTROMAGNETIC FIELDS: The possibility that exposure to electromagnetic
fields (EMFs) emanating from power lines, household appliances and other
electric sources may result in adverse health effects has been a subject of
increased public, governmental and media attention. A considerable amount of
scientific research has been conducted on this topic without definitive results.
Research is continuing to resolve scientific uncertainties. It is too soon to
tell what, if any, impact EMFs may have on the company's financial condition.
NUCLEAR OPERATIONS: Three refueling outages are currently scheduled for 1995.
The North Anna Unit 2 outage will include steam generator replacement. The Surry
Unit 2 outage will include a ten-year in-service inspection, while Surry Unit 1
will have a normal refueling. Refueling outages typically occur every 18 months
and last for approximately 60 days. Virginia Power's goal is to reduce refueling
outages from an average of 60 days to 48 days. When nuclear units are refueled,
Virginia Power replaces the nuclear-generated power with other more expensive
sources. A reduction in the length of an outage should result in increased
availability of low-cost nuclear generation, thereby lowering expenses.
Stress corrosion cracking has occurred in steam generators of a certain
design, including those at the Surry and North Anna Power Stations. The steam
generators at Surry Units 1 and 2 were replaced in 1981 and 1979, respectively.
The replacement of the steam generators at North Anna Unit 1 was completed in
1993 at a cost of $106 million. Replacement of the North Anna Unit 2 steam
generators is scheduled for 1995 at a total estimated company cost of $110
million. Costs associated with the steam generator replacements at North Anna
Unit 1 and Unit 2 are expected to be recovered through rates.
The Nuclear Regulatory Commission has proposed revisions to the nuclear power
plant license renewal rules issued in 1991. Virginia Power intends to work with
industry groups on life extension programs and to comment on the proposed
rulemaking.
CONSERVATION AND LOAD MANAGEMENT: The company is committed to integrated
resource planning by using effective combinations of demand-side and supply-side
options to meet customer needs. Demand-side programs are selected annually at
Virginia Power. The process is designed to ensure selection of the most
cost-effective demand-side packages.
NONUTILITY ISSUES
INDEPENDENT POWER: The major emphasis in expanding Dominion Energy's core
independent power business is international. With investments in Belize and
Argentina and growing interest elsewhere, the trends and risks will have a
foreign focus. Risks include currency fluctuations, developments in national
markets, and governmental actions. Dominion Energy does not consider such risks
to be an impediment to operations abroad. It is managing these risks by limiting
its investments to stable developing countries, by investing when there is an
appropriate balance of risk and reward, and by avoiding over-commitment to one
country or region. In the United States, the continuing industry trend toward
deregulation will offer opportunities to acquire existing assets. With overall
demand for electricity projected to be relatively flat, however, opportunities
to build new capacity will be very limited.
NATURAL GAS: Natural gas operations are now making a significant contribution
to Dominion Energy's earnings and are expected to continue to do so. Since
Dominion Energy has acquired and developed primarily proven and/or producing
reserves, the trend of financial performance will depend largely on the market
price of natural gas. The market price of any commodity is influenced by many
factors outside of the control of Dominion Energy. However, because of the
advantageous cost basis of Dominion Energy's reserves and the related tax
credits, the natural gas operations are profitable at today's market prices.
Since the majority of the reserves have associated tax credits based on
production, future profitability could be impacted adversely by federal
legislation that would eliminate the tax credit before its current expiration in
2002. Management believes that such action is remote.
REAL ESTATE INVESTMENTS: Dominion Capital's investments in real estate have
historically been a relatively minor part of the nonutility business. Within
real estate in general are two very distinct segments: residential land
development and commercial real estate investments and services.
Residential property development primarily targets the middle- to upper-price
market. The critical risk to financial performance in this market is the
regional economy, which affects both market price and the rate at which the
market absorbs the developed product.
Commercial real estate investments are primarily income-producing properties.
With investments concentrated in the retail and office sectors of eastern
Virginia, financial performance will be most directly impacted by the growth of
that regional economy. Dominion Capital's investments in commercial real estate
and in a commercial real estate service and brokerage firm provide a balancing
of risks and returns over the entire commercial real estate cycle.
CORPORATE ISSUES
A dispute over corporate governance issues between Dominion Resources and
Virginia Power arose in 1994. In connection with that dispute, the Virginia
Commission commenced proceedings investigating these and related issues. A
description of the Virginia Commission proceedings is included in Note O to the
Consolidated Financial Statements. A Settlement Agreement was entered into by
the two companies and their respective boards with respect to these matters in
August 1994. The Settlement Agreement is also described in Note O.
During the 1995 session of the Virginia General Assembly, the Virginia
Commission caused legislation to be introduced that addressed the Commission's
authority to intervene in disputes involving public utilities owned by separate
holding companies. That legislation was opposed by Dominion Resources. On
February 20, 1995, the proposed legislation was withdrawn and Dominion
Resources, Virginia Power and the Virginia Commission Staff consented to an
order that is included in Dominion Resources' Current Report on Form 8-K of
February 21, 1995. Under this order which will be effective until July 2, 1996,
Dominion Resources must obtain the Commission's approval before taking steps
such as removing Virginia Power's board members or officers or changing Virginia
Power's articles of incorporation or by-laws. Although the order imposes for the
next fifteen months significant restrictions on the ability of Dominion
Resources to select the board and management of its subsidiary, Dominion
Resources and Virginia Power agreed to the order in the interest of enhancing
relations with the Virginia Commission and achieving the purposes of the
Settlement Agreement.
Disagreements between the companies have arisen from time to time since the
Settlement Agreement was executed. On February 28, 1995, upon recommendation of
a Joint Committee created under the Settlement Agreement, the boards of Dominion
Resources and Virginia Power took further action to enhance cooperation between
the two companies and their relationship with the Virginia Commission. Among
other things, the boards expanded the authority of the Joint Committee to act
for the boards on issues presented to it by the chief executives of the
companies. Each board directed corporate officials and employees of its company
to cooperate fully with the Joint Committee in resolution of issues acted on by
the committee and to support actions taken by the committee. In connection with
these initiatives, the chief executive officers of both companies made known
their intentions to retire in July 1996 and the boards directed the development
of executive succession plans for each company. Also, the Dominion Resources
board received the resignations of directors Bruce C. Gottwald and John W. Snow
and the Virginia Power board received the resignations of directors William W.
Berry and Frank S. Royal, and both boards voted to reduce their size by two
members.
At this time, Dominion Resources is unable to predict the ultimate resolution
of these matters or their effect on the company.
Consolidated Balance Sheets
ASSETS
AT DECEMBER 31, 1994 1993
(millions)
Current assets:
Cash and cash equivalents $ 146.7 $ 102.0
Trading securities 110.8
Marketable securities 149.5
Customer accounts receivable, net 202.7 202.9
Other accounts receivable 83.2 62.0
Accrued unbilled revenues 97.4 105.7
Materials and supplies at
average cost or less:
Plant and general 186.6 182.1
Fossil fuel 122.9 121.0
Other 136.2 123.9
1,086.5 1,049.1
Investments:
Investments in affiliates 282.8 280.9
Available-for-sale-securities 286.5
Marketable securities (cost $287.8) 287.4
Nuclear decommissioning trust funds 260.9 226.4
Investments in real estate 107.5 117.8
Other 222.4 176.8
1,160.1 1,089.3
Property, plant and equipment:
(includes plant under construction
of $828.2 [1993-$913.1]) 15,415.4 14,914.7
Less accumulated depreciation,
depletion and amortization 5,170.0 4,802.1
10,245.4 10,112.6
Deferred charges and other assets:
Regulatory assets 871.0 930.5
Other 199.2 168.0
1,070.2 1,098.5
Total assets $13,562.2 $13,349.5
The accompanying notes are an integral part of the Consolidated Financial
Statements.
