<PAGE> 1
COMMISSION FILE NO. 30-203
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-----------------
FORM U5S
ANNUAL REPORT
FOR THE YEAR ENDED
DECEMBER 31, 1995
-----------------
Filed pursuant to the Public Utility Holding Company Act of 1935
by
CONSOLIDATED NATURAL GAS COMPANY
CNG TOWER, 625 LIBERTY AVENUE, PITTSBURGH, PA 15222-3199
<PAGE> 2
CONSOLIDATED NATURAL GAS COMPANY
FORM U5S--ANNUAL REPORT
For the Year Ended December 31, 1995
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C> <C> <C>
ITEM 1. SYSTEM COMPANIES AND INVESTMENT THEREIN AS OF DECEMBER 31, 1995............... 1
ITEM 2. ACQUISITIONS OR SALES OF UTILITY ASSETS....................................... 3
ITEM 3. ISSUE, SALE, PLEDGE, GUARANTEE OR ASSUMPTION OF SYSTEM SECURITIES............. 3
ITEM 4. ACQUISITION, REDEMPTION OR RETIREMENT OF SYSTEM SECURITIES.................... 4
ITEM 5. INVESTMENTS IN SECURITIES OF NON-SYSTEM COMPANIES............................. 6
ITEM 6. OFFICERS AND DIRECTORS
Part I. Names, principal business address and positions held as of
December 31, 1995................................................. 7
Part II. Banking connections............................................... 12
Part III. Compensation and other related information........................ 12
ITEM 7. CONTRIBUTIONS AND PUBLIC RELATIONS............................................ 14
ITEM 8. SERVICE, SALES AND CONSTRUCTION CONTRACTS
Part I. Contracts for services or goods between system companies.......... 14
Part II. Contracts to purchase services or goods between any system company
and any affiliate................................................. 14
Part III. Employment of any person by any system company for the performance
on a continuing basis of management services...................... 14
ITEM 9. WHOLESALE GENERATORS AND FOREIGN UTILITY COMPANIES
Part I. Information concerning interests held by system companies in
exempt wholesale generators or foreign utility companies.......... 15
Part II. Relationship of exempt wholesale generators and foreign utility
companies to system companies, and financial data................. 16
Part III. Investment in exempt wholesale generators and foreign utility
companies......................................................... 16
ITEM 10. FINANCIAL STATEMENTS AND EXHIBITS
Financial Statements (Index).................................................. 18
Exhibits...................................................................... 59
SIGNATURE................................................................................ 60
</TABLE>
<PAGE> 3
CONSOLIDATED NATURAL GAS COMPANY
FORM U5S--ANNUAL REPORT
For the Year Ended December 31, 1995
ITEM 1. SYSTEM COMPANIES AND INVESTMENT THEREIN AS OF DECEMBER 31, 1995
<TABLE>
<CAPTION>
Number of Owner's
Common % of Issuer's Book
Shares Voting Book Value
Name of Company Business Owned Power Value (Note 1)
- --------------------------------------- -------------------- --------- ------ --------- --------
(Thousands of Dollars)
<S> <C> <C> <C> <C> <C>
CONSOLIDATED NATURAL GAS COMPANY Holding Company
("Registrant," "Parent Company,"
"Company" or "CNG"):
Consolidated Natural Gas Service
Company, Inc.
("Service Company" or "CNGSvc").... Service Company 100 100% $ 10 $ 10
Unsecured debt................ -- -- $ 14,631 $ 14,631
CNG Transmission Corporation
("CNG Transmission" or "CNGT")..... Gas transmission 59,000 100% $746,025 $745,449
Unsecured debt................ -- -- $388,359 $388,359
The East Ohio Gas Company
("East Ohio Gas" or "EOG")......... Gas utility 4,159,353 100% $407,128 $386,664
Unsecured debt................ -- -- $209,722 $209,722
The Peoples Natural Gas Company
("Peoples Natural Gas" or "PNG")... Gas utility 1,655,350 100% $243,108 $233,125
Unsecured debt................ -- -- $130,650 $130,650
Virginia Natural Gas, Inc.
("Virginia Natural Gas" or
"VNG")........................... Gas utility 4,298 100% $171,204 $171,189
Unsecured debt................ -- -- $ 73,418 $ 73,418
Hope Gas, Inc. ("Hope Gas" or "HGI")... Gas utility 409,000 100% $ 59,781 $ 58,621
Unsecured debt................ -- -- $ 38,500 $ 38,500
West Ohio Gas Company
("West Ohio Gas" or "WOG")......... Gas utility 1,499 100% $ 25,047 $ 25,016
Unsecured debt................ -- -- $ 12,639 $ 12,639
CNG Producing Company
("CNG Producing" or "CNGP")........ Exploration and 47,084 100% $484,406 $489,187
Unsecured debt................ production -- -- $253,575 $253,575
CNG Power Company
("CNG Power") (Note 2)............. Nonutility energy 22,460 100% $ 29,084 $ 29,084
Unsecured debt................ ventures -- -- $ 13,473 $ 13,473
CNG Energy Services Corporation
("CNG Energy Services" or
"CNGESC")........................ Energy marketing 1,005 100% $ 3,955 $ 3,818
CNG Power Services Corporation
("CNG Power Services" or
"CNGPSC")........................ Electric power 52 100% $ (145) $ (145)
marketing
CNG Storage Service Company
("CNG Storage" or "CNGStr")........ Gas storage 1,366 100% $ 13,736 $ 13,552
Unsecured debt................ services -- -- $ 7,350 $ 7,350
- ---------------
Notes to ITEM 1 appear on the next page.
</TABLE>
1
<PAGE> 4
ITEM 1. SYSTEM COMPANIES AND INVESTMENT THEREIN AS OF DECEMBER 31, 1995
(Continued)
<TABLE>
<CAPTION>
Number of Owner's
Common % of Issuer's Book
Shares Voting Book Value
Name of Company Business Owned Power Value (Note 1)
- --------------------------------------- -------------------- --------- ------ --------- --------
(Thousands of Dollars)
<S> <C> <C> <C> <C> <C>
CONSOLIDATED NATURAL GAS COMPANY (Continued)
Consolidated System LNG Company
("Consolidated LNG" or "LNG") Importer of
(Note 3)......................... liquified 2,840 100% $32,359 $32,359
natural gas and
gas wholesaler
CNG Research Company
("CNG Research")................... Administers research 1,554 100% $ 83 $ 83
activities
CNG Coal Company ("CNG Coal").......... Holds System 3,736 100% $20,834 $20,834
coal reserves
CNG Financial Services, Inc. ("CNG
Financial")........................ Financing 5 100% $ 50 $ 50
transactions
CNG TRANSMISSION CORPORATION:
CNG Iroquois, Inc.
("CNG Iroquois")................... Special purpose 1,494 100% $18,307 $18,307
subsidiary (Note 4)
CNG PRODUCING COMPANY:
CNG Pipeline Company ("CNG Pipeline").. Oil pipeline 12,000 100% $ 1,588 $ 1,588
CNG POWER COMPANY: (Note 8)
CNG Bear Mountain, Inc.
("CNG Bear Mountain").............. Special purpose 1 100% $ 16 $ 16
subsidiary (Note 5)
CNG Market Center Services, Inc.
("CNG Market Center Services" or
"CNGMCS")........................ Special purpose 10 100% $ 74 $ 74
subsidiary (Note 6)
CNG Technologies, Inc. ("CNG
Technologies")..................... Development of 200 100% $ 1,919 $ 1,919
new gas-related
technologies
Granite Road CoGen, Inc.
("Granite Road")................... Special purpose 1,000 100% $ 1 $ 1
subsidiary (Note 7)
CNG POWER SERVICES CORPORATION:
CNG Lakewood, Inc. ("CNG Lakewood").... Special purpose 52 100% $ 126 $ 554
subsidiary (Note 8)
</TABLE>
- ---------------
Notes:
(1) The Parent Company's investment in common stock of its subsidiaries is
stated at equity to comply with Securities and Exchange Commission ("SEC")
rules. The chart of accounts used during 1995 by the Registrant and its
subsidiaries, except Service Company and CNG Power Services, was the Uniform
System of Accounts Prescribed for Natural Gas Companies by the Federal
Energy Regulatory Commission ("FERC"). The Service Company used the Uniform
System of Accounts for Subsidiary
2
<PAGE> 5
ITEM 1. SYSTEM COMPANIES AND INVESTMENT THEREIN AS OF DECEMBER 31, 1995
(Concluded)
Service Companies prescribed by the SEC. CNG Power Services used the FERC's
Uniform System of Accounts Prescribed for Public Utilities and Licensees.
(2) Effective January 16, 1995, CNG Energy Company was renamed CNG Power
Company.
(3) Consolidated LNG has ended its involvement in liquified natural gas
operations and is currently recovering its undepreciated investment in
related facilities, plus carrying charges and taxes, through a FERC-approved
amortization surcharge.
(4) CNG Iroquois holds a 9.4% general partnership interest in Iroquois Gas
Transmission System, L.P.
(5) CNG Bear Mountain was incorporated in Delaware on December 20, 1994, to
acquire a general partnership interest in Bear Mountain Limited, which owns
an independent power project that will be a qualifying cogeneration facility
under the Public Utility Regulatory Policies Act of 1978.
(6) CNG Market Center Services holds a 50% general partnership interest in the
CNG/Sabine Center gas marketing hub.
(7) Granite Road holds a 50% general partnership interest in Granite Road
Limited, a partnership planning the development of a cogeneration facility.
(8) CNG Lakewood holds a 1% general partnership interest in Lakewood
Cogeneration, L.P. Also, CNG Power, an affiliate, holds a 34% limited
partnership interest in Lakewood Cogeneration, L.P.
ITEM 2. ACQUISITIONS OR SALES OF UTILITY ASSETS
During 1995, East Ohio Gas sold working interests in 62 gas wells in Ohio to 15
different nonaffiliated oil and gas producers for an aggregate amount of
$274,182. These transactions are exempt under Rule 44(b).
Also during 1995, Virginia Natural Gas exchanged a small regulator site with a
non-affiliate adjoining property owner for an easement of right-of-way for a
site on which to construct a replacement regulator. This transaction was
approved by the Virginia State Corporation Commission and is exempt under Rule
44(b).
ITEM 3. ISSUE, SALE, PLEDGE, GUARANTEE OR ASSUMPTION OF SYSTEM SECURITIES
During 1995, Virginia Natural Gas issued security in the form of surety bonds
and a bank letter of credit in connection with performance guarantees related to
erosion and sediment control. The aggregate original amount of such security was
$333,500, with $55,390 remaining outstanding at December 31, 1995. These
transactions were exempt pursuant to Rule 45(b)(6).
The Company has issued guarantees to the states of Pennsylvania, Virginia and
West Virginia to maintain worker's compensation self-insured status for CNG
Transmission, Virginia Natural Gas and Hope Gas. Self-insured status means that
the subsidiary pays the worker's compensation claims directly instead of paying
into the state maintained fund. In recent years these states have revised their
worker's compensation programs and now require parent company guarantees--in
addition to surety bonds--for subsidiary companies to maintain self-insured
status. These transactions are exempt pursuant to Rule 45(b)(6).
3
<PAGE> 6
ITEM 4. ACQUISITION, REDEMPTION OR RETIREMENT OF SYSTEM SECURITIES
Calendar Year 1995
(Thousands of Dollars)
<TABLE>
<CAPTION>
Name of Company Number of Shares or
Acquiring, Redeeming Principal Amount
Name of Issuer and Title of Issue or Retiring Securities Acquired
- ---------------------------------------------- ----------------------- ---------------------
<S> <C> <C>
REGISTERED HOLDING COMPANY:
Parent Company:
Common stock, par value $2.75 per share..... Parent Company 17,351 shares
(Note 3)
East Ohio Gas:
Capital stock, par value $50 per share...... Parent Company 600,000 shares
West Ohio Gas:
Capital stock, par value $10,000 per
share.................................... Parent Company 140 shares
CNG Research:
Capital stock, par value $10,000 per
share.................................... Parent Company 20 shares
Total Registrant.......................
SUBSIDIARIES OF REGISTERED HOLDING COMPANY:
Virginia Natural Gas:
Unsecured loan.............................. Virginia Natural Gas
CNG Producing:
Non-negotiable notes........................ CNG Producing
CNG Power:
Non-negotiable note......................... CNG Power
Consolidated LNG:
Capital stock, par value $10,000 per
share.................................... Consolidated LNG
Total subsidiaries.....................
CNG POWER:
CNG Bear Mountain:
Capital stock, par value $10,000 per
share.................................... CNG Power 1 share
</TABLE>
- ---------------
Notes:
(1) All securities redeemed or retired have been cancelled.
(2) Public Utility Holding Company Act of 1935.
(3) By order dated May 8, 1992, in Release No. 35-25528 (File No. 70-7948), the
Parent Company received Commission authorization to acquire through open
market purchases a total of 4 million shares of its common stock through
December 31, 1995. Shares of common stock may also be acquired by the Parent
Company under the exchange and tax withholding provisions of the 1991 Stock
Incentive Plan and the tax withholding provisions of the Long-Term Incentive
Plan pursuant to Commission authorizations in Release Nos. 35-25294 (File
No. 70-7838) and 35-25425 (File No. 70-7095), respectively. The shares
repurchased or acquired by the Parent Company are held as treasury stock and
are available for reissuance for general corporate purposes or in connection
with various employee benefit plans.
4
<PAGE> 7
<TABLE>
<CAPTION>
Number of Shares or
Principal Amount
Redeemed or Retired
(Note 1) Consideration Commission Authorization (Note 2)
--------------------- ------------- --------------------------------------
<S> <C> <C>
$ 634 (Note 3)
$30,000 Rule 52 exemption
$ 1,400 Rule 52 exemption
$ 200 Release No. 26072 (File No. 70-8415)
-------
$32,234
=======
$4,000 $ 4,000 Rule 42
$4,326 $ 4,326 Rule 42
$ 357 $ 357 Rule 42
5,500 shares $55,000 Release No. 26360 (File No. 70-8599)
-------
$63,683
=======
$ 10 Release No. 26210 (File No. 70-8525)
=======
</TABLE>
---------------
During 1995, no open market purchases were made by the Parent Company. The
Parent Company acquired 17,351 shares during 1995 under the provisions of
the 1991 Stock Incentive Plan and the Long-Term Incentive Plan. Prior to
December 31, 1995, the 17,351 shares were sold to the System's Thrift
Plans at an average price of $36.02 a share. Total proceeds of these sales
amounted to $625,000.
5
<PAGE> 8
ITEM 5. INVESTMENTS IN SECURITIES OF NON-SYSTEM COMPANIES
The aggregate amounts of investments at December 31, 1995, in persons operating
in the system's retail service area are shown below.
<TABLE>
<CAPTION>
Number of Aggregate
Name of Owner Persons Business of Persons Investment
- ---------------------------------- ---------- ---------------------------------- ----------
<S> <C> <C> <C>
CNG Transmission One State Development Fund $ 100,000
Hope Gas One State Development Fund $ 100,000
Hope Gas One Economic Development Small
Business Investment Company (Note) $2,475,000
Virginia Natural Gas One State Development Fund $ 50,369
</TABLE>
- ---------------
Note: Investment made pursuant to the West Virginia Capital Companies Act and
under Rule 40(a)(5).
The above do not include investments in securities of non-system companies which
have been authorized by Commission order under the Public Utility Holding
Company Act of 1935 and which are subject to Rule 24 Certificate filing
requirements.
6
<PAGE> 9
ITEM 6. OFFICERS AND DIRECTORS
Part I. Names, principal business address and positions held as of December 31,
1995
The names, principal business address and positions held as of December 31,
1995, of the officers and directors of system companies is presented in the
tables on pages 8 through 11. The principal business address of each officer and
director is indicated in such tables by the numbers (1) through (22). The
addresses associated with these number designations are shown in the following
address key. The symbols used to indicate the positions held by officers and
directors are shown in the position symbol key below.
Changes effective January 1, 1996
The following change to the Parent Company officers was made effective January
1, 1996: R. W. Best was elected Senior Vice President. This officer also serves
in the same capacity with the Service Company.
ADDRESS KEY
(1) CNG Tower, Pittsburgh, PA 15222
(2) 625 Liberty Avenue, Pittsburgh, PA 15222
(3) 445 West Main Street, Clarksburg, WV 26301
(4) 1717 East Ninth Street, Cleveland, OH 44114
(5) 1450 Poydras Street, New Orleans, LA 70112
(6) 5100 East Virginia Beach Boulevard, Norfolk, VA 23502
(7) Bank One Center West, Clarksburg, WV 26302
(8) 319 West Market Street, Lima, OH 45802
(9) 29 Everett Street, Cambridge, MA 02138
(10) 1819 L Street, N.W., Washington, DC 20036
(11) One Park Ridge Center, Pittsburgh, PA 15244
(12) 101 N. Elizabeth, Suite 607, Lima, OH 45801
(13) 600 Grant Street, Pittsburgh, PA 15230
(14) One PPG Place, Suite 2210, Pittsburgh, PA 15222
(15) 1400 Hanna Building, Cleveland, OH 44115
(16) 131 Regent Wood Road, Northfield, IL 60093
(17) 1000 Six PPG Place, Pittsburgh, PA 15222
(18) 781 Weed Street, New Canaan, CT 06840
(19) 22 West 23rd Street, New York, NY 10010
(20) 500 J. Clyde Morris Boulevard, Newport News, VA 23601
(21) 401 College Place, Norfolk, VA 23510
(22) 787 Seventh Avenue, New York, NY 10019
POSITION SYMBOL KEY
<TABLE>
<S> <C> <C> <C> <C> <C>
CB -- Chairman of the Board SAVP -- Senior Assistant Vice President
P -- President AVP -- Assistant Vice President
SVP -- Senior Vice President AS -- Assistant Secretary
VP -- Vice President AT -- Assistant Treasurer
S -- Secretary AcGC -- Associate General Counsel
T -- Treasurer AtGC -- Assistant General Counsel
Cn -- Controller GM -- General Manager
D -- Director r -- Remuneration
CFO -- Chief Financial Officer df -- Directors' fees
GC -- General Counsel
</TABLE>
7
<PAGE> 10
ITEM 6. OFFICERS AND DIRECTORS (Continued)
Part 1. Names, principal business address and positions held as of December 31,
1995*
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Virginia
Parent Service CNG East Peoples Natural
Company Company Transmission Hope Gas Ohio Gas Natural Gas Gas
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Alderman, T. R. Lima, OH (8)
Atkinson, S. L. Clarksburg, WV (3) S-r
Baril, D. C. New Orleans, LA (5)
Barrack, W. S., Jr. New Canaan, CT (18) D-df
Bartels, M. G. Cleveland, OH (4) SVP-S-T-D-r
Borneman, D. W. Pittsburgh, PA (1) SAVP-r
Boswell, W. P. Pittsburgh, PA (2) VP-GC-S-D-r
Brakeman, B. F. Cleveland, OH (4) VP-r
Brink, G. R. Newport News, VA (20) D-df
Brown, H. E. Clarksburg, WV (3) VP-GC-AS-D-r
Butera, J. E. Pittsburgh, PA (1) AVP-r
Carter, G. B. Clarksburg, WV (3) AVP-r
Causey, J. L. Norfolk, VA (6) VP-r
Chamberlain, A. R. Norfolk, VA (6) VP-r
Chandler, N. F. Pittsburgh, PA (1) AS AS-r
Connell, D. W. Pittsburgh, PA (1) VP-r
Connolly, J. W. Pittsburgh, PA (13) D-df
Crittenden, J. A. Pittsburgh, PA (11)
Cuccinelli, K. T. Pittsburgh, PA (1) VP-r
Curia, J. A. Clarksburg, WV (3) VP-D-r
Davidson, G. A., Jr. Pittsburgh, PA (1) CB-D CB-D-r
Dodd, T. E. Pittsburgh, PA (11)
Elliott, R. S. Clarksburg, WV (7) AS-r
Fickenscher, D. A. Norfolk, VA (6) VP-GC-S-r
Flinn, J. A. Pittsburgh, PA (2) VP-D-r
Fox, W. A. Norfolk, VA (6) D P-D-r
Fratangelo, R. D. Pittsburgh, PA (1) VP-r
Fritsche, W. F., Jr. Pittsburgh, PA (1) SVP SVP-r P D
Funk, C. T., Jr. Pittsburgh, PA (1) VP-r
Garbe, T. F. Pittsburgh, PA (1) Cn Cn-r
Garrett, J. W. Pittsburgh, PA (1) AVP-r
George, S. G. Pittsburgh, PA (2) AcGC-AS-r
Gifford, R. R. Pittsburgh, PA (11) D
Greer, M. D. Clarksburg, WV (3) VP-D-r VP
Gregg, P. P. New Orleans, LA (5)
Grone, J. A. Lima, OH (8)
Groves, R. J. New York, NY (22) D-df
Haas, R. A., Jr. Pittsburgh, PA (1) AVP-r
Halbritter, M. A. Clarksburg, WV (7) GC-S-D-r
Hickly, G. J., Jr. Pittsburgh, PA (11)
Horgan, V. J. Pittsburgh, PA (11)
Hostetler, J. M. Pittsburgh, PA (1) r
Hunter, W. R. Norfolk, VA (6) VP-T-r
Jacquet, T. J. New Orleans, LA (5)
Jeffries, G. A. Pittsburgh, PA (11)
Johns, D. M., Jr. New Orleans, LA (5) AS
Jones, B. E. Washington, DC (10) VP-r
Keiffer, J. D. Pittsburgh, PA (11)
Kleinpeter, K. P. New Orleans, LA (5)
Klink, B. C. Cleveland, OH (4) SVP-D-r
Kovach, R. A. Cleveland, OH (4) VP-r
Lego, P. E. Pittsburgh, PA (14) D-df
Lepionka, R. L. Pittsburgh, PA (11)
Lewis, J. New Orleans, LA (5)
Madden, D. G. Pittsburgh, PA (1) AVP-r
Magnuson, M. G. Washington, DC (10) VP-AtGC-r
Manley, M. J. Clarksburg, WV (3) AT-r AT
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* See page 7 for certain changes effective January 1, 1996.
Address key and position symbol key are located on page 7.
8
<PAGE> 11
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Name of System Companies with Which Connected
- ------------------------------------------------------------------------------------------------------------------------------------
West CNG CNG CNG Energy CNG Power CNG Consolidated CNG CNG
Ohio Gas Producing Power Services Services Storage LNG Research CNG Coal Financial
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
AS-AT-r
AS
AS-r S
D
S-D
S S-r S S S
VP VP-D
VP-GM-D r VP-D
D D
P-D-r P-D P-D
SVP-CFO-T-D-r VP-T-D
S-T-D-r
Cn-T Cn-T-r T T
VP-D-r VP VP-D
AS AS AS AS
AS-r
AS-r AS AS
GC-S-r GC-AS-D
VP-D-r
VP-D-r
D
AT AT-r AT AT
SVP-D-r
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
9
<PAGE> 12
ITEM 6. OFFICERS AND DIRECTORS (Continued)
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Virginia
Parent Service CNG East Peoples Natural
Company Company Transmission Hope Gas Ohio Gas Natural Gas Gas
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Marks, E. J., III Pittsburgh, PA (1) r
McGreevy, S. R. Pittsburgh, PA (1) VP VP-r
McKenna, M. A. Cambridge, MA (9) D-df
McKeown, L. J. Pittsburgh, PA (1) S S-r AS
Meyer, D. S. Pittsburgh, PA (2) VP-T-D-r
Millet, D. G. New Orleans, LA (5)
Minter, S. A. Cleveland, OH (15) D-df
Newland, T. D. Cleveland, OH (4) D P-D-r
Nicholas, G. A. Clarksburg, WV (7) VP-GM-D-r
Nichols, C. J. New Orleans, LA (5)
Owens, R. M. Clarksburg, WV (7) VP-D-r
Peirson, W. R. Northfield, IL (16) D-df
Riley, H. P. New Orleans, LA (5) D
Roberts, C. E. Clarksburg, WV (3) AVP-r
Rutledge, D. B. New Orleans, LA (5)
Sable, R. M., Jr. Pittsburgh, PA (1) T T-r
Schwartz, E. S. Pittsburgh, PA (2) r
Simmons, R. P. Pittsburgh, PA (17) D-df
Simon, J. M. Norfolk, VA (6) Cn-AT-AS-r
Slaby, J. B. Clarksburg, WV (3) VP-T-D-r T
Smith, R. M. Pittsburgh, PA (2) VP-D-r
Suttle, N. W., Jr. Clarksburg, WV (3) AT-r AT
Sypolt, G. L. Clarksburg, WV (3) VP-D-r
Taaffe, G. A., Jr. Pittsburgh, PA (1) AS VP-AtGC-r GC
Taylor, R. D. Pittsburgh, PA (1) AVP-r
Tibbott, J. M. Pittsburgh, PA (1) AVP-r
Tower, T. N Pittsburgh, PA (11)
Usaj, J. S. Pittsburgh, PA (1) VP-r
Vuchetich, M. K. Lima, OH (8)
Wester, T. E. Pittsburgh, PA (2) VP-D-r
Westfall, D. M. Pittsburgh, PA (1) SVP-CFO SVP-CFO-r D
Whitehurst, G. W. Norfolk, VA (21) D-df
Whitlinger, M. M. Pittsburgh, PA (1) AT AT-r
Williams, S. E. Pittsburgh, PA (1) SVP-GC SVP-GC-r
Witter, D. J. Lima, OH (12)
Wright, R. E. Pittsburgh, PA (2) D P-D-r
Wyse, L. New York, NY (19) D-df
Yoho, M. L. Clarksburg, WV (3) SVP-D-r
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Address key and position symbol key are located on page 7.
10
<PAGE> 13
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Name of System Companies with Which Connected
- ------------------------------------------------------------------------------------------------------------------------------------
West CNG CNG CNG Energy CNG Power CNG Consolidated CNG CNG
Ohio Gas Producing Power Services Services Storage LNG Research CNG Coal Financial
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
AS
D D
AS AS AS
AT-r AT
P-D
AT-r
AT
P-D-r
r AS
D T-D VP-T-GM-D
VP-GM-D
T-D
D AS AS
SVP-D-r SVP
VP-GM-D-r
P-D
AT
GC-S-D D
GC
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
11
<PAGE> 14
ITEM 6. OFFICERS AND DIRECTORS (Continued)
Part II. Banking connections
Information concerning all officers and Directors of each system company who
have financial connections within the provisions of Section 17(c) of the Public
Utility Holding Company Act of 1935 as of December 31, 1995, follows:
<TABLE>
<CAPTION>
Position Held Applicable
Name of Officer Name and Location in Financial Exemption
or Director of Financial Institution Institution Rule
- --------------------- ------------------------------------------ ------------- -------------
<S> <C> <C> <C>
J. W. Connolly Mellon Bank Corporation* and Director 70
Mellon Bank, N.A. (a)
Pittsburgh, Pennsylvania
G. A. Davidson, Jr. PNC Bank Corp. Director 70
Pittsburgh, Pennsylvania (a)(c)(e)(f)
R. R. Gifford National City Corporation* Director 70
Cleveland, Ohio (c)(f)
M. D. Greer Huntington National Bank, West Virginia Advisory 70
Morgantown, West Virginia Director (c)(f)
S. A. Minter KeyCorp Director 70
Cleveland, Ohio (a)
W. R. Peirson American National Corporation* and Director 70
American National Bank & Trust Company (a)
of Chicago
Chicago, Illinois
R. P. Simmons PNC Bank Corp. Director 70
Pittsburgh, Pennsylvania (a)
R. E. Wright Dollar Bank Director 70
Pittsburgh, Pennsylvania (c)(f)
</TABLE>
- ---------------
* Bank holding company.
Part III. Compensation and other related information
(a) The compensation of Directors and executive officers of system companies:
Information concerning the compensation of the five highest paid Directors and
executive officers of the system (with all subsidiaries treated as divisions)
for the year 1995 is included in the Registrant's "Notice of Annual Meeting and
Proxy Statement, 1996" which is included as Exhibit F.(3) to this Form U5S.
Information presented under the captions "COMPENSATION OF EXECUTIVE OFFICERS--
SUMMARY COMPENSATION TABLE" on page 11, and "NON-EMPLOYEE DIRECTORS'
COMPENSATION" on page 18, in such proxy statement is hereby incorporated by
reference.
(b) Their interest in the securities of system companies including options or
other rights to acquire securities:
Information concerning the interest of Directors and executive officers in the
securities of system companies, including options or other rights to acquire
securities, is included in the Registrant's "Notice of Annual Meeting and Proxy
Statement, 1996" which is included as Exhibit F.(3) to this Form U5S.
Information presented under the following captions in such proxy statement is
hereby incorporated by reference: "SECURITY OWNERSHIP OF DIRECTORS AND OFFICERS"
on page 10; "OPTION GRANTS IN LAST FISCAL YEAR" on page 12; "AGGREGATED OPTION
EXERCISES IN LAST FISCAL YEAR AND DECEMBER 31, 1995, YEAR-END OPTION VALUES" on
page 13; and "LONG-TERM INCENTIVE PLAN AWARDS IN THE LAST FISCAL YEAR" on page
13.
12
<PAGE> 15
ITEM 6. OFFICERS AND DIRECTORS (Concluded)
(c) Their contracts and transactions with system companies:
Information concerning the contracts and transactions by Directors and executive
officers with system companies is included in the Registrant's "Notice of Annual
Meeting and Proxy Statement, 1996" which is included as Exhibit F.(3) to this
Form U5S. Information presented under the caption "COMPENSATION COMMITTEE
INTERLOCKS AND INSIDER PARTICIPATION" on page 18 in such proxy statement is
hereby incorporated by reference.
(d) Their indebtedness to system companies:
None.
(e) Their participation in bonus and profit-sharing arrangements and other
benefits:
Information concerning the participation by Directors and executive officers in
other benefits is included in the Registrant's "Notice of Annual Meeting and
Proxy Statement, 1996" which is included as Exhibit F.(3) to this Form U5S.
Information presented under the captions "LIFE INSURANCE AND RELATED BENEFIT
PLANS" on pages 18 and 19, and "RETIREMENT PROGRAMS" on page 19, in such proxy
statement is hereby incorporated by reference.
(f) Their rights to indemnification:
Pursuant to Section 145 of the General Corporation Law of the State of Delaware,
in which the Company is incorporated, the Company's by-laws indemnify any person
who was or is a party or is threatened to be made a party to any threatened,
pending or completed action, suit or proceeding, whether civil, criminal,
administrative or investigative (other than an action by or in the right of the
Company) by reason of the fact that he is or was a Director, officer, employee
or agent of the Company, or is or was serving at the request of the Company as a
Director, officer, employee or agent, against expenses (including attorneys'
fees), judgment, fines and amounts paid in settlement actually and reasonably
incurred by him in connection with such action, suit or proceeding if he acted
in good faith and in a manner he reasonably believed to be in or not opposed to
the best interests of the Company, and, with respect to any criminal action or
proceeding, had no reasonable cause to believe his conduct was unlawful.
The Company also purchases directors and officers liability insurance with
limits of $150 million, and, in recognition of the scope of the foregoing by-law
indemnification, certain other errors and omissions and general liability
insurance coverages which are applicable to all employees as insureds, including
Directors and officers.
13
<PAGE> 16
ITEM 7. CONTRIBUTIONS AND PUBLIC RELATIONS
Tabulated below for each system company are the expenditures, disbursements, or
payments made during the year 1995, directly or indirectly, to or for the
account of any citizens group, or public relations counsel. There were no
payments made to any political party, candidate for public office or holder of
such office, or any committee or agent therefor by the system companies during
the year 1995.
<TABLE>
<CAPTION>
Accounts Charged
Name or Number of Per Books of
Name of Company Beneficiary(ies) Purpose Disbursing Company Amount
- --------------------- --------------------------- -------------------- ------------------------- -------
<S> <C> <C> <C> <C>
Parent Company Hays, Domenici Associates Public Relations Other income deductions $10,000
East Ohio Gas Five beneficiaries Civic Other income deductions $14,900
Peoples Natural Gas One beneficiary Public information Other income deductions $ 250
West Ohio Gas One beneficiary Public information Operating expenses $ 25
CNG Producing Two beneficiaries Civic Operating expenses $ 1,100
One beneficiary Public information Operating expenses $ 669
CNG Energy Services Twelve beneficiaries Civic Operating expenses $ 4,795
</TABLE>
- ---------------
The information set forth above with respect to the subsidiary companies of the
Parent Company is based upon memoranda submitted to the Parent Company for such
purpose by each of its subsidiary companies, which memoranda are in the
certified form required by Instruction 2 to ITEM 7. The Parent Company is
preserving such memoranda.
ITEM 8. SERVICE, SALES AND CONSTRUCTION CONTRACTS
Part I. Contracts for services, including engineering or construction services,
or goods supplied or sold between system companies during the year 1995
are as follows:
<TABLE>
<CAPTION>
Date of Contract(s)
Transaction (Note 1) Serving Company Receiving Company Compensation (Note 2)
- -------------------------------- --------------------- --------------------- ------------ -------------------------
<S> <C> <C> <C> <C>
Aircraft services CNG Transmission Hope Gas $ 9,820 Note 3
Management services CNG Transmission Hope Gas $4,938,219 January 1, 1984
Management services CNG Transmission CNG Power $ 335,594 August 15, 1983
Management services CNG Producing CNG Energy Services $ 499,882 October 1, 1990 (Note 4)
Management services CNG Energy Services CNG Power $ 391,610 January 1, 1995
Management services CNG Energy Services CNG Power Services $ 161,041 November 1, 1994
Management and repair services
and supplies East Ohio Gas West Ohio Gas $ 602,226 December 2, 1969
</TABLE>
- ---------------
Notes:
(1) Contracts for aircraft and management services with aggregate consideration
passing between the same companies of less than $100,000 have been omitted.
(2) All contracts were in effect at December 31, 1995, except as noted.
(3) Aircraft service contracts are dated May 1, 1984 and February 17, 1992.
Aircraft owned by CNG Transmission were sold to nonaffiliated parties in May
and July of 1995; thus there will be no further transactions under these
contracts.
(4) Of this amount, $247,257 relates to an Information Services and Special
Services Agreement, the execution of which was pending at December 31, 1995.
Part II. Contracts to purchase services or goods between any system company and
any affiliate (other than a system company) or any company in which any
officer or director of the receiving company is a partner or owns 5
percent or more of any class of equity securities:
None.
Part III. Employment of any person by any system company for the performance on
a continuing basis of management, supervisory or financial advisory
services:
None.
14
<PAGE> 17
ITEM 9. WHOLESALE GENERATORS AND FOREIGN UTILITY COMPANIES
Part I. Information concerning the interests held by system companies in exempt
wholesale generators or foreign utility companies:
(a) Information concerning the interests held by system companies in an exempt
wholesale generator (EWG) follows. System companies do not have an interest in
any foreign utility companies.
Company Name: Lakewood Cogeneration, L.P.
Location of Facility: Lakewood, New Jersey
Business Address: c/o CMS Hydra-Co Enterprises, Inc.
Fairlane Plaza South
330 Town Center Drive
Suite 1000
Dearborn, MI 48126-2712
The Lakewood EWG facility (Facility) is a 237-megawatt combined-cycle, gas-fired
facility, dispatchable by Jersey Central Power & Light Company (JCP&L) via the
Pennsylvania-Jersey-Maryland grid. The Facility uses 2 gas turbines, 2 heat
recovery steam generators, and 1 steam turbine generator. Fuel oil is used as a
back-up fuel. The Facility is directly connected to a JCP&L switchyard, which is
the point of sale for the electricity. The Facility commenced commercial
operations in November 1994.
CNG Power, a wholly owned subsidiary of the Registrant, holds directly a 34
percent limited partnership interest in Lakewood Cogeneration, L.P. (Lakewood
Partnership). CNG Lakewood, a wholly owned subsidiary of CNG Power Services,
owns a 1 percent general partnership interest in the Lakewood Partnership.
(b) At December 31, 1995, CNG's total investment in the project was $17,543,000.
The Lakewood Partnership has term loans with a group of banks that total $211.0
million. These loans are nonrecourse to the partners.
CNG has guaranteed the equity contributions of CNG Power and CNG Lakewood,
including additional equity contributions which may be required relating to
possible construction cost overruns. The total equity contributions guaranteed
by CNG amount to $23,350,000. CNG's cumulative equity contributions to the
Lakewood Partnership total $17,850,000 at December 31, 1995. CNG has not been
required to make any equity contributions relating to construction cost
overruns.
There have been no transfers of assets from a CNG affiliate to the Facility.
(c) The capital structure of the Lakewood Partnership is 80 percent debt and 20
percent equity. The Lakewood Partnership had $5,164,351 in earnings for the
year ended December 31, 1995.
(d) The Lakewood Partnership has an agreement with CNG Energy Services whereby
CNG Energy Services provides all fuel management services for the Facility,
including fuel procurement, transportation and administering the contracts
for the purchase, transportation and storage of the fuels for the Facility.
In addition to tolling fees based on the volumes of fuel used in the
facility, CNG Energy Services receives a monthly administration fee. This
fee, originally set at $6,250 per month, is adjusted by the Gross Domestic
Product Deflator Ratio effective January 1 of each calendar year.
15
<PAGE> 18
ITEM 9. WHOLESALE GENERATORS AND FOREIGN UTILITY COMPANIES (Concluded)
Part II. Relationship of exempt wholesale generators and foreign utility
companies to system companies, and financial data:
An organization chart showing the relationship of the Lakewood Partnership to
other system companies is filed as Exhibit H. to this Form U5S. Financial
statements of the Lakewood Partnership are filed as Exhibit I. to this Form U5S.
Part III. Investment in exempt wholesale generators and foreign utility
companies:
At December 31, 1995, the Company's aggregate investment in the Lakewood project
amounted to $17,543,000. The Company has no investments in foreign utility
companies. The ratio of the aggregate investment in the Lakewood project to the
Registrant's aggregate capital investment in its domestic public utility
subsidiaries was 1.3 percent at December 31, 1995.
