<HTML> <HEAD> <META NAME="Generator" CONTENT="Microsoft Word 97"> <META NAME="Template" CONTENT="C:\PROGRAM FILES\MSOFFICE\OFFICE\html.dot"> </HEAD> <BODY LINK="#0000ff" VLINK="#800080"> <B><I><FONT SIZE=5><P>SECURITIES AND EXCHANGE COMMISSION</P> <P>Washington, D.C. 20549</P> </I></FONT><FONT SIZE=6><P ALIGN="RIGHT">FORM 10-Q</P> </B></FONT><FONT SIZE=2><P>(Mark One)</P> </FONT><P>/X/	Quarterly Report Under Section 13 or 15(d) Of The Securities Exchange Act Of 1934</P> <B><I><FONT SIZE=4><P>For the quarterly period ended September 30, 1999</P> </B></I><P>or</P> <P>/ /	</FONT>Transition Report Pursuant To Section 13 or 15(d) Of 	The Securities Exchange Act Of 1934</P> <I><FONT SIZE=4><P>For the transition period from _____ to ______</P> </I><P>Commission file number 1-8489</P> </FONT><B><FONT SIZE=6><P ALIGN="RIGHT">DOMINION RESOURCES, INC.</P> </B></FONT><FONT SIZE=2><P ALIGN="RIGHT">(Exact name of registrant as specified in its charter)</P> <P> </P> </FONT><FONT SIZE=4><P ALIGN="RIGHT">Virginia</P> </FONT><I><FONT SIZE=2><P ALIGN="RIGHT">(State of incorporation)</P> </I></FONT><FONT SIZE=4><P ALIGN="RIGHT">120 Tredegar Street</P> <P ALIGN="RIGHT">Richmond, Virginia 23219</P> </FONT><I><FONT SIZE=2><P ALIGN="RIGHT">(Address of principal executive offices) (Zip Code)</P> </I><P ALIGN="RIGHT"> </P> </FONT><FONT SIZE=4><P ALIGN="RIGHT">54-1229715</P> </FONT><I><FONT SIZE=2><P ALIGN="RIGHT">(I.R.S. Employer Identification No.)</P> </I></FONT><B><FONT SIZE=4><P ALIGN="RIGHT">Registrant's telephone number (804) 819-2000</P> </B></FONT><FONT SIZE=2><P>Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days.</P> <P ALIGN="CENTER">Yes <U>X </U>No _____</P> <P>At October 31, 1999, the latest practicable date for determination, 190,807,645 shares of common stock, without par value, of the registrant were outstanding.</P> <B><U><P ALIGN="CENTER">DOMINION RESOURCES, INC.</P> <P ALIGN="CENTER">INDEX</P></B></U></FONT> <TABLE CELLSPACING=0 BORDER=0 CELLPADDING=7 WIDTH=638> <TR><TD WIDTH="11%" VALIGN="TOP"> <P> </TD> <TD WIDTH="80%" VALIGN="TOP"> <P> </TD> <TD WIDTH="10%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="RIGHT">Page<BR> <U>Number</U></FONT></TD> </TR> <TR><TD VALIGN="TOP" COLSPAN=3> <B><FONT SIZE=2><P ALIGN="CENTER">PART I. Financial Information</B></FONT></TD> </TR> <TR><TD WIDTH="11%" VALIGN="TOP"> <B><FONT SIZE=2><P>Item 1.</B></FONT></TD> <TD WIDTH="80%" VALIGN="TOP"> <FONT SIZE=2><P>Consolidated Financial Statements</FONT></TD> <TD WIDTH="10%" VALIGN="TOP"> <P> </TD> </TR> <TR><TD WIDTH="11%" VALIGN="TOP"> <P> </TD> <TD WIDTH="80%" VALIGN="TOP"> <FONT SIZE=2><P>Consolidated Statements of Income - Three and Nine Months Ended September 30, 1999 and 1998</FONT></TD> <TD WIDTH="10%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="RIGHT">3</FONT></TD> </TR> <TR><TD WIDTH="11%" VALIGN="TOP"> <P> </TD> <TD WIDTH="80%" VALIGN="TOP"> <FONT SIZE=2><P>Consolidated Balance Sheets - September 30, 1999 and December 31, 1998</FONT></TD> <TD WIDTH="10%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="RIGHT">4-5</FONT></TD> </TR> <TR><TD WIDTH="11%" VALIGN="TOP"> <P> </TD> <TD WIDTH="80%" VALIGN="TOP"> <FONT SIZE=2><P>Consolidated Statements of Cash Flows - Nine Months Ended September 30, 1999 and 1998</FONT></TD> <TD WIDTH="10%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="RIGHT">6</FONT></TD> </TR> <TR><TD WIDTH="11%" VALIGN="TOP"> <P> </TD> <TD WIDTH="80%" VALIGN="TOP"> <FONT SIZE=2><P>Consolidated Statements of Changes in Other Comprehensive Income - Three and Nine Months Ended September 30, 1999 and 1998</FONT></TD> <TD WIDTH="10%" VALIGN="TOP"> <FONT SIZE=2><P> </P> <P ALIGN="RIGHT">7</FONT></TD> </TR> <TR><TD WIDTH="11%" VALIGN="TOP"> <P> </TD> <TD WIDTH="80%" VALIGN="TOP"> <FONT SIZE=2><P>Notes to Consolidated Financial Statements</FONT></TD> <TD WIDTH="10%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="RIGHT">8-17</FONT></TD> </TR> <TR><TD WIDTH="11%" VALIGN="TOP"> <B><FONT SIZE=2><P>Item 2.</B></FONT></TD> <TD WIDTH="80%" VALIGN="TOP"> <FONT SIZE=2><P>Management's Discussion and Analysis of Financial Condition and Results of Operations</FONT></TD> <TD WIDTH="10%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="RIGHT">18-29</FONT></TD> </TR> <TR><TD WIDTH="11%" VALIGN="TOP"> <B><FONT SIZE=2><P>Item 3.</B></FONT></TD> <TD WIDTH="80%" VALIGN="TOP"> <FONT SIZE=2><P>Quantitative and Qualitative Disclosures About Market Risk</FONT></TD> <TD WIDTH="10%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="RIGHT">30-31</FONT></TD> </TR> <TR><TD WIDTH="11%" VALIGN="TOP"> <B><FONT SIZE=2><P> </P> <P> </B></FONT></TD> <TD WIDTH="80%" VALIGN="TOP"> <FONT SIZE=2><P> </P> <P> </P> <P ALIGN="CENTER">PART II. Other Information</FONT></TD> <TD WIDTH="10%" VALIGN="TOP"> <P> </TD> </TR> <TR><TD WIDTH="11%" VALIGN="TOP"> <B><FONT SIZE=2><P>Item 1</B></FONT></TD> <TD WIDTH="80%" VALIGN="TOP"> <FONT SIZE=2><P>Legal Proceedings</FONT></TD> <TD WIDTH="10%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="RIGHT">32</FONT></TD> </TR> <TR><TD WIDTH="11%" VALIGN="TOP"> <B><FONT SIZE=2><P>Item 5.</B></FONT></TD> <TD WIDTH="80%" VALIGN="TOP"> <FONT SIZE=2><P>Other Information</FONT></TD> <TD WIDTH="10%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="RIGHT">32-33</FONT></TD> </TR> <TR><TD WIDTH="11%" VALIGN="TOP"> <B><FONT SIZE=2><P>Item 6.</B></FONT></TD> <TD WIDTH="80%" VALIGN="TOP"> <FONT SIZE=2><P>Exhibits and Reports on Form 8-K</FONT></TD> <TD WIDTH="10%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="RIGHT">34</FONT></TD> </TR> </TABLE> <FONT SIZE=2><P ALIGN="CENTER"> </P> <B><U><P ALIGN="CENTER">DOMINION RESOURCES, INC.</P> <P ALIGN="CENTER">PART I. FINANCIAL INFORMATION</P> <P ALIGN="CENTER">ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS</P> <P ALIGN="CENTER">CONSOLIDATED STATEMENTS OF INCOME</P> </U><P ALIGN="CENTER">(UNAUDITED)</P></B></FONT> <P ALIGN="CENTER"><CENTER><TABLE CELLSPACING=0 BORDER=0 CELLPADDING=7 WIDTH=679> <TR><TD WIDTH="50%" VALIGN="TOP" ROWSPAN=4> <P></TD> <TD WIDTH="24%" VALIGN="TOP" COLSPAN=3 ROWSPAN=2> <B><FONT SIZE=2><P ALIGN="CENTER">Three Months Ended<BR> September 30,</B></FONT></TD> <TD WIDTH="26%" VALIGN="TOP" COLSPAN=3 ROWSPAN=2> <B><FONT SIZE=2><P ALIGN="CENTER">Nine Months Ended<BR> September 30,</B></FONT></TD> </TR> <TR></TR> <TR><TD WIDTH="14%" VALIGN="TOP" COLSPAN=2> <B><U><FONT SIZE=2><P ALIGN="CENTER">1999</B></U></FONT></TD> <TD WIDTH="10%" VALIGN="TOP"> <B><U><FONT SIZE=2><P ALIGN="CENTER">1998</B></U></FONT></TD> <TD WIDTH="15%" VALIGN="TOP" COLSPAN=2> <B><U><FONT SIZE=2><P ALIGN="CENTER">1999</B></U></FONT></TD> <TD WIDTH="11%" VALIGN="TOP"> <B><U><FONT SIZE=2><P ALIGN="CENTER">1998</B></U></FONT></TD> </TR> <TR><TD WIDTH="50%" VALIGN="TOP" COLSPAN=6> <B><FONT SIZE=2><P ALIGN="CENTER">(Millions, except per share amounts)</B></FONT></TD> </TR> <TR><TD WIDTH="50%" VALIGN="TOP"> <FONT SIZE=2><P>Operating revenues and income:</FONT></TD> <TD WIDTH="11%" VALIGN="TOP"> <P> </TD> <TD WIDTH="13%" VALIGN="TOP" COLSPAN=2> <P> </TD> <TD WIDTH="11%" VALIGN="TOP"> <P> </TD> <TD WIDTH="15%" VALIGN="TOP" COLSPAN=2> <P> </TD> </TR> <TR><TD WIDTH="50%" VALIGN="TOP"> <FONT SIZE=2><P>Virginia Power</FONT></TD> <TD WIDTH="11%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="RIGHT">$1,439.9</FONT></TD> <TD WIDTH="13%" VALIGN="TOP" COLSPAN=2> <FONT SIZE=2><P ALIGN="RIGHT">$1,347.6</FONT></TD> <TD WIDTH="11%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="RIGHT">$3,615.0</FONT></TD> <TD WIDTH="15%" VALIGN="TOP" COLSPAN=2> <FONT SIZE=2><P ALIGN="RIGHT">$3,304.4</FONT></TD> </TR> <TR><TD WIDTH="50%" VALIGN="TOP"> <FONT SIZE=2><P>East Midlands</FONT></TD> <TD WIDTH="11%" VALIGN="TOP"> <P> </TD> <TD WIDTH="13%" VALIGN="TOP" COLSPAN=2> <P> </TD> <TD WIDTH="11%" VALIGN="TOP"> <P> </TD> <TD WIDTH="15%" VALIGN="TOP" COLSPAN=2> <FONT SIZE=2><P ALIGN="RIGHT">1,009.5</FONT></TD> </TR> <TR><TD WIDTH="50%" VALIGN="TOP"> <FONT SIZE=2><P>Nonutility</FONT></TD> <TD WIDTH="11%" VALIGN="TOP"> <U><FONT SIZE=2><P ALIGN="RIGHT">222.6</U></FONT></TD> <TD WIDTH="13%" VALIGN="TOP" COLSPAN=2> <U><FONT SIZE=2><P ALIGN="RIGHT">196.7</U></FONT></TD> <TD WIDTH="11%" VALIGN="TOP"> <U><FONT SIZE=2><P ALIGN="RIGHT">655.8</U></FONT></TD> <TD WIDTH="15%" VALIGN="TOP" COLSPAN=2> <U><FONT SIZE=2><P ALIGN="RIGHT">589.1</U></FONT></TD> </TR> <TR><TD WIDTH="50%" VALIGN="TOP"> <P> </TD> <TD WIDTH="11%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="RIGHT">1,662.5</FONT></TD> <TD WIDTH="13%" VALIGN="TOP" COLSPAN=2> <FONT SIZE=2><P ALIGN="RIGHT">1,544.3</FONT></TD> <TD WIDTH="11%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="RIGHT">4,270.8</FONT></TD> <TD WIDTH="15%" VALIGN="TOP" COLSPAN=2> <FONT SIZE=2><P ALIGN="RIGHT">4,903.0</FONT></TD> </TR> <TR><TD WIDTH="50%" VALIGN="TOP"> <FONT SIZE=2><P>Operating expenses:</FONT></TD> <TD WIDTH="11%" VALIGN="TOP"> <P> </TD> <TD WIDTH="13%" VALIGN="TOP" COLSPAN=2> <P> </TD> <TD WIDTH="11%" VALIGN="TOP"> <P> </TD> <TD WIDTH="15%" VALIGN="TOP" COLSPAN=2> <P> </TD> </TR> <TR><TD WIDTH="50%" VALIGN="TOP"> <FONT SIZE=2><P>Fuel, net</FONT></TD> <TD WIDTH="11%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="RIGHT">320.8</FONT></TD> <TD WIDTH="13%" VALIGN="TOP" COLSPAN=2> <FONT SIZE=2><P ALIGN="RIGHT">285.0</FONT></TD> <TD WIDTH="11%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="RIGHT">787.5</FONT></TD> <TD WIDTH="15%" VALIGN="TOP" COLSPAN=2> <FONT SIZE=2><P ALIGN="RIGHT">758.4</FONT></TD> </TR> <TR><TD WIDTH="50%" VALIGN="TOP"> <FONT SIZE=2><P>Purchased power capacity, net</FONT></TD> <TD WIDTH="11%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="RIGHT">195.9</FONT></TD> <TD WIDTH="13%" VALIGN="TOP" COLSPAN=2> <FONT SIZE=2><P ALIGN="RIGHT">216.8</FONT></TD> <TD WIDTH="11%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="RIGHT">604.3</FONT></TD> <TD WIDTH="15%" VALIGN="TOP" COLSPAN=2> <FONT SIZE=2><P ALIGN="RIGHT">601.0</FONT></TD> </TR> <TR><TD WIDTH="50%" VALIGN="TOP"> <FONT SIZE=2><P>Impairment of regulatory assets</FONT></TD> <TD WIDTH="11%" VALIGN="TOP"> <P> </TD> <TD WIDTH="13%" VALIGN="TOP" COLSPAN=2> <P> </TD> <TD WIDTH="11%" VALIGN="TOP"> <P> </TD> <TD WIDTH="15%" VALIGN="TOP" COLSPAN=2> <FONT SIZE=2><P ALIGN="RIGHT">158.6</FONT></TD> </TR> <TR><TD WIDTH="50%" VALIGN="TOP"> <FONT SIZE=2><P>Supply and distribution-East Midlands</FONT></TD> <TD WIDTH="11%" VALIGN="TOP"> <P> </TD> <TD WIDTH="13%" VALIGN="TOP" COLSPAN=2> <P> </TD> <TD WIDTH="11%" VALIGN="TOP"> <P> </TD> <TD WIDTH="15%" VALIGN="TOP" COLSPAN=2> <FONT SIZE=2><P ALIGN="RIGHT">654.9</FONT></TD> </TR> <TR><TD WIDTH="50%" VALIGN="TOP"> <FONT SIZE=2><P>Other operation and maintenance</FONT></TD> <TD WIDTH="11%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="RIGHT">377.4</FONT></TD> <TD WIDTH="13%" VALIGN="TOP" COLSPAN=2> <FONT SIZE=2><P ALIGN="RIGHT">339.4</FONT></TD> <TD WIDTH="11%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="RIGHT">1,003.2</FONT></TD> <TD WIDTH="15%" VALIGN="TOP" COLSPAN=2> <FONT SIZE=2><P ALIGN="RIGHT">1,040.0</FONT></TD> </TR> <TR><TD WIDTH="50%" VALIGN="TOP"> <FONT SIZE=2><P>Depreciation, depletion and amortization</FONT></TD> <TD WIDTH="11%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="RIGHT">190.0</FONT></TD> <TD WIDTH="13%" VALIGN="TOP" COLSPAN=2> <FONT SIZE=2><P ALIGN="RIGHT">176.4</FONT></TD> <TD WIDTH="11%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="RIGHT">544.2</FONT></TD> <TD WIDTH="15%" VALIGN="TOP" COLSPAN=2> <FONT SIZE=2><P ALIGN="RIGHT">564.2</FONT></TD> </TR> <TR><TD WIDTH="50%" VALIGN="TOP"> <FONT SIZE=2><P>Other </FONT></TD> <TD WIDTH="11%" VALIGN="TOP"> <U><FONT SIZE=2><P ALIGN="RIGHT">91.9</U></FONT></TD> <TD WIDTH="13%" VALIGN="TOP" COLSPAN=2> <U><FONT SIZE=2><P ALIGN="RIGHT">91.1</U></FONT></TD> <TD WIDTH="11%" VALIGN="TOP"> <U><FONT SIZE=2><P ALIGN="RIGHT">236.0</U></FONT></TD> <TD WIDTH="15%" VALIGN="TOP" COLSPAN=2> <U><FONT SIZE=2><P ALIGN="RIGHT">242.6</U></FONT></TD> </TR> <TR><TD WIDTH="50%" VALIGN="TOP"> <P> </TD> <TD WIDTH="11%" VALIGN="TOP"> <P> </TD> <TD WIDTH="13%" VALIGN="TOP" COLSPAN=2> <P> </TD> <TD WIDTH="11%" VALIGN="TOP"> <P> </TD> <TD WIDTH="15%" VALIGN="TOP" COLSPAN=2> <P> </TD> </TR> <TR><TD WIDTH="50%" VALIGN="TOP"> <P> </TD> <TD WIDTH="11%" VALIGN="TOP"> <U><FONT SIZE=2><P ALIGN="RIGHT">1,176.0</U></FONT></TD> <TD WIDTH="13%" VALIGN="TOP" COLSPAN=2> <U><FONT SIZE=2><P ALIGN="RIGHT">1,108.7</U></FONT></TD> <TD WIDTH="11%" VALIGN="TOP"> <U><FONT SIZE=2><P ALIGN="RIGHT">3,175.2</U></FONT></TD> <TD WIDTH="15%" VALIGN="TOP" COLSPAN=2> <U><FONT SIZE=2><P ALIGN="RIGHT">4,019.7</U></FONT></TD> </TR> <TR><TD WIDTH="50%" VALIGN="TOP"> <P> </TD> <TD WIDTH="11%" VALIGN="TOP"> <P> </TD> <TD WIDTH="13%" VALIGN="TOP" COLSPAN=2> <P> </TD> <TD WIDTH="11%" VALIGN="TOP"> <P> </TD> <TD WIDTH="15%" VALIGN="TOP" COLSPAN=2> <P> </TD> </TR> <TR><TD WIDTH="50%" VALIGN="TOP"> <FONT SIZE=2><P>Operating income</FONT></TD> <TD WIDTH="11%" VALIGN="TOP"> <U><FONT SIZE=2><P ALIGN="RIGHT">486.5</U></FONT></TD> <TD WIDTH="13%" VALIGN="TOP" COLSPAN=2> <U><FONT SIZE=2><P ALIGN="RIGHT">435.6</U></FONT></TD> <TD WIDTH="11%" VALIGN="TOP"> <U><FONT SIZE=2><P ALIGN="RIGHT">1,095.6</U></FONT></TD> <TD WIDTH="15%" VALIGN="TOP" COLSPAN=2> <U><FONT SIZE=2><P ALIGN="RIGHT">883.3</U></FONT></TD> </TR> <TR><TD WIDTH="50%" VALIGN="TOP"> <P> </TD> <TD WIDTH="11%" VALIGN="TOP"> <P> </TD> <TD WIDTH="13%" VALIGN="TOP" COLSPAN=2> <P> </TD> <TD WIDTH="11%" VALIGN="TOP"> <P> </TD> <TD WIDTH="15%" VALIGN="TOP" COLSPAN=2> <P> </TD> </TR> <TR><TD WIDTH="50%" VALIGN="TOP"> <FONT SIZE=2><P>Other income: </FONT></TD> <TD WIDTH="11%" VALIGN="TOP"> <P> </TD> <TD WIDTH="13%" VALIGN="TOP" COLSPAN=2> </TD> <TD WIDTH="11%" VALIGN="TOP"> <P> </TD> <TD WIDTH="15%" VALIGN="TOP" COLSPAN=2> </TD> </TR> <TR><TD WIDTH="50%" VALIGN="TOP"> <FONT SIZE=2><P>Gain on sale of East Midlands</FONT></TD> <TD WIDTH="11%" VALIGN="TOP"> <P> </TD> <TD WIDTH="13%" VALIGN="TOP" COLSPAN=2> <FONT SIZE=2><P ALIGN="RIGHT">332.3</FONT></TD> <TD WIDTH="11%" VALIGN="TOP"> <P> </TD> <TD WIDTH="15%" VALIGN="TOP" COLSPAN=2> <FONT SIZE=2><P ALIGN="RIGHT">332.3</FONT></TD> </TR> <TR><TD WIDTH="50%" VALIGN="TOP"> <FONT SIZE=2><P>Other</FONT></TD> <TD WIDTH="11%" VALIGN="TOP"> <U><FONT SIZE=2><P ALIGN="RIGHT">20.4</U></FONT></TD> <TD WIDTH="13%" VALIGN="TOP" COLSPAN=2> <U><FONT SIZE=2><P ALIGN="RIGHT">40.5</U></FONT></TD> <TD WIDTH="11%" VALIGN="TOP"> <U><FONT SIZE=2><P ALIGN="RIGHT">69.1</U></FONT></TD> <TD WIDTH="15%" VALIGN="TOP" COLSPAN=2> <U><FONT SIZE=2><P ALIGN="RIGHT">73.5 </U></FONT></TD> </TR> <TR><TD WIDTH="50%" VALIGN="TOP"> <P> </TD> <TD WIDTH="11%" VALIGN="TOP"> <U><FONT SIZE=2><P ALIGN="RIGHT">20.4</U></FONT></TD> <TD WIDTH="13%" VALIGN="TOP" COLSPAN=2> <U><FONT SIZE=2><P ALIGN="RIGHT">372.8</U></FONT></TD> <TD WIDTH="11%" VALIGN="TOP"> <U><FONT SIZE=2><P ALIGN="RIGHT">69.1</U></FONT></TD> <TD WIDTH="15%" VALIGN="TOP" COLSPAN=2> <U><FONT SIZE=2><P ALIGN="RIGHT">405.8</U></FONT></TD> </TR> <TR><TD WIDTH="50%" VALIGN="TOP"> <P> </TD> <TD WIDTH="11%" VALIGN="TOP"> <P> </TD> <TD WIDTH="13%" VALIGN="TOP" COLSPAN=2> <P> </TD> <TD WIDTH="11%" VALIGN="TOP"> <P> </TD> <TD WIDTH="15%" VALIGN="TOP" COLSPAN=2> <P> </TD> </TR> <TR><TD WIDTH="50%" VALIGN="TOP"> <FONT SIZE=2><P>Fixed charges:</FONT></TD> <TD WIDTH="11%" VALIGN="TOP"> <P> </TD> <TD WIDTH="13%" VALIGN="TOP" COLSPAN=2> <P> </TD> <TD WIDTH="11%" VALIGN="TOP"> <P> </TD> <TD WIDTH="15%" VALIGN="TOP" COLSPAN=2> <P> </TD> </TR> <TR><TD WIDTH="50%" VALIGN="TOP"> <FONT SIZE=2><P>Interest charges, net</FONT></TD> <TD WIDTH="11%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="RIGHT">132.6</FONT></TD> <TD WIDTH="13%" VALIGN="TOP" COLSPAN=2> <FONT SIZE=2><P ALIGN="RIGHT">127.9</FONT></TD> <TD WIDTH="11%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="RIGHT">371.5</FONT></TD> <TD WIDTH="15%" VALIGN="TOP" COLSPAN=2> <FONT SIZE=2><P ALIGN="RIGHT">465.7</FONT></TD> </TR> <TR><TD WIDTH="50%" VALIGN="TOP"> <FONT SIZE=2><P>Preferred dividends and distributions of subsidiary trusts</FONT></TD> <TD WIDTH="11%" VALIGN="TOP"> <U><FONT SIZE=2><P ALIGN="RIGHT">16.9</U></FONT></TD> <TD WIDTH="13%" VALIGN="TOP" COLSPAN=2> <U><FONT SIZE=2><P ALIGN="RIGHT">15.0</U></FONT></TD> <TD WIDTH="11%" VALIGN="TOP"> <U><FONT SIZE=2><P ALIGN="RIGHT">49.9</U></FONT></TD> <TD WIDTH="15%" VALIGN="TOP" COLSPAN=2> <U><FONT SIZE=2><P ALIGN="RIGHT">48.3</U></FONT></TD> </TR> <TR><TD WIDTH="50%" VALIGN="TOP"> <P> </TD> <TD WIDTH="11%" VALIGN="TOP"> <P> </TD> <TD WIDTH="13%" VALIGN="TOP" COLSPAN=2> <P> </TD> <TD WIDTH="11%" VALIGN="TOP"> <P> </TD> <TD WIDTH="15%" VALIGN="TOP" COLSPAN=2> <P> </TD> </TR> <TR><TD WIDTH="50%" VALIGN="TOP"> <P> </TD> <TD WIDTH="11%" VALIGN="TOP"> <U><FONT SIZE=2><P ALIGN="RIGHT">149.5</U></FONT></TD> <TD WIDTH="13%" VALIGN="TOP" COLSPAN=2> <U><FONT SIZE=2><P ALIGN="RIGHT">142.9</U></FONT></TD> <TD WIDTH="11%" VALIGN="TOP"> <U><FONT SIZE=2><P ALIGN="RIGHT">421.4</U></FONT></TD> <TD WIDTH="15%" VALIGN="TOP" COLSPAN=2> <U><FONT SIZE=2><P ALIGN="RIGHT">514.0</U></FONT></TD> </TR> <TR><TD WIDTH="50%" VALIGN="TOP"> <P> </TD> <TD WIDTH="11%" VALIGN="TOP"> <P> </TD> <TD WIDTH="13%" VALIGN="TOP" COLSPAN=2> <P> </TD> <TD WIDTH="11%" VALIGN="TOP"> <P> </TD> <TD WIDTH="15%" VALIGN="TOP" COLSPAN=2> <P> </TD> </TR> <TR><TD WIDTH="50%" VALIGN="TOP"> <FONT SIZE=2><P>Income before income taxes, minority interests, and extraordinary item </FONT></TD> <TD WIDTH="11%" VALIGN="TOP"> <U><FONT SIZE=2><P ALIGN="RIGHT"><BR> 357.4</U></FONT></TD> <TD WIDTH="13%" VALIGN="TOP" COLSPAN=2> <U><FONT SIZE=2><P ALIGN="RIGHT"><BR> 665.5</U></FONT></TD> <TD WIDTH="11%" VALIGN="TOP"> <U><FONT SIZE=2><P ALIGN="RIGHT"><BR> 743.3</U></FONT></TD> <TD WIDTH="15%" VALIGN="TOP" COLSPAN=2> <U><FONT SIZE=2><P ALIGN="RIGHT"><BR> 775.1</U></FONT></TD> </TR> <TR><TD WIDTH="50%" VALIGN="TOP"> <P> </TD> <TD WIDTH="11%" VALIGN="TOP"> <P> </TD> <TD WIDTH="13%" VALIGN="TOP" COLSPAN=2> <P> </TD> <TD WIDTH="11%" VALIGN="TOP"> <P> </TD> <TD WIDTH="15%" VALIGN="TOP" COLSPAN=2> <P> </TD> </TR> <TR><TD WIDTH="50%" VALIGN="TOP"> <FONT SIZE=2><P>Provision for income taxes</FONT></TD> <TD WIDTH="11%" VALIGN="TOP"> <U><FONT SIZE=2><P ALIGN="RIGHT">121.0</U></FONT></TD> <TD WIDTH="13%" VALIGN="TOP" COLSPAN=2> <U><FONT SIZE=2><P ALIGN="RIGHT">234.9</U></FONT></TD> <TD WIDTH="11%" VALIGN="TOP"> <U><FONT SIZE=2><P ALIGN="RIGHT">240.7</U></FONT></TD> <TD WIDTH="15%" VALIGN="TOP" COLSPAN=2> <U><FONT SIZE=2><P ALIGN="RIGHT">269.2</U></FONT></TD> </TR> <TR><TD WIDTH="50%" VALIGN="TOP"> <P> </TD> <TD WIDTH="11%" VALIGN="TOP"> <P> </TD> <TD WIDTH="13%" VALIGN="TOP" COLSPAN=2> <P> </TD> <TD WIDTH="11%" VALIGN="TOP"> <P> </TD> <TD WIDTH="15%" VALIGN="TOP" COLSPAN=2> <P> </TD> </TR> <TR><TD WIDTH="50%" VALIGN="TOP"> <FONT SIZE=2><P>Minority interests</FONT></TD> <TD WIDTH="11%" VALIGN="TOP"> <U><FONT SIZE=2><P ALIGN="RIGHT">4.3</U></FONT></TD> <TD WIDTH="13%" VALIGN="TOP" COLSPAN=2> <U><FONT SIZE=2><P ALIGN="RIGHT">6.0</U></FONT></TD> <TD WIDTH="11%" VALIGN="TOP"> <U><FONT SIZE=2><P ALIGN="RIGHT">14.6</U></FONT></TD> <TD WIDTH="15%" VALIGN="TOP" COLSPAN=2> <U><FONT SIZE=2><P ALIGN="RIGHT">24.5</U></FONT></TD> </TR> <TR><TD WIDTH="50%" VALIGN="TOP"> <FONT SIZE=2><P>Income before extraordinary item</FONT></TD> <TD WIDTH="11%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="RIGHT">232.1</FONT></TD> <TD WIDTH="13%" VALIGN="TOP" COLSPAN=2> <FONT SIZE=2><P ALIGN="RIGHT">424.6</FONT></TD> <TD WIDTH="11%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="RIGHT">488.0</FONT></TD> <TD WIDTH="15%" VALIGN="TOP" COLSPAN=2> <FONT SIZE=2><P ALIGN="RIGHT">481.4</FONT></TD> </TR> <TR><TD WIDTH="50%" VALIGN="TOP"> <FONT SIZE=2><P>Extraordinary item, net of tax</FONT></TD> <TD WIDTH="11%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="RIGHT">______</FONT></TD> <TD WIDTH="13%" VALIGN="TOP" COLSPAN=2> <FONT SIZE=2><P ALIGN="RIGHT">______</FONT></TD> <TD WIDTH="11%" VALIGN="TOP"> <U><FONT SIZE=2><P ALIGN="RIGHT">254.8</U></FONT></TD> <TD WIDTH="15%" VALIGN="TOP" COLSPAN=2> <FONT SIZE=2><P ALIGN="RIGHT">______ </FONT></TD> </TR> <TR><TD WIDTH="50%" VALIGN="TOP"> <FONT SIZE=2><P>Net income </FONT></TD> <TD WIDTH="11%" VALIGN="TOP"> <U><FONT SIZE=2><P ALIGN="RIGHT">$ 232.1</U></FONT></TD> <TD WIDTH="13%" VALIGN="TOP" COLSPAN=2> <U><FONT SIZE=2><P ALIGN="RIGHT">$ 424.6</U></FONT></TD> <TD WIDTH="11%" VALIGN="TOP"> <U><FONT SIZE=2><P ALIGN="RIGHT">$ 233.2</U></FONT></TD> <TD WIDTH="15%" VALIGN="TOP" COLSPAN=2> <U><FONT SIZE=2><P ALIGN="RIGHT">$ 481.4</U></FONT></TD> </TR> <TR><TD WIDTH="50%" VALIGN="TOP"> <P> </TD> <TD WIDTH="11%" VALIGN="TOP"> <P> </TD> <TD WIDTH="13%" VALIGN="TOP" COLSPAN=2> <P> </TD> <TD WIDTH="11%" VALIGN="TOP"> <P> </TD> <TD WIDTH="15%" VALIGN="TOP" COLSPAN=2> <P> </TD> </TR> <TR><TD WIDTH="50%" VALIGN="TOP"> <FONT SIZE=2><P>Average shares of common stock - basic and diluted</FONT></TD> <TD WIDTH="11%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="RIGHT">191.4</FONT></TD> <TD WIDTH="13%" VALIGN="TOP" COLSPAN=2> <FONT SIZE=2><P ALIGN="RIGHT">196.1</FONT></TD> <TD WIDTH="11%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="RIGHT">192.3</FONT></TD> <TD WIDTH="15%" VALIGN="TOP" COLSPAN=2> <FONT SIZE=2><P ALIGN="RIGHT">194.8</FONT></TD> </TR> <TR><TD WIDTH="50%" VALIGN="TOP"> <FONT SIZE=2><P>Basic and diluted earnings per share:</FONT></TD> <TD WIDTH="11%" VALIGN="TOP"> <P> </TD> <TD WIDTH="13%" VALIGN="TOP" COLSPAN=2> <P> </TD> <TD WIDTH="11%" VALIGN="TOP"> <P> </TD> <TD WIDTH="15%" VALIGN="TOP" COLSPAN=2> <P> </TD> </TR> <TR><TD WIDTH="50%" VALIGN="TOP"> <FONT SIZE=2><P>Income before extraordinary item</FONT></TD> <TD WIDTH="11%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="RIGHT">$ 1.21</FONT></TD> <TD WIDTH="13%" VALIGN="TOP" COLSPAN=2> <FONT SIZE=2><P ALIGN="RIGHT">$ 2.17</FONT></TD> <TD WIDTH="11%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="RIGHT">$ 2.53</FONT></TD> <TD WIDTH="15%" VALIGN="TOP" COLSPAN=2> <FONT SIZE=2><P ALIGN="RIGHT">$ 2.47</FONT></TD> </TR> <TR><TD WIDTH="50%" VALIGN="TOP"> <FONT SIZE=2><P>Extraordinary Item</FONT></TD> <TD WIDTH="11%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="RIGHT">______</FONT></TD> <TD WIDTH="13%" VALIGN="TOP" COLSPAN=2> <FONT SIZE=2><P ALIGN="RIGHT">______</FONT></TD> <TD WIDTH="11%" VALIGN="TOP"> <U><FONT SIZE=2><P ALIGN="RIGHT">1.32</U></FONT></TD> <TD WIDTH="15%" VALIGN="TOP" COLSPAN=2> <FONT SIZE=2><P ALIGN="RIGHT">______</FONT></TD> </TR> <TR><TD WIDTH="50%" VALIGN="TOP"> <FONT SIZE=2><P>Net income </FONT></TD> <TD WIDTH="11%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="RIGHT">$ 1.21</FONT></TD> <TD WIDTH="13%" VALIGN="TOP" COLSPAN=2> <FONT SIZE=2><P ALIGN="RIGHT">$ 2.17</FONT></TD> <TD WIDTH="11%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="RIGHT">$ 1.21</FONT></TD> <TD WIDTH="15%" VALIGN="TOP" COLSPAN=2> <FONT SIZE=2><P ALIGN="RIGHT">$ 2.47</FONT></TD> </TR> <TR><TD WIDTH="50%" VALIGN="TOP"> <FONT SIZE=2><P>Dividends paid per common share</FONT></TD> <TD WIDTH="11%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="RIGHT">$ 0.645</FONT></TD> <TD WIDTH="13%" VALIGN="TOP" COLSPAN=2> <FONT SIZE=2><P ALIGN="RIGHT">$ 0.645</FONT></TD> <TD WIDTH="11%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="RIGHT">$ 1.935</FONT></TD> <TD WIDTH="15%" VALIGN="TOP" COLSPAN=2> <FONT SIZE=2><P ALIGN="RIGHT">$ 1.935</FONT></TD> </TR> </TABLE> </CENTER></P> <FONT SIZE=2><P>_________________</P> <P>The accompanying notes are an integral part of the Consolidated Financial Statements.</P> <B><P ALIGN="CENTER">DOMINION RESOURCES, INC.