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CFA Institute Research Challenge

Hosted by

Local Challenge (e.g., CFA Society, New York, NY)

Team B.

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Table of Contents: Business Description. ............................................................................................................................................................. 8 Valuation. ............................................................................................................................................................................... 8 Management & Governance. ................................................................................................................................................ 9 Industry Overview and Competitive Positioning. ............................................................................................................... 9 Financial Analysis. ............................................................................................................................................................... 10 Investment Risks. ................................................................................................................................................................. 12

Figure 8: Income Statement ............................................................................................................................................ 14 Figure 9: Balance Sheet ................................................................................................................................................... 15 Figure 1-: Statement of Cash Flows ............................................................................................................................... 16

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NYSSA Student Research This is report is published for educational purposes only

by students competing in the New York Society of Security

Analysts Investment Research Challenge

Team B.

Highlights.

Valuation: Several valuation metrics strongly support a probative BUY rating for Dominion

Resources. The following sum of parts valuation—including, dividend discount model, 2017

price to sales projection estimates, and earnings valuation estimates—indicate undervaluation.

Moreover, revenues appear to shrink in recent years. Still, net income, counterintuitively, seem to

thrive. If accurate, the abovementioned metrics, bolstered by supporting evidence of Dominion—

a highly diversified, vertically integrated company—dominating both energy and utilities

industries, strengthens this conclusion.

Competitive: Dominion outpaces the energy and utilities industries as with top competitors

for both sectors in various measurable categories including:

(1) Profitability;

(2) Dividends;

(3) Shareholder Returns.

If accurate, these metrics further support the plausible inference of Dominion as a buy, with

anticipated growth bolstered by market perception to recent political influences. Dominion’s

apparent diversification strategy catalyzes its competitive advantage, which, may decrease its

susceptibility to losses from possible interest rate increases. Additionally, while excess debt

ranks among Dominion’s noted weaknesses, its vulnerability to insolvency, if anything

buttresses a buy consistent with value investment principles.

Source. iii

Ticker: ● D (NYSE) Recommendation: ● BUY

Price: ● $75.81 Price Target: $77

Earnings/Share

Mar. Jun. Sept. Dec. Year P/E Ratio

AV 2014A $1.03 $.60 $.95 $.46 $3.05 22.45

2015A $.91 $.70 $1.00 $.60 $3.20 19.68

2016E $.88 $.73 $1.10 $.94 $3.65 19.77

2017E $1.10 $.80 $1.15 $.95 $4.00 19.61

Figure 1 – Per Share Overview. i

Date

12-mos

Rolling

EPS

Dividend P/E

Ratio

09/2016 3.32 0.700 22.37

06/2016 3.22 0.700 24.20

03/2016 3.18 0.700 23.62

12/2015 3.21 0.648 21.07

09/2015 3.01 0.648 23.38

06/2015 2.92 0.648 22.90

03/2015 2.50 0.648 28.35

12/2014 2.24 0.600 34.33

Figure 2 – Annual Summary Data

(Millions). ii

Year Sales Net

Income EPS

12/2011 13,765.00 1,408.00 2.45

12/2012 12,835.00 302.00 0.57

12/2013 13,120.00 1,697.00 3.09

12/2014 12,436.00 1,310.00 2.24

12/2015 11,683.00 1,899.00 3.21

Growth Rates -4.02 7.77 6.99

Dominion Resources Inc.

52 Week Price Range 67.58 - 78.97

Average Daily Volume, After 30 days 2,360,000

Beta 0.21

Earnings Per Share, EPS, 5-years -9.25

Payout Ratio 63.62%

Dividend Growth Rate, 5-Year 7.19%

Dividend Yield (Estimated) 3.69%

Shares Outstanding 626,750,000

Market Capitalization 47,260,000,000

Weighted Average Cost of Capital, WAAC 3.30%

Institutional Holdings 67%

Book Value per Share (9/2016) $23.86

Current Ratio, Liquidity 0.42

Return on Equity (9/2016) 18.9%

Market Profile

Industry: Electric Utilities

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Introduction.

Dominion Resources, Inc., (“Dominion”) headquartered in Richmond, Virginia, reputedly ranks among, “the

largest U.S. energy producers and transporters.” Dominion’s massive reach encompasses 14 different states

revealing a diversified mix of business operations. These include but are not subject only to the selling,

generation, transmission, transportation, distribution of electrical energy and natural gas. Established in 1787,

Dominion reportedly became a major electricity supplier by 1909. Some of Dominion’s ostensible features

include:

• Regulated electric transmission & distribution operations;

• Residential, commercial, industrial, governmental services in VA & NC;

• Merchant fleet, energy marketing, & price risk management for its assets;

• Gathering & processing natural gas, with liquefied natural gas operations;

• Wholesale electricity market prices for electric cooperatives & municipalities.

A. Primary Trade Exchange.

Dominion (D) operates as a publicly traded holding company on the New York Stock Exchange (NYSE),

allegedly trading since 1983. iv

B. Primary Sector/Industry Operation.

Dominion specializes in bulk power transmission & control electric services. v

C. Investment Recommendation.

Several valuation metrics strongly support a buy rating for Dominion.

D. Current Stock Price.

As of Jan. 25, 2017, Dominion allegedly closes at $75.81. vi

E. Market Capitalization.

Yahoo Finance! alleges a market cap of $47.5 billion for Dominion on Jan. 20, 2017.

F. Target Stock Price.

NASDAQ estimates Dominion’s 12-month target price at $77.

G. Major Shareholders.

According to Yahoo! Finance, the following major shareholders comprise Dominion:

“.39%” of shares from insiders & 5% owners;

“61.3%” of shares from institutional & mutual fund owners;

“61.54%” of total shares available for institutional & mutual fund trading;

“964” institutional shareholders. vii

Accordingly, Figure 3 – Dominion Shareholders, memorializes Dominion’s shareholders.

Figure 3—Stock Ownership. viii

Type Date No. Owners Shares Held

(000s) % Own

Institutional 09/30/16 1040 411,610 65.67

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DIRECT HOLDERS Shares Date Reported

FARRELL THOMAS F II 989,013 3-Feb-16

MCGETTRICK MARK F 282,242 3-Feb-16

KINGTON MARK J 38,366 20-Feb-15

KOONCE PAUL D 137,122 3-Feb-16

CHRISTIAN DAVID A 131,375 3-Feb-16

LEOPOLD DIANE 37,171 1-May-16

DRAGAS HELEN E 27,124 10-Mar-15

BARR WILLIAM P 35,419 11-May-16

BLUE ROBERT M 37,561 5-Feb-16

HEACOCK DAVID A 29,814 3-Feb-16

TOP INSTITUTIONAL HOLDERS Shares Date Reported

Vanguard Group, Inc. (The) 39,489,005 29-Jun-16

Capital Research Global Investors 34,842,509 29-Jun-16

State Street Corporation 29,919,066 29-Jun-16

Wellington Management Company, LLP 29,222,869 29-Jun-16

Capital World Investors 25,312,923 29-Jun-16

Bank of America Corporation 18,056,405 29-Jun-16

Franklin Resources, Inc 16,949,508 29-Jun-16

BlackRock Institutional Trust Company, N.A. 16,309,679 29-Jun-16

BlackRock Fund Advisors 14,346,101 29-Jun-16

Northern Trust Corporation 7,650,177 29-Jun-16

TOP MUTUAL FUND HOLDERS Shares Date Reported

Capital Income Builder, Inc. 15,773,888 29-Jun-16

Vanguard Total Stock Market Index Fund 12,223,352 29-Jun-16

Washington Mutual Investors Fund 10,267,000 29-Jun-16

Franklin Custodian Funds-Income Fund 10,000,000 29-Jun-16

Vanguard/Wellington Fund Inc. 9,856,740 30-May-16

Investment Company Of America 8,996,324 29-Jun-16

Select Sector SPDR Fund-Utilities 8,200,112 30-Jul-16

Vanguard 500 Index Fund 8,083,673 29-Jun-16

Income Fund of America Inc 7,335,000 29-Jun-16

Vanguard Institutional Index Fund-Institutional Index Fund 6,587,114 30-May-16 ix

Investment Summary.

