-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, UcgKwihXJBKFoJX9jgi+qrJcswqs7fvcdgp+hi+Wq4BH7PQFzMeuoADvspomhwKz 6c5jBmPS8SZ47qItPQQ02A== 0000916641-00-000680.txt : 20000516 0000916641-00-000680.hdr.sgml : 20000516 ACCESSION NUMBER: 0000916641-00-000680 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20000331 FILED AS OF DATE: 20000515 FILER: COMPANY DATA: COMPANY CONFORMED NAME: VIRGINIA ELECTRIC & POWER CO CENTRAL INDEX KEY: 0000103682 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRIC SERVICES [4911] IRS NUMBER: 540418825 STATE OF INCORPORATION: VA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-02255 FILM NUMBER: 630791 BUSINESS ADDRESS: STREET 1: ONE JAMES RIVER PLAZA STREET 2: 701 E CARY STREET CITY: RICHMOND STATE: VA ZIP: 23219-3932 BUSINESS PHONE: 8047713000 MAIL ADDRESS: STREET 1: 701 E CARY STREET CITY: RICHMOND STATE: VA ZIP: 23219-3932 10-Q 1 QUARTERLY REPORT SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ___________________ FORM 10-Q ___________ (Mark one) X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE --- SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2000 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 1-2255 VIRGINIA ELECTRIC AND POWER COMPANY (Exact name of registrant as specified in its charter) VIRGINIA 54-0418825 (State or other jurisdiction of (I.R.S. Employer Incorporation or Organization) Identification No.) ONE JAMES RIVER PLAZA 23219 RICHMOND, VIRGINIA (Address of principal executive offices) (Zip Code) (804) 771-3000 (Registrant's telephone number) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes X No __ - At April 30, 2000, 171,484 shares of common stock, without par value, of the registrant were outstanding. PAGE 2 VIRGINIA ELECTRIC AND POWER COMPANY INDEX ----- Page Number ------ PART I. Financial Information Item 1. Consolidated Financial Statements Consolidated Statements of Income - 3 Three Months Ended March 31, 2000 and 1999 Consolidated Balance Sheets - 4-5 March 31, 2000 and December 31, 1999 Consolidated Statements of Cash Flows - 6 Three Months Ended March 31, 2000 and 1999 Notes to Consolidated Financial Statements 7-10 Item 2. Management's Discussion and Analysis of 11-18 Financial Condition and Results of Operations Item 3. Quantitative and Qualitative Disclosures About 19 Market Risk PART II. Other Information Item 1. Legal Proceedings 20 Item 4. Submission of Matters to a Vote of Security Holders 20 Item 5. Other Information 20 Item 6. Exhibits and Reports on Form 8-K 21 PAGE 3 VIRGINIA ELECTRIC AND POWER COMPANY PART I. Financial Information ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
Three Months Ended March 31, 2000 1999 ------ ------ (Millions) Revenue: Electric service $1,098 $1,045 Other 28 44 ------ ------ Total 1,126 1,089 ------ ------ Expenses: Fuel, net 250 218 Purchased power capacity, net 193 210 Restructuring costs 20 Operations and maintenance 213 202 Depreciation and amortization 135 141 Taxes other than income 56 72 ------ ------ Total 867 843 ------ ------ Income from operations 259 246 Other income 14 9 ------ ------ Income before interest and income taxes 273 255 ------ ------ Interest and related charges: Interest expense, net 68 72 Distributions - Preferred securities of subsidiary trust 3 3 ------ ------ Total 71 75 ------ ------ Income before income taxes 202 180 Income tax expense 72 66 ------ ------ Income before extraordinary item 130 114 Extraordinary item (net of income taxes of $197) (255) ------ ------ Net income (loss) 130 (141) Preferred dividends 10 8 ------ ------ Balance available for common stock $ 120 $ (149) ====== ======
The Company had no other comprehensive income reportable in accordance with Statement of Financial Accounting Standards No. 130, Reporting Comprehensive Income. The accompanying notes are an integral part of the consolidated financial statements. PAGE 4 VIRGINIA ELECTRIC AND POWER COMPANY CONSOLIDATED BALANCE SHEETS Assets (Uuaudited) March 31, December 31, 2000 1999* ------- ------- (Millions) CURRENT ASSETS: Cash and cash equivalents $ 145 $ 62 Accounts receivable: Customer accounts receivable, net 662 664 Other 63 67 Materials and supplies: Plant and general 125 124 Fossil fuel 94 111 Commodity contract assets 282 362 Other 114 145 ------- ------- Total current assets 1,485 1,535 ------- ------- INVESTMENTS: Nuclear decommissioning trust funds 811 818 Other 52 52 ------- ------- Total investments 863 870 ------- ------- DEFERRED DEBITS AND OTHER ASSETS: Regulatory assets 217 221 Unamortized debt issuance costs 32 31 Other 27 29 ------- ------- Total deferred debits and other assets 276 281 ------- ------- PROPERTY, PLANT AND EQUIPMENT: Property, plant and equipment 15,808 15,688 Less accumulated depreciation 6,850 6,746 ------- ------- 8,958 8,942 Nuclear fuel, net 149 137 ------- ------- Net property, plant and equipment 9,107 9,079 ------- ------- Total assets $11,731 $11,765 ======= ======= The accompanying notes are an integral part of the consolidated financial statements. * The consolidated balance sheet at December 31, 1999 has been derived from the audited consolidated financial statements at that date. PAGE 5 VIRGINIA ELECTRIC AND POWER COMPANY CONSOLIDATED BALANCE SHEETS Liabilities and Stockholder's Equity (Unaudited)
March 31, December 31, 2000 1999* ------- ------- (Millions) CURRENT LIABILITIES: Securities due within one year $ 319 $ 375 Short-term debt 185 378 Accounts payable, trade 512 534 Payrolls accrued 54 88 Interest accrued 86 97 Taxes accrued 112 52 Commodity contract liabilities 274 347 Other 210 165 ------- ------- Total current liabilities 1,752 2,036 ------- ------- LONG-TERM DEBT 3,771 3,551 ------- ------- DEFERRED CREDITS AND OTHER LIABILITIES: Accumulated deferred income taxes 1,460 1,452 Deferred investment tax credits 142 146 Other 192 193 ------- ------- Total deferred credits and other liabilities 1,794 1,791 ------- ------- COMMITMENTS AND CONTINGENCIES (See Note D) COMPANY OBLIGATED MANDATORILY REDEEMABLE PREFERRED SECURITIES OF SUBSIDIARY TRUST** 135 135 ------- ------- PREFERRED STOCK: Preferred stock not subject to mandatory redemption 509 509 ------- ------- COMMON STOCKHOLDER'S EQUITY: Common stock 2,738 2,738 Other paid-in capital 17 17 Earnings reinvested in business 1,015 988 ------- ------- Total common stockholder's equity 3,770 3,743 ------- ------- Total liabilities and stockholder's equity $11,731 $11,765 ======= =======
The accompanying notes are an integral part of the consolidated financial statements. *The consolidated balance sheet at December 31, 1999 has been derived from the audited consolidated financial statements at that date. ** As described in Note E to CONSOLIDATED FINANCIAL STATEMENTS, the 8.05% Junior Subordinated Notes totaling $139 million principal amount constitute 100% of the Trust's assets. PAGE 6 VIRGINIA ELECTRIC AND POWER COMPANY CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
Three Months Ended March 31, 2000 1999 ----- ----- (Millions) Cash flow from (to) operating activities: Net income (loss) $ 130 $(141) Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization (includes amortization of nuclear fuel) 157 162 Deferred income taxes 9 13 Deferred investment tax credits, net (4) (4) Deferred fuel expenses (7) Restructuring costs 20 Extraordinary item, net of income taxes 255 Changes in: Accounts receivable 6 133 Materials and supplies 16 (5) Accounts payable (22) (103) Accrued expenses 15 13 Commodity contract assets and liabilities 7 (13) Other 63 17 ----- ----- Net cash flow from operating activities 397 320 ----- ----- Cash flow from (to) financing activities: Issuance (repayment) of short-term debt, net (193) 10 Issuance of long-term debt 220 Retirement of long-term debt and preferred stock (57) (40) Common stock dividend payments (93) (98) Preferred stock dividend payments (10) (8) Distribution-preferred securities of subsidiary trust (3) (3) ----- ----- Net cash flow to financing activities (136) (139) ----- ----- Cash flow to investing activities: Plant expenditures (128) (137) Nuclear fuel (34) (18) Nuclear decommissioning contributions (9) (8) Other (7) ----- ----- Net cash flow to investing activities (178) (163) ----- ----- Increase in cash and cash equivalents 83 18 Cash and cash equivalents at beginning of period 62 49 ----- ----- Cash and cash equivalents at end of period $ 145 $ 67 ===== =====
