<PAGE>
<PAGE> 1
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1994
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________ to __________
Commission file number 1-4874
COLORADO INTERSTATE GAS COMPANY
(Exact name of registrant as specified in its charter)
Delaware 84-0173305
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
Two North Nevada Avenue
Colorado Springs, Colorado 80903-1087
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (719) 473-2300
-----------------------
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, and (2) has been subject to such
filing requirements for the past 90 days. Yes __X__ No _____
As of October 31, 1994, there were outstanding 10 shares of common stock
of the Registrant, $5.00 par value per share, its only class of common
stock. None of the voting stock of the Registrant is held by non-affiliates.
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<PAGE>
<PAGE> 2
PART I
FINANCIAL INFORMATION
Item 1. Financial Statements.
The financial statements of Colorado Interstate Gas Company and its
subsidiaries (the "Company" or "Colorado") are presented herein and are
unaudited, except for balances as of December 31, 1993, and therefore are
subject to year-end adjustments; however, all adjustments which are, in the
opinion of management, necessary for a fair statement of the results of
operations for the periods covered have been made. The adjustments which
have been made are of a normal recurring nature. Such results are not
necessarily indicative of results to be expected for the year due to
seasonal variations and market conditions affecting natural gas sales and
transportation services.
COLORADO INTERSTATE GAS COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(Thousands of Dollars)
<TABLE>
<CAPTION>
September 30, December 31,
ASSETS 1994 1993
--------------- --------------
(Unaudited)
<S> <C> <C>
Plant, Property and Equipment, at cost:
Gas pipeline . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,009,592 $ 980,839
Gas and oil properties, at full-cost . . . . . . . . . . . . . . . . 142,310 139,757
--------------- ---------------
1,151,902 1,120,596
Accumulated depreciation, depletion and amortization . . . . . . . . 625,844 601,890
--------------- ---------------
526,058 518,706
--------------- ---------------
Current Assets:
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 508 704
Receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85,529 172,787
Receivables from affiliates . . . . . . . . . . . . . . . . . . . . 221,619 148,180
Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,308 9,545
Prepayments and other . . . . . . . . . . . . . . . . . . . . . . . 682 979
Current portion of deferred income taxes . . . . . . . . . . . . . . 35,986 23,539
--------------- ---------------
353,632 355,734
--------------- ---------------
Other Assets:
Other deferred charges . . . . . . . . . . . . . . . . . . . . . . . 20,762 27,187
--------------- ---------------
$ 900,452 $ 901,627
--------------- ---------------
--------------- ---------------
</TABLE>
See Notes to Consolidated Financial Statements.
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<PAGE> 3
COLORADO INTERSTATE GAS COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(Thousands of Dollars)
<TABLE>
<CAPTION>
September 30, December 31,
STOCKHOLDERS' EQUITY AND LIABILITIES 1994 1993
--------------- --------------
(Unaudited)
<S> <C> <C>
Common Stock and Other Stockholders' Equity:
Common stock, $5 par value, authorized 10,000 shares; issued and
outstanding 10 shares at stated value . . . . . . . . . . . . . . $ 27,561 $ 27,561
Additional paid-in capital . . . . . . . . . . . . . . . . . . . . . 19,035 19,035
Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . 342,306 311,451
------------ ------------
388,902 358,047
------------ ------------
Mandatory Redemption Preferred Stock, $100 par value, authorized
550,000 shares, outstanding 5,560 shares-5.50% Series . . . . . . . 556 556
------------ ------------
Debt:
Long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . 179,207 179,145
------------ ------------
Current Liabilities:
Accounts payable and accrued expenses . . . . . . . . . . . . . . . 221,870 233,802
Accounts payable to affiliates . . . . . . . . . . . . . . . . . . . 14,388 43,786
Taxes on income . . . . . . . . . . . . . . . . . . . . . . . . . . 7,566 1,275
------------ ------------
243,824 278,863
------------ ------------
Deferred Credits:
Deferred income taxes . . . . . . . . . . . . . . . . . . . . . . . 82,985 80,684
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,978 4,332
------------ ------------
87,963 85,016
------------ ------------
$ 900,452 $ 901,627
------------ ------------
------------ ------------
</TABLE>
See Notes to Consolidated Financial Statements.