16
<PAGE> 19
(THIS PAGE WAS INTENTIONALLY LEFT BLANK)
17
<PAGE> 20
ITEM 10. FINANCIAL STATEMENTS AND EXHIBITS
FINANCIAL STATEMENTS
INDEX
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Report of Independent Accountants..................................................... 19
Consolidating Balance Sheet at December 31, 1995...................................... 20
Consolidating Income Statement for the Year 1995...................................... 24
Consolidating Statement of Retained Earnings for the Year 1995........................ 26
Consolidating Statement of Cash Flows for the Year 1995............................... 28
Consolidating Balance Sheet Supplement................................................ 30
Consolidating Income Statement Supplement............................................. 32
Consolidating Statement of Retained Earnings Supplement............................... 33
Consolidating Statement of Cash Flows Supplement...................................... 34
CNG TRANSMISSION CORPORATION:
Consolidating Balance Sheet at December 31, 1995.................................... 36
Consolidating Income Statement for the Year 1995.................................... 38
Consolidating Statement of Retained Earnings for the Year 1995...................... 39
Consolidating Statement of Cash Flows for the Year 1995............................. 40
CNG PRODUCING COMPANY:
Consolidating Balance Sheet at December 31, 1995.................................... 42
Consolidating Income Statement for the Year 1995.................................... 44
Consolidating Statement of Retained Earnings for the Year 1995...................... 45
Consolidating Statement of Cash Flows for the Year 1995............................. 46
CNG POWER COMPANY:
Consolidating Balance Sheet at December 31, 1995.................................... 48
Consolidating Income Statement for the Year 1995.................................... 50
Consolidating Statement of Retained Earnings for the Year 1995...................... 51
Consolidating Statement of Cash Flows for the Year 1995............................. 52
CNG POWER SERVICES CORPORATION:
Consolidating Balance Sheet at December 31, 1995.................................... 54
Consolidating Income Statement for the Year 1995.................................... 56
Consolidating Statement of Retained Earnings for the Year 1995...................... 57
Consolidating Statement of Cash Flows for the Year 1995............................. 58
Notes to Consolidated Financial Statements for the Year 1995.......................... *
</TABLE>
- ---------------
* The Notes to Consolidated Financial Statements appearing on pages 45 to 73 of
Consolidated Natural Gas Company's Annual Report on Form 10-K for the year
ended December 31, 1995, are incorporated herein by reference.
EXHIBITS
A list of the exhibits is on page 59.
18
<PAGE> 21
ITEM 10. FINANCIAL STATEMENTS AND EXHIBITS (Continued)
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Stockholders of
Consolidated Natural Gas Company
In our opinion, the financial statements listed in the accompanying index on
page 18 present fairly, in all material respects, the consolidated financial
position of Consolidated Natural Gas Company and its subsidiaries at December
31, 1995, and the results of their operations and their cash flows for the year
then ended, in conformity with generally accepted accounting principles. These
financial statements are the responsibility of the Company's management; our
responsibility is to express an opinion on these financial statements based on
our audit. We conducted our audit of these statements in accordance with
generally accepted auditing standards which require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements,
assessing the accounting principles used and significant estimates made by
management, and evaluating the overall financial statement presentation. We
believe that our audit provides a reasonable basis for the opinion expressed
above.
Our audit was made for the purpose of forming an opinion on the consolidated
financial statements taken as a whole. The consolidating information on pages 20
through 58 is presented for purposes of complying with the requirements of the
Public Utility Holding Company Act of 1935 rather than to present financial
position, results of operations, and cash flows of the individual companies.
Accordingly, we do not express an opinion on the financial position, results of
operations and cash flows of the individual companies. However, the
consolidating information on pages 20 through 58 has been subjected to the
auditing procedures applied in the audit of the consolidated financial
statements and, in our opinion, is fairly stated in all material respects in
relation to the consolidated financial statements taken as a whole.
PRICE WATERHOUSE LLP
600 Grant Street
Pittsburgh, Pennsylvania 15219-9954
February 20, 1996
19
<PAGE> 22
ITEM 10. (Continued)
CONSOLIDATED NATURAL GAS COMPANY
CONSOLIDATING BALANCE SHEET
At December 31, 1995
(Thousands of Dollars)
<TABLE>
<CAPTION>
CONSOLIDATED ----------------------
------------
CNG Eliminations
and and Combined CNGT
Assets Subsidiaries Adjustments* Total CNG CNGSvc (Page 36)
- ------ ------------ ------------- ----------- ---------- -------- ----------
<S> <C> <C> <C> <C> <C> <C>
PROPERTY, PLANT AND EQUIPMENT (Note 3)
Gas utility and other plant............ $ 4,710,086 $ (2,201) $ 4,712,287 $ -- $ 23,776 $2,008,946
Accumulated depreciation
and amortization..................... (1,785,965) 362 (1,786,327) -- (15,405) (774,476)
------------ ----------- ----------- ---------- -------- ----------
Net gas utility and other
plant........................... 2,924,121 (1,839) 2,925,960 -- 8,371 1,234,470
------------ ----------- ----------- ---------- -------- ----------
Exploration and production
properties........................... 3,219,264 -- 3,219,264 -- -- 228,961
Accumulated depreciation and
amortization......................... (2,230,980) 27,607 (2,258,587) -- -- (206,543)
------------ ----------- ----------- ---------- -------- ----------
Net exploration and production
properties...................... 988,284 27,607 960,677 -- -- 22,418
------------ ----------- ----------- ---------- -------- ----------
Net property, plant and
equipment....................... 3,912,405 25,768 3,886,637 -- 8,371 1,256,888
------------ ----------- ----------- ---------- -------- ----------
INVESTMENTS
Stocks of subsidiary companies,
at equity -- consolidated............ -- (2,208,896) 2,208,896 2,208,896 -- --
Notes of subsidiary companies --
consolidated......................... -- (1,138,185) 1,138,185 1,138,185 -- --
------------ ----------- ----------- ---------- -------- ----------
Total investments............... -- (3,347,081) 3,347,081 3,347,081 -- --
------------ ----------- ----------- ---------- -------- ----------
CURRENT ASSETS
Cash and temporary cash
investments.......................... 36,277 -- 36,277 552 1,084 739
Accounts receivable
Customers............................ 522,391 -- 522,391 -- -- 47,871
Unbilled revenues and other.......... 144,253 -- 144,253 1,036 763 11,063
Allowance for doubtful accounts...... (10,306) -- (10,306) -- -- --
Receivables from affiliated
companies -- consolidated............ -- (884,487) 884,487 287,567 371,609 43,687
Inventories, at cost
Gas stored -- current
portion (Note 8)................... 112,429 (1,963) 114,392 -- -- --
Materials and supplies
(average cost method).............. 35,815 -- 35,815 -- -- 13,701
Unrecovered gas costs (Note 2)......... 25,123 -- 25,123 -- -- 13,425
Deferred income taxes -- current
(Note 7)............................. 20,993 (4,074) 25,067 -- -- 2,535
Prepayments and other current
assets............................... 181,686 -- 181,686 49,438 260 30,727
------------ ----------- ----------- ---------- -------- ----------
Total current assets............ 1,068,661 (890,524) 1,959,185 338,593 373,716 163,748
------------ ----------- ----------- ---------- -------- ----------
REGULATORY AND OTHER ASSETS
Unamortized abandoned facilities
(Note 9)............................. 28,672 -- 28,672 -- -- --
Other investments...................... 60,939 -- 60,939 -- -- 17,420
Deferred charges and other assets
(Notes 2, 4, 6, 7 and 16)............ 347,616 (86,739) 434,355 11,709 9,364 67,993
------------ ----------- ----------- ---------- -------- ----------
Total regulatory and other
assets........................ 437,227 (86,739) 523,966 11,709 9,364 85,413
------------ ----------- ----------- ---------- -------- ----------
Total assets.................... $ 5,418,293 $(4,298,576) $ 9,716,869 $3,697,383 $391,451 $1,506,049
============ =========== =========== ========== ======== ==========
</TABLE>
- ---------------
* The elimination journal entries pertaining to this consolidating financial
statement are prepared in detail form, showing the amounts pertaining to the
Registrant and each subsidiary company, and are preserved with the
Registrant's copy of this Form U5S.
( ) denotes negative amount.
The Notes to Consolidated Financial Statements are an integral part of this
statement and appear on pages 45 to 73 of Consolidated Natural Gas Company's
Annual Report on Form 10-K for the year ended December 31, 1995, incorporated
herein by reference.
20
<PAGE> 23
<TABLE>
<CAPTION>
SUBSIDIARIES
- ---------------------------------------------------------------------------------------------------------------------------------
CNG Other
CNGP Power CNGPSC Subsidiaries
EOG PNG VNG HGI WOG (Page 42) (Page 48) CNGESC (Page 54) CNGStr (Page 30)
- ---------- --------- --------- -------- -------- ----------- --------- -------- --------- ------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$1,254,334 $ 667,058 $ 443,726 $175,443 $ 65,887 $ -- $ 6,485 $ 8,471 $ 47 $21,063 $ 37,051
(521,016) (232,308) (107,533) (74,550) (26,736) -- (2,002) (1,035) -- -- (31,266)
- ---------- --------- --------- -------- -------- ----------- -------- -------- ------ ------- --------
733,318 434,750 336,193 100,893 39,151 -- 4,483 7,436 47 21,063 5,785
- ---------- --------- --------- -------- -------- ----------- -------- -------- ------ ------- --------
-- -- -- -- -- 2,990,303 -- -- -- -- --
-- -- -- -- -- (2,052,044) -- -- -- -- --
- ---------- --------- --------- -------- -------- ----------- -------- -------- ------ ------- --------
-- -- -- -- -- 938,259 -- -- -- -- --
- ---------- --------- --------- -------- -------- ----------- -------- -------- ------ ------- --------
733,318 434,750 336,193 100,893 39,151 938,259 4,483 7,436 47 21,063 5,785
- ---------- --------- --------- -------- -------- ----------- -------- -------- ------ ------- --------
-- -- -- -- -- -- -- -- -- -- --
-- -- -- -- -- -- -- -- -- -- --
- ---------- --------- --------- -------- -------- ----------- -------- -------- ------ ------- --------
-- -- -- -- -- -- -- -- -- -- --
- ---------- --------- --------- -------- -------- ----------- -------- -------- ------ ------- --------
5,265 7,910 906 4,191 1,228 1,650 511 11,063 913 17 248
199,153 63,788 22,114 20,271 13,024 7,018 -- 149,152 -- -- --
65,309 2,829 18,838 6,878 4,462 24,487 844 3,472 4,166 -- 106
(2,540) (3,735) (376) (484) (93) (1,000) -- (2,078) -- -- --
89 85 -- 58 -- 114,464 18,606 31,225 -- 510 16,587
45,911 25,238 12,076 5,699 6,174 -- -- 19,294 -- -- --
12,495 4,785 669 999 782 1,998 172 200 14 -- --
-- 11,407 -- -- 291 -- -- -- -- -- --
17,041 -- 4,297 800 394 -- -- -- -- -- --
72,700 5,597 226 2,098 2,469 12,397 -- 5,772 -- -- 2
- ---------- --------- --------- -------- -------- ----------- -------- -------- ------ ------- --------
415,423 117,904 58,750 40,510 28,731 161,014 20,133 218,100 5,093 527 16,943
- ---------- --------- --------- -------- -------- ----------- -------- -------- ------ ------- --------
-- -- -- -- -- -- -- -- -- -- 28,672
-- -- 53 3,475 -- -- 32,849 6,641 501 -- --
169,146 131,941 13,711 11,554 9,501 5,794 -- 617 -- -- 3,025
- ---------- --------- --------- -------- -------- ----------- -------- -------- ------ ------- --------
169,146 131,941 13,764 15,029 9,501 5,794 32,849 7,258 501 -- 31,697
- ---------- --------- --------- -------- -------- ----------- -------- -------- ------ ------- --------
$1,317,887 $ 684,595 $ 408,707 $156,432 $ 77,383 $ 1,105,067 $ 57,465 $232,794 $5,641 $21,590 $ 54,425
========== ========= ========= ======== ======== =========== ======== ======== ====== ======= ========
</TABLE>
21
<PAGE> 24
ITEM 10. (Continued)
CONSOLIDATED NATURAL GAS COMPANY
CONSOLIDATING BALANCE SHEET
At December 31, 1995
(Thousands of Dollars)
<TABLE>
<CAPTION>
CONSOLIDATED ----------------------
------------
CNG Eliminations
and and Combined CNGT
Stockholders' Equity and Liabilities Subsidiaries Adjustments* Total CNG CNGSvc (Page 37)
- ------------------------------------ ------------ ------------ ----------- ---------- -------- ----------
<S> <C> <C> <C> <C> <C> <C>
CAPITALIZATION
Common stockholders' equity
Common stock -- par value $2.75 per
share (Note 10)
200,000,000 authorized shares
Issued -- 93,591,623 shares...... $ 257,377 $(1,717,931) $ 1,975,308 $ 257,377 $ 10 $ 590,000
Capital in excess of par value
(Note 10)........................ 478,535 (34,926) 513,461 438,570 -- 2,254
Retained earnings, per accompanying
statement (Note 12).............. 1,309,906 (443,843) 1,753,749 1,309,906 -- 153,771
------------ ----------- ----------- ---------- -------- ----------
Total common stockholders'
equity...................... 2,045,818 (2,196,700) 4,242,518 2,005,853 10 746,025
------------ ----------- ----------- ---------- -------- ----------
Long-term debt (Note 13)
Debentures......................... 1,035,446 -- 1,035,446 1,035,446 -- --
Convertible subordinated
debentures....................... 244,365 -- 244,365 244,365 -- --
Unsecured loan..................... 12,000 -- 12,000 -- -- --
Notes payable to Registrant --
consolidated..................... -- (1,138,185) 1,138,185 -- 14,391 386,282
------------ ----------- ----------- ---------- -------- ----------
Total long-term debt.......... 1,291,811 (1,138,185) 2,429,996 1,279,811 14,391 386,282
------------ ----------- ----------- ---------- -------- ----------
Total capitalization.......... 3,337,629 (3,334,885) 6,672,514 3,285,664 14,401 1,132,307
------------ ----------- ----------- ---------- -------- ----------
CURRENT LIABILITIES
Current maturities on long-term
debt............................... 10,250 -- 10,250 6,250 -- --
Commercial paper (Note 14)........... 336,000 -- 336,000 336,000 -- --
Accounts payable..................... 410,296 -- 410,296 458 5,833 34,087
Estimated rate contingencies and
refunds (Note 2)................... 59,363 -- 59,363 -- -- 17,372
Payables to affiliated companies --
consolidated....................... -- (884,487) 884,487 -- 359,293 28,597
Amounts payable to customers......... 40,315 -- 40,315 -- -- --
Taxes accrued........................ 114,335 -- 114,335 (607) 764 32,630
Deferred income taxes -- current
(Note 7)........................... -- (4,074) 4,074 -- -- --
Dividends declared................... 45,392 -- 45,392 45,392 -- --
Other current liabilities............ 95,339 -- 95,339 19,554 1,861 22,079
------------ ----------- ----------- ---------- -------- ----------
Total current liabilities..... 1,111,290 (888,561) 1,999,851 407,047 367,751 134,765
------------ ----------- ----------- ---------- -------- ----------
DEFERRED CREDITS
Deferred income taxes (Note 7)....... 672,266 9,305 662,961 2,122 (2,366) 153,388
Accumulated deferred investment tax
credits............................ 31,031 -- 31,031 -- -- 186
Deferred credits and other
liabilities (Note 7)............... 266,077 (84,435) 350,512 2,550 11,665 85,403
------------ ----------- ----------- ---------- -------- ----------
Total deferred credits........ 969,374 (75,130) 1,044,504 4,672 9,299 238,977
------------ ----------- ----------- ---------- -------- ----------
COMMITMENTS AND CONTINGENCIES (Note 17)
------------ ----------- ----------- ---------- -------- ----------
Total stockholders' equity and
liabilities................. $ 5,418,293 $(4,298,576) $ 9,716,869 $3,697,383 $391,451 $1,506,049
============ =========== =========== ========== ======== ==========
</TABLE>
- ---------------
* The elimination journal entries pertaining to this consolidating financial
statement are prepared in detail form, showing the amounts pertaining to the
Registrant and each subsidiary company, and are preserved with the
Registrant's copy of this Form U5S.
( ) denotes negative amount.
The Notes to Consolidated Financial Statements are an integral part of this
statement and appear on pages 45 to 73 of Consolidated Natural Gas Company's
Annual Report on Form 10-K for the year ended December 31, 1995, incorporated
herein by reference.
22
<PAGE> 25
<TABLE>
<CAPTION>
SUBSIDIARIES
- -----------------------------------------------------------------------------------------------------------------------------------
CNG Other
CNGP Power CNGPSC Subsidiaries
EOG PNG VNG HGI WOG (Page 43) (Page 49) CNGESC (Page 55) CNGStr (Page 31)
- ---------- --------- --------- -------- -------- ----------- --------- -------- --------- ------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$ 207,968 $ 165,535 $ 109,697 $ 40,900 $ 14,990 $ 470,840 $ 22,460 $ 1 $ 520 $13,660 $ 81,350
4,550 -- 57,603 -- 435 -- -- 10,049 -- -- --
194,610 77,573 3,904 18,881 9,622 13,566 6,624 (6,095) (665) 76 (28,024)
- ---------- --------- --------- -------- -------- ----------- -------- -------- ------ ------- --------
407,128 243,108 171,204 59,781 25,047 484,406 29,084 3,955 (145) 13,736 53,326
- ---------- --------- --------- -------- -------- ----------- -------- -------- ------ ------- --------
-- -- -- -- -- -- -- -- -- -- --
-- -- -- -- -- -- -- -- -- -- --
-- -- 12,000 -- -- -- -- -- -- -- --
209,211 130,139 73,418 38,276 12,460 253,575 13,083 -- -- 7,350 --
- ---------- --------- --------- -------- -------- ----------- -------- -------- ------ ------- --------
209,211 130,139 85,418 38,276 12,460 253,575 13,083 -- -- 7,350 --
- ---------- --------- --------- -------- -------- ----------- -------- -------- ------ ------- --------
616,339 373,247 256,622 98,057 37,507 737,981 42,167 3,955 (145) 21,086 53,326
- ---------- --------- --------- -------- -------- ----------- -------- -------- ------ ------- --------
-- -- 4,000 -- -- -- -- -- -- -- --
-- -- -- -- -- -- -- -- -- -- --
129,306 36,987 20,984 12,545 5,829 75,354 475 84,570 3,779 -- 89
22,092 5,456 10,879 1,993 1,571 -- -- -- -- -- --
183,009 77,015 73,725 7,559 17,470 5,718 745 128,850 1,981 485 40
36,094 -- 4,221 -- -- -- -- -- -- -- --
70,643 (4,720) 2,934 3,800 1,000 9,990 547 (2,381) (68) 19 (216)
-- 4,074 -- -- -- -- -- -- -- -- --
-- -- -- -- -- -- -- -- -- -- --
17,290 8,508 10,658 2,998 803 6,622 2 4,965 -- -- (1)
- ---------- --------- --------- -------- -------- ----------- -------- -------- ------ ------- --------
458,434 127,320 127,401 28,895 26,673 97,684 1,769 216,004 5,692 504 (88)
- ---------- --------- --------- -------- -------- ----------- -------- -------- ------ ------- --------
132,454 115,894 (437) 10,203 5,775 231,722 13,529 (604) 94 -- 1,187
14,487 9,750 3,284 2,714 610 -- -- -- -- -- --
96,173 58,384 21,837 16,563 6,818 37,680 -- 13,439 -- -- --
- ---------- --------- --------- -------- -------- ----------- -------- -------- ------ ------- --------
243,114 184,028 24,684 29,480 13,203 269,402 13,529 12,835 94 -- 1,187
- ---------- --------- --------- -------- -------- ----------- -------- -------- ------ ------- --------
- ---------- --------- --------- -------- -------- ----------- -------- -------- ------ ------- --------
$1,317,887 $ 684,595 $ 408,707 $156,432 $ 77,383 $ 1,105,067 $ 57,465 $232,794 $5,641 $21,590 $ 54,425
========== ========= ========= ======== ======== =========== ======== ======== ====== ======= ========
</TABLE>
23
<PAGE> 26
ITEM 10. (Continued)
CONSOLIDATED NATURAL GAS COMPANY
CONSOLIDATING INCOME STATEMENT
For the Year Ended December 31, 1995
(Thousands of Dollars)
<TABLE>
<CAPTION>
CONSOLIDATED --------------------
------------
CNG Eliminations
and and Combined CNGT
Subsidiaries Adjustments* Total CNG CNGSvc (Page 38)
------------ ------------ ---------- -------- ------- ---------
<S> <C> <C> <C> <C> <C> <C>
OPERATING REVENUES
Regulated gas sales......................... $1,597,379 $ (6,150) $1,603,529 $ -- $ -- $ (8,293)
Nonregulated gas sales...................... 997,724 (271,371) 1,269,095 -- -- 23,273
---------- --------- ---------- -------- ------- --------
Total gas sales.................... 2,595,103 (277,521) 2,872,624 -- -- 14,980
Gas transportation and storage.............. 456,370 (108,428) 564,798 -- -- 441,371
Other....................................... 255,852 (66,071) 321,923 -- 52,959 39,487
---------- --------- ---------- -------- ------- --------
Total operating revenues (Note 2).. 3,307,325 (452,020) 3,759,345 -- 52,959 495,838
---------- --------- ---------- -------- ------- --------
OPERATING EXPENSES
Purchased gas............................... 1,590,137 (385,373) 1,975,510 -- -- 15,997
Transport capacity and other
purchased products........................ 153,577 (9,899) 163,476 -- -- 35,016
Operation expense (Note 4).................. 653,731 (59,857) 713,588 7,074 47,633 153,158
Maintenance................................. 85,881 -- 85,881 -- 1,095 27,847
Depreciation and amortization (Note 3)...... 256,636 4,491 252,145 -- 1,557 63,818
Impairment of gas and oil producing
properties (Note 3)....................... 226,209 -- 226,209 -- -- --
Taxes, other than income taxes.............. 191,698 -- 191,698 2,153 1,654 36,826
---------- --------- ---------- -------- ------- --------
Subtotal........................... 3,157,869 (450,638) 3,608,507 9,227 51,939 332,662
---------- --------- ---------- -------- ------- --------
Operating income before income
taxes............................ 149,456 (1,382) 150,838 (9,227) 1,020 163,176
Income taxes (Note 7)....................... 2,943 (1,648) 4,591 (11,082) -- 55,174
---------- --------- ---------- -------- ------- --------
Operating income................... 146,513 266 146,247 1,855 1,020 108,002
---------- --------- ---------- -------- ------- --------
OTHER INCOME (DEDUCTIONS)
Interest revenues........................... 9,095 (1,222) 10,317 267 55 3,010
Write-down of coal properties (Note 3)...... (31,266) -- (31,266) -- -- --
Other -- net................................ 1,665 -- 1,665 (889) (10) 398
Equity in earnings of subsidiary
companies -- consolidated................. -- (38,902) 38,902 38,902 -- --
Interest revenues from affiliated
companies -- consolidated................. -- (99,748) 99,748 88,500 180 5,149
---------- --------- ---------- -------- ------- --------
Total other income
(deductions)..................... (20,506) (139,872) 119,366 126,780 225 8,557
---------- --------- ---------- -------- ------- --------
Income before interest
charges.......................... 126,007 (139,606) 265,613 128,635 1,245 116,559
---------- --------- ---------- -------- ------- --------
INTEREST CHARGES
Interest on long-term debt.................. 95,823 (85,252) 181,075 94,209 1,168 27,706
Other interest expense...................... 14,732 (12,692) 27,424 13,082 77 (338)
Allowance for funds used during
construction.............................. (5,892) -- (5,892) -- -- (1,408)
---------- --------- ---------- -------- ------- --------
Total interest charges............. 104,663 (97,944) 202,607 107,291 1,245 25,960
---------- --------- ---------- -------- ------- --------
NET INCOME.................................. $ 21,344 $ (41,662) $ 63,006 $ 21,344 $ -- $ 90,599
========== ========= ========== ======== ======= ========
Earnings per share of common stock.......... $.23
Average common shares
outstanding (thousands)................... 93,246
</TABLE>
- ---------------
* The elimination journal entries pertaining to this consolidating financial
statement are prepared in detail form, showing the amounts pertaining to the
Registrant and each subsidiary company, and are preserved with the
Registrant's copy of this Form U5S.
( ) denotes negative amount.
The Notes to Consolidated Financial Statements are an integral part of this
statement and appear on pages 45 to 73 of Consolidated Natural Gas Company's
Annual Report on Form 10-K for the year ended December 31, 1995, incorporated
herein by reference.
24
<PAGE> 27
<TABLE>
<CAPTION>
SUBSIDIARIES
- ---------------------------------------------------------------------------------------------------------------------------------
CNG Other
CNGP Power CNGPSC Subsidiaries
EOG PNG VNG HGI WOG (Page 44) (Page 50) CNGESC (Page 56) CNGStr (Page 32)
- ---------- -------- -------- -------- ------- --------- ---------- ---------- ---------- ------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$ 981,173 $297,550 $154,993 $112,127 $48,554 $ -- $ -- $ -- $ -- $ -- $ 17,425
-- -- -- -- -- 219,690 -- 1,026,132 -- -- --
- ---------- -------- -------- -------- ------- --------- -------- ---------- -------- ------ --------
981,173 297,550 154,993 112,127 48,554 219,690 -- 1,026,132 -- -- 17,425
65,604 37,971 3,661 8,853 6,328 423 -- 587 -- -- --
8,073 10,264 8,343 1,547 186 116,529 13,526 45,774 21,768 3,465 2
- ---------- -------- -------- -------- ------- --------- -------- ---------- -------- ------ --------
1,054,850 345,785 166,997 122,527 55,068 336,642 13,526 1,072,493 21,768 3,465 17,427
- ---------- -------- -------- -------- ------- --------- -------- ---------- -------- ------ --------
587,944 146,231 75,752 62,020 31,646 53,334 -- 1,002,586 -- -- --
-- -- -- -- -- 43,026 9,392 54,420 21,622 -- --
200,077 93,691 36,962 26,597 9,840 98,786 1,815 23,456 416 17 14,066
24,553 17,806 4,682 4,741 1,321 3,836 -- -- -- -- --
30,642 18,865 14,779 4,692 1,994 114,726 385 687 -- -- --
-- -- -- -- -- 226,209 -- -- -- -- --
97,413 23,232 8,431 9,276 4,561 6,359 179 982 1 154 477
- ---------- -------- -------- -------- ------- --------- -------- ---------- -------- ------ --------
940,629 299,825 140,606 107,326 49,362 546,276 11,771 1,082,131 22,039 171 14,543
- ---------- -------- -------- -------- ------- --------- -------- ---------- -------- ------ --------
114,221 45,960 26,391 15,201 5,706 (209,634) 1,755 (9,638) (271) 3,294 2,884
33,255 10,587 6,146 4,541 1,603 (86,607) 2,678 (4,422) 4 1,188 (8,474)
- ---------- -------- -------- -------- ------- --------- -------- ---------- -------- ------ --------
80,966 35,373 20,245 10,660 4,103 (123,027) (923) (5,216) (275) 2,106 11,358
- ---------- -------- -------- -------- ------- --------- -------- ---------- -------- ------ --------
2,321 29 2 552 2 1,939 781 171 -- 8 1,180
-- -- -- -- -- -- -- -- -- -- (31,266)
(1,380) (661) (453) (1,017) 1 57 5,580 (72) 65 -- 46
-- -- -- -- -- -- -- -- -- -- --
18 -- -- 94 -- 3,348 629 1 -- 19 1,810
- ---------- -------- -------- -------- ------- --------- -------- ---------- -------- ------ --------
959 (632) (451) (371) 3 5,344 6,990 100 65 27 (28,230)
- ---------- -------- -------- -------- ------- --------- -------- ---------- -------- ------ --------
81,925 34,741 19,794 10,289 4,106 (117,683) 6,067 (5,116) (210) 2,133 (16,872)
- ---------- -------- -------- -------- ------- --------- -------- ---------- -------- ------ --------
14,648 9,615 7,066 2,681 995 21,341 1,190 -- -- 456 --
5,710 2,986 2,733 219 -- 539 337 2,080 -- 1 (2)
(208) (132) -- (108) -- (4,036) -- -- -- -- --
- ---------- -------- -------- -------- ------- --------- -------- ---------- -------- ------ --------
20,150 12,469 9,799 2,792 995 17,844 1,527 2,080 -- 457 (2)
- ---------- -------- -------- -------- ------- --------- -------- ---------- -------- ------ --------
$ 61,775 $ 22,272 $ 9,995 $ 7,497 $ 3,111 $(135,527) $ 4,540 $ (7,196) $ (210) $1,676 $(16,870)
========== ======== ======== ======== ======= ========= ======== ========== ======== ====== ========
</TABLE>
25
<PAGE> 28
ITEM 10. (Continued)
CONSOLIDATED NATURAL GAS COMPANY
CONSOLIDATING STATEMENT OF RETAINED EARNINGS
For the Year Ended December 31, 1995
(Thousands of Dollars)
<TABLE>
<CAPTION>
CONSOLIDATED ---------------------
------------
CNG Eliminations
and and Combined CNGT
Subsidiaries Adjustments* Total CNG CNGSvc (Page 39)
------------- ----------- ---------- ---------- -------- ---------
<S> <C> <C> <C> <C> <C> <C>
RETAINED EARNINGS
Balance at December 31, 1994............. $1,469,879 $(583,293) $2,053,172 $1,469,879 $ -- $145,469
Net income for the year 1995 per
accompanying income statement.......... 21,344 (41,662) 63,006 21,344 -- 90,599
---------- --------- ---------- ---------- -------- --------
Total........................... 1,491,223 (624,955) 2,116,178 1,491,223 -- 236,068
Dividends declared on common stock --
cash (Note 10)......................... (181,055) 181,112 (362,167) (181,055) -- (82,297)
Pension liability adjustment (Note 5).... (262) -- (262) (262) -- --
---------- --------- ---------- ---------- -------- --------
Balance at December 31, 1995 (Note 12)... $1,309,906 $(443,843) $1,753,749 $1,309,906 $ -- $153,771
========== ========= ========== ========== ======== ========
</TABLE>
- ---------------
* The elimination journal entries pertaining to this consolidating financial
statement are prepared in detail form, showing the amounts pertaining to the
Registrant and each subsidiary company, and are preserved with the
Registrant's copy of this Form U5S.
( ) denotes negative amount.
The Notes to Consolidated Financial Statements are an integral part of this
statement and appear on pages 45 to 73 of Consolidated Natural Gas Company's
Annual Report on Form 10-K for the year ended December 31, 1995, incorporated
herein by reference.
26
<PAGE> 29
<TABLE>
<CAPTION>
SUBSIDIARIES
- --------------------------------------------------------------------------------------------------------------------------------
CNG Other
CNGP Power CNGPSC Subsidiaries
EOG PNG VNG HGI WOG (Page 45) (Page 51) CNGESC (Page 57) CNGStr (Page 33)
- -------- -------- -------- ------- ------- --------- --------- ------- ---------- ------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$190,002 $ 73,427 $ 4,409 $16,803 $ 9,472 $ 152,092 $2,084 $ 1,101 $ (455) $ 43 $(11,154)
61,775 22,272 9,995 7,497 3,111 (135,527) 4,540 (7,196) (210) 1,676 (16,870)
- -------- -------- -------- ------- ------- --------- ------ ------- ------ ------- --------
251,777 95,699 14,404 24,300 12,583 16,565 6,624 (6,095) (665) 1,719 (28,024)
(57,167) (18,126) (10,500) (5,419) (2,961) (2,999) -- -- -- (1,643) --
-- -- -- -- -- -- -- -- -- -- --
- -------- -------- -------- ------- ------- --------- ------ ------- ------ ------- --------
$194,610 $ 77,573 $ 3,904 $18,881 $ 9,622 $ 13,566 $6,624 $(6,095) $ (665) $ 76 $(28,024)
======== ======== ======== ======= ======= ========= ====== ======= ====== ======= ========
</TABLE>
27
<PAGE> 30
ITEM 10. (Continued)
CONSOLIDATED NATURAL GAS COMPANY
CONSOLIDATING STATEMENT OF CASH FLOWS
For the Year Ended December 31, 1995
(Thousands of Dollars)
<TABLE>
<CAPTION>
CONSOLIDATED --------------------
------------ Eliminations
CNG and Combined CNGT
and Subsidiaries Adjustments* Total CNG CNGSvc (Page 40)
---------------- ------------ --------- -------- -------- ---------
<S> <C> <C> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income....................................... $ 21,344 $ (41,662) $ 63,006 $ 21,344 $ -- $ 90,599
Adjustments to reconcile net income to net cash
provided
by (used in) operating activities
Depreciation and amortization.................. 256,636 4,491 252,145 -- 1,557 63,818
Impairment of gas and oil producing
properties................................... 226,209 -- 226,209 -- -- --
Write-down of coal properties.................. 31,266 -- 31,266 -- -- --
Deferred income taxes -- net................... (48,767) (1,648) (47,119) (1,067) (1,406) 14,082
Investment tax credit.......................... (2,198) -- (2,198) -- -- (19)
Changes in current assets and current
liabilities
Accounts receivable -- net................... (116,529) -- (116,529) 59 (155) (1,090)
Receivables from affiliated
cos. -- consolidated....................... -- 334 (334) (338) 602 32,092
Inventories.................................. 77,024 (181) 77,205 -- -- (231)
Unrecovered gas costs........................ (11,988) -- (11,988) -- -- (3,546)
Accounts payable............................. 69,761 -- 69,761 299 1,727 16,548
Payables to affiliated
cos. -- consolidated....................... -- (334) 334 -- (1,531) (2,384)
Estimated rate contingencies and refunds..... (24,041) -- (24,041) -- -- (34,976)
Amounts payable to customers................. (55,825) -- (55,825) -- -- --
Taxes accrued................................ 19,922 3,417 16,505 (295) 576 (6,063)
Other -- net................................. 13,643 (3,417) 17,060 1,810 220 14,323
Changes in other assets and other
liabilities.................................. 92,553 98 92,455 (1,191) 2,189 10,470
Excess of dividends received from sub. cos.
over equity in earnings thereof --
consolidated................................. -- (154,670) 154,670 154,670 -- --
Other -- net................................... 3,714 -- 3,714 406 (10) 1,288
--------- --------- --------- --------- -------- ---------
Net cash provided by (used in) operating
activities............................. 552,724 (193,572) 746,296 175,697 3,769 194,911
--------- --------- --------- --------- -------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES
Plant construction and other property
additions...................................... (434,739) -- (434,739) -- (1,000) (98,706)
Proceeds from dispositions of prop., plant and
equip. -- net.................................. 14,066 -- 14,066 -- 2 2,026
Cost of other investments -- net................. (7,464) -- (7,464) -- -- (1,132)
Intrasystem money pool investments -- net........ -- 122,017 (122,017) (87,522) (62,015) (3,685)
Intrasystem long-term financing -- net........... -- (28,083) 28,083 28,083 -- --
Property transfers to (from) affiliates.......... -- -- -- -- 30 429
--------- --------- --------- --------- -------- ---------
Net cash provided by (used in) investing
activities............................. (428,137) 93,934 (522,071) (59,439) (62,983) (101,068)
--------- --------- --------- --------- -------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES
Issuance of common stock -- Registrant........... 19,058 -- 19,058 19,058 -- --
Issuance of debentures -- Registrant............. 148,899 -- 148,899 148,899 -- --
Unsecured loan repayment......................... (4,000) -- (4,000) -- -- --
Commercial paper repayments -- net............... (103,399) -- (103,399) (103,399) -- --
Dividends paid -- Registrant..................... (180,782) -- (180,782) (180,782) -- --
Intrasystem long-term financing -- net........... -- 28,083 (28,083) -- -- --
Intrasystem money pool borrowings (or
repayments) -- net............................. -- (122,017) 122,017 -- 60,002 (15,950)
Dividends paid -- subsidiary
cos. -- consolidated........................... -- 193,572 (193,572) -- -- (83,383)
Other -- net..................................... (9) -- (9) (9) -- --
--------- --------- --------- --------- -------- ---------
Net cash provided by (used in) financing
activities............................. (120,233) 99,638 (219,871) (116,233) 60,002 (99,333)
--------- --------- --------- --------- -------- ---------
Net increase (decrease) in cash and
TCIs................................... 4,354 -- 4,354 25 788 (5,490)
CASH AND TCIS AT JANUARY 1, 1995................. 31,923 -- 31,923 527 296 6,229
--------- --------- --------- --------- -------- ---------
CASH AND TCIS AT DECEMBER 31, 1995............... $ 36,277 $ -- $ 36,277 $ 552 $ 1,084 $ 739
========= ========= ========= ========= ======== =========
SUPPLEMENTAL CASH FLOW INFORMATION
Cash paid for
Interest (net of amounts capitalized).......... $ 102,663 $ (96,315) $ 198,978 $ 103,184 $ 1,250 $ 27,518
Income taxes (net of refunds).................. $ 58,949 $ -- $ 58,949 $ (10,152) $ 854 $ 48,742
</TABLE>
- ---------------
* The eliminations and adjustments are those required to eliminate
transactions among affiliated companies and otherwise give effect to the
adjusting and reclassifying entries to the consolidating balance sheets,
income statements and statements of retained earnings of the Registrant and
its subsidiaries.
( ) denotes negative amount.
The Notes to Consolidated Financial Statements are an integral part of this
statement and appear on pages 45 to 73 of Consolidated Natural Gas Company's
Annual Report on Form 10-K for the year ended December 31, 1995, incorporated
herein by reference.
