Form U-13-60
Mutual and Subsidiary Service Companies
Revised February 7, 1980
ANNUAL REPORT
For the Period
Beginning January 1, 1995 and Ending December 31, 1995
TO THE
U. S. SECURITIES AND EXCHANGE COMMISSION
OF
CONSOLIDATED NATURAL GAS SERVICE COMPANY, INC.
A Subsidiary Service Company
Date of Incorporation: October 27, 1961
State or Sovereign Power under which Incorporated or Organized: Delaware
Location of Principal Executive Offices of Reporting Company:
CNG Tower
625 Liberty Avenue
Pittsburgh, PA 15222-3199
Name, title, and address of officer to whom correspondence concerning this
report should be addressed:
Stephen R. McGreevy, Vice President
Accounting and Financial Control
CNG Tower
625 Liberty Avenue
Pittsburgh, PA 15222-3199
Name of Principal Holding Company Whose Subsidiaries are served
by Reporting Company:
Consolidated Natural Gas Company
<PAGE>
INSTRUCTIONS FOR USE OF FORM U-13-60
1. TIME OF FILING. Rule 94 provides that on or before the first day of May in
each calendar year, each mutual service company and each subsidiary service
company as to which the Commission shall have made a favorable finding pursuant
to Rule 88, and every service company whose application for approval or
declaration pursuant to Rule 88 is pending shall file with the Commission an
annual report on Form U-13-60 and in accordance with the Instructions for that
form.
2. NUMBER OF COPIES. Each annual report shall be filed in duplicate. The
company should prepare and retain at least one extra copy for itself in case
correspondence with reference to the report become necessary.
3. PERIOD COVERED BY REPORT. The first report filed by any company shall
cover the period from the date the Uniform System of Accounts was required to
be made effective as to that company under Rules 82 and 93 to the end of that
calendar year. Subsequent reports should cover a calendar year.
4. REPORT FORMAT. Reports shall be submitted on the forms prepared by the
Commission. If the space provided on any sheet of such form is inadequate,
additional sheets may be inserted of the same size as a sheet of the form or
folded to such size.
5. MONEY AMOUNTS DISPLAYED. All money amounts required to be shown in
financial statements may be expressed in whole dollars, in thousands of dollars
or in hundred thousands of dollars, as appropriate and subject to provisions of
Regulation S-X (Section 210.3-01(b)).
6. DEFICITS DISPLAYED. Deficits and other like entries shall be indicated by
the use of either brackets or a parenthesis with corresponding reference in
footnotes. (Regulation S-X, Section 210.3-01(c)).
7. MAJOR AMENDMENTS OR CORRECTIONS. Any company desiring to amend or correct
a major omission or error in a report after it has been filed with the
Commission shall submit an amended report including only those pages,
schedules, and entries that are to be amended or corrected. A cover letter
shall be submitted requesting the Commission to incorporate the amended report
changes and shall be signed by a duly authorized officer of the company.
8. DEFINITIONS. Definitions contained in Instruction 01-8 to the Uniform
System of Accounts for Mutual Service Companies and Subsidiary Service
Companies, Public Utility Holding Company Act of 1935, as amended February 2,
1979 shall be applicable to words or terms used specifically within this Form
U-13-60.
9. ORGANIZATION CHART. The service company shall submit with each annual
report a copy of its current organization chart.
2
<PAGE>
10. METHODS OF ALLOCATION. The service company shall submit with each annual
report a listing of the currently effective methods of allocation being used by
the service company and on file with the Securities and Exchange Commission
pursuant to the Public Utility Holding Company Act of 1935.
11. ANNUAL STATEMENT OF COMPENSATION FOR USE OF CAPITAL BILLED. The service
company shall submit with each annual report a copy of the annual statement
supplied to each associate company in support of the amount of compensation for
use of capital billed during the calendar year.
12. ELECTRONIC FILERS. Electronic filers are subject to Regulation S-T and
the EDGAR Filer Manual. Any rule or instruction therein shall be controlling
unless otherwise specifically provided in rules or instructions pertaining to
the submission of this form.
Requirements as to multiple copies filed with the Commission do not apply
to electronic format documents.
Data that appears in tabular or columnar format shall be marked as
prescribed in the EDGAR Filer Manual.
Signatures shall be in typed form rather than manual format. See rule 13
of Regulation S-T.
3
<PAGE>
LISTING OF SCHEDULES AND ANALYSIS OF ACCOUNTS
Schedule or Page
Description of Schedules and Accounts Account Number Number
COMPARATIVE BALANCE SHEET Schedule I 5-6
Service Company Property Schedule II 7-8
Accumulated Provision for Depreciation and
Amortization of Service Company Property Schedule III 9
Investments Schedule IV 10
Accounts Receivable from Associate Companies Schedule V 11
Fuel Stock Expenses Undistributed Schedule VI 12
Stores Expense Undistributed Schedule VII 13
Miscellaneous Current and Accrued Assets Schedule VIII 14
Miscellaneous Deferred Debits Schedule IX 15
Research, Development, or Demonstration
Expenditures Schedule X 16
Proprietary Capital Schedule XI 17
Long-Term Debt Schedule XII 18
Current and Accrued Liabilities Schedule XIII 19
Notes to Financial Statements Schedule XIV 20-25
COMPARATIVE STATEMENT OF INCOME Schedule XV 26
Analysis of Billing - Associate Companies Account 457 27
Analysis of Billing - Nonassociate Companies Account 458 28
Analysis of Charges for Service - Associate
and Nonassociate Companies Schedule XVI 29
Schedule of Expense by Department or
Service Function Schedule XVII 30-33
Departmental Analysis of Salaries Account 920 34
Outside Services Employed Account 923 35-43
Employee Pensions and Benefits Account 926 44
General Advertising Expenses Account 930.1 45
Miscellaneous General Expenses Account 930.2 46
Rents Account 931 47
Taxes Other than Income Taxes Account 408 48
Donations Account 426.1 49
Other Deductions Account 426.5 50
Notes to Statement of Income Schedule XVIII 51
LISTING OF INSTRUCTIONAL FILING REQUIREMENTS
Page
Description of Reports or Statements Number
ORGANIZATION CHART 52
METHODS OF ALLOCATION 53
ANNUAL STATEMENT OF COMPENSATION FOR USE OF CAPITAL BILLED 54-55
SIGNATURE 56
EXHIBIT I 57
EXHIBIT II 58-62
4
<PAGE>
ANNUAL REPORT OF: Consolidated Natural Gas Service Company, Inc.
SCHEDULE I - COMPARATIVE BALANCE SHEET
Give balance sheet of the Company as of December 31
of the current and prior year
As of
Account Assets and Other Debits December 31
Current Prior
1995 1994
(In Thousands)
SERVICE COMPANY PROPERTY
101 Service company property (Schedule II) $ 23,776 $ 23,601
107 Construction work in progress (Schedule II) - -
Total Property $ 23,776 $ 23,601
108 Less accumulated provision for depreciation
and amortization of service company property
(Schedule III) $ 15,405 $ 14,651
Net Service Company Property $ 8,371 $ 8,950
INVESTMENTS
123 Investments in associate companies (Schedule IV) - -
124 Other investments (Schedule IV) - -
Total Investments - -
CURRENT AND ACCRUED ASSETS
131 Cash $ 1,084 $ 296
134 Special deposits 2 2
135 Working funds 2 32
136 Temporary cash investments (Schedule IV) - -
141 Notes receivable - -
143 Accounts receivable 763 608
144 Accumulated provision for uncollectible accounts - -
146 Accounts receivable from associate companies
(Schedule V and XIV-Note 6) 376,280 322,664
152 Fuel stock expenses undistributed (Schedule VI) - -
154 Materials and supplies - -
163 Stores expense undistributed (Schedule VII) - -
165 Prepayments 256 170
174 Miscellaneous current and accrued assets
(Schedule VIII) - 1
Total Current and Accrued Assets $378,387 $323,773
DEFERRED DEBITS
181 Unamortized debt expense $ - $ -
184 Clearing accounts - -
186 Miscellaneous deferred debits (Schedule IX) 10,404 4,071
188 Research, development, or demonstration
expenditures (Schedule X) - -
190 Accumulated deferred income taxes 3,622 2,824
Total Deferred Debits $ 14,026 $ 6,895
TOTAL ASSETS AND OTHER DEBITS $400,784 $339,618
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ANNUAL REPORT OF: Consolidated Natural Gas Service Company, Inc.
SCHEDULE I - COMPARATIVE BALANCE SHEET
As of
Account Liabilities and Proprietary Capital December 31
Current Prior
1995 1994
(In Thousands)
PROPRIETARY CAPITAL
201 Common stock issued (Schedule XI) $ 10 $ 10
211 Miscellaneous paid-in-capital (Schedule XI) - -
215 Appropriated retained earnings (Schedule XI) - -
216 Unappropriated retained earnings (Schedule XI) __________________
Total Proprietary Capital $ 10 $ 10
LONG-TERM DEBT
223 Advances from associate companies (Schedule XII) $ 14,391 $ 14,631
224 Other long-term debt (Schedule XII) - -
225 Unamortized premium on long-term debt - -
226 Unamortized discount on long-term debt-debit - -
__________________
Total Long-Term Debt $ 14,391 $ 14,631
CURRENT AND ACCRUED LIABILITIES
231 Notes payable $ - $ -
232 Accounts payable 5,779 4,028
233 Notes payable to associate companies
(Schedule XIII and XIV-Note 6) 361,462 310,185
234 Accounts payable to associate companies
(Schedule XIII and XIV-Note 6) 2,502 2,865
236 Taxes accrued 764 188
237 Interest accrued - -
238 Dividends declared - -
241 Tax collections payable 54 76
242 Miscellaneous current and accrued liabilities
(Schedule XIII) 2,342 2,355
Total Current and Accrued Liabilities $372,903 $319,697
DEFERRED CREDITS
253 Other deferred credits $ 12,224 $ 3,414
255 Accumulated deferred investment tax credits - -
Total Deferred Credits $ 12,224 $ 3,414
282 ACCUMULATED DEFERRED INCOME TAXES $ 1,256 $ 1,866
TOTAL LIABILITIES AND PROPRIETARY CAPITAL $400,784 $339,618
6
<PAGE>
ANNUAL REPORT OF: Consolidated Natural Gas Service Company, Inc.
