-----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, JSFmPkKF5rT9RKf31fZGK2hnMyOPIoh8XFYA7fdjp8P3y1JeZymJu8OUs4tjBePo R9/8scVrSkmlNIiKniiQ3g== 0000950130-99-003143.txt : 19990520 0000950130-99-003143.hdr.sgml : 19990520 ACCESSION NUMBER: 0000950130-99-003143 CONFORMED SUBMISSION TYPE: 10-K405/A PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19981231 FILED AS OF DATE: 19990519 FILER: COMPANY DATA: COMPANY CONFORMED NAME: DOMINION RESOURCES INC /VA/ CENTRAL INDEX KEY: 0000715957 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRIC SERVICES [4911] IRS NUMBER: 541229715 STATE OF INCORPORATION: VA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K405/A SEC ACT: SEC FILE NUMBER: 001-08489 FILM NUMBER: 99630027 BUSINESS ADDRESS: STREET 1: 901 E BYRD ST, WEST TOWER STREET 2: P O BOX 26532 CITY: RICHMOND STATE: VA ZIP: 23219 BUSINESS PHONE: 8047755700 MAIL ADDRESS: STREET 1: P O BOX 26532 STREET 2: 901 EAST BYRD STREET CITY: RICHMOND STATE: VA ZIP: 23261 10-K405/A 1 AMENDMENT #1 TO FORM 10-K SECURITIES AND EXCHANGE COMMISION Washington, D.C. 20549 _______________________________________ FORM 10-K/A AMENDMENT TO APPLICATION OR REPORT Filed pursuant to Section 12, 13, and 15 (d) of THE SECURITIES EXCHANGE ACT OF 1934 ________________________________________ Dominion Resources, Inc. (Exact name of registrant as specified in charter) AMENDMENT NO. 1 TO FORM 10-K The undersigned registrant hereby amends the exhibits to its 1998 Annual Report on Form 10-K to include the following 1998 Annual Reports for the Dominion Resources, Inc. Employee Savings Plan, Dominion Subsidiary Savings Plan, and the Virginia Power Hourly Employee Savings Plan. Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this amendment to be signed on its behalf by the undersigned, thereunto duly authorized. DOMINION RESOURCES, INC. Registrant BY /s/ THOMAS N. CHEWNING ------------------ Thomas N. Chewning Executive Vice President, Chief Financial Officer Date: May 14, 1999 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 11-K ANNUAL REPORT Pursuant to Section 15(d) of the Securities Exchange Act of 1934 (Mark One): X ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE - ----- SECURITIES EXCHANGE ACT OF 1934. For the fiscal year ended December 31, 1998 or - ----- TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934. For the transition period from ___________ to ____________. Commission File number 333-09167 A. Full title of the plan and the address of the plan, if different from that of the issuer named below: Dominion Resources, Inc. Employee Savings Plan B. Name of issuer of the securities held pursuant of the plan and the address of its principal executive office: DOMINION RESOURCES, INC. P. O. Box 26532 120 Tredegar Street Richmond, Virginia 23261 DOMINION RESOURCES, INC. EMPLOYEE SAVINGS PLAN FINANCIAL STATEMENTS TABLE OF CONTENTS
Pages ---------- Independent Auditors' Report F-2 Financial Statements: Statements of Net Assets Available for Benefits as of December 31, 1998 and 1997 F-3 Statements of Changes in Net Assets Available for Benefits for the Years Ended December 31, 1998 and 1997 F-4 Notes to Financial Statements F-5 - F-20 Supplemental Schedules as of and for the year ended December 31, 1998: Item 27a Schedule of Assets Held for Investment Purposes F-21 Item 27d Schedule of Reportable Transactions F-22
F-1 INDEPENDENT AUDITORS' REPORT - ---------------------------- To the Organization, Compensation and Nominating Committee of the Board of Directors of Dominion Resources, Inc. We have audited the accompanying financial statements of the Dominion Resources, Inc. Employee Savings Plan (the Plan) as of December 31, 1998 and 1997 and for the years ended December 31, 1998 and 1997, listed in the Table of Contents on page F-1. These financial statements are the responsibility of the Plan's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, such financial statements present fairly, in all material respects, the net assets available for benefits of the Plan at December 31, 1998 and 1997, and the changes in net assets available for benefits for the years then ended in conformity with generally accepted accounting principles. Our audits were conducted for the purpose of forming an opinion on the basic financial statements taken as a whole. The accompanying supplemental schedules listed in the Table of Contents are presented for purposes of additional analysis and are not a required part of the basic financial statements, but are supplementary information required by the Department of Labor's Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. These schedules are the responsibility of the Plan's management. Such schedules have been subjected to the auditing procedures applied in our audit of the basic 1998 financial statements and, in our opinion, are fairly stated in all material respects when considered in relation to the basic financial statements taken as a whole. Richmond, Virginia May 14, 1999 F-2 DOMINION RESOURCES, INC. EMPLOYEE SAVINGS PLAN STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS December 31, 1998 and 1997
December 31, ASSETS 1998 1997 Investments (Notes 1 and 2): Dominion Resources, Inc., Common Stock $237,078,039 $227,358,045 Common/Collective Trusts 115,001,303 83,467,788 Interest in Certus Stable Value Fund (Note 7) 59,717,276 44,640,390 Mutual Funds 116,975,232 101,096,713 Loans To Participants 10,164,819 9,620,638 Total Investments 538,936,669 466,183,574 Receivables: Interest 292,331 232,683 Other 116,216 2,219,510 Total Receivables 408,547 2,452,193 Cash 654,894 123,233 Total Assets 540,000,110 468,759,000 Liabilities - Other 227,936 602,594 Net Assets Available for Benefits $539,772,174 $468,156,406
The accompanying notes are an integral part of the financial statements. F-3 DOMINION RESOURCES, INC. EMPLOYEE SAVINGS PLAN STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS For Years Ended December 31, 1998 and 1997
For Years Ended December 31, 1998 1997 Investment income: Net appreciation in fair value of investments (Note 5) $ 46,008,500 $ 51,284,949 Dividend income 17,098,672 17,266,136 Interest and other income 4,141,937 3,610,729 Total investment income 67,249,109 72,161,814 Contributions: Participant (Note 1) 23,753,692 23,543,017 Participating companies (Note 1) 7,977,919 7,457,675 Total additions 98,980,720 103,162,506 Benefits paid to participants 24,572,163 30,900,004 Administrative expenses 254,633 165,007 Total deductions 24,826,796 31,065,011 Net increase before transfer 74,153,924 72,097,495 Transfer of participants' assets to/(from) the Plan (to)/from other plans: (2,538,156) (64,727) Net increase 71,615,768 72,032,768 Net assets available for benefits: Beginning of year 468,156,406 396,123,638 End of year $539,772,174 $468,156,406
The accompanying notes are an integral part of the financial statements. F-4 NOTES TO FINANCIAL STATEMENTS YEARS ENDED DECEMBER 31, 1998 AND 1997 ______________________________________ 1. DESCRIPTION OF PLAN The following description of the Dominion Resources, Inc. Employee Savings Plan (the Plan) provides only general information. Participants should refer to the Plan document for a more complete description of the Plan's provisions. a. GENERAL - The Plan is a defined contribution pension plan covering all full-time salaried employees of the Participating Companies (see Note 1.d) who have six months of service and are age 18 or older. Virginia Electric and Power Company (the Company) a wholly-owned subsidiary of Dominion Resources, Inc. (DRI), is the designated Plan sponsor, fiduciary and administrator. Mellon Bank serves as the trustee of the Plan. The Plan is subject to the provisions of the Employee Retirement Income Security Act of 1974 (ERISA). b. CONTRIBUTIONS - January 1, 1997 - April 30, 1998: A maximum of 17% of the participant's eligible earnings and 9% of highly compensated employee's eligible earnings could be invested in the Plan. Of the 17%, up to 12% could be invested on a tax-deferred basis. The Participating Companies contribute a matching amount equivalent to 50% of each participant's contributions, not to exceed 3% of the participant's eligible earnings, which is used to purchase DRI common stock. May 1, 1998 - December 31, 1998: A maximum of 20% of the participant's eligible earnings and 10% of highly compensated employee's eligible earnings can be invested in the Plan. Of the 20%, up to 15% can be invested on a tax-deferred basis. The Participating Companies contribute a matching amount equivalent to 50% of each participant's contributions, not to exceed 3% of the participant's eligible earnings, which is used to purchase DRI common stock. c. PARTICIPANT ACCOUNTS - Each participant's account includes the effect of the participant's contributions and withdrawals, as applicable, and allocations of the Company's contributions, Plan earnings, and administrative expenses. Allocations are based on participant earnings or account balances, as defined. Forfeited balances of terminated participants' non-vested accounts are used to reduce future Participating Companies' contributions. The benefit to which a participant is entitled is the benefit that can be provided from the participant's account. F-5 d. PLAN PARTICIPANTS - Any subsidiary of DRI may adopt the Plan for the benefit of its qualified salaried employees subject to approval of the Board of Directors of the Company. Currently only Dominion Resources, Inc., Dominion Energy, Dominion Capital, Vidalia Audit, Inc. and Company employees are participating in the Plan. There were 5,306 and 5,443 participants in the Plan as of December 31, 1998 and 1997, respectively. e. VESTING - Participants become vested in their own contributions and the earnings on these amounts immediately, and in the participating companies' matching contributions and earnings after three years of service. Matching contributions vest immediately for participants aged 55 or older. f. INVESTMENT OPTIONS The Plan provides for employee contributions to be invested in the following: (1) Common Stock: Dominion Resources, Inc. (DRI) Common Stock Fund- All investments are in DRI Common Stock or cash equivalent investments for partial shares. (2) Interest in Certus Stable Value Fund: Certus Stable Value Fund - The fund invests in investment contracts of insurance companies and commercial banks and U.S. Government or agency backed bonds. (3) Mutual Funds: Premier Managed Income Fund - The fund invests primarily in investment-grade corporate and U.S. Government obligations having maturities of 10 years or less. Dreyfus Balanced Fund, Inc. - The fund invests in equity and debt securities of domestic and foreign issuers. The Crabbe Huson Equity Fund, Inc. - The fund invests in common stocks that have large market capitalization. Templeton Foreign Fund - The fund invests primarily in equity and debt securities of companies and governments outside the U.S. Warburg Pincus Emerging Growth Fund - The fund invests in equity securities of primarily domestic emerging growth companies. F-6 (4) Common/Collective Trust: Mellon EB Daily Liquidity Index Fund - The fund invests primarily in the 500 stocks of the S&P 500 and may also invest in exchange traded options and financial futures. Upon enrollment in the Plan, a participant may direct employee contributions in any option (except the loan fund) in 1% increments totaling to 100%. Changes in investment options may be made at any time and become effective with the subsequent pay period. Participants can make unlimited transfers among existing funds. Company matching contributions are automatically contributed into the DRI Common Stock fund. However, participants who are under age 50 may transfer 50% of the value of their Company Match Account into another investment option, while participants who are age 50 and over may transfer 100% of the value of the Company Match Account. g. LOANS TO PARTICIPANTS - Participants are eligible to secure loans against their plan account and repay the amount over a one to five- year period. The minimum loan amount is $1,000 and the maximum loan amount is the lesser of: . 