The accompanying notes are an integral part of the consolidated financial statements. PAGE 7 VIRGINIA ELECTRIC AND POWER COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Note A. Significant Accounting Policies General Virginia Electric and Power Company 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 sells electricity to retail customers (including governmental agencies) and to wholesale customers such as rural electric cooperatives, municipalities, power marketers and other utilities. The Virginia service area comprises about 65 percent of Virginia's total land area, but accounts for over 80 percent of its population. The Company engages in off-system wholesale purchases and sales of electricity and purchases and sales of natural gas, and is developing trading relationships beyond the geographic limits of its retail service territory. Within this document, the terms "Virginia Power" and the "Company" shall refer to the entirety of Virginia Electric and Power Company, including, without limitation, its Virginia and North Carolina operations, and all of its subsidiaries. In the opinion of management, the accompanying unaudited consolidated financial statements contain all adjustments, including normal recurring accruals, necessary to present fairly the financial position as of March 31, 2000, the results of operations for the three months ended March 31, 2000 and 1999, and the cash flows for the three months ended March 31, 2000 and 1999. Certain amounts in the 1999 consolidated financial statements have been reclassified to conform to the 2000 presentation. The results of operations for the interim period are not necessarily indicative of the results to be expected for the full year. The consolidated financial statements include the accounts of the Company and its subsidiaries, with all significant intercompany transactions and accounts being eliminated on consolidation. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. These financial statements should be read in conjunction with the consolidated financial statements, and notes thereto, included in the Company's Annual Report on Form 10-K for the year ended December 31, 1999. Note B. Extraordinary Item - Discontinuance of SFAS No. 71 In 1999, the Governor of Virginia signed into law legislation establishing a detailed plan to restructure the electric utility industry in Virginia. Such legislation will deregulate generation by 2002 with the phase-in of retail customer choice beginning at that time. Under this legislation, the Company's base rates will remain generally unchanged until July 2007 and recovery of generation-related costs will continue to be provided through the capped rates. The legislation's deregulation of generation required discontinuation of SFAS No. 71, Accounting for the Effects of Certain Types of Regulation, for the Company's generation operations in the quarter ended March 31, 1999. Discontinuing SFAS No. 71 resulted in an after-tax charge of $255 million to write-off expected unrecoverable generation-related assets and reversal of previously deferred investment tax credits. The Company's transmission and distribution operations continue to meet the criteria for recognition of regulatory assets and liabilities as defined by SFAS No. 71 and fuel expense continues to be subject to deferral accounting. For further discussion of the impact of deregulation in Virginia on the Company, see Management's Discussion and Analysis of Financial Condition and Results of Operations and Notes B and R to the CONSOLIDATED FINANCIAL STATEMENTS included in the Company's Annual Report on Form 10-K for the year ended December 31, 1999. PAGE 8 VIRGINIA ELECTRIC AND POWER COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) Note C. Restructuring Costs On January 28, 2000, Dominion Resources, Inc. (Dominion), Virginia Power's parent company, acquired Consolidated Natural Gas Company (CNG). Subsequent to the acquisition, Dominion and its subsidiaries developed and began the implementation of a plan to restructure the operations of the combined companies. The restructuring plan includes the following components: o An involuntary severance program; o A transition plan to implement operational changes to provide efficiencies, including the consolidation of post-merger operations and the integration of information technology systems; o A voluntary early retirement program. Dominion and its subsidiaries established a comprehensive involuntary severance package for salaried employees whose positions will be eliminated. Severance payments are based on the individual's base salary and years-of- service at the time of termination. Under the restructuring plan, approximately 200 employee positions at Virginia Power have been identified for elimination. Restructuring charges related to workforce reduction costs approximating $20 million were accrued in the first quarter of 2000, reflecting management's best estimate of severance and related costs to be incurred under the plan. At March 31, 2000, a total of 75 positions had been eliminated, resulting in severance payments totaling $696,000. On January 28, 2000, Dominion announced an early retirement program (the "ERP"). This program is a voluntary program for all salaried employees of Dominion, excluding officers. The early retirement option will provide up to three additional years of age and three additional years of employee service, subject to age and service maximums under the companies' retirement plans, for purposes of the benefit formula under the retirement plans. Employees who have attained age 52 and completed at least five years of service as of July 1, 2000 are eligible under the ERP. To elect early retirement, salaried employees must notify Dominion during the period from April 3 through May 17. The expense and related liability associated with the ERP will be recognized upon the Company's receipt of eligible employees' election to accept the ERP. Employees who are involuntarily terminated are also eligible to elect early retirement under the ERP. However, the amount of severance pay may be subject to reduction as a result of coordination with the additional retirement plan benefits provided by the ERP. Whether the ERP is made available to employees covered by the collective bargaining agreement and the period for electing to retire under the ERP are subject to discussion with union representatives. Virginia Power is expected to incur additional charges relating to restructuring and other merger-related activities as business operations are consolidated and administrative functions are integrated. Note D. Commitments and Contingencies Environmental Matters In 1987, the Environmental Protection Agency (EPA) identified the Company and several other entities as Potentially Responsible Parties (PRPs) at two Superfund sites located in Kentucky and Pennsylvania. Current cost studies estimate total remediation costs for the sites