For the Year Ended December 31, 1995
(In Thousands)
SCHEDULE II - SERVICE COMPANY PROPERTY
Balance At Retirements Balance At
Beginning or Other Close of
Description of Year Additions Sales Changes(1) Year
SERVICE COMPANY
PROPERTY
Account
301 Organization $ 1 $ - $ - $ - $ 1
303 Miscellaneous
Intangible
Plant - - - - -
304 Land and Land
Rights 111 - - - 111
305 Structures and
Improvements 4,214 27 - - 4,241
306 Leasehold
Improvements 5,658 - - - 5,658
307 Equipment(2) 7,823 803 753 - 7,873
308 Office
Furniture
and Equip-
ment 5,738 162 27 - 5,873
309 Automobiles,
Other
Vehicles and
Related
Garage Equip-
ment 56 8 45 - 19
310 Aircraft and
Airport
Equipment - - - - -
311 Other Service
Company
Property(3) - - - - -
Subtotal $ 23,601 $ 1,000 $ 825 $ - $ 23,776
107 Construction
Work in
Progress(4) - - - - -
Total $ 23,601 $ 1,000 $ 825 $ - $ 23,776
(1) Provide an explanation of those changes considered material:
Not Applicable
7
<PAGE>
SCHEDULE II - CONTINUED
(2) Subaccounts are required for each class of equipment owned. The service
company shall provide a listing by subaccount of equipment additions
during the year and the balance at the close of the year:
Balance at
Close of
Subaccount Description Additions Year
(In Thousands)
Computer Services Equipment
Hardware $ 799 $ 6,844
Software - 471
Typewriters, Calculators, Copiers & Duplicating 4 335
Office Services Printing and Stationery Equipment - 9
Controller's Department Computer Software - 128
Auditing Department Computer Software - 35
Employee Benefits Department Computer Software - 51
TOTAL $ 803 $ 7,873
(3) Describe Other Service Company Property:
Not Applicable
(4) Describe Construction Work in Progress:
Not applicable.
8
<PAGE>
ANNUAL REPORT OF: Consolidated Natural Gas Service Company, Inc.
For the Year Ended December 31, 1995
(In Thousands)
SCHEDULE III
ACCUMULATED PROVISION FOR DEPRECIATION AND
AMORTIZATION OF SERVICE COMPANY PROPERTY
Additions Other
Charged Changes
Balance At to Add Balance At
Beginning Account (Deduct) Close of
Description of Year 403 Retirements (1) Year
Account
301 Organization $ - $ - $ - $ - $ -
303 Miscellaneous
Intangible
Plant - - - - -
304 Land and Land
Rights - - - - -
305 Structures and
Improvements 1,061 121 - - 1,182
306 Leasehold
Improvements 2,082 305 - - 2,387
307 Equipment 6,305 939 740 - 6,504
308 Office
Furniture and
Fixtures 5,158 189 27 - 5,320
309 Automobiles,
Other
Vehicles and
Related
Garage Equip-
ment 45 3 31 (5) 12
310 Aircraft and
Airport
Equipment - - - - -
311 Other Service
Company
Property - - - - -
TOTAL $ 14,651 $ 1,557 $ 798 $ (5) $ 15,405
(1) Provide an explanation of those changes considered material:
9
<PAGE>
ANNUAL REPORT OF: Consolidated Natural Gas Service Company, Inc.
For the Year Ended December 31, 1995
(In Thousands)
SCHEDULE IV - INVESTMENTS
INSTRUCTIONS: Complete the following schedule concerning investments.
Under Account 124, "Other Investments", state each investment
separately, with description, including, the name of issuing
company, number of shares or principal amount, etc.
Under Account 136, "Temporary Cash Investments", list each
investment separately.
Balance At Balance At
Beginning Close
Description of Year of Year
Account 123 - Investment in Associate Companies None None
Account 124 - Other Investments None None
Account 136 - Temporary Cash Investments
$ - $ -
TOTAL $ - $ -
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<PAGE>
ANNUAL REPORT OF: Consolidated Natural Gas Service Company, Inc.
For the Year Ended December 31, 1995
(In Thousands)
SCHEDULE V - ACCOUNTS RECEIVABLE FROM ASSOCIATE COMPANIES
INSTRUCTIONS: Complete the following schedule listing accounts receivable
from each associate company. Where the service company has
provided accomodation or convenience payments for associate
companies, a separate listing of total payments for each
associate company by subaccount should be provided.
Balance At Balance At
Beginning Close
Description of Year of Year
Account 146 - Accounts Receivable from Associate
Companies
Consolidated Natural Gas Company $ 244 $ 501
The East Ohio Gas Company 165,610 117,032
The Peoples Natural Gas Company 51,068 57,467
CNG Transmission Corporation 22,041 2,503
Hope Gas, Inc. 6,848 2,562
West Ohio Gas Company 10,716 13,833
Consolidated System LNG Company - 11
CNG Producing Company 361 464
CNG Research Company 24 9
CNG Coal Company - 5
CNG Power Company 7,820 1,084
CNG Energy Services Corporation 24,136 110,634
Virginia Natural Gas, Inc. 33,795 70,170
CNG Storage Service Company 1 4
CNG Power Services Corporation - 1
TOTAL $322,664 $376,280
Total
Analysis of Convenience or Accommodation Payments: Payments
Consolidated Natural Gas Company $ 47
The East Ohio Gas Company 4,361
The Peoples Natural Gas Company 1,915
CNG Transmission Corporation 4,873
Hope Gas, Inc. 537
West Ohio Gas Company 211
CNG Producing Company 6,801
CNG Power Company 7
CNG Energy Services Corporation 437
Virginia Natural Gas, Inc. 804
TOTAL PAYMENTS $ 19,993
The majority of these payments were for system insurance,
system employee benefit plans, system memberships and training.
11
<PAGE>
ANNUAL REPORT OF: Consolidated Natural Gas Service Company, Inc.
For the Year Ended December 31, 1995
(In Thousands)
SCHEDULE VI - FUEL STOCK EXPENSES UNDISTRIBUTED
INSTRUCTIONS: Report the amount of labor and expenses incurred with respect
to fuel stock expenses during the year and indicate amount
attributable to each associate company. Under the section
headed "Summary" listed below give an overall report of the
fuel functions performed by the service company.
Description Labor Expenses Total
Account 152 - Fuel Stock Expenses Undistributed None None None
TOTAL None None None
Summary:
Not Applicable
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<PAGE>
ANNUAL REPORT OF: Consolidated Natural Gas Service Company, Inc.
For the Year Ended December 31, 1995
(In Thousands)
SCHEDULE VII - STORES EXPENSE UNDISTRIBUTED
INSTRUCTIONS: Report the amount of labor and expenses incurred with respect
to stores expense during the year and indicate amount
attributable to each associate company.
Description Labor Expenses Total
Account 163 - Stores Expense Undistributed None None None
TOTAL None None None
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<PAGE>
ANNUAL REPORT OF: Consolidated Natural Gas Service Company, Inc.
For the Year Ended December 31, 1995
(In Thousands)
SCHEDULE VIII - MISCELLANEOUS CURRENT AND ACCRUED ASSETS
INSTRUCTIONS: Provide detail of items in this account. Items less than
$10,000 may be grouped, showing the number of items in each
group.
Balance At Balance At
Beginning Close
Description of Year of Year
Account 174 - Miscellaneous Current and
Accrued Assets
Interest-Federal Income Taxes $ 1 $ -
TOTAL $ 1 $ -
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ANNUAL REPORT OF: Consolidated Natural Gas Service Company, Inc.
For the Year Ended December 31, 1995
(In Thousands)
SCHEDULE IX - MISCELLANEOUS DEFERRED DEBITS
INSTRUCTIONS: Provide detail of items in this account. Items less than
$10,000 may be grouped by class showing the number of items
in each class.
Balance At Balance At
Beginning Close
Description of Year of Year
Account 186 - Miscellaneous Deferred Debits
Prepaid Pension Costs $ 3,359 $ 5,491
Pension Supplement Intangible Asset (Non-Qualified) - 3,854
Curtailment Gain - FAS 88 - 418
Pension Supplement Intangible Asset (Qualified) 424 312
Deferred Compensation Expense 170 254
Prepaid IBM/LPC Maintenance 113 55
Miscellaneous 5 20
TOTAL $ 4,071 $ 10,404
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<PAGE>
ANNUAL REPORT OF: Consolidated Natural Gas Service Company, Inc.
For the Year Ended December 31, 1995
(In Thousands)
SCHEDULE X - RESEARCH, DEVELOPMENT, OR DEMONSTRATION EXPENDITURES
INSTRUCTIONS: Provide a description of each material research, development,
or demonstration project which incurred costs by the service
corporation during the year.
Description Amount
Account 188 - Research, Development, or Demonstration
Expenditures
Clean Air Compliance 230
Residential and Commercial Gas Utilization 149
Transportation 136
Power Plants 135
Information 90
Industrial Gas Utilization 77
Gas Supply $ 41
Gas Operations (75)
Subtotal $ 783
Amount Billed to System Companies (783)
TOTAL $ -
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ANNUAL REPORT OF: Consolidated Natural Gas Service Company, Inc.
For the Year Ended December 31, 1995
SCHEDULE XI - PROPRIETARY CAPITAL
Outstanding
Number of Par or Stated Close of Period
Account Shares Value No. of Total
Number Class of Stock Authorized Per Share Shares Amount
201 Common Stock Issued 25,000 $100.00 100 $10,000
INSTRUCTIONS: Classify amounts in each account with brief explanation,
disclosing the general nature of transactions which gave rise
to the reported amounts.
Description Amount
Account 211 - Miscellaneous Paid-In Capital None
Account 215 - Appropriated Retained Earnings None
TOTAL None
INSTRUCTIONS: Give particulars concerning net income or (loss) during the
year, distinguishing between compensation for the use of
capital owed or net loss remaining from servicing
nonassociates per the General Instructions of the Uniform
System of Accounts. For dividends paid during the year in
cash or otherwise, provide rate percentage, amount of
dividend, date declared and date paid.
