<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K/A
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) January 28, 2000
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Dominion Resources, Inc.
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(Exact name of registrant as specified in its charter)
Virginia 1-8489 54-1229715
(State or other jurisdiction (Commission File (IRS Employer
of incorporation) Number) Identification No.)
120 Tredegar Street, Richmond, Virginia 23219
- --------------------------------------- -----
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (804) 819-2000
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--------------------------------------------------
(Former name or former address if changed since last report.)
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Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(a) Financial Statements of Business Acquired.
The audited financial statements of the business acquired, Consolidated
Natural Gas Company (CNG), for the fiscal year ended December 31, 1999,
together with the report of independent auditors, were incorporated by
reference in the Dominion Resources Inc. (Dominion or DRI) Form 8-K,
File No. 1-8489 filed February 1, 2000. The financial statements were
incorporated from CNG's Form 8-K, File No. 1-3196, filed January 27,
2000.
(b) Pro forma financial information.
The Unaudited Pro Forma Combined Consolidated Financial Statements of
Dominion and CNG (the "Pro Forma Financial Statements"), which are Exhibits
to this filing, illustrate the pro forma effect of the merger between
Dominion and CNG (the "Merger") accounted for as a purchase business
combination. The Unaudited Pro Forma Combined Consolidated Balance Sheet has
been prepared as if such transactions occurred on December 31, 1999; the
Unaudited Pro Forma Combined Condensed Consolidated Statement of Income from
continuing operations has been prepared as if such transactions occurred as
of January 1, 1999. The Pro Forma Financial Statements reflect Dominion
having acquired 100% of the outstanding common shares of CNG in exchange for
87.4 million shares of Dominion common stock, valued at $3.5 billion, and
cash of $2.8 billion.
A final determination of required purchase accounting adjustments has not
been completed; accordingly, the purchase accounting adjustments made in
connection with the development of the Pro Forma Financial Statements are
preliminary and have been made solely for purposes of developing the pro
forma combined financial information. The significant adjustments to the pro
forma financial position reflect (i) the debt incurred to finance the
transaction, (ii) the excess fair value of the pension plan assets over
CNG's pension obligations recorded as part of the purchase price allocation,
and (iii) the common stock issued and repurchased to consummate the Merger.
Management believes that the pro forma adjustments and the underlying
assumptions reasonably present the significant pro forma effects of the
Merger. Upon completion of post-merger restructuring activities, the actual
financial position and results of operations of the combined entity will
differ, perhaps significantly, from the pro forma amounts reflected herein
because of changes in operating results between the dates of the pro forma
financial information and the date on which the purchase accounting
adjustments are finalized. The Pro Forma Financial Statements are not
necessarily indicative of actual operating results or financial position had
the transactions occurred as of the dates indicated above, nor do they
purport to indicate operating results or financial position which may be
attained in the future.
The pro forma adjustments do not reflect any potential operating
efficiencies or cost savings which Dominion believes are achievable with
respect to the combined companies.
(c) Exhibits
99 Dominion and its subsidiary companies unaudited pro forma combined
consolidated financial statements and related footnotes for the year end
December 31, 1999 (filed herewith).
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
DOMINION RESOURCES, INC.
Registrant
/s/James L. Trueheart
--------------------
James L. Trueheart
Group Vice President and Controller
(Principal Accounting Officer)
Date: March 24, 2000
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EXHIBIT 99
DOMINION RESOURCES, INC. AND SUBSIDIARY COMPANIES
UNAUDITED PRO FORMA COMBINED
CONSOLIDATED STATEMENT OF INCOME FROM CONTINUING OPERATIONS
Year Ended December 31, 1999
(in millions -- except per share amounts)
<TABLE>
<CAPTION>
DRI CNG Pro Forma Pro Forma
(As Reported) (As Reported) Adjustments Combined
------------- ----------- ----------- ---------
<S> <C>
OPERATING REVENUES AND INCOME
Domestic electric utility service $ 4,274 $ 4,274