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<PAGE> 4
COLORADO INTERSTATE GAS COMPANY AND SUBSIDIARIES
STATEMENT OF CONSOLIDATED EARNINGS
(Thousands of Dollars)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
--------------------- ---------------------
1994 1993 1994 1993
--------- ---------- --------- ---------
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
Revenues:
Operating revenues:
Nonaffiliates . . . . . . . . . . . . . . . . . . . . $ 57,856 $ 91,501 $ 220,421 $ 276,984
Affiliates . . . . . . . . . . . . . . . . . . . . . 19,147 13,837 60,983 45,673
--------- ---------- --------- ---------
77,003 105,338 281,404 322,657
Other income - net . . . . . . . . . . . . . . . . . . . 2,518 1,313 5,966 6,324
--------- ---------- --------- ---------
79,521 106,651 287,370 328,981
--------- ---------- --------- ---------
Costs and Expenses:
Cost of gas sold:
Nonaffiliates . . . . . . . . . . . . . . . . . . . . 4,055 28,881 32,542 82,911
Affiliates . . . . . . . . . . . . . . . . . . . . . 3,180 2,481 5,075 10,076
--------- ---------- --------- ---------
7,235 31,362 37,617 92,987
Operation and maintenance . . . . . . . . . . . . . . . 39,137 38,180 122,236 111,846
Depreciation, depletion and amortization . . . . . . . . 10,242 9,934 30,761 27,079
Interest expense . . . . . . . . . . . . . . . . . . . . 4,733 5,150 14,154 15,580
Taxes on income . . . . . . . . . . . . . . . . . . . . 5,296 7,568 26,625 27,656
--------- ---------- --------- ---------
66,643 92,194 231,393 275,148
--------- ---------- --------- ---------
Net Earnings . . . . . . . . . . . . . . . . . . . . . . . $ 12,878 $ 14,457 $ 55,977 $ 53,833
--------- ---------- --------- ---------
--------- ---------- --------- ---------
</TABLE>
See Notes to Consolidated Financial Statements.
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<PAGE> 5
COLORADO INTERSTATE GAS COMPANY AND SUBSIDIARIES
STATEMENT OF CONSOLIDATED CASH FLOWS
(Thousands of Dollars)
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
--------------------------
1994 1993
----------- ----------
(Unaudited)
<S> <C> <C>
Net Cash Flow From Operating Activities:
Net earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 55,977 $ 53,833
Add (subtract) items not requiring (providing) cash:
Depreciation, depletion and amortization . . . . . . . . . . . . . . . 30,761 27,079
Deferred income taxes . . . . . . . . . . . . . . . . . . . . . . . . . (10,704) 4,013
Producer contract reformation cost recoveries . . . . . . . . . . . . . 3,012 1,212
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,233 (13,248)
Working capital and other changes, excluding changes relating to cash
and non-operating activities:
Receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87,258 16,945
Receivables from affiliates . . . . . . . . . . . . . . . . . . . . . 2,749 5,631
Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 237 (432)
Gas stored underground and prepaid expenses . . . . . . . . . . . . . 115 30,955
Accounts payable and accrued expenses . . . . . . . . . . . . . . . . (11,932) (63,436)
Accounts payable to affiliates . . . . . . . . . . . . . . . . . . . (21,204) (4,400)
Taxes on income . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,291 (13,145)
----------- ----------
145,793 45,007
----------- ----------
Cash Flow from Investing Activities:
Purchases of plant, property and equipment . . . . . . . . . . . . . . . . (40,447) (62,924)
Proceeds from sale of plant, property and equipment . . . . . . . . . . . 1,099 71
Investments - other . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,563 (148)
Net (increase) decrease in note receivable from associated company . . . . (76,188) 236,894
Gas supply prepayments and settlements . . . . . . . . . . . . . . . . . . (28) (1,513)
Recovery of gas supply prepayments . . . . . . . . . . . . . . . . . . . . 330 4,881
----------- ----------
(112,671) 177,261
----------- ----------
Cash Flow from Financing Activities:
Net decrease in notes payable . . . . . . . . . . . . . . . . . . . . . . (712)
Preferred dividends paid . . . . . . . . . . . . . . . . . . . . . . . . . (18) (23)
Common dividends paid . . . . . . . . . . . . . . . . . . . . . . . . . . (33,300) (220,800)
----------- ----------
(33,318) (221,535)
----------- ----------
Net Increase (Decrease) in Cash . . . . . . . . . . . . . . . . . . . . . . . (196) 733
Cash at Beginning of Period . . . . . . . . . . . . . . . . . . . . . . . . . 704 9
----------- ----------
Cash at End of Period . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 508 $ 742
----------- ----------
----------- ----------
</TABLE>
See Notes to Consolidated Financial Statements.