Balance At Net Income Balance At
Beginning or Dividends Close
Description of Year (Loss) Paid of Year
Account 216 - Unappropriated
Retained
Earnings
- - - -
TOTAL None None None None
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<TABLE>
ANNUAL REPORT OF: Consolidated Natural Gas Service Company, Inc.
For the Year Ended December 31, 1995
(In Thousands)
SCHEDULE XII - LONG-TERM DEBT
INSTRUCTIONS: Advances from associate companies should be reported separately for advances on notes, and advances on open
account. Names of associate companies from which advances were received shall be shown under the class and
series of obligation column. For Account 224 - Other long-term debt provide the name of creditor company or
organization, terms of the obligation, date of maturity, interest rate, and the amount authorized and
outstanding.
<CAPTION>
Terms of Oblig Date Balance At Balance
Class & Series of Interest Amount Beginning Deductions at Close
of Obligation Maturity Rate Authorized of Year Additions (1) of Year
Account 223 - Advances from
Associate Companies:
<S> <C> <C> <C> <C> <C> <C> <C>
Consolidated Natural
Gas Company 1996-2011 9.50% $ 3,836 $ 3,836 $ - $ 240 $ 3,596
Consolidated Natural
Gas Company 1999 8.900% 5,000 5,000 - - 5,000
Consolidated Natural
Gas Company 1998 6.200% 5,000 5,000 - - 5,000
Consolidated Natural
Gas Company 2003 6.100% 795 795 - - 795
Account 224 - Other Long-Term Debt: - - - - - - -
TOTAL $14,631 $14,631 $ - $ 240 $14,391
<FN>
(1) GIVE AN EXPLANATION OF DEDUCTIONS:
Current portion of Long-Term Debt moved to Account 233 - Notes Payable to Associate Companies.
</TABLE>
18
<PAGE>
ANNUAL REPORT OF: Consolidated Natural Gas Service Company,Inc.
For the Year Ended December 31, 1995
(In Thousands)
SCHEDULE XIII - CURRENT AND ACCRUED LIABILITIES
INSTRUCTIONS: Provide balance of notes and accounts payable to each
associate company. Give description and amount of
miscellaneous current and accrued liabilities. Items less
than $10,000 may be grouped, showing the number of items in
each group.
Balance At Balance At
Beginning Close
Description of Year of Year
Account 233 - Notes Payable to Associate Companies
Consolidated Natural Gas Company $132,430 $220,192
CNG Transmission Corporation 3,740 5,110
Consolidated System LNG Company 54,920 9,800
CNG Producing Company 94,165 101,835
CNG Research Company 15 30
CNG Coal Company 5,215 5,165
CNG Power Company 19,325 19,105
CNG Storage Service Company 375 225
TOTAL $310,185 $361,462
Account 234 - Accounts Payable to Associate
Companies
Consolidated Natural Gas Company $ 1,779 $ 1,512
The East Ohio Gas Company 26 43
The Peoples Natural Gas Company 10 47
CNG Transmission Corporation 249 156
Hope Gas, Inc. 4 1
Consolidated System LNG Company 266 147
CNG Producing Company 410 492
CNG Coal Company 25 26
CNG Power Company 94 76
CNG Storage Service Company 2 2
TOTAL $ 2,865 $ 2,502
Account 242 - Miscellaneous Current and Accrued
Liabilities
Accrued Vacation Pay $ 1,545 $ 1,214
Deferred Compensation 771 747
Non-Qualified Pension Plans Liability - 375
U. S. Savings Bond Deduction - 1
Miscellaneous 39 5
TOTAL $ 2,355 $ 2,342
19
<PAGE>
ANNUAL REPORT OF: Consolidated Natural Gas Service Company, Inc.
For the Year Ended December 31, 1995
SCHEDULE XIV - NOTES TO FINANCIAL STATEMENTS
INSTRUCTIONS: The space below is provided for important notes regarding the
financial statements or any account thereof. Furnish
particulars as to any significant contingent assets or
liabilities existing at the end of the year. Notes relating
to financial statements shown elsewhere in this report may be
indicated here by reference.
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Significant accounting policies of Consolidated Natural Gas Service Company,
Inc. ("the Company") are summarized in this Note.
Property, Plant and Equipment and Depreciation
The property, plant and equipment accounts consist of investment in a Data
Center including computer equipment, office furniture and equipment, leasehold
improvements and other items which are stated at "original cost". Additions
and betterments are charged to the property accounts at cost. Upon normal
retirement of a plant asset, its cost is charged to accumulated depreciation
together with costs of removal less salvage. The costs of maintenance, repairs
and replacing minor items are charged principally to expense as incurred.
Depreciation and amortization are recorded over the estimated service lives of
plant assets by application of straight-line or accelerated methods.
Income Taxes
The current provision for federal income taxes of the Company is its portion of
the estimated consolidated tax based on a consolidated return filed by
Consolidated Natural Gas Company (Parent Company). The Company's portion has
been determined pursuant to an intercompany tax allocation agreement entered
into by the Parent Company and the System companies, as required by the Public
Utility Holding Company Act of 1935.
2. PENSION AND OTHER BENEFIT PROGRAMS
Pension Program
All employees of the Company are covered under the System's qualified
noncontributory defined benefit pension plans. Benefits payable under the
plans are based primarily on each employee's years of service, age and base
salary during the five years prior to retirement. The plans are funded on an
annual basis to the extent such funding is deductible under federal income
regulations. Plan assets consist primarily of equity securities, fixed income
securities and insurance contracts. The System pension program also includes
the payment of supplemental pension benefits to certain retirees depending on
retirement dates, and the payment of benefits to certain retired executives
under company-sponsored non-qualified employee benefit plans.
20
<PAGE>
ANNUAL REPORT OF: Consolidated Natural Gas Service Company, Inc.
For the Year Ended December 31, 1995
SCHEDULE XIV - NOTES TO FINANCIAL STATEMENTS (Continued)
Pension expense (or credit), which includes the costs of defined benefit
pension plans and pension supplements, was $(496,000) and $(1,099,000) for the
years ended December 31, 1994 and 1995, respectively. The net pension costs,
which were determined by an independent actuary, are included in "Employee
pensions and benefits" in the Statement of Income.
As required by SFAS No. 87, "Employers' Accounting for Pensions," the Company
has recognized a liability for the unfunded accumulated benefit obligation
relating to its supplemental pension benefit plans. An amount equal to the
liability has also been recognized as an intangible asset. Such amounts
recognized are subject to future revision based on both changes in assumptions
and changes in the financial status of the supplemental pension benefit plans.
Effective July 1, 1995, the Company applied SFAS No. 87 to certain of its non-
qualified benefit plans. Benefit costs under these plans had previously been
expensed as paid. The application of SFAS No. 87 to these plans did not have a
material effect on the Company's financial position, result of operations, or
cash flows.
Other Postretirement Benefits
In addition to pension plans, the Company sponsors defined benefit
postretirement plans covering both salaried and hourly employees and certain
dependents. The plans provide medical benefits as well as life insurance
coverage. These benefits are provided through insurance companies and other
providers with the annual cash outlays based on the claim experience of the
related plans.
Employees who retire from the Company on or after attaining age 55 and having
rendered at least 15 years of service, or employees retiring on or after
attaining age 65, are eligible to receive benefits under the plans. The plans
are both contributory and noncontributory, depending on age, retirement date,
the plan elected by the employee, and whether the employee is covered under a
collective bargaining agreement. Most of the medical plans contain cost-
sharing features such as deductibles and coinsurance. For certain of the
contributory medical plans, retiree contributions are adjusted annually.
As permitted, the Company elected to amortize the accumulated postretirement
benefit obligation existing at January 1, 1993 (transition obligation) of
$8,246,000 over a 20-year period. Net periodic postretirement benefit cost for
the year ended December 31, 1994 and 1995 was $1,506,000 and $1,598,000
respectively, as determined by an independent actuary.
21
<PAGE>
ANNUAL REPORT OF: Consolidated Natural Gas Service Company, Inc.
For the Year Ended December 31, 1995
SCHEDULE XIV - NOTES TO FINANCIAL STATEMENTS (Continued)
3. WORKFORCE REDUCTION COSTS
In March 1995, the Parent Company's Board of Directors approved a workforce
reduction program as part of an effort to permanently reduce costs in response
to competitive conditions. The workforce reduction program consisted of a
voluntary early retirement program, with eligibility based upon the employee's
age and years of service as of December 31, 1995, and an involuntary separation
program. The early retirement incentives included five additional years of age
and pension service for determining pension benefits. The early retirment
program was offered from April 1 through May 31, 1995, with eligible employees
retiring before December 31, 1995. The involuntary separation program involved
severance benefit payments.
A total of 21 eligible employees elected to accept the early retirement offer
and an additional 21 employees were separated from the Company in conjunction
with this program. Accordingly, the Company recorded charges to expense in the
1995 Statement of Income, amounting to $4,375,000, including the net impact of
curtailment accounting gains and losses for the pension and postretirement
benefit plans.
4. LONG-TERM DEBT
The aggregate principal amounts of the Company's long-term debt maturing in the
years 1996 through 2000 are: $239,800; $239,800; $5,239,800 $5,239,800 and
$239,800.
The notes payable to the Parent Company bear interest at rates predicated on
and substantially equal to the effective cost of money to the Parent Company
secured through the issuance of its debt securities.
5. COMMITMENTS AND CONTINGENCIES
Lease arrangements of the Company are principally for office space, business
machines and transportation equipment. None of these arrangements,
individually or in the aggregate, are material capital leases. Rental expense,
which in large part represents minimum rentals, incurred in the years 1994 and
1995 was $5,741,000 and $5,460,000, respectively, and is included in the
Statement of Income. Contingent and sublease rentals were not material.
Future minimum rental payments in the aggregate amount to $56,525,000 and for
the years 1996 through 2000 are: $5,062,000; $5,059,000; $4,830,000;
$4,525,000 and $4,543,000. The Company has the option to purchase equipment
from International Business Machines, Inc. at fair market value of the leased
property exercisable at any time.
The approved capital budget for 1996 amounts to approximately $4,333,000. In
this connection, the Company has entered into certain contractual commitments.
22
<PAGE>
ANNUAL REPORT OF: Consolidated Natural Gas Service Company, Inc.