50% of the vested account balance or . $50,000 (reduced by the maximum outstanding loan balance during the prior twelve months). Loan transactions are treated as a transfer between the respective investment fund and the loan fund. The loans are interest-bearing at one percentage point above the prime rate of interest. The rate is determined every quarter; however, the rate is fixed at the inception of the loan for the life of the loan. Participants make repayments to the Plan on a monthly basis. Any defaults in loans result in a reclassification of the remaining loan balances as taxable distributions to the participants. h. PAYMENT OF BENEFITS - Distributions from the Plan are recorded on the valuation date when a participant's valid withdrawal request is processed by the recordkeeper. On termination of service, a participant may elect to receive either a lump-sum amount equal to the value of the participant's vested interest in his or her account, or defer the payment to a future time no later than the year in which the participant attains age 70 1/2. There were no amounts payable to participants at December 31, 1998 and 1997. F-7 i. FLEXIBLE DIVIDEND - During the first quarter of 1998, the Board of Directors of the Company approved an amendment to the Plan that adopts a KSOP provision (combines the features of a 401K and an Employee Stock Ownership Plan) effective May 1, 1998. The KSOP allows participants the choice of (1) receiving cash dividends paid on vested shares held in their DRI Common Stock Fund or (2) continuing to reinvest the dividends in the fund. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES a. VALUATION OF INVESTMENTS: (1) DRI Common Stock Fund - The investments of the Stock Fund are stated at fair value based on the closing sales price reported on the New York Stock Exchange on the last business day of the year. (2) Mutual Funds - Investments in mutual funds are valued at quoted market prices which represent the net asset values of shares held by the Plan at year end. (3) Common/Collective Trusts - Investments in common/collective trust funds (funds) are stated at estimated fair values, which have been determined based on the unit values of the funds. Unit values are determined by the bank sponsoring such funds by dividing the fund's net assets by its units outstanding at the valuation dates. (4) Investment Contracts - The guaranteed investment contracts within the Certus Stable Value Fund are valued at contract value. Contract value represents contributions made under the contract, plus earnings, less Plan withdrawals and administrative expenses. b. INVESTMENT INCOME - Dividend income is recognized on the ex-dividend date. c. EXPENSES - The Plan's expenses are accrued as incurred and paid by the Plan, as provided by the Plan document. d. USE OF ESTIMATES - 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 assets and 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. F-8 3. INVESTMENTS EXCEEDING 5% OF NET ASSETS The following table represents the fair value of investments exceeding 5% of the Plan's net assets at each year end: 1998 1997 Investment at Fair Value as Determined by Quoted Market Price: DRI Common Stock $237,078,039 $227,358,045 Dreyfus Balanced Fund 51,201,732 47,064,871 Certus Stable Value 59,717,276 - Warburg Pincus Emerging Growth Fund 30,532,095 - Investments at Estimated Fair Value: Mellon EB Daily Liquidity Index Fund 114,990,106 82,903,904 4. NET APPRECIATION (DEPRECIATION) IN FAIR VALUE OF INVESTMENTS The Plan's investments (including investments bought, sold, as well as held during the year) appreciated (depreciated) in value by $46,008,500 in 1998 and $51,284,949 in 1997, as follows: a. Realized Gains 1998 1997 Investment at fair value as determined By quoted market price: Common Stock $ 5,767,642 $ 4,151,677 Interest in Certus Stable Value Fund 1,840 1,157 Mutual Funds 4,441,064 9,873,380 10,210,546 14,026,214 Investments at estimated fair value: Common/Collective Trust Funds 4,031,493 3,703,099 $14,242,039 $17,729,313 F-9 b. Unrealized Gains/(Loss) 1998 1997 Investment at fair value as determined By quoted market price: Common Stock $15,188,990 $17,986,445 Mutual Funds (4,378,444) (1,683,672) 10,810,546 16,302,773 Investments at estimated fair value: Common/Collective Trust Funds 20,955,915 17,252,863 $31,766,461 $33,555,636 c. Net Appreciation/(Depreciation) in Fair Value of Investment Investment at fair value as determined By quoted market price: Common Stock $20,956,632 $22,138,122 Interest in Certus Stable Value Fund 1,840 1,157 Mutual Funds 62,620 8,189,708 21,021,092 30,328,987 Investments at estimated fair value: Common/Collective Trust Funds 24,987,408 20,955,962 $46,008,500 $51,284,949 5. PLAN TERMINATION Although it has not expressed any intention to do so, the Company has the right under the Plan to discontinue its contributions at any time and to terminate the Plan subject to the provisions set forth in ERISA. In the event of any termination of the Plan, or upon complete or partial discontinuance of contributions, the accounts of each affected participant shall become fully vested. 6. BY FUND INFORMATION The net assets available for benefits and the changes in net assets available for benefits by investment fund are as follows: F-10 Dominion Resources, Inc. Employee Savings Plan Statement of Net Assets Available for Benefits by Fund December 31, 1998
Participant Directed Mellon EB DRI Common Certus Stable Dreyfus Daily Liquidity Crabbe Huson Assets Total Stock Fund Value Fund Balanced Fund Index Fund Equity Fund - ------ Investments (Notes 1 and 2): Common stock $237,078,039 $95,590,459 Common/collective trust 115,001,303 4,089 $114,990,106 Interest in Certus Stable Value Fund 59,717,276 $59,717,276 Mutual funds 116,975,232 $51,201,732 $18,531,108 Loans 10,164,819 Total investments 538,936,669 95,594,548 59,717,276 51,201,732 114,990,106 18,531,108 Receivables: Interest 292,331 683 290,606 Other 116,216 11,090 426 Total receivables 408,547 11,773 290,606 426 Cash 654,894 55,014 46,260 69,707 161,051 72,145 Total assets 540,000,110 95,661,335 60,054,142 51,271,439 115,151,157 18,603,679 Liabilities - other 227,936 68,264 42,440 426 Net assets available for benefits $539,772,174 $95,593,071 $60,011,702 $51,271,439 $115,151,157 $18,603,253
F-11 Dominion Resources, Inc. Employee Savings Plan Statement of Net Assets Available for Benefits by Fund December 31, 1998
Non-Participant Participant Directed (Cont'd) Directed Premier Templeton Warburg Pincus Managed Foreign Emerging Loan DRI Common Assets Income Fund Fund Growth Fund Fund Stock Fund - ------ Investments (Notes 1 and 2): Common stock $141,487,580 Common/collective trust $ 898 6,210 Interest in Certus Stable Value Fund Mutual funds $4,548,591 $12,161,706 $30,532,095 Loans 10,164,819 Total investments 4,548,591 12,161,706 30,532,095 10,165,717 141,493,790 Receivables: Interest 4 1,038 Other 25,000 79,700 Total receivables 25,000 4 80,738 Cash 13,281 40,765 116,073 (2,963) 83,561 Total assets 4,586,872 12,202,471 30,648,168 10,162,758 141,658,089 Liabilities - other 570 116,236 Net assets available for benefits $4,586,872 $12,202,471 $30,647,598 $10,162,758 $141,541,853
F-12 Dominion Resources, Inc. Employee Savings Plan Statement of Net Assets Available for Benefits by Fund December 31, 1997
Participant Directed Dreyfus Mellon EB DRI Common Certus Stable Balanced Daily Liquidity Crabbe Huson Assets Total Stock Fund Value Fund Fund Index Fund Equity Fund - ------ Investments (Notes 1 and 2): Common stock $227,358,045 $97,187,920 Common/collective trust 83,467,788 192,941 $82,903,904 Interest in Certus Stable Value Fund 44,640,390 $44,640,390 Mutual funds 101,096,713 $47,064,871 $16,949,424 Loans 9,620,638 Total investments 466,183,574 97,380,861 44,640,390 47,064,871 82,903,904 16,949,424 Receivables: Interest 232,683 2,603 225,973 Other 2,219,510 1,340,584 Total receivables 2,452,193 1,343,187 225,973 Cash 123,233 27,211 730 93,573 597 Total assets 468,759,000 98,751,259 44,867,093 47,158,444 82,904,501 16,949,424 Liabilities - other 602,594 74,403 130,247 117,551 Net assets available for benefits $468,156,406 $98,676,856 $44,867,093 $47,028,197 $82,904,501 $16,831,873
F-13 Dominion Resources, Inc. Employee Savings Plan Statement of Net Assets Available for Benefits by Fund December 31, 1997
Non-Participant Participant Directed (Cont'd) Directed Premier Templeton Warburg Pincus Managed Foreign Emerging Loan DRI Common Assets Income Fund Fund Growth Fund Fund Stock Fund ------ Investments (Notes 1 and 2): Common stock $130,170,125 Common/collective trust $ 112,524 258,419 Interest in Certus Stable Value Fund Mutual funds $3,176,350 $11,224,996 $22,681,072 Loans 9,620,638 Total investments 3,176,350 11,224,996 22,681,072 9,733,162 130,428,544 Receivables: Interest 513 3,594 Other 878,926 Total receivables 513 882,520 Cash (2) (2,943) 4,067 Total assets 3,176,350 11,224,994 22,681,072 9,730,732 131,315,131 Liabilities - other 7,409 71,872 115,164 85,948 Net assets available for benefits $3,168,941 $11,153,122 $22,565,908 $9,730,732 $131,229,183
F-14 Dominion Resources, Inc. Employee Savings Plan Statement of Changes in Net Assets Available for Benefits by Fund For Year Ended December 31, 1998
Participant Directed Certus Dreyfus Mellon EB DRI Common Stable Balanced Daily Liquidity Crabbe Huson Total Stock Fund Value Fund Fund Index Fund Equity Fund Investment income: Net appreciation/(depreciation) in fair value of investments (Note 5) $ 46,008,500 $ 8,298,826 $ 1,840 $ 3,097,108 $ 23,151,103 $(1,943,806) Dividend income 17,098,672 5,225,488 1,416,196 1,754,748 107,305 Interest and other income 4,141,937 10,314 3,113,246 Total investment income (Loss) 67,249,109 13,534,628 3,115,086 4,513,304 24,905,851 (1,836,501) Contributions: Participant (Note 1) 23,753,692 2,022,200 2,949,254 2,723,646 6,181,154 3,172,525 Participating companies (Note 1) 7,977,919 Total additions 98,980,720 15,556,828 6,064,340 7,236,950 31,087,005 1,336,024 Benefits paid to participants 24,572,163 4,611,601 4,618,487 1,968,861 3,588,827 873,000 Administrative expenses 254,633 36,113 (62,069) 13,648 67,127 6,936 Total deductions 24,826,796 4,647,714 4,556,418 1,982,509 3,655,954 879,936 Net increase/(decrease) before transfers 74,153,924 10,909,114 1,507,922 5,254,441 27,431,051 456,088 Interfund transfers, net (13,668,130) 14,498,995 (671,480) 5,385,834 1,324,376 Net transfer of participants' assets between plans (2,538,156) (324,769) (862,308) (339,719) (570,229) (9,084) Net increase 71,615,768 (3,083,785) 15,144,609 4,243,242 32,246,656 1,771,380 Net assets available for benefits: Beginning of year 468,156,406 98,676,856 44,867,093 47,028,197 82,904,501 16,831,873 End of year $539,772,174 $ 95,593,071 $60,011,702 $51,271,439 $115,151,157 $18,603,253
F-15 Dominion Resources, Inc. Employee Savings Plan Statement of Changes in Net Assets Available for Benefits by Fund For Year Ended December 31, 1998
