Commission File No. 30-203
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
______________
FORM U5S
ANNUAL REPORT
For the Year Ended
DECEMBER 31, 1993
______________
Filed pursuant to the Public Utility Holding Company Act of 1935
by
CONSOLIDATED NATURAL GAS COMPANY
CNG Tower, 625 Liberty Avenue, Pittsburgh, PA 15222-3199
<PAGE>
CONSOLIDATED NATURAL GAS COMPANY
FORM U5S - ANNUAL REPORT
For the Year Ended December 31, 1993
______________________________________________________________________________
TABLE OF CONTENTS Page
______________________________________________________________________________
ITEM 1. SYSTEM COMPANIES AND INVESTMENT THEREIN AS OF
DECEMBER 31, 1993 . . . . . . . . . . . . . . . . . . . . 1
ITEM 2. ACQUISITIONS OR SALES OF UTILITY ASSETS . . . . . . . . . 3
ITEM 3. ISSUE, SALE, PLEDGE, GUARANTEE OR ASSUMPTION OF SYSTEM
SECURITIES. . . . . . . . . . . . . . . . . . . . . . . . 3
ITEM 4. ACQUISITION, REDEMPTION OR RETIREMENT OF SYSTEM SECURITIES 4
ITEM 5. INVESTMENTS IN SECURITIES OF NON-SYSTEM COMPANIES . . . . 8
ITEM 6. OFFICERS AND DIRECTORS
Part I. Names, principal business address and
positions held as of December 31, 1993. . . . . 9
Part II. Banking connections . . . . . . . . . . . . . . 17
Part III. Compensation and other related information. . . 17
ITEM 7. CONTRIBUTIONS AND PUBLIC RELATIONS. . . . . . . . . . . . 19
ITEM 8. SERVICE, SALES AND CONSTRUCTION CONTRACTS
Part I. Contracts for services or goods between
system companies. . . . . . . . . . . . . . . . 20
Part II. Contracts to purchase services or goods between
any system company and any affiliate. . . . . . 20
Part III. Employment of any person by any system company
for the performance on a continuing basis of
management services . . . . . . . . . . . . . . 20
ITEM 9. WHOLESALE GENERATORS AND FOREIGN UTILITY COMPANIES
Part I. Information concerning interests held by system
companies in exempt wholesale generators or
foreign utility companies . . . . . . . . . . . 21
Part II. Relationship of exempt wholesale generators
and foreign utility companies to system
companies, and financial data . . . . . . . . . 22
Part III. Investment in exempt wholesale generators
and foreign utility companies . . . . . . . . . 22
ITEM 10. FINANCIAL STATEMENTS AND EXHIBITS
Financial Statements (Index). . . . . . . . . . . . . . . 23
Exhibits. . . . . . . . . . . . . . . . . . . . . . . . . 73
SIGNATURE . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
______________________________________________________________________________
<PAGE>
CONSOLIDATED NATURAL GAS COMPANY
FORM U5S - ANNUAL REPORT
For the Year Ended December 31, 1993
ITEM 1. SYSTEM COMPANIES AND INVESTMENT THEREIN AS OF DECEMBER 31, 1993
______________________________________________________________________________
Number of Owner's
Common % of Issuer's Book
Shares Voting Book Value
Name of Company Owned Power Value (Note 1)
______________________________________________________________________________
(Thousands of
Dollars)
CONSOLIDATED NATURAL GAS COMPANY
("Registrant," "Parent Company"
or "Company"):
Consolidated Natural Gas Service
Company, Inc. ("Service Company") . 100 100% $ 10 $ 10
Unsecured debt . . . . . . . . . - - $ 14,631 $ 14,631
CNG Transmission Corporation
("CNG Transmission") . . . . . . . 50,000 100% $649,319 $651,097
Unsecured debt . . . . . . . . . - - $361,359 $361,359
The East Ohio Gas Company
("East Ohio Gas") . . . . . . . . . 3,159,353 100% $357,134 $336,235
Unsecured debt . . . . . . . . . - - $189,597 $189,597
The Peoples Natural Gas Company
("Peoples Natural Gas") . . . . . . 1,475,350 100% $223,638 $213,582
Unsecured debt . . . . . . . . . - - $130,651 $130,651
Virginia Natural Gas, Inc.
("Virginia Natural Gas") . . . . . 4,298 100% $172,087 $172,076
Unsecured debt . . . . . . . . . - - $ 73,418 $ 73,418
Hope Gas, Inc. ("Hope Gas") . . . . . 287,285 100% $ 46,744 $ 45,571
Unsecured debt . . . . . . . . . - - $ 29,771 $ 29,771
West Ohio Gas Company
("West Ohio Gas") . . . . . . . . . 1,737,683 100% $ 18,638 $ 18,609
Unsecured debt . . . . . . . . . - - $ 10,389 $ 10,389
The River Gas Company ("River Gas") . 35,500 100% $ 6,525 $ 6,694
Unsecured debt . . . . . . . . . - - $ 3,025 $ 3,025
CNG Producing Company
("CNG Producing") . . . . . . . . . 47,084 100% $620,941 $626,535
Unsecured debt . . . . . . . . . - - $262,228 $262,228
CNG Energy Company ("CNG Energy") . . 11,150 100% $ 11,281 $ 11,281
Unsecured debt . . . . . . . . . - - $ 6,690 $ 6,690
___________________________________________________________________________
Notes to ITEM 1 appear on the next page.
<PAGE>
ITEM 1. SYSTEM COMPANIES AND INVESTMENT THEREIN AS OF DECEMBER 31, 1993
(Concluded)
______________________________________________________________________________
Number of Owner's
Common % of Issuer's Book
Shares Voting Book Value
Name of Company Owned Power Value (Note 1)
______________________________________________________________________________
(Thousands of
Dollars)
CONSOLIDATED NATURAL GAS COMPANY (Continued)
CNG Gas Services Corporation
("CNG Gas Services") (Note 2) . . . 1,005 100% $ 9,981 $ 9,981
CNG Storage Service Company
("CNG Storage") . . . . . . . . . . 1,366 100% $ 13,674 $ 13,490
Unsecured debt . . . . . . . . . - - $ 7,350 $ 7,350
Consolidated System LNG Company
("Consolidated LNG") . . . . . . . 8,340 100% $ 82,421 $ 82,421
CNG Research Company
("CNG Research") . . . . . . . . . 1,529 100% $ 153 $ 153
CNG Coal Company ("CNG Coal") . . . . 3,736 100% $ 41,430 $ 41,430
CNG Financial Services, Inc.
("CNG Financial") . . . . . . . . . 5 100% $ 50 $ 50
CNG TRANSMISSION CORPORATION:
CNG Iroquois, Inc. . . . . . . . . . 1,494 100% $ 16,155 $ 16,155
CNG PRODUCING COMPANY:
CNG Pipeline Company . . . . . . . . 12,000 100% $ 1,852 $ 1,852
CNG ENERGY COMPANY:
Granite Road CoGen, Inc. . . . . . . 1,000 100% $ 1 $ 1
CNG Technologies, Inc.
("CNG Technologies") . . . . . . . 150 100% $ 1,500 $ 1,500
CNG Lakewood, Inc. ("CNG Lakewood") . 1 100% $ 10 $ 10
______________________________________________________________________________
Notes:
(1) The Parent Company's investment in common stock of its subsidiaries is
stated at equity to comply with the Securities and Exchange Commission's
rules. The chart of accounts used during 1993 by the Registrant and its
subsidiaries, except Service Company, was the Uniform System of Accounts
Prescribed for Natural Gas Companies by the Federal Energy Regulatory
Commission. The Service Company used the Uniform System of Accounts for
Subsidiary Service Companies prescribed by the Securities and Exchange
Commission.
(2) Effective January 1, 1993, the Company's CNG Trading Company subsidiary
was renamed CNG Gas Services Corporation.
2.
<PAGE>
ITEM 2. ACQUISITIONS OR SALES OF UTILITY ASSETS
None.
ITEM 3. ISSUE, SALE, PLEDGE, GUARANTEE OR ASSUMPTION OF SYSTEM SECURITIES
A letter of credit in the amount of $38,100 issued by the Whitney National
Bank
of New Orleans on November 24, 1993, remained outstanding at December 31,
1993.
The letter was in favor of the Minerals Management Service of the U.S.
Department of Interior and was required as security regarding CNG Producing's
possible liability resulting from appeal of a disallowance by the Department
of
Interior of transportation charges related to the calculation of royalties.
The
transaction was exempt pursuant to Rule 45(b)(6).
During 1991, Virginia Natural Gas obtained security in the form of Corporate
Surety Bonds, Bank Letters of Credit and Cash Bonds which supported its
pipeline construction activities in Virginia. At December 31, 1993, security
in the form of a Corporate Surety Bond in the amount of $50,000 remained
outstanding in connection with performance guarantees related to erosion and
sediment control required by one municipality. This remaining security is
expected to be released in 1994. This transaction is exempt pursuant to Rule
45(b)(6).
3.
<PAGE>
ITEM 4. ACQUISITION, REDEMPTION OR RETIREMENT OF SYSTEM SECURITIES
Calendar Year 1993
(Thousands of Dollars)
<TABLE>
<CAPTION>
Name of Company Number of Shares or Number of Shares or
Acquiring, Redeeming Principal Amount Principal Amount
Name of Issuer and Title of Issue or Retiring Securities Acquired Redeemed or Retired (Note 1)
<S> <C> <C> <C>
REGISTERED HOLDING COMPANY:
Parent Company:
Common Stock, par value $2.75 per share. . . Parent Company 29,212 shares
(Note 3)
Debentures . . . . . . . . . . . . . . . . . Parent Company $279,650
Service Company:
Non-negotiable note. . . . . . . . . . . . . Parent Company $ 795
CNG Transmission:
Capital stock, par value $10,000 per share . Parent Company 1,861 shares
Non-negotiable notes . . . . . . . . . . . . Parent Company $117,334
East Ohio Gas:
Capital stock, par value $50 per share. . . . Parent Company 620,000 shares
Non-negotiable notes . . . . . . . . . . . . Parent Company $ 68,416
Peoples Natural Gas:
Capital stock, par value $100 per share. . . Parent Company 232,000 shares
Non-negotiable note. . . . . . . . . . . . . Parent Company $ 26,700
Hope Gas:
Non-negotiable note. . . . . . . . . . . . . Parent Company $ 5,600
West Ohio Gas:
Capital stock, par value $5 per share . . . . Parent Company 740,000 shares
River Gas:
Non-negotiable notes . . . . . . . . . . . . Parent Company $ 1,125
CNG Producing:
Non-negotiable notes . . . . . . . . . . . . Parent Company $ 79,575
CNG Energy:
Capital stock, par value $1,000 per share. . Parent Company 500 shares
CNG Gas Services:
Capital stock, par value $1 per share. . . . Parent Company 500 shares
CNG Storage:
Capital stock, par value $10,000 per share . Parent Company 185 shares
Non-negotiable note. . . . . . . . . . . . . Parent Company $ 1,150
CNG Research:
Capital stock, par value $10,000 per share . Parent Company 15 shares
Consolidated LNG:
Capital stock, par value $10,000 per share . Parent Company (Note 4)
Total Registrant . . . . . . . . . . . . .
<FN>
Notes to ITEM 4 appear on page 8.
</TABLE>
4.
<PAGE>
ITEM 4. ACQUISITION, REDEMPTION OR RETIREMENT OF SYSTEM SECURITIES (Continued)
Calendar Year 1993
(Thousands of Dollars)
<TABLE>
<CAPTION>
Commission
Name of Issuer and Title of Issue Consideration Authorization (Note 2)
<S> <C> <C>
REGISTERED HOLDING COMPANY:
Parent Company:
Common stock, par value $2.75 per share. . . $ 1,417 (Note 3)
Debentures . . . . . . . . . . . . . . . . . $283,208 Rule 42(b)(4) exemption
Service Company:
Non-negotiable note. . . . . . . . . . . . . $ 795 Release No. 25841 (File No. 70-8195)
CNG Transmission:
Capital stock, par value $10,000 per share . $ 18,610 Release No. 25841 (File No. 70-8195)
Non-negotiable notes . . . . . . . . . . . . $117,334 Release No. 25841 (File No. 70-8195)
East Ohio Gas:
Capital stock, par value $50 per share. . . . $ 31,000 Rule 52 exemption
Non-negotiable notes . . . . . . . . . . . . $ 68,416 Release No. 25566 (File No. 70-8000) and
Release No. 25841 (File No. 70-8195)
Peoples Natural Gas:
Capital stock, par value $100 per share . . $ 23,200 Rule 52 exemption
Non-negotiable note. . . . . . . . . . . . . $ 26,700 Release No. 25841 (File No. 70-8195)
Hope Gas:
Non-negotiable note . . . . . . . . . . . . $ 5,600 Release No. 25566 (File No. 70-8000)
West Ohio Gas:
Capital stock, par value $5 per share. . . . $ 3,700 Rule 52 exemption
River Gas:
Non-negotiable notes . . . . . . . . . . . . $ 1,125 Release No. 25841 (File No. 70-8195)
CNG Producing:
Non-negotiable notes . . . . . . . . . . . . $ 79,575 Release No. 25841 (File No. 70-8195)
CNG Energy:
Capital stock, par value $1,000 per share. . $ 500 Release No. 25224 (File No. 70-7761)
CNG Gas Services:
Capital stock, par value $1 per share. . . . $ 5,000 Release No. 25841 (File No. 70-8195)
CNG Storage:
Capital stock, par value $10,000 per share . $ 1,850 Release No. 25566 (File No. 70-8000)
Non-negotiable note . . . . . . . . . . . . $ 1,150 Release No. 25566 (File No. 70-8000)
CNG Research:
Capital stock, par value $10,000 per share . $ 150 Release No. 25566 (File No. 70-8000)
Consolidated LNG:
Capital stock, par value $10,000 per share . $ - Release No. 25841 (File No. 70-8195)
________
Total Registrant . . . . . . . . . . . . . $669,330
========
<FN>
Notes to ITEM 4 appear on page 8.
</TABLE>
5.
<PAGE>
ITEM 4. ACQUISITION, REDEMPTION OR RETIREMENT OF SYSTEM SECURITIES (Continued)
Calendar Year 1993
(Thousands of Dollars)
<TABLE>
<CAPTION>
Name of Company Number of Shares or Number of Shares or
Acquiring, Redeeming Principal Amount Principal Amount
Name of Issuer and Title of Issue or Retiring Securities Acquired Redeemed or Retired (Note 1)
<S> <C> <C> <C>
SUBSIDIARIES OF REGISTERED HOLDING COMPANY:
Service Company:
Non-negotiable note. . . . . . . . . . . . . Service Company $ 795
CNG Transmission:
Non-negotiable notes . . . . . . . . . . . . CNG Transmission $ 99,538
East Ohio Gas:
Non-negotiable notes . . . . . . . . . . . . East Ohio Gas $ 46,333
Peoples Natural Gas:
Non-negotiable notes . . . . . . . . . . . . Peoples Natural Gas $ 5,634
Hope Gas:
Non-negotiable notes . . . . . . . . . . . . Hope Gas $ 950
West Ohio Gas:
Non-negotiable notes . . . . . . . . . . . . West Ohio Gas $ 376
River Gas:
Non-negotiable notes . . . . . . . . . . . . River Gas $ 1,352
CNG Producing:
Non-negotiable notes . . . . . . . . . . . . CNG Producing $ 99,100
Consolidated LNG:
Non-negotiable notes . . . . . . . . . . . . Consolidated LNG $ 12,325
Total subsidiaries . . . . . . . . . . . .
CNG ENERGY:
CNG Technologies:
Capital stock, par value $10,000 per share . CNG Energy 50 shares
<FN>
Notes to ITEM 4 appear on page 8.
</TABLE>
6.
<PAGE>
ITEM 4. ACQUISITION, REDEMPTION OR RETIREMENT OF SYSTEM SECURITIES (Continued)
Calendar Year 1993
(Thousands of Dollars)
<TABLE>
<CAPTION>
Commission
Name of Issuer and Title of Issue Consideration Authorization (Note 2)
<S> <C> <C>
SUBSIDIARIES OF REGISTERED HOLDING COMPANY:
Service Company:
Non-negotiable note. . . . . . . . . . . . . $ 795 Rule 42(b)(2) exemption
CNG Transmission:
Non-negotiable notes . . . . . . . . . . . . $ 99,538 Rule 42(b)(2) exemption
East Ohio Gas:
Non-negotiable notes . . . . . . . . . . . . $ 46,333 Rule 42(b)(2) exemption
Peoples Natural Gas:
Non-negotiable notes . . . . . . . . . . . . $ 5,634 Rule 42(b)(2) exemption
Hope Gas:
Non-negotiable notes . . . . . . . . . . . . $ 950 Rule 42(b)(2) exemption
West Ohio Gas:
Non-negotiable notes . . . . . . . . . . . . $ 376 Rule 42(b)(2) exemption
River Gas:
Non-negotiable notes . . . . . . . . . . . . $ 1,352 Rule 42(b)(2) exemption
CNG Producing:
Non-negotiable notes . . . . . . . . . . . . $ 99,100 Rule 42(b)(2) exemption
Consolidated LNG:
Non-negotiable notes . . . . . . . . . . . . $ 12,325 Rule 42(b)(2) exemption
________
Total subsidiaries . . . . . . . . . . . $266,403
========
CNG ENERGY:
CNG Technologies:
Capital stock, par value $10,000 per share . $ 500 Release No. 25224 (File No. 70-7761)
========
<FN>
Notes to ITEM 4 appear on page 8.
</TABLE>
7.
<PAGE>
ITEM 4. ACQUISITION, REDEMPTION OR RETIREMENT OF SYSTEM SECURITIES (Concluded)
Notes:
(1) All securities redeemed or retired have been cancelled.
(2) Public Utility Holding Company Act of 1935.
(3) By order dated May 8, 1992, in Release No. 35-25528 (File No. 70-7948),
the Parent Company received Commission authorization to acquire through
open market purchases a total of 4 million shares of its common stock
through December 31, 1995. Shares of common stock may also be acquired
by the Parent Company under the exchange and tax withholding provisions
of the 1991 Stock Incentive Plan and the tax withholding provisions of
the Long-Term Incentive Plan pursuant to Commission authorizations in
Release Nos. 35-25294 (File No. 70-7838) and 35-25425 (File No. 70-7095),
respectively. The shares repurchased or acquired by the Parent Company
are held as treasury stock and are available for reissuance for general
corporate purposes or in connection with various employee benefit plans.
During 1993, no open market purchases were made by the Parent Company.
The Parent Company acquired 29,212 shares in 1993 through the provisions
of the 1991 Stock Incentive Plan and the Long-Term Incentive Plan. Prior
to year end, the 29,212 shares were sold to the System's Thrift Plans at
an average price of $45.66 a share. Total proceeds of these sales
amounted to $1,334,000.
(4) During 1993, Consolidated LNG effected a 1 for 100 reverse stock split of
its capital stock. The transaction was accomplished by decreasing the
number of outstanding shares and increasing the par value of the shares
from $100 per share to $10,000 per share. As a result of the reverse
stock split, the number of shares of Consolidated LNG capital stock
outstanding was decreased from 834,000 shares, par value $100, to 8,340
shares, par value $10,000. There was no cash paid or received by either
the Parent Company or Consolidated LNG as a result of this transaction.
ITEM 5. INVESTMENTS IN SECURITIES OF NON-SYSTEM COMPANIES
The aggregate amounts of investments at December 31, 1993, in persons
operating in the system's retail service area and not exceeding $100,000 in
each person are shown below.
______________________________________________________________________________
Number of Aggregate
Name of Owner Persons Business of Persons Investment
______________________________________________________________________________
CNG Transmission One State Development Fund $100,000
Hope Gas One State Development Fund $100,000
Virginia Natural Gas One State Development Fund $ 51,388
______________________________________________________________________________
The above do not include investments in securities of non-system companies
which have been authorized by Commission order under the Public Utility
Holding Company Act of 1935 and which are subject to Rule 24 Certificate
filing requirements.
8.
<PAGE>
ITEM 6. OFFICERS AND DIRECTORS
<TABLE>
Part I. Names, principal business address and positions held as of December 31, 1993
<CAPTION>
Name of System Companies with Which Connected
East
Parent Service CNG Hope Ohio
Company Company Transmission Gas Gas
<S> <C> <C> <C> <C> <C> <C>
Ammons, S. W. 625 Liberty Avenue, Pittsburgh, PA 15222
Atkinson, S. L. 445 West Main Street, Clarksburg, WV 26301 S-r
Banks, T. C. One Park Ridge Center, Pittsburgh, PA 15244
Baril, D. C. 1450 Poydras Street, New Orleans, LA 70112
Bartels, M. G. 1717 East Ninth Street, Cleveland, OH 44114 SVP-D-r
Bean, R. J., Jr. Bank One Center, West, Clarksburg, WV 26302 D P-D-r
Beckert, W. E. 625 Liberty Avenue, Pittsburgh, PA 15222
Beorn, P. F., Jr. Bank One Center, West, Clarksburg, WV 26302 VP-D-r
Birnbaum, S. 1717 East Ninth Street, Cleveland, OH 44114 AVP-r
Bober, D. G. 324 Fourth Street, Marietta, OH 45750
Bonifas, P. J. 319 West Market Street, Lima, OH 45802
Borneman, D. W. CNG Tower, Pittsburgh, PA 15222 AVP-r
Boswell, W. P. 625 Liberty Avenue, Pittsburgh, PA 15222
Brakeman, B. F. 1717 East Ninth Street, Cleveland, OH 44114 VP-r
Brink, G. R. 500 J. Clyde Morris Blvd., Newport News, VA 23601
Brown, H. E. 445 West Main Street, Clarksburg, WV 26301 VP-GC-AS-D-r
Butera, J. E. CNG Tower, Pittsburgh, PA 15222 AVP-r
Carney, P. A. 1717 East Ninth Street, Cleveland, OH 44114 VP-D-r
Causey, J. L. 5100 East Virginia Beach Blvd., Norfolk, VA 23502
Chamberlain, A. R. 5100 East Virginia Beach Blvd., Norfolk, VA 23502
Chandler, N. F. CNG Tower, Pittsburgh, PA 15222 AS r
Clay, J. A. 1450 Poydras Street, New Orleans, LA 70112
Connell, D. W. CNG Tower, Pittsburgh, PA 15222 VP-r
Connolly, J. W. 600 Grant Street, Pittsburgh, PA 15230 D-df
Crittenden, J. A. One Park Ridge Center, Pittsburgh, PA 15244
Cuccinelli, K. T. CNG Tower, Pittsburgh, PA 15222 VP-r
Curia, J. A. 445 West Main Street, Clarksburg, WV 26301 VP-r
Davidson, G. A., Jr. CNG Tower, Pittsburgh, PA 15222 CB-D CB-D-r
Dodd, T. E. CNG Tower, Pittsburgh, PA 15222 r
Dzuricky, D. J. CNG Tower, Pittsburgh, PA 15222 VP-T VP-T-r
Elliott, R. S. Bank One Center, West, Clarksburg, WV 26302 AS-r
Fellabom, J. R. 625 Liberty Avenue, Pittsburgh, PA 15222
Fickenscher, D. A. 5100 East Virginia Beach Blvd., Norfolk, VA 23502
Fink, J. L. CNG Tower, Pittsburgh, PA 15222 VP-r
Flinn, J. A. 625 Liberty Avenue, Pittsburgh, PA 15222
Fox, W. A. 445 West Main Street, Clarksburg, WV 26301 SVP-D-r
Fratangelo, R. D. CNG Tower, Pittsburgh, PA 15222 VP-r
Frink, J. L. 625 Liberty Avenue, Pittsburgh, PA 15222
Fritsche, W. F., Jr. 5100 East Virginia Beach Blvd., Norfolk, VA 23502 D
Funk, C. T. One Park Ridge Center, Pittsburgh, PA 15244
Garbe, T. F. CNG Tower, Pittsburgh, PA 15222 Cn Cn-r
Garrett, J. W. CNG Tower, Pittsburgh, PA 15222 AVP-r
George, S. G. 625 Liberty Avenue, Pittsburgh, PA 15222
Gifford, R. R. 1717 East Ninth Street, Cleveland, OH 44114 D P-D-r
Greer, M. D. 445 West Main Street, Clarksburg, WV 26301 VP-D-r
Gregg, P. P. 1450 Poydras Street, New Orleans, LA 70112
Grone, J. A. 319 West Market Street, Lima, OH 45802
Halbritter, M. A. Bank One Center, West, Clarksburg, WV 26302 GC-S-D-r
Hattery, J. L. 319 West Market Street, Lima, OH 45802
Hunt, D. P. 1450 Poydras Street, New Orleans, LA 70112 D
Hunter, W. R. 5100 East Virginia Beach Blvd., Norfolk, VA 23502
Jacquet, T. J. 1450 Poydras Street, New Orleans, LA 70112
Johns, D. M., Jr. 1450 Poydras Street, New Orleans, LA 70112 AS
Johnson, L. D. CNG Tower, Pittsburgh, PA 15222 EVP-CFO-D EVP-CFO-D-r
Jones, B. E. 1819 L Street, N.W., Washington, DC 20036 VP-r
Jones, P. L. 1450 Poydras Street, New Orleans, LA 70112
Keiffer, J. D. 445 West Main Street, Clarksburg, WV 26301 VP-D-r VP
Kleinpeter, K. P. 1450 Poydras Street, New Orleans, LA 70112
Klink, B. C. 1717 East Ninth Street, Cleveland, OH 44114 VP-D-r
Kossler, J. R. 1717 East Ninth Street, Cleveland, OH 44114 Cn-r
<FN>
Position symbol key appears on page 16.
</TABLE>
9.
<PAGE>
ITEM 6. OFFICERS AND DIRECTORS
<TABLE>
Part I. Names, principal business address and positions held as of December 31, 1993 (Continued)
<CAPTION>
Name of System Companies with Which Connected
Peoples Virginia West
Natural Natural Ohio River CNG
Gas Gas Gas Gas Producing
<S> <C> <C> <C> <C> <C> <C>
Ammons, S. W. 625 Liberty Avenue, Pittsburgh, PA 15222 VP-D-r
Atkinson, S. L. 445 West Main Street, Clarksburg, WV 26301
Banks, T. C. One Park Ridge Center, Pittsburgh, PA 15244
Baril, D. C. 1450 Poydras Street, New Orleans, LA 70112 AS-r
Bartels, M. G. 1717 East Ninth Street, Cleveland, OH 44114 D SVP-D
Bean, R. J., Jr. Bank One Center, West, Clarksburg, WV 26302
Beckert, W. E. 625 Liberty Avenue, Pittsburgh, PA 15222 Cn-r
Beorn, P. F., Jr. Bank One Center, West, Clarksburg, WV 26302
Birnbaum, S. 1717 East Ninth Street, Cleveland, OH 44114
Bober, D. G. 324 Fourth Street, Marietta, OH 45750 GM-r
Bonifas, P. J. 319 West Market Street, Lima, OH 45802 AS-AT-r
Borneman, D. W. CNG Tower, Pittsburgh, PA 15222
Boswell, W. P. 625 Liberty Avenue, Pittsburgh, PA 15222 VP-GC-S-D-r
Brakeman, B. F. 1717 East Ninth Street, Cleveland, OH 44114
Brink, G. R. 500 J. Clyde Morris Blvd., Newport News, VA 23601 D-df
Brown, H. E. 445 West Main Street, Clarksburg, WV 26301
Butera, J. E. CNG Tower, Pittsburgh, PA 15222
Carney, P. A. 1717 East Ninth Street, Cleveland, OH 44114
Causey, J. L. 5100 East Virginia Beach Blvd., Norfolk, VA 23502 VP-r
Chamberlain, A. R. 5100 East Virginia Beach Blvd., Norfolk, VA 23502 AVP-r
Chandler, N. F. CNG Tower, Pittsburgh, PA 15222
Clay, J. A. 1450 Poydras Street, New Orleans, LA 70112 VP-r
Connell, D. W. CNG Tower, Pittsburgh, PA 15222
Connolly, J. W. 600 Grant Street, Pittsburgh, PA 15230
Crittenden, J. A. One Park Ridge Center, Pittsburgh, PA 15244
Cuccinelli, K. T. CNG Tower, Pittsburgh, PA 15222
Curia, J. A. 445 West Main Street, Clarksburg, WV 26301
Davidson, G. A., Jr. CNG Tower, Pittsburgh, PA 15222
Dodd, T. E. CNG Tower, Pittsburgh, PA 15222
Dzuricky, D. J. CNG Tower, Pittsburgh, PA 15222
Elliott, R. S. Bank One Center, West, Clarksburg, WV 26302
Fellabom, J. R. 625 Liberty Avenue, Pittsburgh, PA 15222 T-r
Fickenscher, D. A. 5100 East Virginia Beach Blvd., Norfolk, VA 23502 VP-GC-S-r
Fink, J. L. CNG Tower, Pittsburgh, PA 15222
Flinn, J. A. 625 Liberty Avenue, Pittsburgh, PA 15222 VPD-r
Fox, W. A. 445 West Main Street, Clarksburg, WV 26301
Fratangelo, R. D. CNG Tower, Pittsburgh, PA 15222
Frink, J. L. 625 Liberty Avenue, Pittsburgh, PA 15222 SVP-D-r
Fritsche, W. F., Jr. 5100 East Virginia Beach Blvd., Norfolk, VA 23502 P-D-r
Funk, C. T. One Park Ridge Center, Pittsburgh, PA 15244
Garbe, T. F. CNG Tower, Pittsburgh, PA 15222
Garrett. J. W. CNG Tower, Pittsburgh, PA 15222
George, S. G. 625 Liberty Avenue, Pittsburgh, PA 15222 AcGC-AS-r
Gifford, R. R. 1717 East Ninth Street, Cleveland, OH 44114 P-D P-D
Greer, M. D. 445 West Main Street, Clarksburg, WV 26301
Gregg, P. P. 1450 Poydras Street, New Orleans, LA 70112 SVP-CFO-
T-D-r
Grone, J. A. 319 West Market Street, Lima, OH 45802 S-T-D-r
Halbritter, M. A. Bank One Center, West, Clarksburg, WV 26302
Hattery, J. L. 319 West Market Street, Lima, OH 45802 AT-r
Hunt, D. P. 1450 Poydras Street, New Orleans, LA 70112 P-D-r
Hunter, W. R. 5100 East Virginia Beach Blvd., Norfolk, VA 23502 VP-T-r
Jacquet, T. J. 1450 Poydras Street, New Orleans, LA 70112 AS-r
Johns, D. M., Jr. 1450 Poydras Street, New Orleans, LA 70112 GC-S-r
Johnson, L. D. CNG Tower, Pittsburgh, PA 15222 D
Jones, B. E. 1819 L Street, N.W., Washington, DC 20036
Jones, P. L. 1450 Poydras Street, New Orleans, LA 70112 VP-D-r
Keiffer, J. D. 445 West Main Street, Clarksburg, WV 26301
Kleinpeter, K. P. 1450 Poydras Street, New Orleans, LA 70112 VP-D-r
Klink, B. C. 1717 East Ninth Street, Cleveland, OH 44114 VP-D
Kossler, J. R. 1717 East Ninth Street, Cleveland, OH 44114 Cn
<FN>
Position symbol key appears on page 16.
</TABLE>
10.
<PAGE>
ITEM 6. OFFICERS AND DIRECTORS
<TABLE>
Part I. Names, principal business address and positions held as of December 31, 1993 (Continued)
<CAPTION>
Name of System Companies with Which Connected
CNG
CNG Gas CNG Consolidated CNG
Energy Services Storage LNG Research
<S> <C> <C> <C> <C> <C> <C>
Ammons, S. W. 625 Liberty Avenue, Pittsburgh, PA 15222
Atkinson, S. L. 445 West Main Street, Clarksburg, WV 26301 AS AS
Banks, T. C. One Park Ridge Center, Pittsburgh, PA 15244 T-r
Baril, D. C. 1450 Poydras Street, New Orleans, LA 70112
Bartels, M. G. 1717 East Ninth Street, Cleveland, OH 44114
Bean, R. J., Jr. Bank One Center, West, Clarksburg, WV 26302
Beckert, W. E. 625 Liberty Avenue, Pittsburgh, PA 15222
Beorn, P. F., Jr. Bank One Center, West, Clarksburg, WV 26302
Birnbaum, S. 1717 East Ninth Street, Cleveland, OH 44114
Bober, D. G. 324 Fourth Street, Marietta, OH 45750
Bonifas, P. J. 319 West Market Street, Lima, OH 45802
Borneman, D. W. CNG Tower, Pittsburgh, PA 15222
Boswell, W. P. 625 Liberty Avenue, Pittsburgh, PA 15222
Brakeman, B. F. 1717 East Ninth Street, Cleveland, OH 44114
Brink, G. R. 500 J. Clyde Morris Blvd., Newport News, VA 23601
Brown, H. E. 445 West Main Street, Clarksburg, WV 26301 GC-S-D
Butera, J. E. CNG Tower, Pittsburgh, PA 15222
Carney, P. A. 1717 East Ninth Street, Cleveland, OH 44114
Causey, J. L. 5100 East Virginia Beach Blvd., Norfolk, VA 23502
Chamberlain, A. R. 5100 East Virginia Beach Blvd., Norfolk, VA 23502
Chandler, N. F. CNG Tower, Pittsburgh, PA 15222
Clay, J. A. 1450 Poydras Street, New Orleans, LA 70112
Connell, D. W. CNG Tower, Pittsburgh, PA 15222
Connolly, J. W. 600 Grant Street, Pittsburgh, PA 15230
Crittenden, J. A. One Park Ridge Center, Pittsburgh, PA 15244 S S-r S
Cuccinelli, K. T. CNG Tower, Pittsburgh, PA 15222 VP-D
Curia, J. A. 445 West Main Street, Clarksburg, WV 26301
Davidson, G. A., Jr. CNG Tower, Pittsburgh, PA 15222
Dodd, T. E. CNG Tower, Pittsburgh, PA 15222 VP-GM-D
Dzuricky, D. J. CNG Tower, Pittsburgh, PA 15222 D T-D
Elliott, R. S. Bank One Center, West, Clarksburg, WV 26302
Fellabom, J. R. 625 Liberty Avenue, Pittsburgh, PA 15222
Fickenscher, D. A. 5100 East Virginia Beach Blvd., Norfolk, VA 23502
Fink, J. L. CNG Tower, Pittsburgh, PA 15222
Flinn, J. A. 625 Liberty Avenue, Pittsburgh, PA 15222
Fox, W. A. 445 West Main Street, Clarksburg, WV 26301 VP-D
Fratangelo, R. D. CNG Tower, Pittsburgh, PA 15222 D
Frink, J. L. 625 Liberty Avenue, Pittsburgh, PA 15222
Fritsche, W. F., Jr. 5100 East Virginia Beach Blvd., Norfolk, VA 23502
Funk, C. T. One Park Ridge Center, Pittsburgh, PA 15244 VP-GM-D-r
Garbe, T. F. CNG Tower, Pittsburgh, PA 15222
Garrett, J. W. CNG Tower, Pittsburgh, PA 15222
George, S. G. 625 Liberty Avenue, Pittsburgh, PA 15222
Gifford, R. R. 1717 East Ninth Street, Cleveland, OH 44114
Greer, M. D. 445 West Main Street, Clarksburg, WV 26301
Gregg, P. P. 1450 Poydras Street, New Orleans, LA 70112
Grone, J. A. 319 West Market Street, Lima, OH 45802
Halbritter, M. A. Bank One Center, West, Clarksburg, WV 26302
Hattery, J. L. 319 West Market Street, Lima, OH 45802
Hunt, D. P. 1450 Poydras Street, New Orleans, LA 70112
Hunter, W. R. 5100 East Virginia Beach Blvd., Norfolk, VA 23502
Jacquet, T. J. 1450 Poydras Street, New Orleans, LA 70112
Johns, D. M., Jr. 1450 Poydras Street, New Orleans, LA 70112
Johnson, L. D. CNG Tower, Pittsburgh, PA 15222 P-D P-D
Jones, B. E. 1819 L Street, N.W., Washington, DC 20036
Jones, P. L. 1450 Poydras Street, New Orleans, LA 70112
Keiffer, J. D. 445 West Main Street, Clarksburg, WV 26301
Kleinpeter, K. P. 1450 Poydras Street, New Orleans, LA 70112
Klink, B. C. 1717 East Ninth Street, Cleveland, OH 44114
Kossler, J. R. 1717 East Ninth Street, Cleveland, OH 44114
<FN>
Position symbol key appears on page 16.
</TABLE>
11.
<PAGE>
ITEM 6. OFFICERS AND DIRECTORS
<TABLE>
Part I. Names, principal business address and positions held as of December 31, 1993 (Continued)
<CAPTION>
Name of System Companies with Which Connected
CNG CNG
Coal Financial
<S> <C> <C> <C>
Ammons, S. W. 625 Liberty Avenue, Pittsburgh, PA 15222
Atkinson, S. L. 445 West Main Street, Clarksburg, WV 26301
Banks, T. C. One Park Ridge Center, Pittsburgh, PA 15244
Baril, D. C. 1450 Poydras Street, New Orleans, LA 70112 S
Bartels, M. G. 1717 East Ninth Street, Cleveland, OH 44114
Bean, R. J., Jr. Bank One Center, West, Clarksburg, WV 26302
Beckert, W. E. 625 Liberty Avenue, Pittsburgh, PA 15222
Beorn, P. F., Jr. Bank One Center, West, Clarksburg, WV 26302
Birnbaum, S. 1717 East Ninth Street, Cleveland, OH 44114
Bober, D. G. 324 Fourth Street, Marietta, OH 45750
Bonifas, P. J. 319 West Market Street, Lima, OH 45802
Borneman, D. W. CNG Tower, Pittsburgh, PA 15222
Boswell, W. P. 625 Liberty Avenue, Pittsburgh, PA 15222
Brakeman, B. F. 1717 East Ninth Street, Cleveland, OH 44114
Brink, G. R. 500 J. Clyde Morris Blvd., Newport News, VA 23601
Brown, H. E. 445 West Main Street, Clarksburg, WV 26301
Butera, J. E. CNG Tower, Pittsburgh, PA 15222
Carney, P. A. 1717 East Ninth Street, Cleveland, OH 44114
Causey, J. L. 5100 East Virginia Beach Blvd., Norfolk, VA 23502
Chamberlain, A. R. 5100 East Virginia Beach Blvd., Norfolk, VA 23502
Chandler, N. F. CNG Tower, Pittsburgh, PA 15222 S-D
Clay, J. A. 1450 Poydras Street, New Orleans, LA 70112
Connell, D. W. CNG Tower, Pittsburgh, PA 15222
Connolly, J. W. 600 Grant Street, Pittsburgh, PA 15230
Crittenden, J. A. One Park Ridge Center, Pittsburgh, PA 15244
Cuccinelli, K. T. CNG Tower, Pittsburgh, PA 15222
Curia, J. A. 445 West Main Street, Clarksburg, WV 26301
Davidson, G. A., Jr. CNG Tower, Pittsburgh, PA 15222
Dodd, T. E. CNG Tower, Pittsburgh, PA 15222
Dzuricky, D. J. CNG Tower, Pittsburgh, PA 15222 VP-GM-D
Elliott, R. S. Bank One Center, West, Clarksburg, WV 26302
Fellabom, J. R. 625 Liberty Avenue, Pittsburgh, PA 15222
Fickenscher, D. A. 5100 East Virginia Beach Blvd., Norfolk, VA 23502
Fink, J. L. CNG Tower, Pittsburgh, PA 15222
Flinn, J. A. 625 Liberty Avenue, Pittsburgh, PA 15222
Fox, W. A. 445 West Main Street, Clarksburg, WV 26301
Fratangelo, R. D. CNG Tower, Pittsburgh, PA 15222 D
Frink, J. L. 625 Liberty Avenue, Pittsburgh, PA 15222
Fritsche, W. F., Jr. 5100 East Virginia Beach Blvd., Norfolk, VA 23502
Funk, C. T. One Park Ridge Center, Pittsburgh, PA 15244
Garbe, T. F. CNG Tower, Pittsburgh, PA 15222
Garrett, J. W. CNG Tower, Pittsburgh, PA 15222
George, S. G. 625 Liberty Avenue, Pittsburgh, PA 15222
Gifford, R. R. 1717 East Ninth Street, Cleveland, OH 44114
Greer, M. D. 445 West Main Street, Clarksburg, WV 26301
Gregg, P. P. 1450 Poydras Street, New Orleans, LA 70112 VP-T-D
Grone, J. A. 319 West Market Street, Lima, OH 45802
Halbritter, M. A. Bank One Center, West, Clarksburg, WV 26302
Hattery, J. L. 319 West Market Street, Lima, OH 45802
Hunt, D. P. 1450 Poydras Street, New Orleans, LA 70112 P-D
Hunter, W. R. 5100 East Virginia Beach Blvd., Norfolk, VA 23502
Jacquet, T. J. 1450 Poydras Street, New Orleans, LA 70112
Johns, D. M., Jr. 1450 Poydras Street, New Orleans, LA 70112 GC-AS
Johnson, L. D. CNG Tower, Pittsburgh, PA 15222 SVP-D P-D
Jones, B. E. 1819 L Street, N.W., Washington, DC 20036
Jones, P. L. 1450 Poydras Street, New Orleans, LA 70112
Keiffer, J. D. 445 West Main Street, Clarksburg, WV 26301
Kleinpeter, K. P. 1450 Poydras Street, New Orleans, LA 70112
Klink, B. C. 1717 East Ninth Street, Cleveland, OH 44114
Kossler, J. R. 1717 East Ninth Street, Cleveland, OH 44114
<FN>
Position symbol key appears on page 16.
</TABLE>
12.
<PAGE>
ITEM 6. OFFICERS AND DIRECTORS (Continued)
<TABLE>
<CAPTION>
Name of System Companies with Which Connected
East
Parent Service CNG Hope Ohio
Company Company Transmission Gas Gas
<S> <C> <C> <C> <C> <C> <C>
Leber, J. W. 1450 Poydras Street, New Orleans, LA 70112
Lego, P. E. Westinghouse Building, Gateway Center,
Pittsburgh, PA 15222 D-df
Lepionka, R. L. CNG Tower, Pittsburgh, PA 15222 r
Levitt, T. Cumnock 300, Boston, MA 02163 D-df
Lewis, F. C. 1717 East Ninth Street, Cleveland, OH 44114 S-AcGC-r
Lindsey, B. M., Jr. 625 Liberty Avenue, Pittsburgh, PA 15222
Long, K. R. 1717 East Ninth Street, Cleveland, OH 44114 VP-GC-
AS-r
Madden, D. G. CNG Tower, Pittsburgh, PA 15222 AVP-r
Magnuson, M. G. 1819 L Street, N.W., Washington, DC 20036 VP-AtGC-r
Manley, M. J. 445 West Main Street, Clarksburg, WV 26301 AT-r AT
McGreevy, S. R. CNG Tower, Pittsburgh, PA 15222 VP VP-r
McKean, T. D. CNG Tower, Pittsburgh, PA 15222 r
McKeown, L. J. CNG Tower, Pittsburgh, PA 15222 S S-r
Meyer, D. S. 625 Liberty Avenue, Pittsburgh, PA 15222
Millet, D. G. 1450 Poydras Street, New Orleans, LA 70112
Minter, S. A. 1400 Hanna Building, Cleveland, OH 44115 D-df
Neel, T. H. 1450 Poydras Street, New Orleans, LA 70112
Newland, T. D. 1717 East Ninth Street, Cleveland, OH 44114 VP-r
Nicholas, G. A. Bank One Center, West, Clarksburg, WV 26302 VP-D-r
Nichols, C. J. 1450 Poydras Street, New Orleans, LA 70112
Nichols, J. F. 1450 Poydras Street, New Orleans, LA 70112
Owens, R. M. Bank One Center, West, Clarksburg, WV 26302 VP-D-r
Peirson, W. R. 355 Carriage Way, Deerfield, IL 60015 D-df
Peters, M. H. CNG Tower, Pittsburgh, PA 15222 AS-r
Plusquellec, P. L. 1450 Poydras Street, New Orleans, LA 70112
Rizzo, J. V. CNG Tower, Pittsburgh, PA 15222 AVP-r
Roberts, C. E. 445 West Main Street, Clarksburg, WV 26301 AVP-r
Rushlander, W. M. CNG Tower, Pittsburgh, PA 15222 r
Rutledge, D. B. 1450 Poydras Street, New Orleans, LA 70112
Sable, R. M. CNG Tower, Pittsburgh, PA 15222 SAT SAT-r
Schwartz, E. S. 625 Liberty Avenue, Pittsburgh, PA 15222
Seiler, W. R. CNG Tower, Pittsburgh, PA 15222 ACn ACn-r
Sheets, R. G. 445 West Main Street, Clarksburg, WV 26301 VP-r
Shupe, P. M. 1717 East Ninth Street, Cleveland, OH 44114 VP-r
Simmons, R. P. 1000 Six PPG Place, Pittsburgh, PA 15222 D-df
Simon, J. M. 5100 East Virginia Beach Blvd., Norfolk, VA 23502
Slaby, J. B. 445 West Main Street, Clarksburg, WV 26301 VP-r
Smith, R. M. 625 Liberty Avenue, Pittsburgh, PA 15222
Sokoloski, B. J. 445 West Main Street, Clarksburg, WV 26301 VP-D-r
Sommer, A. A., Jr. 1800 M Street, N.W., Washington, DC 20036 D-df
Suttle, N. W., Jr. 445 West Main Street, Clarksburg, WV 26301 AT-r AT
Sweeney, P. J. 1717 East Ninth Street, Cleveland, OH 44114 T-r
Swenson, P. F. CNG Tower, Pittsburgh, PA 15222 r
Sypolt, G. L. 445 West Main Street, Clarksburg, WV 26301 VP-r
Taaffe, G. A., Jr. CNG Tower, Pittsburgh, PA 15222 AS VP-AtGC-r
Taylor, R. D. CNG Tower, Pittsburgh, PA 15222 AVP-r
Tibbott, J. M. CNG Tower, Pittsburgh, PA 15222 AVP-r
Tierney, F. R., III CNG Tower, Pittsburgh, PA 15222 VP-r
Timms, L. J., Jr. 445 West Main Street, Clarksburg, WV 26301 D P-D-r
Tower, T. N. 1717 East Ninth Street, Cleveland, OH 44114 VP-r
Vuchetich, M. K. 319 West Market Street, Lima, OH 45802
Weatherwax, D. E. CNG Tower, Pittsburgh, PA 15222 SVP SVP-r
Westfall, D. M. 445 West Main Street, Clarksburg, WV 26301 SVP-T-D-r T
Whitacre, J. V. CNG Tower, Pittsburgh, PA 15222 VP-r
Whitehurst, G. W. 401 College Place, Norfolk, VA 23510
Whitlinger, M. M. CNG Tower, Pittsburgh, PA 15222 AT AT-r
Williams, S. E. CNG Tower, Pittsburgh, PA 15222 SVP-GC SVP-GC-r
Witter, D. J. City Loan Building, Lima, OH 45802
Wright, C. L. 5100 East Virginia Beach Blvd., Norfolk, VA 23502
Wright, R. E. 625 Liberty Avenue, Pittsburgh, PA 15222 D
Wyse, L. 79 Fifth Avenue, New York, NY 10003 D-df
Yoho, M. L. 445 West Main Street, Clarksburg, WV 26301 SVP-D-r
<FN>
Position symbol key appears on page 16.
</TABLE>
13.