Consolidated Natural Gas $ 3,074 3,074
Other 1,246 1,246
------------- ------------- ----------------- -----------
Total operating revenues and income 5,520 3,074 - 8,594
------------- ------------- ----------------- -----------
OPERATING EXPENSES
Fuel, net 996 996
Purchased power capacity, net 809 809
Purchased gas 912 912
Liquids, capacity and other
products purchased 280 280
Other operation and maintenance 1,384 773 $3 (D,E,O) 2,160
Depreciation, depletion &
amortization 716 379 64 (M,O) 1,159
Other taxes 304 197 501
------------- ------------- ----------------- -----------
Total operating expenses 4,209 2,541 67 6,817
------------- ------------- ----------------- -----------
Income from Operations 1,311 533 (67) 1,777
------------- ------------- ----------------- -----------
OTHER INCOME AND EXPENSES
Merger Expenses (213) 213 (N) -
Other 91 15 (18) (I,O) 88
------------- -------------- ----------------- ----------
Total other income 91 (198) 195 88
------------- -------------- ----------------- ----------
Income before fixed charges,
income taxes 1,402 335 128 1,865
FIXED CHARGES
Interest charges 507 124 266 (A) 897
Distributions-preferred
securities & preferred stock 67 67
------------- ------------- ----------------- ----------
Total fixed charges 574 124 266 964
------------- ------------- ----------------- ----------
Income before provision for
income taxes and minority
interests 828 211 (138) 901
Provision for income taxes 259 74 63 (G,M,N,O) 396
Minority interests 18 18
------------- ------------- ---------------- ----------
INCOME FROM CONTINUING OPERATIONS $ 551 $ 137 ($201) $ 487
============= ============= ================ ==========
Average Number of Shares Outstanding 191.4 95.8 (41.3) (B,C) 245.9
============= ============= ================ ==========
EARNINGS PER SHARE (basic) $ 2.88 $ 1.43 $ 1.98
============= ============= ==========
EARNINGS PER SHARE (diluted) $ 2.81 $ 1.42 $ 1.98
============= ============= ==========
</TABLE>
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DOMINION RESOURCES, INC. AND SUBSIDIARY COMPANIES
UNAUDITED PRO FORMA COMBINED CONSOLIDATED BALANCE SHEET
December 31, 1999
(in millions)
<TABLE>
<CAPTION>
DRI CNG Pro Forma Pro Forma
(As Reported) (As Reported) Adjustments Combined
----------- ----------- ----------- ---------
<S> <C>
ASSETS
------
CURRENT ASSETS
Cash and cash equivalents $ 280 $ 94 $ 374
Accounts receivable, net 933 527 (8)(K) 1,452
Materials and supplies
Plant and general 143 20 163
Fossil fuel 111 111
Gas stored 86 86
Mortgage loans in warehouse 119 119
Commodity contract assets 362 362
Net assets held for sale 372 372
Other 244 339 583
----------- ---------- --------- ---------
2,192 1,438 (8) 3,622
----------- ---------- --------- ---------
INVESTMENTS
Loans receivable, net 2,034 2,034
Other investments 2,183 354 2,537
----------- ---------- --------- ---------
4,217 354 - 4,571
----------- ---------- --------- ---------
PROPERTY, PLANT AND EQUIPMENT
Net utility and other plant 9,831 2,689 - 12,520
Net exploration and
production properties 933 1,538 ($99)(F,O) 2,372
Acquisition adjustment 3,497 (L) 3,497
----------- ---------- --------- ---------
10,764 4,227 3,398 18,389
----------- ---------- --------- ---------
DEFERRED CHARGES AND OTHER ASSETS
Regulatory assets 221 219 80 (E) 520
Other 353 297 1,115 (D,H) 1,765
----------- ---------- --------- ---------
574 516 1,195 2,285
----------- ---------- --------- ---------
TOTAL ASSETS $ 17,747 $ 6,535 $ 4,585 $ 28,867
=========== ========== ========= =========
</TABLE>
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DOMINION RESOURCES, INC. AND SUBSIDIARY COMPANIES
UNAUDITED PRO FORMA COMBINED BALANCE SHEET
December 31, 1999
(in millions)
<TABLE>
<CAPTION>
DRI CNG Pro Forma Pro Forma
As Reported As Reported Adjustments Combined
----------- ----------- ----------- ---------
LIABILITIES AND
SHAREHOLDERS' EQUITY
--------------------
<S> <C> <C> <C> <C>
CURRENT LIABILITIES
Securities due within one year $536 $ 536
Short-term debt 870 $686 $ 4,260 (A) 5,816
Accounts payable 711 335 45 (H) 1,091
Commodity contract liabilities 347 347
Accrued taxes 89 134 223
Other 446 198 99 (J) 743
------------ --------------- ----------- ----------
2,999 1,353 4,404 8,756
------------ --------------- ----------- ----------
LONG-TERM DEBT 6,936 1,764 (20) (I) 8,680
------------ --------------- ----------- ----------
DEFERRED CREDITS AND OTHER LIABILITIES
Deferred income taxes 1,699 808 360 (G,O) 2,867
Investment tax credits 146 20 166
Other 222 214 84 (E) 520
------------ --------------- ----------- ----------
2,067 1,042 444 3,553
------------ --------------- ----------- ----------
Total liabilities 12,002 4,159 4,828 20,989
------------ --------------- ----------- ----------
MINORITY INTEREST 99 99
------------ --------------- ----------- ----------
