UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-------------
FORM 10-Q
QUARTERLY REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
FOR THE QUARTER ENDED
MARCH 31, 1996
Commission File Number 1-3196
-------------
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
-------------
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 April 30,
1996: 94,109,245
<PAGE>
CONSOLIDATED NATURAL GAS COMPANY
FORM 10-Q QUARTERLY REPORT
For the Quarter Ended March 31, 1996
TABLE OF CONTENTS
PART I - FINANCIAL INFORMATION Page
ITEM 1. FINANCIAL STATEMENTS
CONSOLIDATED STATEMENT OF INCOME (Unaudited)
for the Quarters Ended March 31, 1996 and 1995............... 1
CONDENSED CONSOLIDATED BALANCE SHEET
at March 31, 1996 (Unaudited), and December 31, 1995......... 2
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited)
for the Quarters Ended March 31, 1996 and 1995............... 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...................................... 14
ITEM 2. CHANGES IN SECURITIES.................................. 14
ITEM 3. DEFAULTS UPON SENIOR SECURITIES........................ 14
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.... 14
ITEM 5. OTHER INFORMATION...................................... 14
ITEM 6. EXHIBITS, AND REPORTS ON FORM 8-K...................... 14
SIGNATURES....................................................... 15
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Consolidated Natural Gas Company and Subsidiaries
CONSOLIDATED STATEMENT OF INCOME
(Unaudited) (Thousands of Dollars)
____________________________________________________________________________
Three Months to March 31
1996 1995
____________________________________________________________________________
OPERATING REVENUES
Regulated gas sales............................ $ 749,310 $ 706,326
Nonregulated gas sales......................... 319,232 292,901
__________ __________
Total gas sales............................ 1,068,542 999,227
Gas transportation and storage................. 142,612 129,755
Other.......................................... 103,930 62,655
__________ __________
Total operating revenues (Note 3).......... 1,315,084 1,191,637
__________ __________
OPERATING EXPENSES
Purchased gas.................................. 628,265 637,225
Transport capacity and other
purchased products........................... 72,099 42,371
Operation expense (Note 5)..................... 168,817 158,491
Maintenance.................................... 17,913 20,490
Depreciation and amortization.................. 70,652 65,903
Impairment of gas and oil producing
properties (Note 4).......................... - 226,209
Taxes, other than income taxes................. 55,162 56,866
__________ __________
Subtotal................................... 1,012,908 1,207,555
__________ __________
Operating income before income taxes....... 302,176 (15,918)
Income taxes................................... 97,507 (17,771)
__________ __________
Operating income........................... 204,669 1,853
__________ __________
OTHER INCOME
Interest revenues.............................. 1,080 1,322
Other-net...................................... 2,073 1,368
__________ __________
Total other income......................... 3,153 2,690
__________ __________
Income before interest charges............. 207,822 4,543
__________ __________
INTEREST CHARGES
Interest on long-term debt..................... 24,694 21,997
Other interest expense......................... 3,561 5,443
Allowance for funds used during construction... (1,233) (1,501)
__________ __________
Total interest charges..................... 27,022 25,939
__________ __________
NET INCOME (LOSS).............................. $ 180,800 $ (21,396)
========== ==========
Earnings (loss) per share of common
stock (Note 9):
Primary.................................... $1.92 $(.23)
Fully diluted.............................. $1.86 $(.23)
Average common shares (thousands) (Note 9):
Primary.................................... 94,269 93,045
Fully diluted.............................. 98,828 93,045
Dividends declared per common share.......... $.485 $.485
____________________________________________________________________________
The Notes to Consolidated Financial Statements are an integral part of this
statement.