<PAGE>
ITEM 6. OFFICERS AND DIRECTORS (Continued)
<TABLE>
<CAPTION>
Name of System Companies with Which Connected
Peoples Virginia West
Natural Natural Ohio River CNG
Gas Gas Gas Gas Producing
<S> <C> <C> <C> <C> <C> <C>
Leber, J. W. 1450 Poydras Street, New Orleans, LA 70112 VP-r
Lego, P. E. Westinghouse Building, Gateway Center,
Pittsburgh, PA 15222
Lepionka, R. L. CNG Tower, Pittsburgh, PA 15222
Levitt, T. Cumnock 300, Boston, MA 02163
Lewis, F. C. 1717 East Ninth Street, Cleveland, OH 44114 S-AcGC
Lindsey, B. M., Jr. 625 Liberty Avenue, Pittsburgh, PA 15222 AT-r
Long, K. R. 1717 East Ninth Street, Cleveland, OH 44114 VP-GC-AS
Madden, D. G. CNG Tower, Pittsburgh, PA 15222
Magnuson, M. G. 1819 L Street, N.W., Washington, DC 20036
Manley, M. J. 445 West Main Street, Clarksburg, WV 26301
McGreevy, S. R. CNG Tower, Pittsburgh, PA 15222
McKean, T. D. CNG Tower, Pittsburgh, PA 15222
McKeown, L. J. CNG Tower, Pittsburgh, PA 15222 AS
Meyer, D. S. 625 Liberty Avenue, Pittsburgh, PA 15222 VP-D-r
Millet, D. G. 1450 Poydras Street, New Orleans, LA 70112 AT-r
Minter, S. A. 1400 Hanna Building, Cleveland, OH 44115
Neel, T. H. 1450 Poydras Street, New Orleans, LA 70112 SVP-D-r
Newland, T. D. 1717 East Ninth Street, Cleveland, OH 44114 D VP-D
Nicholas, G. A. Bank One Center, West, Clarksburg, WV 26302
Nichols, C. J. 1450 Poydras Street, New Orleans, LA 70112 AT-r
Nichols, J. F. 1450 Poydras Street, New Orleans, LA 70112 VP-r
Owens, R. M. Bank One Center, West, Clarksburg, WV 26302
Peirson, W. R. 355 Carriage Way, Deerfield, IL 60015
Peters, M. H. CNG Tower, Pittsburgh, PA 15222
Plusquellec, P. L. 1450 Poydras Street, New Orleans, LA 70112 VP-D-r
Rizzo, J. V. CNG Tower, Pittsburgh, PA 15222
Roberts, C. E. 445 West Main Street, Clarksburg, WV 26301
Rushlander, W. M. CNG Tower, Pittsburgh, PA 15222
Rutledge, D. B. 1450 Poydras Street, New Orleans, LA 70112 r
Sable, R. M. CNG Tower, Pittsburgh, PA 15222
Schwartz, E. S. 625 Liberty Avenue, Pittsburgh, PA 15222 r
Seiler, W. R. CNG Tower, Pittsburgh, PA 15222
Sheets, R. G. 445 West Main Street, Clarksburg, WV 26301
Shupe, P. M. 1717 East Ninth Street, Cleveland, OH 44114
Simmons, R. P. 1000 Six PPG Place, Pittsburgh, PA 15222
Simon, J. M. 5100 East Virginia Beach Blvd., Norfolk, VA 23502 Cn-AT-AS-r
Slaby, J. B. 445 West Main Street, Clarksburg, WV 26301
Smith, R. M. 625 Liberty Avenue, Pittsburgh, PA 15222 VP-D-r
Sokoloski, B. J. 445 West Main Street, Clarksburg, WV 26301
Sommer, A. A., Jr. 1800 M Street, N.W., Washington, DC 20036
Suttle, N. W., Jr. 445 West Main Street, Clarksburg, WV 26301
Sweeney, P. J. 1717 East Ninth Street, Cleveland, OH 44114 T
Swenson, P. F. CNG Tower, Pittsburgh, PA 15222
Sypolt, G. L. 445 West Main Street, Clarksburg, WV 26301
Taaffe, G. A., Jr. CNG Tower, Pittsburgh, PA 15222
Taylor, R. D. CNG Tower, Pittsburgh, PA 15222
Tibbott, J. M. CNG Tower, Pittsburgh, PA 15222
Tierney, F. R., III CNG Tower, Pittsburgh, PA 15222
Timms, L. J., Jr. 445 West Main Street, Clarksburg, WV 26301
Tower, T. N. 1717 East Ninth Street, Cleveland, OH 44114
Vuchetich, M. K. 319 West Market Street, Lima, OH 45802 VP-GM-D-r
Weatherwax, D. E. CNG Tower, Pittsburgh, PA 15222
Westfall, D. M. 445 West Main Street, Clarksburg, WV 26301
Whitacre, J. V. CNG Tower, Pittsburgh, PA 15222
Whitehurst, G. W. 401 College Place, Norfolk, VA 23510 D-df
Whitlinger, M. M. CNG Tower, Pittsburgh, PA 15222
Williams, S. E. CNG Tower, Pittsburgh, PA 15222
Witter, D. J. City Loan Building, Lima, OH 45802 GC
Wright, C. L. 5100 East Virginia Beach Blvd., Norfolk, VA 23502 VP-r
Wright, R. E. 625 Liberty Avenue, Pittsburgh, PA 15222 P-D-r
Wyse, L. 79 Fifth Avenue, New York, NY 10003
Yoho, M. L. 445 West Main Street, Clarksburg, WV 26301
<FN>
Position symbol key appears on page 16.
</TABLE>
14.
<PAGE>
ITEM 6. OFFICERS AND DIRECTORS (Continued)
<TABLE>
<CAPTION>
Name of System Companies with Which Connected
CNG
CNG Gas CNG Consolidated CNG
Energy Services Storage LNG Research
<S> <C> <C> <C> <C> <C> <C>
Leber, J. W. 1450 Poydras Street, New Orleans, LA 70112
Lego, P. E. Westinghouse Building, Gateway Center,
Pittsburgh, PA 15222
Lepionka, R. L. CNG Tower, Pittsburgh, PA 15222 AT
Levitt, T. Cumnock 300, Boston, MA 02163
Lewis, F. C. 1717 East Ninth Street, Cleveland, OH 44114
Lindsey, B. M., Jr. 625 Liberty Avenue, Pittsburgh, PA 15222
Long, K. R. 1717 East Ninth Street, Cleveland, OH 44114
Madden, D. G. CNG Tower, Pittsburgh, PA 15222
Magnuson, M. G. 1819 L Street, N.W., Washington, DC 20036
Manley, M. J. 445 West Main Street, Clarksburg, WV 26301 AT
McGreevy, S. R. CNG Tower, Pittsburgh, PA 15222 D
McKean, T. D. CNG Tower, Pittsburgh, PA 15222 AT
McKeown, L. J. CNG Tower, Pittsburgh, PA 15222
Meyer, D. S. 625 Liberty Avenue, Pittsburgh, PA 15222
Millet, D. G. 1450 Poydras Street, New Orleans, LA 70112 AT
Minter, S. A. 1400 Hanna Building, Cleveland, OH 44115
Neel, T. H. 1450 Poydras Street, New Orleans, LA 70112
Newland, T. D. 1717 East Ninth Street, Cleveland, OH 44114
Nicholas, G. A. Bank One Center, West, Clarksburg, WV 26302
Nichols, C. J. 1450 Poydras Street, New Orleans, LA 70112 AT
Nichols, J. F. 1450 Poydras Street, New Orleans, LA 70112
Owens, R. M. Bank One Center, West, Clarksburg, WV 26302 AT
Peirson, W. R. 355 Carriage Way, Deerfield, IL 60015
Peters, M. H. CNG Tower, Pittsburgh, PA 15222 AS AS
Plusquellec, P. L. 1450 Poydras Street, New Orleans, LA 70112
Rizzo, J. V. CNG Tower, Pittsburgh, PA 15222
Roberts, C. E. 445 West Main Street, Clarksburg, WV 26301
Rushlander, W. M. CNG Tower, Pittsburgh, PA 15222 AS
Rutledge D. B. 1450 Poydras Street, New Orleans, LA 70112
Sable, R. M. CNG Tower, Pittsburgh, PA 15222 T AT
Schwartz, E. S. 625 Liberty Avenue, Pittsburgh, PA 15222 VP-GM-D
Seiler, W. R. CNG Tower, Pittsburgh, PA 15222
Sheets, R. G. 445 West Main Street, Clarksburg, WV 26301
Shupe, P. M. 1717 East Ninth Street, Cleveland, OH 44114
Simmons, R. P. 1000 Six PPG Place, Pittsburgh, PA 15222
Simon, J. M. 5100 East Virginia Beach Blvd., Norfolk, VA 23502
Slaby, J. B. 445 West Main Street, Clarksburg, WV 26301
Smith, R. M. 625 Liberty Avenue, Pittsburgh, PA 15222
Sokoloski, B. J. 445 West Main Street, Clarksburg, WV 26301
Sommer, A. A., Jr. 1800 M Street, N.W., Washington, DC 20036
Suttle, N. W., Jr. 445 West Main Street, Clarksburg, WV 26301 AT
Sweeney, P. J. 1717 East Ninth Street, Cleveland, OH 44114
Swenson, P. F. CNG Tower, Pittsburgh, PA 15222 VP-GM-D
Sypolt, G. L. 445 West Main Street, Clarksburg, WV 26301 VP
Taaffe, G. A., Jr. CNG Tower, Pittsburgh, PA 15222 D AS
Taylor, R. D. CNG Tower, Pittsburgh, PA 15222
Tibbott, J. M. CNG Tower, Pittsburgh, PA 15222
Tierney, F. R., III CNG Tower, Pittsburgh, PA 15222
Timms, L. J., Jr. 445 West Main Street, Clarksburg, WV 26301 P-D
Tower, T. N. 1717 East Ninth Street, Cleveland, OH 44114
Vuchetich, M. K. 319 West Market Street, Lima, OH 45802
Weatherwax, D. E. CNG Tower, Pittsburgh, PA 15222
Westfall, D. M. 445 West Main Street, Clarksburg, WV 26301 VP-T-D T-D
Whitacre, J. V. CNG Tower, Pittsburgh, PA 15222 D
Whitehurst, G. W. 401 College Place, Norfolk, VA 23510
Whitlinger, M. M. CNG Tower, Pittsburgh, PA 15222 AT
Williams, S. E. CNG Tower, Pittsburgh, PA 15222 D GC-S-D D
Witter, D. J. City Loan Building, Lima, OH 45802
Wright, C. L. 5100 East Virginia Beach Blvd., Norfolk, VA 23502
Wright, R. E. 625 Liberty Avenue, Pittsburgh, PA 15222
Wyse, L. 79 Fifth Avenue, New York, NY 10003
Yoho, M. L. 445 West Main Street, Clarksburg, WV 26301 VP-D
<FN>
Position symbol key appears on page 16.
</TABLE>
15.
<PAGE>
ITEM 6. OFFICERS AND DIRECTORS (Continued)
<TABLE>
<CAPTION>
Name of System Companies with Which Connected
CNG CNG
Coal Financial
<S> <C> <C> <C>
Leber, J. W. 1450 Poydras Street, New Orleans, LA 70112
Lego, P. E. Westinghouse Building, Gateway Center,
Pittsburgh, PA 15222
Lepionka, R. L. CNG Tower, Pittsburgh, PA 15222
Levitt, T. Cumnock 300, Boston, MA 02163
Lewis, F. C. 1717 East Ninth Street, Cleveland, OH 44114
Lindsey, B. M., Jr. 625 Liberty Avenue, Pittsburgh, PA 15222
Long, K. R. 1717 East Ninth Street, Cleveland, OH 44114
Madden, D. G. CNG Tower, Pittsburgh, PA 15222
Magnuson, M. G. 1819 L Street, N.W., Washington, DC 20036
Manley, M. J. 445 West Main Street, Clarksburg, WV 26301
McGreevy, S. R. CNG Tower, Pittsburgh, PA 15222
McKean, T. D. CNG Tower, Pittsburgh, PA 15222
McKeown, L. J. CNG Tower, Pittsburgh, PA 15222
Meyer, D. S. 625 Liberty Avenue, Pittsburgh, PA 15222
Millet, D. G. 1450 Poydras Street, New Orleans, LA 70112 AT
Minter, S. A. 1400 Hanna Building, Cleveland, OH 44115
Neel, T. H. 1450 Poydras Street, New Orleans, LA 70112
Newland, T. D. 1717 East Ninth Street, Cleveland, OH 44114
Nicholas, G. A. Bank One Center, West, Clarksburg, WV 26302
Nichols, C. J. 1450 Poydras Street, New Orleans, LA 70112
Nichols, J. F. 1450 Poydras Street, New Orleans, LA 70112 D
Owens, R. M. Bank One Center, West, Clarksburg, WV 26302
Peirson, W. R. 355 Carriage Way, Deerfield, IL 60015
Peters, M. H. CNG Tower, Pittsburgh, PA 15222 AS
Plusquellec, P. L. 1450 Poydras Street, New Orleans, LA 70112 VP-D
Rizzo, J. V. CNG Tower, Pittsburgh, PA 15222
Roberts, C. E. 445 West Main Street, Clarksburg, WV 26301
Rushlander, W. M. CNG Tower, Pittsburgh, PA 15222
Rutledge, D. B. 1450 Poydras Street, New Orleans, LA 70112 AS
Sable, R. M. CNG Tower, Pittsburgh, PA 15222 T
Schwartz, E. S. 625 Liberty Avenue, Pittsburgh, PA 15222
Seiler, W. R. CNG Tower, Pittsburgh, PA 15222
Sheets, R. G. 445 West Main Street, Clarksburg, WV 26301
Shupe, P. M. 1717 East Ninth Street, Cleveland, OH 44114
Simmons, R. P. 1000 Six PPG Place, Pittsburgh, PA 15222
Simon, J. M. 5100 East Virginia Beach Blvd., Norfolk, VA 23502
Slaby, J. B. 445 West Main Street, Clarksburg, WV 26301
Smith, R. M. 625 Liberty Avenue, Pittsburgh, PA 15222
Sokoloski, B. J. 445 West Main Street, Clarksburg, WV 26301
Sommer, A. A., Jr. 1800 M Street, N.W., Washington, DC 20036
Suttle, N. W., Jr. 445 West Main Street, Clarksburg, WV 26301
Sweeney, P. J. 1717 East Ninth Street, Cleveland, OH 44114
Swenson, P. F. CNG Tower, Pittsburgh, PA 15222
Sypolt, G. L. 445 West Main Street, Clarksburg, WV 26301
Taaffe, G. A., Jr. CNG Tower, Pittsburgh, PA 15222 AS
Taylor, R. D. CNG Tower, Pittsburgh, PA 15222
Tibbott, J. M. CNG Tower, Pittsburgh, PA 15222
Tierney, F. R., III CNG Tower, Pittsburgh, PA 15222
Timms, L. J., Jr. 445 West Main Street, Clarksburg, WV 26301
Tower, T. N. 1717 East Ninth Street, Cleveland, OH 44114
Vuchetich, M. K. 319 West Market Street, Lima, OH 45802
Weatherwax, D. E. CNG Tower, Pittsburgh, PA 15222
Westfall, D. M. 445 West Main Street, Clarksburg, WV 26301
Whitacre, J. V. CNG Tower, Pittsburgh, PA 15222
Whitehurst, G. W. 401 College Place, Norfolk, VA 23510
Whitlinger, M. M. CNG Tower, Pittsburgh, PA 15222
Williams, S. E. CNG Tower, Pittsburgh, PA 15222
Witter, D. J. City Loan Building, Lima, OH 45802
Wright, C. L. 5100 East Virginia Beach Blvd., Norfolk, VA 23502
Wright, R. E. 625 Liberty Avenue, Pittsburgh, PA 15222
Wyse, L. 79 Fifth Avenue, New York, NY 10003
Yoho, M. L. 445 West Main Street, Clarksburg, WV 26301
<FN>
P O S I T I O N S Y M B O L K E Y
CB - Chairman of the Board T - Treasurer AVP - Assistant Vice President AcGC - Associate General Counsel
P - President Cn - Controller AS - Assistant Secretary AtGC - Assistant General Counsel
EVP - Executive Vice President D - Director SAT - Senior Assistant Treasurer GM - General Manager
SVP - Senior Vice President CFO - Chief Financial Officer AT - Assistant Treasurer r - Remuneration
VP - Vice President GC - General Counsel ACn - Assistant Controller df - Directors' fees
S - Secretary
</TABLE>
16.
<PAGE>
ITEM 6. OFFICERS AND DIRECTORS (Continued)
Part II. Banking connections
Information concerning all officers and Directors of each system company who
have financial connections within the provisions of Section 17(c) of the
Public Utility Holding Company Act of 1935 as of December 31, 1993, follows:
______________________________________________________________________________
Position
Name and Location Held in Applicable
Name of Officer of Financial Financial Exemption
or Director Institution Institution Rule
______________________________________________________________________________
R. J. Bean, Jr. Huntington National Bank, Director 70
West Virginia (c)(f)
Morgantown, West Virginia
J. W. Connolly Mellon Bank Corporation* and Director 70
Mellon Bank, N.A. (a)
Pittsburgh, Pennsylvania
G. A. Davidson, Jr. PNC Bank Corp. Director 70
Pittsburgh, Pennsylvania (a)(c)(e)(f)
R. R. Gifford National City Bank Director 70
Cleveland, Ohio (c)(f)
S. A. Minter Key Corp. Director 70
(Successor to Society (a)
Corporation as of
March 1, 1994)
Cleveland, Ohio
W. R. Peirson American National Corporation* Director 70
and American National Bank (b)
& Trust Company of Chicago
Chicago, Illinois
R. P. Simmons PNC Bank Corp. Director 70
Pittsburgh, Pennsylvania (a)
L. J. Timms, Jr. The Empire National Bank Director 70
Clarksburg, West Virginia (c)(f)
G. W. Whitehurst Signet Bank-Hampton Roads Advisory 70
Norfolk, Virginia Director (c)
* Bank holding company.
______________________________________________________________________________
Part III. Compensation and other related information
(a) The compensation of Directors and executive officers of system companies:
Information concerning the compensation of the five highest paid Directors and
executive officers of the system (with all subsidiaries treated as divisions)
for the year 1993 is included in the Registrant's "Notice of Annual Meeting
and Proxy Statement, 1994" which is filed as Exhibit F.(3) to this Form U5S.
Information presented under the captions "COMPENSATION OF EXECUTIVE OFFICERS -
SUMMARY COMPENSATION TABLE" on page 12, and "NON-EMPLOYEE DIRECTORS'
COMPENSATION" on page 18, in such proxy statement is hereby incorporated by
reference.
17.
<PAGE>
ITEM 6. OFFICERS AND DIRECTORS (Concluded)
(b) Their interest in the securities of system companies including options or
other rights to acquire securities:
Information concerning the interest of Directors and executive officers in the
securities of system companies, including options or other rights to acquire
securities, is included in the Registrant's "Notice of Annual Meeting and
Proxy Statement, 1994" which is filed as Exhibit F.(3) to this Form U5S.
Information presented under the following captions in such proxy statement is
hereby incorporated by reference: "SECURITY OWNERSHIP OF MANAGEMENT" on page
11; "OPTION GRANTS IN LAST FISCAL YEAR" on page 13; "AGGREGATED OPTION
EXERCISES IN LAST FISCAL YEAR AND DECEMBER 31, 1993, YEAR-END OPTION VALUES"
on page 14; and "LONG-TERM INCENTIVE PLAN AWARDS IN LAST FISCAL YEAR" on
page 14.
(c) Their contracts and transactions with system companies:
Information concerning the contracts and transactions by Directors and
executive officers with system companies is included in the Registrant's
"Notice of Annual Meeting and Proxy Statement, 1994" which is filed as Exhibit
F.(3) to this Form U5S. Information presented under the caption "COMPENSATION
COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION" on pages 18 and 19 in such
proxy statement is hereby incorporated by reference.
(d) Their indebtedness to system companies:
None.
(e) Their participation in bonus and profit-sharing arrangements and other
benefits:
Information concerning the participation by Directors and executive officers
in other benefits is included in the Registrant's "Notice of Annual Meeting
and Proxy Statement, 1994" which is filed as Exhibit F.(3) to this Form U5S.
Information presented under the captions "LIFE INSURANCE AND RELATED BENEFIT
PLANS" on page 19, and "RETIREMENT PROGRAMS" on pages 19 and 20, in such proxy
statement is hereby incorporated by reference.
(f) Their rights to indemnification:
Pursuant to Section 145 of the General Corporation Law of the State of
Delaware, in which the Company is incorporated, the Company's by-laws
indemnify
any person who was or is a party or is threatened to be made a party to
any threatened, pending or completed action, suit or proceeding, whether
civil, criminal, administrative or investigative (other than an action by or
in the right of the Company) by reason of the fact that he is or was a
Director, officer, employee or agent of the Company, or is or was serving at
the request of the Company as a Director, officer, employee or agent, against
expenses (including attorneys' fees), judgment, fines and amounts paid in
settlement actually and reasonably incurred by him in connection with such
action, suit or proceeding if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
Company, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful.
The Company also purchases directors and officers liability insurance with
limits of $150 million, and, in recognition of the scope of the foregoing
by-law indemnification, certain other errors and omissions and general
liability insurance coverages which are applicable to all employees as
insureds, including Directors and officers.
18.
<PAGE>
ITEM 7. CONTRIBUTIONS AND PUBLIC RELATIONS
Tabulated below for each system company are the expenditures, disbursements,
or payments made during the year 1993, directly or indirectly, to or for the
account of any citizens group, or public relations counsel. There were no
payments made to any political party, candidate for public office or holder of
such office, or any committee or agent therefor by the system companies during
the year 1993.
<TABLE>
<CAPTION>
______________________________________________________________________________
_______________________________
Accounts Charged
Name of Name or Number of
Per Books of
Company Beneficiary(ies) Purpose
Disbursing Company Amount
______________________________________________________________________________
_______________________________
<S> <C> <C> <C>
<C>
Parent Company Hill and Knowlton Public relations
Operating expenses $ 1,305
One beneficiary Civic
Operating expenses $ 2,500
One beneficiary Civic Other
income deductions $ 2,592
East Ohio Gas Six beneficiaries Civic Other
income deductions $ 7,600
Peoples Natural Gas One beneficiary Public information Other
income deductions $ 250
West Ohio Gas One beneficiary Public information
Operating expenses $ 25
CNG Producing Two beneficiaries Civic
Operating expenses $ 7,700
______________________________________________________________________________
_______________________________
</TABLE>
The information set forth above with respect to the subsidiary companies of
the
Parent Company is based upon memoranda submitted to the Parent Company for
such
purpose by each of its subsidiary companies, which memoranda are in the
certified form required by Instruction 2 to ITEM 7. The Parent Company is
preserving such memoranda.
19.
<PAGE>
ITEM 8. SERVICE, SALES AND CONSTRUCTION CONTRACTS
Part I. Contracts for services, including engineering or construction
services, or goods supplied or sold between system companies during
the year 1993 are as follows:
<TABLE>
<CAPTION>
______________________________________________________________________________
___________________________
Date of
Contract(s)
Transaction (Note 1) Serving Company Receiving Company
Compensation (Note 2)
______________________________________________________________________________
___________________________
<S> <C> <C> <C>
<C>
Aircraft services CNG Transmission Hope Gas $
70,601 Note 3
Aircraft services CNG Transmission CNG Producing $
24,519 Note 3
Management services CNG Transmission Hope Gas
$3,543,531 January 1, 1984
Management services CNG Transmission CNG Producing $
630,098 January 1, 1984
Management services CNG Producing CNG Gas Services
$1,572,349 October 1, 1990
Management services CNG Producing CNG Transmission $
32,738 December 15, 1981
Management services CNG Gas Services CNG Producing $
18,057 Note 4
Management services East Ohio Gas River Gas $
427,364 December 27, 1977
Management and repair
services and supplies East Ohio Gas West Ohio Gas $
217,000 December 2, 1969
______________________________________________________________________________
___________________________
</TABLE>
Notes:
(1) Contracts for aircraft and management services with aggregate
consideration passing between the same companies of less than $100,000
have been omitted.
(2) All contracts were in effect at December 31, 1993, except as noted.
(3) Aircraft service contracts are dated May 1, 1984 and February 17, 1992.
(4) Contract pending.
Part II. Contracts to purchase services or goods between any system company
and any affiliate (other than a system company) or any company in
which any officer or director of the receiving company is a partner
or owns 5 percent or more of any class of equity securities:
None.
Part III. Employment of any person by any system company for the performance
on a continuing basis of management, supervisory or financial
advisory services:
None.
20.
<PAGE>
ITEM 9. WHOLESALE GENERATORS AND FOREIGN UTILITY COMPANIES
Part I. Information concerning the interests held by system companies in
exempt wholesale generators or foreign utility companies:
(a) Information concerning the interests held by system companies in an
exempt
wholesale generator follows. System companies do not have an interest in any
foreign utility companies.
Company Name: Lakewood Cogeneration, L.P.
Location of Facility: Lakewood, New Jersey
Business Address: c/o Hydra-Co Enterprises, Inc.
100 Clinton Square, Suite 400
Syracuse, New York 13202-1049
The Lakewood cogeneration facility is a 237-megawatt combined-cycle, gas-fired
facility currently under construction. Fuel oil will be used as a back-up
fuel. The Lakewood facility is dispatchable by Jersey Central Power & Light
Company ("JCP&L") via the Pennsylvania-Jersey-Maryland (PJM) grid, and is
directly connected to a JCP&L switchyard, which is the point of sale for the
electricity. Construction of the Lakewood facility is expected to be
completed
in September 1994.
CNG Energy Company, a wholly owned subsidiary of the Registrant, holds
directly
a 34 percent limited partnership interest in Lakewood Cogeneration, L.P.
("Lakewood Partnership"). CNG Lakewood, Inc., a wholly owned subsidiary of
CNG
Energy, owns a 1 percent general partnership interest in the Lakewood
Partnership.
(b) At December 31, 1993, the Registrant, through CNG Energy, had a total
investment in the project of $7,186,000, which represents unreimbursed costs
incurred prior to construction.
Upon completion of construction of the $262 million Lakewood facility, CNG
Energy and CNG Lakewood are required to make cash equity contributions of
$17,340,000 and $510,000, respectively, for their capital contributions to the
Lakewood Partnership. Certain additional contributions may also be required
to
the extent of construction cost overruns. The Registrant has guaranteed the
equity contributions of CNG Energy and CNG Lakewood, including the additional
equity contributions relating to possible construction cost overruns. The
total cash contributions guaranteed by the Registrant amount to $23,350,000.
Debt financing for the Lakewood facility, amounting to up to $211 million, is
nonrecourse to the partners.
In November 1992, CNG Energy contributed to the Lakewood Partnership all
contracts, permits, studies and designs which it had created, acquired or
developed relating to the Lakewood facility. The items transferred by CNG
Energy had a net book value of $12,000,000 and were assigned a contribution
value of $12,000,000 by the Lakewood Partnership. CNG Energy is entitled to
receive distributions from the Lakewood Partnership, determined in accordance
with the partnership agreement, which are intended to compensate CNG Energy
for
the documents contributed.
(c) The Lakewood facility is currently under construction. Equity
contributions will not be made by the partners until the construction is
completed and the construction financing is converted to term loan financing.
Therefore, the capital structure of the Lakewood Partnership at December 31,
1993, is 100 percent debt. Since the facility is currently under
construction,
the Lakewood Partnership had no earnings for the year ended December 31, 1993.
21.
<PAGE>
ITEM 9. WHOLESALE GENERATORS AND FOREIGN UTILITY COMPANIES (Concluded)
(d) The Lakewood Partnership has a Fuel Management Agreement with CNG Gas
Services, a wholly owned subsidiary of the Registrant. Under this agreement,
CNG Gas Services will provide all fuel management services for the Lakewood
facility, including fuel procurement, transportation and the administration of
contracts for the purchase, transportation and storage of fuel for the
facility. In addition to tolling fees based on the volumes of fuel used in
the
facility, CNG Gas Services will receive a monthly administration fee. This
fee, originally set at $6,250 per month, will be adjusted effective January 1
each calendar year by the Gross Domestic Product Deflator Ratio.
In the year ended December 31, 1993, CNG Gas Services was reimbursed
$22,000 for direct costs incurred on behalf of the Lakewood Partnership.
Part II. Relationship of exempt wholesale generators and foreign utility
companies to system companies, and financial data:
An organization chart showing the relationship of the Lakewood Partnership
to other system companies is filed as Exhibit G. to this Form U5S. Financial
statements of the Lakewood Partnership are filed as Exhibit H. to this
Form U5S.
Part III. Investment in exempt wholesale generators and foreign utility
companies:
At December 31, 1993, the Company's aggregate investment in the Lakewood
project amounted to $7,186,000. The Company has no investments in foreign
utility companies. The ratio of the aggregate investment in the Lakewood
project to the Registrant's aggregate capital investment in its domestic
public utility subsidiaries was 0.3 percent at December 31, 1993.
22.
<PAGE>
ITEM 10. FINANCIAL STATEMENTS AND EXHIBITS
Financial Statements
INDEX
______________________________________________________________________________
Page
______________________________________________________________________________
Report of Independent Accountants . . . . . . . . . . . . . . . . 24
Consolidating Balance Sheet at December 31, 1993. . . . . . . . . 25
Consolidating Income Statement for the Year 1993. . . . . . . . . 35
Consolidating Statement of Retained Earnings for the Year 1993. . 40
Consolidating Statement of Cash Flows for the Year 1993 . . . . . 45
Notes to Consolidated Financial Statements for the Year 1993. . . 50
______________________________________________________________________________
Exhibits
A list of the exhibits is on page 73.
23.
<PAGE>
ITEM 10. FINANCIAL STATEMENTS AND EXHIBITS (Continued)
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Stockholders of
Consolidated Natural Gas Company
In our opinion, the financial statements listed in the accompanying index on
page 23 present fairly, in all material respects, (1) the consolidated
financial position of Consolidated Natural Gas Company and its subsidiaries at
December 31, 1993, and the results of their operations and their cash flows
for the year then ended and (2) the financial position of Consolidated
Natural Gas Company (registrant) at December 31, 1993, and the results of its
operations and its cash flows for the year then ended, in conformity with
generally accepted accounting principles. These financial statements are the
responsibility of the Company's management; our responsibility is to express
an opinion on these financial statements based on our audits. We conducted
our audits of these statements in accordance with generally accepted auditing
standards which require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management,
and evaluating the overall financial statement presentation. We believe that
our audits provide a reasonable basis for the opinion expressed above.
As discussed in Note 1 to these consolidated financial statements, the Company
adopted Statement of Financial Accounting Standards No. 106, "Employers'
Accounting for Postretirement Benefits Other Than Pensions," and Statement of
Financial Accounting Standards No. 109, "Accounting for Income Taxes," in
1993.
Our audit was made for the purpose of forming an opinion on the consolidated
financial statements taken as a whole and the registrant's financial
statements. The consolidating information on pages 25 through 49 is presented
for purposes of complying with the requirements of the Public Utility Holding
Company Act of 1935 rather than to present financial position, results of
operations, and cash flows of the other individual companies. Accordingly, we
do not express an opinion on the financial position, results of operations and
cash flows of the individual companies other than the registrant. However,
the consolidating information on pages 25 through 49 has been subjected to the
auditing procedures applied in the audit of the consolidated financial
statements and, in our opinion, is fairly stated in all material respects in
relation to the consolidated financial statements taken as a whole.
PRICE WATERHOUSE
Price Waterhouse
600 Grant Street
Pittsburgh, Pennsylvania 15219-9954
February 16, 1994
24.
<PAGE>
ITEM 10.
(Continued)
CONSOLIDATED NATURAL GAS COMPANY
CONSOLIDATING BALANCE SHEET
At December 31, 1993
(Thousands of Dollars)
<TABLE>
<CAPTION>
REGISTERED
CONSOLIDATED HOLDING
Consolidated COMPANY
Natural Gas Eliminations Consolidated
Company and and Combined Natural Gas
Assets Subsidiaries Adjustments* Total Company
<S> <C> <C> <C> <C>
PROPERTY, PLANT AND EQUIPMENT (Note 4)
Gas utility and other plant . . . . . . . . . . . . . . . $ 4,362,996 $ (2,101) $ 4,365,097 $ -
Accumulated depreciation and amortization . . . . . . . . (1,607,606) 330 (1,607,936) -
Net gas utility and other plant . . . . . . . . . 2,755,390 (1,771) 2,757,161 -
Exploration and production properties . . . . . . . . . . 2,983,032 - 2,983,032 -
Accumulated depreciation and amortization . . . . . . . . (1,822,154) 32,515 (1,854,669) -
Net exploration and production properties . . . . 1,160,878 32,515 1,128,363 -
Net property, plant and equipment . . . . . . . . 3,916,268 30,744 3,885,524 -
INVESTMENTS
Stocks of subsidiary companies, at equity - consolidated. - (2,229,215) 2,229,215 2,229,215
Notes of subsidiary companies - consolidated . . . . . . - (1,070,919) 1,070,919 1,070,919
Total investments . . . . . . . . . . . . . . . . - (3,300,134) 3,300,134 3,300,134
CURRENT ASSETS
Cash and temporary cash investments . . . . . . . . . . . 27,122 - 27,122 1,293
Accounts receivable
Customers . . . . . . . . . . . . . . . . . . . . . . . 461,108 - 461,108 -
Other . . . . . . . . . . . . . . . . . . . . . . . . . 176,005 - 176,005 103
Allowance for doubtful accounts . . . . . . . . . . . . (7,640) - (7,640) -
Receivables from affiliated companies - consolidated . . - (1,224,188) 1,224,188 442,204
Inventories, at cost
Gas stored - current portion (LIFO method) (Note 8) . . 140,848 (2,060) 142,908 -
Construction and operating materials and supplies
(average cost method) . . . . . . . . . . . . . . . . 38,784 - 38,784 -
Unrecovered gas costs (net) (Note 3). . . . . . . . . . . (9,000) (27,602) 18,602 -
Deferred income taxes - current portion (Note 7) . . . . 23,685 (909) 24,594 -
Prepayments and other current assets . . . . . . . . . . 192,212 (3,752) 195,964 46,947
Total current assets . . . . . . . . . . . . . . 1,043,124 (1,258,511) 2,301,635 490,547
OTHER ASSETS (Note 9)
Unamortized abandoned facilities . . . . . . . . . . . . 52,676 - 52,676 -
Other investments . . . . . . . . . . . . . . . . . . . . 39,600 - 39,600 -
Deferred charges and other noncurrent assets (Notes 3,
6, 7 and 15) . . . . . . . . . . . . . . . . . . . . . 357,918 (77,474) 435,392 2,222
Total other assets . . . . . . . . . . . . . . . 450,194 (77,474) 527,668 2,222
Total assets . . . . . . . . . . . . . . . . . . $ 5,409,586 $(4,605,375) $10,014,961 $3,792,903
<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>
25.
<PAGE>
ITEM 10.
(Continued)
CONSOLIDATED NATURAL GAS COMPANY
CONSOLIDATING BALANCE SHEET (Continued)
At December 31, 1993
(Thousands of Dollars)
<TABLE>
<CAPTION>
SUBSIDIARIES
Consolidated
Natural Gas CNG The East The Peoples
Service Transmission Ohio Gas Natural Gas
Assets Company, Inc. Corporation Company Company
<S> <C> <C> <C> <C>
PROPERTY, PLANT AND EQUIPMENT (Note 4)
Gas utility and other plant . . . . . . . . . . . . . . . $ 23,071 $1,895,692 $1,158,178 $ 610,501
Accumulated depreciation and amortization . . . . . . . . (13,473) (702,673) (489,339) (211,896)
Net gas utility and other plant . . . . . . . . . 9,598 1,193,019 668,839 398,605
Exploration and production properties . . . . . . . . . . - 237,418 - -
Accumulated depreciation and amortization . . . . . . . . - (206,592) - -
Net exploration and production properties . . . . - 30,826 - -
Net property, plant and equipment . . . . . . . . 9,598 1,223,845 668,839 398,605
INVESTMENTS
Stocks of subsidiary companies, at equity - consolidated. - - - -
Notes of subsidiary companies - consolidated . . . . . . - - - -
Total investments . . . . . . . . . . . . . . . . - - - -
CURRENT ASSETS
Cash and temporary cash investments . . . . . . . . . . . 675 2,396 8,320 4,894
Accounts receivable
Customers . . . . . . . . . . . . . . . . . . . . . . . - 60,128 189,001 77,857
Other . . . . . . . . . . . . . . . . . . . . . . . . . 723 3,558 80,071 971
Allowance for doubtful accounts . . . . . . . . . . . . - - (2,020) (3,535)
Receivables from affiliated companies - consolidated . . 517,648 92,330 461 -
Inventories, at cost
Gas stored - current portion (LIFO method) (Note 8) . . - 2,930 72,426 32,305
Construction and operating materials and supplies
(average cost method) . . . . . . . . . . . . . . . . - 15,075 13,088 4,483
Unrecovered gas costs (net) (Note 3). . . . . . . . . . . - - - 13,483
Deferred income taxes - current portion (Note 7) . . . . - 11,976 8,480 -
Prepayments and other current assets . . . . . . . . . . 70 47,850 67,282 7,929
Total current assets . . . . . . . . . . . . . . 519,116 236,243 437,109 138,387
OTHER ASSETS (Note 9)
Unamortized abandoned facilities . . . . . . . . . . . . - - - -
Other investments . . . . . . . . . . . . . . . . . . . . - 15,763 - -
Deferred charges and other noncurrent assets (Notes 3,
6, 7 and 15) . . . . . . . . . . . . . . . . . . . . . 2,467 107,006 159,138 132,158
Total other assets . . . . . . . . . . . . . . . 2,467 122,769 159,138 132,158
Total assets . . . . . . . . . . . . . . . . . . $531,181 $1,582,857 $1,265,086 $ 669,150
<FN>
The Notes to Consolidated Financial Statements are an integral part of this statement.
( ) denotes negative amount.
</TABLE>
26.
<PAGE>
ITEM 10.
(Continued)
CONSOLIDATED NATURAL GAS COMPANY
CONSOLIDATING BALANCE SHEET (Continued)
At December 31, 1993
(Thousands of Dollars)
<TABLE>
<CAPTION>
SUBSIDIARIES
Virginia Hope West Ohio The River CNG
Natural Gas, Gas Gas Producing
Assets Gas, Inc. Inc. Company Company Company
<S> <C> <C> <C> <C> <C>
PROPERTY, PLANT AND EQUIPMENT (Note 4)
Gas utility and other plant . . . . . . . . . . . . . . . $374,167 $156,022 $ 57,382 $ 23,849 $ -
Accumulated depreciation and amortization . . . . . . . . (84,650) (69,953) (24,134) (10,132) -
Net gas utility and other plant . . . . . . . . . 289,517 86,069 33,248 13,717 -
Exploration and production properties . . . . . . . . . . - - - - 2,745,614
Accumulated depreciation and amortization . . . . . . . . - - - - (1,648,077)
Net exploration and production properties . . . . - - - - 1,097,537
Net property, plant and equipment . . . . . . . . 289,517 86,069 33,248 13,717 1,097,537
INVESTMENTS
Stocks of subsidiary companies, at equity - consolidated. - - - - -
Notes of subsidiary companies - consolidated . . . . . . - - - - -
Total investments . . . . . . . . . . . . . . . . - - - - -
CURRENT ASSETS
Cash and temporary cash investments . . . . . . . . . . . 552 3,451 1,392 298 3,195
Accounts receivable
Customers . . . . . . . . . . . . . . . . . . . . . . . 20,424 12,610 8,732 3,117 20,230
Other . . . . . . . . . . . . . . . . . . . . . . . . . 17,033 6,936 4,737 1,433 59,596
Allowance for doubtful accounts . . . . . . . . . . . . (50) (435) (280) (20) (1,000)
Receivables from affiliated companies - consolidated . . - 6,609 - - 103,317
Inventories, at cost
Gas stored - current portion (LIFO method) (Note 8) . . 11,917 6,749 6,214 2,197 -
Construction and operating materials and supplies
(average cost method) . . . . . . . . . . . . . . . . 534 863 671 164 3,690
Unrecovered gas costs (net) (Note 3). . . . . . . . . . . - 5,119 - - -
Deferred income taxes - current portion (Note 7) . . . . 1,978 1,564 493 103 -
Prepayments and other current assets . . . . . . . . . . 232 8,057 3,399 1,185 9,320
Total current assets . . . . . . . . . . . . . . 52,620 51,523 25,358 8,477 198,348
OTHER ASSETS (Note 9)
Unamortized abandoned facilities . . . . . . . . . . . . - - - - -
Other investments . . . . . . . . . . . . . . . . . . . . 51 2,000 - - -
Deferred charges and other noncurrent assets (Notes 3,
6, 7 and 15) . . . . . . . . . . . . . . . . . . . . . 4,001 9,612 6,389 2,429 3,839
Total other assets . . . . . . . . . . . . . . . 4,052 11,612 6,389 2,429 3,839
Total assets . . . . . . . . . . . . . . . . . . $346,189 $149,204 $ 64,995 $ 24,623 $ 1,299,724
<FN>
The Notes to Consolidated Financial Statements are an integral part of this statement.
( ) denotes negative amount.
</TABLE>
27.
<PAGE>
ITEM 10.
(Continued)
CONSOLIDATED NATURAL GAS COMPANY
CONSOLIDATING BALANCE SHEET (Continued)
At December 31, 1993
(Thousands of Dollars)
<TABLE>
<CAPTION>
SUBSIDIARIES
CNG CNG Gas CNG Storage Consolidated CNG
Energy Services Service System LNG Research
Assets Company Corporation Company Company Company
<S> <C> <C> <C> <C> <C>
PROPERTY, PLANT AND EQUIPMENT (Note 4)
Gas utility and other plant . . . . . . . . . . . . . . . $ 6,373 $ 1,650 $21,063 $ - $ -
Accumulated depreciation and amortization . . . . . . . . (1,347) (339) - - -
Net gas utility and other plant . . . . . . . . . 5,026 1,311 21,063 - -
Exploration and production properties . . . . . . . . . . - - - - -
Accumulated depreciation and amortization . . . . . . . . - - - - -
Net exploration and production properties . . . . - - - - -
Net property, plant and equipment . . . . . . . . 5,026 1,311 21,063 - -
INVESTMENTS
Stocks of subsidiary companies, at equity - consolidated. - - - - -
Notes of subsidiary companies - consolidated . . . . . . - - - - -
Total investments . . . . . . . . . . . . . . . . - - - - -
CURRENT ASSETS
Cash and temporary cash investments . . . . . . . . . . . 370 16 49 48 98
Accounts receivable
Customers . . . . . . . . . . . . . . . . . . . . . . . - 69,009 - - -
Other . . . . . . . . . . . . . . . . . . . . . . . . . 696 135 - - 13
Allowance for doubtful accounts . . . . . . . . . . . . - (300) - - -
Receivables from affiliated companies - consolidated . . - 10,415 904 44,766 82
Inventories, at cost
Gas stored - current portion (LIFO method) (Note 8) . . - 8,170 - - -
Construction and operating materials and supplies
(average cost method) . . . . . . . . . . . . . . . . 216 - - - -
Unrecovered gas costs (net) (Note 3). . . . . . . . . . . - - - - -
Deferred income taxes - current portion (Note 7) . . . . - - - - -
Prepayments and other current assets . . . . . . . . . . - 3,690 - 3 -
Total current assets . . . . . . . . . . . . . . 1,282 91,135 953 44,817 193
OTHER ASSETS (Note 9)
Unamortized abandoned facilities . . . . . . . . . . . . - - - 52,676 -
Other investments . . . . . . . . . . . . . . . . . . . . 21,786 - - - -
Deferred charges and other noncurrent assets (Notes 3,
6, 7 and 15) . . . . . . . . . . . . . . . . . . . . . - 88 - 6,021 13
Total other assets . . . . . . . . . . . . . . . 21,786 88 - 58,697 13
Total assets . . . . . . . . . . . . . . . . . . $ 28,094 $92,534 $22,016 $103,514 $ 206
<FN>
The Notes to Consolidated Financial Statements are an integral part of this statement.
( ) denotes negative amount.
</TABLE>
28.
<PAGE>
ITEM 10.
(Continued)
CONSOLIDATED NATURAL GAS COMPANY
CONSOLIDATING BALANCE SHEET (Continued)
At December 31, 1993
(Thousands of Dollars)
<TABLE>
<CAPTION>
SUBSIDIARIES
CNG CNG
Coal Financial
Assets Company Services, Inc.
<S> <C> <C>
PROPERTY, PLANT AND EQUIPMENT (Note 4)
Gas utility and other plant . . . . . . . . . . . . . . . $ 37,149 $ -
Accumulated depreciation and amortization . . . . . . . . - -
Net gas utility and other plant . . . . . . . . . 37,149 -
Exploration and production properties . . . . . . . . . . - -
Accumulated depreciation and amortization . . . . . . . . - -
Net exploration and production properties . . . . - -
Net property, plant and equipment . . . . . . . . 37,149 -
INVESTMENTS
Stocks of subsidiary companies, at equity - consolidated. - -
Notes of subsidiary companies - consolidated . . . . . . - -
Total investments . . . . . . . . . . . . . . . . - -
CURRENT ASSETS
Cash and temporary cash investments . . . . . . . . . . . 34 41
Accounts receivable
Customers . . . . . . . . . . . . . . . . . . . . . . . - -
Other . . . . . . . . . . . . . . . . . . . . . . . . . - -
Allowance for doubtful accounts . . . . . . . . . . . . - -
Receivables from affiliated companies - consolidated . . 5,452 -
Inventories, at cost
Gas stored - current portion (LIFO method) (Note 8) . . - -
Construction and operating materials and supplies
(average cost method) . . . . . . . . . . . . . . . . - -
Unrecovered gas costs (net) (Note 3). . . . . . . . . . . - -
Deferred income taxes - current portion (Note 7) . . . . - -
Prepayments and other current assets . . . . . . . . . . - -
Total current assets . . . . . . . . . . . . . . 5,486 41
OTHER ASSETS (Note 9)
Unamortized abandoned facilities . . . . . . . . . . . . - -
Other investments . . . . . . . . . . . . . . . . . . . . - -
Deferred charges and other noncurrent assets (Notes 3,
6, 7 and 15) . . . . . . . . . . . . . . . . . . . . . - 9
Total other assets. . . . . . . . . . . . . . . . - 9
Total assets . . . . . . . . . . . . . . . . . . $ 42,635 $ 50
<FN>
The Notes to Consolidated Financial Statements are an integral part of this statement.
( ) denotes negative amount.
</TABLE>
29.
<PAGE>
ITEM 10.
(Continued)
CONSOLIDATED NATURAL GAS COMPANY
CONSOLIDATING BALANCE SHEET (Continued)
At December 31, 1993
(Thousands of Dollars)
<TABLE>
<CAPTION>
REGISTERED
CONSOLIDATED HOLDING
Consolidated COMPANY
Natural Gas Eliminations Consolidated
Company and and Combined Natural Gas
Stockholders' Equity and Liabilities Subsidiaries Adjustments* Total Company
<S> <C> <C> <C> <C>
CAPITALIZATION
Common stockholders' equity
Common stock - par value $2.75 per share (Note 10)
200,000,000 authorized shares
Issued - 92,933,828 shares . . . . . . . . . . . . . $ 255,568 $(1,587,927) $ 1,843,495 $ 255,568
Capital in excess of par value (Note 10) . . . . . . . 454,081 (30,376) 484,457 414,116
Retained earnings, per accompanying statement
(Note 12) . . . . . . . . . . . . . . . . . . . . . 1,466,783 (595,758) 2,062,541 1,466,783
Total common stockholders' equity . . . . . . . 2,176,432 (2,214,061) 4,390,493 2,136,467
Long-term debt (Note 13)
Debentures . . . . . . . . . . . . . . . . . . . . . . 890,748 - 890,748 890,748
Convertible subordinated debentures . . . . . . . . . 247,900 - 247,900 247,900
Unsecured loan . . . . . . . . . . . . . . . . . . . . 20,000 - 20,000 -
Notes payable to Registrant - consolidated . . . . . . - (1,070,919) 1,070,919 -
Total long-term debt . . . . . . . . . . . . . . 1,158,648 (1,070,919) 2,229,567 1,138,648
Total capitalization . . . . . . . . . . . . . . 3,335,080 (3,284,980) 6,620,060 3,275,115
CURRENT LIABILITIES
Commercial paper (Note 14) . . . . . . . . . . . . . . . 455,000 - 455,000 455,000
Accounts payable . . . . . . . . . . . . . . . . . . . . 345,126 - 345,126 3,017
Estimated rate contingencies and refunds (Note 3) . . . 57,456 - 57,456 -
Payables to affiliated companies - consolidated . . . . - (1,224,188) 1,224,188 203
Taxes accrued . . . . . . . . . . . . . . . . . . . . . 112,098 (3,417) 115,515 (1,037)
Unrecovered gas costs (net) (Note 3) . . . . . . . . . . - (27,602) 27,602 -
Deferred income taxes - current portion (Note 7) . . . . - (909) 909 -
Dividends declared . . . . . . . . . . . . . . . . . . . 45,073 - 45,073 45,073
Other accruals and current liabilities . . . . . . . . . 98,145 (335) 98,480 17,288
Total current liabilities . . . . . . . . . . . 1,112,898 (1,256,451) 2,369,349 519,544
DEFERRED CREDITS
Deferred income taxes (Note 7) . . . . . . . . . . . . . 783,511 11,035 772,476 4,311
Accumulated deferred investment tax credits . . . . . . 35,849 - 35,849 -
Other deferred credits and noncurrent liabilities (Note 7) 142,248 (74,979) 217,227 (6,067)
Total deferred credits . . . . . . . . . . . . . 961,608 (63,944) 1,025,552 (1,756)
COMMITMENTS AND CONTINGENCIES (Note 16)
Total stockholders' equity and liabilities . . . $ 5,409,586 $(4,605,375) $10,014,961 $3,792,903
<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>
30.