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<PAGE> 6
COLORADO INTERSTATE GAS COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Summary of Significant Accounting Policies
For additional information relative to operations and financial
position, reference is made to the Company's Annual Report on Form 10-K for
the fiscal year ended December 31, 1993. Certain minor reclassifications of
prior period statements have been made to conform with current reporting
practices. The effect of the reclassifications was not material to the
Company's results of operations or financial position.
Supplemental information relative to the Statement of Consolidated Cash
Flows includes the following: The Company made cash payments for interest
and financing fees, net of amounts capitalized, of $8.7 million and
$10.2 million for the nine months ended September 30, 1994 and 1993,
respectively. Cash payments for income taxes amounted to $31.0 million and
$36.8 million for the nine months ended September 30, 1994 and 1993,
respectively.
Materials and supplies inventories are carried principally at average
cost. Gas stored underground is carried at last-in, first-out cost ("LIFO").
The excess of replacement cost over the carrying value of gas in underground
storage carried by the LIFO method, which is classified as Plant, Property
and Equipment, was $22.5 million and $52.6 million at September 30, 1994 and
December 31, 1993, respectively.
2. Income Taxes
Provisions for income taxes are composed of the following (thousands of
dollars):
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
--------------------- ---------------------
1994 1993 1994 1993
--------- ---------- --------- ---------
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
Current Income Taxes:
Federal . . . . . . . . . . . . . . . . . . . . . . . $ 10,881 $ 3,554 $ 33,597 $ 21,030
State . . . . . . . . . . . . . . . . . . . . . . . . 1,091 405 3,732 2,613
--------- ---------- --------- ---------
11,972 3,959 37,329 23,643
--------- ---------- --------- ---------
Deferred Income Taxes
Federal . . . . . . . . . . . . . . . . . . . . . . . (5,964) 3,026 (9,764) 3,744
State . . . . . . . . . . . . . . . . . . . . . . . . (712) 583 (940) 269
--------- ---------- --------- ---------
(6,676) 3,609 (10,704) 4,013
--------- ---------- --------- ---------
Taxes on Income . . . . . . . . . . . . . . . . . . . . $ 5,296 $ 7,568 $ 26,625 $ 27,656
--------- ---------- --------- ---------
--------- ---------- --------- ---------
</TABLE>
Interim period provisions for income taxes are based on estimated
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<PAGE> 7
effective annual income tax rates.
3. Common Stock
All of the issued and outstanding common stock of the Company is owned
by Coastal Natural Gas Company, a wholly-owned subsidiary of The Coastal
Corporation. Therefore, earnings and cash dividends per common share have no
significance and are not presented.
4. Litigation and Regulatory Matters
Litigation Matters
In December 1992, certain of Colorado's natural gas lessors in the West
Panhandle Field filed a complaint in the U.S. District Court for the
Northern District of Texas, claiming underpayment, breach of fiduciary duty,
fraud and negligent misrepresentation. Management believes that Colorado has
numerous defenses to the lessors' claims, including (i) that the royalties
were properly paid, (ii) that the majority of the claims were released by
written agreement, and (iii) that the majority of the claims are barred by
the statute of limitations. The matter has been set for trial on November
29, 1994.
Other lawsuits and other proceedings which have arisen in the ordinary
course of business are pending or threatened against the Company or its
subsidiaries.
Although no assurances can be given and no determination can be made at
this time as to the outcome of any particular lawsuit or proceeding, the
Company believes there are meritorious defenses to substantially all of the
above claims and that any liability which may finally be determined should
not have a material adverse effect on the Company's consolidated financial
position or results of operations.