LIABILITIES AND SHAREHOLDERS' EQUITY
AT DECEMBER 31, 1994 1993
(millions)
Current liabilities:
Securities due within one year $ 399.1 $ 195.0
Short-term debt 146.0 262.8
Accounts payable, trade 343.5 314.9
Accrued interest 106.3 112.0
Accrued taxes 15.8
Accrued payrolls 59.5 68.3
Customer deposits 55.0 53.9
Provision for rate refunds 12.2 101.7
Other 115.8 81.9
1,237.4 1,206.3
Long-term debt:
Utility 3,910.4 3,899.9
Nonrecourse-nonutility 640.2 700.6
Other 160.0 150.0
4,710.6 4,750.5
Deferred credits and other liabilities:
Deferred income taxes 1,613.6 1,586.7
Investment tax credits 289.2 306.3
Deferred fuel expenses 51.5 54.1
Other 257.7 191.7
2,212.0 2,138.8
Total liabilities 8,160.0 8,095.6
Commitments and contingencies
Preferred stock:
Virginia Power stock subject to
mandatory redemption 222.1 224.0
Virginia Power stock not subject to
mandatory redemption 594.0 594.0
Common shareholders' equity:
Common stock--no par,
authorized 300,000,000 shares,
outstanding--172,405,049 shares
at 1994 and 168,122,687 shares at 1993 3,157.6 2,991.0
Retained earnings 1,455.2 1,417.8
Allowance on available-for-sale securities (47.8) (0.6)
Other paid-in capital 21.1 27.7
4,586.1 4,435.9
Total liabilities and shareholders' equity $13,562.2 $13,349.5
Consolidated Statements of Cash Flows
<TABLE>
FOR THE YEARS ENDED DECEMBER 31, 1994 1993 1992
(millions)
<S> <C> <C> <C>
Cash flows from (to) operating activities:
Net income $ 478.2 $ 516.6 $ 444.5
Adjustments to reconcile net income to net cash:
Cumulative effect of change in method of
accounting for income taxes (15.6)
Depreciation, depletion and amortization 610.7 593.9 560.0
Deferred income taxes 68.2 34.7 137.1
Investment tax credits, net (17.1) (19.2) (19.4)
Allowance for other funds used during construction (6.4) (5.1) (4.8)
Deferred fuel expenses (2.6) (36.1) 45.2
Deferred capacity expenses 26.5 72.8 (102.7)
Non-cash return on terminated construction
project costs--pre-tax (10.3) (11.9) (13.7)
Gain on sale of trust units (49.0)
Changes in current assets and liabilities:
Accounts receivable 19.1 (56.6) (35.7)
Accrued unbilled revenues 11.9 (6.3) 2.8
Materials and supplies (6.5) 27.4 (33.8)
Accounts payable, trade 32.6 26.5 79.2
Accrued interest and taxes (46.5) 31.1 (32.9)
Provision for rate refunds (89.5) (87.6) 161.9
Other changes (27.5) 16.8 9.7
Net cash flows from operating activities 991.8 1,097.0 1,181.8
Cash flows from (to) financing activities:
Issuance of common stock 186.7 196.6 192.6
Issuance of preferred stock 150.0 240.0
Issuance of long-term debt:
Utility 464.0 1,035.0 1,241.0
Nonrecourse-nonutility 18.7 288.4 72.9
Issuance (repayment) of short-term debt (117.0) 133.4 (43.5)
Repayment of long-term debt and preferred stock (349.6) (1,241.6) (1,347.4)
Common dividend payments (434.7) (411.2) (386.9)
Other (8.0) (8.8) (55.3)
Net cash flows from (to) financing activities (239.9) 141.8 (86.6)
Cash flows from (used in) investing activities:
Capital expenditures (excluding AFC-equity funds) (660.9) (712.8) (716.5)
Acquisition of natural gas and
independent power properties (60.4) (316.8) (222.6)
Sale of accounts receivable, net (40.0)
Sale of trust units 128.4
Other investments (74.3) (189.6) (136.0)
Net cash flows used in investing activities (707.2) (1,219.2) (1,075.1)
Increase in cash and cash equivalents $ 44.7 $ 19.6 $ 20.1
Cash and cash equivalents at beginning of the year 102.0 82.4 62.3
Cash and cash equivalents at end of the year $ 146.7 $ 102.0 $ 82.4
</TABLE>
The accompanying notes are an integral part of the Consolidated Financial
Statements.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF CASH FLOWS AND FINANCIAL CONDITION:
(Unaudited)
CONSOLIDATED
FINANCING ACTIVITY
Each of Dominion Resources subsidiaries--Virginia Power, Dominion Capital and
Dominion Energy--obtains capital primarily through cash from operations,
financings and equity contributed by the parent. The utility and nonutility
companies obtain financing based on their individual credit ratings and ability
to repay the debt. In no way are the other companies contingently liable for
each other's indebtedness.
COMMERCIAL PAPER
To finance working capital for operations, proceeds from the sale of Dominion
Resources commercial paper in regional and national markets are made available
to its subsidiaries under the terms of intercompany credit agreements. To
support these borrowings, Dominion Resources had available bank lines of credit
totaling $430.8 million at the end of 1994. Amounts borrowed by the subsidiaries
are repaid to Dominion Resources through cash flows from operations and through
proceeds from permanent financings. Virginia Power had no amount outstanding
under its commercial paper program at December 31, 1994.
COMMON EQUITY
Dominion Resources made no underwritten public offerings of common stock in 1994
but did raise capital from sales of common stock through an Automatic Dividend
Reinvestment and Stock Purchase Plan, a Customer Stock Purchase Plan, and an
Employee Savings Plan. Dominion Resources will continue to raise capital through
these plans in 1995. Proceeds from these plans were (in millions): 1994-$166;
1993-$196.6 and 1992-$192.6. Reflected in the 1994 amount of proceeds from these
plans was the repurchase of 566,000 shares of common stock for an aggregate
price of $20.7 million. Dominion Resources is authorized to repurchase up to 5
million shares of its common stock.
VIRGINIA POWER
LIQUIDITY AND CAPITAL RESOURCES
Liquidity is important to Virginia Power because of the capital intensive nature
of its business, which requires large investments in long-lived assets.
Cash from operations has accounted for, on average, 74 percent of the
company's cash requirements during the past three years. Virginia Power's major
external sources of financing during 1994 were the issuances of $325 million of
First and Refunding Mortgage Bonds, $100 million of unsecured medium term notes
with annual interest rates ranging from 6.15% to 7.27%, and $75 million from
common stock issued to Dominion Resources. The proceeds from these financings
were used for redemptions of $119 million of higher-cost debt and payment of a
portion of Virginia Power's capital requirements. During the year, Virginia
Power retired $166.5 million of securities through mandatory debt maturities and
sinking fund requirements.
SOURCES AND USES OF CASH
1994 1993 1992
(millions)
Sources of cash:
Cash from operations $1,018.3 $1,022.9 $1,175.0
Common stock 75.0 50.0 75.0
Preferred stock 150.0 240.0
Long-term debt 464.0 1,035.0 1,241.0
Other 6.9 76.2
$1,564.2 $2,334.1 $2,731.0
Uses of cash:
Utility plant $ 580.9 $ 644.9 $ 662.2
Nuclear fuel 80.0 67.9 54.3
Repayment of long-term debt
and preferred stock 334.3 1,072.1 1,347.5
Dividends 438.2 421.1 416.1
Nuclear decommissioning
contributions 24.5 24.4 24.3
Other 106.3 103.7 226.6
$1,564.2 $2,334.1 $2,731.0
In addition, Virginia Power repurchased $9.8 million of its securities. These
transactions, among other factors, had the effect of lowering Virginia Power's
embedded cost of debt from 7.67 percent to 7.65 percent in 1994.
In 1994, Virginia Power issued $39 million of variable and fixed-rate
Pollution Control securities to refinance $39 million of higher-cost Pollution
Control securities.
Virginia Power's common equity portion of its capitalization was 44.3 percent
at December 31, 1994.
Proceeds from the sale of commercial paper are primarily used to finance
working capital for operations. Borrowings under this program are limited to
$200 million outstanding at any one time, of which no amount was outstanding at
December 31, 1994. In addition, Virginia Power paid common stock and preferred
stock dividends of $395.5 million and $42.7 million, respectively.
VIRGINIA POWER:
1994 LONG-TERM DEBT ACTIVITY
(excluding sinking fund payments)
Issuances Redemptions
(millions)
Jan. $ 19.5 @ 5.45% Jan. $ 19.5 @ 6.75%
Jan. $125.0 @ 7.60% Jan. $119.0 @ 9.75%
Mar. $ 19.5 @ variable Mar. $019.5 @ 5.63%
May $ 45.0 @ 6.28 to 6.35%
Jun. $ 55.0 @ 6.15 to 7.27%
Oct. $200.0 @ 8.625%
CAPITAL REQUIREMENTS
Virginia Power presently anticipates that kilowatt-hour sales will grow
approximately 2.1 percent a year through 2014. Capacity needed to support this
growth will be provided through a combination of generating units constructed by
Virginia Power, purchases from nonutility generators, and other utility
generators. Each of these options plays an important role in Virginia Power's
overall plan to meet capacity needs. Peaking units may be needed to meet demand
by the end of the decade, but no base load generation is expected to be needed
until the middle of the next decade.
Construction continues on the Clover project in which Virginia Power has a 50
percent ownership interest. Virginia Power's share of construction costs is
estimated to be $533 million. As of December 31, 1994, Virginia Power had
incurred $449.8 million in construction expenditures. Clover Units 1 and 2 are
expected in service by April 1995 and April 1996, respectively.
Virginia Power estimates that in 1995, 82 percent of its construction
expenditures, including nuclear fuel, will be met through cash flow from
operations and the balance, including other capital requirements, will be
obtained through sales of securities and short-term borrowings.
Projected construction and nuclear fuel expenditures for the next three years
are expected to total approximately $1.9 billion, excluding allowance for funds
used during construction (AFC).
NONUTILITY
LIQUIDITY AND CAPITAL RESOURCES
Current capital requirements for nonutility operations are funded from:
internally generated funds; intercompany credit agreements with Dominion
Resources; a $200 million medium-term note facility; $185 million in bank
revolving credit agreements and a $90 million commercial paper program. In 1994,
net borrowings decreased by $33.7 million, primarily due to the cash inflow from
the sale of the Black Warrior Trust units. Net borrowings increased by $264.2
million and $33.6 million during 1993 and 1992, respectively. These funds were
borrowed principally for investments in marketable securities, natural gas
acquisitions, land acquisitions and independent power projects.
CASH FLOWS:
1994 1993 1992
(millions)
Sources of cash:
Cash from operations $ 48.1 $116.9 $ 58.5
Issuance of debt 81.3 415.5 147.0
Sale of trust units 128.4
Contribution from parent 4.9 35.0 135.0
Other 55.9 91.9 100.1
$318.6 $659.3 $440.6
Uses of cash:
Investments $ 39.8 $ 61.7 $ 52.6
Independent power properties 214.1 33.7
Natural gas properties 60.4 102.7 188.9
Land and land development 0.6 14.1
Repayment of debt 115.0 151.3 113.4
Dividends 39.1 32.9 17.7
Other 64.3 96.0 20.2
$318.6 $659.3 $440.6
In 1994 Dominion Capital received $4.9 million from Dominion Resources to
finance its operations.
Nonutility capital requirements in 1995 are expected to be funded primarily
by equity contributions and cash flows from operations.
FINANCIAL POSITION:
1994 1993 1992
(millions)
Marketable securities $ 397.3 $ 436.9 $ 327.5
Hydroelectric project 123.5 116.6 100.6
Enron/Dominion Cogen Corp. 86.2 90.0 94.8
Energy partnerships 124.0 125.6 124.2
Real estate partnerships 11.2 10.3 10.4
Other 140.3 102.4 97.7
Total investments 882.5 881.8 755.2
Land and land development 97.2 104.7 111.5
Independent power properties 240.0 243.1 33.4
Natural gas properties 279.3 326.7 225.4
Other assets 472.1 303.0 199.4
Total assets $1,971.1 $1,859.3 $1,324.9
Total long-term debt $ 640.2 $ 700.6 $ 433.9
Notes to Consolidated Financial Statements
Note A:
SIGNIFICANT ACCOUNTING POLICIES:
Dominion Resources is currently exempt from regulation as a registered holding
company under the Public Utility Holding Company Act of 1935.