<PAGE>
ITEM 10.
(Continued)
CONSOLIDATED NATURAL GAS COMPANY
CONSOLIDATING BALANCE SHEET (Continued)
At December 31, 1993
(Thousands of Dollars)
<TABLE>
<CAPTION>
SUBSIDIARIES
Consolidated
Natural Gas CNG The East The Peoples
Service Transmission Ohio Gas Natural Gas
Stockholders' Equity and Liabilities Company, Inc. Corporation Company Company
<S> <C> <C> <C> <C>
CAPITALIZATION
Common stockholders' equity
Common stock - par value $2.75 per share (Note 10)
200,000,000 authorized shares
Issued - 92,933,828 shares . . . . . . . . . . . . . $ 10 $ 500,000 $ 157,968 $ 147,535
Capital in excess of par value (Note 10) . . . . . . . - 2,254 - -
Retained earnings, per accompanying statement
(Note 12) . . . . . . . . . . . . . . . . . . . . . - 147,065 199,166 76,103
Total common stockholders' equity . . . . . . . 10 649,319 357,134 223,638
Long-term debt (Note 13)
Debentures . . . . . . . . . . . . . . . . . . . . . . - - - -
Convertible subordinated debentures . . . . . . . . . - - - -
Unsecured loan . . . . . . . . . . . . . . . . . . . . - - - -
Notes payable to Registrant - consolidated . . . . . . 14,631 361,359 189,597 120,404
Total long-term debt . . . . . . . . . . . . . . 14,631 361,359 189,597 120,404
Total capitalization . . . . . . . . . . . . . . 14,641 1,010,678 546,731 344,042
CURRENT LIABILITIES
Commercial paper (Note 14) . . . . . . . . . . . . . . . - - - -
Accounts payable . . . . . . . . . . . . . . . . . . . . 2,454 43,764 113,281 29,448
Estimated rate contingencies and refunds (Note 3) . . . - 17,046 12,737 11,617
Payables to affiliated companies - consolidated . . . . 510,547 213,670 274,966 93,054
Taxes accrued . . . . . . . . . . . . . . . . . . . . . 500 31,213 58,220 3,429
Unrecovered gas costs (net) (Note 3) . . . . . . . . . . - 5,942 16,759 -
Deferred income taxes - current portion (Note 7) . . . . - - - 909
Dividends declared . . . . . . . . . . . . . . . . . . . - - - -
Other accruals and current liabilities . . . . . . . . . 1,440 34,314 19,377 7,904
Total current liabilities . . . . . . . . . . . 514,941 345,949 495,340 146,361
DEFERRED CREDITS
Deferred income taxes (Note 7) . . . . . . . . . . . . . (739) 158,417 146,268 122,940
Accumulated deferred investment tax credits . . . . . . - 643 16,619 10,754
Other deferred credits and noncurrent liabilities (Note 7) 2,338 67,170 60,128 45,053
Total deferred credits . . . . . . . . . . . . . 1,599 226,230 223,015 178,747
COMMITMENTS AND CONTINGENCIES (Note 16)
Total stockholders' equity and liabilities . . . $531,181 $1,582,857 $1,265,086 $ 669,150
<FN>
The Notes to Consolidated Financial Statements are an integral part of this statement.
( ) denotes negative amount.
</TABLE>
31.
<PAGE>
ITEM 10.
(Continued)
CONSOLIDATED NATURAL GAS COMPANY
CONSOLIDATING BALANCE SHEET (Continued)
At December 31, 1993
(Thousands of Dollars)
<TABLE>
<CAPTION>
SUBSIDIARIES
Virginia Hope West Ohio The River CNG
Natural Gas, Gas Gas Producing
Stockholders' Equity and Liabilities Gas, Inc. Inc. Company Company Company
<S> <C> <C> <C> <C> <C>
CAPITALIZATION
Common stockholders' equity
Common stock - par value $2.75 per share (Note 10)
200,000,000 authorized shares
Issued - 92,933,828 shares . . . . . . . . . . . . . $109,697 $ 28,728 $ 8,688 $ 3,550 $ 470,840
Capital in excess of par value (Note 10) . . . . . . . 57,603 - 435 - -
Retained earnings, per accompanying statement
(Note 12) . . . . . . . . . . . . . . . . . . . . . 4,787 18,016 9,515 2,975 150,101
Total common stockholders' equity . . . . . . . 172,087 46,744 18,638 6,525 620,941
Long-term debt (Note 13)
Debentures . . . . . . . . . . . . . . . . . . . . . . - - - - -
Convertible subordinated debentures . . . . . . . . . - - - - -
Unsecured loan . . . . . . . . . . . . . . . . . . . . 20,000 - - - -
Notes payable to Registrant - consolidated . . . . . . 73,418 27,052 9,492 3,025 257,901
Total long-term debt . . . . . . . . . . . . . . 93,418 27,052 9,492 3,025 257,901
Total capitalization . . . . . . . . . . . . . . 265,505 73,796 28,130 9,550 878,842
CURRENT LIABILITIES
Commercial paper (Note 14) . . . . . . . . . . . . . . . - - - - -
Accounts payable . . . . . . . . . . . . . . . . . . . . 15,755 10,175 4,672 1,860 76,213
Estimated rate contingencies and refunds (Note 3) . . . 3,528 10,462 1,953 113 -
Payables to affiliated companies - consolidated . . . . 34,758 21,986 17,546 6,390 12,741
Taxes accrued . . . . . . . . . . . . . . . . . . . . . 2,602 8,536 2,275 1,201 6,372
Unrecovered gas costs (net) (Note 3) . . . . . . . . . . 4,466 - 173 262 -
Deferred income taxes - current portion (Note 7) . . . . - - - - -
Dividends declared . . . . . . . . . . . . . . . . . . . - - - - -
Other accruals and current liabilities . . . . . . . . . 8,271 1,369 801 317 6,515
Total current liabilities . . . . . . . . . . . 69,380 52,528 27,420 10,143 101,841
DEFERRED CREDITS
Deferred income taxes (Note 7) . . . . . . . . . . . . . 1,077 9,556 4,336 3,396 293,008
Accumulated deferred investment tax credits . . . . . . 3,588 2,988 716 541 -
Other deferred credits and noncurrent liabilities (Note 7) 6,639 10,336 4,393 993 26,033
Total deferred credits . . . . . . . . . . . . . 11,304 22,880 9,445 4,930 319,041
COMMITMENTS AND CONTINGENCIES (Note 16)
Total stockholders' equity and liabilities . . . $346,189 $149,204 $ 64,995 $24,623 $ 1,299,724
<FN>
The Notes to Consolidated Financial Statements are an integral part of this statement.
( ) denotes negative amount.
</TABLE>
32.
<PAGE>
ITEM 10.
(Continued)
CONSOLIDATED NATURAL GAS COMPANY
CONSOLIDATING BALANCE SHEET (Continued)
At December 31, 1993
(Thousands of Dollars)
<TABLE>
<CAPTION>
SUBSIDIARIES
CNG CNG Gas CNG Storage Consolidated CNG
Energy Services Service System LNG Research
Stockholders' Equity and Liabilities Company Corporation Company Company Company
<S> <C> <C> <C> <C> <C>
CAPITALIZATION
Common stockholders' equity
Common stock - par value $2.75 per share (Note 10)
200,000,000 authorized shares
Issued - 92,933,828 shares . . . . . . . . . . . . . $11,150 $ 1 $13,660 $ 83,400 $ 15,290
Capital in excess of par value (Note 10) . . . . . . . - 10,049 - - -
Retained earnings, per accompanying statement
(Note 12) . . . . . . . . . . . . . . . . . . . . . 131 (69) 14 (979) (15,137)
Total common stockholders' equity . . . . . . . 11,281 9,981 13,674 82,421 153
Long-term debt (Note 13)
Debentures . . . . . . . . . . . . . . . . . . . . . . - - - - -
Convertible subordinated debentures . . . . . . . . . - - - - -
Unsecured loan . . . . . . . . . . . . . . . . . . . . - - - - -
Notes payable to Registrant - consolidated . . . . . . 6,690 - 7,350 - -
Total long-term debt . . . . . . . . . . . . . . 6,690 - 7,350 - -
Total capitalization . . . . . . . . . . . . . . 17,971 9,981 21,024 82,421 153
CURRENT LIABILITIES
Commercial paper (Note 14) . . . . . . . . . . . . . . . - - - - -
Accounts payable . . . . . . . . . . . . . . . . . . . . 666 43,730 - - 12
Estimated rate contingencies and refunds (Note 3) . . . - - - - -
Payables to affiliated companies - consolidated . . . . 715 37,083 522 - -
Taxes accrued . . . . . . . . . . . . . . . . . . . . . 77 1,381 470 186 41
Unrecovered gas costs (net) (Note 3) . . . . . . . . . . - - - - -
Deferred income taxes - current portion (Note 7) . . . . - - - - -
Dividends declared . . . . . . . . . . . . . . . . . . . - - - - -
Other accruals and current liabilities . . . . . . . . . 16 864 - - -
Total current liabilities . . . . . . . . . . . 1,474 83,058 992 186 53
DEFERRED CREDITS
Deferred income taxes (Note 7) . . . . . . . . . . . . . 8,649 (559) - 20,750 -
Accumulated deferred investment tax credits . . . . . . - - - - -
Other deferred credits and noncurrent liabilities (Note 7) - 54 - 157 -
Total deferred credits . . . . . . . . . . . . . 8,649 (505) - 20,907 -
COMMITMENTS AND CONTINGENCIES (Note 16)
Total stockholders' equity and liabilities . . . $28,094 $92,534 $22,016 $103,514 $ 206
<FN>
The Notes to Consolidated Financial Statements are an integral part of this statement.
( ) denotes negative amount.
</TABLE>
33.
<PAGE>
ITEM 10.
(Continued)
CONSOLIDATED NATURAL GAS COMPANY
CONSOLIDATING BALANCE SHEET (Concluded)
At December 31, 1993
(Thousands of Dollars)
<TABLE>
<CAPTION>
SUBSIDIARIES
CNG CNG
Coal Financial
Stockholders' Equity and Liabilities Company Services, Inc.
<S> <C> <C>
CAPITALIZATION
Common stockholders' equity
Common stock - par value $2.75 per share (Note 10)
200,000,000 authorized shares
Issued - 92,933,828 shares . . . . . . . . . . . . . $ 37,360 $ 50
Capital in excess of par value (Note 10) . . . . . . . - -
Retained earnings, per accompanying statement
(Note 12) . . . . . . . . . . . . . . . . . . . . . 4,070 -
Total common stockholders' equity . . . . . . . 41,430 50
Long-term debt (Note 13)
Debentures . . . . . . . . . . . . . . . . . . . . . . - -
Convertible subordinated debentures . . . . . . . . . - -
Unsecured loan . . . . . . . . . . . . . . . . . . . . - -
Notes payable to Registrant - consolidated . . . . . . - -
Total long-term debt . . . . . . . . . . . . . . - -
Total capitalization . . . . . . . . . . . . . . 41,430 50
CURRENT LIABILITIES
Commercial paper (Note 14) . . . . . . . . . . . . . . . - -
Accounts payable . . . . . . . . . . . . . . . . . . . . 79 -
Estimated rate contingencies and refunds (Note 3) . . . - -
Payables to affiliated companies - consolidated . . . . 7 -
Taxes accrued . . . . . . . . . . . . . . . . . . . . . 49 -
Unrecovered gas costs (net) (Note 3) . . . . . . . . . . - -
Deferred income taxes - current portion (Note 7) . . . . - -
Dividends declared . . . . . . . . . . . . . . . . . . . - -
Other accruals and current liabilities . . . . . . . . . 4 -
Total current liabilities . . . . . . . . . . . 139 -
DEFERRED CREDITS
Deferred income taxes (Note 7) . . . . . . . . . . . . . 1,066 -
Accumulated deferred investment tax credits . . . . . . - -
Other deferred credits and noncurrent liabilities (Note 7) - -
Total deferred credits . . . . . . . . . . . . . 1,066 -
COMMITMENTS AND CONTINGENCIES (Note 16)
Total stockholders' equity and liabilities . . . $ 42,635 $ 50
<FN>
The Notes to Consolidated Financial Statements are an integral part of this statement.
( ) denotes negative amount.
</TABLE>
34.
<PAGE>
ITEM 10.
(Continued)
CONSOLIDATED NATURAL GAS COMPANY
CONSOLIDATING INCOME STATEMENT
For the Year Ended December 31, 1993
(Thousands of Dollars)
<TABLE>
<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>
OPERATING REVENUES
Regulated gas sales
Residential and commercial . . . . . . . . . . . . . . . $1,595,142 $ - $1,595,142 $ -
Industrial . . . . . . . . . . . . . . . . . . . . . . . 55,347 - 55,347 -
Wholesale . . . . . . . . . . . . . . . . . . . . . . . 422,698 (228,340) 651,038 -
Nonregulated gas sales . . . . . . . . . . . . . . . . . . 541,849 (174,938) 716,787 -
Total gas sales . . . . . . . . . . . . . . . . . 2,615,036 (403,278) 3,018,314 -
Other operating revenues . . . . . . . . . . . . . . . . . 569,049 (121,969) 691,018 -
Total operating revenues (Notes 2 and 3) . . . . . 3,184,085 (525,247) 3,709,332 -
OPERATING EXPENSES
Purchased gas . . . . . . . . . . . . . . . . . . . . . . 1,603,048 (466,166) 2,069,214 -
Other purchased products . . . . . . . . . . . . . . . . . 62,290 - 62,290 -
Operation expense . . . . . . . . . . . . . . . . . . . . 598,495 (59,546) 658,041 4,717
Maintenance . . . . . . . . . . . . . . . . . . . . . . . 87,207 - 87,207 -
Depreciation and amortization (Note 4) . . . . . . . . . . 294,648 (4,812) 299,460 -
Taxes, other than income taxes . . . . . . . . . . . . . . 181,053 - 181,053 2,967
Subtotal . . . . . . . . . . . . . . . . . . . . . 2,826,741 (530,524) 3,357,265 7,684
Operating income before income taxes . . . . . . . 357,344 5,277 352,067 (7,684)
Income taxes - estimated (Note 7) . . . . . . . . . . . . 99,906 2,029 97,877 (4,977)
Operating income . . . . . . . . . . . . . . . . . 257,438 3,248 254,190 (2,707)
OTHER INCOME
Interest revenues . . . . . . . . . . . . . . . . . . . . 3,317 (4,770) 8,087 106
Gain on purchase of debentures for sinking funds . . . . . 926 - 926 926
Other (net) . . . . . . . . . . . . . . . . . . . . . . . 6,288 - 6,288 1,011
Equity in earnings of subsidiary companies - consolidated. - (209,212) 209,212 209,212
Interest revenues from affiliated companies - consolidated - (97,023) 97,023 92,696
Total other income . . . . . . . . . . . . . . . . 10,531 (311,005) 321,536 303,951
Income before interest charges . . . . . . . . . . 267,969 (307,757) 575,726 301,244
INTEREST CHARGES
Interest on long-term debt . . . . . . . . . . . . . . . . 85,265 (82,573) 167,838 83,253
Other interest expense . . . . . . . . . . . . . . . . . . 4,995 (18,849) 23,844 11,651
Total allowance for funds used during construction
(credit) . . . . . . . . . . . . . . . . . . . . . . . . (10,785) - (10,785) -
Total interest charges . . . . . . . . . . . . . . 79,475 (101,422) 180,897 94,904
Income before cumulative effect of change in
accounting principle . . . . . . . . . . . . . . . . . . 188,494 (206,335) 394,829 206,340
Cumulative effect prior to January 1, 1993, of
applying SFAS No. 109 (Note 7) . . . . . . . . . . . . . 17,422 (457) 17,879 (424)
NET INCOME . . . . . . . . . . . . . . . . . . . . . . . . . $ 205,916 $(206,792) $ 412,708 $205,916
Earnings per share of common stock
Income before cumulative effect of change in
accounting principle . . . . . . . . . . . . . . . . . . $2.03
Cumulative effect prior to January 1, 1993, of
applying SFAS No. 109 (Note 7) . . . . . . . . . . . . . .19
Net Income . . . . . . . . . . . . . . . . . . . . . . . . $2.22
Average common shares outstanding (thousands) . . . . . . . 92,808
<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>
35.
<PAGE>
ITEM 10.
(Continued)
CONSOLIDATED NATURAL GAS COMPANY
CONSOLIDATING INCOME STATEMENT (Continued)
For the Year Ended December 31, 1993
(Thousands of Dollars)
<TABLE>
<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>
OPERATING REVENUES
Regulated gas sales
Residential and commercial . . . . . . . . . . . . . . . $ - $ - $ 962,067 $313,168
Industrial . . . . . . . . . . . . . . . . . . . . . . . - - 43,149 2,580
Wholesale . . . . . . . . . . . . . . . . . . . . . . . - 631,101 - -
Nonregulated gas sales . . . . . . . . . . . . . . . . . . - 32,295 - -
Total gas sales . . . . . . . . . . . . . . . . . - 663,396 1,005,216 315,748
Other operating revenues . . . . . . . . . . . . . . . . . 53,439 354,493 59,190 34,698
Total operating revenues (Notes 2 and 3) . . . . . 53,439 1,017,889 1,064,406 350,446
OPERATING EXPENSES
Purchased gas . . . . . . . . . . . . . . . . . . . . . . - 590,014 677,213 162,887
Other purchased products . . . . . . . . . . . . . . . . . - 12,289 - -
Operation expense . . . . . . . . . . . . . . . . . . . . 48,062 133,851 176,382 79,760
Maintenance . . . . . . . . . . . . . . . . . . . . . . . 738 30,469 24,437 16,171
Depreciation and amortization (Note 4) . . . . . . . . . . 1,913 55,474 29,230 16,636
Taxes, other than income taxes . . . . . . . . . . . . . . 1,483 38,154 84,900 22,945
Subtotal . . . . . . . . . . . . . . . . . . . . . 52,196 860,251 992,162 298,399
Operating income before income taxes . . . . . . . 1,243 157,638 72,244 52,047
Income taxes - estimated (Note 7) . . . . . . . . . . . . 444 50,835 18,550 16,161
Operating income . . . . . . . . . . . . . . . . . 799 106,803 53,694 35,886
OTHER INCOME
Interest revenues . . . . . . . . . . . . . . . . . . . . - 5,395 1,918 -
Gain on purchase of debentures for sinking funds . . . . . - - - -
Other (net) . . . . . . . . . . . . . . . . . . . . . . . 46 2,771 1,085 451
Equity in earnings of subsidiary companies - consolidated. - - - -
Interest revenues from affiliated companies - consolidated 15 371 - -
Total other income . . . . . . . . . . . . . . . . 61 8,537 3,003 451
Income before interest charges . . . . . . . . . . 860 115,340 56,697 36,337
INTEREST CHARGES
Interest on long-term debt . . . . . . . . . . . . . . . . 1,180 25,413 13,299 8,593
Other interest expense . . . . . . . . . . . . . . . . . . 124 5,344 2,005 2,469
Total allowance for funds used during construction
(credit) . . . . . . . . . . . . . . . . . . . . . . . . - (1,163) (72) (75)
Total interest charges . . . . . . . . . . . . . . 1,304 29,594 15,232 10,987
Income before cumulative effect of change in
accounting principle . . . . . . . . . . . . . . . . . . (444) 85,746 41,465 25,350
Cumulative effect prior to January 1, 1993, of
applying SFAS No. 109 (Note 7) . . . . . . . . . . . . . 444 6,525 1,370 (115)
NET INCOME . . . . . . . . . . . . . . . . . . . . . . . . . $ - $ 92,271 $ 42,835 $ 25,235
<FN>
The Notes to Consolidated Financial Statements are an integral part of this statement.
( ) denotes negative amount.
</TABLE>
36.
<PAGE>
ITEM 10.
(Continued)
CONSOLIDATED NATURAL GAS COMPANY
CONSOLIDATING INCOME STATEMENT (Continued)
For the Year Ended December 31, 1993
(Thousands of Dollars)
<TABLE>
<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>
OPERATING REVENUES
Regulated gas sales
Residential and commercial . . . . . . . . . . . . . . . $161,409 $ 94,323 $49,856 $14,319 $ -
Industrial . . . . . . . . . . . . . . . . . . . . . . . 7,249 591 1,310 468 -
Wholesale . . . . . . . . . . . . . . . . . . . . . . . - 1,365 - - -
Nonregulated gas sales . . . . . . . . . . . . . . . . . . - - - - 367,689
Total gas sales . . . . . . . . . . . . . . . . . 168,658 96,279 51,166 14,787 367,689
Other operating revenues . . . . . . . . . . . . . . . . . 11,921 10,515 4,838 1,439 134,604
Total operating revenues (Notes 2 and 3) . . . . . 180,579 106,794 56,004 16,226 502,293
OPERATING EXPENSES
Purchased gas . . . . . . . . . . . . . . . . . . . . . . 96,634 55,679 34,056 8,759 125,535
Other purchased products . . . . . . . . . . . . . . . . . - - - - 40,611
Operation expense . . . . . . . . . . . . . . . . . . . . 31,318 26,388 10,079 3,314 122,655
Maintenance . . . . . . . . . . . . . . . . . . . . . . . 3,994 4,980 1,353 402 4,663
Depreciation and amortization (Note 4) . . . . . . . . . . 12,826 4,087 1,773 743 176,486
Taxes, other than income taxes . . . . . . . . . . . . . . 7,486 7,341 4,292 1,498 7,391
Subtotal . . . . . . . . . . . . . . . . . . . . . 152,258 98,475 51,553 14,716 477,341
Operating income before income taxes . . . . . . . 28,321 8,319 4,451 1,510 24,952
Income taxes - estimated (Note 7) . . . . . . . . . . . . 7,540 721 977 399 3,319
Operating income . . . . . . . . . . . . . . . . . 20,781 7,598 3,474 1,111 21,633
OTHER INCOME
Interest revenues . . . . . . . . . . . . . . . . . . . . 2 - 3 14 619
Gain on purchase of debentures for sinking funds . . . . . - - - - -
Other (net) . . . . . . . . . . . . . . . . . . . . . . . (215) (11) (97) 7 107
Equity in earnings of subsidiary companies - consolidated. - - - - -
Interest revenues from affiliated companies - consolidated 32 - - - 2,114
Total other income . . . . . . . . . . . . . . . . (181) (11) (94) 21 2,840
Income before interest charges . . . . . . . . . . 20,600 7,587 3,380 1,132 24,473
INTEREST CHARGES
Interest on long-term debt . . . . . . . . . . . . . . . . 7,465 2,128 860 214 24,282
Other interest expense . . . . . . . . . . . . . . . . . . 649 462 211 62 283
Total allowance for funds used during construction
(credit) . . . . . . . . . . . . . . . . . . . . . . . . - (7) (5) - (9,463)
Total interest charges . . . . . . . . . . . . . . 8,114 2,583 1,066 276 15,102
Income before cumulative effect of change in
accounting principle . . . . . . . . . . . . . . . . . . 12,486 5,004 2,314 856 9,371
Cumulative effect prior to January 1, 1993, of
applying SFAS No. 109 (Note 7) . . . . . . . . . . . . . - - (88) (33) 12,112
NET INCOME . . . . . . . . . . . . . . . . . . . . . . . . . $ 12,486 $ 5,004 $ 2,226 $ 823 $ 21,483
<FN>
The Notes to Consolidated Financial Statements are an integral part of this statement.
( ) denotes negative amount.
</TABLE>
37.
<PAGE>
ITEM 10.
(Continued)
CONSOLIDATED NATURAL GAS COMPANY
CONSOLIDATING INCOME STATEMENT (Continued)
For the Year Ended December 31, 1993
(Thousands of Dollars)
<TABLE>
<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>
38.
<PAGE>
ITEM 10.
(Continued)
CONSOLIDATED NATURAL GAS COMPANY
CONSOLIDATING INCOME STATEMENT (Concluded)
For the Year Ended December 31, 1993
(Thousands of Dollars)
<TABLE>
<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>
39.
<PAGE>
ITEM 10.
(Continued)
CONSOLIDATED NATURAL GAS COMPANY
CONSOLIDATING STATEMENT OF RETAINED EARNINGS
For the Year Ended December 31, 1993
(Thousands of Dollars)
<TABLE>
<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>
40.
<PAGE>
ITEM 10.
(Continued)
CONSOLIDATED NATURAL GAS COMPANY
CONSOLIDATING STATEMENT OF RETAINED EARNINGS (Continued)
For the Year Ended December 31, 1993
(Thousands of Dollars)
<TABLE>
<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>
41.
<PAGE>
ITEM 10.
(Continued)
CONSOLIDATED NATURAL GAS COMPANY
CONSOLIDATING STATEMENT OF RETAINED EARNINGS (Continued)
For the Year Ended December 31, 1993
(Thousands of Dollars)
<TABLE>
<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>
42.
<PAGE>
ITEM 10.
(Continued)
CONSOLIDATED NATURAL GAS COMPANY
CONSOLIDATING STATEMENT OF RETAINED EARNINGS (Continued)
For the Year Ended December 31, 1993
(Thousands of Dollars)
<TABLE>
<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>
43.
<PAGE>
ITEM 10.
(Continued)
CONSOLIDATED NATURAL GAS COMPANY
CONSOLIDATING STATEMENT OF RETAINED EARNINGS (Concluded)
For the Year Ended December 31, 1993
(Thousands of Dollars)
<TABLE>
<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>
44.
<PAGE>
ITEM 10.
(Continued)
CONSOLIDATED NATURAL GAS COMPANY
CONSOLIDATING STATEMENT OF CASH FLOWS
For the Year Ended December 31, 1993
(Thousands of Dollars)
<TABLE>
<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>
45.
<PAGE>
ITEM 10.
(Continued)
CONSOLIDATED NATURAL GAS COMPANY
CONSOLIDATING STATEMENT OF CASH FLOWS (Continued)
For the Year Ended December 31, 1993
(Thousands of Dollars)
<TABLE>
<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>
46.
<PAGE>
ITEM 10.
(Continued)
CONSOLIDATED NATURAL GAS COMPANY
CONSOLIDATING STATEMENT OF CASH FLOWS (Continued)
For the Year Ended December 31, 1993
(Thousands of Dollars)
<TABLE>
<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>
47.
<PAGE>
ITEM 10.
(Continued)
CONSOLIDATED NATURAL GAS COMPANY
CONSOLIDATING STATEMENT OF CASH FLOWS (Continued)
For the Year Ended December 31, 1993
(Thousands of Dollars)
<TABLE>
<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>
48.
<PAGE>
ITEM 10.
(Continued)
CONSOLIDATED NATURAL GAS COMPANY
CONSOLIDATING STATEMENT OF CASH FLOWS (Concluded)
For the Year Ended December 31, 1993
(Thousands of Dollars)
<TABLE>
<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>
49.
<PAGE>
ITEM 10. CONSOLIDATED NATURAL GAS COMPANY
(Cont.)
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.
50.
<PAGE>
ITEM 10. CONSOLIDATED NATURAL GAS COMPANY
(Cont.)
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 capi-
talized, 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.
51.
<PAGE>
ITEM 10. CONSOLIDATED NATURAL GAS COMPANY
(Cont.)
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.
52.
<PAGE>
ITEM 10. CONSOLIDATED NATURAL GAS COMPANY
(Cont.)
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.
53.
<PAGE>
ITEM 10. CONSOLIDATED NATURAL GAS COMPANY
(Cont.)
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.
54.
<PAGE>
ITEM 10. CONSOLIDATED NATURAL GAS COMPANY
(Cont.)
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.
55.
<PAGE>
ITEM 10. CONSOLIDATED NATURAL GAS COMPANY
(Cont.)
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>
56.
<PAGE>
ITEM 10. CONSOLIDATED NATURAL GAS COMPANY
(Cont.)
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)
=========
______________________________________________________________________________
57.
<PAGE>
ITEM 10. CONSOLIDATED NATURAL GAS COMPANY
(Cont.)
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.
58.
<PAGE>
ITEM 10. CONSOLIDATED NATURAL GAS COMPANY
(Cont.)
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:
59.
<PAGE>
ITEM 10. CONSOLIDATED NATURAL GAS COMPANY
(Cont.)
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.
60.
<PAGE>
ITEM 10. CONSOLIDATED NATURAL GAS COMPANY
(Cont.)
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.
61.
<PAGE>
ITEM 10. CONSOLIDATED NATURAL GAS COMPANY
(Cont.)
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.
62.
<PAGE>
ITEM 10. CONSOLIDATED NATURAL GAS COMPANY
(Cont.)
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.
63.
<PAGE>
ITEM 10. CONSOLIDATED NATURAL GAS COMPANY
(Cont.)
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.
64.
<PAGE>
ITEM 10. CONSOLIDATED NATURAL GAS COMPANY
(Cont.)
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
65.
<PAGE>
ITEM 10. CONSOLIDATED NATURAL GAS COMPANY
(Cont.)
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.
66.
<PAGE>
ITEM 10. CONSOLIDATED NATURAL GAS COMPANY
(Cont.)
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.
67.
<PAGE>
ITEM 10. CONSOLIDATED NATURAL GAS COMPANY
(Cont.)
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
========
______________________________________________________________________________
68.
<PAGE>
ITEM 10. CONSOLIDATED NATURAL GAS COMPANY
(Cont.)
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.
69.
<PAGE>
ITEM 10. CONSOLIDATED NATURAL GAS COMPANY
(Cont.)
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.
70.
<PAGE>
ITEM 10. CONSOLIDATED NATURAL GAS COMPANY
(Cont.)
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.
71.
<PAGE>
ITEM 10. CONSOLIDATED NATURAL GAS COMPANY
(Cont.)
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>
72.
<PAGE>
ITEM 10. FINANCIAL STATEMENTS AND EXHIBITS (Continued)
Exhibits
____________________________________________________________________________
SEC
Exhibit
Reference Description of Exhibit
____________________________________________________________________________
A. Consolidated Natural Gas Company's Form 10-K Annual Report
for the year ended December 31, 1993, is hereby incorporated
by reference.
B. A copy of the charter, as amended, and copy of the by-laws,
as amended, of Consolidated Natural Gas Company and each
subsidiary company thereof, unless otherwise indicated on
the list filed herewith, are incorporated in this report by
reference to previous filings with the Commission, as shown
on such list.
C.(a) The indentures of Consolidated Natural Gas Company are
hereby incorporated by reference to previously filed
material as indicated on the list filed herewith.
(b) Not applicable.
D. Pursuant to Rule 45(c) under the Public Utility Holding
Company Act of 1935, the Agreement, as amended, among system
companies concerning the allocation of current federal
income taxes is filed herewith.
E. Other documents prescribed by rule or order:
(1) Pursuant to Commission Release No. 23023, dated August
5, 1983, in Docket 70-6772 under the Public Utility
Holding Company Act of 1935, certain data in connection
with fractionated liquids transactions between CNG Energy
Company and CNG Transmission Corporation is filed
herewith.
(2) Pursuant to Rule 16(c) under the Public Utility
Holding Company Act of 1935, the annual report of the
Iroquois Gas Transmission System, L.P., for the year
ended December 31, 1993, is filed herewith.
73.
<PAGE>
ITEM 10. FINANCIAL STATEMENTS AND EXHIBITS (Concluded)
Exhibits (Concluded)
____________________________________________________________________________
SEC
Exhibit
Reference Description of Exhibit
____________________________________________________________________________
F. Schedules supporting items of this report:
(1) ITEM 1 - Schedule of Investments is filed herewith.
(2) ITEM 4 - Schedule of Acquisitions, Redemptions, or Retirements
of System Securities is filed herewith.
(3) ITEM 6 - "Notice of Annual Meeting and Proxy Statement, 1994"
is filed herewith.
(4) ITEM 10 - Schedule of utility plant and related depreciation or
amortization accounts, together with schedules of other property
or investments, if applicable, for:
CNG Transmission
East Ohio Gas
Peoples Natural Gas
Virginia Natural Gas
Hope Gas
West Ohio Gas
River Gas
are filed herewith.
G. Organization chart showing the relationship of the exempt wholesale
generator in which the system holds an interest to other system
companies, is filed herewith.
H. Financial statements of the exempt wholesale generator are filed
herewith.
74.
<PAGE>
SIGNATURE
The registrant has duly caused this annual report to be signed on its behalf
by the undersigned thereunto duly authorized pursuant to the requirements of
the Public Utility Holding Company Act of 1935, such company being a
registered holding company.
CONSOLIDATED NATURAL GAS COMPANY
________________________________
(Registrant)
By GEORGE A. DAVIDSON, JR.
____________________________
(George A. Davidson, Jr.)
Chairman of the Board
and Chief Executive Officer
April 28, 1994
75.
<PAGE>
EXHIBIT INDEX
SEC
Exhibit
Reference Description of Exhibit
A. Consolidated Natural Gas Company's Form 10-K
Annual Report for the year ended December 31, 1993,
is hereby incorporated by reference.
B. A copy of the charter, as amended, and copy of the
by-laws, as amended, of Consolidated Natural Gas
Company and each subsidiary company thereof, unless
otherwise indicated on the list filed herewith, are
incorporated in this report by reference to previous
filings with the Commission, as shown on such list.
C.(a) The indentures of Consolidated Natural Gas Company
are hereby incorporated by reference to previously
filed material as indicated on the list filed
herewith.
(b) Not applicable.
D. Pursuant to Rule 45(c) under the Public Utility
Holding Company Act of 1935, the Agreement, as
amended, among system companies concerning the
allocation of current federal income taxes is filed
herewith.
E. Other documents prescribed by rule or order:
(1) Pursuant to Commission Release No. 23023,
dated August 5, 1983, in Docket 70-6772 under
the Public Utility Holding Company Act of
1935, certain data in connection with
fractionated liquids transactions between CNG
Energy Company and CNG Transmission
Corporation is filed herewith.
(2) Pursuant to Rule 16(c) under the Public Utility
Holding Company Act of 1935, the annual report
of the Iroquois Gas Transmission System, L.P.,
for the year ended December 31, 1993, is filed
herewith.
<PAGE>
EXHIBIT INDEX (Concluded)
SEC
Exhibit
Reference Description of Exhibit
F. Schedules supporting items of this report:
(1) ITEM 1 - Schedule of Investments is filed herewith.
(2) ITEM 4 - Schedule of Acquisitions, Redemptions, or
Retirements of System Securities is filed herewith.
(3) ITEM 6 - "Notice of Annual Meeting and Proxy
Statement, 1994" is filed herewith.
(4) ITEM 10 - Schedule of utility plant and related
depreciation or amortization accounts, together
with schedules of other property or investments,
if applicable, for:
CNG Transmission
East Ohio Gas
Peoples Natural Gas
Virginia Natural Gas
Hope Gas
West Ohio Gas
River Gas
are incorporated by reference to Form SE
dated April 27, 1994
G. Organization chart showing the relationship of the
exempt wholesale generator in which the system holds
an interest to other system companies, is filed
herewith.
H. Financial statements of the exempt wholesale
generator are filed herewith.
CHARTERS AND BY-LAWS EXHIBIT B.
______________________________________________________________________________
_
Annual Report
on Form U5S
(File No. 30-203)
Year Ended Other
December 31, Commission Filing
______________________________________________________________________________
Consolidated Natural Gas Company
Certificate of Incorporation, restated
October 4, 1990 1990
By-Laws as last amended March 1, 1993 1992
Consolidated Natural Gas Service Company,
Inc.
(Charter) 1961
Charter Amendment dated November 24,
1961 1961
Charter Amendment dated January 3,
1966 1965
Charter Amendment dated November 30,
1982 1982
By-Laws as last amended March 1, 1993 1992
CNG Transmission Corporation
Charter-Composite Certificate of
Incorporation as last amended
December 30, 1992 1992
By-Laws as last amended May 17, 1993 Filed Herewith
Hope Gas, Inc.
Charter-Agreement and Plan of Merger
which sets forth in Article III the
Certificate of Incorporation of
Consolidated Gas Supply Corporation
as amended and restated on
April 1, 1965, effective date
of the merger 1965
Charter Amendment dated April 28, 1971 1971
Charter Amendment dated June 30, 1975 1975
Charter Amendment dated August 26,
1977 1977
Charter Amendment dated May 11, 1981 1981
Charter Amendment dated June 6, 1984 1984
Charter Amendment dated August 9, 1990 1990 Form SE dated
April 25, 1991
By-Laws as last amended June 4, 1990 1990 Form SE dated
April 25, 1991
______________________________________________________________________________
1.
<PAGE>
CHARTERS AND BY-LAWS (Continued)
______________________________________________________________________________
Annual Report
on Form U5S
(File No. 30-203)
Year Ended Other
December 31, Commission Filing
______________________________________________________________________________
The East Ohio Gas Company
Articles of Incorporation as amended
effective June 17, 1993 Exhibit A-1 to the
Application-
Declaration
on Form U-1, File No.
70-8387
By-Laws as last amended March 12, 1991 Exhibit A-2 to the
Application-
Declaration
on Form U-1, File No.
70-8387
The Peoples Natural Gas Company
Charter-Composite Amended and Restated
Certificate of Incorporation as
last amended effective April 26,
1990 1992
By-Laws as last amended March 15, 1990 1990 Form SE dated
April 25, 1991
The River Gas Company
Articles of Incorporation as amended
effective June 22, 1993 Exhibit A-3 to the
Application-
Declaration
on Form U-1, File No.
70-8387
By-Laws as last amended March 12, 1991 Exhibit A-4 to the
Application-
Declaration
on Form U-1, File No.
70-8387
West Ohio Gas Company
Articles of Incorporation - Agreement
of Merger Effective April 16, 1969 1969
Code of Regulations as last amended
March 15, 1990 1991 Form SE dated
April 24, 1992
______________________________________________________________________________
2.
<PAGE>
CHARTERS AND BY-LAWS (Continued)
______________________________________________________________________________
_
Annual Report
on Form U5S
(File No. 30-203)
Year Ended Other
December 31, Commission Filing
______________________________________________________________________________
CNG Producing Company
Certificate of Incorporation dated
February 29, 1972 1972
Certificate of Amendment of
Certificate of Incorporation of
CNG Development Company of
Alberta before payment of capital
dated March 8, 1972 1972
Charter Amendment dated July 8, 1974 1974
Charter Amendment dated January 23,
1975 1975
Charter Amendment dated July 7, 1980 1980
Charter Amendment dated July 13, 1982 1982
Charter Amendment dated December 7,
1984 1984
Charter Amendment dated January 4,
1985 1985
Charter Amendment dated November 25,
1987 1987 Form SE dated
April 26, 1988
Charter Amendment dated November 15,
1989 1989 Form SE dated
April 25, 1990
Certificate of Agreement of Merger of
CNG Development Company merging
with and into CNG Producing Company
dated December 20, 1990 1990 Form SE dated
April 25, 1991
By-Laws as last amended August 1, 1992 1992
Consolidated System LNG Company
Charter-Composite Certificate of
Incorporation as last amended
July 27, 1993 Filed Herewith
By-Laws as last amended June 1, 1987 1987 Form SE dated
April 26, 1988
CNG Research Company
Certificate of Incorporation dated
June 26, 1975 1975
Charter Amendment dated May 25, 1982 1982
Charter Amendment effective August 23,
1991 1991 Form SE dated
April 24, 1992
By-Laws as last amended September 10,
1976 1977
CNG Coal Company
Certificate of Incorporation dated
October 4, 1976 1977
Charter Amendment dated July 20, 1990 1990 Form SE dated
April 25, 1991
Charter Amendment effective August 23,
1991 1991 Form SE dated
April 24, 1992
By-Laws as last amended June 11, 1990 1990 Form SE dated
April 25, 1991
______________________________________________________________________________
3.
<PAGE>
CHARTERS AND BY-LAWS (Concluded)
______________________________________________________________________________
_
Annual Report
on Form U5S
(File No. 30-203)
Year Ended Other
December 31, Commission Filing
______________________________________________________________________________
CNG Energy Company
Certificate of Incorporation dated
February 17, 1982 1982
Charter Amendment dated December 12,
1986 1986 Form SE dated
April 24, 1987
By-Laws as last amended March 15, 1990 1990 Form SE dated
April 25, 1991
CNG Gas Services Corporation
(Formerly CNG Trading Company)
Charter-Composite Certificate of
Incorporation as last amended
effective January 1, 1993 1992
By-Laws as last amended June 20, 1991 1991 Form SE dated
April 24, 1992
CNG Financial Services, Inc.
Certificate of Incorporation dated
March 1, 1989 1989 Form SE dated
April 25, 1990
By-Laws as adopted May 26, 1989 1989 Form SE dated
April 25, 1990
Virginia Natural Gas, Inc.
Amended and Restated Articles of
Incorporation dated December 26, 1990 1990 Form SE dated
April 25, 1991
By-Laws as amended August 9, 1990 1990 Form SE dated
April 25, 1991
CNG Storage Service Company
Certificate of Incorporation dated
March 23, 1977 1991 Form SE dated
April 24, 1992
Charter Amendment dated December 11,
1989 1991 Form SE dated
April 24, 1992
By-Laws as adopted July 19, 1977 1991 Form SE dated
April 24, 1992
______________________________________________________________________________
4.
BYLAWS
of
CNG TRANSMISSION CORPORATION
a Delaware corporation
1. OFFICES
1.1 Registered Office. The registered office of the Corporation
is located at 100 Tenth Street, Wilmington, Delaware. The Corporation may by
resolution of the Board of Directors, change the location to any other place
in Delaware.
1.2 Principal Office. The principal office of the Corporation
shall be at 445 West Main Street, Clarksburg, Harrison County, West Virginia.
1.3 Other Offices. The Corporation may have such other offices,
within or without the State of Delaware, as the Board of Directors may from
time to time establish.
2. MEETINGS OF STOCKHOLDERS
2.1 Annual Meetings. The annual meeting of the stockholders for
the election of directors and for the transaction of any other proper
business, notice of which was given in the notice of the meeting, shall be
held at nine o'clock in the morning on the first Monday of June in each year,
if not a legal holiday, or if a legal holiday, then on the next succeeding
business day not a legal holiday.
<PAGE>
2.2 Special Meetings. A special meeting of the stockholders may be
called at any time by the Board of Directors or by the President, and shall be
called by the President upon the written request of stockholders of record
holding in the aggregate one-fifth or more of the outstanding shares of stock
of the corporation entitled to vote, such written request to state the purpose
or purposes of the meeting and to be delivered to the President.
2.3 Place of Meetings. The Board of Directors may designate any
place, either within or without the State of Delaware, as the place of meeting
for any annual meeting or for any special meeting called by the Board of
Directors. If no designation is made, or if a special meeting be otherwise
called, the place of meeting shall be the principal office of the corporation.
2.4 Notice of Meetings. Written notice stating the place, date and
hour of the meeting and, in the case of a special meeting, the purpose or
purposes for which the meeting is called, shall be given by or under the
direction of the Secretary, to each stockholder entitled to vote at such
meeting. Except as otherwise required by statute, the written notice shall be
given not less than ten nor more than sixty days before the date of the
meeting. If mailed, such notice shall be deemed to be given when deposited in
the United States mail, postage prepaid, directed to the stockholder at his
address as it appears on the records of the corporation. Attendance of a
person at a meeting of stockholders shall constitute a waiver of notice of
such meeting except when the stockholder attends for the express purpose of
objecting, at the beginning of the meeting, to the transaction of any business
because the meeting is not lawfully called or convened.
2.5 Adjourned Meetings. When a meeting is adjourned to another
time or place, notice need not be given of the adjourned meeting if the time
and place thereof are announced at the meeting at which the adjournment is
taken. At the adjourned meeting the
-2-
<PAGE>
Corporation may transact any business which might have been transacted at the
original meeting. If the adjournment is for more than thirty days, or if
after the adjournment a new record date is fixed for the adjourned meeting, a
notice of the adjourned meeting shall be given to each stockholder of record
entitled to vote at the meeting.
2.6 Voting Lists. The officer who has charge of the stock ledger
of the Corporation shall prepare and make, at least ten days before every
meeting of stockholders, a complete list of the stockholders entitled to vote
at the meeting, arranged in alphabetical order, and showing the address of
each stockholder and the number of shares registered in the name of each
stockholder. Such list shall be open to the examination of any stockholder,
for any purpose germane to the meeting, during ordinary business hours, for a
period of at least ten days prior to the meeting, either at a place within the
city where the meeting is to be held, which place shall be specified in the
notice of the meeting, or, if not so specified, at the place where the meeting
is to be held. The list shall also be produced and kept at the time and place
of the meeting during the whole time thereof, and may be inspected by any
stockholder who is present.
2.7 Quorum. Except as otherwise required by statute, the presence
at any meeting, in person or by proxy, of the holders of record of a majority
of the shares then issued and outstanding and entitled to vote shall be
necessary and sufficient to constitute a quorum for the transaction of
business. In the absence of a quorum, the stockholders entitled to vote,
present in person or by proxy, may adjourn the meeting from time to time until
a quorum is present.
2.8. Proxies. Each stockholder entitled to vote at a meeting of
stockholders or to express consent or dissent to corporate action in writing
without a meeting may authorize another person or persons to act for him by
proxy, but no such proxy shall be voted or acted
-3-
<PAGE>
upon after three years from its date, unless the proxy provides for a longer
period. A duly executed proxy shall be irrevocable if it states that it is
irrevocable and if, and only as long as, it is coupled with an interest
sufficient in law to support an irrevocable power.
2.9 Voting Rights. Except as otherwise provided by statute or by
the Certificate of Incorporation, and subject to the provisions of Paragraph
7.5 of these Bylaws, each stockholder shall at every meeting of the
stockholders be entitled to one vote for each share of the capital stock
having voting power held by such stockholder.
2.10 Required Vote. Except as otherwise required by statute or by
the Certificate of Incorporation, the holders of a majority of the capital
stock having voting power, present in person or by proxy, shall decide any
question brought before a meeting of the stockholders at which a quorum is
present.
2.11 Elections of Directors. Elections of directors need not be by
written ballot.
2.12 Consent of Stockholders in Lieu of Meeting. Any action
required or permitted to be taken at any annual or special meeting of
stockholders may be taken without a meeting, without prior notice and without
a vote, if consent in writing, setting forth the action so taken, is signed by
the holders of outstanding stock have not less than the minimum number of
votes that would be necessary to authorize or take such action at a meeting at
which all shares entitled to vote thereon were present and voted.
3. BOARD OF DIRECTORS
-4-
<PAGE>
3.1 General Powers. The business of the Corporation shall be
managed by the Board of Directors, except as otherwise provided by statute or
by the Certificate of Incorporation.
3.2 Number and Qualifications. The number of directors which shall
constitute the whole board shall be eight. By amendment of this bylaw the
number may be increased or decreased from time to time by the Board of
Directors within the limits permitted by law. Directors need not be
stockholders.
3.3 Term of Office. Each director shall hold office until the
next annual meeting of stockholders and until his successor is elected and
qualified or until his death, resignation or removal.
3.4 Removal. The stockholders may at any time, at a meeting
expressly called for that purpose, remove any or all of the directors, with or
without cause, by a vote of the holders of a majority of the shares then
entitled to vote at an election of directors.
3.5 Vacancies. Vacancies and newly created directorships resulting
from any increase in the authorized number of directors may be filled by a
majority of the directors then in office, although less than a quorum, or by a
sole remaining director.
3.6 First Meetings. The first meeting of each newly elected Board
of Directors shall be held without notice immediately after, and at the same
place as, the annual meeting of the stockholders for the purpose of the
organization of the Board, the election of officers, and the transaction of
such other business as may properly come before the meeting.