28
<PAGE> 31
<TABLE>
<CAPTION>
SUBSIDIARIES
- ----------------------------------------------------------------------------------------------------------------------------------
CNG Other
CNGP Power CNGPSC Subsidiaries
EOG PNG VNG HGI WOG (Page 46) (Page 52) CNGESC (Page 58) CNGStr (Page 34)
- -------- -------- -------- -------- ------- --------- --------- -------- --------- ------ ------------
<C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$ 61,775 $ 22,272 $ 9,995 $ 7,497 $ 3,111 $(135,527) $ 4,540 $ (7,196) $ (210) $1,676 $ (16,870)
30,642 18,865 14,779 4,692 1,994 114,726 385 687 -- -- --
-- -- -- -- -- 226,209 -- -- -- -- --
-- -- -- -- -- -- -- -- -- -- 31,266
11,651 4,102 (332) (198) 503 (62,199) 3,334 81 79 -- (15,749)
(1,336) (502) (152) (137) (52) -- -- -- -- -- --
(29,812) 6,028 (10,242) (10,550) (5,864) 35,129 (173) (95,619) (4,147) -- (93)
272 (85) -- 1,804 -- (11,532) (42) (23,293) -- 5 181
57,221 18,177 265 4,467 69 798 153 (3,700) (14) -- --
-- (11,407) -- 2,185 780 -- -- -- -- -- --
4,628 6,079 (2,933) 1,839 1,789 (13,699) (76) 49,719 3,761 -- 80
(5,716) (4,488) 1,354 335 1,241 (432) 130 10,391 1,407 -- 27
2,914 3,130 5,385 (565) 71 -- -- -- -- -- --
(51,235) (6,309) 1,719 -- -- -- -- -- -- -- --
31,977 (9,766) 2,027 (124) (1,330) 4,694 (647) (4,048) 10 (166) (340)
(14,139) 1,817 185 9,050 1,604 3,098 (101) (801) (1) 1 (6)
30,300 9,128 3,981 2,361 (577) 16,404 (577) 6,280 18 -- 13,669
-- -- -- -- -- -- -- -- -- -- --
1,989 -- -- (11) -- 96 -- -- -- -- (44)
- -------- -------- -------- -------- ------- --------- ------- -------- ------- ------ ---------
131,131 57,041 26,031 22,645 3,339 177,765 6,926 (67,499) 903 1,516 12,121
- -------- -------- -------- -------- ------- --------- ------- -------- ------- ------ ---------
(60,434) (35,244) (47,449) (11,026) (5,112) (169,950) (95) (5,723) -- -- --
5,905 (788) (256) (367) (94) 7,496 -- -- -- -- 142
-- -- (3) -- -- -- 312 (6,641) -- -- --
-- -- -- -- -- (7,670) (6,430) -- -- 150 45,155
-- -- -- -- -- -- -- -- -- -- --
(800) (20) -- (545) -- 116 -- 790 -- -- --
- -------- -------- -------- -------- ------- --------- ------- -------- ------- ------ ---------
(55,329) (36,052) (47,708) (11,938) (5,206) (170,008) (6,213) (11,574) -- 150 45,297
- -------- -------- -------- -------- ------- --------- ------- -------- ------- ------ ---------
-- -- -- -- -- -- -- -- -- -- --
-- -- -- -- -- -- -- -- -- -- --
-- -- (4,000) -- -- -- -- -- -- -- --
-- -- -- -- -- -- -- -- -- -- --
-- -- -- -- -- -- -- -- -- -- --
30,000 -- -- -- 1,400 (4,326) (357) -- -- -- (54,800)
(49,500) 6,285 36,100 (4,305) 3,075 -- -- 86,310 -- -- --
(59,939) (23,092) (11,500) (4,101) (2,373) (5,000) -- -- -- (1,682) (2,502)
-- -- -- -- -- -- -- -- -- -- --
- -------- -------- -------- -------- ------- --------- ------- -------- ------- ------ ---------
(79,439) (16,807) 20,600 (8,406) 2,102 (9,326) (357) 86,310 -- (1,682) (57,302)
- -------- -------- -------- -------- ------- --------- ------- -------- ------- ------ ---------
(3,637) 4,182 (1,077) 2,301 235 (1,569) 356 7,237 903 (16) 116
8,902 3,728 1,983 1,890 993 3,219 155 3,826 10 33 132
- -------- -------- -------- -------- ------- --------- ------- -------- ------- ------ ---------
$ 5,265 $ 7,910 $ 906 $ 4,191 $ 1,228 $ 1,650 $ 511 $ 11,063 $ 913 $ 17 $ 248
======== ======== ======== ======== ======= ========= ======= ======== ======= ====== =========
$ 19,608 $ 11,397 $ 9,515 $ 2,703 $ 942 $ 19,001 $ 1,570 $ 1,829 $ -- $ 457 $ 4
$ 12,947 $ 15,215 $ 4,843 $ 4,236 $ 757 $ (28,202) $ (3) $ 684 $ (85) $1,331 $ 7,782
</TABLE>
29
<PAGE> 32
ITEM 10. (Continued)
CONSOLIDATED NATURAL GAS COMPANY
CONSOLIDATING BALANCE SHEET SUPPLEMENT
At December 31, 1995
(Thousands of Dollars)
<TABLE>
<CAPTION>
Other
Subsidiaries CNG CNG CNG
Assets Total LNG Research Coal Financial
- ------ ------------ -------- -------- -------- ---------
<S> <C> <C> <C> <C> <C>
PROPERTY, PLANT AND EQUIPMENT (Note 3)
Gas utility and other plant.................... $ 37,051 $ -- $ -- $ 37,051 $--
Accumulated depreciation and amortization...... (31,266) -- -- (31,266) --
-------- -------- ---- -------- ---
Net gas utility and other plant...... 5,785 -- -- 5,785 --
-------- -------- ---- -------- ---
Exploration and production properties.......... -- -- -- -- --
Accumulated depreciation and amortization...... -- -- -- -- --
-------- -------- ---- -------- ---
Net exploration and production
properties......................... -- -- -- -- --
-------- -------- ---- -------- ---
Net property, plant and equipment.... 5,785 -- -- 5,785 --
-------- -------- ---- -------- ---
INVESTMENTS
Stocks of subsidiary companies, at equity --
consolidated................................. -- -- -- -- --
Notes of subsidiary
companies -- consolidated.................... -- -- -- -- --
-------- -------- ---- -------- ---
Total investments.................... -- -- -- -- --
-------- -------- ---- -------- ---
CURRENT ASSETS
Cash and temporary cash investments............ 248 14 12 181 41
Accounts receivable
Customers.................................... -- -- -- -- --
Unbilled revenues and other.................. 106 -- 106 -- --
Allowance for doubtful accounts.............. -- -- -- -- --
Receivables from affiliated companies --
consolidated................................. 16,587 11,380 21 5,186 --
Inventories, at cost
Gas stored -- current portion (Note 8)....... -- -- -- -- --
Materials and supplies (average cost
method)................................... -- -- -- -- --
Unrecovered gas costs (Note 2)................. -- -- -- -- --
Deferred income taxes -- current (Note 7)...... -- -- -- -- --
Prepayments and other current assets........... 2 2 -- -- --
-------- -------- ---- -------- ---
Total current assets................. 16,943 11,396 139 5,367 41
-------- -------- ---- -------- ---
REGULATORY AND OTHER ASSETS
Unamortized abandoned facilities (Note 9)...... 28,672 28,672 -- -- --
Other investments.............................. -- -- -- -- --
Deferred charges and other assets (Notes 2, 4,
6, 7 and 16)................................. 3,025 3,003 13 -- 9
-------- -------- ---- -------- ---
Total regulatory and other assets.... 31,697 31,675 13 -- 9
-------- -------- ---- -------- ---
Total assets......................... $ 54,425 $ 43,071 $152 $ 11,152 $50
======== ======== ==== ======== ===
</TABLE>
- ---------------
( ) denotes negative amount.
The Notes to Consolidated Financial Statements are an integral part of this
statement and appear on pages 45 to 73 of Consolidated Natural Gas Company's
Annual Report on Form 10-K for the year ended December 31, 1995, incorporated
herein by reference.
30
<PAGE> 33
ITEM 10. (Continued)
CONSOLIDATED NATURAL GAS COMPANY
CONSOLIDATING BALANCE SHEET SUPPLEMENT
At December 31, 1995
(Thousands of Dollars)
<TABLE>
<CAPTION>
Other
Subsidiaries CNG CNG CNG
Stockholders' Equity and Liabilities Total LNG Research Coal Financial
------------------------------------ ------------ ------- -------- -------- ---------
<S> <C> <C> <C> <C> <C>
CAPITALIZATION
Common stockholders' equity
Common stock -- par value $2.75 per share (Note 10)
200,000,000 authorized shares
Issued -- 93,591,623 shares..................... $ 81,350 $28,400 $ 15,540 $ 37,360 $50
Capital in excess of par value (Note 10)........... -- -- -- -- --
Retained earnings, per accompanying
statement (Note 12)............................. (28,024) 3,959 (15,457) (16,526) --
-------- ------- -------- -------- ---
Total common stockholders' equity.......... 53,326 32,359 83 20,834 50
-------- ------- -------- -------- ---
Long-term debt (Note 13)
Debentures......................................... -- -- -- -- --
Convertible subordinated debentures................ -- -- -- -- --
Unsecured loan..................................... -- -- -- -- --
Notes payable to Registrant -- consolidated........ -- -- -- -- --
-------- ------- -------- -------- ---
Total long-term debt....................... -- -- -- -- --
-------- ------- -------- -------- ---
Total capitalization....................... 53,326 32,359 83 20,834 50
-------- ------- -------- -------- ---
CURRENT LIABILITIES
Current maturities on long-term debt................. -- -- -- -- --
Commercial paper (Note 14)........................... -- -- -- -- --
Accounts payable..................................... 89 -- 62 27 --
Estimated rate contingencies and refunds (Note 2).... -- -- -- -- --
Payables to affiliated companies -- consolidated..... 40 -- -- 40 --
Amounts payable to customers......................... -- -- -- -- --
Taxes accrued........................................ (216) (374) 7 151 --
Deferred income taxes -- current (Note 7)............ -- -- -- -- --
Dividends declared................................... -- -- -- -- --
Other current liabilities............................ (1) -- -- (1) --
-------- ------- -------- -------- ---
Total current liabilities.................. (88) (374) 69 217 --
-------- ------- -------- -------- ---
DEFERRED CREDITS
Deferred income taxes (Note 7)....................... 1,187 11,086 -- (9,899) --
Accumulated deferred investment tax credits.......... -- -- -- -- --
Deferred credits and other liabilities (Note 7)...... -- -- -- -- --
-------- ------- -------- -------- ---
Total deferred credits..................... 1,187 11,086 -- (9,899) --
-------- ------- -------- -------- ---
COMMITMENTS AND CONTINGENCIES (Note 17)
Total stockholders' equity and
liabilities.............................. $ 54,425 $43,071 $ 152 $ 11,152 $50
======== ======= ======== ======== ===
</TABLE>
- ---------------
( ) denotes negative amount.
The Notes to Consolidated Financial Statements are an integral part of this
statement and appear on pages 45 to 73 of Consolidated Natural Gas Company's
Annual Report on Form 10-K for the year ended December 31, 1995, incorporated
herein by reference.
31
<PAGE> 34
ITEM 10. (Continued)
CONSOLIDATED NATURAL GAS COMPANY
CONSOLIDATING INCOME STATEMENT SUPPLEMENT
For the Year Ended December 31, 1995
(Thousands of Dollars)
<TABLE>
<CAPTION>
Other
Subsidiaries CNG CNG CNG
Total LNG Research Coal Financial
------------ -------- -------- -------- ---------
<S> <C> <C> <C> <C> <C>
OPERATING REVENUES
Regulated gas sales............................ $ 17,425 $ 17,425 $ -- $ -- $--
Nonregulated gas sales......................... -- -- -- -- --
-------- -------- ------ -------- ---
Total gas sales...................... 17,425 17,425 -- -- --
Gas transportation and storage................. -- -- -- -- --
Other.......................................... 2 -- -- 2 --
-------- -------- ------ -------- ---
Total operating revenues (Note 2).... 17,427 17,425 -- 2 --
-------- -------- ------ -------- ---
OPERATING EXPENSES
Purchased gas.................................. -- -- -- -- --
Transport capacity and other purchased
products..................................... -- -- -- -- --
Operation expense (Note 4)..................... 14,066 13,678 217 171 --
Maintenance.................................... -- -- -- -- --
Depreciation and amortization (Note 3)......... -- -- -- -- --
Impairment of gas and oil producing
properties (Note 3).......................... -- -- -- -- --
Taxes, other than income taxes................. 477 -- 1 476 --
-------- -------- ------ -------- ---
Subtotal............................. 14,543 13,678 218 647 --
-------- -------- ------ -------- ---
Operating income before income
taxes.............................. 2,884 3,747 (218) (645) --
Income taxes (Note 7).......................... (8,474) 2,771 (75) (11,170) --
-------- -------- ------ -------- ---
Operating income..................... 11,358 976 (143) 10,525 --
-------- -------- ------ -------- ---
OTHER INCOME (DEDUCTIONS)
Interest revenues.............................. 1,180 1,082 1 97 --
Write-down of coal properties (Note 3)......... (31,266) -- -- (31,266) --
Other -- net................................... 46 -- -- 46 --
Equity in earnings of subsidiary companies --
consolidated................................. -- -- -- -- --
Interest revenues from affiliated companies --
consolidated................................. 1,810 1,595 1 214 --
-------- -------- ------ -------- ---
Total other income (deductions)...... (28,230) 2,677 2 (30,909) --
-------- -------- ------ -------- ---
Income before interest charges....... (16,872) 3,653 (141) (20,384) --
-------- -------- ------ -------- ---
INTEREST CHARGES
Interest on long-term debt..................... -- -- -- -- --
Other interest expense......................... (2) (2) -- -- --
Allowance for funds used during construction... -- -- -- -- --
-------- -------- ------ -------- ---
Total interest charges............... (2) (2) -- -- --
-------- -------- ------ -------- ---
NET INCOME..................................... $(16,870) $ 3,655 $ (141) $(20,384) $--
======== ======== ====== ======== ===
</TABLE>
- ---------------
( ) denotes negative amount.
The Notes to Consolidated Financial Statements are an integral part of this
statement and appear on pages 45 to 73 of Consolidated Natural Gas Company's
Annual Report on Form 10-K for the year ended December 31, 1995, incorporated
herein by reference.
32
<PAGE> 35
ITEM 10. (Continued)
CONSOLIDATED NATURAL GAS COMPANY
CONSOLIDATING STATEMENT OF RETAINED EARNINGS SUPPLEMENT
For the Year Ended December 31, 1995
(Thousands of Dollars)
<TABLE>
<CAPTION>
Other
Subsidiaries CNG CNG CNG
Total LNG Research Coal Financial
------------ ------- -------- -------- ---------
<S> <C> <C> <C> <C> <C>
RETAINED EARNINGS
Balance at December 31, 1994............... $(11,154) $ 304 $(15,316) $ 3,858 $ --
Net income for the year 1995 per
accompanying income statement............ (16,870) 3,655 (141) (20,384) --
-------- ------- -------- -------- -----
Total............................ (28,024) 3,959 (15,457) (16,526) --
Dividends declared on common stock --
cash (Note 10)........................... -- -- -- -- --
Pension liability adjustment (Note 5)...... -- -- -- -- --
-------- ------- -------- -------- -----
Balance at December 31, 1995 (Note 12)..... $(28,024) $ 3,959 $(15,457) $(16,526) $ --
======== ======= ======== ======== =====
</TABLE>
- ---------------
( ) denotes negative amount.
The Notes to Consolidated Financial Statements are an integral part of this
statement and appear on pages 45 to 73 of Consolidated Natural Gas Company's
Annual Report on Form 10-K for the year ended December 31, 1995, incorporated
herein by reference.
33
<PAGE> 36
ITEM 10. (Continued)
CONSOLIDATED NATURAL GAS COMPANY
CONSOLIDATING STATEMENT OF CASH FLOWS SUPPLEMENT
For the Year Ended December 31, 1995
(Thousands of Dollars)
<TABLE>
<CAPTION>
Other
Subsidiaries CNG CNG CNG
Total LNG Research Coal Financial
------------ -------- -------- -------- ---------
<S> <C> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income.............................................. $(16,870) $ 3,655 $ (141) $(20,384) $ --
Adjustments to reconcile net income to net cash provided
by (used in) operating activities
Depreciation and amortization......................... -- -- -- -- --
Impairment of gas and oil producing properties........ -- -- -- -- --
Write-down of coal properties......................... 31,266 -- -- 31,266 --
Deferred income taxes-net............................. (15,749) (4,784) -- (10,965) --
Investment tax credit................................. -- -- -- -- --
Changes in current assets and current liabilities
Accounts receivable -- net.......................... (93) -- (93) -- --
Receivables from affiliated cos. -- consolidated.... 181 182 (6) 5 --
Inventories......................................... -- -- -- -- --
Unrecovered gas costs............................... -- -- -- -- --
Accounts payable.................................... 80 -- 53 27 --
Payables to affiliated cos. -- consolidated......... 27 -- (8) 35 --
Estimated rate contingencies and refunds............ -- -- -- -- --
Amounts payable to customers........................ -- -- -- -- --
Taxes accrued....................................... (340) (355) 1 14 --
Other -- net........................................ (6) -- -- (6) --
Changes in other assets and other liabilities......... 13,669 13,669 -- -- --
Excess of dividends received from sub. cos. over
equity in earnings thereof -- consolidated.......... -- -- -- -- --
Other -- net.......................................... (44) -- -- (44) --
-------- -------- ------ -------- -----
Net cash provided by (used in) operating
activities................................... 12,121 12,367 (194) (52) --
-------- -------- ------ -------- -----
CASH FLOWS FROM INVESTING ACTIVITIES
Plant construction and other property additions......... -- -- -- -- --
Proceeds from dispositions of prop., plant and
equip. -- net......................................... 142 -- -- 142 --
Cost of other investments -- net........................ -- -- -- -- --
Intrasystem money pool investments -- net............... 45,155 45,120 (15) 50 --
Intrasystem long-term financing -- net.................. -- -- -- -- --
Property transfers to (from) affiliates................. -- -- -- -- --
-------- -------- ------ -------- -----
Net cash provided by (used in) investing
activities................................... 45,297 45,120 (15) 192 --
-------- -------- ------ -------- -----
CASH FLOWS FROM FINANCING ACTIVITIES
Issuance of common stock -- Registrant.................. -- -- -- -- --
Issuance of debentures -- Registrant.................... -- -- -- -- --
Unsecured loan repayment................................ -- -- -- -- --
Commercial paper repayments -- net...................... -- -- -- -- --
Dividends paid -- Registrant............................ -- -- -- -- --
Intrasystem long-term financing -- net.................. (54,800) (55,000) 200 -- --
Intrasystem money pool borrowings (or
repayments) -- net.................................... -- -- -- -- --
Dividends paid -- subsidiary cos. -- consolidated....... (2,502) (2,502) -- -- --
Other -- net............................................ -- -- -- -- --
-------- -------- ------ -------- -----
Net cash provided by (used in) financing
activities................................... (57,302) (57,502) 200 -- --
-------- -------- ------ -------- -----
Net increase (decrease) in cash and TCIs....... 116 (15) (9) 140 --
CASH AND TCIS AT JANUARY 1, 1995........................ 132 29 21 41 41
-------- -------- ------ -------- -----
CASH AND TCIS AT DECEMBER 31, 1995...................... $ 248 $ 14 $ 12 $ 181 $ 41
======== ======== ====== ======== =====
SUPPLEMENTAL CASH FLOW INFORMATION
Cash paid for
Interest (net of amounts capitalized)............... $ 4 $ -- $ -- $ 4 $ --
Income taxes (net of refunds)....................... $ 7,782 $ 7,910 $ (76) $ (52) $ --
</TABLE>
- ---------------
( ) denotes negative amount.
The Notes to Consolidated Financial Statements are an integral part of this
statement and appear on pages 45 to 73 of Consolidated Natural Gas Company's
Annual Report on Form 10-K for the year ended December 31, 1995, incorporated
herein by reference.
34
<PAGE> 37
(THIS PAGE WAS INTENTIONALLY LEFT BLANK)
35
<PAGE> 38
ITEM 10. (Continued)
CNG TRANSMISSION CORPORATION
CONSOLIDATING BALANCE SHEET
At December 31, 1995
(Thousands of Dollars)
<TABLE>
<CAPTION>
CNGT Eliminations
and and Combined CNG
Subsidiary Adjustments Total CNGT Iroquois
---------- ------------ ---------- ---------- --------
<S> <C> <C> <C> <C> <C>
PROPERTY, PLANT AND EQUIPMENT
Gas utility and other plant............ $2,008,946 $ -- $2,008,946 $2,008,946 $ --
Accumulated depreciation and
amortization......................... (774,476) -- (774,476) (774,476) --
---------- --------- ---------- ---------- -------
Net gas utility and other
plant...................... 1,234,470 -- 1,234,470 1,234,470 --
---------- --------- ---------- ---------- -------
Exploration and production
properties........................... 228,961 -- 228,961 228,961 --
Accumulated depreciation and
amortization......................... (206,543) -- (206,543) (206,543) --
---------- --------- ---------- ---------- -------
Net exploration and
production properties...... 22,418 -- 22,418 22,418 --
---------- --------- ---------- ---------- -------
Net property, plant and
equipment.................. 1,256,888 -- 1,256,888 1,256,888 --
---------- --------- ---------- ---------- -------
INVESTMENTS
Stock of subsidiary company, at
equity -- consolidated............... -- (18,307) 18,307 18,307 --
Notes of subsidiary company --
consolidated......................... -- -- -- -- --
---------- --------- ---------- ---------- -------
Total investments............ -- (18,307) 18,307 18,307 --
---------- --------- ---------- ---------- -------
CURRENT ASSETS
Cash and temporary cash investments.... 739 -- 739 710 29
Accounts receivable
Customers............................ 47,871 -- 47,871 47,871 --
Unbilled revenues and other.......... 11,063 -- 11,063 11,063 --
Allowance for doubtful accounts...... -- -- -- -- --
Receivables from affiliated
companies -- consolidated............ 43,687 -- 43,687 38,552 5,135
Inventories, at cost
Gas stored -- current portion........ -- -- -- -- --
Materials and supplies (average cost
method)........................... 13,701 -- 13,701 13,701 --
Unrecovered gas costs.................. 13,425 -- 13,425 13,425 --
Deferred income taxes -- current....... 2,535 -- 2,535 2,535 --
Prepayments and other current assets... 30,727 -- 30,727 30,727 --
---------- --------- ---------- ---------- -------
Total current assets......... 163,748 -- 163,748 158,584 5,164
---------- --------- ---------- ---------- -------
REGULATORY AND OTHER ASSETS
Unamortized abandoned facilities....... -- -- -- -- --
Other investments...................... 17,420 -- 17,420 -- 17,420
Deferred charges and other assets...... 67,993 -- 67,993 67,993 --
---------- --------- ---------- ---------- -------
Total regulatory and other
assets..................... 85,413 -- 85,413 67,993 17,420
---------- --------- ---------- ---------- -------
Total assets................. $1,506,049 $ (18,307) $1,524,356 $1,501,772 $22,584
========== ========= ========== ========== =======
</TABLE>
- ---------------
( ) denotes negative amount.
36
<PAGE> 39
ITEM 10. (Continued)
CNG TRANSMISSION CORPORATION
CONSOLIDATING BALANCE SHEET
At December 31, 1995
(Thousands of Dollars)
<TABLE>
<CAPTION>
CNGT Eliminations
and and Combined CNG
Subsidiary Adjustments Total CNGT Iroquois
---------- ------------ ---------- ---------- --------
<S> <C> <C> <C> <C> <C>
CAPITALIZATION
Common stockholder's equity
Common stock......................... $ 590,000 $ (14,940) $ 604,940 $ 590,000 $ 14,940
Capital in excess of par value....... 2,254 -- 2,254 2,254 --
Retained earnings, per accompanying
statement......................... 153,771 (3,367) 157,138 153,771 3,367
---------- --------- ---------- ---------- -------
Total common stockholder's
equity..................... 746,025 (18,307) 764,332 746,025 18,307
---------- --------- ---------- ---------- -------
Long-term debt
Debentures........................... -- -- -- -- --
Convertible subordinated
debentures........................ -- -- -- -- --
Unsecured loan....................... -- -- -- -- --
Notes payable to Parent Company...... 386,282 -- 386,282 386,282 --
---------- --------- ---------- ---------- -------
Total long-term debt......... 386,282 -- 386,282 386,282 --
---------- --------- ---------- ---------- -------
Total capitalization......... 1,132,307 (18,307) 1,150,614 1,132,307 18,307
---------- --------- ---------- ---------- -------
CURRENT LIABILITIES
Current maturities on long-term debt... -- -- -- -- --
Commercial paper....................... -- -- -- -- --
Accounts payable....................... 34,087 -- 34,087 34,087 --
Estimated rate contingencies and
refunds.............................. 17,372 -- 17,372 17,372 --
Payables to affiliated companies --
consolidated......................... 28,597 -- 28,597 28,597 --
Amounts payable to customers........... -- -- -- -- --
Taxes accrued.......................... 32,630 -- 32,630 32,385 245
Deferred income taxes -- current....... -- -- -- -- --
Dividends declared..................... -- -- -- -- --
Other current liabilities.............. 22,079 -- 22,079 22,079 --
---------- --------- ---------- ---------- -------
Total current liabilities.... 134,765 -- 134,765 134,520 245
---------- --------- ---------- ---------- -------
DEFERRED CREDITS
Deferred income taxes.................. 153,388 -- 153,388 149,356 4,032
Accumulated deferred investment
tax credits.......................... 186 -- 186 186 --
Deferred credits and other
liabilities.......................... 85,403 -- 85,403 85,403 --
---------- --------- ---------- ---------- -------
Total deferred credits....... 238,977 -- 238,977 234,945 4,032
---------- --------- ---------- ---------- -------
COMMITMENTS AND CONTINGENCIES
---------- --------- ---------- ---------- -------
Total stockholder's equity
and liabilities............ $1,506,049 $ (18,307) $1,524,356 $1,501,772 $22,584
========== ========= ========== ========== =======
</TABLE>
- ---------------
( ) denotes negative amount.
37
<PAGE> 40
ITEM 10. (Continued)
CNG TRANSMISSION CORPORATION
CONSOLIDATING INCOME STATEMENT
For the Year Ended December 31, 1995
(Thousands of Dollars)
<TABLE>
<CAPTION>
CNGT Eliminations
and and Combined CNG
Subsidiary Adjustments Total CNGT Iroquois
---------- ------------ -------- -------- --------
<S> <C> <C> <C> <C> <C>
OPERATING REVENUES
Regulated gas sales......................... $ (8,293) $ -- $ (8,293) $ (8,293) $ --
Nonregulated gas sales...................... 23,273 -- 23,273 23,273 --
--------- ------ -------- -------- --------
Total gas sales................... 14,980 -- 14,980 14,980 --
Gas transportation and storage.............. 441,371 -- 441,371 441,371 --
Other....................................... 39,487 -- 39,487 39,487 --
--------- ------ -------- -------- --------
Total operating revenues.......... 495,838 -- 495,838 495,838 --
--------- ------ -------- -------- --------
OPERATING EXPENSES
Purchased gas............................... 15,997 -- 15,997 15,997 --
Transport capacity and other purchased
products.................................. 35,016 -- 35,016 35,016 --
Operation expense........................... 153,158 -- 153,158 153,158 --
Maintenance................................. 27,847 -- 27,847 27,847 --
Depreciation and amortization............... 63,818 -- 63,818 63,818 --
Impairment of gas and oil producing
properties................................ -- -- -- -- --
Taxes, other than income taxes.............. 36,826 -- 36,826 36,583 243
--------- ------ -------- -------- --------
Subtotal.......................... 332,662 -- 332,662 332,419 243
--------- ------ -------- -------- --------
Operating income before income
taxes........................... 163,176 -- 163,176 163,419 (243)
Income taxes................................ 55,174 -- 55,174 53,225 1,949
--------- ------ -------- -------- --------
Operating income.................. 108,002 -- 108,002 110,194 (2,192)
--------- ------ -------- -------- --------
OTHER INCOME (DEDUCTIONS)
Interest revenues........................... 3,010 -- 3,010 2,942 68
Write-down of coal properties............... -- -- -- -- --
Other -- net................................ 398 -- 398 (1,925) 2,323
Equity in earnings of subsidiary company --
consolidated.............................. -- (372) 372 372 --
Interest revenues from affiliated
companies -- consolidated................. 5,149 -- 5,149 4,981 168
--------- ------ -------- -------- --------
Total other income (deductions)... 8,557 (372) 8,929 6,370 2,559
--------- ------ -------- -------- --------
Income before interest
charges......................... 116,559 (372) 116,931 116,564 367
--------- ------ -------- -------- --------
INTEREST CHARGES
Interest on long-term debt.................. 27,706 -- 27,706 27,706 --
Other interest expense...................... (338) -- (338) (333) (5)
Allowance for funds used during
construction.............................. (1,408) -- (1,408) (1,408) --
--------- ------ -------- -------- --------
Total interest charges............ 25,960 -- 25,960 25,965 (5)
--------- ------ -------- -------- --------
NET INCOME.................................. $ 90,599 $ (372) $ 90,971 $ 90,599 $ 372
========= ====== ======== ======== ========
</TABLE>
- ---------------
( ) denotes negative amount.
38
<PAGE> 41
ITEM 10. (Continued)
CNG TRANSMISSION CORPORATION
CONSOLIDATING STATEMENT OF RETAINED EARNINGS
For the Year Ended December 31, 1995
(Thousands of Dollars)
<TABLE>
<CAPTION>
CNGT Eliminations
and and Combined CNG
Subsidiary Adjustments Total CNGT Iroquois
---------- ------------ -------- -------- --------
<S> <C> <C> <C> <C> <C>
RETAINED EARNINGS
Balance at December 31, 1994............... $ 145,469 $ (2,995) $148,464 $145,469 $2,995
Net income for the year 1995 per
accompanying income statement............ 90,599 (372) 90,971 90,599 372
--------- -------- -------- -------- ------
Total............................ 236,068 (3,367) 239,435 236,068 3,367
Dividends declared on common
stock -- cash............................ (82,297) -- (82,297) (82,297) --
--------- -------- -------- -------- ------
Balance at December 31, 1995............... $ 153,771 $ (3,367) $157,138 $153,771 $3,367
========= ======== ======== ======== ======
</TABLE>
- ---------------
( ) denotes negative amount.
39
<PAGE> 42
ITEM 10. (Continued)
CNG TRANSMISSION CORPORATION
CONSOLIDATING STATEMENT OF CASH FLOWS
For the Year Ended December 31, 1995
(Thousands of Dollars)
<TABLE>
<CAPTION>
CNGT Eliminations
and and Combined CNG
Subsidiary Adjustments Total CNGT Iroquois
---------- ------------ -------- -------- --------
<S> <C> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income................................................. $ 90,599 $(372) $ 90,971 $ 90,599 $ 372
Adjustments to reconcile net income to net cash provided
by (used in) operating activities
Depreciation and amortization............................ 63,818 -- 63,818 63,818 --
Impairment of gas and oil producing properties........... -- -- -- -- --
Write-down of coal properties............................ -- -- -- -- --
Deferred income taxes -- net............................. 14,082 -- 14,082 13,053 1,029
Investment tax credit.................................... (19) -- (19) (19) --
Changes in current assets and current liabilities
Accounts receivable -- net............................. (1,090) -- (1,090) (1,090) --
Receivables from affiliated cos. -- consolidated....... 32,092 (84) 32,176 32,185 (9)
Inventories............................................ (231) -- (231) (231) --
Unrecovered gas costs.................................. (3,546) -- (3,546) (3,546) --
Accounts payable....................................... 16,548 -- 16,548 16,548 --
Payables to affiliated cos. -- consolidated............ (2,384) 84 (2,468) (2,384) (84)
Estimated rate contingencies and refunds............... (34,976) -- (34,976) (34,976) --
Amounts payable to customers........................... -- -- -- -- --
Taxes accrued.......................................... (6,063) -- (6,063) (6,369) 306
Other -- net........................................... 14,323 505 13,818 13,818 --
Changes in other assets and other liabilities............ 10,470 -- 10,470 10,470 --
Excess of dividends received from sub. cos. over
equity in earnings thereof -- consolidated............. -- 372 (372) (372) --
Other -- net............................................. 1,288 -- 1,288 1,288 --
--------- ----- -------- ------- -------
Net cash provided by (used in) operating
activities....................................... 194,911 505 194,406 192,792 1,614
--------- ----- -------- ------- -------
CASH FLOWS FROM INVESTING ACTIVITIES
Plant construction and other property additions............ (98,706) -- (98,706) (98,706) --
Proceeds from dispositions of prop., plant and
equip. -- net............................................ 2,026 -- 2,026 2,026 --
Cost of other investments -- net........................... (1,132) (505) (627) (372) (255)
Intrasystem money pool investments -- net.................. (3,685) -- (3,685) (2,315) (1,370)
Intrasystem long-term financing -- net..................... -- -- -- -- --
Property transfers to (from) affiliates.................... 429 -- 429 429 --
--------- ----- -------- ------- -------
Net cash provided by (used in) investing
activities....................................... (101,068) (505) (100,563) (98,938) (1,625)
--------- ----- -------- ------- -------
CASH FLOWS FROM FINANCING ACTIVITIES
Issuance of common stock................................... -- -- -- -- --
Issuance of debentures..................................... -- -- -- -- --
Unsecured loan repayment................................... -- -- -- -- --
Commercial paper repayments -- net......................... -- -- -- -- --
Dividends paid............................................. -- -- -- -- --
Intrasystem long-term financing -- net..................... -- -- -- -- --
Intrasystem money pool borrowings (or repayments) -- net... (15,950) -- (15,950) (15,950) --
Dividends paid -- subsidiary cos. -- consolidated.......... (83,383) -- (83,383) (83,383) --
Other -- net............................................... -- -- -- -- --
--------- ----- -------- ------- -------
Net cash provided by (used in) financing
activities....................................... (99,333) -- (99,333) (99,333) --
--------- ----- -------- ------- -------
Net increase (decrease) in cash and TCIs........... (5,490) -- (5,490) (5,479) (11)
CASH AND TCIS AT JANUARY 1, 1995........................... 6,229 -- 6,229 6,189 40
--------- ----- -------- ------- -------
CASH AND TCIS AT DECEMBER 31, 1995......................... $ 739 $ -- $ 739 $ 710 $ 29
========= ===== ======== ======== =======
SUPPLEMENTAL CASH FLOW INFORMATION
Cash paid for
Interest (net of amounts capitalized).................... $ 27,518 $ -- $ 27,518 $ 27,518 $ --
Income taxes (net of refunds)............................ $ 48,742 $ -- $ 48,742 $ 48,030 $ 712
</TABLE>
- ---------------
( ) denotes negative amount.
40
<PAGE> 43
(THIS PAGE WAS INTENTIONALLY LEFT BLANK)
41
<PAGE> 44
ITEM 10. (Continued)
CNG PRODUCING COMPANY
CONSOLIDATING BALANCE SHEET
At December 31, 1995
(Thousands of Dollars)
<TABLE>
<CAPTION>
CNGP Eliminations
and and Combined CNG
Subsidiary Adjustments Total CNGP Pipeline
----------- ------------ ----------- ----------- --------
<S> <C> <C> <C> <C> <C>
PROPERTY, PLANT AND EQUIPMENT
Gas utility and other plant......... $ -- $ -- $ -- $ -- $ --
Accumulated depreciation and
amortization...................... -- -- -- -- --
----------- -------- ----------- ----------- -------
---
Net gas utility and other
plant................... -- -- -- -- --
----------- -------- ----------- ----------- -------
---
Exploration and production
properties........................ 2,990,303 -- 2,990,303 2,985,776 4,527
Accumulated depreciation and
amortization...................... (2,052,044) -- (2,052,044) (2,048,222) (3,822)
----------- -------- ----------- ----------- -------
---
Net exploration and
production properties... 938,259 -- 938,259 937,554 705
----------- -------- ----------- ----------- -------
---
Net property, plant and
equipment............... 938,259 -- 938,259 937,554 705
----------- -------- ----------- ----------- -------
---
INVESTMENTS
Stock of subsidiary company, at
equity -- consolidated............ -- (1,588) 1,588 1,588 --
Notes of subsidiary company --
consolidated...................... -- -- -- -- --
----------- -------- ----------- ----------- -------
---
Total investments......... -- (1,588) 1,588 1,588 --
----------- -------- ----------- ----------- -------
---
CURRENT ASSETS
Cash and temporary cash
investments....................... 1,650 -- 1,650 1,608 42
Accounts receivable
Customers......................... 7,018 -- 7,018 7,018 --
Unbilled revenues and other....... 24,487 -- 24,487 24,438 49
Allowance for doubtful accounts... (1,000) -- (1,000) (1,000) --
Receivables from affiliated
companies -- consolidated......... 114,464 -- 114,464 113,272 1,192
Inventories, at cost
Gas stored -- current portion..... -- -- -- -- --
Materials and supplies (average
cost method)................... 1,998 -- 1,998 1,998 --
Unrecovered gas costs............... -- -- -- -- --
Deferred income taxes -- current.... -- -- -- -- --
Prepayments and other current
assets............................ 12,397 -- 12,397 12,379 18
----------- -------- ----------- ----------- -------
---
Total current assets...... 161,014 -- 161,014 159,713 1,301
----------- -------- ----------- ----------- -------
---
REGULATORY AND OTHER ASSETS
Unamortized abandoned facilities.... -- -- -- -- --
Other investments................... -- -- -- -- --
Deferred charges and other assets... 5,794 -- 5,794 5,794 --
----------- -------- ----------- ----------- -------
---
Total regulatory and
other assets............ 5,794 -- 5,794 5,794 --
----------- -------- ----------- ----------- -------
---
Total assets.............. $ 1,105,067 $ (1,588) $ 1,106,655 $ 1,104,649 $ 2,006
=========== ======== =========== =========== =======
</TABLE>
- ---------------
( ) denotes negative amount.
42
<PAGE> 45
ITEM 10. (Continued)
CNG PRODUCING COMPANY
CONSOLIDATING BALANCE SHEET
At December 31, 1995
(Thousands of Dollars)
<TABLE>
<CAPTION>
CNGP Eliminations
and and Combined CNG
Subsidiary Adjustments Total CNGP Pipeline
---------- ------------ ---------- ---------- --------
<S> <C> <C> <C> <C> <C>
CAPITALIZATION
Common stockholder's equity
Common stock.......................... $ 470,840 $(1,200) $ 472,040 $ 470,840 $1,200
Capital in excess of par value........ -- -- -- -- --
Retained earnings, per accompanying
statement.......................... 13,566 (388) 13,954 13,566 388
---------- ------- ---------- ---------- ------
Total common stockholder's
equity...................... 484,406 (1,588) 485,994 484,406 1,588
---------- ------- ---------- ---------- ------
Long-term debt
Debentures............................ -- -- -- -- --
Convertible subordinated debentures... -- -- -- -- --
Unsecured loan........................ -- -- -- -- --
Notes payable to Parent Company....... 253,575 -- 253,575 253,575 --
---------- ------- ---------- ---------- ------
Total long-term debt.......... 253,575 -- 253,575 253,575 --
---------- ------- ---------- ---------- ------
Total capitalization.......... 737,981 (1,588) 739,569 737,981 1,588
---------- ------- ---------- ---------- ------
CURRENT LIABILITIES
Current maturities on long-term debt.... -- -- -- -- --
Commercial paper........................ -- -- -- -- --
Accounts payable........................ 75,354 -- 75,354 75,334 20
Estimated rate contingencies and
refunds............................... -- -- -- -- --
Payables to affiliated companies --
consolidated.......................... 5,718 -- 5,718 5,718 --
Amounts payable to customers............ -- -- -- -- --
Taxes accrued........................... 9,990 -- 9,990 9,846 144
Deferred income taxes -- current........ -- -- -- -- --
Dividends declared...................... -- -- -- -- --
Other current liabilities............... 6,622 -- 6,622 6,622 --
---------- ------- ---------- ---------- ------
Total current liabilities..... 97,684 -- 97,684 97,520 164
---------- ------- ---------- ---------- ------
DEFERRED CREDITS
Deferred income taxes................... 231,722 -- 231,722 231,468 254
Accumulated deferred investment tax
credits............................... -- -- -- -- --
Deferred credits and other
liabilities........................... 37,680 -- 37,680 37,680 --
---------- ------- ---------- ---------- ------
Total deferred credits........ 269,402 -- 269,402 269,148 254
---------- ------- ---------- ---------- ------
COMMITMENTS AND CONTINGENCIES
---------- ------- ---------- ---------- ------
Total stockholder's equity and
liabilities................. $1,105,067 $(1,588) $1,106,655 $1,104,649 $2,006
========== ======= ========== ========== ======
</TABLE>
- ---------------
( ) denotes negative amount.