1
<PAGE>
ITEM 1. FINANCIAL STATEMENTS (Continued)
Consolidated Natural Gas Company and Subsidiaries
CONDENSED CONSOLIDATED BALANCE SHEET
(Thousands of Dollars)
_____________________________________________________________________________
At March At December
31, 1996 31, 1995
(Unaudited)
_____________________________________________________________________________
ASSETS
PROPERTY, PLANT AND EQUIPMENT
Gas utility and other plant.................... $ 4,728,753 $ 4,710,086
Accumulated depreciation and amortization...... (1,818,644) (1,785,965)
___________ ___________
Net gas utility and other plant........... 2,910,109 2,924,121
___________ ___________
Exploration and production properties.......... 3,278,055 3,219,264
Accumulated depreciation and amortization...... (2,268,605) (2,230,980)
___________ ___________
Net exploration and production properties. 1,009,450 988,284
___________ ___________
Net property, plant and equipment......... 3,919,559 3,912,405
___________ ___________
CURRENT ASSETS
Cash and temporary cash investments............ 36,824 36,277
Accounts receivable, less allowance for
doubtful accounts............................ 796,085 656,338
Gas stored - current portion................... 17,739 112,429
Materials and supplies (average cost method)... 36,591 35,815
Unrecovered gas costs.......................... 92,477 25,123
Deferred income taxes - current (net).......... - 20,993
Prepayments and other current assets........... 195,209 181,686
___________ ___________
Total current assets...................... 1,174,925 1,068,661
___________ ___________
REGULATORY AND OTHER ASSETS
Unamortized abandoned facilities............... 25,527 28,672
Other investments.............................. 77,739 60,939
Deferred charges and other assets
(Notes 3 and 5).............................. 349,228 347,616
___________ ___________
Total regulatory and other assets......... 452,494 437,227
___________ ___________
Total assets.............................. $ 5,546,978 $ 5,418,293
=========== ===========
STOCKHOLDERS' EQUITY AND LIABILITIES
CAPITALIZATION
Common stockholders' equity (Notes 6 and 7)
Common stock, par $2.75
(Issued: 1996 - 94,074,914 shares;
1995 - 93,591,623 shares).................. $ 258,706 $ 257,377
Capital in excess of par value............... 498,061 478,535
Retained earnings............................ 1,444,884 1,309,906
Unearned compensation........................ (16,433) -
___________ ___________
Total common stockholders' equity......... 2,185,218 2,045,818
Long-term debt (Note 8)........................ 1,288,115 1,291,811
___________ ___________
Total capitalization...................... 3,473,333 3,337,629
___________ ___________
CURRENT LIABILITIES
Current maturities on long-term debt........... 10,250 10,250
Commercial paper............................... 195,000 336,000
Accounts payable............................... 423,411 410,296
Estimated rate contingencies and
refunds (Note 3)............................. 40,490 59,363
Amounts payable to customers................... 4,454 40,315
Taxes accrued.................................. 146,029 114,335
Deferred income taxes - current (net).......... 21,563 -
Temporary replacement reserve - gas
inventory.................................... 92,457 -
Other current liabilities...................... 164,675 140,731
___________ ___________
Total current liabilities................. 1,098,329 1,111,290
___________ ___________
DEFERRED CREDITS
Deferred income taxes.......................... 666,242 672,266
Accumulated deferred investment tax credits.... 30,481 31,031
Deferred credits and other liabilities......... 278,593 266,077
___________ ___________
Total deferred credits.................... 975,316 969,374
___________ ___________
COMMITMENTS AND CONTINGENCIES
___________ ___________
Total stockholders' equity and liabilities $ 5,546,978 $ 5,418,293
=========== ===========
_____________________________________________________________________________
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)
_____________________________________________________________________________
Three Months to March 31
1996 1995
_____________________________________________________________________________
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss)................................ $ 180,800 $ (21,396)
Adjustments to reconcile net income (loss) to net
cash provided by operating activities
Depreciation and amortization................ 70,652 65,903
Impairment of gas and oil producing
properties................................. - 226,209
Deferred income taxes-net.................... 34,723 (91,512)
Changes in current assets and
current liabilities
Accounts receivable-net.................... (140,773) (102,399)
Inventories................................ 93,914 166,556
Unrecovered gas costs...................... (67,354) 12,154
Accounts payable........................... 9,321 (22,215)
Estimated rate contingencies and refunds... (18,873) 21,719
Amounts payable to customers............... (35,861) 328
Taxes accrued.............................. 31,694 52,380
Temporary replacement reserve - gas
inventory................................ 92,457 53,069
Other-net.................................. 9,404 18,043
Changes in other assets and
other liabilities.......................... 21,594 27,261
Other........................................ 35 114
_________ _________
Net cash provided by operating activities 281,733 406,214
_________ _________
CASH FLOWS USED IN INVESTING ACTIVITIES
Plant construction and other property additions.. (81,347) (80,471)
Proceeds from dispositions of property, plant
and equipment-net.............................. 932 117
Cost of other investments-net.................... (14,920) (8,603)
_________ _________
Net cash used in investing activities.... (95,335) (88,957)
_________ _________
CASH FLOWS PROVIDED BY (OR USED IN) FINANCING ACTIVITIES
Issuance of common stock......................... 3,880 1,516
Unsecured loan repayment......................... (4,000) (4,000)
Commercial paper repayments-net.................. (140,142) (155,775)
Dividends paid................................... (45,588) (45,114)
Other-net........................................ (1) (11)
_________ _________
Net cash used in financing activities.... (185,851) (203,384)
_________ _________
Net increase in cash and temporary
cash investments....................... 547 113,873
CASH AND TEMPORARY CASH INVESTMENTS AT JANUARY 1. 36,277 31,923
_________ _________
CASH AND TEMPORARY CASH INVESTMENTS AT MARCH 31.. $ 36,824 $ 145,796
========= =========
SUPPLEMENTAL CASH FLOW INFORMATION
Cash paid for
Interest (net of amounts capitalized).......... $ 12,839 $ 14,145
Income taxes (net of refunds).................. $ 2,008 $ (3,347)
Non-cash financing activities
Issuance of stock under benefit plans.......... $ 17,955 $ 178
_____________________________________________________________________________
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, 1995, 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 1995 (1995 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. 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 $24,239,000 and
$18,442,000 at December 31, 1995, and March 31, 1996, including interest.