Regulatory Matters
On April 8, 1992, the Federal Energy Regulatory Commission ("FERC")
issued Order No. 636 ("Order 636"), which required significant changes in
the services provided by interstate natural gas pipelines. The Company and
numerous other parties have sought judicial review of aspects of Order 636.
On July 2, 1993, the Company submitted to the FERC an unanimous offer
of settlement which resolved all the Order 636 restructuring issues which
had been raised in its restructuring proceeding. That settlement was
ultimately approved (except for minor issues), and the Company's
restructured services became effective October 1, 1993. As of October 1,
1993, Colorado separated all of its services and separately contracts for
each service on a stand-alone or "unbundled" basis. Gathering, storage and
transportation services are provided at negotiated rates established between
minimum and maximum levels approved by the FERC, while gas processing rates
are not subject to FERC regulations.
Colorado's gas sales for resale contracts extend through September 30,
1996, but provide for reduced customer purchases to be made each year. Under
Order 636, Colorado's certificate to sell gas for resale allows sales to be
made at negotiated prices and not at prices established by the FERC.
Colorado is also authorized to abandon all sales for resale without prior
FERC approval at such time as the contracts expire. Effective October 1,
1993, Colorado formed an unincorporated Merchant Division to conduct most of
the Company's sales activity in the Order 636 environment. The gas sales
volumes reported include those sales which continue to be made by Colorado
- 6 -<PAGE>
<PAGE> 8
together with those of its Merchant Division.
On March 31, 1993, the Company filed at FERC under Docket RP93-99 to
increase its rates by approximately $26.5 million annually. Such rates
(adjusted to reflect the Company's Order 636 program) became effective
subject to refund on October 1, 1993. On August 16, 1994 the Company
submitted an offer of settlement which resolved all of the issues in the
case and established final rates (which are not subject to any refund
obligation) for the period beginning October 1, 1993. At its public meeting
of November 9, 1994, the FERC adopted an order approving the settlement. The
Company will be required to make refunds as a result of the approval of the
settlement. Such refunds will be distributed in early 1995. The Company has
fully accrued for these refunds and therefore such refunds will not have an
adverse effect on its consolidated financial position or results of
operations.
Certain rate issues remain unresolved between the Company, its
customers, its suppliers, and the FERC. The Company has made provisions
which represent management's assessment of the ultimate resolution of these
issues. While the Company estimates the provisions to be adequate to cover
potential adverse rulings on these issues, it cannot estimate when each of
these issues will be resolved.
5. Take-or-Pay Obligations
The Consolidated Balance Sheet includes assets of $7.0 million and
$13.2 million at September 30, 1994 and December 31, 1993, respectively,
relating to prepayments for gas under gas purchase contracts with producers
and settlement payment amounts relative to the restructuring of gas purchase
contracts as negotiated with producers. As a result of the implementation of
Order 636 on October 1, 1993 (see Note 4 of Notes to Consolidated Financial
Statements), gas sales are made at negotiated prices and are not subject to
regulatory price controls. This does not affect the recoverability or the
results of pending take-or-pay litigation or any take-or-pay or contractual
reformation settlements that the Company may achieve with respect to periods
before October 1, 1993. A portion of the costs associated with take-or-pay
incurred prior to October 1, 1993 may continue to be recovered pursuant to
FERC's Order No. 528.
A few gas producers have instituted litigation arising out of take-or-
pay claims against the Company. In the Company's experience, producers'
claims are generally vastly overstated and do not consider all adjustments
provided for in the contract or allowed by law. The Company has resolved the
majority of the exposure with its suppliers for approximately 11% of the
amounts claimed. At December 31, 1993, the Company estimated that unresolved
asserted and unasserted producers' claims amounted to approximately
$22.9 million. The remaining disputes will be settled where possible and
litigated if settlement is not possible.
At December 31, 1993, the Company was committed to make future
purchases under certain take-or-pay contracts with fixed, minimum or
escalating price provisions. Based on contracts in effect at that date, and
before considering reductions provided in the contracts or applicable law,
such commitments are estimated to be $1.2 million, $1.0 million, $1.0
million, $.9 million and $.8 million for the years 1994-1998, respectively,
and $4.8 million thereafter. Such commitments have also not been adjusted
for amounts which may be assigned or released, or for the results of future
litigation or negotiation with producers.
