UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-Q
QUARTERLY REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
FOR THE QUARTER ENDED
SEPTEMBER 30, 1995
Commission File Number 1-3196
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CONSOLIDATED NATURAL GAS COMPANY
A Delaware Corporation
CNG Tower, 625 Liberty Avenue, Pittsburgh, PA 15222-3199
Telephone (412) 227-1000
IRS Employer Identification Number 13-0596475
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Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months and (2) has been subject to such filing
requirements for the past 90 days. Yes____X____ No_________
Number of shares of Common Stock, $2.75 Par Value, outstanding at October 31,
1995: 93,374,775
<PAGE>
CONSOLIDATED NATURAL GAS COMPANY
FORM 10-Q QUARTERLY REPORT
For the Quarter Ended September 30, 1995
TABLE OF CONTENTS
PART I - FINANCIAL INFORMATION Page
ITEM 1. FINANCIAL STATEMENTS
CONSOLIDATED STATEMENT OF INCOME (Unaudited)
for the Three and Nine Months Ended September 30, 1995 and 1994. . 1
CONDENSED CONSOLIDATED BALANCE SHEET
at September 30, 1995 (Unaudited), and December 31, 1994 . . . . . 2
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited)
for the Nine Months Ended September 30, 1995 and 1994. . . . . . . 3
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS . . . . . . . . . . . . 4
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS. . . . . . . . . . . . . 7
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS. . . . . . . . . . . . . . . . . . . . . . 15
ITEM 2. CHANGES IN SECURITIES. . . . . . . . . . . . . . . . . . . . 15
ITEM 3. DEFAULTS UPON SENIOR SECURITIES. . . . . . . . . . . . . . . 15
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. . . . . 15
ITEM 5. OTHER INFORMATION. . . . . . . . . . . . . . . . . . . . . . 15
ITEM 6. EXHIBITS, AND REPORTS ON FORM 8-K. . . . . . . . . . . . . . 15
SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
<PAGE>
PART I -- FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Consolidated Natural Gas Company and Subsidiaries
CONSOLIDATED STATEMENT OF INCOME
(Unaudited) (Thousands of Dollars)
<TABLE>
<CAPTION>
________________________________________________________________________________
____________________________
Nine Months to
Three Months to
September 30
September 30
________________________ ____________________
1995
1994* 1995 1994*
_____________________________________________________________________________________
_______________________
<S> <C> <C>
<C> <C>
OPERATING REVENUES
Regulated gas sales . . . . . . . . . . . . . . . . $1,087,117
$1,226,950 $133,809 $147,586
Nonregulated gas sales . . . . . . . . . . . . . . . 780,940
552,923 221,563 164,860
__________
__________ ________ ________
Total gas sales . . . . . . . . . . . . . . . . 1,868,057
1,779,873 355,372 312,446
Gas transportation and storage . . . . . . . . . . . 325,364
294,953 98,057 90,998
Other . . . . . . . . . . . . . . . . . . . . . . . 178,330
172,607 61,713 48,385
__________
__________ ________ ________
Total operating revenues (Note 3). . . . . . . . 2,371,751
2,247,433 515,142 451,829
__________
__________ ________ ________
OPERATING EXPENSES
Purchased gas. . . . . . . . . . . . . . . . . . . . 1,182,205
1,075,457 219,567 192,097
Transport capacity and other purchased products . . 111,953
76,749 39,162 13,965
Operation expense (Note 5) . . . . . . . . . . . . . 465,450
449,529 131,849 134,341
Maintenance. . . . . . . . . . . . . . . . . . . . . 61,934
63,724 20,405 22,558
Depreciation and amortization. . . . . . . . . . . . 188,975
214,664 59,536 62,180
Impairment of gas and oil producing
properties (Note 4) . . . . . . . . . . . . . . . 226,209
- - - - -
Taxes, other than income taxes . . . . . . . . . . . 145,988
145,720 42,667 44,678
__________
__________ ________ ________
Subtotal . . . . . . . . . . . . . . . . . . . . 2,382,714
2,025,843 513,186 469,819
__________
__________ ________ ________
Operating income before income taxes . . . . . . (10,963)
221,590 1,956 (17,990)
Income taxes . . . . . . . . . . . . . . . . . . . . (41,648)
55,065 (8,575) (11,942)
__________
__________ ________ ________
Operating income . . . . . . . . . . . . . . . . 30,685
166,525 10,531 (6,048)
__________
__________ ________ ________
OTHER INCOME (DEDUCTIONS)
Interest revenues. . . . . . . . . . . . . . . . . . 7,577
3,184 1,994 857
Write-down of coal properties (Note 5) . . . . . . . (31,266)
- - - - -
Other-net . . . . . . . . . . . . . . . . . . . . . 4,761
3,076 1,846 1,117
__________
__________ ________ ________
Total other income (deductions). . . . . . . . . (18,928)
6,260 3,840 1,974
__________
__________ ________ ________
Income before interest charges . . . . . . . . . 11,757
172,785 14,371 (4,074)
__________
__________ ________ ________
INTEREST CHARGES
Interest on long-term debt . . . . . . . . . . . . . 71,030
66,692 24,797 22,095
Other interest expense . . . . . . . . . . . . . . . 10,993
3,391 2,407 561
Allowance for funds used during construction . . . . (4,143)
(6,728) (1,618) (2,173)
__________
__________ ________ ________
Total interest charges . . . . . . . . . . . . . 77,880
63,355 25,586 20,483
__________
__________ ________ ________
NET INCOME (LOSS) . . . . . . . . . . . . . . . . . $ (66,123) $
109,430 $(11,215) $(24,557)
==========
========== ======== ========
Earnings (loss) per share of common stock,
based on average shares outstanding . . . . . . $ (.71) $
1.18 $ (.12) $ (.26)
Average common shares outstanding
(thousands). . . . . . . . . . . . . . . . . . . 93,180
92,991 93,312 93,017
Dividends declared per common share. . . . . . . . $1.455
$1.455 $ .485 $ .485
_____________________________________________________________________________________
_______________________
<FN>
*Certain amounts reclassified for comparative purposes.
The Notes to Consolidated Financial Statements are an integral part of this
statement.