</P> <U><P ALIGN="CENTER">CONSOLIDATED BALANCE SHEETS</P> <P ALIGN="CENTER">ASSETS</P> </U><P ALIGN="CENTER">(UNAUDITED)</P></B></FONT> <TABLE CELLSPACING=0 BORDER=0 CELLPADDING=7 WIDTH=654> <TR><TD WIDTH="67%" VALIGN="TOP" COLSPAN=2> <P> </TD> <TD WIDTH="17%" VALIGN="TOP" COLSPAN=3> <B><FONT SIZE=2><P>September 30,</B></FONT></TD> <TD WIDTH="16%" VALIGN="TOP" COLSPAN=2> <B><FONT SIZE=2><P ALIGN="CENTER">December 31,</B></FONT></TD> </TR> <TR><TD WIDTH="62%" VALIGN="TOP"> <P> </TD> <TD WIDTH="24%" VALIGN="TOP" COLSPAN=5> <B><U><FONT SIZE=2><P ALIGN="CENTER">1999</B></U></FONT></TD> <TD WIDTH="14%" VALIGN="TOP"> <B><U><FONT SIZE=2><P ALIGN="CENTER">1998*</B></U></FONT></TD> </TR> <TR><TD WIDTH="70%" VALIGN="TOP" COLSPAN=3> <P> </TD> <TD WIDTH="30%" VALIGN="TOP" COLSPAN=4> <B><FONT SIZE=2><P ALIGN="CENTER">(Millions)</B></FONT></TD> </TR> <TR><TD WIDTH="70%" VALIGN="TOP" COLSPAN=3 HEIGHT=22> <FONT SIZE=2><P>Current assets:</FONT></TD> <TD WIDTH="11%" VALIGN="TOP" HEIGHT=22><P></P></TD> <TD WIDTH="19%" VALIGN="TOP" COLSPAN=3 HEIGHT=22><P></P></TD> </TR> <TR><TD WIDTH="70%" VALIGN="TOP" COLSPAN=3> <FONT SIZE=2><P>Cash and cash equivalents </FONT></TD> <TD WIDTH="11%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="RIGHT">$ 357.0</FONT></TD> <TD WIDTH="19%" VALIGN="TOP" COLSPAN=3> <FONT SIZE=2><P ALIGN="RIGHT">$ 425.6</FONT></TD> </TR> <TR><TD WIDTH="70%" VALIGN="TOP" COLSPAN=3> <FONT SIZE=2><P>Customer accounts receivable, net</FONT></TD> <TD WIDTH="11%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="RIGHT">824.2</FONT></TD> <TD WIDTH="19%" VALIGN="TOP" COLSPAN=3> <FONT SIZE=2><P ALIGN="RIGHT">777.8</FONT></TD> </TR> <TR><TD WIDTH="70%" VALIGN="TOP" COLSPAN=3> <FONT SIZE=2><P ALIGN="JUSTIFY">Other accounts receivable</FONT></TD> <TD WIDTH="11%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="RIGHT">271.1</FONT></TD> <TD WIDTH="19%" VALIGN="TOP" COLSPAN=3> <FONT SIZE=2><P ALIGN="RIGHT">256.5</FONT></TD> </TR> <TR><TD WIDTH="70%" VALIGN="TOP" COLSPAN=3> <FONT SIZE=2><P ALIGN="JUSTIFY">Materials and supplies:</FONT></TD> <TD WIDTH="11%" VALIGN="TOP"> <P> </TD> <TD WIDTH="19%" VALIGN="TOP" COLSPAN=3> <P> </TD> </TR> <TR><TD WIDTH="70%" VALIGN="TOP" COLSPAN=3> <FONT SIZE=2><P ALIGN="JUSTIFY">Plant and general</FONT></TD> <TD WIDTH="11%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="RIGHT">146.5</FONT></TD> <TD WIDTH="19%" VALIGN="TOP" COLSPAN=3> <FONT SIZE=2><P ALIGN="RIGHT">142.0</FONT></TD> </TR> <TR><TD WIDTH="70%" VALIGN="TOP" COLSPAN=3> <FONT SIZE=2><P ALIGN="JUSTIFY">Fossil fuel</FONT></TD> <TD WIDTH="11%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="RIGHT">103.8</FONT></TD> <TD WIDTH="19%" VALIGN="TOP" COLSPAN=3> <FONT SIZE=2><P ALIGN="RIGHT">95.0</FONT></TD> </TR> <TR><TD WIDTH="70%" VALIGN="TOP" COLSPAN=3> <FONT SIZE=2><P ALIGN="JUSTIFY">Mortgage loans in warehouse </FONT></TD> <TD WIDTH="11%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="RIGHT">312.5</FONT></TD> <TD WIDTH="19%" VALIGN="TOP" COLSPAN=3> <FONT SIZE=2><P ALIGN="RIGHT">140.3</FONT></TD> </TR> <TR><TD WIDTH="70%" VALIGN="TOP" COLSPAN=3> <FONT SIZE=2><P ALIGN="JUSTIFY">Commodity contract assets</FONT></TD> <TD WIDTH="11%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="RIGHT">352.2</FONT></TD> <TD WIDTH="19%" VALIGN="TOP" COLSPAN=3> <FONT SIZE=2><P ALIGN="RIGHT">179.8</FONT></TD> </TR> <TR><TD WIDTH="70%" VALIGN="TOP" COLSPAN=3> <FONT SIZE=2><P ALIGN="JUSTIFY">Other</FONT></TD> <TD WIDTH="11%" VALIGN="TOP"> <U><FONT SIZE=2><P ALIGN="RIGHT">262.1</U></FONT></TD> <TD WIDTH="19%" VALIGN="TOP" COLSPAN=3> <U><FONT SIZE=2><P ALIGN="RIGHT">268.3</U> </FONT></TD> </TR> <TR><TD WIDTH="70%" VALIGN="TOP" COLSPAN=3> </TD> <TD WIDTH="11%" VALIGN="TOP"> <U><FONT SIZE=2><P ALIGN="RIGHT">2,629.4</U></FONT></TD> <TD WIDTH="19%" VALIGN="TOP" COLSPAN=3> <U><FONT SIZE=2><P ALIGN="RIGHT">2,285.3</U></FONT></TD> </TR> <TR><TD WIDTH="70%" VALIGN="TOP" COLSPAN=3> <FONT SIZE=2><P ALIGN="JUSTIFY">Investments:</FONT></TD> <TD WIDTH="11%" VALIGN="TOP"> <P> </TD> <TD WIDTH="19%" VALIGN="TOP" COLSPAN=3> <P> </TD> </TR> <TR><TD WIDTH="70%" VALIGN="TOP" COLSPAN=3> <FONT SIZE=2><P ALIGN="JUSTIFY">Investments in affiliates</FONT></TD> <TD WIDTH="11%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="RIGHT">424.4</FONT></TD> <TD WIDTH="19%" VALIGN="TOP" COLSPAN=3> <FONT SIZE=2><P ALIGN="RIGHT">382.1</FONT></TD> </TR> <TR><TD WIDTH="70%" VALIGN="TOP" COLSPAN=3> <FONT SIZE=2><P ALIGN="JUSTIFY">Available-for-sale securities</FONT></TD> <TD WIDTH="11%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="RIGHT">482.6</FONT></TD> <TD WIDTH="19%" VALIGN="TOP" COLSPAN=3> <FONT SIZE=2><P ALIGN="RIGHT">500.0</FONT></TD> </TR> <TR><TD WIDTH="70%" VALIGN="TOP" COLSPAN=3> <FONT SIZE=2><P ALIGN="JUSTIFY">Nuclear decommissioning trust funds</FONT></TD> <TD WIDTH="11%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="RIGHT">780.1</FONT></TD> <TD WIDTH="19%" VALIGN="TOP" COLSPAN=3> <FONT SIZE=2><P ALIGN="RIGHT">705.1</FONT></TD> </TR> <TR><TD WIDTH="70%" VALIGN="TOP" COLSPAN=3> <FONT SIZE=2><P ALIGN="JUSTIFY">Loans receivable, net</FONT></TD> <TD WIDTH="11%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="RIGHT">1,998.5</FONT></TD> <TD WIDTH="19%" VALIGN="TOP" COLSPAN=3> <FONT SIZE=2><P ALIGN="RIGHT">1,686.5</FONT></TD> </TR> <TR><TD WIDTH="70%" VALIGN="TOP" COLSPAN=3> <FONT SIZE=2><P ALIGN="JUSTIFY">Investments in real estate</FONT></TD> <TD WIDTH="11%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="RIGHT">90.0</FONT></TD> <TD WIDTH="19%" VALIGN="TOP" COLSPAN=3> <FONT SIZE=2><P ALIGN="RIGHT">93.9</FONT></TD> </TR> <TR><TD WIDTH="70%" VALIGN="TOP" COLSPAN=3> <FONT SIZE=2><P ALIGN="JUSTIFY">Other</FONT></TD> <TD WIDTH="11%" VALIGN="TOP"> <U><FONT SIZE=2><P ALIGN="RIGHT">378.0</U></FONT></TD> <TD WIDTH="19%" VALIGN="TOP" COLSPAN=3> <U><FONT SIZE=2><P ALIGN="RIGHT">263.0</U></FONT></TD> </TR> <TR><TD WIDTH="70%" VALIGN="TOP" COLSPAN=3> <P> </TD> <TD WIDTH="11%" VALIGN="TOP"> <U><FONT SIZE=2><P ALIGN="RIGHT">4,153.6</U></FONT></TD> <TD WIDTH="19%" VALIGN="TOP" COLSPAN=3> <U><FONT SIZE=2><P ALIGN="RIGHT">3,630.6</U></FONT></TD> </TR> <TR><TD WIDTH="70%" VALIGN="TOP" COLSPAN=3> <P> </TD> <TD WIDTH="11%" VALIGN="TOP"> <P> </TD> <TD WIDTH="19%" VALIGN="TOP" COLSPAN=3> <P> </TD> </TR> <TR><TD WIDTH="70%" VALIGN="TOP" COLSPAN=3> <FONT SIZE=2><P ALIGN="JUSTIFY">Property, plant and equipment:</FONT></TD> <TD WIDTH="11%" VALIGN="TOP"> <P> </TD> <TD WIDTH="19%" VALIGN="TOP" COLSPAN=3> <P> </TD> </TR> <TR><TD WIDTH="70%" VALIGN="TOP" COLSPAN=3> <FONT SIZE=2><P ALIGN="JUSTIFY">Property, plant and equipment</FONT></TD> <TD WIDTH="11%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="RIGHT">18,998.6</FONT></TD> <TD WIDTH="19%" VALIGN="TOP" COLSPAN=3> <FONT SIZE=2><P ALIGN="RIGHT">18,106.0</FONT></TD> </TR> <TR><TD WIDTH="70%" VALIGN="TOP" COLSPAN=3> <FONT SIZE=2><P ALIGN="JUSTIFY">Less accumulated depreciation, depletion and amortization</FONT></TD> <TD WIDTH="11%" VALIGN="TOP"> <U><FONT SIZE=2><P ALIGN="RIGHT">7,988.6</U></FONT></TD> <TD WIDTH="19%" VALIGN="TOP" COLSPAN=3> <U><FONT SIZE=2><P ALIGN="RIGHT">7,469.4</U> </FONT></TD> </TR> <TR><TD WIDTH="70%" VALIGN="TOP" COLSPAN=3> <P> </TD> <TD WIDTH="11%" VALIGN="TOP"> <P> </TD> <TD WIDTH="19%" VALIGN="TOP" COLSPAN=3> <P> </TD> </TR> <TR><TD WIDTH="70%" VALIGN="TOP" COLSPAN=3> <P> </TD> <TD WIDTH="11%" VALIGN="TOP"> <U><FONT SIZE=2><P ALIGN="RIGHT">11,010.0</U></FONT></TD> <TD WIDTH="19%" VALIGN="TOP" COLSPAN=3> <U><FONT SIZE=2><P ALIGN="RIGHT">10,636.6</U></FONT></TD> </TR> <TR><TD WIDTH="70%" VALIGN="TOP" COLSPAN=3> <FONT SIZE=2><P ALIGN="JUSTIFY">Deferred charges and other assets:</FONT></TD> <TD WIDTH="11%" VALIGN="TOP"> <P> </TD> <TD WIDTH="19%" VALIGN="TOP" COLSPAN=3> <P> </TD> </TR> <TR><TD WIDTH="70%" VALIGN="TOP" COLSPAN=3> <FONT SIZE=2><P ALIGN="JUSTIFY">Regulatory assets</FONT></TD> <TD WIDTH="11%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="RIGHT">223.7</FONT></TD> <TD WIDTH="19%" VALIGN="TOP" COLSPAN=3> <FONT SIZE=2><P ALIGN="RIGHT">620.0</FONT></TD> </TR> <TR><TD WIDTH="70%" VALIGN="TOP" COLSPAN=3> <FONT SIZE=2><P ALIGN="JUSTIFY">Goodwill</FONT></TD> <TD WIDTH="11%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="RIGHT">149.6</FONT></TD> <TD WIDTH="19%" VALIGN="TOP" COLSPAN=3> <FONT SIZE=2><P ALIGN="RIGHT">150.0</FONT></TD> </TR> <TR><TD WIDTH="70%" VALIGN="TOP" COLSPAN=3> <FONT SIZE=2><P ALIGN="JUSTIFY">Other</FONT></TD> <TD WIDTH="11%" VALIGN="TOP"> <U><FONT SIZE=2><P ALIGN="RIGHT">248.5</U></FONT></TD> <TD WIDTH="19%" VALIGN="TOP" COLSPAN=3> <U><FONT SIZE=2><P ALIGN="RIGHT">194.5</U></FONT></TD> </TR> <TR><TD WIDTH="70%" VALIGN="TOP" COLSPAN=3> <P> </TD> <TD WIDTH="11%" VALIGN="TOP"> <U><FONT SIZE=2><P ALIGN="RIGHT">621.8</U></FONT></TD> <TD WIDTH="19%" VALIGN="TOP" COLSPAN=3> <U><FONT SIZE=2><P ALIGN="RIGHT">964.5</U></FONT></TD> </TR> <TR><TD WIDTH="70%" VALIGN="TOP" COLSPAN=3> <P> </TD> <TD WIDTH="11%" VALIGN="TOP"> <P> </TD> <TD WIDTH="19%" VALIGN="TOP" COLSPAN=3> <P> </TD> </TR> <TR><TD WIDTH="70%" VALIGN="TOP" COLSPAN=3> <FONT SIZE=2><P ALIGN="JUSTIFY">Total assets </FONT></TD> <TD WIDTH="11%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="RIGHT">$<U>18,414.8</U></FONT></TD> <TD WIDTH="19%" VALIGN="TOP" COLSPAN=3> <FONT SIZE=2><P ALIGN="RIGHT">$<U>17,517.0</U></FONT></TD> </TR> </TABLE> <FONT SIZE=2><P ALIGN="JUSTIFY">__________________</P> <P ALIGN="JUSTIFY">The accompanying notes are an integral part of the Consolidated Financial Statements.</P> <P ALIGN="JUSTIFY">* The Balance Sheet at December 31, 1998 has been derived from the audited Consolidated Financial Statements at that date.</P> <B><U><P ALIGN="CENTER">DOMINION RESOURCES, INC.</P> <P ALIGN="CENTER">CONSOLIDATED BALANCE SHEETS</P> <P ALIGN="CENTER">LIABILITIES AND SHAREHOLDERS' EQUITY</P> </U><P ALIGN="CENTER">(UNAUDITED)</P></B></FONT> <P ALIGN="CENTER"><CENTER><TABLE CELLSPACING=0 BORDER=0 CELLPADDING=7 WIDTH=695> <TR><TD WIDTH="73%" VALIGN="TOP" COLSPAN=2 HEIGHT=33> <P ALIGN="JUSTIFY"></TD> <TD WIDTH="13%" VALIGN="TOP" HEIGHT=33> <B><FONT SIZE=2><P ALIGN="CENTER">September 30,<BR> <U>1999</B></U></FONT></TD> <TD WIDTH="14%" VALIGN="TOP" COLSPAN=2 HEIGHT=33> <B><FONT SIZE=2><P ALIGN="CENTER">December 31,<BR> <U>1998*</B></U></FONT></TD> </TR> <TR><TD WIDTH="73%" VALIGN="TOP" COLSPAN=2> <P> </TD> <TD WIDTH="27%" VALIGN="TOP" COLSPAN=3> <B><FONT SIZE=2><P ALIGN="CENTER">(Millions)</B></FONT></TD> </TR> <TR><TD WIDTH="73%" VALIGN="TOP" COLSPAN=2> <FONT SIZE=2><P ALIGN="JUSTIFY">Current liabilities:</FONT></TD> <TD WIDTH="16%" VALIGN="TOP" COLSPAN=2> <P> </TD> <TD WIDTH="12%" VALIGN="TOP"> <P> </TD> </TR> <TR><TD WIDTH="73%" VALIGN="TOP" COLSPAN=2> <FONT SIZE=2><P ALIGN="JUSTIFY">Securities due within one year</FONT></TD> <TD WIDTH="16%" VALIGN="TOP" COLSPAN=2> <FONT SIZE=2><P ALIGN="RIGHT">$ 639.3</FONT></TD> <TD WIDTH="12%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="RIGHT">$ 442.9</FONT></TD> </TR> <TR><TD WIDTH="73%" VALIGN="TOP" COLSPAN=2> <FONT SIZE=2><P ALIGN="JUSTIFY">Short-term debt </FONT></TD> <TD WIDTH="16%" VALIGN="TOP" COLSPAN=2> <FONT SIZE=2><P ALIGN="RIGHT">909.9</FONT></TD> <TD WIDTH="12%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="RIGHT">300.8</FONT></TD> </TR> <TR><TD WIDTH="73%" VALIGN="TOP" COLSPAN=2> <FONT SIZE=2><P ALIGN="JUSTIFY">Accounts payable, trade</FONT></TD> <TD WIDTH="16%" VALIGN="TOP" COLSPAN=2> <FONT SIZE=2><P ALIGN="RIGHT">814.8</FONT></TD> <TD WIDTH="12%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="RIGHT">698.5</FONT></TD> </TR> <TR><TD WIDTH="73%" VALIGN="TOP" COLSPAN=2> <FONT SIZE=2><P ALIGN="JUSTIFY">Accrued interest </FONT></TD> <TD WIDTH="16%" VALIGN="TOP" COLSPAN=2> <FONT SIZE=2><P ALIGN="RIGHT">112.2</FONT></TD> <TD WIDTH="12%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="RIGHT">109.1</FONT></TD> </TR> <TR><TD WIDTH="73%" VALIGN="TOP" COLSPAN=2> <FONT SIZE=2><P ALIGN="JUSTIFY">Accrued payroll</FONT></TD> <TD WIDTH="16%" VALIGN="TOP" COLSPAN=2> <FONT SIZE=2><P ALIGN="RIGHT">76.4</FONT></TD> <TD WIDTH="12%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="RIGHT">79.0</FONT></TD> </TR> <TR><TD WIDTH="73%" VALIGN="TOP" COLSPAN=2> <FONT SIZE=2><P ALIGN="JUSTIFY">Accrued taxes</FONT></TD> <TD WIDTH="16%" VALIGN="TOP" COLSPAN=2> <FONT SIZE=2><P ALIGN="RIGHT">232.4</FONT></TD> <TD WIDTH="12%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="RIGHT">175.3</FONT></TD> </TR> <TR><TD WIDTH="73%" VALIGN="TOP" COLSPAN=2> <FONT SIZE=2><P ALIGN="JUSTIFY">Commodity contract liabilities</FONT></TD> <TD WIDTH="16%" VALIGN="TOP" COLSPAN=2> <FONT SIZE=2><P ALIGN="RIGHT">328.3</FONT></TD> <TD WIDTH="12%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="RIGHT">265.8</FONT></TD> </TR> <TR><TD WIDTH="73%" VALIGN="TOP" COLSPAN=2> <FONT SIZE=2><P ALIGN="JUSTIFY">Other</FONT></TD> <TD WIDTH="16%" VALIGN="TOP" COLSPAN=2> <U><FONT SIZE=2><P ALIGN="RIGHT">232.7</U></FONT></TD> <TD WIDTH="12%" VALIGN="TOP"> <U><FONT SIZE=2><P ALIGN="RIGHT">266.8</U></FONT></TD> </TR> <TR><TD WIDTH="73%" VALIGN="TOP" COLSPAN=2> <P> </TD> <TD WIDTH="16%" VALIGN="TOP" COLSPAN=2> <U><FONT SIZE=2><P ALIGN="RIGHT">3,346.0</U></FONT></TD> <TD WIDTH="12%" VALIGN="TOP"> <U><FONT SIZE=2><P ALIGN="RIGHT">2,338.2</U></FONT></TD> </TR> <TR><TD WIDTH="73%" VALIGN="TOP" COLSPAN=2> <FONT SIZE=2><P ALIGN="JUSTIFY">Long-term debt:</FONT></TD> <TD WIDTH="16%" VALIGN="TOP" COLSPAN=2> <P ALIGN="RIGHT"> </TD> <TD WIDTH="12%" VALIGN="TOP"> <P ALIGN="RIGHT"> </TD> </TR> <TR><TD WIDTH="73%" VALIGN="TOP" COLSPAN=2> <FONT SIZE=2><P ALIGN="JUSTIFY">Virginia Power</FONT></TD> <TD WIDTH="16%" VALIGN="TOP" COLSPAN=2> <FONT SIZE=2><P ALIGN="RIGHT">3,486.7</FONT></TD> <TD WIDTH="12%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="RIGHT">3,464.7</FONT></TD> </TR> <TR><TD WIDTH="73%" VALIGN="TOP" COLSPAN=2> <FONT SIZE=2><P ALIGN="JUSTIFY">Nonrecourse - nonutility </FONT></TD> <TD WIDTH="16%" VALIGN="TOP" COLSPAN=2> <FONT SIZE=2><P ALIGN="RIGHT">3,015.2</FONT></TD> <TD WIDTH="12%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="RIGHT">2,727.9</FONT></TD> </TR> <TR><TD WIDTH="73%" VALIGN="TOP" COLSPAN=2> <FONT SIZE=2><P ALIGN="JUSTIFY">Dominion UK </FONT></TD> <TD WIDTH="16%" VALIGN="TOP" COLSPAN=2> <FONT SIZE=2><P ALIGN="RIGHT">55.2</FONT></TD> <TD WIDTH="12%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="RIGHT">55.6</FONT></TD> </TR> <TR><TD WIDTH="73%" VALIGN="TOP" COLSPAN=2> <FONT SIZE=2><P ALIGN="JUSTIFY">Other</FONT></TD> <TD WIDTH="16%" VALIGN="TOP" COLSPAN=2> <U><FONT SIZE=2><P ALIGN="RIGHT">300.0</U></FONT></TD> <TD WIDTH="12%" VALIGN="TOP"> <U><FONT SIZE=2><P ALIGN="RIGHT">3.1</U></FONT></TD> </TR> <TR><TD WIDTH="73%" VALIGN="TOP" COLSPAN=2> <P> </TD> <TD WIDTH="16%" VALIGN="TOP" COLSPAN=2> <U><FONT SIZE=2><P ALIGN="RIGHT">6,857.1</U></FONT></TD> <TD WIDTH="12%" VALIGN="TOP"> <U><FONT SIZE=2><P ALIGN="RIGHT">6,251.3</U></FONT></TD> </TR> <TR><TD WIDTH="73%" VALIGN="TOP" COLSPAN=2> <FONT SIZE=2><P ALIGN="JUSTIFY">Deferred credits and other liabilities: </FONT></TD> <TD WIDTH="16%" VALIGN="TOP" COLSPAN=2> <P ALIGN="RIGHT"> </TD> <TD WIDTH="12%" VALIGN="TOP"> <P ALIGN="RIGHT"> </TD> </TR> <TR><TD WIDTH="73%" VALIGN="TOP" COLSPAN=2> <FONT SIZE=2><P ALIGN="JUSTIFY">Deferred income taxes</FONT></TD> <TD WIDTH="16%" VALIGN="TOP" COLSPAN=2> <FONT SIZE=2><P ALIGN="RIGHT">1,633.9</FONT></TD> <TD WIDTH="12%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="RIGHT">1,792.5</FONT></TD> </TR> <TR><TD WIDTH="73%" VALIGN="TOP" COLSPAN=2> <FONT SIZE=2><P ALIGN="JUSTIFY">Investment tax credits</FONT></TD> <TD WIDTH="16%" VALIGN="TOP" COLSPAN=2> <FONT SIZE=2><P ALIGN="RIGHT">150.8</FONT></TD> <TD WIDTH="12%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="RIGHT">221.4</FONT></TD> </TR> <TR><TD WIDTH="73%" VALIGN="TOP" COLSPAN=2> <FONT SIZE=2><P ALIGN="JUSTIFY">Other</FONT></TD> <TD WIDTH="16%" VALIGN="TOP" COLSPAN=2> <U><FONT SIZE=2><P ALIGN="RIGHT">230.9</U></FONT></TD> <TD WIDTH="12%" VALIGN="TOP"> <U><FONT SIZE=2><P ALIGN="RIGHT">212.8</U></FONT></TD> </TR> <TR><TD WIDTH="73%" VALIGN="TOP" COLSPAN=2> </TD> <TD WIDTH="16%" VALIGN="TOP" COLSPAN=2> <U><FONT SIZE=2><P ALIGN="RIGHT">2,015.6</U></FONT></TD> <TD WIDTH="12%" VALIGN="TOP"> <U><FONT SIZE=2><P ALIGN="RIGHT">2,226.7</U></FONT></TD> </TR> <TR><TD WIDTH="73%" VALIGN="TOP" COLSPAN=2> <FONT SIZE=2><P ALIGN="JUSTIFY">Total liabilities</FONT></TD> <TD WIDTH="16%" VALIGN="TOP" COLSPAN=2> <U><FONT SIZE=2><P ALIGN="RIGHT">12,218.7</U></FONT></TD> <TD WIDTH="12%" VALIGN="TOP"> <U><FONT SIZE=2><P ALIGN="RIGHT">10,816.2</U></FONT></TD> </TR> <TR><TD WIDTH="73%" VALIGN="TOP" COLSPAN=2> <FONT SIZE=2><P ALIGN="JUSTIFY">Minority interest</FONT></TD> <TD WIDTH="16%" VALIGN="TOP" COLSPAN=2> <U><FONT SIZE=2><P ALIGN="RIGHT">296.9</U></FONT></TD> <TD WIDTH="12%" VALIGN="TOP"> <U><FONT SIZE=2><P ALIGN="RIGHT">310.9</U></FONT></TD> </TR> <TR><TD WIDTH="73%" VALIGN="TOP" COLSPAN=2> <FONT SIZE=2><P>Commitments and contingencies (Note I)</FONT></TD> <TD WIDTH="16%" VALIGN="TOP" COLSPAN=2> <P ALIGN="RIGHT"> </TD> <TD WIDTH="12%" VALIGN="TOP"> <P ALIGN="RIGHT"> </TD> </TR> <TR><TD WIDTH="73%" VALIGN="TOP" COLSPAN=2> <FONT SIZE=2><P>Company obligated mandatory redeemable preferred securities **</FONT></TD> <TD WIDTH="16%" VALIGN="TOP" COLSPAN=2> <U><FONT SIZE=2><P ALIGN="RIGHT">385.0</U></FONT></TD> <TD WIDTH="12%" VALIGN="TOP"> <U><FONT SIZE=2><P ALIGN="RIGHT">385.0</U></FONT></TD> </TR> <TR><TD VALIGN="TOP" COLSPAN=5> <FONT SIZE=2><P>Virginia Power preferred stock:</FONT></TD> </TR> <TR><TD WIDTH="70%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="JUSTIFY">Subject to mandatory redemption</FONT></TD> <TD WIDTH="18%" VALIGN="TOP" COLSPAN=3> <P ALIGN="RIGHT"> </TD> <TD WIDTH="12%" VALIGN="TOP"> <U><FONT SIZE=2><P ALIGN="RIGHT">180.0</U></FONT></TD> </TR> <TR><TD WIDTH="70%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="JUSTIFY">Not subject to mandatory redemption</FONT></TD> <TD WIDTH="18%" VALIGN="TOP" COLSPAN=3> <U><FONT SIZE=2><P ALIGN="RIGHT">509.0</U></FONT></TD> <TD WIDTH="12%" VALIGN="TOP"> <U><FONT SIZE=2><P ALIGN="RIGHT">509.0</U> </FONT></TD> </TR> <TR><TD WIDTH="70%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="JUSTIFY">Common shareholders' equity:</FONT></TD> <TD WIDTH="18%" VALIGN="TOP" COLSPAN=3> <P ALIGN="RIGHT"> </TD> <TD WIDTH="12%" VALIGN="TOP"> <P ALIGN="RIGHT"> </TD> </TR> <TR><TD WIDTH="70%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="JUSTIFY">Common stock - no par</FONT></TD> <TD WIDTH="18%" VALIGN="TOP" COLSPAN=3> <FONT SIZE=2><P ALIGN="RIGHT">3,778.7</FONT></TD> <TD WIDTH="12%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="RIGHT">3,933.4</FONT></TD> </TR> <TR><TD WIDTH="70%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="JUSTIFY">Retained earnings</FONT></TD> <TD WIDTH="18%" VALIGN="TOP" COLSPAN=3> <FONT SIZE=2><P ALIGN="RIGHT">1,245.2</FONT></TD> <TD WIDTH="12%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="RIGHT">1,386.4</FONT></TD> </TR> <TR><TD WIDTH="70%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="JUSTIFY">Accumulated other comprehensive income</FONT></TD> <TD WIDTH="18%" VALIGN="TOP" COLSPAN=3> <FONT SIZE=2><P ALIGN="RIGHT">(34.9)</FONT></TD> <TD WIDTH="12%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="RIGHT">(20.1)</FONT></TD> </TR> <TR><TD WIDTH="70%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="JUSTIFY">Other</FONT></TD> <TD WIDTH="18%" VALIGN="TOP" COLSPAN=3> <U><FONT SIZE=2><P ALIGN="RIGHT">16.2</U></FONT></TD> <TD WIDTH="12%" VALIGN="TOP"> <U><FONT SIZE=2><P ALIGN="RIGHT">16.2</U> </FONT></TD> </TR> <TR><TD WIDTH="70%" VALIGN="TOP"> <P> </TD> <TD WIDTH="18%" VALIGN="TOP" COLSPAN=3> <U><FONT SIZE=2><P ALIGN="RIGHT">5,005.2</U></FONT></TD> <TD WIDTH="12%" VALIGN="TOP"> <U><FONT SIZE=2><P ALIGN="RIGHT">5,315.9</U></FONT></TD> </TR> <TR><TD WIDTH="70%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="JUSTIFY">Total liabilities & shareholders' equity</FONT></TD> <TD WIDTH="18%" VALIGN="TOP" COLSPAN=3> <FONT SIZE=2><P ALIGN="RIGHT">$<U>18,414.8</U></FONT></TD> <TD WIDTH="12%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="RIGHT">$<U>17,517.0</U></FONT></TD> </TR> </TABLE> </CENTER></P> <FONT SIZE=2><P ALIGN="JUSTIFY">____________</P> <P ALIGN="JUSTIFY">The accompanying notes are an integral part of the Consolidated Financial Statements.</P> <P>* The Balance Sheet at December 31, 1998 has been derived from the audited Consolidated Financial Statements at that date.</P> <P ALIGN="JUSTIFY">**As described in Note (G) to Notes To Consolidated Financial Statements, the 7.83% and 8.05% Junior Subordinated Notes totaling $257.7 and $139.2 million principal amounts constitute 100% of the Trusts' assets.</P> <B><U><P ALIGN="CENTER">DOMINION RESOURCES, INC.</P> <P ALIGN="CENTER">CONSOLIDATED STATEMENTS OF CASH FLOWS</P> </U><P ALIGN="CENTER">(UNAUDITED)</P></B></FONT> <TABLE CELLSPACING=0 BORDER=0 CELLPADDING=7 WIDTH=638> <TR><TD WIDTH="74%" VALIGN="TOP"> <P> </TD> <TD WIDTH="26%" VALIGN="TOP" COLSPAN=2> <P> </TD> </TR> <TR><TD WIDTH="74%" VALIGN="TOP" ROWSPAN=4> <P> </TD> <TD WIDTH="26%" VALIGN="TOP" COLSPAN=2 ROWSPAN=2> <B><FONT SIZE=2><P ALIGN="CENTER">Nine Months Ended<BR> September 30,</B></FONT></TD> </TR> <TR></TR> <TR><TD WIDTH="14%" VALIGN="TOP"> <B><U><FONT SIZE=2><P ALIGN="CENTER">1999</B></U></FONT></TD> <TD WIDTH="12%" VALIGN="TOP"> <B><U><FONT SIZE=2><P ALIGN="CENTER">1998</B></U></FONT></TD> </TR> <TR><TD WIDTH="26%" VALIGN="TOP" COLSPAN=2> <B><FONT SIZE=2><P ALIGN="CENTER">(Millions)</B></FONT></TD> </TR> <TR><TD WIDTH="74%" VALIGN="TOP"> <B><FONT SIZE=2><P>Cash flows from (used in) operating activities:</B></FONT></TD> <TD WIDTH="14%" VALIGN="TOP"> <P> </TD> <TD WIDTH="12%" VALIGN="TOP"> <P> </TD> </TR> <TR><TD WIDTH="74%" VALIGN="TOP"> <FONT SIZE=2><P>Net income</FONT></TD> <TD WIDTH="14%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="RIGHT">$ 233.2</FONT></TD> <TD WIDTH="12%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="RIGHT">$ 481.4</FONT></TD> </TR> <TR><TD WIDTH="74%" VALIGN="TOP"> <FONT SIZE=2><P>Adjustments to reconcile net income to net cash:</FONT></TD> <TD WIDTH="14%" VALIGN="TOP"> <P ALIGN="RIGHT"> </TD> <TD WIDTH="12%" VALIGN="TOP"> <P ALIGN="RIGHT"> </TD> </TR> <TR><TD WIDTH="74%" VALIGN="TOP"> <FONT SIZE=2><P>Depreciation, depletion and amortization</FONT></TD> <TD WIDTH="14%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="RIGHT">604.2</FONT></TD> <TD WIDTH="12%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="RIGHT">626.2</FONT></TD> </TR> <TR><TD WIDTH="74%" VALIGN="TOP"> <FONT SIZE=2><P>Gain on sale of East Midlands</FONT></TD> <TD WIDTH="14%" VALIGN="TOP"> <P ALIGN="RIGHT"> </TD> <TD WIDTH="12%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="RIGHT">(332.3)</FONT></TD> </TR> <TR><TD WIDTH="74%" VALIGN="TOP"> <FONT SIZE=2><P>Extraordinary item, net of income taxes</FONT></TD> <TD WIDTH="14%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="RIGHT">254.8</FONT></TD> <TD WIDTH="12%" VALIGN="TOP"> <P ALIGN="RIGHT"> </TD> </TR> <TR><TD WIDTH="74%" VALIGN="TOP"> <FONT SIZE=2><P>Impairment of regulatory assets</FONT></TD> <TD WIDTH="14%" VALIGN="TOP"> <P ALIGN="RIGHT"> </TD> <TD WIDTH="12%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="RIGHT">158.6</FONT></TD> </TR> <TR><TD WIDTH="74%" VALIGN="TOP"> <FONT SIZE=2><P>Changes in assets and liabilities:</FONT></TD> <TD WIDTH="14%" VALIGN="TOP"> <P ALIGN="RIGHT"> </TD> <TD WIDTH="12%" VALIGN="TOP"> <P ALIGN="RIGHT"> </TD> </TR> <TR><TD WIDTH="74%" VALIGN="TOP"> <FONT SIZE=2><P>Accounts receivable</FONT></TD> <TD WIDTH="14%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="RIGHT">(77.0)</FONT></TD> <TD WIDTH="12%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="RIGHT">(23.0)</FONT></TD> </TR> <TR><TD WIDTH="74%" VALIGN="TOP"> <FONT SIZE=2><P>Accounts payable, trade</FONT></TD> <TD WIDTH="14%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="RIGHT">72.4</FONT></TD> <TD WIDTH="12%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="RIGHT">156.9</FONT></TD> </TR> <TR><TD WIDTH="74%" VALIGN="TOP"> <FONT SIZE=2><P>Purchase and originations of mortgage loans</FONT></TD> <TD WIDTH="14%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="RIGHT">(1,777.5)</FONT></TD> <TD WIDTH="12%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="RIGHT">(1,586.3)</FONT></TD> </TR> <TR><TD WIDTH="74%" VALIGN="TOP"> <FONT SIZE=2><P>Proceeds from sales and principal collections of mortgage loans</FONT></TD> <TD WIDTH="14%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="RIGHT">1,605.3</FONT></TD> <TD WIDTH="12%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="RIGHT">1,297.4</FONT></TD> </TR> <TR><TD WIDTH="74%" VALIGN="TOP"> <FONT SIZE=2><P>Commodity contract assets and liabilities</FONT></TD> <TD WIDTH="14%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="RIGHT">(103.9)</FONT></TD> <TD WIDTH="12%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="RIGHT">52.7</FONT></TD> </TR> <TR><TD WIDTH="74%" VALIGN="TOP"> <FONT SIZE=2><P>Accrued interest and taxes</FONT></TD> <TD WIDTH="14%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="RIGHT">37.0</FONT></TD> <TD WIDTH="12%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="RIGHT">141.6</FONT></TD> </TR> <TR><TD WIDTH="74%" VALIGN="TOP"> <FONT SIZE=2><P>Other </FONT></TD> <TD WIDTH="14%" VALIGN="TOP"> <U><FONT SIZE=2><P ALIGN="RIGHT">(13.3)</U></FONT></TD> <TD WIDTH="12%" VALIGN="TOP"> <U><FONT SIZE=2><P ALIGN="RIGHT">(144.9)</U></FONT></TD> </TR> <TR><TD WIDTH="74%" VALIGN="TOP"> <B><FONT SIZE=2><P>Net cash flows from operating activities</B></FONT></TD> <TD WIDTH="14%" VALIGN="TOP"> <U><FONT SIZE=2><P ALIGN="RIGHT">835.2</U></FONT></TD> <TD WIDTH="12%" VALIGN="TOP"> <U><FONT SIZE=2><P