to range from $106 million to $156 million. The Company's proportionate share of the total cost is expected to be in the range of $2 million to $3 million, based upon allocation formulas and the volume of waste shipped to the sites. The Company has accrued a reserve of $2 million to meet its obligations at these two sites. Based on a financial assessment of the PRPs involved at these sites, the Company has determined that it is probable that the PRPs will fully pay the costs apportioned to them. The Company generally seeks to recover its costs associated with environmental remediation from third party insurers. At March 31, 2000, any pending or possible claims were not recognized as an asset or offset against such obligations of the Company. PAGE 9 VIRGINIA ELECTRIC AND POWER COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) In 1999, the Company was notified by the Department of Justice of alleged noncompliance with the EPA's oil spill prevention, control and countermeasures (SPCC) plans and facility response plan (FRP) requirements at one of the Company's power stations. If, in a legal proceeding, such instances of noncompliance are deemed to have occurred, the Company may be required to remedy any alleged deficiencies and pay civil penalties. Settlement of this matter is currently in negotiation and is not expected to be material to the Company's financial condition or results of operations. In 1999, the Company identified matters at certain other power stations that the EPA might view as not in compliance with the SPCC and FRP requirements. The Company reported these matters to the EPA and its plan for correction thereof. Presently, the EPA has not assessed any penalties against the Company, pending its review of the Company's disclosure information. Future resolution of these matters is not expected to have a material impact on the Company's financial condition or results of operations. In 1999, the Company received notices from the Attorneys General of Connecticut and New York, respectively, of their intention to file suit against the Company for alleged violations of the Clean Air Act. The notices question whether modifications at certain Virginia Power generating facilities were properly permitted under the Clean Air Act and allege that emissions from these facilities have contributed to damage to public health and the environment in the Northeast. Management believes, based on newspaper reports and other sources, that it is one of a number of companies with fossil fuel power generating stations in the southeast and central United States to have received such notifications. The Company believes that it has obtained the permits necessary in connection with its generating facilities and that legal proceedings, if pursed by the Attorneys General, would not have a material adverse effect on it's financial condition or results of operations. In a related development, in May 2000, the Company received a Notice of Violation (NOV) from the EPA, alleging as had the Attorneys General's notices that Virginia Power is operating its Mt. Storm Power Station in West Virginia in violation of the Clean Air Act. The NOV alleges that the Company failed to obtain New Source Review permits prior to undertaking specified construction projects at the station. EPA alleges that each of these projects resulted in an increase in the emission of air pollutants beyond levels that require a New Source Review permit specified under the Clean Air Act. Violations of the Clean Air Act may result in the imposition of substantial civil penalties and injunctive relief. The Company believes that it has obtained the permits necessary in connection with its generating facilities and will vigorously defend against the allegations in the NOV. For additional information regarding Contingencies, see Note R to CONSOLIDATED FINANCIAL STATEMENTS included in the Company's Annual Report on Form 10-K for the year ended December 31, 1999. Note E. Company Obligated Mandatorily Redeemable Preferred Securities of Subsidiary Trust In 1995, the Company established Virginia Power Capital Trust I (VP Capital Trust). VP Capital Trust sold 5.4 million shares of Preferred Securities for $135 million, representing preferred beneficial interests and 97% beneficial ownership in the assets held by VP Capital Trust. Virginia Power issued $139 million of its 1995 Series A, 8.05% Junior Subordinated Notes (the Notes) in exchange for the $135 million realized from the sale of the Preferred Securities and $4 million of common securities of VP Capital Trust. The common securities represent the remaining 3% beneficial ownership interest in the assets held by VP Capital Trust. The Notes constitute 100% of VP Capital Trust's assets. PAGE 10 VIRGINIA ELECTRIC AND POWER COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) Note F. Preferred Stock As of March 31, 2000 the total number of authorized shares for all preferred stock (whether or not subject to mandatory redemption) was 10 million shares. There were 1.4 million and 5.1 million issued and outstanding shares of preferred stock subject to mandatory redemption and preferred stock not subject to mandatory redemption, respectively. In March 2000, the Company redeemed 400,000 shares of preferred stock subject to mandatory redemption. The remaining 1.4 million shares of preferred stock subject to mandatory redemption are scheduled to be redeemed in September 2000. Accordingly, the Company has classified the $140 million of preferred stock subject to mandatory redemption in Securities due within one year at March 31, 2000. Note G. Recently Issued Accounting Standards The Financial Accounting Standards Board has issued an Exposure Draft proposing amendments to SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities. If adopted, the proposed new accounting standard will become effective with the implementation of SFAS No. 133. The Exposure Draft addresses various implementation issues including expanded availability of exclusions of normal purchase and normal sale agreements from classification as derivatives. The Company is in the process of assessing the impact and method of adoption of SFAS No. 133 and has not estimated the financial impact of adoption. To the extent that any of the contracts are subject to fair value accounting, implementing appropriate hedging strategies could possibly mitigate the potential impact on earnings volatility. Note H. Business Segments The Company manages its operations along two primary business lines, Energy and Delivery. The Energy segment, formerly the Generation segment, encompasses the Company's generation portfolio, trading and marketing activities, nuclear consulting services and energy services activities. The Delivery segment includes bulk power transmission, distribution and metering services, and customer service and continues to be subject to cost-based regulation. The majority of the Company's revenues are provided through bundled rate tariffs. Such revenues generally are allocated between the two business lines for management reporting based on prior cost of service studies. Amounts in Other include: 1) transactions or events for which the segments are not held accountable for internal reporting purposes (including the 2000 restructuring charge and 1999 extraordinary item); 2) adjustments to reconcile internal financial statement groupings to those used to prepare the externally reported consolidated financial statements; 3) intercompany eliminations, where applicable; and 4) assets of the Company's corporate operations that are not allocated to our Energy and Delivery segments for internal reporting purposes.