These amounts are reported in the Condensed Consolidated Balance Sheet under
"Estimated rate contingencies and refunds" together with $35,124,000 and
$22,048,000, 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 $37,021,000 and $30,361,000 at December 31, 1995,
and March 31, 1996, 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 $25 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 1995 Form 10-K, the Company 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 during the first
quarter of 1995, 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) In January 1996, unions at two subsidiaries approved the adoption of a
workforce reduction program as part of the Company's efforts to permanently
reduce costs in response to competitive conditions. The workforce reduction
program consisted of a voluntary early retirement program, with eligibility
based upon the employee's age and years of service as of December 31, 1996,
and a voluntary separation program. The early retirement incentives included
five additional years of age and pension service for determining pension
benefits. The early retirement program was offered from February 1 through
March 31, 1996, with eligible employees retiring effective April 1, 1996. The
voluntary separation program involved severance benefit payments to affected
employees.
A total of 73 eligible employees elected to accept the early retirement
offer and an additional 57 employees left the Company under the voluntary
separation program. In connection with the workforce reduction program, the
Company recorded charges to earnings in the first quarter of 1996 amounting to
$3,379,000 for retirement incentives and severance costs. Such charges
reduced 1996 first quarter net income by $2,069,000, or 2 cents a share. In
addition, one of the subsidiaries has deferred $812,000 of workforce reduction
costs pending recovery in future rate-making proceedings.
(6) A summary of the changes in common stock, capital in excess of par value,
unearned compensation and treasury stock subsequent to December 31, 1995,
follows:
<TABLE>
<CAPTION>
________________________________________________________________________________
____________________________
Common Stock
Issued Capital in
Treasury Stock
____________________
____________________
Number Value Excess of
Unearned Number
of Shares at Par Par Value
Compensation of Shares Cost
________________________________________________________________________________
____________________________
(In Thousands)
<S> <C> <C> <C> <C>
<C> <C>
At December 31, 1995............. 93,592 $257,377 $478,535 $
- - - - $ -
Common stock issued
Performance shares............. 343 943 14,421
(15,364) - -
Stock awards................... 68 187 2,848
(3,006) - -
Stock options.................. 45 124 1,512
- - - - -
Dividend Reinvestment Plan..... 27 75 1,190
- - - - -
Amortization and adjustment.... - - (444)
1,937 - -
Purchase of treasury stock....... - - -
- - - (3) (122)
Sale of treasury stock........... - - (1)
- - - 3 122
______ ________ ________
________ _____ _____
At March 31, 1996................ 94,075 $258,706 $498,061
$(16,433) - $ -
====== ======== ========
======== ===== =====
________________________________________________________________________________
____________________________
</TABLE>
During the first quarter of 1996, restricted stock awards and performance
restricted stock awards (performance shares) were granted to certain key
employees of the Company. The common stock issued for these awards is held by
the Company until the attached restrictions lapse. The market value of the
restricted stock awards on the date granted is recognized as compensation
expense over the vesting period - in this case, three years. For performance
shares, the market value of the awards, including any changes since the date
of grant, is recognized as compensation expense over the three-year
performance period. The value of the awards not yet recognized as
compensation expense is reflected in common stockholders' equity as Unearned
Compensation.
5
<PAGE>
ITEM 1. FINANCIAL STATEMENTS (Concluded)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Concluded)
(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, $641,844,000 of consolidated retained earnings was free from
such restrictions at March 31, 1996.
(8) The 9 3/8% Debentures Due February 1, 1997, continue to be classified as
long-term debt at March 31, 1996, based on the Company's intent to refinance
the debentures at maturity through the use of the Company's currently
effective registration statement for the sale of debt securities on file with
the SEC.
(9) For the quarter ended March 31, 1996, primary earnings per share has been
calculated by dividing net income, as reported, by the sum of the weighted
average number of common shares outstanding plus the net additional shares
which would have been outstanding assuming the exercise of potentially
dilutive stock options. Primary earnings per share did not differ materially
from earnings per share calculated using actual weighted average shares
outstanding. Fully diluted earnings per share has been determined by
adjusting net income to exclude the after-tax interest cost on the Company's
outstanding convertible subordinated debentures. This pro forma net income
has been divided by the sum of: the weighted average number of common shares
outstanding; the net additional shares which would have been outstanding
assuming the exercise of potentially dilutive stock options; and the
additional shares which would have been outstanding assuming all the
convertible subordinated debentures had been converted to common shares on
January 1, 1996.
Under the Company's Shareholder Rights Plan, holders of such Rights are
entitled to purchase from the Company additional shares of common stock. The
Rights are exercisable if certain conditions are met in connection with a
possible acquisition of the Company's common stock by a third party. Also,
under certain conditions, the Board of Directors may exchange the Rights, in
whole or in part, at an exchange ratio of one share of common stock per Right,
subject to adjustment. As previously reported, on January 23, 1996, the Board
of Directors declared a dividend of one Right for each share of common stock
outstanding at the close of business on February 28, 1996. While the Rights
declared under the Plan may have a potentially dilutive effect, they have been
excluded from the calculation of fully diluted earnings per share since the
conditions necessary for the exercise of such Rights were not satisfied.