A. Dominion—Investment Profile.

Over the past decade, Dominion experienced exponential price growth, which remained largely steady through

2014, though plateauing, increasing at diminished rates from 2015 to present. x If true, the evidence suggests

potential pinnacle prices for Dominion as it perhaps progresses to market maturity. Though such a conclusion

may appear conjectural, perhaps too premature to espouse, the following evidence comports with this inference.

B. Valuation Summary.

In February 2016, Dominion received an underweight rating due ostensibly to capital expenditure escalation.xi

Capital expenditures include fixed asset investments such as preserving land, building, and/or equipment. xii

Underweight implies projected company underperformance—an undervalued price—compared to competitors

in the same industry. xiii If accurate, Dominion presumably constitutes a strong buy because it supposedly trades

lower than industry average projections. Why? If true, lower comparative trade prices imply potential growth

on the assumption of buying lower now to advantage an upswing on possible price surges later.

Figure 4 – Dominion Resources, Inc.—Shareholders

Th

ere are no sources in the current document.

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Conversely, Dominion’s ratings reversed by April 2016. xiv Indeed, underweight appeared 18 times from

January 31, 2013–November 9, 2015. But the incidence of 15 marketweight and 4 overweight referenced

throughout this period plausibly offset underweight classifications. xv If accurate, this offsetting effect may

suggest an overall neutral “marketweight” average, plausibly suggesting prices aligned with general “market

expectations.” xvi

C. Significant Recent Developments.

On Nov. 10, 2016, after the election, a first indication of buy manifested as Dominion’s price fell to $70.98,

perhaps consistent with initial market reaction. xvii Additionally, analysts predict a buy. A buy/sell indication

might appear too premature, perhaps speculative to infer at present with the assumed confluence of emerging

political and social change imminently approaching. Nevertheless, several significant events—Hurricane

Matthew, the 2016 election, and Federal Reserve interest rate spikes—transpired to plausibly influence

Dominion’s valuation, which collectively, support a buy.

(a) Hurricane Matthew. Initially, late 2016 trends showed recent price declines for Dominion. On Aug. 8, 2016, Dominion’s price

target diminished from $82 to $79. Since Sept. 22, 2016 Dominion’s price declined from $77.04 to $74.27 by

Sept. 30. Prices continued to decrease, staggering between $72 and $73 throughout Oct. 2016. Hurricane

Matthew may correlate as a contributing factor to Dominion’s struggles surpassing the near $73 mark in

October. xviii But Dominion’s declivity since July 1, 2016 from nearly $78 to a stagnant $72-$73, supports, in

the short-run, under $78, assuming this short-term pattern continues. xix Interestingly, Dominion’s price soared

to $75.31 for Oct. 31 and $75.50 on Nov. 8, 2016, consistently remaining around $74, before dramatically

plummeting after Nov. 8th. However, evidence of rising prices over time combined with allegedly low implied

volatility may suggest a long-term valuation exceeding $75.

Dominion almost closed its price-target threshold on Dec. 29, 2016, and as of Jan. 4, 2017, hovered near

$76.6. xx From Jan. 5-9, prices remained in the high $76 range, before plummeting to $75.42 by Jan. 10, 2017.

If true, the latest trends most strongly support a valuation of at least $75, assuming no anomalous changes.

Several contributing factors, including, the election, and hopes of a stronger economy consistent with regime

change, plausibly correlate with this recent growth phenomenon. Yet, many variables may impact value

fluctuations.

(b) 2016 Election. Politics questionably correlates to this sudden slide, specifically, initial ambivalence perhaps about the

ideological impact of President-elect Trump with a Republican congressional majority. The Dow Jones

dropping nearly “650 points” on Nov. 8-9 plausibly suggests probative psychological response to market

uncertainty—regime change presumably correlated with apprehensive perceptions. xxi Apparently, the election

took some by surprise. xxii Typically, U.S. elections remotely affect market outcomes, particularly, one energy

company, since Congress “repealing solar ITC and Wind PTC,” constitutes a “highly unlikely,” scenario. xxiii

Despite unwarranted fears, likely an overreaction—“climbing the wall of worry,” with “unfolding election

uncertainties”—concern presumably abounds about “renewable energy.” xxiv If true, these uncertainties may

reflect Dominion’s initial downward path from Nov. 8–14 2016. xxv This assumed ambivalence, however,

appears to contradict reality, because analysts appear optimistic about Trump “removing regulatory

impediments,” while “emphasizing expanded U.S. oil and gas production.” xxvi

Contrariwise, Dominion’s valuation appeared to largely skyrocket from Nov. 14–Dec. 2, 2016. Prices reached

$76.11 on Nov. 29, 2016, before trailing $74 into early December. The Thanksgiving-week Black-Friday and

Cyber-week deals might account for some of this price hypertrophy. But accelerated growth apparently

resumed throughout Dec. 2016, attenuating the inference of post-election paranoia. For example, Dec. 8–13,

Dominion’s price presumably climbed from $73.50 to $76.51 by Dec. 19th, pinnacling at $76.99 on Dec. 29,

2016, before closing the year with $76.59. xxvii The Dow Jones nearly eclipsing 20,000 points in an epic

historic record, post-2016 election, might partially explain Dominion’s recent momentum. The holiday season

perhaps also contributed, assuming heightened utility expense plausibly inferred from weather and/or travel.

But the Dow transcending 20,000 on 1/25/2017 strengthens a conclusion of correlation, plausibly influencing

Dominion’s latest soar to $75.86 at 11:43 A.M. that day. xxviii The historic 2017 post-inaugural event during

Trump’s first week as President strengthens this inference, if attributed to hopes of successful capitalistic

growth from laissez-faire tax-cuts. If accurate, this assumption of energy expansion in reduced tax and

occupational opportunities comports with Dominion’s growth projection potential, plausibly reinforcing a buy.

(c) Energy Expansion.

However, the unified Republican party majority in an incumbent Trump administration supports continued

growth for Dominion, assuming heightened domestic investments, tax cuts, and employment. Furthermore,

Dominion appears more apt to hypertrophy from the unprecedented potential of alternative energy exploration

as the North Dakota Bakken in subsidizing these domestic incentives. The largely untapped Bakken

presumably harbors at minimum 4.3 billion barrels of shale oil, a copious energy cornucopia to enhance

natural gas production, if efficaciously harnessed through fracking. xxix This conclusion comports with

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Dominion’s recent company developments. xxx Apparently, Dominion secured a “$2.5 billion acquisition with

Bakken,” in 2007, presumably the historically highest energy deal at that time. xxxi If accurate, this inference—

accompanied by Dominion’s alleged 2016 Questar acquisition—plausibly supports an upward surge,

strengthening the conclusion of a buy. If true, assuming energy exploration escalates and Dominion

strategically advantages this opportunity, attempts to differentiate by diversifying resources may embolden its

assumed dominant competitive position. President Trump’s Keystone Pipeline Executive Order on 1/24/17—

abrogating Obama’s restrictions—if successfully implemented with Congress’ sanctioning—arguably

catalyzes “energy resources expansion” and job creation. xxxii Assuming the promise of energy expansion,

providing no force majeure events—terrorism, natural disasters, etc.—Dominion appears favorably disposed

to growth in a plausibly buy.