For the Year Ended December 31, 1995
SCHEDULE XIV - NOTES TO FINANCIAL STATEMENTS (Continued)
6. MONEY POOL
Since 1986, the Parent Company and its subsidiaries have participated in the
Consolidated Natural Gas System Money Pool ("Pool") which is administered by
the Company on behalf of the participants. The operation of the Pool was
authorized by the Securities and Exchange Commission in Public Utility Holding
Company Act of 1935 Release No. 24128 (File No. 70-7258).
Participants contribute the amount of their available funds to the Pool based
on cash flow projections. The short-term financing requirements of
participants, with the exception of the Parent Company, are satisfied by
advances from the Pool. After satisfaction of the borrowing needs of
participants and after any possible prepayment of outstanding indebtedness, the
Company, as agent for the Pool, invests the excess funds on a short-term basis.
Participants providing funds to the Pool share in the interest earned on these
investments on a basis proportionate to their investment in the Pool.
Participants borrowing from the Pool pay interest generally at a rate
equivalent to the effective cost of short-term borrowings to the Parent
Company. Participants may withdraw their investments in the Pool at any time.
Borrowings from the Pool are payable on demand, and may be prepaid at any time
without premium or penalty.
23
<PAGE>
ANNUAL REPORT OF: Consolidated Natural Gas Service Company, Inc.
For the Year Ended December 31, 1995
SCHEDULE XIV - NOTES TO FINANCIAL STATEMENTS (Continued)
At December 31, 1995, the detail of the pool was as follows:
Investment in Pool (including interest)
Consolidated Natural Gas Company $220,915,000
CNG Transmission Corporation 5,255,000
Hope Gas, Inc. 1,000
Consolidated System LNG Company 9,850,000
CNG Producing Company 102,314,000
CNG Research 30,000
CNG Coal Company 5,191,000
CNG Power Company 19,181,000
CNG Storage Service Company 227,000 $362,964,000
Consolidated Natural Gas Service Company 6,449,000
Subtotal 369,413,000
Less:
Borrowings from Pool (including interest)
The East Ohio Gas Company $114,740,000
The Peoples Natural Gas Company 56,295,000
CNG Transmission Corporation 1,426,000
Hope Gas, Inc. 2,329,000
West Ohio Gas Company 13,699,000
CNG Power Company 1,084,000
CNG Energy Services Corporation 110,313,000
Virginia Natural Gas, Inc. 69,527,000
Subtotal 369,413,000
Total $ -
Temporary Cash Investments $ -
Interest Receivable - Money Pool -
Total $ -
24
<PAGE>
ANNUAL REPORT OF: Consolidated Natural Gas Service Company, Inc.
For the Year Ended December 31, 1995
SCHEDULE XIV - NOTES TO FINANCIAL STATEMENTS (Concluded)
6. AFFILIATED ACCOUNTS
The amounts reported in this Form U-13-60 are on a general ledger account
basis. Affiliated company receivables and payables are detailed on Schedule V,
page 11, and Schedule XIII, page 19, respectively. The amounts reported in
Form U5S are on a summary basis with right of offset and groupings of similar
items. A reconciliation of affiliated receivables and payables at December 31,
1995, is as follows:
As Reported As Reported
Affiliated Accounts in Form U-13-60 in Form U5S Difference
Accounts Receivable $376,280,000 $371,609,000 $ 4,671,000
Notes Payable $361,462,000 - $361,462,000
Accounts Payable 2,502,000 - 2,502,000
Payables to Affiliated Companies - $359,293,000 (359,293,000)
$ 4,671,000
25
<PAGE>
ANNUAL REPORT OF: Consolidated Natural Gas Service Company, Inc.
For the Years Ended December 31, 1995 and 1994
(In Thousands)
SCHEDULE XV - COMPARATIVE STATEMENT OF INCOME
Current Prior
Description Year Year
Account 1995 1994
INCOME
457 Services rendered to associate companies $52,959 $55,387
458 Services rendered to nonassociate companies - -
421 Miscellaneous income or loss 254 50
Total Income $53,213 $55,437
EXPENSE
920 Salaries and wages $18,260 $20,628
921 Office supplies and expenses 4,066 4,395
922 Administrative expense transferred - credit (19) (178)
923 Outside services employed 9,081 10,579
924 Property insurance - -
925 Injuries and damages 70 77
926 Employee pensions and benefits 9,004 6,455
928 Regulatory commission expense - -
930.1 General advertising expenses - -
930.2 Miscellaneous general expenses 1,447 2,077
931 Rents 5,460 5,741
932 Maintenance of structures and equipment 1,095 1,089
403 Depreciation and amortization expense 1,557 1,688
408 Taxes other than income taxes 1,654 1,587
409 Income taxes 1,406 220
410 Provision for deferred income taxes (656) 514
411 Provision for deferred income taxes - credit (750) (734)
411.5 Investment tax credit - -
419.6 Curtailment Gain - FAS 88 (418) -
426.1 Donations - -
426.5 Other deductions 30 27
426.7 Curtailment Loss - FAS 106 682 -
427 Interest on long-term debt - -
430 Interest on debt to associate companies 1,186 1,218
431 Other interest expense 58 54
Total Expense $53,213 $55,437
Net Income or (Loss) None None
26
<PAGE>
ANNUAL REPORT OF: Consolidated Natural Gas Service Company, Inc.
For the Year Ended December 31, 1995
(In Thousands)
ANALYSIS OF BILLING
ASSOCIATE COMPANIES - ACCOUNT 457
Direct Indirect Compensation Total
Costs Costs For Use Amount
Name of Associate Company Charged Charged of Capital Billed
457-1 457-2(A) 457-3(B)
Consolidated Natural Gas Company $ 1,736 $ 919 $ 54 $ 2,709
The East Ohio Gas Company 10,977 4,320 354 15,651
The Peoples Natural Gas Company 5,509 2,141 180 7,830
CNG Transmission Corporation 8,644 3,505 285 12,434
Hope Gas, Inc. 1,240 520 39 1,799
West Ohio Gas Company 616 237 20 873
Consolidated System LNG Company 4 2 - 6
CNG Producing Company 3,506 1,686 110 5,302
CNG Research Company 88 44 3 135
CNG Coal Company 7 4 - 11
CNG Power Company 156 61 4 221
CNG Energy Services Corporation 1,272 647 41 1,960
Virginia Natural Gas, Inc. 2,882 1,035 96 4,013
CNG Storage Service Company 10 5 - 15
(A) The amount of indirect costs
charged of $15,126 is net of
$254 miscellaneous income.
(B) Includes $300 which was directly
billed to associate companies
and $886 which was indirectly
billed to associate companies.
TOTAL $36,647 $15,126 $ 1,186 $52,959
27
<PAGE>
ANNUAL REPORT OF: Consolidated Natural Gas Service Company, Inc.
For the Year Ended December 31, 1995
(In Thousands)
ANALYSIS OF BILLING
NONASSOCIATE COMPANIES - ACCOUNT 458
Name of Direct Indirect Compensation Excess Total
Nonassociate Cost Cost For Use Total or Amount
Company Charged Charged Of Capital Cost Deficiency Billed
458-1 458-2 458-3 458-4
None
INSTRUCTION: Provide a brief description of the services rendered to each
nonassociate company:
Not Applicable
28
<PAGE>
<TABLE>
ANNUAL REPORT OF: Consolidated Natural Gas Service Company, Inc.
For the Year Ended December 31, 1995
(In Thousands)
<CAPTION>
SCHEDULE XVI - ANALYSIS OF CHARGES FOR SERVICE
ASSOCIATE AND NONASSOCIATE COMPANIES
Associate Nonassociate
Company Charges Company Charges Total Charges for Service
Direct Indirect Direct Indirect Direct Indirect
Description of Items Cost Cost Total Cost Cost Total Cost Cost Total
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
920 Salaries and Wages $ 15,342 $ 2,918 $18,260 $15,342 $ 2,918 $18,260
921 Office Supplies and Expenses 3,416 650 4,066 3,416 650 4,066
922 Administrative Expense Transferred -
Credit (16) (3) (19) (16) (3) (19)
923 Outside Services Employed 7,630 1,451 9,081 7,630 1,451 9,081
924 Property Insurance - - - - - -
925 Injuries and Damages 26 44 70 26 44 70
926 Employee Pensions and Benefits 1,746 7,258 9,004 1,746 7,258 9,004
928 Regulatory Commission Expense - - - - - -
930.1 General Advertising Expenses - - - - - -
930.2 Miscellaneous General Expenses 1,216 231 1,447 1,216 231 1,447
931 Rents 4,588 872 5,460 4,588 872 5,460
932 Maintenance of Structures and Equipment 920 175 1,095 920 175 1,095
403 Depreciation and Amortization Expense 1,308 249 1,557 1,308 249 1,557
408 Taxes Other than Income Taxes 437 1,217 1,654 437 1,217 1,654
409 Income Taxes - 1,406 1,406 - 1,406 1,406
410 Provision for Deferred Income Taxes - (656) (656) - (656) (656)
411 Provision for Deferred Income Taxes Cr. - (750) (750) - (750) (750)
411.5 Investment Tax Credit - - - - - -
419 Curtailment Gain - (418) (418) - (418) (418)
426.1 Donations - - - - - -
426.5 Other Deductions 30 - 30 30 - 30
426.7 Curtailment Loss - 682 682 - 682 682
427 Interest on Long-Term Debt - - - - - -
431 Other Interest Expense 4 54 58 4 54 58
INSTRUCTION: Total cost of service will equal
for associate and nonassociate
companies the total amount billed
under their separate analysis of
billing schedules.
TOTAL EXPENSES $36,647 $15,380 $52,027 $36,647 $15,380 $52,027
Compensation for Use of Equity Capital
430 Interest on Debt to Associate
Companies 1,186 1,186
TOTAL COST OF SERVICE $53,213 $53,213
29
</TABLE>
<PAGE>
<TABLE>
ANNUAL REPORT OF: Consolidated Natural Gas Service Company, Inc.