Accounting for the utility business conforms with generally accepted
accounting principles as applied to regulated public utilities and as prescribed
by federal agencies and the commissions of the states in which the utility
business operates.
CONSOLIDATION: The Consolidated Financial Statements include the accounts of
Dominion Resources and its subsidiaries. In consolidation, all significant
inter-company transactions and accounts have been eliminated.
OPERATING REVENUES AND INCOME: Utility revenues are recorded on the basis of
service rendered. Dividend income on securities owned is recognized on the
ex-dividend date.
Investments in common stocks of affiliates representing 20 percent to 50
percent ownership, and joint ventures and partnerships representing generally 50
percent or less ownership interests, are accounted for under the equity method.
PROPERTY, PLANT AND EQUIPMENT: Utility plant is recorded at original cost,
which includes labor, materials, services, AFC (where permitted by regulators),
and other indirect costs.
The cost of acquisition, exploration and development of natural resource
properties is accounted for under the successful efforts method.
Interest is capitalized in connection with the construction of major
facilities. The capitalized interest is recorded as part of the asset to which
it relates and is amortized over the asset's estimated useful life. In 1994,
1993 and 1992, $7.4 million, $6 million, and $8.2 million of interest cost was
capitalized, respectively. Capitalized interest includes AFC-other funds for
certain regulatory jurisdictions of $4.2 million, $3.5 million and $4.7 million
for the years ended December 31, 1994, 1993 and 1992, respectively.
Major classes of property, plant and equipment and their respective balances
are:
AT DECEMBER 31, 1994 1993
(millions)
Utility:
Production $ 6,916.6 $ 6,659.0
Transmission 1,301.2 1,248.4
Distribution 3,989.8 3,761.0
Other electric 860.8 794.6
Construction work-in-progress 828.2 913.1
Nuclear fuel 817.2 814.1
Total utility 14,713.8 14,190.2
Nonutility:
Natural gas properties 331.6 381.1
Independent power properties 253.0 247.8
Construction work-in-progress 45.6 29.8
Other 71.4 65.8
Total nonutility 701.6 724.5
Total property,
plant and equipment $15,415.4 $14,914.7
DEPRECIATION, DEPLETION AND AMORTIZATION: Depreciation of utility plant (other
than nuclear fuel) is computed using the straight-line method based on projected
useful service lives. The cost of depreciable utility plant retired and the cost
of removal, less salvage, are charged to accumulated depreciation. The provision
for depreciation on utility plant was based on weighted average depreciable
plant using a rate of 3.2 percent for 1994, 1993 and 1992.
Owned nuclear fuel is amortized on a unit-of-production basis sufficient to
amortize fully, over the estimated service life, the cost of the fuel plus
permanent storage and disposal costs.
Costs in excess of net assets acquired from equity investments are amortized
over periods not to exceed 40 years.
NUCLEAR DECOMMISSIONING: Nuclear plant decommissioning costs are accrued and
recovered through rates over the expected service lives of Virginia Power's
nuclear generating units. The amounts collected from customers are being placed
in trust, which, with the accumulated earnings thereon, will be utilized solely
to fund future decommissioning obligations.
Approximately every four years, site-specific studies are prepared to
determine the decommissioning cost estimate for Virginia Power's four nuclear
units. The current cost estimate is based on the DECON method, which assumes the
decontamination or prompt removal of radioactive contaminants so that the
property may be released for unrestricted use shortly after cessation of
operations. Virginia Power currently estimates that decommissioning will begin
at the expiration date of each unit's operating license, which will occur in
2012, 2013, 2018 and 2020 for the Surry Units 1 & 2 and North Anna Units 1 & 2,
respectively. Based on Virginia Power's latest decommissioning study completed
in 1994, total decommissioning costs, including reclamation costs, are estimated
to be $1 billion in 1994 dollars.
The accumulated provision for decommissioning of $260.9 million and $226.4
million is included in accumulated depreciation, depletion and amortization at
December 31, 1994 and 1993, respectively. Provisions for decommissioning of
$24.5 million, $24.4 million and $24.3 million applicable to 1994, 1993 and
1992, respectively, are included in depreciation, depletion and amortization
expense. The balance in Virginia Power's Nuclear Decommissioning trust funds was
$260.9 million and $226.4 million at December 31, 1994 and 1993, respectively.
The net unrealized loss of $5.2 million at December 31, 1994 is included in the
accumulated provision for decommissioning.
Earnings of the trust funds were $15.2 million, $16.3 million and $9.1
million for 1994, 1993 and 1992, respectively, and are included in other income
in the Consolidated Financial Statements.
In 1994 and 1993, the accretion of the accumulated provision for
decommissioning, equal to the earnings of the trust funds, was recorded in other
income. Such amounts in 1992 were recorded in interest charges, net.
The Financial Accounting Standards Board (FASB) is reviewing the accounting
for nuclear plant decommissioning. If current electric utility industry
practices for such decommissioning are changed, annual provisions for
decommissioning could increase. FASB may ultimately determine that the estimated
cost of decommissioning should be reported as a liability rather than as
accumulated depreciation and that a substantial portion of the decommissioning
obligation should be recognized earlier in the operating life of the nuclear
plant.
FEDERAL INCOME TAXES: Dominion Resources and its subsidiaries file a
consolidated federal income tax return.
Dominion Resources adopted SFAS No. 109, "Accounting for Income Taxes" in
1992 which requires companies to measure and record deferred tax assets and
liabilities for all temporary differences. Temporary differences occur when
events and transactions recognized for financial reporting result in taxable or
tax-deductible amounts in future periods. The regulatory treatment of temporary
differences can differ from the requirements of SFAS No. 109. Accordingly,
Virginia Power recognizes a regulatory asset if it is probable that future
revenues will be provided for the payment of those deferred tax liabilities.
Similarly, in the event a deferred tax liability is reduced to reflect changes
in tax rates, a regulatory liability is established if it is probable that a
future reduction in revenue will result.
Due to regulatory requirements, Virginia Power accounts for investment tax
credits under the "deferral method" which provides for the amortization of these
credits over the service lives of the property giving rise to the credits.
ALLOWANCE FOR FUNDS USED DURING CONSTRUCTION: The applicable regulatory
Uniform System of Accounts defines AFC as the cost during the construction
period of borrowed funds used for construction purposes and a reasonable rate on
other funds when so used.
The pre-tax AFC rates for 1994, 1993 and 1992 were 8.9, 9.4 and 10.3 percent,
respectively. Approximately 83 percent of Virginia Power's construction work in
progress (CWIP) is now included in rate base and a cash return is collected
currently thereon.
DEFERRED CAPACITY AND FUEL EXPENSES: In 1992, Virginia Power began to defer
certain capacity expenses based on an order by the Virginia Commission.
Approximately 90 percent of fuel expenses and 80 percent of capacity expenses
are subject to deferral accounting. Under this method, the difference between
reasonably incurred actual expenses and the level of expenses included in
current rates is deferred and matched against future revenues.
AMORTIZATION OF DEBT ISSUANCE COSTS: Dominion Resources defers and amortizes
any expenses incurred in the issuance of long-term debt including premiums and
discounts associated with such debt over the lives of the respective issues. Any
gains or losses resulting from the refinancing of Virginia Power debt are also
deferred and amortized over the lives of the new issues of long-term debt as
permitted by the appropriate regulatory commission. At Virginia Power, gains or
losses resulting from the redemption of debt without refinancing are amortized
over the remaining lives of the redeemed issues.
MARKETABLE SECURITIES: Dominion Resources adopted, effective January 1, 1994,
SFAS No. 115, "Accounting for Certain Investments in Debt and Equity
Securities." The standard requires companies to account for and classify
investments in equity securities that have readily determinable fair values and
for all investments in debt securities, based on management's intent. The
investments are to be classified into three categories and accounted for in the
following manner.
Debt securities which are intended to be held to maturity are classified as
held-to-maturity securities and reported at amortized cost. Debt and equity
securities purchased and held with the intent of selling them in the current
period are classified as trading securities. They are reported at fair value and
unrealized gains and losses are included in earnings. Debt and equity securities
that are neither heldto-maturity or trading are classified as available-for-sale
securities. These are reported at fair value with unrealized gains and losses
reported in shareholders' equity, net of tax.
This standard is to be applied on a prospective basis effective with fiscal
years beginning after December 15, 1993 and cannot be applied retroactively to
the prior year's financial statements.
In 1993, the company accounted for marketable securities as prescribed in
SFAS No. 12, "Accounting for Certain Marketable Securities." Based on this
standard, current and noncurrent marketable securities are carried at the lower
of aggregate cost or market value. A change in the valuation of the current
portfolio is recognized in the determination of net income in the current
period. For noncurrent marketable securities, a valuation allowance,
representing the excess of aggregate cost over the market value of these
securities, is included in common shareholders' equity for those securities
affected by a decline in value considered to be temporary.
NONRECOURSE-NONUTILITY FINANCINGS: Dominion Resources' nonutility
subsidiaries issue debt to finance their operations and obtain financings that
generally are secured by the assets of the nonutility subsidiaries. However,
Dominion Resources may be required to provide contingent equity support or to
maintain a minimum net worth at the nonutility subsidiaries. These financings
have been segregated on the accompanying financial statements to distinguish
their nonrecourse nature.
CASH: Current banking arrangements generally do not require checks to be
funded until actually presented for payment. At December 31, 1994 and 1993, the
company's accounts payable included the net effect of checks outstanding but not
yet presented for payment of $72.2 million and $78.1 million, respectively.
Dominion Resources considers cash and cash equivalents to include cash on
hand and temporary investments purchased with a maturity of three months or
less.