ALIGN="RIGHT">828.3</U></FONT></TD> </TR> <TR><TD WIDTH="74%" VALIGN="TOP"> <B><FONT SIZE=2><P>Cash flows from (used in) financing activities:</B></FONT></TD> <TD WIDTH="14%" VALIGN="TOP"> <P ALIGN="RIGHT"> </TD> <TD WIDTH="12%" VALIGN="TOP"> <P ALIGN="RIGHT"> </TD> </TR> <TR><TD WIDTH="74%" VALIGN="TOP"> <FONT SIZE=2><P>Issuance of common stock</FONT></TD> <TD WIDTH="14%" VALIGN="TOP"> <P ALIGN="RIGHT"> </TD> <TD WIDTH="12%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="RIGHT">354.3</FONT></TD> </TR> <TR><TD WIDTH="74%" VALIGN="TOP"> <FONT SIZE=2><P>Repurchase of common stock</FONT></TD> <TD WIDTH="14%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="RIGHT">(159.2)</FONT></TD> <TD WIDTH="12%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="RIGHT">(56.2)</FONT></TD> </TR> <TR><TD WIDTH="74%" VALIGN="TOP"> <FONT SIZE=2><P>Issuance of long-term debt</FONT></TD> <TD WIDTH="14%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="RIGHT">4,243.2</FONT></TD> <TD WIDTH="12%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="RIGHT">3,220.7</FONT></TD> </TR> <TR><TD WIDTH="74%" VALIGN="TOP"> <FONT SIZE=2><P>Issuance of short-term debt</FONT></TD> <TD WIDTH="14%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="RIGHT">407.8</FONT></TD> <TD WIDTH="12%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="RIGHT">61.3</FONT></TD> </TR> <TR><TD WIDTH="74%" VALIGN="TOP"> <FONT SIZE=2><P>Repayment of long-term debt</FONT></TD> <TD WIDTH="14%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="RIGHT">(3,617.7)</FONT></TD> <TD WIDTH="12%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="RIGHT">(3,101.8)</FONT></TD> </TR> <TR><TD WIDTH="74%" VALIGN="TOP"> <FONT SIZE=2><P>Repayment of short-term debt</FONT></TD> <TD WIDTH="14%" VALIGN="TOP"> <P ALIGN="RIGHT"> </TD> <TD WIDTH="12%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="RIGHT">(148.7)</FONT></TD> </TR> <TR><TD WIDTH="74%" VALIGN="TOP"> <FONT SIZE=2><P>Common dividend payments</FONT></TD> <TD WIDTH="14%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="RIGHT">(371.6)</FONT></TD> <TD WIDTH="12%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="RIGHT">(378.2)</FONT></TD> </TR> <TR><TD WIDTH="74%" VALIGN="TOP"> <FONT SIZE=2><P>Other</FONT></TD> <TD WIDTH="14%" VALIGN="TOP"> <U><FONT SIZE=2><P ALIGN="RIGHT">(37.8)</U></FONT></TD> <TD WIDTH="12%" VALIGN="TOP"> <U><FONT SIZE=2><P ALIGN="RIGHT">(32.4)</U></FONT></TD> </TR> <TR><TD WIDTH="74%" VALIGN="TOP"> <B><FONT SIZE=2><P>Net cash flows from (used in) financing activities</B></FONT></TD> <TD WIDTH="14%" VALIGN="TOP"> <U><FONT SIZE=2><P ALIGN="RIGHT">464.7</U></FONT></TD> <TD WIDTH="12%" VALIGN="TOP"> <U><FONT SIZE=2><P ALIGN="RIGHT">(81.0)</U></FONT></TD> </TR> <TR><TD WIDTH="74%" VALIGN="TOP"> <B><FONT SIZE=2><P>Cash flows from (used in) investing activities:</B></FONT></TD> <TD WIDTH="14%" VALIGN="TOP"> <P ALIGN="RIGHT"> </TD> <TD WIDTH="12%" VALIGN="TOP"> <P ALIGN="RIGHT"> </TD> </TR> <TR><TD WIDTH="74%" VALIGN="TOP"> <FONT SIZE=2><P>Utility capital expenditures</FONT></TD> <TD WIDTH="14%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="RIGHT">(492.2)</FONT></TD> <TD WIDTH="12%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="RIGHT">(462.8)</FONT></TD> </TR> <TR><TD WIDTH="74%" VALIGN="TOP"> <FONT SIZE=2><P>Non-utility capital expenditures</FONT></TD> <TD WIDTH="14%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="RIGHT">(71.0)</FONT></TD> <TD WIDTH="12%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="RIGHT">(75.1)</FONT></TD> </TR> <TR><TD WIDTH="74%" VALIGN="TOP"> <FONT SIZE=2><P>Acquisition of natural gas and independent power properties</FONT></TD> <TD WIDTH="14%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="RIGHT">(131.5)</FONT></TD> <TD WIDTH="12%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="RIGHT">(68.1)</FONT></TD> </TR> <TR><TD WIDTH="74%" VALIGN="TOP"> <FONT SIZE=2><P>Proceeds from sale of East Midlands</FONT></TD> <TD WIDTH="14%" VALIGN="TOP"> <P ALIGN="RIGHT"> </TD> <TD WIDTH="12%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="RIGHT">1,409.4</FONT></TD> </TR> <TR><TD WIDTH="74%" VALIGN="TOP"> <FONT SIZE=2><P>Loan originations</FONT></TD> <TD WIDTH="14%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="RIGHT">(1,818.9)</FONT></TD> <TD WIDTH="12%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="RIGHT">(1,958.2)</FONT></TD> </TR> <TR><TD WIDTH="74%" VALIGN="TOP"> <FONT SIZE=2><P>Repayment of loan originations</FONT></TD> <TD WIDTH="14%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="RIGHT">1,526.3</FONT></TD> <TD WIDTH="12%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="RIGHT">1,386.0</FONT></TD> </TR> <TR><TD WIDTH="74%" VALIGN="TOP"> <FONT SIZE=2><P>Acquisition of businesses</FONT></TD> <TD WIDTH="14%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="RIGHT">(166.6)</FONT></TD> <TD WIDTH="12%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="RIGHT">(339.0)</FONT></TD> </TR> <TR><TD WIDTH="74%" VALIGN="TOP"> <FONT SIZE=2><P>Purchase of securities</FONT></TD> <TD WIDTH="14%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="RIGHT">(102.1)</FONT></TD> <TD WIDTH="12%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="RIGHT">(45.6)</FONT></TD> </TR> <TR><TD WIDTH="74%" VALIGN="TOP"> <FONT SIZE=2><P>Investments in affiliates</FONT></TD> <TD WIDTH="14%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="RIGHT">(42.8)</FONT></TD> <TD WIDTH="12%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="RIGHT">(19.0)</FONT></TD> </TR> <TR><TD WIDTH="74%" VALIGN="TOP"> <FONT SIZE=2><P>Other investments</FONT></TD> <TD WIDTH="14%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="RIGHT">(73.7)</FONT></TD> <TD WIDTH="12%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="RIGHT">15.3</FONT></TD> </TR> <TR><TD WIDTH="74%" VALIGN="TOP"> <FONT SIZE=2><P>Proceeds from sale of securities</FONT></TD> <TD WIDTH="14%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="RIGHT">121.7</FONT></TD> <TD WIDTH="12%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="RIGHT">64.0</FONT></TD> </TR> <TR><TD WIDTH="74%" VALIGN="TOP"> <FONT SIZE=2><P>Other</FONT></TD> <TD WIDTH="14%" VALIGN="TOP"> <U><FONT SIZE=2><P ALIGN="RIGHT">(117.7)</U></FONT></TD> <TD WIDTH="12%" VALIGN="TOP"> <U><FONT SIZE=2><P ALIGN="RIGHT">(10.8)</U></FONT></TD> </TR> <TR><TD WIDTH="74%" VALIGN="TOP"> <B><FONT SIZE=2><P>Net cash flows used in investing activities</B></FONT></TD> <TD WIDTH="14%" VALIGN="TOP"> <U><FONT SIZE=2><P ALIGN="RIGHT">(1,368.5)</U></FONT></TD> <TD WIDTH="12%" VALIGN="TOP"> <U><FONT SIZE=2><P ALIGN="RIGHT">(103.9)</U></FONT></TD> </TR> <TR><TD WIDTH="74%" VALIGN="TOP"> <B><FONT SIZE=2><P>Increase (decrease) in cash and cash equivalents</B></FONT></TD> <TD WIDTH="14%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="RIGHT">(68.6)</FONT></TD> <TD WIDTH="12%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="RIGHT">643.4</FONT></TD> </TR> <TR><TD WIDTH="74%" VALIGN="TOP"> <B><FONT SIZE=2><P>Cash and cash equivalents at beginning of period</B></FONT></TD> <TD WIDTH="14%" VALIGN="TOP"> <U><FONT SIZE=2><P ALIGN="RIGHT">425.6</U></FONT></TD> <TD WIDTH="12%" VALIGN="TOP"> <U><FONT SIZE=2><P ALIGN="RIGHT">321.7</U></FONT></TD> </TR> <TR><TD WIDTH="74%" VALIGN="TOP"> <B><FONT SIZE=2><P>Cash and cash equivalents at end of period</B></FONT></TD> <TD WIDTH="14%" VALIGN="TOP"> <U><FONT SIZE=2><P ALIGN="RIGHT">$ 357.0</U></FONT></TD> <TD WIDTH="12%" VALIGN="TOP"> <U><FONT SIZE=2><P ALIGN="RIGHT">$ 965.1</U></FONT></TD> </TR> </TABLE> <B><U><FONT SIZE=2><P ALIGN="CENTER">DOMINION RESOURCES, INC.</P> <P ALIGN="CENTER">CONSOLIDATED STATEMENT OF CHANGES IN OTHER COMPREHENSIVE INCOME</P> </U><P ALIGN="CENTER">(UNAUDITED)</P></B></FONT> <TABLE CELLSPACING=0 BORDER=0 CELLPADDING=7 WIDTH=638> <TR><TD WIDTH="60%" VALIGN="TOP" ROWSPAN=2> <P> </TD> <TD WIDTH="20%" VALIGN="TOP" COLSPAN=2> <B><FONT SIZE=2><P ALIGN="CENTER">Three Months Ended</B></FONT></TD> <TD WIDTH="20%" VALIGN="TOP" COLSPAN=2> <B><FONT SIZE=2><P ALIGN="CENTER">Nine Months Ended</B></FONT></TD> </TR> <TR><TD WIDTH="20%" VALIGN="TOP" COLSPAN=2> <B><FONT SIZE=2><P ALIGN="CENTER">September 30,</B></FONT></TD> <TD WIDTH="20%" VALIGN="TOP" COLSPAN=2> <B><FONT SIZE=2><P ALIGN="CENTER">September 30,</B></FONT></TD> </TR> <TR><TD WIDTH="60%" VALIGN="TOP"> <P> </TD> <TD WIDTH="10%" VALIGN="TOP"> <B><U><FONT SIZE=2><P ALIGN="CENTER">1999</B></U></FONT></TD> <TD WIDTH="10%" VALIGN="TOP"> <B><U><FONT SIZE=2><P ALIGN="CENTER">1998</B></U></FONT></TD> <TD WIDTH="10%" VALIGN="TOP"> <B><U><FONT SIZE=2><P ALIGN="CENTER">1999</B></U></FONT></TD> <TD WIDTH="10%" VALIGN="TOP"> <B><U><FONT SIZE=2><P ALIGN="CENTER">1998</B></U></FONT></TD> </TR> <TR><TD WIDTH="60%" VALIGN="TOP"> <P> </TD> <TD WIDTH="40%" VALIGN="TOP" COLSPAN=4> <B><FONT SIZE=2><P ALIGN="CENTER">(Millions)</B></FONT></TD> </TR> <TR><TD WIDTH="60%" VALIGN="TOP"> <B><FONT SIZE=2><P>Other Comprehensive Income:</B></FONT></TD> <TD WIDTH="10%" VALIGN="TOP"> <P> </TD> <TD WIDTH="10%" VALIGN="TOP"> <P> </TD> <TD WIDTH="10%" VALIGN="TOP"> <P> </TD> <TD WIDTH="10%" VALIGN="TOP"> <P> </TD> </TR> <TR><TD WIDTH="60%" VALIGN="TOP"> <FONT SIZE=2><P>Unrealized gains (losses) on investment securities:</FONT></TD> <TD WIDTH="10%" VALIGN="TOP"> <P> </TD> <TD WIDTH="10%" VALIGN="TOP"> <P> </TD> <TD WIDTH="10%" VALIGN="TOP"> <P> </TD> <TD WIDTH="10%" VALIGN="TOP"> <P> </TD> </TR> <TR><TD WIDTH="60%" VALIGN="TOP"> <FONT SIZE=2><P>Pre-tax</FONT></TD> <TD WIDTH="10%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="RIGHT">$ (12.2)</FONT></TD> <TD WIDTH="10%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="RIGHT">$ (2.6)</FONT></TD> <TD WIDTH="10%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="RIGHT">$ (4.9)</FONT></TD> <TD WIDTH="10%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="RIGHT">$ 2.0</FONT></TD> </TR> <TR><TD WIDTH="60%" VALIGN="TOP"> <FONT SIZE=2><P>Tax</FONT></TD> <TD WIDTH="10%" VALIGN="TOP"> <U><FONT SIZE=2><P ALIGN="RIGHT">3.6</U></FONT></TD> <TD WIDTH="10%" VALIGN="TOP"> <U><FONT SIZE=2><P ALIGN="RIGHT">0.9</U></FONT></TD> <TD WIDTH="10%" VALIGN="TOP"> <U><FONT SIZE=2><P ALIGN="RIGHT">(0.4)</U></FONT></TD> <TD WIDTH="10%" VALIGN="TOP"> <U><FONT SIZE=2><P ALIGN="RIGHT">(0.7)</U></FONT></TD> </TR> <TR><TD WIDTH="60%" VALIGN="TOP"> <FONT SIZE=2><P>Net of tax</FONT></TD> <TD WIDTH="10%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="RIGHT">(8.6)</FONT></TD> <TD WIDTH="10%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="RIGHT">(1.7)</FONT></TD> <TD WIDTH="10%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="RIGHT">(5.3)</FONT></TD> <TD WIDTH="10%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="RIGHT">1.3</FONT></TD> </TR> <TR><TD WIDTH="60%" VALIGN="TOP"> <FONT SIZE=2><P>Foreign currency translation adjustments</FONT></TD> <TD WIDTH="10%" VALIGN="TOP"> <U><FONT SIZE=2><P ALIGN="RIGHT">(7.5)</U></FONT></TD> <TD WIDTH="10%" VALIGN="TOP"> <U><FONT SIZE=2><P ALIGN="RIGHT">(11.9)</U></FONT></TD> <TD WIDTH="10%" VALIGN="TOP"> <U><FONT SIZE=2><P ALIGN="RIGHT">(9.5)</U></FONT></TD> <TD WIDTH="10%" VALIGN="TOP"> <U><FONT SIZE=2><P ALIGN="RIGHT">(6.1)</U></FONT></TD> </TR> <TR><TD WIDTH="60%" VALIGN="TOP"> <FONT SIZE=2><P>Increase in other comprehensive income</FONT></TD> <TD WIDTH="10%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="RIGHT">(16.1)</FONT></TD> <TD WIDTH="10%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="RIGHT">(13.6)</FONT></TD> <TD WIDTH="10%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="RIGHT">(14.8)</FONT></TD> <TD WIDTH="10%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="RIGHT">(4.8)</FONT></TD> </TR> <TR><TD WIDTH="60%" VALIGN="TOP"> <FONT SIZE=2><P>Accumulated other comprehensive income at beginning of period</FONT></TD> <TD WIDTH="10%" VALIGN="TOP"> <U><FONT SIZE=2><P ALIGN="RIGHT">(18.8)</U></FONT></TD> <TD WIDTH="10%" VALIGN="TOP"> <U><FONT SIZE=2><P ALIGN="RIGHT">5.5</U></FONT></TD> <TD WIDTH="10%" VALIGN="TOP"> <U><FONT SIZE=2><P ALIGN="RIGHT">(20.1)</U></FONT></TD> <TD WIDTH="10%" VALIGN="TOP"> <U><FONT SIZE=2><P ALIGN="RIGHT">(3.3)</U></FONT></TD> </TR> <TR><TD WIDTH="60%" VALIGN="TOP"> <FONT SIZE=2><P>Accumulated other comprehensive income at end of period</FONT></TD> <TD WIDTH="10%" VALIGN="TOP"> <U><FONT SIZE=2><P ALIGN="RIGHT">$(34.9)</U></FONT></TD> <TD WIDTH="10%" VALIGN="TOP"> <U><FONT SIZE=2><P ALIGN="RIGHT">$ (8.1)</U></FONT></TD> <TD WIDTH="10%" VALIGN="TOP"> <U><FONT SIZE=2><P ALIGN="RIGHT">$(34.9)</U></FONT></TD> <TD WIDTH="10%" VALIGN="TOP"> <U><FONT SIZE=2><P ALIGN="RIGHT">$(8.1)</U></FONT></TD> </TR> </TABLE> <FONT SIZE=2><P> </P> <P> </P> <P> </P> <P> </P> <P> </P> <P> </P> <P> </P> <P> </P> <P> </P> <P> </P> <P> </P> <P> </P> <P> </P> <P> </P> <P> </P> <P> </P> <P> </P> <P> </P> <P> </P> <P> </P> <P> </P> <P> </P> <P> </P> <P> </P> <P> </P> <P> </P> <P> </P> <P> </P> <P> </P> <P>______________________</P> <P>The accompanying notes are an integral part of the Consolidated Financial Statements.</P> <B><U><P ALIGN="CENTER"> </P> <P ALIGN="CENTER">DOMINION RESOURCES, INC.</P> <P ALIGN="CENTER">NOTES TO CONSOLIDATED FINANCIAL STATEMENTS</P> </U><P>(A)	<U>DOMINION RESOURCES AND INTERIM REPORTING POLICIES</P> </U><P ALIGN="JUSTIFY">NATURE OF OPERATIONS</P> <P ALIGN="JUSTIFY">General Organization and Legal Description</P> </B><P ALIGN="JUSTIFY">Dominion Resources is a holding company headquartered in Richmond, Virginia. Its principal subsidiary is Virginia Electric and Power Company (Virginia Power), which is a regulated public utility. Virginia Power is engaged in the generation, transmission, distribution and sale of electric energy within a 30,000 square mile area in Virginia and northeastern North Carolina. It sells electricity to retail customers (including government agencies) and to wholesale customers such as rural electric cooperatives, power marketers and municipalities. The Virginia service area comprises about 65 percent of Virginia's total land area, but accounts for 80 percent of its population. Virginia Power's wholesale power group engages in off-system wholesale purchases and sales of electricity and purchases and sales of natural gas beyond the geographic limits of Virginia Power's service territory.</P> <P>Dominion Resources' subsidiary Dominion Energy is engaged in independent power production and the acquisition and sale of natural gas and oil reserves. Some of the independent power and natural gas and oil businesses are located in foreign countries. In Latin America, Dominion Energy is engaged in power generation. However, see Note (L) for information about the sale of such interests. In Canada, Dominion Energy is engaged in natural gas exploration, production and storage. Including the Latin American power generation interests being sold, Dominion Energy's net investment in foreign operations is approximately $416.2 million at September 30, 1999. </P> <P>Dominion Capital is Dominion Resources' financial services subsidiary. Dominion Capital's primary business is financial services which includes commercial lending, merchant banking and residential mortgage lending.</P> <P>Dominion Resources' United Kingdom subsidiary, Dominion U.K. Holding, Inc., owns an 80% interest in Corby Power Station, a 350 megawatt natural gas fired power station located in Northamptonshire, about 90 miles north of London.</P> <P>Dominion Resources translates foreign currency financial statements by adjusting balance sheet accounts using the exchange rate at the balance sheet date and income statement accounts using the average exchange rate for the reporting period.</P> <B><P>GENERAL</P> </B><P>In the opinion of Dominion Resources' management, the accompanying unaudited Consolidated Financial Statements contain all adjustments, including normal recurring accruals, necessary to present fairly the financial position as of September 30, 1999, the results of operations for the three-month and nine-month periods ended September 30, 1999 and 1998, and cash flows for the nine-month periods ended September 30, 1999 and 1998.</P> <P>These Consolidated Financial Statements should be read in conjunction with the Consolidated Financial Statements and notes included in the Dominion Resources Annual Report on Form 10-K for the year ended December 31, 1998.</P> <P>The Consolidated Financial Statements include the accounts of Dominion Resources and its subsidiaries, with all significant intercompany transactions and accounts being eliminated on consolidation.</P> <P>Dominion Resources uses the equity method when accounting for its 80% investment in Corby Power Ltd. (Corby) as the company believes that Corby's governing agreements give substantive participating rights to the minority shareholder. Corby owns and operates a 350-megawatt gas-fired power station in England. Corby had total revenues of $34.8 million and total expenses of $27.5 million for the third quarter ending September 30, 1999. Also, Corby had total revenues of $98.4 million and total expenses of $87.6 million for the nine-month period ending September 30, 1999. Interest and taxes were included in total expenses for each period. </P> <B><U><P ALIGN="CENTER">DOMINION RESOURCES, INC.</P> <P ALIGN="CENTER">NOTES TO CONSOLIDATED FINANCIAL STATEMENTS</P> </U><P ALIGN="CENTER">(CONTINUED)</P> </B><P>The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.</P> <P>The results of operations for the interim periods are not necessarily indicative of the results expected for the full year. Information for quarterly periods is affected by seasonal variations in sales, rate changes and other factors.</P> <P>Certain amounts in the 1998 financial statements have been reclassified to conform to the 1999 presentation.</P> <P>Under Statement of Financial Accounting Standards No. 128, <I>Earnings Per Share </I>(SFAS No. 128), Dominion Resources computation of diluted earnings per share is the same as basic earnings per share. For more information, see Note (K) to Consolidated Financial Statements.</P> <P>As discussed in the Dominion Resources' Form 8-K, filed March 29, 1999, Virginia Power discontinued the application of Statement of Financial Accounting Standards No. 71 (SFAS No. 71), <I>Accounting for the Effects of Certain Types of Regulation</I>,<I> </I>to its generation operations. The effect thereof was an after-tax charge of $254.8 million. See Note (C) below.</P> <B><P>Segment Reporting</P> </B><P ALIGN="JUSTIFY">Under SFAS No. 131, <I>Disclosure About Segments of an Enterprise and Related Information</I>,<I> </I>Dominion Resources has defined segments based on product, geographic location and regulatory environment. </P> <P>In preparation for the transition to competition for electric generation in Virginia, beginning May 1, 1999 Dominion Resources began to evaluate the operating results and financial information across Virginia Power's and Dominion Energy's current organizational structure. Although the employees and assets involved remain with their respective companies, Dominion Resources currently evaluates the operations of Dominion Energy and Virginia Power in the following business segments: </P> <UL> <LI>generation-related operations of both Virginia Power and Dominion Energy (referred to as Dominion Generation); </LI> <LI>regulated electric transmission and distribution services (referred to as Virginia Power - Wires Business); and </LI> <LI>oil and gas operations of Dominion Energy (referred to as Dominion Energy - Gas Operations).</LI></UL> <P>In addition to the business segments mentioned above, Dominion Resources also reviews the following as business segments:</P> <UL> <LI>the financial services of Dominion Capital; </LI> <LI>Dominion UK which was sold by Dominion Resources on July 27, 1998; and </LI> <LI>Corporate Operations.</LI></UL> <P>The Corporate Operations category includes:</P> <UL> <LI>corporate costs of Dominion Resources' holding company, </LI> <LI>Corby Power (UK) operations, </LI> <LI>intercompany eliminations, </LI> <LI>impact of the impairment of regulatory assets and one-time refund recorded as a result of the settlement of Virginia Power's 1998 Virginia jurisdictional rate proceedings in the second quarter of 1998, and </LI> <LI>extraordinary item recorded in the first quarter of 1999. See Note (C) to the Notes to the Consolidated Financial Statements.</LI></UL> <P>For more information on business segments, see Note (M) to the Notes to the Consolidated Financial Statements. </P> <B><U><P ALIGN="CENTER">DOMINION RESOURCES, INC.</P> <P ALIGN="CENTER">NOTES TO CONSOLIDATED FINANCIAL STATEMENTS</P> </U><P ALIGN="CENTER">(CONTINUED)</P> <OL START=2 TYPE="A"> <U><LI>DOMINION RESOURCES, INC. and CONSOLIDATED NATURAL GAS COMPANY MERGER</LI> </B></U><P>In May 1999, Dominion Resources filed an application with the Securities and Exchange Commission (SEC) to obtain approval of its merger with Consolidated Natural Gas Company (CNG). CNG is a registered holding company subject to the provisions of the Public Utility Holding Company Act of 1935 (1935 Act). As a result of the merger, Dominion Resources will become a registered public utility holding company under the provisions of the 1935 Act. The 1935 Act imposes a number of restrictions on the operations of registered holding company systems. One such restriction is it limits the ability of registered holding companies to engage in activities unrelated to their utility operations. Consequently, as part of its application with the SEC, Dominion Resources has specified its intentions to divest itself of Dominion Capital, Inc. its financial services subsidiary. Although a formal plan for divestiture has not been adopted, the SEC typically allows two to three years for this to be accomplished.</P> <P>On June 30, 1999, the shareholders of Dominion Resources and CNG approved the merger agreement between the companies at each company's Special Meeting of Shareholders. Also, the companies have sought necessary state and federal regulatory approvals.</P> <P>Dominion Resources and CNG announced on August 9, 1999, that they have agreed to divest Virginia Natural Gas, Inc. (VNG), CNG's local gas distribution subsidiary, under an agreement with the Staff of the Virginia Commission. The companies have also greed with the Federal Trade Commission (FTC) to divest VNG. Dominion Resources has one year after the merger is completed to sell VNG to a third party. If the sale of VNG is not completed within the timeframe of one year, VNG will be spun off as an independent company with the common stock distributed to Dominion Resources shareholders. Both deadlines are subject to reasonable extensions, which may be granted by the regulatory authorities.</P> <P>As of November 12, 1999, all state regulatory commissions and the FTC have approved the merger, subject to certain conditions agreed to by Dominion Resources and CNG. In addition, FERC has voted to conditionally approve the merger. The companies intend to file a response accepting the conditions. The companies' request for approval of the transaction is still pending with the Securities and Exchange Commission. </P> <B><U><P ALIGN="JUSTIFY"><LI>VIRGINIA JURISDICTIONAL RATES</LI></P></OL> </B></U><P>As discussed below, Virginia Power prospectively changed certain of its accounting policies and estimates, pursuant to the discontinuance of SFAS No. 71, to conform such policies and estimates to those used by non-regulated entitles. The overall impact of these changes was not material to Virginia Power's results of operations and financial condition.</P> <P>Virginia Power no longer includes an allowance for funds used during construction (AFC) in the cost of property, plant, and equipment constructed for its generation operations. Rather, such costs include, where applicable, interest costs capitalized in accordance with SFAs No. 34, <I>Capitalization of Interest Cost</I>. Virginia Power continues to include AFC, rather than capitalized interest, in the cost of property, plant, and equipment used in its transmission and distribution operations, where permitted by regulating authorities. </P> <P>Virginia Power no longer provides for the cost of removal in its provision for depreciation of generation related property, as formerly required by regulators. Such costs are expensed as incurred. Also, Virginia Power no longer records retirements of generation related property by charging accumulated depreciation. Rather, Virginia Power records gains and losses upon retirement of such property based upon the difference between proceeds received, if any, and the property's undepreciated basis at the retirement date. In addition, Virginia Power reevaluated the economic useful life estimates of its generation related property in light of the scheduled deregulation of the generation business in Virginia.