43
<PAGE> 46
ITEM 10. (Continued)
CNG PRODUCING COMPANY
CONSOLIDATING INCOME STATEMENT
For the Year Ended December 31, 1995
(Thousands of Dollars)
<TABLE>
<CAPTION>
CNGP Eliminations
and and Combined CNG
Subsidiary Adjustments Total CNGP Pipeline
---------- ------------ --------- --------- --------
<S> <C> <C> <C> <C> <C>
OPERATING REVENUES
Regulated gas sales....................... $ -- $ -- $ -- $ -- $ --
Nonregulated gas sales.................... 219,690 -- 219,690 219,690 --
--------- ----- --------- --------- ------
Total gas sales................. 219,690 -- 219,690 219,690 --
Gas transportation and storage............ 423 -- 423 423 --
Other..................................... 116,529 (526) 117,055 116,041 1,014
--------- ----- --------- --------- ------
Total operating revenues........ 336,642 (526) 337,168 336,154 1,014
--------- ----- --------- --------- ------
OPERATING EXPENSES
Purchased gas............................. 53,334 -- 53,334 53,334 --
Transport capacity and other purchased
products................................ 43,026 (526) 43,552 43,552 --
Operation expense......................... 98,786 -- 98,786 98,495 291
Maintenance............................... 3,836 -- 3,836 3,836 --
Depreciation and amortization............. 114,726 -- 114,726 114,638 88
Impairment of gas and oil producing
properties.............................. 226,209 -- 226,209 226,209 --
Taxes, other than income taxes............ 6,359 -- 6,359 6,353 6
--------- ----- --------- --------- ------
Subtotal........................ 546,276 (526) 546,802 546,417 385
--------- ----- --------- --------- ------
Operating income before income
taxes......................... (209,634) -- (209,634) (210,263) 629
Income taxes.............................. (86,607) -- (86,607) (86,850) 243
--------- ----- --------- --------- ------
Operating income................ (123,027) -- (123,027) (123,413) 386
--------- ----- --------- --------- ------
OTHER INCOME (DEDUCTIONS)
Interest revenues......................... 1,939 -- 1,939 1,920 19
Write-down of coal properties............. -- -- -- -- --
Other -- net.............................. 57 -- 57 57 --
Equity in earnings of subsidiary
company --
consolidated............................ -- (451) 451 451 --
Interest revenues from affiliated
companies -- consolidated............... 3,348 -- 3,348 3,302 46
--------- ----- --------- --------- ------
Total other income
(deductions).................. 5,344 (451) 5,795 5,730 65
--------- ----- --------- --------- ------
Income before interest
charges....................... (117,683) (451) (117,232) (117,683) 451
--------- ----- --------- --------- ------
INTEREST CHARGES
Interest on long-term debt................ 21,341 -- 21,341 21,341 --
Other interest expense.................... 539 -- 539 539 --
Allowance for funds used during
construction............................ (4,036) -- (4,036) (4,036) --
--------- ----- --------- --------- ------
Total interest charges.......... 17,844 -- 17,844 17,844 --
--------- ----- --------- --------- ------
NET INCOME................................ $(135,527) $(451) $(135,076) $(135,527) $ 451
========= ===== ========= ========= ======
</TABLE>
- ---------------
( ) denotes negative amount.
44
<PAGE> 47
ITEM 10. (Continued)
CNG PRODUCING COMPANY
CONSOLIDATING STATEMENT OF RETAINED EARNINGS
For the Year Ended December 31, 1995
(Thousands of Dollars)
<TABLE>
<CAPTION>
CNGP Eliminations
and and Combined CNG
Subsidiary Adjustments Total CNGP Pipeline
---------- ------------ --------- --------- --------
<S> <C> <C> <C> <C> <C>
RETAINED EARNINGS
Balance at December 31, 1994.......... $ 152,092 $(249) $ 152,341 $ 152,092 $ 249
Net income for the year 1995 per
accompanying income statement....... (135,527) (451) (135,076) (135,527) 451
--------- ----- --------- --------- ------
Total.......................... 16,565 (700) 17,265 16,565 700
Dividends declared on common stock --
cash................................ (2,999) 312 (3,311) (2,999) (312)
--------- ----- --------- --------- ------
Balance at December 31, 1995.......... $ 13,566 $(388) $ 13,954 $ 13,566 $ 388
========= ===== ========= ========= ======
</TABLE>
- ---------------
( ) denotes negative amount.
45
<PAGE> 48
ITEM 10. (Continued)
CNG PRODUCING COMPANY
CONSOLIDATING STATEMENT OF CASH FLOWS
For the Year Ended December 31, 1995
(Thousands of Dollars)
<TABLE>
<CAPTION>
CNGP Eliminations
and and Combined CNG
Subsidiary Adjustments Total CNGP Pipeline
---------- ------------ --------- --------- --------
<S> <C> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income.............................................. $(135,527) $(451) $(135,076) $(135,527) $ 451
Adjustments to reconcile net income to net cash provided
by (used in) operating activities
Depreciation and amortization......................... 114,726 -- 114,726 114,638 88
Impairment of gas and oil producing properties........ 226,209 -- 226,209 226,209 --
Write-down of coal properties......................... -- -- -- -- --
Deferred income taxes -- net.......................... (62,199) -- (62,199) (62,177) (22)
Investment tax credit................................. -- -- -- -- --
Changes in current assets and current liabilities
Accounts receivable -- net.......................... 35,129 -- 35,129 35,133 (4)
Receivables from affiliated cos. -- consolidated.... (11,532) -- (11,532) (11,550) 18
Inventories......................................... 798 -- 798 798 --
Unrecovered gas costs............................... -- -- -- -- --
Accounts payable.................................... (13,699) -- (13,699) (13,700) 1
Payables to affiliated cos. -- consolidated......... (432) -- (432) (432) --
Estimated rate contingencies and refunds............ -- -- -- -- --
Amounts payable to customers........................ -- -- -- -- --
Taxes accrued....................................... 4,694 -- 4,694 4,569 125
Other -- net........................................ 3,098 -- 3,098 3,100 (2)
Changes in other assets and other liabilities......... 16,404 -- 16,404 16,404 --
Excess of dividends received from sub. cos. over
equity in earnings thereof -- consolidated.......... -- 200 (200) (200) --
Other -- net.......................................... 96 -- 96 96 --
--------- ----- --------- --------- -----
Net cash provided by (used in) operating
activities................................... 177,765 (251) 178,016 177,361 655
--------- ----- --------- --------- -----
CASH FLOWS FROM INVESTING ACTIVITIES
Plant construction and other property additions......... (169,950) -- (169,950) (169,950) --
Proceeds from dispositions of prop., plant and
equip. -- net......................................... 7,496 -- 7,496 7,496 --
Cost of other investments -- net........................ -- -- -- -- --
Intrasystem money pool investments -- net............... (7,670) -- (7,670) (7,270) (400)
Intrasystem long-term financing -- net.................. -- -- -- -- --
Property transfers to (from) affiliates................. 116 -- 116 116 --
--------- ----- --------- --------- -----
Net cash provided by (used in) investing
activities................................... (170,008) -- (170,008) (169,608) (400)
--------- ----- --------- --------- -----
CASH FLOWS FROM FINANCING ACTIVITIES
Issuance of common stock................................ -- -- -- -- --
Issuance of debentures.................................. -- -- -- -- --
Unsecured loan repayment................................ -- -- -- -- --
Commercial paper repayments -- net...................... -- -- -- -- --
Dividends paid.......................................... -- -- -- -- --
Intrasystem long-term financing -- net.................. (4,326) -- (4,326) (4,326) --
Intrasystem money pool borrowings (or
repayments) -- net.................................... -- -- -- -- --
Dividends paid -- subsidiary cos. -- consolidated....... (5,000) 251 (5,251) (5,000) (251)
Other -- net............................................ -- -- -- -- --
--------- ----- --------- --------- -----
Net cash provided by (used in) financing
activities................................... (9,326) 251 (9,577) (9,326) (251)
--------- ----- --------- --------- -----
Net increase (decrease) in cash and TCIs....... (1,569) -- (1,569) (1,573) 4
CASH AND TCIS AT JANUARY 1, 1995........................ 3,219 -- 3,219 3,181 38
--------- ----- --------- --------- -----
CASH AND TCIS AT DECEMBER 31, 1995...................... $ 1,650 $ -- $ 1,650 $ 1,608 $ 42
========= ===== ========= ========= =====
SUPPLEMENTAL CASH FLOW INFORMATION
Cash paid for
Interest (net of amounts capitalized)................. $ 19,001 $ -- $ 19,001 $ 19,001 $ --
Income taxes (net of refunds)......................... $ (28,202) $ -- $ (28,202) $ (28,342) $ 140
</TABLE>
- ---------------
( ) denotes negative amount.
46
<PAGE> 49
(THIS PAGE WAS INTENTIONALLY LEFT BLANK)
47
<PAGE> 50
ITEM 10. (Continued)
CNG POWER COMPANY
CONSOLIDATING BALANCE SHEET
At December 31, 1995
(Thousands of Dollars)
<TABLE>
<CAPTION>
CNG Power Eliminations CNG
and and Combined CNG CNG Granite Bear
Subsidiaries Adjustments Total Power Technologies Road Mountain CNGMCS
------------ ------------ -------- ------- ------------ ------- -------- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
PROPERTY, PLANT AND EQUIPMENT
Gas utility and other plant........... $ 6,485 $ -- $ 6,485 $ 6,485 $ -- $-- $-- $ --
Accumulated depreciation and
amortization........................ (2,002) -- (2,002) (2,002) -- -- -- --
------- ------- ------- ------- ------ --- --- ----
Net gas utility and other
plant....................... 4,483 -- 4,483 4,483 -- -- -- --
------- ------- ------- ------- ------ --- --- ----
Exploration and production
properties.......................... -- -- -- -- -- -- -- --
Accumulated depreciation and
amortization........................ -- -- -- -- -- -- -- --
------- ------- ------- ------- ------ --- --- ----
Net exploration and production
properties.................. -- -- -- -- -- -- -- --
------- ------- ------- ------- ------ --- --- ----
Net property, plant and
equipment................... 4,483 -- 4,483 4,483 -- -- -- --
------- ------- ------- ------- ------ --- --- ----
INVESTMENTS
Stocks of subsidiary companies, at
equity -- consolidated.............. -- (2,010) 2,010 2,010 -- -- -- --
Notes of subsidiary
companies -- consolidated........... -- -- -- -- -- -- -- --
------- ------- ------- ------- ------ --- --- ----
Total investments............. -- (2,010) 2,010 2,010 -- -- -- --
------- ------- ------- ------- ------ --- --- ----
CURRENT ASSETS
Cash and temporary cash investments... 511 -- 511 510 -- -- -- 1
Accounts receivable
Customers........................... -- -- -- -- -- -- -- --
Unbilled revenues and other......... 844 -- 844 844 -- -- -- --
Allowance for doubtful accounts..... -- -- -- -- -- -- -- --
Receivables from affiliated
companies -- consolidated........... 18,606 (236) 18,842 18,774 58 -- 10 --
Inventories, at cost
Gas stored -- current portion....... -- -- -- -- -- -- -- --
Materials and supplies (average cost
method)........................... 172 -- 172 172 -- -- -- --
Unrecovered gas costs................. -- -- -- -- -- -- -- --
Deferred income taxes -- current...... -- -- -- -- -- -- -- --
Prepayments and other current
assets.............................. -- -- -- -- -- -- -- --
------- ------- ------- ------- ------ --- --- ----
Total current assets.......... 20,133 (236) 20,369 20,300 58 -- 10 1
------- ------- ------- ------- ------ --- --- ----
REGULATORY AND OTHER ASSETS
Unamortized abandoned facilities...... -- -- -- -- -- -- -- --
Other investments..................... 32,849 -- 32,849 30,539 2,000 1 6 303
Deferred charges and other assets..... -- -- -- -- -- -- -- --
------- ------- ------- ------- ------ --- --- ----
Total regulatory and other
assets...................... 32,849 -- 32,849 30,539 2,000 1 6 303
------- ------- ------- ------- ------ --- --- ----
Total assets.................. $57,465 $(2,246) $59,711 $57,332 $2,058 $ 1 $16 $304
======= ======= ======= ======= ====== === === ====
</TABLE>
- ---------------
( ) denotes negative amount.
48
<PAGE> 51
ITEM 10. (Continued)
CNG POWER COMPANY
CONSOLIDATING BALANCE SHEET
At December 31, 1995
(Thousands of Dollars)
<TABLE>
<CAPTION>
CNG Power Eliminations CNG
and and Combined CNG CNG Granite Bear
Subsidiaries Adjustments Total Power Technologies Road Mountain CNGMCS
------------ ------------ -------- ------- ------------ ------- -------- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
CAPITALIZATION
Common stockholder's equity
Common stock....................... $22,460 $(2,111) $24,571 $22,460 $2,000 $ 1 $ 10 $100
Capital in excess of par value..... -- -- -- -- -- -- -- --
Retained earnings, per accompanying
statement........................ 6,624 101 6,523 6,624 (81) -- 6 (26)
------- ------- ------- ------- ------ --- --- ----
Total common stockholder's
equity..................... 29,084 (2,010) 31,094 29,084 1,919 1 16 74
------- ------- ------- ------- ------ --- --- ----
Long-term debt
Debentures......................... -- -- -- -- -- -- -- --
Convertible subordinated
debentures....................... -- -- -- -- -- -- -- --
Unsecured loan..................... -- -- -- -- -- -- -- --
Notes payable to Parent Company.... 13,083 -- 13,083 13,083 -- -- -- --
------- ------- ------- ------- ------ --- --- ----
Total long-term debt......... 13,083 -- 13,083 13,083 -- -- -- --
------- ------- ------- ------- ------ --- --- ----
Total capitalization......... 42,167 (2,010) 44,177 42,167 1,919 1 16 74
------- ------- ------- ------- ------ --- --- ----
CURRENT LIABILITIES
Current maturities on long-term
debt............................... -- -- -- -- -- -- -- --
Commercial paper..................... -- -- -- -- -- -- -- --
Accounts payable..................... 475 -- 475 455 -- -- -- 20
Estimated rate contingencies and
refunds............................ -- -- -- -- -- -- -- --
Payables to affiliated
companies -- consolidated.......... 745 (236) 981 740 -- -- -- 241
Amounts payable to customers......... -- -- -- -- -- -- -- --
Taxes accrued........................ 547 -- 547 566 12 -- -- (31)
Deferred income taxes -- current..... -- -- -- -- -- -- -- --
Dividends declared................... -- -- -- -- -- -- -- --
Other current liabilities............ 2 -- 2 2 -- -- -- --
------- ------- ------- ------- ------ --- --- ----
Total current liabilities.... 1,769 (236) 2,005 1,763 12 -- -- 230
------- ------- ------- ------- ------ --- --- ----
DEFERRED CREDITS
Deferred income taxes................ 13,529 -- 13,529 13,402 127 -- -- --
Accumulated deferred investment tax
credits............................ -- -- -- -- -- -- -- --
Deferred credits and other
liabilities........................ -- -- -- -- -- -- -- --
------- ------- ------- ------- ------ --- --- ----
Total deferred credits....... 13,529 -- 13,529 13,402 127 -- -- --
------- ------- ------- ------- ------ --- --- ----
COMMITMENTS AND CONTINGENCIES
------- ------- ------- ------- ------ --- --- ----
Total stockholder's equity
and liabilities............ $57,465 $(2,246) $59,711 $57,332 $2,058 $ 1 $ 16 $304
======= ======= ======= ======= ====== === ==== ====
</TABLE>
- ---------------
( ) denotes negative amount.
49
<PAGE> 52
ITEM 10. (Continued)
CNG POWER COMPANY
CONSOLIDATING INCOME STATEMENT
For the Year Ended December 31, 1995
(Thousands of Dollars)
<TABLE>
<CAPTION>
CNG Power Eliminations CNG
and and Combined CNG CNG Granite Bear
Subsidiaries Adjustments Total Power Technologies Road Mountain CNGMCS
------------ ------------ -------- ------- ------------ ------- -------- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
OPERATING REVENUES
Regulated gas sales.............. $ -- $ -- $ -- $ -- $ -- $-- $-- $ --
Nonregulated gas sales........... -- -- -- -- -- -- -- --
------- ---- ------- ------- ---- --- --- -----
Total gas sales.......... -- -- -- -- -- -- -- --
Gas transportation and storage... -- -- -- -- -- -- -- --
Other............................ 13,526 -- 13,526 13,526 -- -- -- --
------- ---- ------- ------- ---- --- --- -----
Total operating
revenues............... 13,526 -- 13,526 13,526 -- -- -- --
------- ---- ------- ------- ---- --- --- -----
OPERATING EXPENSES
Purchased gas.................... -- -- -- -- -- -- -- --
Transport capacity and other
purchased products............. 9,392 -- 9,392 9,392 -- -- -- --
Operation expense................ 1,815 -- 1,815 1,652 1 -- -- 162
Maintenance...................... -- -- -- -- -- -- -- --
Depreciation and amortization.... 385 -- 385 385 -- -- -- --
Impairment of gas and oil
producing properties........... -- -- -- -- -- -- -- --
Taxes, other than income taxes... 179 -- 179 168 11 -- -- --
------- ---- ------- ------- ---- --- --- -----
Subtotal................. 11,771 -- 11,771 11,597 12 -- -- 162
------- ---- ------- ------- ---- --- --- -----
Operating income before
income taxes........... 1,755 -- 1,755 1,929 (12) -- -- (162)
Income taxes..................... 2,678 -- 2,678 2,601 71 -- -- 6
------- ---- ------- ------- ---- --- --- -----
Operating income......... (923) -- (923) (672) (83) -- -- (168)
------- ---- ------- ------- ---- --- --- -----
OTHER INCOME (DEDUCTIONS)
Interest revenues................ 781 -- 781 781 -- -- -- --
Write-down of coal properties.... -- -- -- -- -- -- -- --
Other -- net..................... 5,580 -- 5,580 5,371 -- -- 6 203
Equity in earnings of subsidiary
companies -- consolidated...... -- 42 (42) (42) -- -- -- --
Interest revenues from affiliated
companies -- consolidated...... 629 -- 629 629 -- -- -- --
------- ---- ------- ------- ---- --- --- -----
Total other income
(deductions)........... 6,990 42 6,948 6,739 -- -- 6 203
------- ---- ------- ------- ---- --- --- -----
Income before interest
charges................ 6,067 42 6,025 6,067 (83) -- 6 35
------- ---- ------- ------- ---- --- --- -----
INTEREST CHARGES
Interest on long-term debt....... 1,190 -- 1,190 1,190 -- -- -- --
Other interest expense........... 337 -- 337 337 -- -- -- --
Allowance for funds used during
construction................... -- -- -- -- -- -- -- --
------- ---- ------- ------- ---- --- --- -----
Total interest charges... 1,527 -- 1,527 1,527 -- -- -- --
------- ---- ------- ------- ---- --- --- -----
NET INCOME....................... $ 4,540 $ 42 $ 4,498 $ 4,540 $(83) $-- $ 6 $ 35
======= ==== ======= ======= ==== === === =====
</TABLE>
- ---------------
( ) denotes negative amount.
50
<PAGE> 53
ITEM 10. (Continued)
CNG POWER COMPANY
CONSOLIDATING STATEMENT OF RETAINED EARNINGS
For the Year Ended December 31, 1995
(Thousands of Dollars)
<TABLE>
<CAPTION>
CNG Power Eliminations CNG
and and Combined CNG CNG Granite Bear
Subsidiaries Adjustments Total Power Technologies Road Mountain CNGMCS
------------ ------------ -------- ------ ------------ ------- -------- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
RETAINED EARNINGS
Balance at December 31, 1994.......... $2,084 $ 59 $2,025 $2,084 $ 2 $-- $ -- $(61)
Net income for the year 1995 per
accompanying income statement....... 4,540 42 4,498 4,540 (83) -- 6 35
------ ---- ------ ------ ---- --- ---- ----
Total........................ 6,624 101 6,523 6,624 (81) -- 6 (26)
Dividends declared on common stock --
cash................................ -- -- -- -- -- -- -- --
------ ---- ------ ------ ---- --- ---- ----
Balance at December 31, 1995.......... $6,624 $101 $6,523 $6,624 $(81) $-- $ 6 $(26)
====== ==== ====== ====== ==== === ==== ====
</TABLE>
- ---------------
( ) denotes negative amount.
51
<PAGE> 54
ITEM 10. (Continued)
CNG POWER COMPANY
CONSOLIDATING STATEMENT OF CASH FLOWS
For the Year Ended December 31, 1995
(Thousands of Dollars)
<TABLE>
<CAPTION>
CNG Power Eliminations CNG
and and Combined CNG CNG Granite Bear
Subsidiaries Adjustments Total Power Technologies Road Mountain CNGMCS
------------ ------------ -------- ------- ------------ ------- -------- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING
ACTIVITIES
Net income......................... $ 4,540 $ 42 $ 4,498 $ 4,540 $(83) $-- $ 6 $ 35
Adjustments to reconcile net income
to net cash provided by (used in)
operating activities
Depreciation and amortization.... 385 -- 385 385 -- -- -- --
Impairment of gas and oil
producing properties........... -- -- -- -- -- -- -- --
Write-down of coal properties.... -- -- -- -- -- -- -- --
Deferred income taxes -- net..... 3,334 -- 3,334 3,223 111 -- -- --
Investment tax credit............ -- -- -- -- -- -- -- --
Changes in current assets and
current liabilities
Accounts receivable -- net..... (173) -- (173) (173) -- -- -- --
Receivables from affiliated
cos. -- consolidated......... (42) 178 (220) (172) (38) -- (10) --
Inventories.................... 153 -- 153 153 -- -- -- --
Unrecovered gas costs.......... -- -- -- -- -- -- -- --
Accounts payable............... (76) -- (76) (96) -- -- -- 20
Payables to affiliated
cos. -- consolidated......... 130 (178) 308 148 -- -- -- 160
Estimated rate contingencies
and refunds.................. -- -- -- -- -- -- -- --
Amounts payable to customers... -- -- -- -- -- -- -- --
Taxes accrued.................. (647) -- (647) (657) 10 -- -- --
Other -- net................... (101) -- (101) (89) -- -- -- (12)
Changes in other assets and other
liabilities.................... (577) -- (577) (368) -- -- (6) (203)
Excess of dividends received from
sub. cos. over equity in
earnings thereof --
consolidated................... -- (42) 42 42 -- -- -- --
Other -- net..................... -- -- -- -- -- -- -- --
------- ------ ------- ------- ---- --- ---- -----
Net cash provided by (used
in) operating
activities............... 6,926 -- 6,926 6,936 -- -- (10) --
------- ------ ------- ------- ---- --- ---- -----
CASH FLOWS FROM INVESTING
ACTIVITIES
Plant construction and other
property additions............... (95) -- (95) (95) -- -- -- --
Proceeds from dispositions of
prop., plant and
equip. -- net.................... -- -- -- -- -- -- -- --
Cost of other investments -- net... 312 10 302 302 -- -- -- --
Intrasystem money pool
investments -- net............... (6,430) -- (6,430) (6,430) -- -- -- --
Intrasystem long-term
financing -- net................. -- -- -- -- -- -- -- --
Property transfers to (from)
affiliates....................... -- -- -- -- -- -- -- --
------- ------ ------- ------- ---- --- ---- -----
Net cash provided by (used
in) investing
activities............... (6,213) 10 (6,223) (6,223) -- -- -- --
------- ------ ------- ------- ---- --- ---- -----
CASH FLOWS FROM FINANCING
ACTIVITIES
Issuance of common stock........... -- -- -- -- -- -- -- --
Issuance of debentures............. -- -- -- -- -- -- -- --
Unsecured loan repayment........... -- -- -- -- -- -- -- --
Commercial paper
repayments -- net................ -- -- -- -- -- -- -- --
Dividends paid..................... -- -- -- -- -- -- -- --
Intrasystem long-term
financing -- net................. (357) (10) (347) (357) -- -- 10 --
Intrasystem money pool borrowings
(or repayments) -- net........... -- -- -- -- -- -- -- --
Dividends paid -- subsidiary
cos. -- consolidated............. -- -- -- -- -- -- -- --
Other -- net....................... -- -- -- -- -- -- -- --
------- ------ ------- ------- ---- --- ---- -----
Net cash provided by (used
in) financing
activities............... (357) (10) (347) (357) -- -- 10 --
------- ------ ------- ------- ---- --- ---- -----
Net increase (decrease) in
cash and TCIs............ 356 -- 356 356 -- -- -- --
CASH AND TCIS AT JANUARY 1, 1995... 155 -- 155 154 -- -- -- 1
------- ------ ------- ------- ---- --- ---- -----
CASH AND TCIS AT DECEMBER 31,
1995............................. $ 511 $ -- $ 511 $ 510 $ -- $-- $ -- $ 1
======= ====== ======= ======= ==== === ==== =====
SUPPLEMENTAL CASH FLOW INFORMATION
Cash paid for
Interest (net of amounts
capitalized)................... $ 1,570 $ -- $ 1,570 $ 1,570 $ -- $-- $ -- $ --
Income taxes (net of refunds).... $ (3) $ -- $ (3) $ 41 $(50) $-- $ -- $ 6
</TABLE>
- ---------------
( ) denotes negative amount.
52
<PAGE> 55
(THIS PAGE WAS INTENTIONALLY LEFT BLANK)
53
<PAGE> 56
ITEM 10. (Continued)
CNG POWER SERVICES CORPORATION
CONSOLIDATING BALANCE SHEET
At December 31, 1995
(Thousands of Dollars)
<TABLE>
<CAPTION>
CNGPSC Eliminations
and and Combined CNG
Subsidiary Adjustments Total CNGPSC Lakewood
---------- ------------ -------- ------ --------
<S> <C> <C> <C> <C> <C>
PROPERTY, PLANT AND EQUIPMENT
Gas utility and other plant.................. $ 47 $ -- $ 47 $ 47 $ --
Accumulated depreciation and amortization.... -- -- -- -- --
------ ----- ------ ------ ----
Net gas utility and other plant.... 47 -- 47 47 --
------ ----- ------ ------ ----
Exploration and production properties........ -- -- -- -- --
Accumulated depreciation and amortization.... -- -- -- -- --
------ ----- ------ ------ ----
Net exploration and production
properties....................... -- -- -- -- --
------ ----- ------ ------ ----
Net property, plant and
equipment........................ 47 -- 47 47 --
------ ----- ------ ------ ----
INVESTMENTS
Stock of subsidiary company, at equity --
consolidated............................... -- (554) 554 554 --
Notes of subsidiary
company -- consolidated.................... -- -- -- -- --
------ ----- ------ ------ ----
Total investments.................. -- (554) 554 554 --
------ ----- ------ ------ ----
CURRENT ASSETS
Cash and temporary cash investments.......... 913 -- 913 828 85
Accounts receivable
Customers.................................. -- -- -- -- --
Unbilled revenues and other................ 4,166 -- 4,166 4,135 31
Allowance for doubtful accounts............ -- -- -- -- --
Receivables from affiliated companies --
consolidated............................... -- (10) 10 10 --
Inventories, at cost
Gas stored -- current portion.............. -- -- -- -- --
Materials and supplies (average cost
method)................................. 14 -- 14 14 --
Unrecovered gas costs........................ -- -- -- -- --
Deferred income taxes -- current............. -- -- -- -- --
Prepayments and other current assets......... -- -- -- -- --
------ ----- ------ ------ ----
Total current assets............... 5,093 (10) 5,103 4,987 116
------ ----- ------ ------ ----
REGULATORY AND OTHER ASSETS
Unamortized abandoned facilities............. -- -- -- -- --
Other investments............................ 501 -- 501 -- 501
Deferred charges and other assets............ -- -- -- -- --
------ ----- ------ ------ ----
Total regulatory and other
assets........................... 501 -- 501 -- 501
------ ----- ------ ------ ----
Total assets....................... $5,641 $(564) $6,205 $5,588 $617
====== ===== ====== ====== ====
</TABLE>
- ---------------
( ) denotes negative amount.
54
<PAGE> 57
ITEM 10. (Continued)
CNG POWER SERVICES CORPORATION
CONSOLIDATING BALANCE SHEET
At December 31, 1995
(Thousands of Dollars)
<TABLE>
<CAPTION>
CNGPSC Eliminations
and and Combined CNG
Subsidiary Adjustments Total CNGPSC Lakewood
---------- ------------ -------- ------ --------
<S> <C> <C> <C> <C> <C>
CAPITALIZATION
Common stockholder's equity
Common stock............................... $ 520 $(520) $1,040 $ 520 $ 520
Capital in excess of par value............. -- -- -- -- --
Retained earnings, per accompanying
statement............................... (665) (34) (631) (237) (394)
------ ----- ------ ------ -----
Total common stockholder's
equity........................... (145) (554) 409 283 126
------ ----- ------ ------ -----
Long-term debt
Debentures................................. -- -- -- -- --
Convertible subordinated debentures........ -- -- -- -- --
Unsecured loan............................. -- -- -- -- --
Notes payable to Parent Company............ -- -- -- -- --
------ ----- ------ ------ -----
Total long-term debt............... -- -- -- -- --
------ ----- ------ ------ -----
Total capitalization............... (145) (554) 409 283 126
------ ----- ------ ------ -----
CURRENT LIABILITIES
Current maturities on long-term debt......... -- -- -- -- --
Commercial paper............................. -- -- -- -- --
Accounts payable............................. 3,779 -- 3,779 3,779 --
Estimated rate contingencies and refunds..... -- -- -- -- --
Payables to affiliated
companies -- consolidated.................. 1,981 (10) 1,991 1,465 526
Amounts payable to customers................. -- -- -- -- --
Taxes accrued................................ (68) -- (68) 57 (125)
Deferred income taxes -- current............. -- -- -- -- --
Dividends declared........................... -- -- -- -- --
Other current liabilities.................... -- -- -- -- --
------ ----- ------ ------ -----
Total current liabilities.......... 5,692 (10) 5,702 5,301 401
------ ----- ------ ------ -----
DEFERRED CREDITS
Deferred income taxes........................ 94 -- 94 4 90
Accumulated deferred investment tax
credits.................................... -- -- -- -- --
Deferred credits and other liabilities....... -- -- -- -- --
------ ----- ------ ------ -----
Total deferred credits............. 94 -- 94 4 90
------ ----- ------ ------ -----
COMMITMENTS AND CONTINGENCIES
------ ----- ------ ------ -----
Total stockholder's equity and
liabilities...................... $5,641 $(564) $6,205 $5,588 $ 617
====== ===== ====== ====== =====
</TABLE>
- ---------------
( ) denotes negative amount.
55
<PAGE> 58
ITEM 10. (Continued)
CNG POWER SERVICES CORPORATION
CONSOLIDATING INCOME STATEMENT
For the Year Ended December 31, 1995
(Thousands of Dollars)
<TABLE>
<CAPTION>
CNGPSC Eliminations
and and Combined CNG
Subsidiary Adjustments Total CNGPSC Lakewood
----------- ------------ -------- ------- --------
<S> <C> <C> <C> <C> <C>
OPERATING REVENUES
Regulated gas sales.......................... $ -- $ -- $ -- $ -- $ --
Nonregulated gas sales....................... -- -- -- -- --
------- ---- ------- ------- ----
Total gas sales.................... -- -- -- -- --
Gas transportation and storage............... -- -- -- -- --
Other........................................ 21,768 -- 21,768 21,768 --
------- ---- ------- ------- ----
Total operating revenues........... 21,768 -- 21,768 21,768 --
------- ---- ------- ------- ----
OPERATING EXPENSES
Purchased gas................................ -- -- -- -- --
Transport capacity and other purchased
products................................... 21,622 -- 21,622 21,622 --
Operation expense............................ 416 -- 416 404 12
Maintenance.................................. -- -- -- -- --
Depreciation and amortization................ -- -- -- -- --
Impairment of gas and oil producing
properties................................. -- -- -- -- --
Taxes, other than income taxes............... 1 -- 1 -- 1
------- ---- ------- ------- ----
Subtotal........................... 22,039 -- 22,039 22,026 13
------- ---- ------- ------- ----
Operating income before income
taxes............................ (271) -- (271) (258) (13)
Income taxes................................. 4 -- 4 (16) 20
------- ---- ------- ------- ----
Operating income................... (275) -- (275) (242) (33)
------- ---- ------- ------- ----
OTHER INCOME (DEDUCTIONS)
Interest revenues............................ -- -- -- -- --
Write-down of coal properties................ -- -- -- -- --
Other -- net................................. 65 -- 65 -- 65
Equity in earnings of subsidiary company --
consolidated............................... -- (32) 32 32 --
Interest revenues from affiliated
companies -- consolidated................. -- -- -- -- --
------- ---- ------- ------- ----
Total other income (deductions).... 65 (32) 97 32 65
------- ---- ------- ------- ----
Income before interest charges..... (210) (32) (178) (210) 32
------- ---- ------- ------- ----
INTEREST CHARGES
Interest on long-term debt................... -- -- -- -- --
Other interest expense....................... -- -- -- -- --
Allowance for funds used during
construction............................... -- -- -- -- --
------- ---- ------- ------- ----
Total interest charges............. -- -- -- -- --
------- ---- ------- ------- ----
NET INCOME................................... $ (210) $(32) $ (178) $ (210) $ 32
======= ==== ======= ======= ====
</TABLE>
- ---------------
( ) denotes negative amount.
56
<PAGE> 59
ITEM 10. (Continued)
CNG POWER SERVICES CORPORATION
CONSOLIDATING STATEMENT OF RETAINED EARNINGS
For the Year Ended December 31, 1995
(Thousands of Dollars)
<TABLE>
<CAPTION>
CNGPSC Eliminations
and and Combined CNG
Subsidiary Adjustments Total CNGPSC Lakewood
---------- ------------ -------- ------ --------
<S> <C> <C> <C> <C> <C>
RETAINED EARNINGS
Balance at December 31, 1994............. $(455) $ (2) $(453) $ (27) $(426)
Net income for the year 1995 per
accompanying income statement.......... (210) (32) (178) (210) 32
----- ---- ----- ----- -----
Total.......................... (665) (34) (631) (237) (394)
Dividends declared on common
stock -- cash.......................... -- -- -- -- --
----- ---- ----- ----- -----
Balance at December 31, 1995............. $(665) $(34) $(631) $(237) $(394)
===== ==== ===== ===== =====
</TABLE>
- ---------------
( ) denotes negative amount.
57
<PAGE> 60
ITEM 10. (Continued)
CNG POWER SERVICES CORPORATION
CONSOLIDATING STATEMENT OF CASH FLOWS
For the Year Ended December 31, 1995
(Thousands of Dollars)
<TABLE>
<CAPTION>
CNGPSC Eliminations
and and Combined CNG
Subsidiary Adjustments Total CNGPSC Lakewood
---------- ------------ -------- ------- --------
<S> <C> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income.............................................. $ (210) $(32) $ (178) $ (210) $ 32
Adjustments to reconcile net income to net cash provided
by (used in) operating activities
Depreciation and amortization......................... -- -- -- -- --
Impairment of gas and oil producing properties........ -- -- -- -- --
Write-down of coal properties......................... -- -- -- -- --
Deferred income taxes -- net.......................... 79 -- 79 4 75
Investment tax credit................................. -- -- -- -- --
Changes in current assets and current liabilities
Accounts receivable -- net.......................... (4,147) -- (4,147) (4,135) (12)
Receivables from affiliated cos. -- consolidated.... -- 10 (10) (10) --
Inventories......................................... (14) -- (14) (14) --
Unrecovered gas costs............................... -- -- -- -- --
Accounts payable.................................... 3,761 -- 3,761 3,761 --
Payables to affiliated cos. -- consolidated......... 1,407 (10) 1,417 1,399 18
Estimated rate contingencies and refunds............ -- -- -- -- --
Amounts payable to customers........................ -- -- -- -- --
Taxes accrued....................................... 10 -- 10 65 (55)
Other -- net........................................ (1) -- (1) -- (1)
Changes in other assets and other liabilities......... 18 -- 18 -- 18
Excess of dividends received from sub. cos. over
equity in earnings thereof -- consolidated.......... -- 32 (32) (32) --
Other -- net.......................................... -- -- -- -- --
------- ---- ------- ------- ----
Net cash provided by (used in) operating
activities................................... 903 -- 903 828 75
------- ---- ------- ------- ----
CASH FLOWS FROM INVESTING ACTIVITIES
Plant construction and other property additions......... -- -- -- -- --
Proceeds from dispositions of prop., plant and
equip. -- net......................................... -- -- -- -- --
Cost of other investments -- net........................ -- -- -- -- --
Intrasystem money pool investments -- net............... -- -- -- -- --
Intrasystem long-term financing -- net.................. -- -- -- -- --
Property transfers to (from) affiliates................. -- -- -- -- --
------- ---- ------- ------- ----
Net cash provided by (used in) investing
activities................................... -- -- -- -- --
------- ---- ------- ------- ----
CASH FLOWS FROM FINANCING ACTIVITIES
Issuance of common stock................................ -- -- -- -- --
Issuance of debentures.................................. -- -- -- -- --
Unsecured loan repayment................................ -- -- -- -- --
Commercial paper repayments -- net...................... -- -- -- -- --
Dividends paid.......................................... -- -- -- -- --
Intrasystem long-term financing -- net.................. -- -- -- -- --
Intrasystem money pool borrowings (or
repayments) -- net.................................... -- -- -- -- --
Dividends paid -- subsidiary cos. -- consolidated....... -- -- -- -- --
Other -- net............................................ -- -- -- -- --
------- ---- ------- ------- ----
Net cash provided by (used in) financing
activities................................... -- -- -- -- --
------- ---- ------- ------- ----
Net increase (decrease) in cash and TCIs....... 903 -- 903 828 75
CASH AND TCIS AT JANUARY 1, 1995........................ 10 -- 10 -- 10
------- ---- ------- ------- ----
CASH AND TCIS AT DECEMBER 31, 1995...................... $ 913 $ -- $ 913 $ 828 $ 85
======= ==== ======= ======= ====
SUPPLEMENTAL CASH FLOW INFORMATION
Cash paid for
Interest (net of amounts capitalized)................. $ -- $ -- $ -- $ -- $ --
Income taxes (net of refunds)......................... $ (85) $ -- $ (85) $ (85) $ --
</TABLE>
- ---------------
() denotes negative amount.
58
<PAGE> 61
ITEM 10. FINANCIAL STATEMENTS AND EXHIBITS (Concluded)
EXHIBITS
<TABLE>
<CAPTION>
SEC
Exhibit
Reference Description of Exhibit
- --------- ------------------------------------------------------------------------------------
<S> <C> <C>
A. Consolidated Natural Gas Company's Form 10-K Annual Report for the year ended
December 31, 1995, is hereby incorporated by reference to the filing made on March
28, 1996 under File No. 1-3196.
B. (1) A copy of the charter, as amended, and copy of the by-laws, as amended, of
Consolidated Natural Gas Company and each subsidiary company thereof, unless
otherwise indicated on the list filed herewith, are incorporated in this report
by reference to previous filings with the Commission, as shown on such list.
(2) Description of Consolidated Natural Gas Company Rights Agreement, is hereby
incorporated by reference to Exhibit 1 to the Current Report on Form 8-K filed
on January 23, 1996 under File No. 1-3196.