SUPPLEMENTARY CASH FLOWS INFORMATION:
1994 1993 1992
(millions)
Cash paid during
the year for:
Interest (reduced for net
costs of borrowed funds
capitalized) $355.9 $375.8 $379.8
Federal income taxes 154.2 187.8 111.9
Non-cash transactions
from investing and
financing activities:
Exchange of long-term
marketable securities 11.8 169.8 156.1
Assumption of obligations
and acquisition of utility
property 26.3
Other 3.1 (0.4) (0.9)
RECLASSIFICATION: Certain amounts in the 1993 and 1992 Consolidated Financial
Statements have been reclassified to conform to the 1994 presentation.
Note B:
SALE OF RECEIVABLES:
Virginia Power has an agreement to sell, with limited recourse, certain accounts
receivable including unbilled amounts, up to a maximum of $200 million.
Additional receivables are continually sold, at Virginia Power's discretion, to
replace those collected up to the limit. At December 31, 1994 and 1993, $160
million and $200 million, respectively, of such receivables had been sold and
were outstanding under this agreement. The limited recourse is provided by
Virginia Power's assignment of an additional undivided interest in accounts
receivable to cover any potential losses to the purchaser due to uncollectible
accounts. Virginia Power has provided for the estimated amount of such losses in
its accounts.
Note C:
TAXES:
1994 1993 1992
(MILLIONS, EXCEPT PERCENTAGES)
Taxes other than federal
income tax:
Real estate and property $ 83.9 $ 84.8 $ 79.2
State and local gross receipts 104.9 100.8 92.8
Payroll 33.9 31.3 30.8
Other 51.9 47.3 35.2
$274.6 $264.2 $238.0
Provision for federal
income taxes:
Included in operating expenses:
Current $120.8 $197.2 $ 96.3
Tax effects of temporary/
timing differences:
Liberalized depreciation 61.3 50.6 69.5
Indirect construction costs (21.5) (23.2) (12.6)
Other plant related items 4.0 19.9 10.0
Deferred fuel .8 11.8 (15.4)
Deferred capacity (9.0) (24.7) 34.9
Debt issuance costs 3.7 8.3 15.4
Customer accounts reserve 36.8 (34.9) 7.5
Intangible drilling costs 4.1 15.3 9.6
Other, net (12.9) 9.1 7.8
67.3 32.2 126.7
Net deferred investment tax
credits--amortization (17.1) (19.2) (19.4)
Total provision for federal
income tax expense $171.0 $210.2 $203.6
Computation of provision
for federal income tax:
Pre-tax income $649.2 $726.8 $632.5
Tax at statutory federal income
tax rate of 35% applied to
pre-tax income (34% in 1992)* $227.2 $254.4 $215.0
Changes in federal income
taxes resulting from:
Preferred dividends of
Virginia Power 14.8 14.8 15.5
Amortization of investment
tax credits (17.1) (16.1) (15.1)
Nonconventional fuel credit (32.0) (30.5) (5.8)
Other, net (21.9) (12.4) (6.0)
Total provision for federal
income tax expense $171.0 $210.2 $203.6
Effective tax rate 26.3% 28.9% 32.2%
(*) The Omnibus Budget Reconciliation Act of 1993 increased the corporate income
tax rate to 35 percent effective January 1, 1993.
In 1992, Dominion Resources adopted the provisions of SFAS No. 109. The
company implemented and reported the standard as a change in accounting
principle with the cumulative effect on prior years of a $15.6 million (10 cents
per share) increase in 1992 earnings. The adoption of SFAS No. 109 increased
deferred income tax liabilities by $459 million and resulted in the
establishment of a net regulatory asset by the same amount. For additional
information, see Federal Income Taxes under Note A.
Dominion Resources net noncurrent deferred tax liability is attributable to:
1994 1993
(MILLIONS)
Assets:
Deferred investment tax credits $ (102.4) $ (108.5)
Liabilities:
Depreciation method and plant basis
differences 1,349.7 1,310.6
Intangible drilling costs 31.0 31.4
Income taxes recoverable through
future rates 172.9 176.3
Terminated construction project costs 23.9 27.6
Partnership basis differences 104.3 93.0
Other 34.2 56.3
Total deferred income tax liability 1,716.0 1,695.2
Net deferred income tax liability $1,613.6 $1,586.7
Note D:
REGULATORY ASSETS:
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 company's regulatory assets
included the following:
AT DECEMBER 31, 1994 1993
(millions)
Income taxes recoverable through future rates $488.2 $497.8
Cost of decommissioning DOE uranium
enrichment facilities 83.7 85.2
Deferred losses or gains on reacquired debt 107.0 103.6
North Anna Unit 3 project termination costs 128.5 153.3
Other 63.6 90.6
Total $871.0 $930.5
Income taxes recoverable through future rates represent principally the tax
effect of depreciation differences not normalized. These amounts are amortized
as the related temporary differences reverse.
The costs of decommissioning the Department of Energy's (DOE) uranium
enrichment facilities have been deferred and represent the unamortized portion
of Virginia Power's required contributions to a fund for decommissioning and
decontaminating the DOE's uranium enrichment facilities. Virginia Power is
making such contributions over a 15-year period with escalation for inflation.
These costs are being recovered in fuel rates.
Deferred losses or gains on reacquired debt are deferred and amortized over
the lives of the new issues of long-term debt. Gains or losses resulting from
the redemption of debt without refinancing are amortized over the remaining
lives of the redeemed issues.
The construction of North Anna 3 was terminated in November 1982. All retail
jurisdictions have permitted recovery of the incurred costs. The amounts
deferred are being amortized over a 15-year period for Virginia and FERC
jurisdictional customers.
Note E:
JOINTLY OWNED PLANTS:
The following information relates to Virginia Power's proportionate share of
jointly owned plants at December 31, 1994:
Bath County
Pumped North Anna Clover
Storage Station Power Station Power Station
Ownership interest 60.0% 88.4% 50.0%
(millions)
Utility plant in service $1,078.3 $1,774.5
Accumulated depreciation 173.3 598.4
Nuclear fuel 409.8
Accumulated amortization
of nuclear fuel 382.0
CWIP 0.6 163.6 $449.8
The co-owners are obligated to pay their share of all future construction
expenditures and operating costs of the jointly owned facilities in the same
proportion as their respective ownership interest. Virginia Power's share of
operating costs is classified in the appropriate expense category in the
consolidated statements of income.
Note F:
SHORT-TERM DEBT:
Dominion Resources and its subsidiaries have credit agreements with various
expiration dates. These agreements provided for maximum borrowings of $705.8
million and $660.8 million at December 31, 1994 and 1993, respectively. At
December 31, 1994 and 1993, $135.2 million and $148.3 million, respectively, was
borrowed under such agreements and classified as long-term debt.
Dominion Resources credit agreements supported $224.0 million and $235.7
million of Dominion Resources' commercial paper at December 31, 1994 and 1993,
respectively. These agreements also supported $43 million of Virginia Power's
commercial paper at December 31, 1993. No Virginia Power commercial paper was
outstanding at December 31, 1994. A subsidiary of Dominion Capital also had
$90.7 million and $90.3 million of nonrecourse commercial paper outstanding at
December 31, 1994 and 1993, respectively. A total of $250 million and $240
million of the commercial paper was classified as long-term debt at December 31,
1994 and 1993, respectively. The commercial paper is supported by revolving
credit agreements that have expiration dates extending beyond one year.
Dominion Resources and its subsidiaries pay fees in lieu of compensating
balances in connection with these credit agreements. A summary of short-term
debt outstanding at December 31 follows:
Amount Weighted Average
Outstanding Interest Rate
(millions, except percentages)
1994
Commercial paper $64.0 6.08%
Term-notes 82.0 7.38%
Total $146.0
1993
Commercial paper $128.7 3.46%
Master notes 0.1 2.85%
Term-notes 134.0 7.60%
Total $262.8
Note G:
MARKETABLE SECURITIES:
Effective January 1, 1994, Dominion Resources adopted SFAS No. 115, "Accounting
for Certain Investments in Debt and Equity Securities (SFAS No. 115)." The
standard prescribes how companies are to account for and report investments in
equity securities that have readily determinable fair values and for all
investments in debt securities. This standard is effective for fiscal years
beginning after December 15, 1993. The adoption of SFAS No. 115 resulted in an
increase in earnings of $6.3 million, net of tax, for the unrealized gain on
marketable securities classified as trading at Janaury 1, 1994.
Securities classified as available-for-sale as of December 31, 1994:
Gross Gross
Unrealized Unrealized
Security Holding Holding Aggregate
Type Cost Gains Losses Fair Value
(millions)
Equity $334.5 $1.3 $54.2 $281.6
Debt 5.5 0.6 4.9
Maturities of debt securities classified as available-for-sale as of December
31, 1994:
Aggregate
Security Type Cost Fair Value
(millions)
Tax exempt obligations:
After five years $5.4 $4.8
Temporary investments and deposits:
After five years 0.1 0.1
For the year ended December 31, 1994, the proceeds from the sales of
available-for-sale securities is $35.8 million and the gross realized gains and
losses were $0.4 million and $1.6 million, respectively. The basis on which the
cost of these securities was determined is specific identification. The gross
gains included in earnings from transfers of securities from the
available-for-sale category into the trading category is $0.8 million. The
change in net unrealized holding gain or loss on available-for-sale securities
has resulted in a decrease in the separate component of shareholders' equity
during the year ended December 31, 1994 of $47.2 million, net of tax. The change
in net unrealized holding gain or loss on trading securities decreased earnings
during the year ended December 31, 1994 by $10 million.
In 1993, the company accounted for marketable securities as prescribed in
SFAS No. 12. At December 31, 1993 the marketable securities classified as
short-term had aggregate cost and aggregate market values of $149.5 million and
$157.7 million, respectively. The marketable securities classified as long-term
had aggregate cost and aggregate market values of $287.8 million and $287.4
million, respectively. During 1993, a decrease was recorded in the valuation
allowance included in common shareholders' equity of $11.2 million.
Net realized gains of $12.5 million and $15.8 million on the sale of
marketable securities were included in net income for the years ended December
31, 1993 and 1992, respectively.