Primary and fully diluted loss per share for the quarter ended March 31,
1995, are based on the actual weighted average common shares outstanding since
both the assumed exercise of stock options and the assumed conversion of the
Company's convertible subordinated debentures would produce anti-dilutive
results.
(10) Effective January 1, 1996, the Company adopted the provisions of
Statement of Financial Accounting Standards (SFAS) No. 121, "Accounting for
the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed
Of." This standard requires that long-lived assets and certain intangibles be
reviewed for impairment when events or changes in circumstances indicate that
the carrying amount of an asset may not be recoverable. If the aggregate
estimated future cash flows to be derived from an asset are less than its
carrying amount, an impairment must be recognized. SFAS No. 121 also requires
the write-off of a regulatory asset if and when it is no longer probable that
future revenues will provide for the recovery of the carrying value of the
asset. The adoption of SFAS No. 121 did not have a material effect on the
Company's financial position, results of operations or cash flows.
6
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
FINANCIAL CONDITION
Because of the seasonal nature of the regulated subsidiaries' heating
business, a substantial portion of the Company's cash receipts for the year
are realized in the first quarter of the year. As shown in the Condensed
Consolidated Statement of Cash Flows, net cash provided by operating
activities was $281.7 million and $406.2 million for the three months ended
March 31, 1996 and 1995, respectively. The decline in net cash provided by
operating activities in 1996 is due in part to increases in accounts
receivable, the deferral of purchased gas costs in excess of costs currently
recovered in rates, and payment of customer refunds during the period. In
addition to satisfying cash requirements for operations, capital expenditures,
and dividend payments in the current year quarter, available cash was used to
reduce the amount of commercial paper borrowings outstanding at the end of
1995.
Due to the significant amount of revenues generated during the first quarter,
the consolidated balance sheet at the end of March customarily shows an
increase in cash and temporary cash investments and an increase in accounts
receivable over balances at the end of the previous year. However, the
balance of cash and temporary cash investments at March 31, 1996, is
comparable to the balance at December 31, 1995, due primarily to the deferral
by the distribution subsidiaries of certain gas cost increases incurred during
the first quarter of 1996 and the repayment of commercial paper borrowings.
The inventory of stored gas was reduced during the first quarter of the year
due to the increased demand for gas during the winter heating season. Under
the LIFO accounting method, the excess of the estimated current cost of
replacing inventories of gas withdrawn from storage during the early part of
the year over LIFO inventory cost at the time of withdrawal is recorded in the
income statement and as a current liability. This liability is reduced as the
inventory is replenished later in the year, and by year-end the liability is
eliminated.
During the remainder of 1996, 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's two short-term credit agreements totaling $775 million are
available to support commercial paper borrowings. In addition, borrowings
under the short-term credit agreements may be used to temporarily finance
capital expenditures. These credit agreements are currently scheduled to
expire on June 29, 1996; however, the Company expects that the agreements will
be renewed or replaced by comparable agreements. There were no amounts
outstanding under these credit agreements at March 31, 1996.
The restrictions on the Company's ability to issue funded debt resulting from
the first quarter 1995 charge for the impairment of gas and oil producing
properties (see "Restrictions Under Certain Debt Agreements," page 4, of the
1995 Form 10-K) were effectively removed with the reporting of 1996 first
quarter results. Therefore, additional external financing could be obtained,
if necessary, through the issuance of new debt securities during the remainder
of 1996. In this regard, the Company has a currently effective shelf
registration with the SEC that would permit the sale of up to $350 million of
debt securities. The amount and timing of any future sale of these debt
securities will depend on capital requirements and financial market
conditions. In addition, reference is made to Note 8 to the consolidated
financial statements regarding the use of debt securities under the shelf
registration.
Reference is made to Note 10 to the consolidated financial statements for
information regarding a new accounting standard adopted by the Company in
1996. Also in connection with this discussion of financial condition,
reference is also made to Notes 3 and 5 through 7 to the consolidated
financial statements.
7
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (Continued)
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.
THREE MONTHS ENDED MARCH 31, 1996 AND 1995
System Results
The Company reported net income for the first three months of 1996 of
$180,800,000, or $1.92 per share, compared with a net loss of $21,396,000, or
23 cents a share, in the first three months of 1995. The 1995 results include
the effect of 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 (see Note 4 to the consolidated financial statements, page 4).
Excluding the impact of this charge, net income for the first three months of
1995 would have been $123,604,000, or $1.33 per share. Higher wellhead prices
for natural gas, increased gas and oil production, colder weather, lower
operating costs and the impact of new rates in place for most of the Company's
gas distribution customers contributed to the improved 1996 results.
The Company's average gas wellhead price was $2.71 a thousand cubic feet (Mcf)
in the first quarter of 1996, up significantly from $1.82 in 1995 and
reflecting higher demand due to the colder than normal weather and reduced
storage inventory levels nationwide. Gas production increased 30 percent and
oil production was up 36 percent in the first three months of 1996 compared to
1995. Weather in the Company's retail service territories in the 1996 first
quarter was 14.6 percent colder than 1995 and 7.3 percent colder than normal.