</P> <P ALIGN="CENTER"> </P> <B><U><P ALIGN="CENTER">DOMINION RESOURCES, INC.</P> <P ALIGN="CENTER">NOTES TO CONSOLIDATED FINANCIAL STATEMENTS</P> </U><P ALIGN="CENTER">(CONTINUED)</P> </B><P ALIGN="JUSTIFY">In 1998, Virginia Power negotiated a settlement with the Virginia State Corporation Commission (Virginia Commission) that resolved then outstanding rate proceedings. As part of the settlement, Virginia Power agreed to a one-time rate refund paid to customers in 1998 and a two-phased rate reduction and base rate freeze through February 2002. For additional information, see Note R to Consolidated Financial Statements included in Dominion Resources' Annual Report on Form 10-K for the year ended December 31, 1998.</P> <P ALIGN="JUSTIFY">In March 1999, the Governor of Virginia signed into law legislation establishing a detailed plan to restructure the electric utility industry in Virginia. Such legislation will deregulate generation by 2002 with the phase-in of retail customer choice beginning at that time. Under this legislation, Virginia Power's base rates will remain generally unchanged until July 2007 and recovery of generation-related costs will continue to be provided through the capped rates. The legislation's deregulation of generation required discontinuation of Statement of Financial Accounting Standards No. 71 for Virginia Power's generation operations in the first quarter of 1999. Virginia Power's transmission and distribution operations continue to meet the criteria for recognition of regulatory assets and liabilities as defined by SFAS No. 71. In addition, fuel expense continues to be subject to deferral accounting. </P> <P>The effect of discontinuing SFAS No. 71 was an after-tax charge to earnings of $254.8 million. The $254.8 million charge included the write-off of generation-related assets that were not expected to be recovered during the transition period. It also included the write-off of approximately $38 million, after-tax, of deferred investment tax credits. </P> <P ALIGN="JUSTIFY">Also, in conjunction with the discontinuance of SFAS No. 71, Virginia Power reviewed its utility plant assets and long-term power purchase contracts for possible impairment. No impairments were recorded based on Virginia Power's analyses, which were highly dependent on the underlying assumptions. Significant estimates were required in recording the effect of the deregulation legislation, including the fair value determination for generating facilities and estimated purchases under long-term power purchase contracts. </P> <P>Virginia Power remains subject to numerous risks including, among others, exposure to long-term power purchase commitment losses, environmental contingencies, changes in tax laws, decommissioning costs, inflation, increased capital costs, and recovery of certain other items. Management believes the stable rates that are provided until July 2007 by the 1999 legislation present a reasonable opportunity to recover a substantial portion of Virginia Power's potentially stranded costs as more fully described in Dominion Resources' 1998 Annual Report on Form 10-K in Competition--Exposure to Potentially Stranded Costs, Management's Discussion and Analysis of Financial Condition and Results of Operations. See also Note (B) to Consolidated Financial Statements included in Dominion Resources' Form 10-Q for the period ended March 31, 1999 for further discussion of the impact of the discontinuation of SFAS No. 71 and impairment review.</P> <B><P>(D) <U>PROVISION FOR INCOME TAXES </P> </B></U><P ALIGN="JUSTIFY">Income before provision for income taxes, classified by source of income, and before minority interest was as follows:</P></FONT> <P ALIGN="CENTER"><CENTER><TABLE CELLSPACING=0 BORDER=0 CELLPADDING=7 WIDTH=402> <TR><TD WIDTH="27%" VALIGN="TOP" HEIGHT=13> <P></TD> <TD WIDTH="36%" VALIGN="TOP" COLSPAN=2 HEIGHT=13> <B><FONT SIZE=2><P ALIGN="CENTER">Three Months Ended<BR> September 30,</B></FONT></TD> <TD WIDTH="37%" VALIGN="TOP" COLSPAN=2 HEIGHT=13> <B><FONT SIZE=2><P ALIGN="CENTER">Nine Months Ended<BR> September 30,</B></FONT></TD> </TR> <TR><TD WIDTH="27%" VALIGN="TOP" HEIGHT=13><P></P></TD> <TD WIDTH="18%" VALIGN="TOP" HEIGHT=13> <B><U><FONT SIZE=2><P ALIGN="CENTER">1999</B></U></FONT></TD> <TD WIDTH="18%" VALIGN="TOP" HEIGHT=13> <B><U><FONT SIZE=2><P ALIGN="CENTER">1998</B></U></FONT></TD> <TD WIDTH="19%" VALIGN="TOP" HEIGHT=13> <B><U><FONT SIZE=2><P ALIGN="CENTER">1999</B></U></FONT></TD> <TD WIDTH="18%" VALIGN="TOP" HEIGHT=13> <B><U><FONT SIZE=2><P ALIGN="CENTER">1998</B></U></FONT></TD> </TR> <TR><TD WIDTH="27%" VALIGN="TOP" HEIGHT=13><P></P></TD> <TD WIDTH="73%" VALIGN="TOP" COLSPAN=4 HEIGHT=13> <B><FONT SIZE=2><P ALIGN="CENTER">(Millions)</B></FONT></TD> </TR> <TR><TD WIDTH="27%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="JUSTIFY">U.S.</FONT></TD> <TD WIDTH="18%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="RIGHT">$342.7</FONT></TD> <TD WIDTH="18%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="RIGHT">$285.8</FONT></TD> <TD WIDTH="19%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="RIGHT">$713.7</FONT></TD> <TD WIDTH="18%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="RIGHT">$331.7</FONT></TD> </TR> <TR><TD WIDTH="27%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="JUSTIFY">Non U.S.</FONT></TD> <TD WIDTH="18%" VALIGN="TOP"> <U><FONT SIZE=2><P ALIGN="RIGHT">14.7</U></FONT></TD> <TD WIDTH="18%" VALIGN="TOP"> <U><FONT SIZE=2><P ALIGN="RIGHT">379.7</U></FONT></TD> <TD WIDTH="19%" VALIGN="TOP"> <U><FONT SIZE=2><P ALIGN="RIGHT">29.6</U></FONT></TD> <TD WIDTH="18%" VALIGN="TOP"> <U><FONT SIZE=2><P ALIGN="RIGHT">443.4</U></FONT></TD> </TR> <TR><TD WIDTH="27%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="JUSTIFY">Total</FONT></TD> <TD WIDTH="18%" VALIGN="TOP"> <U><FONT SIZE=2><P ALIGN="RIGHT">$357.4</U></FONT></TD> <TD WIDTH="18%" VALIGN="TOP"> <U><FONT SIZE=2><P ALIGN="RIGHT">$665.5</U></FONT></TD> <TD WIDTH="19%" VALIGN="TOP"> <U><FONT SIZE=2><P ALIGN="RIGHT">$743.3</U></FONT></TD> <TD WIDTH="18%" VALIGN="TOP"> <U><FONT SIZE=2><P ALIGN="RIGHT">$775.1</U></FONT></TD> </TR> </TABLE> </CENTER></P> <FONT SIZE=2><P ALIGN="CENTER"> </P> <B><U><P ALIGN="CENTER">DOMINION RESOURCES, INC.</P> <P ALIGN="CENTER">NOTES TO CONSOLIDATED FINANCIAL STATEMENTS</P> </U><P ALIGN="CENTER">(CONTINUED)</P> </B><P ALIGN="CENTER">The statutory U.S. federal income tax rate reconciles to the effective income tax rates as follows:</P></FONT> <TABLE CELLSPACING=0 BORDER=0 CELLPADDING=7 WIDTH=608> <TR><TD WIDTH="57%" VALIGN="TOP"> <P> </TD> <TD WIDTH="22%" VALIGN="TOP" COLSPAN=2> <B><FONT SIZE=2><P ALIGN="CENTER">Three MonthsEnded</P> <P ALIGN="CENTER">September 30,</B></FONT></TD> <TD WIDTH="21%" VALIGN="TOP" COLSPAN=2> <B><FONT SIZE=2><P ALIGN="CENTER">Nine Months Ended</P> <P ALIGN="CENTER">September 30,</B></FONT></TD> </TR> <TR><TD WIDTH="57%" VALIGN="TOP"> </TD> <TD WIDTH="10%" VALIGN="TOP"> <B><U><FONT SIZE=2><P ALIGN="CENTER">1999</B></U></FONT></TD> <TD WIDTH="12%" VALIGN="TOP"> <B><U><FONT SIZE=2><P ALIGN="CENTER">1998</B></U></FONT></TD> <TD WIDTH="10%" VALIGN="TOP"> <B><U><FONT SIZE=2><P ALIGN="CENTER">1999</B></U></FONT></TD> <TD WIDTH="11%" VALIGN="TOP"> <B><U><FONT SIZE=2><P ALIGN="CENTER">1998</B></U></FONT></TD> </TR> <TR><TD WIDTH="57%" VALIGN="TOP"> <P> </TD> <TD WIDTH="43%" VALIGN="TOP" COLSPAN=4> <B><U><FONT SIZE=2><P ALIGN="CENTER">Percents</B></U></FONT></TD> </TR> <TR><TD WIDTH="57%" VALIGN="TOP"> <FONT SIZE=2><P>U.S. statutory rate</FONT></TD> <TD WIDTH="10%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="RIGHT">35.0</FONT></TD> <TD WIDTH="12%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="RIGHT">35.0</FONT></TD> <TD WIDTH="10%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="RIGHT">35.0</FONT></TD> <TD WIDTH="11%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="RIGHT">35.0</FONT></TD> </TR> <TR><TD WIDTH="57%" VALIGN="TOP"> <FONT SIZE=2><P>Utility plant differences</FONT></TD> <TD WIDTH="10%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="RIGHT">(0.2)</FONT></TD> <TD WIDTH="12%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="RIGHT">0.9</FONT></TD> <TD WIDTH="10%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="RIGHT">0.3</FONT></TD> <TD WIDTH="11%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="RIGHT">3.1</FONT></TD> </TR> <TR><TD WIDTH="57%" VALIGN="TOP"> <FONT SIZE=2><P>Amortization of investment tax credits</FONT></TD> <TD WIDTH="10%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="RIGHT">(1.0)</FONT></TD> <TD WIDTH="12%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="RIGHT">(0.6)</FONT></TD> <TD WIDTH="10%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="RIGHT">(1.5)</FONT></TD> <TD WIDTH="11%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="RIGHT">(1.6)</FONT></TD> </TR> <TR><TD WIDTH="57%" VALIGN="TOP"> <FONT SIZE=2><P>Preferred dividends of Virginia Power</FONT></TD> <TD WIDTH="10%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="RIGHT">0.9</FONT></TD> <TD WIDTH="12%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="RIGHT">0.5</FONT></TD> <TD WIDTH="10%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="RIGHT">1.3</FONT></TD> <TD WIDTH="11%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="RIGHT">1.2</FONT></TD> </TR> <TR><TD WIDTH="57%" VALIGN="TOP"> <FONT SIZE=2><P>Nonconventional fuel credit</FONT></TD> <TD WIDTH="10%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="RIGHT">(2.7)</FONT></TD> <TD WIDTH="12%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="RIGHT">(1.0)</FONT></TD> <TD WIDTH="10%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="RIGHT">(3.7)</FONT></TD> <TD WIDTH="11%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="RIGHT">(2.4)</FONT></TD> </TR> <TR><TD WIDTH="57%" VALIGN="TOP"> <FONT SIZE=2><P>Benefits and taxes related to foreign operations</FONT></TD> <TD WIDTH="10%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="RIGHT">1.4</FONT></TD> <TD WIDTH="12%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="RIGHT">(2.8)</FONT></TD> <TD WIDTH="10%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="RIGHT">0.1</FONT></TD> <TD WIDTH="11%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="RIGHT">(4.5)</FONT></TD> </TR> <TR><TD WIDTH="57%" VALIGN="TOP"> <FONT SIZE=2><P>State taxes, net of federal benefit</FONT></TD> <TD WIDTH="10%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="RIGHT">0.8</FONT></TD> <TD WIDTH="12%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="RIGHT">0.2</FONT></TD> <TD WIDTH="10%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="RIGHT">1.4</FONT></TD> <TD WIDTH="11%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="RIGHT">1.0</FONT></TD> </TR> <TR><TD WIDTH="57%" VALIGN="TOP"> <FONT SIZE=2><P>Other, net</FONT></TD> <TD WIDTH="10%" VALIGN="TOP"> <U><FONT SIZE=2><P ALIGN="RIGHT">(0.4)</U></FONT></TD> <TD WIDTH="12%" VALIGN="TOP"> <U><FONT SIZE=2><P ALIGN="RIGHT">3.1</U></FONT></TD> <TD WIDTH="10%" VALIGN="TOP"> <U><FONT SIZE=2><P ALIGN="RIGHT">(0.5)</U></FONT></TD> <TD WIDTH="11%" VALIGN="TOP"> <U><FONT SIZE=2><P ALIGN="RIGHT">2.9</U></FONT></TD> </TR> <TR><TD WIDTH="57%" VALIGN="TOP"> <FONT SIZE=2><P>Effective tax rate</FONT></TD> <TD WIDTH="10%" VALIGN="TOP"> <U><FONT SIZE=2><P ALIGN="RIGHT">33.8</U></FONT></TD> <TD WIDTH="12%" VALIGN="TOP"> <U><FONT SIZE=2><P ALIGN="RIGHT">35.3</U></FONT></TD> <TD WIDTH="10%" VALIGN="TOP"> <U><FONT SIZE=2><P ALIGN="RIGHT">32.4</U></FONT></TD> <TD WIDTH="11%" VALIGN="TOP"> <U><FONT SIZE=2><P ALIGN="RIGHT">34.7</U></FONT></TD> </TR> </TABLE> <FONT SIZE=2><P ALIGN="JUSTIFY">The effective income tax rate includes state and foreign income taxes.</P> <B><P>(E) <U>COMMON STOCK</P> </B></U><P>At September 30, 1999, there were 300,000,000 shares of Dominion Resources common stock authorized of which 190,882,545 were issued and outstanding. Common shares issued and purchased during the referenced periods were as follows:</P></FONT> <TABLE CELLSPACING=0 BORDER=0 CELLPADDING=7 WIDTH=618> <TR><TD WIDTH="47%" VALIGN="TOP"> <P> </TD> <TD WIDTH="27%" VALIGN="TOP" COLSPAN=2> <B><FONT SIZE=2><P ALIGN="CENTER">Three Months Ended<BR> September 30,</B></FONT></TD> <TD WIDTH="28%" VALIGN="TOP" COLSPAN=2> <B><FONT SIZE=2><P ALIGN="CENTER">Nine Months Ended<BR> September 30,</B></FONT></TD> </TR> <TR><TD WIDTH="47%" VALIGN="TOP"> <P> </TD> <TD WIDTH="13%" VALIGN="TOP"> <B><U><FONT SIZE=2><P ALIGN="CENTER">1999</B></U></FONT></TD> <TD WIDTH="14%" VALIGN="TOP"> <B><U><FONT SIZE=2><P ALIGN="CENTER">1998</B></U></FONT></TD> <TD WIDTH="13%" VALIGN="TOP"> <B><U><FONT SIZE=2><P ALIGN="CENTER">1999</B></U></FONT></TD> <TD WIDTH="15%" VALIGN="TOP"> <B><U><FONT SIZE=2><P ALIGN="CENTER">1998</B></U></FONT></TD> </TR> <TR><TD WIDTH="47%" VALIGN="TOP"> <FONT SIZE=2><P>Employee Savings Plans</FONT></TD> <TD WIDTH="13%" VALIGN="TOP"> <P ALIGN="RIGHT"> </TD> <TD WIDTH="14%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="RIGHT">38,458</FONT></TD> <TD WIDTH="13%" VALIGN="TOP"> <P ALIGN="RIGHT"> </TD> <TD WIDTH="15%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="RIGHT">437,814</FONT></TD> </TR> <TR><TD WIDTH="47%" VALIGN="TOP"> <FONT SIZE=2><P>Dominion Direct Investment</FONT></TD> <TD WIDTH="13%" VALIGN="TOP"> <P ALIGN="RIGHT"> </TD> <TD WIDTH="14%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="RIGHT">107,884</FONT></TD> <TD WIDTH="13%" VALIGN="TOP"> <P ALIGN="RIGHT"> </TD> <TD WIDTH="15%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="RIGHT">1,695,238</FONT></TD> </TR> <TR><TD WIDTH="47%" VALIGN="TOP"> <FONT SIZE=2><P>Public Offering</FONT></TD> <TD WIDTH="13%" VALIGN="TOP"> <P ALIGN="RIGHT"> </TD> <TD WIDTH="14%" VALIGN="TOP"> <P ALIGN="RIGHT"> </TD> <TD WIDTH="13%" VALIGN="TOP"> <P ALIGN="RIGHT"> </TD> <TD WIDTH="15%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="RIGHT">6,775,000</FONT></TD> </TR> <TR><TD WIDTH="47%" VALIGN="TOP"> <FONT SIZE=2><P>Stock Repurchase</FONT></TD> <TD WIDTH="13%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="RIGHT">(1,097,000)</FONT></TD> <TD WIDTH="14%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="RIGHT">(1,359,000) </FONT></TD> <TD WIDTH="13%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="RIGHT">(3,715,700)</FONT></TD> <TD WIDTH="15%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="RIGHT">(1,359,000)</FONT></TD> </TR> <TR><TD WIDTH="47%" VALIGN="TOP"> <FONT SIZE=2><P>Other </FONT></TD> <TD WIDTH="13%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="RIGHT">_________</FONT></TD> <TD WIDTH="14%" VALIGN="TOP"> <U><FONT SIZE=2><P ALIGN="RIGHT">67,742</U></FONT></TD> <TD WIDTH="13%" VALIGN="TOP"> <U><FONT SIZE=2><P ALIGN="RIGHT">140,139</U></FONT></TD> <TD WIDTH="15%" VALIGN="TOP"> <U><FONT SIZE=2><P ALIGN="RIGHT">14,727</U></FONT></TD> </TR> <TR><TD WIDTH="47%" VALIGN="TOP"> <FONT SIZE=2><P>Total Shares</FONT></TD> <TD WIDTH="13%" VALIGN="TOP"> <U><FONT SIZE=2><P ALIGN="RIGHT">(1,097,000)</U></FONT></TD> <TD WIDTH="14%" VALIGN="TOP"> <U><FONT SIZE=2><P ALIGN="RIGHT">(1,144,916)</U> </FONT></TD> <TD WIDTH="13%" VALIGN="TOP"> <U><FONT SIZE=2><P ALIGN="RIGHT">(3,575,561)</U></FONT></TD> <TD WIDTH="15%" VALIGN="TOP"> <U><FONT SIZE=2><P ALIGN="RIGHT">7,563,779</U></FONT></TD> </TR> </TABLE> <FONT SIZE=2><P>On July 20, 1998, the Dominion Resources Board of Directors authorized the repurchase of up to $650 million (approximately 8 percent) of Dominion Resources common stock outstanding. As of September 30, 1999, Dominion Resources has repurchased $257.8 million of common stock and continues to monitor market conditions for opportunities to repurchase additional shares.</P> <P>Also, effective August 1, 1998, shares required by Dominion Direct Investment and the Employee Savings Plans are being acquired on the open market instead of issuing new shares.</P> <B><P>(F) 		<U>PREFERRED STOCK - VIRGINIA POWER</P> </B></U><P>As of September 30, 1999, there were 1,800,000 and 5,090,140 issued and outstanding shares of preferred stock subject to mandatory redemption and preferred stock not subject to mandatory redemption, respectively. There are 10,000,000 authorized shares of Virginia Power's preferred stock. </P> <P>Of the 1,800,000 issued and outstanding shares of preferred stock subject to mandatory redemption, 400,000 shares are scheduled to be redeemed in March 2000 and the remaining 1,400,000 shares are scheduled to be redeemed in September 2000. Accordingly, Virginia Power has classified the $180 million of preferred stock subject to mandatory redemption in Securities Due Within One Year at September 30, 1999.</P> <B><U><P ALIGN="CENTER">DOMINION RESOURCES, INC.</P> <P ALIGN="CENTER">NOTES TO CONSOLIDATED FINANCIAL STATEMENTS</P> </U><P ALIGN="CENTER">(CONTINUED)</P> <P>(G)	<U>COMPANY OBLIGATED MANDATORILY REDEEMABLE PREFERRED SECURITIES </P> </B></U><P>In December 1997, Dominion Resources established Dominion Resources Capital Trust I (DR Capital Trust). DR Capital Trust sold 250,000 shares of capital securities for $250 million, representing preferred beneficial interests and 97% beneficial ownership in the assets held by DR Capital Trust.</P> <P>Dominion Resources issued $257.7 million of 7.83% Junior Subordinated Debentures (Debentures) in exchange for the $250 million realized from the sale of the capital securities and $7.7 million of common securities of DR Capital Trust. The common securities, which are held by Dominion Resources, represent the remaining 3% beneficial ownership interest in the assets held by DR Capital Trust. The Debentures constitute 100 percent of DR Capital Trust's assets.</P> <P>In 1995, Virginia Power established Virginia Power Capital Trust I (VP Capital Trust). VP Capital Trust sold 5,400,000 shares of preferred securities for $135 million, representing preferred beneficial interests and 97% beneficial ownership in the assets held by VP Capital Trust.</P> <P>Virginia Power issued $139.2 million of its 1995 Series A, 8.05% Junior Subordinated Notes (the Notes) in exchange for the $135 million realized from the sale of the preferred securities and $4.2 million of common securities of VP Capital Trust. The common securities, which are held by Virginia Power, represent the remaining 3% beneficial<B> </B>ownership interest in the assets held by VP Capital Trust. The Notes constitute 100% of VP Capital Trust's assets.</P> <B><P>(H) <U>RECENTLY ISSUED ACCOUNTING STANDARDS</B></U> </P> <P>The Financial Accounting Standards Board (FASB) recently issued SFAS No. 137, <I>Accounting for Derivative Instruments and Hedging Activities--Deferral of the Effective Date of FASB Statement No. 133</I>, which defers the effective date of SFAS No. 133, <I>Accounting for Derivative Instruments and Hedging Activities</I>. As a result, Dominion Resources must adopt SFAS No. 133 no later than January 1, 2001. SFAS No. 133 requires that derivative instruments (including certain derivative instruments embedded in other contracts) be recorded in the balance sheet as either an asset or liability measured at fair value. The statement requires that changes in a derivative's fair value be recognized currently in earnings unless specific hedge accounting criteria are met. </P> <P ALIGN="JUSTIFY">The FASB-sponsored Derivatives Implementation Group that is addressing implementation issues related to SFAS No. 133 has tentatively concluded that certain long-term power purchase contracts may be considered derivatives under SFAS No. 133. Dominion Resources has not yet quantified the impacts of adopting SFAS No. 133 and has not yet determined the timing of, or method of, adoption.</P> <B><P>(I) <U>CONTINGENCIES</U> </P> <P>VIRGINIA POWER</P> <P>Nuclear Insurance</P> </B><P>The Price-Anderson Act limits the public liability of an owner of a nuclear power plant to $9.7 billion for a single nuclear incident. Virginia Power is a member of certain insurance programs that provide coverage for property damage to members' nuclear generating plants, replacement power and liability in the event of a nuclear incident. Virginia Power may be subject to retrospective premiums in the event of major incidents at nuclear units owned by covered utilities (including Virginia Power).</P> <P>For additional information, see Note (T) to the Notes to the Consolidated Financial Statements included in Dominion Resources' Annual Report on Form 10-K for the year ended December 31, 1998.</P> </FONT><B><P ALIGN="CENTER"> </P> <U><FONT SIZE=2><P ALIGN="CENTER">DOMINION RESOURCES, INC.</P> <P ALIGN="CENTER">NOTES TO CONSOLIDATED FINANCIAL STATEMENTS</P> </U><P ALIGN="CENTER">(CONTINUED)</P> <P>Environmental Matters</P> </B><P>In 1987, the Environmental Protection Agency (EPA) has identified Virginia Power and several other entities as Potentially Responsible Parties (PRPs) at two Superfund sites located in Kentucky and Pennsylvania. Current cost stuties estimate total remediation costs for the sites to range from $106.0 million to $156.1 million. Virginia Power's proportionate share of the total cost is expected to be in the range of $1.7 million to $2.8 million, based upon allocation formulas and the volume of waste shipped to the sites. Virginia Power has accrued a reserve of $1.7 million to meet its obligations at these two sites. Based on a financial assessment of the PRPs involved at these sites, Virginia Power has determined that it is probable that the PRPs will fully pay the costs apportioned to them. </P> <P>Virginia Power generally seeks to recover its costs associated with environmental remediation from third party insurers. At September 30, 1999, any pending or possible claims were not recognized as an asset or offset against such obligations of Virginia Power.</P> <P>In April 1999, Virginia Power was notified by the Department of Justice of alleged noncompliance with the EPA's oil spill, prevention, control and countermeasures (SPCC) plans and facility response (FRP) requirements at one of its power stations. If, in a legal proceeding, such instances of noncompliance are deemed to have occurred, Virginia Power may be required to remedy any alleged deficiencies and pay civil penalties. Settlement of this matter is currently in negotiation and is not expected to be material to Virginia Power's financial condition or results of operations.</P> <P>In August 1999, Virginia Power identified matters at certain other power stations that the EPA might view as not in compliance with the SPCC and FRP requirements. Virginia Power, reported these matters to the EPA and its plan for correction. Presently, the EPA has not assessed any penalties against Virginia Power, pending its review of Virginia Power's disclosure information. Future resolution of these matters is not expected to have a material impact on Virginia Power's financial condition or results of operations.</P> <B><P>DOMINION RESOURCES AND ITS NONUTILITY SUBSIDIARIES</P> <P>Dominion Resources</P> </B><P>DR Group Holdings Guarantee</P> <P>On October 30, 1998, DR Group Holdings entered into a revolving credit agreement with Bayerische Landesbank Girozentrale. The total commitment and outstanding balance of the agreement is 33.5 million pounds sterling ($55.2 million at September 30, 1999). Dominion Resources is guarantor to DR Group Holdings for this revolving credit agreement.</P> <B><P ALIGN="JUSTIFY">Dominion Energy</P> </B><P>Subsidiaries of Dominion Energy have general partnership interests in certain of its energy ventures. These subsidiaries may be required to fund future operations of these investments, if operating cash flow is insufficient.</P> <B><P>Dominion Capital</P> </B><P>As of September 30, 1999, Dominion Capital had commitments to fund loans of approximately $818.7 million.</P> <P>For additional information regarding Contingencies, see Note (T) to the Notes to the Consolidated Financial Statements included in Dominion Resources' Annual Report on Form 10-K for the year ended December 31, 1998.</P> <B><P ALIGN="CENTER"> </P> <U><P ALIGN="CENTER">DOMINION RESOURCES, INC.