(d) Federal Reserve. On Dec. 15, 2016, the Federal Reserve reportedly announced its decision to raise interest rates .25%, with

further increases projected in 2017. xxxiii If true, this development may suggest uncertainty for utilities

companies. On the one hand, utilities companies may struggle if higher costs of capital assumed in a Fed rate

rise risks deterring investors from supporting them. xxxiv

However, utilities companies may advantage a presumably stronger economy, potentially eliciting possibly

greater “natural gas and electricity” consumption to spur exponential growth.xxxv Economic improvement

might also incidentally incentivize higher rent rates, which may amplify effect of increased demand,

aggrandizing revenue, if accompanied by augmented utilities costs. If achieved, utilities companies may

ameliorate stock prices. But this inference assumes, providing economic trends continue, the assumed gains

overshadow possible long-run investment losses.

Nevertheless, Dominion constitutes a “well-diversified utilities company”—purportedly, “producing over 12%

returns,” by late November 2016—likely equipped to withstand “high-interest rates and turbulent markets.” xxxvi For example, Dominion’s diversification record referenced in derivative contracts, combining futures,

options, and swaps, to mitigate “price sensitivity risks,” strengthens this inference. xxxvii If accurate, Dominion

possesses an opportunity to strategically steepen its alleged competitive edge, assuming less diversified

companies sustain investment losses while Dominion inversely proliferates. If so, disparities may deepen,

possibly polarizing Dominion’s dominance over the energy and utilities industries, plausibly outpacing

competitors. Therefore, assuming this rationale, Dominion may hedge these risks, potentially arbitraging

industry losses to its advantage diversifying derivatives, possibly hybridizing options agreements. For

example, option collars may offset costs by combining the option to call (buy) and put (sell) assets together

under contract. xxxviii Likewise, Dominion may also integrate option collars with swap arrangements that trade

volatile flotation for fixed interest rates to further stabilize costs against risk of loss. Less diversified

companies in the industry may lack this luxury, and if so, proportionately perish. Hence, the totality of

evidence supports a probative buy for Dominion.

Figure 5: Dominion Trading Price Fluctuations—FY 2016 Source: See NASDAQ, Dominion Resources Inc., Stock Report, NASDAQ Report, © 2016 EDGAR®, Dec. 30, 2016,

http://www.nasdaq.com/symbol/d/stock-report.

Figure 5. Recent political paradigmatic transitions plausibly influencing market reaction suggest a

shift in shareholder perception from former sell to sudden buy following 11-9-2016.

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Business Description.

A. Dominion Services.

As a leading U.S. energy distributor, Dominion’s preeminent portfolio presumably accommodates

approximately 25,700 megawatts of generation. xxxix Dominion’s natural gas storage systems distinguishes

among the nation’s largest. Currently, its estimated 1 trillion cubic feet storage capacity allegedly surpasses

6 million customers in utility and retail energy services throughout 14 states. xl Other services include:

14,400 miles in natural gas transmission; xli

Gathering & storage pipeline;

6,500-mile electric transmission lines;

57,300 miles of electric distribution lines. xlii

B. Dominion Financials.

Forecasts estimate P/E Ratio declines for Dominion from actual 2015 results in every year after 2015. xliii The

P/E ratio refers to stock price divided by earnings; price/earnings. Generally, lower P/E means the stock price

diminished compared to earnings, and vice versa for higher P/E. For example, if denominator earnings

increase while price remains unchanged, the P/E ratio diminishes consistent with mathematical logic, e.g., ½

> ¼. Conceptually, price per earnings, P/E, estimates what an investor typically wishes to pay proportionately

for the stock’s price. Dominion Resources presently purports a 22.9 P/E. xliv If true, a high P/E reveal stock

prices increasing compared to earnings by investor valuations.

Valuation.

A. Sum of Parts.

Several valuation metrics strongly support a BUY rating for Dominion Resources. The following sum of

parts valuation—including, dividend discount model, 2017 price to sales projection estimates, and earnings

valuation estimates—indicate undervaluation. For example, the dividend discount model purports an

estimated 2017 valuation for Dominion of $93 despite prices within the $74-$76 range by Jan. 25, 2017. xlv

Wells Fargo’s estimated valuation range between $77 and $80 strengthens this inference since Dominion

presently staggers between $75-76, pinnacling at $76.99 on Dec. 29, 2016.xlvi Currently, Dominion’s 2015

projections for 2017 estimate price to sales at $78.27, excluding the presently unavailable 2016 reports. xlvii

Similarly, 2017 sales projections estimate $13.3682 billion compared to $11.683 billion for actual 2015 sales. xlviii Additionally, earnings valuation estimates $82.15, with NASDAQ’s current conservative 12-month

target price listed at $77. xlix Present trends suggest Dominion trading at a premium compared to its

competitors, specifically, “15x” vis-à-vis the “10.5x industry average.” l Dominion’s stock presumably rose

“13%” and yields “3.7%,” a stock which Hedge Fund Analyst Correspondent Jim Cramer apparently

endorsed among his portfolio picks. li Growth prospects suggest virtually, “10% recovery since the election,”

with a “3% premium to it both 50-day and 200-day moving averages by Jan. 4, 2017.” A moving average

forecasts growth from the arithmetic average of most recent data periods. If true, these prospects plausibly

suggest strong growth, assuming Dominion remains within moving average levels because stocks surpassing

moving average levels typically portend bullishness.

B. Dividend-Growth.

Additionally, the earnings potential assumed in new growth projects reported plausibly support attractive

dividend growth. lii For example, Dominion’s quarterly cash dividend presumably grew “by nearly 8.1% to

$.70 per share,” in Dec. 2015. liii From these reports, Dominion estimates its dividend payout target between

“70-75% of operating earnings,” projecting an “8% annual dividend growth rate from 2014 to 2020.” liv

Moreover, Dominion reported a dividend yield of “3.77% on Oct. 21, 2016,” maintaining 3% minimum over

five years, steadily distributed “every quarter since Nov. 2011.” lv Investopedia reportedly ranks Dominion

among the top 3 dividend utilities stocks, strengthening the inference of competitive investment growth.lvi

Ultimately, if accurate, Dominion’s steady dividend growth reflects its overall growth—solvency assumed in

an ability to pay shareholders—strengthening the inference of buy. The projected growth potential implies

progressive valuation increase with time, assuming this pattern continues. Accordingly, this prospective

growth pattern comports with present trends, assuming political predictions attributed to a predominantly

Republican Congress and incumbent Trump administration unifies conservative de-regulation. If so,

Dominion likely benefits purportedly from the laissez faire environment of diminished energy regulations,

possible tax-rate attenuation, and/or subsidized domestic energy initiatives incentivizing business.

While the energy and utilities sectors stand to benefit at large from relaxed regulation, Dominion’s alleged

competitive edge, again, positions it strategically for proportionate gains. Therefore, assuming the above,

Dominion’s reputed record of outpacing rivals likely continues, and possibly broadens if its diversification

strategy further mitigates losses perhaps otherwise incurred.

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C. Rapid Revenue Reductions.

Moreover, Dominion’s revenues reportedly shrank steadily from $13.06 Billion in June 2014 to $11.05

Billion by June 2016. Dominion’s assumed excess debt perhaps correlates with reduced revenue. lvii If

anything, assuming the above, reduced revenue more strongly supports a buy consistent with general value

investment principles, buying low to advantage potential upswing growth. Likewise, Dominion’s ability as a

utilities monopoly to securitize practical services, discontinuing services of customers defaulting on monthly

bills, presumably distinguishes it among “value investments.” lviii

Management & Governance.