Note H:
FAIR VALUE OF FINANCIAL INSTRUMENTS:
The fair value amounts of the company's financial instruments have been
determined using available market information and valuation methodologies deemed
appropriate in the opinion of management. However, considerable judgment is
required to interpret market data to develop the estimates of fair value.
Accordingly, the estimates presented herein are not necessarily indicative of
the amounts that the company could realize in a current market exchange. The use
of different market assumptions and/or estimation assumptions may have a
material effect on the estimated fair value amounts.
<TABLE>
Carrying Amount Estimated Fair Value
DECEMBER 31, 1994 1993 1994 1993
(millions)
<S> <C> <C> <C> <C>
Assets:
Cash and cash equivalents $ 146.7 $ 102.0 $ 146.7 $ 102.0
Marketable securities 418.0 464.1 418.0 464.1
Notes receivable 17.1 2.5 17.1 2.5
Nuclear decommissioning trust funds 260.9 226.4 260.9 243.8
Liabilities:
Short-term debt $ 146.0 $ 262.8 $ 146.0 $ 262.8
Long-term debt 5,134.4 4,966.1 4,951.9 5,237.5
Preferred stock $ 222.1 $ 225.5 $ 201.5 $ 251.8
</TABLE>
CASH AND CASH EQUIVALENTS: The carrying amount of these items is a reasonable
estimate of their fair value.
MARKETABLE SECURITIES AND NUCLEAR DECOMMISSIONING TRUST FUNDS: The estimated
fair value is determined based on quoted market prices, dealer quotes, and
prices obtained from independent pricing sources.
NOTES RECEIVABLE: The carrying value approximates fair value due to the
variable rate or term structure of the notes receivable.
SHORT-TERM DEBT AND LONG-TERM DEBT:Market values are used to determine the
fair value for debt securities for which a market exists. For debt issues that
are not quoted on an exchange, interest rates currently available to the company
for issuance of debt with similar terms and remaining maturities are used to
estimate fair value. The carrying amount of debt issues with short-term
maturities and variable rates that are refinanced at current market rates is a
reasonable estimate of their fair value.
PREFERRED STOCK: The fair value of the fixed-rate preferred stock subject to
mandatory redemption was estimated by discounting the dividend and principal
payments for a representative issue of each series over the average remaining
life of the series.
Note I:
LONG-TERM DEBT:
AT DECEMBER 31, 1994 1993
(millions)
Virginia Power First and Refunding Mortgage Bonds(1):
1987 Series B, 9.375%, due 1994 $ 100.0
1992 Series A, 6.375%, due 1995 $ 180.0 180.0
Series T, 4.5%, due 1995 56.6 56.6
Series U, 5.125%, due 1997 49.3 49.3
1992 Series B, 7.25%, due 1997 250.0 250.0
1988 Series A, 9.375%, due 1998 150.0 150.0
1992 Series F, 6.25%, due 1998 75.0 75.0
1989 Series B, 8.875%, due 1999 100.0 100.0
Various series, 5.875%-8%, due 2000-2004 940.0 940.0
Various series, 6.75%-7.625%, due 2005-2009 215.0 234.5
Various series, 9.75%, due 2014-2019 119.0
Various series, 5.45%-8.75%, due 2020-2024 944.5 600.0
Total First and Refunding Mortgage Bonds 2,960.4 2,854.4
Other long-term debt:
Virginia Power:
Bank loans, notes and term loans, 6.15%-10.8%,
due 1994-2003 798.2 770.8
Pollution control financings(2):
Fixed interest rate, 5.625%, due 2002 19.5
Money market municipals, due 2008-2027(3) 488.6 444.6
Dominion Resources:
Commercial paper(4) 160.0 150.0
Total other long-term debt 1,446.8 1,384.9
Nonrecourse--nonutility debt:
Dominion Resources:
Bank loans, 9.25%, due 2008 22.5 23.4
Dominion Capital:
Senior notes, fixed rate, 6.12%-11.875%,
due 2000-2005(5) 102.0 102.0
Term notes, fixed rate, 4.6%-12.48%,
due 1994-2020 206.0 206.0
Revolving credit agreements, due 1994-1995(6) 61.7 69.8
Commercial paper(7) 90.0 90.3
Dominion Energy:
Term loan, 7.22% (1993-10.13%), due 1996(8) 71.3 63.6
Revolving credit agreements, due 1996(9) 69.5 75.0
Term loan, 5.445%, due 1998 75.0 95.0
Bank loans, 9.70-13.20%, due 2005 28.8
Other 0.3 1.7
Total nonrecourse--nonutility debt 727.1 726.8
Less amounts due within one year:
First and refunding mortgage bonds 236.6 100.0
Bank loans, notes and term loans 75.6 65.0
Sinking fund obligations 0.8
Nonrecourse--nonutility 86.9 26.2
Total amount due within one year 399.1 192.0
Less unamortized discount, net of premium 24.6 23.6
Total long-term debt $4,710.6 $4,750.5
(1) Substantially all of Virginia Power's property is subject to the lien of the
mortgage securing its First and Refunding Mortgage Bonds.
(2) Certain pollution control equipment at Virginia Power's generating
facilities has been pledged or conveyed to secure these financings.
(3) Interest rates vary based on short-term tax-exempt market rates. The
weighted avg. daily interest rates were 2.96% and 2.53% for 1994 and 1993,
respectively.
(4) See Note F to the Consolidated Financial Statements.
(5) The Rincon Securities common stock owned by Dominion Capital is pledged as
collateral to secure the loan.
(6) The weighted average interest rates during 1994 and 1993 were 5.19% and
4.05%, respectively.
(7) The weighted average interest rates during 1994 and 1993 were 5.91% and
3.22%, respectively.
(8) The Enron/Dominion Cogen Corp. common stock owned by Dominion Energy is
pledged as collateral to secure the loan.
(9) The weighted average interest rates during 1994 and 1993 were 4.72% and
3.66%, respectively.
With a portion of the proceeds from the sale of $200 million First and
Refunding Mortgage Bonds of 1993, Series G, Virginia Power, in 1993, irrevocably
placed in a trust $138.2 million to defease $119.1 million 1990 Series A Bonds.
As a result, the 1990 Series A Bonds are considered to be extinguished for
financial reporting purposes and are excluded from the balance sheet at December
31, 1994 and 1993. The cost of $19.1 million was deferred and is being amortized
over the life of the new issues.
Certain of the company's revolving credit agreements include capitalization
ratio covenants (currently no amounts are outstanding under these agreements).
The most restrictive of these covenants would require the maintenance of at
least $3.1 billion of the company's common shareholders' equity.
Maturities (including cash sinking fund obligations) through 1999 are as
follows (in millions): 1995-$399.1; 1996-$474.2; 1997-$427.1; 1998-$402.9 and
1999-$271.5.
Note J:
COMMON STOCK:
During 1994 the company purchased on the open market and retired 566,000 shares
of common stock for an aggregate price of $20.7 million. From 1992 through 1994,
the following changes in common stock occurred:
<TABLE>
1994 1993 1992
Shares Shares Shares
Outstanding Amount Outstanding Amount Outstanding Amount
(millions)
<S> <C> <C> <C> <C> <C> <C>
Balance at January 1 168.1 $2,991.0 163.8 $2,796.3 158.8 $2,614.3
Changes due to:
Automatic Dividend Reinvestment and
Stock Purchase Plan 2.9 112.2 2.6 115.3 3.1 117.9
Stock Purchase Plan for customers
of Virginia Power 1.3 51.3 1.0 51.6 1.0 40.6
Employee Savings Plan .6 23.2 .7 29.7 .9 34.1
Transfer to other paid-in capital (11.7)
Stock repurchase and retirement (.6) (20.7)
Other .1 .6 (1.9) 1.1
Balance at December 31 172.4 $3,157.6 168.1 $2,991.0 163.8 $2,796.3
</TABLE>
Note K:
LONG-TERM INCENTIVE PLAN:
A long-term incentive plan (the Plan) provides for the granting of nonqualified
stock options and restricted stock to certain employees of Dominion Resources
and its affiliates. The aggregate number of shares of common stock that may be
issued pursuant to the Plan is 3,750,000. The changes in share and option awards
under the Plan were as follows:
<TABLE>
Restricted Price Stock Option Shares
Shares Per Share Options Price Exercisable
<S> <C> <C> <C> <C> <C>
Balance at December 31, 1991 18,029 72,945 50,145
Awards granted--1992 10,388 $36.375-$40.75 $37.58-$40.125
Exercised/distributed (11,393) (58,239)
Balance at December 31, 1992 17,024 14,706 14,706
Awards granted-1993 19,457 $41.875-$42.75 $27.75-$29.625
Exercised/distributed (9,582) (2,242)
Balance at December 31, 1993 26,899 12,464 12,464
Awards granted-1994 19,842 $40.625-$40.875 $29.625
Exercised/distributed (5,555) (1,388)
Balance at December 31, 1994 41,186 11,076 11,076
</TABLE>
Note L:
PREFERRED STOCK:
Dominion Resources is authorized to issue up to 20,000,000 shares of preferred
stock; however, no such shares are issued and outstanding.
Virginia Power has authorized 10,000,000 shares of preferred stock, $100
liquidation preference. Upon involuntary liquidation, each share is entitled to
receive $100 plus accrued dividends. Dividends are cumulative. Virginia Power
preferred stock subject to mandatory redemption at December 31, 1994 was as
follows:
<TABLE>
Entitled per share upon redemption
Shares And thereafter to amounts Annual sinking fund
Series Outstanding Amount Through declining in steps to fund requirements at $100 per share
<S> <C> <C> <C> <C> <C>
$5.58 400,000 (1) (2)
6.35 1,400,000 (1) (3)
7.30 417,319 $105.84 4/14/95 $100.00 after 4/14/02 15,000(4)
Total 2,217,319
</TABLE>
(1) Shares are non-callable prior to redemption.
(2) All shares to be redeemed on 3/1/00.
(3) All shares to be redeemed on 9/1/00.
(4) The 1995 and a portion of the 1996 sinking fund requirements were satisfied
by the 1994 open market purchase.