</P> <P ALIGN="CENTER">NOTES TO CONSOLIDATED FINANCIAL STATEMENTS</P> </U><P ALIGN="CENTER">(CONTINUED)</P> <P ALIGN="JUSTIFY">(J) <U>LINES OF CREDIT</P> </B></U><P ALIGN="JUSTIFY">Dominion Resources and its subsidiaries have lines of credit, revolving credit agreements and bank commitments that provide for maximum borrowings of $5,058.6 million. At September 30, 1999, $2,359.1 million had been borrowed under such agreements. In addition, these credit agreements supported $523.5 million of Dominion Resources' commercial paper and $693.1 million of non-recourse commercial paper issued by Dominion Resources' subsidiaries which was outstanding at September 30, 1999. At September 30, 1999, $363.6 million of Dominion Resources and its subsidiaries commercial paper is classified as long-term debt since it is supported by revolving credit agreements that have expiration dates extending beyond one year.</P> <B><P>(K) <U>LONG-TERM INCENTIVES</P> </U><P>1999 Option Awards:</P> </B><P>During the first nine months of 1999, Dominion Resources has awarded 7,146,383 nonqualified stock options under its Incentive Compensation Plan to employees and directors of Dominion Resources, Virginia Power and Dominion Energy. The weighted-average exercise price of the options is $41.375 at September 30, 1999. The total number of shares available under this plan is 11 million. The following table provides the grant date, amount, exercise price, and expiration dates of the awards. The exercise price for the options is equal to the market price of Dominion Resources common stock on the date of the grant. As a result of a change adopted in September 1999, these stock options will vest on January 1, 2000. </P></FONT> <P ALIGN="CENTER"><CENTER><TABLE CELLSPACING=0 BORDER=0 CELLPADDING=7 WIDTH=326> <TR><TD WIDTH="19%" VALIGN="TOP"> <P ALIGN="CENTER"><FONT SIZE=2>Date of</FONT></TD> <TD WIDTH="35%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="CENTER">Amount of </FONT></TD> <TD WIDTH="22%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="CENTER">Exercise</FONT></TD> <TD WIDTH="24%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="CENTER">Expiration</FONT></TD> </TR> <TR><TD WIDTH="19%" VALIGN="TOP"> <U><FONT SIZE=2><P ALIGN="CENTER">Award</U></FONT></TD> <TD WIDTH="35%" VALIGN="TOP"> <U><FONT SIZE=2><P ALIGN="CENTER">Options Awarded</U></FONT></TD> <TD WIDTH="22%" VALIGN="TOP"> <U><FONT SIZE=2><P ALIGN="CENTER">Price</U></FONT></TD> <TD WIDTH="24%" VALIGN="TOP"> <U><FONT SIZE=2><P ALIGN="CENTER">Date</U></FONT></TD> </TR> <TR><TD WIDTH="19%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="CENTER">5/17/99</FONT></TD> <TD WIDTH="35%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="RIGHT">6,939,000</FONT></TD> <TD WIDTH="22%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="CENTER">$41.25</FONT></TD> <TD WIDTH="24%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="CENTER">5/17/09</FONT></TD> </TR> <TR><TD WIDTH="19%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="CENTER">7/12/99</FONT></TD> <TD WIDTH="35%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="RIGHT">65,000</FONT></TD> <TD WIDTH="22%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="CENTER">$43.625</FONT></TD> <TD WIDTH="24%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="CENTER">7/12/09</FONT></TD> </TR> <TR><TD WIDTH="19%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="CENTER">9/15/99</FONT></TD> <TD WIDTH="35%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="RIGHT">78,300</FONT></TD> <TD WIDTH="22%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="CENTER">$46.375</FONT></TD> <TD WIDTH="24%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="CENTER">9/15/09</FONT></TD> </TR> <TR><TD WIDTH="19%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="CENTER">9/20/99</FONT></TD> <TD WIDTH="35%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="RIGHT">64,083</FONT></TD> <TD WIDTH="22%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="CENTER">$46.5625</FONT></TD> <TD WIDTH="24%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="CENTER">9/20/09</FONT></TD> </TR> </TABLE> </CENTER></P> <B><FONT SIZE=2><P>Accounting Treatment:</P> </B><P>In 1995, FASB issued SFAS No. 123, <I>Accounting for Stock Based Compensation</I>. Under SFAS No. 123, compensation cost is measured at the grant date based on the fair value of the award and is recognized over the service (or vesting) period. However, as permitted under SFAS No. 123, the company instead measures compensation cost in accordance with Accounting Principles Board Opinion No. 25, <I>Accounting for Stock Issued to Employees</I> and related interpretations. Under this standard, compensation cost is measured as the difference between the market price of the company's common stock and the exercise price of the option at the grant date. Accordingly, no compensation expense has been recognized for the stock option grants.</P> <P>Had compensation cost associated with the stock options been determined under SFAS No. 123 based on the fair market value at the grant date, such cost , net of related income taxes, would have been approximately $3.6 million for the three month period and $5.4 million for the nine month period ended September 30, 1999. Basic earnings per share for the three-month and nine-month periods ended September 30, 1999, would have decreased by $0.02 and $0.03, respectively, due to the issuance of the stock options. Fully diluted earnings per share for both the three and nine-month periods ended September 30, 1999, would not have been affected. </P> <P>The fair value of the options was estimated on the date of grant using the Black-Scholes option pricing model. The following assumptions were used:</P> <UL> <LI>expected dividend yield of 5.88%, </LI> <LI>expected volatility of 15.5%, </LI> <LI>risk-free interest rate of 5.53% and </LI> <LI>expected lives of six years. </LI></UL> <B><U><P ALIGN="CENTER">DOMINION RESOURCES, INC.</P> <P ALIGN="CENTER">NOTES TO CONSOLIDATED FINANCIAL STATEMENTS</P> </U><P ALIGN="CENTER">(CONTINUED)</P> </B><P ALIGN="CENTER"> </P> <UL> <LI>The fair values of each option at the dates of the grants are as follows:</LI> <LI>May 17, 1999		$4.10 </LI> <LI>July 12, 1999		$4.34 </LI> <LI>September 15, 1999	$4.61 </LI> <LI>September 20, 1999	$4.62</LI></UL> <P>The weighted-average grant-date fair value of options granted during the nine-month period September 30, 1999 is $4.11.</P> <B><P>Previous Option Awards:</P> </B><P>For the nine-month period ended September 30, 1999, 1,013 shares were issued associated with exercised stock options from previous awards. These previous awards were made under the Dominion Resources' Long-Term Incentive Plan, which expired in 1997 and was replaced with the Dominion Resources Incentive Compensation Plan. As of September 30, 1999, options on 1,113 shares were exercisable from previous awards under the Dominion Resources Long-Term Incentive Plan.</P> <B><P>Other Stock Awards:</P> </B><P>In addition, during the first nine months of 1999, the Board of Directors of Dominion Resources awarded certain participants in the Dominion Resources, Inc. Incentive Compensation Plan 5,000 shares of common stock at $44.50 per share, 13,916 shares of restricted stock at $44.50 per share and 10,842 shares of restricted stock at $46.75 per share.</P> <OL START=12 TYPE="A"> <B><LI>PENDING SALE OF LATIN AMERICAN INTERESTS</LI></OL> </B><P>As mentioned in Dominion Resources' Form 10-Q for the quarter ended June 30, 1999, Dominion Energy had reached an agreement on August 1, 1999, to sell its interests in approximately 1,200 megawatts of gross generation capacity located in Latin America. Duke Energy International is purchasing the interests for approximately $405 million. Dominion Energy completed the sale of its interests in Belize and Peru on November 1, 1999 and expects to complete the sale of its interests in Argentina and Bolivia in 2000, following receipt of certain regulatory approvals. </P> <P>During the third quarter of 1999, Dominion Energy adjusted the carrying amount of the Latin American interests to be sold to Duke Energy International and recognized an impairment loss of $18.1 million, including the effect of applicable income taxes. The pretax loss of $14.4 million was recorded in Other Operation and Maintenance and the income tax effect of $3.7 million was recorded in Provision for Income Taxes on Dominion Resources' Consolidated Statements of Income. </P> <P>The results of operations for the Latin American interests are as follows:</P></FONT> <P ALIGN="CENTER"><CENTER><TABLE CELLSPACING=0 BORDER=0 CELLPADDING=7 WIDTH=364> <TR><TD WIDTH="23%" VALIGN="TOP"> <P> </TD> <TD WIDTH="38%" VALIGN="TOP" COLSPAN=2> <B><FONT SIZE=2><P ALIGN="CENTER">Three Months Ended September 30, </B></FONT></TD> <TD WIDTH="39%" VALIGN="TOP" COLSPAN=2> <B><FONT SIZE=2><P ALIGN="CENTER">Nine Months Ended September 30,</B></FONT></TD> </TR> <TR><TD WIDTH="23%" VALIGN="TOP"> <FONT SIZE=2><P>(millions)</FONT></TD> <TD WIDTH="17%" VALIGN="TOP"> <B><U><FONT SIZE=2><P ALIGN="CENTER">1999</B></U></FONT></TD> <TD WIDTH="21%" VALIGN="TOP"> <B><U><FONT SIZE=2><P ALIGN="CENTER">1998</B></U></FONT></TD> <TD WIDTH="18%" VALIGN="TOP"> <B><U><FONT SIZE=2><P ALIGN="CENTER">1999</B></U></FONT></TD> <TD WIDTH="21%" VALIGN="TOP"> <B><U><FONT SIZE=2><P ALIGN="CENTER">1998</B></U></FONT></TD> </TR> <TR><TD WIDTH="23%" VALIGN="TOP"> <FONT SIZE=2><P>Net Income</FONT></TD> <TD WIDTH="17%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="CENTER">$4.3</FONT></TD> <TD WIDTH="21%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="CENTER">$4.1</FONT></TD> <TD WIDTH="18%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="CENTER">$6.8</FONT></TD> <TD WIDTH="21%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="CENTER">$15.4</FONT></TD> </TR> </TABLE> </CENTER></P> <B><FONT SIZE=2><P ALIGN="CENTER"> </P> <U><P ALIGN="CENTER">DOMINION RESOURCES, INC.</P> <P ALIGN="CENTER">NOTES TO CONSOLIDATED FINANCIAL STATEMENTS</P> </U><P ALIGN="CENTER">(CONTINUED)</P> <P ALIGN="CENTER">(M) <U>BUSINESS SEGMENTS</P> </B></U><P>Business segment financial information follows for the three month and nine month periods ended September 30, 1999 and 1998. </P></FONT> <TABLE CELLSPACING=0 BORDER=0 CELLPADDING=7 WIDTH=687> <TR><TD WIDTH="20%" VALIGN="TOP"> <P> </TD> <TD WIDTH="12%" VALIGN="TOP"> <B><FONT SIZE=1><P ALIGN="CENTER">Virginia Power Wires Business</B></FONT></TD> <TD WIDTH="11%" VALIGN="TOP"> <B><FONT SIZE=1><P ALIGN="CENTER">Dominion Capital</B></FONT></TD> <TD WIDTH="11%" VALIGN="TOP"> <B><FONT SIZE=1><P ALIGN="CENTER">Dominion</P> <P ALIGN="CENTER">Generation</B></FONT></TD> <TD WIDTH="10%" VALIGN="TOP"> <B><FONT SIZE=1><P ALIGN="CENTER">Dominion UK</B></FONT></TD> <TD WIDTH="13%" VALIGN="TOP"> <B><FONT SIZE=1><P ALIGN="CENTER">Dominion Energy - Gas Operations</B></FONT></TD> <TD WIDTH="11%" VALIGN="TOP"> <B><FONT SIZE=1><P ALIGN="CENTER">Corporate Operations</B></FONT></TD> <TD WIDTH="12%" VALIGN="TOP"> <B><FONT SIZE=1><P ALIGN="CENTER">Consolidated Total</B></FONT></TD> </TR> <TR><TD WIDTH="20%" VALIGN="TOP"> <FONT SIZE=2><P>(millions, except total assets)</FONT></TD> <TD WIDTH="12%" VALIGN="TOP"> <P> </TD> <TD WIDTH="11%" VALIGN="TOP"> <P> </TD> <TD WIDTH="11%" VALIGN="TOP"> <P> </TD> <TD WIDTH="10%" VALIGN="TOP"> <P> </TD> <TD WIDTH="13%" VALIGN="TOP"> <P> </TD> <TD WIDTH="11%" VALIGN="TOP"> <P> </TD> <TD WIDTH="12%" VALIGN="TOP"> <P> </TD> </TR> <TR><TD WIDTH="20%" VALIGN="TOP"> <B><FONT SIZE=2><P>Three Months Ended September 30</B>,</FONT></TD> <TD WIDTH="12%" VALIGN="TOP"> <P> </TD> <TD WIDTH="11%" VALIGN="TOP"> <P> </TD> <TD WIDTH="11%" VALIGN="TOP"> <P> </TD> <TD WIDTH="10%" VALIGN="TOP"> <P> </TD> <TD WIDTH="13%" VALIGN="TOP"> <P> </TD> <TD WIDTH="11%" VALIGN="TOP"> <P> </TD> <TD WIDTH="12%" VALIGN="TOP"> <P> </TD> </TR> <TR><TD WIDTH="20%" VALIGN="TOP"> <B><FONT SIZE=2><P>1999</B></FONT></TD> <TD WIDTH="12%" VALIGN="TOP"> <P> </TD> <TD WIDTH="11%" VALIGN="TOP"> <P> </TD> <TD WIDTH="11%" VALIGN="TOP"> <P> </TD> <TD WIDTH="10%" VALIGN="TOP"> <P> </TD> <TD WIDTH="13%" VALIGN="TOP"> <P> </TD> <TD WIDTH="11%" VALIGN="TOP"> <P> </TD> <TD WIDTH="12%" VALIGN="TOP"> <P> </TD> </TR> <TR><TD WIDTH="20%" VALIGN="TOP"> <FONT SIZE=2><P>Revenues</FONT></TD> <TD WIDTH="12%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="RIGHT">$354.6</FONT></TD> <TD WIDTH="11%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="RIGHT">$91.7</FONT></TD> <TD WIDTH="11%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="RIGHT">$1,139.0</FONT></TD> <TD WIDTH="10%" VALIGN="TOP"> <P ALIGN="RIGHT"> </TD> <TD WIDTH="13%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="RIGHT">$67.7</FONT></TD> <TD WIDTH="11%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="RIGHT">$9.5</FONT></TD> <TD WIDTH="12%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="RIGHT">$1,662.5</FONT></TD> </TR> <TR><TD WIDTH="20%" VALIGN="TOP"> <FONT SIZE=2><P>Net income (loss)</FONT></TD> <TD WIDTH="12%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="RIGHT">$63.5</FONT></TD> <TD WIDTH="11%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="RIGHT">$7.2</FONT></TD> <TD WIDTH="11%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="RIGHT">$155.6</FONT></TD> <TD WIDTH="10%" VALIGN="TOP"> <P ALIGN="RIGHT"> </TD> <TD WIDTH="13%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="RIGHT">$11.9</FONT></TD> <TD WIDTH="11%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="RIGHT">$(6.1)</FONT></TD> <TD WIDTH="12%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="RIGHT">$232.1</FONT></TD> </TR> <TR><TD WIDTH="20%" VALIGN="TOP"> <FONT SIZE=2><P>Total assets (billions)</FONT></TD> <TD WIDTH="12%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="RIGHT">$4.6</FONT></TD> <TD WIDTH="11%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="RIGHT">$3.6</FONT></TD> <TD WIDTH="11%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="RIGHT">$8.8</FONT></TD> <TD WIDTH="10%" VALIGN="TOP"> <P ALIGN="RIGHT"> </TD> <TD WIDTH="13%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="RIGHT">$1.2</FONT></TD> <TD WIDTH="11%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="RIGHT">$0.2</FONT></TD> <TD WIDTH="12%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="RIGHT">$18.4</FONT></TD> </TR> <TR><TD WIDTH="20%" VALIGN="TOP"> <P> </TD> <TD WIDTH="12%" VALIGN="TOP"> <P ALIGN="RIGHT"> </TD> <TD WIDTH="11%" VALIGN="TOP"> <P ALIGN="RIGHT"> </TD> <TD WIDTH="11%" VALIGN="TOP"> <P ALIGN="RIGHT"> </TD> <TD WIDTH="10%" VALIGN="TOP"> <P ALIGN="RIGHT"> </TD> <TD WIDTH="13%" VALIGN="TOP"> <P ALIGN="RIGHT"> </TD> <TD WIDTH="11%" VALIGN="TOP"> <P ALIGN="RIGHT"> </TD> <TD WIDTH="12%" VALIGN="TOP"> <P ALIGN="RIGHT"> </TD> </TR> <TR><TD WIDTH="20%" VALIGN="TOP"> <B><FONT SIZE=2><P ALIGN="JUSTIFY">1998</B></FONT></TD> <TD WIDTH="12%" VALIGN="TOP"> <P ALIGN="RIGHT"> </TD> <TD WIDTH="11%" VALIGN="TOP"> <P ALIGN="RIGHT"> </TD> <TD WIDTH="11%" VALIGN="TOP"> <P ALIGN="RIGHT"> </TD> <TD WIDTH="10%" VALIGN="TOP"> <P ALIGN="RIGHT"> </TD> <TD WIDTH="13%" VALIGN="TOP"> <P ALIGN="RIGHT"> </TD> <TD WIDTH="11%" VALIGN="TOP"> <P ALIGN="RIGHT"> </TD> <TD WIDTH="12%" VALIGN="TOP"> <P ALIGN="RIGHT"> </TD> </TR> <TR><TD WIDTH="20%" VALIGN="TOP"> <FONT SIZE=2><P>Revenues</FONT></TD> <TD WIDTH="12%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="RIGHT">$329.1</FONT></TD> <TD WIDTH="11%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="RIGHT">$95.1</FONT></TD> <TD WIDTH="11%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="RIGHT">$1,072.8</FONT></TD> <TD WIDTH="10%" VALIGN="TOP"> <P ALIGN="RIGHT"> </TD> <TD WIDTH="13%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="RIGHT">$42.2</FONT></TD> <TD WIDTH="11%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="RIGHT">$5.1</FONT></TD> <TD WIDTH="12%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="RIGHT">$1,544.3</FONT></TD> </TR> <TR><TD WIDTH="20%" VALIGN="TOP"> <FONT SIZE=2><P>Net income (loss)</FONT></TD> <TD WIDTH="12%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="RIGHT">$72.7</FONT></TD> <TD WIDTH="11%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="RIGHT">$10.4</FONT></TD> <TD WIDTH="11%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="RIGHT">$135.3</FONT></TD> <TD WIDTH="10%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="RIGHT">$200.7</FONT></TD> <TD WIDTH="13%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="RIGHT">$7.2</FONT></TD> <TD WIDTH="11%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="RIGHT">$(1.7)</FONT></TD> <TD WIDTH="12%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="RIGHT">$424.6</FONT></TD> </TR> <TR><TD WIDTH="20%" VALIGN="TOP"> <FONT SIZE=2><P>Total assets at 12/31/98 (billions)</FONT></TD> <TD WIDTH="12%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="RIGHT"><BR> $4.6</FONT></TD> <TD WIDTH="11%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="RIGHT"><BR> $3.1</FONT></TD> <TD WIDTH="11%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="RIGHT"><BR> $8.8</FONT></TD> <TD WIDTH="10%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="RIGHT"><BR> $0.2</FONT></TD> <TD WIDTH="13%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="RIGHT"><BR> $0.8</FONT></TD> <TD WIDTH="11%" VALIGN="TOP"> <P ALIGN="RIGHT"> </TD> <TD WIDTH="12%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="RIGHT"><BR> $17.5</FONT></TD> </TR> <TR><TD WIDTH="20%" VALIGN="TOP"> <P> </TD> <TD WIDTH="12%" VALIGN="TOP"> <P ALIGN="RIGHT"> </TD> <TD WIDTH="11%" VALIGN="TOP"> <P ALIGN="RIGHT"> </TD> <TD WIDTH="11%" VALIGN="TOP"> <P ALIGN="RIGHT"> </TD> <TD WIDTH="10%" VALIGN="TOP"> <P ALIGN="RIGHT"> </TD> <TD WIDTH="13%" VALIGN="TOP"> <P ALIGN="RIGHT"> </TD> <TD WIDTH="11%" VALIGN="TOP"> <P ALIGN="RIGHT"> </TD> <TD WIDTH="12%" VALIGN="TOP"> <P ALIGN="RIGHT"> </TD> </TR> <TR><TD WIDTH="20%" VALIGN="TOP"> <B><FONT SIZE=2><P>Nine Months Ended September 30,</B></FONT></TD> <TD WIDTH="12%" VALIGN="TOP"> <P ALIGN="RIGHT"> </TD> <TD WIDTH="11%" VALIGN="TOP"> <P ALIGN="RIGHT"> </TD> <TD WIDTH="11%" VALIGN="TOP"> <P ALIGN="RIGHT"> </TD> <TD WIDTH="10%" VALIGN="TOP"> <P ALIGN="RIGHT"> </TD> <TD WIDTH="13%" VALIGN="TOP"> <P ALIGN="RIGHT"> </TD> <TD WIDTH="11%" VALIGN="TOP"> <P ALIGN="RIGHT"> </TD> <TD WIDTH="12%" VALIGN="TOP"> <P ALIGN="RIGHT"> </TD> </TR> <TR><TD WIDTH="20%" VALIGN="TOP"> <B><FONT SIZE=2><P>1999</B></FONT></TD> <TD WIDTH="12%" VALIGN="TOP"> <P ALIGN="RIGHT"> </TD> <TD WIDTH="11%" VALIGN="TOP"> <P ALIGN="RIGHT"> </TD> <TD WIDTH="11%" VALIGN="TOP"> <P ALIGN="RIGHT"> </TD> <TD WIDTH="10%" VALIGN="TOP"> <P ALIGN="RIGHT"> </TD> <TD WIDTH="13%" VALIGN="TOP"> <P ALIGN="RIGHT"> </TD> <TD WIDTH="11%" VALIGN="TOP"> <P ALIGN="RIGHT"> </TD> <TD WIDTH="12%" VALIGN="TOP"> <P ALIGN="RIGHT"> </TD> </TR> <TR><TD WIDTH="20%" VALIGN="TOP"> <FONT SIZE=2><P>Revenues</FONT></TD> <TD WIDTH="12%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="RIGHT">$905.5</FONT></TD> <TD WIDTH="11%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="RIGHT">$320.1</FONT></TD> <TD WIDTH="11%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="RIGHT">$2,844.7</FONT></TD> <TD WIDTH="10%" VALIGN="TOP"> <P ALIGN="RIGHT"> </TD> <TD WIDTH="13%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="RIGHT">$179.5</FONT></TD> <TD WIDTH="11%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="RIGHT">$21.0</FONT></TD> <TD WIDTH="12%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="RIGHT">$4,270.8</FONT></TD> </TR> <TR><TD WIDTH="20%" VALIGN="TOP"> <FONT SIZE=2><P>Net income (loss)</FONT></TD> <TD WIDTH="12%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="RIGHT">$151.2</FONT></TD> <TD WIDTH="11%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="RIGHT">$43.1</FONT></TD> <TD WIDTH="11%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="RIGHT">$271.4</FONT></TD> <TD WIDTH="10%" VALIGN="TOP"> <P ALIGN="RIGHT"> </TD> <TD WIDTH="13%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="RIGHT">$32.4</FONT></TD> <TD WIDTH="11%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="RIGHT">$(264.9)</FONT></TD> <TD WIDTH="12%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="RIGHT">$233.2</FONT></TD> </TR> <TR><TD WIDTH="20%" VALIGN="TOP"> <P> </TD> <TD WIDTH="12%" VALIGN="TOP"> <P ALIGN="RIGHT"> </TD> <TD WIDTH="11%" VALIGN="TOP"> <P ALIGN="RIGHT"> </TD> <TD WIDTH="11%" VALIGN="TOP"> <P ALIGN="RIGHT"> </TD> <TD WIDTH="10%" VALIGN="TOP"> <P ALIGN="RIGHT"> </TD> <TD WIDTH="13%" VALIGN="TOP"> <P ALIGN="RIGHT"> </TD> <TD WIDTH="11%" VALIGN="TOP"> <P ALIGN="RIGHT"> </TD> <TD WIDTH="12%" VALIGN="TOP"> <P ALIGN="RIGHT"> </TD> </TR> <TR><TD WIDTH="20%" VALIGN="TOP"> <B><FONT SIZE=2><P>1998</B></FONT></TD> <TD WIDTH="12%" VALIGN="TOP"> <P> </TD> <TD WIDTH="11%" VALIGN="TOP"> <P> </TD> <TD WIDTH="11%" VALIGN="TOP"> <P> </TD> <TD WIDTH="10%" VALIGN="TOP"> <P> </TD> <TD WIDTH="13%" VALIGN="TOP"> <P> </TD> <TD WIDTH="11%" VALIGN="TOP"> <P> </TD> <TD WIDTH="12%" VALIGN="TOP"> <P> </TD> </TR> <TR><TD WIDTH="20%" VALIGN="TOP"> <FONT SIZE=2><P>Revenues</FONT></TD> <TD WIDTH="12%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="RIGHT">$867.2</FONT></TD> <TD WIDTH="11%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="RIGHT">$306.1</FONT></TD> <TD WIDTH="11%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="RIGHT">$2,740.3</FONT></TD> <TD WIDTH="10%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="RIGHT">$934.8</FONT></TD> <TD WIDTH="13%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="RIGHT">$119.1</FONT></TD> <TD WIDTH="11%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="RIGHT">$ (64.5)</FONT></TD> <TD WIDTH="12%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="RIGHT">$4,903.0</FONT></TD> </TR> <TR><TD WIDTH="20%" VALIGN="TOP"> <FONT SIZE=2><P>Net income (loss)</FONT></TD> <TD WIDTH="12%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="RIGHT">$143.1</FONT></TD> <TD WIDTH="11%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="RIGHT">$56.1</FONT></TD> <TD WIDTH="11%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="RIGHT">$245.0</FONT></TD> <TD WIDTH="10%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="RIGHT">$227.2</FONT></TD> <TD WIDTH="13%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="RIGHT">$19.2</FONT></TD> <TD WIDTH="11%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="RIGHT">$(209.2)</FONT></TD> <TD WIDTH="12%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="RIGHT">$481.4</FONT></TD> </TR> </TABLE> <B><U><FONT SIZE=2><P ALIGN="CENTER"> </P> <P ALIGN="CENTER">DOMINION RESOURCES, INC.</P> <P ALIGN="CENTER">ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS</P> <P ALIGN="CENTER">OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS</P> </B></U><P>This Management's Discussion and Analysis of Financial Condition and Results of Operations contains "forward-looking statements" as defined by the Private Securities Litigation Reform Act of 1995, including (without limitation) discussions as to expectations, beliefs, plans, objectives and future financial performance, or assumptions underlying or concerning matters discussed in this document. These discussions, and any other discussions, including certain contingency matters (and their respective cautionary statements) discussed elsewhere in this report, that are not historical facts, are forward-looking and, accordingly, involve estimates, projections, goals, forecasts, assumptions and uncertainties that could cause actual results or outcomes to differ materially from those expressed in the forward-looking statements. </P> <P>The business and financial condition of Dominion Resources are influenced by a number of factors including political and economic risks, market demand for energy, inflation, capital market conditions, governmental policies, legislative and regulatory actions (including those of the Federal Energy Regulatory Commission (FERC), the Securities and Exchange Commission (SEC), the Environmental Protection Agency, the Department of Energy, the Nuclear Regulatory Commission, the Virginia Commission and the North Carolina Utilities Commission), industry and rate structure and legal and administrative proceedings. Some other important factors that could cause actual results or outcomes to differ materially from those discussed in the forward-looking statements include changes in and compliance with environmental laws and policies, weather conditions and catastrophic weather-related damage, present or prospective wholesale and retail competition, competition for new energy development opportunities, pricing and transportation of commodities, operation of nuclear power facilities, acquisition and disposition of assets and facilities, effects of the merger with CNG, recovery of the cost of purchased power, nuclear decommissioning costs, the ability of Dominion Resources, its suppliers, and its customers to successfully address Year 2000 readiness issues, exposure to changes in the fair value of commodity contracts, counter-party credit risk and unanticipated changes in operating expenses and capital expenditures. All such factors are difficult to predict, contain uncertainties that may materially affect actual results, and may be beyond the control of Dominion Resources. New factors emerge from time to time and it is not possible for management to predict all such factors, nor can it assess the impact of each such factor on Dominion Resources.