Non-Participant Participant Directed (Cont'd) Directed Premier Templeton Warburg Pincus Managed Foreign Emerging Loan DRI Common Income Fund Income Fund Growth Fund Fund Stock Fund Investment income: Net appreciation/(depreciation) In fair value of investments (Note 5) $ (78,288) $(1,012,394) $ 1,836,305 $ 12,657,806 Dividend income 298,672 326,074 7,970,189 Interest and other income $ 1,002,645 15,732 Total investment income (Loss) 220,384 (686,320) 1,836,305 1,002,645 20,643,727 Contributions: Participant (Note 1) 496,458 1,738,319 4,470,136 Participating companies (Note 1) 7,977,919 Total additions 716,842 1,051,999 6,306,441 1,002,645 28,621,646 Benefits paid to participants 179,906 514,443 1,008,975 174,206 7,033,857 Administrative expenses 1,235 3,948 9,914 122,700 55,081 Total deductions 181,141 518,391 1,018,889 296,906 7,088,938 Net increase/(decrease) before transfers 535,701 533,608 5,287,552 705,739 21,532,708 Interfund transfers, net 870,762 547,672 2,802,505 (320,097) (10,770,437) Net transfer of participants' assets between plans 11,468 (31,931) (8,367) 46,384 (449,601) Net increase 1,417,931 1,049,349 8,081,690 432,026 10,312,670 Net assets available for benefits: Beginning of year 3,168,941 11,153,122 22,565,908 9,730,732 131,229,183 End of year $4,586,872 $12,202,471 $30,647,598 $10,162,758 $141,541,853
F-16 Dominion Resources, Inc. Employee Savings Plan Statement of Changes in Net Assets Available for Benefits by Fund For Year Ended December 31, 1997
Participant Directed Certus Mellon EB DRI Common Stable Dreyfus Daily Liquidity Crabbe Huson Total Stock Fund Value Fund Balanced Fund Index Fund Equity Fund Investment income: Net appreciation/(depreciation) In fair value of investments (Note 5) $ 51,284,949 $ 9,298,012 $ 1,158 $ 5,627,656 $18,009,278 $ 2,403,589 Dividend income 17,266,136 6,363,373 848,922 1,532,321 33,431 Interest and other income 3,610,729 19,056 2,633,317 245,734 Total investment income 72,161,814 15,680,441 2,634,475 6,722,312 19,541,599 2,437,020 Contributions: Participant (Note 1) 23,543,017 2,615,112 3,173,056 2,565,734 5,493,143 3,056,811 Participating companies (Note 1) 7,457,675 Total additions 103,162,506 18,295,553 5,807,531 9,288,046 25,034,742 5,493,831 Benefits paid to participants 30,900,004 6,676,627 4,887,344 3,327,585 4,290,462 349,371 Administrative expenses 165,007 39,392 20,203 13,516 47,181 4,608 Total deductions 31,065,011 6,716,019 4,907,547 3,341,101 4,337,643 353,979 Net increase/(decrease) before transfers 72,097,495 11,579,534 899,984 5,946,945 20,697,099 5,139,852 Interfund transfers, net (17,650,575) 4,542,962 2,097,143 5,045,450 4,657,377 Net transfer of participants' assets between plans (64,727) 225,445 9,489 (124,026) (71,441) 24,752 Net increase 72,032,768 (5,845,596) 5,452,435 7,920,062 25,671,108 9,821,981 Net assets available for benefits: Beginning of year 396,123,638 104,522,452 39,414,658 39,108,135 57,233,393 7,009,892 End of year $468,156,406 $ 98,676,856 $44,867,093 $47,028,197 $82,904,501 $16,831,873
F-17 Dominion Resources, Inc. Employee Savings Plan Statement of Changes in Net Assets Available for Benefits by Fund For Year Ended December 31, 1997
Non-Participant Participant Directed (Cont'd) Directed Premier Templeton Warburg Pincus Managed Foreign Emerging Loan DRI Common Income Fund Income Fund Growth Fund Fund Stock Fund Investment income: Net appreciation/(depreciation) in fair value of investments (Note 5) $ 56,494 $ 101,969 $ 2,946,684 $ 12,840,109 Dividend income 133,661 310,931 8,043,497 Interest and other income 10,853 $ 675,379 26,390 Total investment income 201,008 412,900 2,946,684 675,379 20,909,996 Contributions: Participant (Note 1) 433,846 1,792,031 4,413,284 Participating companies (Note 1) 7,457,675 Total additions 634,854 2,204,931 7,359,968 675,379 28,367,671 Benefits paid to participants 182,751 500,694 649,302 789,389 9,246,479 Administrative expenses 620 3,046 6,716 (24,451) 54,176 Total deductions 183,371 503,740 656,018 764,938 9,300,655 Net increase/(decrease) before transfers 451,483 1,701,191 6,703,950 (89,559) 19,067,016 Interfund transfers, net 1,245,035 4,957,435 6,053,378 2,321,434 (13,269,639) Net transfer of participants' assets between plans (367) 12,896 72,957 56,978 (271,410) Net increase 1,696,151 6,671,522 12,830,285 2,288,853 5,525,967 Net assets available for benefits: Beginning of year 1,472,790 4,481,600 9,735,623 7,441,879 125,703,216 End of year $3,168,941 $11,153,122 $22,565,908 $9,730,732 $131,229,183
F-18 7. PLAN INTEREST IN THE CERTUS STABLE VALUE FUND The Plan's investments are in a Master Trust which was established for the investment of assets for the Plan and other Company sponsored plans (the Virginia Power Hourly Employee Savings Plan and the Dominion Subsidiary Savings Plan). The assets of the Master Trust are held by Mellon Bank. As of December 31, 1998 and 1997, the assets of the Master Trust were separately maintained by each Company sponsored plan, with the exception of the Certus Stable Value Fund (Certus Fund). As of December 31, 1998 and 1997, the Plan's interest in the net assets of the Certus Fund was approximately 73% and 70%, respectively. Investment income and administrative expenses relating to the Certus Fund are allocated to the individual plans based upon average monthly balances invested by each plan. The following table presents the fair value of the undivided investments in the Certus Fund held by the Master Trust:
December 31, 1998 1997 Investments at fair value: Guaranteed Investment Contracts $74,692,313 $58,085,100 Common/collective trust 9,764,282 7,012,518 Total $84,456,595 $65,097,618 Investment income for the Certus Stable Value Fund is as follows: Net appreciation in fair value of investments $ 3,755,318 $ 426,972 Interest 4,477,951 3,883,054 Total $ 8,233,269 $ 4,310,026
8. VALUATION OF INVESTMENT CONTRACTS The Plan's investment contracts are fully-benefit responsive and have been presented on the financial statements at contract value. The Plan's portion of the contracts has an estimated fair value of $60,019,382 and $44,875,042 at December 31, 1998 and 1997, respectively. The underlying investment contracts are carried at variable and fixed rates with expiration dates through 2007. The variable rates are reviewed and adjusted quarterly. The average yield on the contracts are estimated at 6.26% and 6.57% at December 31, 1998 and December 31, 1997. 9. TAX STATUS The Plan is a qualified employees' profit sharing trust under Sections 401(a) and 401(k) of the Internal Revenue Code and, as such, is exempt from Federal income taxes under Section 501(a). Pursuant to Section 402(a) of the Internal Revenue Code, a participant is not taxed on the income and pretax contributions allocated to the participant's account until such time as the participant or the participant's beneficiaries receive distributions from the Plan. F-19 The Plan obtained its latest determination letter on November 9, 1993, in which the Internal Revenue Service stated that the Plan, as then designed, was in compliance with the applicable requirements of the Internal Revenue Code. The Plan has been amended since receiving the determination letter. However, the Company believes that the Plan is currently designed and operating in compliance with the applicable requirements of the Internal Revenue Code. 10. SUBSEQUENT EVENT Effective April 1, 1999 two of the current funds were replaced. The Crabbe Huson Equity Fund was replaced by the MAS Mid Cap Value Fund and the Dreyfus Balanced Fund, Inc. was replaced by the Dreyfus Premier Balanced Fund. No action was required of the participants as a result of these changes. The same payroll elections continued for participants contributing to either the Crabbe Huson Equity or the Dreyfus Balanced Fund, Inc. as of April 1, 1999. A balance in either of the replaced funds, as of March 31, 1999 was automatically transferred to the corresponding new fund as of April 1, 1999. Participants who did not want balances transferred to the new funds were given the opportunity to reallocate balances among the other investment funds on or before March 31, 1999. F-20 DOMINION RESOURCES, INC. EMPLOYEE SAVINGS PLAN SUPPLEMENTAL SCHEDULE AS OF DECEMBER 31, 1998 ITEM 27a SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES Current Description Cost Value Dominion Resources, Inc., Common Stock $183,264,961 $237,078,039 Interest in Certus Stable Value Fund Certus Stable Value Fund 59,717,276 59,717,276 Common/Collective Trusts DRI Common Stock Fund 10,299 10,299 Loan Fund 898 898 Mellon S&P 500 Index Daily Fund 114,435,506 114,990,106 114,446,703 115,001,303 Mutual Funds Crabbe Huson Equity Fund Inc. 18,778,520 18,531,108 Dreyfus Balanced Fund Inc. 51,299,452 51,201,732 Premier Managed Income Fund 4,544,119 4,548,591 Templeton Foreign Fund Inc. 12,289,457 12,161,706 Warburg Pincus Emerging Growth Fund 30,235,563 30,532,095 117,147,111 116,975,232 Loans to Participants 10,164,819 10,164,819 Total Assets Held for Investment $484,740,870 $538,936,669 F-21 DOMINION RESOURCES, INC. EMPLOYEE SAVINGS PLAN SUPPLEMENTAL SCHEDULE AS OF DECEMBER 31, 1998 ITEM 27d SCHEDULE OF REPORTABLE TRANSACTIONS The assets of the Dominion Resources, Inc. Employee Savings Plan were combined with the assets of the Virginia Power Hourly Employee Savings Plan and the Dominion Subsidiary Savings Plan in a master trust for investment purposes until June 1, 1996. Effective June 1, 1996, a new master trust was established which does not combine the assets of the Dominion Resources, Inc. Employee Savings Plan with the assets of the Virginia Power Hourly Employee Savings Plan and the Dominion Subsidiary Savings Plan, except for the Certus Stable Value Fund. Schedules that report the 5% transactions which transpired in 1998 for this trust were filed in paper format as Exhibit 99(i). F-22 SECURITIES AND EXCHANGE COMMISION WASHINGTON, D.C. 20549 FORM 11-K ANNUAL REPORT Pursuant to Section 15 (d) of the Securities Exchange Act of 1934 (Mark One) : X A REPORT PURSUANT TO SECTION 15 (D) OF THE SECURITIE - ----- EXCHANGE ACT OF 1934. For the fiscal year ended December 31, 1998 OR TRANSITION REPORT PURSUANT TO SECTION 15 (D) of the securities exchange - ----- act of 1934. For the transition period from ________ to _________ Commission File number 333-09167 A. Full title of the plan and the address of the plan, if different from that of the issuer named below: Dominion Subsidiary Savings Plan B. Name of issuer of the securities held pursuant to the plan and the address of its principal executive office: DOMINION RESOURCES, INC. P.O. Box 26532 120 Tredegar Street Richmond, Virginia 23261 DOMINION SUBSIDIARY SAVINGS PLAN. FINANCIAL STATEMENTS TABLE OF CONTENTS
Pages ----- Independent Auditors' Report F-2 Financial Statements: Statements of Net Assets Available for Benefits as of December 31, 1998 and 1997 F-3 Statements of Changes in Net Assets Available for Benefits for the Years Ended December 31, 1998 and 1997 F-4 Notes to Financial Statements F-5 - F-20 Supplemental Schedules as of December 31, 1998: Item 27a - Schedule of Assets Held for Investment Purposes F-21 Item 27d - Schedule of Reportable Transactions F-22