</TABLE>
1
<PAGE>
ITEM 1. FINANCIAL STATEMENTS (Continued)
Consolidated Natural Gas Company and Subsidiaries
CONDENSED CONSOLIDATED BALANCE SHEET
(Thousands of Dollars)
_____________________________________________________________________________
At September At December
30, 1995 31, 1994
(Unaudited)
_____________________________________________________________________________
ASSETS
PROPERTY, PLANT AND EQUIPMENT
Gas utility and other plant...................... $ 4,690,094 $ 4,546,753
Accumulated depreciation and amortization........ (1,773,805) (1,686,788)
___________ ___________
Net gas utility and other plant............. 2,916,289 2,859,965
___________ ___________
Exploration and production properties............ 3,207,038 3,130,203
Accumulated depreciation and amortization........ (2,228,714) (1,963,522)
___________ ___________
Net exploration and production properties... 978,324 1,166,681
___________ ___________
Net property, plant and equipment........... 3,894,613 4,026,646
___________ ___________
CURRENT ASSETS
Cash and temporary cash investments.............. 26,444 31,923
Accounts receivable, less allowance for
doubtful accounts.............................. 360,284 546,291
Gas stored - current portion (LIFO method)....... 185,625 190,196
Materials and supplies (average cost method)..... 38,309 35,072
Unrecovered gas costs............................ - 13,135
Deferred income taxes - current.................. 81,552 60,103
Prepayments and other current assets............. 159,170 188,019
___________ ___________
Total current assets........................ 851,384 1,064,739
___________ ___________
REGULATORY AND OTHER ASSETS
Unamortized abandoned facilities................. 31,743 40,955
Other investments................................ 64,352 54,682
Deferred charges and other assets (Notes 3 and 5) 342,796 331,651
___________ ___________
Total regulatory and other assets........... 438,891 427,288
___________ ___________
Total assets................................ $ 5,184,888 $ 5,518,673
=========== ===========
STOCKHOLDERS' EQUITY AND LIABILITIES
CAPITALIZATION
Common stockholders' equity (Notes 6 and 7)
Common stock, par $2.75
(Issued: 1995 - 93,366,470 shares;
1994 - 93,027,847 shares).................... $ 256,758 $ 255,827
Capital in excess of par value................. 470,822 458,628
Retained earnings.............................. 1,268,096 1,469,879
___________ ___________
Total common stockholders' equity........... 1,995,676 2,184,334
Long-term debt (Note 8).......................... 1,297,756 1,151,973
___________ ___________
Total capitalization........................ 3,293,432 3,336,307
___________ ___________
CURRENT LIABILITIES
Current maturities on long-term debt............. 4,000 4,000
Commercial paper................................. 139,000 440,000
Accounts payable................................. 323,806 357,611
Estimated rate contingencies and
refunds (Note 3)............................... 130,720 83,404
Amounts payable to customers..................... 103,761 96,140
Taxes accrued.................................... 84,060 94,413
Other current liabilities........................ 150,865 135,180
___________ ___________
Total current liabilities................... 936,212 1,210,748
___________ ___________
DEFERRED CREDITS
Deferred income taxes............................ 669,221 758,633
Accumulated deferred investment tax credits...... 31,585 33,229
Deferred credits and other liabilities........... 254,438 179,756
___________ ___________
Total deferred credits...................... 955,244 971,618
___________ ___________
COMMITMENTS AND CONTINGENCIES
___________ ___________
Total stockholders' equity and liabilities.. $ 5,184,888 $ 5,518,673
=========== ===========
_____________________________________________________________________________
The Notes to Consolidated Financial Statements are an integral part of this
statement.
2
<PAGE>
ITEM 1. FINANCIAL STATEMENTS (Continued)
Consolidated Natural Gas Company and Subsidiaries
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited) (Thousands of Dollars)
_____________________________________________________________________________
Nine Months to September 30
_____________________
1995 1994
_____________________________________________________________________________
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss)................................... $ (66,123) $ 109,430
Adjustments to reconcile net income (loss) to net
cash provided by operating activities
Depreciation and amortization................... 188,975 214,664
Impairment of gas and oil producing
properties.................................... 226,209 -
Write-down of coal properties................... 31,266 -
Deferred income taxes-net....................... (114,367) (60,633)
Changes in current assets and
current liabilities
Accounts receivable-net....................... 177,394 325,252
Inventories................................... 1,334 (67,778)
Unrecovered gas costs......................... 13,135 8,400
Accounts payable.............................. (29,081) (88,962)
Estimated rate contingencies and refunds...... 47,316 23,385
Amounts payable to customers.................. 7,621 62,284
Taxes accrued................................. (10,353) (28,703)
Other-net..................................... 45,663 32,926
Changes in other assets and
other liabilities............................. 55,095 49,376
Other-net....................................... 2,276 115
_________ _________
Net cash provided by operating activities... 576,360 579,756
_________ _________
CASH FLOWS USED IN INVESTING ACTIVITIES
Plant construction and other property additions..... (311,042) (270,053)
Proceeds from dispositions of property, plant
and equipment-net................................. 12,489 683
Cost of other investments-net....................... (4,761) (2,296)
_________ _________
Net cash used in investing activities....... (303,314) (271,666)
_________ _________
CASH FLOWS PROVIDED BY (OR USED IN) FINANCING ACTIVITIES
Issuance of common stock............................ 11,887 240
Issuance of debentures.............................. 148,899 -
Unsecured loan repayment............................ (4,000) -
Commercial paper repayments-net..................... (299,805) (176,872)
Dividends paid...................................... (135,496) (135,298)
Other-net........................................... (10) (1)
_________ _________
Net cash used in financing activities....... (278,525) (311,931)
_________ _________
Net decrease in cash and temporary
cash investments.......................... (5,479) (3,841)
CASH AND TEMPORARY CASH INVESTMENTS AT JANUARY 1.... 31,923 27,122
_________ _________
CASH AND TEMPORARY CASH INVESTMENTS AT SEPTEMBER 30. $ 26,444 $ 23,281
========= =========
SUPPLEMENTAL CASH FLOW INFORMATION
Cash paid for
Interest (net of amounts capitalized)............. $ 60,320 $ 53,984
Income taxes (net of refunds)..................... $ 58,501 $ 117,914
Non-cash financing activities
Conversion of 7 1/4% Convertible
Subordinated Debentures......................... $ - $ 3,795
_____________________________________________________________________________
The Notes to Consolidated Financial Statements are an integral part of this
statement.