-5-
<PAGE>
3.7 Regular Meetings. Regular meetings of the Board of Directors
may be held without notice at such times and at such places, within or without
the State of Delaware, as shall from time to time be determined by the Board.
3.8 Special Meetings. Special meetings of the Board of Directors
may be called by the President and shall be called by the Secretary on the
written request of two directors. Such meetings shall be held at such times
and at such places, within or without the State of Delaware, as shall be
determined by the President or by the directors requesting the meeting.
Notice of the time and place thereof shall be mailed to each director,
addressed to him at his address as it appears on the records of the
corporation, at least two days before the day on which the meeting is to be
held, or sent to him at such place by telegraph, radio or cable, or telephoned
or delivered to him personally, not later than the day before the day on which
the meeting is to be held. Such notice need not state the purposes of the
meeting. Attendance of a director at a meeting shall constitute a waiver of
notice of such meeting, except when the director attends for the express
purpose of objecting, at the beginning of the meeting, to the transaction of
any business because the meeting is not lawfully called or convened.
3.9 Quorum, Required Vote and Adjournment. The presence, at any
meeting of one-third of the total number of directors shall be necessary and
sufficient to constitute a quorum for the transaction of business. Except as
otherwise required by statute or by the Certificate of Incorporation, the vote
of a majority of the directors present at a meeting at which a quorum is
present shall be the act of the Board of Directors. In the absence of a
quorum, a majority of the directors present at the time and place of any
meeting may adjourn such meeting from time to time until a quorum be present.
-6-
<PAGE>
3.10 Consent of Directors in Lieu of Meeting. Any action required
or permitted to be taken at any meeting of the Board of Directors or any
committees thereof, may be taken without a meeting if all the members of the
Board or committee, as the case may be, consent thereto in writing. The
Secretary shall file the written consents with the minutes of the Board or
committee.
3.11 Limitation on Liability
(a) To the full extent that the General Corporation Law of the
State of Delaware, as the same now exists, permits elimination or limitation
of the liability of directors, no director of the Corporation shall be liable
to the Corporation or its stockholders for monetary damages for breach of
fiduciary duty as a director, except for liability (i) for any breach of the
director's duty of loyalty to the Corporation or its stockholders, (ii) for
acts or omissions not in good faith or which involves intentional misconduct
or a knowing violation of law, (iii) under Section 174 of the Delaware General
Corporation Law, or (iv) for any transaction from which the director derived
an improper personal benefit.
(b) To the full extent permitted by law, all directors of the
corporation shall be afforded any exemption from liability or limitation of
liability permitted by any subsequent enactment, modifications or amendment of
the General Corporation laws of the State of Delaware.
(c) Any repeal or modification of either or both of the foregoing
paragraphs by the stockholders of the Corporation shall not adversely affect
any exemption from liability or limitation of liability or other right of a
director of the Corporation with respect to any matter occurring prior to such
repeal or modification.
-7-
<PAGE>
4. COMMITTEES
4.1 Powers; Duties. The Board of Directors may, by resolution
passed by a majority of the whole Board, designate one or more committees,
each committee to consist of two or more of the directors of the Corporation,
which, to the extent provided in the resolution, shall have and may exercise
the powers of the Board of Directors in the management of the business and
affairs of the Corporation, and may authorize the seal of the Corporation to
be affixed to all papers which may require it. In the absence or
disqualification of a member of a committee, the member or members thereof
present at any meeting and not disqualified from voting, whether or not
constituting a quorum, may unanimously appoint another member of the Board to
act at the meeting in place of any absent or disqualified member. Each
committee shall have such name and duties as may be determined from time to
time by resolution adopted by the Board of Directors. The committees of the
Board of Directors shall keep regular minutes of their proceedings and report
the same to the Board of Directors when required.
5. OFFICERS
5.1 Number. The officers of the Corporation shall be a President,
a Vice President, a Secretary, a Treasurer, and such other officers as the
Board shall specify from time to time, each of whom shall be elected by the
Board of Directors. Any number of offices may be held by the same person.
5.2 Election, Term of Office and Qualifications. The officers of
the Corporation to be elected by the Board of Directors shall be elected
annually at the first meeting of the Board held after each annual meeting of
stockholders. If the election of officers shall not
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<PAGE>
be held at such meeting, such election shall be held as soon thereafter as
conveniently may be. Each officer shall hold office until his successor is
elected and qualified or until his death, resignation or removal. No officer
need be a director or stockholder of the Corporation.
5.3 Subordinate Officers. The Board of Directors from time to time
may appoint other officers and agents, including one or more Assistant
Secretaries and one or more Assistant Treasurers, each of whom shall hold
office for such period, have such authority and perform such duties as the
Board of Directors from time to time may determine. The Board of Directors
may delegate the power to appoint any such subordinate officers and agents and
to prescribe their respective authorities and duties.
5.4 Removal. Any officer or agent may be removed at any time, with
or without cause, by the affirmative vote of a majority of the directors then
in office.
5.5 Vacancies. Any vacancy occurring in any office of the
corporation shall be filled for the unexpired term in the manner prescribed by
these Bylaws for the regular election or appointment to the office.
5.6 The President. The President shall be the chief executive
officer of the Corporation and, subject to the direction and under the
supervision of the Board of Directors shall have general charge of the
business, affairs and property of the Corporation, and control over its
officers, agents and employees. He shall preside at all meetings of the
stockholders and of the Board of Directors at which he is present. He shall,
in general, perform all duties and have all powers incident to the office of
President and shall perform such other duties and have such other powers as
from time to time may be assigned to him by these Bylaws or by the Board of
Directors. The President shall be chosen from among the directors.
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<PAGE>
5.7 The Vice Presidents. At the request of the President or in the
event of his absence or disability, the Vice President, or in case there shall
be more than one Vice president, the Vice President designated by the
President, or in the absence of such designation, the Vice President or other
officer designated by the Board of Directors, shall perform all the duties of
the President, and when so acting, shall have all the powers of, and be
subject to all the restrictions upon, the President. Any Vice President shall
perform such other duties and have such other powers as from time to time may
be assigned to him by these Bylaws or by the Board of Directors or by the
President.
5.8 The Secretary and Assistant Secretaries. The Secretary shall
keep the minutes of the proceedings of the stockholders and of the Board of
Directors in one or more books to be kept for that purpose. He shall have
custody of the seal of the Corporation and shall have authority to cause such
seal to be affixed to, or impressed or otherwise reproduced upon all documents
the execution and delivery of which on behalf of the Corporation shall have
been duly authorized. The seal also may be affixed, impressed and attested by
the Treasurer or any Assistant Secretary or Assistant Treasurer. He shall, in
general, perform all duties and have all powers incident to the office of
Secretary and shall perform such other duties and have such other powers as
may from time to time be assigned to him by these Bylaws, by the Board of
Directors or by the President. The Assistant Secretaries, in the order
determined by the Board, shall, in the absence of the Secretary, perform the
duties and exercise the powers of the Secretary. Any Assistant Secretary
shall perform such other duties and have such other powers as the Board may
prescribe.
5.9 The Treasurer and Assistant Treasurers. The Treasurer shall
have custody of the corporate funds and securities and shall keep full and
accurate accounts of receipts and
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<PAGE>
disbursements in books belonging to the Corporation. He shall cause all
moneys and other valuable effects to be deposited in the name and to the
credit of the corporation in such depositories as may be designated by the
Board of Directors. He shall cause the funds of the Corporation to be
disbursed when such disbursements have been duly authorized, taking proper
vouchers for such disbursements, and shall render to the President and the
Board of Directors, whenever requested, an account of all his transactions as
Treasurer and of the financial condition of the Corporation. He shall, in
general, perform all duties and have all powers incident to the office of
Treasurer and shall perform such other duties and have such other powers as
may from time to time be assigned to him by these Bylaws, by the Board of
Directors or by the President. The Assistant Treasurers, in the order
determined by the Board, shall, in the absence of the Treasurer, perform the
duties and exercise the powers of the Treasurer. Any Assistant Treasurer
shall perform such other duties and have such other powers as the Board may
prescribe.
6. EXECUTION OF INSTRUMENTS
6.1 Execution of Instruments Generally. All documents, instruments
or writings of any nature shall be signed, executed, verified, acknowledged
and delivered by such officer or officers or such agent or agents of the
Corporation and in such manner as the Board of Directors from time to time may
determine.
6.2 Checks, Drafts, Etc. All notes, drafts, acceptances, checks,
endorsements and all evidence of indebtedness of the Corporation whatsoever,
shall be signed by such officer or officers or such agent or agents of the
Corporation and in such manner as the Board of Directors from time to time may
determine. Endorsements for deposit to the credit of the
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<PAGE>
Corporation in any of its duly authorized depositories shall be made in such
manner as the Board of Directors from time to time may determine.
6.3 Proxies. Proxies to vote with respect to shares of stock of
other corporations owned by or standing in the name of the Corporation may be
executed and delivered from time to time on behalf of the Corporation by the
President or a Vice President and the Secretary or an Assistant Secretary of
the Corporation or by any other person or persons duly authorized by the Board
of Directors.
7. CAPITAL STOCK
7.1 Stock Certificates. Every holder of stock in the Corporation
shall be entitled to have a certificate signed by, or in the name of the
Corporation by the President or a Vice President, and by the Treasurer or an
Assistant Treasurer, or the Secretary or an Assistant Secretary of the
Corporation certifying the number of shares owned by him in the Corporation.
Any or all of the signatures on the certificate may be by a facsimile. In
case any officer who has signed or whose facsimile signature has been placed
upon a certificate shall have ceased to be such officer before such
certificate is issued, it may be issued by the Corporation with the same
effect as if he were such officer at the date of issue.
7.2 Transfer of Stock. Shares of stock of the Corporation shall
only be transferred on the books of the Corporation by the holder of record
thereof or by his attorney duly authorized in writing, upon surrender to the
Corporation of the certificates for such shares endorsed by the appropriate
person or persons, with such evidence of the authenticity of such endorsement,
transfer, authorization and other matters as the Corporation may reasonably
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<PAGE>
require, and accompanied by all necessary stock transfer tax stamps. In that
event it shall be the duty of the Corporation to issue a new certificate to
the person entitled thereto, cancel the old certificate, and record the
transaction on its books.
7.3 Rights of Corporation with Respect to Registered Owners. Prior
to the surrender of the Corporation of the certificates for shares of stock
with a request to record the transfer of such shares, the Corporation may
treat the registered owner as the person entitled to receive dividends, to
vote, to receive notifications, and otherwise to exercise all the rights and
powers of an owner.
7.4 Transfer Agents and Registrars. The Board of Directors may
make such rules and regulations as it may deem expedient concerning the
issuance and transfer of certificates for shares of the stock of the
Corporation and may appoint transfer agents or registrars or both, and may
require all certificates of stock to bear the signature of either or both.
Nothing herein shall be construed to prohibit the Corporation from acting as
its own transfer agent at any of its offices.
7.5 Record Dates. In order that the Corporation may determine the
stockholders entitled to notice of or to vote at any meeting of stockholders
or any adjournment thereof, or to express consent to corporate action in
writing without a meeting, or entitled to receive payment of any dividend or
other distribution or allotment of any rights, or entitled to exercise any
rights in respect of any change, conversion or exchange of stock or for the
purpose of any other lawful action, the Board of Directors may fix, in
advance, a record date, which shall not be more than sixty nor less than ten
days before the date of such meeting, nor more than sixty days prior to any
other action. If no record date is fixed, the record date for determining
stockholders entitled to notice of or to vote at a meeting of stockholders
shall be at
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<PAGE>
the close of business on the day next preceding the day on which notice is
given, or, if notice is waived, at the close of business on the day next
preceding the day on which the meeting is held. If no record date is fixed,
the record date for determining stockholders entitled to express consent to
corporate action in writing without a meeting, when no prior action by the
Board of Directors is necessary, shall be the day on which the first written
consent is expressed. The record date for determining stockholders for any
other purpose shall be at the close of business on the day on which the Board
of Directors adopts the resolution relating thereto. A determination of
stockholders of record entitled to notice of or to vote at a meeting of
stockholders shall apply to any adjournment of the meeting; provided, however,
that the Board of Directors may fix a new record date for the adjourned
meeting.
7.6 Lost, Destroyed and Stolen Certificates. Where the owner of a
certificate for shares claims that such certificate has been lost, destroyed
or wrongfully taken, the Corporation shall issue a new certificate in place of
the original certificate if the owner (a) so requests before the Corporation
has notice that the shares have been acquired by a bona fide purchaser; (b)
files with the Corporation a sufficient indemnity bond; and (c) satisfies such
other reasonable requirements including evidence of such loss, destruction or
wrongful taking, as may be imposed by the Corporation.
8. DIVIDENDS
8.1 Sources of Dividends. The directors of the Corporation,
subject to any restrictions contained in the statutes and Certificate of
Incorporation, may declare and pay dividends upon the shares of the capital
stock of the Corporation either (a) out of its surplus as defined and computed
in accordance with the General Corporation Law of Delaware, as
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<PAGE>
amended from time to time, or (b) in case there shall be no such surplus, out
of its net profits for the fiscal year in which the dividend is declared
and/or preceding fiscal year.
8.2 Reserves. Before the payment of any dividend, the directors of
the Corporation may set apart out of any of the funds of the Corporation
available for dividends a reserve or reserves for any proper purpose, and the
directors may abolish any such reserve in the manner in which it was created.
8.3 Reliance on Corporate Records. A director shall be fully
protected in relying in good faith upon the books of account of the
Corporation or statements prepared by any of its officials or by independent
public accountants as to the value and amount of the assets, liabilities and
net profits of the Corporation, or any other facts pertinent to the existence
and amount of surplus or other funds from which dividends might properly be
declared and paid, or with which the Corporation's stock might properly be
redeemed or purchased.
8.4 Manner of Payment. Dividends may be paid in cash, in property,
or in shares of the capital stock of the Corporation at par.
9. GENERAL PROVISIONS
9.1 Waiver of Notice. Whenever notice is required to be given
under any provision of the statutes or of the Certificate of Incorporation or
Bylaws, a written waiver thereof, signed by the person entitled to notice,
whether before or after the time stated therein, shall be deemed equivalent to
notice. Attendance of a person at a meeting shall constitute a waiver of
notice of that meeting, except where the person attends a meeting for the
express
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<PAGE>
purpose of objecting, at the beginning of the meeting, to the transaction of
any business because the meeting was not lawfully called or convened.
9.2 Seal. The corporate seal, subject to alteration by the Board
of Directors, shall be in the form of a circle and shall bear the name of the
Corporation and the year of its incorporation and shall indicate its formation
under the laws of the State of Delaware. Such seal may be used by causing it
or a facsimile thereof to be impressed or affixed or in any other manner
reproduced.
9.3 Fiscal Year. The fiscal year shall be the calendar year except
as otherwise provided by the Board of Directors.
9.4 Indemnification.
(a) The Corporation shall indemnify any person who was or is a
party or is threatened to be made a part to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative
or investigative (other than an action by or in the right of the Corporation)
by reason of the fact that he is or was a director, officer, employee or agent
of the Corporation, or is or was serving at the written request of the
Corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, against expenses
(including attorneys' fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred by him in connection with such action, suit
or proceeding if he acted in good faith and in a manner he reasonably believed
to be in or not opposed to the best interests of the Corporation, and, with
respect to any criminal action or proceeding, had no reasonable cause to
believe his conduct was unlawful. The
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<PAGE>
termination of any action, suit or proceeding by judgment, order, settlement,
conviction, or upon a plea of nolo contendere or its equivalent, shall not, of
itself, create a presumption that the person did not act in good faith and in
a manner which he reasonably believed to be in or not opposed to the best
interests of the Corporation, and, with respect to any criminal action or
proceeding, had reasonable cause to believe that his conduct was unlawful.
(b) The Corporation shall indemnify any person who was or is a
party or is threatened to be made a party to any threatened, pending or
completed action or suit by or in the right of the Corporation to procure a
judgment in its favor by reason of the fact that he is or was a director,
officer, employee or agent of the Corporation, or is or was serving at the
written request of the Corporation as a director, officer, employee or agent
of another corporation, partnership, joint venture, trust or other enterprise,
against expenses (including attorneys' fees) actually and reasonably incurred
by him in connection with the defense or settlement of such action or suit if
he acted in good faith and in a manner he reasonably believed to be in or not
opposed to the best interests of the Corporation and except that no
indemnification shall be made in respect of any claim, issue or matter as to
which such person shall have been adjudged to be liable to the Corporation
unless and only to the extent that the Court of Chancery of the State of
Delaware or the court in which such action or suit was brought shall determine
upon application that, despite the adjudication of liability but in view of
all the circumstances of the case, such person is fairly and reasonably
entitled to indemnity for such expenses which the Court of Chancery of the
State of Delaware or such other court shall deem proper.
(c) To the extent that a director, officer, employee or agent
of the Corporation has been successful on the merits or otherwise in defense
of any action, suit or
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<PAGE>
proceeding referred to in subparagraphs (a) and (b) of this Paragraph 9.4, or
in defense of any claim, issue or matter therein, he shall be indemnified
against expenses (including attorneys' fees) actually and reasonably incurred
by him in connection therewith.
(d) Any indemnification under subparagraphs (a) and (b) of
this Paragraph 9.4 (unless ordered by a court) shall be made by the
Corporation only as authorized in the specific case upon a determination that
indemnification of the director, officer, employee or agent is proper in the
circumstances because he has met the applicable standard of conduct set forth
therein. Such determination shall be made (1) by the Board of Directors by a
majority vote of a quorum consisting of directors who were not parties to such
action, suit or proceeding, or (2) if such a quorum is not obtainable, or,
even if obtainable a quorum of disinterested directors so directs, by
independent legal counsel in a written opinion, or (3) by the stockholders.
(e) Expenses incurred in defending a civil or criminal action,
suit or proceeding may be paid by the Corporation in advance of the final
disposition of such action, suit or proceeding upon the receipt of an
undertaking by or on behalf of the director, officer, employee or agent to
repay such amount if it shall ultimately be determined that he is not entitled
to be indemnified by the Corporation as authorized in this Paragraph 9.4.
(f) The indemnification and advancement of expenses provided
by or granted pursuant to the other subparagraphs of this Paragraph 9.4 shall
not be deemed exclusive of any other rights to which those seeking
indemnification or advancement of expenses may be entitled under any statute,
bylaw, agreement, vote of stockholders or disinterested directors or
otherwise, both as to action in his official capacity and as to action in
another capacity while holding such office.
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<PAGE>
(g) By action of its Board of Directors, notwithstanding any
interest of the directors in the action, the Corporation may purchase and
maintain insurance, in such amounts as of the Board of Directors deems
appropriate, on behalf of any person who is or was a director, officer,
employee or agent of the Corporation, or is or was serving at the written
request of the Corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise,
against any liability asserted against him and incurred by him in any such
capacity, or arising out of his status as such, whether or not the Corporation
would have the power or would be required to indemnify him against such
liability under the provisions of this Paragraph 9.4 of the General
Corporation Law of the State of Delaware.
(h) The indemnification and advancement of expenses provided
by, or granted pursuant to, this Paragraph shall, unless otherwise provided
when authorized or ratified, continue as to a person who has ceased to be a
director, officer, employee or agent and shall inure to the benefit of the
heirs, executors and administrators of such a person.
10. AMENDMENTS
10.1 By the Stockholders. These Bylaws may be amended or repealed,
or new Bylaws may be made and adopted, by a majority vote of all the stock of
the Corporation issued and outstanding and entitled to vote at any annual or
special meeting of the stockholders, provided that notice of intention to
amend shall have been contained in the notice of meeting.
10.2 By the Directors. These Bylaws, including amendments adopted
by the stockholders, may be amended or repealed by a majority vote of the
whole Board of Directors at
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<PAGE>
any regular or special meeting of the Board, provided that the stockholders
may from time to time specify particular provisions of the bylaws which shall
not be amended by the Board of Directors.
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CERTIFICATE OF INCORPORATION
OF
CONSOLIDATED SYSTEM LNG COMPANY
FIRST. The name of the Corporation is
CONSOLIDATED SYSTEM LNG COMPANY
SECOND. Its registered office in the State of Delaware is to be located
at
No. 100 West Tenth Street, in the City of Wilmington, County of New Castle.
The registered agent in charge thereof at such address is The Corporation
Trust
Company.
THIRD. The nature of the business, and the objects and purposes proposed
to be transacted, promoted and carried on, are to do any and all the things
herein mentioned, as fully and to the same extent as natural persons might or
could do, and in any part of the world, viz.:
(a) To prospect, explore and drill for, or otherwise acquire,
import, receive, produce, mine, gather, store, treat, liquefy, refine,
reform, blend, combine, regasify, process, manufacture, strip, purchase,
transmit, transport, sell or otherwise dispose of, furnish and deliver
gaseous or liquid, natural, artificial, synthetic and mixed gas, oil,
naphtha
<PAGE>
and other hydrocarbons including gasoline, and sulphur and other minerals
and mineral substances either gaseous, liquid or solid, together with all
derivatives, products or by-products thereof;
(b) To construct, purchase, lease or otherwise acquire, own,
operate, maintain, sell or otherwise dispose of all necessary facilities
to accomplish the objects and purposes set forth in paragraph (a) hereof,
together with such machinery, plants, appliances, supplies and other
equipment and property used, useful or convenient to the operation and
maintenance of said facilities;
(c) To exercise the power of eminent domain to the fullest extent
permitted by Federal law or applicable State statutes for the purpose of
acquiring such real or personal property and such easements, rights of
way, licenses or other interest in such real or personal property, as may
be necessary or convenient in the construction and/or operation and
maintenance of any property or facilities of the Company to which such
Federal law or applicable State statutes apply;
(d) To acquire, bring together, hold, dispose of, and deal in,
royalty and other interests in hydrocarbons
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<PAGE>
and minerals and to manage and control said hydrocarbon and mineral
interests and to collect the revenues arising therefrom; and
(e) To engage in any lawful act or activity for which corporations
may be organized under the General Corporation Law of Delaware.
FOURTH. The amount of the total authorized capital stock of this company
is One Hundred Million ($100,000,000) Dollars divided into 10,000 shares of
Ten
Thousand ($10,000) Dollars par value each.
FIFTH. The name and mailing address of each incorporator is as follows:
Name Mailing Address
B. J. Consono 100 West Tenth Street
Wilmington, Delaware 19899
W. E. Paul Garrett 100 West Tenth Street
Wilmington, Delaware 19899
J. L. Rivera 100 West Tenth Street
Wilmington, Delaware 19899
SIXTH. The powers of the incorporator(s) shall terminate upon the filing
of this Certificate of Incorporation, and the names and mailing addresses of
persons to serve as directors until the first annual meeting of stockholders
or until their successors are elected and qualify are:
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<PAGE>
Names of Directors Mailing Addresses
J. H. BYRNSIDE 445 W. Main Street,
Clarksburg, W. Va.
M. K. HAGER 445 W. Main Street,
Clarksburg, W. Va.
H. A. OFFUTT 445 W. Main Street,
Clarksburg, W. Va.
L. C. SWING 445 W. Main Street,
Clarksburg, W. Va.
T. A. WHITE 445 W. Main Street,
Clarksburg, W. Va.
SEVENTH. For the management of the business and for the conduct of the
affairs of the Company, and in further definition, limitation and regulation
of
the powers of the Company and of its directors and stockholders, it is further
provided:
1. The number of directors of the Company shall be such as from
time to time shall be fixed by, or in the manner provided in, the By-
Laws.
2. In furtherance and not in limitation of the powers conferred by
statute, the Board of Directors is expressly authorized:
(a) To make, alter or repeal the By-Laws of the Company subject to the
power of the stockholders to alter or repeal the By-Laws made by the
Board of Directors.
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<PAGE>
(b) To authorize and cause to be executed mortgages and liens upon the
real and personal property of the Company.
(c) To determine whether any, and, if any, what part, of the net profits
of the Company or of its surplus shall be declared in dividends and
paid to the stockholders, and to direct and determine the use and
disposition of any such net profits or such net assets in excess of
capital.
(d) To set apart out of any funds of the Company available for dividends
a reserve or reserves for any proper purpose and to abolish any such
reserve or reserves, to make such other provisions, if any, as the
Board of Directors may deem necessary or advisable for working
capital, for additions, improvements and betterments to plant and
equipment, for expansion of the business of the Company (including
the acquisition of real and personal property for that purpose) and
for any other purposes of the Company.
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<PAGE>
(e) By resolution or resolutions passed by a majority of the whole Board
of Directors, to designate one or more committees, each committee to
consist of two or more of the directors of the Company. Any such
committee to the extent provided in the resolution or in the By-Laws
of the Company, shall have and may exercise the powers of the Board
of Directors in the management of the business and affairs of the
Company.
(f) When and as authorized by the affirmative vote of the holders of a
majority of the stock issued and outstanding having voting power
given at a stockholders' meeting duly called upon such notice as is
required by statute, or when authorized by the written consent of
the
holders of a majority of the voting stock issued and outstanding, to
sell, lease or exchange all or substantially all of the property and
assets of the Company, including its good will and its corporate
franchises, upon such terms and conditions and for such
consideration, which may consist
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in whole or in part of money or property including shares of stock
in, and/or other securities of, any other corporation or
corporations, as its Board of Directors shall deem expedient and for
the best interests of the Company;
(g) The Company may in its By-Laws confer powers upon its Board of
Directors in addition to the foregoing, and in addition to the
powers
and authorities expressly conferred upon it by statute.
EIGHTH. Meetings of directors and stockholders may be held within or
without the State of Delaware, as the By-Laws may provide. The books of the
Company may be kept (subject to any provision contained in the statutes)
outside the State of Delaware at such place or places as may be designated
from
time to time by the Board of Directors or in the By-Laws of the Company.
Elections of directors need not be by written ballot unless the By-Laws of the
Company shall so provide.
NINTH. The Company reserves the right to amend, alter, change or repeal
any provision contained in this Certificate of Incorporation, in the manner
now
or hereafter
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<PAGE>
prescribed by statute, and all rights conferred upon stockholders herein are
granted subject to this reservation.
WE, THE UNDERSIGNED, being each of the incorporators hereinbefore named,
for the purpose of forming a corporation pursuant to the General Corporation
Law of the State of Delaware, do make this certificate, hereby declaring and
certifying that this is our act and deed and the facts herein stated are true,
and accordingly have hereunto set our hands this 27th day of May, 1971.
B. J. Consono
__________________ (SEAL)
W. E. Paul Garrett
__________________ (SEAL)
J. L. Rivera
__________________ (SEAL)
-8-
<PAGE>
STATE OF DELAWARE )
: ss.:
COUNTY OF NEW CASTLE )
BE IT REMEMBERED that on this 27th day of May,A. D. 1971, personally came
before me, a Notary Public for the State of Delaware, B. J. Consono, W. E.
Paul
Garrett and J. L. Rivera, all of the parties to the foregoing Certificate of
Incorporation, known to me personally to be such, and severally acknowledged
the said certificate to be the act and deed of the signers respectively and
that the facts stated therein are true.
GIVEN under my hand and seal of office the day and year aforesaid.
A. Dana Atwell
______________
Notary Public
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EXHIBIT C.(a)
INDENTURES OF CONSOLIDATED NATURAL GAS COMPANY
The Indentures and Supplemental Indentures between Consolidated Natural Gas
Company and its debenture Trustees, as listed below, are incorporated by
reference to material previously filed with the Commission as indicated:
Manufacturers Hanover Trust Company (now Chemical Bank)
Indenture dated as of May 1, 1971 (Exhibit (5) to Certificate of
Notification at Commission File No. 70-5012)
Eleventh Supplemental Indenture thereto dated as of December 1,
1986 (Exhibit (5) to Certificate of Notification at Commission
File No. 70-7079)
Thirteenth Supplemental Indenture thereto dated as of February 1,
1989 (Exhibit (5) to Certificate of Notification at Commission
File No. 70-7336)
Fourteenth Supplemental Indenture thereto dated as of June 1, 1989
(Exhibit (5) to Certificate of Notification at Commission File
No. 70-7336)
Fifteenth Supplemental Indenture thereto dated as of October 1,
1989 (Exhibit (5) to Certificate of Notification at Commission
File No. 70-7651)
Sixteenth Supplemental Indenture thereto dated as of October 1,
1992 (Exhibit (4) to Certificate of Notification at Commission
File No. 70-7651)
Seventeenth Supplemental Indenture thereto dated as of August 1,
1993 (Exhibit (4) to Certificate of Notification at Commission
File No. 70-8167)
Eighteenth Supplemental Indenture thereto dated as of December 1,
1993 (Exhibit (4) to Certificate of Notification at Commission
File No. 70-8167)
The Chase Manhattan Bank (National Association)
Indenture dated as of December 15, 1990 (Exhibit (4A)(1) to
Consolidated Natural Gas Company's Form 10-K Annual Report for
the year ended December 31, 1990, Commission File No. 1-3196)
THIRD AMENDMENT TO AGREEMENT PURSUANT TO RULE 45(c)
UNDER THE PUBLIC UTILITY HOLDING COMPANY ACT OF 1935
WHEREAS, Consolidated Natural Gas Company (hereinafter referred to as
"Parent"), a corporation organized and existing under the laws of the State of
Delaware, and its directly and indirectly wholly owned subsidiary corporations
(individually a "Subsidiary," collectively "Subsidiaries") whose names and
respective states of incorporation are listed below, i.e.:
State of
Name of Subsidiarv Incorporation
Consolidated Natural Gas Service Delaware
Company, Inc.
CNG Transmission Corporation Delaware
The East Ohio Gas Company Ohio
The Peoples Natural Gas Company Pennsylvania
Hope Gas, Inc. West Virginia
The River Gas Company West Virginia
West Ohio Gas Company Ohio
CNG Producing Company Delaware
CNG Pipeline Company, a wholly-
owned subsidiary of CNG
Producing Company Texas
CNG Development Company Delaware
CNG Energy Company Delaware
CNG Trading Company Delaware
Consolidated System LNG Company Delaware
CNG Research Company Delaware
CNG Coal Company Delaware
have entered into an Agreement dated December 3l, 1981, as amended, for the
allocation of current federal and state income taxes (the "Agreement") and
WHEREAS, Parent and its Subsidiaries (hereinafter collectively referred
to as the "Companies") are desirous of amending the Agreement for the purpose
<PAGE>
of adding additional Subsidiaries that Parent or one of its Subsidiaries has
acquired and giving recognition to the merger of one of the Subsidiaries into
another Subsidiary.
NOW, THEREFORE, the Companies, for mutual benefit and valuable
considerations, do hereby convenant and agree with one another that, pursuant
to paragraph IV of the Agreement, it shall be amended as follows:
First: The additional wholly-owned Subsidiaries of Parent whose names and
respective states of incorporation are listed below will become
parties to the Agreement, i.e.:
State of
Name Of Subsidiary Incorporation
Virginia Natural Gas, Inc. Virginia
CNG Financial Services, Inc. Delaware
CNG Storage Service Company Delaware
Second: CNG Technologies, Inc., incorporated in the State of Delaware on
January 15, 1991, and a wholly-owned Subsidiary of CNG Energy
Company, a party to the Agreement, will also become a party to
the Agreement.
Third: CNG Iroquois, Inc., incorporated in the State of Delaware, a
wholly-owned Subsidiary of CNG Transmission Corporation, a party
to the Agreement, will also become a party to the Agreement.
Fourth: As a result of the merger of CNG Producing Company and CNG
Development Company, effective January 1, 1991, CNG Producing
Company will become successor in interest and will succeed to all
of the rights, benefits and obligations of CNG Development Company
under the Agreement.
<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed in its name and on its behalf by one of its
officers duly authorized, and its corporate seal to be affixed hereto
by its Secretary or one of its Assistant Secretaries as of the 22nd day
of April, 1991 to be effective (i) as of December 31, 1990 as to
Paragraph First and Third above, (ii) as of the date of incorporation
of the corporation named therein as to Paragraph Second above, and
(iii) as of January 1, 1991 as to Paragraph Fourth above.
ATTEST: CONSOLIDATED NATURAL GAS COMPANY
/s/ LAURA J. MCKEOWN /s/ LESTER D. JOHNSON
_____________________________ By:______________________________
Secretary Senior Vice President and
Chief Financial Officer
ATTEST: CONSOLIDATED NATURAL GAS SERVICE
COMPANY, INC.
/s/ LAURA J. MCKEOWN /s/ LESTER D. JOHNSON
_____________________________ By:______________________________
Secretary Senior Vice President and
Chief Financial Officer
ATTEST: THE PEOPLES NATURAL GAS COMPANY
/s/ SUSAN G. GEORGE /s/ JOHN R. FELLABOM
_____________________________ By:______________________________
Asst. Secretary Treasurer
ATTEST: CNG ENERGY COMPANY
/s/ EDWARD E. RIECK /s/ LESTER D. JOHNSON
_____________________________ By:______________________________
Secretary Vice President
ATTEST: CNG FINANCIAL SERVICES, INC.
/s/ N. F. CHANDLER /s/ R. M. SABLE
_____________________________ By:______________________________
Secretary Treasurer
<PAGE>
ATTEST: CNG TRANSMISSION CORPORATION
/s/ STEPHEN E. WILLIAMS /s/ R. GARY SHEETS
_____________________________ By:______________________________
Secretary Treasurer
ATTEST: HOPE GAS, INC.
/s/ MARC A. HALBRITTER /s/ R. GARY SHEETS
_____________________________ By:______________________________
Secretary Treasurer
ATTEST: CONSOLIDATED SYSTEM LNG COMPANY
/s/ D. E. WEATHERWAX /s/ DAVID M. WESTFALL
_____________________________ By:______________________________
Secretary Treasurer
ATTEST: CNG STORAGE SERVICE COMPANY
/s/ STEPHEN E. WILLIAMS /s/ DAVID M. WESTFALL
_____________________________ By:______________________________
Secretary Treasurer
ATTEST: CNG IROQUOIS, INC.
/s/ STEPHEN E. WILLIAMS /s/ R. GARY SHEETS
_____________________________ By:______________________________
Secretary Treasurer
ATTEST CNG RESEARCH COMPANY
/s/ GEORGE A. TAAFFE /s/ PAUL F. SWENSON
_____________________________ By:______________________________
Secretary Vice President
ATTEST: CNG TECHNOLOGIES, INC.
/s/ N. F. CHANDLER /s/ R. M. SABLE
_____________________________ By:______________________________
Secretary Treasurer
<PAGE>
ATTEST: CNG PRODUCING COMPANY (Also
signing as successor in inter-
est for CNG Development Company)
/s/ D. MALCOLM JOHNS, JR. /s/ PAUL P. GREGG
_____________________________ By:______________________________
Secretary Treasurer
ATTEST: CNG PIPELINE COMPANY, a wholly-
owned subsidiary of CNG
Producing Company
/s/ DAVID BARIL /s/ PAUL P. GREGG
_____________________________ By:______________________________
Secretary Treasurer
ATTEST: CNG COAL COMPANY
/s/ DAVID BARIL /s/ PAUL P. GREGG
_____________________________ By:______________________________
Secretary Treasurer
ATTEST: CNG TRADING COMPANY
/s/ DAVID BARIL /s/ TONY C. BANKS
_____________________________ By:______________________________
Secretary Treasurer
ATTEST: VIRGINIA NATURAL GAS, INC.
/s/ DONALD A. FICKENSCHER /s/ DAVID J. DZURICKY
_____________________________ By:______________________________
Secretary Treasurer
ATTEST: THE EAST OHIO GAS COMPANY
/s/ KENNETH R. LONG /s/ PATRICK J. SWEENEY
_____________________________ By:______________________________
Assistant Secretary Treasurer
ATTEST: THE RIVER GAS COMPANY
/s/ KENNETH R. LONG /s/ PATRICK J. SWEENEY
_____________________________ By:______________________________
Assistant Secretary Treasurer
ATTEST: WEST OHIO GAS COMPANY
/s/ PAUL J. BONIFAS /s/ JAMES A. GRONE
_____________________________ By:______________________________
Assistant Secretary Treasurer
<PAGE>
SECOND AMENDMENT TO AGREEMENT PURSUANT TO RULE 45(c)
UNDER THE PUBLIC UTILITY HOLDING COMPANY ACT OF 1935
WHEREAS, Consolidated Natural Gas Company (hereinafter referred to as
"Parent"), a corporation organized and existing under the laws of the State of
Delaware, and its wholly owned subsidiary corporations whose names and
respective states of incorporation are listed below, i.e.:
State of
Name of subsidiary Incorporation
_________________________________ _______________
Consolidated Natural Gas Service
Company, Inc. Delaware
CNG Transmission Corporation Delaware
The East Ohio Gas Company Ohio
The Peoples Natural Gas Company Pennsylvania
Hope Gas, Inc. West Virginia
The River Gas Company West Virginia
West Ohio Gas Company Ohio
CNG Producing Company Delaware
CNG Pipeline Company, a wholly
owned subsidiary of CNG
Producing Company Texas
CNG Development Company Delaware
CNG Energy Company Delaware
CNG Trading Company Delaware
Consolidated System LNG Company Delaware
CNG Research Company Delaware
CNG Coal Company Delaware
are desirous of amending their Agreement for the allocation of current Federal
and state consolidated taxes; and
WHEREAS, Parent and its subsidiaries (hereinafter collectively referred
to as the "Companies") join annually in the filing of a consolidated Federal
income and certain state tax returns; and
1
<PAGE>
WHEREAS, the Securities and Exchange Commission has adopted Rule 45(c)
pursuant to the Public Utility Holding Company Act of 1935 providing for the
allocation of consolidated taxes among associated Companies;
NOW, THEREFORE, the Companies, for mutual benefit and valuable
considerations, do hereby covenant and agree with one another that the
allocation of the consolidated current Federal income tax, alternative
minimum, and superfund tax liabilities of the Companies shall be allocated as
contemplated by said Rule 45(c), as follows:
First: There shall be allocated to each Company the tax effects of its
own gains or losses subject to capital gains or claim of right
treatment, tax credits and the material effects of any other
features of the Internal Revenue Code applicable to a
particular Company (including its carryover amounts) to the
extent that the above described effects are utilized in the
consolidated return in the taxable year but excluding any
consolidated alternative minimum tax or superfund tax
liabilities.
Second: The balance of the current Federal tax liability of the
Companies (after the allocations described in paragraph First above
and excluding any consolidated alternative minimum tax or superfund
tax liabilities) shall be allocated on the basis of the contribution
of each Company to the consolidated taxable income of all the
Companies, excluding income subject to capital gain or claim of
right treatment. The tax attributable to such capital gain or claim
of right income will have been separately allocated pursuant to
2
<PAGE>
paragraph First above. The tax allocated to a Company under this
paragraph, which may be either positive or negative, shall be equal
to the consolidated Federal tax liability (as described in this
paragraph Second) multiplied by a fraction, the numerator of which
is the positive or negative taxable income of the Company (as
adjusted in paragraphs First and Third), including any carryover
loss attributable to the Company to the extent absorbed in the
taxable year and the denominator of which is the consolidated
taxable income of the Companies (as adjusted in paragraphs First and
Third). Companies with taxable income will be allocated a tax
liability under this paragraph while Companies with net operating
losses will be allocated a tax benefit or credit.
Third: The tax effect of inter-company transactions eliminated in the
calculation of consolidated taxable income shall be eliminated
from the taxable income of the Companies involved in such
transactions for purposes of the calculations provided in
paragraph Second.
Fourth: If a consolidated current alternative minimum tax liability
exists, such liability will be allocated only to those
Companies with a separate Company alternative minimum tax
liability. The tax allocated to a Company under this
paragraph, which may only be positive, shall be equal to the
consolidated alternative minimum tax liability multiplied by a
fraction, the numerator of which is that Company's separate
Company alternative minimum tax and the denominator of which is
3
<PAGE>
the total of the alternative minimum tax liabilities of those
Companies with a separate company alternative minimum tax
liability. If the regular tax in the consolidated tax return
is reduced by reason of the alternative minimum tax credit (as
defined in IRC Sec. 53), the benefit of such credit shall be
allocated to those Companies who (by having an alternative
minimum tax liability allocated to them in a prior year)
generated the credit.
Fifth: If a consolidated current superfund tax liability exists, such
liability shall be allocated to each Company based on a
fraction, the numerator of which is that Company's modified
alternative minimum taxable income (as defined in IRC Sec. 59A)
and the denominator of which is consolidated modified
alternative minimum taxable income. Companies with modified
alternative minimum taxable income will be allocated a
superfund tax liability under this paragraph while Companies
with a modified alternative minimum taxable loss will be
allocated a tax benefit or credit.
Sixth: Under the method of allocation described in paragraphs First
through Fifth above, the Companies agree that the tax allocated
to each Company shall not exceed the amount of tax (either
regular, alternative minimum or superfund tax) of such Company
based upon a separate return computed as if such Company had
always filed its tax returns on a separate basis. However, in
computing the separate return tax liability of a Company, items
of carryforward, carryback and inter-company transactions, to
the extent absorbed in the tax allocation of other years, shall
be disregarded. In addition, corporate tax rates that are
4
<PAGE>
less than the maximum rate imposed by Sec. 11 of the Internal
Revenue Code shall be disregarded in computing the separate return
tax liability of a Company.
Seventh: Nonetheless, if there is an excess of allocated liability over
a separate return tax which would be allocated to a Company but
for paragraph Sixth above, such excess shall be apportioned
among the other members of the group in direct proportion to
the reduction in tax liability resulting to such members as
measured by the difference between their tax liabilities
computed on a separate return basis and their allocated portion
of the consolidated tax liability.
Further, the Companies do hereby covenant and agree with one another that
the current state consolidated Corporate tax liabilities for those states in
which consolidated returns are filed shall be allocated as contemplated by
said Rule 45(c), as follows:
First: To each Company operating in the state there shall be allocated
the income tax effects of the Company's state taxable losses
(on a separate Company basis), any state tax credits and the
material effects of any other features of the state tax code
applicable to a particular Company including its carryover amounts
to the extent that the above described effects are utilized in the
consolidated state return in the taxable year.
5
<PAGE>
Second: To each Company operating in the state that generates state
taxable income, there shall be allocated income tax expense by
first increasing the state consolidated current income tax
liability by the sum of the tax effects allocated in paragraph
First above. The total shall then be allocated among those
Companies incurring an income tax expense based on the ratio of
that Company's separate Company state income tax to the sum of
the separate Company state income tax of all Companies
incurring state income tax expense.
Third: NONETHELESS, if for any Company there is an excess of allocated
liability (pursuant to paragraphs First and Second) over the
liability on a separate Company basis, such excess shall be
allocated among the Companies with net state tax benefits.
Such excess shall be allocated to all such Companies based on
the ratio of their separate Company net tax benefits to the sum
of income tax benefits of all Companies which were allocated
such benefits. The allocation of such excess tax shall have the
effect of reducing the income tax benefits of those Companies but in
no case shall such allocation result in reducing such tax benefits
below zero for any Company that realizes a net taxable loss on a
separate Company basis.
6
<PAGE>
It is further agreed by and among the Companies as follows:
I. PAYMENTS: It is agreed that those Companies allocated a current
Federal or state income tax liability under this agreement will pay
such liability to the Parent Company in the amounts and on the dates
directed by Parent. The Parent Company will, in turn, pay the
consolidated tax to the relevant taxing jurisdiction and also to
those Companies which were allocated a tax benefit. It is
contemplated that all payments required to be made by the Companies
pursuant to this Agreement will be made on dates approximating the
dates specified in the Internal Revenue or state Codes for the
payment of corporate taxes.
II. SEPARATE RETURN LIABILITY: The Companies intend that the result of
the proposed method of allocation and payment will be:
(a) No Company will pay more than its separate return liability
as if it had always filed separate returns. However, the
qualifications set out in paragraph Sixth and Seventh under Federal
tax allocation and paragraph Third under state tax allocation above
concerning the calculation of a separate return tax shall apply.
(b) Each Company having a net operating loss or other net
tax benefit will receive in current cash payments the
benefit of its own net operating loss or other net tax
benefit to the extent that the other Companies can utilize
7
<PAGE>
such items to offset the tax liability they would otherwise
have on a separate return basis or to the extent utilized in
the consolidated return (after taking into account any tax
credits they could utilize on a separate return basis);
III. EFFECTIVE DATE: This amendment shall be effective for allocation of
the current Federal and state income tax liabilities of the
Companies for the calendar year 1988 and all subsequent years until
this Agreement is further amended in writing by each Company which
is party hereto.
IV. APPROVAL AND AMENDMENTS: This Agreement is subject to the approval
of the Securities and Exchange Commission. Any amendments to this
Agreement may be made only with the unanimous written consent of all
the parties hereto. A copy of this Agreement will be filed as an
exhibit to the Parent's Annual Report to the Securities and Exchange
Commission on Form U5S for 1988, and any amendments to this
Agreement shall also be filed as exhibits to the Parent's Form U5S
for the year when the amendment becomes effective. It is
contemplated that any additional Companies which hereinafter become
associated with the Companies shall join in and become a party to
this Agreement by amendment thereto.
V. PRIOR AGREEMENT AMENDED: This Agreement amends the prior Agreement
relating to the allocation of income tax liability dated December
31, 1981 as amended January 1, 1984 by replacing in full such prior
Agreement.
8
<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement
to be executed in its name and on its behalf by one of its officers duly
authorized, and its corporate seal to be affixed hereto by its Secretary or
one of its Assistant Secretaries as of the 20th day of April, 1989 to be
effective January 1, 1988.
ATTEST: CONSOLIDATED NATURAL GAS COMPANY
/s/ RAYMOND R. ERNEST By: /s/ L. D. JOHNSON
__________________________ ______________________________
Secretary Senior Vice President and
Chief Financial Officer
ATTEST: CONSOLIDATED NATURAL GAS SERVICE
COMPANY, INC.
/s/ RAYMOND R. ERNEST By: /s/ L. D. JOHNSON
__________________________ ______________________________
Secretary Senior Vice President and
Chief Financial Officer
ATTEST: THE PEOPLES NATURAL GAS COMPANY
/s/ W. P. BOSWELL By: /s/ JOHN R. FELLABOM
__________________________ ______________________________
Secretary Treasurer
ATTEST: CNG DEVELOPMENT COMPANY
/s/ DONALD A. FICKENSCHER By: /s/ J. R. KOSSLER
__________________________ ______________________________
Secretary Treasurer
9
<PAGE>
ATTEST: CNG ENERGY COMPANY
/s/ EDWARD E. RIECK By: /s/ JOHN V. WHITACRE
__________________________ ______________________________
Secretary Treasurer
ATTEST: CNG TRADING COMPANY
/s/ GEORGE A. TAAFFE By: /s/ R. M. SABLE
__________________________ ______________________________
Secretary Treasurer
ATTEST: CNG RESEARCH COMPANY
/s/ GEORGE A. TAAFFE By: /s/ JOHN V. WHITACRE
__________________________ ______________________________
Secretary Treasurer
ATTEST: CNG COAL COMPANY
/s/ DONALD A. FICKENSCHER By: /s/ J. R. KOSSLER
__________________________ ______________________________
Secretary Treasurer
ATTEST: CNG PRODUCING COMPANY
/s/ PHILIP L. JONES By: /s/ PAUL P. GREGG
__________________________ ______________________________
Secretary Treasurer
ATTEST: CNG PIPELINE COMPANY, a wholly-
owned subsidiary of CNG Producing
Company
/s/ DAVID BARIL By: /s/ PAUL P. GREGG
__________________________ ______________________________
Secretary Treasurer
10
<PAGE>
ATTEST: CNG TRANSMISSION CORPORATION
/s/ STEPHEN E. WILLIAMS By: /s/ DAVID J. DZURICKY
__________________________ ______________________________
Secretary Treasurer
ATTEST: HOPE GAS, INC.