Consolidated Description Energy Delivery Other Total - --------------------------------------------------------------------------------------------------------------- (Millions) Three Months Ended March 31, 2000 Revenues $825 $297 $ 4 $1,126 Income before interest and income taxes 152 141 (20) 273 Net income (loss) 76 67 (13) 130 Three Months Ended March 31, 1999 Revenues $802 $281 $ 6 $1,089 Income before interest and income taxes 141 114 255 Net income (loss) 65 49 (255) (141)
PAGE 11 VIRGINIA ELECTRIC AND POWER COMPANY ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS This Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) contains "forward-looking statements" as defined by the Private Securities Litigation Reform Act of 1995, including (without limitation) discussions as to expectations, beliefs, plans, objectives and future financial performance, or assumptions underlying or concerning matters discussed in this document. These discussions, and any other discussions, including certain contingency matters (and their respective cautionary statements) discussed elsewhere in this report, that are not historical facts, are forward-looking and, accordingly, involve estimates, projections, goals, forecasts, assumptions and uncertainties that could cause actual results or outcomes to differ materially from those expressed in the forward-looking statements. The business and financial condition of Virginia Power are influenced by a number of factors including political and economic risks, market demand for energy, inflation, capital market conditions, governmental policies, legislative and regulatory actions (including those of the Federal Energy Regulatory Commission (FERC), the Environmental Protection Agency (EPA), the Department of Energy, the Nuclear Regulatory Commission, the Virginia Commission and the North Carolina Utilities Commission), industry and rate structure and legal and administrative proceedings. Some other important factors that could cause actual results or outcomes to differ materially from those discussed in the forward- looking statements include changes in and compliance with environmental laws and policies, weather conditions and catastrophic weather-related damage, present or prospective wholesale and retail competition, competition for new energy development opportunities, pricing and transportation of commodities, operation of nuclear power facilities, acquisition and disposition of assets and facilities, nuclear decommissioning costs, exposure to changes in the fair value of commodity contracts, counter-party credit risk and unanticipated changes in operating expenses and capital expenditures. All such factors are difficult to predict, contain uncertainties that may materially affect actual results, and may be beyond the control of Virginia Power. New factors emerge from time to time and it is not possible for management to predict all such factors, nor can it assess the impact of each such factor on Virginia Power. Any forward-looking statement speaks only as of the date on which such statement is made, and Virginia Power undertakes no obligation to update any forward-looking statement or statements to reflect events or circumstances after the date on which such statement is made. Business Segments We manage our operations in a manner that requires disclosure of two business segments--Energy and Delivery. Our Energy segment, formerly the Generation segment, includes our portfolio of generating facilities and purchased power contracts, trading and marketing activities, nuclear consulting services, and energy services activities. Our Delivery segment includes bulk power transmission, distribution and metering services, and customer service and continues to be subject to cost-based regulation. The majority of our revenue is provided through bundled rate tariffs. Such revenue is allocated between the Energy and Delivery segments for internal reporting purposes and discussion herein. Certain activities discussed in Liquidity and Capital Resources are not managed currently at the segment level; however, specific references to segments are made as appropriate. Our discussion of trends and variations generally applies to Virginia Power as a whole. Liquidity and Capital Resources Internal Sources of Liquidity Cash flow from operating activities provided $397 million and $320 million during the quarters ended March 31, 2000 and 1999, respectively. Operating cash flow, after dividend payments, covered over 100 percent of our plant and nuclear fuel expenditures during each of these quarters and, on average, covered over 80 percent of our total cash requirements. Cash requirements not met by the timing or amount of cash flow from operations are generally satisfied with proceeds from the sale of securities and short-term borrowings. PAGE 12 VIRGINIA ELECTRIC AND POWER COMPANY ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued) External Sources of Liquidity In March 2000, we issued $220 million in aggregate principal of variable-rate medium-term notes maturing in 2002. We also entered a swap agreement as a hedge to synthetically convert these variable-rate notes to fixed rate debt. Under the swap agreement, we will pay a 7.27% fixed rate. We issued the notes primarily to satisfy the retirement during the first quarter of 2000 of approximately $57 million of outstanding debt and preferred stock and repayments in April 2000 of $169 million of outstanding debt. We have a commercial paper program that is supported by two credit facilities totaling $500 million. Net borrowings under the program were $185 million at March 31, 2000, a decrease of $193 million from amounts outstanding at December 31, 1999. Borrowings under these facilities are used to fund working capital requirements and may vary significantly during the course of the year depending upon the timing and amount of cash requirements not satisfied by current cash provided from operations. As of March 31, 2000, we have $520 million of remaining principal amount under currently effective shelf registrations with the Securities and Exchange Commission available to meet capital requirements. Capital Expenditures During the quarter ended March 31, 2000, our investing activities resulted in net cash outflows of $178 million. These activities included plant and nuclear fuel expenditures of $162 million. Generation-related projects totaled approximately $87 million and included continued construction of four 150 MW combustion turbines, expected to be completed by midyear 2000, environmental upgrades, and routine capital improvements. We spent approximately $71 million on transmission and distribution-related projects reflecting routine capital improvements and expenditures associated with new connections. Remaining plant and equipment expenditures of $4 million primarily reflects our continued investment in information technology. There have been no significant changes in the planned levels of spending for capacity and other capital projects and maturities of securities as disclosed in MD&A included in our Annual Report on Form 10-K for the year ended December 31, 1999. We expect to fund our capital requirements and maturities with cash flow from operations and a combination of sales of securities and short-term borrowings. Results Of Operations The following General discussion of the results of operations for Virginia Power considers those aspects of the results of our operations that relate to both our Energy and Delivery segments, and accordingly, are discussed on a consolidated basis. In addition, we discuss separately the results of operations specific to our Energy and Delivery segments. General Total Revenue for the quarters ended March 31, 2000 and 1999, respectively was allocated to the Energy and Delivery segments as follows: Quarter Ended March 31, 2000 1999 ----------- ------------ (Millions) Energy $ 825 $ 802 Delivery 297 281 Other* 4 6 ------ ------ Total Revenue $1,126 $1,089 ====== ====== *See Note H to CONSOLIDATED FINANCIAL STATEMENTS for discussion of the nature of this line item. PAGE 13 VIRGINIA ELECTRIC AND POWER COMPANY ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued) Electric service revenue consists primarily of sales to retail customers in our service territory at rates authorized by the Virginia and North Carolina regulatory commissions and sales to cooperatives and municipalities at wholesale rates authorized by FERC. The following analysis and discussion present the primary factors affecting this revenue for the quarter ended March 31, 2000: Three Months Ended March 31, 2000 vs. 1999 ----------------------- (Millions) Electric service revenue Retail customer growth $19 Weather 1 