</P> <P>Any forward-looking statement speaks only as of the date on which such statement is made, and Dominion Resources undertakes no obligation to update any forward-looking statement or statements to reflect events or circumstances after the date on which such statement is made. </P> <B><U><P>Business Segments</P> </B></U><P>In preparation for the transition to competition for electric generation in Virginia, beginning May 1, 1999 Dominion Resources began to evaluate the operating results and financial information across Virginia Power's and Dominion Energy's current organizational structure. Although the employees and assets involved remain with their respective companies, Dominion Resources currently evaluates the operations of Dominion Energy and Virginia Power in the following business segments: </P> <UL> <LI>generation-related operations of both Virginia Power and Dominion Energy (referred to as Dominion Generation); </LI> <LI>regulated electric transmission and distribution services (referred to as Virginia Power - Wires Business); and </LI> <LI>oil and gas operations of Dominion Energy (Dominion Energy - Gas Operations).</LI></UL> <P>In addition to the business segments mentioned above, Dominion Resources also reviews the following as business segments:</P> <UL> <LI>the financial services of Dominion Capital; </LI> <LI>Dominion UK which was sold by Dominion Resources on July 27, 1998; and </LI> <LI>Corporate Operations (corporate costs of Dominion Resources' holding company, Corby Power (UK) operations, intercompany eliminations, plus the impact of the impairment of regulatory assets and one-time refund recorded as a result of the settlement of Virginia Power's 1998 Virginia jurisdictional rate proceedings in the second quarter of 1998 and the extraordinary item recorded in the first quarter of 1999). See Note (C) to Consolidated Financial Statements.</LI></UL> <B><P ALIGN="CENTER">DOMINION RESOURCES, INC.</P> <U><P ALIGN="CENTER">ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS</P> <P ALIGN="CENTER">OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS</P> </U><P ALIGN="CENTER">(CONTINUED)</P> </B><P>Dominion Resources has structured its Management's Discussion and Analysis of Financial Condition and Results of Operations to reflect the above mentioned business segments. </P> <P>Certain activities discussed under Liquidity and Capital Resources are currently evaluated based on existing legal entities rather than the operating segments defined by the new organizational structure because we continue to analyze these matters internally by legal entity. </P> <B><U><P>RESULTS OF OPERATIONS</P> </B></U><P>We have organized our discussion of Results of Operations into the following subsections:</P> <OL> <LI>Dominion Resources - Consolidated</LI> <LI>Virginia Power - Wires Business</LI> <LI>Dominion Generation</LI> <LI>Dominion Energy - Gas Operations</LI> <LI>Dominion Capital</LI></OL> <B><P>1. DOMINION RESOURCES - CONSOLIDATED</B> </P> <B><P>Earnings Per Share</P></B></FONT> <TABLE CELLSPACING=0 BORDER=0 CELLPADDING=7 WIDTH=601> <TR><TD WIDTH="54%" VALIGN="TOP"> <P> </TD> <TD WIDTH="24%" VALIGN="TOP" COLSPAN=2> <B><FONT SIZE=2><P ALIGN="CENTER">Three Months Ended<BR> September 30,</B></FONT></TD> <TD WIDTH="22%" VALIGN="TOP" COLSPAN=2> <B><FONT SIZE=2><P ALIGN="CENTER">Nine Months Ended<BR> September 30,</B></FONT></TD> </TR> <TR><TD WIDTH="54%" VALIGN="TOP"> <P> </TD> <TD WIDTH="13%" VALIGN="TOP"> <B><U><FONT SIZE=2><P ALIGN="CENTER">1999</B></U></FONT></TD> <TD WIDTH="11%" VALIGN="TOP"> <B><U><FONT SIZE=2><P ALIGN="CENTER">1998</B></U></FONT></TD> <TD WIDTH="11%" VALIGN="TOP"> <B><U><FONT SIZE=2><P ALIGN="CENTER">1999</B></U></FONT></TD> <TD WIDTH="11%" VALIGN="TOP"> <B><U><FONT SIZE=2><P ALIGN="CENTER">1998</B></U></FONT></TD> </TR> <TR><TD WIDTH="54%" VALIGN="TOP"> <FONT SIZE=2><P>Virginia Power-Wires Business</FONT></TD> <TD WIDTH="13%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="RIGHT">$0.33</FONT></TD> <TD WIDTH="11%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="RIGHT">$0.37</FONT></TD> <TD WIDTH="11%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="RIGHT">$ 0.79</FONT></TD> <TD WIDTH="11%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="RIGHT">$ 0.73</FONT></TD> </TR> <TR><TD WIDTH="54%" VALIGN="TOP"> <FONT SIZE=2><P>Dominion Generation</FONT></TD> <TD WIDTH="13%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="RIGHT">0.81</FONT></TD> <TD WIDTH="11%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="RIGHT">0.69</FONT></TD> <TD WIDTH="11%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="RIGHT">1.41</FONT></TD> <TD WIDTH="11%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="RIGHT">1.26</FONT></TD> </TR> <TR><TD WIDTH="54%" VALIGN="TOP"> <FONT SIZE=2><P>Dominion Capital</FONT></TD> <TD WIDTH="13%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="RIGHT">0.04</FONT></TD> <TD WIDTH="11%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="RIGHT">0.05</FONT></TD> <TD WIDTH="11%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="RIGHT">0.22</FONT></TD> <TD WIDTH="11%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="RIGHT">0.29</FONT></TD> </TR> <TR><TD WIDTH="54%" VALIGN="TOP" HEIGHT=19> <FONT SIZE=2><P>Dominion Energy-Gas Operations</FONT></TD> <TD WIDTH="13%" VALIGN="TOP" HEIGHT=19> <FONT SIZE=2><P ALIGN="RIGHT">0.06</FONT></TD> <TD WIDTH="11%" VALIGN="TOP" HEIGHT=19> <FONT SIZE=2><P ALIGN="RIGHT">0.04</FONT></TD> <TD WIDTH="11%" VALIGN="TOP" HEIGHT=19> <FONT SIZE=2><P ALIGN="RIGHT">0.17</FONT></TD> <TD WIDTH="11%" VALIGN="TOP" HEIGHT=19> <FONT SIZE=2><P ALIGN="RIGHT">0.10</FONT></TD> </TR> <TR><TD WIDTH="54%" VALIGN="TOP"> <FONT SIZE=2><P>Dominion UK </FONT></TD> <TD WIDTH="13%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="RIGHT">0.00</FONT></TD> <TD WIDTH="11%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="RIGHT">1.03</FONT></TD> <TD WIDTH="11%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="RIGHT">0.00</FONT></TD> <TD WIDTH="11%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="RIGHT">1.17</FONT></TD> </TR> <TR><TD WIDTH="54%" VALIGN="TOP"> <FONT SIZE=2><P>Corporate Operations</FONT></TD> <TD WIDTH="13%" VALIGN="TOP"> <U><FONT SIZE=2><P ALIGN="RIGHT">(0.03</U>)</FONT></TD> <TD WIDTH="11%" VALIGN="TOP"> <U><FONT SIZE=2><P ALIGN="RIGHT">(0.01)</U></FONT></TD> <TD WIDTH="11%" VALIGN="TOP"> <U><FONT SIZE=2><P ALIGN="RIGHT">(1.38</U>)</FONT></TD> <TD WIDTH="11%" VALIGN="TOP"> <U><FONT SIZE=2><P ALIGN="RIGHT">(1.08</U>)</FONT></TD> </TR> <TR><TD WIDTH="54%" VALIGN="TOP"> <FONT SIZE=2><P>Consolidated</FONT></TD> <TD WIDTH="13%" VALIGN="TOP"> <U><FONT SIZE=2><P ALIGN="RIGHT">$1.21</U></FONT></TD> <TD WIDTH="11%" VALIGN="TOP"> <U><FONT SIZE=2><P ALIGN="RIGHT">$2.17</U></FONT></TD> <TD WIDTH="11%" VALIGN="TOP"> <U><FONT SIZE=2><P ALIGN="RIGHT">$ 1.21</U></FONT></TD> <TD WIDTH="11%" VALIGN="TOP"> <U><FONT SIZE=2><P ALIGN="RIGHT">$ 2.47</U></FONT></TD> </TR> </TABLE> <FONT SIZE=2><P>The results of operations for the interim periods are not necessarily indicative of the results expected for the full year. Information for quarterly periods is affected by seasonal variations in sales, rate changes, timing of fuel expense recovery and other factors.</P> <P>Consolidated earnings decreased $0.96 per share for the third quarter of 1999 when compared to the same time period in 1998. The decrease was primarily due to:</P> <UL> <LI>the gain on the sale of East Midlands in the third quarter of 1998, </LI> <LI>an impairment loss recognized in the third quarter of 1999 by Dominion Generation as a result of the pending sale of its interests in approximately 1,200 megawatts of gross generation capacity located in Latin America, and </LI> <LI>increased service restoration costs incurred by Virginia Power - Wires Business due to hurricane damage. </LI></UL> <P>The decrease in earnings was offset by the performance of Dominion Generation's energy marketing business. The performance was attributable to changes in the composition and the fair value of its portfolio of commodity contracts as well as the settlement of commodity contract liabilities using Dominion Generation resources rather than market purchases. </P> </FONT><FONT FACE="Courier New" SIZE=2><P ALIGN="CENTER"> </P> </FONT><B><U><FONT SIZE=2><P ALIGN="CENTER">DOMINION RESOURCES, INC</B>.</P> <B><P ALIGN="CENTER">ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS</P> <P ALIGN="CENTER">OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS</P> </U><P ALIGN="CENTER">(CONTINUED)</P> </B><P>Consolidated earnings decreased by $1.26 per share during the first nine months of 1999 as compared to the same period in 1998 primarily due to:</P> <UL> <LI>the write-off of generation related assets and liabilities at Virginia Power in the first quarter of 1999, </LI> <LI>the impairment loss recorded by Dominion Generation in anticipation of the sale of the South American subsidiaries, </LI> <LI>the gain on the sale of East Midlands in the third quarter of 1998, and </LI> <LI>the absence in 1999 of earnings from East Midland's operations which were sold in the third quarter of 1998.</LI></UL> <P>The effects of these transactions were offset by the performance of Dominion Generation's energy marketing business during the first nine months of 1999, explained above, and the impairment of regulatory assets and one-time base rate refund resulting from the settlement of Virginia Power's Virginia jurisdictional rate proceedings in the second quarter of 1998. See Note (C) to Consolidated Financial Statements.</P> <B><P>Operating Income</P> </B><P>Operating income increased by $212.3 million during the first nine months of 1999 as compared to the same period in 1998, primarily due to the recording of the impairment of regulatory assets and one-time rate refund recorded in the second quarter of 1998 associated with the rate settlement with the Virginia Commission. See Note (C) to Consolidated Financial Statements. The increase was offset by the absence of Dominion UK's East Midlands operations which was sold in the third quarter of 1998.</P> <B><P ALIGN="JUSTIFY">Interest Charges, Net</P> </B><P>Interest charges, net decreased by $94.2 million during the nine-month period ended September 30, 1999, as compared to the same period in 1998 primarily due to the absence of East Midlands debt because of the sale of East Midlands in the third quarter of 1998.</P> <B><P>Extraordinary Item, Net of Tax</P> </B><P>Extraordinary item, net of tax consists of a charge to earnings for the write-off of assets and liabilities related to Virginia Power's generation activities which will not be recovered through capped regulated rates. For more information on the extraordinary item, see Note (C) to Consolidated Financial Statements.</P> <B><P>Provision for Income Taxes</P> </B><P>The Provision for Income Taxes in the third quarter and nine months ended September 30, 1999 decreased when compared to the same periods in 1998, primarily due to the recording of related income taxes associated with the sale of East Midlands in July 1998.</P> <B><P>2. VIRGINIA POWER - WIRES BUSINESS</P> </B><P>The business segment Virginia Power-Wires Business includes customer service, bulk power transmission, distribution and metering services that continue to be subject to cost-based regulation. </P> <P>Net income for the three months ended September 30, 1999, decreased as compared to the same period in 1998, </P> <P>primarily due to increased service restoration costs associated with hurricane damage. For the nine months ended </P> <P>September 30, 1999, net income increased as compared to the same period in 1998 due to increased revenues for electric transmission services and from customer growth, offset in part by increased expenses associated with ice storm and hurricane damage during the first and third quarters of 1999.</P> <P ALIGN="CENTER"> </P> <B><U><P ALIGN="CENTER">DOMINION RESOURCES, INC.</P> <P ALIGN="CENTER">ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS</P> <P ALIGN="CENTER">OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS</P> </U><P ALIGN="CENTER">(CONTINUED)</P> <P ALIGN="CENTER">3. DOMINION GENERATION</P> </B><P>The business segment Dominion Generation consists of the combined generation operations of Dominion Energy and Virginia Power.</P> <B><P>Operating Revenue and Income</P> </B><P>Operating revenues and income increased for the third quarter and first nine months of 1999 when compared to the same periods in 1998 primarily due to changes in the composition and the fair value of Dominion Generation's portfolio of commodity contracts as well as the settlement of commodity contract liabilities using company resources rather than market purchases.</P> <B><P>Operating Expenses</P> </B><P>Operating expenses for the nine month period ended September 30, 1999 as compared to the same period in 1998, increased primarily due to:</P> <UL> <LI>increased fuel costs from higher production from our generating units and increased energy purchases, offset, in part, by deferral of fuel costs expected to be recovered in future fuel rates; and </LI> <LI>higher costs associated with planned outages.</LI></UL> <B><P ALIGN="JUSTIFY">4. DOMINION ENERGY - GAS OPERATIONS</P> </B><P ALIGN="JUSTIFY">The business segment Dominion Energy - Gas Operations consists of the gas and oil operations of Dominion Energy.</P> <P ALIGN="JUSTIFY">Increases in the results of operations for the three month and nine month periods ended September 30, 1999, as compared to the same periods in 1998, resulted primarily from the effects of higher oil and gas production. This incremental production was related to increased reserves obtained through acquisition activities.</P> <B><P>5. DOMINION CAPITAL</P> </B><P>The business segment Dominion Capital's net income decreased during the third quarter and first nine months of 1999, as compared to the same periods in 1998, primarily due to the timing of net investment gains in 1998, partially offset by a higher earnings contribution from the financial services operations in 1999.</P> <B><U><P>LIQUIDITY AND CAPITAL RESOURCES</B></U> </P> <P>We have organized our discussion of Liquidity and Capital Resources into the following subsections:</P> <OL> <LI>Dominion Resources - Consolidated</LI> <LI>Virginia Power</LI> <LI>Dominion Energy</LI> <LI>Dominion Capital</LI></OL> <B><P>1. DOMINION RESOURCES - CONSOLIDATED</P> <P>Cash Flows From Financing Activities</P> </B><P>Financing activities provided cash flows of $464.7 million during the first nine months of 1999 resulting primarily from the issuance of commercial paper and long-term debt offset by the repurchase of common stock and the payment of common stock dividends.</P> <P>On October 15, 1999, the Board of Directors of Dominion Resources declared a quarterly common stock dividend of $0.645 per share, payable December 20, 1999, to holders of record at the close of business November 26, 1999.</P> <B><U><P ALIGN="CENTER">DOMINION RESOURCES, INC.</P> <P ALIGN="CENTER">ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS</P> <P ALIGN="CENTER">OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS</P> </U><P ALIGN="CENTER">(CONTINUED)</P> </B><P>On July 20, 1998, the Dominion Resources Board of Directors approved the repurchase of up to $650 million of Dominion Resources common stock. Under this program, Dominion Resources repurchased 3,715,700 shares of common stock ($159.2 million) during the first nine months of 1999. </P> <P>On March 31, 1999, Dominion Resources increased its bank lines of credit to $600 million by replacing the April 1, 1998, $200 million short-term credit agreement with a new $300 million, 364-day facility. Dominion Resources uses these credit agreements to support its commercial paper borrowings. The proceeds from these borrowings are used to finance Dominion Resources nonutility subsidiaries' working capital for operations.</P> <B><P>Cash Flows Used In Investing Activities</P> </B><P>Net cash flows used in investing activities during the first nine months of 1999 were $1,368.5 million. The primary reasons for the cash outflows were:</P> <UL> <LI>utility plant (including nuclear fuel) expenditures at Virginia Power; </LI> <LI>funding for commercial lending activities at the Company's financial services companies, </LI> <LI>Dominion Energy's acquisition of San Juan Partners, LLC and Remington Energy, Ltd.; and </LI> <LI>funding to expand and upgrade certain independent power plants owned by Dominion Energy.</LI></UL> <B><P>2. VIRGINIA POWER</P> <P>Cash Flows From Operations</P> </B><P>Operating activities resulted in $62.9 million decreased cash flow for the nine months ended September 30, 1999 as compared to the same period in 1998. This decrease reflects primarily the timing of payments of accounts payable and certain other expenses. Internal generation of cash at Virginia Power exceeded capital requirements during the first nine months of 1999 and 1998. </P> <B><P ALIGN="JUSTIFY">Cash Flows Used in Financing Activities</P> </B><P>Cash used in financing activities was as follows:</P></FONT> <TABLE CELLSPACING=0 BORDER=0 CELLPADDING=7 WIDTH=637> <TR><TD WIDTH="74%" VALIGN="TOP"> <P> </TD> <TD WIDTH="26%" VALIGN="TOP" COLSPAN=2> <B><FONT SIZE=2><P ALIGN="CENTER">Nine Months Ended<BR> September 30,</B></FONT></TD> </TR> <TR><TD WIDTH="74%" VALIGN="TOP"> <P> </TD> <TD WIDTH="12%" VALIGN="TOP"> <B><U><FONT SIZE=2><P ALIGN="CENTER">1999</B></U></FONT></TD> <TD WIDTH="14%" VALIGN="TOP"> <B><U><FONT SIZE=2><P ALIGN="CENTER">1998</B></U></FONT></TD> </TR> <TR><TD WIDTH="74%" VALIGN="TOP"> <P> </TD> <TD WIDTH="26%" VALIGN="TOP" COLSPAN=2> <B><FONT SIZE=2><P ALIGN="CENTER">(Millions)</B></FONT></TD> </TR> <TR><TD WIDTH="74%" VALIGN="TOP"> <FONT SIZE=2><P>Issuance of long-term debt</FONT></TD> <TD WIDTH="12%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="RIGHT">$ 230.0</FONT></TD> <TD WIDTH="14%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="RIGHT">$ 150.0</FONT></TD> </TR> <TR><TD WIDTH="74%" VALIGN="TOP"> <FONT SIZE=2><P>Issuance (repayment) of short-term debt, net</FONT></TD> <TD WIDTH="12%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="RIGHT">35.9</FONT></TD> <TD WIDTH="14%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="RIGHT">(148.7)</FONT></TD> </TR> <TR><TD WIDTH="74%" VALIGN="TOP"> <FONT SIZE=2><P>Repayment of long-term debt</FONT></TD> <TD WIDTH="12%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="RIGHT">(332.7)</FONT></TD> <TD WIDTH="14%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="RIGHT">(292.5)</FONT></TD> </TR> <TR><TD WIDTH="74%" VALIGN="TOP"> <FONT SIZE=2><P>Common dividend payments</FONT></TD> <TD WIDTH="12%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="RIGHT">(285.5)</FONT></TD> <TD WIDTH="14%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="RIGHT">(285.7)</FONT></TD> </TR> <TR><TD WIDTH="74%" VALIGN="TOP"> <FONT SIZE=2><P>Other</FONT></TD> <TD WIDTH="12%" VALIGN="TOP"> <U><FONT SIZE=2><P ALIGN="RIGHT">(13.4)</U></FONT></TD> <TD WIDTH="14%" VALIGN="TOP"> <U><FONT SIZE=2><P ALIGN="RIGHT">(12.9)</U></FONT></TD> </TR> <TR><TD WIDTH="74%" VALIGN="TOP"> <FONT SIZE=2><P>Total</FONT></TD> <TD WIDTH="12%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="RIGHT">$<U>(365.7</U>)</FONT></TD> <TD WIDTH="14%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="RIGHT">$<U>(589.8</U>)</FONT></TD> </TR> </TABLE> <FONT FACE="Tms Rmn,Times New Roman" SIZE=2><P>In June 1999, Virginia Power issued $150 million in aggregate principal of unsecured Senior Notes, Series 1999-A, with an annual coupon rate of 6.7%, due June 30, 2009; and $80 million of Medium-Term Notes, Series G, with an annual coupon rate of 6.3%, due June 21, 2001.</P> </FONT><FONT SIZE=2><P ALIGN="JUSTIFY">During the first nine months of 1999, Virginia Power retired $309 million in aggregate principal amount of mandatory debt maturities. In July 1999, Virginia Power repurchased $23.7 million in aggregate principal amount of First and Refunding Mortgage Bonds that were made available through the open market.</P> </FONT><FONT FACE="Courier New" SIZE=2><P ALIGN="CENTER"> </P> </FONT><B><U><FONT SIZE=2><P ALIGN="CENTER">DOMINION RESOURCES, INC</B>.</P> <B><P ALIGN="CENTER">ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS</P> <P ALIGN="CENTER">OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS</P> </U><P ALIGN="CENTER">(CONTINUED)</P> </B><P ALIGN="JUSTIFY">As of September 30, 1999, Virginia Power has available for its use to meet capital requirements $915 million of remaining principal amount under its currently effective shelf registrations with the Securities and Exchange Commission. </P> <P>Virginia Power has a commercial paper program that is supported by two credit facilities totaling $500 million. Proceeds from the sale of commercial paper are primarily used to provide working capital. Net borrowings under the program were $257.6 million at September 30, 1999.</P> <P>On November 1, 1999, Virginia Power issued $75 million in aggregate principal of unsecured Senior Notes, Series 1999-B, with an annual coupon rate of 7.2%, due November 1, 2004. </P> <B><P>Cash Flows Used in Investing Activities</P> </B><P>Cash used in investing activities was as follows:</P></FONT> <TABLE CELLSPACING=0 BORDER=0 CELLPADDING=7 WIDTH=619> <TR><TD WIDTH="76%" VALIGN="TOP"> <P> </TD> <TD WIDTH="25%" VALIGN="TOP" COLSPAN=2> <B><FONT SIZE=2><P ALIGN="CENTER">Nine Months Ended<BR> September 30,</B></FONT></TD> </TR> <TR><TD WIDTH="76%" VALIGN="TOP"> <P> </TD> <TD WIDTH="13%" VALIGN="TOP"> <B><U><FONT SIZE=2><P ALIGN="CENTER">1999</B></U></FONT></TD> <TD WIDTH="12%" VALIGN="TOP"> <B><U><FONT SIZE=2><P ALIGN="CENTER">1998</B></U></FONT></TD> </TR> <TR><TD WIDTH="76%" VALIGN="TOP"> <P> </TD> <TD WIDTH="25%" VALIGN="TOP" COLSPAN=2> <B><FONT SIZE=2><P ALIGN="CENTER">(Millions)</B></FONT></TD> </TR> <TR><TD WIDTH="76%" VALIGN="TOP" HEIGHT=17> <FONT SIZE=2><P>Plant expenditures</FONT></TD> <TD WIDTH="13%" VALIGN="TOP" HEIGHT=17> <FONT SIZE=2><P ALIGN="RIGHT">$(452.8)</FONT></TD> <TD WIDTH="12%" VALIGN="TOP" HEIGHT=17> <FONT SIZE=2><P ALIGN="RIGHT">$(300.6)</FONT></TD> </TR> <TR><TD WIDTH="76%" VALIGN="TOP" HEIGHT=17> <FONT SIZE=2><P>Nuclear fuel </FONT></TD> <TD WIDTH="13%" VALIGN="TOP" HEIGHT=17> <FONT SIZE=2><P ALIGN="RIGHT">(39.4)</FONT></TD> <TD WIDTH="12%" VALIGN="TOP" HEIGHT=17> <FONT SIZE=2><P ALIGN="RIGHT">(70.2)</FONT></TD> </TR> <TR><TD WIDTH="76%" VALIGN="TOP" HEIGHT=17> <FONT SIZE=2><P>Nuclear decommissioning contributions</FONT></TD> <TD WIDTH="13%" VALIGN="TOP" HEIGHT=17> <FONT SIZE=2><P ALIGN="RIGHT">(19.9)</FONT></TD> <TD WIDTH="12%" VALIGN="TOP" HEIGHT=17> <FONT SIZE=2><P ALIGN="RIGHT">(37.5)</FONT></TD> </TR> <TR><TD WIDTH="76%" VALIGN="TOP" HEIGHT=17> <FONT SIZE=2><P>Other</FONT></TD> <TD WIDTH="13%" VALIGN="TOP" HEIGHT=17> <U><FONT SIZE=2><P ALIGN="RIGHT">(5.1</U>)</FONT></TD> <TD WIDTH="12%" VALIGN="TOP" HEIGHT=17> <U><FONT SIZE=2><P ALIGN="RIGHT">(3.7)</U></FONT></TD> </TR> <TR><TD WIDTH="76%" VALIGN="TOP" HEIGHT=17> <FONT SIZE=2><P>Total</FONT></TD> <TD WIDTH="13%" VALIGN="TOP" HEIGHT=17> <FONT SIZE=2><P ALIGN="RIGHT">$<U>(517.2</U>)</FONT></TD> <TD WIDTH="12%" VALIGN="TOP" HEIGHT=17> <U><FONT SIZE=2><P ALIGN="RIGHT">$(412.0)</U></FONT></TD> </TR> </TABLE> <FONT SIZE=2><P>Investing activities for the first nine months of 1999 resulted in a net cash outflow of $517.2 million primarily due to $452.8 million of plant expenditures, $39.4 million of nuclear fuel expenditures and $19.9 million of contributions to nuclear decommissioning trusts. Of the construction expenditures, Virginia Power spent approximately $231.3 million on Virginia Power - Wires Business projects and $221.5 million on Dominion Generation utility projects, including additional capacity and environmental upgrades. </P> <B><P>3. DOMINION ENERGY</P> <P>Cash Flows From Operating Activities</P> </B><P>Cash flows from operations for the nine months ended September 30, 1999 decreased by $31.3 million, as compared to the same period in 1998, primarily due to timing of payments from normal business operations.