3
<PAGE>
ITEM 1. FINANCIAL STATEMENTS (Continued)
Consolidated Natural Gas Company and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(1) With the exception of the Condensed Consolidated Balance Sheet at December
31, 1994, which is derived from the Consolidated Balance Sheet at that date
which was included in the Annual Report to the Securities and Exchange
Commission (SEC) on Form 10-K for 1994 (1994 Form 10-K), the consolidated
financial statements appearing on pages 1 through 3 are unaudited. In the
opinion of management, the information furnished reflects all adjustments
necessary to a fair statement of the results for the interim periods
presented.
(2) 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. Because of
low seasonal demand for gas during the summer months, 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 past cost increases.
(3) Certain increases in prices by subsidiaries and other rate-making issues
are subject to final modification in regulatory proceedings. The related
accumulated provisions pertaining to these matters were $52,210,000 and
$106,991,000 at December 31, 1994, and September 30, 1995, including interest.
These amounts are reported in the Condensed Consolidated Balance Sheet under
"Estimated rate contingencies and refunds" together with $31,194,000 and
$23,729,000, respectively, which are primarily refunds received from suppliers
and refundable to customers under regulatory procedures.
The Company's distribution subsidiaries have incurred or are expected to
incur obligations to upstream pipeline companies, including CNG Transmission
Corporation (CNG Transmission, a subsidiary), for transition costs under
Federal Energy Regulatory Commission (FERC) Order 636. The estimated
liability for such costs was $69,451,000 and $44,365,000 at December 31, 1994,
and September 30, 1995, respectively. Additional amounts are likely to be
accrued in the future once the pipeline companies receive final FERC approval
to recover their remaining transition costs. Based on management's current
estimates, the distribution subsidiaries' portion of such additional costs
could be in the range of $35 million.
Based on regulatory actions in two jurisdictions and the past rate-making
treatment of similar costs in the other jurisdictions, management believes
that the distribution subsidiaries should generally be able to pass through
all Order 636 transition costs to their customers.
(4) As described in the 1994 Form 10-K, Consolidated follows the full cost
method of accounting for its gas and oil producing activities prescribed by
the SEC. Under this method, all costs directly associated with property
acquisition, exploration and development activities are capitalized, with the
limitation that such amounts, net of related deferred taxes, not exceed the
present value of the estimated future net revenues expected from the
production of the related proved gas and oil reserves. The estimate of future
revenues is determined under guidelines established by the SEC and is not
necessarily indicative of the future economic value of the Company's proved
reserves. However, if net capitalized costs exceed the estimated value at the
end of any quarterly period, then a permanent write-down of the assets must be
recognized in that period.
Due primarily to the decline in wellhead gas prices, the Company was
required to recognize an impairment of its gas and oil producing properties at
March 31, 1995. The charge amounted to $226,209,000 and reduced 1995 first
quarter net income by $145,000,000, or $1.56 per share. The charge had no
effect on the Company's cash flow.
4
<PAGE>
ITEM 1. FINANCIAL STATEMENTS (Continued)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(5) As described in the 1994 Form 10-K, the Company has been considering a
variety of cost cutting and restructuring measures to permanently reduce costs
in light of current competitive conditions. In this regard, the Company
recognized charges in the 1995 second and third quarters in connection with
previously announced workforce reductions and in the 1995 second quarter for
the write-down of the carrying value of its coal properties.
Workforce Reductions
As previously reported, the workforce reduction program approved in March
1995 by the Company's Board of Directors included a voluntary early retirement
program and an involuntary separation program. The early retirement program
was offered at six of the Company's subsidiaries from April 1 through May 31,
1995, with eligible employees retiring before December 31, 1995. In June
1995, the Board of Directors approved a separate workforce reduction program
at a seventh subsidiary that included voluntary early retirement incentives
similar to those offered at the other six subsidiaries. The early retirement
program was offered at the seventh subsidiary from July 1 through August 31,
1995. Eligible employees under this program will also retire before December
31, 1995.
A total of 571 eligible employees elected to accept the early retirement
offer. Thus far in 1995, an additional 217 employees have been separated from
the Company in conjunction with the workforce reduction programs. In
connection with the workforce reductions, Consolidated recorded charges to
earnings in the second and third quarters amounting to $36,412,000 and
$3,457,000, respectively, for retirement incentives and severance costs. Such
charges reduced 1995 second and third quarter net income by $23,668,000, or 25
cents a share, and $2,343,000, or 2 cents a share, respectively. In addition,
certain of the Company's regulated subsidiaries have deferred $10,004,000 of
workforce reduction costs pending recovery in future rate-making proceedings.
Savings attributable to reduced salary and benefit costs will be realized in
the remainder of 1995 and in future periods.
Adoption of an early retirement program is still subject to union approval
at two subsidiaries. If adopted, the program may result in additional charges;
however, these charges are not expected to be significant.
Write-down of Coal Properties
In connection with a review of non-strategic assets, the Company initiated
an evaluation of the possible disposition of the coal reserves and related
properties owned by CNG Coal Company, a subsidiary. The Company had acquired
these reserves in the late 1960s and 1970s to meet expected long-term gas
supply needs through coal gasification. However, due to gas industry
deregulation, excess gas supplies nationwide, and both low demand and prices
for coal, the Company concluded that it is not economically feasible to
develop such reserves, nor are these assets currently aligned with the
Company's longer term strategy.
An appraisal of the properties was completed during the second quarter of
1995 by an independent geological firm and indicated that a write-down was
warranted. Accordingly, at June 30, 1995, the cost of these properties was
written down resulting in a charge amounting to $31,266,000. This charge
reduced 1995 second quarter net income by $20,323,000, or 22 cents per share,
but had no effect on the Company's cash flow.
5
<PAGE>
ITEM 1. FINANCIAL STATEMENTS (Concluded)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Concluded)
(6) A summary of the changes in common stock, capital in excess of par value,
and treasury stock subsequent to December 31, 1994, follows:
_____________________________________________________________________________
Common Stock
Issued Capital in Treasury Stock
___________________ ________________
Number Value Excess of Number
of Shares at Par Par Value of Shares Cost
_____________________________________________________________________________
(In Thousands)
At December 31, 1994......... 93,028 $255,827 $458,628 - $ -
Common stock issued
System Thrift Plans........ 213 585 7,586 - -
Dividend Reinvestment Plan. 72 200 2,581 - -
Stock awards-net........... 27 74 1,134 - -
Stock options.............. 26 72 903 - -
Purchase of treasury stock... - - - (16) (589)
Sale of treasury stock....... - - (10) 16 589
______ ________ ________ ____ _____
At September 30, 1995........ 93,366 $256,758 $470,822 - $ -
====== ======== ======== ==== =====
_____________________________________________________________________________
(7) The indenture between the Company and Chemical Bank, as Trustee, relating
to certain of the Company's senior debenture issues contains restrictions on
dividend payments by the Company and acquisitions of its capital stock. Under
these provisions, $465,223,000 of consolidated retained earnings was free from
such restrictions at September 30, 1995.