OBLIGATED MANDITORILY REDEEMABLE
PREFERRED SECURITIES OF SUBSIDIARY TRUSTS 385 385
------------ --------------- ----------- ----------
PREFERRED STOCK:
Subject to mandatory redemption
Not subject to mandatory redemption 509 509
------------ --------------- ----------- ----------
COMMON SHAREHOLDERS' EQUITY
Common stock 3,561 264 1,849 (B,C,L) 5,674
Retained earnings 1,190 1,545 (1,525) (L,O) 1,210
Accumulated other comprehensive income (15) (15)
Other paid in capital 16 567 (567) (L) 16
------------ --------------- ----------- ----------
4,752 2,376 (243) 6,885
------------ --------------- ----------- ----------
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $17,747 $6,535 $ 4,585 $28,867
============ =============== =========== ==========
</TABLE>
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Notes to the Unaudited Pro Forma Combined Consolidated Financial Statements
The Unaudited Pro Forma Combined Consolidated Financial Statements do not
reflect the non-recurring costs associated with integrating the operations of
the two companies, nor any of the anticipated recurring savings arising from the
integration. Costs of integration will result in significant non-recurring
charges to the combined results of operations in 2000 as a result of the
consummation of the Merger; however, the actual amount of such charges cannot be
determined until the transition plan relating to the integration of operations
is completed.
Merger Financing
A. To reflect the issuance of $3.3 billion, (6.05 percent) commercial paper of
Dominion and $1 billion, (6.19 percent) privately placed money market notes
prior to the Merger. The fees associated with this debt will be
approximately $7 million and the annual interest expense will be
approximately $259 million. Dominion anticipates refinancing these amounts
with long-term debt, preferred, and/or convertible securities along with
the proceeds from the divestiture (see note P) of other non-core assets.
Exchange of Shares and Cash
B. To reflect the issuance of 87.4 million shares of Dominion common stock
valued at $3.5 billion and the cash distribution of $2.9 billion in
exchange for the outstanding shares of CNG at closing.
Stock Repurchases
C. To reflect the repurchase of 32.9 million shares of Dominion common stock
for $1.4 billion which was the first step in the Merger treated as a
reorganization.
Purchase Adjustments
D. To reflect the excess of plan assets of $1.1 billion over projected benefit
obligations related to CNG's pension plans. The Income Statement also
reflects the impact ($21 million increase in expense) resulting from the
recognition of prepaid pension cost.
E. To reflect the excess of the projected benefit obligation of $84 million
over plan assets related to CNG's other postretirement benefit plans and
corresponding regulatory assets of $80 million. The Income Statement also
reflects the impact ( $10 million decrease in expenses) resulting from the
recognition of the excess of the other postretirement benefit obligation
over the fair value of plan assets.
F. To reflect a reduction in value of CNG's non-regulated oil and gas
exploration and production properties based on current market valuation
($129 million).
G. To reflect the deferred income taxes of $350 million related to the
purchase price allocated to CNG's assets and liabilities. The estimated
provision for income taxes related to the pro forma adjustments are based
on an assumed combined federal and state income tax rate of 38 percent.
H. To record direct costs of the Merger (including fees of financial advisors,
legal counsel and independent auditors) estimated to be $70 million,
consisting of $45 million associated with contractual termination benefits
and $25 million relating to deferred merger costs.
I. To reflect the fair value of CNG's long-term debt associated with its
exploration and production properties which results in a $20 million
reduction in its carrying value as of January 28, 2000 (or the closing).
Annual amortization of this purchase accounting debt discount would be
approximately $2 million.
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Notes to the Unaudited Pro Forma Combined Consolidated Financial Statements
(Continued)
J. To reflect liabilities of $26 million associated with seismic relicensing
fees for oil and gas exploration and production. Also reflects a liability
of $73 million for the fair value of financial contracts entered into by
CNG to mitigate exposure to volatility in oil and gas prices.
K. To reflect an increase of approximately $8 million in bad debt reserves due
to a change in collections policy and related reserve policy.
L. To eliminate Dominion's investment in CNG of $6.4 billion (see note B)
against CNG's common shareholders' equity of $2.4 billion and record the
gross acquisition adjustment of $4 billion.