C.(a) The indentures of Consolidated Natural Gas Company are hereby incorporated by
reference to previously filed material as indicated on the list filed herewith.
(b) Not applicable.
D. Pursuant to Rule 45(c) under the Public Utility Holding Company Act of 1935, the
Agreement among system companies concerning the allocation of current federal income
taxes is filed herewith.
E. Pursuant to Rule 16(c) under the Public Utility Holding Company Act of 1935, the
annual report of the Iroquois Gas Transmission System, L.P., for the year ended
December 31, 1995, is filed herewith.
F. Schedules supporting items of this report:
(1) ITEM 1--Schedule of Investments is filed herewith.
(2) ITEM 4--Schedule of Acquisitions, Redemptions, or Retirements of System
Securities is filed herewith.
(3) ITEM 6--Consolidated Natural Gas Company's "Notice of Annual Meeting and Proxy
Statement, 1996" is hereby incorporated by reference to the filing made on
March 27, 1996, under File No. 1-3196.
(4) ITEM 10--Schedule of utility plant and related depreciation or amortization
accounts, together with schedules of other property or investments, if
applicable, for:
CNG Transmission
East Ohio Gas
Peoples Natural Gas
Virginia Natural Gas
Hope Gas
West Ohio Gas
are filed herewith.
G. Financial Data Schedules have been filed electronically (Exhibit 27 for EDGAR
purposes).
H. Organization chart showing the relationship of the exempt wholesale generator in
which the system holds an interest to other system companies, is filed herewith.
I. Financial statements of the exempt wholesale generator are filed herewith.
</TABLE>
59
<PAGE> 62
SIGNATURE
The registrant has duly caused this annual report to be signed on its behalf by
the undersigned thereunto duly authorized pursuant to the requirements of the
Public Utility Holding Company Act of 1935, such company being a registered
holding company.
CONSOLIDATED NATURAL GAS COMPANY
--------------------------------------
(Registrant)
By D. M. WESTFALL
------------------------------------
(D. M. Westfall)
Senior Vice President
and Chief Financial Officer
April 26, 1996
60
<PAGE> 63
EXHIBIT INDEX
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------
SEC
Exhibit
Reference Description of Exhibit
- ----------------------------------------------------------------------------
<S> <C>
A. Consolidated Natural Gas Company's Form 10-K Annual Report
for the year ended December 31, 1995 is hereby incorporated
by reference to the filing made on March 28, 1996 under
File No. 1-3196.
B. (1) A copy of the charter, as amended, and copy of the by-laws,
as amended, of Consolidated Natural Gas Company and each
subsidiary company thereof, unless otherwise indicated on
the list filed herewith, are incorporated in this report by
reference to previous filings with the Commission, as shown
on such list.
(2) Description of Consolidated Natural Gas Company Rights
Agreement, is hereby incorporated by reference to Exhibit 1
to the Current Report on Form 8-K filed on January 23, 1996
under File No. 1-3196.
C.(a) The indentures of Consolidated Natural Gas Company are
hereby incorporated by reference to previously filed
material as indicated on the list filed herewith.
(b) Not applicable.
D. Pursuant to Rule 45(c) under the Public Utility Holding
Company Act of 1935, the Agreement among system
companies concerning the allocation of current federal
income taxes is filed herewith.
E. Pursuant to Rule 16(c) under the Public Utility
Holding Company Act of 1935, the annual report of the
Iroquois Gas Transmission System, L.P., for the year
ended December 31, 1995, is filed herewith.
</TABLE>
<PAGE> 64
EXHIBIT INDEX (Concluded)
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------
SEC
Exhibit
Reference Description of Exhibit
- ----------------------------------------------------------------------------
<S> <C>
F. Schedules supporting items of this report:
(1) ITEM 1 - Schedule of Investments is filed herewith.
(2) ITEM 4 - Schedule of Acquisitions, Redemptions, or Retirements
of System Securities is filed herewith.
(3) ITEM 6 - Consolidated Natural Gas Company's "Notice of Annual
Meeting and Proxy Statement, 1996" is hereby incorporated by
reference to the filing made on March 27, 1996 under
File No. 1-3196.
(4) ITEM 10 - Schedule of utility plant and related depreciation or
amortization accounts, together with schedules of other property
or investments, if applicable, for:
CNG Transmission
East Ohio Gas
Peoples Natural Gas
Virginia Natural Gas
Hope Gas
West Ohio Gas
are filed herewith.
G. Financial Data Schedules have been filed electronically (Exhibit 27
for EDGAR purposes).
H. Organization chart showing the relationship of the exempt wholesale
generator in which the system holds an interest to other system
companies, is filed herewith.
I. Financial statements of the exempt wholesale generator are filed
herewith.
</TABLE>
<TABLE> <S> <C>
<ARTICLE> OPUR1
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATING FINANCIAL STATEMENTS INCLUDED IN ITEM 10 OF CONSOLIDATED NATURAL
GAS COMPANY'S ANNUAL REPORT ON FORM U5S FOR THE YEAR ENDED DECEMBER 31, 1995,
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 2,924,121
<OTHER-PROPERTY-AND-INVEST> 988,284
<TOTAL-CURRENT-ASSETS> 1,068,661
<TOTAL-DEFERRED-CHARGES> 347,616
<OTHER-ASSETS> 89,611
<TOTAL-ASSETS> 5,418,293
<COMMON> 257,377
<CAPITAL-SURPLUS-PAID-IN> 438,255
<RETAINED-EARNINGS> 1,309,906
<TOTAL-COMMON-STOCKHOLDERS-EQ> 2,045,818
0
0
<LONG-TERM-DEBT-NET> 1,291,811
<SHORT-TERM-NOTES> 0
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 336,000
<LONG-TERM-DEBT-CURRENT-PORT> 10,250
0
<CAPITAL-LEASE-OBLIGATIONS> 0
<LEASES-CURRENT> 0
<OTHER-ITEMS-CAPITAL-AND-LIAB> 1,734,414
<TOT-CAPITALIZATION-AND-LIAB> 5,418,293
<GROSS-OPERATING-REVENUE> 3,307,325
<INCOME-TAX-EXPENSE> 2,943
<OTHER-OPERATING-EXPENSES> 3,157,869
<TOTAL-OPERATING-EXPENSES> 3,160,812
<OPERATING-INCOME-LOSS> 146,513
<OTHER-INCOME-NET> (20,506)
<INCOME-BEFORE-INTEREST-EXPEN> 126,007
<TOTAL-INTEREST-EXPENSE> 104,663
<NET-INCOME> 21,344
0
<EARNINGS-AVAILABLE-FOR-COMM> 21,344
<COMMON-STOCK-DIVIDENDS> 181,055
<TOTAL-INTEREST-ON-BONDS> 97,515
<CASH-FLOW-OPERATIONS> 552,724
<EPS-PRIMARY> .23
<EPS-DILUTED> .34
</TABLE>
<TABLE> <S> <C>
<ARTICLE> OPUR1
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATING FINANCIAL STATEMENTS INCLUDED IN ITEM 10 OF CONSOLIDATED NATURAL
GAS COMPANY'S ANNUAL REPORT ON FORM U5S FOR THE YEAR ENDED DECEMBER 31, 1995,
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<SUBSIDIARY>
<NUMBER> 05
<NAME> EAST OHIO GAS
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 733,318
<OTHER-PROPERTY-AND-INVEST> 0
<TOTAL-CURRENT-ASSETS> 415,423
<TOTAL-DEFERRED-CHARGES> 169,146
<OTHER-ASSETS> 0
<TOTAL-ASSETS> 1,317,887
<COMMON> 207,868
<CAPITAL-SURPLUS-PAID-IN> 0
<RETAINED-EARNINGS> 194,610
<TOTAL-COMMON-STOCKHOLDERS-EQ> 407,128
0
0
<LONG-TERM-DEBT-NET> 209,211
<SHORT-TERM-NOTES> 0
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 0
<LONG-TERM-DEBT-CURRENT-PORT> 0
0
<CAPITAL-LEASE-OBLIGATIONS> 0
<LEASES-CURRENT> 0
<OTHER-ITEMS-CAPITAL-AND-LIAB> 701,548
<TOT-CAPITALIZATION-AND-LIAB> 1,317,887
<GROSS-OPERATING-REVENUE> 1,054,850
<INCOME-TAX-EXPENSE> 33,255
<OTHER-OPERATING-EXPENSES> 940,629
<TOTAL-OPERATING-EXPENSES> 973,884
<OPERATING-INCOME-LOSS> 80,966
<OTHER-INCOME-NET> 959
<INCOME-BEFORE-INTEREST-EXPEN> 81,925
<TOTAL-INTEREST-EXPENSE> 20,150
<NET-INCOME> 61,775
0
<EARNINGS-AVAILABLE-FOR-COMM> 61,775
<COMMON-STOCK-DIVIDENDS> 57,167
<TOTAL-INTEREST-ON-BONDS> 0
<CASH-FLOW-OPERATIONS> 131,131
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> OPUR1
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATING FINANCIAL STATEMENTS INCLUDED IN ITEM 10 OF CONSOLIDATED NATURAL
GAS COMPANY'S ANNUAL REPORT ON FORM U5S FOR THE YEAR ENDED DECEMBER 31, 1995,
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<SUBSIDIARY>
<NUMBER> 06
<NAME> PEOPLES NATURAL GAS
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 434,750
<OTHER-PROPERTY-AND-INVEST> 0
<TOTAL-CURRENT-ASSETS> 117,904
<TOTAL-DEFERRED-CHARGES> 131,941
<OTHER-ASSETS> 0
<TOTAL-ASSETS> 684,595
<COMMON> 165,535
<CAPITAL-SURPLUS-PAID-IN> 0
<RETAINED-EARNINGS> 77,573
<TOTAL-COMMON-STOCKHOLDERS-EQ> 243,108
0
0
<LONG-TERM-DEBT-NET> 130,139
<SHORT-TERM-NOTES> 0
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 0
<LONG-TERM-DEBT-CURRENT-PORT> 0
0
<CAPITAL-LEASE-OBLIGATIONS> 0
<LEASES-CURRENT> 0
<OTHER-ITEMS-CAPITAL-AND-LIAB> 311,348
<TOT-CAPITALIZATION-AND-LIAB> 684,595
<GROSS-OPERATING-REVENUE> 345,785
<INCOME-TAX-EXPENSE> 10,587
<OTHER-OPERATING-EXPENSES> 299,825
<TOTAL-OPERATING-EXPENSES> 310,412
<OPERATING-INCOME-LOSS> 35,373
<OTHER-INCOME-NET> (632)
<INCOME-BEFORE-INTEREST-EXPEN> 34,741
<TOTAL-INTEREST-EXPENSE> 12,469
<NET-INCOME> 22,272
0
<EARNINGS-AVAILABLE-FOR-COMM> 22,272
<COMMON-STOCK-DIVIDENDS> 18,126
<TOTAL-INTEREST-ON-BONDS> 0
<CASH-FLOW-OPERATIONS> 57,041
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> OPUR1
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATING FINANCIAL STATEMENTS INCLUDED IN ITEM 10 OF CONSOLIDATED NATURAL
GAS COMPANY'S ANNUAL REPORT ON FORM U5S FOR THE YEAR ENDED DECEMBER 31, 1995,
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<SUBSIDIARY>
<NUMBER> 07
<NAME> VIRGINIA NATURAL GAS
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 336,193
<OTHER-PROPERTY-AND-INVEST> 0
<TOTAL-CURRENT-ASSETS> 58,750
<TOTAL-DEFERRED-CHARGES> 13,711
<OTHER-ASSETS> 53
<TOTAL-ASSETS> 408,707
<COMMON> 109,697
<CAPITAL-SURPLUS-PAID-IN> 1,082
<RETAINED-EARNINGS> 3,904
<TOTAL-COMMON-STOCKHOLDERS-EQ> 171,204
0
0
<LONG-TERM-DEBT-NET> 85,418
<SHORT-TERM-NOTES> 0
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 0
<LONG-TERM-DEBT-CURRENT-PORT> 4,000
0
<CAPITAL-LEASE-OBLIGATIONS> 0
<LEASES-CURRENT> 0
<OTHER-ITEMS-CAPITAL-AND-LIAB> 148,085
<TOT-CAPITALIZATION-AND-LIAB> 408,707
<GROSS-OPERATING-REVENUE> 166,997
<INCOME-TAX-EXPENSE> 6,146
<OTHER-OPERATING-EXPENSES> 140,606
<TOTAL-OPERATING-EXPENSES> 146,752
<OPERATING-INCOME-LOSS> 20,245
<OTHER-INCOME-NET> (451)
<INCOME-BEFORE-INTEREST-EXPEN> 19,794
<TOTAL-INTEREST-EXPENSE> 9,799
<NET-INCOME> 9,995
0
<EARNINGS-AVAILABLE-FOR-COMM> 9,995
<COMMON-STOCK-DIVIDENDS> 10,500
<TOTAL-INTEREST-ON-BONDS> 0
<CASH-FLOW-OPERATIONS> 26,031
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> OPUR1
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATING FINANCIAL STATEMENTS INCLUDED IN ITEM 10 OF CONSOLIDATED NATURAL
GAS COMPANY'S ANNUAL REPORT ON FORM U5S FOR THE YEAR ENDED DECEMBER 31, 1995,
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<SUBSIDIARY>
<NUMBER> 08
<NAME> HOPE GAS
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 100,893
<OTHER-PROPERTY-AND-INVEST> 0
<TOTAL-CURRENT-ASSETS> 40,510
<TOTAL-DEFERRED-CHARGES> 11,554
<OTHER-ASSETS> 3,475
<TOTAL-ASSETS> 156,432
<COMMON> 40,900
<CAPITAL-SURPLUS-PAID-IN> 0
<RETAINED-EARNINGS> 18,881
<TOTAL-COMMON-STOCKHOLDERS-EQ> 59,781
0
0
<LONG-TERM-DEBT-NET> 38,276
<SHORT-TERM-NOTES> 0
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 0
<LONG-TERM-DEBT-CURRENT-PORT> 0
0
<CAPITAL-LEASE-OBLIGATIONS> 0
<LEASES-CURRENT> 0
<OTHER-ITEMS-CAPITAL-AND-LIAB> 58,375
<TOT-CAPITALIZATION-AND-LIAB> 156,432
<GROSS-OPERATING-REVENUE> 122,527
<INCOME-TAX-EXPENSE> 4,541
<OTHER-OPERATING-EXPENSES> 107,326
<TOTAL-OPERATING-EXPENSES> 111,867
<OPERATING-INCOME-LOSS> 10,660
<OTHER-INCOME-NET> (371)
<INCOME-BEFORE-INTEREST-EXPEN> 10,289
<TOTAL-INTEREST-EXPENSE> 2,792
<NET-INCOME> 7,497
0
<EARNINGS-AVAILABLE-FOR-COMM> 7,497
<COMMON-STOCK-DIVIDENDS> 5,419
<TOTAL-INTEREST-ON-BONDS> 0
<CASH-FLOW-OPERATIONS> 22,645
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> OPUR1
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATING FINANCIAL STATEMENTS INCLUDED IN ITEM 10 OF CONSOLIDATED NATURAL
GAS COMPANY'S ANNUAL REPORT ON FORM U5S FOR THE YEAR ENDED DECEMBER 31, 1995,
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<SUBSIDIARY>
<NUMBER> 09
<NAME> WEST OHIO GAS
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 39,151
<OTHER-PROPERTY-AND-INVEST> 0
<TOTAL-CURRENT-ASSETS> 28,731
<TOTAL-DEFERRED-CHARGES> 9,501
<OTHER-ASSETS> 0
<TOTAL-ASSETS> 77,383
<COMMON> 14,990
<CAPITAL-SURPLUS-PAID-IN> 435
<RETAINED-EARNINGS> 9,622
<TOTAL-COMMON-STOCKHOLDERS-EQ> 25,047
0
0
<LONG-TERM-DEBT-NET> 12,460
<SHORT-TERM-NOTES> 0
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 0
<LONG-TERM-DEBT-CURRENT-PORT> 0
0
<CAPITAL-LEASE-OBLIGATIONS> 0
<LEASES-CURRENT> 0
<OTHER-ITEMS-CAPITAL-AND-LIAB> 39,876
<TOT-CAPITALIZATION-AND-LIAB> 77,383
<GROSS-OPERATING-REVENUE> 55,068
<INCOME-TAX-EXPENSE> 1,603
<OTHER-OPERATING-EXPENSES> 49,362
<TOTAL-OPERATING-EXPENSES> 50,965
<OPERATING-INCOME-LOSS> 4,103
<OTHER-INCOME-NET> 3
<INCOME-BEFORE-INTEREST-EXPEN> 4,106
<TOTAL-INTEREST-EXPENSE> 995
<NET-INCOME> 3,111
0
<EARNINGS-AVAILABLE-FOR-COMM> 3,111
<COMMON-STOCK-DIVIDENDS> 2,961
<TOTAL-INTEREST-ON-BONDS> 0
<CASH-FLOW-OPERATIONS> 3,339
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
<PAGE> 1
CHARTERS AND BY-LAWS
<TABLE>
<CAPTION>
EXHIBIT B.
- -------------------------------------------------------------------------------------------------------------------------
Annual Report
on Form U5S
(File No. 30-203)
Year Ended
December 31, Other Commission Filing
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
CONSOLIDATED NATURAL GAS COMPANY
Certificate of Incorporation, restated
October 4, 1990 1990
By-Laws as last amended March 1, 1993 1992
CONSOLIDATED NATURAL GAS SERVICE COMPANY, INC.
(Charter) 1961
Charter Amendment dated November 24, 1961 1961
Charter Amendment dated January 3, 1966 1965
Charter Amendment dated November 30, 1982 1982
By-Laws as last amended March 1, 1993 1992
CNG TRANSMISSION CORPORATION
Charter-Composite Certificate of Incorporation
as last amended December 30, 1992 1992
Charter Amendment dated November 8, 1994 1994
By-Laws as last amended May 31, 1995 Filed Herewith
HOPE GAS, INC.
Charter-Agreement and Plan of Merger which sets
forth in Article III the Certificate of Incorporation
of Consolidated Gas Supply Corporation as
amended and restated on April 1, 1965,
effective date of the merger 1965
Charter Amendment dated April 28, 1971 1971
Charter Amendment dated June 30, 1975 1975
Charter Amendment dated August 26, 1977 1977
Charter Amendment dated May 11, 1981 1981
Charter Amendment dated June 6, 1984 1984
Charter Amendment dated August 9, 1990 1990 (Form SE dated April 25, 1991)
By-Laws as last amended June 4, 1990 1990 (Form SE dated April 25, 1991)
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 2
CHARTERS AND BY-LAWS (Continued)
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
Annual Report
on Form U5S
(File No. 30-203)
Year Ended
December 31, Other Commission Filing
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
THE EAST OHIO GAS COMPANY
Article of Incorporation as amended
effective June 17, 1993 Exhibit A-1 to the
Application-Declaration
on Form U-1, File
No. 70-8387
By-Laws as last amended March 12, 1991 Exhibit A-2 to the
Application-Declaration
on Form U-1, File
No. 70-8387
THE PEOPLES NATURAL GAS COMPANY
Charter-Composite Amended and Restated
Certificate of Incorporation as last
amended effective April 26, 1990 1992
By-Laws as last amended March 15, 1990 1990 (Form SE dated April 25, 1991)
WEST OHIO GAS COMPANY
Articles of Incorporation-Agreement of Merger
Effective April 16, 1969 1969
Charter Amendment dated December 1, 1994 1994
Code of Regulations as last amended
March 15, 1990 1991 (Form SE dated April 24, 1992)
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 3
CHARTERS AND BY-LAWS (Continued)
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
Annual Report
on Form U5S
(File No. 30-203)
Year Ended
December 31, Other Commission Filing
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
CNG PRODUCING COMPANY
Certificate of Incorporation dated February 29, 1972 1972
Certificate of Amendment of Certificate of
Incorporation of CNG Development Company
of Alberta before payment of capital
dated March 8, 1972 1972
Charter Amendment dated July 8, 1974 1974
Charter Amendment dated January 23, 1975 1975
Charter Amendment dated July 7, 1980 1980
Charter Amendment dated July 13, 1982 1982
Charter Amendment dated December 7, 1984 1984
Charter Amendment dated January 4, 1985 1985
Charter Amendment dated November 25, 1987 1987 (Form SE dated April 26, 1988)
Charter Amendment dated November 15, 1989 1989 (Form SE dated April 25, 1990)
Certificate of Agreement of Merger of CNG
Development Company merging with and into
CNG Producing Company dated December 20, 1990 1990 (Form SE dated April 25, 1991)
By-Laws as last amended August 1, 1992 1992
CONSOLIDATED SYSTEM LNG COMPANY
Charter-Composite Certificate of Incorporation
as last amended July 27, 1993 1993
By-Laws as last amended June 1, 1987 1987 (Form SE dated April 26, 1988)
CNG RESEARCH COMPANY
Certificate of Incorporation dated June 26, 1975 1975
Charter Amendment dated May 25, 1982 1982
Charter Amendment effective August 23, 1991 1991 (Form SE dated April 24, 1992)
By-Laws as last amended September 10, 1976 1977
CNG COAL COMPANY
Certificate of Incorporation dated October 4, 1976 1977
Charter Amendment dated July 20, 1990 1990 (Form SE dated April 25, 1991)
Charter Amendment effective August 23, 1991 1991 (Form SE dated April 24, 1992)
By-Laws as last amended June 11, 1990 1990 (Form SE dated April 25, 1991)
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 4
CHARTERS AND BY-LAWS (Continued)
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
Annual Report
on Form U5S
(File No. 30-203)
Year Ended
December 31, Other Commission Filing
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
CNG POWER COMPANY
Certificate of Incorporation dated February 17, 1982 1982
Charter Amendment dated December 12, 1986 1986 (Form SE dated April 24, 1987)
Charter Amendment dated January 13, 1995 Exhibit A-1 to Amendment
No. 3 on Form U-1, File
No. 70-8285
By-Laws as last amended January 13, 1995 Exhibit A-2 to Amendment
No. 3 on Form U-1, File
No. 70-8285
CNG ENERGY SERVICES CORPORATION
Charter-Composite Certificate of Incorporation
as last amended effective January 1, 1993 1992
Charter Amendment dated September 1, 1994 Exhibit A-1 to the
Application-Declaration
on Form U-1, File
No. 70-8577
By-Laws as last amended June 20, 1991 1991 (Form SE dated April 24, 1992)
CNG FINANCIAL SERVICES, INC.
Certificate of Incorporation dated March 1, 1989 1989 (Form SE dated April 25, 1990)
By-Laws as adopted May 26, 1989 1989 (Form SE dated April 25, 1990)
VIRGINIA NATURAL GAS, INC.
Amended and Restated Articles of Incorporation
dated December 26, 1990 1990 (Form SE dated April 25, 1991)
By-Laws as amended August 9, 1990 1990 (Form SE dated April 25, 1991)
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 5
CHARTERS AND BY-LAWS (Concluded)
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
Annual Report
on Form U5S
(File No. 30-203)
Year Ended
December 31, Other Commission Filing
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
CNG STORAGE SERVICE COMPANY
Certificate of Incorporation dated March 23, 1977 1991 (Form SE dated April 24, 1992)
Charter Amendment dated December 11, 1989 1991 (Form SE dated April 24, 1992)
By-Laws as adopted July 19, 1977 1991 (Form SE dated April 24, 1992)
CNG POWER SERVICES CORPORATION
Certificate of Incorporation dated August 5, 1994 1994
By-Laws as adopted 1994
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 6
CNG TRANSMISSION CORPORATION
BYLAWS
Adopted April 30, 1980
As Amended
Date Sections
---- --------
December 23, 1982 3.2
December 1, 1986 9.4
March 5, 1990 3.2
March 15, 1990 3.11
December 2, 1991 (Effective January 1, 1992) 3.2
May 17, 1993 3.2
May 31, 1995 (Effective June 1, 1995) 3.2
-1-
<PAGE> 7
CONTENTS
--------
1. OFFICES
1.1 Registered Office
1.2 Principal Office
1.3 Other Offices
2. MEETING OF STOCKHOLDERS
2.1 Annual Meetings
2.2 Special Meetings
2.3 Place of Meetings
2.4 Notice of Meetings
2.5 Adjourned Meetings
2.6 Voting Lists
2.7 Quorum
2.8 Proxies
2.9 Voting Rights
2.10 Required Vote
2.11 Election of Directors
2.12 Consent of Stockholders in Lieu of Meeting
3. BOARD OF DIRECTORS
3.1 General Powers
3.2 Number and Qualifications
3.3 Term of Office
3.4 Removal
3.5 Vacancies
3.6 First Meetings
3.7 Regular Meetings
3.8 Special Meetings
3.9 Quorum, Required Vote, and Adjournment
3.10 Consent of Directors in Lieu of Meeting
3.11 Limitation on Liability
4. COMMITTEES
4.1 Powers; Duties
5. OFFICERS
5.1 Number
5.2 Election, Term of Office, and Qualifications
5.3 Subordinate Officers
5.4 Removal
5.5 Vacancies
5.6 The President
5.7 The Vice Presidents
5.8 The Secretary and Assistant Secretaries
5.9 The Treasurer and Assistant Treasurers
-2-
<PAGE> 8
6. EXECUTION OF INSTRUMENTS
6.1 Execution of Instruments Generally
6.2 Checks, Drafts, Etc.
6.3 Proxies
7. CAPITAL STOCK
7.1 Stock Certificates
7.2 Transfer of Stock
7.3 Rights of Corporation with Respect to Registered Owners
7.4 Transfer Agents and Registrars
7.5 Record Date
7.6 Lost, Destroyed and Stolen Certificates
8. DIVIDENDS
8.1 Sources of Dividends
8.2 Reserves
8.3 Reliance on Corporate Records
8.4 Manner of Payment
9. GENERAL PROVISIONS
9.1 Waiver of Notice
9.2 Seal
9.3 Fiscal Year
9.4 Indemnification
10. AMENDMENTS
10.1 By the Stockholders
10.2 By the Directors
-3-
<PAGE> 9
BYLAWS
OF
CNG TRANSMISSION CORPORATION
A Delaware Corporation
1. OFFICES
1.1 REGISTERED OFFICE. The registered office of the Corporation is
located at 100 Tenth Street, Wilmington, Delaware. The Corporation may by
resolution of the Board of Directors, change the location to any other place in
Delaware.
1.2 PRINCIPAL OFFICE. The principal office of the Corporation
shall be at 445 West Main Street, Clarksburg, Harrison County, West Virginia.
1.3 OTHER OFFICES. The Corporation may have such other offices,
within or without the State of Delaware, as the Board of Directors may from
time to time establish.
2. MEETINGS OF STOCKHOLDERS
2.1 ANNUAL MEETINGS. The annual meeting of the stockholders for
the election of directors and for the transaction of any other proper business,
notice of which was given in the notice of the meeting, shall be held at nine
o'clock in the morning on the first Monday of June in each year, if not a legal
holiday, or if a legal holiday, then on the next succeeding business day not a
legal holiday.
<PAGE> 10
2.2 SPECIAL MEETINGS. A special meeting of the stockholders may be
called at any time by the Board of Directors or by the President, and shall be
called by the President upon the written request of stockholders of record
holding in the aggregate one-fifth or more of the outstanding shares of stock
of the Corporation entitled to vote, such written request to state the purpose
or purposes of the meeting and to be delivered to the President.
2.3 PLACE OF MEETINGS. The Board of Directors may designate any
place, either within or without the State of Delaware, as the place of meeting
for any annual meeting or for any special meeting called by the Board of
Directors. If no designation is made, or if a special meeting be otherwise
called, the place of meeting shall be the principal office of the Corporation.
2.4 NOTICE OF MEETINGS. Written notice stating the place, date and
hour of the meeting and, in the case of a special meeting, the purpose or
purposes for which the meeting is called, shall be given by or under the
direction of the Secretary, to each stockholder entitled to vote at such
meeting. Except as otherwise required by statute, the written notice shall be
given not less than ten nor more than sixty days before the date of the
meeting. If mailed, such notice shall be deemed to be given when deposited in
the United States mail, postage prepaid, directed to the stockholder at his
address as it appears on the records of the Corporation. Attendance of a
person at a meeting of stockholders shall constitute a waiver of notice of such
meeting,
-2-
<PAGE> 11
except when the stockholder attends for the express purpose of objecting, at
the beginning of the meeting, to the transaction of any business because the
meeting is not lawfully called or convened.
2.5 ADJOURNED MEETINGS. When a meeting is adjourned to another
time or place, notice need not be given of the adjourned meeting if the time
and place thereof are announced at the meeting at which the adjournment is
taken. At the adjourned meeting the Corporation may transact any business
which might have been transacted at the original meeting. If the adjournment
is for more than thirty days, or if after the adjournment a new record date is
fixed for the adjourned meeting, a notice of the adjourned meeting shall be
given to each stockholder of record entitled to vote at the meeting.
2.6 VOTING LISTS. The officer who has charge of the stock ledger
of the Corporation shall prepare and make, at least ten days before every
meeting of stockholders, a complete list of the stockholders entitled to vote
at the meeting, arranged in alphabetical order, and showing the address of each
stockholder and the number of shares registered in the name of each
stockholder. Such list shall be open to the examination of any stockholder,
for any purpose germane to the meeting, during ordinary business hours, for a
period of at least ten days prior to the meeting, either at a place within the
city where the meeting is to be held, which place shall be specified in the
notice of the meeting, or, if not so specified, at the place where the meeting
is to be held. The list shall also be produced
-3-
<PAGE> 12
and kept at the time and place of the meeting during the whole time thereof,
and may be inspected by any stockholder who is present.
2.7 QUORUM. Except as otherwise required by statute, the presence
at any meeting, in person or by proxy, of the holders of record of a majority
of the shares then issued and outstanding and entitled to vote shall be
necessary and sufficient to constitute a quorum for the transaction of
business. In the absence of a quorum, the stockholders entitled to vote,
present in person or by proxy, may adjourn the meeting from time to time until
a quorum is present.
2.8 PROXIES. Each stockholder entitled to vote at a meeting of
stockholders or to express consent or dissent to corporate action in writing
without a meeting may authorize another person or persons to act for him by
proxy, but no such proxy shall be voted or acted upon after three years from
its date, unless the proxy provides for a longer period. A duly executed proxy
shall be irrevocable if it states that it is irrevocable and if, and only as
long as, it is coupled with an interest sufficient in law to support an
irrevocable power.
2.9 VOTING RIGHTS. Except as otherwise provided by statute or by
the Certificate of Incorporation, and subject to the provisions of Paragraph
7.5 of these Bylaws, each stockholder shall at every meeting of the
stockholders be entitled to one vote for each share of the capital stock having
voting power held by such stockholder.
-4-
<PAGE> 13
2.10 REQUIRED VOTE. Except as otherwise required by statute or by
the Certificate of Incorporation, the holders of a majority of the capital
stock having voting power, present in person or by proxy, shall decide any
question brought before a meeting of the stockholders at which a quorum is
present.
2.11 ELECTIONS OF DIRECTORS. Elections of directors need not be by
written ballot.
2.12 CONSENT OF STOCKHOLDERS IN LIEU OF MEETING. Any action
required or permitted to be taken at any annual or special meeting of
stockholders may be taken without a meeting, without prior notice and without a
vote, if consent in writing, setting forth the action so taken, is signed by
the holders of outstanding stock having not less than the minimum number of
votes that would be necessary to authorize or take such action at a meeting at
which all shares entitled to vote thereon were present and voted.
3. BOARD OF DIRECTORS
3.1 GENERAL POWERS. The business of the Corporation shall be
managed by the Board of Directors, except as otherwise provided by statute or
by the Certificate of Incorporation.
3.2 NUMBER AND QUALIFICATIONS. The number of directors which shall
constitute the whole board shall be seven. By amendment of this bylaw the
number may be increased or decreased from time to time by the Board of
Directors within the limits permitted by law. Directors need not be
stockholders.
3.3 TERM OF OFFICE. Each director shall hold office until the next
annual meeting of stockholders and until his
-5-
<PAGE> 14
successor is elected and qualified or until his death, resignation or removal.
3.4 REMOVAL. The stockholders may at any time, at a meeting
expressly called for that purpose, remove any or all of the directors, with or
without cause, by a vote of the holders of a majority of the shares then
entitled to vote at an election of directors.
3.5 VACANCIES. Vacancies and newly created directorships resulting
from any increase in the authorized number of directors may be filled by a
majority of the directors then in office, although less than a quorum, or by a
sole remaining director.
3.6 FIRST MEETINGS. The first meeting of each newly elected Board
of Directors shall be held without notice immediately after, and at the same
place as, the annual meeting of the stockholders for the purpose of the
organization of the Board, the election of officers, and the transaction of
such other business as may properly come before the meeting.
3.7 REGULAR MEETINGS. Regular meetings of the Board of Directors
may be held without notice at such times and at such places, within or without
the State of Delaware, as shall from time to time be determined by the Board.
3.8 SPECIAL MEETINGS. Special meetings of the Board of Directors
may be called by the President and shall be called by the Secretary on the
written request of two directors. Such meetings shall be held at such times
and at such places, within or without the State of Delaware, as shall be
determined by the President or by the directors requesting the meeting. Notice
of
-6-
<PAGE> 15
the time and place thereof shall be mailed to each director, addressed to him
at his address as it appears on the records of the Corporation, at least two
days before the day on which the meeting is to be held, or sent to him at such
place by telegraph, radio or cable, or telephoned or delivered to him
personally, not later than the day before the day on which the meeting is to be
held. Such notice need not state the purposes of the meeting. Attendance of a
director at a meeting shall constitute a waiver of notice of such meeting,
except when the director attends for the express purpose of objecting, at the
beginning of the meeting, to the transaction of any business because the
meeting is not lawfully called or convened.
3.9 QUORUM, REQUIRED VOTE, AND ADJOURNMENT. The presence, at any
meeting, of one-third of the total number of directors shall be necessary and
sufficient to constitute a quorum for the transaction of business. Except as
otherwise required by statute or by the Certificate of Incorporation, the vote
of a majority of the directors present at a meeting at which a quorum is
present shall be the act of the Board of Directors. In the absence of a
quorum, a majority of the directors present at the time and place of any
meeting may adjourn such meeting from time to time until a quorum be present.
3.10 CONSENT OF DIRECTORS IN LIEU OF MEETING. Any action required
or permitted to be taken at any meeting of the Board of Directors, or any
committee thereof, may be taken without a meeting if all the members of the
Board or committee, as the case
-7-
<PAGE> 16
may be, consent thereto in writing. The Secretary shall file the written
consents with the minutes of the Board or committee.
3.11 LIMITATION ON LIABILITY
(a) To the full extent that the General Corporation Law of the
State of Delaware, as the same now exists, permits elimination or limitation of
the liability of directors, no director of the Corporation shall be liable to
the Corporation or its stockholders for monetary damages for breach of
fiduciary duty as a director, except for liability (i) for any breach of the
director's duty of loyalty to the Corporation or its stockholders, (ii) for
acts or omissions not in good faith or which involves intentional misconduct or
a knowing violation of law, (iii) under Section 174 of the Delaware General
Corporation Law, or (iv) for any transaction from which the director derived an
improper personal benefit.
(b) To the full extent permitted by law, all directors of the
Corporation shall be afforded any exemption from liability or limitation of
liability permitted by any subsequent enactment, modification or amendment of
the General Corporation Law of the State of Delaware.
(c) Any repeal or modification of either or both of the
foregoing paragraphs by the stockholders of the Corporation shall not adversely
affect any exemption from liability, limitation of liability or other right of
a director of the Corporation with respect to any matter occurring prior to
such repeal or modification.
-8-
<PAGE> 17
4. COMMITTEES
4.1 POWERS; DUTIES. The Board of Directors may, by resolution
passed by a majority of the whole Board, designate one or more committees, each
committee to consist of two or more of the directors of the Corporation, which,
to the extent provided in the resolution, shall have and may exercise the
powers of the Board of Directors in the management of the business and affairs
of the Corporation, and may authorize the seal of the Corporation to be affixed
to all papers which may require it. In the absence or disqualification of a
member of a committee, the member or members thereof present at any meeting and
not disqualified from voting, whether or not constituting a quorum, may
unanimously appoint another member of the Board to act at the meeting in place
of any absent or disqualified member. Each committee shall have such name and
duties as may be determined from time to time by resolution adopted by the
Board of Directors. The committees of the Board of Directors shall keep
regular minutes of their proceedings and report the same to the Board of
Directors when required.
5. OFFICERS
5.1 NUMBER. The officers of the Corporation shall be a President,
a Vice President, a Secretary, a Treasurer, and such other officers as the
Board shall specify from time to time, each of whom shall be elected by the
Board of Directors. Any number of offices may be held by the same person.
-9-
<PAGE> 18
5.2 ELECTION, TERM OF OFFICE, AND QUALIFICATIONS. The officers of
the Corporation to be elected by the Board of Directors shall be elected
annually at the first meeting of the Board held after each annual meeting of
stockholders. If the election of officers shall not be held at such meeting,
such election shall be held as soon thereafter as conveniently may be. Each
officer shall hold office until his successor is elected and qualified or until
his death, resignation or removal. No officer need be a director or
stockholder of the Corporation.
5.3 SUBORDINATE OFFICERS. The Board of Directors from time to time
may appoint other officers and agents, including one or more Assistant
Secretaries and one or more Assistant Treasurers, each of whom shall hold
office for such period, have such authority and perform such duties as the
Board of Directors from time to time may determine. The Board of Directors may
delegate the power to appoint any such subordinate officers and agents and to
prescribe their respective authorities and duties.
5.4 REMOVAL. Any officer or agent may be removed at any time, with
or without cause, by the affirmative vote of a majority of the directors then
in office.
5.5 VACANCIES. Any vacancy occurring in any office of the
Corporation shall be filled for the unexpired term in the manner prescribed by
these Bylaws for the regular election or appointment to the office.
5.6 THE PRESIDENT. The President shall be the chief executive
officer of the Corporation and, subject to the direction and under the
supervision of the Board of Directors,
-10-
<PAGE> 19
shall have general charge of the business, affairs and property of the
Corporation, and control over its officers, agents and employees. He shall
preside at all meetings of the stockholders and of the Board of Directors at
which he is present. He shall, in general, perform all duties and have all
powers incident to the office of President and shall perform such other duties
and have such other powers as from time to time may be assigned to him by these
Bylaws or by the Board of Directors. The President shall be chosen from among
the directors.
5.7 THE VICE PRESIDENTS. At the request of the President or in the
event of his absence or disability, the Vice President, or in case there shall
be more than one Vice President, the Vice President designated by the
President, or in the absence of such designation, the Vice President or other
officer designated by the Board of Directors, shall perform all the duties of
the President, and when so acting, shall have all the powers of, and be subject
to all the restrictions upon, the President. Any Vice President shall perform
such other duties and have such other powers as from time to time may be
assigned to him by these Bylaws or by the Board of Directors or by the
President.