(8) During April 1995, the Company sold $150,000,000 of 7 3/8% Debentures Due
April 1, 2005. Net proceeds from the sale were received on April 19, 1995.
6
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
FINANCIAL CONDITION
Because of low seasonal demand for gas during the summer months, sales and
transportation revenues are lower during this period compared to the first and
second quarters, and third quarter results generally range from a loss to a
small profit. As shown in the Condensed Consolidated Statement of Cash Flows,
net cash provided by operating activities was $576.3 million and $579.8
million for the nine months ended September 30, 1995 and 1994, respectively.
In addition to satisfying cash requirements for operations, capital
expenditures, and dividend payments in the current nine-month period,
available cash was used to repay a substantial portion of the commercial paper
borrowings outstanding at the end of 1994.
Due to the seasonality of the regulated subsidiaries' heating business, the
balance sheet at the end of September customarily shows a significant decrease
in accounts receivable from the balance at the end of the previous year.
Also, by September 30, gas inventories which had been withdrawn during the
early part of the year have been substantially replenished for the forthcoming
heating season.
As a result of the charges in 1995 for workforce reduction costs and write-
downs of gas and oil producing properties and coal properties, Consolidated's
ability to issue funded debt will be restricted for a period of time (see
"Restrictions Under Certain Debt Agreements," page 4, of the 1994 Form 10-K).
However, the Company has adequate alternative funding resources available to
meet expected operating and capital requirements.
The proceeds from the Company's issuance of $150 million of debentures in
April 1995 have been used to finance, in part, 1995 capital expenditures and
to reduce short-term debt. During the remainder of 1995, funds required for
the capital spending program as well as other general corporate purposes are
expected to be obtained principally from internal cash generation. The sale
of commercial paper will be used to provide short-term financing to the
subsidiaries, primarily for gas inventory and other working capital
requirements. The Company currently has back-up lines of credit totaling $475
million available to support commercial paper borrowings. An additional $125
million of back-up lines may be obtained, if necessary.
In connection with this discussion of financial condition, reference is made
to Notes 3 through 8 to the consolidated financial statements.
RESULTS OF OPERATIONS
A major portion of the gas sold or transported by the Company's distribution
and transmission operations is ultimately used for space heating. As a
result, earnings are affected by changes in the weather. Because most of the
operating subsidiaries are subject to price regulation by federal or state
commissions, earnings can be affected by regulatory delays when price
increases are sought through general rate filings to recover certain higher
costs of operation.
7
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (Continued)
THREE MONTHS AND NINE MONTHS ENDED SEPTEMBER 30, 1995 AND 1994
System Results
The Company reported a net loss for the first nine months of 1995 of
$66,123,000, or 71 cents a share, compared with net income of $109,430,000, or
$1.18 a share, in the first nine months of 1994. Earnings for 1995, however,
include the effects of three special items. During the first quarter,
Consolidated recorded a non-cash charge to write down the cost of gas and oil
producing properties, amounting to $145,000,000 after taxes, or $1.56 per
share. During the second and third quarters of 1995, the Company recorded
charges totaling $26,011,000 after taxes, or 27 cents a share, for costs
related to the implementation of workforce reduction programs. In addition,
during the second quarter Consolidated recognized a non-cash charge of
$20,323,000 after taxes, or 22 cents a share, in connection with a write-down
of coal properties. Excluding these special items, net income for the first
nine months of 1995 would have been $125,211,000, or $1.34 per share.
Reference is made to Notes 4 and 5 to the consolidated financial statements,
pages 4 and 5, for details of the special charges recognized in 1995.
For the 1995 third quarter, Consolidated reported a net loss of $11,215,000,
or 12 cents a share, compared with a net loss of $24,557,000, or 26 cents a
share, in the prior year period. Excluding workforce reduction charges of
$2,343,000 after taxes, or 2 cents a share, recognized during the 1995 third
quarter, the net loss for the three months would have been $8,872,000, or 10
cents a share. Consolidated's utility operations normally experience a loss
in the third quarter because of low seasonal demand for gas in the summer
months.
Excluding the special charges from the 1995 results, the favorable effects of
new rates in place for most of the Company's gas distribution customers, cost
control, and higher oil wellhead prices more than offset the impact of
continued low wellhead prices for natural gas, warmer than normal weather, and
lower gas and oil production during the first nine months of 1995. Weather in
Consolidated's retail service territories through the first nine months of
1995 was 11.3 percent warmer than in 1994 and 6.6 percent warmer than normal.
In the third quarter, cost savings from the workforce reductions and higher
gas and oil production contributed positively to the Company's 1995 results.
Operating Revenues
Regulated gas sales revenues in the first nine months of 1995 declined $139.9
million from the comparable 1994 period, with sales volumes decreasing 19.3
billion cubic feet (Bcf), to 187.8 Bcf. Nonregulated gas sales revenues
increased $228.1 million in the first nine months of 1995, with sales volumes
increasing 211.3 Bcf over the 1994 period, to 453.6 Bcf. Regulated gas sales
revenues and volumes declined for each of the major customer groups --
residential, commercial, and industrial -- in the first nine months of 1995
reflecting, for the most part, weather that was warmer than the prior year.
The increase in nonregulated gas sales revenues and volumes was attributable
to the growth of the Company's energy marketing services component. The
increased volumes sold more than offset the effect of the decline in wellhead
and brokered gas prices. In the 1995 third quarter, regulated gas sales
revenues declined $13.8 million due in part to lower commercial and industrial
sales volumes. Third quarter 1995 nonregulated gas sales revenues rose $56.7
million, to $221.6 million, with sales volumes increasing 49.6 Bcf, to 131.3
Bcf.
Gas transportation and storage revenues were $325.4 million in the first nine
months of 1995, up $30.4 million over 1994. The increase was due principally
to higher transportation revenues, which increased $24.2 million due to both
increased volumes and rates. Gas transportation and storage revenues
8
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (Continued)
increased in the third quarter of 1995 by $7.1 million compared with the prior
year quarter, as storage revenues increased $4.7 million due largely to an
increase in storage services provided by certain of the Company's distribution
subsidiaries.