Schedules Omitted: The following schedules are omitted because of the absence of the conditions under which they are required, or because the required information is included in the financial statements or notes thereto: Schedules I, II and III. F-1 INDEPENDENT AUDITORS'; REPORT - ----------------------------- To the Organization, Compensation and Nominating Committee of the Board of Directors of Dominion Resources, Inc. We have audited the accompanying financial statements of the Dominion Subsidiary Savings Plan (the Plan) as of December 31, 1998 and 1997 and for the years ended December 31, 1998 and 1997, listed in the Table of Contents on page F-1. These financial statements are the responsibility of the Plan's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, such financial statements present fairly, in all material respects, the net assets available for benefits of the Plan at December 31, 1998 and 1997, and the changes in net assets available for benefits for the years ended December 31, 1998 and 1997 in conformity with generally accepted accounting principles. Our audits were conducted for the purpose of forming an opinion on the basic financial statements taken as a whole. The accompanying supplemental schedules listed in the Table of Contents are presented for purposes of additional analysis and are not a required part of the basic financial statements, but are supplementary information required by the Department of Labor's Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. These schedules are the responsibility of the Plan's management. Such schedules have been subjected to the auditing procedures applied in our audit of the basic 1998 financial statements and, in our opinion, are fairly stated in all material respects when considered in relation to the basic financial statements taken as a whole. Richmond, Virginia May 14, 1999 F-2 DOMINION RESOURCES, INC. DOMINION SUBSIDIARY SAVINGS PLAN STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS December 31, ASSETS 1998 1997 ------ Investments (Notes 1 and 2): Dominion Resources, Inc., Common Stock $2,422,703 $1,531,994 Common/Collective Trusts 1,654,721 863,944 Interest in Certus Stable Value Fund 1,082,468 625,665 Mutual Funds 3,108,641 2,079,050 Loans To Participants 291,450 231,367 Total Investments 8,559,983 5,332,020 Receivables: Interest 8,248 4,657 Contributions: Participants 99,694 47,803 Participating companies 34,210 14,299 Total receivables 142,152 66,759 Other 386 3,777 Total assets 8,702,521 5,402,556 LIABILITIES Other Liabilities 4,246 Net Assets Available for Benefits $8,698,275 $5,402,556 The accompanying notes are an integral part of the financial statements. F-3 DOMINION RESOURCES, INC. DOMINION SUBSIDIARY SAVINGS PLAN STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS For the Years Ended December 31, 1998 1997 Investment income: Dividends $ 207,416 $ 108,309 Interest and other 71,377 63,535 Net appreciation in fair value of investments (Note 4) 511,028 577,340 Total investment income 789,821 749,184 Contributions (Note 1): Participants 1,881,460 1,080,983 Participating companies 625,919 397,339 Total additions 3,297,200 2,227,506 Benefits paid to participants 501,399 277,929 Administrative expense 12,424 6,314 Total Deductions 513,823 284,243 Net increase before transfers 2,783,377 1,943,263 Transfer of participants' assets to the Plan from other plans 512,342 1,591,698 Net assets available for benefits: Beginning of year 5,402,556 1,867,595 End of year $8,698,275 $5,402,556 The accompanying notes are an integral part of the financial statements. F-4 NOTES TO FINANCIAL STATEMENTS YEARS ENDED DECEMBER 31, 1998 AND 1997 1. DESCRIPTION OF PLAN The following description of the Dominion Subsidiary Savings Plan ( the "Plan") provides only general information. Participants should refer to the Plan document for a more complete description of the Plan's provisions. a) GENERAL The Plan is a defined contribution pension plan covering all employees of Dominion Land Management Company; Carthage Energy Services, Inc.; Waterford Management Company; Stonehouse Management Company; Saxon Mortgage, Inc.; Meritech Mortgage Services, Inc.; America's MoneyLine, Inc.; Mortgage Finance, Inc.; Governor's Land Management Company, Inc.; Old North State Management Company; Dominion Appalachian Development, Inc,; Two Rivers Country Club; Dominion Energy Services, Inc., Dominion Midwest Energy; Great Lakes Compression, Inc.; First Dominion Capital, LLC; and OptaCor Financial Services Company (the Participating Companies). Employees are eligible who have six months of service and are age 18 or older and are scheduled to work or actually work at least 1,000 hours a year as a regular full-time employee or part-time employee. Dominion Capital, Inc. (the "Company"), a wholly-owned subsidiary of Dominion Resources (DRI), is the designated Plan sponsor and fiduciary . DRI is the plan administrator. Mellon Bank serves as the trustee of the Plan. The Plan is subject to the provisions of the Employee Retirement Income Security Act of 1974 (ERISA). b) CONTRIBUTIONS A maximum of 17% (20% as of May 1, 1998) of the participant's eligible earnings can be invested in the Plan. Of this 17%, up to 12% (15% as of May 1, 1998) can be invested on a tax-deferred basis. The Participating Companies contribute a matching amount equivalent to 50% of each participant's contributions, not to exceed 3% of the participant's eligible earnings, which is used to purchase Dominion Resources common stock. c) PARTICIPANT ACCOUNTS Each participant's account is credited with the participant's contributions, as applicable, and allocations of (a) the Company's contributions and (b) Plan earnings, and debited with withdrawals and an allocation of administrative expenses. Allocations are based on participant earnings or account balances, as defined. Forfeited balances of terminated participants' nonvested accounts are used to reduce future Company contributions. The benefit to which a participant is entitled is the benefit that can be provided from the participant's account. F-5 d) PLAN PARTICIPANTS There were 525 and 422 participants in the Plan as of December 31, 1998 and 1997, respectively. e) VESTING Participants become vested in their own contributions and the earnings on these amounts immediately and in the Participating Companies' matching contributions and earnings after three years of service. f) INVESTMENT OPTIONS Upon enrollment in the Plan, a participant may direct employee contributions in any option (except the loan fund) in 1% increments totaling to 100%. Changes in investment options may be made at any time and become effective as soon as administratively practicable. Participants can make unlimited transfers among existing fund balances. Participating Companies' matching contributions are originally invested in DRI Common Stock. However, participants who are under age 50 may transfer 50% of the value of the stock in the Company Match Account into another investment option, while participants who are age 50 and over may transfer 100% of the value of the Company Match Account. The Plan provides for employee contributions to be invested in the following funds: Dominion Resources, Inc. (DRI) Common Stock Fund - All investments are in DRI Common Stock Certus Stable Value Fund - The fund invests in investment contracts of insurance companies and commercial banks and U.S. Government or agency backed bonds. Premier Managed Income Fund - The fund invests mainly in U. S. Government securities and corporate bonds, but may also invest in foreign securities. Dreyfus Balanced Fund, Inc. - The fund invests in equities, fixed income securities and cash equivalents. Mellon EB Daily Liquidity Index Fund - The fund invests primarily in the 500 stocks of the S&P 500 and may also invest in exchange traded options and financial futures. The Crabbe Huson Equity Fund, Inc. - The fund may invest in domestic and foreign securities. F-6 Warburg Pincus Emerging Growth Fund - The fund invests in equity securities of primarily domestic emerging growth companies. Templeton Foreign Fund - The fund invests primarily in foreign securities and bonds. LOANS TO PARTICIPANTS Participants are eligible to secure loans against their Plan assets. The maximum loan amount is the lesser of: . 50% of the vested account balance or . $50,000 (reduced by the maximum outstanding loan balance during the prior twelve months) Loan transactions are treated as a transfer between the respective investment funds to the loan fund. The loans are interest-bearing at one percentage point above the prime rate of interest. The rate is determined every quarter, however, the rate is fixed at the inception of the loan for the life of the loan. Loan terms range from one to five years. Participants make repayments to the Plan on a monthly basis. Any defaults in loans result in a reclassification of the remaining loan balances as taxable distributions to the participants. g) PAYMENT OF BENEFITS On termination of service, a participant may elect to receive immediately a lump-sum amount equal to the value of the participant's vested interest in his or her account, or, if the vested balance exceeds $5,000, a lump sum distribution any time prior to reaching age 70 1/2. There were no amounts payable to such participants at December 31, 1998 and 1997. h) FLEXIBLE DIVIDEND During the first quarter of 1998, the Board of Directors of the Company approved an amendment to the Plan that adopts a KSOP provision (combines the features of a 401K and an Employee Stock Ownership Plan) effective May 1, 1998. The KSOP allows participants the choice of (1) receiving cash dividends paid on vested shares held in their DRI Common Stock Fund or (2) continuing to reinvest the dividends in the fund. F-7 i) USE OF ESTIMATES 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 assets and 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. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES a) VALUATION OF INVESTMENTS: (1) Stock Fund - the investments of the Stock Fund are stated at fair value based on closing sales prices reported on recognized securities exchanges on the last business day of the year. (2) Common/Collective Trusts - Investments in common/collective trust funds (funds) are stated at estimated fair values, which have been determined based on the unit values of the funds. Unit values are determined by the bank sponsoring such funds by dividing the fund's net assets by its units outstanding at the valuation dates. (3) Investment Contracts - The guaranteed investment contracts within the Certus Stable Value Fund are valued at contract value. Contract value represents contributions made under the contract, plus earnings, less Plan withdrawals and administrative expense. (4) Mutual Funds - Investments in mutual funds are valued at quoted market prices which represent the net asset values of shares held by the Plan at year-end. (5) Loans to Participants - The loans to participants are valued at cost plus accrued interest which approximates fair value. (b) INVESTMENT INCOME - Dividend income is recognized on the ex-dividend date. (c) EXPENSES - The Plan's expenses are accrued as incurred and paid by the Plan, as provided by the Plan document. F-8 3. INVESTMENTS EXCEEDING 5% OF NET ASSETS The following table represents the fair value of investments exceeding 5% of the Plan's net assets at each year end: 1998 1997 Investment at Fair Value as Determined by Quoted Market Price: DRI Common Stock $2,422,703 $1,531,994 Dreyfus Balance 895,560 627,790 Crabbe Huson Equity 790,631 549,158 Warburg Pincus Emerging Growth 872,189 537,412 Investments at Estimated Fair Value: Certus Stable Value $1,082,468 $ 625,665 Mellon EB Daily Liquidity Index 1,649,670 844,580 F-9 4. NET APPRECIATION IN FAIR VALUE OF INVESTMENTS The Plan's investments (including investments bought, sold, as well as held during the year) appreciated in value by $511,028 in 1998 and $577,340 in 1997, as follows: 1998 1997 Investment at Fair Value as Determined by Quoted Market Price: Common Stock $238,003 $186,788 Mutual Funds -14,133 228,896 223,870 415,684 Investments at Estimated Fair Value: Common/Collective Trust Funds 287,158 161,656 Net change in fair value $511,028 $577,340 5. PLAN TERMINATION Although it has not expressed any intention to do so, the Company has the right under the Plan to discontinue its contributions at any time and to terminate the Plan subject to the provisions set forth in ERISA. In the event of any termination of the Plan, or upon complete or partial discontinuance of contributions, the accounts of each affected participant shall become fully vested. 6. BY FUND INFORMATION The net assets available for benefits on a by fund basis and the changes in net assets available for benefits on a by fund basis are as follows: F-10 EMPLOYEE SAVINGS PLAN Statement of Net Assets Available For Benefits by Fund December 31, 1998