/s/ R. S. ELLIOTT By: /s/ DAVID J. DZURICKY
__________________________ ______________________________
Secretary Treasurer
ATTEST: CONSOLIDATED SYSTEM LNG COMPANY
/s/ D. E. WEATHERWAX By: /s/ L. D. JOHNSON
__________________________ ______________________________
Secretary President
ATTEST: THE EAST OHIO GAS COMPANY
/s/ F. C. LEWIS By: /s/ D. F. CARROLL
__________________________ ______________________________
Secretary Treasurer
ATTEST: THE RIVER GAS COMPANY
/s/ F. C. LEWIS By: /s/ D. F. CARROLL
__________________________ ______________________________
Secretary Treasurer
ATTEST: WEST OHIO GAS COMPANY
/s/ PAUL J. BONIFAS By: /s/ JAMES A. GRONE
__________________________ ______________________________
Assistant Secretary Treasurer
11
<PAGE>
FIRST AMENDMENT TO AGREEMENT PURSUANT TO RULE 45(c)
UNDER THE PUBLIC UTILITY HOLDING COMPANY ACT OF 1935
WHEREAS, Consolidated Natural Gas Company (hereinafter referred to as
"Parent"), a corporation organized and existing under the laws of the State of
Delaware, and its wholly owned subsidiary corporations whose names and
respective states of incorporation are listed below, i.e.:
Name of Subsidiary State of Incorporation
Consolidated Natural Gas Service
Company, Inc. Delaware
Consolidated Gas Supply Corporation West Virginia
The East Ohio Gas Company Ohio
The Peoples Natural Gas Company Pennsylvania
The River Gas Company West Virginia
West Ohio Gas Company Ohio
CNG Producing Company, acting in its
own behalf and as successor by merger
to CNG Development Company Ltd.
(Organized in Canada) Delaware
Consolidated System LNG Company Delaware
CNG Research Company Delaware
CNG Coal Company Delaware
have entered into an Agreement on December 31, 1981 for the allocation of
current federal income taxes (the Agreement) and
WHEREAS, Parent and its subsidiaries (hereinafter collectively referred
to as the "Companies") are desirous of amending the Agreement for the purpose
of adding additional subsidiaries that Parent or one of its subsidiaries has
acquired since December 31, 1981 and to recognize a change in the name of one
subsidiary;
1
<PAGE>
NOW, THEREFORE, the Companies, for mutual benefit and valuable
considerations, do hereby covenant and agree with one another that, pursuant
to paragraph IV of the Agreement, it shall be amended as follows:
First: The additional wholly owned subsidiaries of Parent whose names
and respective states of incorporation are listed below will
become parties to the Agreement, i.e.:
Name of Subsidiary State of Incorporation
CNG Energy Company Delaware
CNG Development Company Delaware
Consolidated Gas Delaware
Transmission Corporation
Second: CNG Pipeline Company, incorporated in the State of Texas and a
wholly owned subsidiary of CNG Producing Company, a party to
the Agreement, will also become a party to the Agreement.
Third: Consolidated Gas Supply Corporation, a party to the Agreement,
will change its name to Hope Gas, Inc., and that change is
recognized in this amendment.
2
<PAGE>
IN WITNESS WHEREOF, each of the parties to the Agreement as amended
herein has caused this amendment to be executed in its name and on its behalf
by one of its officers duly authorized, and its corporate seal to be affixed
hereto by its Secretary or one of its Assistant Secretaries on this 15th day
of April, 1984, to be effective as of January 1, 1984.
ATTEST: CONSOLIDATED NATURAL GAS COMPANY
/s/ A. MARK ABRAMOVIC By: /s/ L. D. JOHNSON
__________________________ ______________________________
Asst. Secretary Vice President and Treasurer
ATTEST: CONSOLIDATED NATURAL GAS SERVICE
COMPANY, INC.
/s/ A. MARK ABRAMOVIC By: /s/ L. D. JOHNSON
__________________________ ______________________________
Secretary Vice President and Treasurer
ATTEST: CONSOLIDATED GAS TRANSMISSION
CORPORATION
/s/ D. E. WEATHERWAX By: /s/ JAMES M. FRASHURE
__________________________ ______________________________
Secretary Treasurer
ATTEST: THE EAST OHIO GAS COMPANY
/s/ DONALD L. ZITO By: /s/ MICHAEL G. BARTELS
__________________________ ______________________________
Secretary Vice President and Treasurer
3
<PAGE>
ATTEST: THE PEOPLES NATURAL GAS
COMPANY
/s/ ROBERT M. JACOB By: /s/ ROGER E. WRIGHT
__________________________ ______________________________
Secretary Vice President
ATTEST: THE RIVER GAS COMPANY
/s/ DONALD L. ZITO By: /s/ MICHAEL G. BARTELS
__________________________ ______________________________
Secretary Vice President and Treasurer
ATTEST: WEST OHIO GAS COMPANY
/s/ PHILLIP C. MCCLAIN By: /s/ JOHN F. JOHNSON
__________________________ ______________________________
Secretary Vice President and Treasurer
ATTEST: CNG PRODUCING COMPANY
/s/ J. WAYNE GILLETTE By: /s/ JOHN V. WHITACRE
__________________________ ______________________________
Secretary Vice President and Treasurer
ATTEST: CNG PRODUCING COMPANY AS SUCCESSOR
BY MERGER TO CNG DEVELOPMENT
COMPANY LTD.
/s/ J. WAYNE GILLETTE By: /s/ JOHN V. WHITACRE
__________________________ ______________________________
Secretary Vice President and Treasurer
4
<PAGE>
ATTEST: CONSOLIDATED SYSTEM LNG COMPANY
/s/ D. E. WEATHERWAX By: /s/ JAMES M. FRASHURE
__________________________ ______________________________
Secretary Treasurer
ATTEST: CNG RESEARCH COMPANY
/s/ A. MARK ABRAMOVIC By: /s/ L. D. JOHNSON
__________________________ ______________________________
Secretary Treasurer
ATTEST: CNG COAL COMPANY
/s/ D. E. WEATHERWAX By: /s/ JAMES M. FRASHURE
__________________________ ______________________________
Secretary Treasurer
ATTEST: CNG ENERGY COMPANY
/s/ A. MARK ABRAMOVIC By: /s/ L. D. JOHNSON
__________________________ ______________________________
Secretary Treasurer
ATTEST: CNG DEVELOPMENT COMPANY
/s/ PHILIP L. JONES By: /s/ J. R. KOSSLER
__________________________ ______________________________
Secretary Treasurer
5
<PAGE>
ATTEST: HOPE GAS, INC. (CONSOLIDATED GAS
SUPPLY CORPORATION)
/s/ D. E. WEATHERWAX BY: /s/ JAMES M. FRASHURE
__________________________ ______________________________
Secretary Treasurer
ATTEST: CNG PIPELINE COMPANY
/s/ J. WAYNE GILLETTE By: /s/ JOHN V. WHITACRE
__________________________ ______________________________
Secretary Vice President and Treasurer
6
<PAGE>
AGREEMENT PURSUANT TO RULE 45(c)
UNDER THE PUBLIC UTILITY HOLDING COMPANY ACT OF 1935
WHEREAS, Consolidated Natural Gas Company (hereinafter referred to as
"Parent"), a corporation organized and existing under the laws of the State of
Delaware, and its wholly owned subsidiary corporations whose names and
respective states of incorporation are listed below, i.e.:
State of
Name of Subsidiary Incorporation
Consolidated Natural Gas Service
Company, Inc. Delaware
Consolidated Gas Supply Corporation West Virginia
The East Ohio Gas Company Ohio
The Peoples Natural Gas Company Pennsylvania
The River Gas Company West Virginia
West Ohio Gas Company Ohio
CNG Producing Company, acting in Delaware
its own behalf and as successor
by merger to CNG Development
Company Delaware
CNG Research Company Delaware
CNG Coal Company Delaware
are desirous of entering into an Agreement for the allocation of current
federal income taxes; and
WHEREAS, Parent and its subsidiaries (hereinafter collectively referred
to as the "Companies") join annually in the filing of a consolidated federal
income tax return; and
WHEREAS, the Securities and Exchange Commission has adopted Rule 45(c)
pursuant to the Public Utility Holding Company Act of 1935 providing for the
allocation of consolidated federal income taxes among associated companies;
NOW, THEREFORE, the Companies, for mutual benefit and valuable
considerations, do hereby covenant and agree with one another that the
allocation of the consolidated current federal income tax liability of the
Companies shall be allocated as contemplated by said Rule 45(c), as follows:
<PAGE>
2
First: There shall be allocated to each Company the tax effects of its
own gains or losses subject to capital gain rates, its
investment tax credits, foreign tax credits and the material
effects of any other features of the Internal Revenue Code
applicable to a particular Company including its carryover
amounts to the extent those amounts are absorbed in the taxable
year.
Second: The balance of the current tax liability of the Companies
(after the special allocations described in paragraph First
above) shall be allocated on the basis of the contribution of
each Company to the consolidated taxable income of all the
Companies, excluding income subject to taxation at capital gain
rates. The tax attributable to such capital gain income will
have been separately allocated pursuant to paragraph First
above. The tax allocated to a Company under this paragraph,
which may be either positive or negative, shall be equal to the
consolidated tax liability (as adjusted by paragraphs First and
Fourth) multiplied by a fraction, the numerator of which is the
positive or negative corporate taxable income of the Company (as
adjusted in paragraph Third), including any carryover loss
attributable to the Company to the extent absorbed in the taxable
year, and the denominator of which is the consolidated taxable
income of the Companies (as adjusted in paragraphs First and Third).
Companies with taxable income will be allocated a tax liability
under this method while Companies with net operating losses will be
allocated a tax benefit or credit.
<PAGE>
3
Third: The tax effect of inter-company transactions eliminated in the
calculation of consolidated taxable income shall be eliminated
from the corporate taxable income of the Companies involved in
such transactions in the calculations provided in paragraph
Second.
Fourth: Any consolidated minimum income tax arising from preference
items will be allocated among the Companies in the ratio of
their dollars of preference income giving rise to such consolidated
minimum income tax.
Fifth: Under the method of allocation described in paragraphs First
through Fourth above, the Companies agree that the tax
allocated to each Company shall not exceed the amount of tax of
such Company based upon a separate return computed as if such
Company had always filed its tax returns on a separate return
basis. However, in computing the separate return tax liability
of a Company, items of carryforward, carryback and inter-
company transactions to the extent absorbed in the tax
allocation of other years shall be disregarded. In addition,
corporate tax rates that are less than the maximum rate imposed
by Section 11 of the Internal Revenue Code shall be disregarded in
computing the separate return tax liability of a company.
<PAGE>
4
Sixth: Nonetheless, if there is an excess of liability over a separate
return tax which would be allocated to a Company but for
paragraph Fifth above such excess shall be apportioned among
the other members of the group in direct proportion to the
reduction in tax liability resulting to such members as measured by
the difference between their tax liabilities computed on a separate
return basis and their allocated portion of the consolidated tax
liability.
It is further agreed by and among the Companies as follows:
I. PAYMENTS: It is agreed that those Companies allocated a current federal
income tax liability under this agreement will pay the Internal Revenue
Service a portion of that liability in the amounts and on the dates
directed by Parent. Another portion of the current federal income tax
liability of those Companies will be paid by them to the other Companies
which were allocated a tax benefit. Such payments will also be made in
the amounts and on the dates directed by Parent. It is contemplated that
all payments required to be made by the Companies pursuant to this
agreement will be made on dates approximating the dates specified in the
Internal Revenue Code for the payment of corporate income taxes.
II. SEPARATE RETURN LIABILITY: The Companies intend that the result of the
proposed method of allocation and payment will be:
(a) No Company will pay more than its separate return
liability as if it had always filed separate returns. However,
the qualifications set out in paragraph Fifth above concerning
the calculation of a separate return tax shall apply.
<PAGE>
5
(b) Each Company having a net operating loss or other net tax
benefit will receive in current cash payments the benefit
of its own net operating loss or other net tax benefits to
the extent that the other Companies can utilize such items
to offset the tax liability they would otherwise have on a
separate return basis (after taking into account any
investment tax credits they could utilize on a separate
return basis);
(c) Each company will pay that portion of the consolidated
minimum income tax which its preference income causes.
III. EFFECTIVE DATE: This Agreement shall be effective for allocation of the
current income tax liability of the Companies for the calendar year 1981
and all subsequent years until this Agreement shall be amended in writing
by each of the Companies which is a party hereto.
IV. APPROVAL AND AMENDMENTS: This Agreement is subject to the approval of
the Securities and Exchange Commission, the Federal Energy Regulatory
Commission and/or the public utility commission of one or more states.
Any amendments to this Agreement may be made only with the unanimous
written consent of all the parties hereto. A copy of this Agreement will
be filed as an exhibit to the Parent's Annual Report to the Securities
and Exchange Commission on Form U5S for 1981, and any amendments to this
Agreement shall also be filed as exhibits to the Parent's Form U5S for
the year when the amendment becomes effective. It is contemplated that
<PAGE>
6
any additional companies which hereafter become associated with the
Companies shall have the option of joining in and becoming a party to
this Agreement by amendment thereto.
V. PRIOR AGREEMENTS SUPERSEDED: Any prior agreements relating to the
allocation of income tax liability among the Companies are superseded.
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement
to be executed in its name and on its behalf by one of its officers duly
authorized, and its corporate seal to be affixed hereto by its Secretary or
one of its Assistant Secretaries on this 31st day of December 1981.
ATTEST: CONSOLIDATED NATURAL GAS COMPANY
/s/ ROBERT R. COPP By: /s/ H. A. OFFUTT
__________________________ ______________________________
Secretary Senior Vice President and
Chief Financial Officer
ATTEST: CONSOLIDATED NATURAL GAS SERVICE
COMPANY, INC.
/s/ A. MARK ABRAMOVIC By: /s/ H. A. OFFUTT
__________________________ ______________________________
Secretary Senior Vice President and
Chief Financial Officer
ATTEST: CONSOLIDATED GAS SUPPLY CORPORATION
/s/ D. E. WEATHERWAX By: /s/ JAMES M. FRASHURE
__________________________ ______________________________
Secretary Treasurer
<PAGE>
7
ATTEST: THE EAST OHIO GAS COMPANY
/s/ ROBERT W. CORP By: /s/ PARRY KELLER
__________________________ ______________________________
Secretary Treasurer
ATTEST: THE PEOPLES NATURAL GAS COMPANY
/s/ ROBERT M. JACOB By: /s/ ROGER E. WRIGHT
__________________________ ______________________________
Secretary Vice President - Financial
ATTEST: THE RIVER GAS COMPANY
/s/ ROBERT W. CORP By: /s/ PARRY KELLER
__________________________ ______________________________
Secretary Treasurer
ATTEST: WEST OHIO GAS COMPANY
/s/ PHILLIP C. MCCLAIN By: /s/ JOHN F. JOHNSON
__________________________ ______________________________
Secretary Treasurer
ATTEST: CNG PRODUCING COMPANY
/s/ JOSEPH W. PORTER, JR. By: /s/ JOHN V. WHITACRE
__________________________ ______________________________
Secretary Vice President & Treasurer
<PAGE>
8
ATTEST: CNG PRODUCING COMPANY AS SUCCESSOR
BY MERGER TO CNG DEVELOPMENT
COMPANY
/s/ JOSEPH W. PORTER, JR. By: /s/ JOHN V. WHITACRE
__________________________ ______________________________
Secretary Vice President & Treasurer
ATTEST: CONSOLIDATED SYSTEM LNG COMPANY
/s/ A. MARK ABRAMOVIC By: /s/ T. A. WHITE
__________________________ ______________________________
Secretary President
ATTEST: CNG RESEARCH COMPANY
/s/ A. MARK ABRAMOVIC By: /s/ T. A. WHITE
__________________________ ______________________________
Secretary President
ATTEST: CNG COAL COMPANY
/s/ A. MARK ABRAMOVIC BY: /s/ H. A. OFFUTT
__________________________ ______________________________
Assistant Secretary Vice President
<PAGE> 1
CNG Energy Company
Index of Exhibit to Form U5S
For the Year Ended December 31, 1993
Page
Index to Exhibit . . . . . . . . . . . . . . . . . . . . . . 1
Divisional Statement of Income and Retained Earnings . . . . 2-3
Divisional Balance Sheet . . . . . . . . . . . . . . . . . . 4-9
Cost Allocations Showing the Computation of the Annual Cost
Incurred by CNG Transmission Corporation to
Perform its Contract with CNG Energy Company
Production from Copley, Shultz, West Union, Papco
and NGL Partners Extraction Facilities
For the Period January 1 to March 31, 1993 . . . . . . . 10
For the Period April 1 to December 31, 1993 . . . . . . 11
Volume of Liquids Processed by CNG Transmission Corporation. 12
Volume and Kind of Products Delivered to CNG Energy Company. 12
Amount Paid by CNG Energy Company to CNG Transmission
Corporation for Fractionation Services . . . . . . . . . . 12
Number of Gallons of Fractionated Liquids Purchased by CNG
Energy Company During the Calendar Year, Including Price
Paid Per Gallon . . . . . . . . . . . . . . . . . . . . . 12
Total Cost of CNG Transmission Corporation Personnel
Services Engaged in Marketing the Fractionated Liquids
Purchased by CNG Energy Company . . . . . . . . . . . . . 12
<PAGE> 2
<TABLE>
CNG Energy Company
Consolidating and Divisional Statement of Income and
Retained Earnings
For the Year Ended December 31, 1993 (Unaudited)
(Thousands of Dollars)
<CAPTION>
CNG Energy Consolidating
Company Eliminations CNG Granite CNG
and and Technologies, Road Lakewood,
Subsidiaries Adjustments Inc. CoGen, Inc. Inc.
<S> <C> <C> <C> <C> <C>
Operating Revenues
Fractionation services . . . . . . . $ 1,878 $ - $ - $ - $ -
Sale of gasoline . . . . . . . . . . 2,418 - - - -
Sale of butane . . . . . . . . . . . 1,921 - - - -
Sale of propane . . . . . . . . . . 5,017 - - - -
Sale of isobutane . . . . . . . . . 1,140 - - - -
User fees - Ben's Run pipeline . . . 1,146 - - - -
Shared Savings - Sanidairy . . . . . 25 - - - -
Total operating revenues . . . 13,545 - - - -
Operating Expenses
Operation expense
Products purchased for resale . . 9,390 - - - -
Other . . . . . . . . . . . . . . 3,144 - 2 - 473
Subtotal . . . . . . . . . . . 12,534 - 2 - 473
Depreciation and amortization . . . 207 - - - -
Taxes, other than income taxes . . . 615 - 4 - 1
Subtotal . . . . . . . . . . . 13,356 - 6 - 474
Operating income before
income taxes . . . . . . . . 189 -
(6) - (474)
Income taxes - estimated . . . . . . 408 -
(1) - (166)
Operating income . . . . . . . (219) -
(5) - (308)
Other Income
Interest revenues . . . . . . . . . 212 - - - -
Other (net) . . . . . . . . . . . . 1,120 - - - -
Equity in earnings of subsidiary
companies - consolidated . . . . . - 313 - - -
Total other income . . . . . . 1,332 313 - - -
Income before interest charges 1,113 313
(5) - (308)
Interest Charges
Interest on long-term debt . . . . . 568 - - - -
Other interest expense . . . . . . . 313 - - - -
Capitalized interest . . . . . . . . - - - - -
Total interest charges . . . . 881 - - - -
Income before cumulative effect of
change in accounting principle . . . 232 313
(5) - (308)
Cumulative effect prior to January 1,
1993, of applying SFAS No. 109 . . . (832) - - - -
Net Income . . . . . . . . . . . . . . (600) 313
(5) - (308)
Dividends Declared . . . . . . . . . . - - - - -
Retained Earnings at January 1, 1993 . 731 8
(1) - (7)
Retained Earnings at December 31, 1993 $ 131 $ 321 $
(6) $ - $(315)
</TABLE>
<PAGE> 3
<TABLE>
CNG Energy Company
Consolidating and Divisional Statement of Income and
Retained Earnings
For the Year Ended December 31, 1993 (Unaudited)
(Thousands of Dollars)
<CAPTION>
CNG
Technical
Energy Cogeneration Liquids NGV
Products
Company Division Division Division
Division
<S> <C> <C> <C> <C> <C>
Operating Revenues
Fractionation services . . . . . . . $ 1,878 $ - $ 1,878 $
- - $ -
Sale of gasoline . . . . . . . . . . 2,418 - 2,418
- - -
Sale of butane . . . . . . . . . . . 1,921 - 1,921
- - -
Sale of propane . . . . . . . . . . 5,017 - 5,017
- - -
Sale of isobutane . . . . . . . . . 1,140 - 1,140
- - -
User fees - Ben's Run pipeline . . . 1,146 - 1,146
- - -
Shared Savings - Sanidairy . . . . . 25 25 -
- - -
Total operating revenues . . . 13,545 25 13,520
- - -
Operating Expenses
Operation expense
Products purchased for resale . . 9,390 - 9,390
- - -
Other . . . . . . . . . . . . . . 2,669 1,585 1,083
1 -
Subtotal . . . . . . . . . . . 12,059 1,585 10,473
1 -
Depreciation and amortization . . . 207 (77) 284
- - -
Taxes, other than income taxes . . . 610 406 204
- - -
Subtotal . . . . . . . . . . . 12,876 1,914 10,961
1 -
Operating income before
income taxes . . . . . . . . 669 (1,889) 2,559
(1) -
Income taxes - estimated . . . . . . 575 (281) 864
- - (8)
Operating income . . . . . . . 94 (1,608) 1,695
(1) 8
Other Income
Interest revenues . . . . . . . . . 212 120 92
- - -
Other (net) . . . . . . . . . . . . 1,120 1,160 -
- - (40)
Equity in earnings of subsidiary
companies - consolidated . . . . . (313) (308) -
- - (5)
Total other income . . . . . . 1,019 972 92
- - (45)
Income before interest charges 1,113 (636) 1,787
(1) (37)
Interest Charges
Interest on long-term debt . . . . . 568 518 50
- - -
Other interest expense . . . . . . . 313 312 1
- - -
Capitalized interest . . . . . . . . - - -
- - -
Total interest charges . . . . 881 830 51
- - -
Income before cumulative effect of
change in accounting principle . . . 232 (1,466) 1,736
(1) (37)
Cumulative effect prior to January 1,
1993, of applying SFAS No. 109 . . . (832) (952) 104
- - 16
Net Income . . . . . . . . . . . . . . (600) (2,418) 1,840
(1) (21)
Dividends Declared . . . . . . . . . . - - -
- - -
Retained Earnings at January 1, 1993 . 731 (4,174) 6,079
(5) (1,169)
Retained Earnings at December 31, 1993 $ 131 $(6,592) $ 7,919
$(6) $(1,190)
</TABLE>
<PAGE> 4
<TABLE>
CNG Energy Company
Consolidating and Divisional Balance Sheet
December 31, 1993 (Unaudited)
(Thousands of Dollars)
<CAPTION>
CNG Energy Consolidating
Company Eliminations CNG Granite
and and Technologies, Road
Subsidiaries Adjustments Inc. CoGen, Inc.
<S> <C> <C> <C> <C>
Assets
Property, Plant and Equipment
Total investment . . . . . . $ 6,373 $ - $ - $ -
Accumulated depreciation . 1,347 - - -
Net property,
plant and equipment . 5,026 - - -
Investments
Stock of subsidiary companies,
at equity . . . . . . . . . - (1,190) - -
Total investments . . . - (1,190) - -
Current Assets
Cash . . . . . . . . . . . . 370 - - -
Accounts receivable . . . . . 696 - - -
Receivables from affiliated
companies . . . . . . . . . - - - -
Receivables from
CNG Energy Company . . . . - - - -
Inventories, at cost . . . . 216 - - -
Total current assets . 1,282 - - -
Other Assets
Investments, at cost . . . . 6,150 - 1,500 -
Investments, at equity . . . 15,636 - - 1
Total investments . . . 21,786 - 1,500 1
Deferred Charges . . . . . . - - - -
Total other assets . . 21,786 - 1,500 1
Total assets . . . . . $28,094 $(1,190) $1,500 $ 1
</TABLE>
<PAGE> 5
<TABLE>
CNG Energy Company
Consolidating and Divisional Balance Sheet
December 31, 1993 (Unaudited)
(Thousands of Dollars)
<CAPTION>
Divisional
CNG CNG Eliminations
Lakewood, Energy and Cogeneration
Inc. Company Adjustments Division
<S> <C> <C> <C> <C>
Assets
Property, Plant and Equipment
Total investment . . . . . . $ - $ 6,373 $ - $ 690
Accumulated depreciation . - 1,347 - 237
Net property,
plant and equipment . - 5,026 - 453
Investments
Stock of subsidiary companies,
at equity . . . . . . . . . - 1,190 - (304)
Total investments . . . - 1,190 - (304)
Current Assets
Cash . . . . . . . . . . . . 10 360 - -
Accounts receivable . . . . . 19 677 - 76
Receivables from affiliated
companies . . . . . . . . . - - (7,419) 4,368
Receivables from
CNG Energy Company . . . . - - (2,372) -
Inventories, at cost . . . . - 216 - -
Total current assets . 29 1,253 (9,791) 4,444
Other Assets
Investments, at cost . . . . - 4,650 - 4,650
Investments, at equity . . . - 15,635 - 15,635
Total investments . . . - 20,285 - 20,285
Deferred Charges . . . . . . - - - -
Total other assets . . - 20,285 - 20,285
Total assets . . . . . $ 29 $27,754 $(9,791) $24,878
</TABLE>
<PAGE> 6
<TABLE>
CNG Energy Company
Consolidating and Divisional Balance Sheet
December 31, 1993 (Unaudited)
(Thousands of Dollars)
<CAPTION>
Technical
Liquids NGV Products
Division Division Division
<S> <C> <C> <C>
Assets
Property, Plant and Equipment
Total investment . . . . . . $ 5,683* $ - $ -
Accumulated depreciation . 1,110 - -
Net property,
plant and equipment . 4,573 - -
Investments
Stock of subsidiary companies,
at equity . . . . . . . . . - - 1,494
Total investments . . . - - 1,494
Current Assets
Cash . . . . . . . . . . . . 360 - -
Accounts receivable . . . . . 601 - -
Receivables from affiliated
companies . . . . . . . . . 3,051 - -
Receivables from
CNG Energy Company . . . . 2,372 - -
Inventories, at cost . . . . 216 - -
Total current assets . 6,600 - -
Other Assets
Investments, at cost . . . . - - -
Investments, at equity . . . - - -
Total investments . . . - - -
Deferred Charges . . . . . . - - -
Total other assets . . - - -
Total assets . . . . . $11,173 $ - $1,494
*Includes Ben's Run Pipeline investment of $3,823.
</TABLE>
<PAGE> 7
<TABLE>
CNG Energy Company
Consolidating and Divisional Balance
Sheet
December 31, 1993 (Unaudited)
(Thousands of Dollars)
<CAPTION>
CNG Energy Consolidating
Company Eliminations CNG Granite
and and Technologies, Road
Subsidiaries Adjustments Inc. CoGen, Inc.
<S> <C> <C> <C> <C>
Stockholder's Equity and
Liabilities
Capitalization
Common stockholder's equity
Common stock, par value
$1,000 per share
SEC Authorized -
112,500 shares
Issued and outstanding -
11,150 shares . . . . $11,150 $(1,511) $1,500 $ 1
Retained earnings, per
accompanying statement . . 131 321 (6) -
Total common
stockholder's equity 11,281 (1,190) 1,494 1
Long-term notes payable to
Parent Company . . . . . . 6,690 - - -
Total capitalization . 17,971 (1,190) 1,494 1
Current Liabilities
Accounts payable . . . . . . 666 - - -
Payables to affiliated
companies
Current maturities on
long-term debt. . . . . . - - - -
Other . . . . . . . . . . . 715 - - -
Payables to CNG Energy
Company . . . . . . . . . . - - (5) -
Taxes accrued . . . . . . . . 77 - 11 -
Other current liabilities . . 16 - - -
Total current
liabilities . . . . . 1,474 - 6 -
Deferred Income Taxes . . . . . 8,649 - - -
Total stockholder's
equity and
liabilities . . . . $28,094 $(1,190) $1,500 $ 1
</TABLE>
<PAGE> 8
<TABLE>
CNG Energy Company
Consolidating and Divisional Balance
Sheet
December 31, 1993 (Unaudited)
(Thousands of Dollars)
<CAPTION>
Divisional
CNG CNG Eliminations
Lakewood, Energy and Cogeneration
Inc. Company Adjustments Division
<S> <C> <C> <C> <C>
Stockholder's Equity and
Liabilities
Capitalization
Common stockholder's equity
Common stock, par value
$1,000 per share
SEC Authorized -
112,500 shares
Issued and outstanding -
11,150 shares . . . .$ 10 $11,150 $ - $ 8,630
Retained earnings, per
accompanying statement . . (315) 131 -
(6,592)
Total common
stockholder's equity (305) 11,281 - 2,038
Long-term notes payable to
Parent Company . . . . . . - 6,690 -
6,160
Total capitalization . (305) 17,971 - 8,198
Current Liabilities
Accounts payable . . . . . . 195 471 -
151
Payables to affiliated
companies
Current maturities on
long-term debt. . . . . . - - -
- -
Other . . . . . . . . . . . 59 656 (7,419)
7,933
Payables to CNG Energy
Company . . . . . . . . . . 249 (244) (2,372)
920
Taxes accrued . . . . . . . . (169) 235 -
(163)
Other current liabilities . . - 16 -
- -
Total current
liabilities . . . . . 334 1,134 (9,791) 8,841
Deferred Income Taxes . . . . . - 8,649 -
7,839
Total stockholder's
equity and
liabilities . . . . $ 29 $27,754 $(9,791)
$24,878
</TABLE>
<PAGE> 9
<TABLE>
CNG Energy Company
Consolidating and Divisional Balance Sheet
December 31, 1993 (Unaudited)
(Thousands of Dollars)
<CAPTION>
Technical
Liquids NGV Products
Division Division Division
<S> <C> <C> <C>
Stockholder's Equity and
Liabilities
Capitalization
Common stockholder's equity
Common stock, par value
$1,000 per share
SEC Authorized -
112,500 shares
Issued and outstanding -
11,150 shares . . . .$ 1,020 $ - $ 1,500
Retained earnings, per
accompanying statement . . 7,919 (6)
(1,190)
Total common
stockholder's equity 8,939 (6) 310
Long-term notes payable to
Parent Company . . . . . . 530 -
- -
Total capitalization . 9,469 (6) 310
Current Liabilities
Accounts payable . . . . . . 320 -
- -
Payables to affiliated
companies
Current maturities on
long-term debt . . . . . - -
- -
Other . . . . . . . . . . . 142 -
- -
Payables to CNG Energy
Company . . . . . . . . . . - 8
1,200
Taxes accrued . . . . . . . . 416 (2)
(16)
Other current liabilities . . 16 -
- -
Total current
liabilities . . . . . 894 6 1,184
Deferred Income Taxes . . . . . 810 -
- -
Total stockholder's
equity and
liabilities . . . . $11,173 $ - $
1,494
</TABLE>
<PAGE> 10
<TABLE>
CNG Transmission Corporation's
Cost Allocations for Fractionation Services
for
CNG Energy Company
For the Period January 1 to March 31, 1993
(In Thousands)
<CAPTION>
Minimum Throughput
Total to Allocation Cost of Bill Unit Charge
Description be Allocated Factor Depropanizer Calculation
Calculation
<S> <C> <C> <C> <C> <C>
Operating and Maintenance Expenses . $ 4,024 .2019 (1) $ 813 $ - $ 813
Administrative and General Expenses . 3,093 .2019
624 - 624
Subtotal . . . . . . . . . . . 7,117 1,437
- - 1,437
Depreciation and Amortization
Products extraction plant . . . . . 1,164 .0990 (2)
115 115 -
General plant . . . . . . . . . . . 91 .0990
9 9 -
Subtotal . . . . . . . . . . . 1,255 124
124 -
Other Taxes
FICA and unemployment . . . . . . . 274 .2019
55 - 55
Ad valorem and all other . . . . . 132 .0990
13 13 -
Subtotal . . . . . . . . . . . 406 68
13 55
Income Taxes - Federal and State . . (111) .0990
(11) (11) -
Rate of Return at 15.75% . . . . . . 2,141 .0990
212 212 -
Total $10,808 $1,830
Total allocated capacity related costs $ 338
Total allocated throughput related costs $ 1,492
Allocation factor . . . . . . . . . . .2263(3)
Gallons of throughput . . . . . . . . 122,984
Annual charge (in dollars). . . . . . $ 76,563
Unit charge (in dollars) . . . . . . $.01214/gallon
Daily charge (in dollars) . . . . . . $214.58/day(4)
Notes:
(1) Based on the MMBtu's of products processed downstream of depropanizer
to total MMBtu's processed
at Hastings Plant.
(2) Based on the net book value of the depropanizer to the total book
value of the plant used.
(3) Reserve capacity divided by the total capacity (78,000 gallons divided
by 345,000 gallons).
(4) Based on 357 days per year.
</TABLE>
<PAGE> 11
<TABLE>
CNG Transmission Corporation's
Cost Allocations for Fractionation Services
for
CNG Energy Company
For the Period April 1 to December 31, 1993
(In Thousands)
<CAPTION>
Minimum Throughput
Total to Allocation Cost of Bill Unit Charge
Description be Allocated Factor Depropanizer Calculation
Calculation
<S> <C> <C> <C> <C> <C>
Operating and Maintenance Expenses . . $ 4,581 .1985(1) $ 909 $ - $ 909
Administrative and General Expenses . . 3,634 .1985 722 - 722
Subtotal . . . . . . . . . . . . 8,215 1,631 - 1,631
Depreciation and Amortization
Products extraction plant . . . . . . 1,178 .0987(2) 116 116 -
General plant . . . . . . . . . . . . 89 .0987 9 9 -
Subtotal . . . . . . . . . . . . 1,267 125 125 -
Other Taxes
FICA and unemployment . . . . . . . . 304 .1985 60 - 60
Ad valorem and all other . . . . . . 115 .0987 11 11 -
Subtotal . . . . . . . . . . . . 419 71 11 60
Income Taxes - Federal and State . . . (85) .0987 (8) (8) -
Rate of Return at 15.75% . . . . . . . 2,026 .0987 200 200 -
Total $11,842 $2,019
Total allocated capacity related costs $328
Total allocated throughput related costs $1,691
Allocation factor . . . . . . . . . . . .2272(3)
Gallons of throughput . . . . . . . . . 124,114
Annual charge (in dollars). . . . . . . $ 74,522
Unit charge (in dollars) . . . . . . . $.01362/gallon
Daily charge (in dollars) . . . . . . . $211.47/day(4)
Notes:
(1) Based on the MMBtu's of products processed downstream of depropanizer
to total MMBtu's processed
at Hastings Plant.
(2) Based on the net book value of the depropanizer to the total book
value of the plant used.
(3) Reserve capacity divided by the total capacity (80,000 gallons divided
by 352,000 gallons).
(4) Based on 352 days.
</TABLE>
<PAGE> 12
CNG Energy Company
Year 1993
(Amounts in Thousands)
A. Volume of Liquids Processed by CNG Transmission Corporation:
Product Gallons
Propane 57,335
Normal Butane 17,374
Isobutane 8,213
Gasoline 18,282
Ethane 98,488
Total 199,692
B. Volume and Kind of Products Delivered to CNG Energy Company:
Product Gallons
Propane 13,938
Normal Butane 4,842
Isobutane 2,672
Gasoline 5,639
Total 27,091
C. Amount Paid by CNG Energy Company to CNG Transmission Corporation for
Fractionation Services:
Fractionation fees billed by CNG Transmission Corporation for production
from the Copley, Shultz, West Union extraction, NGL Partners and Papco
facilities totalled $432.
D. Number of Gallons of Fractionated Liquids Purchased by CNG Energy Company
During the Calendar Year, Including Price Paid Per Gallon:
Product Gallons Avg. Cost/Gallon Total Cost
Propane 13,938 $.3227 $ 4,498
Normal Butane 4,842 .3462 1,676
Isobutane 2,672 .4104 1,097
Gasoline 5,639 .3885 2,191
Total 27,091 $ 9,462
E. Total Cost of CNG Transmission Corporation Personnel Services Engaged in
Marketing the Fractionated Liquids Purchased by CNG Energy Company:
Marketing $ 68
Shipping and Receiving 12
Accounting 12
$ 92
IROQUOIS
GAS TRANSMISSION SYSTEM
'93
FINANCIAL STATEMENTS
<PAGE>
1993 Highlights
Volumes
(graphic material omitted)
Revenues
(graphic material omitted)
<PAGE>
1993 IROQUOIS FINANCIALS - Page 1
MANAGEMENT'S DISCUSSION
OF FINANCIAL RESULTS
EARNINGS
The significant improvement in the partnership's financial and operating
results in 1993 reflect Iroquois' continuing commitment to its customers and
its aggressive marketing of services. After a 10-month phase-in to full
contracted volumes in 1992, the 1993 results also reflect Iroquois' first full
year of service. Volumes transported during the year exceeded 250 million
decatherms (MMDth), an increase of over 55% compared to the 1992 level of 161
MMDth. Similarly, operating revenues, of $137.7 million for 1993, are $45.8
million or almost 50% above the 1992 level.
A significant achievement during the year was the construction and placing in-
service of Iroquois' first compressor station located at Wright, N.Y. This
major construction feat was achieved on schedule despite the short time
available for construction to take place. The two state-of-the-art Solar
compressor units were placed in-service during November 1993. With the
additional capacity provided by the station, new records were set almost
daily. In December, a new peak day of 804 MMDth was reached. The success of
1993 is also reflected in the net income results; $18.8 million compared to
the $10.8 million achieved in 1992. The major contributing factors for the
change in net income in 1993 from 1992 are noted in the table below.
Summary of Changes - Increase/(Decrease)
(000's)
1993 1992 Change
_______ _______ _______
Operating Income $73,389 $42,993 $30,396
Other Income 1,520 3,080 (1,560)
Interest Expense 42,908 27,455 15,453
_______ _______ _______
Income Before Income Taxes 32,001 18,618 13,383
Provision for Taxes 13,174 7,855 5,319
_______ _______ _______
Net Income $18,827 $10,763 $ 8,064
======= ======= =======
CAPITAL EXPENDITURES
Direct capital expenditures in 1993 were $29.0 million compared to $54.7
million during the previous year. The 1992 expenditures included restoration
activity on the pipeline as well as some preliminary engineering work for the
Northport meter and Wright Compressor stations. The Northport meter station,
located at Northport, Long Island, was completed and placed in service, as
well as several smaller customer meter sta-
<PAGE>
1993 IROQUOIS FINANCIALS - Page 2
tions at various locations along the system. In addition, 1993 expenditures
included some preliminary engineering costs associated with the Croghan
Compressor Station for which certificate approval was received in February
1994. This facility is required to provide service to the second phase of the
Selkirk power generation project located at Bethlehem, New York. The station,
to be located at Croghan, New York, is scheduled for construction during the
summer of 1994 with an in-service date of November 1, 1994.
ASSETS
Total assets at December 31, 1993, were $712.3 million, a decrease of $29.8
million from the previous year.
Gross natural gas plant in service increased $29.4 million in 1993 as a result
of the addition of the Wright compressor and Northport meter stations as well
as the restoration activities undertaken following the completion of the
pipeline.
Total current assets, $40.5 million at December 31, 1993, are down $41.7 from
a year earlier due primarily to a reduction in cash balances held at year end.
The first cash distributions to the Partners were made during 1993 in
accordance with the terms of the Loan Agreement. A total of $57.7 million was
distributed to the Partners during the year. Cash retained at year end is
primarily invested in short term securities as specified in the Loan
Agreement.
Deferred charges balance includes a deferred income tax balance of $18.1
million within the Regulatory assets-income tax related classification.
Deferred tax was recorded in 1993 to comply with the requirements of Statement
of Financial Accounting Standards No. 109 ("FAS 109"). The Regulatory assets-
other classification includes, as of December 31, 1993, the $3.4 million
unamortized deferred regulatory asset which FERC authorized to permit the
deferral of certain facility-related costs which were incurred during the
system phase-in period (December 1991 - October 31, 1992). The balance of the
deferred regulatory asset is being amortized over the next 18 years beginning
November 1, 1993.
LONG-TERM DEBT
Total outstanding long-term debt at December 31, 1992, was $522.6 million. In
1993, Iroquois made principal payments of $34.0 million, as required under the
terms of the Loan Agreement. Iroquois also entered into $17.6 million of
additional long-term financing to support the construction of the new
compressor station at Wright, New York. At December 31, 1993, the total
outstanding long-term debt was $506.2 million.
<PAGE>
1993 IROQUOIS FINANCIALS - Page 3
AMOUNTS EQUIVALENT TO DEFERRED INCOME TAXES
At December 31, 1993, $18.1 million was recorded under the classification
"Amounts Equivalent to Deferred Income Taxes" in compliance with FAS 109 and
FERC accounting directives. An identical amount was also recorded as a
"Regulatory Asset - Income Tax Related."
PARTNERS' EQUITY
Partners' equity at December 31, 1993, was $163.8 million compared to $189.6
million the previous year-end. In 1993, cash distributions of $57.7 million
were made to the Partners as permitted by the Loan Agreement. The debt-to-
equity ratio permitted under the terms of the Loan Agreement, for the period
following a cash distribution, cannot exceed 3.5:1. The actual year-end debt-
to-equity ratio, following the December cash distribution, was 3.1:1.
<PAGE>
Report of Independent Accountants
To the Partners of
Iroquois Gas Transmission System, L.P.
We have audited the accompanying balance sheets of Iroquois Gas Transmission
System, L.P. as of December 31, 1993 and 1992, and the related statements of
income, changes in partners' equity and cash flows for the years then ended.
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements
based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Iroquois Gas Transmission
System, L.P. as of December 31, 1993 and 1992, and the results of its
operations and its cash flows for the years then ended in conformity with
generally accepted accounting principles.
As discussed in Note 2, the Company changed its method of accounting for
income taxes in 1993.
Coopers & Lybrand
Hartford, Connecticut
February 22, 1994
<PAGE>
FINANCIAL STATEMENTS
<PAGE>
1993 IROQUOIS FINANCIALS - Page 6
IROQUOIS GAS TRANSMISSION SYSTEM, L.P.
BALANCE SHEETS
ASSETS
______________________________________________________________________________
_
(Thousands of dollars)
December 31,
1993 1992
____ ____
CURRENT ASSETS:
Cash and temporary cash investments $ 25,910 $ 67,995
Accounts receivable - trade 6,480 5,275
Accounts receivable - affiliates 6,341 7,089
Other assets 1,806 1,910
________ ________
Total current assets 40,537 82,269
________ ________
NATURAL GAS TRANSMISSION PLANT:
Natural gas plant in service 714,732 685,293
Construction-work-in-progress 2,614 2,824
________ ________
717,346 688,117
Accumulated depreciation and
amortization (67,630) (32,846)
________ ________
NET NATURAL GAS TRANSMISSION PLANT 649,716 655,271
________ ________
DEFERRED CHARGES:
Regulatory assets - income tax related 18,056 -
Regulatory assets - other 3,431 3,542
Other deferred charges 590 1,047
________ ________
Total Deferred Charges 22,077 4,589
________ ________
Total Assets $712,330 $742,129
======== ========
The accompanying notes are an integral part of these financial statements.
______________________________________________________________________________
_
<PAGE>
1993 IROQUOIS FINANCIALS - Page 7
IROQUOIS GAS TRANSMISSION SYSTEM, L.P.
BALANCE SHEETS
LIABILITIES AND PARTNERS' EQUITY
______________________________________________________________________________
_
(Thousands of dollars)
December 31,
1993 1992
____ ____
CURRENT LIABILITIES:
Accounts payable - trade $ 7,176 $ 12,572
Accounts payable - affiliates - 956
Contractors retention 510 3,064
Accrued interest 6,841 7,353
Current portion of long-term debt 32,972 33,970
Other current liabilities 9,726 6,012
________ ________
Total Current Liabilities 57,225 63,927
________ ________
LONG-TERM DEBT 473,216 488,638
________ ________
AMOUNTS EQUIVALENT TO DEFERRED INCOME TAXES:
Generated by Partnership 27,293 3,804
Payable by Partners (9,237) (3,804)
________ ________
Total Amounts Equivalent to Deferred
Income Taxes 18,056 -
________ ________
COMMITMENTS AND CONTINGENCIES - -
________ ________
TOTAL LIABILITIES 548,497 552,565
________ ________
Partners' Equity 163,833 189,564
________ ________
TOTAL LIABILITIES AND PARTNERS' EQUITY $712,330 $742,129
======== ========
______________________________________________________________________________
_
<PAGE>
1993 IROQUOIS FINANCIALS - Page 8
IROQUOIS GAS TRANSMISSION SYSTEM, L.P.
STATEMENTS OF INCOME
______________________________________________________________________________
_
(Thousands of dollars)
Years Ended
December 31,
1993 1992
____ ____
OPERATING REVENUES $137,661 $ 91,888
________ ________
OPERATING EXPENSES:
Operations 21,800 12,368
Depreciation and amortization 35,014 31,720
Taxes, other than income 7,458 4,807
________ ________
64,272 48,895
________ ________
OPERATING INCOME 73,389 42,993
________ ________
OTHER INCOME & (EXPENSES):
Interest and dividend income 1,294 835
Allowance for equity funds used during
construction 260 525
Deferred regulatory asset - 2,020
Other (34) (300)
________ ________
1,520 3,080
________ ________
INCOME BEFORE INTEREST EXPENSE AND TAXES 74,909 46,073
________ ________
INTEREST EXPENSE:
Interest expense 43,347 28,481
ALLOWANCE FOR BORROWED FUNDS USED DURING
CONSTRUCTION (439) (1,026)
________ ________
NET INTEREST EXPENSE 42,908 27,455
________ ________
INCOME BEFORE TAXES 32,001 18,618
PROVISION FOR TAXES 13,174 7,855
________ ________
NET INCOME $ 18,827 $ 10,763
======== ========
The accompanying notes are an integral part of these financial statements.
______________________________________________________________________________
_
<PAGE>
1993 IROQUOIS FINANCIALS - Page 9
IROQUOIS GAS TRANSMISSION SYSTEM, L.P.
STATEMENT OF CASH FLOWS
______________________________________________________________________________
_
(Thousands of dollars)
Years Ended
December 31,
1993 1992
____ ____
Cash Flows from Operating Activities:
Net income $ 18,827 $ 10,763
________ ________
Adjustments to reconcile net income
to net cash provided by (used in)
operating activities:
Depreciation and amortization 35,014 31,720
Allowance for equity funds used
during construction (260) (525)
Increase in deferred regulatory assets (18,134) (2,020)
Increase in amounts equivalent to
deferred income taxes 18,056 -
Income and other taxes payable by
Partners 13,174 7,855
Changes in working capital:
Increase in accounts receivable (457) (6,310)
Decrease (Increase) in other assets 104 (1,325)
Decrease (Increase) in other deferred
charges 416 (1,570)
Decrease in accounts payable (6,352) (20,836)
Decrease in contractors retention (2,554) (20,937)
Decrease (Increase) in accrued interest (512) 3,003
Increase in other accrued liabilities 3,714 6,012
________ ________
42,209 (4,933)
________ ________
Net Cash Provided by Operating
Activities 61,036 5,830
________ ________
Cash Flows from Investing Activities:
Capital expenditures (28,969) (54,683)
________ ________
Net Cash Used by Investing Activities (28,969) (54,683)
________ ________
Cash Flows from Financing Activities:
Repayments of long-term debt (33,970) -
Partner distributions (57,732) -
Proceeds from long-term debt 17,550 94,108
Partners' equity contributions - 18,914
________ ________
Net Cash (Used for) Provided by
Financing Activities (74,152) 113,022
________ ________
Net Increase/(Decrease) in Cash and Temporary
Cash Investments (42,085) 64,169
Cash and Temporary Cash Investments at
Beginning of Year 67,995 3,826
________ ________
Cash and Temporary Cash Investments at
End of Year $ 25,910 $ 67,995
======== ========
Supplemental disclosure of cash flow
information:
Interest Paid $ 43,721 $ 25,478
======== ========
The accompanying notes are an integral part of these financial statements.
______________________________________________________________________________
_
<PAGE>
1993 IROQUOIS FINANCIALS Page - 10
IROQUOIS GAS TRANSMISSION SYSTEM, L.P.
STATEMENT OF CHANGES IN PARTNERS' EQUITY
______________________________________________________________________________
_
(Thousands of dollars)
Total
_____
PARTNERS' EQUITY,
Balance at December 31, 1991 $152,032
Net Income 1992 10,763
Taxes payable by Partners:
Federal income taxes 6,338
Other state taxes 867
State income taxes 650
Equity contributions by Partners 18,914
________
PARTNERS' EQUITY,
Balance at December 31, 1992 189,564
Net Income 1993 18,827
Taxes payable by Partners:
Federal income taxes 10,680
Other state taxes 1,087
State income taxes 1,407
Equity distributions to Partners (57,732)
________
PARTNERS' EQUITY,
Balance at December 31, 1993 $163,833
========
The accompanying notes are an integral part of these financial statements.