A. Corporate Governance. Corporate governance refers to a regulatory system that balances company, stakeholder, and government

interests. lix It assumes an agency relationship whereby one or multiple persons, including companies—

agents—provide services on another’s behalf—principals. lx

Here, principal beneficiaries entrust agents with a requisite fiduciary responsibility—relationship based on

duty, loyalty, and obedience—trust in confidence—to act on their behalf. On Oct. 1, 2016, Institutional

Shareholder Services (ISS) Governance QuickScore assigned Dominion an overall Corporate Governance

rating of 6. lxi According to ISS QuickScore, 6 falls just shy of high-corporate governance risks. lxii

However, Dominion also respectively received “8”—high governance risks—for “Board” and “Shareholder

Rights” subsets as an assumed arithmetic average factored into this rating. lxiii QuickScore Methodology

presumably evaluates company “governance structure” through annual, “year-round,” data-driven

inspections, incorporating nearly “200 factors,” to analyze risks, assigning weights based on the following:

“Input from ISS’ global governance experts;”

Perceived “impact of governance practices,”

“ISS voting policy” consistent with “prevailing” regional “governance standards.” lxiv

Industry Overview and Competitive Positioning.

The energy industry as inferred from high metrics appears competitive, presumably catalyzed by

technological advances. Dominion appears to outpace its competitors and the overall industry as inferred

from its financials including:

2016-17 BUSINESS RATIOS—DOMINION v. Energy Competitors. lxv

2016-17 BUSINESS RATIOS—DOMINION v. Electric Utilities Competitors. lxx

Financial Ratios: Dominion American Electric Power DTE Energy Industry Average

12-month Dividend Yield 3.69% 3.63% 3.12% 3.25%

Return on Equity, ROE 15.38% 15.38% 10.35% 9.78%

EV/EBITDA 15.28 lxvi 15.71 lxvii 11.48 lxviii 12.35 lxix

Market Capitalization $ 47.57 Billion $ 30.79 Billion $ 17.57 Billion $ 14.98 Billion

Financial Ratios: Dominion National Grid Exelon Industry

12-month Dividend Yield 3.7% 4.7% 5.0% 3.59%

Return on Equity, ROE 15.38% 16.07% 4.80% 8.93%

EV/EBITDA 15.28 lxxi 10.10 lxxii 8.22 lxxiii 11.57 lxxiv

Market Capitalization $ 47.3 B 43.92B 33.05B $6.75 B lxxv

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The following SWOT summary itemizes Dominion’s comparable industry competitiveness:

For Dominion’s industry competitiveness, please see p. 11, Figure 7, DOMINION—PORTER’S FIVE FORCES.

Financial Analysis.

A. Analyst Summary. Current projections depending on market conditions, might suggest declining growth for Dominion, possibly

stemming from market cycle maturity. If true, the “bullish” analyst summary leaning toward “buy,” plausibly

supports this inference because declines may suggest short-term upswing growth opportunity, if prices later

climb. lxxvii The last shareholder exchange filed on 11/15/16 indicating “purchase,” may support this conclusion. lxxviii If so, shareholders plausibly perceive an opportunity for continued growth, presumably advantaging

Dominion’s latest upswing growth consistent with overall political and economic trends. If true, de-regulation

inferred from impending regime change may support this conclusion, assuming shareholders factored market

perception into their investment decision.

B. Competitive Comparables.

Consider Dominion’s metrics versus its rivals. Recall our foregoing P/E discussion. Historically, Dominion

boasts a P/E ratio greater than 20 over the past few years. If accurate, analysts’ buy indication might appear

optimistic because value investing principles suggest buying low, and selling high to avoid risk of loss.

Typically, a P/E ratio exceeding “17” may signal danger. lxxix

But the energy industry average indicates a 19.8 P/E as of 12/16/16. Even so, Dominion’s P/E presumably

ranks highest among its 10 competitors at 21.89. But this conclusion assumes P/E constitutes the primary

valuation benchmark. Ultimately, valuation metrics accompanied by key shareholder behavior consistent with

politicized psychological influence on present market trends correlate to buy, justifying “A- buy street rating.” lxxx After all, Dominion’s competitiveness evidenced in its # 1 return on equity, 15.38% ROE, demonstrates

growth potential, which if true, plausibly reinforces a buy. To strengthen this conclusion, Dominion’s 3Q 2016

Net Income reportedly grew “21.54% faster than the average growth of its competitors.” lxxxi Assuming the

pattern persists, Dominion’s growth potential suggests a buy given its opportunity for sizeable gains.

Conversely, Dominion’s maturity, high-debts, and possible struggles increasing, “15% ROE faster than 15%,

without borrowing funds or selling more shares,” might mitigate this inference. lxxxii However, Dominion’s

purported “15.38%” ROE dominates the energy industry. Likewise, reported revenue losses reveal

opportunities for significant long-term growth compared to competitors, advantaging potential upswing growth,

perhaps further precipitated by politicized energy expansion initiatives. Additionally, Dominion’s attempts to

differentiate with diversified derivatives, as abovementioned, reduces investment loss risks, plausibly

enhancing competitiveness if upswing growth materializes. Dominion also purportedly boasts the highest

market capitalization. While companies with high market capitalization may yield limited short-term returns,

“they generally reward investors,” providing “consistent share value increases and dividend payments.” lxxxiii

Additionally, Dominion’s alleged lower net income compared to the industry supports a buy consistent with

value investment, with opportunities for growth if energy expansion accelerates. Dominion’s exhibited metrics

support this conclusion. Consider the following financial ratios as additional evidence to Dominion’s buy-

rating consistent with upswing growth assumed in continued competitiveness:

Strengths.

Energy/Utilities Leader

Highly Diversified.

Pipeline Capacity.

Customer Expansion.

Sustained Growth.

Weaknesses.

Excess Debt.

Governance Issues.

Mature Company.

High P/E Ratios.

Analyst Optimism.

Opportunities.

U.S. Regime-change.

Nuclear /Solar-Wind Power.

Globalization.

Climate Change.

Technological Innovations

Threats.

Environmental Policies.

Global Competitors.

Volatile Sector. lxxvi

Weather Sensitivity.

Force Majeure:

(Terrorism, natural disaster, etc.).

11

2016 -17 BUSINESS METRICS—DOMINION V. ENERGY PEERS. lxxxiv

2016-17 BUSINESS METRICS—DOMINION v. INDUSTRY PEERS. lxxxv

C. Revenues.

According to Business 2016-17 Metrics, Dominion’s 5-year revenue Compound Annual Growth Rate (CAGR)

referenced 5.1% decline—almost inversely proportionate with the industry, which revealed 5.6% gains. FY

2012 serves as a benchmark year elucidating Dominion’s alarming revenue decline after abandoning the

unregulated market for both electric and natural gas services. As FY 2015 concluded, Dominion’s unregulated

electric revenue presumably plummeted 45.73% compared to 2012. Total revenues reportedly declined every

year since 2010, ostensibly at an average rate of 5%. If accurate, these progressive, annual declines reported

plausibly correlate with Dominion’s excess debts, perhaps reflected in a “large capital investment plan,” and

“high consolidated leverage.” lxxxvi See below, Figure 5. But Fitch also projects “consolidated leverage

improvement,” over the next several years. lxxxvii If true, that assertion assumes debt-reduction in a more

balanced capital structure, which assuming so, implies growth potential, strengthening the buy-rating inference.

Political trends comport with this conclusion.

Furthermore, Questar’s regulated gas operations purportedly comprise 35% of Dominion’s EBITDA,

strengthening a buy-rating inferred from operation expansion if Dominion allegedly acquires Questar.lxxxix If

accurate, however, attempts to strategically diversify long-term investment risks with excess debts securitized

via self-regulated operation expansion and acquisition reasonably support Dominion’s revenue loss. But loss

may avail upswing cyclical growth consistent with value investment principles. If true, the evidence

strengthens a buy-rating because investors may buy Dominion low now and advantage subsequent

exponential growth, assuming it remunerates its debts.

