<PAGE> 1
File Number 70-8415
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
Amendment No. 1
to
FORM U-1
APPLICATION-DECLARATION UNDER THE
PUBLIC UTILITY HOLDING COMPANY ACT OF 1935
By
CONSOLIDATED NATURAL GAS COMPANY
CNG Tower
625 Liberty Avenue
Pittsburgh, Pennsylvania 15222-3199
and its subsidiary companies:
CNG COAL COMPANY CONSOLIDATED NATURAL GAS
CNG GAS SERVICES CORPORATION SERVICE COMPANY, INC.
CNG PRODUCING COMPANY CONSOLIDATED SYSTEM LNG COMPANY
and its subsidiary HOPE GAS, INC.
company CNG PIPELINE THE EAST OHIO GAS COMPANY
COMPANY THE PEOPLES NATURAL GAS COMPANY
CNG RESEARCH COMPANY THE RIVER GAS COMPANY
CNG STORAGE SERVICE COMPANY VIRGINIA NATURAL GAS, INC.
CNG TRANSMISSION CORPORATION WEST OHIO GAS COMPANY
Consolidated Natural Gas Company,
a registered holding company,
is the parent of the other parties.
Names and addresses of agents for service:
STEPHEN E. WILLIAMS, Senior Vice N. F. CHANDLER, General Attorney
President and General Counsel Consolidated Natural Gas Service
Consolidated Natural Gas Company Company, Inc.
CNG Research Company CNG Tower
Consolidated System LNG Company 625 Liberty Avenue
CNG Tower Pittsburgh, PA 15222-3199
625 Liberty Avenue
Pittsburgh, PA 15222-3199 CORY, MEREDITH, WITTER, ROUSH & CHENEY
Counsel for West Ohio Gas
H. E. BROWN, Vice President and Company
General Counsel P.O. Box 1217
CNG Transmission Corporation Lima, OH 45802-1217
CNG Storage Service Company
445 West Main Street W. P. BOSWELL, Vice President,
Clarksburg, WV 26301 Secretary and General Counsel
The Peoples Natural Gas Company
CNG Tower
625 Liberty Avenue
Pittsburgh, PA 15222-3199
<PAGE> 2
File Number 70-8415
Names and addresses of agents for service: (Continued)
D. M. JOHNS, JR., Secretary and K. R. LONG, Vice President
General Counsel and General Counsel
CNG Producing Company The East Ohio Gas Company
CNG Coal Company The River Gas Company
CNG Pipeline Company 1717 East Ninth Street
CNG Tower Cleveland, OH 44114-0759
1450 Poydras Street
New Orleans, LA 70112-6000 D. A. FICKENSCHER, Secretary
and General Counsel
J. A. CRITTENDEN, Secretary Virginia Natural Gas, Inc.
CNG Gas Services Corporation 5100 East Virginia Beach
One Park Ridge Center Boulevard
P. O. Box 15746 Norfolk, VA 23502-3488
Pittsburgh, PA 15244-0746
MARC HALBRITTER, Secretary and
General Counsel
Hope Gas, Inc.
P.O. Box 2868
Clarksburg, WV 26301-2868
<PAGE> 3
File Number 70-8415
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
Amendment No. 1
to
FORM U-1
APPLICATION-DECLARATION UNDER THE
PUBLIC UTILITY HOLDING COMPANY ACT OF 1935
Consolidated and the other joint parties to this filing hereby amend
their Form U-1 under File No. 70-8415. The purpose of this Amendment No. 1 is
to put on file that portion of the original Form U-1 at File No. 70-8415,
filed on April 29, 1994, which for unexplained reasons was not filed via EDGAR
on such date.
<PAGE> 4
<TABLE>
-PAGE 17
CONSOLIDATED NATURAL GAS COMPANY
CONSOLIDATING INCOME STATEMENT (Continued)
For the Year Ended December 31, 1993
(Thousands of Dollars)
<CAPTION>
SUBSIDIARIES
CNG CNG Gas CNG Storage Consolidated
CNG
Energy Services Service System LNG
Research
Company Corporation Company Company
Company
<S> <C> <C> <C> <C>
<C>
OPERATING REVENUES
Regulated gas sales
Residential and commercial . . . . . . . . . . . . . . . $ - $ - $ - $
- $ -
Industrial . . . . . . . . . . . . . . . . . . . . . . . - - -
- -
Wholesale . . . . . . . . . . . . . . . . . . . . . . . - - -
18,572 -
Nonregulated gas sales . . . . . . . . . . . . . . . . . . - 316,803 -
- -
Total gas sales . . . . . . . . . . . . . . . . . - 316,803 -
18,572 -
Other operating revenues . . . . . . . . . . . . . . . . . 13,545 8,851 3,483
- -
Total operating revenues (Notes 2 and 3) . . . . . 13,545 325,654 3,483
18,572 -
OPERATING EXPENSES
Purchased gas . . . . . . . . . . . . . . . . . . . . . . - 318,437 -
- -
Other purchased products . . . . . . . . . . . . . . . . . 9,390 - -
- -
Operation expense . . . . . . . . . . . . . . . . . . . . 3,144 5,297 4
12,659 318
Maintenance . . . . . . . . . . . . . . . . . . . . . . . - - -
- -
Depreciation and amortization (Note 4) . . . . . . . . . . 207 85 -
- -
Taxes, other than income taxes . . . . . . . . . . . . . . 615 1,220 134
3 1
Subtotal . . . . . . . . . . . . . . . . . . . . . 13,356 325,039 138
12,662 319
Operating income before income taxes . . . . . . . 189 615 3,345
5,910 (319)
Income taxes - estimated (Note 7) . . . . . . . . . . . . 408 151 1,238
2,402 (121)
Operating income . . . . . . . . . . . . . . . . . (219) 464 2,107
3,508 (198)
OTHER INCOME
Interest revenues . . . . . . . . . . . . . . . . . . . . 3 4 -
20 1
Gain on purchase of debentures for sinking funds . . . . . - - -
- -
Other (net) . . . . . . . . . . . . . . . . . . . . . . . 1,120 1 -
- -
Equity in earnings of subsidiary companies - consolidated. - - -
- -
Interest revenues from affiliated companies - consolidated 209 71 9
1,335 2
Total other income . . . . . . . . . . . . . . . . 1,332 76 9
1,355 3
Income before interest charges . . . . . . . . . . 1,113 540 2,116
4,863 (195)
INTEREST CHARGES
Interest on long-term debt . . . . . . . . . . . . . . . . 568 - 420
163 -
Other interest expense . . . . . . . . . . . . . . . . . . 313 220 51
- -
Total allowance for funds used during construction
(credit) . . . . . . . . . . . . . . . . . . . . . . . . - - -
- -
Total interest charges . . . . . . . . . . . . . . 881 220 471
163 -
Income before cumulative effect of change in
accounting principle . . . . . . . . . . . . . . . . . . 232 320 1,645
4,700 (195)
Cumulative effect prior to January 1, 1993, of
applying SFAS No. 109 (Note 7) . . . . . . . . . . . . . (832) - -
(1,153) -
NET INCOME . . . . . . . . . . . . . . . . . . . . . . . . . $ (600) $ 320 $ 1,645 $
3,547 $ (195)
<FN>
The Notes to Consolidated Financial Statements are an integral part of this statement.
( ) denotes negative amount.
</TABLE>
<PAGE> 5
<TABLE>
-PAGE 18
CONSOLIDATED NATURAL GAS COMPANY
CONSOLIDATING INCOME STATEMENT (Concluded)
For the Year Ended December 31, 1993
(Thousands of Dollars)
<CAPTION>
SUBSIDIARIES
CNG CNG
Coal Financial
Company Services, Inc.
<S> <C> <C>
OPERATING REVENUES
Regulated gas sales
Residential and commercial . . . . . . . . . . . . . . . $ - $ -
Industrial . . . . . . . . . . . . . . . . . . . . . . . - -
Wholesale . . . . . . . . . . . . . . . . . . . . . . . - -
Nonregulated gas sales . . . . . . . . . . . . . . . . . . - -
Total gas sales . . . . . . . . . . . . . . . . . - -
Other operating revenues . . . . . . . . . . . . . . . . . 2 -
Total operating revenues (Notes 2 and 3) . . . . . 2 -
OPERATING EXPENSES
Purchased gas . . . . . . . . . . . . . . . . . . . . . . - -
Other purchased products . . . . . . . . . . . . . . . . . - -
Operation expense . . . . . . . . . . . . . . . . . . . . 93 -
Maintenance . . . . . . . . . . . . . . . . . . . . . . . - -
Depreciation and amortization (Note 4) . . . . . . . . . . - -
Taxes, other than income taxes . . . . . . . . . . . . . . 623 -
Subtotal . . . . . . . . . . . . . . . . . . . . . 716 -
Operating income before income taxes . . . . . . . (714) -
Income taxes - estimated (Note 7) . . . . . . . . . . . . (170) -
Operating income . . . . . . . . . . . . . . . . . (544) -
OTHER INCOME
Interest revenues . . . . . . . . . . . . . . . . . . . . 2 -
Gain on purchase of debentures for sinking funds . . . . . - -
Other (net) . . . . . . . . . . . . . . . . . . . . . . . 12 -
Equity in earnings of subsidiary companies - consolidated. - -
Interest revenues from affiliated companies - consolidated 169 -
Total other income . . . . . . . . . . . . . . . . 183 -
Income before interest charges . . . . . . . . . . (361) -
INTEREST CHARGES
Interest on long-term debt . . . . . . . . . . . . . . . . - -
Other interest expense . . . . . . . . . . . . . . . . . . - -
Total allowance for funds used during construction
(credit) . . . . . . . . . . . . . . . . . . . . . . . . - -
Total interest charges . . . . . . . . . . . . . . - -
Income before cumulative effect of change in
accounting principle . . . . . . . . . . . . . . . . . . (361) -
Cumulative effect prior to January 1, 1993, of
applying SFAS No. 109 (Note 7) . . . . . . . . . . . . . 73 -
NET INCOME . . . . . . . . . . . . . . . . . . . . . . . . . $ (288) $ -
<FN>
The Notes to Consolidated Financial Statements are an integral part of this statement.
( ) denotes negative amount.
</TABLE>
<PAGE> 6
<TABLE>
-PAGE 19
CONSOLIDATED NATURAL GAS COMPANY
CONSOLIDATING STATEMENT OF RETAINED EARNINGS
For the Year Ended December 31, 1993
(Thousands of Dollars)
<CAPTION>
REGISTERED
CONSOLIDATED
HOLDING
Consolidated
COMPANY
Natural Gas Eliminations
Consolidated
Company and and Combined
Natural Gas
Subsidiaries Adjustments* Total
Company
<S> <C> <C> <C>
<C>
RETAINED EARNINGS
Balance at December 31, 1992 . . . . . . . . . . . . . . $1,439,277 $(588,825)
$2,028,102 $1,439,277
Net income for the year 1993 per accompanying
income statement . . . . . . . . . . . . . . . . . . . 205,916 (206,792)
412,708 205,916
Total . . . . . . . . . . . . . . . . . . . . . . 1,645,193 (795,617)
2,440,810 1,645,193
Dividends declared on common stock - cash (Note 10). . . (178,771) 199,859
(378,630) (178,771)
Pension liability adjustment (Note 5). . . . . . . . . . 361 -
361 361
Balance at December 31, 1993 (Note 12) . . . . . . . . . $1,466,783 $(595,758)
$2,062,541 $1,466,783
<FN>
* The elimination journal entries pertaining to this consolidating financial statement are prepared in
detail form, showing the
amounts pertaining to the Registrant and each subsidiary company, and are preserved with the Registrant's
copy of this Form
U5S.
The Notes to Consolidated Financial Statements are an integral part of this statement.
( ) denotes negative amount.
</TABLE>
<PAGE> 7
<TABLE>
-PAGE 20
CONSOLIDATED NATURAL GAS COMPANY
CONSOLIDATING STATEMENT OF RETAINED EARNINGS (Continued)
For the Year Ended December 31, 1993
(Thousands of Dollars)
<CAPTION>
SUBSIDIARIES
Consolidated
Natural Gas CNG The East The
Peoples
Service Transmission Ohio Gas
Natural Gas
Company, Inc. Corporation Company
Company
<S> <C> <C> <C>
<C>
RETAINED EARNINGS
Balance at December 31, 1992 . . . . . . . . . . . . . . . . . . . $ - $146,104
$192,899 $ 76,053
Net income for the year 1993 per accompanying
income statement . . . . . . . . . . . . . . . . . . . . . . . . - 92,271
42,835 25,235
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . - 238,375
235,734 101,288
Dividends declared on common stock - cash (Note 10). . . . . . . . - (91,310)
(36,568) (25,185)
Pension liability adjustment (Note 5). . . . . . . . . . . . . . . - -
- -
Balance at December 31, 1993 (Note 12) . . . . . . . . . . . . . . $ - $147,065
$199,166 $ 76,103
<FN>
The Notes to Consolidated Financial Statements are an integral part of this statement.
( ) denotes negative amount.
</TABLE>
<PAGE> 8
<TABLE>
-PAGE 21
CONSOLIDATED NATURAL GAS COMPANY
CONSOLIDATING STATEMENT OF RETAINED EARNINGS (Continued)
For the Year Ended December 31, 1993
(Thousands of Dollars)
<CAPTION>
SUBSIDIARIES
Virginia Hope West Ohio The River
CNG
Natural Gas, Gas Gas
Producing
Gas, Inc. Inc. Company Company
Company
<S> <C> <C> <C> <C>
<C>
RETAINED EARNINGS
Balance at December 31, 1992 . . . . . . . . . . . . . . $ 3,801 $18,255 $10,277 $
2,921 $153,323
Net income for the year 1993 per accompanying
income statement . . . . . . . . . . . . . . . . . . . 12,486 5,004 2,226
823 21,483
Total . . . . . . . . . . . . . . . . . . . . . . 16,287 23,259 12,503 3,744
174,806
Dividends declared on common stock - cash (Note 10). . . (11,500) (5,243) (2,988)
(769) (24,705)
Pension liability adjustment (Note 5). . . . . . . . . . - - - -
-
Balance at December 31, 1993 (Note 12) . . . . . . . . . $ 4,787 $18,016 $ 9,515 $
2,975 $150,101
<FN>
The Notes to Consolidated Financial Statements are an integral part of this statement.
( ) denotes negative amount.
</TABLE>
<PAGE> 9
<TABLE>
-PAGE 22
CONSOLIDATED NATURAL GAS COMPANY
CONSOLIDATING STATEMENT OF RETAINED EARNINGS (Continued)
For the Year Ended December 31, 1993
(Thousands of Dollars)
<CAPTION>
SUBSIDIARIES
CNG CNG Gas CNG Storage Consolidated
Energy Services Service System LNG
Company Corporation Company Company
<S> <C> <C> <C> <C>
RETAINED EARNINGS
Balance at December 31, 1992 . . . . . . . . . . . . . . $ 731 $ (389) $ (40) $
(4,526)
Net income for the year 1993 per accompanying
income statement . . . . . . . . . . . . . . . . . . . (600) 320 1,645
3,547
Total . . . . . . . . . . . . . . . . . . . . . . 131 (69) 1,605
(979)
Dividends declared on common stock - cash (Note 10). . . - - (1,591)
-
Pension liability adjustment (Note 5). . . . . . . . . . - - -
-
Balance at December 31, 1993 (Note 12) . . . . . . . . . $ 131 $ (69) $ 14 $
(979)
<FN>
The Notes to Consolidated Financial Statements are an integral part of this statement.
( ) denotes negative amount.
</TABLE>
<PAGE> 10
<TABLE>
-PAGE 23
CONSOLIDATED NATURAL GAS COMPANY
CONSOLIDATING STATEMENT OF RETAINED EARNINGS (Concluded)
For the Year Ended December 31, 1993
(Thousands of Dollars)
<CAPTION>
SUBSIDIARIES
CNG CNG CNG
Research Coal Financial
Company Company Services, Inc.
<S> <C> <C> <C>
RETAINED EARNINGS
Balance at December 31, 1992 . . . . . . . . . . . . . . $(14,942) $ 4,358 $ -
Net income for the year 1993 per accompanying
income statement . . . . . . . . . . . . . . . . . . . (195) (288) -
Total . . . . . . . . . . . . . . . . . . . . . . (15,137) 4,070 -
Dividends declared on common stock - cash (Note 10). . . - - -
Pension liability adjustment (Note 5). . . . . . . . . . - - -
Balance at December 31, 1993 (Note 12) . . . . . . . . . $(15,137) $ 4,070 $ -
<FN>
The Notes to Consolidated Financial Statements are an integral part of this statement.
( ) denotes negative amount.