The Company has made provisions, which it believes are adequate, for
payments to producers that may be required for settlement of take-or-pay
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<PAGE> 9
claims and restructuring of future contractual commitments. In determining
the net loss relating to such provisions, the Company has also made accruals
for the estimated portion of such payments which would be recoverable
pursuant to FERC approved settlements with customers. Such provisions and
accruals were not material to the Company for the calendar year 1993 and the
nine-month period ended September 30, 1994.
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
The Notes to Consolidated Financial Statements contain information that
is pertinent to the following analysis.
Liquidity and Capital Resources
The Company uses the following consolidated ratios to measure liquidity
and its ability to meet future funding needs and debt service requirements.
<TABLE>
<CAPTION>
Twelve Months Ended
--------------------------------
September 30, December 31,
1994 1993
---------------- -------------
(Unaudited)
<S> <C> <C>
Cash flow from operating activities to capital expenditures
and debt service requirements . . . . . . . . . . . . . . . . . . . 241.7% 80.0%
Total debt to total capitalization . . . . . . . . . . . . . . . . . 31.5% 33.3%
Times interest earned (before tax) . . . . . . . . . . . . . . . . . 7.0 6.5
</TABLE>
The increase in the cash flow from operating activities to capital
expenditures and debt service requirements ratio is due mainly to working
capital changes and a decrease in capital expenditures. The decrease in the
total debt to total capitalization ratio is due to increased retained
earnings resulting from the first nine month's 1994 earnings. The increase
in the times interest earned ratio can be attributed to increased earnings
before tax and reduced interest expense.
The Company's primary needs for cash are for general corporate
purposes, capital expenditures and debt service requirements. Management
believes that the Company's stable financial position and earnings ability
will enable it to continue to generate and obtain capital for financing
needs in the foreseeable future.
Order 636, issued in 1992, required significant changes in natural gas
pipeline services. See Note 4 of Notes to Consolidated Financial Statements.
Results of Operations
On April 8, 1992 the FERC issued Order 636 which required significant
changes in the services provided by interstate natural gas pipelines (see
Note 4 of Notes to Consolidated Financial Statements). The intent of Order
636 is to ensure that interstate pipeline transportation services are equal
in quality for all gas supplies, whether the buyer purchases gas from the
pipeline or from any other gas supplier. The FERC amended its regulations to
require the use of the straight fixed variable ("SFV") rate setting
- 8 -<PAGE>
<PAGE> 10
methodology. In general, SFV provides that all fixed costs of providing
service to firm customers (including an authorized return on rate base and
associated taxes) are to be received through fixed monthly reservation
charges, which are not a function of volumes transported, while including
within the commodity billing component the pipeline's variable operating
costs. In addition, the adoption of Order 636 has resulted in the incurrence
of transition costs. However, Order 636 provides mechanisms for the recovery
of such costs within a reasonable time period.
On July 2, 1993, the Company submitted to the FERC an unanimous offer
of settlement which resolved all the Order 636 restructuring issues which
had been raised in its restructuring proceeding. That settlement was
ultimately approved (except for minor issues), and the Company's
restructured services became effective October 1, 1993. As of October 1,
1993, Colorado separated all of its services and separately contracts for
each service on a stand-alone or "unbundled" basis. Gathering, storage and
transportation services are provided at negotiated rates established between
minimum and maximum levels approved by the FERC, while gas processing rates
are not subject to FERC regulations.
Colorado's gas sales for resale contracts extend through September 30,
1996, but provide for reduced customer purchases to be made each year.
Under Order 636, Colorado's certificate to sell gas for resale allows sales
to be made at negotiated prices and not at prices established by the FERC.
Colorado is also authorized to abandon all sales for resale without prior
FERC approval at such time as the contracts expire. Effective October 1,
1993, Colorado formed an unincorporated Merchant Division to conduct most of
the Company's sales activity in the Order 636 environment. The gas sales
volumes reported include those sales which continue to be made by Colorado
together with those of its Merchant Division.