Participant Directed Mellon EB DRI Common Certus Stable Dreyfus Daily Liquidity Crabbe Huson Assets Total Stock Fund Value Fund Balance Fund Index Fund Equity Fund Investments: Common Stock $2,422,703 $1,077,169 Common/Collective Trust 1,654,721 $1,649,670 Interest in Certus Stable Value Fund 1,082,468 $1,082,468 Mutual Funds 3,108,641 $895,560 $790,631 Loans Receivable 291,450 Total Investments 8,559,983 1,077,169 1,082,468 895,560 1,649,670 790,631 Receivables: Interest Receivable 8,248 5,078 Contribution receivable: Participant 99,694 7,891 8,451 14,321 24,583 16,799 Participating Companies 34,210 Total receivables 142,152 7,891 13,529 14,321 24,583 16,799 Other 386 193 Total Assets 8,702,521 1,085,060 1,095,997 909,881 1,674,446 807,430 Liabilities Other Liabilities 4,246 64 3,629 Net Assets Available for Benefits $8,698,275 $1,084,996 $1,092,368 $909,881 $1,674,446 $807,430
F-11 DOMINION SUBSIDIARY SAVINGS PLAN Statement of Net Assets Available For Benefits by Fund December 31, 1998
Participant Directed (Cont'd) Non-Participant Directed Premier Templeton Warburg Pincus Managed Foreign Emerging Loan DRI Common Assets Income Fund Fund Growth Fund Fund Stock Fund Investments: Common Stock $1,345,534 Common/Collective Trust $ 3,698 1,353 Interest in Cettus Stable Value Fund Mutual Funds $223,389 $326,872 $872,189 Loans Receivable 291,450 Total Investments 223,389 326,872 872,189 295,148 1,346,887 Receivables: Interest Receivable 1,233 1,845 92 Contribution receivable: Participant 3,756 7,901 15,992 Participating Companies 34,210 Total receivables 4,989 7,901 15,992 1,845 34,302 Other 193 Total Assets 228,378 334,773 888,374 296,993 1,381,189 Liabilities Other Liabilities 553 Net Assets Available for Benefits $228,378 $334,773 $888,374 $296,993 $1,380,636
F-12 DOMINION SUBSIDIARY SAVINGS PLAN Statement of Net Assets Available for Benefits by Fund December 31, 1997
Participant Directed Mellon EB DRI Common Certus Stable Dreyfus Daily Liquidity Crabbe Huson Assets Total Stock Fund Value Fund Balance Fund Index Fund Equity Fund - ------ Investments: Common Stock $1,531,994 $841,960 Common/Collective Trust 863,944 10,695 $844,580 Interest in Certus Stable Value Fund 625,665 $625,665 Mutual Funds 2,079,050 $627,790 $549,158 Loans Receivable 231,367 Total Investments 5,332,020 852,655 625,665 627,790 844,580 549,158 Receivables: Interest Receivable 4,657 64 3,271 Contribution Receivable: Participants 47,803 4,671 4,565 6,350 9,721 8,306 Participating companies 14,299 Total receivables 66,759 4,735 7,836 6,350 9,721 8,306 Other 3,777 141 559 Total Assets 5,402,556 857,531 633,501 634,140 854,301 558,023 Other Liabilities Net Assets Available for Benefits $5,402,556 $857,531 $633,501 $634,140 $854,301 $558,023
F-13 DOMINION SUBSIDIARY SAVINGS PLAN Statement of Net Assets Available For Benefits by Fund December 31, 1997
Non-Participant Participant Directed (Cont'd) Directed Premier Templeton Warburg Pincus Managed Foreign E erging Loan DRI Common Assets Income Fund Fund Growth Fund Fund Stock Fund - ------ Investments: Common Stock $690,034 Common/Collective Trust $ 511 8,158 Interest in Certus Stable Value Fund Mutual Funds $111,431 $253,259 $537,412 Loans Receivable 231,367 Total Investments 111,431 253,259 537,412 231,878 698,192 Receibables: Interest Receivable 1,252 70 Contribution Receivable: Participant 1,230 4,807 8,153 Participating Companies 14,299 Total receivables 1,230 4,807 8,153 1,252 14,369 Other -83 3,003 157 Total Assets 112,661 258,066 545,482 236,133 712,718 Other Liabilities Net assets available for benefits $112,661 $258,066 $545,482 $236,133 $712,718
F-14 DOMINION SUBSIDIARY SAVINGS PLAN Statement of Changes in Net Assets Available for Plan Benefits by Fund For Year Ended December 31, 1998
Participant Directed Certus Dreyfus Mellon EB Crabbe Templeton DRI Common Stable Balanced Daily Liquidty Huson Foreign Total Stock Fund Value Fund Fund Index Fund Equity Fund Income Fund Investment Income: Dividends $ 207,416 $ 37,312 $ 21,454 $ 21,633 $ 4,439 $ 32,934 Interest and Other 71,377 420 $ 51,783 Net appreciation (depreciation) in fair value of investments 511,028 77,351 49,233 287,158 -71,325 -44,080 Total Investment Income 789,821 115,083 51,783 70,687 308,791 -66,886 -11,146 Contributions: Participants 1,881,460 182,382 159,443 257,300 425,656 349,526 45,292 Participating Companies 625,919 Interfund Transfers, Net -63,570 207,800 -17,725 -9,437 -46,658 -47,057 Total Additions/ (Subtractions) 3,297,200 233,895 419,026 310,262 725,010 235,982 87,089 Distributions to Participants 501,399 13,184 257,634 48,701 37,284 40,970 20,578 Administrative Expense 12,424 1,192 1,852 1,312 2,402 1,249 519 Total deductions 513,823 14,376 259,486 50,013 39,686 42,219 21,097 Net increase/(decrease) transfer 2,783,377 219,519 159,540 260,249 685,324 193,763 65,992 Transfer of Participants' Assets To the Plan from other Plans 512,342 7,946 299,327 15,492 134,821 55,644 10,715 Net Increase/(Decrease) 3,295,719 227,465 458,867 275,741 820,145 249,407 76,707 Net Assets Available for Benefits: Beginning of Year 5,402,556 857,531 633,501 634,140 854,301 558,023 258,066 End of Year $8,698,275 $1,084,996 $1,092,368 $909,881 $1,674,446 $807,430 $334,773
F-15 DOMINION SUBSIDIARY SAVINGS PLAN Statement of Changes in Net Assets Available for Plan Benefits by Fund For Year Ended December 31, 1998
Non-Participant Participant Directed (Cont'd) Directed ----------------------------- -------- Warburg Pincus Premier Emerging Managed Loan DRI Common Growth Fund Income Fund Fund Stock Fund ----------- Investment Income: Dividends $ 12,149 $ 77,495 Interest and Other $ 18,303 871 Net appreciation (depreciation) in fair value of investments $ 55,499 -3,460 160,652 Total Investment Income 55,499 8,689 18,303 239,018 Contributions: Participants 303,886 57,975 Participating Companies 625,919 Interfund Transfers, Net 1,022 60,082 47,573 -132,030 Total Additions/(Subtractions) 360,407 126,746 65,876 732,907 Distributions to Participants 34,794 15,856 5,016 27,382 Administrative Expense 1,141 283 2,474 Total Deductions 35,935 16,139 5,016 29,856 Net increase/(decrease) before transfer 324,472 110,607 60,860 703,051 Transfer of Participants' Assets To the Plan from other Plans 18,420 5,110 -35,133 Net Increase/(Decrease) 342,892 115,717 60,860 667,918 Net Assets Available for benefits: Beginning of Year (as restated) 545,482 112,661 236,133 712,718 End of Year $888,374 $228,378 $296,993 $1,380,636
F-16 DOMINION SUBSIDIARY SAVINGS PLAN Statement of Changes in Net Assets Available for Plan Benefits by Fund For Year Ended December 31, 1997
Certus Dreyfus Mellon EB Crabbe Templeton DRI Common Stable Balanced Daily Liquity Huson Foreign Total Stock Fund Value Fund Fund Index Fund Equity Fund Income Fund Investment Income: Dividends $ 108,309 $ 29,906 $ 11,051 $ 13,791 $ 1,135 $ 6,835 Interest and Other 63,535 1,887 $ 42,949 3,162 723 506 338 Net appreciation (depreciation) in fair value of investments 577,340 73,781 70,280 161,656 81,875 -394 Total Investment Income 749,184 105,574 42,949 84,493 176,170 83,516 6,779 Contributions: Participants 1,080,983 126,108 128,123 141,932 205,664 179,138 101,852 Participating Companies 397,339 Interfund Transfers, Net -48,160 19,209 -44,913 -49,947 -19,689 -4,595 Total Additions 2,227,506 183,522 190,281 181,512 331,887 242,965 104,036 Distributions to Participants 277,929 29,816 132,462 17,352 26,789 23,404 3,731 Administrative Expense 6,314 -13 1,691 1,042 1,428 765 369 Total deductions 284,243 29,803 134,153 18,394 28,217 24,169 4,100 Net increase before transfer 1,943,263 153,719 56,128 163,118 303,670 218,796 99,936 Transfer of Participants' Assets To the Plan from other Plans 1,591,698 529,158 268,562 199,297 234,332 163,981 58,394 Net Increase/(Decrease) 3,534,961 682,877 324,690 362,415 538,002 382,777 158,330 Net Assets Available for Benefits: Beginning of Year 1,867,595 174,654 308,811 271,725 316,299 175,246 99,736 End of Year $5,402,556 $857,531 $633,501 $634,140 $854,301 $558,023 $258,066
F-17 DOMINION SUBSIDIARY SAVINGS PLAN Statement of Changes in Net Assets Available for Plan Benefits by Fund For Year Ended December 31, 1997
Non-Participant Directed -------- Participant Directed (Cont'd) ----------------------------- Warburg Pincus Premier Emerging Managed Loan DRI Common Growth Fund Income Fund Fund Stock Fund Investment Income: Dividends $ 5,296 $ 40,295 Interest and Other $ 695 482 $ 9,902 2,891 Net appreciation (depreciation) in fair value of investments 74,214 2,921 113,007 Total Investment Income 74,909 8,699 9,902 156,193 Contributions: Participants 167,454 30,712 Participating Companies 397,339 Interfund Transfers, Net -11,338 19,217 152,530 -12,314 Total Additions 231,025 58,628 162,432 541,218 Distributions to Participants 22,173 16,594 -13,216 18,824 Administrative Expense 874 182 -24 Total Deductions 23,047 16,776 -13,216 18,800 Net increase before transfer 207,978 41,852 175,648 522,418 Transfer of Participants' Assets To the Plan from other Plans 116,056 21,918 Net Increase 324,034 63,770 175,648 522,418 Net Assets Available for benefits: Beginning of Year 221,448 48,891 60,485 190,300 End of Year $545,482 $112,661 $236,133 $712,718
F-18 7. PLAN INTEREST IN THE CERTUS STABLE VALUE FUND The Plan's investments are in a Master Trust which was established for the investment of assets for the Plan and other company sponsored plans (the Virginia Power Hourly Employee Savings Plan and the Dominion Resources, Inc. Employee Savings Plan). The assets of the Master Trust are held by Mellon Bank. As of December 31, 1998 and 1997, the assets of the Master Trust were separately maintained by each company sponsored plan, with the exception of the Certus Stable Value Fund (Certus Fund). As of December 31, 1998 and 1997, the Plan's interest in the net assets of the Certus Fund was approximately 1% for each year. Investment income and administrative expenses relating to the Certus Fund are allocated to the individual plans based upon average monthly balances invested by each Plan. The following table presents the fair value of the undivided investments in the Certus Fund held by the Master Trust: December 31, ------------ 1998 1997 ---- ---- Investments at fair value: Guaranteed Investment Contracts $74,692,313 $58,085,100 Common/collective trust 9,764,282 7,012,518 ----------- ----------- Total $84,456,595 $65,097,618 =========== =========== Investment income for the Certus Stable Value Fund is as follows: Net appreciation in fair value of investments $ 3,755,318 $ 426,972 Interest 4,477,951 3,883,054 ----------- ----------- Total $ 8,233,269 $ 4,310,026 =========== =========== 8. TAX STATUS The Plan is a qualified employees' profit sharing trust under Sections 401(a) and 401(k) of the Internal Revenue Code and, as such, is exempt from Federal income taxes under Section 501(a). Pursuant to Section 402 (a) of the Internal Revenue Code, a participant is not taxed on the income and pretax contributions allocated to the participant's account until such time as the participant or the participant's beneficiaries receive distributions from the Plan. The Plan obtained its latest determination letter on May 21, 1996, in which the Internal Revenue Service stated that the Plan, as then designed, was in compliance with the applicable requirements of the Internal Revenue Code. The Plan has been amended since receiving the determination letter. However, the company believes that the Plan is currently designed and operating in compliance with the applicable requirements of the Internal Revenue Code. F-19 9. VALUATION OF INVESTMENT CONTRACTS The Plan's investment contracts are fully-benefit responsive and have been presented on the financial statements at contract value. The Plan's portion of the contracts has an estimated fair value of $1,096,695 and $655,057 at December 31, 1998 and December 31, 1997. The underlying investment contracts are carried at variable and fixed rates with expiration dates through 2007. The variable rates are reviewed and adjusted quarterly. The average yield on the contracts are estimated at 6.26% and 6.57% at December 31, 1998 and December 31, 1997. 