</TABLE>
<PAGE> 11
<TABLE>
-PAGE 24
CONSOLIDATED NATURAL GAS COMPANY
CONSOLIDATING STATEMENT OF CASH FLOWS
For the Year Ended December 31, 1993
(Thousands of Dollars)
<CAPTION>
REGISTERED
CONSOLIDATED
HOLDING
Consolidated
COMPANY
Natural Gas Eliminations
Consolidated
Company and and Combined
Natural Gas
Subsidiaries Adjustments* Total
Company
<S> <C> <C> <C>
<C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income . . . . . . . . . . . . . . . . . . . . . . . . . $ 205,916 $(206,792) $
412,708 $ 205,916
Adjustments to reconcile net income to net cash provided
by (used in) operating activities
Cumulative effect prior to January 1, 1993, of
applying SFAS No. 109 . . . . . . . . . . . . . . . . (17,422) 457
(17,879) 424
Depreciation and amortization . . . . . . . . . . . . . 294,648 (4,812)
299,460 -
Deferred income taxes (net) . . . . . . . . . . . . . . (19,782) 2,029
(21,811) (4,157)
Investment tax credit . . . . . . . . . . . . . . . . . (2,620) -
(2,620) -
Certain changes in current assets and liabilities
Accounts receivable, less allowance . . . . . . . . . (107,292) -
(107,292) (17)
Receivables from affiliated cos. - consolidated . . . - 74,800
(74,800) (335)
Inventories . . . . . . . . . . . . . . . . . . . . . (22,212) (109)
(22,103) -
Unrecovered gas costs (net) . . . . . . . . . . . . . 273,942 -
273,942 -
Accounts payable . . . . . . . . . . . . . . . . . . . 13,831 -
13,831 1,697
Payables to affiliated cos. - consolidated . . . . . . - (74,800)
74,800 (49)
Estimated rate contingencies and refunds . . . . . . . (21,930) -
(21,930) -
Taxes accrued . . . . . . . . . . . . . . . . . . . . 16,909 977
15,932 701
Other (net) . . . . . . . . . . . . . . . . . . . . . (5,022) (977)
(4,045) (5,284)
Certain changes in noncurrent assets and liabilities . . (137,571) 15
(137,586) 3,728
Excess of dividends received from sub. cos. over
equity in earnings thereof - consolidated . . . . . . - (398)
398 398
Other (net) . . . . . . . . . . . . . . . . . . . . . . (446) -
(446) 112
Net cash provided by (used in) operating activities. 470,949 (209,610)
680,559 203,134
CASH FLOWS FROM INVESTING ACTIVITIES
Plant construction and other property additions . . . . . . (333,056) -
(333,056) -
Proceeds from dispositions of prop., plant and equip. (net). 4,716 -
4,716 -
Cost of other investments (net) . . . . . . . . . . . . . . (567) -
(567) -
Intrasystem money pool investments (net) . . . . . . . . . . - (26,610)
26,610 74,575
Intrasystem long-term financing (net) . . . . . . . . . . . - 118,300
(118,300) (118,300)
Property transfers to (from) affiliates . . . . . . . . . . - -
- -
Net cash provided by (used in) investing activities. (328,907) 91,690
(420,597) (43,725)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of common stock - Registrant . . . . 13,066 -
13,066 13,066
Proceeds from issuance of debentures - Registrant . . . . . 295,098 -
295,098 295,098
Purchase of debentures . . . . . . . . . . . . . . . . . . . (283,208) -
(283,208) (283,208)
Commercial paper borrowings (net) . . . . . . . . . . . . . (5,015) -
(5,015) (5,015)
Dividends paid on common stock - Registrant . . . . . . . . (178,125) -
(178,125) (178,125)
Intrasystem long-term financing (net) . . . . . . . . . . . - (118,300)
118,300 -
Intrasystem money pool borrowings and repayments (net) . . . - 26,610
(26,610) -
Dividends on common stock - sub. cos. - consolidated . . . . - 209,610
(209,610) -
Other (net). . . . . . . . . . . . . . . . . . . . . . . . . (91) -
(91) (83)
Net cash provided by (used in) financing activities. (158,275) 117,920
(276,195) (158,267)
Net increase (decrease) in cash and TCIs . . . . . . (16,233) -
(16,233) 1,142
CASH AND TCIs AT JANUARY 1, 1993 . . . . . . . . . . . . . . . 43,355 -
43,355 151
CASH AND TCIs AT DECEMBER 31, 1993 . . . . . . . . . . . . . . $ 27,122 $ - $
27,122 $ 1,293
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid for interest (net of amounts capitalized) . . . . $ 92,880 $ (94,747) $
187,627 $ 95,121
Cash paid for income taxes (net of refunds) . . . . . . . . $ 109,998 $ - $
109,998 $ (2,900)
<FN>
* The eliminations and adjustments are those required to eliminate transactions among affiliated companies
and otherwise
give effect to the adjusting and reclassifying entries to the consolidating balance sheets, income
statements and
statements of retained earnings of the Registrant and its subsidiaries.
The Notes to Consolidated Financial Statements are an integral part of this statement.
( ) denotes negative amount.
</TABLE>
<PAGE> 12
<TABLE>
-PAGE 25
CONSOLIDATED NATURAL GAS COMPANY
CONSOLIDATING STATEMENT OF CASH FLOWS (Continued)
For the Year Ended December 31, 1993
(Thousands of Dollars)
<CAPTION>
SUBSIDIARIES
Consolidated
Natural Gas CNG The East The
Peoples
Service Transmission Ohio Gas
Natural Gas
Company, Inc. Corporation Company
Company
<S> <C> <C> <C>
<C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income . . . . . . . . . . . . . . . . . . . . . . . . . $ - $ 92,271 $
42,835 $ 25,235
Adjustments to reconcile net income to net cash provided
by (used in) operating activities
Cumulative effect prior to January 1, 1993, of
applying SFAS No. 109 . . . . . . . . . . . . . . . . (444) (6,525)
(1,370) 115
Depreciation and amortization . . . . . . . . . . . . . 1,913 55,474
29,230 16,636
Deferred income taxes (net) . . . . . . . . . . . . . . 14 (60,722)
19,327 4,254
Investment tax credit . . . . . . . . . . . . . . . . . - (438)
(1,307) (502)
Certain changes in current assets and liabilities
Accounts receivable, less allowance . . . . . . . . . 14 21,049
(45,840) (8,738)
Receivables from affiliated cos. - consolidated . . . (512) (62,731)
(77) 272
Inventories . . . . . . . . . . . . . . . . . . . . . - 60,293
(44,181) (17,676)
Unrecovered gas costs (net) . . . . . . . . . . . . . - 239,639 29,406
1,975
Accounts payable . . . . . . . . . . . . . . . . . . . (82) (46,051) 11,762
(5,021)
Payables to affiliated cos. - consolidated . . . . . . (653) (4,978) 40,914
23,597
Estimated rate contingencies and refunds . . . . . . . - (31,661)
(3,637) 7,745
Taxes accrued . . . . . . . . . . . . . . . . . . . . 25 7,827
(1,162) 803
Other (net) . . . . . . . . . . . . . . . . . . . . . 71 4,245
(5,705) 2,228
Certain changes in noncurrent assets and liabilities . . 677 (73,460)
(57,820) (19,118)
Excess of dividends received from sub. cos. over
equity in earnings thereof - consolidated . . . . . . - - -
-
Other (net) . . . . . . . . . . . . . . . . . . . . . . (45) (146)
(424) -
Net cash provided by (used in) operating activities. 978 194,086 11,951
31,805
CASH FLOWS FROM INVESTING ACTIVITIES
Plant construction and other property additions . . . . . . (1,271) (112,104)
(49,021) (28,013)
Proceeds from dispositions of prop., plant and equip. (net). 24 1,678
(89) (1,123)
Cost of other investments (net). . . . . . . . . . . . . . . - (728) -
-
Intrasystem money pool investments (net) . . . . . . . . . . 7,305 - -
-
Intrasystem long-term financing (net) . . . . . . . . . . . - - -
-
Property transfers to (from) affiliates . . . . . . . . . . - 476
(9) (3)
Net cash provided by (used in) investing activities. 6,058 (110,678)
(49,119) (29,139)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of common stock - Registrant . . . . - - -
-
Proceeds from issuance of debentures - Registrant . . . . . - - -
-
Purchase of debentures . . . . . . . . . . . . . . . . . . . - - -
-
Commercial paper borrowings (net) . . . . . . . . . . . . . - - -
-
Dividends paid on common stock - Registrant . . . . . . . . - - -
-
Intrasystem long-term financing (net) . . . . . . . . . . . - 36,406
53,083 44,266
Intrasystem money pool borrowings and repayments (net) . . . (19,305) (32,570)
24,000 (22,800)
Dividends on common stock - sub. cos. - consolidated . . . . - (88,060)
(40,018) (27,292)
Other (net). . . . . . . . . . . . . . . . . . . . . . . . . - (8) -
-
Net cash provided by (used in) financing activities. (19,305) (84,232) 37,065
(5,826)
Net increase (decrease) in cash and TCIs . . . . . . (12,269) (824)
(103) (3,160)
CASH AND TCIs AT JANUARY 1, 1993 . . . . . . . . . . . . . . . 12,944 3,220
8,423 8,054
CASH AND TCIs AT DECEMBER 31, 1993 . . . . . . . . . . . . . . $ 675 $ 2,396 $
8,320 $ 4,894
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid for interest (net of amounts capitalized) . . . . $ 1,247 $ 31,651 $
14,727 $ 11,670
Cash paid for income taxes (net of refunds) . . . . . . . . $ 406 $ 105,927 $
5,271 $ 12,766
<FN>
The Notes to Consolidated Financial Statements are an integral part of this statement.
( ) denotes negative amount.
</TABLE>
<PAGE> 13
<TABLE>
-PAGE 26
CONSOLIDATED NATURAL GAS COMPANY
CONSOLIDATING STATEMENT OF CASH FLOWS (Continued)
For the Year Ended December 31, 1993
(Thousands of Dollars)
<CAPTION>
SUBSIDIARIES
Virginia Hope West Ohio The River
CNG
Natural Gas, Gas Gas
Producing
Gas, Inc. Inc. Company Company
Company
<S> <C> <C> <C> <C>
<C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income . . . . . . . . . . . . . . . . . . . . . . . . . $ 12,486 $ 5,004 $ 2,226 $ 823
$ 21,483
Adjustments to reconcile net income to net cash provided
by (used in) operating activities
Cumulative effect prior to January 1, 1993, of
applying SFAS No. 109 . . . . . . . . . . . . . . . . - - 88 33
(12,112)
Depreciation and amortization . . . . . . . . . . . . . 12,826 4,087 1,773 743
176,486
Deferred income taxes (net) . . . . . . . . . . . . . . 4,547 (285) 445 163
16,641
Investment tax credit . . . . . . . . . . . . . . . . . (151) (137) (56)
(29) -
Certain changes in current assets and liabilities
Accounts receivable, less allowance . . . . . . . . . (3,404) 5,029 (858) (534)
(13,487)
Receivables from affiliated cos. - consolidated . . . - (6,609) 22 -
4,043
Inventories . . . . . . . . . . . . . . . . . . . . . (3,339) (4,965) (5,049) (481)
1,520
Unrecovered gas costs (net) . . . . . . . . . . . . . 3,631 1,230 (2,016) 77
-
Accounts payable . . . . . . . . . . . . . . . . . . . 3,379 (3,057) (73) (317)
16,333
Payables to affiliated cos. - consolidated . . . . . . (26) 4,688 1,019 492
(80)
Estimated rate contingencies and refunds . . . . . . . (115) 3,845 1,983 (90)
-
Taxes accrued . . . . . . . . . . . . . . . . . . . . 54 4,762 (218) 303
1,293
Other (net) . . . . . . . . . . . . . . . . . . . . . 530 503 2,368 (43)
(2,939)
Certain changes in noncurrent assets and liabilities . . 2,134 (6,490) (1,996)
(574) 3,806
Excess of dividends received from sub. cos. over
equity in earnings thereof - consolidated . . . . . . - - - -
-
Other (net) . . . . . . . . . . . . . . . . . . . . . . 17 - - -
-
Net cash provided by (used in) operating activities. 32,569 7,605 (342) 566
212,987
CASH FLOWS FROM INVESTING ACTIVITIES
Plant construction and other property additions . . . . . . (23,069) (7,703) (4,237)
(971) (105,410)
Proceeds from dispositions of prop., plant and equip. (net). (209) (74) (112) 32
4,629
Cost of other investments (net) . . . . . . . . . . . . . . (22) - - -
-
Intrasystem money pool investments (net) . . . . . . . . . . - - - -
(59,410)
Intrasystem long-term financing (net) . . . . . . . . . . . - - - -
-
Property transfers to (from) affiliates . . . . . . . . . . - (8) - -
(304)
Net cash provided by (used in) investing activities. (23,300) (7,785) (4,349) (939)
(160,495)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of common stock - Registrant . . . . - - - -
-
Proceeds from issuance of debentures - Registrant . . . . . - - - -
-
Purchase of debentures . . . . . . . . . . . . . . . . . . . - - - -
-
Commercial paper borrowings (net) . . . . . . . . . . . . . - - - -
-
Dividends paid on common stock - Registrant . . . . . . . . - - - -
-
Intrasystem long-term financing (net) . . . . . . . . . . . - 4,650 3,323
(227) (19,526)
Intrasystem money pool borrowings and repayments (net) . . . 1,500 (905) 3,135 1,450
-
Dividends on common stock - sub. cos. - consolidated . . . . (10,618) (4,197) (2,414)
(728) (33,068)
Other (net). . . . . . . . . . . . . . . . . . . . . . . . . - - - -
-
Net cash provided by (used in) financing activities. (9,118) (452) 4,044 495
(52,594)
Net increase (decrease) in cash and TCIs . . . . . . 151 (632) (647) 122
(102)
CASH AND TCIs AT JANUARY 1, 1993 . . . . . . . . . . . . . . . 401 4,083 2,039
176 3,297
CASH AND TCIs AT DECEMBER 31, 1993 . . . . . . . . . . . . . . $ 552 $ 3,451 $ 1,392 $
298 $ 3,195
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid for interest (net of amounts capitalized) . . . . $ 7,867 $ 2,937 $ 1,090 $ 258
$ 19,329
Cash paid for income taxes (net of refunds) . . . . . . . . $ 2,749 $ (4,831) $ 1,077 $ 95
$ (14,919)
<FN>
The Notes to Consolidated Financial Statements are an integral part of this statement.
( ) denotes negative amount.
</TABLE>
<PAGE> 14
<TABLE>
-PAGE 27
CONSOLIDATED NATURAL GAS COMPANY
CONSOLIDATING STATEMENT OF CASH FLOWS (Continued)
For the Year Ended December 31, 1993
(Thousands of Dollars)
<CAPTION>
SUBSIDIARIES
CNG CNG Gas CNG Storage Consolidated
CNG
Energy Services Service System LNG
Research
Company Corporation Company Company
Company
<S> <C> <C> <C> <C>
<C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income . . . . . . . . . . . . . . . . . . . . . . . . . $ (600) $ 320 $ 1,645 $
3,547 $ (195)
Adjustments to reconcile net income to net cash provided
by (used in) operating activities
Cumulative effect prior to January 1, 1993, of
applying SFAS No. 109 . . . . . . . . . . . . . . . . 832 - -
1,153 -
Depreciation and amortization . . . . . . . . . . . . . 207 85 -
- -
Deferred income taxes (net) . . . . . . . . . . . . . . 2,419 (416) -
(4,473) 34
Investment tax credit . . . . . . . . . . . . . . . . . - - -
- -
Certain changes in current assets and liabilities
Accounts receivable, less allowance . . . . . . . . . (79) (60,458) -
- 31
Receivables from affiliated cos. - consolidated . . . - (9,154) 18
118 143
Inventories . . . . . . . . . . . . . . . . . . . . . (55) (8,170) -
- -
Unrecovered gas costs (net) . . . . . . . . . . . . . - - -
- -
Accounts payable . . . . . . . . . . . . . . . . . . . 212 35,055 -
- (9)
Payables to affiliated cos. - consolidated . . . . . . 155 9,706 46
- -
Estimated rate contingencies and refunds . . . . . . . - - -
- -
Taxes accrued . . . . . . . . . . . . . . . . . . . . (403) 2,162 190
(330) (47)
Other (net) . . . . . . . . . . . . . . . . . . . . . (17) (1,539) -
1,533 (1)
Certain changes in noncurrent assets and liabilities . . 464 (76) -
11,140 -
Excess of dividends received from sub. cos. over
equity in earnings thereof - consolidated . . . . . . - - -
- -
Other (net) . . . . . . . . . . . . . . . . . . . . . . 40 - -
- -
Net cash provided by (used in) operating activities. 3,175 (32,485) 1,899
12,688 (44)
CASH FLOWS FROM INVESTING ACTIVITIES
Plant construction and other property additions . . . . . . - (1,257) -
- -
Proceeds from dispositions of prop., plant and equip. (net). (40) - -
- -
Cost of other investments (net) . . . . . . . . . . . . . . 183 - -
- -
Intrasystem money pool investments (net) . . . . . . . . . . - 5,125 (615)
(345) (25)
Intrasystem long-term financing (net) . . . . . . . . . . . - - -
- -
Property transfers to (from) affiliates . . . . . . . . . . - (152) -
- -
Net cash provided by (used in) investing activities. 143 3,716 (615)
(345) (25)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of common stock - Registrant . . . . - - -
- -
Proceeds from issuance of debentures - Registrant . . . . . - - -
- -
Purchase of debentures . . . . . . . . . . . . . . . . . . . - - -
- -
Commercial paper borrowings (net) . . . . . . . . . . . . . - - -
- -
Dividends paid on common stock - Registrant . . . . . . . . - - -
- -
Intrasystem long-term financing (net) . . . . . . . . . . . 500 5,000 3,000
(12,325) 150
Intrasystem money pool borrowings and repayments (net) . . . (1,945) 23,600 (2,770)
- -
Dividends on common stock - sub. cos. - consolidated . . . . (1,700) - (1,515)
- -
Other (net). . . . . . . . . . . . . . . . . . . . . . . . . - - -
- -
Net cash provided by (used in) financing activities. (3,145) 28,600 (1,285)
(12,325) 150
Net increase (decrease) in cash and TCIs . . . . . . 173 (169) (1)
18 81
CASH AND TCIs AT JANUARY 1, 1993 . . . . . . . . . . . . . . . 197 185 50
30 17
CASH AND TCIs AT DECEMBER 31, 1993 . . . . . . . . . . . . . . $ 370 $ 16 $ 49 $
48 $ 98
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid for interest (net of amounts capitalized) . . . . $ 882 $ 177 $ 424 $
246 $ 1
Cash paid for income taxes (net of refunds) . . . . . . . . $ (1,464) $ (475) $ 1,146 $
5,706 $ (110)
<FN>
The Notes to Consolidated Financial Statements are an integral part of this statement.
( ) denotes negative amount.
</TABLE>
<PAGE> 15
<TABLE>
-PAGE 28
CONSOLIDATED NATURAL GAS COMPANY
CONSOLIDATING STATEMENT OF CASH FLOWS (Concluded)
For the Year Ended December 31, 1993
(Thousands of Dollars)
<CAPTION>
SUBSIDIARIES
CNG CNG
Coal Financial
Company Services, Inc.