Maturities are $0.7 million for 1996 and $1.5 million for each of the years
1997-1999.
During the years 1992 through 1994, the following shares were redeemed:
Year Dividend Shares
1994 $7.30 37,681
1993 7.30 30,000
1993 7.58 480,000
1993 7.325 400,419
1992 8.20 330,000
1992 8.40 512,000
1992 8.60 228,764
1992 8.625 203,500
1992 8.925 164,500
At December 31, 1994 Virginia Power preferred stock not subject to mandatory
redemption, $100 liquidation preference, is listed in the table below.
Issued and Entitled Per
Outstanding Share Upon
Dividend Shares Redemption
$5.00 106,677 $112.50
4.04 12,926 102.27
4.20 14,797 102.50
4.12 32,534 103.73
4.80 73,206 101.00
7.45 400,000 101.00
7.20 450,000 101.00
7.05 500,000 105.00(1)
6.98 600,000 105.00(2)
MMP 1/87 series(3) 500,000 100.00
MMP 6/87 series(3) 750,000 100.00
MMP 10/88 series(3) 750,000 100.00
MMP 6/89 series(3) 750,000 100.00
MMP 9/92A(3) 500,000 100.00
MMP 9/92B(3) 500,000 100.00
Total 5,940,140
(1) Through 7/31/03 and thereafter to amounts declining in steps to $100.00
after 7/31/13.
(2) Through 8/31/03 and thereafter to amounts declining in steps to $100.00
after 8/31/13.
(3) Money Market Preferred (MMP) dividend rates are variable and are set every
49 days via an auction. The weighted average rates for these series in 1994,
1993 and 1992, including fees for broker/dealer agreements, were 3.75%,
3.01%, and 3.43%, respectively.
In 1993, 350,000 and 500,000 shares of the $7.72 and the $7.72 (1972 Series)
Dividend Preferred Stock, respectively, were redeemed.
Note M:
RETIREMENT PLAN AND POSTRETIREMENT BENEFITS:
RETIREMENT PLAN: Dominion Resources' Retirement Plan (the Plan) covers virtually
all employees of Dominion Resources and its subsidiaries. The benefits are based
on years of service and the employee's compensation. Dominion Resources' funding
policy is to contribute annually an amount that is in accordance with the
provisions of the Employment Retirement Income Security Act of 1974.
The components of the provision for net periodic pension expense were as
follows:
1994 1993 1992
(millions)
Service cost--benefits earned
during the year $ 24.6 $ 21.9 $ 20.7
Interest cost on projected
benefit obligation 46.3 46.3 41.0
Actual return on plan assets (51.3) (49.3) (45.7)
Net amortization and deferral 0.1 (2.6) (2.6)
Net periodic pension cost $ 19.7 $ 16.3 $ 13.4
The following table sets forth the Plan's funded status:
1994 1993
(millions)
Actuarial present value of benefit
obligations:
Accumulated benefit obligation, including
vested benefit of 1994-$480.9
and 1993-$414.9 $577.5 $440.7
Projected benefit obligation
for service rendered to date $678.4 $602.8
Plan assets at fair value, primarily
listed stocks and U.S. bonds 588.1 588.3
Projected benefit obligation in excess
of plan assets (90.3) (14.5)
Unrecognized net loss from past experience
different from that assumed and effects
of changes in assumptions 102.8 54.1
Unrecognized prior service cost 5.9 6.5
Unrecognized net asset at January 1,
being recognized over 16 years
beginning in 1986 (28.5) (31.8)
Prepaid (accrued) pension cost included
in other assets (liabilities) $(10.1) $ 14.3
Significant assumptions used in determining net periodic pension cost and the
projected benefit obligation were:
AS OF DECEMBER 31, 1994 1993
Discount rates 8.25% 7.75%
Rates of increase in
compensation levels 5% 5%
Expected long-term
rate of return 9.5% 9.5%
POSTRETIREMENT BENEFITS: Dominion Resources and its subsidiaries provide retiree
health care and life insurance benefits through insurance companies with annual
premiums based on benefits paid during the year. From time to time in the past,
Dominion Resources and its subsidiaries have changed benefits. Some of these
changes have reduced benefits. Under the terms of their benefits plans, the
companies reserve the right to change, modify or terminate the plans.
Effective January 1, 1993, Dominion Resources adopted the provisions of SFAS
No. 106, "Employers' Accounting for Postretirement Benefits Other Than
Pensions," which requires the accrual of the cost of providing other
postretirement benefits (OPEB), including medical and life insurance coverage,
during the active service of the employee. Prior to 1993, Dominion Resources
recognized expense in the year the benefits were provided and paid $10.5 million
for these benefits in 1992.
Net periodic postretirement benefit expense for 1994 and 1993 was as follows:
YEAR ENDING DECEMBER 31, 1994 1993
(millions)
Service cost $11.2 $ 9.8
Interest cost 21.8 20.8
Return on plan assets 0.9 (2.0)
Amortization of transition obligation 12.1 12.1
Net amortization and deferral (4.1) 0.7
Net periodic postretirement benefit expense $41.9 $41.4
The following table sets forth the funded status of the plan:
DECEMBER 31, 1994 1993
(millions)
Fair value of plan assets $ 59.7 $ 28.4
Accumulated postretirement benefit obligation:
Retirees $ 208.7 $ 142.4
Active plan participants 93.9 112.1
Accumulated postretirement benefit obligation 302.6 254.5
Accumulated postretirement benefit obligation
in excess of plan assets (242.9) (226.1)
Unrecognized transition obligation 218.3 230.4
Unrecognized net experience gain 16.9 (8.9)
Accrued postretirement benefit cost $ (7.7) $ (4.6)
A one percent increase in the health care cost trend rate would result in an
increase of $5 million in the service and interest cost components and a $27.1
million increase in the accumulated postretirement benefit obligation.
Significant assumptions used in determining the postretirement benefit
obligation were:
1994 1993
Discount rates 8.25% 7.75%
Assumed return on
plan assets 9.0% 9.0%
Medical cost
trend rate 10% for first year 11% for first year
9% for second year 10% for second year
Scaling down to Scaling down to
4.75% beginning in 4.75% beginning in
the year 2001 the year 2001
Virginia Power is recovering these costs in rates on an accrual basis in all
material respects, in all jurisdictions. Current and future rate recoveries of
OPEB accruals are expected to collect sufficient amounts to provide for the
unfunded accumulated postretirement obligation over time.
The funds being collected for OPEB accrual in rates, in excess of OPEB
benefits actually paid during the year, are contributed to external benefit
trusts under Virginia Power's current funding policy.
Note N:
EARLY RETIREMENT AND VOLUNTARY SEPARATION PROGRAMS:
During the first quarter of 1994, Virginia Power offered an early retirement
program to employees aged 50 or older and offered a voluntary separation program
to all regular full-time employees. The offers under the program expired
September 1, 1994. Approximately 1,400 employees accepted offers under these
programs. The costs associated with these programs were $90.1 million. Virginia
Power capitalized $25.9 million based upon prior regulatory precedent and
expensed $64.2 million.
Note O:
COMMITMENTS AND CONTINGENCIES:
As the result of issues generated in the course of daily business, the company
is involved in legal, tax and regulatory proceedings before various courts,
regulatory commissions and governmental agencies. While some of the proceedings
involve substantial amounts of money, management believes that the final
disposition of these proceedings will not have an adverse material effect on
operations or the financial position of the company.
VIRGINIA POWER
Rates: On February 3, 1994, the Virginia Commission entered its Final Order in
Virginia Power's 1992 rate case, approving an increase in annual revenues of
$241.9 million. Refunds of $129.2 million (representing the amount recovered
under interim rates in excess of the rates finally approved, with interest) were
completed by the end of April.
Construction Program: Virginia Power has made substantial commitments in
connection with its construction program and nuclear fuel expenditures, which
are estimated to total $673.2 million (excluding AFC) for 1995. Additional
financing is contemplated in connection with this program.
Purchased Power Contracts: Since 1984, Virginia Power has entered into contracts
for the long-term purchase of capacity and energy from other utilities,
qualifying facilities and independent power producers. As of December 31, 1994,
there were 75 nonutility generating facilities under contract to provide
Virginia Power 3,506 megawatts of dependable summer capacity. Of these, 65
projects (aggregating 3,244 megawatts) were operational at the end of 1994, with
the balance to become operational at various dates before 1997. The following
table shows the minimum payments expected to be made under these contracts for
projects that are currently operating or have obtained construction financing.
The totals include payments for capacity, which are subject to generating
performance as provided by the contracts, and payments for the minimum amounts
of energy Virginia Power is obligated to buy and the producers provide.
Commitments
(millions) Capacity Other
1995 $735.5 $198.6
1996 750.8 203.9
1997 796.9 210.5
1998 800.4 216.8
1999 803.5 217.9
After 1999 12,186.3 2,839.0
Total $16,073.4 $3,886.7
Present value of
the total $7,104.7 $1,602.4
In addition to the commitments listed above, under some contracts, Virginia
Power may purchase, at its option, additional power as needed. Payments for
purchased power (including economy, emergency, limited-term, short-term, and
long-term purchases) for the years 1994, 1993 and 1992 were $1,025 million, $958
million and $766 million, respectively.
Fuel Purchase Commitments: Virginia Power's estimated fuel purchase commitments
for the next five years for system generation are as follows: 1995-$351 million;
1996-$266 million; 1997-$153 million; 1998-$33 million; and 1999-$32 million.
Environmental Matters: Environmental costs have been historically recovered
through the ratemaking process; however, should material costs be incurred and
not recovered through rates, Virginia Power's results of operations and
financial condition could be adversely impacted.
The EPA has identified Virginia Power and several other entities as Potentially
Responsible Parties (PRPs) at two Superfund sites located in Kentucky and
Pennsylvania. The estimated future remediation costs for the sites are in the
range of $46.5 million to $134.6 million. Virginia Power's proportionate share
of the costs is expected to be in the range of $0.5 million to $6.7 million,
based upon allocation formulas and the volume of waste shipped to the sites. As
of December 31, 1994, Virginia Power had provided for $1.4 million to meet its
obligations at these two sites. Based on a financial assessment of the PRPs
involved at these sites, Virginia Power has determined that it is probable that
the PRPs will fully pay the costs apportioned to them.