</P> <B><P>Cash Flows From Financing Activities</P> </B><P>Cash from (used in) financing activities was as follows:</P></FONT> <P ALIGN="CENTER"><CENTER><TABLE CELLSPACING=0 BORDER=0 CELLPADDING=7 WIDTH=492> <TR><TD WIDTH="65%" VALIGN="TOP"> <P> </TD> <TD WIDTH="36%" VALIGN="TOP" COLSPAN=2> <B><FONT SIZE=2><P ALIGN="CENTER">Nine Months Ended<BR> September 30,</B></FONT></TD> </TR> <TR><TD WIDTH="65%" VALIGN="TOP"> <P> </TD> <TD WIDTH="20%" VALIGN="TOP"> <B><U><FONT SIZE=2><P ALIGN="CENTER">1999</B></U></FONT></TD> <TD WIDTH="16%" VALIGN="TOP"> <B><U><FONT SIZE=2><P ALIGN="CENTER">1998</B></U></FONT></TD> </TR> <TR><TD WIDTH="65%" VALIGN="TOP"> <P> </TD> <TD WIDTH="36%" VALIGN="TOP" COLSPAN=2> <B><FONT SIZE=2><P ALIGN="CENTER">(Millions)</B></FONT></TD> </TR> <TR><TD WIDTH="65%" VALIGN="TOP"> <FONT SIZE=2><P>Issuance of long-term debt</FONT></TD> <TD WIDTH="20%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="RIGHT">$ 46.2 </FONT></TD> <TD WIDTH="16%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="RIGHT">$409.2</FONT></TD> </TR> <TR><TD WIDTH="65%" VALIGN="TOP"> <FONT SIZE=2><P>Investment from parent</FONT></TD> <TD WIDTH="20%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="RIGHT">115.0</FONT></TD> <TD WIDTH="16%" VALIGN="TOP"> <P ALIGN="RIGHT"> </TD> </TR> <TR><TD WIDTH="65%" VALIGN="TOP"> <FONT SIZE=2><P>Dividend payment</FONT></TD> <TD WIDTH="20%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="RIGHT">(47.0)</FONT></TD> <TD WIDTH="16%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="RIGHT">(35.9)</FONT></TD> </TR> <TR><TD WIDTH="65%" VALIGN="TOP"> <FONT SIZE=2><P>Issuance of intercompany debt</FONT></TD> <TD WIDTH="20%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="RIGHT">206.8</FONT></TD> <TD WIDTH="16%" VALIGN="TOP"> <P ALIGN="RIGHT"> </TD> </TR> <TR><TD WIDTH="65%" VALIGN="TOP"> <FONT SIZE=2><P>Other</FONT></TD> <TD WIDTH="20%" VALIGN="TOP"> <U><FONT SIZE=2><P ALIGN="RIGHT">(29.1</U>) </FONT></TD> <TD WIDTH="16%" VALIGN="TOP"> <U><FONT SIZE=2><P ALIGN="RIGHT">12.1</U></FONT></TD> </TR> <TR><TD WIDTH="65%" VALIGN="TOP"> <FONT SIZE=2><P>Total</FONT></TD> <TD WIDTH="20%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="RIGHT">$<U>291.9</U></FONT></TD> <TD WIDTH="16%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="RIGHT">$<U>385.4</U></FONT></TD> </TR> </TABLE> </CENTER></P> <B><U><FONT SIZE=2><P ALIGN="CENTER">DOMINION RESOURCES, INC</B>.</P> <B><P ALIGN="CENTER">ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS</P> <P ALIGN="CENTER">OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS</P> </U><P ALIGN="CENTER">(CONTINUED)</P> </B><P ALIGN="CENTER"> </P> <P>During the first nine months of 1999, cash flows from financing activities were $291.9 million primarily due to intercompany borrowings and an equity contribution from Dominion Resources. Proceeds were used primarily to fund the Remington Energy, Ltd. and San Juan Partners, LLC acquisitions which expanded Dominion Energy's natural gas exploration, development and production operations. Also, Dominion Energy borrowed funds to expand and upgrade its independent power plants.</P> <B><P>Cash Flows Used In Investing Activities</P> </B><P>Cash from (used in) investing activities was as follows:</P></FONT> <P ALIGN="RIGHT"><TABLE CELLSPACING=0 BORDER=0 CELLPADDING=7 WIDTH=540> <TR><TD WIDTH="60%" VALIGN="TOP"> <P> </TD> <TD WIDTH="40%" VALIGN="TOP" COLSPAN=8> <B><FONT SIZE=2><P ALIGN="CENTER">Nine Months Ended<BR> September 30,</B></FONT></TD> </TR> <TR><TD WIDTH="64%" VALIGN="TOP" COLSPAN=3> <P> </TD> <TD WIDTH="17%" VALIGN="TOP" COLSPAN=4> <B><U><FONT SIZE=2><P ALIGN="CENTER">1999</B></U></FONT></TD> <TD WIDTH="20%" VALIGN="TOP" COLSPAN=2> <B><U><FONT SIZE=2><P ALIGN="CENTER">1998</B></U></FONT></TD> </TR> <TR><TD WIDTH="60%" VALIGN="TOP"> <P> </TD> <TD WIDTH="40%" VALIGN="TOP" COLSPAN=8> <B><FONT SIZE=2><P ALIGN="CENTER">(Millions)</B></FONT></TD> </TR> <TR><TD WIDTH="63%" VALIGN="TOP" COLSPAN=2> <FONT SIZE=2><P>Investment in natural gas assets </FONT></TD> <TD WIDTH="17%" VALIGN="TOP" COLSPAN=4> <FONT SIZE=2><P ALIGN="RIGHT">$(42.7)</FONT></TD> <TD WIDTH="20%" VALIGN="TOP" COLSPAN=3> <FONT SIZE=2><P ALIGN="RIGHT">$(25.2)</FONT></TD> </TR> <TR><TD WIDTH="63%" VALIGN="TOP" COLSPAN=2> <FONT SIZE=2><P>Investment in power generation assets</FONT></TD> <TD WIDTH="17%" VALIGN="TOP" COLSPAN=4> <FONT SIZE=2><P ALIGN="RIGHT">(88.8)</FONT></TD> <TD WIDTH="20%" VALIGN="TOP" COLSPAN=3> <FONT SIZE=2><P ALIGN="RIGHT">(42.9)</FONT></TD> </TR> <TR><TD WIDTH="63%" VALIGN="TOP" COLSPAN=2> <FONT SIZE=2><P>Acquisition of business</FONT></TD> <TD WIDTH="17%" VALIGN="TOP" COLSPAN=4> <FONT SIZE=2><P ALIGN="RIGHT">(166.6)</FONT></TD> <TD WIDTH="20%" VALIGN="TOP" COLSPAN=3> <FONT SIZE=2><P ALIGN="RIGHT">(339.0)</FONT></TD> </TR> <TR><TD WIDTH="63%" VALIGN="TOP" COLSPAN=2> <FONT SIZE=2><P>Sale of business</FONT></TD> <TD WIDTH="17%" VALIGN="TOP" COLSPAN=4> <P ALIGN="RIGHT"> </TD> <TD WIDTH="20%" VALIGN="TOP" COLSPAN=3> <FONT SIZE=2><P ALIGN="RIGHT">52.7</FONT></TD> </TR> <TR><TD WIDTH="63%" VALIGN="TOP" COLSPAN=2> <FONT SIZE=2><P>Nonutility capital expenditures</FONT></TD> <TD WIDTH="17%" VALIGN="TOP" COLSPAN=4> <FONT SIZE=2><P ALIGN="RIGHT">(63.0)</FONT></TD> <TD WIDTH="20%" VALIGN="TOP" COLSPAN=3> <FONT SIZE=2><P ALIGN="RIGHT">(70.4)</FONT></TD> </TR> <TR><TD WIDTH="63%" VALIGN="TOP" COLSPAN=2> <FONT SIZE=2><P>Investment in affiliates</FONT></TD> <TD WIDTH="17%" VALIGN="TOP" COLSPAN=4> <FONT SIZE=2><P ALIGN="RIGHT">(62.3)</FONT></TD> <TD WIDTH="20%" VALIGN="TOP" COLSPAN=3> <FONT SIZE=2><P ALIGN="RIGHT">0.5</FONT></TD> </TR> <TR><TD WIDTH="63%" VALIGN="TOP" COLSPAN=2> <FONT SIZE=2><P>Other </FONT></TD> <TD WIDTH="17%" VALIGN="TOP" COLSPAN=4> <U><FONT SIZE=2><P ALIGN="RIGHT">16.3</U></FONT></TD> <TD WIDTH="20%" VALIGN="TOP" COLSPAN=3> <U><FONT SIZE=2><P ALIGN="RIGHT">(31.4)</U></FONT></TD> </TR> <TR><TD WIDTH="63%" VALIGN="TOP" COLSPAN=2> <FONT SIZE=2><P>Total</FONT></TD> <TD WIDTH="17%" VALIGN="TOP" COLSPAN=4> <FONT SIZE=2><P ALIGN="RIGHT">$<U>(407.1</U>)</FONT></TD> <TD WIDTH="20%" VALIGN="TOP" COLSPAN=3> <FONT SIZE=2><P ALIGN="RIGHT">$<U>(455.7</U>)</FONT></TD> </TR> </TABLE> </P> <FONT SIZE=2><P>During the first nine months of 1999, cash flows used in investing activities were $407.1 million primarily due to the following:</P> <UL> <LI>the San Juan Partners, LLC and Remington Energy, Ltd. acquisitions and </LI> <LI>Dominion Generation's investment in expansion and upgrade activities at certain of its independent power plants.</LI></UL> <B><P>4. DOMINION CAPITAL</P> <P>Cash Flows Used In Operating Activities</P> </B><P ALIGN="JUSTIFY">Dominion Capital's cash flows used in operations for the nine months ended September 30, 1999 decreased by $166.4 million as compared to the same period for 1998 primarily due to a decrease in mortgage originations, net of sales and principal collections.</P> <P> </P> </FONT><FONT FACE="Courier New" SIZE=2><P ALIGN="CENTER"> </P> </FONT><B><U><FONT SIZE=2><P ALIGN="CENTER">DOMINION RESOURCES, INC</B>.</P> <B><P ALIGN="CENTER">ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS</P> <P ALIGN="CENTER">OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS</P> </U><P ALIGN="CENTER">(CONTINUED)</P> <P ALIGN="JUSTIFY">Cash Flows From Financing Activities</P> </B><P>Cash from financing activities was as follows:</P></FONT> <P ALIGN="CENTER"><CENTER><TABLE CELLSPACING=0 BORDER=0 CELLPADDING=7 WIDTH=510> <TR><TD WIDTH="54%" VALIGN="TOP"> <P> </TD> <TD WIDTH="46%" VALIGN="TOP" COLSPAN=4> <B><FONT SIZE=2><P ALIGN="CENTER">Nine Months Ended<BR> September 30,</B></FONT></TD> </TR> <TR><TD WIDTH="63%" VALIGN="TOP" COLSPAN=2> <P> </TD> <TD WIDTH="14%" VALIGN="TOP"> <B><U><FONT SIZE=2><P ALIGN="CENTER">1999</B></U></FONT></TD> <TD WIDTH="23%" VALIGN="TOP" COLSPAN=2> <B><U><FONT SIZE=2><P ALIGN="CENTER">1998</B></U></FONT></TD> </TR> <TR><TD WIDTH="54%" VALIGN="TOP"> <P> </TD> <TD WIDTH="46%" VALIGN="TOP" COLSPAN=4> <B><FONT SIZE=2><P ALIGN="CENTER">(Millions)</B></FONT></TD> </TR> <TR><TD WIDTH="63%" VALIGN="TOP" COLSPAN=2> <FONT SIZE=2><P>Issuance of long-term debt</FONT></TD> <TD WIDTH="18%" VALIGN="TOP" COLSPAN=2> <FONT SIZE=2><P ALIGN="RIGHT">$ 3,213.1</FONT></TD> <TD WIDTH="19%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="RIGHT">$2,293.1</FONT></TD> </TR> <TR><TD WIDTH="63%" VALIGN="TOP" COLSPAN=2> <FONT SIZE=2><P>Repayment of long-term debt</FONT></TD> <TD WIDTH="18%" VALIGN="TOP" COLSPAN=2> <FONT SIZE=2><P ALIGN="RIGHT">(3,285.0)</FONT></TD> <TD WIDTH="19%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="RIGHT">(1,924.9)</FONT></TD> </TR> <TR><TD WIDTH="63%" VALIGN="TOP" COLSPAN=2> <FONT SIZE=2><P>Issuance of commercial paper</FONT></TD> <TD WIDTH="18%" VALIGN="TOP" COLSPAN=2> <FONT SIZE=2><P ALIGN="RIGHT">606.3</FONT></TD> <TD WIDTH="19%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="RIGHT">368.1</FONT></TD> </TR> <TR><TD WIDTH="63%" VALIGN="TOP" COLSPAN=2> <FONT SIZE=2><P>Investment from parent</FONT></TD> <TD WIDTH="18%" VALIGN="TOP" COLSPAN=2> <FONT SIZE=2><P ALIGN="RIGHT">75.0</FONT></TD> <TD WIDTH="19%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="RIGHT">99.1</FONT></TD> </TR> <TR><TD WIDTH="63%" VALIGN="TOP" COLSPAN=2> <FONT SIZE=2><P>Dividend payment</FONT></TD> <TD WIDTH="18%" VALIGN="TOP" COLSPAN=2> <FONT SIZE=2><P ALIGN="RIGHT">(53.4)</FONT></TD> <TD WIDTH="19%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="RIGHT">(38.9)</FONT></TD> </TR> <TR><TD WIDTH="63%" VALIGN="TOP" COLSPAN=2> <FONT SIZE=2><P>Issuance (repayment) of intercompany debt</FONT></TD> <TD WIDTH="18%" VALIGN="TOP" COLSPAN=2> <FONT SIZE=2><P ALIGN="RIGHT">(110.9)</FONT></TD> <TD WIDTH="19%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="RIGHT">50.8</FONT></TD> </TR> <TR><TD WIDTH="63%" VALIGN="TOP" COLSPAN=2> <FONT SIZE=2><P>Other</FONT></TD> <TD WIDTH="18%" VALIGN="TOP" COLSPAN=2> <FONT SIZE=2><P ALIGN="RIGHT">______ </FONT></TD> <TD WIDTH="19%" VALIGN="TOP"> <U><FONT SIZE=2><P ALIGN="RIGHT">0.1</U></FONT></TD> </TR> <TR><TD WIDTH="63%" VALIGN="TOP" COLSPAN=2> <FONT SIZE=2><P>Total</FONT></TD> <TD WIDTH="18%" VALIGN="TOP" COLSPAN=2> <FONT SIZE=2><P ALIGN="RIGHT">$<U> 445.1</U></FONT></TD> <TD WIDTH="19%" VALIGN="TOP"> <U><FONT SIZE=2><P ALIGN="RIGHT">$ 847.4</U></FONT></TD> </TR> </TABLE> </CENTER></P> <FONT SIZE=2><P>During the first nine months of 1999, Dominion Capital's cash flows from financing activities were $445.1 million due to funding needs for loan originations and purchase and originations of mortgages.</P> <B><P>Cash Flows Used In Investing Activities</P> </B><P>Cash used in investing activities was as follows:</P></FONT> <P ALIGN="CENTER"><CENTER><TABLE CELLSPACING=0 BORDER=0 CELLPADDING=7 WIDTH=510> <TR><TD WIDTH="62%" VALIGN="TOP"> <P> </TD> <TD WIDTH="38%" VALIGN="TOP" COLSPAN=3> <B><FONT SIZE=2><P ALIGN="CENTER">Nine Months Ended<BR> September 30,</B></FONT></TD> </TR> <TR><TD WIDTH="62%" VALIGN="TOP"> <P> </TD> <TD WIDTH="14%" VALIGN="TOP"> <B><U><FONT SIZE=2><P ALIGN="CENTER">1999</B></U></FONT></TD> <TD WIDTH="24%" VALIGN="TOP" COLSPAN=2> <B><U><FONT SIZE=2><P ALIGN="CENTER">1998</B></U></FONT></TD> </TR> <TR><TD WIDTH="62%" VALIGN="TOP"> <P> </TD> <TD WIDTH="38%" VALIGN="TOP" COLSPAN=3> <B><FONT SIZE=2><P ALIGN="CENTER">(Millions)</B></FONT></TD> </TR> <TR><TD WIDTH="62%" VALIGN="TOP"> <FONT SIZE=2><P>Loan originations</FONT></TD> <TD WIDTH="19%" VALIGN="TOP" COLSPAN=2> <FONT SIZE=2><P ALIGN="RIGHT">$(1,818.9)</FONT></TD> <TD WIDTH="19%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="RIGHT">$(1,958.2)</FONT></TD> </TR> <TR><TD WIDTH="62%" VALIGN="TOP"> <FONT SIZE=2><P>Repayments of loan originations</FONT></TD> <TD WIDTH="19%" VALIGN="TOP" COLSPAN=2> <FONT SIZE=2><P ALIGN="RIGHT">1,526.3</FONT></TD> <TD WIDTH="19%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="RIGHT">1,386.0</FONT></TD> </TR> <TR><TD WIDTH="62%" VALIGN="TOP"> <FONT SIZE=2><P>Purchase of securities</FONT></TD> <TD WIDTH="19%" VALIGN="TOP" COLSPAN=2> <FONT SIZE=2><P ALIGN="RIGHT">(102.1)</FONT></TD> <TD WIDTH="19%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="RIGHT">(27.2)</FONT></TD> </TR> <TR><TD WIDTH="62%" VALIGN="TOP"> <FONT SIZE=2><P>Proceeds from sale of securities</FONT></TD> <TD WIDTH="19%" VALIGN="TOP" COLSPAN=2> <FONT SIZE=2><P ALIGN="RIGHT">121.7</FONT></TD> <TD WIDTH="19%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="RIGHT">34.3</FONT></TD> </TR> <TR><TD WIDTH="62%" VALIGN="TOP"> <FONT SIZE=2><P>Other investments</FONT></TD> <TD WIDTH="19%" VALIGN="TOP" COLSPAN=2> <FONT SIZE=2><P ALIGN="RIGHT">(73.7)</FONT></TD> <TD WIDTH="19%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="RIGHT">15.3</FONT></TD> </TR> <TR><TD WIDTH="62%" VALIGN="TOP"> <FONT SIZE=2><P>Other </FONT></TD> <TD WIDTH="19%" VALIGN="TOP" COLSPAN=2> <U><FONT SIZE=2><P ALIGN="RIGHT">(43.3</U>)</FONT></TD> <TD WIDTH="19%" VALIGN="TOP"> <U><FONT SIZE=2><P ALIGN="RIGHT">(20.2)</U></FONT></TD> </TR> <TR><TD WIDTH="62%" VALIGN="TOP"> <FONT SIZE=2><P>Total</FONT></TD> <TD WIDTH="19%" VALIGN="TOP" COLSPAN=2> <U><FONT SIZE=2><P ALIGN="RIGHT">$ (390.0</U>)</FONT></TD> <TD WIDTH="19%" VALIGN="TOP"> <U><FONT SIZE=2><P ALIGN="RIGHT">$ (570.0</U>)</FONT></TD> </TR> </TABLE> </CENTER></P> <FONT SIZE=2><P>During the first nine months of 1999, Dominion Capital's cash flows used in investing activities were $390 million primarily due to the funding for commercial lending activities.</P> <B><P>Contingencies</P> </B><P>For information on contingencies, see Note (I) to Consolidated Financial Statements.</P> <B><U><P ALIGN="CENTER">DOMINION RESOURCES, INC</B>.</P> <B><P ALIGN="CENTER">ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS</P> <P ALIGN="CENTER">OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS</P> </U><P ALIGN="CENTER">(CONTINUED)</P> <U><P ALIGN="CENTER">FUTURE ISSUES</B></U> </P> <B><P>DOMINION RESOURCES - CONSOLIDATED</P> <P>CNG Merger</P> </B><P>On June 30, 1999, shareholders of Dominion Resources and CNG approved the merger agreement between the companies at each company's Special Meeting of Shareholders.</P> <P>Dominion Resources and CNG announced on August 9, 1999, that they have agreed to divest Virginia Natural Gas, Inc. (VNG), CNG's local gas distribution subsidiary, under an agreement with the Staff of the Virginia Commission. The companies have also greed with the Federal Trade Commission (FTC) to divest VNG. Dominion Resources has one year after the merger is completed to sell VNG to a third party. If the sale of VNG is not completed within the timeframe of one year, VNG will be spun off as an independent company with the common stock distributed to Dominion Resources shareholders. Both deadlines are subject to reasonable extensions, which may be granted by the regulatory authorities.</P> <P>As of November 12, 1999, all state regulatory commissions and the FTC have approved the merger, subject to certain conditions agreed to by Dominion Resources and CNG. In addition, FERC has voted to conditionally approve the merger. The companies intend to file a response accepting the conditions. The companies' request for approval of the transaction is still pending with the Securities and Exchange Commission. </P> <B><P>Power Generation Development</P> </B><P>On April 14, 1999, Dominion Resources and a subsidiary of CNG signed an agreement to develop natural gas-fired power generation facilities along CNG's natural gas pipeline system. This agreement is not conditional upon the proposed merger between Dominion Resources and CNG.</P> <P>Under terms of the agreement the companies have identified a number of potential development sites along CNG's natural gas pipeline network in Ohio, Pennsylvania, New York, West Virginia and Virginia. Dominion Resources and CNG affiliates will develop, own, operate and maintain the facilities on a 50-50 ownership basis.</P> <B><P>VIRGINIA POWER</P> <P>Competition</P> </B><P>On March 25, 1999, the Governor of Virginia signed into law legislation establishing a detailed plan to restructure the electric utility industry in Virginia which will provide for customer choice beginning in 2002. Under this legislation, Virginia Power's base rates will remain unchanged until July 2007 and recovery of generation-related costs will continue to be provided through capped rates and wires charges assessed to those customers opting for alternate suppliers. In the absence of capped rates, Virginia Power would be exposed, on a pre-tax basis, to approximately $3.2 billion of potential losses related to long-term power purchase commitments. </P> <P ALIGN="JUSTIFY">The legislation's deregulation of generation is an event that required discontinuation of SFAS No. 71 for Virginia Power's generation operations. Virginia Power's transmission and distribution operations continue to meet the criteria for recognition of regulatory assets and liabilities as defined by SFAS No. 71. In addition, cost-based recovery of fuel expenses continues until July 2007. </P> </FONT><FONT FACE="Courier New" SIZE=2><P ALIGN="CENTER"> </P> </FONT><B><U><FONT SIZE=2><P ALIGN="CENTER">DOMINION RESOURCES, INC</B>.</P> <B><P ALIGN="CENTER">ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS</P> <P ALIGN="CENTER">OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS</P> </U><P ALIGN="CENTER">(CONTINUED)</P> </B><P>Virginia Power is subject to a base rate freeze at reduced revenue levels until July 2007. In addition, Virginia Power remains subject to numerous risks including, among others, exposure to long-term power purchase commitment losses, environmental contingencies, changes in tax laws, decommissioning costs, inflation, increased capital costs, and recovery of certain other items. Virginia Power believes the stable rates that are provided until July 2007 by the legislation present a reasonable opportunity to recover a substantial portion of Virginia Power's potentially stranded costs as more fully described in Dominion Resources' 1998 Form 10-K. See Competition--Exposure to Potentially Stranded Costs, Management's Discussion and Analysis of Operations. </P> <P ALIGN="JUSTIFY">For additional information, see Note (C) to Consolidated Financial Statements and, Part II, Item 5. Other Information, Virginia Power-Regulation. </P> <B><P>North Carolina Rates</P> </B><P>In support of the request of Dominion Resources for approval by the North Carolina Utilities Commission of its proposed merger with Consolidated Natural Gas Company, Virginia Power and Dominion Resources reached an agreement with the Public Staff of the North Carolina Utilities Commission. As part of the agreement, Virginia Power agreed not to request an increase in North Carolina retail electric base rates until after December 31, 2005, except for certain events that would have a significant financial impact on Virginia Power. Such events could include any governmental action or an occurrence that is beyond Virginia Power's control and not attributable to Virginia Power's fault or negligence. However, fuel rates are still subject to change under the annual fuel cost adjustment proceedings. The North Carolina Utilities Commission approved the merger, subject to conditions agreed to by Dominion Resources and Virginia Power, on October 18, 1999.</P> <B><P ALIGN="JUSTIFY">Clean Air Act Matters</P> </B><P ALIGN="JUSTIFY">On November 8, 1999 and September 21, 1999, Virginia Power received notices from the Attorney General of the States of Connecticut and New York, respectively, of their intention to file suit against Virginia Power for alleged violations of the Clean Air Act. The notices question whether modifications at certain Virginia Power generating facilities were properly permitted under the Clean Air Act and allege that emissions from these facilities have contributed to damage to public health and the environment in the Northeast. To date, no suits have been filed. Virginia Power believes, based on newspaper reports and other sources, that Virginia Power is one of a number of companies with fossil fuel power generating stations in the southeast and central U.S. to have received such notifications. Virginia Power believes that it has obtained the permits necessary in connection with its generating facilities and that suits, if any, filed by the Attorney Generals would not have a material adverse effect on Virginia Power's financial condition or results of operations.</P> <B><P>DOMINION ENERGY</P> <P>Sale of Power</P> </B><P>In April 1999, Elwood Energy LLC (Elwood Energy), a joint venture between subsidiaries of Dominion Energy and Peoples Energy Corporation, signed agreements with Commonwealth Edison Company (ComEd) and Engage Energy US, L.P. (Engage) to sell all generating capacity from its natural gas-fired facility. Under the agreements, ComEd and Engage have each contracted for one-half of the generating capacity of Elwood Energy. In July 1999, Elwood Energy began commercial operations.</P> <B><P>Sale of Latin American Interests</P> </B><P>For information on Dominion Energy's sale of its interests in Latin American generating capacity to Duke Energy International, see Note (L) to Consolidated Financial Statements.</P> <B><U><P ALIGN="CENTER">DOMINION RESOURCES, INC</B>.</P> <B><P ALIGN="CENTER">ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS</P> <P ALIGN="CENTER">OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS</P> </U><P ALIGN="CENTER">(CONTINUED)</P> <P ALIGN="CENTER">DOMINION CAPITAL</P> </B><P>As reported in the merger proxy sent to shareholders of both companies, Dominion Resources expects to divest its financial services subsidiary, Dominion Capital. However, no formal plan of disposal has been adopted, see Note (B) to Consolidated Financial Statements.</P> <B><U><P>YEAR 2000 COMPLIANCE</U> </P> <P>DOMINION RESOURCES CONSOLIDATED</P> </B><P>Dominion Resources remains on schedule to complete all necessary work to prepare the company and its subsidiaries for the year 2000. The following table summarizes our status and projected timetable:</P></FONT> <TABLE CELLSPACING=0 BORDER=0 CELLPADDING=7 WIDTH=595> <TR><TD WIDTH="32%" VALIGN="TOP"> <P> </TD> <TD WIDTH="68%" VALIGN="TOP" COLSPAN=4> <B><U><FONT SIZE=2><P ALIGN="CENTER">Percent of Critical Systems Year 2000 Ready</B></U></FONT></TD> </TR> <TR><TD WIDTH="44%" VALIGN="TOP" COLSPAN=2> <P> </TD> <TD WIDTH="34%" VALIGN="TOP" COLSPAN=2> <B><U><FONT SIZE=2><P ALIGN="CENTER">Actual</B></U></FONT></TD> <TD WIDTH="22%" VALIGN="TOP"> <B><U><FONT SIZE=2><P ALIGN="CENTER">Planned</B></U></FONT></TD> </TR> <TR><TD WIDTH="32%" VALIGN="TOP"> <P> </TD> <TD WIDTH="26%" VALIGN="TOP" COLSPAN=2> <B><U><FONT SIZE=2><P ALIGN="CENTER">7/31/99</B></U></FONT></TD> <TD WIDTH="20%" VALIGN="TOP"> <B><U><FONT SIZE=2><P ALIGN="CENTER">9/30/99</B></U></FONT></TD> <TD WIDTH="22%" VALIGN="TOP"> <B><U><FONT SIZE=2><P ALIGN="CENTER">12/31/99</B></U></FONT></TD> </TR> <TR><TD WIDTH="32%" VALIGN="TOP"> <FONT SIZE=2><P>Virginia Power</FONT></TD> <TD WIDTH="26%" VALIGN="TOP" COLSPAN=2> <FONT SIZE=2><P ALIGN="CENTER">99%</FONT></TD> <TD WIDTH="20%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="CENTER">99%</FONT></TD> <TD WIDTH="22%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="CENTER">100%</FONT></TD> </TR> <TR><TD WIDTH="32%" VALIGN="TOP"> <FONT SIZE=2><P>Dominion Resources</FONT></TD> <TD WIDTH="26%" VALIGN="TOP" COLSPAN=2> <FONT SIZE=2><P ALIGN="CENTER">75%</FONT></TD> <TD WIDTH="20%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="CENTER">75%*</FONT></TD> <TD WIDTH="22%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="CENTER">100%</FONT></TD> </TR> <TR><TD WIDTH="32%" VALIGN="TOP"> <FONT SIZE=2><P>Dominion Energy</FONT></TD> <TD WIDTH="26%" VALIGN="TOP" COLSPAN=2> <FONT SIZE=2><P ALIGN="CENTER">84%</FONT></TD> <TD WIDTH="20%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="CENTER">100%</FONT></TD> <TD WIDTH="22%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="CENTER">100%</FONT></TD> </TR> <TR><TD WIDTH="32%" VALIGN="TOP"> <FONT SIZE=2><P>Dominion Capital</FONT></TD> <TD WIDTH="26%" VALIGN="TOP" COLSPAN=2> <FONT SIZE=2><P ALIGN="CENTER">100%</FONT></TD> <TD WIDTH="20%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="CENTER">100%</FONT></TD> <TD WIDTH="22%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="CENTER">100%</FONT></TD> </TR> </TABLE> <FONT SIZE=2><P>* Dominion Resources previously planned to be 100% complete by July 31, 1999. Because of the pending merger with CNG , the decision to replace the existing cash management system was delayed. Remediation and testing of the system was completed on November 10, 1999, therefore obtaining 100% year 2000 readiness.