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income . . . . . . . . . . . . . . . . . . . . . . . . . $ (288) $ -
Adjustments to reconcile net income to net cash provided
by (used in) operating activities
Cumulative effect prior to January 1, 1993, of
applying SFAS No. 109 . . . . . . . . . . . . . . . . (73) -
Depreciation and amortization . . . . . . . . . . . . . - -
Deferred income taxes (net) . . . . . . . . . . . . . . 398 -
Investment tax credit . . . . . . . . . . . . . . . . . - -
Certain changes in current assets and liabilities
Accounts receivable, less allowance . . . . . . . . . - -
Receivables from affiliated cos. - consolidated . . . 2 -
Inventories . . . . . . . . . . . . . . . . . . . . . - -
Unrecovered gas costs (net) . . . . . . . . . . . . . - -
Accounts payable . . . . . . . . . . . . . . . . . . . 3 -
Payables to affiliated cos. - consolidated . . . . . . (31) -
Estimated rate contingencies and refunds . . . . . . . - -
Taxes accrued . . . . . . . . . . . . . . . . . . . . (28) -
Other (net) . . . . . . . . . . . . . . . . . . . . . 5 -
Certain changes in noncurrent assets and liabilities . . - (1)
Excess of dividends received from sub. cos. over
equity in earnings thereof - consolidated . . . . . . - -
Other (net) . . . . . . . . . . . . . . . . . . . . . . - -
Net cash provided by (used in) operating activities. (12) (1)
CASH FLOWS FROM INVESTING ACTIVITIES
Plant construction and other property additions . . . . . . - -
Proceeds from dispositions of prop., plant and equip. (net). - -
Cost of other investments (net) . . . . . . . . . . . . . . - -
Intrasystem money pool investments (net) . . . . . . . . . . - -
Intrasystem long-term financing (net) . . . . . . . . . . . - -
Property transfers to (from) affiliates . . . . . . . . . . - -
Net cash provided by (used in) investing activities. - -
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of common stock - Registrant . . . . - -
Proceeds from issuance of debentures - Registrant . . . . . - -
Purchase of debentures . . . . . . . . . . . . . . . . . . . - -
Commercial paper borrowings (net) . . . . . . . . . . . . . - -
Dividends paid on common stock - Registrant . . . . . . . . - -
Intrasystem long-term financing (net) . . . . . . . . . . . - -
Intrasystem money pool borrowings and repayments (net) . . . - -
Dividends on common stock - sub. cos. - consolidated . . . . - -
Other (net). . . . . . . . . . . . . . . . . . . . . . . . . - -
Net cash provided by (used in) financing activities. - -
Net increase (decrease) in cash and TCIs . . . . . . (12) (1)
CASH AND TCIs AT JANUARY 1, 1993 . . . . . . . . . . . . . . . 46 42
CASH AND TCIs AT DECEMBER 31, 1993 . . . . . . . . . . . . . . $ 34 $ 41
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid for interest (net of amounts capitalized) . . . . $ - $ -
Cash paid for income taxes (net of refunds) . . . . . . . . $ (446) $ -
<FN>
The Notes to Consolidated Financial Statements are an integral part of this statement.
( ) denotes negative amount.
</TABLE>
<PAGE> 16
-PAGE 29
CONSOLIDATED NATURAL GAS COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Year Ended December 31, 1993
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Methods of allocating costs to accounting periods by the subsidiary companies
subject to federal or state accounting and rate regulation may differ from
methods generally applied by nonregulated companies. However, when the
accounting allocations prescribed by regulatory authorities are used for
ratemaking, the economic effects thereof determine the application of
generally accepted accounting principles. Significant accounting policies
of Consolidated Natural Gas Company and subsidiaries (Consolidated) within
this framework are summarized in this Note.
PRINCIPLES OF CONSOLIDATION
The Registrant owns all of the capital stock of its subsidiaries. The
consolidated financial statements represent the accounts of the Registrant
and its subsidiaries after the elimination of intercompany transactions.
The subsidiary companies follow the equity method of accounting for
investments in partnerships and corporate joint ventures when the subsidiary
is able to influence the financial and operating policies of the investee.
For investments where the subsidiary is not able to influence the business
policies of the investee, the cost method is applied.
REVENUE RECOGNITION
Revenues from gas sales and transportation services are recognized in the same
period in which the related gas volumes are delivered to customers. The
subsidiaries bill and recognize sales revenues from residential and certain
commercial and industrial customers on the basis of scheduled meter readings.
In addition, revenues are recorded for estimated deliveries of gas to these
customers from the meter reading date to the end of the accounting period.
For wholesale and other commercial and industrial customers, revenues are
based upon actual deliveries of gas to the end of the period.
UNRECOVERED GAS COSTS
Where permitted by regulatory authorities, the subsidiaries defer the
difference between certain gas costs incurred, including take-or-pay and
transportation costs, and the amount of such costs included in current rates.
Amounts deferred are recognized as purchased gas costs in future periods when
such costs are recovered through adjusted rates.
HEDGING AND OTHER ENERGY PRICE MANAGEMENT ACTIVITIES
The nonregulated subsidiaries utilize natural gas and crude oil futures
contracts to hedge a portion of their transactions against the risk of market
price fluctuations. Gains and losses on these contracts are deferred and
subsequently recognized in the period the related hedged transaction occurs.
Cash flows from hedging transactions are included in the Consolidating
Statement of Cash Flows as an operating activity -- the same category as the
cash flows from the transaction being hedged.
The nonregulated subsidiaries, on occasion, enter into price swap agreements
to modify their exposure to natural gas price risk. Under these agreements,
the subsidiaries receive payments from, or make payments to, counterparties
generally based on the difference between fixed and variable gas prices
specified in the contracts. Settlement takes place under the agreements on
a monthly basis, and amounts received or paid are recognized as an adjustment
to nonregulated gas sales revenues.
<PAGE> 17
-PAGE 30
CONSOLIDATED NATURAL GAS COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
For the Year Ended December 31, 1993
PROPERTY, PLANT AND EQUIPMENT AND DEPRECIATION
The property, plant and equipment accounts are stated at the cost incurred
or, where required by regulatory authorities, "original cost." Additions
and betterments are charged to the property accounts at cost. Upon normal
retirement of a plant asset, its cost is charged to accumulated depreciation
together with costs of removal less salvage. The costs of maintenance,
repairs and replacing minor items are charged principally to expense as
incurred.
GAS AND OIL PRODUCING ACTIVITIES
CNG Producing and CNG Transmission follow the full cost method of accounting
for gas and oil producing activities prescribed by the Securities and
Exchange Commission (SEC). Under the full cost method, all costs directly
associated with property acquisition, exploration, and development
activities are capitalized, with the principal limitation that such amounts
not exceed the present value of estimated future net revenues to be derived
from the production of proved gas and oil reserves.
The gas and oil producing activities of the distribution subsidiaries are
subject to cost-of-service rate regulation and are exempt from the accounting
methods prescribed by the SEC.
DEPRECIATION AND AMORTIZATION
Depreciation and amortization are recorded over the estimated service lives
of plant assets by application of the straight-line method or, in the case
of gas and oil producing properties, the unit-of-production method.
Under the full cost method of accounting, amortization is also accrued on
estimated future costs to be incurred in developing proved gas and oil
reserves, including projected dismantlement and abandonment costs net of
projected salvage values. However, the costs of investments in unproved
properties and major development projects are excluded from amortization
until it is determined whether or not proved reserves are attributable to
such properties.
ALLOWANCE FOR FUNDS USED DURING CONSTRUCTION
The subsidiaries subject to cost-of-service rate regulation capitalize the
estimated costs of equity funds and/or borrowed funds used during the
construction of major projects. Under regulatory practices, those companies
are permitted to include the costs capitalized in rate base for rate-making
purposes when the completed facilities are placed in service. The remaining
subsidiaries capitalize interest costs as part of the cost of acquiring
certain assets. Generally, interest is capitalized on unproved properties
and major construction and development projects on which amortization is not
yet being recorded.
In determining the allowance for funds used during construction, the rates
ranging from 3 1/4% to 8 7/8% in 1993 reflect the pretax cost of borrowed
funds used to finance construction expenditures. There were no equity funds
capitalized in 1993.
INCOME TAXES
The current provision for income taxes represents amounts paid or currently
payable. Investment tax credits which were deferred where required by
regulatory authorities are being amortized as credits to income over the
estimated service lives of the related properties.
<PAGE> 18
-PAGE 31
CONSOLIDATED NATURAL GAS COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
For the Year Ended December 31, 1993
CHANGE IN ACCOUNTING
Effective January 1, 1993, the Company adopted the provisions of Statement of
Financial Accounting Standards (SFAS) No. 109, "Accounting for Income Taxes."
The adoption of SFAS No. 109 changed the Company's method of accounting for
income taxes from the deferred method to an asset and liability approach.
Under SFAS No. 109, deferred tax liabilities and assets are recognized for the
expected future tax consequences attributable to temporary differences between
the carrying amounts of assets and liabilities and their tax bases. In
addition, such deferred tax asset and liability amounts are adjusted for the
effects of enacted changes in tax laws or rates. Under the previous income
tax accounting principle, deferred income taxes were generally provided for
the tax effects of timing differences between the recognition of revenue and
expense for income tax purposes and financial reporting purposes. Once
recognized, tax balances were not adjusted for subsequent changes in tax laws
or rates.
SFAS No. 109 also requires the recognition of additional deferred tax
liabilities and assets for timing differences on which deferred tax treatment
had been prohibited in the past by regulatory authorities. Regulatory assets
and liabilities corresponding to such additional deferred taxes, representing
future amounts collectible from or refundable to customers through the
rate-making process, may also be recorded.
The cumulative effect on years prior to 1993 of applying SFAS No. 109
increased 1993 net income by $17,422,000, or $.19 per share. This cumulative
effect adjustment resulted primarily from the reduction in deferred income
tax balances associated with the Company's nonregulated activities. The
application of SFAS No. 109 had no effect on reported pretax earnings.
PENSION AND OTHER BENEFIT PROGRAMS
PENSION PROGRAM
The subsidiaries have qualified noncontributory defined benefit pension plans
covering all employees. Benefits payable under the plans are based primarily
on each employee's years of service, age and base salary during the five years
prior to retirement. Net pension costs are determined by an independent
actuary, and the plans are funded on an annual basis to the extent such
funding is deductible under federal income tax regulations. Plan assets
consist primarily of equity securities, fixed income securities and insurance
contracts. The pension program also includes the payment of supplemental
pension benefits to certain retirees depending on retirement dates.
In accordance with the requirements of Statement of Financial Accounting
Standards No. 87, "Employers' Accounting for Pensions," Consolidated has
recognized a liability for the unfunded accumulated benefit obligation
relating to its supplemental pension benefit plans. An amount equal to the
liability, less a required reduction in common stockholders' equity, net of
applicable deferred taxes, has also been recognized as an intangible asset.
Such amounts recognized are subject to future revision based on both changes
in assumptions and changes in the financial status of the supplemental
pension benefit plans.
OTHER POSTRETIREMENT BENEFITS
In addition to pension plans, the subsidiaries sponsor defined benefit
postretirement plans covering both salaried and hourly employees and certain
dependents. The plans provide medical benefits as well as life insurance
coverage. These benefits are provided through insurance companies and other
providers with the annual cash outlays based on the claim experience of the
related plans.
<PAGE> 19
-PAGE 32
CONSOLIDATED NATURAL GAS COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
For the Year Ended December 31, 1993
Employees who retire from System companies on or after attaining age 55 and
having rendered at least 15 years of service, or employees retiring on or
after attaining age 65, are eligible to receive benefits under the plans.
The plans are both contributory and noncontributory, depending on age,
retirement date, the plan elected by the employee, and whether the employee
is covered under a collective bargaining agreement. Most of the medical
plans contain cost-sharing features such as deductibles and coinsurance.
For certain of the contributory medical plans, retiree contributions are
adjusted annually.
CHANGE IN ACCOUNTING
As required, Consolidated adopted Statement of Financial Accounting Standards
No. 106, "Employers' Accounting for Postretirement Benefits Other Than
Pensions," effective January 1, 1993. This standard required a change from
the practice of recognizing such costs on a pay-as-you-go basis to an accrual
method. Under the standard, the estimated future costs of providing
postretirement benefits are recognized as an expense and a corresponding
liability during the employees' service periods. For the current contributory
postretirement medical plans, the calculations under SFAS No. 106 anticipate
future changes in cost-sharing that are included in the written plan.
As permitted by the standard, the Company elected to amortize the accumulated
postretirement benefit obligation existing at the date of adoption (transition
obligation) over a 20-year period. Prior to 1993, amounts paid for
postretirement benefits were recognized as an expense in the period paid.
FASB STATEMENT NO. 112
In November 1992, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 112, "Employers' Accounting for
Postemployment Benefits." This Statement covers benefits such as salary
continuation, severance pay and disability-related benefits provided to
inactive and former employees prior to retirement. The standard requires the
accrual of a liability for the postemployment benefit obligations if certain
specified conditions are met. Statement No. 112 is effective for fiscal years
beginning after December 15, 1993. Based on management's current estimates
and assumptions, the adoption of the standard is not expected to have a
material effect on Consolidated's financial position, results of operations
or cash flows.
ENVIRONMENTAL EXPENDITURES
Environmental-related expenditures associated with current operations are
generally expensed as incurred. Expenditures for the assessment and/or
remediation of environmental conditions related to past operations are
charged to expense or are deferred pending probable recovery. In this
connection, a liability is recognized when the assessment or remediation
effort is probable and the future costs are estimable. Estimated future
costs for the abandonment and restoration of gas and oil properties are
accrued currently through charges to depreciation.
Claims for recovery of environmental-related costs from insurance carriers
and other third parties or through regulatory procedures are recognized
separately as assets when future recovery is deemed probable.
GAINS AND LOSSES ON REACQUISITION OF DEBT
Gains and losses (including redemption premiums) on the purchase or
redemption of the Registrant's debentures are generally deferred and then
included in income over the original lives of the applicable debenture
issues to give recognition to the economic effect of the rate-making process
on certain subsidiaries. The portion not deferred is included in income
when realized.
<PAGE> 20
-PAGE 33
CONSOLIDATED NATURAL GAS COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
For the Year Ended December 31, 1993
EARNINGS PER SHARE
Earnings per share of common stock is computed based on the weighted average
number of common shares outstanding during the period. Under the methods
prescribed by generally accepted accounting principles, the assumed exercise
of outstanding stock options is not considered to have a dilutive effect on
earnings per share. Also, the conversion of the Registrant's outstanding
convertible subordinated debentures has not been assumed in determining
earnings per share since such conversion would be antidilutive.
TEMPORARY CASH INVESTMENTS
Temporary cash investments (TCIs) consist of short-term, highly liquid
investments that are readily convertible to cash and present no significant
interest rate risk. Such temporary cash investments are stated at cost,
which approximates fair value due to their short maturities. For purposes
of the Consolidating Statement of Cash Flows, temporary cash investments are
considered to be cash equivalents.
2. LINE OF BUSINESS
Total operating revenues of the subsidiaries are derived from their
operations in all phases of the natural gas business. Operations are
conducted principally in the United States with CNG Producing also owning a
working interest in a heavy oil program in Alberta, Canada.
A substantial portion of total operating revenues and related accounts
receivable are generated by the Company's distribution and transmission
subsidiaries. The distribution subsidiaries sell gas and/or provide
transportation services to residential, commercial and industrial customers
in Ohio, Pennsylvania, Virginia and West Virginia. These subsidiaries
require deposits from certain customers to obtain utility services. The
transmission subsidiary provides gas transportation, storage and related
services to affiliates and to utilities and end-users in the Midwest, the
Mid-Atlantic states and the Northeast.
3. RATE MATTERS
Certain increases in prices by subsidiaries and other rate-making issues are
subject to final modification in regulatory proceedings. The related
accumulated provision pertaining to these matters was $17,777,000 at December
31, 1993, including interest. This amount is reported in the Consolidating
Balance Sheet under "Estimated rate contingencies and refunds" together with
$39,679,000 which is primarily refunds received from suppliers and refundable
to customers under regulatory procedures.
Pursuant to a November 1993 order from the Federal Energy Regulatory
Commission (FERC), in December 1993, CNG Transmission billed its customers,
including certain affiliates, $177.9 million, which represented the balance of
its unrecovered purchased gas costs and unrecovered sales-related
transportation costs existing at October 1, 1993 -- the date CNG
Transmission's restructured services under FERC Order 636 became effective.
Of the $177.9 million removed from unrecovered gas costs, $75,292,000 is
included in the Consolidating Balance Sheet at December 31, 1993, under
"Deferred charges and other noncurrent assets" representing the distribution
subsidiaries' portion of such billing. The subsidiaries are pursuing the
recovery of these costs in state regulatory proceedings.
<PAGE> 21
-PAGE 34
CONSOLIDATED NATURAL GAS COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
For the Year Ended December 31, 1993
In addition, at December 31, 1993, an estimated liability and a corresponding
regulatory asset amounting to $6,300,000 have been recorded by the
distribution subsidiaries for their portion of FERC Order 636 transition
costs expected to be billed by nonaffiliated upstream pipeline companies.
This liability reflects an estimate of these pipeline companies' unrecovered
gas costs approved for billing by the FERC. Additional amounts are likely
to be accrued in the future by the distribution subsidiaries for gas supply
realignment costs and other Order 636 transition costs once these pipeline
companies receive final FERC approval to recover these costs. Based on the
pipeline companies' filings with the FERC, the distribution subsidiaries
currently estimate that their portion of such costs could be in the range of
$75 million. However, since settlement negotiations and regulatory
proceedings regarding these costs are still in progress, the ultimate
amount billed may vary significantly from this estimate.
Based on the nature of the costs and the past rate-making treatment of
similar costs, management believes that the distribution subsidiaries
should generally be able to pass through all Order 636 transition costs
to their customers.
4. PROPERTY, PLANT AND EQUIPMENT AND DEPRECIATION
Total provisions for depreciation of property, plant and equipment for the
year ended December 31, 1993, including amounts charged to accounts other
than "Depreciation and amortization" in the Consolidating Income Statement,
were equivalent to approximately 4.2% of the average capitalized investment
subject to depreciation and amortization.