The colder weather resulted in higher space-heating sales by the Company's
distribution subsidiaries and increased transportation volumes by the
transmission operations. First quarter 1996 results also include the impact
of general rate increases that became effective in the latter part of 1995 at
three of the Company's gas distribution subsidiaries.
Operating Revenues
Regulated gas sales revenues increased $43.0 million in the first three months
of 1996 compared to the prior year period, with sales volumes increasing 14.3
billion cubic feet (Bcf) from 1995 to 142.0 Bcf. Regulated gas sales revenues
and volumes were up for the Company's residential and commercial customer
groups but were relatively unchanged for the industrial customer class
compared to 1995. Nonregulated gas sales revenues increased $26.3 million, to
$319.2 million, while sales volumes declined 62.5 Bcf to 109.5 Bcf. Although
sales from production increased, nonregulated gas sales volumes declined as
the energy marketing services component reduced transaction volumes due to
market conditions and lower gas margins.
Gas transportation and storage revenues were $142.6 million in the 1996 first
quarter, up $12.9 million over the comparable 1995 period. The increase
reflects higher gas transportation revenues, which were up $13.3 million over
1995 due in part to increased transportation volumes at the distribution
subsidiaries.
8
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (Continued)
Other operating revenues increased $41.3 million, to $104.0 million, in the
first three months of 1996. Electricity sales by the energy marketing
services component increased $16.9 million compared to the 1995 period.
Revenues from the sale of products extracted from natural gas increased $8.1
million in the 1996 first quarter, due in part to increased propane sales
volumes and rates. In addition, revenues from oil brokering were up $5.8
million, while revenues from the sale of oil and condensate production
increased $3.9 million. Other revenues increased $6.6 million in the first
quarter of 1996 due in part to increased revenues from royalties and other
miscellaneous revenue categories.
Operating Expenses
Operating expenses, excluding income taxes, declined $194.6 million in the
first three months of 1996 to $1,012.9 million. Excluding the impact of the
impairment of gas and oil producing properties of $226.2 million in the 1995
first quarter, operating expenses increased $31.6 million compared to the
prior year. Total purchased gas expense declined $8.9 million, to $628.3
million. Decreased volume requirements in connection with nonregulated gas
sales and the deferral of purchased gas costs by the regulated subsidiaries
more than offset higher average purchase prices during the 1996 quarter.
Transport capacity and other purchased products expense increased $29.7
million, to $72.1 million, due primarily to electricity purchased for resale
by the energy marketing services component and oil purchased for resale by CNG
Producing Company (CNG Producing). Combined operation and maintenance expense
increased $7.7 million in the 1996 first quarter due largely to higher
royalties paid and workforce reduction costs (see Note 5 to the consolidated
financial statements, page 5). These increases were partially offset by lower
payroll and administrative expenses. Depreciation and amortization expense
increased $4.7 million due primarily to higher gas and oil production volumes.
Taxes, other than income taxes, were down $1.6 million in 1996 due to lower
excise, property and storage taxes.
Income taxes increased $115.3 million in the first quarter of 1996 reflecting
pretax income of $278.3 million in that quarter, compared to a pretax loss of
$39.2 million in the prior year period.
Interest Revenues and Interest Charges
Interest revenues were $1.1 million in the 1996 first quarter, relatively
unchanged from the prior year. Total interest charges increased $1.0 million
in the first three months of 1996 due primarily to interest expense related to
the $150 million of debentures issued in April 1995. This increase was
partially offset by reduced interest expense related to the decreased level of
commercial paper borrowings in 1996.
In connection with this discussion of results of operations, reference is also
made to Notes 2 and 3 to the consolidated financial statements.
9
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (Continued)
DATA BY BUSINESS COMPONENTS
The following table sets forth certain data for the components of the
Company's business.
_____________________________________________________________________________
Three Months to
March 31
__________________
1996 1995
_____________________________________________________________________________
OPERATING INCOME BEFORE INCOME TAXES (In Millions)
Distribution................................ $ 204.5 $ 152.9
Transmission................................ 65.2 54.2
Exploration and production.................. 36.2 (227.4)
Energy marketing services*.................. (1.0) 2.5
Other....................................... .5 .8
Corporate and eliminations.................. (3.2) 1.1
________ ________
Total..................................... $ 302.2 $ (15.9)
======== ========
OPERATING REVENUES (In Millions)
Distribution................................ $ 801.6 $ 749.2
Transmission................................ 154.8 140.5
Exploration and production.................. 142.3 83.6
Energy marketing services*.................. 379.9 323.4
Other....................................... 4.5 4.4
Corporate and eliminations.................. (168.0) (109.5)
________ ________
Total..................................... $1,315.1 $1,191.6
======== ========
GAS SALES (In Bcf)
Distribution................................ 142.0 127.7
Exploration and production.................. 36.9 30.3
Energy marketing services*.................. 115.6 171.9
Eliminations................................ (43.0) (30.2)
________ ________
Total sales............................... 251.5 299.7
======== ========
GAS TRANSPORTATION (In Bcf)
Distribution................................ 55.7 48.0
Transmission................................ 284.4 254.9
Exploration and production.................. .4 .4
Energy marketing services*.................. .9 1.3
Eliminations................................ (76.3) (63.0)
________ ________
Total transportation...................... 265.1 241.6
======== ========
_____________________________________________________________________________
*Amounts for the three months ended March 31, 1996 include CNG Storage Service
Company (CNG Storage). CNG Storage was included in the "Transmission"
component for 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
$204.5 million in the first three months of 1996, up $51.6 million, or 34
percent, from the 1995 quarter. Distribution throughput in the first quarter
of 1996 was 197.7 Bcf, a 13 percent increase compared to 1995, reflecting
weather that was colder than normal and colder than 1995. First quarter 1996
results also benefited from cost reduction efforts at the distribution
subsidiaries and the impact of general rate increases that went into effect in
the latter part of 1995 at The Peoples Natural Gas Company, Hope Gas, Inc. and
The East Ohio Gas Company (East Ohio Gas).