For the Year Ended December 31, 1995
(In Thousands)
SCHEDULE XVII - SCHEDULE OF EXPENSE DISTRIBUTION
BY
DEPARTMENT OR SERVICE FUNCTION
<CAPTION> External
Rates & Affairs
Total Executive Corp. Legal Regulatory Legal & Policy
Description of Items Amount Overhead Office Commun. Washington Affairs Secretary's Pgh. Development
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
920 Salaries and Wages $18,260 $ - $ 2,172 $ 469 $ 535 $ 365 $ 220 $ 944 $ 720
921 Office Supplies and
Expenses 4,066 183 400 81 125 42 36 251 228
922 Administrative
Expense Trans-
ferred Credit (19) (3) - 5 - - - 5 -
923 Outside Services
Employed 9,081 805 126 341 32 44 65 822 215
924 Property Insurance - - - - - - - - -
925 Injuries and Damage 70 44 - - - - - - -
926 Employee Pensions
and Benefits 9,004 7,258 - - - - - - -
928 Regulatory Commis-
sion Expense - - - - - - - - -
930.1 General Advertising
Expense - - - - - - - - -
930.2 Miscellaneous
General Expenses 1,447 (46) 20 518 3 2 580 5 76
931 Rents 5,460 - 462 98 228 86 63 121 327
932 Maintenance of
Structures and
Equipment 1,095 - 23 1 13 1 2 2 20
403 Depreciation and
Amortization
Expense 1,557 - 48 18 36 15 7 25 36
408 Taxes Other Than
Income Taxes 1,654 1,217 1 - 5 - - - 3
409 Income Taxes 1,406 1,406 - - - - - - -
410 Provision for
Deferred Income
Taxes (656) (656) - - - - - - -
411 Provision for
Deferred Income
Taxes - Credit (750) (750) - - - - - - -
411.5 Investment Tax
Credit - - - - - - - - -
419 Curtailment Gain (418) (418) - - - - - - -
426.1 Donations - - - - - - - - -
426.5 Other Deductions 30 - 18 - - 1 2 2 1
426.75 Curtailment Loss 682 682 - - - - - - -
427 Interest on Long-
Term Debt - - - - - - - - -
430 Interest on Debt
to Associate
Companies 1,186 886 - - - - - - -
431 Other Interest
Expense 58 54 4 - - - - - -
TOTAL EXPENSES = $53,213 $10,662 $ 3,274 $ 1,531 $ 977 $ 556 $ 975 $ 2,177 $ 1,626
30
</TABLE>
<PAGE>
<TABLE>
ANNUAL REPORT OF: Consolidated Natural Gas Service Company, Inc.
For the Year Ended December 31, 1995
(In Thousands)
SCHEDULE XVII - SCHEDULE OF EXPENSE DISTRIBUTION
BY
DEPARTMENT OR SERVICE FUNCTION
<CAPTION>
Information Internal Human Employee
Description of Items Controller's Technology Auditing Resources Benefits Treasurer's Tax
<S> <C> <C> <C> <C> <C> <C> <C>
920 Salaries and Wages $ 1,370 $ 4,343 $ 975 $ 743 $ 1,066 $ 848 $ 610
921 Office Supplies and
Expenses 92 1,081 161 156 164 117 40
922 Administrative
Expense Trans-
ferred Credit 234 (929) (5) 13 371 261 (1)
923 Outside Services
Employed 49 2,295 2 328 1,627 97 35
924 Property Insurance - - - - - - -
925 Injuries and Damages - 26 - - - - -
926 Employee Pensions
and Benefits - 1,746 - - - - -
928 Regulatory Commis-
sion Expense - - - - - - -
930.1 General Advertising
Expense - - - - - - -
930.2 Miscellaneous
General Expenses 14 8 1 58 5 13 3
931 Rents 249 783 96 187 231 203 107
932 Maintenance of
Structures and
Equipment 4 813 1 4 22 3 2
403 Depreciation and
Amortization
Expense 39 854 24 27 66 36 12
408 Taxes Other Than
Income Taxes - 426 - - - - -
409 Income Taxes - - - - - - -
410 Provision for
Deferred Income
Taxes - - - - - - -
411 Provision for
Deferred Income
Taxes - Credit - - - - - - -
411.5 Investment Tax
Credit - - - - - - -
419 Curtailment Gain - - - - - - -
426.1 Donations - - - - - - -
426.5 Other Deductions - - - 1 - 4 -
426.75 Curtailment Loss - - - - - - -
427 Interest on Long-
Term Debt - - - - - - -
430 Interest on Debt
to Associate
Companies - 300 - - - - -
431 Other Interest
Expense - - - - - - -
TOTAL EXPENSES = $ 2,051 $ 11,746 $ 1,255 $ 1,517 $ 3,552 $ 1,582 $ 808
31
</TABLE>
<PAGE>
<TABLE>
ANNUAL REPORT OF: Consolidated Natural Gas Service Company, Inc.
For the Year Ended December 31, 1995
(In Thousands)
SCHEDULE XVII - SCHEDULE OF EXPENSE DISTRIBUTION
BY
DEPARTMENT OR SERVICE FUNCTION
<CAPTION>
Corporate
Strategic Business & Geological Environmental
Risk Financial Corporate Operations Library Service Business Market
Description of Items Management Planning Planning Services Services Engineering Development Development Research
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
920 Salaries and Wages $ 105 $ 254 $ 453 $ 351 $ 90 $ 152 $ 466 $ 67 $ 292
921 Office Supplies and
Expenses 29 10 24 165 41 27 130 57 79
922 Administrative
Expense Trans-
ferred Credit 25 - - - - - 6 - (1)
923 Outside Services
Employed 17 - 155 9 103 9 938 133 666
924 Property Insurance - - - - - - - - -
925 Injuries and Damages - - - - - - - - -
926 Employee Pensions
and Benefits - - - - - - - - -
928 Regulatory Commis-
sion Expense - - - - - - - - -
930.1 General Advertising
Expense - - - - - - - - -
930.2 Miscellaneous
General Expenses 4 - 11 27 - - 16 3 1
931 Rents 62 42 87 63 41 27 90 14 43
932 Maintenance of
Structures and
Equipment 14 - 1 3 2 - 7 - 1
403 Depreciation and
Amortization
Expense 14 5 12 11 17 3 17 3 10
408 Taxes Other Than
Income Taxes - - - - 1 - - - -
409 Income Taxes - - - - - - - - -
410 Provision for
Deferred Income
Taxes - - - - - - - - -
411 Provision for
Deferred Income
Taxes - Credit - - - - - - - - -
411.5 Investment Tax
Credit - - - - - - - - -
419 Curtailment Gain - - - - - - - - -
426.1 Donations - - - - - - - - -
426.5 Other Deductions - - - - - - 1 -
426.75 Curtailment Loss - - - - - - - - -
427 Interest on Long-
Term Debt - - - - - - - - -
430 Interest on Debt
`to Associate
Companies - - - - - - - - -
431 Other Interest
Expense - - - - - - - - -
TOTAL EXPENSES = $ 270 $ 311 $ 743 $ 629 $ 296 $ 218 $ 1,671 $ 277 $ 1,091
32
</TABLE>
<PAGE>
<TABLE>
ANNUAL REPORT OF: Consolidated Natural Gas Service Company, Inc.
For the Year Ended December 31, 1995
(In Thousands)
SCHEDULE XVII - SCHEDULE OF EXPENSE DISTRIBUTION
BY
<CAPTION> DEPARTMENT OR SERVICE FUNCTION
Investor Asset Facility New York Facility
Description of Items Relations Management Operations Office Services
<S> <C> <C> <C> <C> <C>
920 Salaries and Wages $ 221 $ 121 $ 139 $ 46 $ 123
921 Office Supplies and
Expenses 102 7 8 30 200
922 Administrative
Expense Trans-
ferred Credit - - - - -
923 Outside Services
Employed 56 - - - 112
924 Property Insurance - - - - -
925 Injuries and Damages - - - - -
926 Employee Pensions
and Benefits - - - - -
928 Regulatory Commis-
sion Expense - - - - -
930.1 General Advertising
Expense - - - - -
930.2 Miscellaneous
General Expenses 118 - 1 9 (3)
931 Rents 51 11 27 122 1,539
932 Maintenance of
Structures and
Equipment 1 - 1 1 153
403 Depreciation and
Amortization
Expense 8 2 6 12 194
408 Taxes Other Than
Income Taxes - - - - -
409 Income Taxes - - - - -
410 Provision for
Deferred Income
Taxes - - - - -
411 Provision for
Deferred Income
Taxes - Credit - - - - -
411.5 Investment Tax
Credit - - - - -
419 Curtailment Gain - - - - -
426.1 Donations - - - - -
426.5 Other Deductions - - - - -
426.75 Curtailment Loss - - - - -
427 Interest on Long-
Term Debt - - - - -
430 Interest on Debt
to Associate
Companies - - - - -
431 Other Interest
Expense - - - - -
TOTAL EXPENSES = $ 557 $ 141 $ 182 $ 220 $ 2,318
33
</TABLE>
<PAGE>
ANNUAL REPORT OF: Consolidated Natural Gas Service Company, Inc.
For the Year Ended December 31, 1995
(In Thousands)
DEPARTMENTAL ANALYSIS OF SALARIES - ACCOUNT 920
Departmental Salary Expense Number of
Name of Department Included in Amounts Billed To Personnel
Indicate each department Total Parent Other Non End of
or service function. Amount(A) Company Associates Associates Year
Executive Office $ 2,172 $ 320 $ 1,852 None 9
Corporate Communications 469 12 457 10
Legal - Washington 535 1 534 8
Rates & Regulatory Affairs 365 - 365 -
Secretary's 220 124 96 4
Legal - Pittsburgh 944 10 934 11
External Affairs &
Policy Development 720 70 650 12
Controller's 1,370 108 1,262 25
Information Technology 4,343 - 4,343 69
Internal Auditing 975 1 974 20
Human Resources 743 22 721 11
Employee Benefits 1,066 2 1,064 22
Treasurer's 848 55 793 17
Tax 610 31 579 9
Risk Management 105 1 104 2
Strategic Financial
Planning 254 136 118 4
Corporate Planning 453 5 448 7
Business & Operations
Services 351 - 351 4
Library Services 90 - 90 2
Corporate Geological
Engineering Services 152 3 149 -
Business Development 466 22 444 2
Environmental Market
Development 67 - 67 -
Research 292 - 292 2
Investor Relations 221 8 213 3
Asset Management 121 - 121 1
Facility Operations 139 - 139 4
New York Office 46 - 46 1
Facility Services 123 - 123 4
TOTAL $18,260 $ 931 $17,329 None 263
(A) Excludes Vacation, Holiday and Other Paid Absences which are included
in Account 926, Page 44.