D. Sales Growth

Dominion Virginia Power’s infrastructural investment, if successful, support substantial growth. Capital

expenditures serve to subsidize underground program plans for electricity distribution in locations where

Dominion operations. These plans include a Capital Expenditure (CAPEX) of $113 million to 4,000 miles in

underground tap lines. xc If successfully administered, perhaps further precipitated by plausible political

support, total electrical distribution may yield Growth CAPEX of the following from 2016-2020:

Dominion Virginia Power: $6.1 Billion;

Dominion Generation: $ 4.1 Billion;

Dominion Energy: $ 5.5 Billion;

Total Dominion Capex: $15.7 Billion. xci

Financial Ratios: Dominion Nextera Energy Southern Company Industry Average

12-month Dividend Yield 3.71% 2.92% 4.56% 3.59%

Return on Equity, ROE 15.38% 15.38% 10.35% 9.78%

Market Capitalization $47.57 billion $57.06 billion 47.75 billion $6.75 Billion

Financials Dominion National Grid, PLC Exelon Industry Average

Net Income $2.023 Billion $2.048 Billion $1.240 Billion $3.484 Billion

5-Yr Rev CAGR -5.1% +1.1% +9.6% +5.6%

Market Capitalization $ 47.57 Billion $46.009 Billion $45.046 Billion $12.71 Billion.

Figure 6 – Key Financial Ratios and Statistics. lxxxviii

Profitability 2015 Leverage 2015

Net Inc/Common Equity 0.28 Total Liability/Total Assets 0.78

Net Inc/Total Assets 0.03 Curr Debt/Equity 0.45

Net Inc/Inv Cap 0.04 Total Debt/Equity 2.31

12

E. Cash Flow

Cash flow from investment activities report losses since 2015, with losses expected continue, assumed in

capital expenditure investment. Nevertheless, financing activities reveal steady growth since 2012. For

additional information, see Appendix, Figure 10—Cash Flows, p. 14.

Investment Risks.

A. Financial Risk—High Debt. Dominion’s purported high-leverage appears troubling. xcii High leverage assumes an unbalanced capital

structure, specifically, disproportionate debt investment compared to equity—high debt/equity ratio. High-

leverage means the company takes on higher debt expense compared to equity in financing operations.

Generally, high-leverage implies high-default risk. xciii Assuming this conclusion, if Dominion’s debt

exceeds its cash flows, the company may become unviable, specifically, insolvent, if unable to repay

creditors.

Additionally, Dominion’s record reveals a BBB Moody’s rating. xciv BBB satisfies the minimum threshold

for investment grade bonds. xcv If accurate, Dominion’s BBB rating indicates high-risk, possibly suggesting a

suboptimal investment compared to competitors.

Furthermore, “rising bond yields,” assuming the pattern continues, might pose “negative implications for

electric companies,” like Dominion because potentially “higher borrowing costs,” suggest more debt. xcvi

Again, more debt, if applicable to Dominion as an electric company, typically exacerbates default risk—

possible struggles repaying creditors—assuming money owed exceeds cash flows. Default evinced in non-

payment generally implies surmounting debt—failure to repay because money owed exceeds cash inflow—

assuming no fraudulent motive. Risk means the company’s vulnerability to certain threats, which if

unaddressed, may jeopardize its continued viability. Higher risk may aggravate volatility. If true, elevated

default potential assumed in higher debt may offset a regarded leading energy company’s high valuation.

Accordingly, these factors may collectively strengthen the conclusion of volatility evidenced in Dominion’s

historical record, namely, unpredictable fluctuations from underweight to marketweight or higher.

Nevertheless, Market Realist lists Dominion among utility stocks evincing “low implied volatility,” namely,

a year-to-date return (YTD) allegedly of “8.2%.” xcvii Implied volatility estimates a security’s price

volatility. xcviii If accurate, Dominion’s estimated low implied volatility suggests lower risk—less

susceptibility to price fluctuation—which, assuming this conclusion, supports increased valuation over time.

Therefore, stable prices plausibly assumed in low price volatility may signal investors to infer a higher price

for Dominion in the future. Hence, the decision to buy now appears ripe in exploiting these benefits.

B. Legal Risks—Corporate Governance. Dominion’s above corporate governance numbers, if true, prove troubling because they suggest possible

conflict of interest fiduciary violations. Why? Officers maintain a requisite fiduciary responsibility to

company shareholders, entrusted with advancing their vested interest in the corporation. Fiduciary violations

result when a company acts adversely—contrary to its shareholders’ obligations—by corporate waste and/or

conflicts of interests—advantaging at the shareholders’ detriment. This same fiduciary relationship of trust

also applies to agent officers toward the principal corporation. Therefore, even if Dominion allegedly acts

adversely to its legal, financial responsibility, the company’s alleged liability risks brand damage. If accurate,

assuming this conclusion, even alleged liability risks discrediting Dominion, possibly denigrating its

reputation, and by greater extension, viability compared to industry competitors. Ultimately, Dominion’s

alleged failure appointing an “independent environmental expert,” for its board under SEC Rules 14a-8(i)(3)

plausibly substantiates QuickScore’s ratings of high corporate governance risks. xcix Assuming these

considerations, Dominion’s price may diminish, which if so, possibly justifies a lower valuation than

prevailing projections. Advocating a price on these influences presently appears too speculative to

sufficiently correlate. Indeed, financial analysts reportedly “ranked Dominion # 1 among Fortune’s 2015

‘Most Admired’ electric and gas utilities,” vis-à-vis asset investment, operation, and/or allocation. c If true,

Dominion’s assumed respectable reputation weakens the inference of reported corporate governance issues

correlating with diminished valuation. If true, these factors support a plausible buy, affording a potential

opportunity to possibly capitalize a low price from presumably diminished value. But time may tell.

13

T

h

r

e

a

t

o

f

N

e

w

E

n

t

r

a

n

t

s

APPENDIX.

Figure 7—DOMINION: PORTER’S FIVE FORCES. ci

Porter’s 5

Forces

Local power source

limitations.

Limited individual price

influence.

Consumer Size.

Threat of Rivalry – Low.

Threat of Entrants – High.

Threat of Substitutes – Low but Growing.

Buyer Bargaining Power – Low.

Supplier Bargaining Power – High.

Impractical

to self-create energy source.

Finite energy resources.

Commoditization.

Solar/ wind power

generation imminent.

Geographic Limits

(e.g. contract).

Large competitors.

Large Set-up Costs.

Passing Regulations.

Solar Energy (Sunrun

& Tesla in suburbs).

Oil, coal, & other resource

risks.

Larger company implies larger

order size.

Future suggests solar, wind, &

other renewable resource

capability.