Amortization of capitalized costs under the full cost method of accounting
for Consolidated's exploration and production operations amounted to $1.18
per Mcf (thousand cubic feet) equivalent of gas and oil produced in 1993.
Costs of unproved properties capitalized under the full cost method of
accounting that are excluded from amortization at December 31, 1993, and the
years in which such excluded costs were incurred, follow:
_____________________________________________________________________________
December 31, Incurred in Calendar Year
1993 1993 1992 1991 Prior
_____________________________________________________________________________
(In Thousands)
Property acquisition costs. . . $ 28,920 $ 5,772 $ 1,358 $ 3,902 $17,888
Exploration costs . . . . . . . 41,002 14,161 6,993 7,659 12,189
Capitalized interest. . . . . . 38,641 890 1,485 5,380 30,886
________ _______ _______ _______ _______
Total . . . . . . . . . . . . $108,563 $20,823 $ 9,836 $16,941 $60,963
======== ======= ======= ======= =======
_____________________________________________________________________________
There are no significant properties, as defined by the SEC, excluded from
amortization at December 31, 1993. As gas and oil reserves are proved
through drilling or as properties are judged to be impaired, excluded costs
and any related reserves are transferred on an ongoing, well-by-well basis
into the amortization calculation.
<PAGE> 22
-PAGE 35
CONSOLIDATED NATURAL GAS COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
For the Year Ended December 31, 1993
5. PENSION COSTS
Pension expense, which includes the costs of defined benefit pension plans and
pension supplements, was a credit of $4,844,000 for the year ended December
31, 1993. The net pension credit, which was determined by an independent
actuary, included the following components:
_____________________________________________________________________________
Year Ended December 31, 1993
_____________________________________________________________________________
(In Thousands)
Service cost - benefits earned during the period. . . . . . . $ 27,266
Interest cost on projected benefit obligation . . . . . . . . 56,834
Return on plan assets . . . . . . . . . . . . . . . . . . . . (89,441)
Net amortization and deferral . . . . . . . . . . . . . . . . (303)
Special voluntary retirement programs . . . . . . . . . . . . 800
________
Net pension credit. . . . . . . . . . . . . . . . . . . . . $ (4,844)
========
_____________________________________________________________________________
In 1989, Peoples Natural Gas offered special retirement incentives to certain
salaried and hourly employees. The additional pension payments resulting from
these incentives are being paid from the assets of the applicable pension
plans. The estimated cost of these additional benefits, amounting to
approximately $8,000,000, was deferred and is being amortized to expense over
a 10-year period which began October 1, 1990, in accordance with the
rate-making treatment approved by the Pennsylvania Public Utility Commission.
The amount amortized to pension expense in 1993 was $800,000.
The following table sets forth the funded status of the plans, as determined
by an independent actuary, at December 31, 1993:
<TABLE>
<CAPTION>
____________________________________________________________________________________________________
____
December 31, 1993
____________________________________________________________________________________________________
____
Plans Where Plans Where
Assets Exceed Accumulated
Accumulated Benefits
Benefits Exceed Assets
____________________________________________________________________________________________________
____
(In Thousands)
<S> <C> <C>
Actuarial present value of:
Vested benefit obligation . . . . . . . . . . . . . . . . . . . . $ 656,308 $
15,728
========== ========
Accumulated benefit obligation. . . . . . . . . . . . . . . . . . $ 683,559 $
15,728
========== ========
Projected benefit obligation. . . . . . . . . . . . . . . . . . . $ 918,079 $
15,728
Plan assets at fair value . . . . . . . . . . . . . . . . . . . . . 1,190,909
-
__________ ________
Plan assets in excess of (or less than) projected
benefit obligation. . . . . . . . . . . . . . . . . . . . . . . 272,830
(15,728)
Unrecognized net loss (or gain) . . . . . . . . . . . . . . . . . . (170,333)
2,495
Unrecognized net obligation (or asset). . . . . . . . . . . . . . . (95,940)
3,780
Unrecognized prior service cost (or benefit). . . . . . . . . . . . 7,535
3,792
Recognition of minimum liability. . . . . . . . . . . . . . . . . . -
(10,067)
__________ ________
Prepaid pension cost (or pension liability) recognized
in the Consolidating Balance Sheet. . . . . . . . . . . . . . . $ 14,092
$(15,728)
========== ========
____________________________________________________________________________________________________
____
</TABLE>
<PAGE> 23
-PAGE 36
CONSOLIDATED NATURAL GAS COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
For the Year Ended December 31, 1993
The projected benefit obligation was determined using an annual discount rate
of 6.5% and an average assumed annual rate of salary increase of 5.5%. The
expected long-term rate of return on plan assets was 8.0% per annum.
The minimum liability recognized relating to the Company's supplemental
pension benefit plans amounted to $10,067,000 at December 31, 1993. The
related intangible asset recognized as of that date amounted to $7,572,000.
These amounts are included in the Consolidating Balance Sheet under "Other
deferred credits and noncurrent liabilities" and "Deferred charges and other
noncurrent assets." Adjustments of the minimum liability and intangible asset
due to changes in assumptions or the financial status of the plans resulted in
a credit to retained earnings of $361,000 at December 31, 1993.
6. OTHER POSTRETIREMENT BENEFITS
Effective January 1, 1993, the Company adopted the provisions of Statement of
Financial Accounting Standards No. 106, "Employers' Accounting for
Postretirement Benefits Other Than Pensions." Statement No. 106 requires that
the estimated future costs of providing postretirement benefits, such as
health care and life insurance, be recognized as an expense and a liability
during the employees' service periods. As permitted under the standard, the
Company elected to amortize the accumulated postretirement benefit obligation
existing at the date of adoption (transition obligation) of $288,393,000
over a 20-year
period.
Net periodic postretirement benefit cost for the year ended December 31, 1993,
as determined by an independent actuary, included the following components:
______________________________________________________________________________
Year Ended December 31, 1993
______________________________________________________________________________
(In Thousands)
Service cost - benefits attributed to service during the period $10,549
Interest cost on accumulated postretirement benefit obligation 23,208
Amortization of transition obligation. . . . . . . . . 14,420
_______
Net periodic postretirement benefit cost . . . . . . . $48,177
=======
______________________________________________________________________________
The following table reconciles the plans' combined funded status, as
determined
by an independent actuary, with amounts included in the Consolidating Balance
Sheet at December 31, 1993:
______________________________________________________________________________
December 31, 1993
______________________________________________________________________________
(In Thousands)
Accumulated postretirement benefit obligation:
Retirees. . . . . . . . . . . . . . . . . . $ 165,819
Fully eligible active plan participants . . . . . . . 58,465
Other active plan participants . . . . . . . . . . 102,900
_________
Total accumulated postretirement benefit obligation. . . 327,184
Plan assets at fair value. . . . . . . . . . . . . -
_________
Accumulated postretirement benefit obligation
in excess of plan assets . . . . . . . . . . . (327,184)
Unrecognized net loss . . . . . . . . . . . . . . 22,821
Unrecognized transition obligation. . . . . . . . . . 273,973
_________
Accrued postretirement benefit cost recognized in the
Consolidating Balance Sheet . . . . . . . . . . $ (30,390)
=========
______________________________________________________________________________
<PAGE> 24
-PAGE 37
CONSOLIDATED NATURAL GAS COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
For the Year Ended December 31, 1993
The weighted average discount rate used in determining the accumulated
postretirement benefit obligation was 7.25%. The average assumed annual
rate of salary increase for the applicable life insurance plans was 5.5%.
The assumed health care cost trend rate used in measuring the accumulated
postretirement benefit obligation for the medical plans is 11% for 1994,
declining gradually to 5% in 2003 and remaining at that level thereafter.
The health care cost trend rate assumption has a significant effect on the
amounts reported. If the health care cost trend rate were increased by 1%
in each year, the accumulated postretirement benefit obligation as of
December 31, 1993, would be increased by $28.8 million. A 1% change would
also increase the aggregate of the service and interest cost components of
net periodic postretirement benefit cost for 1993 by $4.2 million.
The majority of the estimated postretirement benefit costs and of the
transition obligation is attributable to Consolidated's rate-regulated
subsidiaries. Accordingly, these subsidiaries are seeking, or intend to seek
as soon as practicable, rate relief from their respective regulatory
commissions for the increased level of expense resulting from the adoption of
the standard. In this regard, regulatory authorities having jurisdiction over
the Company's subsidiaries have indicated their intention to generally allow
inclusion in rates of postretirement benefit costs determined on an accrual
basis, subject to prudency and certain other conditions. As a result, the
Company's rate-regulated subsidiaries have generally deferred the differences
between SFAS No. 106 costs and amounts currently included in rates pending
expected recovery of Statement No. 106 costs and related deferrals in
regulatory proceedings. The amount of SFAS No. 106 costs deferred at
December 31, 1993, was $27,662,000, which is included in the Consolidating
Balance Sheet under "Deferred charges and other noncurrent assets."
Currently, the subsidiary companies do not prefund postretirement benefit
costs, but pay claims as presented. However, the FERC and certain state
regulatory authorities have indicated that when SFAS No. 106 costs are
recovered in rates, amounts collected must be deposited in irrevocable trust
funds dedicated for the sole purpose of paying postretirement benefits.
Prior to the adoption of SFAS No. 106, postretirement benefit costs were
expensed as paid.
7. INCOME TAXES
As detailed in Note 1, the Company adopted Statement of Financial Accounting
Standards No. 109, "Accounting for Income Taxes," effective January 1, 1993.
Statement No. 109 required a change from the deferred method to an asset and
liability approach for accounting for and reporting of income taxes. The
cumulative effect on years prior to 1993 of applying SFAS No. 109 increased
net income in 1993 by $17,422,000, or $.19 per share, due primarily to the
reduction in deferred tax balances associated with the Company's nonregulated
activities.
<PAGE> 25
-PAGE 38
CONSOLIDATED NATURAL GAS COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
For the Year Ended December 31, 1993
"Income taxes - estimated" included the following:
_____________________________________________________________________________
Year Ended December 31, 1993
_____________________________________________________________________________
(In Thousands)
Current provision
Federal. . . . . . . . . . . . . . . . . . . . . . . . . $ 99,029
State. . . . . . . . . . . . . . . . . . . . . . . . . . 23,279
Deferred income taxes (net)
Federal. . . . . . . . . . . . . . . . . . . . . . . . . (6,688)
State. . . . . . . . . . . . . . . . . . . . . . . . . . (13,094)
Investment tax credit. . . . . . . . . . . . . . . . . . . (2,620)
________
Total. . . . . . . . . . . . . . . . . . . . . . . . . . $ 99,906
========
Income before taxes. . . . . . . . . . . . . . . . . . . . $288,400
========
_____________________________________________________________________________
On August 10, 1993, the federal corporate income tax rate was increased from
34% to 35%, retroactive to January 1, 1993. As required by SFAS No. 109,
existing deferred tax assets and liabilities were adjusted to reflect this
enacted tax rate change. As a result, deferred income tax expense was
increased (and operating income was reduced) in the third quarter of 1993 by
$11,429,000, or $.12 per share. In addition, income taxes based on pretax
earnings for the year 1993 increased by $2,692,000, or $.03 per share because
of the higher rate. The total adjustment to the net deferred income tax
liability included in the Consolidating Balance Sheet as a result of the
increase in the federal corporate income tax rate amounted to $26,707,000.
Income taxes charged to operating income differed from the amount of
$100,940,000 shown below that was computed by applying the statutory federal
income tax rate of 35% to reported income before taxes. The reasons for the
difference follow:
_____________________________________________________________________________
Year Ended December 31, 1993
_____________________________________________________________________________
% of Pretax
Amount Income
_____________________________________________________________________________
(In Thousands)
Computed "expected" tax expense. . . . . . . . . . . $100,940 35.0%
Increases (or reductions) in tax resulting from:
Production tax credit. . . . . . . . . . . . . . . (8,435) (2.9)
Investment tax credit. . . . . . . . . . . . . . . (2,620) (.9)
State income taxes . . . . . . . . . . . . . . . . 6,620 2.3
Effect of increase in federal corporate income
tax rate on deferred income taxes. . . . . . . . 11,429 3.9
Miscellaneous. . . . . . . . . . . . . . . . . . . (8,028) (2.8)
________ _____
Actual tax expense . . . . . . . . . . . . . . . $ 99,906 34.6%
======== =====
_____________________________________________________________________________
The current and noncurrent deferred income taxes reported in the
Consolidating Balance Sheet at December 31, 1993, represent the net expected
future tax consequences attributable to temporary differences between the
carrying amounts of assets and liabilities and their tax bases. These
temporary differences and the related tax effects were as follows:
<PAGE> 26
-PAGE 39
CONSOLIDATED NATURAL GAS COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
For the Year Ended December 31, 1993
______________________________________________________________________________
1993
Deferred income Deferred income
December 31, taxes taxes-current
______________________________________________________________________________
(In Thousands)
Deferred tax liabilities:
Excess of tax over book depreciation . . $425,488 $ -
Exploration and intangible well
drilling costs . . . . . . . . . 276,462 -
FERC Order 636 transition costs . . . . 48,404 -
Allowance for funds used
during construction . . . . . . . 41,089 -
Other. . . . . . . . . . . . . 72,695 -
________ ________
Total liabilities . . . . . . . . 864,138 -
________ ________
Deferred tax assets:
Deferred investment tax credits . . . . 20,291 -
Tax basis step-up in connection with
acquisition of subsidiary . . . . . 15,001 -
Overheads capitalized for tax purposes. . 12,240 -
Supplier and other refunds. . . . . . - 13,959
Unrecovered gas costs . . . . . . . - 3,979
Other. . . . . . . . . . . . . 33,095 5,747
Valuation allowance . . . . . . . . - -
________ ________
Total assets. . . . . . . . . . 80,627 23,685
________ ________
Total deferred income taxes. . . . . $783,511 $(23,685)
======== ========
______________________________________________________________________________
A regulatory liability amounting to $72,208,000 has been recorded representing
the reduction to previously recorded deferred income taxes associated with
rate-regulated activities that are expected to be refundable to customers, net
of certain taxes collectible from customers. Also, a regulatory asset
corresponding to the recognition of additional deferred income taxes not
previously recorded because of past rate-making practices amounting to
$113,483,000 has been recorded at December 31, 1993. These regulatory amounts
are included in the Consolidating Balance Sheet under "Other deferred credits
and noncurrent liabilities" and "Deferred charges and other noncurrent
assets," respectively.
8. GAS STORED
Based upon the average price of gas purchased during 1993, the current cost
of replacing the inventory of "Gas stored - current portion" exceeded the
amount stated on a LIFO basis by approximately $176,397,000 at December 31,
1993.
A portion of gas in underground storage used as a pressure base for operations
is included in "Property, Plant and Equipment" in the amount of $123,564,000
at December 31, 1993.
9. OTHER ASSETS
UNAMORTIZED ABANDONED FACILITIES
In 1988, Consolidated LNG received FERC approval for the abandonment of its
interest in liquefied natural gas facilities at Cove Point, Maryland. In
connection with the abandonment, Consolidated LNG recorded a deferred asset
in accordance with the provisions of FASB Statement No. 90, "Accounting for
Abandonments and Disallowances of Plant Costs." This deferred asset, which
represents the present value of allowable costs expected to be recovered, is
being amortized over the 10-year recovery period which began March 1, 1988,
as prescribed in the FERC order.
<PAGE> 27
-PAGE 40
CONSOLIDATED NATURAL GAS COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
For the Year Ended December 31, 1993
LAKEWOOD COGENERATION PROJECT
CNG Energy holds directly a 34% limited partnership interest in Lakewood
Cogeneration, L.P. (Lakewood Partnership), a partnership formed to construct,
own and operate a cogeneration facility in Lakewood, New Jersey. CNG
Lakewood, Inc., a wholly owned subsidiary of CNG Energy, owns a 1%
general partnership interest in the Lakewood Partnership. Using natural gas,
the facility will produce electricity for sale to an electric utility and
steam for sale primarily to customers in an industrial park.
In November 1992, the Lakewood Partnership entered into a credit agreement
with a group of banks and an institutional investor that will provide up to
$262,000,000 in construction financing through non-recourse loans made to
the partnership. A portion of the proceeds from the construction loans was
used to reimburse the partners for certain expenditures previously made in
connection with the project. Construction of the facility began in late 1992
and is expected to be completed by the end of 1994. At December 31, 1993,
CNG Energy's total investment in the project amounted to $7,186,000.
10. COMMON STOCKHOLDERS' EQUITY
DIVIDENDS ON COMMON STOCK
Dividends on the Registrant's common stock were paid at the annual rate of
$1.92 a common share in 1993. The first quarterly dividend paid in 1993,
amounting to 48 cents a common share, was declared in December 1992. In
December 1993, a quarterly dividend of 48.5 cents a share was declared
payable February 15, 1994.
CHANGES IN COMMON STOCK, CAPITAL IN EXCESS OF PAR VALUE AND TREASURY STOCK
A summary of the changes in common stock, capital in excess of par value
and treasury stock follows:
<TABLE>
<CAPTION>
________________________________________________________________________________________________________
_________________
Common Stock
Issued Capital in Treasury
Stock
_____________________
____________________
Number Value Excess of Number
of Shares at Par Par Value of Shares
Cost
________________________________________________________________________________________________________
_________________
(In Thousands)
<S> <C> <C> <C>
<C> <C>
At December 31, 1992 . . . . . . . . . . . . . . . . . 92,557 $254,532 $439,029
- $ -
Common stock issued
Stock options. . . . . . . . . . . . . . . . . . . . 238 654 8,834
- -
Stock awards (net) . . . . . . . . . . . . . . . . . 66 180 2,925
- -
Dividend Reinvestment Plan . . . . . . . . . . . . . 58 159 2,697
- -
System Thrift Plans. . . . . . . . . . . . . . . . . 15 43 679
- -
Purchase of treasury stock . . . . . . . . . . . . . . - - -
(29) (1,417)
Sale of treasury stock . . . . . . . . . . . . . . . . - - (83)
29 1,417
______ ________ ________ ____
_______
At December 31, 1993 . . . . . . . . . . . . . . . . . 92,934 $255,568 $454,081
- $ -
====== ======== ======== ====
=======
________________________________________________________________________________________________________
_________________
</TABLE>
Capital in excess of par value includes paid-in capital of $398,749,000 and
$413,801,000 at December 31, 1992 and 1993, respectively. Other capital in
excess of par value was unchanged during the year and amounted to $40,280,000
at December 31, 1992 and 1993.