As a result of Order 636 (as well as the FERC's earlier orders
requiring pipelines to offer "open access" service), Colorado competes with
numerous other providers for its gas sales services as well as its
gathering, transportation and storage services.
The change in the Company's earnings for the three and nine month
periods ended September 30, 1994, in comparison to the corresponding periods
in 1993, is a result of the following:
Operating Revenues. The operating revenues by segment were as follows
(thousands of dollars):
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
--------------------- ---------------------
1994 1993 1994 1993
--------- ---------- --------- ---------
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
Natural gas . . . . . . . . . . . . . . . . . . . . . . $ 73,814 $ 103,845 $ 270,704 $ 319,522
Exploration and production . . . . . . . . . . . . . . . 5,688 5,625 17,405 13,230
Eliminations . . . . . . . . . . . . . . . . . . . . . . (2,499) (4,132) (6,705) (10,095)
--------- ---------- --------- ---------
$ 77,003 $ 105,338 $ 281,404 $ 322,657
--------- ---------- --------- ---------
--------- ---------- --------- ---------
</TABLE>
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<PAGE> 11
The operating revenues from natural gas operations for the three month
period ended September 30, 1994 decreased from the comparable 1993 period
due primarily to recording in 1993 the sale of storage gas inventory
pursuant to Order 636, a decrease in average gas sales prices and an
increase in rate reservations partially offset by increased sales volumes
and increased transportation and gathering volumes and rates. Operating
revenues from natural gas operations for the nine month period ended
September 30, 1994 decreased from the comparable 1993 period due to the 1993
sale of storage gas inventory, decreased average gas sales prices and
volumes and an increase in rate reservations partially offset by increased
average prices and volumes of gas transported and gathered.
The increase in exploration and production revenues for both the three
month and nine month periods ended September 30, 1994 is due primarily to
the increased sale of natural gas and condensate volumes partially offset by
reduced oil sales volumes and lower prices for all products.
Other Income Net. The net increase in the three month period ended
September 30, 1994 and the net decrease in the nine month period ended
September 30, 1994 are due to changes in interest income from affiliates as
a result of fluctuating loan amounts and rates.
Cost of Gas Sold. The decrease for the three month period ended
September 30, 1994 from the comparable 1993 period is due primarily to the
decrease in storage gas costs associated with the 1993 Order 636 storage gas
inventory sale, decreased average gas purchase rates and an increased credit
for gas used in operations partially offset by reduced purchase gas cost
deferrals pursuant to Order 636 and increased gas purchase volumes. The
decrease for the nine month period ended September 30, 1994 from the
comparable 1993 period is due to the 1993 storage gas inventory sale, a
decrease in average gas purchase rates and volumes and an increased credit
for gas used in operations offset by reduced purchase gas cost deferrals.
Operation and Maintenance. These expenses increased in both 1994
periods as a result of increased gas used in operations, which has a
corresponding reduction in the cost of gas sold, partially offset by
decreased gas transportation costs paid to others.
Depreciation, Depletion and Amortization. These expenses increased in
both 1994 periods as a result of an increase in the natural gas segment's
depreciable plant and increased production volumes in the exploration and
production segment.
- 10 -<PAGE>
<PAGE> 12
Operating Profit. The operating profit by segment was as follows
(thousands of dollars):
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
--------------------- ---------------------
1994 1993 1994 1993
--------- ---------- --------- ---------
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
Natural gas . . . . . . . . . . . . . . . . . . . . . . $ 21,146 $ 26,457 $ 92,441 $ 92,790
Exploration and production . . . . . . . . . . . . . . . 742 609 2,036 1,077
--------- ---------- --------- ---------
$ 21,888 $ 27,066 $ 94,477 $ 93,867
--------- ---------- --------- ---------
--------- ---------- --------- ---------
</TABLE>
The natural gas segment's operating profit decreased by $5.3 million
for the three month period ended September 30, 1994 due to decreased average
gas sales prices, an increase in rate reservations, increased operation and
maintenance expense, and increased depreciation, depletion and amortization
partially offset by increased gas sales volumes and increases in
transportation and gathering volumes and rates. The decrease of $.3 million
for the nine month period ended September 30, 1994 is primarily due to
decreased average gas sales prices and volumes, increased rate reservations,
increased operation and maintenance expense, and increased depreciation,
depletion and amortization offset by increased average prices and volumes of
gas transported and gathered and decreased average gas purchase rates and
volumes.