Other operating revenues increased $5.8 million, to $178.3 million, in the
first nine months of 1995. The increase reflects electricity sales of $15.1
million in 1995 by the energy marketing services component. In addition,
revenues from oil brokering were up $6.0 million, while revenues from the sale
of oil and condensate production increased $3.0 million. Revenues from the
sale of products extracted from natural gas declined $5.0 million in the first
nine months of 1995, due largely to the discontinuance of ethane sales in 1995.
Other revenues decreased $13.3 million in the first nine months of 1995 due in
part to reduced revenues from royalties and other miscellaneous revenue
categories. In the 1995 third quarter, total other operating revenues
increased $13.4 million due primarily to electricity sales of $13.1 million.
Operating Expenses
Total operating expenses, excluding income taxes, increased $357.0 million in
the first nine months of 1995 and $43.5 million in the third quarter.
Excluding the impact of the impairment of gas and oil producing properties and
the workforce reduction charges, operating expenses for the first nine months
of 1995 were up $90.9 million. Excluding the effect of the third quarter
workforce reduction charge, operating expenses for the 1995 third quarter
increased $40.0 million. Total purchased gas expense was up $106.7 million in
the first nine months and $27.5 million in the third quarter of 1995 due
primarily to increased volume requirements associated with nonregulated gas
sales. Transport capacity and other purchased products expense increased
$35.3 million in the first nine months of 1995 and $25.3 million in the 1995
third quarter due chiefly to electricity purchased for resale and increased
purchases of transport capacity by the energy marketing services component.
Excluding the effect of the workforce reduction charges, combined operation
and maintenance expense declined $25.7 million in the first nine months of
1995 and $8.1 million in the third quarter of 1995 due in large part to lower
payroll costs. The absence of incentive bonuses in 1995 as compared to 1994
was a major factor for the reduced payroll costs for the nine-month period.
The benefits of the workforce reduction programs were reflected in the lower
payroll costs in both 1995 periods. Lower royalties paid as a result of lower
gas wellhead prices also contributed to the decreases in operation expense.
Depreciation and amortization expense declined $25.7 million and $2.7 million
in the first nine months and third quarter of 1995, respectively, due to lower
investment resulting from the write-down of gas and oil producing properties,
lower gas production volumes for the nine-month period and higher reserve
additions. Taxes, other than income taxes, were flat for the first nine
months of 1995 and declined $2.0 million in the 1995 third quarter due largely
to lower revenue-based taxes. Income taxes decreased $96.7 million in the
first nine months of 1995 compared to 1994 due primarily to lower pretax
earnings. The 1995 third quarter income tax benefit decreased $3.3 million
compared to the 1994 quarter due chiefly to a smaller pretax operating loss in
1995.
Interest Revenues and Interest Charges
Interest revenues increased $4.4 million in the first nine months of 1995 and
$1.1 million in the third quarter due primarily to the higher level of
temporary cash investments in 1995.
Total interest charges were up $14.5 million in the first nine months of 1995
and $5.1 million in the 1995 third quarter due chiefly to interest expense
related to the $150 million of debentures issued in April 1995 and, for the
nine-month period, higher interest rates incurred on commercial paper
borrowings.
9
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (Continued)
In connection with this discussion of results of operations, reference is also
made to Notes 2 and 3 to the consolidated financial statements.
DATA BY BUSINESS COMPONENTS
The following table sets forth certain data for the components of the
Company's business.
____________________________________________________________________________
Nine Months to Three Months to
September 30 September 30
__________________ ________________
1995 1994 1995 1994
____________________________________________________________________________
OPERATING INCOME BEFORE INCOME TAXES (In Millions)
Distribution . . . . . . . . . . . . . $ 101.3 $ 86.2 $ (33.7) $ (48.3)
Transmission . . . . . . . . . . . . . 106.2 101.1 28.2 26.1
Exploration and production . . . . . . (223.4) 30.8 8.3 2.7
Energy marketing services* . . . . . . 2.3 - (2.1) -
Other. . . . . . . . . . . . . . . . . 2.1 4.3 .6 .2
Corporate and eliminations . . . . . . .5 (.8) .6 1.3
________ ________ _______ _______
Total. . . . . . . . . . . . . . . . $ (11.0) $ 221.6 $ 1.9 $ (18.0)
======== ======== ======= ======
OPERATING REVENUES (In Millions)
Distribution . . . . . . . . . . . . . $1,190.1 $1,308.2 $ 165.1 $ 165.3
Transmission . . . . . . . . . . . . . 330.5 348.2 88.7 112.4
Exploration and production . . . . . . 254.8 382.0 84.0 101.0
Energy marketing services* . . . . . . 853.9 - 248.1 -
Other. . . . . . . . . . . . . . . . . 13.1 385.0 4.3 116.7
Corporate and eliminations . . . . . . (270.6) (176.0) (75.0) (43.6)
________ ________ _______ _______
Total. . . . . . . . . . . . . . . . $2,371.8 $2,247.4 $ 515.2 $ 451.8
======== ======== ======= =======
GAS SALES (In Bcf)
Distribution . . . . . . . . . . . . . 187.8 207.1 19.1 20.2
Exploration and production . . . . . . 92.2 133.3 29.9 38.6
Energy marketing services* . . . . . . 454.8 - 131.4 -
Other. . . . . . . . . . . . . . . . . - 146.1 - 51.1
Eliminations . . . . . . . . . . . . . (93.4) (37.1) (30.0) (8.0)
________ ________ _______ _______
Total sales. . . . . . . . . . . . . 641.4 449.4 150.4 101.9
======== ======== ======= =======
GAS TRANSPORTATION (In Bcf)
Distribution . . . . . . . . . . . . . 118.4 108.7 33.4 29.3
Transmission . . . . . . . . . . . . . 528.4 541.5 125.1 121.8
Exploration and production . . . . . . 1.3 1.0 .4 .6
Energy marketing services* . . . . . . 3.9 - 1.2 -
Other. . . . . . . . . . . . . . . . . - 5.3 - 1.8
Eliminations . . . . . . . . . . . . . (111.9) (140.7) (25.1) (26.9)
________ ________ _______ _______
Total transportation . . . . . . . . 540.1 515.8 135.0 126.6
======== ======== ======= =======
_____________________________________________________________________________
* Includes CNG Energy Services Corporation (CNG Energy Services), CNG Power
Company, CNG Power Services Corporation, and CNG Storage Service Company
(CNG Storage). These subsidiaries, except CNG Storage, were included in
"Other" in 1994. CNG Storage was included in the "Transmission" component
in 1994 and in the three months ended March 31, 1995.