14

Figure 8: Income Statement $ in millions

DOMINION RESOURCES INC (D) INCOME STATEMENT

Fiscal year ends in December. USD in millions except per share data.2011-12 2012-12 2013-12 2014-12 2015-12 TTM

Revenue 14379 13093 13120 12436 11683 11207

Cost of revenue 6412 5312 5574 5116 3606 2871

Gross profit 7967 7781 7546 7320 8077 8336

Operating expenses

Operation and maintenance 3483 4868 2459 2765 2595 2853

Depreciation and amortization 1069 1186 1208 1292 1395 1470

Other operating expenses 554 571 563 542 551 567

Total operating expenses 5106 6625 4230 4599 4541 4890

Operating income 2861 1156 3316 2721 3536 3446

Interest Expense 869 882 877 1193 904 945

Other income (expense) 179 223 265 250 196 258

Income before income taxes 2171 497 2704 1778 2828 2759

Provision for income taxes 745 146 892 452 905 672

Net income from continuing operations 1426 351 1812 1326 1923 2087

Net income from discontinuing ops -22 -92

Other -18 -27 -23 -16 -24 -64

Net income 1408 302 1697 1310 1899 2023

Net income available to common shareholders1408 302 1697 1310 1899 2023

Earnings per share

Basic 2.46 0.53 2.93 2.25 3.21 3.32

Diluted 2.45 0.53 2.93 2.24 3.2 3.31

Weighted average shares outstanding

Basic 573 573 579 583 592 609

Diluted 575 574 580 584 594 610

EBITDA 4328 2822 4971 4531 5401 5448 *Morningstar Financials. cii

15

Figure 9: Balance Sheet $ in millions

DOMINION RESOURCES INC (D) BALANCE SHEET

Fiscal year ends in December. USD in millions except per share data.2011-12 2012-12 2013-12 2014-12 2015-12

Assets

Current assets

Cash

Cash and cash equivalents 102 248 936 605 623

Total cash 102 248 936 605 623

Receivables 2035 1717 1836 1633 1369

Inventories 1348 1259 1176 1410 1348

Prepaid expenses 262 326 192 167 198

Other current assets 1683 1590 1800 1800 653

Total current assets 5430 5140 5940 5615 4191

Non-current assets

Property, plant and equipment

Gross property, plant and equipment 42990 44321 46969 51406 57776

Accumulated Depreciation -13320 -13548 -14341 -15136 -16222

Net property, plant and equipment 29670 30773 32628 36270 41554

Equity and other investments 3844 3888 5102 5561 5774

Goodwill 3141 3130 3086 3044 3294

Intangible assets 637 536 560 570 570

Prepaid pension costs 681 702 942 956 943

Regulatory assets 1382 1717 1228 1642 1865

Other long-term assets 829 952 610 669 606

Total non-current assets 40184 41698 44156 48712 54606

Total assets 45614 46838 50096 54327 58797

Liabilities and stockholders' equity

Liabilities

Current liabilities

Short-term debt 3293 4635 3446 4150 5335

Accounts payable 1250 1137 1168 952 726

Accrued liabilities 678 636 609 566 515

Other current liabilities 1741 1355 1771 1530 1544

Total current liabilities 6962 7763 6994 7198 8120

Non-current liabilities

Long-term debt 17394 16851 19330 21805 23616

Deferred taxes liabilities 5216 5800 7114 7444 7414

Pensions and other benefits 962 1831 481 1296 1199

Regulatory liabilities 1324 1514 2001 1991 2285

Minority interest 57 57 402 938

Other long-term liabilities 2253 2454 2534 2636 2561

Total non-current liabilities 27206 28507 31460 35574 38013

Total liabilities 34168 36270 38454 42772 46133

stockholders' equity

Additional paid-in capital 5359 5655 5783 5876 6680

Retained earnings 6697 5790 6183 6095 6458

Accumulated other comprehensive income -610 -877 -324 -416 -474

Total stockholders' equity 11446 10568 11642 11555 12664

Total liabilities and stockholders' equity 45614 46838 50096 54327 58797

*Morningstar Financials.ciii

16

Figure 1-: Statement of Cash Flows $ in millions

DOMINION RESOURCES INC (D) Statement of CASH FLOW

Fiscal year ends in December. USD in millions except per share data.2011-12 2012-12 2013-12 2014-12 2015-12 TTM

Cash Flows From Operating Activities

Net income 1426 329 1720 1326 1923 2087

Depreciation & amortization 1288 1443 1390 1560 1669 1744

Investment/asset impairment charges 283 2089 48

Deferred income taxes 756 246 737 449 854 632

Accounts receivable 365 292 -98 131 294 84

Inventory -185 33 -29 -43 -26 -33

Prepaid expenses -19 -85 123 24 -25 1

Accounts payable -413 -61 50 -202 -199 -66

Accrued liabilities -216 -12 -27 -41 -52 166

Interest payable -12 -27

Other working capital -98 271 -198 -211 103 -137

Other non-cash items -204 -396 -256 446 -66 -70

Net cash provided by operating activities 2983 4137 3433 3439 4475 4408

Cash Flows From Investing Activities

Investments in property, plant, and equipment -3652 -4145 -4104 -5345 -5575 -6479

Property, plant, and equipment reductions 60 79 9

Acquisitions, net 625 272 -497 -4372

Purchases of investments -1828 -1392 -1493 -1447 -1744 -1631

Sales/Maturities of investments 1757 1356 1476 1235 1340 1412

Other investing activities 402 341 38 44 -106 -121

Net cash used for investing activities -3321 -3840 -3458 -5181 -6503 -11182

Cash Flows From Financing Activities

Debt issued 2320 1500 4535 6485 3562 8230

Debt repayment -637 -1675 -1903 -4393 -1292 -2386

Common stock issued 38 265 278 205 786 2148

Redemption of preferred stock -259

Repurchases of treasury stock -601

Cash dividends paid -1146 -1225 -1319 -1409 -1536 -1673

Other financing activities 404 984 -1498 1115 797 468

Net cash provided by (used for) financing activities 378 -151 93 1744 2317 6787

Net change in cash 40 146 68 2 289 13

Cash at beginning of period 62 102 248 316 318 238

Cash at end of period 102 248 316 318 607 251

Free Cash Flow

Operating cash flow 2983 4137 3433 3439 4475 4408

Capital expenditure -3652 -4145 -4104 -5345 -5575 -6479

Free cash flow -669 -8 -671 -1906 -1100 -2071

Supplemental schedule of cash flow data

Cash paid for income taxes -58 56 72 75

Cash paid for interest 913 852 889 843 *Morningstar Financials. civ

17

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to Chase Elusive EPS growth, Summary Profile, Bank of America, Merrill Lynch, Feb. 8, 2016, p. 11. xvi Id. at p. 11. xvii See Insidercow.com, Dominion (D), Insider Transactions—Profit from Insider Trading, visited on Jan. 1,

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18

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Journal, Dec. 15, 2016, 12:51 A.M., Wall Street Journal, © 2017 Dow Jones & Company, p. 1,

http://www.wsj.com/articles/fed-raises-rates-for-first-time-in-2016-anticipates-3-increases-in-2017-1481742086. xxxiv See W. David Ellrich, CPA/ABV, ASA, CFE, CVA, CFF, Karyl H Neal, CPA/PFS, Utility Bulls, Moore,

Ellrich, & Neal, P.A., Certified Public Accountants, 2017, p. 1, http://mencpa.com/utility-bulls/. xxxv See Winning Investing.com, Rising Interests: Good or Bad for Dividend Stocks, Winning Investing, May 15,

2015, p. 2, http://www.winninginvesting.com/interest_rates.htm. xxxvi http://seekingalpha.com/article/3749866-bullish-case-dominion-resources xxxvii See McNabb, David E., Public Utilities: Management Challenge for the 21st Century, Edward Elgar

Publishing Limited, © David E. Mc Nabb, 2005, p. 134. xxxviii See W. David Ellrich, CPA/ABV, ASA, CFE, CVA, CFF, Karyl H Neal, CPA/PFS, Utility Bulls, Moore,

Ellrich, & Neal, P.A., Certified Public Accountants, 2017, p. 1, http://mencpa.com/utility-bulls/; See Seeking

19

Alpha, A Bullish Case for Dominion Resources, Dec. 11, 2015, © 2017 Seeking Alpha, p. 3,

http://seekingalpha.com/article/3749866-bullish-case-dominion-resources. xxxix See Dominion, Company Profile, Dominion Resources, Inc., © 2016, p. 1,

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Dominion, Inc., News Releases, Oct. 18, 2016, p. 3, https://www.dom.com/residential/dominion-

hope/news/news-releases/137183; See Exchange-Traded Fund (ETF) Channel, D Description—Dominion