34
<PAGE>
ANNUAL REPORT OF: Consolidated Natural Gas Service Company, Inc.
For the Year Ended December 31, 1995
(In Thousands)
OUTSIDE SERVICES EMPLOYED - ACCOUNT 923
INSTRUCTIONS: Provide a breakdown by subaccount of outside services
employed. If the aggregate amounts paid to any one payee and
included within one subaccount is less than $25,000, only the
aggregate number and amount of all such payments included
within the subaccount need be shown. Provide a subtotal for
each type of service.
Relationship
"A"=Associate
"NA"=Non
From Whom Purchased Address Associate Amount
Legal Services:
Buchanan Ingersoll, P.C. 5800 USX Tower NA $ 451
600 Grant Street
Pittsburgh, PA 15219
Cahill, Gordon & Reindel,P.C. Eighty Pine Street NA 132
New York, NY 10005
Pearne, Gordon, McCoy, P.O. Box 72028 NA 60
& Granger Cleveland, OH 44192
Ivins, Phillips & Barker, 1700 Pennsylvania Avenue NA 41
P.C. NW #600
Washington, DC 20006-4704
Doepken, Keevican, Weis 37th Floor, USX Tower NA 25
& Medved 600 Grant Street
Pittsburgh, PA 15219
Miscellaneous (15 items
less than $25,000) - NA 93
TOTAL $ 802
Tax Services:
Ivins, Phillips & Barker,P.C. 1700 Pennsylvania Avenue NA $ 29
NW #600
Washington, DC 20006-4704
35
<PAGE>
ANNUAL REPORT OF: Consolidated Natural Gas Service Company, Inc.
For the Year Ended December 31, 1995
(In Thousands)
OUTSIDE SERVICES EMPLOYED - ACCOUNT 923 (Continued)
Relationship
"A"=Associate
"NA"=Non
From Whom Purchased Address Associate Amount
Tax Services (continued):
Miscellaneous (2 items
less than $25,000) - NA 2
TOTAL $ 31
Auditing Services:
Price Waterhouse, LLP 600 Grant Street
Suite 4500
Pittsburgh, PA 15219 NA $ 72
Other Special Services:
Towers Perrin, Inc. P.O. Box 8500, S-6110 NA 1,415
Philadelphia, PA 19178
International Business 1300 East Ninth Street NA 885
Machines Cleveland, OH 44114
CNG Transmission Corporation 445 West Main Street A 588
Clarksburg, WV 26301
Stone & Webster Management P.O. Box 1611 NA 266
Consultants, Inc. Boston, MA 02205-1611
Mobius Management Systems, One Ramada Plaza NA 247
Inc. New Rochelle, NY 10801
Hunter Group, Inc. P.O. Box 17110 NA 213
Baltimore, MD 21203-7110
36
<PAGE>
ANNUAL REPORT OF: Consolidated Natural Gas Service Company, Inc.
For the Year Ended December 31, 1995
(In Thousands)
OUTSIDE SERVICES EMPLOYED - ACCOUNT 923 (Continued)
Relationship
"A"=Associate
"NA"=Non
From Whom Purchased Address Associate Amount
East Ohio Gas Company 1717 E. Ninth Street A 162
Cleveland, OH 44114
Panhandle International Dev. 5400 Westheimer Court NA 160
Corporation Houston, TX 77056-5310
Implementation Management P.O. Box 337 NA 135
Associates, Inc. Brighton, CO 80601
CNG Producing Company 1450 Poydras Street A 126
New Orleans, LA 70112-6000
PeopleSoft, Inc. 1331 North California Blvd. NA 117
Walnut Creek, 94596
Peoples Natural Gas Company 625 Liberty Avenue A 106
Pittsburgh, PA 15222-3197
Data Resource Management, 203 Chaucer Courty South NA 106
Inc. Sewickley, PA 15143
Heidrick & Struggles, Inc. P.O. Box 92227 NA 105
Chicago, IL 60675-4590
Kissel-Blake, Inc. 25 Broadway NA 100
New York, NY 10004
Charan Associates, Inc. 12655 N. Central Expressway NA 82
Suite 103
Dallas, TX 75243
37
<PAGE>
ANNUAL REPORT OF: Consolidated Natural Gas Service Company, Inc.
For the Year Ended December 31, 1995
(In Thousands)
OUTSIDE SERVICES EMPLOYED - ACCOUNT 923 (Continued)
Relationship
"A"=Associate
"NA"=Non
From Whom Purchased Address Associate Amount
Computer Associates P.O. Box 360355 NA 76
International, Inc. Pittsburgh, PA 15251-6355
Hill and Knowlton P.O. Box 8500-4445 NA 73
Philadelphia, PA 19178
York Triathlon Consortium c/o Rushmore Trust & Savings NA 72
4922 Fairont Avenue
Bethesda, MD 20814-6076
Pittsburgh Business Chamber of Commerce Bldg. NA 71
Consultants, Inc. 411 Seventh Avenue
Suite 1401A
Pittsburgh, PA 15219
Comdisco Disaster Recovery 6111 N. River Road NA 70
Services, Inc. Rosemont, IL 60018-4992
D'Elia Wittkofski, Inc. One Market Street NA 64
Pittsburgh, PA 15222
Allegheny Personnel Services Tow PNC Plaza NA 61
Suite 2050
620 Liberty Avenue
Pittsburgh, PA 15222
BMC Software, Inc. NCNB Texas National Bank NA 58
P.O. Box 298761
Houston, TX 77298-0761
Meta Group, Inc. P.O. Box 10265 NA 57
Newark, NJ 07193-0265
38
<PAGE>
ANNUAL REPORT OF: Consolidated Natural Gas Service Company, Inc.
For the Year Ended December 31, 1995
(In Thousands)
OUTSIDE SERVICES EMPLOYED - ACCOUNT 923 (Continued)
Relationship
"A"=Associate
"NA"=Non
From Whom Purchased Address Associate Amount
Right Associates P.O. Box 640052 NA 54
Pittsburgh, PA 15264-0052
Forrester Research, Inc. One Brattle Square NA 51
Cambridge, MA 02138
Reltech Information Asset 4601 N. Fairfax Drive NA 49
Management Suite 1050
Arlington, VA 22203
Witalis Burke Associates, Liberty Center NA 48
Inc. Suite 450
Pittsburgh, PA 15222
Northeastern Executive Group, 401 Smith Drive NA 46
Inc. Suite 150
Cranberry Professional Park
Cranberry Township, PA 16066
Olsten Services P.O. Box 8906 NA 45
Melville, NY 11747-8906
Legent Corporation Two Allegheny Center NA 44
Pittsburgh, PA 15212-5494
Professional Services Group The Hartley Rose Building NA 43
425 First Avenue
Pittsburgh, PA 15219-1321
Mainsail Associates, Inc. 294 Washington Street NA 41
Suite 429
Boston, MA 02108
39
<PAGE>
ANNUAL REPORT OF: Consolidated Natural Gas Service Company, Inc.
For the Year Ended December 31, 1995
(In Thousands)
OUTSIDE SERVICES EMPLOYED - ACCOUNT 923 (Continued)
Relationship
"A"=Associate
"NA"=Non
From Whom Purchased Address Associate Amount
Other Special Services (Cont.)
Compucom Systems, Inc. P.O. Box 7780-3106 NA 40
Philadelphia, PA 19182-3106
Viasoft 3033 North 44th Street NA 39
Phoenix, AZ 85018
Protellicess 29 Santa Monica Boulevard NA 38
Suite 460
Santa Monica, CA 90401
Schmidt Consulting Services 405 McKnight Park Drive NA 35
Pittsburgh, PA 15237
PR Newswire G.P.O. Box 5897 NA 35
New York, NY 10087-5897
Corporate Word (The) P.O. Box 23609 NA 35
Pittsburgh, PA 15222-6609
Omega Systems Omega Building NA 32
160 N. Craig Street
Pittsburgh, PA 15213
DRI/McGraw Hill P.O. Box 5-0210 NA 29
Woburn, MA 01815-0210
New Image Press P.O. Box 400001 NA 28
Pittsburgh, PA 15268-0001
40
<PAGE>
ANNUAL REPORT OF: Consolidated Natural Gas Service Company, Inc.
For the Year Ended December 31, 1995
(In Thousands)
OUTSIDE SERVICES EMPLOYED - ACCOUNT 923 (Continued)
Relationship
"A"=Associate
"NA"=Non
From Whom Purchased Address Associate Amount
Other Special Services (Cont.)
Hayes, Domenici & Nunn 1320 Old Chain Bridge Road NA 27
Suite 330
McLean, VA 22101
Technology Partners, Inc. 13910 Champion Forest Drive NA 27
Suite 203
Houston, TX 77069
Information Handling Services 15 Inverness Way East NA 26
Englewood, CO 80112-5704
Oracle Corporation P.O. Box 71028 NA 26
Chicago, IL 60694-1028
Power Investors Management 300 North Continental Blvd. NA 25
Suite 200
El Segundo, CA 90245
Miscellaneous (1 item
less than $25,000) - A 12
Miscellaneous (213 items
less than $25,000) NA 1,103
TOTAL $ 7,393
Research Services:
Berkau & Associates 1701 21st Avenue South NA 235
Suite 418
Nashville, TN 37212
41
<PAGE>
ANNUAL REPORT OF: Consolidated Natural Gas Service Company, Inc.