10
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (Continued)
Distribution
Operating income before income taxes of the gas distribution operations was
$101.3 million in the first nine months of 1995, up $15.1 million from the
comparable 1994 period. Results for the first nine months of 1995 include
workforce reduction charges totaling $20.9 million. Excluding these charges,
operating income before income taxes for the first nine months of 1995 was
$122.2 million. In addition to lower operating costs in 1995, general rate
increases put into effect in late 1994 at The East Ohio Gas Company and
Virginia Natural Gas, Inc. (Virginia Natural Gas) and in July 1994 and August
1995 at The Peoples Natural Gas Company (Peoples Natural Gas) offset the
effects of reduced throughput. The rate increase at Virginia Natural Gas is
being collected subject to refund. Total distribution throughput was 306.2
Bcf, down 3 percent compared with 315.8 Bcf in the first nine months of 1994.
Warmer weather in 1995 was the primary reason for the lower throughput
volumes. Residential gas sales decreased 11.8 Bcf in the first nine months of
1995 to 136.6 Bcf. Commercial sales decreased 4.7 Bcf to 46.1 Bcf while
volumes transported for these customers were up 2.8 Bcf. Deliveries to
industrial customers were higher in the 1995 period, increasing 5.3 Bcf.
While industrial sales were down 2.8 Bcf to 5.0 Bcf, transportation volumes
rose 8.1 Bcf to 96.8 Bcf.
In the third quarter of 1995, the distribution operations reported an
operating loss before income taxes of $33.7 million, compared with an
operating loss of $48.3 million in the 1994 third quarter. Excluding
workforce reduction charges, the 1995 third quarter operating loss before
income taxes was $30.5 million. The results for both quarterly periods
reflect the seasonal nature of these subsidiary companies' heating business.
Results for the 1995 quarter reflect the rate increases and lower operating
expenses noted above. Residential gas sales of 13.5 Bcf were flat compared to
the prior year, while commercial sales were down .5 Bcf to 4.7 Bcf. Gas
transported for commercial customers in the 1995 quarter was 3.4 Bcf, up .2
Bcf from 1994. Deliveries to industrial customers increased 2.5 Bcf to 30.7
Bcf, as increased transportation volumes offset a decline in sales.
Transmission
Operating income before income taxes of the gas transmission operations in the
first nine months of 1995 was $106.2 million, up 5 percent from $101.1 million
in 1994. Results for the first nine months of 1995 include workforce
reduction charges totaling $6.5 million. Excluding these charges, operating
income before income taxes for the first nine months of 1995 was $112.7
million. For the third quarter, operating income before income taxes was
$28.2 million, an increase of 8 percent from $26.1 million in 1994. Excluding
special charges, 1995 third quarter operating income was $28.6 million. A
general rate increase which became effective July 1, 1994, subject to refund,
contributed favorably to results for the first nine months of 1995. Results
for both 1995 periods reflect lower operating costs compared to the prior year
periods.
Gas throughput for the transmission operations, consisting entirely of
transportation volumes, was 528.4 Bcf in the first nine months of 1995, down
from 541.5 Bcf in the comparable 1994 period. Gas throughput was 125.1 Bcf in
the third quarter of 1995, up 3.3 Bcf from 1994.
Exploration and Production
The exploration and production operations reported an operating loss before
income taxes of $223.4 million in the first nine months of 1995, compared with
operating income before income taxes of $30.8 million in 1994. In the 1995
third quarter, operating income before income taxes was $8.3 million, compared
to $2.7 million in 1994. The loss for the first nine months of 1995 reflects
the non-cash charge of $226.2 million in the 1995 first quarter for the
impairment of gas and oil producing properties.
11
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (Continued)
In addition, workforce reduction charges totaling $8.9 million and a credit of
$.3 million are included in the results for the first nine months and third
quarter of 1995, respectively. Excluding the special items, the exploration
and production operations had operating income before income taxes of $11.7
million and $8.0 million in the first nine months and third quarter of 1995,
respectively.
The impact of continued low gas wellhead prices and lower gas and oil
production more than offset the favorable impact of higher oil wellhead prices
and reduced production-related expenses in the first nine months of 1995. For
the third quarter of 1995, higher natural gas and oil production, higher oil
wellhead prices, and reduced operating expenses more than offset the impact of
low gas wellhead prices.
Consolidated's average gas wellhead price in the first nine months of 1995 was
$1.80 a thousand cubic feet (Mcf), compared with $2.26 in 1994. In the third
quarter, the average gas price was $1.78 per Mcf, down from $1.97 in the third
quarter of 1994. Gas production in the first nine months of 1995 was 74.5
Bcf, down 16 percent from 88.7 Bcf in 1994. Third quarter gas production was
23.6 Bcf, up 6 percent from 22.2 Bcf in the 1994 quarter. Consolidated's
average oil prices were higher in both 1995 periods. Wellhead prices averaged
$16.24 a barrel in the nine months compared with $14.01 in 1994, while prices
for the quarter averaged $15.54 a barrel, up from $15.16 a year ago. Oil
production was 2.4 million barrels in the first nine months of 1995, down from
2.5 million barrels in 1994. For the third quarter, oil production was
824,000 barrels, up from 708,000 barrels in the 1994 quarter. For the first
nine months of 1995, a combination of voluntary production shut-ins due to low
prices and normal declines at certain properties caused the decrease in gas
production. Lower oil production for the first nine months of 1995 was
primarily attributable to normal production declines at older properties. The
higher gas and oil production in the 1995 third quarter compared to the 1994
period reflects the impact of the voluntary shut-in of production in the prior
year quarter.
Energy Marketing Services
Energy marketing services reported operating income before income taxes of
$2.3 million in the first nine months of 1995 and an operating loss before
income taxes of $2.1 million in the third quarter of 1995. This component is
comprised primarily of CNG Energy Services, a marketing subsidiary that
provides large customers with natural gas, electricity and related services
throughout North America. Total throughput for this component was 458.7 Bcf
for the first nine months of 1995 and 132.6 Bcf for the third quarter.
Wholesale electric power sales totaled 1.7 million megawatt-hours and 874,000
megawatt-hours for the first nine months and third quarter of 1995,
respectively. Declining margins on natural gas transactions was the major
factor for the operating loss in the third quarter.