Resources, Inc., ETF Channel, © 2009—2016, https://www.etfchannel.com/symbol/d/. xli See Dominion, Questar, Dominion-Questar Combination Receives Wyoming Public Service Commission

Approval; Companies Expect to Close on Merger September 16, Acquire Media, Sept. 14, 2016, p. 1,

http://files.shareholder.com/downloads/STR/3086162729x0x908243/aa9f39f2-36be-4cca-b6d6-

839a8de74f1c/STR_News_2016_9_14_General.pdf. xlii See Yahoo! Finance, Dominion Resources, Inc. (D)—Summary, Yahoo! Finance, Inc. Oct. 19, 2016, p. 1,

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Insider/Generate.php?DV=yes&tickerLookUp=D&Submit232=GO#. xliii See NASDAQ, Dominion Resources, Inc. Stock Research Analyst Summary, Zacks Investment Research,

NASDAQ, Dec. 9, 2016, http://www.nasdaq.com/symbol/d/analyst-research. xliv See MarketWatch, Dominion Resources, Inc. (D), Jan. 25, 2016, © 2017 MarketWatch, p. 1,

http://www.marketwatch.com/investing/stock/d. xlv See Bloomberg, L.P., Natural Gas (NA) Regulated Integrated Utilities Value, Analyst Curated (BI), Jan. 24,

2017, © 2017 Bloomberg Finance L.P., https://www.bloomberg.com/. xlvi See Wells Fargo, Dominion Resources—Equity Research, © 2017 Wells Fargo, Securities, LLC, Jan. 13, 2017,

p. 1,

file:///C:/Users/Michael/AppData/Local/Temp/dominion%20resources%20research%20WF%20%2013jan17-

1.pdf. xlvii See Bloomberg, L.P., Natural Gas (NA) Regulated Integrated Utilities Value, Analyst Curated (BI), Jan. 24,

2017, © 2017 Bloomberg Finance L.P., https://www.bloomberg.com/. xlviii See Bloomberg, L.P., Natural Gas (NA) Regulated Integrated Utilities Value, Analyst Curated (BI), Jan. 24,

2017, © 2017 Bloomberg Finance L.P., https://www.bloomberg.com/. xlix See Bloomberg, L.P., Natural Gas (NA) Regulated Integrated Utilities Value, Analyst Curated (BI), Jan. 24,

2017, © 2017 Bloomberg Finance L.P., https://www.bloomberg.com/; See NASDAQ, Dominion Resources, Inc.

Stock Research Analyst Summary, Zacks Investment Research, NASDAQ, Dec. 9, 2016,

http://www.nasdaq.com/symbol/d/analyst-research. l See Kruger, Vincent, Dominion Resources: Analyzing Stock and Growth Prospects in 2017, Part I of V, Jan. 5,

2017, Market Realist, p. 3-4, http://marketrealist.com/2017/01/chart-indicators-short-interest-dominion-

hint/?utm_source=yahoo&utm_medium=feed&yptr=yahoo. li See Rutt, Scott, Seems Like This Bull Can Take Any Hit: Cramer’s ‘Mad Money’ Recap (Wednesday 1/4/17),

TheStreet, Jan. 4, 2017, © 1996-2017 TheStreet, Inc., p. 4, https://www.thestreet.com/story/13942716/1/seems-

like-this-bull-can-take-any-hit-cramer-s-mad-money-recap-wednesday-1-4-17.html. lii Seeking Alpha, Why Should Dominion Resources Be the Pick on Further Weakness?, Oct. 10, 2016, © 2017

Seeking Alpha, p. 1, http://seekingalpha.com/article/4011126-dominion-resources-pick-weakness. liii See Zacks Investment Research, Zacks Equity Research Report for D—Dominion Resources, Inc., Jan. 18,

2017, © 2017 Zacks Investment Research, p. 3, https://www.zacks.com/zer/report/D?t=D&ticker=D. liv See Id.at 3. lv See Id.at 3. lvi See Edwards, John, The Three Best Dividends Stocks in the Utility Sector, (DUK, FE), Oct. 28, 2015, © 2017,

Investopedia, LLC, p. 3, http://www.investopedia.com/articles/markets/102815/3-best-dividend-stocks-utility-

sector.asp. lvii See Market Mad House, Dominion Resources are Utilities Still a Value Investment, Oct. 22, 2016, © 2017

Market Mad House, p. 4, http://marketmadhouse.com/dominion-resources-utilities-still-value-investment/. lviii See Id. at 2.

20

lix See Carver, John, Carver, Miram, Basic Principles of Policy Governance, The Carver Guide Series on Effective

Board Governance, No. 1, San Francisco: Jossey-Bass, 1996, p. 1; See Investopedia, LLC, Corporate

Governance, 2016, p. 1, http://www.investopedia.com/terms/c/corporategovernance.asp. lx See Besley & Brigham, Essentials of Managerial Finance, 14th Edition, Thomson South-Western, 2008, 2005, p

17. lxi See Yahoo! Finance, Dominion Resources, Inc. (D)—Summary, Yahoo! Finance, Inc. Oct. 19, 2016, p. 1,

https://finance.yahoo.com/quote/D/profile?p=D. lxii See Id. at 1; see also Institutional Shareholder Services (ISS), ISS Governance QuickScore—Methodology, ©

2016, p.1, https://www.issgovernance.com/solutions/iss-analytics/quickscore/#. lxiii See Id. at p.1; see also Institutional Shareholder Services (ISS), ISS Governance QuickScore—

Methodology, © 2016, p.1, https://www.issgovernance.com/solutions/iss-analytics/quickscore/#. lxiv See Institutional Shareholder Services (ISS), ISS Governance QuickScore—Methodology, © 2016, p.1,

https://www.issgovernance.com/solutions/iss-analytics/quickscore/#. lxv See Bloomberg, L.P., Natural Gas (NA) Regulated Integrated Utilities Value, Analyst Curated (BI), Jan. 24,

2017, © 2017 Bloomberg Finance L.P., https://www.bloomberg.com/. lxvi See Guru Focus, Dominion Resources, Inc. EV/EBITDA (As of Today), Jan. 25, 2017, © 2004-2017, Guru

Focus.com, LLC, p. 1, http://www.gurufocus.com/term/ev2ebitda/NYSE:D/EVEBITDA/Dominion-Resources-

Inc. lxvii See Guru Focus, American Electric Company Power, Inc. (AEP) EV/EBITDA (As of Today), Jan. 25, 2017, ©

2004-2017, Guru Focus.com, LLC, p. 1,

http://www.gurufocus.com/term/ev2ebitda/NYSE:AEP/EVEBITDA/American-Electric-Power-Co-Inc. lxviii See Guru Focus, DTE Energy, Co. EV/EBITDA (As of Today), Jan. 25, 2017, © 2004-2017, Guru Focus.com,

LLC, p. 1, http://www.gurufocus.com/term/ev2ebitda/NYSE:DTE/EVEBITDA/DTE-Energy-Co. lxix See New York University (NYU) Stern School of Business, Enterprise Value Multiples by Sector, Jan. 2017,

http://pages.stern.nyu.edu/~adamodar/New_Home_Page/datafile/vebitda.html. lxx See Zacks Investment Research, Utility Electric Power, © 2017 Zacks Investment Research, p. 1-2,

https://www.zacks.com/stocks/industry-rank/industry/utility-electric-power-193; See Zacks Investment Research,

Dominion Resources, Inc. (D), Jan. 25, 2017, p.1-2, https://www.zacks.com/stock/quote/D?q=D (except numbers

individually cited in chart by the immediately following endnote). lxxi See Guru Focus, Dominion Resources, Inc. EV/EBITDA (As of Today), Jan. 25, 2017, © 2004-2017, Guru

Focus.com, LLC, p. 1, http://www.gurufocus.com/term/ev2ebitda/NYSE:D/EVEBITDA/Dominion-Resources-