<PAGE> 28
-PAGE 41
CONSOLIDATED NATURAL GAS COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
For the Year Ended December 31, 1993
UNISSUED SHARES
At December 31, 1993, 107,066,172 shares of common stock were unissued. Of
these, a total of 18,436,115 shares have been registered with the SEC for
possible issuance under various employee benefit plans including the 1991
Stock Incentive Plan, the Long-Term Incentive Plan and the System Thrift
Plans. Shares acquired by these plans can consist of original issue shares,
treasury shares or shares purchased in the open market. In addition, 741,356
shares have been registered with the SEC for possible issuance to shareholders
under the Dividend Reinvestment Plan and 4,629,629 shares have been registered
for issuance upon conversion of the Registrant's convertible subordinated
debentures.
TREASURY STOCK
Under a stock repurchase plan approved by the Board of Directors, the
Registrant can purchase in the open market up to 4,000,000 shares of its
common stock through December 31, 1995. The Registrant may also acquire
shares of its common stock through certain provisions of the 1991 Stock
Incentive Plan and the Long-Term Incentive Plan. Shares repurchased or
acquired are held as treasury stock and are available for reissuance for
general corporate purposes or in connection with various employee benefit
plans. When treasury shares are reissued, the difference between the market
value at reissuance and the cost of shares is reflected in "Capital in excess
of par value." The cost of any shares held as treasury stock is shown as a
reduction in common stockholders' equity in the Consolidating Balance Sheet.
STOCK AWARDS AND STOCK OPTIONS
1991 Stock Incentive Plan
The 1991 Stock Incentive Plan provides for the granting of stock awards,
stock options and other stock-based awards to employees of the Company and
its subsidiaries. The maximum number of shares available for issuance in
each calendar year is determined in accordance with a formula contained in the
plan. During 1993, 3,056,107 shares were available for issuance under the
plan.
Stock awards granted under the plan may be in the form of restricted stock or
deferred stock. Shares issued as restricted stock awards are held by the
Registrant until the attached restrictions lapse. Deferred stock awards
generally consist of a right to receive shares at the end of specified
deferral periods. The market value of the stock award on the date granted is
recorded as compensation expense over the applicable restriction or deferral
period.
Stock options granted under the plan allow the purchase of common shares at a
price not less than fair market value at the date of grant and not less than
par value.
Stock appreciation rights may also be granted, either alone or in tandem with
stock options. These rights permit the recipient to receive, upon exercise,
the excess of the fair market value of a share on the date of exercise over
the grant price. The grant price is generally the fair market value of the
stock on the date of grant. As of December 31, 1993, no stock appreciation
rights have been granted under the plan.
The 1991 Stock Incentive Plan also provides for the granting of performance
awards, dividend equivalents, or other awards which may be based on, or
related to, shares of the Registrant's common stock. The granting of stock
awards constitutes a non-cash financing activity of the Registrant.
<PAGE> 29
-PAGE 42
CONSOLIDATED NATURAL GAS COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
For the Year Ended December 31, 1993
LONG-TERM INCENTIVE PLAN
The Company's Long-Term Incentive Plan, which provided for the issuance of
common shares to key employees as either restricted stock awards or stock
options, terminated by its terms on November 9, 1991. However, the
provisions of the plan continue with respect to any restricted stock awards
and stock options granted prior to the termination date.
Shares of common stock issued as restricted stock awards under the plan are
held by the Registrant until certain restrictions lapse, which ordinarily
occurs equally on the third through sixth award anniversaries. The market
value of the stock when awarded is recorded as compensation expense over the
six-year period.
Stock options granted under the plan allow the purchase of common shares at a
price not less than fair market value at the date of grant and not less than
par value. The options generally are exercisable in four equal annual
installments commencing with the second anniversary of the grant and expire
after 10 years from the date of grant.
A summary of stock option activity under both plans for the year ended
December 31, 1993, follows:
______________________________________________________________________________
Number Option Price
of Shares Per Share
______________________________________________________________________________
(In Thousands)
Shares under option:
At December 31, 1992 . . . . . . . . 1,713 $32.50 - $50.75
Granted in 1993. . . . . . . . . . . 552 $44.88 - $55.00
Exercised in 1993. . . . . . . . . . (238) $33.25 - $50.75
Cancelled in 1993. . . . . . . . . . (65) $34.75 - $50.75
_____
At December 31, 1993 . . . . . . . . 1,962 $32.50 - $55.00
=====
______________________________________________________________________________
At December 31, 1993, options were exercisable for the purchase of 295,077
shares. Stock options become exercisable for the purchase of 381,164 shares
in 1994, 456,311 in 1995, 402,394 in 1996, and 426,618 shares thereafter.
11. PREFERRED STOCK
The Registrant's authorized cumulative preferred stock consists of 2,500,000
shares at a par value of $100 each. There were no shares of preferred stock
issued or outstanding at December 31, 1993.
12. DIVIDEND RESTRICTIONS
The indenture relating to the Registrant's senior debenture issues and the
preferred stock provisions of its Certificate of Incorporation contain
restrictions on dividend payments by the Registrant and acquisitions of its
capital stock. Under the indenture provisions (there being no preferred
stock outstanding), $664,756,000 of consolidated retained earnings was free
from such restrictions at December 31, 1993. The indenture also imposes
dividend limitations on the subsidiaries, but at December 31, 1993, these
limitations did not restrict their ability to pay dividends to the
Registrant.
<PAGE> 30
-PAGE 43
CONSOLIDATED NATURAL GAS COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
For the Year Ended December 31, 1993
13. LONG-TERM DEBT
Long-term debt, follows:
_____________________________________________________________________________
December 31, 1993
_____________________________________________________________________________
(In Thousands)
Debentures
6 5/8%, Due December 1, 2013 . . . . . . . . . . . . $ 150,000
5 3/4%, Due August 1, 2003 . . . . . . . . . . . . . 150,000
5 7/8%, Due October 1, 1998. . . . . . . . . . . . . 150,000
8 3/4%, Due October 1, 2019. . . . . . . . . . . . . 150,000
8 3/4%, Due June 1, 1999 . . . . . . . . . . . . . . 100,000
9 3/8%, Due February 1, 1997 . . . . . . . . . . . . 100,000
8 5/8%, Due December 1, 2011 . . . . . . . . . . . . 100,000
Unamortized debt discount, less premium. . . . . . . (9,252)
Convertible Subordinated Debentures
7 1/4%, Due December 15, 2015. . . . . . . . . . . . 250,000
Unamortized debt discount. . . . . . . . . . . . . . (2,100)
9.94% Unsecured loan due January 1, 1999 . . . . . . . 20,000
__________
Total. . . . . . . . . . . . . . . . . . . . . . . $1,158,648
==========
_____________________________________________________________________________
The estimated fair value of the Registrant's debentures at December 31, 1993,
was $1,235,351,000. Fair value was estimated based on closing transactions
and/or quotations for the Registrant's debentures as of that date.
There are no debentures maturing in the years 1994 and 1995. The aggregate
principal amounts of the Registrant's debentures maturing in the years 1996
through 1998 are: $6,250,000; $106,250,000 and $156,250,000.
Discounts and premiums and the expenses incurred in connection with the
issuance of debentures are being amortized on a basis which will equitably
distribute the net amount to "Interest on long-term debt," over the life of
each debenture issue.
The Registrant's 7 1/4% Convertible Subordinated Debentures, which mature on
December 15, 2015, are convertible into shares of the Registrant's common
stock at any time prior to maturity at an initial conversion price of $54 per
share. Under additional terms of the issue, on December 15, 2000, the
Registrant is obligated to purchase, at the option of the holder, any
Debenture then outstanding for 100% of the principal amount plus accrued
interest.
The 9.94% unsecured loan due January 1, 1999, is an obligation of Virginia
Natural Gas. This $20,000,000 loan, which is to be repaid in five annual
installments of $4,000,000 each, beginning January 1, 1995, has been
guaranteed by the Registrant.
<PAGE> 31
-PAGE 44
CONSOLIDATED NATURAL GAS COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
For the Year Ended December 31, 1993
In March 1991, the Registrant entered into a credit agreement with a group of
banks that provides for the borrowing of up to $300,000,000. The 1991 Credit
Agreement initially was to expire on March 31, 1994; however, each year the
term of the agreement has, with the approval of the banks, been extended for
a period of one additional year. In February 1994, the term was extended to
March 31, 1997. The loans under the 1991 Credit Agreement are in the form of
revolving credits and may, at the option of the Registrant, be structured
either as syndicated loans by a group of participating banks or money market
loans by individual participating banks. The loans may be borrowed, paid or
prepaid and reborrowed on a few days notice. Varying interest rate options
are available for syndicated loans, while the interest rate on money market
loans is determined from quotes rendered by the participating banks. A
commitment fee of 1/8 of 1% per annum is charged under the 1991 Credit
Agreement. No revolving credit loans were outstanding at December 31, 1993.
14. SHORT-TERM BORROWINGS
The weighted average interest rate on the Registrant's $455,000,000 of
commercial paper notes outstanding at December 31, 1993, was 3.35%. Because
of the short maturities of commercial paper notes, the carrying amount
represents a reasonable estimate of fair value.
Commercial paper notes are supported by unused lines of credit totaling
$475,000,000. These lines may be used if the sale of commercial paper is not
feasible. Each of the lines bears a commitment fee, but such fees, in the
aggregate, are not significant. In addition to these credit lines, the
Registrant may utilize unused portions of its 1991 Credit Agreement to
provide support for commercial paper notes.
There are no agreements or arrangements requiring compensating balances with
respect to either lines of credit or outstanding bank loans. Under the
Company's policy, bank deposits are maintained for normal operating purposes.
15. ENVIRONMENTAL MATTERS
The Company and its subsidiaries are subject to various federal, state and
local laws and regulations relating to the protection of the environment.
These laws and regulations govern both current and future operations and
potentially extend to plant sites formerly owned or operated by the Company
and its subsidiaries, or their predecessors.
As part of their normal business operations, the subsidiaries periodically
monitor their properties and facilities and resolve potential environmental
matters so as to remain in compliance with the various environmental laws and
regulations. The Company also conducts general environmental surveys on a
continuing basis at its operating facilities to assure compliance with these
laws and regulations. In this regard, voluntary surveys at subsidiary meter
sites were conducted to determine the extent of any possible soil
contamination due to mercury spillage. These studies, which are continuing,
are not in response to any governmental or regulatory directive, order or
settlement agreement and have not disclosed any mercury contamination for
which the remediation costs would be considered material to Consolidated's
financial position, results of operations or cash flows. On August 16, 1990,
CNG Transmission entered into a Consent Order and Agreement with the
Commonwealth of Pennsylvania Department of Environmental Resources (DER) in
which CNG Transmission has agreed with the DER's determination of certain
violations of the Pennsylvania Solid Waste Management Act, the Pennsylvania
Clean Streams Law and the rules and regulations promulgated thereunder.
It is unknown at this time
<PAGE> 32
-PAGE 45
CONSOLIDATED NATURAL GAS COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
For the Year Ended December 31, 1993
whether civil penalties will be assessed. Pursuant to the Order and
Agreement, CNG Transmission is performing certain sampling, testing and
analysis, and conducting a program of remediation at some of its Pennsylvania
facilities. Total remediation costs in connection with the Order and
Agreement
are not expected to be material with respect to Consolidated's financial
position, results of operations or cash flows. Based on current knowledge,
the
Company has recognized a gross estimated liability amounting to $19,661,000 at
December 31, 1993, for future costs expected to be incurred to remediate or
mitigate hazardous substances at mercury sites and at facilities covered by
the
Order and Agreement. The estimate for this liability was based on current
environmental laws and regulations and existing technology.
Inasmuch as certain environmental-related expenditures are expected to be
recoverable in future regulatory proceedings, a regulatory asset amounting to
$11,378,000 at December 31, 1993, is included in the Consolidating Balance
Sheet under the caption "Deferred charges and other noncurrent assets." Also,
uncontested claims amounting to $3,566,000 at December 31, 1993, were
recognized for environmental-related costs probable of recovery through joint-
interest operating agreements.
The total amount included in operating expenses for remediation and other
environmental-related costs was $9,049,000 for the year ended December 31,
1993. The components of such costs are as follows:
______________________________________________________________________________
Year Ended December 31, 1993
______________________________________________________________________________
(In Thousands)
Recurring costs for ongoing operations . . . . . . . . . . . . . $3,381
Mandated remediation and other compliance costs . . . . . . . . 3,963
Voluntary remediation costs. . . . . . . . . . . . . . . . . . . 1,185
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 520
______
Total. . . . . . . . . . . . . . . . . . . . . . . . . . . . . $9,049
======
______________________________________________________________________________
The Company's environmental-related capital expenditures for monitoring or
complying with laws and regulations for 1993 were not material.
The Company has determined that it is associated with 16 former manufactured
gas plant sites, five of which are currently owned by the Company. Studies
conducted by other utilities at their former manufactured gas plants have
indicated that their sites contain coal tar and other potentially harmful
materials. None of the 16 former sites with which the Company is associated
is under investigation by any state or federal environmental agency, and no
investigation or action is currently anticipated. At this time it is not
known
if, or to what degree, these sites may contain environmental contamination.
Therefore, the Company is not able to estimate the cost, if any, that may be
required for the possible remediation of these sites.
The exact nature of environmental issues that the Company may encounter in the
future cannot be predicted. Additional environmental liabilities may result
in
the future as more stringent environmental laws and regulations are
implemented
and as the Company obtains more specific information about its existing sites
and production facilities. At present, no estimate of any such additional
liability, or range of liability amounts, can be made.
<PAGE> 33
-PAGE 46
CONSOLIDATED NATURAL GAS COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
For the Year Ended December 31, 1993
16. COMMITMENTS AND CONTINGENCIES
Lease arrangements of the subsidiaries are principally for office space,
business machines and transportation equipment. None of these arrangements,
individually or in the aggregate, are material capital leases. Rental expense
incurred in the year 1993 was not material, and future rental payments
required under leases in effect at December 31, 1993, are not material.
CNG Transmission and certain of the Company's distribution subsidiaries are
subject to the Federal Clean Air Act and the Federal Clean Air Act Amendments
of 1990 (1990 amendments) which added significantly to the existing
requirements established by the Federal Clean Air Act. These subsidiaries
operate compressor stations that are covered by the new nitrogen oxide
emission
standard established as a result of the 1990 amendments. The Company will
have
until May 31, 1995, to comply with the emission standard. The Company expects
that compliance will require significant capital expenditures to modify the
compressor engines along the Company's pipeline system. However, the actual
cost of compliance will be dependent upon the requirements imposed by the
environmental agencies of the states in which the compressor stations are
located. Based on the Company's preliminary estimates and analyses,
approximately $46 million of capital expenditures may be required. Actual
capital expenditures required to comply with the 1990 amendments are expected
to be recoverable through future regulatory proceedings. Reference is made to
Note 15 for additional information on environmental matters.
It is estimated that Consolidated's 1994 capital budget will amount to
$439,600,000, and that approximately $153,000,000 of that amount will be
directed to gas and oil producing activities. In connection with the
capital budget, the subsidiaries have entered into certain contractual
commitments.
The subsidiaries have claims and suits pending against them, but, in the
opinion of management and counsel, the ultimate liability will not have a
material effect on Consolidated's financial position, results of operations
or cash flows.
<PAGE> 34
-PAGE 47
CONSOLIDATED NATURAL GAS COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
For the Year Ended December 31, 1993
17. SUPPLEMENTARY FINANCIAL INFORMATION - UNAUDITED
(A) GAS AND OIL PRODUCING ACTIVITIES (EXCLUDING COST-OF-SERVICE
RATE-REGULATED ACTIVITIES)
This information has been prepared in accordance with Statement of Financial
Accounting Standards No. 69, "Disclosures about Oil and Gas Producing
Activities," and related SEC pronouncements. Statement No. 69 is a
comprehensive, standard set of required disclosures about the gas and oil
producing activities of publicly traded companies. The following dis-
closures exclude the gas and oil producing activities subject to
cost-of-service rate regulation. Certain disclosures about these gas and oil
activities, which are exempt from the accounting methods prescribed by the
SEC, are included under "Cost-of-Service Properties" in this Note (A).
CAPITALIZED COSTS
The aggregate amounts of costs capitalized by subsidiaries for their gas and
oil producing activities, and related aggregate amounts of accumulated
depreciation and amortization, follow:
______________________________________________________________________________
December 31, 1993
______________________________________________________________________________
(In Thousands)
Capitalized costs of
Proved properties. . . . . . . . . . . . . . . . . . . $2,685,856
Unproved properties. . . . . . . . . . . . . . . . . . 232,312
__________
Total. . . . . . . . . . . . . . . . . . . . . . . . $2,918,168
==========
Accumulated depreciation of
Proved properties. . . . . . . . . . . . . . . . . . . $1,723,113
Unproved properties. . . . . . . . . . . . . . . . . . 78,352
__________
Total. . . . . . . . . . . . . . . . . . . . . . . . $1,801,465
==========
______________________________________________________________________________
TOTAL COSTS INCURRED
The following costs were incurred by subsidiaries in their gas and oil
producing activities during the year 1993.