This component also encompasses the Company's ownership interests in seven
independent power plants and reported equity income of $2.9 million and $1.7
million in the first nine months and third quarter of 1995, respectively.
These amounts are not included in operating income before income taxes.
12
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (Continued)
SELECTED TWELVE-MONTH DATA
The following selected financial data (unaudited) relates to the twelve months
ended September 30, 1995 (in thousands of dollars):
______________________________________________________________________________
Operating revenues..................................... $3,160,346
Operating expenses..................................... 3,049,494
Operating income before income taxes............... 110,852
Income taxes........................................... (14,286)
Other income (deductions).............................. (15,494)
Interest charges....................................... 102,026
Net income......................................... $ 7,618*
Earnings per share of common stock................. $.08*
Average common shares outstanding (thousands)...... 93,141
Times fixed charges earned............................. .92**
______________________________________________________________________________
* Includes an impairment of gas and oil producing properties in the 1995 first
quarter amounting to $145,000,000 after taxes, or $1.56 per share; charges
related to workforce reductions in the 1995 second and third quarters
totaling $26,011,000 after taxes, or 27 cents a share; and a write-down of
coal properties in the 1995 second quarter amounting to $20,323,000 after
taxes, or 22 cents a share.
** To achieve a one-to-one coverage, an additional $9,545,000 of pretax
earnings would be needed.
OTHER INFORMATION
Federal and State Regulatory Matters
As previously reported, on December 30, 1993, CNG Transmission filed a general
rate filing with the FERC. The increase went into effect July 1, 1994,
subject to refund. On September 8, 1995, an administrative law judge
certified CNG Transmission's proposed settlement agreement resolving the
issues in this case. FERC approval of the settlement is expected in the
fourth quarter of 1995.
Peoples Natural Gas filed a settlement agreement with the Pennsylvania Public
Utility Commission (PA PUC) in June 1995 in connection with its February 1,
1995 general rate filing. The settlement was approved by the PA PUC on August
3, 1995, with the rate increase effective August 4, 1995. The approved
settlement includes an $8.0 million annual revenue increase.
On September 1, 1995, Virginia Natural Gas filed an expedited rate filing with
the Virginia State Corporation Commission requesting an annual revenue increase
of
$7.2 million. The requested rate increase reflects additional plant
investments due to major pipeline reinforcement and expansion projects. The
new rates went into effect, subject to refund, on October 1, 1995.
On October 26, 1995, the Public Service Commission of West Virginia approved a
settlement agreement filed by Hope Gas, Inc. covering its January 4, 1995
general rate filing. The new rates became effective November 1, 1995. The
approved settlement agreement also includes provisions designed to reduce the
gas cost portion of rates over the three-year period covered by the settlement.
13
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (Concluded)
Exploration and Production
As previously reported, CNG Producing Company, acting alone or with partners,
was the high bidder on eight of the tracts offered at the federal government's
May 10, 1995 Gulf of Mexico lease sale. The Company's bid totaled $3.2
million for 100 percent working interests in five tracts and 50 percent, 40
percent, and 37.5 percent interests in the remaining three tracts. The
Company has been awarded all eight tracts.
**********
In connection with the financial information included in PART I of this
report, reference is made to the Company's 1994 Annual Report and its Annual
Report to the SEC on Form 10-K for the year ended December 31, 1994, and its
quarterly reports to the SEC on Form 10-Q for the quarters ended March 31 and
June 30, 1995.
14
<PAGE>
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
There have been no material new legal proceedings instituted in the third
quarter of 1995, and there have been no material developments during the
quarter in the legal proceedings disclosed in the Company's 1994 Form 10-K or
in any earlier Form 10-Q for 1995 as then pending.
Reference is made to "Federal and State Regulatory Matters," page 13, for a
description of certain regulatory proceedings.
ITEM 2. CHANGES IN SECURITIES
(a) None.
(b) Limitations on the payment of dividends by the Company are set forth in
Note 7 to the consolidated financial statements, page 6, and reference is made
thereto.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
ITEM 5. OTHER INFORMATION
None, other than as described elsewhere in this report.
ITEM 6. EXHIBITS, AND REPORTS ON FORM 8-K
REPORTS ON FORM 8-K - None.
EXHIBITS
______________________________________________________________________________
SEC
Exhibit
Number Description of Exhibit
______________________________________________________________________________
(11) Statement re Computation of Per Share Earnings:
Computations of Earnings Per Share of Common Stock, Primary Earnings
Per Share, and Fully Diluted Earnings Per Share of Consolidated Natural
Gas Company and Subsidiaries for the three months and nine months ended
September 30, 1995 and 1994
(12) Statement re Computation of Ratios:
Ratio of Earnings to Fixed Charges of Consolidated Natural Gas Company
and Subsidiaries for the twelve months ended September 30, 1995
(27) Financial Data Schedule
______________________________________________________________________________
15
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CONSOLIDATED NATURAL GAS COMPANY
_______________________________________
(Registrant)
L. D. JOHNSON
_______________________________________
L. D. Johnson, Vice Chairman
and Chief Financial Officer
S. R. MCGREEVY
_______________________________________
S. R. McGreevy, Vice President,
Accounting and Financial Control
November 13, 1995
16
<PAGE>
EXHIBIT INDEX
______________________________________________________________________________
SEC
Exhibit
Number Description of Exhibit
______________________________________________________________________________
(11) Statement re Computation of Per Share Earnings:
Computations of Earnings Per Share of Common Stock, Primary Earnings