10. SUBSEQUENT EVENTS Effective April 1, 1999 two of the current funds were replaced. The Crabbe Huson Equity Fund was replaced by the MAS Mid Cap Value Fund and the Dreyfus Balanced Fund, Inc. was replaced by the Dreyfus Premier Balanced Fund. No action was required of the participants as a result of these changes. The same payroll elections continued for participants contributing to either the Crabbe Huson Equity or the Dreyfus Balanced Fund, Inc. as of April 1, 1999. A balance in either of the replaced funds as of March 31, 1999 was automatically transferred to the corresponding new fund as of April 1, 1999. Participants who did not want balances transferred to the new funds were given the opportunity to reallocate balances among the other investments funds on or before March 31, 1999. F-20 DOMINION SUBSIDIARY SAVINGS PLAN SUPPLEMENTAL SCHEDULE AS OF DECEMBER 31, 1998 ITEM 27a - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES Current Description Cost Value - ----------- Dominion Resources, Inc., Common Stock $2,026,942 $2,422,703 Common/Collective Trusts TBC Inc Pooled Employee Funds Daily Liquidity Fund 6,051 6,051 Interest in Certus Stable Value Fund 1,082,468 1,082,468 Mellon S&P 500 Index Daily Fund 1,227,078 1,649,670 2,135,597 2,737,189 Mutual Funds Crabbe Huson Equity Fund Inc. 910,908 790,631 Dreyfus Balanced Fund Inc. 907,221 895,560 Premier Managed Income Fund 224,681 223,389 Templeton Foreign Fund Inc. 371,441 326,872 Warburg Pincus Emerging Growth Fund 779,120 872,189 3,193,371 3,108,641 Participant Loans bearing interest At 9.5% with maturities in 60 months 291,450 291,450 ---------- ---------- Total Assets Held for Investment $7,647,360 $8,559,983 F-21 DOMINION SUBSIDIARY SAVINGS PLAN SUPPLEMENTAL SCHEDULE AS OF DECEMBER 31, 1998 ITEM 27d - SCHEDULE OF REPORTABLE TRANSACTIONS Schedules that report the 5% transactions which transpired in 1998 for this trust were filed in paper format as Exhibit 99 (iii). F-22 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 11-K ANNUAL REPORT Pursuant to Section 15(d) of the Securities Exchange Act of 1934 (Mark One): X ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES - ------ EXCHANGE ACT OF 1934. For the fiscal year ended December 31, 1998 or TRANSITION REPORT PURSUANT TO SECTION 15(d) - ------ OF THE SECURITIES EXCHANGE ACT OF 1934. For the transition period from ___________ to ____________. Commission File number 333-09167 A. Full title of the plan and the address of the plan, if different from that of the issuer named below: Virginia Power Hourly Employee Savings Plan B. Name of issuer of the securities held pursuant of the plan and the address of its principal executive office: DOMINION RESOURCES, INC. P. O. Box 26532 120 Tredegar Street Richmond, Virginia 23261 VIRGINIA POWER HOURLY EMPLOYEE SAVINGS PLAN FINANCIAL STATEMENTS TABLE OF CONTENTS
Pages ----- Independent Auditors' Report F-2 Financial Statements: Statements of Net Assets Available for Benefits as of December 31, 1998 and 1997 F-3 Statements of Changes in Net Assets Available for Benefits for the Years Ended December 31, 1998 and 1997 F-4 Notes to Financial Statements F-5 - F-20 Supplemental Schedules as of and for the year ended December 31, 1998: Item 27a Schedule of Assets Held for Investment Purposes F-21 Item 27d Schedule of Reportable Transactions F-22
F-1 INDEPENDENT AUDITORS' REPORT - ---------------------------- To the Organization, Compensation and Nominating Committee of the Board of Directors of Dominion Resources, Inc. We have audited the accompanying financial statements of the Virginia Power Hourly Employee Savings Plan (the Plan) as of December 31, 1998 and 1997 and for the years ended December 31, 1998 and 1997 listed in the Table of Contents on page F-1. These financial statements are the responsibility of the Plan's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, such financial statements present fairly, in all material respects, the net assets available for benefits of the Plan at December 31, 1998 and 1997, and the changes in net assets available for benefits for the years then ended in conformity with generally accepted accounting principles. Our audits were conducted for the purpose of forming an opinion on the basic financial statements taken as a whole. The accompanying supplemental schedules listed in the Table of Contents are presented for purposes of additional analysis and are not a required part of the basic financial statements, but are supplementary information required by the Department of Labor's Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. These schedules are the responsibility of the Plans management. Such schedules have been subjected to the auditing procedures applied in our audit of the basic 1998 financial statements and, in our opinion, are fairly stated in all material respects when considered in relation to the basic financial statements taken as a whole. Richmond, Virginia May 14, 1999 F-2 VIRGINIA POWER HOURLY EMPLOYEE SAVINGS PLAN STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS December 31, 1998 and 1997 December 31, ASSETS 1998 1997 Investments (Note 1 and 2): Dominion Resources, Inc., Common Stock $ 77,761,773 $ 71,021,169 Common/Collective Trusts 7,460,106 4,189,191 Interest in Certus Stable Value Fund (Note 7) 21,370,959 18,587,458 Mutual Funds 15,925,612 12,388,533 Loans To Participants 3,982,649 3,301,157 Total Investments 126,501,099 109,487,508 Receivables: Interest 105,437 97,259 Other 142,449 313,962 Total Receivables 247,886 411,221 Cash 119,399 64 Total Assets 126,868,384 109,898,793 Liabilities - Other 273,851 376,182 Net Assets Available for Benefits $126,594,533 $109,522,611 The accompanying notes are an integral part of the financial statements. F-3 VIRGINIA POWER HOURLY EMPLOYEE SAVINGS PLAN STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS For the Years Ended December 1998 and 1997
For the Years Ended December 31 1998 1997 Investment income: Net appreciation in fair value of investments (Note 5) $ 8,044,537 $ 8,702,140 Dividend income 4,557,743 4,461,716 Interest and other income 1,573,566 1,370,147 Total investment income 14,175,846 14,534,003 Contributions: Participant (Note 1) 8,553,974 7,954,739 Participating companies (Note 1) 3,295,037 3,138,250 Total additions 26,024,857 25,626,992 Benefits paid to participants 7,441,322 6,469,943 Administrative expenses 156,072 58,906 Total deductions 7,597,394 6,528,849 Net increase before transfers 18,427,463 19,098,143 Transfer of participants' assets from the Plan to other plans (1,355,541) (716,414) Net increase 17,071,922 18,381,729 Net assets available for benefits: Beginning of year 109,522,611 91,140,882 End of year $126,594,533 $109,522,611
The accompanying notes are an integral part of the financial statements. F-4 NOTES TO FINANCIAL STATEMENTS YEARS ENDED DECEMBER 31, 1998 AND 1997 1. DESCRIPTION OF PLAN The following description of the Virginia Power Hourly Employee Savings Plan (the Plan) provides only general information. Participants should refer to the Plan document for a more complete description of the Plan's provisions. a. GENERAL - The Plan is a defined contribution pension plan covering all full-time hourly employees of the Virginia Electric and Power Company (the Company) who have six months of service and are age 18 or older. The Company, a wholly-owned subsidiary of Dominion Resources, Inc. (DRI), is the designated Plan sponsor, fiduciary and administrator. Mellon Bank serves as the trustee of the Plan. The Plan is subject to the provisions of the Employee Retirement Income Security Act of 1974 (ERISA). b. CONTRIBUTIONS - January 1, 1997 - April 30, 1998 A maximum of 17% of the participant's eligible earnings and 9% of highly compensated employee's eligible earnings could be invested in the Plan. Of the 17%, up to 12% could be invested on a tax-deferred basis. The Company contributed a matching amount equivalent to 50% of each participant's contributions, not to exceed 3% of the participant's eligible earnings, which is used to purchase DRI common stock. May 1, 1998 - December 31, 1998 A maximum of 20% of the participant's eligible earnings and 10% of highly compensated employee's eligible earnings can be invested in the Plan. Of the 20%, up to 15% can be invested on a tax-deferred basis. The Company contributes a matching amount equivalent to 50% of each participant's contributions, not to exceed 3% of the participant's eligible earnings, which is used to purchase DRI common stock. c. PARTICIPANT ACCOUNTS - Each participant's account includes the effect of the participant's contributions and withdrawals, as applicable, and allocations of the Company's contributions, Plan earnings, administrative expenses. Allocations are based on participant earnings or account balances, as defined. Forfeited balances of terminated participants' non-vested accounts are used to reduce future Participating Companies' contributions. The benefit to which a participant is entitled is the benefit that can be provided from the participant's account. F-5 d. PARTICIPANTS - Any subsidiary of DRI may adopt the Plan for the benefit of its qualified hourly employees subject to approval of the Board of Directors of the Company. Currently only Company employees are participating in the Plan. There were 3,012 and 3,054 participants in the Plan as of December 31, 1998 and 1997, respectively e. VESTING - Participants become vested in their own contributions and the earnings on these amounts immediately, and in the participating companies' matching contributions and earnings after three years of service. Matching contributions vest immediately for participants aged 55 or older. f. INVESTMENT OPTIONS - The Plan provides for employee contributions to be invested in the following: (1) Common Stock: Dominion Resources, Inc. (DRI) Common Stock Fund - All investments are in DRI Common Stock or cash equivalent investments for partial shares. (2) Interest in Certus Stable Value Fund: Certus Stable Value Fund - The fund invests in investment contracts of insurance companies and commercial banks and U.S. Government or agency backed bonds. (3) Mutual Funds: Premier Managed Income Fund - The fund invests primarily in investment-grade corporate and U.S. Government obligations having maturities of 10 years or less. Dreyfus Balanced Fund, Inc. - The fund invests in equity and debt securities of domestic and foreign issuers. The Crabbe Huson Equity Fund, Inc. - The fund invests in common stocks that have large market capitalization. Templeton Foreign Fund - The fund invests primarily in equity and debt securities of companies and governments outside the U.S. Warburg Pincus Emerging Growth