Base rate reduction (8) Fuel rate variance 10 Other retail, net 25 --- Total retail 47 --- Other electric service 6 --- Total electric service $53 === Retail customer growth--Electric service revenue increased approximately $19 million due to higher levels of retail customers during the quarter ended March 31, 2000 compared to the comparable quarter of the prior year. On average, there were approximately 38,000 more retail customers during the quarter ended March 31, 2000 versus the comparable quarter of 1999. Weather--Weather typically has a significant impact on our electric service revenue. However, for the comparative periods presented, weather did not have a significant impact. Base rate reduction--As part of our 1998 rate settlement, we agreed to a two- phased rate reduction, $100 million effective March 1, 1998 and an additional $50 million effective March 1, 1999. The impact of the second phase rate reduction on the quarter ended March 31, 2000 was an $8 million reduction of electric service revenue compared to the comparable period in 1999. As a result of Virginia law enacted in 1999, our Virginia jurisdictional base rates will remain unchanged until July 2007. See Note B to CONSOLIDATED FINANCIAL STATEMENTS. Fuel rates--Currently, we recover the cost of fuel used in generating electricity through fuel rates approved by regulatory authorities. The increase in fuel rate revenue reflects higher fuel rates approved during the quarter ended March 31, 2000 as compared to the same quarter in 1999. Other retail, net--The extra "leap-year" day in February 2000 favorably impacted electric service revenue by approximately $12 million as compared to the quarter ended March 31, 1999. Other factors affecting electric service revenue for the quarter were individually insignificant. Other electric service revenue--This revenue increased during the quarter ended March 31, 2000, as compared to the comparable quarter in 1999, due to increased revenue for electric transmission services. Certain expenses, which are not allocated separately to the Energy and Delivery segments, changed as follows when compared to the respective prior quarter: PAGE 14 VIRGINIA ELECTRIC AND POWER COMPANY ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued) Restructuring Costs -During the first quarter 2000, restructuring costs were incurred in connection with the implementation of a plan to restructure the operations of all Dominion subsidiaries following its acquisition with Consolidated Natural Gas Company. We recorded a charge for approximately $20 million for costs associated with work-force reduction activities. See Note C. to the CONSOLIDATED FINANCIAL STATEMENTS for more information regarding these restructuring costs. Extraordinary item--This extraordinary item was recorded in connection with the passage of new legislation in 1999 establishing a detailed plan to restructure the electric utility industry in Virginia. The legislation's deregulation of generation was an event that required discontinuation of Statement of Financial Accounting Standards (SFAS) No. 71, Accounting for the Effects of Certain Types of Regulation, for our generation operations. Generation-related assets and liabilities not expected to be recovered through cost-based rates were written off in March 1999, resulting in an after-tax charge of $255 million. See Note B to CONSOLIDATED FINANCIAL STATEMENTS. Energy Net income for our Energy segment increased for the quarter ended March 31, 2000 as compared to the same quarter of 1999. This growth in net income reflects increased electric service revenue resulting from growth in our customer base offset partially by lower revenues associated with our power and gas marketing and trading activities. Expenses for the quarter, as compared to the prior year quarter, increased reflecting higher fuel and operating expenses offset partially by lower expenses associated with depreciation and amortization and other taxes. Selected financial information relevant to the operations of our Energy segment for the comparative quarters is as follows: Three Months Ended March 31, 2000 1999 -------- ------ (Millions) Electric service revenue $ 809 $ 766 Other revenue 16 36 Fuel, net 250 218 Purchased power capacity, net 193 210 Operations and maintenance 111 100 Depreciation and amortization 66 76 Taxes other than income 5 17 Income before interest and income taxes 152 141 Net income 76 65 Other revenue includes sales of electricity beyond our service territory, sales of natural gas, and other revenue. The decrease in other revenue during the quarter ended March 31, 2000 as compared to the same quarter in 1999 reflects primarily lower revenues associated with power marketing and trading activities and lower mark-to-market gains on our portfolio of commodity contracts. Fuel, net increased in the quarter ended March 31, 2000, as compared to the same quarter of 1999, primarily due to increased energy purchases and the inclusion of previously deferred fuel expenses being recovered in current fuel rates. Purchased power capacity, net decreased in the quarter ended March 31, 2000 as compared to comparable quarter of 1999 reflecting the expiration of two major long-term power purchase contracts as of December 31, 1999. Operations and maintenance increased in the quarter ended March 31, 2000 as compared to same quarter of 1999, primarily as a result of nuclear outage costs in the current quarter with no similar level of costs in 1999. PAGE 15 VIRGINIA ELECTRIC AND POWER COMPANY ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued) Depreciation and amortization decreased for the quarter ended March 31, 2000, as compared to the comparable quarter of 1999, reflecting the amortization of certain terminated construction projects in the prior year quarter with no such expenses occurring in the current quarter. Taxes other than income decreased during the quarter ended March 31, 2000 as compared to the comparable quarter of 1999 due to the accrual for a tax refund in the first quarter of 2000. Delivery Overall, the net income of our Delivery segment increased for the quarter ended March 31, 2000, as compared to the comparable quarter of 1999, reflecting increased revenue for electric transmission services and lower costs associated with storm-related service restoration activities. Selected financial information relevant to the operations of our Delivery segment for the comparative quarters is as follows: Three Months Ended March 31, 2000 1999 -------- ------- (Millions) Electric service revenue $ 289 $ 279 Operations and maintenance 61 69 Income before interest and income taxes 141 114 Net income 67 49 Operations and maintenance for the quarter ended March 31, 2000 as compared to the same period in 1999 was lower as the 1999 expenses reflected higher service restoration costs associated with ice-storm damage. Future Issues The following discussion of future issues includes current developments of previously disclosed matters and new issues arising during the period covered by and subsequent to these financial statements. We recommend that this section be read in connection with Future Issues in MD&A included in our Annual Report on Form 10-K for the year ended December 31, 1999. Competition-Legislative Initiatives Virginia In March 1999, the Governor of Virginia signed into law legislation establishing a detailed plan to restructure the electric utility industry in Virginia which will provide for customer choice beginning in 2002. For additional information on the impact of this legislation and customer choice, see Note B to CONSOLIDATED FINANCIAL STATEMENTS and MD&A included in our Annual Report on Form 10-K for the year ended December 31, 1999. Since March 1999, we have supported certain technical amendments which were passed by the 2000 General Assembly and were signed by the Governor in April 2000. PAGE 16 VIRGINIA ELECTRIC AND POWER COMPANY ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued) In March 1998, the Virginia Commission issued an Order Establishing Investigation with regard to independent system operators, regional power exchanges and retail access pilot programs. The Order instructed Virginia Power and American Electric Power-Virginia (AEP) each to design and file a retail access pilot program. In response, we filed a report describing the details, objectives and characteristics of our proposed retail access pilot program and a hearing was held. On April 28, 2000, the Virginia Commission entered a Final Order adopting, with certain exceptions, the Hearing Examiner's recommendations, including the Hearing Examiner's market price methodology. Pursuant to the Final Order, the Company's pilot program will