______________________________________________________________________________
_
<PAGE>
1993 IROQUOIS FINANCIALS - Page 11
NOTES TO FINANCIAL STATEMENTS
1. DESCRIPTION OF PARTNERSHIP:
Iroquois Gas Transmission System, L.P., ("Iroquois" or "Company") is a
Delaware limited Partnership formed for the purpose of constructing, owning
and operating a natural gas transmission pipeline from the Canada-United
States border near Waddington, N.Y., to South Commack, Long Island, N.Y. In
accordance with the limited partnership agreement, the Partnership shall
continue in existence until November 1, 2089, and from year to year
thereafter, until the Partners elect to dissolve the Partnership and terminate
the limited partnership agreement.
The general partners consist of TransCanada Iroquois Ltd. (29.0%),
Tennessee/New England Pipeline Co. (13.2%), NorthEast Transmission Co.
(11.4%), Housatonic Corporation (10.5%), ANR Iroquois, Inc. (9.4%), CNG
Iroquois, Inc. (9.4%), Alenco Iroquois Pipeline, Inc. (6.0%), JMC-Iroquois
Inc. (2.8%), NJNR Pipeline Company (2.8%), ENI Transmission Company (2.4%) and
LILCO Energy Systems, Inc. (1.0%). The New York Power Authority is a limited
partner (2.1%). The Iroquois Pipeline Operating Company, a wholly owned
subsidiary of general partner, TransCanada PipeLines Limited, is the
administrative operator of the pipeline. Tennessee Gas Pipeline Co. is the
field operator of the pipeline.
Income and expenses are allocated to the Partners and credited to their
respective equity accounts in accordance with the limited partnership
agreement and their respective percentage interests.
Distributions to Partners shall be made concurrently to all Partners in
proportion to their respective partnership interests. As of December 31,
1992, no distributions were made to the Partners; however, the first
partnership distribution was made during the second quarter of 1993. Total
distributions of $57.7 million were made during 1993.
2. SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES:
BASIS OF PRESENTATION
Iroquois is subject to regulation by the Federal Energy Regulatory Commission
("FERC"). Iroquois' accounting policies conform to generally accepted
accounting principles, as applied in the case of regulated public utilities,
and to the accounting requirements and rate-making practices of the FERC.
Certain reclassifications have been made to the prior year financial
statements to conform to the current reporting format.
CASH AND TEMPORARY CASH INVESTMENTS
Iroquois considers all highly liquid temporary cash investments purchased with
a maturity date of three months or less to be cash equivalents. Temporary
cash investments of $25.9 million, consisting primarily of low risk mutual
funds, are carried at cost, which approximates market. The Loan Agreement
places certain restrictions on distributions of funds to the Partners (See
Note 3). At December 31, 1993 and 1992, $12.4 million and $42.8 million,
respectively, of cash and temporary cash investments were held to satisfy
<PAGE>
1993 IROQUOIS FINANCIALS - Page 12
the terms of the Loan Agreement. Iroquois' cash and temporary cash
investments represent a concentration of credit risk. Management believes
that the credit risk is mitigated by its practice of limiting its investments
to low risk mutual funds, rated Aaa by Moody's Investor Services and AAAm by
Standard and Poor's, and its cash deposits to large, highly rated financial
institutions.
NATURAL GAS PLANT IN SERVICE
Natural gas plant in service is carried at original cost. The majority of the
natural gas plant in service is categorized as natural gas transmission plant,
and is depreciated over 20 years on a straight-line basis. The remainder is
general plant and is depreciated on a straight-line basis over various useful
lives averaging five years.
On December 1, 1991, the pipeline was placed in-service from the Canada-United
States border to Wright, N.Y., and the related costs were transferred to
natural gas transmission plant. The remainder of the pipeline became fully
operational on January 25, 1992, and the corresponding construction work-in-
progress was also transferred to natural gas transmission plant.
CONSTRUCTION WORK-IN-PROGRESS
Expenditures incurred for feasibility studies, market analyses, engineering
design, legal advice, project management, right-of-way and other costs
incurred for completion and expansion of facilities are included in
Construction Work-In-Progress ("CWIP"). In addition to restoration activities
related to the completion of the base pipeline, several new metering and
compressor station facilities were constructed and transferred to gas plant in
service in 1993 and 1992. These included the compressor station at Wright,
New York, and meter stations at Northport, New York, and Brookfield and New
Milford, Connecticut. At December 31, 1993, CWIP included preliminary
engineering costs relating to the new compressor station at Croghan, New York,
and a new lateral in Milford, Connecticut, as well as other on-going minor
capital projects.
ALLOWANCE FOR FUNDS USED DURING CONSTRUCTION
The allowance for funds used during construction ("AFUDC") represents the cost
of funds used to finance natural gas transmission plant under construction.
The AFUDC rate includes a component for borrowed funds as well as equity,
calculated in accordance with the FERC regulations. The AFUDC is capitalized
as an element of Natural Gas Plant in Service.
PROVISION FOR TAXES
The Partnership began reflecting income and other taxes payable by the
Partners in its financial statements during 1992.
The payment of income taxes is the responsibility of the Partners and such
taxes are not normally reflected in the financial statements of partnerships.
Iroquois' approved rates, however, include an allowance for taxes (calculated
as if it were a corporation) and the FERC requires Iroquois to record such
taxes in the Partnership records to reflect the taxes payable by the Partners
as a result of Iroquois' operations. These taxes are recorded without regard
as to whether each Partner can utilize its share of the Iroquois tax
deductions. Iroquois' rate base, for rate-making purposes, is reduced by the
amount equivalent to accumulated deferred income taxes in calculating the
required return.
<PAGE>
1993 IROQUOIS FINANCIALS - Page 13
Effective January 1, 1993, the Company adopted SFAS No. 109 "Accounting for
Income Taxes." Under SFAS No. 109 deferred taxes are provided based upon,
among other factors, enacted tax rates which would apply in the period that
the taxes become payable, and by adjusting deferred tax assets or liabilities
for known changes in future tax rates. SFAS No. 109 requires recognition of a
deferred income tax liability for the equity component of AFUDC. In addition,
SFAS No. 109 requires that, if it is probable that the future increase in
taxes payable will be recovered from customers through future rates, an asset
should be recognized for that probable future revenue pursuant to SFAS No. 71,
"Accounting for the Effect of Certain Types of Regulation."
3. FINANCING:
On June 11, 1991, Iroquois entered into a loan agreement which provided a loan
facility totalling $522.6 million to be amortized over a 14-year period
commencing November 1, 1992.
On August 30, 1992, the total amount of the loan became non-recourse to the
Partners. However, the Partners' equity interest remained pledged until
December 7, 1993, at which time the required conditions were met and the liens
were extinguished.
As of December 31, 1993, Iroquois was party to interest rate swap transactions
for aggregate notional principal amounts of $520 million, which are being
amortized over 14 years in accordance with the principal repayment schedule
provided in the loan agreement. The interest rate and margin over the term of
the swaps average 7.6867% and 1.098%, respectively. The remaining $2.6
million of the original loan carries interest calculated at LIBOR plus the
applicable margin. The Company entered into an agreement to convert $2.4
million to a fixed rate of 5.89% effective April 5, 1994. Interest rates
averaged 8.5617% and 5.08% during 1993 and 1992, respectively.
During 1993, Iroquois entered into Expansion Loan Agreement #1 in the amount
of $17.6 million to construct the Wright Compressor Station. The expansion
loan conditions are substantially the same as those of the base loan and are
non-recourse with respect to the Partners. The loan agreement provides three
interest rate funding options: Eurodollar, CD or Base Rate. Iroquois has
consistently borrowed under the Eurodollar option with margins ranging from
1 3/8% to 1 5/8% over and above the applicable interest rate. A commitment
fee of 3/8% was payable to the banks for the unused portion of the facility
during the borrowing period. Interest rates under the loan agreement,
including margin, ranged from 4.5625% to 4.8750% during 1993. The Company
entered into an agreement to convert this $17.6 million debt to a fixed rate
of 5.935% effective April 5, 1994.
Iroquois is subject to risk from nonperformance of the counterparties of the
swap agreements; however, this risk is substantially mitigated by the fact
that these counterparties are large, highly rated financial institutions. The
largest single exposure is $155.6 million.
At December 31, 1993, the outstanding principal was $488.6 million on the base
loan and $17.6 million on the expansion loan for total long-term debt of
$506.2 million. The combined schedule of repayments are as follows: $33.0
million, $31.9 million, $30.3 million, $29.2 million, $28.1 million, and
$353.7 million for the years
<PAGE>
1993 IROQUOIS FINANCIALS - Page 14
1994, 1995, 1996, 1997, 1998, and thereafter, respectively.
The loan agreements are collateralized by all the assets of the partnership
and subject Iroquois to certain restrictions and covenants related to, among
other things, indebtedness, investments, certain expenditures, and
distributions to Partners. Under the most restrictive of these covenants,
Iroquois is required to maintain a debt-to-equity ratio no greater than 3 to 1
prior to making distributions, or 3.5 to 1 after making distributions and
cannot make partner distributions until debt service reserve requirements are
met.
At December 31, 1993, the Company had an outstanding letter-of-credit in the
amount of $36.8 million, which is guaranteed by the Partners.
4. GAS TRANSPORTATION CONTRACTS:
Iroquois has 20-year gas transportation contracts with 23 shippers to provide
interstate natural gas transportation service in accordance with a FERC-
approved tariff. As of December 31, 1993, the gas transportation contracts
provide firm reserved transportation service of 641.1 MMcf/d of natural gas.
The gas transportation contracts expire between December 1, 2011, and November
1, 2012.
5. RATE-RELATED REGULATORY
PROCEEDINGS:
TARIFF FILING
On November 10, 1992, Iroquois filed gas tariff sheets with the FERC to effect
implementation of a deferred asset surcharge. The filing was in compliance
with the FERC's March 11, 1991, order in Docket No. CP89-634-004. In this
Order, the FERC authorized Iroquois to defer facility-related costs in excess
of operating revenues during the initial start-up period (the period from
December 1, 1991, to October 31, 1992) while service on Iroquois' system was
phased in. The total deferred asset included in the November 10, 1992, filing
was $3.574 million which is being amortized over the remaining 19-year term of
Iroquois' long-term service agreements. By order issued December 21, 1992,
the FERC accepted such tariff sheets effective November 1, 1992.
6. COMMITMENTS AND CONTINGENCIES:
FEDERAL REGULATORY PROCEEDINGS
On December 1, 1993, Iroquois submitted a filing with the FERC in Docket No.
RP94-72-000 for a cost of service of $149.033 million, an increase in rates
for natural gas transportation service of $8.425 million. The filing is also
designed to comply with the Commission's November 14, 1990 Order originally
certificating the pipeline, which required Iroquois to file a rate case two
years from the date service was initiated, once experience had been gained in
operating the new pipeline.
Twenty-seven parties intervened in the proceeding, of which six protested
certain aspects of Iroquois' filing. On December 30, 1993, the FERC issued an
order accepting Iroquois' filing and suspending its effectiveness until June
1, 1994, subject to refund and subject to further Commission action. The
Commission noted the pendency of two related matters: (1) in Docket No.
FA92-59-000, the Commission's Office of Chief Accountant raised an issue
regarding Iroquois' capitalization of certain expenditures relating to
<PAGE>
1993 IROQUOIS FINANCIALS - Page 15
the construction of the pipeline; and (2) the Enforcement Staff of the
Commission's Office of General Counsel and Staff in the Office of Pipeline and
Producer Regulation had sent data requests (referenced below) to Iroquois
which bear upon concerns raised in the protests. The Commission deferred
further action on the filing until after it had received and analyzed the
additional data requested of Iroquois.
On December 3, 1993, Iroquois received notification from the Enforcement Staff
of the Commission's Office of the General Counsel ("Enforcement") that
Enforcement has commenced a preliminary, non-public investigation concerning
Iroquois' construction of certain of its pipeline facilities. That office has
requested certain information regarding such construction. In addition, on
December 27, 1993, Iroquois received a similar request for information from
the Army Corps of Engineers requesting certain information regarding the
construction of certain of its pipeline facilities.
Iroquois is evaluating these requests for information and intends to work with
these agencies to address their concerns.
FEDERAL INVESTIGATIONS
Iroquois has been informed by the U.S. Attorney's Offices for the Northern,
Southern and Eastern Districts of New York that a civil investigation is
underway to determine whether Iroquois committed civil environmental
violations during construction of the pipeline. In February, 1992, 26 alleged
violations were identified to Iroquois in writing. In response, Iroquois
denied that such violations occurred and asserted that all concerns raised by
governmental authorities during construction had been fully responded to.
Iroquois subsequently was informed that the universe of alleged violations
included certain field reports prepared by a Federal/State Inter-Agency Task
Force which surveyed the right-of-way in connection with the right-of-way
restoration program. Iroquois has advised the appropriate U.S. Attorneys'
Offices that none of the matters referenced in field reports issued to date
represent violations of any law or governmental authorization. No proceedings
in connection with this civil investigation have been commenced by the federal
government against Iroquois.
In addition, a criminal investigation has been initiated against Iroquois and
its environmental consultant by the U.S. Attorneys' Office for the Northern
District of New York in conjunction with the U.S. Environmental Protection
Agency ("EPA") and the Federal Bureau of Investigation ("FBI"). According to
a press release issued by the FBI, in June 1992, areas under investigation
include possible environmental violations, wire fraud, mail fraud, and
providing false information or concealment of information from federal
agencies in conjunction with the construction of the base pipeline. To date,
no criminal charges have been filed, and the Assistant U.S. Attorney in charge
of the investigation has stated that he is not yet ready to meet with
Iroquois' attorneys to discuss the specifics of the matter. Accordingly, no
provision for liability, if any, that may result has been made in the
financial statements. Management, however, believes that the pipeline
construction and right-of-way activities were conducted in a legal and
responsible manner.
LEGAL PROCEEDINGS - OTHER
Iroquois is party to various legal actions incident to its business, however,
management believes that no material losses will
<PAGE>
1993 IROQUOIS FINANCIALS - Page 16
result from such proceedings.
LEASES
Iroquois leases its office space under operating lease arrangements. The
leases expire at various dates through 1997 and are renewable at Iroquois'
option. Iroquois also leases a right-of-way easement on Long Island, New York,
from the Long Island Lighting Company ("LILCO"), a general partner, which
requires annual payments escalating 5% a year over the 39-year term of the
lease. In addition, Iroquois leases various equipment and automobiles under
non-cancelable operating leases. During the years ended December 31, 1993,
and 1992, Iroquois made payments of $1.1 million and $1.3 million under
operating leases, of which $0.1 million and $0.8 million, respectively, were
capitalized and $1.0 million and $0.5 million, respectively, were recorded as
rental expense. Future minimum rental payments under operating lease
arrangements are $0.5 million for each of the years 1994 through 1997, $0.3
million for 1998, and $5.1 million thereafter.
7. INCOME TAXES
As discussed in Note 2, the Company adopted SFAS No. 109 as of January 1,
1993. The cumulative effect of this change in accounting for income taxes of
$16.7 million, representing a deferred income tax liability with respect to
the equity component of AFUDC and a corresponding asset recorded in deferred
charges - regulatory asset for the same amount, is reflected in the December
31, 1993, financial Statements. Deferred income taxes which are the result of
operations will become the obligation of the partners when the temporary
differences related to those items reverse. The Company recognizes a decrease
in the Amounts Equivalent to Deferred Income Taxes account for these amounts
and records a corresponding increase to partners' equity. Deferred income
taxes with respect to the equity component of AFUDC remain on the accounts of
the Partnership until the related deferred regulatory asset is recognized.
Prior year's financial statements have not been restated to apply the
provisions of SFAS No. 109.
Total income tax expense includes the following components:
U.S. State-
Federal State Other Total
(in thousands)
1993:
Current $ 6,354 $ 299 $ 1,087 $ 7,740
Deferred 4,326 1,108 - 5,434
________ ________ ________ ________
TOTAL $ 10,680 $ 1,407 $ 1,087 $ 13,174
======== ======== ======== ========
1992:
Current $ 4,122 $ 117 $ 867 $ 5,106
Deferred 2,216 533 - 2,749
________ ________ ________ ________
TOTAL $ 6,338 $ 650 $ 867 $ 7,855
======== ======== ======== ========
<PAGE>
1993 IROQUOIS FINANCIALS - Page 17
Deferred income taxes included in the income statement for the
years December 31, 1993, and 1992 relate to the following (in
thousands of dollars):
1993 1992
Depreciation $10,477 $ 5,496
Capitalized interest - (310)
Deferred regulatory asset (73) 742
Property taxes 359 349
Legal costs 690 240
Accrued expenses (976) -
Alternative minimum tax credit (5,609) (3,545)
Other 566 (223)
_______ _______
Total deferred taxes $ 5,434 $ 2,749
======= =======
For the year ended December 31, 1992, deferred income taxes were provided
under Accounting Principles Bulletin No. 11, Accounting for Income Taxes.
This opinion has been superseded by SFAS 109. The components of the net
deferred tax liability as of December 31, 1993, are as follow (in thousands of
dollars):
1993
DEFERRED TAX ASSETS:
Alternative minimum tax credit $ 9,154
Accrued expenses 1,083
________
Total deferred tax assets 10,237
________
DEFERRED TAX LIABILITIES:
Depreciation and related items (17,188)
Deferred regulatory assets (1,310)
Property tax (739)
Legal costs (941)
Other (191)
________
Total deferred tax liabilities (20,369)
________
Net deferred tax liabilities (10,132)
Less deferral of tax rate change 895
________
Deferred taxes - Operations (9,237)
Deferred taxes related to Equity AFUDC (17,161)
Deferred taxes related to change in tax rate (895)
________
Total deferred taxes at December 31, 1993 $(27,293)
========
<PAGE>
1993 IROQUOIS FINANCIALS - Page 18
8. RELATED-PARTY TRANSACTIONS:
Operating revenues during 1993 and 1992 of $65.7 million and $56.2 million,
respectively, and amounts due from related parties were primarily for gas
transportation services. Payments and amounts due to related parties were
primarily for services rendered under operating agreements between TransCanada
PipeLines, Tenneco and the IGTS L.P.
These contracts include various services provided in connection with
construction management, engineering, maintenance and operation of the
pipeline
and other costs incident to Iroquois' operation. Payments made during 1993
and
1992 included $13.8 million and $16.0 million, respectively, of affiliated
activity.
<TABLE>
<CAPTION>
1993
1992
Payments Due From Revenue
Payments Due From Revenue
to Related Related From Related
to Related (to) Related From Related
Parties Parties Parties
Parties Parties Parties
<S> <C> <C> <C>
<C> <C> <C>
TransCanada Iroquois LTD $ 8.0 $ 0.1 $ 0.2
$12.2 0.1 $ 2.5
Tennessee Gas Pipeline 5.7 - -
3.6 (0.8) -
NorthEast Transmission Co. - 1.6 20.8
0.1 1.8 14.7
Housatonic Corp. - 1.3 1.5
- - 1.3 8.2
ANR Iroquois - 0.2 0.1
- - 0.2 1.3
CNG Iroquois - 0.1 -
- - - 0.4
JMC Iroquois - 0.2 7.3
- - 0.6 1.3
NJNR Pipeline Company - 0.9 10.9
- - 0.9 10.6
EN Transmission Company - 0.6 6.5
- - 0.5 4.2
LILCO Energy Systems 0.1 1.5 18.4
0.1 1.5 13.0
_____ _____ _____
_____ _____ _____
TOTALS $13.8 $ 6.5 $65.7
$16.0 $ 6.1 $56.2
===== ===== =====
===== ===== =====
</TABLE>
9. EMPLOYEE BENEFITS:
Iroquois offers a defined contribution retirement plan with a 401(k) provision
to its full-time salaried employees with over one year of service. The
employees' contributions are matched dollar for dollar by Iroquois up to 5% of
base pay. These costs are recognized on a monthly basis and funding is made
on
a pay-as-you-go basis. During 1993 and 1992, Iroquois recognized $297.3
thousand and $144.5 thousand, respectively, of expenses in connection with
this
plan. Iroquois does not provide post-retirement health or life insurance
benefits.
10. DISCLOSURES - FAIR VALUE OF FINANCIAL INSTRUMENTS:
The discussion below summarizes methods and assumptions used to estimate the
fair value of each class of financial instruments.
CASH AND TEMPORARY CASH INVESTMENTS
For temporary cash investments, the carrying amount is a reasonable estimate
fair value.
<PAGE>
1993 IROQUOIS FINANCIALS - Page 19
LONG-TERM DEBT
The fair value of Iroquois' long-term debt is estimated based on the quoted
market prices for the same or similar issues or on the current rates offered
to Iroquois for debt of the same remaining maturities.
INTEREST RATE SWAP AGREEMENTS
The fair value of interest rate swaps (used for hedging purposes) is the
estimated amount that Iroquois would receive or pay to terminate the swap
agreements at the reporting date, taking into account current interest rates
and current credit worthiness of the swap counterparties.
The estimated fair values of Iroquois financial investments are summarized in
the table below:
At December 31, 1993 (in thousands): Carrying Amount Fair Value
Cash and temporary cash investments $25,910 $25,910
Long-term debt ($506,188) ($506,188)
Interest rate swap agreements - ($54,706)
<PAGE>
IROQUOIS PARTNERS
TransCanada Iroquois Ltd. (TRANSCANADA PIPELINES LIMITED) 29.0%
Tennessee/New England Gas Pipeline Company (TENNECO GAS) 13.2%
Northeast Transmission Company (BROOKLYN UNION GAS COMPANY) 11.4%
Housatonic Corporation (YANKEE ENERGY SYSTEM, INC.) 10.5%
CNG Iroquois, Inc. (CNG TRANSMISSION CORP.) 9.4%
ANR Iroquois, Inc. (ANR PIPELINE COMPANY) 9.4%
ALENCO Iroquois Pipelines, Inc. (AEC PIPELINES) 6.0%
JMC-Iroquois, Inc. (J. MAKOWSKI ASSOCIATES, INC.) 2.8%
NJNR Pipeline Company (NEW JERSEY RESOURCES CORP.) 2.8%
ENI Transmission Company (CONNECTICUT NATURAL GAS) 2.4%
New York Power Authority 2.1%
LILCO Energy Systems, Inc. (LONG ISLAND LIGHTING COMPANY) 1.0%
IROQUOIS MANAGEMENT TEAM
GEORGE HUGH, Chairman, IGTS Management Committee
CRAIG FREW, President
PAUL BAILEY, Vice President, Finance & Administration
BERNIE OTIS, Vice President, Transmission
JEFF BRUNER, General Counsel
GARY DAVIS, Director, Environmental Programs and Community Relations
<PAGE>
APPENDIX TO EX-99.3
The following graphic material which appeared in the paper format version of
the document is omitted from this electronic format document:
1993 HIGHLIGHTS (page 2 of the electronic format document)
(1) Two bar charts appeared under the heading "VOLUMES":
The first bar chart showed "Volumes Transported." The years 1993 and
1992 were on the horizontal axis. Volumes ranging from 0 to 250 Bcf, in 50
Bcf increments, were on the vertical axis. The three-dimensional bar for 1993
showed volumes of 245 Bcf. A similar bar for 1992 showed volumes of 155 Bcf.
The second bar chart showed "Long-Term Firm Volumes." The years 1993 and
1992 were on the horizontal axis. Volumes ranging from 540 to 660 MMcf/d, in
20 MMcf/d increments, were on the vertical axis. The three-dimensional bar
for 1993 showed volumes of 641.1 MMcf/d. A similar bar for 1992 showed 581.1
MMcf/d.
(2) Two bar charts appeared under the heading "REVENUES":
The first bar chart showed "Operating Revenues." The years 1993 and 1992
were on the horizontal axis. Dollar amounts ranging from 0 to 140 million, in
20 million increments, were on the vertical axis. The three-dimensional bar
for 1993 showed operating revenues of $137.7 million. A similar bar for 1992
showed operating revenues of $91.9 million
The second bar chart showed "Net Income Results." The years 1993 and
1992 were on the horizontal axis. Dollar amounts ranging from 0 to 20
million, in 5 million increments, were on the vertical axis. The three-
dimensional bar for 1993 showed net income of $18.8 million. A similar bar
for 1992 showed net income of $10.8 million.
<TABLE>
EXHIBIT F.(1)
ITEM 1 - SCHEDULE OF INVESTMENTS
________________________________
At December 31, 1993
(Thousands of Dollars)
<CAPTION>
Principal
Name of Issuer Title of Issue Amount
__________________ __________________________________________________________ _________
<S> <C> <C>
Service Company Non-negotiable notes:
9.5% - maturing serially November 30, 1996 to 2011 . . $ 3,836
8.90% - maturing May 31, 1999 . . . . . . . . . . . . . 5,000
6.20% - maturing September 30, 1998 . . . . . . . . . . 5,000
6.10% - maturing July 31, 2003. . . . . . . . . . . . . 795
________
Total unsecured debt . . . . . . . . . . . . . . . . . . $ 14,631
========
CNG Transmission Non-negotiable notes:
9.5% - maturing serially November 30, 1996 to 2011 . . $ 33,225
7.40% - maturing serially November 30, 2000 to 2015 . . 75,000
8.95% - maturing serially September 30, 2004 to 2014 . 35,000
6.20% - maturing September 30, 1998 . . . . . . . . . . 100,800
6.10% - maturing July 31, 2003. . . . . . . . . . . . . 59,541
6.80% - maturing November 30, 2013. . . . . . . . . . . 57,793
________
Total unsecured debt . . . . . . . . . . . . . . . . . . $361,359
========
East Ohio Gas Non-negotiable notes:
9.5% - maturing serially November 30, 1996 to 2011 . . $ 8,181
8.90% - maturing May 31, 1999 . . . . . . . . . . . . . 15,000
7.40% - maturing serially November 30, 2000 to 2015 . . 30,000
8.95% - maturing serially September 30, 2009 to 2019 . 20,000
6.20% - maturing September 30, 1998 . . . . . . . . . . 77,000
6.10% - maturing July 31, 2003. . . . . . . . . . . . . 28,134
6.80% - maturing November 30, 2013. . . . . . . . . . . 11,282
________
Total unsecured debt . . . . . . . . . . . . . . . . . . $189,597
========
</TABLE>
<PAGE>
<TABLE>
ITEM 1 - SCHEDULE OF INVESTMENTS
________________________________
At December 31, 1993
(Thousands of Dollars)
<CAPTION>
Principal
Name of Issuer Title of Issue Amount
__________________
__________________________________________________________ _________
<S> <C> <C>
Peoples Natural
Gas Non-negotiable notes:
8.05% - maturing June 30, 1994. . . . . . . . . . . . . $ 1,020
8.05% - maturing October 31, 1994 . . . . . . . . . . . 680
8.35% - maturing October 31, 1994 . . . . . . . . . . . 550
7.95% - maturing serially November 30, 1994 to 1995 . . 660
8.55% - maturing serially June 30, 1994 to 1995 . . . . 1,440
8.55% - maturing serially November 30, 1994 to 1995 . . 1,260
8.25% - maturing serially April 30, 1994 to 1996 . . . 1,428
8.25% - maturing serially September 30, 1994 to 1996 . 896
7.65% - maturing serially April 30, 1994 to 1997 . . . 2,464
7-3/4% - maturing serially May 31, 1994 to 1998 . . . . 4,104
8-3/4% - maturing serially February 28, 1994 to 1999 . . 3,520
9.35% - maturing serially June 30, 1994 to 1995 . . . . 813
8.25% - maturing serially May 31, 1994 to 1997 . . . . 1,060
7.875% - maturing serially March 31, 1994 to 1996 . . . 7,500
8.375% - maturing serially March 31, 1994 to 1996 . . . 9,375
9.5% - maturing serially November 30, 1996 to 2011 . . 8,181
9.5% - maturing January 31, 1997 . . . . . . . . . . . 10,000
8.90% - maturing May 31, 1999 . . . . . . . . . . . . . 10,000
7.40% - maturing serially November 30, 2000 to 2015 . . 15,000
8.95% - maturing serially September 30, 2009 to 2019 . 14,000
6.20% - maturing September 30, 1998 . . . . . . . . . . 10,000
6.80% - maturing November 30, 2013. . . . . . . . . . . 26,700
________
Total unsecured debt . . . . . . . . . . . . . . . . . . $130,651
========
Virginia Natural
Gas Non-negotiable notes:
8.90% - maturing May 31, 1999 . . . . . . . . . . . . . $ 33,318
6.20% - maturing September 30, 1998 . . . . . . . . . . 40,100
________
Total unsecured debt . . . . . . . . . . . . . . . . . . $ 73,418
========
</TABLE>
<PAGE>
<TABLE>
ITEM 1 - SCHEDULE OF INVESTMENTS
________________________________
At December 31, 1993
(Thousands of Dollars)
<CAPTION>
Principal
Name of Issuer Title of Issue Amount
__________________ __________________________________________________________ _________
<S> <C> <C>
Hope Gas Non-negotiable notes:
8.05% - maturing June 30, 1994 . . . . . . . . . . . . $ 359
8.05% - maturing October 31, 1994 . . . . . . . . . . . 238
8.35% - maturing October 31, 1994 . . . . . . . . . . . 76
7.95% - maturing serially November 30, 1994 to 1995 . . 92
8.55% - maturing serially June 30, 1994 to 1995 . . . . 649
8.55% - maturing serially November 30, 1994 to 1995 . . 568
8.25% - maturing serially April 30, 1994 to 1996 . . . 629
8.25% - maturing serially September 30, 1994 to 1996 . 393
7.65% - maturing serially April 30, 1994 to 1997 . . . 766
7-3/4% - maturing serially May 31, 1994 to 1998 . . . . 556
8-3/4% - maturing serially February 28, 1994 to 1999 . . 663
9.35% - maturing serially June 30, 1994 to 1995 . . . . 87
8.45% - maturing serially August 31, 1994 to 1996 . . . 457
8.25% - maturing serially May 31, 1994 to 1997 . . . . 147
8.375% - maturing serially March 31, 1994 to 1996 . . . 4,108
9.5% - maturing serially November 30, 1996 to 2011 . . 3,583
7.40% - maturing serially November 30, 2000 to 2015 . . 5,000
8.95% - maturing serially September 30, 2009 to 2019 . 3,000
6.20% - maturing September 30, 1998 . . . . . . . . . . 8,400
_______
Total unsecured debt . . . . . . . . . . . . . . . . . . $29,771
=======
West Ohio Gas Non-negotiable notes:
8.05% - maturing June 30, 1994 . . . . . . . . . . . . $ 180
8.05% - maturing October 31, 1994 . . . . . . . . . . . 120
8.55% - maturing serially June 30, 1994 to 1995 . . . . 242
8.55% - maturing serially November 30, 1994 to 1995 . . 226
8.25% - maturing serially April 30, 1994 to 1996 . . . 193
8.25% - maturing serially September 30, 1994 to 1996 . 115
7.65% - maturing serially April 30, 1994 to 1997 . . . 272
8.25% - maturing serially May 31, 1994 to 1995 . . . . 240
8.375% - maturing serially March 31, 1994 to 1996 . . . 938
9.5% - maturing serially November 30, 1996 to 2011 . . 2,863
7.40% - maturing serially November 30, 2000 to 2015 . . 5,000
_______
Total unsecured debt . . . . . . . . . . . . . . . . . . $10,389
=======
</TABLE>
<PAGE>
<TABLE>
ITEM 1 - SCHEDULE OF INVESTMENTS
________________________________
At December 31, 1993
(Thousands of Dollars)
<CAPTION>
Principal
Name of Issuer Title of Issue Amount
__________________ __________________________________________________________ _________
<S> <C> <C>
River Gas Non-negotiable notes:
6.20% - maturing September 30, 1998 . . . . . . . . . . $ 1,900
6.10% - maturing July 31, 2003. . . . . . . . . . . . . 462
6.80% - maturing November 30, 2013. . . . . . . . . . . 663
________
Total unsecured debt . . . . . . . . . . . . . . . . . . $ 3,025
========
CNG Producing Non-negotiable notes:
9.5% - maturing serially November 30, 1994 to 1995 . . $ 8,653
9.5% - maturing January 31, 1997 . . . . . . . . . . . 90,000
8.90% - maturing May 31, 1999 . . . . . . . . . . . . . 35,000
8.95% - maturing serially September 30, 1999 to 2009 . 49,000
6.10% - maturing July 31, 2003. . . . . . . . . . . . . 71,075
6.80% - maturing November 30, 2013. . . . . . . . . . . 8,500
________
Total unsecured debt . . . . . . . . . . . . . . . . . . $262,228
========
CNG Energy Non-negotiable notes:
9.5% - maturing serially November 30, 1996 to 2011 . . $ 530
8.95% - maturing serially September 30, 2009 to 2019 . 4,000
7.40% - maturing serially November 30, 2000 to 2015 . . 2,160
________
Total unsecured debt . . . . . . . . . . . . . . . . . . $ 6,690
========
CNG Storage Non-negotiable notes:
6.20% - maturing September 30, 1998 . . . . . . . . . . $ 7,350
========
</TABLE>
<TABLE>
ITEM 4 - SCHEDULE OF ACQUISITIONS, REDEMPTIONS, OR RETIREMENTS OF SYSTEM
SECURITIES EXHIBIT F.(2)
Calendar Year 1993
(Thousands of Dollars)
<CAPTION>
______________________________________________________________________________
____________________________________________________
Number of
Number of Shares or
Shares or Principal
Principal Amount
Amount Redeemed or
Commission
Name of Issuer and Title of Issue Acquired Retired
Consideration Authorization
______________________________________________________________________________
____________________________________________________
<S> <C> <C>
<C> <C>
Registered Holding Company
Parent Company:
Common stock, par value $2.75 per share 24,038 shares $
643 Release No. 35-25294 (File No. 70-7838)
Common stock, par value $2.75 per share 5,174 shares
134 Release No. 35-25425 (File No. 70-7095)
______
________
Total Common stock 29,212 shares $
1,417
======
========
Debentures
7 5/8% Debentures Due April 1, 1996 $100,000
$101,700 Rule 42(b) (4) exemption
8 1/8% Debentures Due June 1, 1997 $ 23,300 $
23,540 Rule 42(b) (4) exemption
8 3/8% Debentures Due September 1, 1996 $ 18,600 $
18,847 Rule 42(b) (4) exemption
9 1/4% Debentures Due July 1, 1995 $ 18,750 $
18,934 Rule 42(b) (4) exemption
8 5/8% Debentures Due March 1, 1999 $ 22,000 $
22,360 Rule 42(b) (4) exemption
7 3/4% Debentures Due June 1, 1998 $ 20,000 $
20,282 Rule 42(b) (4) exemption
7 5/8% Debentures Due May 1, 1997 $ 18,000 $
18,179 Rule 42(b) (4) exemption
7 3/4% Debentures Due October 1, 1996 $ 8,000 $
8,078 Rule 42(b) (4) exemption
8 3/8% Debentures Due May 1, 1996 $ 12,800 $
12,883 Rule 42(b) (4) exemption
7 7/8% Debentures Due December 1, 1995 $ 12,600 $
12,686 Rule 42(b) (4) exemption
9% Debentures Due July 1, 1995 $ 11,200 $
11,294 Rule 42(b) (4) exemption
8 1/4% Debentures Due November 1, 1994 $ 7,200 $
7,225 Rule 42(b) (4) exemption
7 3/4% Debentures Due July 1, 1994 $ 7,200 $
7,200 Rule 42(b) (4) exemption
________
________
Total Debentures $279,650
$283,208
========
========
Consolidated Natural Gas Service
Company, Inc.:
Non-negotiable note
6.1% Non-negotiable note due 7/31/03 $ 795 $
795 Release No. 35-25841 (File No. 70-8195)
========
========
CNG Transmission Corporation:
Non-negotiable notes
6.1% Non-negotiable note due 7/31/03 $ 59,541 $
59,541 Release No. 35-25841 (File No. 70-8195)
6.80% Non-negotiable note due 11/30/13 $ 31,203 $
31,203 Release No. 35-25841 (File No. 70-8195)
6.80% Non-negotiable note due 11/30/13 $ 26,590 $
26,590 Release No. 35-25841 (File No. 70-8195)
________
________
$117,334
$117,334
========
========
</TABLE>
<PAGE>
<TABLE>
ITEM 4 - SCHEDULE OF ACQUISITIONS, REDEMPTIONS, OR RETIREMENTS OF SYSTEM
SECURITIES (Continued)
Calendar Year 1993
(Thousands of Dollars)
<CAPTION>
______________________________________________________________________________
____________________________________________________
Number of
Number of Shares or
Shares or Principal
Principal Amount
Amount Redeemed or
Commission
Name of Issuer and Title of Issue Acquired Retired
Consideration Authorization
______________________________________________________________________________
____________________________________________________
<S> <C> <C>
<C> <C>
East Ohio Gas Company:
Non-negotiable notes
6.20% Non-negotiable note due 9/30/98 $29,000
$29,000 Release No. 35-25566 (File No. 70-8000)
6.1% Non-negotiable note due 7/31/03 $28,134
$28,134 Release No. 35-25841 (File No. 70-8195)
6.80% Non-negotiable note due 11/30/13 $11,282
$11,282 Release No. 35-25841 (File No. 70-8195)
_______
_______
$68,416
$68,416
=======
=======
Peoples Natural Gas Company:
Non-negotiable note
6.80% Non-negotiable note due 11/30/13 $26,700
$26,700 Release No. 35-25841 (File No. 70-8195)
=======
=======
Hope Gas, Inc.:
Non-negotiable note
6.20% Non-negotiable note due 9/30/98 $ 5,600 $
5,600 Release No. 35-25566 (File No. 70-8000)
=======
=======
River Gas Company:
Non-negotiable notes
6.1% Non-negotiable note due 7/31/03 $ 462 $
462 Release No. 35-25841 (File No. 70-8195)
6.80% Non-negotiable note due 11/30/13 $ 663 $
663 Release No. 35-25841 (File No. 70-8195)
_______
_______
$ 1,125 $
1,125
=======
=======
CNG Producing Company:
Non-negotiable notes
6.1% Non-negotiable note due 7/31/03 $71,075
$71,075 Release No. 35-25841 (File No. 70-8195)
6.80% Non-negotiable note due 11/30/13 $ 8,500 $
8,500 Release No. 35-25841 (File No. 70-8195)
_______
_______
$79,575
$79,575
=======
=======
CNG Storage Service Company:
Non-negotiable note
6.20% Non-negotiable note due 9/30/98 $ 1,150 $
1,150 Release No. 35-25566 (File No. 70-8000)
=======
=======
</TABLE>
<PAGE>
<TABLE>
ITEM 4 - SCHEDULE OF ACQUISITIONS, REDEMPTIONS, OR RETIREMENTS OF SYSTEM
SECURITIES (Continued)
Calendar Year 1993
(Thousands of Dollars)
<CAPTION>
______________________________________________________________________________
____________________________________________________
Number of
Number of Shares or
Shares or Principal
Principal Amount
Amount Redeemed or
Commission
Name of Issuer and Title of Issue Acquired Retired
Consideration Authorization
______________________________________________________________________________
____________________________________________________
<S> <C> <C>
<C> <C>
Subsidiaries of Registered Holding Company
Consolidated Natural Gas Service Company, Inc.
Non-negotiable notes
7 3/4% Non-negotiable notes due
5/31/98 $ 795 $
795 Rule 42(b) (2) exemption
========
========
CNG Transmission Corporation:
Non-negotiable notes
8.05% Non-negotiable notes due
6/30/93 thru 6/30/94 $ 3,993 $
3,993 Rule 42(b) (2) exemption
8.05% Non-negotiable notes due
10/31/93 thru 10/31/94 $ 2,658 $
2,658 Rule 42(b) (2) exemption
8.35% Non-negotiable notes due
10/31/93 thru 10/31/94 $ 840 $
840 Rule 42(b) (2) exemption
7.95% Non-negotiable notes due
11/30/93 thru 11/30/95 $ 980 $
980 Rule 42(b) (2) exemption
8.55% Non-negotiable notes due
6/30/93 thru 6/30/95 $ 7,014 $
7,014 Rule 42(b) (2) exemption
8.55% Non-negotiable notes due
11/30/93 thru 11/30/95 $ 6,142 $
6,142 Rule 42(b) (2) exemption
8 1/4% Non-negotiable notes due
4/30/93 thru 4/30/96 $ 6,665 $
6,665 Rule 42(b) (2) exemption
8 1/4% Non-negotiable notes due
9/30/93 thru 9/30/96 $ 4,167 $
4,167 Rule 42(b) (2) exemption
7.65% Non-negotiable notes due
4/30/93 thru 4/30/97 $ 8,000 $
8,000 Rule 42(b) (2) exemption
7 3/4% Non-negotiable notes due
5/31/93 thru 5/31/98 $ 5,734 $
5,734 Rule 42(b) (2) exemption
8 3/4% Non-negotiable notes due
2/28/93 thru 2/28/99 $ 6,765 $
6,765 Rule 42(b) (2) exemption
9.35% Non-negotiable notes due
6/30/93 thru 6/30/95 $ 1,206 $
1,206 Rule 42(b) (2) exemption
8.45% Non-negotiable notes due
8/31/93 thru 8/31/96 $ 5,603 $
5,603 Rule 42(b) (2) exemption
8 1/4% Non-negotiable notes due
5/31/93 thru 5/31/97 $ 1,691 $
1,691 Rule 42(b) (2) exemption
8 3/8% Non-negotiable notes due
3/31/94 thru 3/31/96 $ 38,080 $
38,080 Rule 42(b) (2) exemption
________
________
Total Non-negotiable notes $ 99,538 $
99,538
========
========
</TABLE>
<PAGE>
<TABLE>
ITEM 4 - SCHEDULE OF ACQUISITIONS, REDEMPTIONS, OR RETIREMENTS OF SYSTEM
SECURITIES (Continued)
Calendar Year 1993
(Thousands of Dollars)
<CAPTION>
______________________________________________________________________________
___________________________________________________
Number of
Number of Shares or
Shares or Principal
Principal Amount
Amount Redeemed or
Commission
Name of Issuer and Title of Issue Acquired Retired
Consideration Authorization
______________________________________________________________________________
____________________________________________________
<S> <C> <C>
<C> <C>
East Ohio Gas Company:
Non-negotiable notes
8.05% Non-negotiable notes due
6/30/93 thru 6/30/94 $ 698 $
698 Rule 42(b) (2) exemption
8.05% Non-negotiable notes due
10/31/93 thru 10/31/94 $ 478 $
478 Rule 42(b) (2) exemption
8.35% Non-negotiable notes due
10/31/93 thru 10/31/94 $ 660 $
660 Rule 42(b) (2) exemption
7.95% Non-negotiable notes due
11/30/93 thru 11/30/95 $ 770 $
770 Rule 42(b) (2) exemption
8.55% Non-negotiable notes due
6/30/93 thru 6/30/95 $ 2,180 $
2,180 Rule 42(b) (2) exemption
8.55% Non-negotiable notes due
11/30/93 thru 11/30/95 $ 1,894 $
1,894 Rule 42(b) (2) exemption
8 1/4% Non-negotiable notes due
4/30/93 thru 4/30/96 $ 2,520 $
2,520 Rule 42(b) (2) exemption
8 1/4% Non-negotiable notes due
9/30/93 thru 9/30/96 $ 1,576 $
1,576 Rule 42(b) (2) exemption
7.65% Non-negotiable notes due
4/30/93 thru 4/30/97 $ 3,492 $
3,492 Rule 42(b) (2) exemption
7 3/4% Non-negotiable notes due
5/31/93 thru 5/31/98 $ 6,440 $
6,440 Rule 42(b) (2) exemption
9.35% Non-negotiable notes due
6/30/93 thru 6/30/95 $ 3,750 $
3,750 Rule 42(b) (2) exemption
8.45% Non-negotiable notes due
8/31/93 thru 8/31/96 $ 2,500 $
2,500 Rule 42(b) (2) exemption
7.875% Non-negotiable notes due
3/31/93 thru 3/31/96 $ 10,000 $
10,000 Rule 42(b) (2) exemption
8 3/8% Non-negotiable notes due
3/31/94 thru 3/31/96 $ 9,375 $
9,375 Rule 42(b) (2) exemption
________
________
Total Non-negotiable notes $ 46,333 $
46,333
========
========
</TABLE>
<PAGE>
<TABLE>
ITEM 4 - SCHEDULE OF ACQUISITIONS, REDEMPTIONS, OR RETIREMENTS OF SYSTEM
SECURITIES (Continued)
Calendar Year 1993
(Thousands of Dollars)
<CAPTION>
______________________________________________________________________________
____________________________________________________
Number of
Number of Shares or
Shares or Principal
Principal Amount
Amount Redeemed or
Commission
Name of Issuer and Title of Issue Acquired Retired
Consideration Authorization
______________________________________________________________________________
____________________________________________________
<S> <C> <C>
<C> <C>
Peoples Natural Gas Company:
Non-negotiable notes
8.05% Non-negotiable notes due
6/30/93 $ 204 $
204 Rule 42(b) (2) exemption
8.05% Non-negotiable notes due
10/31/93 $ 136 $
136 Rule 42(b) (2) exemption
8.35% Non-negotiable notes due
10/31/93 $ 110 $
110 Rule 42(b) (2) exemption
7.95% Non-negotiable notes due
11/30/93 $ 110 $
110 Rule 42(b) (2) exemption
8.55% Non-negotiable notes due
6/30/93 $ 240 $
240 Rule 42(b) (2) exemption
8.55% Non-negotiable notes due
11/30/93 $ 210 $
210 Rule 42(b) (2) exemption
8 1/4% Non-negotiable notes due
4/30/93 $ 204 $
204 Rule 42(b) (2) exemption
8 1/4% Non-negotiable notes due
9/30/93 $ 128 $
128 Rule 42(b) (2) exemption
7.65% Non-negotiable notes due
4/30/93 $ 308 $
308 Rule 42(b) (2) exemption
7 3/4% Non-negotiable notes due
5/31/93 $ 456 $
456 Rule 42(b) (2) exemption
8 3/4% Non-negotiable notes due
2/28/93 $ 352 $
352 Rule 42(b) (2) exemption
9.35% Non-negotiable notes due
6/30/93 $ 406 $
406 Rule 42(b) (2) exemption
8 1/4% Non-negotiable notes due
5/31/93 $ 270 $
270 Rule 42(b) (2) exemption
7.875% Non-negotiable notes due
3/31/93 $ 2,500 $
2,500 Rule 42(b) (2) exemption
________
________
Total Non-negotiable notes $ 5,634 $
5,634
========
========
</TABLE>
<PAGE>
<TABLE>
ITEM 4 - SCHEDULE OF ACQUISITIONS, REDEMPTIONS, OR RETIREMENTS OF SYSTEM
SECURITIES (Continued)
Calendar Year 1993
(Thousands of Dollars)
<CAPTION>
______________________________________________________________________________
____________________________________________________
Number of
Number of Shares or
Shares or Principal
Principal Amount
Amount Redeemed or
Commission
Name of Issuer and Title of Issue Acquired Retired
Consideration Authorization
______________________________________________________________________________
____________________________________________________
<S> <C> <C>
<C> <C>
Hope Gas, Inc.:
Non-negotiable notes
8.05% Non-negotiable notes due
6/30/93 $ 72 $
72 Rule 42(b) (2) exemption
8.05% Non-negotiable notes due
10/31/93 $ 48 $
48 Rule 42(b) (2) exemption
8.35% Non-negotiable notes due
10/31/93 $ 16 $
16 Rule 42(b) (2) exemption
7.95% Non-negotiable notes due
11/30/93 $ 15 $
15 Rule 42(b) (2) exemption
8.55% Non-negotiable notes due
6/30/93 $ 108 $
108 Rule 42(b) (2) exemption
8.55% Non-negotiable notes due
11/30/93 $ 94 $
94 Rule 42(b) (2) exemption
8 1/4% Non-negotiable notes due
4/30/93 $ 90 $
90 Rule 42(b) (2) exemption
8 1/4% Non-negotiable notes due
9/30/93 $ 56 $
56 Rule 42(b) (2) exemption
7.65% Non-negotiable notes due
4/30/93 $ 96 $
96 Rule 42(b) (2) exemption
7 3/4% Non-negotiable notes due
5/31/93 $ 62 $
62 Rule 42(b) (2) exemption
8 3/4% Non-negotiable notes due
2/28/93 $ 66 $
66 Rule 42(b) (2) exemption
9.35% Non-negotiable notes due
6/30/93 $ 44 $
44 Rule 42(b) (2) exemption
8.45% Non-negotiable notes due
8/31/93 $ 146 $
146 Rule 42(b) (2) exemption
8 1/4% Non-negotiable notes due
5/31/93 $ 37 $
37 Rule 42(b) (2) exemption
________
________
Total Non-negotiable notes $ 950 $
950
========
========
</TABLE>
<PAGE>
<TABLE>
ITEM 4 - SCHEDULE OF ACQUISITIONS, REDEMPTIONS, OR RETIREMENTS OF SYSTEM
SECURITIES (Continued)
Calendar Year 1993
(Thousands of Dollars)
<CAPTION>
______________________________________________________________________________
____________________________________________________
Number of
Number of Shares or
Shares or Principal
Principal Amount
Amount Redeemed or
Commission
Name of Issuer and Title of Issue Acquired Retired
Consideration Authorization
______________________________________________________________________________
____________________________________________________
<S> <C> <C>
<C> <C>
West Ohio Gas Company:
Non-negotiable notes
8.05% Non-negotiable notes due
6/30/93 $ 36 $
36 Rule 42(b) (2) exemption
8.05% Non-negotiable notes due
10/31/93 $ 24 $
24 Rule 42(b) (2) exemption
8.55% Non-negotiable notes due
6/30/93 $ 42 $
42 Rule 42(b) (2) exemption
8.55% Non-negotiable notes due
11/30/93 $ 36 $
36 Rule 42(b) (2) exemption
8 1/4% Non-negotiable notes due
4/30/93 $ 28 $
28 Rule 42(b) (2) exemption
8 1/4% Non-negotiable notes due
9/30/93 $ 16 $
16 Rule 42(b) (2) exemption
7.65% Non-negotiable notes due
4/30/93 $ 34 $
34 Rule 42(b) (2) exemption
8 1/4% Non-negotiable notes due
5/31/93 $ 160 $
160 Rule 42(b) (2) exemption
________
________
Total Non-negotiable notes $ 376 $
376
========
========
</TABLE>
<PAGE>
<TABLE>
ITEM 4 - SCHEDULE OF ACQUISITIONS, REDEMPTIONS, OR RETIREMENTS OF SYSTEM
SECURITIES (Continued)
Calendar Year 1993
(Thousands of Dollars)
<CAPTION>
______________________________________________________________________________
____________________________________________________
Number of
Number of Shares or
Shares or Principal
Principal Amount
Amount Redeemed or
Commission
Name of Issuer and Title of Issue Acquired Retired
Consideration Authorization
______________________________________________________________________________
____________________________________________________
<S> <C> <C>
<C> <C>
River Gas Company:
Non-negotiable notes
8.05% Non-negotiable notes due
6/30/93 thru 6/30/94 $ 47 $
47 Rule 42(b) (2) exemption
8.05% Non-negotiable notes due
10/31/93 thru 10/31/94 $ 25 $
25 Rule 42(b) (2) exemption
8.35% Non-negotiable notes due
10/31/93 thru 10/31/94 $ 24 $
24 Rule 42(b) (2) exemption
7.95% Non-negotiable notes due
11/30/93 thru 11/30/95 $ 28 $
28 Rule 42(b) (2) exemption
8.55% Non-negotiable notes due
6/30/93 thru 6/30/95 $ 40 $
40 Rule 42(b) (2) exemption
8.55% Non-negotiable notes due
11/30/93 thru 11/30/95 $ 30 $
30 Rule 42(b) (2) exemption
8 1/4% Non-negotiable notes due
4/30/93 thru 4/30/96 $ 59 $
59 Rule 42(b) (2) exemption
8 1/4% Non-negotiable notes due
9/30/93 thru 9/30/96 $ 37 $
37 Rule 42(b) (2) exemption
7.65% Non-negotiable notes due
4/30/93 thru 4/30/97 $ 126 $
126 Rule 42(b) (2) exemption
7 3/4% Non-negotiable notes due
5/31/93 thru 5/31/98 $ 120 $
120 Rule 42(b) (2) exemption
8 3/4% Non-negotiable notes due
2/28/93 thru 2/28/99 $ 132 $
132 Rule 42(b) (2) exemption
9.35% Non-negotiable notes due
6/30/93 thru 6/30/95 $ 68 $
68 Rule 42(b) (2) exemption
8 1/4% Non-negotiable notes due
5/31/93 thru 5/31/98 $ 416 $
416 Rule 42(b) (2) exemption
7.875% Non-negotiable notes due
3/31/93 thru 3/31/96 $ 200 $
200 Rule 42(b) (2) exemption
________
________
Total Non-negotiable notes $ 1,352 $
1,352
========
========
</TABLE>
<PAGE>
<TABLE>
ITEM 4 - SCHEDULE OF ACQUISITIONS, REDEMPTIONS, OR RETIREMENTS OF SYSTEM
SECURITIES (Concluded)
Calendar Year 1993
(Thousands of Dollars)
<CAPTION>
______________________________________________________________________________
____________________________________________________
Number of
Number of Shares or
Shares or Principal
Principal Amount
Amount Redeemed or
Commission
Name of Issuer and Title of Issue Acquired Retired
Consideration Authorization
______________________________________________________________________________
____________________________________________________
<S> <C> <C>
<C> <C>
CNG Producing Company:
Non-negotiable notes
8 1/4% Non-negotiable notes due
5/31/93 thru 5/31/98 $ 20,625 $
20,625 Rule 42(b) (2) exemption
7.875% Non-negotiable notes due
3/31/93 thru 3/31/96 $ 30,000 $
30,000 Rule 42(b) (2) exemption
13% Non-negotiable notes due
5/31/93 thru 5/31/94 $ 7,124 $
7,124 Rule 42(b) (2) exemption
9.5% Non-negotiable notes due
11/30/93 $ 4,326 $
4,326 Rule 42(b) (2) exemption
8 3/8% Non-negotiable notes due
3/31/94 thru 3/31/96 $ 37,025 $
37,025 Rule 42(b) (2) exemption
________
________
Total Non-negotiable notes $ 99,100 $
99,100
========
========
Consolidated System LNG Company:
Non-negotiable notes
7 3/4% Non-negotiable notes due
5/31/93 thru 5/31/98 $ 5,200 $
5,200 Rule 42(b) (2) exemption
8 1/4% Non-negotiable notes due
5/31/94 thru 5/31/97 $ 7,125 $
7,125 Rule 42(b) (2) exemption
________
________
$ 12,325 $
12,325
========
========
</TABLE>
<PAGE> 1
Consolidated Natural Gas Company Notice of Annual Meeting
CNG Tower and Proxy Statement
625 Liberty Avenue 1994
Pittsburgh, Pennsylvania 15222-3199 CNG
Consolidated Natural Gas Company
Gas Distribution
The East Ohio Gas Company
Cleveland, Ohio
The Peoples Natural Gas Company
Pittsburgh, Pennsylvania
Virginia Natural Gas, Inc.