For the Year Ended December 31, 1995
(In Thousands)
OUTSIDE SERVICES EMPLOYED - ACCOUNT 923 (Continued)
Relationship
"A"=Associate
"NA"=Non
From Whom Purchased Address Associate Amount
Research Services (continued)
Atlanta Gas Light Company P.O. Box 4569 NA 200
Atlanta, GA 30302-4569
Energy Systems Associates 300 Gateway Two NA 129
Corporation Pittsburgh, PA 15222
Trimblehouse 4658 S. Old Peachtree Road NA 84
Norcross, GA 30071
ATA Foundation, Inc. (The) 2200 Mill Road NA 67
Alexandria, VA 22314-4677
Institute of Gas Technology, P.O. Box 91127 NA 54
Inc. Chicago, IL 60693
Gas Research Institute P.O. Box 91806 NA 50
Chicago, IL 60693
MVE, Inc. 407 7th Street, NW NA 47
New Prague, MN 56071-1010
Process Systems International Department 600-0625W NA 31
Inc. P.O. Box 94020
Palatine, IL 60094-4020
Advanced Technologies 2964 Falmouth Road NA 27
Management, Inc. Cleveland, OH 44122
42
<PAGE>
ANNUAL REPORT OF: Consolidated Natural Gas Service Company, Inc.
For the Year Ended December 31, 1995
(In Thousands)
OUTSIDE SERVICES EMPLOYED - ACCOUNT 923 (Continued)
Relationship
"A"=Associate
"NA"=Non
From Whom Purchased Address Associate Amount
Miscellaneous (1 item -
less than $25,000) A 5
Hydra Rig, Inc. P.O. Box 15951 NA (125)
Fort Worth, TX 76119
Southern California Gas 555 West 5th Street NA (105)
Company Los Angeles, CA 90071
P L S International 10910 Briggs Road NA (71)
Cleveland, OH 44111
AGA Laboratories 1515 Wilson Boulevard NA (57)
Arlington, VA 22209
Miscellaneous Credits (4 items - NA (57)
less than $25,000)
Miscellaneous (66 items -
less than $25,000) NA 269
TOTAL $ 783
GRAND TOTAL $ 9,081
43
<PAGE>
ANNUAL REPORT OF: Consolidated Natural Gas Service Company, Inc.
For the Year Ended December 31, 1995
(In Thousands)
EMPLOYEE PENSIONS AND BENEFITS - ACCOUNT 926
INSTRUCTIONS: Provide a listing of each pension plan and benefit program
provided by the service company. Such listing should be
limited to $25,000.
Description Amount
Workforce Reduction $ 3,450
Medical Insurance $ 2,022
Alternate Thrift Trust 1,100
Holiday 824
Vacation 815
Other Paid Absences 369
Contributory Group Life Insurance 287
Flex Dollars 265
Disability Benefits 239
Survivor Benefit Insurance 234
Flex Benefit Administration Fees 115
Miscellaneous Welfare Expense 107
Educational Refunds 87
Workmen's Compensation Insurance 79
Dental Insurance 65
Employee Medical Programs 45
Pension Expense (1,099)
TOTAL $ 9,004
44
<PAGE>
ANNUAL REPORT OF: Consolidated Natural Gas Service Company, Inc.
For the Year Ended December 31, 1995
(In Thousands)
GENERAL ADVERTISING EXPENSES-ACCOUNT 930.1
INSTRUCTIONS: Provide a listing of the amount included in Account 930.1,
"General Advertising Expenses", classifying the items
according to the nature of the advertising and as defined in
the account definition. If a particular class includes an
amount in excess of $3,000 applicable to a single payee,
show separately the name of the payee and the aggregate
amount applicable thereto.
Description Name of Payee Amount
None
TOTAL None
45
<PAGE>
ANNUAL REPORT OF: Consolidated Natural Gas Service Company, Inc.
For the Year Ended December 31, 1995
(In Thousands)
MISCELLANEOUS GENERAL EXPENSES - ACCOUNT 930.2
INSTRUCTIONS: Provide a listing of the amount included in Account 930.2,
"Miscellaneous General Expenses", classifying such expenses
according to their nature. Payments and expenses permitted by
Section 321 (b) (2) of the Federal Election Campaign Act, as
amended by Public Law 94-283 in 1976 (2 U.S.C. Section 441 (b)
(2)) shall be separately classified.
Description Amount
Annual Shareholders Report $ 455
Transfer Agent Expenses 237
Other Shareholder Reports 147
Security Analyst Meeting Expenses 122
Miscellaneous Expenses - Business Meeting/Group Meals 120
Other Miscellaneous Expenses 97
Proxy Solicitation Expenses 71
Stock Listing Fees 61
Debenture Trustee Expenses 56
Dividend Disbursing & Reinvesting Expenses 55
Other Shareholder Expenses 26
TOTAL $ 1,447
46
<PAGE>
ANNUAL REPORT OF: Consolidated Natural Gas Service Company, Inc.
For the Year Ended December 31, 1995
(In Thousands)
RENTS - ACCOUNT 931
INSTRUCTIONS: Provide a listing of the amount included in Account 931,
"Rents", classifying such expenses by major groupings of
property, as defined in the account definition of the
Uniform System of Accounts.
Type of Property Amount
Office Rents $ 4,827
Office Equipment Rental - Computer 121
Office Equipment Rental - Other 69
Automobile Rental 79
Miscellaneous Rents 364
TOTAL $ 5,460
47
<PAGE>
ANNUAL REPORT OF: Consolidated Natural Gas Service Company, Inc.
For the Year Ended December 31, 1995
(In Thousands)
TAXES OTHER THAN INCOME TAXES - ACCOUNT 408
INSTRUCTIONS: Provide an analysis of Account 408, "Taxes Other Than Income
Taxes". Separate the analysis into two groups: (1) other
than U. S. Government taxes, and (2) U. S. Government taxes.
Specify each of the various kinds of taxes and show the
amounts thereof. Provide a subtotal for each class of tax.
Kind of Tax Amount
(A) Other Than U. S. Government Taxes
State Unemployment Tax $ 77
Pittsburgh Business Privilege Tax 89
Ohio Real & Personal Property Taxes 61
District of Columbia Franchise Tax 17
District of Columbia Personal Property Tax 8
New York Commercial Rent - Occupancy Tax 5
Other Miscellaneous Taxes 3
New York State Franchise Tax 2
Pennsylvania Personal Property & Franchise Tax 2
SUBTOTAL $ 264
(B) U. S. Government Taxes
Federal Social Security Tax $ 1,370
Federal Unemployment Tax 20
SUBTOTAL $ 1,390
TOTAL $ 1,654
48
<PAGE>
ANNUAL REPORT OF: Consolidated Natural Gas Service Company, Inc.
For the Year Ended December 31, 1995
(In Thousands)
DONATIONS - ACCOUNT 426.1
INSTRUCTIONS: Provide a listing of the amount included in Account 426.1,
"Donations", classifying such expenses by its purpose. The
aggregate number and amount of all items of less than $3,000
may be shown in lieu of details.
Name of Recipient Purpose of Donation Amount
None
TOTAL None
49
<PAGE>
ANNUAL REPORT OF: Consolidated Natural Gas Service Company, Inc.
For the Year Ended December 31, 1995
(In Thousands)
OTHER DEDUCTIONS - ACCOUNT 426.5
INSTRUCTIONS: Provide a listing of the amount included in Account 426.5,
"Other Deductions", classifying such expenses according to
their nature.
Description Name of Payee Amount
Miscellaneous (127 Items) $ 30
TOTAL $ 30
50
<PAGE>
ANNUAL REPORT OF: Consolidated Natural Gas Service Company, Inc.
For the Year Ended December 31, 1995
SCHEDULE XVIII - NOTES TO STATEMENT OF INCOME
INSTRUCTIONS: The space below is provided for important notes regarding the
statement of income or any account thereof. Furnish particulars
as to any significant increase in services rendered or expenses
incurred during the year. Notes relating to financial
statements shown elsewhere in this report may be indicated here
by reference.
See Notes to Financial Statements, Schedule XIV, page 20-25.
51
<PAGE>
ANNUAL REPORT OF: Consolidated Natural Gas Service Company, Inc.
ORGANIZATION CHART - 1995
See Exhibit I filed herewith.
52
<PAGE>
ANNUAL REPORT OF: Consolidated Natural Gas Service Company, Inc.
METHODS OF ALLOCATION
See Exhibit II filed herewith.
53
<PAGE>
ANNUAL REPORT OF: Consolidated Natural Gas Service Company, Inc.
(In Thousands)
For the Year Ended December 31, 1995
ANNUAL STATEMENT OF COMPENSATION FOR USE OF CAPITAL BILLED
Total Annual
Direct Allocation
Billing of of Direct
Company Information Services Percent Interest
Consolidated Natural Gas Company $ - * $ *
The East Ohio Gas Company 4,112 34% 102
The Peoples Natural Gas Company 2,205 18% 54
CNG Transmission Corporation 3,219 26% 80
Hope Gas, Inc. 364 3% 9
West Ohio Gas Company 260 2% 6
Consolidated System LNG Company - * *
CNG Producing Company 453 4% 11
CNG Research Company - * *
CNG Coal Company - * *
CNG Power Company 3 - -
CNG Energy Services Corporation 122 1% 3
Virginia Natural Gas, Inc. 1,430 12% 35
CNG Storage Service Company - - -
TOTAL $12,168 100% $ 300
*These System Companies were excluded from allocation since there were no
direct charges for Corporate Information Services Department.
54
<PAGE>
ANNUAL REPORT OF: Consolidated Natural Gas Service Company, Inc.
(In Thousands)
For The Year Ended December 31, 1995
ANNUAL STATEMENT OF COMPENSATION FOR USE OF CAPITAL BILLED
(Continued)
Total Annual Allocation Total
Indirect Costs of Indirect Allocation
Company Billed Percent Interest of Interest
Consolidated Natural Gas
Company $ 973 6% $ 54 $ 54
The East Ohio Gas Company 4,573 29% 253 355
The Peoples Natural Gas
Company 2,266 14% 125 179
CNG Transmission Corporation 3,710 23% 205 285
Hope Gas, Inc. 550 3% 30 39
West Ohio Gas Company 251 2% 14 20
Consolidated System LNG
Company 2 - - -
CNG Producing Company 1,784 11% 99 110
CNG Research Company 47 - 3 3
CNG Coal Company 4 - - -
CNG Power Company 65 1% 4 4
CNG Energy Services Corporation 684 4% 38 41
Virginia Natural Gas, Inc. 1,096 7% 61 96
CNG Storage Service Company 6 - - -
TOTAL $ 16,011 100% $ 886 $ 1,186
55
<PAGE>
ANNUAL REPORT OF: Consolidated Natural Gas Service Company, Inc.