Residential gas sales volumes increased 12.0 Bcf in the first three months of
1996 to 104.9 Bcf. Sales to commercial customers rose 2.1 Bcf to 34.0 Bcf
while volumes transported to these customers increased 3.5 Bcf to 14.0 Bcf.
Total deliveries to industrial customers increased 2.3 Bcf, to 41.1 Bcf,
compared with the prior year. Industrial transport volumes were up 2.2 Bcf to
38.2 Bcf, while sales volumes rose .1 Bcf to 2.9 Bcf. Off-system transport
volumes rose 2.0 Bcf in the 1996 quarter.
Transmission
Operating income before income taxes of the gas transmission operations in the
1996 first quarter was $65.2 million, up $11.0 million from $54.2 million in
the prior year period. Gas throughput, consisting entirely of transportation
volumes, was 284.4 Bcf in the first quarter of 1996, up from 254.9 Bcf in
1995. Increased gas transportation and by-products revenues, higher
transportation rates and lower combined operation and maintenance expenses,
partially offset by workforce reduction charges, contributed to 1996 results.
Exploration and Production
The exploration and production operations reported operating income before
income taxes of $36.2 million in the first three months of 1996, compared with
an operating loss before income taxes of $227.4 million in the first quarter
of 1995. Excluding the impact of the 1995 first quarter charge of $226.2
million for the impairment of gas and oil producing properties (see Note 4 to
the consolidated financial statements, page 4), the exploration and production
operations experienced an operating loss of $1.2 million in 1995. The 1996
first quarter results reflect higher gas and oil wellhead prices, increased
gas and oil production, and lower operation expense compared to 1995.
The Company's average gas wellhead price was $2.71 per Mcf in the 1996 first
quarter, up 49 percent from $1.82 in 1995, reflecting higher demand resulting
from the colder weather in 1996 and reduced storage inventory levels
nationwide. Gas production in the first three months of 1996 was 31.7 Bcf, up
from 24.3 Bcf in 1995. The increase in gas production is due partially to the
impact of Popeye, a deep-water project in the Gulf of Mexico which began
production in January 1996, and the effect of voluntary production shut-ins
in the 1995 first quarter resulting from low prices. Another significant Gulf
of Mexico project, Main Pass 225, commenced production late in the first
quarter of 1996. The Company's average oil wellhead price increased to $16.80
a barrel in the 1996 quarter from $16.14 in the prior year. Oil production in
the first quarter of 1996 was 1,002,700 barrels, up 36 percent from 735,200
barrels in 1995. The increase in oil production in 1996 is due in large part
to production from the Popeye project.
11
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (Continued)
Energy Marketing Services
Energy Marketing Services reported an operating loss before income taxes of
$1.0 million in the first three months of 1996, compared to operating income
before income taxes of $2.5 million in the prior year quarter. The loss in
the 1996 period reflects the significant increase in average purchased gas
costs during the quarter which exceeded the gas sales revenues recognized
under term sales contracts. Total throughput for this component was 116.5 Bcf
in the first quarter of 1996, a decrease from 173.2 Bcf in 1995, as the energy
marketing services component reduced transaction volumes due to market
conditions and lower gas margins. Power marketing, or electric volumes
marketed, increased in the first quarter of 1996 to 792,000 megawatt-hours
compared with 429,000 megawatt-hours in 1995.
This component also includes the Company's ownership in seven independent
power plants and reported equity income of $.6 million in the first quarter of
1996, compared to $.3 million in 1995. These amounts are not included in
operating income before income taxes.
SELECTED TWELVE-MONTH DATA
The following selected financial data (unaudited) relates to the twelve months
ended March 31, 1996 (in thousands of dollars):
______________________________________________________________________________
Operating revenues..................................... $3,430,772
Operating expenses..................................... 2,963,222
Operating income before income taxes............... 467,550
Income taxes........................................... 118,221
Other income (deductions).............................. (20,043)
Interest charges....................................... 105,746
Net income......................................... $ 223,540*
Earnings per share of common stock................. $2.39*
Average common shares outstanding (thousands)...... 93,490
Times fixed charges earned............................. 3.79
______________________________________________________________________________
*Includes charges related to workforce reductions in the last three quarters
of 1995 totaling $25,618,000 after taxes, or 27 cents a share; a write-down
of coal properties in the 1995 second quarter amounting to $20,323,000 after
taxes, or 22 cents a share; and charges related to workforce reductions in
the 1996 first quarter totaling $2,069,000 after taxes, or 2 cents a share.