Fund - The fund invests in equity securities of primarily domestic emerging growth companies. F-6 (4) Common/Collective Trust: Mellon EB Daily Liquidity Index Fund - The fund invests primarily in the 500 stocks of the S&P 500 and may also invest in exchange traded options and financial futures. Upon enrollment in the Plan, a participant may direct employee contributions in any option (except the loan fund) in 1% increments totaling to 100%. Changes in investment options may be made at any time and become effective with the subsequent pay period. Participants can make unlimited transfers among existing funds. Company matching contributions are automatically contributed into the DRI Common Stock fund. However, participants who are under age 50 may transfer 50% of the value of their Company Match Account into another investment option, while participants who are age 50 and over may transfer 100% of the value of the Company Match Account. g. LOANS TO PARTICIPANTS - Participants are eligible to secure loans against their plan account and repay the amount over a one to five- year period. The minimum loan amount is $1,000 and the maximum loan amount is the lesser of: - 50% of the vested account balance or - $50,000 (reduced by the maximum outstanding loan balance during the prior 12 months). Loan transactions are treated as a transfer between the respective investment fund and the loan fund. The loans are interest-bearing at one percentage point above the prime rate of interest. The rate is determined every quarter; however, the rate is fixed at the inception of the loan for the life of the loan. Participants make repayments to the Plan on a monthly basis. Any defaults in loans result in a reclassification of the remaining loan balances as taxable distributions to the participants. h. PAYMENT OF BENEFITS - Distributions from the Plan are recorded on the valuation date when a participant's valid withdrawal request is processed by the recordkeeper. On termination of service, a participant may elect to receive either a lump-sum amount equal to the value of the participant's vested interest in his or her account, or defer the payment to a future time no later than the year in which the participant attains age 70 1/2. There were no amounts payable to participants at December 31, 1998 and 1997. F-7 i. FLEXIBLE DIVIDEND - During the first quarter of 1998, the Board of Directors of the Company approved an amendment to the Plan that adopts a KSOP provision (combines the features of a 401K and an Employee Stock Ownership Plan) effective May 1, 1998. The KSOP allows participants the choice of (1) receiving cash dividends paid on vested shares held in their DRI Common Stock Fund or (2) continuing to reinvest the dividends in the fund. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES a. VALUATION OF INVESTMENTS: (1) DRI Common Stock Fund - The investments of the Stock Fund are stated at fair value based on the closing sales prices reported on the New York Stock Exchange on the last business day of the year. (2) Mutual Funds - Investments in mutual funds are valued at quoted market prices which represent the net asset values of shares held by the Plan at year end. (3) Common/Collective Trusts - Investments in common/collective trust funds (funds) are stated at estimated fair values, which have been determined based on the unit values of the funds. Unit values are determined by the bank sponsoring such funds by dividing the fund's net assets by its units outstanding at the valuation dates. (4) Investment Contracts - The guaranteed investment contracts within the Certus Stable Value Fund are valued at contract value. Contract value represents contributions made under the contract, plus earnings, less Plan withdrawals and administrative expenses. b. INVESTMENT INCOME Dividend income is recognized on the ex-dividend date. c. EXPENSES - The Plan's expenses are accrued as incurred and paid by the Plan, as provided by the Plan document. d. USE OF ESTIMATES - 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 assets and 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. F-8 3. INVESTMENTS EXCEEDING 5% OF NET ASSETS The following table represents the fair value of investments exceeding 5% of the Plan's net assets at each year end: 1998 1997 Investment at Fair Value as Determined by Quoted Market Price: DRI Common Stock $77,761,773 $71,021,169 Certus Stable Value 21,370,959 - Warburg Pincus Emerging Growth Fund 6,383,774 - Investment at Estimated Fair Value: Mellon S&P 500 Index Daily Fund 7,260,010 - 4. NET APPRECIATION (DEPRECIATION) IN FAIR VALUE OF INVESTMENTS The Plan's investments (including investments ,bought, sold, as well as held during the year) appreciated (depreciated) in value by $8,044,537 in 1998 and $ 8,702,140 in 1997 as follows: a. Realized Gain 1998 1997 Investment at fair value as determined by quoted market price: Common Stock $1,207,553 $ 836,051 Interest in Certus Stable Value Fund - 22 Mutual Funds 362,432 1,076,392 1,569,985 1,912,465 Investments at estimated fair value: Common/Collective Trust Funds 129,941 380,093 $1,699,926 $2,292,558 b. Unrealized Gain/(Loss) 1998 1997 Investment at fair value as determined by quoted market price: Common Stock $5,548,635 $6,026,861 Mutual Funds (748,809) (468,411) 4,799,826 5,558,450 Investments at estimated fair value: Common/Collective Trust Funds 1,544,785 851,132 $6,344,611 $6,409,582 F-9 c. Net Appreciation/(Depreciation) in Fair Value of Investment 1998 1997 Investment at fair value as determined by quoted market price: Common Stock $6,756,188 $6,862,912 Interest in Certus Stable Value Fund - 22 Mutual Funds (386,377) 607,981 6,369,811 7,470,915 Investments at estimated fair value: Common/Collective Trust Funds 1,674,726 1,231,225 $8,044,537 $8,702,140 5. PLAN TERMINATION Although it has not expressed any intention to do so, the Company has the right under the Plan to discontinue its contributions at any time and to terminate the Plan subject to the provisions set forth in ERISA. In the event of any termination of the Plan, or upon complete or partial discontinuance of contributions, the accounts of each affected participant shall become fully vested. 6. BY FUND INFORMATION The net assets available for benefits and the changes in net assets available for benefits by investment fund are as follows: F-10 Virginia Power Hourly Employee Saving Plan Statement of Net Assets Available for Benefits by Fund December 31, 1998
Participant Directed Mellon EB DRI Common Certus Stable Dreyfus Daily Liquidity Crabbe Huson Assets Total Stock Fund Value Fund Balanced Fund Index Fund Equity Fund - ------ Investments (Notes 1 and 2): Common stock $ 77,761,773 $33,611,093 Common/collective trust 7,460,106 84,574 $7,260,010 Interest in Certus Stable Value Fund 21,370,959 $21,370,959 Mutual funds 15,925,612 $3,257,934 $4,045,815 Loans 3,982,649 Total investments 126,501,099 33,695,667 21,370,959 3,257,934 7,260,010 4,045,815 Receivables: Interest 105,437 290 104,747 Other 142,449 63,563 Total receivables 247,886 63,853 104,747 Cash 119,399 26 Total assets 126,868,384 33,759,520 21,475,706 3,257,934 7,260,036 4,045,815 Liabilities - other 273,851 74,455 23,737 1 Net assets available for benefits $126,594,533 $33,685,065 $21,451,969 $3,257,934 $7,260,036 $4,045,814
F-11 Virginia Power Hourly Employee Saving Plan Statement of Net Assets Available for Benefits by Fund December 31, 1998
Non-Participant Participant Directed (Cont'd) Directed Premier Templeton Warburg Pincus Managed Foreign Emerging Loan DRI Common Assets Income Fund Fund Growth Fund Fund Stock Fund ------ Investments (Notes 1 and 2): Common stock $44,150,680 Common/collective trust $ 3,418 112,104 Interest in Certus Stable Value Fund Mutual funds $460,795 $1,777,293 $6,383,775 Loans 3,982,649 Total investments 460,795 1,777,293 6,383,775 3,986,067 44,262,784 Receivables: Interest 15 385 Other 39,928 38,958 Total receivables 39,928 15 39,343 Cash 63 111 119,199 Total assets 500,786 1,777,293 6,383,886 4,105,281 44,302,127 Liabilities - other 38,644 111 136,903 Net assets available for benefits $462,142 $1,777,182 $6,383,886 $4,105,281 $44,165,224
F-12 Virginia Power Hourly Employee Savings Plan Statement of Net Assets Available for Benefits by Fund December 31, 1997
Participant Directed Mellon EB DRI Common Certus Stable Dreyfus Daily Liquidity Crabbe Huson Assets Total Stock Fund Value Fund Balanced Fund Index Fund Equity Fund - ------ Investments (Notes 1 and 2): Common stock $ 71,021,169 $31,903,015 Common/collective trust 4,189,191 $4,132,879 Interest in Certus Stable Value Fund 18,587,458 $18,587,458 Mutual funds 12,388,533 $2,106,357 $3,542,278 Loans 3,301,157 Total investments 109,487,508 31,903,015 18,587,458 2,106,357 4,132,879 3,542,278 Receivables: Interest 97,259 483 95,918 Other 313,962 140,027 Total receivables 411,221 140,510 95,918 Cash 64 50 Total assets 109,898,793 32,043,525 18,683,376 2,106,357 4,132,929 3,542,278 Liabilities - other 376,182 100,273 30,059 49 37,012 Net assets available for benefits $109,522,611 $31,943,252 $18,683,376 $2,076,298 $4,132,880 $3,505,266
F-13 Virginia Power Hourly Employee Savings Plan Statement of Net Assets Available for Benefits by Fund December 31, 1997
Non-Participant Participant Directed (Cont'd) Directed Premier Templeton Warburg Pincus Managed Foreign Emerging Loan DRI Common Assets Income Fund Fund Growth Fund Fund Stock Fund - ------ Investments (Notes 1 and 2): Common stock $39,118,154 Common/collective trust $ 56,312 Interest in Certus Stable Value Fund Mutual funds $347,852 $1,537,699 $4,854,347 Loans 3,301,157 Total investments 347,852 1,537,699 4,854,347 3,357,469 39,118,154 Receivables: Interest 256 602 Other 173,935 Total receivables 256 174,537 Cash 14 Total assets 347,852 1,537,699 4,854,347 3,357,739 39,292,691 Liabilities - other 3,671 19,565 59,732 125,821 Net assets available for benefits $344,181 $1,518,134 $4,794,615 $3,357,739 $39,166,870
F-14 Virginia Power Hourly Employee Savings Plan Statement of Changes in Net Assets Available for Benefits by Fund For Year Ended December 31, 1998
Participant Directed Certus Mellon EB DRI Common Stable Dreyfus Daily Liquidity Crabbe Huson Total Stock Fund Value Fund Balanced Fund Index Fund Equity Fund Investment income: Net appreciation/(depreciation) in fair value of investments (Note 5) $ 8,044,537 $ 2,905,161 $ 161,755 $1,339,743 $ (421,608) Dividend income 4,557,743 1,822,348 81,120 101,486 23,323 Interest and other income 1,573,566 2,890 $ 1,177,141 Total investment income (loss) 14,175,846 4,730,399 1,177,141 242,875 1,441,229 (398,285) Contributions: Participant (Note 1) 8,553,974 1,617,196 2,461,651 669,802 1,110,108 852,176 Participating companies (Note 1) 3,295,037 Total additions 26,024,857 6,347,595 3,638,792 912,677 2,551,337 453,891 Benefits paid to participants 7,441,322 1,829,897 2,312,910 113,393 168,785 183,688 Administrative expenses 156,072 28,703 17,594 2,435 6,207 2,918 Total deductions 7,597,394 1,858,600 2,330,504 115,828 174,992 186,606 Net increase/(decrease) before transfers 18,427,463 4,488,995 1,308,288 796,849 2,376,345 267,285 Interfund transfers, net (2,379,985) 1,611,797 436,429 933,676 357,494 Net transfer of participants' assets Between plans (1,355,541) (367,197) (151,492) (51,642) (182,865) (84,231) Net increase 17,071,922 1,741,813 2,768,593 1,181,636 3,127,156 540,548 Net assets available for benefits: Beginning of year 109,522,611 31,943,252 18,683,376 2,076,298 4,132,880 3,505,266 End of year $126,594,533 $33,685,065 $21,451,969 $3,257,934 $7,260,036 $4,045,814
F-15 Virginia Power Hourly Employee Savings Plan Statement of Changes in Net Assets Available for Benefits by Fund For Year Ended December 31, 1998