begin on September 1, 2000 and will initially give approximately 35,000 customers the ability to choose their electric supplier. The program will be expanded to include approximately 71,000 customers by January 2001. A final order from the Virginia Commission on the interim rules governing electric and gas retail pilot programs in Virginia is expected early in the second quarter of 2000. In April 2000, the Virginia Commission entered an order proposing regulations governing the functional separation of the generation, retail transmission, and distribution of incumbent electric utilities under the Virginia Electric Utility Restructuring Act (the Act). Pursuant to the Act, Virginia electric utilities are required to file their functional separation plans with the Virginia Commission by January 1, 2001. Comments on the Commission's proposed functional separation rules are due by May 22, 2000. North Carolina In April 2000, a study commission, established by the North Carolina General Assembly to explore the future of electric service in North Carolina, developed a proposal to provide full retail competition to North Carolina by January 1, 2006, with a phase-in beginning on January 1, 2005 of up to 50% of each power supplier's customer load. These recommendations will be part of a report to be given to the General Assembly scheduled to begin in May 2000. The study commission will recommend to the 2001 General Assembly specific legislative language necessary to accomplish its recommendations including a proposal regarding resolution of certain issues concerning municipal power agency debt. Restructuring Charges We expect to incur additional charges relating to restructuring and other merger-related activities as business operations are consolidated and administrative functions are integrated. The planned workforce reductions should avoid future annualized operating costs of approximately $18 million that would have otherwise been incurred. See Note C. to CONSOLIDATED FINANCIAL STATEMENTS for further discussion of restructuring activities and related costs. Clear Air Act Matters The Virginia Department of Environmental Quality (DEQ) is proposing to impose a plantwide ozone season NOx emission limit of 0.15 lb/mmBtu at the Possum Point Power Station beginning in May 2003 as part of a State Implementation Plan to address ozone levels in Northern Virginia, which is classified as a serious ozone non-attainment area. Given the age of the existing units at Possum and the high probability of additional control requirements in the future, we evaluated various options to optimize the ability to continue to operate these units in a cost-effective manner while providing the Northern Virginia area with a reliable source of electricity. Based on this evaluation, we recently announced the planned replacement of 465 MW of existing coal-fired generation at Possum Point with a new, cleaner combined cycle gas unit at an estimated capital cost of $280 million. PAGE 17 VIRGINIA ELECTRIC AND POWER COMPANY ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued) In May 2000, Virginia Power received a Notice of Violation (NOV) from the EPA, alleging that Virginia Power is operating the Mt. Storm Power Station in West Virginia in violation of the Clean Air Act. The NOV alleges that we failed to obtain New Source Review permits prior to undertaking specified construction projects at the station. EPA alleges that each of these projects resulted in an increase in the emission of air pollutants beyond levels that require a New Source Review permit specified under the Clean Air Act. As previously disclosed, the Company has also received notices from the Attorneys General of Connecticut and New York claiming similar violations of the Clean Air Act. Violations of the Clean Air Act may result in the imposition of substantial civil penalties and injunctive relief. We believe that we have obtained the permits necessary in connection with our generating facilities and will vigorously defend against the allegations in the NOV. See Note D. to CONSOLIDATED FINANCIAL STATEMENTS for further discussion of this matter. Recently Issued Accounting Standards The Financial Accounting Standards Board has issued an Exposure Draft proposing amendments to SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities. If adopted, the proposed new accounting standard will become effective with the implementation of SFAS No. 133. The Exposure Draft addresses various implementation issues including expanded availability of exclusions of normal purchase and normal sale agreements from classification as derivatives. The Company is in the process of assessing the impact and method of adoption of SFAS No. 133 and has not estimated the financial impact of adoption. To the extent that any of the contracts are subject to fair value accounting, implementing appropriate hedging strategies could possibly mitigate the potential impact on earnings volatility. Year 2000 Readiness We experienced a successful transition to the Year 2000 and to February 29, 2000. Our transmission and distribution systems and our generating units continued to operate smoothly through the transition periods. Our customers have not lost power as a result of a Year 2000 problem. We expect no significant Year 2000 problems in the future. Actual Year 2000 costs of $27 million have been expended as of March 31, 2000. Additional costs throughout the remainder of 2000 are not expected to be significant. We cannot estimate or predict the potential adverse consequences that could result from a third party's failure to effectively address remaining Year 2000 issues, if any, but believe that any impact would be short-term in nature and would not have a material adverse impact on results of operations. Market Risk Sensitive Instruments and Risk Management We are exposed to market risk because we utilize financial instruments, derivative financial instruments and derivative commodity instruments. The market risks inherent in these instruments are represented by the potential loss due to adverse changes in commodity prices, interest rates and equity security prices as described below. Commodity price risk is experienced in our power generation and commodity marketing and trading business due to the exposure to market shifts in the prices received and paid for natural gas and electricity. Interest rate risk generally is related to our outstanding debt, preferred stock and trust-issued securities. We are exposed to equity price risk primarily as a result of equity securities held in nuclear decommissioning trusts. On a quarterly basis, we present an updated sensitivity analysis to disclose quantitative information about our exposure to commodity price risk as our portfolio of derivative commodity contracts held for trading purposes may change significantly each quarter. We do not present quarterly updates to the quantitative information regarding interest rate and equity price risk disclosed in Market Risk Sensitive Instruments and Risk Management under MD&A included in our Annual Report on Form 10-K for the year ended December 31, 1999. Generally, changes in our portfolio of securities subject to such risks do not give rise to significant changes in the quantitative information reported on an annual basis. PAGE 18 VIRGINIA ELECTRIC AND POWER COMPANY ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued) Commodity Price Risk As part of our strategy to market energy from our generation capacity and to manage related risks, we manage a portfolio of derivative commodity contracts held for trading purposes. These contracts are sensitive to changes in the prices of natural gas and electricity. We employ established policies and procedures to manage the risks associated with these price fluctuations and use various commodity instruments, such as futures, swaps and options, to reduce risk by creating offsetting market positions. In addition, we seek to use our generation capacity, when not needed to serve customers in our service territory, to satisfy commitments to sell energy. One of the techniques commonly used to measure risk in a commodity trading portfolio is sensitivity analysis, which determines a hypothetical change in the fair value of the portfolio which would result from an assumed change in the market prices of the related commodities. The fair value of the portfolio is a function of the underlying commodity, contract prices and market prices represented by each derivative commodity contract. For swaps, forward contracts and options, market value reflects our best estimates considering over-the- counter quotations, time value and volatility factors of the underlying commitments. Exchange-traded