SIGNATURE CLAUSE
Pursuant to the requirements of the Public Utility Holding Company Act of
1935 and the rules and regulations of the Securities and Exchange
Commission issued thereunder, the undersigned company has duly caused this
report to be signed on its behalf by the undersigned officer thereunto duly
authorized.
Consolidated Natural Gas Service Company, Inc.
(Name of Reporting Company)
By: Stephen R. McGreevy
(Signature of Signing Officer)
Stephen R. McGreevy, Vice President
Accounting and Financial Control
(Printed Name and Title of Signing Officer)
Date: April 29, 1996
56
CONSOLIDATED NATURAL GAS SERVICE COMPANY, INC. Exhibit I
Organization Chart
Board of Directors
Chairman and
Chief Executive Officer
Senior Vice President and
Chief Financial Officer
Vice President
Accounting and Financial Control
Controller
Treasurer
Vice President
Taxes and Strategic Financial Planning
Sr. Vice President
Sr. Vice President, Distribution
Sr. Vice President and General Counsel
Vice President and
Assistant General Counsel-Washington, DC
Vice President and
Assistant General Counsel-Pittsburgh
Vice President
External Affairs & Policy Development
Vice President
Business Development
Vice President
Business & Operations Services
Vice President
Human Resources and Administration
Corporate Secretary
Vice President, Planning
Effective March 1, 1996
57
CONSOLIDATED NATURAL GAS SERVICE COMPANY, INC. Exhibit II
Methods of Allocation
Method of Allocating Cost among companies receiving service under this and
similar service contracts with Consolidated Natural Gas Service Company, Inc.
1. The costs of rendering service by the Service Corporation will include
all costs of doing business including interest on debt but excluding a
return for the use of equity capital for which no charge will be made
to System companies.
2. (a) The Service Corporation will maintain a separate record of the
expenses of each department. The expenses of each department will
include:
(i) those expenses that are directly attributable to such
department, and
(ii) an appropriate portion of those office and housekeeping
expenses that are not directly attributable to a department
but which are necessary to the operation of such department.
(b) Expenses of the department will include salaries and wages of
employees, rent and utilities, materials and supplies,
depreciation, and all other expenses attributable to the department
excluding, however, employee welfare expenses. The expenses of a
department will not include:
(i) those incremental out-of-pocket expenses that are incurred for
the direct benefit and convenience of an individual company or
group of companies;
(ii) Service Corporation overhead expenses, including expenses of
the corporate secretary's department that are attributable to
maintaining the corporate existence of the Service
Corporation, franchise and other general taxes, employee
welfare expenses, and all other incidental overhead expenses
including those auditing fees, internal auditing department
expenses and accounting department expenses attributable to
the Service Corporation.
(c) The Service Corporation will establish annual budgets for
controlling the expenses of each department and for determining
estimated costs to be included in interim monthly billing.
1
<PAGE>
CONSOLIDATED NATURAL GAS SERVICE COMPANY, INC. Exhibit II
(Continued)
Methods of Allocation
3. (a) Employees in each department will be divided into two classes:
(i) Those employees rendering service to System companies, and
(ii) Those office and general service employees, such as
secretaries, stenographers, telephone operators and file
clerks, who generally assist employees in Class A or render
other housekeeping services and who are not engaged directly
in rendering service to each Company or a group of companies.
(b) Expenses set forth in Section 2 above (which exclude sickness and
disability benefits, paid absences, and other welfare expenses)
will be separated to show:
(i) salaries and wages of Class A employees, and
(ii) all other expenses of the department.
(c) There will be attributed to each dollar of a Class A employee's
salary or wage, that percentage of all other expenses of his
department (as defined in (b) above), that his salary or wage is to
the total Class A salaries and wages of that department.
(d) Class A employees in each department will maintain a record of the
time they are employed in rendering service to each company or
group of companies. An hourly rate will be determined by dividing
the total expense attributable to a Class A employee as determined
under subsection (c) above by the productive hours reported by such
employee.
4. The charge to the Company for a particular service will be determined
by multiplying the hours reported by Class A employees in rendering
such service to each Company by the hourly rates applicable to such
employees. When such employees render service to a group of companies,
the charge to each Company will be determined by multiplying the hours
attributable to the Company under the allocation formulas set forth in
Section 9 of this Exhibit by the hourly rates applicable to such
employees.
5. To the extent appropriate and practical, the foregoing computations of
hourly rates and charges may be determined for groups of employees
within reasonable salary range limits.
6. Those expenses of the Service Corporation that are not included in the
annual expense of a department under Section 2 above will be charged to
System companies receiving service as follows:
2
<PAGE>
CONSOLIDATED NATURAL GAS SERVICE COMPANY, INC. Exhibit II
(Continued)
Methods of Allocation
(a) Incremental out-of-pocket costs incurred for the direct benefit and
convenience of a company or group of companies will be charged
directly to such company or group of companies. Such costs
incurred for a group of companies will be allocated on the basis of
an appropriate formula.
(b) Service Corporation overhead expenses referred to in Section 2
above will be charged to the Company in the proportion that the
charges made to the Company for costs, other than those set forth
in this Section 6, are to the total of such charges to all
companies receiving service.
7. Notwithstanding the foregoing basis of determining cost allocations for
billing purposes, cost allocations for certain services involving
machine operations and production units will be determined on an
appropriate basis established by the Service Corporation relating to
the direct use of machine equipment or production units.
8. Monthly bills will be issued for the services rendered to the Company
on an estimated basis. Such estimate will normally be predicated on
service department budgets and estimated productive hours of employees
for the year. At the end of each year, estimated figures will be
revised to reflect actual experience during such year and adjustments
will be made in amounts billed to give effect to such revision.
9. When Class A employees render services to a group of companies, the
following formulas shall be used to allocate the time of such employees
to the individual companies receiving such service:
(a) Department formulas to be used when employees render services to
all companies participating in such service, for the services
indicated:
Service Department
or Function Basis of Allocation
Computer Services The number of residential and commercial
(Revenue System) customers at the end of the preceding
calendar year.
Employee Benefits The number of employee and annuitant accounts
as of the preceding December 31st.
Human Resources The number of employees as of the preceding
December 31st.
3
<PAGE>
Exhibit II
(Continued)
CONSOLIDATED NATURAL GAS SERVICE COMPANY, INC.
Methods of Allocation
Service Department
or Function Basis of Allocation
Corporate Planning Total investment in utility plant (as defined
by FERC and State Commissions) booked at
preceding December 31st.
Risk Management Insurance premiums for the preceding year
ended December 31st.
Market Development Gross revenues from the sale of natural gas
excluding intercompany sales booked during
the preceding year ended December 31st.
Rates Utility company gross revenues booked during
the preceding year ended December 31st.
Research Gross revenues from the sale of natural gas,
including intercompany sales, booked during
the preceding year ended December 31st.
Tax The sum of the total income and total
deductions as reported for Federal Income Tax
purposes on the last return filed.
Corporate Secretary/ The weighted average the previous three
Investor Relations years of total service company billings.
(b) Formulas to be used in the absence of a department formula or when
service rendered by employees is for a different group of companies
than those companies regularly participating in such service:
Company Group Basis of Allocation
All companies (includes Operating revenue deductions booked during
all System Companies the preceding year ended December 31st.
except Service
Corporation)
All operating companies Operating revenue deductions booked during
the preceding year ended December 31st.
All retail companies Volume of gas sold at retail during the
preceding year ended December 31st.
4
<PAGE>
Exhibit II
(Concluded)
CONSOLIDATED NATURAL GAS SERVICE COMPANY, INC.
Methods of Allocation
Company Group Basis of Allocation
All wholesale companies Gross revenues from sales for resale booked
during the preceding year ended December
31st.
All companies pur- Volume of gas purchased from non-affiliated
chasing gas from non- pipeline companies during the preceding year
affiliated companies ended December 31st.
All companies purchasing Volume of gas purchased from individual
gas from an individual pipeline company during the preceding year
non-affiliated pipeline ended December 31st.
company
All companies having Gross investment in transmission plant
transmission lines booked at preceding December 31st.
All production companies Production plant budget for the current year
of allocation.
Appalachian production Gross investment in Appalachian production
companies plant booked at preceding December 31st.
All storage companies Gross investment in storage plant, excluding
non-current inventory, booked at preceding
December 31st.
All Companies/ The weighted average of the previous three
Shareholder Activities years of total Service Company billings.
(c) If the use of a basis of allocation would result in an inequity
because of a change in operations or organization then the Service
Corporation may adjust the basis to effect an equitable
distribution.
5
<TABLE> <S> <C>
<ARTICLE> OPUR2
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
<BOOK-VALUE> PER-BOOK
<NET-SERVICE-COMPANY-PROPERTY> 8,371
<TOTAL-INVESTMENTS> 0
<TOTAL-CURRENT-ASSETS> 378,387
<TOTAL-DEFERRED-DEBITS> 14,026
<OTHER-ASSETS-AND-DEBITS> 0
<TOTAL-ASSETS-AND-DEBITS> 400,784
<TOTAL-PROPRIETARY-CAPITAL> 10
<TOTAL-LONG-TERM-DEBT> 14,391
<NOTES-PAYABLE> 0
<NOTES-PAYABLE-ASSOCIATE-COMP> 361,462
<OTHER-CURR-AND-ACCRUED-LIAB> 11,441
<TOTAL-DEFERRED-CREDITS> 12,224
<DEFERRED-INCOME-TAX> 1,256
<TOT-LIABIL-AND-PROPRIET-CAP> 400,784
<SERVICES-ASSOCIATE-COMPANIES> 52,959
<SERVICES-NON-ASSOCIATE-COMP> 0
<MISC-INCOME-OR-LOSS> 254
<TOTAL-INCOME> 53,213
<SALARIES-AND-WAGES> 18,260
<EMPLOYEE-PENSION-AND-BENEFIT> 9,004
<OTHER-EXPENSES> 25,949
<TOTAL-EXPENSES> 53,213
<NET-INCOME> 0
<TOTAL-EXPENSES-DIRECT-COST> 36,647
<TOTAL-EXPENSES-INDIRECT-COST> 16,566
<TOT-EXP-DIRECT-AND-INDIRECT> 53,213
<PERSONNEL-END-OF-YEAR> 263
</TABLE>