______________________________________________________________________________
Year Ended December 31, 1993
______________________________________________________________________________
(In Thousands)
Property acquisition costs
Proved properties. . . . . . . . . . . . . . . . . . . $ 132
Unproved properties. . . . . . . . . . . . . . . . . . 18,224
________
Subtotal . . . . . . . . . . . . . . . . . . . . . . 18,356
Exploration costs. . . . . . . . . . . . . . . . . . . . 47,934
Development costs. . . . . . . . . . . . . . . . . . . . 40,516
________
Total. . . . . . . . . . . . . . . . . . . . . . . . $106,806
========
______________________________________________________________________________
<PAGE> 35
-PAGE 48
CONSOLIDATED NATURAL GAS COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
For the Year Ended December 31, 1993
RESULTS OF OPERATIONS
The elements of the "results of operations for gas and oil producing
activities" which follow are as required and defined by the FASB. The
Registrant cautions that these standardized disclosures do not represent the
results of operations based on its historical financial statements. In
addition to requiring different determinations of revenues and costs, the
disclosures exclude the impact of interest expense and corporate overheads.
_____________________________________________________________________________
Year Ended December 31, 1993
_____________________________________________________________________________
(In Thousands)
Revenues (net of royalties) from:
Sales to unaffiliated companies. . . . . . . . . . . . $204,614
Transfers to other operations. . . . . . . . . . . . . 88,241
________
Total. . . . . . . . . . . . . . . . . . . . . . . . 292,855
________
Less: Production (lifting) costs. . . . . . . . . . . . 49,177
Depreciation and amortization . . . . . . . . . . 173,171
Income tax expense. . . . . . . . . . . . . . . . 18,400
________
Results of operations. . . . . . . . . . . . . . . . . . $ 52,107
========
____________________________________________________________ _________________
COMPANY-OWNED RESERVES (NON-COST-OF-SERVICE RESERVES)
Estimated net quantities of proved gas and oil (including condensate) reserves
in the United States and Canada at December 31, 1993, and changes in the
reserves during the year 1993, are shown in the two schedules which follow:
_____________________________________________________________________________
Year Ended December 31, 1993
_____________________________________________________________________________
(In Bcf)
Proved developed and undeveloped reserves* - Gas
At January 1 . . . . . . . . . . . . . . . . . . . . . 918
Changes in reserves
Revisions of previous estimates. . . . . . . . . . . 46
Extensions, discoveries and other additions. . . . . 55
Production . . . . . . . . . . . . . . . . . . . . . (124)
Sales of gas in place. . . . . . . . . . . . . . . . (10)
____
At December 31 . . . . . . . . . . . . . . . . . . . . 885
====
Proved developed reserves* - Gas
At January 1 . . . . . . . . . . . . . . . . . . . . . 794
At December 31 . . . . . . . . . . . . . . . . . . . . 761
* Net before royalty.
_____________________________________________________________________________
The preceding proved developed and undeveloped gas reserves at January 1, and
December 31, 1993, include United States reserves of 917 and 884 Bcf which,
together with the Canadian reserves and the gas reserves reported under "Cost-
of-Service Properties," are as contained in reports of Ralph E. Davis
Associates, Inc., independent geologists.
<PAGE> 36
-PAGE 49
CONSOLIDATED NATURAL GAS COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
For the Year Ended December 31, 1993
_____________________________________________________________________________
Year Ended December 31, 1993
_____________________________________________________________________________
(In Thousand Bbls)
Proved developed and undeveloped reserves* - Oil
At January 1 . . . . . . . . . . . . . . . . . . . . . 29,238
Changes in reserves
Revisions of previous estimates. . . . . . . . . . . 290
Extensions, discoveries and other additions. . . . . 1,978
Production . . . . . . . . . . . . . . . . . . . . . (3,907)
Sales of oil in place. . . . . . . . . . . . . . . . (3)
______
At December 31 . . . . . . . . . . . . . . . . . . . . 27,596
======
Proved developed reserves* - Oil
At January 1 . . . . . . . . . . . . . . . . . . . . . 27,449
At December 31 . . . . . . . . . . . . . . . . . . . . 21,936
* Net before royalty.
_____________________________________________________________________________
The foregoing proved developed and undeveloped oil reserves at January 1, and
December 31, 1993, include United States reserves of 23,493 and 21,917
thousand barrels, respectively. These, together with the Canadian reserves
and the oil reserves reported under "Cost-of-Service Properties," are as
contained in reports of Ralph E. Davis Associates, Inc.
STANDARDIZED MEASURE OF DISCOUNTED FUTURE NET CASH FLOWS AND CHANGES
THEREIN
The following tabulation has been prepared in accordance with the FASB's
rules for disclosure of a standardized measure of discounted future net cash
flows relating to Company-owned proved gas and oil reserve quantities.
_____________________________________________________________________________
December 31, 1993
_____________________________________________________________________________
(In Thousands)
Future cash inflows. . . . . . . . . . . . . . . . . . . $2,336,553
Less: Future development and production costs . . . . . 529,592
Future income tax expense . . . . . . . . . . . . 537,966
__________
Future net cash flows. . . . . . . . . . . . . . . . . . 1,268,995
Less annual discount (10% a year). . . . . . . . . . . . 500,732
__________
Standardized measure of discounted future net cash flows $ 768,263
==========
_____________________________________________________________________________
In the foregoing determination of future cash inflows, sales prices for gas
were based on contractual arrangements or market prices at year end. Prices
for oil were based on average prices received from sales in the month of
December 1993. Future costs of developing and producing the proved gas and
oil reserves reported at the end of the year were based on costs determined
at the year end, assuming the continuation of existing economic conditions.
Future income taxes were computed by applying the appropriate year-end or
future statutory tax rate to future pretax net cash flows, less the tax
basis of the properties involved, and giving effect to tax deductions, or
permanent differences and tax credits.
<PAGE> 37
-PAGE 50
CONSOLIDATED NATURAL GAS COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
For the Year Ended December 31, 1993
It is not intended that the FASB's standardized measure of discounted future
net cash flows represent the fair market value of Consolidated's proved
reserves. The Registrant cautions that the disclosures shown are based on
estimates of proved reserve quantities and future production schedules which
are inherently imprecise and subject to revision, and the 10% discount rate
is arbitrary. In addition, present costs and prices are used in the
determinations and no value may be assigned to probable or possible reserves.
The following tabulation is a summary of changes between the total
standardized measure of discounted future net cash flows at the beginning and
end of the year.
<TABLE>
<CAPTION>
________________________________________________________________________________________________________
______
Year Ended December 31,
1993
________________________________________________________________________________________________________
______
(In Thousands)
<S> <C>
Standardized measure of discounted future net cash flows at January 1. . . . . . . . . . . $
818,352
Changes in the year resulting from
Sales and transfers of gas and oil produced during the year, less production costs . . .
(243,678)
Prices and production and development costs related to future production . . . . . . . .
12,635
Extensions, discoveries, and other additions, less production
and development costs. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
99,662
Previously estimated development costs incurred during the year. . . . . . . . . . . . .
4,838
Revisions of previous quantity estimates . . . . . . . . . . . . . . . . . . . . . . . .
66,506
Accretion of discount. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
109,287
Income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(41,395)
Purchases and sales of proved reserves in place (net). . . . . . . . . . . . . . . . . .
(5,439)
Other (principally timing of production) . . . . . . . . . . . . . . . . . . . . . . . .
(52,505)
_________
Standardized measure of discounted future net cash flows at December 31. . . . . . . . . . $
768,263
=========
________________________________________________________________________________________________________
______
</TABLE>
COST-OF-SERVICE PROPERTIES
As previously stated, activities subject to cost-of-service rate regulation
are excluded from the foregoing information. At December 31, 1993, net
capitalized costs of cost-of-service properties amounted to $27,320,000.
Related proved reserves of gas and oil are located in the United States, and
at January 1, and December 31, 1993, amounted to 80 and 75 Bcf of gas and 283
and 287 thousand barrels of oil, respectively. Production for the year 1993
amounted to 6 Bcf of gas and 29 thousand barrels of oil.
Future revenues associated with production of the foregoing gas and oil
reserves would be based upon cost-of-service ratemaking and historical asset
costs, with rate of return levels determined by various state regulatory
commissions.
<PAGE> 38
-PAGE 51
CONSOLIDATED NATURAL GAS COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Concluded)
For the Year Ended December 31, 1993
(B) QUARTERLY FINANCIAL DATA
A summary of the quarterly results of operations for the year 1993 follows.
Because a major portion of the gas sold or transported by the Company's
distribution and transmission operations is ultimately used for space heating,
both revenues and earnings are subject to seasonal fluctuations, and third
quarter results are usually the least significant of the year for
Consolidated. Seasonal fluctuations are further influenced by the timing of
price relief granted under regulation to compensate for certain past cost
increases.
<TABLE>
<CAPTION>
____________________________________________________________ ________________________________________
Quarter
First Second Third* Fourth
____________________________________________________________ ________________________________________
(In Thousands)
<S> <C> <C> <C> <C>
1993
Total operating revenues . . . . . . . . $1,131,526 $549,070 $473,348 $1,030,141
Operating income. . . . . . . . . . . 144,904 24,133 (11,389) 99,790
Income before cumulative effect of
change in accounting principle . . . . . 125,714 6,636 (29,965) 86,109
Cumulative effect prior to January 1,
1993, of applying SFAS No. 109 . . . . . 17,422 - - -
Net income. . . . . . . . . . . . . 143,136 6,636 (29,965) 86,109
Earnings per share of common stock**
Income before cumulative effect of
change in accounting principle. . . . . 1.36 .07 (.32) .93
Cumulative effect prior to January 1,
1993, of applying SFAS No. 109. . . . . .19 - - -
Net income . . . . . . . . . . . . 1.55 .07 (.32) .93
<FN>
* Operating income and net income for the 1993 third quarter are reduced to reflect additional
deferred income taxes of $11,429,000, or $(.12) per share, resulting from the increase in the
federal corporate income tax rate (see Note 7 to the consolidated financial statements).
** The sum of the quarterly amounts does not equal the year's amount because the quarterly
calculations are based on a changing number of average shares outstanding.
____________________________________________________________ ________________________________________
</TABLE>
<PAGE> 39
<TABLE>
ITEM 6(b), PAGE 52
BALANCE SHEET
CONSOLIDATED
CONSOLIDATED NATURAL GAS COMPANY
AND SUBSIDIARIES - CONSOLIDATED
BALANCE SHEET AT DECEMBER 31, 1993
(In thousands of dollars)
ASSETS
<CAPTION>
Per Pro Forma Entries Pro
Books (Page 60) Forma
___________ _________________ ___________
<S> <C> <C> <C>
PROPERTY, PLANT AND EQUIPMENT
Gas utility and other plant $ 4,362,996 $ 4,362,996
Accumulated depreciation and amortization (1,607,606) (1,607,606)
___________ ________ ___________
Net gas utility and other plant 2,755,390 - 2,755,390
___________ ________ ___________
Exploration and production properties 2,983,032 2,983,032
Accumulated depreciation and amortization (1,822,154) (1,822,154)
___________ ________ ___________
Net exploration and production
properties 1,160,878 - 1,160,878
___________ ________ ___________
Net property, plant and equipment 3,916,268 - 3,916,268
___________ ________ ___________
CURRENT ASSETS
Cash and temporary cash investments 27,122 (1)$345,000 372,122
Accounts receivable
Customers 461,108 461,108
Other 176,005 176,005
Allowance for doubtful accounts (7,640) (7,640)
Inventories, at cost
Gas stored - current portion (LIFO method) 140,848 140,848
Construction and operating materials
and supplies (average cost method) 38,784 38,784
Unrecovered gas costs (net) (9,000) (9,000)
Deferred income taxes - current portion 23,685 23,685
Prepayments and other current assets 192,212 192,212
___________ ________ ___________
Total current assets 1,043,124 345,000 1,388,124
___________ ________ ___________
OTHER ASSETS
Unamortized abandoned facilities 52,676 52,676
Other investments 39,600 39,600
Deferred charges and other noncurrent assets 357,918 357,918
___________ ________ ___________
Total other assets 450,194 - 450,194
___________ ________ ___________
Total assets $ 5,409,586 $345,000 $ 5,754,586
=========== ======== ===========
<FN>
( ) denotes negative amount.
</TABLE>
<PAGE> 40
<TABLE>
ITEM 6(b), PAGE 53
BALANCE SHEET
CONSOLIDATED
CONSOLIDATED NATURAL GAS COMPANY
AND SUBSIDIARIES - CONSOLIDATED
BALANCE SHEET AT DECEMBER 31, 1993
(In thousands of dollars)
STOCKHOLDERS' EQUITY AND LIABILITIES
<CAPTION>
Per Pro Forma Entries Pro
Books (Page 60) Forma
___________ _________________ ___________
<S> <C> <C> <C>
CAPITALIZATION
Common stockholders' equity
Common stock, par value $2.75 per share
Authorized - 200,000,000 shares
Issued - 92,933,828 shares $ 255,568 $ 255,568
Capital in excess of par value 454,081 454,081
Retained earnings 1,466,783 1,466,783
___________ ________ ___________
Total common stockholders' equity 2,176,432 - 2,176,432
___________ ________ ___________
Long-term debt (Schedule, next page)
Debentures 890,748 890,748
Convertible subordinated debentures 247,900 247,900
Unsecured loan 20,000 20,000
___________ ________ ___________
Total long-term debt 1,158,648 - 1,158,648
___________ ________ ___________
Total capitalization 3,335,080 - 3,335,080
___________ ________ ___________
CURRENT LIABILITIES
Commercial paper 455,000 (1)$345,000 800,000
Accounts payable 345,126 345,126
Estimated rate contingencies and refunds 57,456 57,456
Taxes accrued 112,098 112,098
Dividends declared 45,073 45,073
Other accruals and current liabilities 98,145 98,145
___________ ________ ___________
Total current liabilities 1,112,898 345,000 1,457,898
___________ ________ ___________
DEFERRED CREDITS
Deferred income taxes 783,511 783,511
Accumulated deferred investment tax credits 35,849 35,849
Other deferred credits and noncurrent
liabilities 142,248 142,248
___________ ________ ___________
Total deferred credits 961,608 - 961,608
___________ ________ ___________
COMMITMENTS AND CONTINGENCIES
___________ ________ ___________
Total stockholders' equity and
liabilities $ 5,409,586 $345,000 $ 5,754,586
=========== ======== ===========
<FN>
</TABLE>
<PAGE> 41
<TABLE>
ITEM 6(b), PAGE 54
SCHEDULE OF LONG-
TERM DEBT
CONSOLIDATED
CONSOLIDATED NATURAL GAS COMPANY
AND SUBSIDIARIES - CONSOLIDATED
SCHEDULE OF LONG-TERM DEBT AT DECEMBER 31, 1993
(In thousands of dollars)
<CAPTION>
<S> <C>
LONG-TERM DEBT
Debentures
Parent Company:
6-5/8% Debentures Due December 1, 2013 $ 150,000
5-3/4% Debentures Due August 1, 2003 150,000
5-7/8% Debentures Due October 1, 1998 150,000
8-3/4% Debentures Due October 1, 2019 150,000
8-3/4% Debentures Due June 1, 1999 100,000
9-3/8% Debentures Due February 1, 1997 100,000
8-5/8% Debentures Due December 1, 2011 100,000
Unamortized debt discount, less premium (9,252)
__________
890,748
__________
7-1/4% Convertible Subordinated Debentures
Due December 15, 2015 - Parent Company 250,000
Unamortized debt discount (2,100)
__________
247,900
__________
9.94% Unsecured loan due January 1, 1999
Subsidiary Company 20,000
__________
Total long-term debt $1,158,648
==========
<FN>
( ) denotes negative amount.
</TABLE>
<PAGE> 42
<TABLE>
ITEM 6(b), PAGE 55
INCOME STATEMENT
CONSOLIDATED
CONSOLIDATED NATURAL GAS COMPANY
AND SUBSIDIARIES - CONSOLIDATED
INCOME STATEMENT FOR THE YEAR 1993
(In thousands of dollars)
<CAPTION>
Per Pro Forma Entries Pro
Books (Page 60) Forma
__________ _________________ __________
<S> <C> <C> <C>
OPERATING REVENUES
Regulated gas sales
Residential and commercial $1,595,142 $1,595,142
Industrial 55,347 55,347
Wholesale 422,698 422,698
Nonregulated gas sales 541,849 541,849
__________ ________ __________
Total gas sales 2,615,036 - 2,615,036
Other operating revenues 569,049 569,049
__________ ________ __________
Total operating revenues 3,184,085 - 3,184,085
__________ ________ __________
OPERATING EXPENSES
Purchased gas 1,603,048 1,603,048
Other purchased products 62,290 62,290
Operation expense 598,495 598,495
Maintenance 87,207 87,207
Depreciation and amortization 294,648 294,648
Taxes, other than income taxes 181,053 181,053
__________ ________ __________
Subtotal 2,826,741 - 2,826,741
__________ ________ __________
Operating income before
income taxes 357,344 357,344
Income taxes - estimated 99,906 (2)$ (2,435) 97,471
__________ ________ __________
Operating income 257,438 2,435 259,873
__________ ________ __________
OTHER INCOME
Interest revenues 3,317 3,317
Gain on purchase of debentures for
sinking funds 926 926
Other (net) 6,288 6,288
__________ ________ __________
Total other income 10,531 - 10,531
__________ ________ __________
Income before interest charges 267,969 2,435 270,404
__________ ________ __________
INTEREST CHARGES
Interest on long-term debt 85,265 85,265
Other interest expense 4,995 (2) 6,956 11,951
Total allowance for funds used during
construction (credit) (10,785) (10,785)
__________ ________ __________
Total interest charges 79,475 6,956 86,431
__________ ________ __________
Income before cumulative effect of change
in accounting principle 188,494 (4,521) 183,973
Cumulative effect prior to January 1, 1993,
of applying SFAS No. 109 17,422 - 17,422
__________ ________ __________
NET INCOME $ 205,916 $ (4,521) $ 201,395
========== ======== ==========
<FN>
( ) denotes negative amount.