futures and options are marked to market based on closing exchange prices. We have determined a hypothetical loss by calculating a hypothetical fair value for each contract assuming a 10% unfavorable change in the market prices of the related commodity and comparing it to the fair value of the contracts based on market prices at March 31, 2000 and December 31, 1999. This hypothetical 10% change in commodity prices would have resulted in a hypothetical loss of approximately $6 million and $5 million in the fair value of our commodity contracts as of March 31, 2000 and December 31, 1999, respectively. The sensitivity analysis does not include the price risks associated with utility operations, including those underlying utility fuel requirements. In the normal course of business, we also face risks that are either nonfinancial or nonquantifiable. Such risks principally include credit risk, which is not reflected in the sensitivity analysis above. PAGE 19 VIRGINIA ELECTRIC AND POWER COMPANY ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK See Market Risk Sensitive Instruments and Risk Management under MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. PAGE 20 VIRGINIA ELECTRIC AND POWER COMPANY PART II. OTHER INFORMATION Item 1. Legal Proceedings - ------------------------- In May 2000, the Company received a Notice of Violation (NOV) from the Environmental Protection Agency (EPA), alleging that Virginia Power is operating the Mt. Storm Power Station in West Virginia in violation of the Clean Air Act. The NOV alleges that we failed to obtain New Source Review permits prior to undertaking specified construction projects at the station. EPA alleges that each of these projects resulted in an increase in the emission of air pollutants beyond levels that require a New Source Review permit specified under the Clean Air Act. As previously reported, the Company has also received notices from the Attorneys General of Connecticut and New York claiming similar violations of the Clean Air Act. Violations of the Clean Air Act may result in the imposition of substantial civil penalties and injunctive relief. Item 4. Submission of Matters to a Vote of Security Holders. - -------------------------------------------------------------- a) By consent in lieu of an Annual Meeting, Dominion Resources, Inc., the sole holder of all the voting Common Stock of the Company, on April 28, 2000, approved amendments to the Company's Bylaws to change the number of Directors to be within a range of not less than three nor more than eighteen, and b) elected the following persons to serve as Directors of the Company until the next annual election of the Board: Thos. E. Capps Thomas F. Farrell, II Edgar M. Roach, Jr. Item 5. Other Information - -------------------------- Regulation Virginia -------- In March 1998, the Virginia Commission issued an Order Establishing Investigation with regard to independent system operators, regional power exchanges and retail access pilot programs. The Order instructed Virginia Power and American Electric Power-Virginia (AEP) each to design and file a retail access pilot program. In response, we filed a report describing the details, objectives and characteristics of our proposed retail access pilot program and a hearing was held. On April 28, 2000, the Virginia Commission entered a Final Order adopting, with certain exceptions, the Hearing Examiner's recommendations, including the Hearing Examiner's market price methodology. Pursuant to the Final Order, the Company's pilot program will begin on September 1, 2000 and will initially give approximately 35,000 customers the ability to choose their electric supplier. The program will be expanded to include approximately 71,000 customers by January 2001. A final order from the Virginia Commission on the interim rules governing electric and gas retail pilot programs in Virginia is expected early in the second quarter of 2000. In April 2000, the Virginia Commission entered an order proposing regulations governing the functional separation of the generation, retail transmission, and distribution of incumbent electric utilities under the Virginia Electric Utility Restructuring Act (the Act). Pursuant to the Act, Virginia electric utilities are required to file their functional separation plans with the Virginia Commission by January 1, 2001. Comments on the Commission's proposed functional separation rules are due by May 22, 2000. North Carolina -------------- In April 2000, a study commission, established by the North Carolina General Assembly to explore the future of electric service in North Carolina, developed a proposal to provide full retail competition to North Carolina by January 1, 2006, with a phase-in beginning on January 1, 2005 of up to 50% of each power supplier's customer load. These recommendations will be part of a report to be given to the General Assembly scheduled to begin in May 2000. Environmental Matters The Virginia Department of Environmental Quality is proposing to impose a plantwide ozone season NOx emission limit of 0.15 lb/mmBtu at the Possum Point Power Station beginning in May 2003, as part of a State Implementation Plan to address ozone levels in Northern Virginia. For more details, see Future Issues under MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. PAGE 21 VIRGINIA ELECTRIC AND POWER COMPANY PART II - OTHER INFORMATION (Continued) Item 6. Exhibits and Reports on Form 8-K - ----------------------------------------- (a) Exhibits: 3 Bylaws, as amended and effective April 28, 2000 (filed herewith). 27 Financial Data Schedule (filed herewith). (b) Reports on Form 8-K; None PAGE 22 SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. VIRGINIA ELECTRIC AND POWER COMPANY Registrant May 12, 2000 /S/J.L. Trueheart ------------------------------------------ J.L. Trueheart Group Vice President and Controller (Principal Accounting Officer) EX-3 2 BYLAWS OF VIRGINIA ELECTRIC & POWER Exhibit 3 BYLAWS OF VIRGINIA ELECTRIC AND POWER COMPANY As amended and in effect on April 28, 2000 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.................................................. 4 IX Board of Directors................................................ 4 X Powers of Directors............................................... 4 XI Executive and Other Committees.................................... 5 XII Meetings of Directors and Quorum.................................. 5 XIII Action Without a Meeting.......................................... 7 XIV Officers.......................................................... 7 XV Eligibility of Officers........................................... 7 XVI Chairman of the Board of Directors and President.................. 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
BYLAWS OF VIRGINIA ELECTRIC AND POWER COMPANY ARTICLE I. Name. The name of the Corporation is Virginia Electric and Power Company. 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 fourth Friday in April in each year if not a legal holiday, and if a legal holiday then on the next business day 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, any Chief Executive Officer, or a majority of the Directors or in accordance with the provisions of Article III of the Articles of Incorporation. Special Meetings of the Shareholders shall 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 Article III of 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, any Chief Executive Officer, any President or any Vice President or the Corporate Secretary or any Assistant Corporate Secretary, by hand or 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 or when hand delivered at said address. 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 in the manner provided above, 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, 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, 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 hereinbefore 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 office 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 Article III 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 or the 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 stock of any class shall, as to all matters in respect of which stock of any class has 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 in Article III. The number of Directors may be fixed from time to time by Resolution of the Board of Directors within a variable range of not less than three nor more than eighteen. Except as otherwise provided in Article XXI hereof, each Director shall serve until the next Annual Meeting of Shareholders and until his successor is duly elected and qualified or until the number of Directors is decreased. The foregoing provisions are, however, subject to Article III of the Articles of Incorporation, if and whenever the same may become applicable by the accrual of voting rights to the Preferred Stock. 