Virginia Power and Dominion Resources along with Consolidated Natural Gas have
remedial action responsibilities remaining at three coal tar sites. Virginia
Power had provided a $2 million reserve to meet its estimated liability, based
on site studies and investigations performed at these sites.
Virginia Power generally seeks to recover its costs associated with
environmental remediation from third-party insurers. At December 31, 1994
pending claims were not recognized as an asset or offset against recorded
obligations.
In order to comply with the Clean Air Act, Virginia Power has installed a
scrubber at its Mt. Storm Unit 3 Power Station. The scrubber began operation on
October 31, 1994. The cost of this scrubber and related equipment was $147
million.
Virginia Power is presently conducting studies leading to the compliance plan
for Phase II of the Clean Air Act, which may involve the installation of two
additional scrubbers, the addition of nitrogen oxide (NOx) controls and other
methods for compliance.
The present estimate for the total capital cost for compliance, assuming the
installation of three scrubbers, nitrogen oxide controls and emission monitoring
instrumentation, is $481 million (1992 dollars). Annual incremental compliance
costs for operation, maintenance and fuel costs are estimated to be $128
million. These cost estimates may change upon completion of the study effort now
under way.
Virginia Power continues to work with the West Virginia Office of Air Quality
concerning opacity requirements applicable to the Mt. Storm Power Station.
Litigation: Virginia Power and Doswell Limited Partnership (Doswell) have been
unable to agree on the calculation of a fixed fuel transportation charge to be
paid to Doswell under a purchased power contract. Doswell filed suit in the
Circuit Court in the City of Richmond alleging breach of contract and actual and
constructive fraud and seeking damages of not less than $75 million. The issues
of actual and constructive fraud were dismissed from the case, with prejudice,
leaving only the contract claim, which reduced alleged damages to approximately
$19 million. On March 2, 1995, the court announced its verdict in favor of
Virginia Power.
A dispute over corporate governance issues between Dominion Resources and
Virginia Power arose in 1994. On June 17, 1994, Dominion Resources and Virginia
Power received an order from the Virginia Commission (the 1994 Order) that,
among other things, initiated an investigation into the affiliate relationships
and corporate governance issues between Dominion Resources and Virginia Power
(the First Proceeding). The text of the 1994 Order was set forth in Dominion
Resources' Current Report on Form 8-K of June 17, 1994. Between June and August
1994, Dominion Resources and Virginia Power made various filings with the
Commission, and the Commission issued several procedural orders, in connection
with the First Proceeding. A description of those filings and orders is set
forth in Dominion Resources' Quarterly Report on Form 10-Q for the period ending
June 30, 1994.
On or around August 5, 1994, Dominion Resources received a letter from a
purported shareholder, Barbara Margulis, demanding that Dominion Resources
commence a suit against certain of its directors and officers for conduct
related to the corporate governance issues addressed in the 1994 Order. By
letter dated October 19, 1994, Ms. Margulis clarified her earlier letter to
limit it to certain defined matters including conduct relating to the
renegotiation of a coal transportation contract between Virginia Power and CSX
Transportation. The board appointed a special committee of directors to
investigate these allegations, and that investigation is ongoing.
On August 15, 1994, Dominion Resources, Virginia Power and their respective
directors entered into a Settlement Agreement resolving certain of the disputed
corporate governance issues. The terms of that settlement are summarized in
Dominion Resources' Current Report on Form 8-K of August 17, 1994. Pursuant to
the Settlement Agreement, Dominion Resources and Virginia Power filed a Joint
Motion to Dismiss certain of the corporate governance issues from the First
Proceeding. The Commission denied that Motion on August 24, 1994, continued the
First Proceeding, and instituted a new proceeding (the Second Proceeding) into
the holding company structure and the relationship between Dominion Resources
and Virginia Power. The Virginia Commission stated that the proceeding would be
an "investigation directed not at averting a crisis or penalizing past conduct,
but toward protecting the public interest in the future." The Commission
directed its Staff to conduct an investigation and file an interim report on or
before December 1, 1994.
On December 1, 1994, the Staff of the Virginia Commission and its consultants
filed an Interim Report in the Second Proceeding. That Report is included in
Dominion Resources' Current Report on Form 8-K of December 5, 1994. The Interim
Report made numerous recommendations for Commission involvement in matters of
corporate governance, corporate structure, affiliate service arrangements, and
operating relationships between Dominion Resources and Virginia Power, and
suggested certain financial constraints on Dominion Resources and new regulatory
authority for the Commission. Many of these suggestions were far-reaching. On
December 21, 1994, Dominion Resources and Virginia Power filed a Joint Response
to the Interim Report, in which they accepted some of the recommendations and
urged that the corporate governance structure established by the Settlement
Agreement continue while they considered the other recommendations in the course
of a strategic planning effort by Dominion Resources.
On January 23, 1995, the Staff of the Virginia Commission issued a report in the
Second Proceeding on its investigation of a coal transportation contract between
Virginia Power and CSX Transportation. The Staff's report concluded that
Dominion Resources improperly pressured Virginia Power to renegotiate the
contract, and recommended that approximately $11 million ($8.3 million Virginia
jurisdictional) of the coal transportation costs incurred under the contract
from 1991 through May 31, 1994, be disallowed in determining Virginia Power's
rates. The Staff's report further recommended that any future transportation
costs that it identified as excess be disallowed over the remainder of the
contract, which expires on May 31, 2000.
Virginia Power has recorded a regulatory liability of $10.5 million at December
31, 1994. Virginia Power currently estimates that the total amount called into
question by the Virginia Commission Staff report is a net present value of $60
million ($100 million over the life of the contract). On February 1, 1995,
without admitting any imprudence, fault or liability, and believing that their
relationship with the Commission would be enhanced, Dominion Resources and
Virginia Power filed a motion in the Second Proceeding offering to refund to
Virginia Power customers $8.3 million in settlement of these issues regarding
transportation rates.
During the 1995 session of the Virginia General Assembly, the Virginia
Commission caused legislation to be introduced that addressed the Commission's
authority to intervene in disputes involving public utilities owned by separate
holding companies. That legislation was opposed by Dominion Resources. On
February 20, 1995, the proposed legislation was withdrawn and Dominion
Resources, Virginia Power and the Virginia Commission Staff consented to an
order that is included in Dominion Resources' Current Report on Form 8-K of
February 21, 1995. Under this order, which will be effective until July 2, 1996,
Dominion Resources must obtain the Commission's approval before taking steps
such as removing Virginia Power's board members or officers or changing Virginia
Power's articles of incorporation or by-laws. Although the order imposes for a
period of time significant restrictions on the ability of Dominion Resources to
select the board and management of its subsidiary, Dominion Resources and
Virginia Power agreed to the order in the interest of enhancing relations with
the Virginia Commission and achieving the purposes of the Settlement Agreement.
Disagreements between the companies have arisen from time to time since the
Settlement Agreement was executed. On February 28, 1995, upon recommendation of
a Joint Committee created under the Settlement Agreement, the boards of Dominion
Resources and Virginia Power took further action to enhance cooperation between
the two companies and their relationship with the Virginia Commission. Among
other things, the boards expanded the authority of the Joint Committee to act
for the boards on issues presented to it by the chief executives of the
companies. Each board directed corporate officials and employees of its company
to cooperate fully with the Joint Committee in resolution of issues acted on by
the committee and to support actions taken by the committee. In connection with
these initiatives, the chief executive officers of both companies made known
their intentions to retire in July 1996 and the boards directed the development
of executive succession plans for each company. Also, the Dominion Resources
board received the resignations of directors Bruce C. Gottwald and John W. Snow
and the Virginia Power board received the resignations of directors William W.
Berry and Frank S. Royal, and both boards voted to reduce their size by two
members.
At this time, Dominion Resources is unable to predict the ultimate resolution of
these matters or their effect on the company.
Nuclear Insurance: The Price-Anderson Act limits the public liability of an
owner of a nuclear power plant to $8.9 billion for a single nuclear incident.
The Price Anderson Amendments Act of 1988 allows for an inflationary provision
adjustment every five years. Virginia Power has purchased $200 million of
coverage from commercial insurance pools with the remainder provided through a
mandatory industry risk-sharing program. In the event of a nuclear incident at
any licensed nuclear reactor in the United States, Virginia Power could be
assessed up to $81.7 million (including a 3 percent insurance premium tax for
Virginia) for each of its four licensed reactors not to exceed $10.3 million
(including a 3 percent insurance premium tax for Virginia) per year per reactor.
There is no limit to the number of incidents for which this retrospective
premium can be assessed.
Nuclear liability coverage for claims made by nuclear workers first hired on or
after January 1, 1988, except those arising out of an extraordinary nuclear
occurrence, is provided under the Master Worker insurance program. (Those first
hired into the nuclear industry prior to January 1, 1988, are covered by the
policy discussed above). The aggregate limit of coverage for the industry is
$400 million ($200 million policy limit with automatic reinstatements of an
additional $200 million). Virginia Power's maximum retrospective assessment is
approximately $12.7 million (including a 3 percent insurance premium tax for
Virginia).
Virginia Power's current level of property insurance coverage ($2.55 billion for
North Anna and $2.4 billion for Surry) exceeds the NRC's minimum requirement for
nuclear power plant licensees of $1.06 billion per reactor site, and includes
coverage for premature decommissioning and functional total loss. The NRC
requires that the proceeds from this insurance be used first to return the
reactor to and maintain it in a safe and stable condition, and second to
decontaminate the reactor and station site in accordance with a plan approved by
the NRC. The property insurance coverage provided to Virginia Power is subject
to retrospective premium assessments in any policy year in which losses exceed
the funds available to these insurance companies. The maximum assessment at the
first incident of the current policy period is $45.4 million. The maximum
assessment related to a second incident is an additional $15.1 million.