5.8 THE SECRETARY AND ASSISTANT SECRETARIES. The Secretary shall
keep the minutes of the proceedings of the stockholders and of the Board of
Directors in one or more books to be kept for that purpose. He shall have
custody of the seal of the Corporation and shall have authority to cause such
seal to be affixed to, or impressed or otherwise reproduced upon, all documents
the execution and delivery of which on behalf of the
-11-
<PAGE> 20
Corporation shall have been duly authorized. The seal also may be affixed,
impressed and attested by the Treasurer or any Assistant Secretary or Assistant
Treasurer. He shall, in general, perform all duties and have all powers
incident to the office of Secretary and shall perform such other duties and
have such other powers as may from time to time be assigned to him by these
Bylaws, by the Board of Directors or by the President. The Assistant
Secretaries, in the order determined by the Board, shall, in the absence of the
Secretary, perform the duties and exercise the powers of the Secretary. Any
Assistant Secretary shall perform such other duties and have such other powers
as the Board may prescribe.
5.9 THE TREASURER AND ASSISTANT TREASURERS. The Treasurer shall
have custody of the corporate funds and securities and shall keep full and
accurate accounts of receipts and disbursements in books belonging to the
Corporation. He shall cause all moneys and other valuable effects to be
deposited in the name and to the credit of the Corporation in such depositories
as may be designated by the Board of Directors. He shall cause the funds of
the Corporation to be disbursed when such disbursements have been duly
authorized, taking proper vouchers for such disbursements, and shall render to
the President and the Board of Directors, whenever requested, an account of all
his transactions as Treasurer and of the financial condition of the
Corporation. He shall, in general, perform all duties and have all powers
incident to the office of Treasurer and shall perform such other duties and
have such other powers as
-12-
<PAGE> 21
may from time to time be assigned to him by these Bylaws, by the Board of
Directors or by the President. The Assistant Treasurers, in the order
determined by the Board, shall, in the absence of the Treasurer, perform the
duties and exercise the powers of the Treasurer. Any Assistant Treasurer shall
perform such other duties and have such other powers as the Board may
prescribe.
6. EXECUTION OF INSTRUMENTS
6.1 EXECUTION OF INSTRUMENTS GENERALLY. All documents, instruments
or writings of any nature shall be signed, executed, verified, acknowledged and
delivered by such officer or officers or such agent or agents of the
Corporation and in such manner as the Board of Directors from time to time may
determine.
6.2 CHECKS, DRAFTS, ETC. All notes, drafts, acceptances, checks,
endorsements, and all evidence of indebtedness of the Corporation whatsoever,
shall be signed by such officer or officers or such agent or agents of the
Corporation and in such manner as the Board of Directors from time to time may
determine. Endorsements for deposit to the credit of the Corporation in any of
its duly authorized depositories shall be made in such manner as the Board of
Directors from time to time may determine.
6.3 PROXIES. Proxies to vote with respect to shares of stock of
other corporations owned by or standing in the name of the Corporation may be
executed and delivered from time to time on behalf of the Corporation by the
President or a Vice President and the Secretary or an Assistant Secretary of
the Corporation or
-13-
<PAGE> 22
by any other person or persons duly authorized by the Board of Directors.
7. CAPITAL STOCK
7.1 STOCK CERTIFICATES. Every holder of stock in the Corporation
shall be entitled to have a certificate signed by, or in the name of the
Corporation by the President or a Vice President, and by the Treasurer or an
Assistant Treasurer, or the Secretary or an Assistant Secretary of the
Corporation certifying the number of shares owned by him in the Corporation.
Any or all of the signatures on the certificate may be by a facsimile. In case
any officer who has signed or whose facsimile signature has been placed upon a
certificate shall have ceased to be such officer before such certificate is
issued, it may be issued by the Corporation with the same effect as if he were
such officer at the date of issue.
7.2 TRANSFER OF STOCK. Shares of stock of the Corporation shall
only be transferred on the books of the Corporation by the holder of record
thereof or by his attorney duly authorized in writing, upon surrender to the
Corporation of the certificates for such shares endorsed by the appropriate
person or persons, with such evidence of the authenticity of such endorsement,
transfer, authorization and other matters as the Corporation may reasonably
require, and accompanied by all necessary stock transfer tax stamps. In that
event it shall be the duty of the Corporation to issue a new certificate to the
-14-
<PAGE> 23
person entitled thereto, cancel the old certificate, and record the transaction
on its books.
7.3 RIGHTS OF CORPORATION WITH RESPECT TO REGISTERED OWNERS. Prior
to the surrender to the Corporation of the certificates for shares of stock
with a request to record the transfer of such shares, the Corporation may treat
the registered owner as the person entitled to receive dividends, to vote, to
receive notifications, and otherwise to exercise all the rights and powers of
an owner.
7.4 TRANSFER AGENTS AND REGISTRARS. The Board of Directors may
make such rules and regulations as it may deem expedient concerning the
issuance and transfer of certificates for shares of the stock of the
Corporation and may appoint transfer agents or registrars or both, and may
require all certificates of stock to bear the signature of either or both.
Nothing herein shall be construed to prohibit the Corporation from acting as
its own transfer agent at any of its offices.
7.5 RECORD DATES. In order that the Corporation may determine the
stockholders entitled to notice of or to vote at any meeting of stockholders or
any adjournment thereof, or to express consent to corporate action in writing
without a meeting, or entitled to receive payment of any dividend or other
distribution or allotment of any rights, or entitled to exercise any rights in
respect of any change, conversion or exchange of stock or for the purpose of
any other lawful action, the Board of Directors may fix, in advance, a record
date, which shall not be more than sixty nor less than ten days before the date
of such
-15-
<PAGE> 24
meeting, nor more than sixty days prior to any other action. If no record date
is fixed, the record date for determining stockholders entitled to notice of or
to vote at a meeting of stockholders shall be at the close of business on the
day next preceding the day on which notice is given, or, if notice is waived,
at the close of business on the day next preceding the day on which the meeting
is held. If no record date is fixed, the record date for determining
stockholders entitled to express consent to corporate action in writing without
a meeting, when no prior action by the Board of Directors is necessary, shall
be the day on which the first written consent is expressed. The record date for
determining stockholders for any other purpose shall be at the close of
business on the day on which the Board of Directors adopts the resolution
relating thereto. A determination of stockholders of record entitled to notice
of or to vote at a meeting of stockholders shall apply to any adjournment of
the meeting; provided, however, that the Board of Directors may fix a new
record date for the adjourned meeting.
7.6 LOST, DESTROYED AND STOLEN CERTIFICATES. Where the owner of a
certificate for shares claims that such certificate has been lost, destroyed or
wrongfully taken, the Corporation shall issue a new certificate in place of the
original certificate if the owner (a) so requests before the Corporation has
notice that the shares have been acquired by a bona fide purchaser; (b) files
with the Corporation a sufficient indemnity bond; and (c) satisfies such other
reasonable requirements,
-16-
<PAGE> 25
including evidence of such loss, destruction, or wrongful taking, as may be
imposed by the Corporation.
8. DIVIDENDS
8.1 SOURCES OF DIVIDENDS. The directors of the Corporation,
subject to any restrictions contained in the statutes and Certificate of
Incorporation, may declare and pay dividends upon the shares of the capital
stock of the Corporation either (a) out of its surplus as defined and computed
in accordance with the General Corporation Law of Delaware, as amended from
time to time, or (b) in case there shall be no such surplus, out of its net
profits for the fiscal year in which the dividend is declared and/or preceding
fiscal year.
8.2 RESERVES. Before the payment of any dividend, the directors of
the Corporation may set apart out of any of the funds of the Corporation
available for dividends a reserve or reserves for any proper purpose, and the
directors may abolish any such reserve in the manner in which it was created.
8.3 RELIANCE ON CORPORATE RECORDS. A director shall be fully
protected in relying in good faith upon the books of account of the Corporation
or statements prepared by any of its officials or by independent public
accountants as to the value and amount of the assets, liabilities and net
profits of the Corporation, or any other facts pertinent to the existence and
amount of surplus or other funds from which dividends might properly be
declared and paid, or with which the Corporation's stock might properly be
redeemed or purchased.
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<PAGE> 26
8.4 MANNER OF PAYMENT. Dividends may be paid in cash, in property,
or in shares of the capital stock of the Corporation at par.
9. GENERAL PROVISIONS
9.1 WAIVER OF NOTICE. Whenever notice is required to be given
under any provision of the statutes or of the Certificate of Incorporation or
Bylaws, a written waiver thereof, signed by the person entitled to notice,
whether before or after the time stated therein, shall be deemed equivalent to
notice. Attendance of a person at a meeting shall constitute a waiver of
notice of that meeting, except where the person attends a meeting for the
express purpose of objecting, at the beginning of the meeting, to the
transaction of any business because the meeting was not lawfully called or
convened.
9.2 SEAL. The corporate seal, subject to alteration by the Board
of Directors, shall be in the form of a circle and shall bear the name of the
Corporation and the year of its incorporation and shall indicate its formation
under the laws of the State of Delaware. Such seal may be used by causing it
or a facsimile thereof to be impressed or affixed or in any other manner
reproduced.
9.3 FISCAL YEAR. The fiscal year shall be the calendar year except
as otherwise provided by the Board of Directors.
9.4 INDEMNIFICATION.
(a) The Corporation shall indemnify any person who was or is a
party or is threatened to be made a party to any
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<PAGE> 27
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative (other than an action by or in the
right of the Corporation) by reason of the fact that he is or was a director,
officer, employee or agent of the Corporation, or is or was serving at the
written request of the Corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise,
against expenses (including attorneys' fees), judgments, fines and amounts paid
in settlement actually and reasonably incurred by him in connection with such
action, suit or proceeding if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
Corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful. The termination of any
action, suit or proceeding by judgment, order, settlement, conviction, or upon
a plea of nolo contendere or its equivalent, shall not, of itself, create a
presumption that the person did not act in good faith and in a manner which he
reasonably believed to be in or not opposed to the best interests of the
Corporation, and, with respect to any criminal action or proceeding, had
reasonable cause to believe that his conduct was unlawful.
(b) The Corporation shall indemnify any person who was or is a
party or is threatened to be made a party to any threatened, pending or
completed action or suit by or in the right of the Corporation to procure a
judgment in its favor by reason of the fact that he is or was a director,
officer,
-19-
<PAGE> 28
employee or agent of the Corporation, or is or was serving at the written
request of the Corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise, against
expenses (including attorneys' fees) actually and reasonably incurred by him in
connection with the defense or settlement of such action or suit if he acted in
good faith and in a manner he reasonably believed to be in or not opposed to
the best interests of the Corporation and except that no indemnification shall
be made in respect of any claim, issue or matter as to which such person shall
have been adjudged to be liable to the Corporation unless and only to the
extent that the court of Chancery of the State of Delaware or the court in
which such action or suit was brought shall determine upon application that,
despite the adjudication of liability but in view of all the circumstances of
the case, such person is fairly and reasonably entitled to indemnity for such
expenses which the Court of Chancery of the State of Delaware or such other
court shall deem proper.
(c) To the extent that a director, officer, employee or agent
of the Corporation has been successful on the merits or otherwise in defense of
any action, suit or proceeding referred to in subparagraphs (a) and (b) of this
Paragraph 9.4, or in defense of any claim, issue or matter therein, he shall be
indemnified against expenses (including attorneys' fees) actually and
reasonably incurred by him in connection therewith.
(d) Any indemnification under subparagraphs (a) and (b) of
this Paragraph 9.4 (unless ordered by a court) shall be
-20-
<PAGE> 29
made by the Corporation only as authorized in the specific case upon a
determination that indemnification of the director, officer, employee or agent
is proper in the circumstances because he has met the applicable standard of
conduct set forth therein. Such determination shall be made (1) by the Board
of Directors by a majority vote of a quorum consisting of directors who were
not parties to such action, suit or proceeding, or (2) if such a quorum is not
obtainable, or, even if obtainable a quorum of disinterested directors so
directs, by independent legal counsel in a written opinion, or (3) by the
stockholders.
(e) Expenses incurred in defending a civil or criminal action,
suit or proceeding may be paid by the Corporation in advance of the final
disposition of such action, suit or proceeding upon the receipt of an
undertaking by or on behalf of the director, officer, employee or agent to
repay such amount if it shall ultimately be determined that he is not entitled
to be indemnified by the Corporation as authorized in this Paragraph 9.4.
(f) The indemnification and advancement of expenses provided
by or granted pursuant to the other subparagraphs of this Paragraph 9.4 shall
not be deemed exclusive of any other rights to which those seeking
indemnification or advancement of expenses may be entitled under any statute,
by-law, agreement, vote of stockholders or disinterested directors or
otherwise, both as to action in his official capacity and as to action in
another capacity while holding such office.
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<PAGE> 30
(g) By action of its Board of Directors, notwithstanding any
interest of the directors in the action, the Corporation may purchase and
maintain insurance, in such amounts as of the Board of Directors deems
appropriate, on behalf of any person who is or was a director, officer,
employee or agent of the Corporation, or is or was serving at the written
request of the Corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise, against any
liability asserted against him and incurred by him in any such capacity, or
arising out of his status as such, whether or not the Corporation would have
the power or would be required to indemnify him against such liability under
the provisions of this Paragraph 9.4 of the General Corporation Law of the
State of Delaware.
(h) The indemnification and advancement of expenses provided
by, or granted pursuant to, this Paragraph shall, unless otherwise provided
when authorized or ratified, continue as to a person who has ceased to be a
director, officer, employee or agent and shall inure to the benefit of the
heirs, executors and administrators of such a person.
10. AMENDMENTS
10.1 BY THE STOCKHOLDERS. These Bylaws may be amended or repealed,
or new Bylaws may be made and adopted, by a majority vote of all the stock of
the Corporation issued and outstanding and entitled to vote at any annual or
special meeting of the
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<PAGE> 31
stockholders, provided that notice of intention to amend shall have been
contained in the notice of meeting.
10.2 BY THE DIRECTORS. These Bylaws, including amendments adopted
by the stockholders, may be amended or repealed by a majority vote of the whole
Board of Directors at any regular or special meeting of the Board, provided
that the stockholders may from time to time specify particular provisions of
the bylaws which shall not be amended by the Board of Directors.
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<PAGE> 1
EXHIBIT C.(a)
INDENTURES OF CONSOLIDATED NATURAL GAS COMPANY
The Indentures and Supplemental Indentures between Consolidated Natural Gas
Company and its debenture Trustees, as listed below, are incorporated by
reference to material previously filed with the Commission as indicated:
Manufacturers Hanover Trust Company (now Chemical Bank)
Indenture dated as of May 1, 1971 (Exhibit (5) to Certificate of
Notification at Commission File No. 70-5012)
Eleventh Supplemental Indenture thereto dated as of December 1, 1986
(Exhibit (5) to Certificate of Notification at Commission File
No. 70-7079)
Thirteenth Supplemental Indenture thereto dated as of February 1, 1989
(Exhibit (5) to Certificate of Notification at Commission File
No. 70-7336)
Fourteenth Supplemental Indenture thereto dated as of June 1, 1989
(Exhibit (5) to Certificate of Notification at Commission File
No. 70-7336)
Fifteenth Supplemental Indenture thereto dated as of October 1, 1989
(Exhibit (5) to Certificate of Notification at Commission File
No. 70-7651)
Sixteenth Supplemental Indenture thereto dated as of October 1, 1992
(Exhibit (4) to Certificate of Notification at Commission File
No. 70-7651)
Seventeenth Supplemental Indenture thereto dated as of August 1, 1993
(Exhibit (4) to Certificate of Notification at Commission File
No. 70-8167)
Eighteenth Supplemental Indenture thereto dated as of December 1, 1993
(Exhibit (4) to Certificate of Notification at Commission File
No. 70-8167)
United States Trust Company of New York
Indenture dated as of April 1, 1995 (Exhibit (4) to Certificate of
Notification at Commission File No. 70-8107)
The Chase Manhattan Bank (National Association)
Indenture dated as of December 15, 1990 (Exhibit (4A)(1) to
Consolidated Natural Gas Company's Form 10-K Annual Report for the
year ended December 31, 1990, Commission File No. 1-3196)
<PAGE> 1
EXHIBIT D
AGREEMENT PURSUANT TO RULE 45(c)
UNDER THE PUBLIC UTILITY HOLDING COMPANY ACT OF 1935
WHEREAS, Consolidated Natural Gas Company (hereinafter referred to as
"Parent"), a corporation organized and existing under the laws of the State of
Delaware, and its wholly owned subsidiary corporations whose names and
respective states of incorporation are listed below, i.e.:
<TABLE>
<CAPTION>
State of
Name of Subsidiary Incorporation
- ------------------------------------ -------------
<S> <C>
Consolidated Natural Gas Service
Company, Inc. Delaware
CNG Transmission Corporation Delaware
CNG Iroquois, Inc., a wholly-owned
subsidiary of CNG Transmission
Corporation Delaware
The East Ohio Gas Company Ohio
The Peoples Natural Gas Company Pennsylvania
Virginia Natural Gas, Inc. Virginia
Hope Gas, Inc. West Virginia
West Ohio Gas Company Ohio
CNG Producing Company Delaware
CNG Pipeline Company, a wholly-
owned subsidiary of CNG
Producing Company Texas
CNG Power Company (name changed
from CNG Energy Company -
effective January 16, 1995) Delaware
CNG Technologies, Inc., a
wholly-owned subsidiary of
CNG Power Company Delaware
Granite Road Cogen, Inc. a
wholly-owned subsidiary of
CNG Power Company Delaware
CNG Market Center Services, Inc. a
wholly-owned subsidiary of
CNG Power Company Delaware
</TABLE>
1
<PAGE> 2
<TABLE>
<S> <C>
CNG Bear Mountain, Inc., a
wholly-owned subsidiary of
CNG Power Company Delaware
CNG Energy Services Corporation Delaware
CNG Power Services Corporation Delaware
CNG Lakewood, Inc. a
wholly-owned subsidiary of
CNG Power Services Corporation Delaware
CNG Storage Service Company Delaware
Consolidated System LNG Company Delaware
CNG Research Company Delaware
CNG Coal Company Delaware
CNG Financial Services, Inc. Delaware
</TABLE>
are desirous of entering into an Agreement for the allocation of current
federal income taxes; and
WHEREAS, Parent and its Subsidiaries (hereinafter collectively referred to
as the "Companies") join annually in the filing of a consolidated federal
income tax return; and
WHEREAS, the Securities and Exchange Commission has adopted Rule 45(c)
pursuant to the Public Utility Holding Company Act of 1935 providing for the
allocation of consolidated federal income taxes among associated companies;
NOW, THEREFORE, the Companies, for mutual benefit and valuable
considerations, do hereby covenant and agree with one another that the
allocation of the consolidated current federal income tax liability of the
Companies shall be allocated as contemplated by said Rule 45(c), as follows:
2
<PAGE> 3
First: There shall be allocated to each Company the tax effects of its own
gains or losses subject to capital gains or claim of right
treatment, tax credits and the material effects of any other features
of the Internal Revenue Code applicable to a particular Company
(including its carryover amounts) to the extent that the above
described effects are utilized in the consolidated return in the
taxable year but excluding any consolidated alternative minimum tax
or superfund tax liabilities.
Second: The balance of the current Federal tax liability of the Companies
(after the allocations described in paragraph First above and
excluding any consolidated alternative minimum tax or superfund tax
liabilities) shall be allocated on the basis of the contribution of
each Company to the consolidated taxable income of all the Companies,
excluding income subject to capital gain or claim of right treatment.
The tax attributable to such capital gain or claim of right income
will have been separately allocated pursuant to paragraph First
above. The tax allocated to a Company under this paragraph, which
may be either positive or negative, shall be equal to the
consolidated Federal tax liability (as described in this
3
<PAGE> 4
paragraph Second) multiplied by a fraction, the numerator of which is
the positive or negative taxable income of the Company (as adjusted
in paragraphs First and Third), including any carryover loss
attributable to the Company to the extent absorbed in the taxable
year and the denominator of which is the consolidated taxable income
of the Companies (as adjusted in paragraphs First and Third).
Companies with taxable income will be allocated a tax liability under
this paragraph while Companies with net operating losses will be
allocated a tax benefit or credit.
Third: The tax effect of inter-company transactions eliminated in the
calculation of consolidated taxable income shall be eliminated from
the taxable income of the Companies involved in such transactions for
purposes of the calculations provided in paragraph Second.
Fourth: If a consolidated current alternative minimum tax liability exists,
such liability will be allocated only to those Companies with a
separate Company alternative minimum tax liability. The tax
allocated to a Company under this paragraph, which may only be
positive, shall be equal to the consolidated alternative minimum tax
liability
4
<PAGE> 5
multiplied by a fraction, the numerator of which is that Company's
separate Company alternative minimum tax and the denominator of which
is the total of the alternative minimum tax liabilities of those
Companies with a separate company alternative minimum tax liability.
If the regular tax in the consolidated tax return is reduced by
reason of the alternative minimum tax credit (as defined in IRC Sec.
53), the benefit of such credit shall be allocated to those Companies
that (by having an alternative minimum tax liability allocated to
them in a prior year) generated the credit.
Fifth: If a consolidated current superfund tax liability exists, such
liability shall be allocated to each Company based on a fraction, the
numerator of which is that Company's modified alternative minimum
taxable income (as defined in IRC Sec. 59A) and the denominator of
which is consolidated modified alternative minimum taxable income.
Companies with modified alternative minimum taxable income will be
allocated a superfund tax liability under this paragraph while
Companies with a modified alternative minimum taxable loss will be
allocated a tax benefit or credit.
5
<PAGE> 6
Sixth: Under the method of allocation described in paragraphs First through
Fifth above, the Companies agree that the tax allocated to each
Company shall not exceed the amount of tax (either regular,
alternative minimum or superfund tax) of such Company based upon a
separate return computed as if such Company had always filed its tax
returns on a separate basis. However, in computing the separate
return tax liability of a Company, items of carryforward, carryback
and inter-company transaction, to the extent absorbed in the tax
allocation of other years, shall be disregarded. In addition,
corporate tax rates that are less than the maximum rate imposed by
Sec. 11 of the Internal Revenue Code shall be disregarded in
computing the separate return tax liability of a Company.
Seventh: Nonetheless, if there is an excess of allocated liability over a
separate return tax which would be allocated to a Company but for
paragraph Sixth above, such excess shall be apportioned among the
other members of the group in direct proportion to the reduction in
tax liability resulting to such members as measured by the difference
between their tax liabilities computed on a separate
6
<PAGE> 7
return basis and their allocated portion of the consolidated tax
liability.
Further, the Companies do hereby covenant and agree with one another that
the current state consolidated Corporate tax liabilities for those states in
which consolidated returns are filed shall be allocated as contemplated by said
Rule 45(c), as follows:
First: To each Company operating in the state there shall be allocated the
income tax effects of the Company's state taxable losses (on a
separate Company basis), any state tax credits and the material
effects of any other features of the state tax code applicable to a
particular Company including its carryover amounts to the extent that
the above described effects are utilized in the consolidated state
return in the taxable year.
Second: To each Company operating in the state that generates state taxable
income, there shall be allocated income tax expense by first
increasing the state consolidated current income tax liability by the
sum of the tax effects allocated in paragraph First above. The total
shall then be allocated among those Companies incurring an income tax
expense based on the ratio of that
7
<PAGE> 8
Company's separate Company state income tax to the sum of the
separate Company state income tax of all Companies incurring state
income tax expense.
Third: Nonetheless, if for any Company there is an excess of allocated
liability (pursuant to paragraphs First and Second) over the
liability on a separate Company basis, such excess shall be allocated
among the Companies with net state tax benefits. Such excess shall
be allocated to all such Companies based on the ratio of their
separate Company net tax benefits to the sum of income tax benefits
of all Companies which were allocated such benefits. The allocation
of such excess tax shall have the effect of reducing the income tax
benefits of those Companies but in no case shall such allocation
result in reducing such tax benefits below zero for any Company that
realizes a net taxable loss on a separate Company basis.
It is further agreed by and among the Companies as follows:
I. PAYMENTS: It is agreed that those Companies allocated a current Federal
or state income tax liability under this agreement will pay such liability
to the Parent Company in the amounts and on the dates directed by Parent.
The Parent Company will, in turn, pay the consolidated tax to the
8
<PAGE> 9
relevant taxing jurisdiction and also to those Companies which were
allocated a tax benefit. It is contemplated that all payments required to
be made by the Companies pursuant to this Agreement will be made on dates
approximating the dates specified in the Internal Revenue or state Codes
for the payment of corporate taxes.
II. SEPARATE RETURN LIABILITY: The Companies intend that the result of the
proposed method of allocation and payment will be:
(a) No Company will pay more than its separate return liability as
if it had always filed separate returns. However, the qualifications
set out in paragraph Sixth and Seventh under Federal tax allocation
and paragraph Third under state tax allocation above concerning the
calculation of a separate return tax shall apply.
(b) Each Company having a net operating loss or other net tax benefit
will receive in current cash payments the benefit of its own net
operating loss or other net tax benefit to the extent that the other
Companies can utilize such items to offset the tax liability they
would otherwise have on a separate return basis or to the extent
utilized in the consolidated
9
<PAGE> 10
return (after taking into account any tax credits they could utilize
on a separate return basis);
III. EFFECTIVE DATE: This Agreement shall be effective for allocation of the
current Federal and state income tax liabilities of the Companies for the
calendar year 1994 and all subsequent years until this Agreement is
further amended in writing by each Company which is party hereto.
IV. APPROVAL AND AMENDMENTS: This Agreement is subject to the approval of the
Securities and Exchange Commission. Any amendments to this Agreement may
be made only with the unanimous written consent of all the parties hereto.
A copy of this Agreement will be filed as an exhibit to the Parent's
Annual Report to the Securities and Exchange Commission on Form U5S for
1994, and any amendments to this Agreement shall also be filed as exhibits
to the Parent's Form U5S for the year when the amendment becomes
effective. It is contemplated that any additional Companies which
hereinafter become associated with the Companies shall join in and become
a party to this Agreement by amendment thereto.
PRIOR AGREEMENTS SUPERSEDED:
Any prior agreements relating to the allocation of income tax liability
among the Companies are superseded.
10
<PAGE> 11
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement
to be executed in its name and on its behalf by one of its officers duly
authorized, and its corporate seal to be affixed hereto by its Secretary as of
the 26th day of April 1995 to be effective (i) as of December 31, 1994.
ATTEST: CONSOLIDATED NATURAL GAS COMPANY
L. J. MCKEOWN By: L. D. JOHNSON
- ----------------------------- -----------------------------
Secretary Vice Chairman and
Chief Financial Officer
ATTEST: CONSOLIDATED NATURAL GAS SERVICE
COMPANY, INC.
L. J. MCKEOWN By: L. D. JOHNSON
- ----------------------------- -----------------------------
Secretary Vice Chairman and
Chief Financial Officer
ATTEST: THE PEOPLES NATURAL GAS COMPANY
W. P. BOSWELL By: D. S. MEYER
- ----------------------------- -----------------------------
Secretary Treasurer
ATTEST: CNG FINANCIAL SERVICES, INC.
N. F. CHANDLER By: R. M. SABLE
- ----------------------------- -----------------------------
Secretary Treasurer
ATTEST: CNG RESEARCH COMPANY
J. A. CRITTENDEN By: P. F. SWENSON
- ----------------------------- -----------------------------
Secretary Vice President
11
<PAGE> 12
ATTEST: CNG PRODUCING COMPANY
D. M. JOHNS, JR. By: P. P. GREGG
- ----------------------------- -----------------------------
Secretary Treasurer
ATTEST: CNG PIPELINE COMPANY
D. C. BARIL By: P. P. GREGG
- ----------------------------- -----------------------------
Secretary Treasurer
ATTEST: CNG COAL COMPANY
D. C. BARIL By: P. P. GREGG
- ----------------------------- -----------------------------
Secretary Treasurer
12
<PAGE> 13
ATTEST: CNG POWER COMPANY
J. A. CRITTENDEN By: G. J. HICKLY, JR.
- ----------------------------- -----------------------------
Secretary Treasurer
ATTEST: CNG ENERGY SERVICES CORPORATION
J. A. CRITTENDEN By: G. J. HICKLY, JR.
- ----------------------------- -----------------------------
Secretary Treasurer
ATTEST: CNG LAKEWOOD, INC.
J. A. CRITTENDEN By: G. J. HICKLY, JR.
- ----------------------------- -----------------------------
Secretary Treasurer
ATTEST: GRANITE ROAD COGEN, INC.
J. A. CRITTENDEN By: R. L. LEPIONKA
- ----------------------------- -----------------------------
Secretary Treasurer
ATTEST: CNG BEAR MOUNTAIN, INC.
J. A. CRITTENDEN By: G. J. HICKLY, JR.
- ----------------------------- -----------------------------
Secretary Treasurer
ATTEST: CNG MARKET CENTER SERVICES, INC.
N. F. CHANDLER By: R. L. LEPIONKA
- ----------------------------- -----------------------------
Secretary Treasurer
ATTEST: CNG TECHNOLOGIES, INC.
N. F. CHANDLER By: G. J. HICKLY, JR.
- ----------------------------- -----------------------------
Secretary Treasurer
13
<PAGE> 14
ATTEST: CNG TRANSMISSION CORPORATION
S. L. ATKINSON By: J. B. SLABY
- ----------------------------- -----------------------------
Secretary Treasurer
ATTEST: HOPE GAS, INC.
M. A. HALBRITTER By: J. B. SLABY
- ----------------------------- -----------------------------
Secretary Treasurer
ATTEST: CONSOLIDATED SYSTEM LNG COMPANY
S. L. ATKINSON By: J. B. SLABY
- ----------------------------- -----------------------------
Assistant Secretary Treasurer
ATTEST: CNG STORAGE SERVICE COMPANY
S. L. ATKINSON By: J. B. SLABY
- ----------------------------- -----------------------------
Assistant Secretary Treasurer
ATTEST: CNG IROQUOIS, INC.
S. L. ATKINSON By: J. B. SLABY
- ----------------------------- -----------------------------
Assistant Secretary Treasurer
14
<PAGE> 15
ATTEST: THE EAST OHIO GAS COMPANY
F. C. LEWIS By: P. J. SWEENEY
- ----------------------------- -----------------------------
Assistant Secretary Treasurer
15
<PAGE> 16
ATTEST: VIRGINIA NATURAL GAS, INC.
D. A. FICKENSCHER By: W. R. HUNTER
- ----------------------------- -----------------------------
Secretary Treasurer
16
<PAGE> 17
ATTEST: WEST OHIO GAS COMPANY
T. R. ALDERMAN By: J. A. GRONE
- ----------------------------- -----------------------------
Assistant Secretary Treasurer
17
<PAGE> 18
ATTEST: CNG POWER SERVICES CORPORATION
J. A. CRITTENDEN By: G. J. HICKLY, JR.
- ----------------------------- -----------------------------
Secretary Treasurer
18
<PAGE> 1
1995
Financial Statements
LOGO
Iroquois Gas Transmission System
Iroquois Pipeline Operating Company, Operator
<PAGE> 2
- --------- CONTRACT YEAR VOLUMES (Nov. 1, 1994--Oct. 31, 1995)
SUMMARY
TOTAL TRANSPORTED ................... 308.9 Bcf
DAILY AVERAGE ................... 846.3 MMcf
PEAK DAY ................... 1.0 Bcf
on August 6, 1994
Bcf-Billion cubic feet
MMcf-Million cubic feet
- ---------------------------------------------------------------
- --------- TOTAL VOLUMES TRANSPORTED (Bcf) IN CONTRACT YEARS
<TABLE>
<S> <C>
91-92 123
92-93 240.1
93-94 264.6
94-95 308.9
</TABLE>
- ---------------------------------------------------------------
- --------- TOTAL VOLUMES TRANSPORTED BY MONTH (Bcf) (Nov. 94--Oct. 95)
<TABLE>
<S> <C>
Nov. 94 22.5
Dec. 94 26.1
Jan. 95 27.8
Feb. 95 25.5
Mar. 95 28.0
Apr. 95 24.0
May 95 25.5
Jun. 95 24.6
Jul. 95 26.0
Aug. 95 28.2
Sep. 95 24.3
Oct. 95 26.4
</TABLE>
- ------------------------------------------------------------------------
- ---------ANNUAL HOUSEHOLD ENERGY NEEDS
Iroquois transported enough natural gas
to meet the annual energy needs of:
<TABLE>
<CAPTION>
Contract Years Millions of Homes
<S> <C>
91-92 1.2
92-93 2.4
93-94 2.6
94-95 3.1
</TABLE>
- ---------------------------------------------------------------
<PAGE> 3
Iroquois Gas Transmission System Page 1
- ----------------------------------------------------------------------------
COMPANY PROFILE
Iroquois Gas Transmission System, L.P. ("Iroquois" or "Company") is an
interstate pipeline extending 375 miles from the U.S. - Canadian border at
Waddington, NY through the state of Connecticut to Long Island, NY. Since
commencement of service in December 1991, the Company has added a short lateral
line, several meter stations as well as two compressor stations at Wright, NY.
and Croghan, NY.
The Company provides service to local gas distribution companies, electric
utilities and electric power generators, directly or indirectly, through
exchanges and interconnecting pipelines, throughout the northeastern U.S.
Iroquois is a Delaware limited partnership owned by 12 U.S. and Canadian energy
companies with headquarters in Shelton, Connecticut.
CORPORATE MISSION
To maximize natural gas transportation into the Northeast in a safe,
environmentally sound and cost effective manner, while maintaining the highest
level of service to our customers.
ENVIRONMENTAL CREDO
We are committed to preserving our environment by seeking ways to minimize
environmental intrusions and to maximize protection of our natural resources.
On the cover: Iroquois' Land Preservation and Enhancement Program (LPEP)
assisted The Nature Conservancy in preserving 73 acres of the Bonaparte Swamp
in Diana, N.Y.
<PAGE> 4
Page 2 Iroquois Gas Transmission System
- -------------------------------------------------------------------------------
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Overview
Iroquois filed its first rate case in December 1993 in accordance with the
requirements of its original Federal Energy Regulatory Commission ("FERC" or
"Commission") certificate. An uncontested rate settlement was approved by the
Commission on June 19, 1995. The new rates, which were effective February 1,
1995, reflect a 6.5% reduction from previously approved rates (refer to Note 6
of the financial statements).
RESULTS OF OPERATIONS
Operating Revenues
Total deliveries for 1995 were 314 billion cubic feet, an increase of 17% over
the prior year. The increase was made possible by the additional capability
provided by the Croghan Compressor Station which was placed in service in
December 1994. The additional revenue contribution provided by the increase in
system throughput more than offset the effects of the rate reduction.
Consequently operating revenues were $6.6 million or 4.6% above the 1994 level.
The 1995 and 1994 operating revenues are net of the rate refund provision made
by the Company of $7.5 million and $4.8 million respectively.
Operation Expenses
The operations expense for 1995 and 1994 include provisions, of $2.0 million and
$6.1 million, respectively, for the potential disallowance of legal costs for
rate making purposes incurred by the Company in its defense of the investigation
discussed in Note 6 to the financial statements. The accounting and rate
treatment of these costs is pending a decision by the Commission. Excluding the
provision for legal expenses, total operations expense increased by $2.4 million
as a result of the additional costs associated with the new compressor station
and greater maintenance activity on the mainline facilities in 1995 relative to
the prior year.
Depreciation
The change in the depreciation rate from 5% to 4% for transmission plant,
effective February 1, 1995 in accordance with the rate settlement, accounted
for the decrease of $5.2 million in depreciation expense.
Taxes Other Than Income
The increase of $0.4 million in taxes other than income, in 1995 compared to
1994, is due primarily to the increase in property tax assessments for the new
compressor facilities.
<PAGE> 5
Other Income & (Expenses)
Interest and dividend income has increased $1.4 million in 1995 compared to the
$1.2 million earned in 1994 due primarily to the large cash balances maintained
through the year. A provision of $24.7 million was made in 1995 for potential
liabilities relating to the federal investigations discussed in Note 6 of the
financial statements.
LIQUIDITY AND CAPITAL RESOURCES
Capital expenditures of $7.9 million, were incurred in 1995 for minor capital
projects. This activity was down significantly from the 1994 capital expenditure
level of $27.6 million which included expansion of the system with the
construction of the Croghan Compressor Station.
Cash flow (defined as net income adjusted for non-cash items such as
depreciation and deferred income taxes) represents the cash generated from
operations available for capital expenditures, Partner distributions, and other
operational needs. Net cash provided by operating activities decreased $4.2
million in 1995 compared to the prior year. This reduction is due to the impact
of the rate case settlement and the rate refunds paid to customers in 1995. This
decrease in cash flow was partially mitigated by an increase in the
transportation service volumes and associated revenues in 1995 compared to 1994.
Iroquois' working capital needs are supported by a $10 million line of credit
provided by a major financial institution. During 1994, $4 million of this
facility was utilized and was outstanding at year end. This obligation was
repaid in 1995. Also during 1995, $13.4 million of new debt was incurred to
finance the Croghan Compressor Station. Long term debt outstanding at the end of
1995 was $454.5 million reduced from the $473.2 million outstanding at the end
of 1994 due to the net effect of the new debt less the repayment of $32.1
million made pursuant to the debt agreement repayment schedule.
MANAGEMENT REPORT
The financial statements of Iroquois Gas Transmission System, L.P. and other
sections of this Annual Report were prepared by management of its operator,
Iroquois Pipeline Operating Company, which is responsible for their integrity
and objectivity. These financial statements were prepared in accordance with
generally accepted accounting principles and were audited by Coopers & Lybrand
L.L.P. Management considered materiality when making significant estimates and
judgments.
The Company maintains a system of internal controls over
<PAGE> 6
Iroquois Gas Transmission System Page 3
- -------------------------------------------------------------------------------
financial reporting, which is designed to provide reasonable assurance to the
Company's management and the Management Committee of Iroquois, which is
comprised entirely of Partner representatives, regarding the preparation of
reliable published financial statements. The system contains self-monitoring
mechanisms, and actions are taken to correct deficiencies as they are
identified. Even an effective internal control system, no matter how well
designed, has inherent limitations, including the possibility of the
circumvention or overriding of controls, and such systems can provide only
reasonable assurance with respect to financial statement preparation. Further,
because of changes in conditions, internal control system effectiveness may
vary over time.
Through established programs, the Company regularly emphasizes to its
management employees their internal control responsibilities and policies
prohibiting conflicts of interest. The Audit Committee of Iroquois is comprised
entirely of Partner representatives. This Committee meets periodically with
management, the internal auditor and the independent auditors to review the
activities of each and to discuss audit matters, financial reporting and the
adequacy of internal controls.
Management believes that its system of internal accounting controls and control
environment provide reasonable assurance that its assets are safeguarded from
loss or unauthorized use and that its financial records, which are the basis
for the preparation of all financial statements, are reliable.
<PAGE> 7
LOGO COOPERS & LYBRAND L.L.P.
a professional services firm
REPORT OF INDEPENDENT ACCOUNTANTS
---------------------------------
To the Partners of
Iroquois Gas Transmission System, L.P.:
We have audited the accompanying balance sheets of Iroquois Gas Transmission
System, L.P. as of December 31, 1995 and 1994, and the related statements of
income, changes in partners' equity, and cash flows for the years then ended.