Inc. lxxii See Guru Focus, National Grid, PLC., EV/EBITDA (As of Today), Jan. 25, 2017, © 2004-2017, Guru

Focus.com, LLC, p. 1,

http://www.gurufocus.com/term/ev2ebitda/OTCPK:NGGTF/EV%252FEBITDA/National%2BGrid%2BPLC. lxxiii See Guru Focus, Exelon, Corp (EXC), EV/EBITDA (As of Today), Jan. 25, 2017, © 2004-2017, Guru

Focus.com, LLC, p. 1, http://www.gurufocus.com/term/ev2ebitda/EXC/EV%252FEBITDA/Exelon%2BCorp. lxxiv See New York University (NYU) Stern School of Business, Enterprise Value Multiples by Sector, Jan. 2017,

http://pages.stern.nyu.edu/~adamodar/New_Home_Page/datafile/vebitda.html. lxxv See Zacks Investment Research, Zacks Equity Research Report for D—Dominion Resources, Inc., Jan. 18,

2017, © 2017 Zacks Investment Research, p. 6, https://www.zacks.com/zer/report/D?t=D&ticker=D. lxxvi Davis, Mark, The 8 Most Volatile Sectors, July 6, 2012, © 2017 Investopedia, LLC,

http://www.investopedia.com/financial-edge/0712/the-8-most-volatile-sectors.aspx. lxxvii See NASDAQ, Dominion Resources, Inc. Stock Research Analyst Summary, Zacks Investment Research,

NASDAQ, Dec. 9, 2016, http://www.nasdaq.com/symbol/d/analyst-research. lxxviii See Insidercow.com, Dominion (D), Insider Transactions—Profit from Insider Trading, visited on Jan. 1,

2017, p. 1, http://insidercow.com/. lxxix See Richard Koch, “The 80/20 Principle: The Secret to Achieving More With Less,” 2008, Crown Business, a

division of Random House, p. 213. lxxx See TheStreet, Dominion Resources, Inc. (D), © 1996-2017 TheStreet, Inc., Jan. 25, 2017, p. 1,

https://www.thestreet.com/quote/D.html. lxxxi CSI Market, Inc., D Sales vs. Its Competitors Q 3, Jan. 25, 2017 © 2017 CSI Market, Inc., p. 1-2,

http://csimarket.com/stocks/compet_glance.php?code=D.

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lxxxii See McClure, Ben, How Return on Equity Can Help You Find Profitable Stocks, Aug. 11, 2014, 6.M., E.T., ©

Investopedia, LLC, p. 4, http://www.investopedia.com/articles/fundamental/03/100103.asp?lgl=bt1tn-no-widget. lxxxiii Investopedia, Market Capitalization, © 2017, Investopedia, LLC, p. 1-2,

http://www.investopedia.com/terms/m/marketcapitalization.asp. lxxxiv See Bloomberg, L.P., Natural Gas (NA) Regulated Integrated Utilities Value, Analyst Curated (BI), Jan. 24,

2017, © 2017 Bloomberg Finance L.P., https://www.bloomberg.com/. lxxxv See Morningstar, Dominion Resources, Inc. (D)—Valuation Multiples Top Competitors & Peers, © 2017

Morningstar, Inc., Jan. 25, 2017, p. 1-3, http://financials.morningstar.com/competitors/industry-peer.action?t=D. lxxxvi See FitchRatings, Fitch Upgrade Dominion Resources’ Remarketed Junior Sub Notes Rating to ‘BBB,’” May

18, 2016, p. 3-4, https://www.fitchratings.com/site/pr/1004719. lxxxvii See Id. at 4. lxxxviii See NASDAQ, Dominion Resources Inc., Stock Report, NASDAQ Report, © 2016 EDGAR®, Dec. 30,

2016, http://www.nasdaq.com/symbol/d/stock-report. lxxxix See Dominion Resources, Inc., Investor Relations Reference Book—Dominion and Question to Combine,

Questar Corporation Overview, Dominion Resources, May 2016, p. 99, 103-104,

file:///C:/Users/Michael/AppData/Local/Temp/Investor%20Relations%20Reference%20Book-

May%202016%20(FINAL)%20(1).pdf. xc Bacque, Peter, Dominion Virginia Power Launching $2 Billion to Underground Outage-Prone Power Lines,

Richmond Times-Dispatch, © 2017 BH Media Group, Inc., Blox Content Management System, TownNews.com,

p. 1-2, http://www.richmond.com/business/local/article_008d25a4-a78c-5811-a336-e76554f8f494.html. xci See Dominion Resources, Inc., Investor Relations Reference Book—Dominion and Question to Combine,

Questar Corporation Overview, Dominion Resources, May 2016, p. 18-21,

file:///C:/Users/Michael/AppData/Local/Temp/Investor%20Relations%20Reference%20Book-

May%202016%20(FINAL)%20(1).pdf. xcii See Quinn, Peter D., CFA, Dominion Resources, Inc.—D: Raising Relative Value Ratings on Dominion

Resources, Summary Profile, Bank of America, Merrill Lynch, April 7, 2016, p. 7. xciii See Westerfield, Ross, Jordan, Jaffe, Corporate Finance 11th Edition, McGraw Hill Education, 2016, p. 406. xciv See Quinn, Peter D., CFA, Dominion Resources, Inc.—D:‘D is for Downgrade as More Capital is Committed

to Chase Elusive EPS growth, Summary Profile, Bank of America, Merrill Lynch, Feb. 8, 2016, p. 9. xcv See Madura, Jeff, Financial Markets and Institutions, 11th Edition, © 2015, 2012, Cengage Learning, p. 50. xcvi See Chin, Brian, Allan, Stuart A. , Dominion Resources—Cove Point LNG Field Trip Notes, Bank of

America, Merrill Lynch, Mar. 20 2016, p. 2; see Seabury, Chris, How Interest Rates Affect The U.S. Markets,

Mar. 17, 2016, © 2016, Investopedia LLC, p. 1, http://www.investopedia.com/articles/stocks/09/how-interest-

rates-affect-markets.asp xcvii Scott, Robert, Returns of Utility Stocks with High and Low Implied Volatility, Market Realist, Oct. 20, 2016,

9:58 A.M. EDT, p. 2, http://marketrealist.com/2016/10/returns-utility-stocks-high-low-implied-volatility-

12/?utm_source=market-watch-

headline&utm_medium=feed&utm_content=main_permalink&utm_campaign=returns-utility-stocks-high-low-

implied-volatility-12. xcviii See Investopedia, Implied Volatility - IV, © 2016, Investopedia LLC, p. 1,

http://www.investopedia.com/terms/i/iv.asp. xcix U.S. Securities and Exchange Commission, Submittal Letter for Joyce Loving, Feb. 11, 2016, p. 1-2, Dec. 29,

2015, p. 3-4, https://www.sec.gov/divisions/corpfin/cf-noaction/14a-8/2016/joyceloving021116-14a8.pdf. c Farrell, Thomas, F., II, Dominion CEO Letter to Investors—2015 Summary Annual Report, 2015, p.9,

https://www.dom.com/library/domcom/pdfs/investors/annual-reports/dom-annual-2015/ceo-letter.pdf?la=en ci See Su, Yifeng, Kauffman, Graham, McVey, Scott, Li, Tianning, Porter’s five forces analysis, Ohio State

University, Fisher College of Business, PowerPoint, 2014, Slide 10,

https://fisher.osu.edu/supplements/10/9163/SP14%20-%20Utilities%20Sector%20Presentation.pdf. cii See Morningstar financials for Income Statement, Balance Sheet and Cash Flow Statement,

http://financials.morningstar.com/income-statement/is.html?t=D&region=USA&culture=en_US. ciii See Id. civ See Id.