Norfolk, Virginia
Hope Gas, Inc.
Clarksburg, West Virginia
West Ohio Gas Company
Lima, Ohio
The River Gas Company
Marietta, Ohio
Gas Transmission
CNG Transmission Corporation
Clarksburg, West Virginia
CNG Storage Service Company
Clarksburg, West Virginia
Exploration and Production
CNG Producing Company
New Orleans, Louisiana
Other
Consolidated Natural Gas Service
Company, Inc.
Pittsburgh, Pennsylvania
CNG Energy Company
Pittsburgh, Pennsylvania
CNG Gas Services Corporation
Pittsburgh, Pennsylvania
Consolidated System LNG Company
Clarksburg, West Virginia
CNG Research Company
Pittsburgh, Pennsylvania
CNG Coal Company
Pittsburgh, Pennsylvania
<PAGE> 2
1
CONSOLIDATED NATURAL GAS COMPANY
April 5, 1994
Dear Stockholder:
You are cordially invited to attend the 1994 Annual Meeting of Stockholders
to be held on Tuesday, May 17, 1994, at 2:00 p.m. Eastern Time at the Hotel
duPont, 11th and Market Streets, Wilmington, Delaware 19801 in the Gold
Ballroom.
The business items to be acted on during the Meeting are listed in the Notice
of Meeting and are described more fully in the Proxy Statement. The Board of
Directors has given careful consideration to these proposals and believes
that Proposals 1, 2 and 3 are in the best interests of the Company. The
Board recommends that you vote FOR Proposals 1, 2 and 3. Following the
business session, I will report on the Company's progress, plans and
prospects, and the Officers and Directors will be available to respond to
questions and comments.
It is important that you be represented at the Annual Meeting in person or by
proxy. Whether or not you plan to attend, we urge you to mark, sign, date and
return the enclosed proxy card promptly in the postage paid envelope
provided. If you plan to attend, please check the appropriate box on the
proxy card.
In accordance with the Company's usual practice, a summary of the proceedings
of the Annual Meeting will be mailed to all stockholders.
Thank you for your cooperation.
Sincerely,
GEORGE A. DAVIDSON, JR.
George A. Davidson, Jr.
Chairman of the Board and
Chief Executive Officer
<PAGE> 3
2
CONSOLIDATED NATURAL GAS COMPANY
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
The Annual Meeting of Consolidated Natural Gas Company will be held on
Tuesday, May 17, 1994, at 2:00 p.m. Eastern Time at the Hotel duPont, 11th
and Market Streets, Wilmington, Delaware 19801 in the Gold Ballroom.
Stockholders of record at the close of business on March 23, 1994, will be
entitled to vote at the Meeting and any adjournment thereof.
The agenda for the Meeting includes:
1. Election of two Directors.
2. Ratification of the appointment of Price Waterhouse as independent
accountants.
3. A proposal to approve the adoption of a Restricted Stock Plan for
non-employee Directors.
4. Transaction of any other business which may properly be brought
before the Meeting.
In the event you cannot be present in person, please sign and promptly return
the enclosed proxy card in the accompanying postage paid envelope so that
your shares will be represented at the Meeting. Prompt return of proxies
will save the Company the expense of further requests for proxies to insure a
quorum.
By order of the Board of Directors,
LAURA J. MCKEOWN
Laura J. McKeown
Secretary
Pittsburgh, Pennsylvania
April 5, 1994
<PAGE> 4
3
CONSOLIDATED NATURAL GAS COMPANY
PROXY STATEMENT
This statement and proxy card, mailed to stockholders commencing on or about
April 8, 1994, are furnished in connection with the solicitation by the Board
of Directors of Consolidated Natural Gas Company of proxies to be voted at
the Annual Meeting of Stockholders, and any adjournment thereof, for the
purposes stated in the Notice of the Annual Meeting. Any stockholder who
cannot attend is requested to sign and return the accompanying proxy card
promptly. The proxy reflects the number of shares registered in a
stockholder's name directly and, for participants in the Company's Dividend
Reinvestment Plan, includes full shares credited to a participant's Dividend
Reinvestment Plan account. Proxies so given will be voted on all matters
brought before the Meeting and, as to the matters with respect to which a
choice is specified, will be voted as directed. The cost of solicitation
will be paid by the Company. In addition to the use of the mails, proxies
may be solicited personally, or by telephone or telecopy, by employees of the
Company and its subsidiaries with no special compensation to these employees.
Kissel-Blake Inc., 25 Broadway, New York, New York 10004, has been retained
to assist in the solicitation of proxies at an estimated cost of $10,000.
The Company will reimburse brokerage houses and other custodians, nominees,
and fiduciaries for expenses incurred in sending proxy material to their
principals.
Any proxy given pursuant to this solicitation may be revoked at any time
prior to exercise by written notice to the Corporate Secretary, by filing a
later dated executed proxy, or by attending and voting at the Annual Meeting.
The address of the principal executive offices of the Company is Consolidated
Natural Gas Company, CNG Tower, 625 Liberty Avenue, Pittsburgh, Pennsylvania
15222-3199.
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF. Holders of Common Stock,
$2.75 par value, of record on March 23, 1994, have one vote for each share
held. On March 23, 1994, 92,944,564 shares of Common Stock were outstanding.
A majority of the outstanding shares will constitute a quorum at the Meeting.
Abstentions and broker non-votes are counted for purposes of determining the
presence or absence of a quorum for the transaction of business. Abstentions
are counted in tabulations of the votes cast on proposals presented to
stockholders. Broker non-votes are not counted for purposes of determining
whether a proposal has been approved.
The table indicates the beneficial ownership, as of January 31, 1994, of
the Company's Common Stock with respect to the only person known to the
Company to be the beneficial owner of more than 5 percent of such Common
Stock. On January 31, 1994, 92,938,540 shares of Common Stock were
outstanding.
<PAGE> 5
Amount and Nature Percent
Name and Address of of Beneficial of Outstanding
Beneficial Owner Ownership Common Stock
_________________________________________________________________________
Trustees, Alternate Thrift Trust of
Employees Thrift Plans
CNG Tower, 625 Liberty Avenue
Pittsburgh, PA 15222-3199 11,078,125(1) 11.9%
____________________
(1) Such shares are beneficially owned in varying amounts by 7,238 employees,
no one of whom beneficially owned in excess of 14,000 shares in the Plans,
or 2/100ths of 1 percent of the shares outstanding. Such shares are voted
pursuant to confidential instructions of participating employees and in
the absence of instructions such shares are not voted. A Registration
Statement relating to various investment options available to participants
in the Plans has been made effective under the Securities Act of 1933 and
is on file with the Securities and Exchange Commission (SEC).
_________________________________________________________________________
4
The Board of Directors does not know of any other persons or groups who
beneficially own 5 percent or more of the outstanding shares of Common Stock.
ANNUAL REPORT. Commencing on or about March 15, 1994, the Company's Annual
Report for the year ended December 31, 1993, including financial statements,
was mailed to stockholders of record on March 1, 1994, and will be mailed to
any additional persons who were not stockholders on that date but are
stockholders of record on March 23, 1994. The Company will provide a copy of
the Annual Report to any stockholder of record after March 23, 1994, upon
request in writing to the Corporate Secretary, Consolidated Natural Gas
Company, CNG Tower, 625 Liberty Avenue, Pittsburgh, Pennsylvania 15222-3199.
<PAGE> 6
PROPOSAL 1
ELECTION OF DIRECTORS
The Board of Directors consists of ten members divided into three classes.
Each class has a three-year term, and only one class is elected each year.
There are no family relationships among any of the nominees, Continuing
Directors and Executive Officers of the Company nor any arrangement or
understanding between any Director or Executive Officer or any other person
pursuant to which any of the nominees has been nominated.
During 1993, each of the members of the Board of Directors attended more than
75 percent of the aggregate of the Board meetings and meetings held by all
committees of the Board on which the Director served during the periods that
the Director served.
On recommendation of the Nominating Committee of the Board of Directors, two
incumbent Class I Directors have been designated nominees for reelection; each
has consented to be a nominee and to serve if elected. The remaining
Directors will continue to serve in accordance with their previous elections.
Mr. Sommer, having reached the mandatory retirement age, will retire on the
date of the Annual Meeting, at which time the size of the Board shall be
decreased from ten to nine members. The names and other information
concerning the two persons nominated for a term of three years and the seven
continuing Board members are set forth by Class on pages 5 through 9 of this
proxy statement. The personal information has been furnished to the Company
by the nominees and other Directors. Unless you specify otherwise on your
signed proxy card, your shares will be voted FOR the election of the two
persons named below to three-year terms as Directors. In the event of an
unexpected vacancy on the slate of nominees, your shares will be voted for the
election of a substitute nominee if one shall be designated by the Board. If
any nominee for election as Director is unable to serve, which the Board of
Directors does not anticipate, the persons named in the proxy may vote for
another person in accordance with their judgment.
VOTE NEEDED FOR ELECTION OF DIRECTORS
Directors are elected by a plurality of the votes of the shares of Common
Stock present in person or represented by proxy and entitled to vote at the
Annual Meeting. Any shares not voted (whether by abstention, broker non-vote
or votes withheld) are not counted as votes cast for such individuals and will
be excluded from the vote.
<PAGE> 7
5
DIRECTORS NOMINATED FOR ELECTION TO THE BOARD WITH A TERM EXPIRING MAY 1997
(photo STEVEN A. MINTER Chair: Compensation and
omitted) Age 55 Benefits Committee
Director since 1988 Member: Ethics Committee
Nominating Committee
Mr. Minter has been the Executive Director and President of The
Cleveland Foundation, Cleveland, Ohio, since 1984, an organization
supporting health, human services, cultural and educational
programs in the greater Cleveland area. He had
been Associate Director and Program Officer of The Cleveland Foundation from
1975 to 1980 and from 1981 to 1983. He served as Undersecretary of the U.S.
Department of Education, Washington, D.C., from 1980 to 1981. He was the
Commissioner of Public Welfare for the Commonwealth of Massachusetts from 1970
to 1975. Mr. Minter is a Director of Goodyear Tire & Rubber Company,
Rubbermaid Inc. and KeyCorp. He is also a Trustee of the College of Wooster
and of The Foundation Center.
(photo LOIS WYSE Chair: Ethics Committee
omitted) Age 67 Member: Compensation and
Director since 1978 Benefits Committee
Nominating Committee
Ms. Wyse has been President of Wyse Advertising, Inc., a
Cleveland-based advertising agency with offices in New York, since
February 1979, and prior thereto had been an Executive Vice
President of the same firm since 1970. She is a
Contributing Editor of Good Housekeeping magazine, a syndicated columnist for
United Features Syndicate, and a widely published author. She is also a
Director of Catalyst and a Trustee of Beth Israel Medical Center.
<PAGE> 8
6
CONTINUING DIRECTORS WITH A TERM EXPIRING MAY 1995
(photo J. W. CONNOLLY Chair: Financial Policy Committee
omitted) Age 60 Member: Compensation and
Director since 1984 Benefits Committee
Executive Committee
Nominating Committee
Mr. Connolly served as Senior Vice President and Director of H. J.
Heinz Company, Pittsburgh, Pennsylvania, a processed food products
manufacturer, from 1985 to his retirement in December 1993. He
served as President and Chief Executive
Officer of Heinz U.S.A., a division of the H. J. Heinz Company, from 1980 to
1985, and served as Executive Vice President of that company from 1979 to
1980. He was President and Chief Executive Officer of The Hubinger Company,
an H. J. Heinz Company subsidiary, from 1976 to 1979, Treasurer of H. J. Heinz
Company from 1973 to 1976, and a Vice President of Ore-Ida Foods, Inc., an H.
J. Heinz Company subsidiary, from 1967 to 1973. An attorney by profession,
Mr. Connolly joined the Law Department of the H. J. Heinz Company in 1961. He
is a Director of Mellon Bank, N.A., Mellon Bank Corporation,
Presbyterian-University Health System, and the University of Pittsburgh
Medical Center System. He is also a Trustee of the University of Pittsburgh.
(photo GEORGE A. DAVIDSON, JR. Chair: Executive Committee
omitted) Age 55 Member: Financial Policy Committee
Director since 1985 Nominating Committee
Mr. Davidson has served as Chairman of the Board and Chief
Executive Officer of the Company since May 1987, and has been
employed by the Consolidated system since 1966. He served as Vice
Chairman and Chief Operating Officer of the Company from
January 1987 to May 1987, and Vice Chairman from October 1985 to January 1987.
He served as President of CNG Transmission Corporation(1) from 1984 through
1985. He had been Vice President, System Gas Operations, for Consolidated
Natural Gas Service Company, Inc.,(1) from 1981 to 1984, and was Assistant
Vice President, Rates and Certificates, of that company from 1975 to 1981.
Mr. Davidson held various other positions in the Rates and Certificates
Department from 1966 to 1975. Mr. Davidson serves on the National Petroleum
Council and the Allegheny Conference on Community Development. He is a
Director of the American Gas Association, PNC Bank Corp. and B. F. Goodrich
Company. He is also a Trustee of the University of Pittsburgh.
(1)Wholly owned subsidiary of the Company.
<PAGE> 9
7
CONTINUING DIRECTORS WITH A TERM EXPIRING MAY 1995
(photo LESTER D. JOHNSON
omitted) Age 62
Director since 1992
Mr. Johnson has served as Executive Vice President and Chief
Financial Officer of the Company since March 1992 and Director
since May 1992, and has been employed by the Consolidated system
since 1955. He served as Senior Vice
President and Chief Financial Officer from 1986 to 1992 and Vice President and
Chief Financial Officer from 1984 to 1986. He had been Vice President and
Treasurer from 1982 to 1984, Treasurer from 1979 to 1982 and Assistant
Treasurer from 1970 to 1979. He joined The Peoples Natural Gas Company (1) in
1955 and held a succession of financial posts. He is a member of the Finance
Committee of the American Gas Association and a member of the Management
Advisory Board of Duquesne University.
(photo RICHARD P. SIMMONS Member: Audit Committee
omitted) Age 62 Ethics Committee
Director since 1990 Executive Committee
Nominating Committee
Mr. Simmons has served as Chairman and Chairman of the Executive
Committee of Allegheny Ludlum Corporation, Pittsburgh,
Pennsylvania, a specialty steel manufacturer, since 1990. He
served as Chairman and Chief Executive
Officer from 1980 to 1990, and as a Director of that company since 1980. He
had been a Director of Allegheny Ludlum Industries from 1973 to 1980 and a
member of the Executive Office of that company from 1978 to 1980. Mr. Simmons
is a Director of PNC Bank Corp. and a Director of USAir Group, Inc. He is a
member of the Massachusetts Institute of Technology Corporation and
Development Committee, Director and Chairman of the Pittsburgh Symphony
Society, a member of the Executive Committee of the Allegheny Conference on
Community Development and Chairman of the Southwestern Pennsylvania United
Way.
(1)Wholly owned subsidiary of the Company.
<PAGE> 10
8
CONTINUING DIRECTORS WITH A TERM EXPIRING MAY 1996
(photo PAUL E. LEGO Member: Compensation and Benefits
omitted) Age 63 Committee
Director since 1991 Executive Committee
Financial Policy Committee
Nominating Committee
Mr. Lego served as Chairman and Chief Executive Officer of
Westinghouse Electric Corporation, an electronic products and
services, environmental systems, equipment and broadcasting
company, Pittsburgh, Pennsylvania, from 1990 to his
retirement in January 1993. He served that company as President and Chief
Operating Officer from 1988 to 1990 and as a Director from 1988 to 1993. He
had been Senior Executive Vice President, Corporate Resources from 1985 to
1988, Executive Vice President, Westinghouse Industries & International Group
from 1983 to 1985 and Executive Vice President, Westinghouse Industry Products
from 1980 to 1983. Prior thereto, he served in various engineering and
management capacities with Westinghouse since 1956. Mr. Lego is a Director of
the Lincoln Electric Company and USX Corporation. He is a member of the
Business Council and a Trustee of the University of Pittsburgh.
(photo THEODORE LEVITT Chair: Nominating Committee
omitted) Age 69 Member: Audit Committee
Director since 1982 Financial Policy Committee
Professor Levitt is the Edward W. Carter Professor of Business
Administration, Emeritus, Harvard University Graduate School of
Business Administration. He served as Editor of the Harvard
Business Review from September 1985 to
December 1989, and became a member of the faculty of the Graduate School of
Business Administration, Harvard University in 1959, serving as head of its
marketing area for six years. He was a full-time economic and marketing
consultant to Standard Oil Company (Indiana) from 1955 to 1959, has been a
consultant to senior management of a large number of major corporations and
industries, and has authored numerous books on marketing theory and practice.
He is a Director of Landmark Graphics Corporation, Melville Corporation,
Sanford C. Bernstein Fund, Inc., Saatchi & Saatchi Company PLC and The Stride
Rite Corporation.
<PAGE> 11
9
CONTINUING DIRECTORS WITH A TERM EXPIRING MAY 1996
(photo WALTER R. PEIRSON Member: Audit Committee
omitted) Age 67 Financial Policy Committee
Director since 1989 Nominating Committee
Mr. Peirson served as a Director of Amoco Corporation, Chicago,
Illinois, an integrated oil company and producer of natural gas,
from 1976 to 1989, and as an Executive Vice President of that
company from 1978 until his retirement in
1989. Mr. Peirson served as President of Amoco Oil Company from 1974 to 1978,
Executive Vice President from 1971 to 1974 and Vice President-Marketing of
that company from 1968 to 1971. He was President of Toloma Gas Products Co.,
subsidiary of Standard Oil Company (Indiana), from 1964 to 1968. He served as
President of General Gas Corporation from 1962 to 1964 and Executive Vice
President of that company from 1961 to 1962. He was an attorney at Standard
Oil Company of Indiana from 1955 to 1961. He is a Director of American
National Bank & Trust Company of Chicago, American National Corporation and
the Federal Signal Corporation. He is also a Trustee of the Museum of Science
and Industry in Chicago.
DIRECTOR RETIRING IN MAY 1994
(photo A. A. SOMMER, JR. Chair: Audit Committee
omitted) Age 69 Member: Ethics Committee
Director since 1977 Executive Committee
Nominating Committee
Mr. Sommer has been a partner in the law firm of Morgan, Lewis &
Bockius, Washington, D.C., since 1979. He had been a partner in
the law firm of Wilmer, Cutler & Pickering, Washington, D.C., from
1977 to 1979, and a partner in the law
firm of Jones, Day, Reavis & Pogue from 1976 to 1977. He served as a
Commissioner of the Securities and Exchange Commission from 1973 to 1976. He
was a partner in the law firm of Calfee, Halter, Calfee, Griswold & Sommer,
Cleveland, Ohio, from 1960 to 1973. Mr. Sommer is a Director of Figgie
International Inc. and the National Association of Corporate Directors. He is
a member of the Board of Governors of the National Association of Security
Dealers, and is Chairman of The Public Oversight Board of the American
Institute of Certified Public Accountants.
<PAGE> 12
10
THE BOARD OF DIRECTORS AND CERTAIN COMMITTEES THEREOF
BOARD OF DIRECTORS
The Company is managed under the direction of the Board of Directors, which
met eight times in 1993. To assist it in various areas of responsibility,
the Board has established several standing committees that are briefly
described below.
AUDIT COMMITTEE
The Audit Committee is composed of four non-employee Directors. Among its
functions are: reviewing the scope and effectiveness of audits by the
independent accountants and the Company's internal auditing staff; selecting
and recommending to the Board of Directors the employment of independent
accountants, subject to ratification by the stockholders; receiving and
acting on comments and suggestions by the independent accountants and by the
internal auditors with respect to their audit activities; approving fees
charged by the independent accountants; and reviewing the Company's annual
financial statements before their release.
The Committee met five times in 1993.
COMPENSATION AND BENEFITS COMMITTEE
The Compensation and Benefits Committee is composed of four non-employee
Directors. The Committee approves the salary budgets for all non-union
employees and fixes the salaries of the Officers and other personnel on the
executive payroll of the Company and its subsidiaries.
The Committee also has general supervision over the administration of all
non-union employee pension, compensation and benefit plans of the Company and
its subsidiaries; reviews proposals with respect to the creation of and
changes in such plans; and makes appropriate recommendations with respect
thereto to the Board of Directors. The Committee met seven times in 1993.
ETHICS COMMITTEE
The Ethics Committee consists of four non-employee Directors. Its function
is to review and act on all situations subject to the provisions and
procedures of the Company's Business Ethics Policy and to monitor the
Company's environmental compliance activities. The Committee met four times
in 1993.
FINANCIAL POLICY COMMITTEE
The Financial Policy Committee consists of four non-employee Directors and
the Chairman of the Board. Its function is to oversee the short-term and
long-term financial activities and planning of the Company including dividend
actions. The Committee met three times in 1993.
<PAGE> 13
NOMINATING COMMITTEE
The Nominating Committee currently consists of eight non-employee Directors
and the Chairman of the Board. It reviews the qualifications of Director
candidates on the basis of recognized achievements and their ability to bring
skills and experience to the deliberations of the Board.
It also recommends qualified candidates to the Board, including the slate of
nominees submitted to the stockholders at the Annual Meeting; reviews the
size and composition of the Board; and monitors the Company's management
succession program. The Committee met four times in 1993.
Stockholders who wish to propose candidates to the Nominating Committee for
election to the Board at the 1995 Annual Meeting should write to the
Corporate Secretary, Consolidated Natural Gas Company, CNG Tower, 625 Liberty
Avenue, Pittsburgh, Pennsylvania 15222-3199, between March 17, 1995 and April
17, 1995, stating in detail the qualifications of such candidates for
consideration by the Committee. Any such recommendation should be
accompanied by a written statement from the candidate of his or her consent
to be considered as a candidate and, if nominated and elected, to serve as a
Director.
11
SECURITY OWNERSHIP OF MANAGEMENT
The following table lists the beneficial ownership, as of January 31, 1994,
of the Company's Common Stock by each current Director, named executive and
all current Directors and Officers as a group.
Number of Number of
Shares Shares Under Percent of
Name of Beneficially Exercisable Outstanding
Beneficial Owner Owned(1) Options(2) Common Stock
________________________________________________________________________
J. W. Connolly 700 .001
G. A. Davidson, Jr. 45,056 29,165 .080
D. P. Hunt 17,433 13,575 .033
L. D. Johnson 18,083 11,139 .031
P. E. Lego 500 .001
T. Levitt 800 .001
S. A. Minter 730 .001
W. R. Peirson 2,000 .002
R. P. Simmons 1,000 .001
A. A. Sommer, Jr. 2,200 (3) .002
<PAGE> 14
Number of Number of
Shares Shares Under Percent of
Name of Beneficially Exercisable Outstanding
Beneficial Owner Owned(1) Options(2) Common Stock
________________________________________________________________________
L. J. Timms, Jr. 23,038 9,948 .035
D. E. Weatherwax 8,603 5,608 .015
L. Wyse 400 --(4)
Directors and Officers of the
Company as a group
(18 persons) 150,424 88,426 .257
____________
(1) Includes shares owned by spouses and, in the case of employees,
shares beneficially owned under the Alternate Thrift Trust of the Employees
Thrift Plans, and the Employee Stock Ownership Plan. Unless otherwise
noted, the Directors and Officers have sole voting and investment power.
(2) Includes shares subject to options exercisable on January 31, 1994,
and options that will become exercisable within 60 days thereafter.
(3) Includes a family interest of 1,000 shares over which he has shared
voting and investment power.
(4) Less than .001 percent of outstanding shares.
________________________________________________________________________
<PAGE> 15
12
COMPENSATION OF EXECUTIVE OFFICERS
The following table sets forth the compensation of the named Executive
Officers for the last three completed fiscal years of the Company.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long-Term
Annual Compensation Compensation
___________________________ ___________________
Other All
Annual Restricted Shares Other
Compen- Stock Under- Compen-
Name and Bonus sation Award(s) lying
sation
Principal Position Year Salary (1) (2) (3) Options
(4)
____________________ ____ ________ ________ ________ __________ _______
________
<S> <C> <C> <C> <C> <C> <C>
<C>
G. A. Davidson, Jr. 1993 $511,100 $280,400 $ 3,012 27,310
$38,654
(Chairman and 1992 483,400 219,103 3,000 35,013
36,364
Chief Executive 1991 464,800 203,891 $940,461 26,793
Officer, Director)
D. P. Hunt 1993 229,600 129,200 8,385 9,566
20,703
(President, 1992 216,000 61,819 10,889 8,430
16,414
CNG Producing) 1991 205,800 30,997 329,370 9,384
L. D. Johnson 1993 273,700 156,100 793 15,790
27,687
(Executive Vice 1992 255,400 165,755 762 12,262
25,495
President, Chief 1991 232,200 107,400 329,370 9,384
Financial Officer,
Director)
L. J. Timms, Jr. 1993 232,800 137,000 708 9,566
18,796
(President, CNG 1992 219,300 114,967 866 12,262
16,620
Transmission) 1991 205,800 124,830 329,370 9,384
D. E. Weatherwax 1993 227,300 121,000 999 9,566
23,052
(Senior Vice 1992 213,700 109,212 876 126,038 7,998
21,458
President, 1991 193,500 91,902 214,856 6,122
Administration)
____________________
</TABLE>
(1) The 1991 and 1992 bonuses were paid in cash and restricted stock. The
restrictions on the stock lapsed six months from the grant date. For 1991,
the amounts shown reflect cash and stock priced at $34.625 per share
(closing price on March 13, 1992, the grant date); for 1992, include cash
and stock priced at $47.00 per share (closing price on March 15, 1993, the
grant date). The 1993 bonus was paid entirely in cash.
<PAGE> 16
(2) Includes tax reimbursements only for the fiscal years ended
December 31, 1992, and December 31, 1993. No amounts are included in this
column for the Executive Split Dollar Life Insurance Plan because the
executives' contributions to this plan are greater than or equal to the
term life insurance costs that apply to the underlying life insurance
policies. No amounts are included for perquisites or personal benefits
because, for each Executive Officer, the aggregate amount of such
compensation was less than $50,000 and less than 10% of that executive's
base salary and bonus for 1992 and 1993.
(3) Restricted Stock Award Grants are reported at aggregate market value at
the date of grant. The 1991 Restricted Stock Awards shown were granted on
January 2, 1991. The market value on that date was $43.875 per share. The
number of shares granted in 1991 for the named Executive Officers was: Mr.
Davidson, 21,435; Mr. Hunt, 7,507; Mr. Johnson, 7,507; Mr. Timms, 7,507;
and Mr. Weatherwax, 4,897. Mr. Weatherwax was granted an award on March
16, 1992, of 3,627 shares with a market value on the date of $34.75 per
share. Restrictions on the awards lapse in 25% increments, beginning with
the first anniversary and on each of the next three anniversaries of the
grant date. Dividends are paid on the shares from the date of grant.
Restricted Stock Award Grants are based on the individual's level of
performance and responsibility. At December 31, 1993, the number of
Restricted Stock holdings for each of the named Executive Officers was:
Mr. Davidson, 10,374; Mr. Hunt, 3,486; Mr. Johnson, 3,582; Mr. Timms,
3,372; and Mr. Weatherwax, 5,429. The aggregate value of such holdings at
December 31, 1993, at the year-end closing price of $47.00 per share, for
each of the named Executive Officers was: Mr. Davidson, $487,578; Mr.
Hunt, $163,842; Mr. Johnson, $168,354; Mr. Timms, $158,484; and Mr.
Weatherwax, $255,163.
(4) Comprised of annual employer matching thrift plan contributions and ESOP
allocations only for the fiscal years ending December 31, 1992, and
December 31, 1993.
13
The following table contains information concerning the grant of stock
options under the Company's 1991 Stock Incentive Plan to the named Executive
Officers as of the end of the last fiscal year of the Company. No SARs
(stock appreciation rights) have been granted.
<PAGE> 17
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
Individual Grants
__________________________________
% of
Number Total Potential
of Options Realizable Value
at
Shares Granted Exercise Assumed Annual
Under- to Em- or Rates of Stock
lying ployees Base Price Appreciation
Options in Price Expir- for Option Term
(2)
Granted Fiscal Per ation
___________________________________
Name (1) Yr. Share Date 0% 5%
10%
___________________ _______ _______ ________ ______ ___ ______________
______________
<S> <C> <C> <C> <C> <C> <C>
<C>
G. A. Davidson, Jr. 27,310 4.95% $ 46.00 2003 0 $ 790,055 $
2,002,155
D. P. Hunt 9,566 1.73 46.00 2003 0 276,736
701,304
L. D. Johnson 15,790 2.86 46.00 2003 0 456,791
1,157,599
L. J. Timms, Jr. 9,566 1.73 46.00 2003 0 276,736
701,304
D. E. Weatherwax 9,566 1.73 46.00 2003 0 276,736
701,304
_______________________________________________________________________________
_____________
All Shareholders N/A N/A N/A N/A 0 $2,688,633,228
$6,813,524,479
_______________________________________________________________________________
_____________
All Optionees 552,211 100.00 $44.875- 2003 0 $ 15,974,996 $
40,483,777
$ 55.00
_______________________________________________________________________________
_____________
Optionee Gain as %
of All
Shareholder Gain N/A N/A N/A N/A N/A .6%
.6%
_______________________________________________________________________________
_____________
</TABLE>
(1) All material terms of the Non-Qualified Stock Options granted in 1993
are as follows. Non-Qualified Stock Options are granted at the fair market
value of a share on the date of grant of the option. The option expires on
the tenth anniversary of the grant date and is exercisable in installments
of up to 25% of the shares on or after the second, third, fourth and fifth
anniversaries of the grant. If the employee retires from CNG, his or her
options expire the earlier of the option expiration date or three years
after he or she retires. If an employee otherwise leaves CNG, his or her
options expire the earlier of the option expiration date or three months
after he or she ceases to be employed by CNG. Subject to the vesting
schedule, options are exercisable from time to time up to the expiration
date. Non-Qualified Stock Option Award grants are based on the
individual's level of performance and responsibility.
<PAGE> 18
(2) Based on actual option term (10-year) and annual compounding at rates
shown. The dollar amounts under these columns are the result of
calculations at 0% and at the 5% and 10% rates set by the Securities and
Exchange Commission and therefore are not intended to forecast possible
future appreciation, if any, of the Company's stock price. No gain to the
optionees is possible without stock price appreciation, which will benefit
all shareholders commensurately. A zero percent gain in stock price
appreciation will result in zero dollars for the optionees. The Company
did not use an alternative formula for a grant date valuation, as the
Company is not aware of any formula which will determine with reasonable
accuracy a present value based on future unknown or volatile factors.
14
The following table sets forth information with respect to the named
executives concerning the exercise of options during the last fiscal year of
the Company and unexercised options held as of the end of the fiscal year.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND DECEMBER 31, 1993, YEAR-END OPTION VALUES
Number of Value of
Shares Underlying Unexercised,
Unexercised Options In-the-Money Options
Held at Year-End at Year-End (2)
Shares ___________________ ____________________
Acquired Value
On Realized Exercis- Unexercis- Exercis- Unexercis-
Name Exercise (1) able able able able
___________________ ________ ________ ________ __________ ________ _________
G. A. Davidson, Jr. 18,399 $187,067 6,542 92,859 $ 0 $546,313
D. P. Hunt 4,985 87,238 7,241 28,021 27,344 141,498
L. D. Johnson 6,432 66,067 2,910 39,362 0 197,527
L. J. Timms, Jr. 6,865 75,431 2,020 32,392 0 192,311
D. E. Weatherwax 4,553 32,142 0 25,175 0 129,826
__________________
(1) Market value of underlying shares at time of exercise minus the exercise
price.
(2) Market value of underlying shares at year-end market price of $47.00 per
share minus the exercise price.
<PAGE> 19
LONG-TERM INCENTIVE PLAN AWARDS IN LAST FISCAL YEAR
No Restricted Stock Awards were made to the named executives under the
Long-Term Incentive Plan in 1993.
EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT AGREEMENTS
Messrs. Davidson, Hunt, Johnson, Timms and Weatherwax entered into agreements
with the Company dated November 14, 1989, that have provisions which become
operative upon a defined change of control of the Company. Such agreements
preserve for three years following a change of control the annual salary
levels and employee benefits as are then in effect for these executives and
provide that, in the event of certain terminations of employment, these
executives shall receive severance payments equal to up to 2.99 times their
respective annual compensation prior to severance.
COMPENSATION AND BENEFITS COMMITTEE REPORT
The Company's executive compensation programs are administered by the
Compensation and Benefits Committee of the Board of Directors (the
"Committee"), which is composed of four non-employee Directors. The
Committee reviews and approves all issues pertaining to executive
compensation. Total compensation is designed in relationship to compensation
paid by competitor organizations. Base salary and long-term incentive
compensation are targeted to median market levels and short-term incentive
compensation is goal based and structured to be comparable to that paid by
competitor organizations. The objective of the Company's three compensation
programs (base salary, short-term incentive and long-term incentive) is to
provide a total compensation package that will enable the Company to attract,
motivate and retain outstanding individuals and align their success with that
of the Company's shareholders.
Competitor organizations are defined annually as part of the compensation
administration process and include fully integrated natural gas companies as
well as broader industry
15
comparatives, e.g., comparably-sized general industrial companies and, where
appropriate, specific energy companies.
The level of base salary paid to executives for 1993 was determined on the
basis of performance and experience. The Company measures or identifies its
base salary structure by range midpoints in comparison to base salaries
offered by competitors. Salary levels are targeted to, and in 1993
correspond to, the median range of compensation paid by competitor
organizations. These are not the same companies that comprise the American
Gas Association Diversified Gas Index shown on the shareholder return
performance presentation. The specific competitive marketplace which the
Company and its subsidiaries use in the base salary analysis is determined
based on the nature and level of the positions being analyzed and the labor
markets from which individuals would be recruited. The Committee also
considered the competitiveness of the entire compensation package in its
determination of salary levels.
<PAGE> 20
Short-term incentive compensation plans are used at both corporate and
subsidiary levels. The appropriateness of applying an incentive compensation
arrangement to any given position is determined based on the nature of the
position, its potential for contribution and the then-current competitive
environment. Short-term incentive opportunity is structured so that awards
are competitive at a level commensurate with the performance level achieved
by the employee with consideration for the employee's level of
responsibility. The short-term incentive plan has threshold, target and
maximum bonus levels for the various executive levels based on competitive
data. For the named Executive Officers, the threshold bonus level is 18% to
20% of base pay, the target bonus level is 45% to 50% of base pay, and the
maximum bonus level is 63% to 70% of base pay. At the corporate level, the
primary form of short-term incentive compensation is a cash or stock bonus
pool arrangement, for which all employees on the Company's System executive
payroll are eligible. The bonus pool is established as a percentage of
corporate net income based on a weighted differential between established
goals and actual performance; the pool is then, in turn, allocated to
individual participants based on the achievement of their individual and
respective company goals. At 85% of goal achievement, the threshold bonus
pool is created; at 100% of goal, the target bonus pool is achieved; at 115%
or greater of goal achievement, the maximum bonus pool is achieved. At less
than the threshold level, there is no bonus pool. The performance measures
(weighted as indicated) are based on the Company's fixed charge coverage
ratio (20%), return on equity (40%), net income (20%) and cash flow (20%),
with performance goals established based on the Company's annual long-range
forecast, actual prior year performance and business plan reviews.
Performance targets are set to meet or exceed the performance of peer
companies. For the last fiscal year, the overall goal achievement was 107%
with return on equity achieving 115% of goal, fixed charge coverage ratio
achieving 115% of goal, net income achieving 98% of goal, and cash flow
achieving 94% of goal.
Long-term incentive compensation plans are limited to only those employees
who are in positions which can affect the long-term success of the Company,
including both the establishment and execution of the Company's business
strategies. The 1991 Stock Incentive Plan is the principal method for
long-term incentive compensation, and compensation thereunder principally
takes the form of Non-Qualified Stock Option grants and Restricted Stock
Awards. The purposes of long-term incentive compensation are to: (i) focus
key executives' efforts on performance which will increase the value of the
Company to its shareholders; (ii) align the interests of management with
those of the shareholders; (iii) provide a competitive long-term incentive
and capital accumulation opportunity; and (iv) provide a retention incentive
for selected key executives. Performance criteria
16
used in long-term incentives are tied directly to the individual
participant's performance over time and his or her impact on increasing the
economic performance of the Company. Previous awards of options or
restricted stock are not considered in the determination of an award.
Executive performance against stated position responsibilities and goals is
evaluated annually. Such performance rating is used with the level of
responsibility in determining the amount of the award. At expected levels of
performance, the long-term incentive award is structured at the median range;
at levels of performance that exceed expectations, the
<PAGE> 21
grant is structured at the 75th percentile; if performance is outstanding,
the grant is structured at the 90th percentile.
The Committee utilizes the services of an independent compensation
consultant to assess market relativity of executive compensation ranges.
Consistent with the Company's compensation philosophy, adjustments are made
to any executive compensation ranges necessary to achieve levels of
compensation at the median market position.
Effective for the tax year ended December 31, 1994, the Revenue
Reconciliation Act of 1993 placed certain limits on the deductibility of
non-performance based executive compensation. Current and anticipated levels
of executive compensation do not subject the Company to these limitations.
At such time that executive compensation levels subject the Company to
deductibility limits, the Committee will consider the Company's alternatives
with respect to qualifying executive compensation for deductibility.
Mr. Davidson's compensation for 1993 was determined in the general context
of the programs described above. In particular, Mr. Davidson's 1993
incentive compensation was based on the following measures of the Company's
performance (weighted as shown): net income (10%), cash flow (defined as net
income plus depreciation plus deferred taxes minus dividends) (5%), return on
equity (compared to peer companies) (10%), credit rating of the Company's
long-term debt (10%), price to earnings ratio (compared to published summary
data) (10%), and the attainment of prescribed levels of gas and oil reserve
additions and finding and development costs (15%). In addition, Mr.
Davidson's 1993 incentive compensation was based upon providing direction for
changes in System marketing efforts and business information systems
necessitated by the Federal Energy Regulatory Commission's natural gas
industry deregulation on the Company's core business segments (20%) and
discretion of the Committee (20%). Mr. Davidson's threshold bonus level is
20% of base pay, his target bonus level is 50% of base pay and his maximum
bonus level is 70% of base pay. Mr. Davidson's overall weighted goal
achievement was 101% of established performance goals. Based on this level
of achievement, the Committee established Mr. Davidson's incentive
compensation at $280,400.
S. A. Minter, Chair
J. W. Connolly
P. E. Lego
L. Wyse
17
SHAREHOLDER RETURN PERFORMANCE PRESENTATION
Set forth below is a line graph comparing the yearly cumulative total
shareholder return on CNG's Common Stock against the cumulative total return
of the S&P 500 Stock Index and the American Gas Association (AGA) Diversified
Gas Index for the period of five years commencing December 31, 1988, and
ended December 31, 1993.
<PAGE> 22
The AGA is the primary trade association for the natural gas industry. The
AGA's Diversified Gas Index is published in the AGA Financial Quarterly
Review. This publication is sent to industry executives and security
analysts and is provided to anyone who requests a copy. The index was
prepared in January 1994, under the direction of the AGA Finance Committee.
All companies contained in the index are members of the AGA. Those companies
are: Arkla, Inc., Chesapeake Utilities Corp., Columbia Gas System, Inc.,
Consolidated Natural Gas Company, Eastern Enterprises, Energen Corporation,
ENSERCH Corporation, Equitable Resources, K N Energy, Inc., NICOR Inc., ONEOK
Inc., Pacific Enterprises, Pennsylvania Enterprises, Inc., Questar
Corporation, South Jersey Industries, Inc., Southwest Gas Corporation,
Southwestern Energy, UGI Corporation, Valley Resources, Inc., Washington
Energy Company and WICOR, Inc.
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN*
1988 1989 1990 1991 1992 1993
_______________________________________________________
CNG $100 $129 $118 $120 $132 $142
S&P 500 100 132 128 166 179 197
AGA 100 140 124 108 114 130
_______________________________________________________
*Assumes $100 investment on December 31, 1988, and
reinvestment of dividends.
18
NON-EMPLOYEE DIRECTORS' COMPENSATION
Non-employee Directors are currently paid a $24,000 annual retainer, a $2,000
per diem fee for attending each Board meeting including all Board Committee
meetings held in conjunction with such Board meeting, and a $1,000 per diem
fee for participating in telephonic Board or Board Committee meetings.
Committee Chairpersons receive an additional annual fee of $3,000. Such
Directors may elect to defer receipt of these payments until after retirement
from the Board. Such payments are deferred in the form of cash credits or
Consolidated Natural Gas Company Common Stock credits. Such stock credits are
valued as Common Stock
<PAGE> 23
equivalents equal to the number of shares that could have been purchased at
the closing price on the date the compensation was earned. As of the date
any dividend is paid on the Company's Common Stock, a credit is made to each
participant's deferred account equal to the number of shares of Common Stock
that could have been purchased on such date with the dividend paid. Amounts
deferred in the form of cash credits earn interest, compounded quarterly, at
a rate equal to the closing prime commercial rate at The Chase Manhattan Bank
N.A. on the last day of each quarter. The annual retainer paid to
non-employee Directors, as set by the Board of Directors from time to time,
shall continue to be paid for life to each non-employee Director retired at
age 70, or at an earlier age due to disability, provided the non-employee
Director served a minimum of four years and agrees to be generally available
as a consultant. Employee Directors do not receive any compensation for
service as Directors.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During 1993, the following Directors served as members of the Compensation
and Benefits Committee: S. A. Minter, Chair, J. W. Connolly, P. E. Lego and
L. Wyse.
The Company has Credit Agreements totalling $300 million with a group of
banks. Each participating bank is compensated with a commitment fee of 1/8
of 1 percent on its respective commitment amounts. The Company also
maintains commercial paper back-up lines with various banks that total $475
million. Each commercial paper back-up line bank receives a commitment fee
of 1/10 of 1 percent on its line amount.