Based on the severity of the incident, the board of directors of Virginia
Power's nuclear insurers has the discretion to lower the maximum retrospective
premium assessment or eliminate either or both completely. For any losses that
exceed the limits, or for which insurance proceeds are not available because
they must first be used for stabilization and decontamination, Virginia Power
has the financial responsibility.
Virginia Power purchases insurance from Nuclear Electric Insurance Limited
(NEIL) to cover the cost of replacement power during the prolonged outage of a
nuclear unit due to direct physical damage of the unit. Under this program,
Virginia Power is subject to a retrospective premium assessment for any policy
year in which losses exceed funds available to NEIL. The current policy period's
maximum assessment is $9.2 million.
As a joint owner of the North Anna Power Station, ODEC is responsible for its
proportionate share (11.6 percent) of the insurance premiums applicable to that
station, including any retrospective premium assessments and any losses not
covered by insurance.
DOMINION ENERGY
Dominion Cogen, Inc., is a wholly owned subsidiary of Dominion Energy with an
investment interest in the 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 $59.3
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.
Note P:
QUARTERLY FINANCIAL AND COMMON STOCK DATA:
(UNAUDITED)
The following amounts reflect all adjustments, consisting of only normal
recurring accruals (except as disclosed below), necessary in the opinion of
Dominion Resources management for a fair statement of the results for the
interim periods.
1994 1993
(millions, except per share amounts)
Revenues
First Quarter $1,167.0 $1,105.8
Second Quarter 1,109.7 1,005.3
Third Quarter 1,209.8 1,287.1
Fourth Quarter 1,004.6 1,035.7
Year $4,491.1 $4,433.9
Income before provision for federal
income taxes
First Quarter $197.5 $170.8
Second Quarter 188.9 143.7
Third Quarter 234.5 300.0
Fourth Quarter 28.3 112.3
Year $649.2 $726.8
Net income
First Quarter $141.4 $122.5
Second Quarter 136.2 103.1
Third Quarter 161.3 199.0
Fourth Quarter 39.3 92.0
Year $478.2 $516.6
Earnings per share
First Quarter $0.84 $0.74
Second Quarter 0.80 0.63
Third Quarter 0.94 1.20
Fourth Quarter 0.23 0.55
Year $2.81 $3.12
Dividends per share
First Quarter $0.635 $0.615
Second Quarter 0.635 0.615
Third Quarter 0.635 0.615
Fourth Quarter 0.645 0.635
Year $2.550 $2.480
Common stock price range
First Quarter 45-3/8-39-5/8 44-1/4-38-1/4
Second Quarter 42-1/2-35-7/8 451/2-41-7/8
Third Quarter 38-3/8-34-7/8 48-7/8-44-1/8
Fourth Quarter 38-1/8-35-1/8 49-1/2-43-7/8
Year 45-3/8-34-7/8 49-1/2-38-1/4
During the first quarter of 1994, Virginia Power offered an early retirement
program to employees aged 50 or older and offered a voluntary separation program
to all regular full-time employees. The offers under the programs expired
September 1, 1994. Approximately 1,400 employees accepted offers under these
programs. The costs associated with these programs were $90.1 million.
Virginia Power capitalized $25.9 million based upon prior regulatory precedent
and expensed $2.8 million, $10.4 million and $51 million during the second,
third and fourth quarters, respectively. The impact of the write-off was to
reduce net income by $1.8 million, $6.7 million and $33.1 million for the
second, third and fourth quarters, respectively.
On June 28, 1994, Dominion Energy transferred a 65% overriding royalty interest
in coal seam gas properties then owned by Dominion Black Warrior Basin, a wholly
owned subsidiary of Dominion Energy, to Dominion Resources Black Warrior Trust,
which is sponsored by Dominion Resources. Units in the trust were sold in the
second quarter to third parties, culminating in a gain of $28.9 million, net of
tax. Total federal and state taxes for this transaction amounted to $20.1
million.
<PAGE>
Report of Management's Responsibilities
The management of Dominion Resources, Inc. is responsible for all information
and representations contained in the Consolidated Financial Statements and other
sections of the annual report. The Consolidated Financial Statements, which
include amounts based on estimates and judgments of management, have been
prepared in conformity with generally accepted accounting principles. Other
financial information in the annual report is consistent with that in the
Consolidated Financial Statements.
Management maintains a system of internal accounting controls designed to
provide reasonable assurance, at a reasonable cost, that Dominion Resources' and
its subsidiaries' assets are safeguarded against loss from unauthorized use or
disposition and that transactions are executed and recorded in accordance with
established procedures. Management recognizes the inherent limitations of any
system of internal accounting control, and therefore cannot provide absolute
assurance that the objectives of the established internal accounting controls
will be met.
This system includes written policies, an organizational structure designed
to ensure appropriate segregation of responsibilities, careful selection and
training of qualified personnel, and internal audits. Management believes that
during 1994 the system of internal control was adequate to accomplish the
intended objectives.
The Consolidated Financial Statements have been audited by Deloitte & Touche
LLP, independent auditors, whose designation by the Board of Directors was
ratified by the shareholders. Their audits were conducted in accordance with
generally accepted auditing standards and include a review of Dominion
Resources' and its subsidiaries' accounting systems, procedures and internal
controls, and the performance of tests and other auditing procedures sufficient
to provide reasonable assurance that the Consolidated Financial Statements are
not materially misleading and do not contain material errors.
The Audit Committees of the Boards of Directors, composed entirely of
directors who are not officers or employees of Dominion Resources or its
subsidiaries, meet periodically with independent auditors, the internal auditors
and management to discuss auditing, internal accounting control and financial
reporting matters and to ensure that each is properly discharged. Both
independent auditors and the internal auditors periodically meet alone with the
Audit Committees and have free access to the Committees at any time.
Management recognizes its responsibility for fostering a strong ethical
climate so that Dominion Resources' affairs are conducted according to the
highest standards of personal corporate conduct. This responsibility is
characterized and reflected in Dominion Resources' Code of Ethics, which
addresses potential conflicts of interest, compliance with all domestic and
foreign laws, the confidentiality of proprietary information, and full
disclosure of public information.
Dominion Resources, Inc.
Thos. E. Capps
Chairman and
Chief Executive Officer
James L. Trueheart
Vice President and Controller
<PAGE>
Report of Independent Auditors
TO THE SHAREHOLDERS AND BOARD OF DIRECTORS OF DOMINION RESOURCES, INC.
We have audited the accompanying consolidated balance sheets of Dominion
Resources, Inc. and subsidiaries as of December 31, 1994 and 1993 and the
related consolidated statements of income and retained earnings and of cash
flows for each of the three years in the period ended December 31, 1994. These
Consolidated Financial Statements are the responsibility of the company's
management. Our responsibility is to express an opinion on these Consolidated
Financial Statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, such Consolidated Financial Statements present fairly, in all
material respects, the consolidated financial position of Dominion Resources,
Inc. and subsidiaries as of December 31, 1994 and 1993 and the results of their
operations and their cash flows for each of the three years in the period ended
December 31, 1994 in conformity with generally accepted accounting principles.
Dominion Resources, Inc. changed its methods of accounting for postretirement
benefits other than pensions in 1993 (see Note M) and for accounting for income
taxes in 1992 (see Note C) in order to conform with recently issued accounting
standards.
Richmond, Virginia
February 6, 1995
Exhibit 22
DOMINION RESOURCES, INC.
SUBSIDIARIES OF THE REGISTRANT
JURISDICTION OF NAME UNDER WHICH
NAME INCORPORATION BUSINESS IS CONDUCTED
Virginia Electric and Power Virginia Virginia Power in
Company Virginia and North
Carolina Power in
North Carolina
Dominion Energy, Inc Virginia Dominion Energy, Inc.
Dominion Capital, Inc. Virginia Dominion capital, Inc.
EXHIBIT 23(i)
Hunton & Williams
Riverfront Plaza, East Tower
951 East Byrd Street
Richmond, Virginia 23219-4074
Telephone (804) 788-8200
Facsimile (804) 788-8218
March 8, 1995
Dominion Resources, Inc.
Richmond, Virginia 23261
Dominion Resources, Inc.
Form 10-K
Gentlemen:
We consent to the incorporation by reference into the registration
statements of Dominion Resources, Inc. on Form S-3 (File No. 33-52477 and File
No. 33-49397) and on Form S-8 (File No. 33-55403 and File No. 33-46428) of the
statements, included in this Annual Report on Form 10-K, made in regard to our
firm that relate to franchises, title to properties, rate, environmental and
other regulatory matters and litigation.
Sincerely yours,
HUNTON & WILLIAMS
EXHIBIT 23(ii)
Jackson & Kelly
Attorneys at Law
1600 Laidley Tower
P. O. Box 553
Charleston, West Virginia 25322
Telephone 304-340-1000 Telecopier 304-340-1130
March 8, 1995
Dominion Resources, Inc.
Richmond, Virginia 23261
Re: Dominion Resources, Inc.
Form 10-K
Gentlemen:
We consent to the incorporation by reference into the registration
statements of Dominion Resources, Inc. on Form S-3 (File No. 33-52477 and File
No. 33-49397) and on Form S-8 (File No. 33-55403 and File No. 33-46428) of the
statements, included in this Annual Report on Form 10-K, made in regard to our
firm that are governed by the laws of West Virginia and that relate to
franchises, title to properties, limitations upon the issuance of bonds and
preferred stock, rate, and other regulatory matters, and litigation.
Sincerely yours,
JACKSON & KELLY
EXHIBIT 23(iii)
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in Registration Statements File No.
33-52477 and File No. 33-49397 of Dominion Resources, Inc. on Forms S-3 and
Registration Statements File No. 33-55403 and File No. 33-46428 on Forms S-8 of
our report dated February 6, 1995, appearing in and incorporated by reference in
the Annual Report on Form 10-K of Dominion Resources, Inc. for the year ended
December 31, 1994.
DELOITTE & TOUCHE LLP
Richmond, Virginia
March 8, 1995
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