OTHER INFORMATION
Environmental Matter
As previously reported, the Company discovered in the course of conducting a
routine environmental survey at East Ohio Gas that some of its practices for
collecting and handling pipeline fluids that may have been contaminated with
polychlorinated biphenyls (PCBs) may not have complied with environmental
regulations. The appropriate agencies have been notified as part of the
federal self-disclosure process and discussions are continuing with the
agencies to gain approval of revised collection and handling procedures. A
thorough investigation of all collection and handling practices at East Ohio
Gas is ongoing and the results of this investigation will be provided to the
appropriate agencies. The discrepancies in the procedures were primarily in
connection with recordkeeping and did not involve spills, leaks, or other
mishandling of PCB contaminated fluids and did not damage the environment.
12
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (Concluded)
The Company is expected to enter into a Memorandum of Agreement with the
United States Environmental Protection Agency (EPA) later in 1996 concerning
the evaluation of the Company's compliance with PCB regulations and the
disclosure and corrective action relating to this evaluation. The agreement
will provide that at the conclusion of the evaluation process, the Company and
the EPA will negotiate an enforceable Consent Agreement resolving all issues
of non-compliance with environmental regulations.
The Company anticipates that penalties, if any, incurred in connection with
this matter may be mitigated as a result of the Company's self disclosure.
The amount of any liabilities in connection with this matter is not expected
to be material with respect to the Company's financial position, results of
operations or cash flows.
Exploration and Production
Natural gas production began in January 1996 at Popeye, a deep-water natural
gas discovery in the Green Canyon area of the Gulf of Mexico. The field is
producing over 120 million cubic feet of gas per day from two wells flowing
through a state of the art subsea facility developed to produce gas 2,000 feet
below sea level. Shell Offshore Inc., operator of the project, and CNG
Producing each have a 37.5 percent interest in the property. Other
participants in the joint venture are Mobil Oil Exploration and Producing
Southeast and BP Exploration Inc.
The natural gas gathering system built by CNG Energy Services Corporation and
Centana Energy Corporation in the Gulf of Mexico became operational during
March 1996. The system is gathering over 136 million cubic feet of natural
gas and 1,850 barrels of condensate per day from two wells in the Main Pass
area. This system is also expected to gather gas at the Viosca Knoll field in
early 1997. Construction will begin later in 1996 on a related oil gathering
project.
CNG Producing, acting alone or with partners, was the high bidder on five of
the tracts offered at the federal government's April 24, 1996 Gulf of Mexico
lease sale. The Company's bids totaled $7.6 million for 100 percent working
interests in four tracts and a 50 percent interest in the remaining property.
The bids must still be accepted by the government.
State Regulatory Matters
As previously reported, on February 23, 1996, Virginia Natural Gas, Inc.
(Virginia Natural Gas) requested approval from the Virginia State Corporation
Commission (VSCC) to withdraw its September 1, 1995 expedited rate filing.
This filing had requested an annual revenue increase of $7.2 million. The new
rates went into effect, subject to refund, on October 1, 1995. On March 28,
1996, Virginia Natural Gas received approval from the VSCC to withdraw the
rate filing. Customer refunds related to the filing will be made on or before
July 17, 1996.
On January 30, 1996, the VSCC issued a final order in connection with Virginia
Natural Gas' September 1, 1994 general rate filing. The order results in an
annual revenue increase of $6.1 million, retroactive to October 1, 1994, the
date new rates went into effect subject to refund. Customer refunds resulting
from the order were made in early 1996. The order reflects an imputed return
on equity of 11.3 percent. In its filing, Virginia Natural Gas had requested
a $9.9 million increase in annual revenues and a return on equity of 11.75
percent.
**********
In connection with the financial information included in PART I of this
report, reference is made to the Company's 1995 Annual Report and its Annual
Report to the SEC on Form 10-K for the year ended December 31, 1995.
13
<PAGE>
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
There have been no material new legal proceedings instituted in the first
quarter of 1996, and there have been no material developments during the
quarter in the legal proceedings disclosed in the Company's 1995 Form 10-K as
then pending.
Reference is made to "Environmental Matter" and "State Regulatory Matters,"
pages 12 and 13, respectively, for a description of an environmental matter
and certain regulatory proceedings, respectively.
ITEM 2. CHANGES IN SECURITIES
(a) See response to Item 6. below.
(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
On January 23, 1996, the Company filed a Current Report on Form 8-K regarding
a Rights Agreement. Financial statements were not required with this filing.