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these consolidated financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Iroquois Gas Transmission
System, L.P. as of December 31, 1995 and 1994, and the results of its
operations and its cash flows for the years then ended in conformity with
generally accepted accounting principles.
COOPERS & LYBRAND L.L.P.
Hartford, Connecticut
February 16, 1996
Coopers & Lybrand L.L.P. is a member of Coopers & Lybrand International, a
limited liability association incorporated in Switzerland.
<PAGE> 8
Page 6 Iroquois Gas Transmission System
- -------------------------------------------------------------------------------
IROQUOIS GAS TRANSMISSION SYSTEM, L.P.
BALANCE SHEETS
<TABLE>
<CAPTION>
ASSETS (THOUSANDS OF DOLLARS)
- ------------------------------------------------------------------------------------------------------
AT DECEMBER 31 1995 1994
- ------------------------------------------------------------------------------------------------------
<S> <C> <C>
CURRENT ASSETS:
Cash and temporary cash investments $ 48,483 $ 28,823
Accounts receivable - trade 7,815 8,579
Accounts receivable - affiliates 6,847 6,498
Other current assets 2,280 1,939
--------- ---------
TOTAL CURRENT ASSETS 65,425 45,839
--------- ---------
NATURAL GAS TRANSMISSION PLANT:
Natural gas plant in service 752,438 744,750
Construction-work-in-progress 655 443
--------- ---------
753,093 745,193
Accumulated depreciation and amortization (135,239) (104,064)
--------- ---------
NET NATURAL GAS TRANSMISSION PLANT 617,854 641,129
--------- ---------
DEFERRED CHARGES:
Regulatory assets - income tax related 15,801 16,491
Regulatory assets - other 2,978 3,166
Other deferred charges 497 569
--------- ---------
TOTAL DEFERRED CHARGES 19,276 20,226
--------- ---------
TOTAL ASSETS $ 702,555 $ 707,194
========= =========
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE> 9
Iroquois Gas Transmission System Page 7
- -------------------------------------------------------------------------------
IROQUOIS GAS TRANSMISSION SYSTEM, L.P.
BALANCE SHEETS
<TABLE>
<CAPTION>
LIABILITIES AND PARTNERS' EQUITY (THOUSANDS OF DOLLARS)
- ----------------------------------------------------------------------------------------------------
AT DECEMBER 31 1995 1994
- ----------------------------------------------------------------------------------------------------
<S> <C> <C>
CURRENT LIABILITIES:
Accounts payable-trade $ 4,474 $ 6,055
Accrued interest 6,864 6,822
Notes payable -- 4,000
Current portion of long-term debt 30,669 31,922
Other current liabilities 16,471 16,226
Accrual for federal investigations (Note 6) 24,700 --
-------- --------
TOTAL CURRENT LIABILITIES 83,178 65,025
-------- --------
LONG-TERM DEBT 423,816 441,294
REVENUES SUBJECT TO REFUND -- 4,785
OTHER NONCURRENT LIABILITIES 272 650
-------- --------
424,088 446,729
-------- --------
AMOUNTS EQUIVALENT TO DEFERRED INCOME TAXES:
Generated by Partnership 36,184 30,839
Payable by Partners (20,383) (14,348)
-------- --------
TOTAL AMOUNTS EQUIVALENT TO
DEFERRED INCOME TAXES 15,801 16,491
-------- --------
COMMITMENTS AND CONTINGENCIES (NOTE 6) -- --
TOTAL LIABILITIES 523,067 528,245
-------- --------
PARTNERS' EQUITY 179,488 178,949
-------- --------
TOTAL LIABILITIES AND PARTNERS' EQUITY $702,555 $707,194
======== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE> 10
Page 8 Iroquois Gas Transmission System
- ------------------------------------------------------------------------------
IROQUOIS GAS TRANSMISSION SYSTEM, L.P.
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
(THOUSANDS OF DOLLARS)
- ----------------------------------------------------------------------------------------------------
FOR THE YEARS ENDED DECEMBER 31 1995 1994
- ----------------------------------------------------------------------------------------------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 6,147 $18,850
------- -------
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Depreciation and amortization 31,416 36,699
Allowance for equity funds used during construction (24) (276)
Decrease in deferred regulatory asset-income tax related 690 1,565
Increase in amounts equivalent to deferred income taxes (690) (1,565)
Income and other taxes payable by Partners 16,392 13,266
Decrease in other deferred charges 72 21
(Decrease) increase in revenues subject to refund (4,785) 4,785
Changes in working capital:
Decrease (increase) in accounts receivable 415 (2,256)
Increase in other assets (377) (133)
(Decrease) increase in accounts payable (1,581) 925
Increase (decrease) in accrued interest 42 (19)
Increase in accrual for federal investigations 24,700 --
(Decrease) increase in other liabilities (133) 4,594
------- -------
66,137 57,606
------- -------
NET CASH PROVIDED BY OPERATING ACTIVITIES 72,284 76,456
------- -------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (7,893) (27,571)
------- -------
NET CASH USED FOR INVESTING ACTIVITIES (7,893) (27,571)
------- -------
CASH FLOWS FROM FINANCING ACTIVITIES:
Partner distributions (22,000) (17,000)
Repayments of long-term debt (32,089) (32,972)
Proceeds from long-term debt 13,358 --
Repayments of notes payable (4,000) --
Proceeds from notes payable -- 4,000
------- -------
NET CASH USED FOR FINANCING ACTIVITIES (44,731) (45,972)
NET INCREASE/(DECREASE) IN CASH AND TEMPORARY CASH INVESTMENTS 19,660 2,913
CASH AND TEMPORARY CASH INVESTMENTS AT BEGINNING OF YEAR 28,823 25,910
------- -------
CASH AND TEMPORARY CASH INVESTMENTS AT END OF YEAR $48,483 $28,823
======= =======
Supplemental disclosure of cash flow information:
Cash paid for interest $30,148 $41,833
======= =======
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE> 11
Iroquois Gas Transmission System Page 9
- -------------------------------------------------------------------------------
IROQUOIS GAS TRANSMISSION SYSTEM, L.P.
STATEMENTS OF INCOME
<TABLE>
<CAPTION>
(THOUSANDS OF DOLLARS)
- -----------------------------------------------------------------------------------------------------
FOR THE YEARS ENDED DECEMBER 31 1995 1994
- -----------------------------------------------------------------------------------------------------
<S> <C> <C>
NET OPERATING REVENUES $151,129 $144,502
OPERATING EXPENSES:
Operations 25,016 26,553
Depreciation and Amortization 31,416 36,699
Taxes, other than income 9,215 8,782
-------- ---------
TOTAL OPERATING EXPENSES 65,647 72,034
-------- ---------
OPERATING INCOME 85,482 72,468
-------- ---------
OTHER INCOME & (EXPENSES):
Interest and dividend income 2,652 1,241
Allowance for equity funds used during construction 24 276
Other, net (472) (300)
Provision for federal investigations (Note 6) (24,700) --
-------- ---------
(22,496) 1,217
-------- ---------
INCOME BEFORE INTEREST CHARGES AND TAXES 62,986 73,685
INTEREST EXPENSE:
Interest expense 40,492 42,058
Allowance for borrowed funds used during construction (45) (489)
-------- --------
NET INTEREST EXPENSE 40,447 41,569
-------- --------
INCOME BEFORE TAXES 22,539 32,116
PROVISION FOR TAXES 16,392 13,266
-------- --------
NET INCOME $6,147 $18,850
======== ========
</TABLE>
The accompanying notes are an integral part of these financial statments.
<PAGE> 12
Page 10 Iroquois Gas Transmission System
- -------------------------------------------------------------------------------
IROQUOIS GAS TRANSMISSION SYSTEM, L.P.
STATEMENT OF CHANGES IN PARTNERS' EQUITY
<TABLE>
<CAPTION>
(THOUSANDS OF DOLLARS)
- ----------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------
<S> <C>
PARTNERS' EQUITY,
BALANCE AT DECEMBER 31, 1993 $163,833
Net Income 1994 18,850
Taxes payable by Partners:
Federal income taxes 10,981
Other state taxes 1,186
State income taxes 1,099
--------
13,266
Equity distributions to Partners (17,000)
--------
PARTNERS' EQUITY,
BALANCE AT DECEMBER 31, 1994 178,949
Net Income 1995 6,147
Taxes payable by Partners:
Federal income taxes 14,221
Other state taxes 1,419
State income taxes 752
--------
16,392
Equity distributions to Partners (22,000)
--------
PARTNERS' EQUITY,
BALANCE AT DECEMBER 31, 1995 $179,488
========
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE> 13
Iroquois Gas Transmission System Page 11
- -------------------------------------------------------------------------------
1. DESCRIPTION OF PARTNERSHIP:
Iroquois Gas Transmission System, L.P., ("Iroquois" or "Company") is a Delaware
limited partnership formed for the purpose of constructing, owning and
operating a natural gas transmission pipeline from the Canada-United States
border near Waddington, NY, to South Commack, Long Island, NY. In accordance
with the limited partnership agreement, the Partnership shall continue in
existence until November 1, 2089, and from year to year thereafter, until the
Partners elect to dissolve the Partnership and terminate the limited
partnership agreement.
The general partners consist of TransCanada Iroquois Ltd. (29.0%),
Tennessee/New England Pipeline Co. (13.2%), NorthEast Transmission Co. (11.4%),
Housatonic Corporation (10.5%), ANR Iroquois, Inc. (9.4%), CNG Iroquois, Inc.
(9.4%), Alenco Iroquois Pipeline, Inc. (6.0%), JMC-Iroquois Inc. (2.8%), NJNR
Pipeline Company (2.8%), ENI Transmission Company (2.4%) and LILCO Energy
Systems, Inc. (1.0%). The New York Power Authority is a limited partner (2.1%).
The Iroquois Pipeline Operating Company, is an affiliate of general partner
TransCanada PipeLines Iroquois Limited, is the administrative operator of the
pipeline. Tennessee Gas Pipeline Co. is the field operator of the pipeline.
Income and expenses are allocated to the Partners and credited to their
respective equity accounts in accordance with the limited partnership agreement
and their respective percentage interests.
Distributions to Partners are made concurrently to all Partners in proportion
to their respective partnership interests. Total cash distributions of $22.0
million and $17.0 million were made during 1995 and 1994, respectively.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Basis of Presentation
The financial statements of the Company are in conformity with generally
accepted accounting principles and with accounting for regulated public
utilities prescribed by the Federal Energy Regulatory Commission ("FERC").
Generally accepted accounting principles for regulated entities allow the
Company to give accounting recognition to the actions of regulatory authorities
in accordance with the provisions of Statement of Financial Accounting
Standards (SFAS) NO. 71, "Accounting for the Effects of Certain Types of
Regulation". In accordance with SFAS No. 71, the Company has deferred
recognition of costs (a regulatory asset) or has recognized obligations
(a regula-
<PAGE> 14
tory liability) if it is probable that such costs will be recovered or
obligation relieved in the future through the ratemaking process.
Cash and Temporary Cash Investments
Iroquois considers all highly liquid temporary cash investments purchased with
an original maturity date of three months or less to be cash equivalents.
Temporary cash investments of $48.5 million, consisting primarily of low risk
mutual funds, are carried at cost, which approximates market. At December 31,
1995 and 1994, $12.1 million of cash and temporary cash investments were held
to satisfy the terms of the Loan Agreement (refer to Note 3).
Natural Gas Plant In-Service
Natural gas plant in-service is carried at original cost. The majority of the
natural gas plant in-service is categorized as natural gas transmission plant
which was depreciated over 20 years on a straight line basis from the
in-service date through January 31, 1995. Commencing February 1, 1995
transmission plant is depreciated over 25 years on a straight-line basis as a
result of the rate case settlement. The general plant is depreciated on a
straight-line basis over various useful lives averaging five years.
Construction Work-In-Progress
At December 31, 1995, CWIP included construction costs relating to on-going
minor capital projects.
Allowance for Funds Used During Construction
The allowance for funds used during construction ("AFUDC") represents the cost
of funds used to finance natural gas transmission plant under construction. The
AFUDC rate includes a component for borrowed funds as well as equity. The
AFUDC is capitalized as an element of natural gas plant in service.
Provision for Taxes
The payment of income taxes is the responsibility of the Partners and such
taxes are not normally reflected in the financial statements of partnerships.
Iroquois' approved rates, however, include an allowance for taxes (calculated
as if it were a corporation) and the FERC requires Iroquois to record such
taxes in the Partnership records to reflect the taxes payable by the Partners
as a result of Iroquois' operations. These taxes are recorded without regard as
to whether each Partner can utilize its share of the Iroquois tax deductions.
Iroquois' rate base, for rate-making purposes, is reduced by the amount
equivalent to accumulated deferred income taxes in calculating the
<PAGE> 15
Page 12 Iroquois Gas Transmission System
- -------------------------------------------------------------------------------
required return.
Effective January 1, 1993, the Company adopted Statement of Financial
Accounting Standards No. 109 ("SFAS No. 109") Accounting for Income Taxes.
Under SFAS No. 109, deferred taxes are provided based upon, among other
factors, enacted tax rates which would apply in the period that the taxes
become payable, and by adjusting deferred tax assets or liabilities for known
changes in future tax rates. SFAS No. 109 requires recognition of a deferred
income tax liability for the equity component of AFUDC.
Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
3. FINANCING:
On June 11, 1991, Iroquois entered into a loan agreement which provided a loan
facility totaling $522.6 million to be amortized over a 14-year period
commencing November 1, 1992.
On August 30, 1992, the total amount of the loan became non-recourse to the
Partners. However, the Partners' equity interest remained pledged until
December 7, 1993, at which time the required conditions were met and the liens
were extinguished.
During 1993, Iroquois entered into Expansion Loan Agreement No. 1 in the amount
of $17.6 million to construct the Wright Compressor Station. The expansion loan
conditions are substantially the same as those of the base loan and are
non-recourse with respect to the Partners.
During 1995, Iroquois entered into an Expansion Loan Agreement No. 2 to finance
the Croghan Compressor Station. Iroquois borrowed approximately $13.4 million
of which $13.2 million is outstanding at December 31, 1995. This loan is
subject to similar provisions as the above noted loans. The loan will mature in
November 2008.
<PAGE> 16
As of December 31, 1995, Iroquois was party to interest rate swap transactions
for aggregate notional principal amounts of $550.7 million. The interest rate
swaps relating to the original loan and Expansion Loan No. 1 are $537.6 million
which are being amortized over 14 years in accordance with the principal
repayment schedule provided in the Loan Agreement. The interest rate and
margin over the term of the swaps average 7.615% and 1.159% respectively. The
interest rate swap relating to Expansion Loan No. 2 is $13.2 million with an
average interest rate and margin of 6.0% and 1.066% respectively. The interest
rate swap for Expansion Loan No. 2 expires November 2, 1998 at which time the
interest rate, unless a new interest rate swap is undertaken, will be based
upon daily LIBOR plus an average margin of 1.153% over the term of the loan.
The Original Loan Agreement requires that at least 50% of the original debt is
hedged by interest rate swaps. The fair value of interest rate swaps is the
estimated amount that Iroquois would receive or pay to terminate the swap
agreements at the reporting date, taking into account current interest rates
and current credit worthiness of the swap counterparties. The fair value of
the interest rate swaps were ($44.8) million and $11.5 million at December 31,
1995 and 1994, respectively.
Iroquois is subject to risk from non-performance of the counterparties of the
swap agreements. In the event of non-performance, the Company would be required
to pay interest subject to the original terms of the loan agreement. This risk
is substantially mitigated by the fact that the counterparties are large, highly
rated financial institutions. At December 31, 1995 the largest single exposure
under the swap agreements is $15.9 million.
At December 31, 1995, the outstanding principal was $425.4 million on the base
loan and $15.9 million on Expansion Loan Agreement No. 1 and $13.2 million on
Expansion Loan No. 2 for total long-term debt of $454.5 million. The combined
schedule of repayments is as follows (in millions):
<TABLE>
<CAPTION>
YEAR SCHEDULED REPAYMENT
- ---- -------------------
<S> <C>
1996 $ 30.7
1997 $ 29.7
1998 $ 28.7
1999 $ 28.7
2000 $ 28.8
Thereafter $307.9
</TABLE>
The loan agreements are collateralized by all the assets of
<PAGE> 17
Iroquois Gas Transmission System Page 13
- -------------------------------------------------------------------------------
the Partnership and subject Iroquois to certain restrictions and covenants
related to, among other things, indebtedness, investments, certain
expenditures, financial ratios, and limitations on distributions to Partners.
At December 31, 1995, the Company had an outstanding letter of credit in the
amount of $34.6 million, which is guaranteed by the Partners.
The Company has an unsecured line of credit which permits borrowings up to a
maximum of $10,000,000 at a rate equal to the lenders' alternate base rate plus
0.5%. At December 31, 1994, $4 million was outstanding and was subsequently
repaid in total in 1995. This facility is reviewed on an annual basis with the
current agreement expiring in March 1996. The line of credit contains a
subjective acceleration clause as its most restrictive covenant.
4. CONCENTRATIONS OF CREDIT RISK:
Iroquois' cash and temporary cash investments and trade accounts receivable
represent concentrations of credit risk. Management believes that the credit
risk associated with cash and temporary cash investments is mitigated by its
practice of limiting its investments to low risk mutual funds, rated Aaa by
Moody's Investor Services and AAA by Standard and Poor's, and its cash deposits
to large, highly rated financial institutions. Management also believes that
the credit risk associated with trade accounts receivable is mitigated by the
restrictive terms of the FERC gas tariff which requires customers to pay for
service within 20 days after the end of the month of service delivery.
5. GAS TRANSPORTATION CONTRACTS:
As of December 31, 1995, Iroquois was providing multi-year firm reserved
transportation service to 30 shippers of 836.6 MMcf/d of natural gas which
breaks down as follows:
<TABLE>
<CAPTION>
TERM IN YEARS QUANTITY IN MMcf/d
- ------------- ------------------
<S> <C>
3-10 14.5
10-15 16.5
15-20 805.6
TOTAL 836.6
</TABLE>
The twenty year firm service gas transportation contracts expire between
December 1, 2011 and November 1, 2014.
6. COMMITMENTS AND CONTINGENCIES:
Regulatory Proceedings
On December 1, 1993, Iroquois submitted a general rate
<PAGE> 18
change application with the Federal Energy Regulatory Commission ("FERC or
Commission") in Docket No. RP94-72-000. The filing was designed to comply with
the Commission's November 14, 1990 Order originally certificating the pipeline,
which required Iroquois to file a rate case within two years from the date
service was initiated, once experience had been gained in operating the
new pipeline.
On December 30, 1993, the FERC issued an order accepting Iroquois' filing and
suspending its effectiveness until June 1, 1994, subject to refund and subject
to further Commission action. The Commission noted the pendency of two related
matters: (1) in Docket No. FA92-59-000, the Commission's Office of Chief
Accountant raised an issue regarding Iroquois' capitalization of certain
expenditures relating to the construction of the pipeline; and (2) the
Enforcement Staff of the Commission's Office of General Counsel and Staff in
the Office of Pipeline Regulation had sent data requests (referenced below) to
Iroquois which bear upon certain concerns raised in the protests. On March 23,
1994, the Commission issued an order establishing a hearing in the rate case
proceeding. On March 30, 1995, prior to the hearing, Iroquois filed a
Stipulation and Agreement which resolved all issues except the accounting and
recovery of legal defense costs incurred in connection with the federal
investigations. The Stipulation and Agreement resulted in an overall reduction
from Iroquois' pre-filed rates for transportation service of approximately
6.5%, effective February 1, 1995. The Commission issued an order on June 19,
1995 approving this Stipulation and Agreement; on September 1, 1995 they
accepted Iroquois' compliance filing making necessary changes to its FERC Gas
Tariff to reflect the approval of the Stipulation and Agreement. Iroquois made
appropriate refunds in compliance with the terms of the Stipulation and
Agreement.
In regard to the reserved issued of legal defense costs, Iroquois has made a
provision for potential disallowance for rate making purposes, of these costs
incurred through December 31, 1995. A hearing was held on the reserved issue on
April 5, 1995. On July 19, 1995, the Presiding Administrative Law Judge issued
an Initial Decision which, if adopted by the Commission, would permit Iroquois
to capitalize those legal defense costs and recover $4.1 million of such costs
(the dollar amount of such costs which Iroquois filed to recover in the
December 1, 1993 rate case) from its customers. Various participants, including
the Commission staff, have filed exceptions to
<PAGE> 19
Page 14 Iroquois Gas Transmission System
- -------------------------------------------------------------------------------
the Initial Decision with the Commission (which were opposed by Iroquois on
September 7, 1995). The issue is currently pending before the Commission for
its action. On November 10, 1992, Iroquois filed tariff sheets with the
Commission to effect implementation of a deferred asset surcharge. The filing
was in compliance with the Commission's March 11, 1991 order in Docket No.
CP89-634-004. In this Order, the Commission authorized Iroquois to defer
facility-related costs in excess of operating revenues during the initial
start-up period (the period from December 1, 1991 to October 31, 1992) while
service on Iroquois' system was phased in. The total deferred asset included in
the November 10, 1992 filing was $3.574 million which is being amortized over
the remaining 19-year term of Iroquois' long-term service agreements. Each year
the Company submits a filing with the Commission to recover these costs. The
latest order which was issued by the Commission on October 23, 1995 in Docket
No. TM96-2-110, accepted such tariff sheets effective November 1, 1995.
On December 3, 1993, Iroquois received notification from the Enforcement Staff
of the Commission's Office of the General Counsel ("Enforcement") that
Enforcement has commenced a preliminary, non-public investigation concerning
Iroquois' construction of certain of its pipeline facilities. That office has
requested certain information regarding such construction. In addition, on
December 27, 1993 and September 27, 1994, Iroquois received similar requests for
information from the Army Corps of Engineers requesting certain information
regarding the construction of certain of its pipeline facilities. Iroquois also
has received inquiries from the Department of Transportation and the staff of
the New York Public Service Commission regarding construction of certain of its
pipeline facilities. In that regard, on January 26, 1995, a group of landowners
along the pipeline route filed a complaint with the New York Public Service
Commission concerning certain construction practices by Iroquois. Iroquois has
been asked by the New York Public Service Commission to respond to such
inquiries.
Iroquois is providing information to these agencies in response to their
requests.
Federal Investigations
Iroquois has been informed by the U.S. Attorney's Offices for the Northern,
Southern and Eastern Districts of New York that a civil investigation is
underway to determine whether Iroquois committed civil environmental viola-
<PAGE> 20
tions during construction of the pipeline. In February 1992, 26 alleged
violations were identified to Iroquois in writing. In response, Iroquois denied
that such violations occurred and asserted that all concerns raised by
governmental authorities during construction had been fully responded to.
Iroquois subsequently was informed that the universe of alleged violations
included certain field reports prepared by a Federal/State Inter-Agency Task
Force which surveyed the right-of-way in connection with the right-of-way
restoration program. No proceedings in connection with this civil investigation
have been commenced by the federal government against Iroquois.
In addition, Iroquois and its environmental consultant remain subjects of a
federal criminal investigation commenced in 1992. This grand jury proceeding is
being conducted by the United States Attorney for the Northern District of New
York in conjunction with representatives of both the United States
Environmental Protection Agency ("EPA") and the Federal Bureau of Investigation
("FBI"). An FBI press release issued in July 1992 described the focus of the
inquiry as whether Iroquois and possibly others violated federal environmental
laws, provided false information or otherwise concealed information in
conjunction with the construction of the base pipeline or otherwise used
interstate mails or wire to commit a fraud in connection with the construction
of the base pipeline. Iroquois management believes that the pipeline
construction and right-of-way activities were conducted in a responsible
manner. Nevertheless, in the absence of a negotiated resolution, Iroquois deems
it probable, based on representations by the United States Attorney's Office,
that the United States Attorney will seek indictments and, in them, substantial
fines and other sanctions.
Iroquois and its counsel have met with and expect to continue to meet with
those conducting the civil and criminal investigations, from time to time, both
to gain an informed understanding of the focus and direction of the
investigations in order to defend itself and to explore a range of possible
resolutions acceptable to all parties.
A global resolution of the federal civil and criminal investigations and agency
proceedings could involve fines and other monetary sanctions that would be
material to the financial results of operation and the financial condition of
Iroquois. Although no agreements have been reached regarding the disposition of
these matters, Iroquois has made a $24.7 million provision in its 1995
financial statements for dollar liability associated with these proceed-
<PAGE> 21
Iroquois Gas Transmission System Page 15
- -------------------------------------------------------------------------------
ings to reflect its evolving understanding of the probable outcome. At this
time, however, management cannot predict whether this amount would be
sufficient to cover all potential liabilities arising out of the governmental
investigations.
Legal Proceedings - Other
Iroquois is party to various other legal actions incident to its business,
however, management believes that no material losses will result from such
proceedings.
Leases
Iroquois leases its office space under operating lease arrangements. The leases
expire at various dates through 2003 and are renewable at Iroquois' option.
Iroquois also leases a right-of-way easement on Long Island, New York, from the
Long Island Lighting Company ("LILCO"), a general partner, which requires
annual payments escalating 5% a year over the 39-year term of the lease. In
addition, Iroquois leases various equipment and automobiles under
non-cancelable operating leases. During the years ended December 31, 1995, and
1994, Iroquois made payments of $0.8 million and $0.9 million respectively,
under operating leases, of which $0.1 million and $0.1 million, respectively,
were capitalized and $0.7 million and $0.8 million, respectively, were recorded
as rental expense. Future minimum rental payments under operating lease
arrangements are as follows (millions of dollars):
<TABLE>
<CAPTION>
YEAR AMOUNT
- ---- ------
<S> <C>
1996 $ 0.7
1997 $ 0.7
1998 $ 0.7
1999 $ 0.7
2000 $ 0.7
Thereafter $ 7.5
</TABLE>
7. INCOME TAXES:
As discussed in Note 2, the Company adopted SFAS No. 109 as of January 1, 1993.
The cumulative effect of this change in accounting for income taxes of $16.7
million, representing a deferred income tax liability with respect to the
equity component of AFUDC and a corresponding asset recorded in deferred
charges - regulatory asset for the same amount, is reflected in the
December 31, 1993, financial statements. Deferred income taxes which are the
result of operations will become the obligation of the Partners when the
temporary differences related to those
<PAGE> 22
items reverse. The Company recognizes a decrease in the Amounts Equivalent to
Deferred Income Taxes account for these amounts and records a corresponding
increase to Partners' equity. Deferred income taxes with respect to the equity
component of AFUDC remain on the accounts of the Partnership until the related
deferred regulatory asset is recognized.
Total income tax expense includes the following components (thousands of
dollars):
<TABLE>
<CAPTION>
U.S. Federal State State-Other Total
------------ ----- ----------- -----
<S> <C> <C> <C> <C>
1995:
Current $ 7,856 $ 1,082 $ 1,419 $ 10,357
Deferred 6,365 (330) -- 6,035
Total $ 14,221 $ 752 $ 1,419 $ 16,392
</TABLE>
<TABLE>
<CAPTION>
U.S. Federal State State-Other Total
------------ ----- ----------- -----
<S> <C> <C> <C> <C>
1994:
Current $ 6,457 $ 512 $ 1,186 $ 8,155
Deferred 4,524 587 -- 5,111
Total $ 10,981 $ 1,099 $ 1,186 $ 13,266
</TABLE>
For the year ended December 31, 1995, the effective tax rate differs from the
Federal statutory rate due principally to the one time non deductible portion
of the provision for the Federal investigations and the impact of state taxes
net of Federal benefit. For the year ended December 31, 1994, the difference
is due principally to the impact of state taxes net of Federal benefit.
Deferred income taxes included in the income statement relate to the following
(thousands of dollars):
<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
Depreciation $ 7,850 $ 7,642
Deferred regulatory asset (71) (71)
Property taxes 82 6
Legal costs 858 2,247
Accrued expenses (2,549) (2,224)
Alternative minimum tax credit (298) (2,392)
Other 164 (97)
Total deferred taxes $ 6,035 $ 5,111
</TABLE>
<PAGE> 23
Page 16 Iroquois Gas Transmission System
- -------------------------------------------------------------------------------
The components of the net deferred tax liability are as follows (thousands
of dollars):
<TABLE>
<CAPTION>
At December 31, 1995 1994
- --------------- ---- ----
<S> <C> <C>
DEFERRED TAX ASSETS-
Alternative minimum tax credit $ 11,844 $ 11,546
Accrued expenses 5,857 3,307
Total deferred tax assets $ 17,701 $ 14,853
DEFERRED TAX LIABILITIES-
Depreciation and related items $(32,600) $(24,786)
Deferred regulatory assets (1,167) (1,239)
Property Tax (827) (745)
Legal Costs (4,046) (3,188)
Other (258) (93)
Total deferred tax liabilities $(38,898) $(30,051)
Net deferred tax liabilities $(21,197) $(15,198)
Less deferral of tax rate change 814 850
Deferred taxes - Operations (20,383) (14,348)
Deferred tax related to Equity AFUDC (14,987) (15,641)
Deferred tax related to change in tax rate (814) (850)
Total deferred taxes $(36,184) $(30,839)
</TABLE>
8. RELATED PARTY TRANSACTIONS:
Operating revenues and amounts due from related parties were primarily for gas
transportation services.
Payments to related parties were primarily for services rendered under
operating agreements between Iroquois and TransCanada PipeLines Company, and
between IPOC and Tennessee Gas Pipeline Company. These contracts include
various services provided in connection with construction management,
engineering, maintenance and operation of the pipeline and other costs incident
to Iroquois' operation. The table below summarizes Iroquois' related party
transactions (millions of dollars):
<TABLE>
<CAPTION>
1995 1994
-------------------------------------------------------------
Payments Due Revenue Payments Due Revenue
to From From to From From
Related Related Related Related Related Related
Parties Parties Parties Parties Parties Parties
-------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
TransCanada Iroquois Ltd. $ 7.4 $0.1 $ 0.2 $10.1 $0.1 $ --
Tennessee Gas Pipeline 6.9 -- -- 6.7 -- --
NorthEast Transmission Co. -- 1.4 19.0 -- 1.7 19.7
Housatonic Corp. -- 1.2 14.9 -- 1.3 15.5
ANR Iroquois -- 0.3 0.7 -- -- 0.2
CNG Iroquois -- 1.0 4.2 -- 0.2 0.3
JMC Iroquois -- -- -- -- -- --
NJNR Pipeline Co. -- 0.9 10.9 -- 1.0 11.3
ENI Transmission Co. -- 0.5 6.8 -- 0.6 7.3
LILCO Energy Systems 0.1 1.4 17.6 0.1 1.6 18.3
----- ---- ----- ----- ---- -----
Totals $14.4 $6.8 $74.3 $16.9 $6.5 $72.6
----- ---- ----- ----- ---- -----
</TABLE>
<PAGE> 24
9. EMPLOYEE BENEFITS:
Iroquois offers a defined contribution retirement plan with a 401(k) provision
to its full-time salaried employees with over one year of service. The
employees' contributions are matched dollar for dollar by Iroquois up to 5% of
base pay in addition to any discretionary amounts approved by the Board of
Directors of the Plan Sponsor. These costs are recognized on a monthly basis
and funding is made on a pay-as-you-go basis. During 1995 and 1994, Iroquois
recognized $403.2 thousand and $408.4 thousand, respectively, of expenses in
connection with this plan. Iroquois does not provide post-retirement health or
life insurance benefits.
<PAGE> 25
- --------------------------- MULTI-YEAR, FIRM CONTRACTS
<TABLE>
<S> <C>
Base Pipeline 581
1993-1994 641
1994-1995 750
1995-1996 836
</TABLE>
- -------------------------------------------------------------------
- --------------------------- 1995-1996 MULTI-YEAR, FIRM CONTRACTED
VOLUMES BY STATE
<TABLE>
<S> <C>
Rhode Island 2%
New York 38%
New Hampshire 1%
Massachusetts 24%
Connecticut 22%
Other 7%
New Jersey 6%
</TABLE>
- -------------------------------------------------------------------
- --------------------------- 1995-1996
MULTI-YEAR, FIRM CONTRACTED
VOLUMES BY END USE
<TABLE>
<S> <C>
Marketers/Producers 7%
LDCs 61%
Electrics 32%
</TABLE>
- -------------------------------------------------------------------
<PAGE> 26
Iroquois Partners
TransCanada Iroquois Ltd.--29.0% (TransCanada PipeLines Limited)
Tennessee/New England Gas Pipeline Company--13.2% (Tenneco Energy)
North East Transmission Company--11.4% (Brooklyn Union Gas)
Housatonic Corporation--10.5% (Yankee Energy System, Inc.)
ANR Iroquois, Inc.--9.4% (ANR Pipeline Company)
CNG Iroquois, Inc.--9.4% (CNG Transmission Corporation)
ALENCO Iroquois Pipelines, Inc.--6.0% (AEC Pipelines)
JMC-Iroquois, Inc.--2.8% (U.S. Generating Company)
NJNR Pipeline Company--2.8% (New Jersey Resources Corporation)
ENI Transmission Company--2.4% (Connecticut Natural Gas Corporation)
New York Power Authority--2.1%
LILCO Energy Systems, Inc.--1.0% (Long Island Lighting Company)
Organization
Iroquois Gas Transmission System is a 375-mile interstate natural gas pipeline
owned by a partnership of 12 U.S. and Canadian energy companies. (See listing
of partners above.) Iroquois Pipeline Operating Company is the agent for and
operator of the Iroquois Gas Transmission System.
Corporate Mission
To maximize natural gas transportation into the Northeast in a safe,
environmentally sound and cost-effective manner, while maintaining the highest
level of service to our customers.
Environmental Credo
We are committed to preserving our environment by seeking ways to minimize
environmental intrusions and to maximize protection of our natural resources.
LOGO
Iroquois Gas Transmission System
Iroquois Pipeline Operating Company, Operator
<TABLE>
<S> <C>
One Corporate Drive, Suite 600 Iroquois' One-Stop Transportation Numbers:
Shelton, Connecticut 06484-6211 Nominations: 203/944/7077
Phone 203/925/7200 Operations: 203/944/7071
Fax 203/929/9501 Irodynamics (EBB): 203/944/7001
Internet address: Call Before You Dig:
http://www.naturalgas.com/iroquois/ New York State 1/800/962/7962
E-Mail address: Connecticut 1/800/922/4455
[email protected] Long Island 1/516/661/6000
</TABLE>
Logo Printed entirely with soy-based inks on recycled paper
<PAGE> 1
EXHIBIT F.(1)
ITEM 1 - SCHEDULE OF INVESTMENTS
________________________________
At December 31, 1995
(Thousands of Dollars)
<TABLE>
<CAPTION>
Principal
Name of Issuer Title of Issue Amount
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C>
Service Company Non-negotiable notes:
9.5% - maturing serially November 30, 1996 to 2011 . . . . . $ 3,836
8.90% - maturing May 31, 1999 . . . . . . . . . . . . . . . . 5,000
6.20% - maturing September 30, 1998 . . . . . . . . . . . . . 5,000
6.10% - maturing July 31, 2003. . . . . . . . . . . . . . . . 795
________
Total unsecured debt . . . . . . . . . . . . . . . . . . . . $ 14,631
========
CNG Transmission Non-negotiable notes:
9.5% - maturing serially November 30, 1996 to 2011 . . . . . $ 33,225
7.40% - maturing serially November 30, 2000 to 2015 . . . . . 75,000
8.95% - maturing serially September 30, 2004 to 2014 . . . . 35,000
6.20% - maturing September 30, 1998 . . . . . . . . . . . . . 100,800
6.10% - maturing July 31, 2003. . . . . . . . . . . . . . . . 59,541
6.80% - maturing November 30, 2013. . . . . . . . . . . . . . 57,793
8.75% - maturing December 31, 2014. . . . . . . . . . . . . . 27,000
________
Total unsecured debt . . . . . . . . . . . . . . . . . . . . $388,359
========
East Ohio Gas Non-negotiable notes:
9.5% - maturing serially November 30, 1996 to 2011 . . . . . $ 8,181
8.90% - maturing May 31, 1999 . . . . . . . . . . . . . . . . 15,000
7.40% - maturing serially November 30, 2000 to 2015 . . . . . 30,000
8.95% - maturing serially September 30, 2009 to 2019 . . . . 20,000
6.20% - maturing September 30, 1998 . . . . . . . . . . . . . 78,900
6.10% - maturing July 31, 2003. . . . . . . . . . . . . . . . 28,596
6.80% - maturing November 30, 2013. . . . . . . . . . . . . . 29,045
________
Total unsecured debt . . . . . . . . . . . . . . . . . . . . $209,722
========
</TABLE>
<PAGE> 2
ITEM 1 - SCHEDULE OF INVESTMENTS
________________________________
At December 31, 1995
(Thousands of Dollars)
<TABLE>
<CAPTION>
Principal
Name of Issuer Title of Issue Amount
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C>
Peoples Natural
Gas Non-negotiable notes:
9.5% - maturing serially November 30, 1996 to 2011 . . . . . $ 8,181
9.5% - maturing January 31, 1997 . . . . . . . . . . . . . . 10,000
8.90% - maturing May 31, 1999 . . . . . . . . . . . . . . . . 10,000
7.40% - maturing serially November 30, 2000 to 2015 . . . . . 15,000
8.95% - maturing serially September 30, 2009 to 2019 . . . . 14,000
6.20% - maturing September 30, 1998 . . . . . . . . . . . . . 10,000
6.80% - maturing November 30, 2013. . . . . . . . . . . . . . 37,430
6.10% - maturing July 31, 2003. . . . . . . . . . . . . . . . 26,039
________
Total unsecured debt . . . . . . . . . . . . . . . . . . . . $130,650
========
Virginia Natural
Gas Non-negotiable notes:
8.90% - maturing May 31, 1999 . . . . . . . . . . . . . . . . $ 33,318
6.20% - maturing September 30, 1998 . . . . . . . . . . . . . 40,100
________
Total unsecured debt . . . . . . . . . . . . . . . . . . . . $ 73,418
========
</TABLE>
<PAGE> 3
ITEM 1 - SCHEDULE OF INVESTMENTS
________________________________
At December 31, 1995
(Thousands of Dollars)
<TABLE>
<CAPTION>
Principal
Name of Issuer Title of Issue Amount
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C>
Hope Gas Non-negotiable notes:
9.5% - maturing serially November 30, 1996 to 2011 . . . . . $ 3,583
7.40% - maturing serially November 30, 2000 to 2015 . . . . . 5,000
8.95% - maturing serially September 30, 2009 to 2019 . . . . 3,000
6.20% - maturing September 30, 1998 . . . . . . . . . . . . . 8,400
6.10% - maturing July 31, 2003. . . . . . . . . . . . . . . . 6,420
6.80% - maturing November 30, 2013. . . . . . . . . . . . . . 12,097
_______
Total unsecured debt . . . . . . . . . . . . . . . . . . . . $38,500
=======
West Ohio Gas Non-negotiable notes:
9.5% - maturing serially November 30, 1996 to 2011 . . . . . $ 2,863
7.40% - maturing serially November 30, 2000 to 2015 . . . . . 5,000
6.10% - maturing July 31, 2003. . . . . . . . . . . . . . . . 1,625
6.80% - maturing November 30, 2013. . . . . . . . . . . . . . 901
8.75% - maturing December 31, 2014. . . . . . . . . . . . . . 2,250
_______
Total unsecured debt . . . . . . . . . . . . . . . . . . . . $12,639
=======
</TABLE>
<PAGE> 4
ITEM 1 - SCHEDULE OF INVESTMENTS
________________________________
At December 31, 1995
(Thousands of Dollars)
<TABLE>
<CAPTION>
Principal
Name of Issuer Title of Issue Amount
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C>
CNG Producing Non-negotiable notes:
9.5% - maturing January 31, 1997 . . . . . . . . . . . . . . $ 90,000
8.90% - maturing May 31, 1999 . . . . . . . . . . . . . . . . 35,000
8.95% - maturing serially September 30, 1999 to 2009. . . . . 49,000
6.10% - maturing July 31, 2003. . . . . . . . . . . . . . . . 71,075
6.80% - maturing November 30, 2013. . . . . . . . . . . . . . 8,500
________
Total unsecured debt . . . . . . . . . . . . . . . . . . . . $253,575
========
CNG Power Non-negotiable notes:
9.5% - maturing serially November 30, 1996 to 2011 . . . . . $ 530
8.95% - maturing serially September 30, 2009 to 2019. . . . . 4,000
7.40% - maturing serially November 30, 2000 to 2015 . . . . . 2,160
8.75% - maturing serially November 30, 1996 to 2014 . . . . . 6,783
________
Total unsecured debt . . . . . . . . . . . . . . . . . . . . $ 13,473
========
CNG Storage Non-negotiable notes:
6.20% - maturing September 30, 1998 . . . . . . . . . . . . . $ 7,350
========
</TABLE>
<PAGE> 1
EXHIBIT F.(2)
ITEM 4 - SCHEDULE OF ACQUISITIONS, REDEMPTIONS, OR RETIREMENTS OF SYSTEM
SECURITIES
<TABLE>
<CAPTION>
Calendar Year 1995
(Thousands of Dollars)
- -----------------------------------------------------------------------------------------------------------------------------------
Number of
Number of Shares or
Shares or Principal
Principal Amount
Amount Redeemed or Commission
Name of Issuer and Title of Issue Acquired Retired Consideration Authorization
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Registered Holding Company
Parent Company:
Common stock, par value $2.75 per share 13,138 shares $ 481 Release No. 35-25294 (File No. 70-7838)
Common stock, par value $2.75 per share 4,213 shares 153 Release No. 35-25425 (File No. 70-7095)
------ --------
Total Common stock 17,351 shares $ 634
====== ========
Subsidiaries & Registered Holding Company:
Virginia Natural Gas Company:
Unsecured loan
9.94% Unsecured loan due 1/1/95 $ 4,000 $ 4,000 Rule 42
======== ========
CNG Producing Company:
Non-negotiable notes
9.5% Non-negotiable notes due
11/30/95 $ 4,326 $ 4,326 Rule 42
======== ========
CNG Power Company:
Non-negotiable note
8.75% Non-negotiable note due
11/30/95 $ 357 $ 357 Rule 42
======== ========
</TABLE>
<PAGE> 1
EX-99.7
FORM U5S EX. H. - CHART, EWG RELATIONSHIPS
EXHIBIT H.