Per Share, and Fully Diluted Earnings Per Share of Consolidated Natural
Gas Company and Subsidiaries for the three months and nine months ended
September 30, 1995 and 1994, are filed herewith
(12) Statement re Computation of Ratios:
Ratio of Earnings to Fixed Charges of Consolidated Natural Gas Company
and Subsidiaries for the twelve months ended September 30, 1995,
is filed herewith
(27) Financial Data Schedule, is filed herewith
______________________________________________________________________________
EXHIBIT 11
CONSOLIDATED NATURAL GAS COMPANY AND SUBSIDIARIES
COMPUTATION OF PER SHARE EARNINGS
(In Thousands, Except Per Share Data)
<TABLE>
<CAPTION>
________________________________________________________________________________
_________________________
Nine Months to
Three Months to
September 30
September 30
_____________________
_____________________
1995 1994
1995 1994
________________________________________________________________________________
_________________________
<S> <C> <C>
<C> <C>
EARNINGS (LOSS) PER SHARE OF COMMON STOCK,
as Shown on the Consolidated
Statement of Income
Net income (loss) . . . . . . . . . . . . . . . . . $(66,123) $109,430
$(11,215) $(24,557)
________ ________
________ ________
Average common shares outstanding. . . . . . . . . . 93,180 92,991
93,312 93,017
________ ________
________ ________
Earnings (loss) per share of common stock . . . . $ (.71) $ 1.18
$ (.12) $ (.26)
======== ========
======== ========
PRIMARY EARNINGS (LOSS) PER SHARE
Net income (loss) . . . . . . . . . . . . . . . . . $(66,123) $109,430
$(11,215) $(24,557)
________ ________
________ ________
Average common shares outstanding. . . . . . . . . . 93,180 92,991
93,312 93,017
Incremental shares resulting from
assumed exercise of stock options. . . . . . . . . 69 97
75 75
________ ________
________ ________
Average common shares, as adjusted . . . . . . . . . 93,249 93,088
93,387 93,092
________ ________
________ ________
Primary earnings (loss) per share . . . . . . . . $ (.71)(2) $
1.18(1) $ (.12)(2) $ (.26)(2)
======== ========
======== ========
FULLY DILUTED EARNINGS (LOSS) PER SHARE (Note 2)
Net income (loss) . . . . . . . . . . . . . . . . . $(66,123) $109,430
$(11,215) $(24,557)
Interest on 7 1/4% Convertible Subordinated
Debentures, net of tax effect. . . . . . . . . . . 8,948 9,022
3,090 2,974
________ ________
________ ________
Net income (loss), as adjusted . . . . . . . . . . . $(57,175) $118,452
$ (8,125) $(21,583)
________ ________
________ ________
Average common shares outstanding. . . . . . . . . . 93,180 92,991
93,312 93,017
Incremental shares resulting from
assumed exercise of stock options. . . . . . . . . 110 117
155 75
Shares issuable from assumed conversion
of 7 1/4% Convertible Subordinated
Debentures . . . . . . . . . . . . . . . . . . . . 4,559 4,583
4,559 4,583
________ ________
________ ________
Average common shares, as adjusted . . . . . . . . . 97,849 97,691
98,026 97,675
________ ________
________ ________
Fully diluted earnings (loss) per share . . . . . $ (.58) $ 1.21
$ (.08) $ (.22)
======== ========
======== ========
________________________________________________________________________________
_________________________
<FN>
Notes:
(1) This calculation is submitted in accordance with Regulation S-K Item
601(b)(11) although not
required by footnote 2 to paragraph 14 of APB Opinion No. 15 because it
results in dilution of
less than 3%.
(2) This calculation is submitted in accordance with Regulation S-K Item
601(b)(11) although it is
contrary to either paragraph 30 or 40 of APB Opinion No. 15 because the
assumed exercise of
stock options and/or the assumed conversion of the 7 1/4% Convertible
Subordinated Debentures
produce an antidilutive result.
</TABLE>
EXHIBIT 12
CONSOLIDATED NATURAL GAS COMPANY AND SUBSIDIARIES
RATIO OF EARNINGS TO FIXED CHARGES
(Thousands of Dollars)
_____________________________________________________________________________
Twelve Months to September 30 1995
_____________________________________________________________________________
Earnings:
Net income................................................ $ 7,618
Add income taxes.......................................... (14,286)
________
Loss before income taxes................................ (6,668)
Distributed income from unconsolidated investee,
less equity in earnings thereof......................... (2,877)
________
Subtotal................................................ (9,545)
________
Add fixed charges:
Interest on long-term debt, including amortization
of debt discount and expense less premium............. 93,126
Other interest expense.................................. 15,594
Portion of rentals deemed to be representative
of the interest factor................................ 9,139
________
Total Fixed Charges......................................... 117,859
________
Total Earnings.............................................. $108,314
========
Ratio of Earnings to Fixed Charges.......................... .92(1)
========
_____________________________________________________________________________
Note:
(1) To achieve a one-to-one coverage, an additional $9,545,000 of pretax
earnings would be needed.
<TABLE> <S> <C>
<ARTICLE> UT
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED FINANCIAL STATEMENTS INCLUDED IN ITEM 1 OF CONSOLIDATED NATURAL
GAS COMPANY'S QUARTERLY REPORT ON FORM 10-Q FOR THE QUARTER ENDED SEPTEMBER 30,
1995, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> SEP-30-1995
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 2,916,289
<OTHER-PROPERTY-AND-INVEST> 978,324
<TOTAL-CURRENT-ASSETS> 851,384
<TOTAL-DEFERRED-CHARGES> 342,796
<OTHER-ASSETS> 96,095
<TOTAL-ASSETS> 5,184,888
<COMMON> 256,758
<CAPITAL-SURPLUS-PAID-IN> 430,542
<RETAINED-EARNINGS> 1,268,096
<TOTAL-COMMON-STOCKHOLDERS-EQ> 1,995,676
0
0
<LONG-TERM-DEBT-NET> 1,297,756
<SHORT-TERM-NOTES> 0
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 139,000
<LONG-TERM-DEBT-CURRENT-PORT> 4,000
0
<CAPITAL-LEASE-OBLIGATIONS> 0
<LEASES-CURRENT> 0
<OTHER-ITEMS-CAPITAL-AND-LIAB> 1,748,456
<TOT-CAPITALIZATION-AND-LIAB> 5,184,888
<GROSS-OPERATING-REVENUE> 2,371,751
<INCOME-TAX-EXPENSE> (41,648)
<OTHER-OPERATING-EXPENSES> 2,382,714
<TOTAL-OPERATING-EXPENSES> 2,341,066
<OPERATING-INCOME-LOSS> 30,685
<OTHER-INCOME-NET> (18,928)
<INCOME-BEFORE-INTEREST-EXPEN> 11,757
<TOTAL-INTEREST-EXPENSE> 77,880
<NET-INCOME> (66,123)
0
<EARNINGS-AVAILABLE-FOR-COMM> (66,123)
<COMMON-STOCK-DIVIDENDS> 135,660
<TOTAL-INTEREST-ON-BONDS> 97,560
<CASH-FLOW-OPERATIONS> 576,360
<EPS-PRIMARY> (.71)
<EPS-DILUTED> (.58)
</TABLE>