<TABLE>
<CAPTION>
The gross acquisition adjustment is allocated to CNG's assets and liabilities as follows:
- ----------------------------------------------------------------------------------------
Debit Credit
------- ------
<S> <C> <C>
Gross acquisition adjustment (millions) $3,997
------
Other deferred charges-prepaid pension cost(D) $1,140
Net Exploration & production properties (F) 129
Long-term debt (I) 20
Accounts receivable,net (K) 8
Other deferred credits & other liabilities-(E) 4
OPEB obligation
Other deferred credits & other liabilities-(J) 99
seismic license fee and financial
contracts
Accounts payable-merger costs (H) 45
Other deferred charges-merger costs (H) 25
Deferred income taxes (G) 350
--- ------
Net reduction to acquisition adjustment $ 500
------
Net acquisition adjustment $3,497
------
</TABLE>
M. To reflect the amortization of the acquisition adjustment using the
straight line method over forty years (annual amortization expense of $88
million) and the amortization of oil and gas exploration and production
properties over a ten year period (annual amortization of $13 million).
CNG's Pre-Merger Expenses
N. Shareholder approval of the Merger constituted a change of control as
defined in the CNG stock incentive plans. Accordingly, the vesting of stock
options and certain other stock awards was accelerated pursuant to the
provisions of the plans and/or award agreements. Also, the change of
control effectively granted limited stock appreciation rights to holders of
vested stock options and certain other stock awards. Specifically, the plan
and/or award agreements permitted the holder to elect, during the period
from July 1, 1999 through August 29, 1999, to receive a cash payment in
exchange for surrendering vested stock options and awards. This provision
covered outstanding vested stock options granted since 1989 to
approximately 700 employees. The amount to be paid to the holders was based
on the value determined under the associated plans, which considered the
option exercise price, award value, and the change of control price as
defined in the plans. Based on the value of the vested options and awards
expected to be surrendered and cashed out, CNG recognized a charge to Other
Income and Expenses for the quarter ended June 30, 1999 of $153.5 million.
5
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Notes to the Unaudited Pro Forma Combined Consolidated Financial Statements
(Continued)
During 1999, CNG also recorded charges to Other Income and Expenses for
other direct incremental merger costs, including fees of financial
advisors, legal counsel , costs related to certain executive employment
agreements and other costs. These charges totaled $59.2 million for the
twelve months ended December 31, 1999.
The $212.7 million of nonrecurring charges and the related $67 million tax
benefit recognized by CNG during 1999 have been excluded from the Pro Forma
Combined Consolidated Income Statement.
Change in Accounting Method
O. Since Dominion's entry into the oil and gas exploration and production
business in 1987, Dominion's activities have been directed primarily to
low-risk drilling and acquisitions of producing reserves. With the nature
of these activities and the minimal amounts spent on exploration
activities, Dominion followed the successful efforts method of accounting.
Based on the nature and size of CNG's oil and gas exploration and
production activities, management intends to follow the full cost method
of accounting for its oil and gas exploration and production activities.
The following reflects the effect of adoption of the full cost method of
accounting on the Pro Forma Financial Statements:
<TABLE>
<CAPTION>
Debit Credit
----- -------
(millions)
----------
<S> <C> <C> <C>
Balance Sheet Net exploration and production properties $ 30
Deferred income taxes $ 10
Retained earnings 20
Income Statement Other operation & maintenance expenses $ 8
Depreciation, depletion & amortization 11
-------
Provision for income taxes $ 1
Other income 16
----- -------
Net income effect $ 2
-------
</TABLE>
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Notes to the Unaudited Pro Forma Combined Consolidated Financial Statements
(Continued)
Disposition of Assets
P. As part of the Securities and Exchange Commission (SEC) Order under the
PUHCA of 1935 approving the Merger, Dominion must divest itself of Dominion
Capital, its financial services subsidiary. Although a formal plan for
diverstiture has not been adopted, the SEC allowed three years for this to
be accomplished. During the Merger approval process, Dominion and CNG also
agreed to divest Virginia Natural Gas, Inc. (VNG), CNG's local gas
distribution subsidiary located in Virginia Beach, Virginia. Dominion has
one year after the Merger is completed (January 28, 2000) to sell VNG to a
third party. If the sale of VNG is not completed within one year, VNG will
be spun off as an independent company with the common stock distributed to
Dominion shareholders. Both deadlines are subject to reasonable extensions,
which may be granted by regulatory authorities.
During 1999, Dominion Energy, a subsidiary of Dominion, agreed to the sale
of its Latin American interests to Duke Energy. As a result of the change
in Dominion's foreign investment strategy, CNG has begun accepting bids for
the sale of its foreign assets.
The unaudited pro forma combined consolidated financial statements do not
reflect any adjustments for the above stated anticipated divestitures.
7