CONSOLIDATED NATURAL GAS COMPANY
RELATIONSHIP OF EXEMPT WHOLESALE GENERATOR
TO OTHER SYSTEM COMPANIES
CONSOLIDATED NATURAL GAS COMPANY
-----------------------------------------
(Wholly owned [ ] (Wholly owned
subsidiary) [ ] subsidiary)
[ ]
CNG POWER SERVICES CNG POWER COMPANY
CORPORATION ]
[ /
(Wholly owned [ /
subsidiary) [ /
[ /
CNG LAKEWOOD, INC. /
\ /
\ / (34% Limited
\ / Partnership
\ / Interest)
\ /
\ /
\ /
\ /
\ /
\ /
(1% General \ /
Partnership \ /
Interest) \ /
\ /
\ /
\ /
\/
LAKEWOOD COGENERATION, L.P.
*
*
* (Fuel
* Manager)
*
*
CNG ENERGY
SERVICES
CORPORATION
<PAGE> 1
EXHIBIT I
ARTHUR ANDERSEN LLP
LAKEWOOD COGENERATION LIMITED PARTNERSHIP
FINANCIAL STATEMENTS
AS OF DECEMBER 31, 1995 AND 1994
TOGETHER WITH AUDITORS' REPORT
<PAGE> 2
ARTHUR ANDERSEN LLP
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
----------------------------------------
To the Partners of Lakewood
Cogeneration Limited Partnership:
We have audited the accompanying balance sheet of Lakewood Cogeneration Limited
Partnership (a Delaware Limited Partnership) as of December 31, 1995, and the
related statements of income, changes in partners' equity and cash flows for
the year then ended. These financial statements are the responsibility of the
Partnership's management. Our responsibility is to express an opinion on these
financial statements based on our audit. The financial statements of the
Partnership as of and for the period ended December 31, 1994, were audited by
other auditors whose report dated April 21, 1995, expressed an unqualified
opinion on those statements.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of the Lakewood Cogeneration
Limited Partnership as of December 31, 1995, and the results of its operations
and its cash flows for the year then ended in conformity with generally
accepted accounting principles.
/s/ Arthur Andersen LLP
-----------------------
ARTHUR ANDERSEN LLP
Detroit, Michigan,
February 28, 1996.
<PAGE> 3
LAKEWOOD COGENERATION LIMITED PARTNERSHIP
BALANCE SHEETS
AS OF DECEMBER 31, 1995 AND 1994
<TABLE>
<CAPTION>
1995 1994
------------ ------------
ASSETS
<S> <C> <C>
Cash and cash equivalents $ 6,620,727 $ 8,530,925
Accounts receivable 4,242,935 4,211,592
Accounts receivable from affiliates 17,604 17,504
Prepaid expenses 360,910 954,541
Inventory 430,502 421,009
------------ ------------
Total current assets 11,672,678 14,135,571
Net property, plant and equipment 225,185,032 224,413,347
Restricted cash (Note 5) 17,476,550 --
Deferred charges, net 8,096,730 8,105,184
Accounts receivable (Note 7) 2,000,000 2,000,000
------------ ------------
Total assets $264,430,990 $248,654,102
============ ============
LIABILITIES AND PARTNERS' EQUITY
Accounts payable and accrued liabilities $ 2,818,650 $ 2,156,257
Accounts payable to affiliates (Note 3) 3,758,635 13,746,717
Current portion of long term debt 4,830,000 --
Accrued interest 639,444 1,280,913
------------ ------------
Total current liabilities 12,046,729 17,183,887
Retainage payable (Note 2) 1,222,650 10,244,731
Loans payable to affiliates (Note 6) -- 24,034,140
Long Term Debt (Note 6) 202,395,001 196,283,505
------------ ------------
Total non-current liabilities 203,617,651 230,562,376
Partners' equity 48,766,610 907,839
Commitments and contingencies (Note 7)
------------ ------------
Total liabilities and partners' equity $264,430,990 $248,654,102
============ ============
</TABLE>
The accompanying notes are an integral part
of these financial statements.
2
<PAGE> 4
LAKEWOOD COGENERATION LIMITED PARTNERSHIP
STATEMENTS OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 1995
AND THE PERIOD FROM NOVEMBER 9, 1994 TO DECEMBER 31, 1994
<TABLE>
<CAPTION>
(See Note 1)
For the For the Period From
Year Ended November 9, 1994
December 31, 1995 to December 31, 1994
----------------- --------------------
<S> <C> <C>
Revenues:
Electric sales $54,458,284 $ 7,088,394
Operating expenses:
Operating and maintenance 6,134,386 762,955
Fuel 13,053,126 1,345,800
Depreciation and amortization 8,320,718 1,182,041
Administrative and general 3,925,249 377,622
----------- -----------
Total operating expenses 31,433,479 3,668,418
----------- -----------
Income before interest income and expense 23,024,805 3,419,976
Interest income and expense:
Interest income 1,288,696 44,534
Interest expense (19,149,150) (2,556,671)
----------- -----------
Net interest expense (17,860,454) (2,512,137)
----------- -----------
Net Income $ 5,164,351 $ 907,839
=========== ===========
</TABLE>
The accompanying notes are an integral part
of these financial statements.
3
<PAGE> 5
LAKEWOOD COGENERATION LIMITED PARTNERSHIP
STATEMENTS OF CHANGES IN PARTNERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1995 AND 1994
<TABLE>
<CAPTION>
HCE CNG CNG POWER HYDRA-CO TPC TOTAL
--------- ----------- -------------- ------------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Balance at
December 31, 1993 $ -- $ -- $ -- $ -- $ -- $ --
--------- --------- ------------ ----------- ----------- ------------
Contributions -- -- -- -- -- --
Net Income 9,078 9,078 308,666 399,449 181,568 907,839
--------- --------- ------------ ----------- ----------- ------------
Balance at
December 31, 1994 $ 9,078 $ 9,078 $ 308,666 $ 399,449 $ 181,568 $ 907,839
========= ========= ============ =========== =========== ============
Contributions 510,000 510,000 24,527,000 22,440,000 10,200,000 58,187,000
Distributions (83,056) (83,056) (10,010,897) (3,654,455) (1,661,116) (15,492,580)
Net Income 51,644 51,644 1,755,879 2,272,314 1,032,870 5,164,351
--------- --------- ------------ ----------- ----------- ------------
Balance at
December 31, 1995 $ 487,666 $ 487,666 $ 16,580,648 $21,457,308 $ 9,753,322 $ 48,766,610
========= ========= ============ =========== =========== ============
</TABLE>
The accompanying notes are an integral part
of these financial statements.
4
<PAGE> 6
LAKEWOOD COGENERATION LIMITED PARTNERSHIP
STATEMENTS OF CASH FLOWS
FOR THE YEAR ENDED DECEMBER 31, 1995
AND THE PERIOD FROM NOVEMBER 9, 1994 TO DECEMBER 31, 1994
<TABLE>
<CAPTION>
(See Note 1)
For The For the Period From
Year Ended November 9, 1994
December 31, 1995 to December 31, 1994
----------------- --------------------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 5,164,351 $ 907,839
Adjustments to reconcile net income to net
cash provided (used) by operating activities:
Depreciation and amortization 8,320,718 1,182,041
Effect on cash flows of changes in:
Accounts receivable (31,343) (3,525,520)
Accounts receivable from affiliates (100) 125,595
Fuel inventory (9,493) (421,009)
Prepaid expenses 242,873 (911,382)
Accounts payable and accrued liabilities 377,342 (15,018,895)
Accounts payable to affiliates (3,988,082) 13,270,313
Retainage payable (8,855,719) (1,774,274)
Accrued interest (641,469) 1,235,940
------------- ------------
Total adjustments (4,585,273) (5,837,191)
------------- ------------
Net cash provided/(used) by operating activities 579,078 (4,929,352)
------------ ------------
Cash flows from investing activities:
Property, plant & equipment additions (8,240,531) (65,655,422)
Deferred charges (373,971) 291,188
Change in restricted cash (17,476,550) --
------------ ------------
Net cash used by investing activities (26,091,052) (65,364,234)
------------ ------------
Cash flows from financing activities:
Proceeds from loans payable 14,716,496 54,502,602
Repayments of loans payable (3,775,000) --
Borrowing from affiliates 6,615,860 24,034,140
Distributions to partners (14,305,580) --
Contributions from partners 20,350,000 --
------------ ------------
Net cash provided by financing activities 23,601,776 78,536,742
------------ ------------
Net increase (decrease) in cash and cash equivalents (1,910,198) 8,243,156
Cash and cash equivalents at beginning of period 8,530,925 287,769
------------ ------------
Cash and cash equivalents at end of period $ 6,620,727 $ 8,530,925
============ ============
Supplemental disclosure of cash flow information:
Cash paid during the year for interest $ 19,345,353 $ 10,813,763
Supplemental disclosure of non-cash financing activity:
The Partnership accrued borrowings from affiliates for $24,034,140 in 1994. In 1995, an additional $6,615,860 was accrued. On the
conversion date (June 8, 1995), these borrowings were converted to equity as specified by the partnership agreement (See Note 8).
</TABLE>
The accompanying notes are an integral part
of these financial statements.
5
<PAGE> 7
LAKEWOOD COGENERATION LIMITED PARTNERSHIP
NOTES TO THE FINANCIAL STATEMENTS
1. DESCRIPTION AND STATUS OF PARTNERSHIP
Lakewood Cogeneration Limited Partnership (the Partnership) is a Delaware
limited partnership. The Partnership was formed to acquire, develop, construct,
refurbish, own, operate, manage and lease a 237 MW natural gas-fired
cogeneration power production facility located in Lakewood, New Jersey (the
Facility). The Partnership Agreement expires in 2050. The Partnership assumed
operating responsibility for the Facility on November 9, 1994, and, as of that
date, ceased capitalizing start-up and interest costs and began reflecting
results of operations in the Statements of Income. The interests of the
partners in the Partnership are as follows:
<TABLE>
<S> <C>
GENERAL PARTNERS
HCE-Lakewood, Inc. (HCE) 1%
CNG Lakewood, Inc. (CNG) 1%
LIMITED PARTNERS
HYDRA-CO ENTERPRISES, Inc. (HYDRA-CO) 44%
CNG Power Company (CNG Power) 34%
TPC Lakewood, Inc. (TPC) 20%
----
100%
====
</TABLE>
Profits and losses will be allocated among the partners in proportion to their
respective equity interest. Net cash flow shall be distributed at least
semi-annually, if available, and allocated among the partners in the same
manner as profits and losses.
2. FACILITY DESCRIPTION AND AGREEMENTS
The Facility is designed to burn natural gas and liquid fuel to cogenerate 237
MW (net) of electric energy. The electricity is sold to Jersey Central Power
and Light (JCP&L), a subsidiary of General Public Utilities (GPU) under a
20-year Power Purchase Agreement. The Facility is also designed to generate
steam which will be sold to Rhone Poulenc Specialty Chemicals Co.
(Rhone-Poulenc) under a 5-year agreement commencing in 1996.
The Partnership entered into an Amended and Restated Performance Construction
Contract (the EPC Contract) with CRS Sirrine Engineers, Inc. (CRSS) for a total
contract price of $151,900,000. In accordance with the EPC Contract, the
Partnership withheld 10% of the amounts payable to CRSS as retainage until
Substantial Completion, as defined, was achieved. The EPC Contract called for
the Facility to be substantially complete by September 1, 1994 at which time
certain performance tests were required to be met. The EPC Contract also
provided for CRSS to pay certain liquidated damages to the extent that these
performance tests or certain other milestones were not met by September 1,
1994.
6
<PAGE> 8
LAKEWOOD COGENERATION LIMITED PARTNERSHIP
NOTES TO THE FINANCIAL STATEMENTS
(CONTINUED)
In February 1995, CRSS and the Partnership entered into a Settlement Agreement.
Pursuant to the agreement, the date of Substantial Completion was designated
November 9, 1994. Furthermore, the balance of retainage held prior to the
Settlement Agreement ($15,445,000) was reduced by $5,200,000 in full
satisfaction of liquidated damages. This amount has been recorded as a
reduction to property, plant and equipment in the accompanying Balance Sheet.
The Settlement Agreement also allowed the Partnership to hold from retainage,
otherwise due and payable, an amount of $3,000,000 as security for the
performance of final punchlist items and an amount of $2,000,000 in an interest
bearing escrow account for a specified amount of time as security for potential
warranty claims. The remaining retainage of $5,245,000 due to CRSS, after the
deduction of $5,200,000 and the withholding of $5,000,000, was paid to CRSS in
March 1995. Pursuant to the agreement, CRSS indemnified the Partnership against
any liabilities or costs incurred as a result of any disputes between CRSS and
its subcontractors and unconditionally guaranteed the performance of warranty
obligations of CRSS. At the Final Completion Date (November 20, 1995), it was
determined that punchlist items valuing $511,688 remained to be completed. As
such $1,488,312 plus $28,500 of accrued interest was returned to CRSS. At
December 31, 1995, the remaining balance in the escrow account was $514,341
(See Note 5).
Pursuant to the Power Purchase Agreement, JCP&L will purchase the contract
capacity, as defined, at specified rates under a dispatchable arrangement. The
agreement expires 20 years from the Full Delivery Date, which was November 8,
1994 and may be extended for successive periods of 5 years.
Pursuant to a Capacity Reservation Precedent Agreement with New Jersey Natural
Gas Company (NJNG), a Consent and Agreement dated July 17, 1991 and a Letter
Agreement dated June 29, 1992, NJNG has agreed to construct natural gas
pipelines to interconnect two interstate pipeline systems with the Facility and
sell the assets to the Partnership for $6,850,000, which was paid at financial
closing and is included as a component of plant, property and equipment on the
Balance Sheet. Commencing on April 1, 1994, the Partnership will pay an annual
charge of $2,614,000 escalated annually by the Gross Domestic Product Price
Deflator for the reservation of transportation capacity. This agreement expires
in April 2014 and provides for early termination payments to NJNG under certain
circumstances. NJNG has the right to repurchase the assets at the termination
of the agreement. The Partnership paid NJNG $2,616,000 and $377,000 in 1995 and
1994, respectively.
In July 1993, to remove regulatory risk and ownership restrictions of being a
Qualifying Facility (QF) and to improve the overall project economics, the
Partnership filed with the Federal Energy Regulatory Commission (FERC) for
Exempt Wholesale Generator (EWG) status. In September 1993, the EWG application
was approved. In connection with the EWG filing, a required rate filing was
also made with FERC for approval of the rates under the existing power contract
with JCP&L. This rate application was also approved.
By obtaining EWG status, the Partnership is exempt from PURPA Qualifying
Facility regulations which require minimum amount of steam sales; the
Partnership only needs to sell steam in an amount to qualify as a cogeneration
facility under its permit requirements. In February 1994, the Partnership
agreed to the termination of a Steam Services Agreement previously entered into
with Kimball Medical Center (Kimball) under which the Partnership was to
provide thermal energy to Kimball at specified rates. In lieu of providing
steam, the Partnership funded $950,000 for the purchase and installation of two
steam absorption chillers and a steam line for Kimball.
In June 1994, the Partnership entered into a Steam Supply Agreement with
Rhone-Poulenc under which Rhone-Poulenc will accept and purchase steam, at rate
of $3.25/Klbs., for the initial year of the agreement and then escalated
annually at a rate equal to the increase granted by NJNG for its firm gas rate
for industrial customers. The agreement shall have an initial term of 5 years
and can be automatically extended annually with agreement of both parties. In
no event, shall the
7
<PAGE> 9
LAKEWOOD COGENERATION LIMITED PARTNERSHIP
NOTES TO THE FINANCIAL STATEMENTS
(CONTINUED)
initial term and extensions exceed 20 years. The Partnership is also required
to construct, at its expense, the steam distribution system to deliver the
steam to Rhone-Poulenc.
In November 1994, as a result of obtaining EWG status, the Partnership
terminated certain agreements with American Eagle Distillation Company (AEDC)
which had provided for the Partnership to construct and maintain a water
distillation facility on behalf of AEDC and for AEDC to purchase certain
minimum amounts of thermal energy from the Partnership. Subsequently, AEDC
filed suit against the Partnership and HCE alleging wrongful termination and
fraud. Pre-trial discovery resulted in a negotiated settlement of this matter
in March 1995 for a payment from the Partnership to AEDC of $390,000 and mutual
releases.
Pursuant to an Agreement of Grant and Reservation with the Lakewood Township
Municipal Utilities Authority (LTMUA) as amended by First and Second Amendments
dated August 20, 1991 and July 21, 1992, respectively, the Partnership has
agreed to construct certain Water Facilities (the Water Facilities). The
Partnership is required to maintain the Water Facilities and will transfer
title of the Water Facilities and the real property acquired in connection with
the Water Facilities to LTMUA upon completion. In addition, the Partnership has
agreed to make non-refundable contributions to LTMUA toward the construction,
permitting, and operation of wells needed to provide water to the Facility.
LTMUA was paid $7,000 and $17,000 in 1995 and 1994, respectively, which is
included as a component of property, plant and equipment in the accompanying
Balance Sheets.
In September 1994, the Partnership terminated a Water Service Agreement with
Arrowhead Industrial Water, Inc. (Arrowhead) which required Arrowhead to
design, install, operate and own a water purification system.
Airport Associates (Airport) and the Industrial Commission of the Township of
Lakewood (LIC) entered into a contract for the sale by LIC to Airport of
certain lands (LIC Contract). The Partnership and Airport entered into certain
agreements (Bennett Contracts) providing for the sale by Airport to the
Partnership of the LIC Tracts (except the Bennett Tract), land previously
owned by Airport and easement rights in other lands owned by Airport for an
aggregate purchase price of $3,300,000, of which $1,000,000 was paid in 1993.
The Partnership loaned $560,000 to Airport to finance the purchase of the
Bennett Tract in exchange for a promissory note secured by a mortgage and
Security Agreement on the Bennett Tract. The promissory note provided for
annual amortization payments of $150,000 over a four year term beginning on
October 15, 1992. In September 1994, Airport agreed to forego $356,000 in
payment for well easements and made a payment of $85,000 to the Partnership
in exchange for full satisfaction of the payments due under the promissory note.
In October 1995, the Partnership entered into a Long Term Maintenance
Agreement with ABB Power Generation, Inc. (ABB) for its two combustion
turbines. The contract value of $16,051,000 is to be paid over a 61 month
period, as defined. As of December 31, 1995, $1,480,000 had been paid to ABB.
3. RELATED PARTY TRANSACTIONS
CNG Power was reimbursed $28,000 and $186,000 in 1995 and 1994 respectively,
for direct costs incurred on behalf of the Partnership.
The Partnership has entered into a Project Management Services Agreement with
Lakewood Project Management, Inc. (LPMI), a wholly-owned subsidiary of HYDRA-CO
for an aggregate sum of $2,765,000 which expires at the end of the
8
<PAGE> 10
LAKEWOOD COGENERATION LIMITED PARTNERSHIP
NOTES TO THE FINANCIAL STATEMENTS
(CONTINUED)
Warranty Period, as defined. Total project management fees charged by LPMI for
project management services in 1995 and 1994 were $720,000 and $1,100,000,
respectively, and are included as a component of property, plant and equipment.
LPMI was also reimbursed for direct costs incurred on behalf of the Partnership
in the amount of $22,000 in 1994.
The Partnership has entered into an Administrative Services Agreement with
HYDRA-CO which expires in November 2012 and may be renewed annually upon mutual
agreement. Total administrative fees earned by HYDRA-CO and included as a
component of property, plant and equipment, were $107,000 in 1994.
Administrative fees of $309,000 and $43,000 were expensed in 1995 and 1994,
respectively. HYDRA-CO was also reimbursed $351,000 and $1,083,000 in 1995 and
1994, respectively, for direct costs incurred on behalf of the Partnership. The
majority of amounts reimbursed in 1994 relate to work on the EWG conversion
(See Note 2).
The Partnership has entered into an Operation and Maintenance Agreement with
CMS Generation Operating Company II, Lakewood Division (CMSG II), a
wholly-owned subsidiary of HYDRA-CO, and previously known as HYDRA-CO
Operations, Inc., which expires on the twenty-first anniversary of the
commercial operation date and may be renewed annually thereafter. Under the
terms of the agreement, CMSG II is to be reimbursed for all direct costs
incurred and receive an overhead fee of $200,000 and a base fee of $60 per
hour multiplied by the number of actual dispatch hours, as defined. CMSG II can
also earn a bonus if certain performance factors are achieved. Fees and bonuses
earned by CMSG II of $397,000 and $57,000 were expensed in 1995 and 1994,
respectively. CMSG II was also reimbursed for direct costs incurred on behalf
of the Partnership in the amount of $3,168,000 and $1,574,000 in 1995 and 1994,
respectively.
The Partnership has entered into a Fuel Management Agreement with CNG Energy
Services Corporation (ESC), a wholly-owned subsidiary of CNG, to develop and
administer a comprehensive fuel supply and transportation procedure. The term
of the agreement shall be the earlier of 5 years from the substantial
completion date or December 31, 2001 and will be automatically renewed for
additional one-year terms unless terminated by either party. ESC was reimbursed
for fees and direct costs fees incurred on behalf of the Partnership in the
amount of $8,916,000 and $1,929,000 in 1995 and 1994, respectively.
Under the terms of the Partnership Agreement, HCE is entitled to a treasury fee
of up to $400,000 per year if certain interest cost savings, as defined, are
realized by the Partnership. The treasury fee commences on June 8, 1995. Total
interest cost savings earned by HCE and expensed in 1995 were $220,000.
Under the terms of the Partnership Agreement and the loan agreements, available
cost underruns, as defined, will be paid to the general partners. Such
underruns are payable in the amount that the total project costs are less than
$262,000,000. At December 31, 1994, cost underrun fees amounting to $11,900,000
were accrued in accounts payable to affiliates, and there is no accrual for
these underruns as of December 31, 1995. At December 31, 1995, $13,258,000 has
been paid to the partners for these cost underruns. These underruns were
reflected as either a management fee, capitalized during the construction
phase, or a return of capital (See Note 8), pursuant to the Partnership
Agreement, in the accompanying financial statements.
4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION - The preparation of financial statements in conformity
with generally accepted accounting
9
<PAGE> 11
LAKEWOOD COGENERATION LIMITED PARTNERSHIP
NOTES TO THE FINANCIAL STATEMENTS
(CONTINUED)
principles requires management to make estimates and assumptions that affect
the reported amounts of assets and liabilities and disclosure of contingent
assets and liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting period. Actual results
could differ from those estimates.
FAIR VALUE OF FINANCIAL INSTRUMENTS - All financial instruments recorded by the
Partnership are estimated to approximate fair value.
PLANT AND EQUIPMENT - Plant and equipment are stated at cost which includes all
direct, and applicable indirect, construction, development and financing costs.
The plant and equipment is being depreciated over the Facility's estimated
useful life of 30 years. The composite rate of depreciation is 3.3%.
Depreciation expense was $7,071,000 and $1,007,000 in 1995 and 1994,
respectively.
INTEREST CAPITALIZATION - Interest costs incurred during construction of the
Facility were capitalized as a part of construction work in process. The amount
of interest capitalized is based on the interest costs incurred on the specific
borrowings for the construction project, reduced by the interest earned from
the investment of the unexpended portion of such borrowings. Interest costs
incurred and capitalized totaled approximately $14,407,000, and was offset by
interest earned of $98,000 on unexpended debt proceeds.
INCOME TAXES - Consistent with partnership accounting, no provision has been
made for income taxes in the accompanying Balance Sheets as such taxes are
payable by the individual partners.
DEFERRED CHARGES - Costs associated with the formation of the Partnership
aggregating approximately $5,419,000 and $4,805,000 at December 31, 1995 and
1994, respectively, have been deferred and are being amortized using the
straight-line method over a five-year period commencing with the commercial
operation of the Facility. Amortization expense of such costs amounted to
$1,084,000 and $139,000 in 1995 and 1994, respectively.
Costs incurred in negotiating and securing the construction and term financing
amounted to $4,103,000 and $3,953,000 at December 31, 1995 and 1994,
respectively, and have been deferred and are being amortized using the
effective interest method over the term of the related debt. Amortization of
such costs amounted to $166,000 and $36,000 in 1995 and 1994, respectively.
STATEMENT OF CASH FLOWS - For purposes of the Statement of Cash Flows, the
Partnership considers highly liquid investments with an original maturity of
three months or less to be cash equivalents. Also, Non-Current Restricted Cash
is excluded from cash and cash equivalents.
RECLASSIFICATION - Certain amounts from the prior year have been reclassified
in the accompanying financial statements to conform with the 1995 presentation.
NEW ACCOUNTING STANDARD - Effective in 1996, Statement of Financial Accounting
Standards No. 121, "Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to be Disposed Of," requires impairment losses on long-lived
assets to be recognized when an asset's book value exceeds its future cash
flows (undiscounted). Management has not determined the impact this Standard
may have on the Partnership.
10
<PAGE> 12
LAKEWOOD COGENERATION LIMITED PARTNERSHIP
NOTES TO THE FINANCIAL STATEMENTS
(CONTINUED)
5. RESTRICTED CASH
In accordance with the terms of the Second Amended and Restated Depositary
Agreement (the Depositary Agreement) between the Partnership, Mellon Bank, N.A.
(as the Collateral Agent), ABN-AMRO Bank, N.V., Westpac Banking Corporation,
The Sanwa Bank Limited, Shawmut Bank, N.A., and the Industrial Bank of Japan,
New York, the Partnership maintains various funds on behalf of the Collateral
Agent.
Under the terms of the Depositary Agreement, the Partnership is required to
deposit all revenues into the Disbursement Account.
The Partnership is required to maintain a Major Maintenance Account with
semi-annual deposits, as defined. Amounts may be withdrawn to pay amounts due
and payable with the Maintenance schedule and other extraordinary maintenance
of the Facility. As of December 31, 1995, there was $2,151,752 on deposit in
the Major Maintenance Account.
The Collateral Agent requires that the balance in the Debt Service Reserve
(DSR) be equal to the excess of the Maximum Debt Service Amount over the
aggregate amount of funds on deposit on the Conversion Date (June 8, 1995), as
defined. The Collateral Agent determined the DSR requirement to an amount not
to exceed $7,000,000 (excluding interest), and at December 31, 1995, there was
$7,188,926 on deposit in the DSR account of which $188,926 was interest.
The Partnership is required to maintain a reserve in the amount of $100,000
plus accrued interest for Bank Litigation Legal Costs. Transfers from this
account may be made to pay costs associated with the Bank Litigation Legal
Costs. At December 31, 1995, the amounts on deposit for this reserve was
$102,830.
Until the completion of all construction and warranty phases, the Partnership
is required to maintain a Punchlist and Warranty Escrow. Funds may be withdrawn
to pay construction costs with prior approval of both Mellon Bank and its
Independent Engineers. The excess funds of the Punchlist and Warranty Escrow
not used for construction items will be distributed to the partners as either a
management fee or a return of capital (See Note 3). As of December 31, 1995,
the balance in the Punchlist and Warranty Escrow was $3,293,036.
In accordance with the Settlement Agreement, the Partnership is maintaining an
interest bearing escrow for CRSS as security for potential warranty claims
(Warranty Escrow). The initial funding of the escrow was $2,000,000 by CRSS in
March 1995. At the Final Completion Date (November 20, 1995), it was determined
that punchlist items valuing $511,688 remained to be completed. As such
$1,488,312 plus $28,500 of accrued interest was returned to CRSS. At December
31, 1995, the remaining balance in the Warranty Escrow account was $514,341
(See Note 2).
6. LONG-TERM DEBT
The Partnership maintains construction and term loan financing from two
sources. They are a group of banks (the Bank Lenders) and John Hancock Mutual
Life Insurance Company (Hancock). Mellon Bank, N.A. (Mellon) is acting as the
administrative agent for all lenders.
The Bank Lenders have made available Tranche A Bank Loans in the amount of
$136,000,000. As of December 31, 1994, $121,284,000 had been borrowed. Upon the
Conversion Date, the total Tranche A Bank Loans in the amount of
11
<PAGE> 13
LAKEWOOD COGENERATION LIMITED PARTNERSHIP
NOTES TO THE FINANCIAL STATEMENTS
(CONTINUED)
$136,000,000 were converted into the Continuing Bank Term Loans (Term Loans).
The Term Loans are being repaid in semi-annual installments over a fourteen
year period which commenced June 30, 1995. Principal payments totaling
$3,400,000 were made in 1995. Principal amounts due on the Term Loans for each
of the five years succeeding December 31, 1995 are as follows: $4,080,000,
$4,760,000, $6,120,000, $6,800,000, and $7,480,000.
The Bank Lenders had made available Tranche B Bank Loans in the amount of
$51,000,000. The Partnership does not anticipate borrowings under the Tranche B
Bank Loans.
Until the Conversion Date, the Partnership paid an unused commitment fee of
0.375 percent on the aggregate unused portion of the Tranche A and Tranche B
Bank Loans. This fee, which has been capitalized as a component of property,
plant and equipment, totaled $831,000 in 1994. Additional unused commitment
fees of $26,000 were expensed in 1994. In 1995, unused commitment fees of
$64,000 were expensed.
In addition, the Bank Lenders made available a Working Capital Loan of
$2,000,000. The Partnership paid a standby fee of 0.125 percent on any unused
portion of the Working Capital Loan up to the Conversion Date. Commencing on
the Conversion Date, the Partnership pays an unused commitment fee of 0.375
percent on the average daily unused portion of the Working Capital Loan. This
fee, which was capitalized as a component of property, plant, and equipment
totaled $2,500 in 1994. In 1995, this fee was expensed in the amount of $5,400.
This loan commitment will terminate on the fifth anniversary of the Conversion
Date. The Partnership may request one year extensions through the final
maturity date of the Term Loans.
Hancock has made available Institutional Loans of $75,000,000. As of December
31, 1995 and 1994, respectively, $74,625,000 and $75,000,000 is outstanding.
The Institutional Loans are being repaid in semi-annual installments over an
eighteen and one-half year period which began June 30, 1995. Principal amounts
due on the Institutional Loans for each of the five years succeeding December
31, 1995 are as follows: $750,000, $750,000, $750,000, 750,000, and $750,000.
The Partnership has three interest rate options on the Bank Loans: a Base Rate
option, a CD Rate option and a LIBOR Rate option. Each of these rates is
equivalent to the corresponding Mellon Bank interest rate option plus a credit
spread which varies depending on the type of Bank Loan, the interest rate
option chosen and the timing of the loan. In December, 1993, the Partnership
entered into a forward interest rate SWAP with Mellon Bank, N.A. and ABN-AMRO
Bank, N.V. in an aggregate notional amount of $125,000,000. The effective date
of the SWAP is January 3, 1995 for a duration of fourteen years under which the
Partnership pays interest on the notional amount at a fixed rate of 6.68
percent and receives interest at the LIBOR Rate. The effect of this agreement
is to fix the interest rate on $125,000,000 at 7.93 percent for the first five
years of the agreement, 8.18 percent for the next five years and 8.43 percent
for the last four years. The Institutional Loans bear interest at a rate equal
to the yields of actively traded "On The Run" United States Treasury securities
plus a credit spread. The maturity of such securities and the credit spread has
varied due to the timing of the loans. The weighted average interest rate up
until November 9, 1994 was 6.5 percent. Per the Credit Agreement, the rate on
the Institutional Loan was fixed at 10.66 percent on November 9, 1994.
The Partnership paid the lenders an EWG conversion fee of $738,500 in 1994,
which was equal to 0.35 percent of the aggregate of Tranche A Bank Loan and
Institutional Loan commitments. The EWG conversion fee was capitalized as a
component of property, plant and equipment in the accompanying Balance Sheet.
The Partnership has agreed to pay an Administrative Agent's Fee to Mellon. This
fee is equal to $100,000 per year for
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<PAGE> 14
LAKEWOOD COGENERATION LIMITED PARTNERSHIP
NOTES TO THE FINANCIAL STATEMENTS
(CONTINUED)
the period from financial closing through the six month anniversary of the
Conversion Date and $75,000 per year thereafter. Fees paid in 1994 totaled
$85,000 and were capitalized as a component of property, plant and equipment.
Fees expensed in 1995 and 1994 were $94,000 and $14,000, respectively.
On the Conversion Date, subordinated loans to the Partnership in the amount of
$2,600,000, $17,850,000 and $10,200,000 due HYDRA-CO, CNG, and TPC,
respectively, were converted to equity. (See Note 8). Interest was accruing on
these loans at the LIBOR rate plus one percent and was paid June 16, 1995.
Total interest paid for these loans in 1994 and 1995 was $1,331,019 ($150,698,
$537,509, and $642,812 on each loan, respectively).
7. COMMITMENTS AND CONTINGENCIES
The Partnership entered into a Environmental Preservation Trust Fund Agreement
with the Township of Lakewood (Township). On the financial closing date, the
Partnership paid the Township $2,000,000 which was used to create an
Environmental Preservation Trust Fund (the Fund) in order to provide an
independent form of financial security to the Township to insure that the
Partnership will promptly respond to cure any environmental impact events, as
defined. The Township shall have the right to receive all interest derived from
the Fund. The term of the Fund will expire 20 years after the date the
certificate of occupancy has been issued for the Facility. Assuming no
environmental impact event has occurred, the $2,000,000 will be returned to the
Partnership at the expiration of the term. This amount has been reflected as a
receivable from the Township of Lakewood in the accompanying Balance Sheets.
The Partnership has entered into a Host Benefits Agreement with the Township to
make minimum annual payments in the amount of $600,000 or the actual amount of
real estate taxes assessed on the Facility, whichever is greater. In September
1994, the Township assessed the Partnership's plant and equipment with a
valuation of $69,884,000 or approximately $1,900,000 in annual property taxes.
The Partnership believes this assessment is grossly overstated and is currently
appealing the assessment with the Ocean County Board of Taxation.
In June 1993, the Ocean County Prosecutor in Toms River, New Jersey commenced
an investigation into certain activities surrounding the development of the
Facility. The investigation resulted in an indictment of the Partnership,
HYDRA-CO, HCE and certain individuals in June 1994. In August 1994, the
entities entered into a Cooperation Agreement with the Ocean County
Prosecutor's office which included admittance into the Ocean County Pre-Trial
Intervention Program. In accordance with the agreement, the Partnership agreed
to cooperate with any ongoing investigation and to perform community service in
exchange for acceptance by the Prosecutor's office of no admission of guilt by
the entities.
8. CAPITAL CONTRIBUTIONS AND DISTRIBUTIONS
Pursuant to the Partnership Agreement, on or before the Conversion Date, the
partners shall make the following cash equity contributions: HCE ($510,000),
CNG ($510,000), CNG Power ($17,340,000), HYDRA-CO ($22,440,000) and TPC
($10,200,000). On the Conversion Date, each of the partners contributed their
above share in either a cash contribution or a conversion of their subordinated
loans to equity. (See Note 6). Also pursuant to the Partnership Agreement, CNG
contributed to the Partnership title to any contracts, permits, studies and
designs created, acquired or developed in connection with the Facility. The
fair value of these have been reflected as an additional contribution and an
increase in property, plant, and equipment.
13
<PAGE> 15
LAKEWOOD COGENERATION LIMITED PARTNERSHIP
NOTES TO THE FINANCIAL STATEMENTS
(CONTINUED)
There are also provisions for certain additional contributions or distributions
to the extent of construction cost overruns or underruns, respectively (See
Note 3). During 1995, $8,545,000 and $4,713,000 was paid to the partners as a
return of capital and management fee, respectively, for these costs underruns.
Operating Distributions of $6,947,580 were also made in 1995.
14