Currently, PNC Bank, Pittsburgh, Pennsylvania, the subsidiary of PNC Bank
Corp., of which Messrs. Davidson and Simmons are Directors, provides a
commitment of $30 million under the Credit Agreement and a commercial paper
back-up line of $130 million. Mellon Bank, N.A., Pittsburgh, Pennsylvania,
of which Mr. Connolly is a Director, provides a commitment of $40 million
under the Credit Agreement and a commercial paper back-up line of $130
million. Society National Bank, Cleveland, Ohio, the subsidiary of KeyCorp
(formerly Society Corporation), of which Mr. Minter is a Director, provides a
commitment of $40 million under the Credit Agreement and a commercial paper
back-up line of $50 million. There were no amounts outstanding from either
PNC Bank, Mellon Bank, N.A., or Society National Bank during 1993 under the
Credit Agreements or the commercial paper back-up line arrangement.
Since 1967, Morgan, Lewis & Bockius has performed legal services for the
Company and certain of its subsidiaries. During 1993, this firm was paid
aggregate fees of $65,996 for such services. Mr. Sommer has been a partner of
that law firm since August 1979. The Company retains numerous non-affiliated
law firms that provide similar services, and the rates that Morgan, Lewis &
Bockius charges are comparable to those charged by the non-affiliated firms.
The Company expects to continue receiving services from this firm in 1994.
The Company has, since 1977, retained Wyse Advertising, Inc., of which Ms.
Wyse is the President and a principal stockholder. Wyse Advertising plans,
creates, writes and designs media communications at
<PAGE> 24
commission rates and billing practices which are comparable to such rates
and
19
practices charged by non-affiliated firms. During 1993, the Company paid
aggregate commissions of $364,372 to Wyse Advertising.
LIFE INSURANCE AND RELATED BENEFIT PLANS
The Company maintains a program composed of Split Dollar Life Insurance Plans
and Supplemental Death Benefit Plans for employees on the executive payroll
of the Company and its subsidiaries, as well as non-employee Directors, which
provides death benefits to beneficiaries of those individuals. There were
161 eligible employees on December 31, 1993, and 122 were participating. Five
non-employee Directors were also participating. The Plans are under the
general supervision of the Compensation and Benefits Committee of the Board.
Continuation of the Plans beyond retirement requires the Committee's
approval. The costs for the Split Dollar Life Insurance Plans are shared by
the Company and the participants. Each year an employee participant pays a
premium based on age and amount of individual coverage, which is
approximately twice annual salary. Each year Director participants pay a
premium based on age and amount of individual coverage. The Company pays all
additional premiums and expects to receive proceeds approximately equal to
its investment in the policy through the total coverage exceeding the
participant's individual coverage. The Supplemental Death Benefit Plans
provide for payments to a deceased participant's beneficiaries over a period
of years.
RETIREMENT PROGRAMS
A non-contributory Pension Plan is maintained for employees who are not
represented by a recognized union, including Officers of the Company and its
subsidiaries. On December 31, 1993, all 3,415 eligible employees of the
Company and its subsidiary companies were participating in the Pension Plan.
The Company also maintains an unfunded Short Service Supplemental
Retirement Plan for certain management employees whose commencement of
service with the Company occurred after the employee had acquired experience
of considerable value to the Company and who will have less than 32 years of
service at normal retirement.
The following table illustrates maximum annual benefits -- including any
supplemental payment described above but before being reduced by a required
offset -- at normal retirement date (age 65) on the individual life annuity
basis for the indicated levels of final average annual salary and various
periods of service.
<PAGE> 25
PENSION PLAN TABLE
_______________________________________________________________________
Annual Pension Benefit
for Years of Service Indicated
_________________________________________________________
Average
Annual Salary 15 20 25 35 40
_______________________________________________________________________
$100,000 . . $ 34,000 $ 45,300 $ 55,000 $ 59,500 $
68,000
150,000 . . 51,000 68,000 82,500 89,300
102,000
200,000 . . 68,000 90,700 110,000 119,000
136,000
250,000 . . 85,000 113,300 137,500 148,800
170,000
300,000 . . 102,000 136,000 165,000 178,500
204,000
350,000 . . 119,000 158,700 192,500 208,300
238,000
400,000 . . 136,000 181,300 220,000 238,000
272,000
450,000 . . 153,000 204,000 247,500 267,800
306,000
500,000 . . 170,000 226,700 275,000 297,500
340,000
550,000 . . 187,000 249,300 302,500 327,300
374,000
20
The 1993 salaries, projected service to age 65, and estimated annual
retirement benefits on the individual life form of annuity, assuming
continuation of their December 1993 salaries until age 65 for each of the
individuals in the Summary Compensation table, are as follows:
ESTIMATED ANNUAL RETIREMENT BENEFITS
Years of
Service at Years of Estimated Annual
1993 Year-End Service Retirement Benefits
Name Salary 1993 at Age 65 at Age 65
__________________________________________________________________________
G. A. Davidson, Jr. . $511,100 27 37 $340,416
D. P. Hunt . . . . . . 229,600 30 43 182,607
L. D. Johnson . . . . 273,700 35 39 182,491
L. J. Timms, Jr. . . . 232,800 30 38 161,265
D. E. Weatherwax . . . 227,300 37 38 139,448
__________________________________________________________________________
The Company also maintains a Supplemental Retirement Benefit Plan under
which payments may be made, at the sole discretion of the Compensation and
Benefits Committee of the Board, to individuals comprising the executive
payroll. As of December 31, 1993, there were 161 potentially eligible
employees. The decision to grant a Supplemental Retirement Benefit is based
on a review of the retiring employee's total available benefits. Payments
under such Plan during 1993 amounted to $291,000. The maximum annual
supplemental annuity under this Plan is 10 percent of an individual's final
average annual salary. Assuming continuation of their December 1993 salaries
until age 65, the five individuals named in the Summary Compensation table
would be eligible to receive the following maximum annual supplemental
retirement benefits: Mr. Davidson, $54,620; Mr. Hunt, $25,660; Mr. Johnson,
$28,192; Mr. Timms, $25,660; Mr. Weatherwax, $21,904.
<PAGE> 26
The benefits described above have not been reduced by the limitations
imposed on qualified plans by the Internal Revenue Code. As permitted by the
Code, the Board of Directors has adopted a policy whereby supplemental
payments may be made, as necessary, to maintain the benefit levels earned
under the benefit plans.
21
PROPOSAL 2
RATIFICATION OF APPOINTMENT OF INDEPENDENT ACCOUNTANTS
Price Waterhouse has audited the accounts of the Company and its subsidiaries
since 1943. On recommendation of the Audit Committee, the Board of Directors
has, subject to ratification by the stockholders, appointed Price Waterhouse
to audit the accounts of the Company and its subsidiaries for the fiscal year
1994. Audit fees to Price Waterhouse in 1993 incurred by the Company and its
subsidiaries were approximately $1,034,300. Representatives of Price
Waterhouse will be present at the Meeting to respond to appropriate questions
and will have an opportunity to make a statement if they desire to do so.
Accordingly, the following resolutions will be offered at the Meeting:
RESOLVED, That the appointment, by the Board of Directors of the Company,
of Price Waterhouse to audit the accounts of the Company and its subsidiary
companies for the fiscal year 1994, effective upon ratification by the
stockholders be, and it hereby is, ratified; and
FURTHER RESOLVED, That a representative of Price Waterhouse shall attend
the next Annual Meeting and any special meetings of stockholders that may be
held in the interim.
An affirmative vote of the holders of a majority of the Company's Common
Stock, represented in person or by proxy and entitled to vote at the Meeting,
is necessary for ratification. If the stockholders do not ratify the
appointment of Price Waterhouse, the selection of independent accountants
will be reconsidered by the Audit Committee and the Board of Directors.
BOARD RECOMMENDATION
The Board recommends that stockholders vote FOR Proposal 2, and the
accompanying proxy will be so voted, unless a contrary specification is made.
<PAGE> 27
PROPOSAL 3
NON-EMPLOYEE DIRECTORS' RESTRICTED STOCK PLAN
INTRODUCTION
On September 14, 1993, the Board of Directors of the Company adopted the
Non-Employee Directors' Restricted Stock Plan (the "Plan") subject to
shareholder approval. The purpose of this Plan is to assist the Company in
retaining highly qualified persons to serve as non-employee Directors by
enabling such Directors to acquire a proprietary interest in the Company, and
by providing to such Directors an incentive to continue to serve the Company.
A full copy of the Plan is attached as Exhibit A to the Proxy Statement. The
major features of the Plan are summarized below and such summary is qualified
in its entirety by reference to the Plan.
SUMMARY OF AWARDS UNDER THE PLAN
The number of shares of Common Stock available for issuance under the Plan is
15,000 shares. The Plan provides for the automatic annual grant to each
non-employee Director of 100 shares of the Company's Common Stock, subject to
restrictions, following the Annual Shareholders' Meeting on the date of the
Annual Shareholders' Meeting. Each non-employee Director granted Restricted
Stock under the Plan shall be entitled to receive dividends on such
Restricted Stock when dividends are declared and paid on the Company's Common
Stock; shall be entitled to vote Restricted Stock on any matter submitted to
a vote of holders of Common Stock; and shall have all rights of a shareholder
of the Company, except that until restrictions on such stock expire, shall
22
have no right to sell, transfer, give, assign, pledge or otherwise encumber
or dispose of such Restricted Stock.
The restrictions on a Director's Restricted Stock shall lapse in 25%
installments on the anniversary date of each grant or shall lapse in total
upon the Director's retirement at age 70 or the Director's ceasing to serve
due to death or disability, whichever first occurs.
AMENDMENT TO AND TERMINATION OF THE PLAN
The Board may amend, alter, suspend, discontinue, or terminate the Plan
unless such action requires shareholder approval.
CHANGE OF CONTROL
In the event of a "Change of Control" of the Company as that term is defined
in the Company's 1991 Stock Incentive Plan, all restrictions on all
outstanding Restricted Stock will lapse and the Company will repurchase all
such shares which were awarded more than six months prior to the change of
control at the then fair market value.
A "Change of Control" under the 1991 Stock Incentive Plan is deemed to have
generally occurred when (i) 20% or more of the voting power of outstanding
voting securities of the Company becomes owned by another person other than
the Company or a Related Party, (ii) the majority of the Board of Directors
ceases to be comprised of Directors whose nomination or election was approved
by Directors already in office, (iii) the
<PAGE> 28
stockholders of the Company approve a merger, consolidation, recapitalization
or reorganization of the Company, reverse stock split of voting securities,
or an acquisition of securities by the Company unless there is a continuation
of at least 75% in voting power interest or a Related Party owns more than
50% of the surviving entity's voting securities, or (iv) the stockholders
approve a liquidation or sale of all or substantially all of the Company's
assets other than when a Related Party would end up owning more than 50% of
such assets. A "Related Party" is (i) a majority-owned subsidiary of the
Company ("Subsidiary"), (ii) one or more employees of the Company or of a
Subsidiary, (iii) a fiduciary holding securities under an employee benefit
plan of the Company or a Subsidiary, or (iv) a corporation owned by the
stockholders of the Company in substantially the same proportion as their
ownership of voting securities of the Company.
TAX IMPLICATIONS OF THE PLAN
The awards granted under the Plan in shares of Restricted Stock will be
recognized as ordinary income to the participant, equal to the cash or the
fair market value of the freely transferable and non-forfeitable stock
received, upon the lapsing of restrictions on such award. The Company will
be entitled to a deduction for the amount recognized as ordinary income by
the participant.
NEW PLAN BENEFITS
NON-EMPLOYEE DIRECTORS' RESTRICTED STOCK
Position Dollar Value (1) Number of Shares
_________________________________________________________________________
Non-Employee Directors as
a group (7 persons) $28,088 700
(1) If approved, it is expected that 700 shares will be granted on the
date of the Annual Shareholders' Meeting. This value is an estimate
based on the March 30, 1994, closing price of the Company's Common
Stock of $40.125 per share.
23
VOTE NEEDED FOR APPROVAL OF THE PROPOSAL
Approval of this proposal requires an affirmative vote by the holders of the
majority of the shares present in person or represented by proxy and entitled
to vote. An abstention, broker non-vote or vote withheld will have the same
effect as a vote against this proposal.
BOARD RECOMMENDATION
The Board of Directors recommends a vote for approval and adoption of the
Non-Employee Directors' Restricted Stock Plan and the accompanying proxy will
be so voted, unless a contrary specification is made.
PROCEDURE FOR SUBMISSION OF 1995 STOCKHOLDER PROPOSALS
Proposals by stockholders for inclusion in the 1995 Annual Meeting Proxy
Statement must be received by the Corporate Secretary, Consolidated
Natural Gas Company, CNG Tower, 625 Liberty Avenue, Pittsburgh,
<PAGE> 29
Pennsylvania 15222-3199, prior to December 3, 1994. All such proposals are
subject to the applicable rules and requirements of the Securities and
Exchange Commission.
OTHER BUSINESS
The Board of Directors does not intend to bring any business before the
Meeting other than that listed in the foregoing Notice and is not aware of
any business intended to be presented to the Meeting by any other person.
Should other matters properly come before the Meeting, the persons named in
the accompanying proxy will vote said proxy in such manner as they may, in
their discretion, determine.
LAURA J. MCKEOWN
Laura J. McKeown
Secretary
April 5, 1994
NOTE: YOUR SHARES CANNOT BE VOTED UNLESS YOU SIGN AND RETURN
YOUR PROXY CARD, OR ATTEND THE MEETING AND VOTE IN PERSON.
<PAGE> 30
24
EXHIBIT A
CONSOLIDATED NATURAL GAS COMPANY
NON-EMPLOYEE DIRECTORS' RESTRICTED STOCK PLAN
The purpose of this Non-Employee Directors' Restricted Stock Plan (the
"Plan") is to assist Consolidated Natural Gas Company, a Delaware
corporation (the "Company"), in retaining and attracting highly
qualified persons to serve as non-employee Directors by enabling such
Directors to acquire a proprietary interest in the Company, and by
providing to such Directors an incentive to continue to serve the
Company. The Plan provides for the automatic annual grant to each
non-employee Director of 100 shares of the Company's Common Stock, par
value $2.75 per share ("Common Stock"), subject to restrictions (the
"Restricted Stock").
1. AMOUNT AND SOURCE OF STOCK
The aggregate number and class of shares which may be granted as
Restricted Stock under the Plan is 15,000 shares of Common Stock,
subject to adjustment as provided in Section 7. Such shares may be
authorized but unissued shares of Common Stock of the Company or may
be shares held in or acquired for the treasury of the Company. Any
Restricted Stock granted hereunder which is forfeited pursuant to the
terms of the Plan shall not be available for grants under the Plan.
2. ADMINISTRATION OF THE PLAN
The Plan shall be administered by the Compensation and Benefits
Committee of the Board of Directors of the Company (the "Committee").
In addition to any other powers granted to the Committee, it shall
have the following powers, subject to the express provisions of the
Plan:
a) to construe and interpret the Plan;
b) to make all determinations and take all other actions
necessary or advisable for the administration of the Plan, except that
the persons entitled to receive Restricted Stock and the dates and
amounts of such awards shall be determined as provided in Articles 4,
5 and 6, and the Committee shall have no discretion as to such
matters; and
c) to delegate to Officers or managers of the Company the
authority to perform administrative functions under the Plan.
Any determinations or actions made or taken by the Committee
pursuant to this Article shall be binding and final.
<PAGE> 31
3. EFFECTIVE DATE AND TERM OF PLAN
The Plan shall be effective on September 14, 1993, the date on which
it was adopted by the Board, subject to subsequent approval by
shareholders of the Company holding not less than a majority of the
shares present and voting at a meeting of its shareholders (provided a
quorum is present). Unless earlier terminated by the Board, the Plan
shall terminate at such time that no further Common Stock is available
for grants under the Plan.
25
4. ELIGIBILITY
Each Director of the Company who is not then, and has not been at any
time during the previous year, an employee of the Company or any
parent or subsidiary of the Company shall be eligible to receive
Restricted Stock under the Plan. Notwithstanding the foregoing, no
Director who is serving on the Board as a result of a nomination or
appointment pursuant to the terms of any debt instrument, preferred
stock, underwriting agreement or other contract entered into by the
Company shall be eligible to participate in the Plan. No person other
than those specified in this Section 4 shall participate in the Plan.
5. GRANTS OF RESTRICTED STOCK
Each person who is an eligible Director of the Company immediately
following the Annual Shareholders' Meeting shall receive an annual
grant of 100 shares of Restricted Stock on the date of the Annual
Shareholders' Meeting.
6. TERMS OF RESTRICTED STOCK
Except as hereinafter provided, all Restricted Stock shall be subject
to the following terms and conditions:
(a) Rights and Restrictions. A participant granted
Restricted Stock shall be entitled to receive dividends on such
Restricted Stock when, as and if dividends are declared and paid
on Common Stock, such participant shall be entitled to vote
Restricted Stock on any matter submitted to a vote of holders of
Common Stock, and such participant shall have all other rights of
a shareholder of the Company except as otherwise expressly
provided under this Section 6. Until restrictions on Restricted
Stock expire in accordance with Section 6(b), a participant shall
have no right to sell, transfer, give, assign, pledge or
otherwise encumber or dispose of such Restricted Stock (except
for transfers and forfeitures to the Company). Restricted Stock
shall be granted under the Plan for no consideration other than
the services of the Director to be performed during the period
the restrictions set forth in this Section 6 (the "Restrictions")
are in effect.
<PAGE> 32
(b) Expiration of Restrictions. The Restrictions on a
Director's Restricted Stock shall lapse in 25% installments on
the anniversary date of each grant or shall lapse in total upon
the participant Director's retirement at age 70, the Director's
ceasing to serve due to death or disability, whichever first
occurs. In the event of a "Change of Control" of the Company as
that term is defined in the Company's 1991 Stock Incentive Plan,
all Restrictions on all outstanding Restricted Stock will lapse
and the Company will repurchase all such shares which were
awarded more than six months prior to the Change of Control at
the then fair market value.
(c) Forfeiture. A participant who ceases to serve the
Company as a Director shall, at the time he or she ceases to hold
office, forfeit any Restricted Stock as to which the Restrictions
have not theretofore expired, unless the participant ceases to
serve as a Director as a result of the death or following the
disability of the Director; for this purpose, "disability" shall
have the meaning as established in the Company's long-term
disability plan provided, however, that, if a participant ceases
to serve as a Director and immediately thereafter he or she
becomes employed by the Company or any subsidiary of the Company,
then, solely for purposes of the
26
Plan, such participant shall not be treated as having ceased
service as a Director, and employment by the Company or any
subsidiary of the Company shall be treated, for purposes of the
Plan, as if such employment were service as a Director (solely so
that Restrictions on such participant's Restricted Stock shall
continue in effect until lapsed in accordance with Section 6).
(d) Certificates for Shares of Restricted Stock. Restricted
Stock granted under the Plan to a Director shall be evidenced by
issuance of one or more certificates in the name of the Director,
bearing an appropriate legend referring to the terms, conditions
and Restrictions applicable to Restricted Stock, and shall remain
in the physical custody of the Secretary of the Company until
such time as the Restrictions on such shares have expired. In
addition, Restricted Stock shall be subject to such stop-transfer
orders and other Restrictions as the General Counsel of the
Company shall deem advisable under federal or state securities
laws, rules and regulations thereunder or the rules of any
national quotation system or any national securities exchange on
which Common Stock is quoted or listed, and the General Counsel
may cause a legend or legends to be placed on any such
certificates to make appropriate reference to such Restrictions.
<PAGE> 33
(e) Restricted Stock Agreement; Stock Powers. The Company
and each Director to whom Restricted Stock is granted hereunder
shall enter into a Restricted Stock Agreement in the form as the
Board may approve, to evidence the grant of Restricted Stock
hereunder. In addition, each Director to whom Restricted Stock
is granted shall execute one or more stock powers, in such form
as may be specified by the General Counsel, authorizing the
transfer of the Restricted Stock to the Company, in order to give
effect to the forfeiture provisions of Section 6(c).
7. ADJUSTMENT PROVISIONS
In the event of any recapitalization, reorganization, merger,
consolidation, spin-off, combination, repurchase, exchange of shares
or other securities of the Company, stock split or reverse split,
liquidation, dissolution or other similar corporate transaction or
event which affects Common Stock such that an adjustment is determined
by the Board to be appropriate in order to prevent dilution or
enlargement of participants' rights under the Plan, then the Board
shall, in such manner as it may deem equitable, (i) adjust any or all
of the number and kind of shares reserved under the Plan and the
number and kind of shares which may thereafter be issued to Directors
as Restricted Stock and (ii), if participants holding Restricted Stock
would not be affected by the event in substantially the same way as
other holders of Common Stock, adjust the number and kind of shares
outstanding as Restricted Stock.
8. AMENDMENT TO THE PLAN
The Board may amend, alter, suspend, discontinue, or terminate the
Plan at any time without the approval or consent of the Company
shareholders or Plan participant, provided that (i) without the
approval of the Company shareholders, no amendment, alteration,
suspension, discontinuation, or termination of the Plan shall be made
if shareholder approval is required by any federal or state law or
regulation, or any applicable listing requirement or rule of a
securities trading system or stock exchange on which the Common Stock
is then quoted or listed, or the Board in its discretion
27
determines that obtaining such shareholder approval is for any reason
advisable; (ii) without the consent of any affected Plan participant,
no amendment, alteration, suspension, discontinuation, or termination
of the Plan may impair the rights of such participant relating to any
Restricted Stock theretofore granted to him or her; and (iii) any Plan
provision that specifies the Directors who may receive Restricted
Stock, the amount of Restricted Stock, and the timing of grants to
Directors, or is otherwise a "plan provision" within the meaning of
Rule 16b-
<PAGE> 34
3(c)(2)(ii) under the Exchange Act (as initially adopted in SEC
Release No. 34-28869, February 8, 1991) or any successor provision
thereto, shall not be amended more than once every six months, other
than to comport with changes in the Internal Revenue Code of 1986, as
amended, the Employee Retirement Income Security Act of 1974, as
amended, or the rules thereunder.
9. GENERAL PROVISIONS
(a) Compliance with Securities Laws and NASDAQ Requirements. No
Restricted Stock shall be granted and no shares shall be distributed
in a transaction subject to the registration requirements of the
Securities Act of 1933, as amended, or any state securities law or
subject to any requirement of the National Association of Securities
Dealers, Inc. (the "NASD") as a condition to the quotation of the
shares on any national quotation system or under any listing agreement
between the Company and any national securities exchange, and no grant
of Restricted Stock will confer upon any participant rights to such
distribution, until such laws and other obligations of the Company
have been complied with in full.
(b) No Right to Continue as a Director. Nothing contained in the
Plan or any Restricted Stock Agreement shall confer upon any Director
any right to continue to serve as a Director of the Company.
(c) Governing Law. The validity, construction and effect of the
Plan and any Restricted Stock Agreement shall be determined in
accordance with the laws of the State of Delaware, without giving
effect to principles of conflicts of laws.
ATTENTION: Stockholders Participating in the Dividend Reinvestment Plan
The accompanying proxy card reflects the total shares of Common Stock
registered in your name directly, as well as any full shares credited to your
Dividend Reinvestment Plan account.
<PAGE> 35
(FORM OF PROXY - SIDE 1)
CNG CONSOLIDATED NATURAL GAS COMPANY
PROXY SOLICITED ON BEHALF OF
THE BOARD OF DIRECTORS OF THE COMPANY
FOR THE ANNUAL MEETING OF STOCKHOLDERS MAY 17, 1994.
P The undersigned hereby appoints G.A. Davidson, Jr., L.D. Johnson and
L. Wyse, and each or any of them, proxies with full power of substitution
R to vote the stock of the undersigned, as directed hereon, at the Annual
Meeting of Stockholders of CONSOLIDATED NATURAL GAS COMPANY to be held at
O the Hotel duPont, 11th and Market Streets, Wilmington, Delaware 19801 in
the Gold Ballroom, on Tuesday, May 17, 1994, at 2:00 p.m. (EDT), and at
X any adjournment thereof, and, in their discretion, on any other matters
that may properly come before the Meeting.
Y
(change of address)
ELECTION OF DIRECTORS, _______________________________________
Nominees: S.A. Minter and L. Wyse
_______________________________________
_______________________________________
_______________________________________
(If you have written in the above
space, please mark the corresponding
box on the reverse side of this card.)
PLEASE SPECIFY YOUR CHOICES BY MARKING THE APPROPRIATE BOXES, SEE REVERSE
SIDE. WHEN PROPERLY EXECUTED, THIS PROXY WILL BE VOTED IN ACCORDANCE WITH
YOUR INSTRUCTIONS, OR, IF YOU GIVE NO INSTRUCTIONS, THIS PROXY WILL BE
VOTED FOR ITEMS 1, 2 AND 3.
- - - - - - - -
/ SEE REVERSE /
/ SIDE /
- - - - - - - -
<PAGE> 36
(FORM OF PROXY - SIDE 2)
Please mark your SHARES IN YOUR NAME REINVESTMENT SHARES
/x/ votes as in this
example.
FOR WITHHELD FOR AGAINST ABSTAIN
1. Election of 2. Ratification
Directors / / / / of Price / / / / / /
(see reverse) Waterhouse
as indepen-
dent account-
ants.
For, except vote withheld
from the following nominee(s):
______________________________
FOR AGAINST ABSTAIN
3. Adoption of a
Restricted Stock / / / / / /
Plan for non-
employee Directors.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE
FOR ITEMS 1, 2 AND 3.
Change
of / /
Address
Attend
Meeting / /
(no ticket
required)
SIGNATURE(S) ______________________________________ DATE _______________
SIGNATURE(S) ______________________________________ DATE _______________
NOTE: Please sign exactly as name appears hereon. Joint owners should each
sign. When signing as attorney, executor, administrator, trustee or
guardian, please give full title as such. If signing on behalf of a
corporation, please sign the full corporate name by authorized officer.
<PAGE> 37
Appendix to
Consolidated Natural Gas Company
1994 Annual Meeting Proxy Statement and Form of Proxy
Pursuant to Rules 12b-37(d) and 499(d)(3)
Narrative Description of Graphic and Image Material
___________________________________________________
(1) Pages 5 through 9 of the circulated document contain a 1-1/4" x 1-5/8"
black and white photograph of each Director in the rectangular space to the
left of each section of text describing the Director's name, age, committee
membership, business experience and related matters.
(2) Page 17 of the circulated document contains a line graph presenting
shareholder return performance. A narrative description and graphic data
points are described in the body of the electronic filing.
EXHIBIT G.
CONSOLIDATED NATURAL GAS COMPANY
RELATIONSHIP OF EXEMPT WHOLESALE GENERATOR
TO OTHER SYSTEM COMPANIES
CONSOLIDATED
NATURAL
GAS COMPANY
|
|
|
(Wholly |
owned |
subsidiary) |
|
|
|
|
CNG ENERGY
COMPANY \
| \ (34% Limited
| \ Partnership
| \ Interest)
| \
(Wholly | \
owned | \
subsidiary) | LAKEWOOD COGENERATION, L.P.
| / *
| / *
| / * (Fuel
| / (1% General * Manager)
| / Partnership *
| / Interest) *
CNG / CNG GAS
LAKEWOOD, SERVICES
INC. CORPORATION
LAKEWOOD COGENERATION, L.P.
Financial Statements
***
December 31, 1993 and 1992
150 Airport Road 100 Clinton Square Square Suite
400
Lakewood, New Jersey 08701 Syracuse, New York
13202
(908) 901-7389 (315) 471-
2881
<PAGE>
One MONY Plaza Telephone (315) 474-6571
Syracuse, NY 13202
PRICE WATERHOUSE
REPORT OF INDEPENDENT ACCOUNTANTS
March 25, 1994
To the General Partners of
Lakewood Cogeneration, L.P.
In our opinion, the accompanying balance sheets presents fairly, in all
material respects, the financial position of Lakewood Cogeneration, L.P. at
December 31, 1993 and 1992 in conformity with generally accepted accounting
principles. These financial statements are the responsibility of the
Partnership's management; our responsibility is to express an opinion on these
financial statements based on our audits. We conducted our audits of these
statements in accordance with generally accepted auditing standards which
require that we plan and perform the audits to obtain reasonable assurance
about whether the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for the opinion expressed above.
Price Waterhouse
<PAGE>
LAKEWOOD COGENERATION, L.P.
BALANCE SHEETS
Assets December 31,
1993
1992*
Cash and cash equivalents $ 287,769 $
58,668
Accounts receivable 2,829,171
2,666,090
Prepaid expenses 43,159
19,243
Equipment 61,532 -
Construction work in process 153,297,927
31,409,303
Deferred costs 8,571,394
8,444,556
Land 6,405,485
5,353,647
____________
____________
Total assets $171,496,437 $
47,951,507
============
============
Liabilities and Partners' Equity
Accounts payable and accrued liabilities $ 17,175,152 $
5,500,901
Accounts payable to affiliates (Note 2) 476,404
19,025
Accrued interest 44,973
9,510
Retainage payable (Note 4) 12,019,005
911,400
Construction loan (Note 3) 141,780,903
41,510,671
____________
____________
Total liabilities 171,496,437
47,951,507
____________
____________
Partners' equity
Commitments and contingencies (Note 4) ____________
____________
Total liabilities and partners' equity $171,496,437 $
47,951,507
============
============
* - Certain amounts have been reclassified to conform with the current year
presentation.
The accompanying notes are an integral part
of this financial statement
<PAGE>
LAKEWOOD COGENERATION, L.P.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1993 AND 1992
Note 1 - Organization and Significant Accounting Policies
Organization - Lakewood Cogeneration, L.P. ("Lakewood" or the "Partnership")
is a Delaware limited partnership restructured in November 1992 with HCE -
Lakewood, Inc ("HCE") and CNG Lakewood, Inc. ("CNG") as the general partners.
The limited partners are HYDRA-CO Enterprises, Inc. ("HYDRA-CO"), CNG Energy
Company ("CNG Energy") and TPC Lakewood, Inc. ("TPC"). HYDRA-CO is a wholly-
owned subsidiary of Niagara Mohawk Power Corporation. CNG Energy is a wholly
owned subsidiary of Consolidated Natural Gas Company ("CNGC"). The
Partnership was formed to own, develop, construct and operate a 237 MW natural
gas-fired cogeneration power production facility located in Lakewood, New
Jersey ("the Facility"). The principal activities of the Partnership during
1993 and 1992 were development, engineering, procurement and construction.
Financial Closing for the Partnership occurred on November 10, 1992. The
Partnership Agreement expires in 2050.
Capital contributions - On or before the Conversion Date (Note 3), the
Partners shall make the following cash equity contributions: HCE - $510,000,
CNG -$510,000, HYDRA-CO - $22,440,000, CNG Energy - $17,340,000 and TPC -
$10,200,000. There are also provisions for certain additional contributions
or distributions to the extent of construction cost overruns or underruns,
respectively. Cash contributions from CNG and CNG Energy are backed by a
Guaranty dated November 3, 1992 from CNGC. HCE, HYDRA-CO and TPC cash
contributions are backed by letters of credit ("Equity Contribution Letters of
Credit").
On the financial closing date, CNG Energy was required to contribute to the
Partnership all Facility related contracts, permits, studies and designs
created, acquired or developed by CNG Energy which have been assigned a
contribution value of $12,000,000 in the Partnership Agreement. These items
were assigned a zero value in the accompanying financial statements.
Allocations - Income and losses are to be allocated 1 percent to HCE, 1
percent to CNG, 44 percent to HYDRA-CO, 34 percent to CNG Energy and 20
percent to TPC.
Net cash flow shall be distributed at least semi-annually, if available, and
allocated among the partners in the same manner as income and losses except as
noted below for return of capital payments to CNG Energy.
In accordance with the Partnership Agreement, the Partnership made a
distribution to CNG Energy of $4,813,000 upon the financial closing date,
which for tax purposes is a return of capital. This amount was intended to
partially compensate CNG Energy for the Facility related documents which it
contributed to the Partnership (see Capital contributions above) and was
accounted for as an addition to construction work in process on the balance
sheet. The Partnership will make additional returns of capital to CNG Energy
pursuant to the allocation of available construction cost underruns (See Note
4). To the extent CNG Energy has not received the $12,000,000 value assigned
to the Facility related documents which it contributed as of the Conversion
Date, it shall receive distributions for five years following Substantial
Completion, as defined, equal to one-third of the excess of net cash flow
attributable for such years over a projected net cash flow for such year.
These amounts will be paid after distributions of available projected net cash
flow but before any other distributions to the
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Partners, and will terminate earlier upon the cumulative receipt by CNG Energy
of $12,000,000.
Fair Value of Financial Instruments - All financial instruments recorded by
the Partnership are estimated to approximate fair market value.
Plant and equipment - Plant and equipment, reflected as construction work in
progress in the accompanying balance sheets, are stated at cost which includes
all direct, and applicable indirect, construction, development and financing
costs.
Interest capitalization - Interest costs incurred during construction are
being capitalized as a part of construction work in process. Interest
capitalized is based on the interest costs incurred on the specific borrowings
for the construction project, reduced by the interest earned from the
investment of the unexpended portion of such borrowings. Interest costs
incurred and capitalized through December 31, 1993 and 1992 totaled
approximately $5,225,000 and $513,000, respectively, and were offset by
interest earned of $56,000 and $1,500, respectively, on unexpended debt
proceeds.
Income taxes - No provision has been made for income taxes in the accompanying
balance sheet as such taxes are payable by the individual partners.
Deferred charges - Costs associated with the formation of the Partnership
aggregating approximately $4,482,000 and $4,378,000 at December 31, 1993 and
1992, respectively, have been deferred and will be amortized using the
straight-line method over a five-year period commencing with the commercial
operation of the Facility.
Costs related to obtaining the thermal sales and steam services agreements in
the amount of $539,000 and $501,000 at December 31, 1993 and 1992,
respectively, have been deferred and will be amortized using the straight-line
method over the 20 year term of the Thermal Sales and Steam Service
Agreements.
Cost incurred in negotiating and securing the construction and term financing
amounting to $3,826,000 and $3,594,000 at December 31, 1993 and 1992,
respectively, have been deferred and are being amortized using the straight-
line method over the term of the related debt. Amortization of such costs
amounted to approximately $247,000 and $29,000 in 1993 and 1992, respectively,
and have been capitalized as a component of construction work in process.
Note 2 - Related Party Transactions
CNG Energy was reimbursed $28,000 and $7,004,000 in 1993 and 1992
respectively, for direct costs incurred on behalf of the Partnership. The
1992 reimbursement includes the $4,813,000 distribution discussed in Note 1.
The Partnership has entered into a Project Management Services Agreement with
Lakewood Project Management, Inc. ("LPMI"), a wholly-owned subsidiary of HYDRA-
CO for an aggregate sum of $2,765,000 which expires at the end of the Warranty
Period, as defined. Total project management fees charged by LPMI for project
management services in 1993 and 1992 were $1,200,000 and $100,000,
respectively, and are included as a component of construction work in process.
LPMI was also reimbursed $70,000 for direct costs incurred on behalf of the
Partnership in 1993.
2
<PAGE>
The Partnership has entered into an Administrative Services Agreement with
HYDRA-CO which expires in November 2012 and may be renewed annually upon
mutual agreement. Total administrative fees earned by HYDRA-CO in 1993 and
1992 were $125,000 and $21,000, respectively, and are included as a component
of construction work in process. HYDRA-CO was also reimbursed $64,000 and
$10,605,000 in 1993 and 1992, respectively, for direct costs incurred on
behalf of the Partnership.
The Partnership has entered into an Operation and Maintenance Agreement with
HYDRA-CO Operations, Inc. ("HCO"), a wholly-owned subsidiary of HYDRA-CO which
expires on the twenty-first anniversary of the commercial operation date and
may be renewed annually thereafter. Under the terms of the agreement, HCO is
to be reimbursed for all direct costs incurred and receive an overhead fee of
$200,000 and a base fee of $60 per hour multiplied by the number of actual
dispatch hours, as defined. HCO can also earn a bonus if certain performance
factors are achieved. HCO was reimbursed $423,000 in 1993 for direct costs
incurred on behalf of the Partnership.
The Partnership has entered into a Fuel Management Agreement with CNG Trading
Company, a wholly-owned subsidiary of CNG Energy, to develop and administer a
comprehensive fuel supply and transportation procedure. The term of the
agreement shall be the earlier of 5 years from the substantial completion date
or December 31, 2001 and will be automatically renewed for additional one-year
terms unless terminated by either party. CNG Trading was reimbursed $22,000
in 1993 for direct costs incurred on behalf of the Partnership.
Under the terms of the Partnership Agreement, HCE is entitled to a treasury
fee of up to $400,000 per year if certain interest cost savings, as defined,
are realized by the Partnership.
Note 3 - Construction and Term Financing
The Partnership has obtained construction and term loan financing from two
sources. They are a group of banks (the "Bank Lenders") and John Hancock
Mutual Life Insurance Company ("Hancock"). Mellon Bank, N.A. ("Mellon") is
acting as the administrative agent for all lenders.
The Bank Lenders have agreed to make available Tranche A Bank Loans in the
amount of $136,000,000. As of December 31, 1993, $87,595,000 of this loan
commitment has been borrowed. Upon the Conversion Date, as defined, the
Tranche A Bank Loans will convert into the Continuing Bank Term Loans ("Term
Loans"). The Term Loans will be repaid in semi-annual installments over a
fourteen-year period commencing June 30, 1995. Principal amounts due on the
Term Loans for each of the five years succeeding December 31, 1993 are as
follows: $0, $3,400,000, $4,080,000, $4,760,000 and $6,120,000.
The Bank Lenders will also make available Tranche B Bank Loans in the amount
of $51,000,000. No Tranche B Bank Loans can be made available until there has
been a full commitment of Tranche A Bank Loans; no Tranche B Bank Loans were
made in 1993 or 1992. The Tranche B Bank Loans will be repaid with the cash
equity contributions to be made by the Partners on Conversion Date (Note 1).
The Partnership pays an unused commitment fee of 0.375 percent on the
aggregate unused portion of the Tranche A and Tranche B Bank Loans. This fee
totalled
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<PAGE>
$511,000 and $88,000 in 1993 and 1992, respectively, and has been capitalized
as a part of construction work in process.
In addition, the Bank Lenders will make available on or after the Conversion
Date a Working Capital Loan of $2,000,000. The Partnership pays a standby fee
of 0.125 percent on any unused portion of the Working Capital Loan up to the
conversion date. This fee totalled $2,500 in 1993 and has been capitalized as
a part of construction work in process. Commencing on the Conversion Date,
the Partnership will pay an unused commitment fee of 0.375 percent on the
average daily unused portion of the Working Capital Loan. This loan
commitment will terminate on the fifth anniversary of the Conversion Date or
earlier under certain default conditions. The Partnership may request one
year extensions through the final maturity date of the Term Loans.
Hancock has agreed to make available Institutional Loans of $75,000,000. As
of December 31, 1993, $54,000,000 of this loan commitment has been borrowed.
The Institutional Loans will be repaid in semi-annual installments over an
eighteen and one-half year period commencing June 30, 1995. Principal amounts
due on the Institutional Loans for each of the five years succeeding December
31, 1993 are as follows: $0, $375,000, $750,000, $750,000 and $750,000.
The Partnership has three interest rate options on the Bank Loans; a Base Rate
option, a CD Rate option and a LIBOR Rate option. Each of these rates is
equivalent to the corresponding Mellon Bank interest rate option plus a credit
spread which varies depending upon the type of Bank Loan, the interest rate
option chosen and the timing of the loan. In December 1993, the Partnership
entered into a forward interest rate swap with Mellon Bank, N.A. and ABN-AMRO
Bank, N.V. in an aggregate notional amount of $125,000,000. The effective
date of the swap is January 3, 1995 for a duration of fourteen years under
which the Partnership pays interest on the notional amount at a fixed rate of
6.68 percent and receives interest at the LIBOR Rate. The effect of this
agreement is to fix the Partnership's interest at 7.93 percent for the first
five years of the agreement, 8.18 percent for the next five year and 8.43
percent for the last four years. The Institutional Loans will bear interest
at a rate equal to the yields of actively traded "On The Run" United States
Treasury securities plus a credit spread. The maturity of such securities and
the credit spread will vary depending upon the timing of the loan. The
weighted average interest rate during 1993 and 1992 was 5.4 percent and 5.7
percent, respectively.
The Partnership paid Mellon a closing fee of $2,129,000 in 1992, which was
allocated on a percentage basis to the various Bank Lenders. An advisory fee
of $104,000 was also paid to both Mellon and Westpac Banking Corporation.
These fees were recorded as deferred charges on the balance sheet.
The Partnership has agreed to pay an Administrative Agent's Fee to Mellon.
This fee is equal to $100,000 per year for the period from financial closing
through the six months anniversary of the Conversion Date and $75,000 per year
thereafter. Fees paid in 1993 and 1992 totaled $100,000 and $50,000,
respectively, and have been capitalized as a component of construction work in
process.
Note 4 - Commitments and Continqencies
The Partnership has entered into an Amended and Restated Performance
Construction Contract with CRS Sirrine Engineers, Inc. ("CRSS") for a total
contract price of
4
<PAGE>
$151,900,000. In accordance with the contract, the Partnership will withhold
10% of the amounts payable to CRSS as retainage until Substantial Completion,
as defined, is achieved. As of December 31, 1993 and December 31, 1992, the
balance of retainage withheld was $11,995,000 and $911,000, respectively.
The agreement calls for the Facility to be substantially complete by September
1, 1994 at which time certain performance tests are required to be met. The
agreement provides for CRSS to pay certain liquidation damages to the extent
that these performance tests or certain other milestones, after the
substantial completion date are not met. In addition, CRSS is entitled to
certain bonus payments if the substantial completion date is achieved before
September 1, 1994.
CRSS has advised the Partnership of potential difficulties of meeting
applicable limits in the state and federal air pollution control permits
previously issued by the New Jersey Department of Environmental Protection and
Energy ("DEPE") for the facility. At this time, the Partnership and CRSS are
seeking clarification of certain provisions in the permits; management does
not believe that the resolution of this matter will have a material impact on
the financial position or results of operations of the Partnership.
The Partnership has entered into a Power Purchase Agreement with Jersey
Central Power & Light Company ("JCP&L"). JCP&L will purchase the contract
capacity, as defined, at specified rates under a dispatchable arrangement.
Pursuant to the agreement, the Partnership paid JCP&L liquidated damages of
$2,000,000 during 1992 since the Full Delivery Date, as defined, was not
achieved by April 30, 1992. Such amount is included as a component of
construction work in process on the balance sheet. If the Full Delivery Date
is not achieved by November 30, 1994 a daily deficiency payment, as defined,
shall be paid to JCP&L for each day thereafter until the Initial Delivery Date
is achieved. The agreement expires 20 years from the Full Delivery Date and
may be extended for successive periods of 5 years.
Pursuant to a Capacity Reservation Precedent Agreement with New Jersey Natural
Gas Company ("NJNG"), a Consent and Agreement dated July 17, 1991 and a Letter
Agreement dated June 29, 1992, NJNG has agreed to construct natural gas
pipelines to interconnect two interstate pipeline systems with the Facility
and sell the assets to the Partnership for $6,850,000 which was paid at
financial closing and is included as a component of construction work in
process on the balance sheet. Commencing on April 1, 1994, the Partnership
will pay an annual charge of $2,614,000 for the reservation of transportation
capacity. This agreement expires in April 2014 and provides for early
termination payments to NJNG under certain circumstances. NJNG has the right
to repurchase the assets at the termination of the agreement.
In July 1993, to remove regulatory risk and ownership restrictions of being a
Qualifying Facility (QF") and to improve the overall project economics, the
Partnership filed with the Federal Energy Regulatory Commission ("FERC") for
Exempt Wholesale Generator ("EWG") status. In September 1993, the EWG
application was approved. In connection with the EWG filing, a required rate
filing was also made with FERC for approval of the rates under the existing
power contract with JCP&L. In July 1993, the rate application was approved.
By obtaining EWG status, the Partnership is exempt from PURPA Qualifying
Facility regulations which require minimum amount of steam sales; the
Partnership only needs to sell steam in an amount to qualify as a cogeneration
facility under its
5
<PAGE>
permit requirements. In February 1994, the Partnership agreed to the
termination of the Steam Services Agreement previously entered into with
Kimball Medical Center under which the Partnership was to provide thermal
energy to Kimball at specified rates. In lieu of providing steam, the
Partnership will fund $950,000 for the purchase and installation of two steam
absorption chillers and a steam line for Kimball.
As a result of obtaining EWG status, the Partnership intends to exercise its
rights to terminate certain agreements with American Eagle Distillation
Company ("AEDC") which provided for the Partnership to construct and maintain
a water distillation facility on behalf of AEDC and for AEDC to purchase
certain minimum amounts of thermal energy from the Partnership.
Pursuant to an Agreement of Grant and Reservation with the Lakewood Township
Municipal Utilities Authority ("LTMUA") as amended by First and Second
Amendments dated August 20, 1991 and July 21, 1992, respectively, the
Partnership has agreed to construct certain Water Facilities ("the Water
Facilities"), is required to maintain the Water Facilities and will transfer
title of the Water Facilities and the real property acquired in connection
with the Water Facilities to LTMUA upon completion. In addition, the
Partnership has agreed to make non-refundable contributions to LTMUA toward
the construction, permitting and operation of wells needed to provide water to
the Facility. LTMUA was paid $791,000 and $435,000 in 1993 and 1992,
respectively, which is included as components of construction work in process
in the balance sheets.
The Partnership has entered into a Water Service Agreement with Arrowhead
Industrial Water, Inc. ("Arrowhead") under which Arrowhead will design,
install, operate and own a water purification system. The Partnership will
pay monthly service charges to Arrowhead, as defined in the agreement. The
term of the agreement shall be 20 years and may be renewed for a period not to
exceed 5 years.
Airport Associates ("Airport") and the Industrial Commission of the Township
of Lakewood ("LIC") entered into a contract for the sale by LIC to Airport of
certain lands ("LIC Contract"). The Partnership and Airport entered into
certain agreements ("Bennett Contracts") providing for the sale by Airport to
the Partnership of the LIC Tracts (except the Bennett Tract), land previously
owned by Airport and easement rights in other lands owned by Airport for an
aggregate purchase price of $3,300,000, of which $1,000,000 was paid in 1993
and $2,300,000 was paid during 1992. The Partnership loaned $560,000 to
Airport to finance the purchase of the Bennett Tract in exchange for a
promissory note secured by a mortgage and Security Agreement on the Bennett
Tract. The promissory note provides for annual amortization payments of
$150,000 over a four year term beginning on October 15, 1992.
The Partnership entered into a Environmental Preservation Trust Fund Agreement
with the Township of Lakewood ("Township"). On the financial closing date,
the Partnership paid the Township $2,000,000 which was used to create an
Environmental Preservation Trust Fund ("the Fund") in order to provide an
independent form of financial security to the Township to insure that the
Partnership will promptly respond to cure any environmental impact events, as
defined. The Township shall have the right to receive all interest derived
from the Fund. The term of the Fund will expire 20 years after the date the
certificate of occupancy has been issued for the Facility. Assuming no
environmental impact event has occurred, the $2,000,000 will be returned to
the
6
<PAGE>
Partnership at the expiration of the term. This amount has been reflected as
a receivable from the Town of Lakewood in the balance sheet.
The Partnership has entered into a Host Benefits Agreement with the Township
to make minimum annual payments in the amount of $600,000 or the actual amount
of real estate taxes assessed on the facility, whichever is greater. The
amount will be payable in quarterly installments and will commence upon the
issuance of a certificate of occupancy, as defined, for the site.
In June 1993, the Ocean County Prosecutor in Toms River, New Jersey commenced
an investigation into certain activities surrounding the development of the
facility. At this time, no charges have been filed against any entity or
person and the Partnership is aggressively responding to the investigation.
Management does not expect that the resolution of this matter will have a
material impact on the financial position or results of operations of the
Partnership.
7