</P> <P>Dominion Resources expects year 2000 costs to be within the range of $30 million to $40 million of which $28 million to $33 million relates to Virginia Power. </P> <P>Actual year 2000 costs of $28.1 million have been expended as of September 30, 1999. Substantially all expenses not yet incurred relate to contingency planning, communications activities, remediation of non-critical systems and continued remediation validation.</P> <P>In addition to our remediation programs directed at our critical information systems, embedded systems and external relationships, our year 2000 readiness efforts include evaluation of reasonably likely worst case scenarios and the development of contingency plans to address how we would respond to problems, should they occur. Our contingency planning efforts to support continuity of operations into and beyond the year 2000 are complete. These plans will continue to be refined and validated throughout the remainder of 1999.</P> <P ALIGN="CENTER">As part of our contingency planning process, we have considered and evaluated, and continue to evaluate, reasonably likely worst case scenarios and their impact on critical business processes. Based on our evaluations, such potential scenarios could include the following:</P> <UL> <LI>minor variations in voltage or frequency with no significant effect on electric service; </LI> <LI>temporary loss of a portion of generation capacity, including possibly non-utility generators; however, such loss is not expected to be sufficient to adversely affect electric service; </LI> <LI>temporary loss of some telecommunications functionality and other services with no impact expected on electric service; and </LI> <LI>temporary loss of a small portion of commercial and industrial customer loads due to customer year 2000 issues with no expected adverse impact on stability of electric service.</LI></UL> </FONT><FONT FACE="Courier New" SIZE=2><P ALIGN="CENTER"> </P> </FONT><B><U><FONT SIZE=2><P ALIGN="CENTER">DOMINION RESOURCES, INC</B>.</P> <B><P ALIGN="CENTER">ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS</P> <P ALIGN="CENTER">OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS</P> </U><P ALIGN="CENTER">(CONTINUED)</P> </B><P>When considering these scenarios or others specifically related to Virginia Power, Dominion Resources takes into account that Virginia Power, and the entire electric power industry, already have extensive contingency plans in place for many events such as extreme temperatures, storms, equipment failures, sudden loss of customer load or sudden loss of a generation unit. Year 2000 contingency planning is an extension of these existing plans.</P> <P>Year 2000 contingency plans address the scenarios recommended in the North American Electric Reliability Council Year 2000 Contingency Planning Guide, as well as additional company specific scenarios. For example, one contingency plan prescribes that in the event voice communications fail, satellite phones will be used to provide operational information to our operations center and to other utilities.</P> <P>Our contingency planning efforts also include developing precautionary measures. Precautionary measures are intended to place us in a position to mitigate the impact of year 2000 related problems, in the unlikely event problems occur. Examples of precautionary measures include planned additional staffing in key operational positions to facilitate quick responses to unusual situations, and having extra supplies on hand to minimize the impact if we experience interrupted access to key supplies.</P> <P>Virginia Power is actively participating in industry contingency planning efforts at the regional and national level. Virginia Power successfully participated in two nationwide drills by electric utilities on April 9, 1999, and on September 8-9, 1999, coordinated by the North American Electric Reliability Council (NERC). The April exercise simulated the partial failure of some primary voice and data communications to demonstrate the ability of electric utilities to communicate operating information using backup systems. The September drill simulated the rollover and tested administration, operating, communications, and contingency response plans for the Year 2000 transition. No actual communication systems or generating units were shut down during either exercise. Service to Virginia Power customers during the two drills was not affected.</P> <P>During the remainder of 1999, the project team will focus on validating and fine-tuning contingency plans, non-critical remediation, validation of remediated components, and validation of critical supplier readiness.</P> <P>Dominion Resources cannot estimate or predict the potential adverse consequences, if any, that could result from a third party's failure to effectively address the year 2000 issue, but believes that any impact would be short-term in nature and would not have a material adverse impact on results of operations. Based on Dominion Resources' and industry analyses to date, we do not believe the most reasonably likely worst case scenarios identified above, if they were to occur, would have a material adverse affect on Dominion Resources' businesses or results of operations.</P> <P>For additional information, see Year 2000 Compliance, Management's Discussion and Analysis of Operations in Dominion Resources' Annual Report on Form 10-K for the year ended December 31, 1998.</P> <B><U><P>RECENTLY ISSUED ACCOUNTING STANDARDS</U> </P> </B><P>For information on recently issued accounting standards, see Note (H) to Consolidated Financial Statements.</P> <B><U><P ALIGN="CENTER"> </P> <P ALIGN="CENTER">DOMINION RESOURCES, INC.</P> <P ALIGN="CENTER">ITEM 3. QUANTITATIVE AND QUALITATIVE</P> <P ALIGN="CENTER">DISCLOSURES ABOUT MARKET RISK</P> </U><P ALIGN="CENTER">MARKET RATE SENSITIVE INSTRUMENTS AND RISK MANAGEMENT</B> </P> <P>Dominion Resources is exposed to market risk because it utilizes financial instruments, derivative financial instruments and derivative commodity instruments. The market risks inherent in these instruments are represented by the potential loss due to adverse changes in commodity prices, equity security prices, interest rates and foreign currency exchange rates as described below. Interest rate risk generally is related to Dominion Resources' and its subsidiaries' outstanding debt as well as their commercial, consumer, and mortgage lending activities. Currency risk exists principally through Dominion Energy's investments in Canada and some debt denominated in European currencies associated with Dominion Energy's investments in South America. Dominion Resources is exposed to equity price risk through various portfolios of equity securities. Commodity price risk is experienced in Dominion Resources' subsidiaries Dominion Energy and Virginia Power. They are exposed to effects of market shifts in the prices they receive and pay for natural gas and electricity.</P> <P>Dominion Resources uses derivative commodity instruments to hedge electric operations, gas production and procurement operations and as part of its trading activities.</P> <P>Dominion Resources is also exposed to price risk associated with the nonfinancial assets and liabilities of power production operations, including underlying fuel requirements and natural gas operations.</P> <P>Dominion Resources uses the sensitivity analysis methodology to disclose the quantitative information for the interest rate, commodity price and foreign exchange risks. Sensitivity analysis provides a presentation of the potential loss of future earnings, fair values, or cash flows from market risk sensitive instruments over a selected time period due to one or more hypothetical changes in interest rates, foreign currency exchange rates, commodity prices, or other similar price changes. The Tabular Presentation methodology is used to disclose equity price market risk. The tabular presentation of summarized information requires disclosure of key terms and information for market risk sensitive instruments. </P> <B><P>Interest Rate Risk - Non-Trading Activities</P> </B><P ALIGN="JUSTIFY">Dominion Resources and its subsidiaries manage interest rate risk exposure by maintaining a mix of fixed and variable rate debt. In addition, Dominion Resources enters into interest rate sensitive derivatives. Examples of these derivatives are swaps, forwards and futures contracts.</P> <P ALIGN="JUSTIFY">Dominion Resources, as part of its routine risk management policy, reviews its exposure to market risk.</P> <B><P ALIGN="JUSTIFY">Gas Commodity Price Risk - Non-Trading Activities</P> </B><P>Dominion Energy is exposed to the impact of market fluctuations in the sales price Dominion Energy receives for its produced natural gas and oil. To reduce price risk caused by market fluctuations, Dominion Energy generally follows a policy of hedging a portion of its natural gas and oil sales commitments by selecting derivative commodity instruments whose historical price fluctuations correlate strongly with those of the production being hedged. Dominion Energy enters into options, swaps, and collars to mitigate a loss in revenues, should natural gas or oil prices decline in future production periods. Dominion Energy also mitigates price risk by entering into fixed price sale agreements with physical purchasers of natural gas. </P> <P>When conducting sensitivity analysis of the change in the fair value of Dominion Energy's oil and natural gas contracts which would result from a hypothetical change in the future market price of oil and natural gas, the fair value of the contracts are determined from option pricing models which take into account the market prices of oil and natural gas in future periods, the volatility of the market prices in each period, as well as the time value factors of the underlying commitments. In most instances, market prices and volatility are determined from quoted prices on the futures exchange.</P> <P ALIGN="CENTER"> </P> <B><U><P ALIGN="CENTER">DOMINION RESOURCES, INC.</P> <P ALIGN="CENTER">ITEM 3. QUANTITATIVE AND QUALITATIVE</P> <P ALIGN="CENTER">DISCLOSURES ABOUT MARKET RISK</P> <P ALIGN="CENTER">(CONTINUED)</P> </B></U><P>Dominion Resources has determined a hypothetical decrease in fair value for its oil and natural gas contracts assuming a 10% unfavorable change in market prices and comparing it to the fair value of the contracts based on market prices at September 30, 1999 and December 31, 1998. This hypothetical 10% change in market prices would have resulted in a decrease in fair value of approximately $23.4 million and $8 million as of September 30, 1999 and December 31, 1998, respectively.</P> <P ALIGN="JUSTIFY">The impact of a change in oil and natural gas commodity prices on Dominion Energy's oil and natural gas contracts at a point in time is not necessarily representative of the results that will be realized when such contracts are ultimately settled.</P> <B><P ALIGN="JUSTIFY">Electric and Gas Commodity Price Risk - Trading Activities</P> </B><P ALIGN="JUSTIFY">As part of its strategy to market energy from its generation capacity and to manage related risks, Virginia Power manages a portfolio of derivative commodity contracts held for trading purposes. These contracts are sensitive to changes in the prices of natural gas and electricity. Virginia Power employs established policies and procedures to manage the risks associated with these price fluctuations and uses various commodity instruments, such as futures, swaps and options, to reduce risk by creating offsetting market positions. In addition, Virginia Power seeks to use its generation capacity, when not needed to serve customers in its service territory, to satisfy commitments to sell energy.</P> <P>Based on the sensitivity analysis methodology discussed previously in this section, Virginia Power has determined a hypothetical loss by calculating a hypothetical fair value for each contract assuming a 10 percent unfavorable change in the market prices of the related commodity and comparing it to the fair value of the contracts based on market prices at September 30, 1999 and December 31, 1998. This hypothetical 10 percent change in commodity prices would have resulted in a hypothetical loss of approximately $4.5 million and $13.5 million in the fair value of its commodity contracts as of September 30, 1999 and December 31, 1998, respectively.</P> <P>The sensitivity analysis does not include the price risks associated with utility fuel requirements, since these costs are generally provided for through our rates established by the regulatory commissions having jurisdiction over fuel cost recovery, nor does it include risks that are either nonfinancial or nonquantifiable. In addition, provisions are made in the financial statements to address credit risk.</P> <P ALIGN="JUSTIFY">The risk associated with Dominion Resources' use of these instruments has not materially changed from that discussed in Market Rate Sensitive Instruments and Risk Management under MANAGEMENT'S DISCUSSION AND ANALYSIS OF CASH FLOWS AND FINANCIAL CONDITION included in Dominion Resources' Annual Report on Form 10-K for the year ended December 31, 1998.</P> <B><U><P ALIGN="CENTER"> </P> <P ALIGN="CENTER">DOMINION RESOURCES, INC.</P> <P ALIGN="CENTER">PART II. - OTHER INFORMATION</P> <P ALIGN="JUSTIFY">ITEM 1. LEGAL PROCEEDINGS</P> </U><P>VIRGINIA POWER</P> <P ALIGN="JUSTIFY">Environmental Matters</P> </B><P ALIGN="JUSTIFY">In April 1999, Virginia Power was notified by the Department of Justice of alleged noncompliance with the EPA's oil spill, prevention, control and countermeasures (SPCC) plans and facility response plan (FRP) requirements at one of Virginia Power's power stations. If, in a legal proceeding, such instances of noncompliance are deemed to have occurred, Virginia Power may be required to remedy any alleged deficiencies and pay civil penalties. Settlement of this matter is currently in negotiation and is not expected to be material to Virginia Power's financial condition or results of operations. </P> <P ALIGN="JUSTIFY">In August 1999, Virginia Power identified matters at certain other power stations that the EPA might view as not in compliance with the SPCC and FRP requirements. Virginia Power reported these matters to the EPA and its plan for correction thereof. Presently, the EPA has not assessed any penalties against Virginia Power, pending its review of Virginia Power's disclosure information. Future resolution of these matters is not expected to have a material impact on Virginia Power's financial condition or results of operations.</P> <B><P ALIGN="JUSTIFY">Clean Air Act Matters</P> </B><P ALIGN="JUSTIFY">On November 8, 1999 and September 21, 1999, Virginia Power received notices from the Attorney General of the States of Connecticut and New York, respectively, of their intention to file suit against Virginia Power for alleged violations of the Clean Air Act. The notices question whether modifications at Virginia Power generating facilities were properly permitted under the Clean Air Act and allege that emissions from these facilities have contributed to damage to public health and the environment in the Northeast. To date, no suits have been filed. Virginia Power believes, based on newspaper reports and other sources, that it is one of a number of companies with fossil fuel power generating stations in the southeast and central U.S. to have received such notifications. Virginia Power believes that it has obtained the permits necessary in connection with its generating facilities and that suits, if any, filed by the Attorney Generals will not have a material adverse effect on Virginia Power and its subsidiaries. </P> <B><U><P ALIGN="JUSTIFY">ITEM 5. OTHER INFORMATION</P> </U><P ALIGN="CENTER">THE COMPANY</P> <P>2000 Annual Meeting Date</P> </B><P>The date on which Dominion Resources plans to hold its 2000 annual shareholders meeting has been changed to April 28, 2000.</P> <B><P>The Merger</P> </B><P>With respect to Dominion Resources' merger as previously reported, all state regulatory commissions and the FTC have approved the merger, subject to certain conditions agreed to by Dominion Resources and CNG. In addition, FERC has voted to conditionally approve the merger. The companies intend to file a response with FERC accepting the conditions. The companies' request for approval of the transaction is still pending with the Securities and Exchange Commission. </P> <P>For additional information, see Note (B) to Consolidated Financial Statements.</P> </FONT><B><P ALIGN="CENTER"> </P> <U><FONT SIZE=2><P ALIGN="CENTER">DOMINION RESOURCES, INC.</P> <P ALIGN="CENTER">PART II. - OTHER INFORMATION</P> </U><P ALIGN="CENTER">(CONTINUED)</P> <P ALIGN="CENTER">VIRGINIA POWER</P> <P ALIGN="JUSTIFY">Regulation</P> </B><P ALIGN="JUSTIFY">Virginia</P> <P ALIGN="JUSTIFY">As previously reported, on March 20, 1998, the Virginia Commission issued an Order instructing Virginia Power and AEP-Virginia, as the Commonwealth's two largest investor-owned utilities, each to design and file a retail access pilot program. Virginia Power filed a report on November 2, 1998, describing the details, objectives and characteristics of its proposed retail access pilot program. On August 6, 1999, the Hearing Examiner issued a report on interim rules for the introduction of electric and natural gas retail competition in Virginia. On September 8, 1999, Virginia Power, the Virginia Commission Staff and two other parties entered into an agreement which resolved the size and scope of the proposed Pilot Program and the methodology for determining the market price of electricity used in calculating the wires charge assessed to those customers opting for alternate suppliers. A Hearing was held on September 8-9, 1999 and the Hearing Examiner's Report is anticipated later this year.</FONT> </P> <FONT SIZE=2><P ALIGN="JUSTIFY">FERC</P> <P ALIGN="JUSTIFY">On June 3, 1999, Virginia Power, together with American Electric Power Services Corporation, Consumers Energy Company, The Detroit Edison Company, and First Energy Corporation, on behalf of themselves and their public utility operating company subsidiaries, filed with FERC applications under Sections 205 and 203 of the Federal Power Act for approval of the proposed Alliance Regional Transmission Organization (Alliance RTO).</P> <P>The application seeks approval to create the Alliance RTO. If accepted, the Alliance RTO would operate the transmission systems of the companies, ensure transmission reliability and provide non-discriminatory access to the transmission grid. The applications include a proposed Alliance RTO open access transmission tariff that would cover service into, from and through the Alliance RTO.</P> <P ALIGN="JUSTIFY">On October 1, 1999, the application process to form the Alliance RTO was completed. The Alliance Companies requested FERC issue an order approving the formation of the Alliance RTO by December 31, 1999.</P> <B><P ALIGN="JUSTIFY">Rates</P> </B><P ALIGN="JUSTIFY">Virginia</P> <P ALIGN="JUSTIFY">On<B> </B>October 22, 1999, Virginia Power filed an application with the Virginia Commission for an increase of approximately $86 million in fuel rates to be effective December 1, 1999. Virginia Power is waiting for a hearing to be scheduled.</P> <P ALIGN="JUSTIFY">North Carolina</P> <P ALIGN="JUSTIFY">	<I>Rate Agreement	</P> </I><P ALIGN="JUSTIFY">In support of Dominion Resources' request for approval by the North Carolina Utilities Commission (North Carolina Commission) of its proposed merger with Consolidated Natural Gas Company, Virginia Power and Dominion Resources reached an agreement with the Public Staff of the North Carolina Commission. As part of the agreement, Virginia Power agreed not to request an increase in its North Carolina retail electric base rates until after December 31, 2005, except for certain events that would have a significant financial impact on Virginia Power. Such events could include any governmental action or an occurrence that is beyond its control and not attributable to Virginia Power's fault or negligence. However, fuel rates are still subject to change under the annual fuel cost adjustment proceedings. The North Carolina Commission approved the merger, subject to conditions agreed to by Dominion Resources and Virginia Power, on October 18, 1999. </P> <B><U><P ALIGN="CENTER">DOMINION RESOURCES, INC.</P> <P ALIGN="CENTER">PART II. - OTHER INFORMATION</P> </U><P ALIGN="CENTER">(CONTINUED)</P> </B><I><P>Cogenerators and Small Power Producers</P> </I><P>As previously reported, on November 6, 1998, Virginia Power filed for approval of a new Schedule 19 which governs purchases from cogenerators and small power producers. On July 16, 1999, the North Carolina Commission issued an order directing Virginia Power to file, on or before July 26, 1999, a long-term standard contract terms and conditions for five, ten and fifteen year periods for qualifying hydro-electric facilities and small power producers. On August 26, 1999 Virginia Power filed the standard contract terms as directed by the North Carolina Commission.</P> <I><P ALIGN="JUSTIFY">Fuel Filing</P> </I><P ALIGN="JUSTIFY">On September 17, 1999, Virginia Power filed a request with the North Carolina Commission for a $5.5 million increase in annual fuel rates. A hearing on the matter is scheduled for November 16, 1999.</P> <B><P ALIGN="JUSTIFY">Sources of Power</P> </B><P>On July 6, 1999, Virginia Power established a new one-hour integrated service area summer peak demand of 16,216 Mw and also established a new 24-hour period system energy output record of 326,188 Mwh. </P> <B><P ALIGN="JUSTIFY">Future Sources of Power</P> </B><P ALIGN="JUSTIFY">As previously reported, on May 14, 1999, the Virginia Commission approved Virginia Power's construction of four gas-fired turbine generators in Fauquier County, Virginia. A Petition to Appeal the approval was filed by an opposing party on July 13, 1999 in the Virginia Supreme Court. On September 28, 1999, the Virginia Supreme Court agreed to hear the Appeal. The same party has appealed the air permit issued to Virginia Power by the Department of Environmental Quality. Virginia Power will participate in both of the appeals in support of upholding the applicable order and permit. Construction of the units has begun with commercial operation expected by mid 2000.</P> <P>	</P> <B><U><P>ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K</P> </B></U><P>(a) Exhibits:</P></FONT> <P ALIGN="RIGHT"><TABLE CELLSPACING=0 BORDER=0 CELLPADDING=7 WIDTH=706> <TR><TD WIDTH="6%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="JUSTIFY">3 -</FONT></TD> <TD WIDTH="94%" VALIGN="TOP"> <FONT SIZE=2><P>Bylaws as in effect October 15, 1999 (filed herewith).</FONT></TD> </TR> <TR><TD WIDTH="6%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="JUSTIFY">11-</FONT></TD> <TD WIDTH="94%" VALIGN="TOP"> <FONT SIZE=2><P>Statement re: computation of per share earnings (included in this Form 10-Q on page 3)</FONT></TD> </TR> <TR><TD WIDTH="6%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="JUSTIFY">27-</FONT></TD> <TD WIDTH="94%" VALIGN="TOP"> <FONT SIZE=2><P>Financial Data Schedule (filed herewith).</FONT></TD> </TR> </TABLE> </P> <FONT SIZE=2><P>(b) Reports on Form 8-K</P> <P>	None</P> <B><P ALIGN="CENTER">SIGNATURE</P> </B><P>Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.</P></FONT> <TABLE CELLSPACING=0 BORDER=0 CELLPADDING=7 WIDTH=624> <TR><TD WIDTH="54%" VALIGN="TOP"> <P> </TD> <TD WIDTH="46%" VALIGN="TOP"> <P> </TD> </TR> <TR><TD WIDTH="54%" VALIGN="TOP"> <P> </TD> <TD WIDTH="46%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="CENTER">DOMINION RESOURCES, INC.<BR> Registrant</FONT></TD> </TR> <TR><TD WIDTH="54%" VALIGN="TOP"> <P> </TD> <TD WIDTH="46%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="CENTER">BY <U>JAMES L. TRUEHEART</U></FONT></TD> </TR> <TR><TD WIDTH="54%" VALIGN="TOP"> <P> </TD> <TD WIDTH="46%" VALIGN="TOP"> <FONT SIZE=2><P ALIGN="CENTER">James L. Trueheart<BR> Senior Vice President and Controller<BR> (Principal Accounting Officer)</FONT></TD> </TR> <TR><TD WIDTH="54%" VALIGN="TOP"> <P> </TD> <TD WIDTH="46%" VALIGN="TOP"> <P> </TD> </TR> </TABLE> <FONT SIZE=2><P>November 12, 1999</P></FONT></BODY> </HTML>