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 ended March
31, 1996 and 1995
(12) Statement re Computation of Ratios:
Ratio of Earnings to Fixed Charges of Consolidated Natural Gas Company
and Subsidiaries for the twelve months ended March 31, 1996
(27) Financial Data Schedule
______________________________________________________________________________
14
<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)
D. M. Westfall
_______________________________________
D. M. Westfall
Senior Vice President
and Chief Financial Officer
S. R. McGreevy
_______________________________________
S. R. McGreevy, Vice President,
Accounting and Financial Control
May 13, 1996
<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 ended March
31, 1996 and 1995 is 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 March 31, 1996 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)
____________________________________________________________________________
Three Months to March 31
1996 1995
____________________________________________________________________________
EARNINGS (LOSS) PER SHARE OF COMMON STOCK,
as Shown on the Consolidated Statement of Income
Net income (loss)............................... $180,800 $(21,396)
________ ________
Average common shares outstanding............... 94,028 93,045
________ ________
Earnings (loss) per share of common stock..... $ 1.92 $ (.23)
======== ========
PRIMARY EARNINGS (LOSS) PER SHARE
Net income (loss)............................... $180,800 $(21,396)
________ ________
Average common shares outstanding............... 94,028 93,045
Incremental shares resulting from
assumed exercise of stock options............. 241 22
________ ________
Average common shares, as adjusted.............. 94,269 93,067
________ ________
Primary earnings (loss) per share............. $ 1.92(1) $ (.23)(2)
======== ========
FULLY DILUTED EARNINGS (LOSS) PER SHARE
Net income (loss)............................... $180,800 $(21,396)
Interest on 7 1/4% Convertible Subordinated
Debentures, net of tax effect................. 2,924 2,974
________ ________
Net income (loss), as adjusted.................. 183,724 (18,422)
________ ________
Average common shares outstanding............... 94,028 93,045
Incremental shares resulting from
assumed exercise of stock options............. 241 64
Shares issuable from assumed conversion of
7 1/4% Convertible Subordinated Debentures.... 4,559 4,559
________ ________
Average common shares, as adjusted.............. 98,828 97,668
________ ________
Fully diluted earnings (loss) per share....... $ 1.86 $ (.19)(2)
======== ========
____________________________________________________________________________
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.
EXHIBIT 12
CONSOLIDATED NATURAL GAS COMPANY AND SUBSIDIARIES
RATIO OF EARNINGS TO FIXED CHARGES
(Thousands of Dollars)
_____________________________________________________________________________
Twelve Months to March 31 1996
_____________________________________________________________________________
Earnings:
Net income................................................ $223,540
Add income taxes.......................................... 118,221
________
Income before income taxes.............................. 341,761
Distributed income from unconsolidated investee,
less equity in earnings thereof......................... 1,748
________
Subtotal................................................ 343,509
________
Add fixed charges:
Interest on long-term debt, including amortization
of debt discount and expense less premium............. 98,520
Other interest expense.................................. 12,850
Portion of rentals deemed to be representative
of the interest factor................................ 9,892
Fixed charges associated with 50% projects with debt.... 1,968
________
TOTAL FIXED CHARGES......................................... 123,230
________
TOTAL EARNINGS.............................................. $466,739
========
RATIO OF EARNINGS TO FIXED CHARGES.......................... 3.79
========
_____________________________________________________________________________
<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 MARCH 31,
1996 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> MAR-31-1996
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 2,910,109
<OTHER-PROPERTY-AND-INVEST> 1,009,450
<TOTAL-CURRENT-ASSETS> 1,174,925
<TOTAL-DEFERRED-CHARGES> 349,228
<OTHER-ASSETS> 103,266
<TOTAL-ASSETS> 5,546,978
<COMMON> 258,706
<CAPITAL-SURPLUS-PAID-IN> 457,781
<RETAINED-EARNINGS> 1,444,884
<TOTAL-COMMON-STOCKHOLDERS-EQ> 2,185,218
0
0
<LONG-TERM-DEBT-NET> 1,288,115
<SHORT-TERM-NOTES> 0
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 195,000
<LONG-TERM-DEBT-CURRENT-PORT> 10,250
0
<CAPITAL-LEASE-OBLIGATIONS> 0
<LEASES-CURRENT> 0
<OTHER-ITEMS-CAPITAL-AND-LIAB> 1,892,242
<TOT-CAPITALIZATION-AND-LIAB> 5,546,978
<GROSS-OPERATING-REVENUE> 1,315,084
<INCOME-TAX-EXPENSE> 97,507
<OTHER-OPERATING-EXPENSES> 1,012,908
<TOTAL-OPERATING-EXPENSES> 1,110,415
<OPERATING-INCOME-LOSS> 204,669
<OTHER-INCOME-NET> 3,153
<INCOME-BEFORE-INTEREST-EXPEN> 207,822
<TOTAL-INTEREST-EXPENSE> 27,022
<NET-INCOME> 180,800
0
<EARNINGS-AVAILABLE-FOR-COMM> 180,800
<COMMON-STOCK-DIVIDENDS> 45,822
<TOTAL-INTEREST-ON-BONDS> 97,378
<CASH-FLOW-OPERATIONS> 281,733
<EPS-PRIMARY> 1.92
<EPS-DILUTED> 1.86
</TABLE>