</TABLE>
<PAGE> 43
<TABLE>
ITEM 6(b), PAGE 56
BALANCE SHEET
PARENT COMPANY
CONSOLIDATED NATURAL GAS COMPANY
BALANCE SHEET AT DECEMBER 31, 1993
(In thousands of dollars)
ASSETS
<CAPTION>
Pro Forma Entries
(Pages 60 and 61)
_____________________________
Per File No. This Pro
Books 70-8195 Application Forma
___________ _____________ ___________ ___________
<S> <C> <C> <C> <C>
INVESTMENTS
Investments in subsidiaries - consolidated
Common stock, at equity $2,229,215 $2,229,215
Long-term notes 1,070,919 (5)$ 2,526 - 1,073,445
__________ _______ _________ __________
Total investments 3,300,134 2,526 - 3,302,660
__________ _______ _________ __________
CURRENT ASSETS
Cash 1,293 (5) (2,526) (SP)$(407,576) (408,809)*
Accounts receivable
Receivables from subsidiaries -
consolidated 442,204 - (SP) 752,576 1,194,780
Other 103 103
Prepayments and other current assets 46,947 46,947
__________ _______ _________ __________
Total current assets 490,547 (2,526) 345,000 833,021
__________ _______ _________ __________
DEFERRED CHARGES 2,222 - - 2,222
__________ _______ _________ __________
Total assets $3,792,903 $ - $ 345,000 $4,137,903
========== ======= ========= ==========
<FN>
(SP) refers to summary posting.
( ) denotes negative amount.
*The indicated net deficiency in funds available for financing the transactions set forth herein
is expected to be met from internal cash generation.
</TABLE>
<PAGE> 44
<TABLE>
ITEM 6(b), PAGE 57
BALANCE SHEET
PARENT COMPANY
CONSOLIDATED NATURAL GAS COMPANY
BALANCE SHEET AT DECEMBER 31, 1993
(In thousands of dollars)
STOCKHOLDERS' EQUITY AND LIABILITIES
<CAPTION>
Pro Forma Entries
(Page 60)
_____________________________
Per File No. This Pro
Books 70-8195 Application Forma
___________ _____________ ___________ ___________
<S> <C> <C> <C> <C>
CAPITALIZATION
Common stockholders' equity
Common stock, par value $2.75 per share
Authorized - 200,000,000 shares
Issued - 92,933,828 shares $ 255,568 $ 255,568
Capital in excess of par value 414,116 414,116
Retained earnings 1,466,783 1,466,783
__________ _________ ________ __________
Total common stockholders' equity 2,136,467 - - 2,136,467
__________ _________ ________ __________
Long-term debt (Schedule, next page)
Debentures 890,748 890,748
Convertible subordinated debentures 247,900 247,900
__________ _________ ________ __________
Total long-term debt 1,138,648 - - 1,138,648
__________ _________ ________ __________
Total capitalization 3,275,115 - - 3,275,115
__________ _________ ________ __________
CURRENT LIABILITIES
Commercial paper 455,000 - (1)$345,000 800,000
Payables to subsidiaries - consolidated 203 203
Dividends declared 45,073 45,073
Other accruals and current liabilities 19,268 19,268
__________ _________ ________ __________
Total current liabilities 519,544 - 345,000 864,544
__________ _________ ________ __________
DEFERRED CREDITS
Deferred income taxes 4,311 4,311
Other deferred credits (6,067) (6,067)
__________ _________ ________ __________
Total deferred credits (1,756) - - (1,756)
__________ _________ ________ __________
COMMITMENTS AND CONTINGENCIES
__________ _________ ________ __________
Total stockholders' equity and
liabilities $3,792,903 - $345,000 $4,137,903
========== ========= ======== ==========
<FN>
( ) denotes negative amount.
</TABLE>
<PAGE> 45
<TABLE>
ITEM 6(b), PAGE 58
SCHEDULE OF LONG-
TERM DEBT
PARENT COMPANY
CONSOLIDATED NATURAL GAS COMPANY
SCHEDULE OF LONG-TERM DEBT AT DECEMBER 31, 1993
(In thousands of dollars)
<CAPTION>
<S> <C>
LONG-TERM DEBT
Debentures
6-5/8% Debentures Due December 1, 2013 $ 150,000
5-3/4% Debentures Due August 1, 2003 150,000
5-7/8% Debentures Due October 1, 1998 150,000
8-3/4% Debentures Due October 1, 2019 150,000
8-3/4% Debentures Due June 1, 1999 100,000
9-3/8% Debentures Due February 1, 1997 100,000
8-5/8% Debentures Due December 1, 2011 100,000
Unamortized debt discount, less premium (9,252)
__________
890,748
__________
7-1/4% Convertible Subordinated Debentures
Due December 15, 2015 250,000
Unamortized debt discount (2,100)
__________
247,900
__________
Total long-term debt $1,138,648
==========
<FN>
( ) denotes negative amount.
</TABLE>
<PAGE> 46
ITEM 6(b), PAGE 59
INCOME STATEMENT
PARENT COMPANY
CONSOLIDATED NATURAL GAS COMPANY
INCOME STATEMENT FOR THE YEAR 1993 (NOTE)
(In thousands of dollars)
INCOME
Equity in earnings of subsidiaries - consolidated $209,212
Interest income from subsidiaries - consolidated 92,696
Other interest income 106
Gain on purchase of debentures for sinking funds 926
________
Total income 302,940
________
DEDUCTIONS FROM INCOME
Operation expense 4,717
Income taxes - estimated (4,977)
Interest expense 94,904
Other deductions 1,956
________
Total deductions from income 96,600
________
Income before cumulative effect of change
in accounting principle 206,340
Cumulative effect prior to January 1, 1993,
of applying SFAS No. 109 (424)
________
NET INCOME $205,916
========
Note: A pro forma income statement for the Parent Company has not been
included inasmuch as interest expense on the additional short-term
debt to be incurred would be offset by income from the related
ultimate investments in the subsidiaries.
<PAGE> 47
ITEM 6(b), PAGE 60
STATEMENT OF
PRO FORMA ADJUSTING
ENTRIES
STATEMENT OF PRO FORMA ADJUSTING ENTRIES
CONSOLIDATED NATURAL GAS COMPANY
AND SUBSIDIARIES - CONSOLIDATED
BALANCE SHEET
(1) Issuance and sale of commercial paper which would not exceed
$800,000,000 aggregate principal amount outstanding at any one
time. The foregoing amount has been reduced in this entry to
reflect the repayment of $455,000,000 of commercial paper notes
outstanding at December 31, 1993.
Debit Credit
____________ ____________
Cash $345,000,000
Commercial paper $345,000,000
INCOME STATEMENT
(2) Adjustment to reflect the effect on other interest expense and
income taxes of the transaction set forth in Entry (1) above.
Increase
(Decrease)
____________
Other Interest Expense
Estimated interest expense resulting
from estimated average $460,000,000
principal amount of commercial paper
notes to be outstanding during 1994
at an assumed average interest
rate of 4.0% $18,400,000
Less actual 1993 interest expense 11,444,000 $ 6,956,000
___________
Income Taxes - Estimated
Estimated reduction in federal income
taxes resulting from increased
interest expense of $6,956,000 (2,435,000)
____________
Net Income (Decrease) $ (4,521,000)
============
<PAGE> 48
ITEM 6(b), PAGE 61
STATEMENT OF
PRO FORMA ADJUSTING
ENTRIES
(CONTINUED)
CONSOLIDATED NATURAL GAS COMPANY
BALANCE SHEET
Entry (1) above is also applicable to the balance sheet of the Parent
Company.
(3) Open account advances to be made to subsidiaries by the Parent
Company to provide financing for general corporate purposes,
including gas storage inventories, other working capital
requirements, and temporary financing of construction expenditures
until long-term financing is obtained and/or cash is generated
internally.
Debit Credit
______________ ______________
Receivables from subsidiaries -
consolidated $1,115,000,000
Cash $1,115,000,000
(4) Repayments to the Parent Company of amounts at December 31, 1993,
of open account advances made to subsidiaries to provide financing
for general corporate purposes, including gas storage inventories
and other working capital requirements.
Debit Credit
______________ ______________
Cash $ 362,424,000
Receivables from subsidiaries -
consolidated $ 362,424,000
(5) Issuance of long-term notes to the Parent Company as previously
authorized by the Commission at File No. 70-8195.
Debit Credit
______________ ______________
Long-term notes $ 2,526,000
Cash $ 2,526,000
<PAGE> 49
SIGNATURES
__________
Pursuant to the requirements of the Public Utility Holding Company
Act of 1935, the undersigned companies have duly caused this statement to be
signed on their behalf by the undersigned thereunto duly authorized.
CONSOLIDATED NATURAL GAS COMPANY
By L. D. Johnson, Executive Vice
President and Chief Financial
Officer
CNG COAL COMPANY
CNG GAS SERVICES CORPORATION
CNG PRODUCING COMPANY
CNG PIPELINE COMPANY
CNG RESEARCH COMPANY
CNG STORAGE SERVICE COMPANY
CNG TRANSMISSION CORPORATION
CONSOLIDATED NATURAL GAS SERVICE
COMPANY, INC.
CONSOLIDATED SYSTEM LNG COMPANY
HOPE GAS, INC.
THE EAST OHIO GAS COMPANY
THE PEOPLES NATURAL GAS COMPANY
THE RIVER GAS COMPANY
VIRGINIA NATURAL GAS, INC.
WEST OHIO GAS COMPANY
By N. F. Chandler, Their Attorney
Dated: May 6, 1994
<PAGE> 1
<TABLE>
EXHIBIT G
ESTIMATED CASH FLOW FOR THE YEAR 1994
FOR CONSOLIDATED NATURAL GAS COMPANY AND
SUBSIDIARIES - CONSOLIDATED BASIS
(000) OMITTED
<CAPTION>
CASH AVAILABLE JAN FEB MAR APR
<S> <C> <C> <C> <C>
CASH AND TEMPORARY CASH INVESTMENTS BEG. BAL. $ 44,462 $ 36,733 $ 36,493 $ 36,879
CASH FROM RETAINED EARNINGS, DEPRECIATION &
CHANGE IN WORKING CAPITAL, ETC. 78,405 127,923 179,276 48,490
__________________________________________
TOTAL CASH AVAILABLE 122,867 164,656 215,769 85,369
CASH REQUIREMENTS
PLANT SPENDING 30,134 28,089 27,890 31,078
DIVIDENDS 45,074
SINKING FUND REQUIREMENTS & OTHERS
__________________________________________
TOTAL CASH REQUIREMENTS 30,134 73,163 27,890 31,078
__________________________________________
EXCESS OR (DEFICIT) 92,733 91,493 187,879 54,291
FINANCING ACTIVITY
PROCEEDS FROM BANK LOANS AND COMMERCIAL PAPER 195,500 344,000 193,000 175,700
PROCEEDS FROM DEBENTURES SALES OR STOCK
ISSUANCE
REPAYMENT OF BANK LOANS AND/OR COMMERCIAL PAPER 251,500 399,000 344,000 193,000
__________________________________________
NET ADDITIONS (REPAYMENTS) (56,000) (55,000) (15,100) (17,300)
CASH & TEMPORARY CASH INVESTMENTS
ENDING BALANCE $ 36,733 $ 36,493 $ 36,879 $36,991
==========================================
1993 1994
DEC JAN FEB MAR APR
<C> <C> <C> <C> <C>
MONTH END BANK LOANS AND COMMERCIAL PAPER
BALANCES $455,000 $ 399,000 $344,000 $193,000 $175,700
</TABLE>
<PAGE> 2
<TABLE>
EXHIBIT G
ESTIMATED CASH FLOW FOR THE YEAR 1994
FOR CONSOLIDATED NATURAL GAS COMPANY AND
SUBSIDIARIES - CONSOLIDATED BASIS
(000) OMITTED
<CAPTION>
CASH AVAILABLE MAY JUN JUL AUG
<S> <C> <C> <C> <C>
CASH AND TEMPORARY CASH INVESTMENTS BEG. BAL. $ 36,991 $ 36,320 $ 36,312 $ 36,865
CASH FROM RETAINED EARNINGS, DEPRECIATION &
CHANGE IN WORKING CAPITAL, ETC. 25,041 (60,413) (27,352) (41,374)
____________________________________________
TOTAL CASH AVAILABLE 62,032 (24,093) 8,960 (4,509)
CASH REQUIREMENTS
PLANT SPENDING 35,337 47,295 37,795 40,235
DIVIDENDS 45,075 45,075
SINKING FUND REQUIREMENTS & OTHERS
____________________________________________
TOTAL CASH REQUIREMENTS 80,412 47,295 37,795 85,310
____________________________________________
EXCESS OR (DEFICIT) (18,380) (71,388) (28,835) (89,819)
FINANCING ACTIVITY
PROCEEDS FROM BANK LOANS AND COMMERCIAL PAPER 230,400 338,100 403,800 530,500
PROCEEDS FROM DEBENTURES SALES OR STOCK
ISSUANCE
REPAYMENT OF BANK LOANS AND/OR COMMERCIAL PAPER 175,700 230,400 338,100 403,800
____________________________________________
NET ADDITIONS (REPAYMENTS) 54,700 107,700 65,700 126,700
CASH & TEMPORARY CASH INVESTMENTS
ENDING BALANCE $ 36,320 $ 36,312 $ 36,865 $ 36,881
============================================
MAY JUN JUL AUG
MONTH END BANK LOANS AND COMMERCIAL PAPER
BALANCES $230,400 $338,100 $403,800 $530,500
</TABLE>
<PAGE> 3
<TABLE>
EXHIBIT G
ESTIMATED CASH FLOW FOR THE YEAR 1994
FOR CONSOLIDATED NATURAL GAS COMPANY AND
SUBSIDIARIES - CONSOLIDATED BASIS
(000) OMITTED
<CAPTION>
CASH AVAILABLE SEP OCT NOV DEC TOTAL
<S> <C> <C> <C> <C> <C>
CASH AND TEMPORARY CASH INVESTMENTS BEG. BAL. $ 36,881 $ 36,084 $ 36,408 $ 36,999 $ 44,462
CASH FROM RETAINED EARNINGS, DEPRECIATION &
CHANGE IN WORKING CAPITAL, ETC. (49,374) (43,895) (18,772) (12,978) 204,977
____________________________________________________
TOTAL CASH AVAILABLE (12,493) (7,811) 17,636 24,021 249,439
CASH REQUIREMENTS
PLANT SPENDING 39,123 31,481 43,262 35,105 426,824
DIVIDENDS 45,075 180,299
SINKING FUND REQUIREMENTS & OTHERS 0
____________________________________________________
TOTAL CASH REQUIREMENTS 39,123 31,481 88,337 35,105 607,123
____________________________________________________
EXCESS OR (DEFICIT) (51,616) (39,292) (70,701) (11,084) (357,684)
FINANCING ACTIVITY
PROCEEDS FROM BANK LOANS AND COMMERCIAL PAPER 618,200 693,900 801,600 850,300 5,375,000
PROCEEDS FROM DEBENTURES SALES OR
STOCK ISSUANCE
REPAYMENT OF BANK LOANS AND/OR COMMERCIAL 530,500 618,200 693,900 801,600 4,979,700
____________________________________________________
NET ADDITIONS (REPAYMENTS) 87,700 75,700 107,700 48,700 395,300
CASH & TEMPORARY CASH INVESTMENTS
ENDING BALANCE $ 36,084 $ 36,408 $ 36,999 $ 37,616 $ 37,616
====================================================
SEP OCT NOV DEC
MONTH END BANK LOANS AND COMMERCIAL PAPER
BALANCES $618,200 $ 693,900 $801,600 $850,300
</TABLE>
<PAGE> 4
<TABLE>
EXHIBIT G
ESTIMATED CASH FLOW FOR THE YEAR 1995
FOR CONSOLIDATED NATURAL GAS COMPANY AND
SUBSIDIARIES - CONSOLIDATED BASIS
(000) OMITTED
<CAPTION>
CASH AVAILABLE JAN FEB MAR APR
<S> <C> <C> <C> <C>
CASH AND TEMPORARY CASH INVESTMENTS BEG. BAL. $ 37,616 $ 37,616 $ 37,304 $ 36,072
CASH FROM RETAINED EARNINGS, DEPRECIATION &
CHANGE IN WORKING CAPITAL, ETC. 95,020 125,147 50,227 22,643
__________________________________________
TOTAL CASH AVAILABLE 132,636 162,763 87,531 58,715
CASH REQUIREMENTS
PLANT SPENDING 35,020 30,384 31,459 32,154
DIVIDENDS 45,075
SINKING FUND REQUIREMENTS & OTHERS
__________________________________________
TOTAL CASH REQUIREMENTS 35,020 75,459 31,459 32,154
__________________________________________
EXCESS OR (DEFICIT) 97,616 87,304 56,072 26,561
FINANCING ACTIVITY
PROCEEDS FROM BANK LOANS AND COMMERCIAL PAPER 790,300 740,300 720,300 730,300
PROCEEDS FROM DEBENTURE SALES OR STOCK
ISSUANCE
REPAYMENT OF BANK LOANS AND/OR COMMERCIAL PAPER 850,300 790,300 740,300 720,300
__________________________________________
NET ADDITIONS (REPAYMENTS) (60,000) (50,000) (20,000) 10,000
CASH & TEMPORARY CASH INVESTMENTS
ENDING BALANCE $ 37,616 $ 37,304 $ 36,072 $ 36,561
==========================================
1994 1995
DEC JAN FEB MAR APR
<C> <C> <C> <C> <C>
MONTH END BANK LOANS AND COMMERCIAL PAPER
BALANCES $850,300 $790,300 $740,300 $ 720,300 $730,300
</TABLE>
<PAGE> 5
<TABLE>
EXHIBIT G
ESTIMATED CASH FLOW FOR THE YEAR 1995
FOR CONSOLIDATED NATURAL GAS COMPANY AND
SUBSIDIARIES - CONSOLIDATED BASIS
(000) OMITTED
<CAPTION>
CASH AVAILABLE MAY JUN JUL AUG
<S> <C> <C> <C> <C>
CASH AND TEMPORARY CASH INVESTMENTS BEG. BAL. $ 36,561 $ 39,078 $ 38,301 $ 37,098
CASH FROM RETAINED EARNINGS, DEPRECIATION &
CHANGE IN WORKING CAPITAL, ETC. 93,329 28,427 40,375 67,505
____________________________________________
TOTAL CASH AVAILABLE 129,890 67,505 78,676 104,603
CASH REQUIREMENTS
PLANT SPENDING 35,737 49,204 31,578 35,640
DIVIDENDS 45,075 45,075
SINKING FUND REQUIREMENTS & OTHERS
____________________________________________
TOTAL CASH REQUIREMENTS 80,812 49,204 31,578 80,715
____________________________________________
EXCESS OR (DEFICIT) 49,078 18,301 47,098 23,888
FINANCING ACTIVITY
PROCEEDS FROM BANK LOANS AND COMMERCIAL PAPER 720,300 740,300 730,300 745,300
PROCEEDS FROM DEBENTURE SALES OR STOCK
ISSUANCE
REPAYMENT OF BANK LOANS AND/OR COMMERCIAL PAPER 730,300 720,300 740,300 730,300
____________________________________________
NET ADDITIONS (REPAYMENTS) (10,000) 20,000 (10,000) 15,000
CASH & TEMPORARY CASH INVESTMENTS
ENDING BALANCE $ 39,078 $ 38,301 $ 37,098 $ 38,888
============================================
MAY JUN JUL AUG
MONTH END BANK LOANS AND COMMERCIAL PAPER
BALANCES $720,300 $740,300 $ 730,300 $745,300
</TABLE>
<PAGE> 6
<TABLE>
EXHIBIT G
ESTIMATED CASH FLOW FOR THE YEAR 1995