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 likewise may appoint from their number 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. 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 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 any Chief Executive Officer shall prescribe a shorter notice to be given personally or by telephoning 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 Article III of 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 Board of Directors shall appoint such officers of the Corporation with such titles and duties as the Board in its discretion may determine. The Chairman of the Board of Directors and the Vice Chairman, if one is elected, shall be officers unless they are not full-time employees of the Corporation. The officers and the Chairman of the Board 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 foregoing shall not preclude the Board from electing individual officers at any regular or special meeting of the Board of Directors. The Board of Directors may appoint one or more Chief Executive Officers, Presidents, Chief Operating Officers, Chief Financial Officers, Treasurers and Controllers and other officers with such titles, powers and duties with respect to the Corporation and its operating divisions as the Board of Directors may prescribe. Except as otherwise prescribed by the Board of Directors, such officers shall have the powers and duties commonly incident to their offices. Where more than one such Chief Executive Officer or Chief Financial Officer has been so appointed, each shall be authorized to execute documents on behalf of the Corporation as its chief executive officer or chief financial officer, as the case may be, for purposes of filing the same with governmental or regulatory authorities including, without limitation, the State Corporation Commission of the Commonwealth of Virginia and the Securities and Exchange Commission. The officers appointed by the Board of Directors shall include a Corporate Secretary who shall perform the duties set forth in Article XVIII and such other duties as are commonly incident to such office. The Board of Directors, in its discretion, may appoint one or more Vice Presidents and one or more assistant officers to any of the officers it appoints with the exception of any Chief Executive Officers, Presidents, Chief Operating Officers or Chief Financial Officers, and may appoint such other officers or agents as it may deem advisable and prescribe their powers and duties. Unless otherwise provided by the Board, any such officer or agent shall have the powers and duties commonly incident to his office. Except as otherwise provided by the Board of Directors, each Chief Executive Officer, President and Vice President shall have authority to sign certificates of stock, bonds, deeds and contracts and to delegate such authority in such manner as may be approved by a Chief Executive Officer or President. ARTICLE XV. Eligibility of Officers. The Chairman of the Board of Directors, any Vice Chairman of the Board of Directors, any Chief Executive Officer and any President of the Corporation shall be Directors. The office of Chief Executive Officer may be held by a person who does not also hold the office of President. In the case where a Chief Executive Officer who is not a President has been appointed by the Board of Directors, any President also appointed shall not be chief executive officer, but shall have such other powers and responsibilities as are prescribed by the Board of Directors and these Bylaws. Any person may hold more than one office provided, however, that none of the Corporate Secretary, any Treasurer, any Chief Financial Officer or any Controller shall at the same time hold the office of Chairman of the Board of Directors or any office as Chief Executive Officer or President. ARTICLE XVI. Chairman of the Board of Directors and Vice Chairman. 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. In the absence of the Chairman of the Board of Directors, the Vice Chairman of the Board of Directors, if one has been elected, shall perform his duties. The Vice Chairman, if any, shall also perform the duties commonly incident to his office and such other duties as the Board of Directors shall designate from time to time. In the absence of the Vice Chairman of the Board of Directors, or if no Vice Chairman has been elected, his duties shall be performed by a Chief Executive Officer of the Corporation. If more than one Chief Executive Officer has been appointed, the Chairman shall from time to time designate the order in which such chief executive officers shall serve in the event of such absences. ARTICLE XVII. Presidents; Vice Presidents --------------------------- In the event of the absence or disability of a Chief Executive Officer, the duties and powers of the Chief Executive Officer shall be performed and exercised by the President; and in the event of the absence or disability of a 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 order of priority set forth below. Where the absent or disabled Chief Executive Officer or President has been appointed for a division, the officers in the line of succession referred to in this Article shall, unless otherwise provided by the Board of Directors, be officers in the corresponding division. The order of priority among Vice Presidents for succession referred to above is: (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, 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 a Chief Executive Officer, a 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 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. Where a Treasurer has been appointed to serve for a division of the Corporation, he shall exercise the foregoing power and duties with respect to such division. 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 may resign at any time by giving written notice to the Board of Directors, to the Chairman of the Board of Directors, to a Chief Executive Officer 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 or without cause and elect his successor; but this provision is subject to Article III of the Articles of Incorporation, if and whenever the same may become applicable by the accrual of voting rights to the Preferred Stock. The Board of Directors, by vote of a majority of the entire Board, may remove any officer, agent or member of any Committees elected or appointed by them, 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, 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 a Chief Executive Officer, a President or a Vice President and by a 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 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, any Chief Executive Officer, President or 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, a Chief Executive officer, a President or the Corporate Secretary may himself attend any meeting of the shareholders of any such other corporation and there at vote or exercise any or all other powers of the Corporation as the shareholder of such other corporation. ARTICLE XXVII. Bonds, Debentures and Notes Issued Under an Indenture. All bonds, debentures and notes issued under an Indenture shall be signed by a Chief Executive Officer, 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 a 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 and debentures authenticated by a corporate trustee may be made manually or by facsimile. ARTICLE XXVIII. Amendments. All Bylaws shall be subject to alteration or repeal, and new Bylaws may be made by the affirmative vote of a majority of the Directors. The Shareholders entitled to vote, however, shall have the power to rescind, amend, alter or repeal the Bylaws and to enact Bylaws which, if expressly so provided, may not be amended, altered or repealed by the Board of Directors. 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 place of the meeting, which shall be the principal office of the Corporation at the time if feasible, but otherwise shall be any other place specified in the notice. The notice shall also specify the time 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; (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. EX-27 3 FINANCIAL DATA SCHEDULE
UT 3-MOS DEC-31-2000 MAR-31-2000 PRO-FORMA 9,107 863 1,485 276 0 11,731 2,738 17 1,015 3,770 135 509 3,771 0 0 185 179 140 27 15 3,000 11,731 1,126 72 867 939 187 14 201 71 130 10 120 93 0 397 0 0
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