Non-Participant Participant Directed (Cont'd) Directed Premier Templeton Warburg Pincus Managed Foreign Emerging Loan DRI Common Income Fund Income Fund Growth Fund Fund Stock Fund Investment income: Net appreciation/(depreciation) in fair value of investments (Note 5) $ (7,783) $ (118,741) $ 334,983 $ 3,851,027 Dividend income 67,631 46,165 2,415,670 Interest and other income (38,643) $ 428,347 3,831 Total investment income (loss) 21,205 (72,576) 334,983 428,347 6,270,528 Contributions: Participant (Note 1) 107,569 425,588 1,309,884 Participating companies (Note 1) 3,295,037 Total additions 128,774 353,012 1,644,867 428,347 9,565,565 Benefits paid to participants 18,984 75,107 253,175 59,705 2,425,678 Administrative expenses 340 1,376 4,537 53,913 38,049 Total deductions 19,324 76,483 257,712 113,618 2,463,727 Net increase/(decrease) before transfers 109,450 276,529 1,387,155 314,729 7,101,838 Interfund transfers, net 25,469 29,003 315,969 479,024 (1,808,876) Net transfer of participants' assets between plans (16,958) (46,484) (113,853) (46,211) (294,608) Net increase 117,961 259,048 1,589,271 747,542 4,998,354 Net assets available for benefits: Beginning of year 344,181 1,518,134 4,794,615 3,357,739 39,166,870 End of year $462,142 $1,777,182 $6,383,886 $4,105,281 $44,165,224
F-16 Virginia Power Hourly Employee Savings Plan Statement of Changes in Net Assets Available for Benefits by Fund For Year Ended December 31, 1997
Participant Directed Certus Mellon EB DRI Common Stable Dreyfus Daily Liquidity Crabbe Huson Total Stock Fund Value Fund Balanced Fund Index Fund Equity Fund Investment income: Net appreciation/(depreciation) in fair value of investments (Note 5) $ 8,702,140 $ 3,067,722 $ 22 $ 136,853 $ 638,620 $ 479,795 Dividend income 4,461,716 1,995,965 31,149 60,066 7,149 Interest and other income 1,370,147 3,981 1,117,126 6,059 Total investment income 14,534,003 5,067,668 1,117,148 174,061 698,686 486,944 Contributions: Participant (Note 1) 7,954,739 1,521,458 2,487,916 599,771 874,926 760,358 Participating companies (Note 1) 3,138,250 Total additions 25,626,992 6,589,126 3,605,064 773,832 1,573,612 1,247,302 Benefits paid to participants 6,469,943 2,195,899 1,852,353 80,010 165,054 158,551 Administrative expenses 58,906 23,396 16,744 1,397 2,847 1,895 Total deductions 6,528,849 2,219,295 1,869,097 81,407 167,901 160,446 Net increase/(decrease) before transfers 19,098,143 4,369,831 1,735,967 692,425 1,405,711 1,086,856 Interfund transfers, net (4,122,295) (820,835) 869,814 1,734,428 1,221,175 Net transfer of participants' assets between plans (716,414) (193,992) (101,609) 9,416 (52,842) (24,710) Net increase 18,381,729 53,544 813,523 1,571,655 3,087,297 2,283,321 Net assets available for benefits: Beginning of year 91,140,882 31,889,708 17,869,853 504,643 1,045,583 1,221,945 End of year $109,522,611 $31,943,252 $18,683,376 $2,076,298 $4,132,880 $3,505,266
F-17 Virginia Power Hourly Employee Savings Plan Statement of Changes in Net Assets Available for Benefits by Fund For Year Ended December 31, 1997
Non-Participant Participant Directed (Cont'd) Directed Premier Templeton Warburg Pincus Managed Foreign Emerging Loan DRI Common Income Fund Income Fund Growth Fund Fund Stock Fund Investment income: Net appreciation/(depreciation) in fair value of investments (Note 5) $ 5,153 $ (13,821) $ 592,605 $ 3,795,191 Dividend income 10,891 41,522 2,314,974 Interest and other income 759 $ 231,718 10,504 Total investment income 16,803 27,701 592,605 231,718 6,120,669 Contributions: Participant (Note 1) 100,234 421,360 1,188,716 Participating companies (Note 1) 3,138,250 Total additions 117,037 449,061 1,781,321 231,718 9,258,919 Benefits paid to participants 18,798 52,540 156,758 126,250 1,663,730 Administrative expenses 190 1,006 2,830 (28,302) 36,903 Total deductions 18,988 53,546 159,588 97,948 1,700,633 Net increase/(decrease) before transfers 98,049 395,515 1,621,733 133,770 7,558,286 Interfund transfers, net 165,503 650,821 1,447,781 1,037,433 (2,183,825) Net transfer of participants' assets between plans (774) (15,630) (73,585) (56,978) (205,710) Net increase 262,778 1,030,706 2,995,929 1,114,225 5,168,751 Net assets available for benefits: Beginning of year 81,403 487,428 1,798,686 2,243,514 33,998,119 End of year $344,181 $1,518,134 $4,794,615 $3,357,739 $39,166,870
F-18 7. PLAN INTEREST IN THE CERTUS STABLE VALUE FUND The Plan's investments are in a Master Trust which was established for the investment of assets for the Plan and other Company sponsored plans (the Dominion Resources, Inc. Employee Savings Plan and the Dominion Subsidiary Savings Plan). The assets of the Master Trust are held by Mellon Bank. As of December 31, 1998 and 1997, the assets of the Master Trust were separately maintained by each Company sponsored plan, with the exception of the Certus Stable Value Fund (Certus Fund). As of December 31, 1998 and 1997, the Plan's interest in the net assets of the Certus Fund was approximately 26% and 29%, respectively. Investment income and administrative expenses relating to the Certus Fund are allocated to the individual plans based upon average monthly balances invested by each plan. The following table presents the fair value of the undivided investments in the Certus Fund:
December 31, 1998 1997 Investments at fair value: Guaranteed Investment Contracts $74,692,313 $58,085,100 Common/collective trust 9,764,282 7,012,518 Total $84,456,595 $65,097,618 Investment income for the Certus Stable Value Fund is as follows: Net appreciation in fair value of investments $ 3,755,318 $ 426,972 Interest 4,477,951 3,883,054 Total $ 8,233,269 $ 4,310,026
8. VALUATION OF INVESTMENT CONTRACTS The Plan's investment contracts are fully-benefit responsive and have been presented on the financial statements at contract value. The Plan's portion of the contracts has an estimated fair value of $21,479,073 and $18,685,163 at December 31, 1998 and 1997, respectively. The underlying investment contracts are carried at variable and fixed rates with expiration dates through 2007. The variable rates are reviewed and adjusted quarterly. The average yield on the contracts are estimated at 6.26% and 6.57% at December 31, 1998 and December 31, 1997. F-19 9. TAX STATUS The Plan is a qualified employees' profit sharing trust under Sections 401(a) and 401(k) of the Internal Revenue Code and, as such, is exempt from Federal income taxes under Section 501(a). Pursuant to Section 402(a) of the Internal Revenue Code, a participant is not taxed on the income and pretax contributions allocated to the participant's account until such time as the participant or the participant's beneficiaries receive distributions from the Plan. The Plan obtained its latest determination letter on November 9, 1993, in which the Internal Revenue Service stated that the Plan, as then designed, was in compliance with the applicable requirements of the Internal Revenue Code. The Plan has been amended since receiving the determination letter. However, the Company believes that the Plan is currently designed and operating in compliance with the applicable requirements of the Internal Revenue Code. 10. SUBSEQUENT EVENT Effective April 1, 1999 two of the current funds were replaced. The Crabbe Huson Equity Fund was replaced by the MAS Mid Cap Value Fund and the Dreyfus Balanced Fund, Inc. was replaced by the Dreyfus Premier Balanced Fund. No action was required of the participants as a result of these changes. The same payroll election continued for participants contributing to either the Crabbe Huson Equity or the Dreyfus Balanced Fund, Inc. as of April 1, 1999. A balance in either of the replaced funds, as of March 31, 1999, was automatically transferred to the corresponding new fund as of April 1, 1999. Participants who did not want balances transferred to the new funds were given the opportunity to reallocate balances among the other investment funds on or before March 31, 1999. F-20 VIRGINIA POWER HOURLY EMPLOYEE SAVINGS PLAN SUPPLEMENTAL SCHEDULE AS OF DECEMBER 31, 1998 ITEM 27a SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES Current Description Cost Value Dominion Resources, Inc., Common Stock $ 60,431,633 $ 77,761,773 Interest in Certus Stable Value Fund Certus Stable Value Fund 21,370,959 21,370,959 Common/Collective Trusts DRI Common Stock Fund 196,678 196,678 Loan Fund 3,418 3,418 Mellon S&P 500 Index Daily Fund 5,476,682 7,260,010 5,676,778 7,460,106 Mutual Funds Crabbe Huson Equity Fund Inc. 4,803,710 4,045,815 Dreyfus Balanced Fund Inc. 3,370,677 3,257,934 Premier Managed Income Fund 464,885 460,795 Templeton Foreign Fund Inc. 2,129,374 1,777,293 Warburg Pincus Emerging Growth Fund 5,729,507 6,383,775 16,498,153 15,925,612 Loans to Participants 3,301,157 3,982,649 Total Assets Held for Investment $107,278,680 $126,501,099 F-21 VIRGINIA POWER HOURLY EMPLOYEE SAVINGS PLAN SUPPLEMENTAL SCHEDULE AS OF DECEMBER 31, 1998 ITEM 27d SCHEDULE OF REPORTABLE TRANSACTIONS The assets of the Virginia Power Hourly Employee Savings Plan were combined with the assets of the Dominion Resources, Inc. Employee Savings Plan and the Dominion Subsidiary Savings Plan in a master trust for investment purposes until June 1, 1996. Effective June 1, 1996, a new master trust was established which does not combine the assets of the Virginia Power Hourly Employee Savings Plan with the assets of the Dominion Resources, Inc. Employee Savings Plan and the Dominion Subsidiary Savings Plan, except for the Certus Stable Value Fund. Schedules that report the 5% transactions which transpired in 1998 for this trust were filed in paper format as Exhibit 99(v). F-22 FORM 11-K DECEMBER 31, 1998 EXHIBIT INDEX Exhibit Page Exhibit 99(i) Financial Statements to Form 11-K of Dominion Resources, Inc. Employee Savings Plan (filed in paper format) Exhibit 99(ii) Independent auditor's consent (filed electronically herewith) Exhibit 99(iii) Financial Statements to Form 11-K of Dominion Resources, Inc. Dominion Subsidiary Savings Plan (filed in paper format) Exhibit 99(iv) Independent auditor's consent (filed electronically herewith) Exhibit 99(v) Financial Statements to Form 11-K of Virginia Power Hourly Employee Savings Plan (filed in paper format) Exhibit 99(vi) Independent auditor's consent (filed electronically herewith) EX-99.II 2 CONSENT OF DELOITTE & TOUCHE LLP Exhibit 99(ii) INDEPENDENT AUDITORS' CONSENT We consent to the incorporation by reference in Registration Statement no. 333- 09167 of Dominion Resources, Inc. on Form S-8 of our report dated May 14, 1999, appearing in this Annual Report on Form 11-K of Dominion Resources, Inc. Employee Savings Plan for the year ended December 31, 1998. DELOITTE & TOUCHE LLP Richmond, Virginia May 14, 1999 EX-99.IV 3 CONSENT OF DELOITTE & TOUCHE LLP Exhibit 99(iv) INDEPENDENT AUDITORS' CONSENT We consent to the incorporation by reference in Registration Statement no. 33- 62705 of Dominion Resources, Inc. on Form S-8 of our report dated May 14, 1999, appearing in this Annual Report on Form 11-K of Dominion Resources, Inc. Subsidiary Savings Plan for the year ended December 31, 1998. DELOITTE & TOUCHE LLP Richmond, Virginia May 14, 1999 EX-99.VI 4 CONSENT OF DELOITTE & TOUCHE LLP Exhibit 99(vi) INDEPENDENT AUDITORS' CONSENT We consent to the incorporation by reference in Registration Statement no. 333- 09167 of Dominion Resources, Inc. on Form S-8 of our report dated May 14, 1999, appearing in this Annual Report on Form 11-K of Virginia Power Hourly Employee Savings Plan for the year ended December 31, 1998. DELOITTE & TOUCHE LLP Richmond, Virginia May 14, 1999 -----END PRIVACY-ENHANCED MESSAGE-----