The operating profit for the exploration and production segment
increased by $.1 million for the three month period and $1.0 million for the
nine month period ended September 30, 1994 as increased gas sales volumes
more than offset increased depreciation, depletion and amortization expense.
Interest Expense. The decreases in 1994 from the comparable 1993
periods are primarily due to lower average debt outstanding as a result of
the early redemption of notes during the fourth quarter of 1993.
Taxes on Income. The decrease in the three month period ended
September 30, 1994 from the comparable 1993 period is the result of
decreased earnings before income taxes. The decrease in the nine month
period ended September 30, 1994 from the comparable 1993 period is due
primarily to tax credits utilized by the exploration and production segment
partially offset by increased earnings before income taxes.
Environmental Matters
The Company's operations are subject to extensive federal, state and
local environmental laws and regulations which may affect such operations
and costs as a result of their effect on the construction and maintenance of
its pipeline facilities as well as its gas and oil exploration and
production operations. Appropriate governmental authorities may enforce
these laws and regulations with a variety of civil and criminal enforcement
measures, including monetary penalties and remediation requirements.
- 11 -<PAGE>
<PAGE> 13
The Comprehensive Environmental Response, Compensation and Liability
Act, also known as "Superfund," as reauthorized, imposes liability, without
regard to fault or the legality of the original act, for disposal of a
"hazardous substance." The Company is not presently, and has not been in the
past, a potentially responsible party in any "Superfund" waste disposal
sites.
There are additional areas of environmental remediation
responsibilities which may fall upon the Company. Future information and
developments will require the Company to continually reassess the expected
impact of all applicable environmental laws. Compliance with all applicable
environmental protection laws is not expected to have a material adverse
impact on the Company's liquidity, consolidated financial position or
results of operations.
- 12 -<PAGE>
<PAGE> 14
PART II
OTHER INFORMATION
Item 1. Legal Proceedings.
The information required hereunder is incorporated by reference
into Part II of this Report from Notes 4 and 5 of the Notes to Consolidated
Financial Statements set forth in Part I of this Report.
Item 2. Changes in Securities.
None.
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Submission of Matters to a Vote of Security Holders.
None.
Item 5. Other Information.
None.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits.
(27) Financial Data Schedule.
(b) Reports on Form 8-K.
No reports on Form 8-K were filed during the quarter ended
September 30, 1994.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this Report to be signed on its behalf
by the undersigned thereunto duly authorized.
COLORADO INTERSTATE GAS COMPANY
(Registrant)
Date: November ___, 1994 By: DAN A. HOMEC
----------------------------
Dan A. Homec
Assistant Vice President
and Controller
(As Authorized Officer and
Chief Accounting Officer)
- 13 -<PAGE>
<PAGE> 15
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit
Number Description
- --------------------------------------------------------------------------------------------------------------------------------
<S> <S>
27 Financial Data Schedule
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM COLORADO
INTERSTATE GAS COMPANY FORM 10-Q QUARTERLY REPORT FOR THE PERIOD ENDED SEPTEMBER
30, 1994 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> SEP-30-1994
<CASH> 508
<SECURITIES> 0
<RECEIVABLES> 307,148
<ALLOWANCES> 0
<INVENTORY> 9,308
<CURRENT-ASSETS> 353,632
<PP&E> 1,151,902
<DEPRECIATION> 625,844
<TOTAL-ASSETS> 900,452
<CURRENT-LIABILITIES> 243,824
<BONDS> 179,207
<COMMON> 27,561
556
0
<OTHER-SE> 361,341
<TOTAL-LIABILITY-AND-EQUITY> 900,452
<SALES> 281,404
<TOTAL-REVENUES> 287,370
<CGS> 37,617
<TOTAL-COSTS> 190,614
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 14,154
<INCOME-PRETAX> 82,602
<INCOME-TAX> 26,625
<INCOME-CONTINUING> 55,977
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 55,977
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