FOR CONSOLIDATED NATURAL GAS COMPANY AND
SUBSIDIARIES - CONSOLIDATED BASIS
(000) OMITTED
<CAPTION>
CASH AVAILABLE SEP OCT NOV DEC TOTAL
<S> <C> <C> <C> <C> <C>
CASH AND TEMPORARY CASH INVESTMENTS BEG. BAL. $ 38,888 $ 37,692 $ 40,296 $ 40,113 $ 37,616
CASH FROM RETAINED EARNINGS, DEPRECIATION &
CHANGE IN WORKING CAPITAL, ETC. 49,108 (2,965) 29,709 29,175 627,700
________________________________________________________
TOTAL CASH AVAILABLE 87,996 34,727 70,005 69,288 665,316
CASH REQUIREMENTS
PLANT SPENDING 40,304 34,431 29,817 47,302 433,030
DIVIDENDS 45,075 180,300
SINKING FUND REQUIREMENTS & OTHERS
________________________________________________________
TOTAL CASH REQUIREMENTS 40,304 34,431 74,892 47,302 613,330
________________________________________________________
EXCESS OR (DEFICIT) 47,692 296 (4,887) 21,986 51,986
FINANCING ACTIVITY
PROCEEDS FROM BANK LOANS AND COMMERCIAL PAPER 735,300 775,300 820,300 835,300 9,083,600
PROCEEDS FROM DEBENTURE SALES OR STOCK
ISSUANCE
REPAYMENT OF BANK LOANS AND/OR COMMERCIAL
PAPER 745,300 735,300 775,300 820,300 9,098,600
________________________________________________________
NET ADDITIONS (REPAYMENTS) (10,000) 40,000 45,000 15,000 (15,000)
CASH & TEMPORARY CASH INVESTMENTS
ENDING BALANCE $ 37,692 $ 40,296 $ 40,113 $ 36,986 $ 36,986
========================================================
SEP OCT NOV DEC
MONTH END BANK LOANS AND COMMERCIAL PAPER
BALANCES $735,300 $ 775,300 $ 820,300 $ 835,300
</TABLE>
<PAGE> 1
<TABLE>
EXHIBIT H
CONSOLIDATED NATURAL GAS SYSTEM
ESTIMATE OF CAPITAL EXPENDITURES OF SUBSIDIARY COMPANIES
FOR THE YEAR 1994
($000)
<CAPTION>
Subsidiary CNG The The Peoples The The
Companies CNG Transmission Virginia East Ohio Natural Gas River Gas West Ohio Hope
Plant Combined Corporate Corporation Natural Gas Company Company Company Gas Company Gas, Inc
______________ ____________ _________ ____________ ________ ____________ ___________ ___________ ___________ ________
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Production $ 155,157 $ 0 $ 2,435 $ 106 $ 2,407 $ 1,250 $ 97 $ 0 $ 262
By-Products 1,005 0 905 0 0 0 0 0 0
Storage and
Processing 26,518 0 22,975 0 2,058 1,485 0 0 0
Transmission 91,463 0 80,045 3,519 2,513 4,300 128 853 105
Distribution 93,681 0 0 20,942 38,510 22,640 694 2,274 8,621
General 40,615 1,185 10,058 3,805 12,260 6,633 243 1,179 830
Non-Utility 18,385 0 0 0 0 0 0 0 0
______________ _________ ______ ________ _______ _________ ________ _______ _______ _______
Total $ 426,824 $1,185 $116,418 $28,372 $ 57,748 $ 36,308 $ 1,162 $ 4,306 $ 9,818
========= ====== ======== ======= ======== ======== ======= ======= =======
</TABLE>
<PAGE> 2
<TABLE>
EXHIBIT H
CONSOLIDATED NATURAL GAS SYSTEM
ESTIMATE OF CAPITAL EXPENDITURES OF SUBSIDIARY COMPANIES
FOR THE YEAR 1994
($000)
(Continued)
<CAPTION>
Consolidated CNG CNG
System LNG Producing CNG Coal Energy
Plant Company Company Company Gas Services Company
______________ _____________ ____________ ________ ____________ ________
<S> <C> <C> <C> <C> <C>
Production $ 0 $ 148,600 $ 0 $ 0 $ 0
By-Products 0 100 0 0 0
Storage and
Processing 0 0 0 0 0
Transmission 0 0 0 0 0
Distribution 0 0 0 0 0
General 0 3,721 0 700 0
Non-Utility 0 0 0 0 18,385 (1)
_____ _________ ____ _____ _______
Total $ 0 $ 152,421 $ 0 $ 700 $18,385
===== ========= ==== ===== =======
(1) This is not subject of this filing. Spending authorized under file # 70-7909.
</TABLE>
<PAGE> 3
<TABLE>
EXHIBIT H
CONSOLIDATED NATURAL GAS SYSTEM
ESTIMATE OF CAPITAL EXPENDITURES OF SUBSIDIARY COMPANIES
($000)
FOR THE YEAR 1995
<CAPTION>
Subsidiary CNG The The Peoples The The
Companies CNG Transmission Virginia East Ohio Natural Gas River Gas West Ohio Hope
Plant Combined Corporate Corporation Natural Gas Company Company Company Gas Company Gas, Inc
______________ ____________ _________ ____________ ________ ____________ ___________ ___________ ___________ ________
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Production $ 159,551 $ 0 $ 2,510 $ 533 $ 2,504 $ 1,915 $ 117 $ 0 $ 272
By-Products 1,670 0 1,570 0 0 0 0 0 0
Storage and
Processing 31,061 0 26,265 0 2,471 2,325 0 0 0
Transmission 80,955 0 65,495 8,479 2,342 3,080 77 173 1,309
Distribution 110,391 0 0 28,807 44,995 24,935 867 2,378 8,409
General 49,382 900 11,935 6,171 14,694 9,757 161 1,463 801
Non-Utility 20 0 0 0 0 0 0 0 0
______________ _________ ____ ________ _______ ________ ________ _______ _______ _______
Total $ 433,030 $900 $107,775 $43,990 $ 67,006 $ 42,012 $ 1,222 $ 4,014 $10,791
========= ==== ======== ======= ======== ======== ======= ======= =======
Projected to be
spent in the
first six months $ 213,958 $378 $ 48,199 $24,000 $ 30,579 $ 16,023 $ 408 $ 1,352 $ 4,239
========= ==== ======== ======= ======== ======== ======= ======= =======
The Customer Activities Marketing Program for $5.3 and $6.63 million respectively in 1994 and 1995 was allocated
based on percent of total budget.
</TABLE>
<PAGE> 4
<TABLE>
EXHIBIT H
CONSOLIDATED NATURAL GAS SYSTEM
ESTIMATE OF CAPITAL EXPENDITURES OF SUBSIDIARY COMPANIES
$(000)
FOR THE YEAR 1995
(Continued)
<CAPTION>
Consolidated CNG CNG
System LNG Producing CNG Coal Energy
Plant Company Company Company Gas Services Company
______________ _____________ ____________ ________ ____________ ________
<S> <C> <C> <C> <C> <C>
Production $ 0 $ 151,700 $ 0 $ 0 $ 0
By-Products 0 100 0 0 0
Storage and
Processing 0 0 0 0 0
Transmission 0 0 0 0 0
Distribution 0 0 0 0 0
General 0 3,000 0 500 0
Non-Utility 0 0 0 0 20
_____ _________ ____ _____ _______
Total $ 0 $ 154,800 $ 0 $ 500 $ 20
===== ========= ==== ===== =======
Projected to be
spent in the
first six months $ 0 $ 88,780 $ 0 $ 0 $ 0
===== ========= ==== ===== =======
</TABLE>
<PAGE> 5
EXHIBIT H
Explanation of Use of Proceeds of Consolidated Natural Gas
Service Company, Inc., CNG Research Company and CNG Coal Company
for the Period July 1, 1994 through June 30, 1995
The requested authorization of Consolidated Natural Gas Service
Company, Inc. ("Service Company") is designed to accommodate plant
expenditures, as detailed below, provide working capital and provide for
contingencies. The working capital requirements stem from the timing
difference between when Service Company incurs costs associated with
performing services on behalf of the other subsidiary companies of
Consolidated and when it receives reimbursement from such subsidiaries.
Generally, such other subsidiaries are billed by the fifteenth of the month
following the month of service and make payment to Service Company on the next
to last business day of that month. The result is a lag of from 30 to 60
days.
1993 January to June 1994 Total
______ ____________________ ______
(000) (000) (000)
Computer Hardware $ 941 $ 300 $1,241
Furniture & Equipment 158 50 208
Others 86 28 114
______ ______ ______
Total $1,185 $ 378 $1,563
====== ====== ======
CNG Research Company currently has no operating revenues. The
financing authorizations requested is to accommodate miscellaneous expenses
associated with various research projects.
CNG Coal Company also currently has no operating revenues. The
financing requested is to accommodate miscellaneous expenses, including
property taxes, associated with the coal properties owned by the Company.
<PAGE> 1
EXHIBIT O
Proposed Notice
Pursuant to Rule 22(f)
SECURITIES AND EXCHANGE COMMISSION
(Release No. 35- )
Filings Under the Public Utility Holding Company Act of 1935
("Act")
May , 1994
Notice is hereby given that the following filing(s) has/have been made
with the Commission pursuant to provisions of the Act and rules promulgated
thereunder. All interested persons are referred to the application(s) and/or
declaration(s) for complete statements of the proposed transaction(s)
summarized below. The application(s) and/or declaration(s) and any amendments
thereto is/are available for public inspection through the Commission's Office
of Public Reference.
Interested persons wishing to comment or request a hearing on the
application(s) and/or declaration(s) should submit their views in writing by
May , 1994 to the Secretary, Securities and Exchange Commission,
Washington, D.C. 20549, and serve a copy on the relevant applicant(s) and/or
declarant(s) at the address(es) specified below. Proof of service (by
affidavit or, in case of an attorney at law, by certificate) should be filed
with the request. Any request for hearing shall identify specifically the
issues of fact or law that are disputed. A person who so requests will be
notified of any hearing, if ordered, and will receive a copy of any notice or
order issued in the matter. After said date, the application(s) and/or
declaration(s), as filed or as amended, may be granted and/or permitted to
become effective.
_____________________________
<PAGE> 2
EXHIBIT O
Consolidated Natural Gas Company, Et Al. (70- )
________________________________________
Consolidated Natural Gas Company ("Consolidated"), a registered holding
company, CNG Tower, Pittsburgh, Pennsylvania 15222-3199, and its wholly owned
nonutility subsidiary companies, Consolidated System LNG Company ("LNG"), CNG
Research Company ("Research") and Consolidated Natural Gas Service Company,
Inc. ("Service"), located at CNG Tower, Pittsburgh, Pennsylvania 15222-3199;
CNG Coal Company ("Coal"), CNG Producing Company ("Producing"), and its
subsidiary CNG Pipeline Company ("Pipeline"), CNG Tower, 1450 Poydras Street,
New Orleans, Louisiana 70112-6000; CNG Transmission Corporation
("Transmission") and CNG Storage Service Company ("Storage"), 445 West Main
Street, Clarksburg, West Virginia 26301; CNG Gas Services Corporation ("Gas
Services"), One Park Ridge Center, P.O. Box 15746, Pittsburgh, PA 15244-0746;
and Consolidated's wholly owned public-utility subsidiary companies, The
Peoples Natural Gas Company ("Peoples"), CNG Tower, Pittsburgh, Pennsylvania
15222-3199; The East Ohio Gas Company ("East Ohio"), 1717 East Ninth Street,
Cleveland, Ohio 44115; The River Gas Company ("River Gas"), 324 Fourth Street,
Marietta, Ohio 45750; Virginia Natural Gas, Inc. ("Virginia Gas"), 5100 East
Virginia Beach Boulevard, Norfolk, Virginia 23501-3488; Hope Gas, Inc. ("Hope
Gas"), P.O. Box 2868 Clarksburg, West Virginia 26302-2868; and West Ohio Gas
Company ("West Ohio"), 319 West Market Street, Lima Ohio 45802
("Subsidiaries"), have filed an application-declaration under Sections 6(a),
7, 9(a), 10, 12(b) and 12(c) of the Act and Rules 43, 45 and 50(a)(5)
thereunder.
Consolidated proposes to issue and sell commercial paper pursuant to an
exception from competitive bidding, in an aggregate principal amount not to
<PAGE> 3
exceed $800 million outstanding at any one time, from time-to-time through
June 30, 1995 ("Commercial Paper"). Such Commercial Paper may be domestic
commercial paper ("Domestic Paper") and/or European commercial paper ("Euro
Paper"). Domestic Paper will have varying maturities of not more than 270
days and Euro Paper will have maturities from 7 to 183 days. Consolidated
proposes to sell Domestic Paper or Euro Paper, whichever provides the lower
cost in a given transaction, but only so long as the discount rate or the
effective interest cost on the date of sale does not exceed the prime rate of
interest from a commercial bank.
To the extent that it becomes impractical to sell the Commercial Paper
due to market conditions or otherwise, Consolidated proposed to borrow, repay
and reborrow, without collateral under back-up lines of credit, in an
aggregate principal amount not to exceed $600 million through June 30, 1995
("Loans"). The Loans will mature not more than one year from the date of each
borrowing, will be prepayable in whole or part at any time, and will bear
interest at a rate not to exceed the prime commercial rate of interest of the
lending bank in effect on the date of each borrowing.
It is also proposed that through June 30, 1995, Consolidated provide
financing to the Subsidiaries in an aggregate amount not exceeding $1,115
million in the form of open account advances, long-term loans and/or capital
stock purchases. Individual Subsidiary financing by Consolidated would not
exceed the following amounts: (1) Transmission, $250 million; (2) East Ohio,
$250 million; (3) Peoples, $125 million; (4) Virginia Gas, $60 million;
(5) Hope Gas, $25 million; (6) Gas Services, $100 million; (7) Storage, $1
million; (8) West Ohio, $25 million; (9) Service, $15 million; (10) Producing,
$250 million; (11) River Gas, $10 million; (12) Coal, $3 million; and
(13) Research, $1 million.
<PAGE> 4
Open account advances ("Advances"), may be made, repaid and remade on a
revolving basis, and all such Advances will be repaid within one year from the
date of the first Advance to the borrowing Subsidiary with interest at the
same effective rate of interest as Consolidated's weighted average effective
rate of commercial paper and/or revolving credit borrowings. If no such
borrowings are outstanding, the interest rate shall be predicated on the
Federal Funds' effective rate of interest as quoted by the Federal Reserve
Bank of New York. Advances will be made through the CNG System money pool
authorized under a Commission order dated June 12, 1986, (HCAR No. 24128).
Long term loans will mature over a period of time not in excess of 30
years with the interest rate predicated on and substantially equal to
Consolidated's cost of funds for comparable borrowings by the parent. In the
event Consolidated has not had recent comparable borrowings, the rates will be
tied to the Salomon Brothers indicative rate for comparable debt issuances
published in Salomon Brothers, Inc. Bond Market Roundup, or to a comparable
rate index, on the date nearest to the time of takedown.
Capital stock will be purchased from the Subsidiaries at its par value
(book value in the case of Virginia Gas). Capital stock transactions between
Consolidated and its utility Subsidiaries, Hope Gas, Peoples, Virginia Gas,
West Ohio Company, East Ohio and River Gas, would occur under an exemption
pursuant to Rule 52 and are not part of the authorization requested herein.
Producing proposes from time to time through June 30, 1995, to provide
to Pipeline up to an aggregate of $1 million of financing through short-term
loans in the form of open account advances and/or long-term loans evidenced by
non-negotiable notes (documented by book entry only) and/or the purchase of up
to 10,000 shares of common stock $100 par value of Pipeline. The open account
advances and long-term loan will bear interest at rates equal to the cost of
money to Producing through its borrowing from Consolidated.
<PAGE> 5
Authority is also requested to increase any Subsidiary's authorized
common stock as needed to accommodate proposed stock sales and to provide for
future issues, any such increase being limited to a number of shares
calculated by dividing the aggregate financing proposed for such Subsidiary in
the application-declaration by the par value (book value in the case of
Virginia Gas) of such Subsidiary's common stock rounded up to the near
hundred.
Consolidated, East Ohio and River Gas have filed an application with the
Commission, File No. 70-8387, for the approval of a merger of River Gas into
East Ohio. In the event such merger is consummated, it is requested that East
Ohio be authorized to assume, after such merger, the position of River Gas
with respect to all unutilized authorizations granted concerning River Gas in
this proceeding.
_____________________________
For the Commission, by the Division of Investment Management, pursuant
to delegated authority.
Jonathan G. Katz
Secretary
