Form U-13-60
Mutual and Subsidiary Service Companies
Revised February 7, 1980
ANNUAL REPORT
For the Period
Beginning January 1, 1999 and Ending December 31, 1999
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.
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<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.
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<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 11-12
Fuel Stock Expenses Undistributed Schedule VI 13
Stores Expense Undistributed Schedule VII 14
Miscellaneous Current and Accrued Assets Schedule VIII 15
Miscellaneous Deferred Debits Schedule IX 16
Research, Development, or Demonstration
Expenditures Schedule X 17
Proprietary Capital Schedule XI 18
Long-Term Debt Schedule XII 19
Current and Accrued Liabilities Schedule XIII 20-21
Notes to Financial Statements Schedule XIV 22-28
COMPARATIVE STATEMENT OF INCOME Schedule XV 29
Analysis of Billing - Associate Companies Account 457 30
Analysis of Billing - Non associate Companies Account 458 31
Analysis of Charges for Service - Associate
and Non associate Companies Schedule XVI 32
Schedule of Expense by Department or
Service Function Schedule XVII 33-44
Departmental Analysis of Salaries Account 920 45-48
Outside Services Employed Account 923 49-50
Employee Pensions and Benefits Account 926 51
General Advertising Expenses Account 930.1 52
Miscellaneous General Expenses Account 930.2 53
Rents Account 931 54
Taxes Other than Income Taxes Account 408 55
Donations Account 426.1 56
Other Deductions Account 426.5 57
Notes to Statement of Income Schedule XVIII 58
LISTING OF INSTRUCTIONAL FILING REQUIREMENTS
Page
Description of Reports or Statements Number
ORGANIZATION CHART 59
METHODS OF ALLOCATION 60
ANNUAL STATEMENT OF COMPENSATION FOR USE OF CAPITAL BILLED 61
SIGNATURE 62
EXHIBIT I 1
EXHIBIT II 1-6
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
1999 1998
(In Thousands)
SERVICE COMPANY PROPERTY
101 Service company property (Schedule II) $ 43,981 $ 40,975
107 Construction work in progress (Schedule II) - -
Total Property $ 43,981 $ 40,975
108 Less accumulated provision for depreciation
and amortization of service company property
(Schedule III) $ 19,763 $ 13,961
Net Service Company Property $ 24,218 $ 27,014
INVESTMENTS
123 Investments in associate companies (Schedule IV) - -
124 Other investments (Schedule IV) - -
Total Investments - -
CURRENT AND ACCRUED ASSETS
131 Cash $ 412 $ 290
134 Special deposits 2 2
135 Working funds 7 1
136 Temporary cash investments (Schedule IV) 61,817 82,000
141 Notes receivable - -
143 Accounts receivable 867 6,640
144 Accumulated provision for uncollectible accounts - -
146 Accounts receivable from associate companies
(Schedule V and XIV-Note 6) 633,303 580,621
152 Fuel stock expenses undistributed (Schedule VI) - -
154 Materials and supplies - 15
163 Stores expense undistributed (Schedule VII) - -
165 Prepayments 1,855 187
174 Miscellaneous current and accrued assets
(Schedule VIII) - -
Total Current and Accrued Assets $698,263 $669,756
DEFERRED DEBITS
181 Unamortized debt expense $ - $ -
184 Clearing accounts 59 313
186 Miscellaneous deferred debits (Schedule IX) 17,893 16,398
188 Research, development, or demonstration
expenditures (Schedule X) - -
190 Accumulated deferred income taxes 3,936 6,883
Total Deferred Debits $ 21,889 $ 23,594
TOTAL ASSETS AND OTHER DEBITS $744,369 $720,364
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<PAGE>
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
1999 1998
(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) $ 23,432 $ 3,672
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 23,432 $ 3,672
CURRENT AND ACCRUED LIABILITIES
231 Notes payable $ - $ -
232 Accounts payable 9,331 15,545
233 Notes payable to associate companies
(Schedule XIII and XIV-Note 6) 646,801 659,857
234 Accounts payable to associate companies
(Schedule XIII and XIV-Note 6) 7,078 14,301
236 Taxes accrued (363) (406)
237 Interest accrued - -
238 Dividends declared - -
241 Tax collections payable 377 (47)
242 Miscellaneous current and accrued liabilities
(Schedule XIII) 3,297 5,123
Total Current and Accrued Liabilities $666,521 $694,373
DEFERRED CREDITS
253 Other deferred credits $ 48,728 $ 18,241
255 Accumulated deferred investment tax credits - -
Total Deferred Credits $ 48,728 $ 18,241
282 ACCUMULATED DEFERRED INCOME TAXES $ 5,677 $ 4,068
TOTAL LIABILITIES AND PROPRIETARY CAPITAL $744,368 $720,364
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<PAGE>
ANNUAL REPORT OF: Consolidated Natural Gas Service Company, Inc.
For the Year Ended December 31, 1999
(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 4,164 684 - - 4,848
306 Leasehold
Improvements 7,276 - - (106) 7,170
307 Equipment(2) 24,530 4,739 11 - 29,258
308 Office
Furniture
and Equip-
ment 4,862 107 5 (2,371)(A) 2,593
309 Automobiles,
Other
Vehicles and
Related
Garage Equip-
ment 31 - 31 - -
310 Aircraft and
Airport
Equipment - - - - -
311 Other Service
Company
Property(3) - - - - -
SUBTOTAL $ 40,975 $ 5,530 $ 47 $(2,477) $ 43,981
107 Construction
Work in
Progress(4) - - - - -
TOTAL $ 40,975 $ 5,530 $ 47 $(2,477) $ 43,981
(1) Provide an explanation of those changes considered material:
(A) Correction of prior year asset additions.
7
<PAGE>
ANNUAL REPORT OF: Consolidated Natural Gas Service Company, Inc.
For the Year Ended December 31, 1999
(In Thousands)
SCHEDULE II - CONTINUED
(2) Sub accounts are required for each class of equipment owned. The service
company shall provide a listing by sub account of equipment additions
during the year and the balance at the close of the year:
Balance At
Close of
Subaccount Description Additions Year
Computer Hardware $ 4,683 $ 25,744
Computer Software 10 3,337
Typewriters, Calculators, Copiers & Duplicating 46 177
TOTAL $ 4,739 $ 29,258
(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, 1999
(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 1,551 174 - - 1,725
306 Leasehold
Improvements 3,618 507 - - 4,125
307 Equipment 7,507 4,780 (A) 11 - 12,276
308 Office
Furniture and
Fixtures 1,259 369 5 14 1,637
309 Automobiles,
Other
Vehicles and
Related
Garage Equip-
ment 26 5 31 - -
310 Aircraft and
Airport
Equipment - - - - -
311 Other Service
Company
Property - - - - -
TOTAL $ 13,961 $ 5,835 $ 47 $ 14 $ 19,763
(1) Provide an explanation of those changes considered material:
(A) Includes a correction prior year additions.
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<PAGE>
ANNUAL REPORT OF: Consolidated Natural Gas Service Company, Inc.
For the Year Ended December 31, 1999
(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 of
Description of Year Year
Account 123 - Investment in Associate Companies $ - $ -
Account 124 - Other Investments - -
Account 136 - Temporary Cash Investments
Bayerische Vereinsbank, NY $ 82,000 $ -
National Australia Bank - 61,817
TOTAL $ 82,000 $ 61,817
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<PAGE>
ANNUAL REPORT OF: Consolidated Natural Gas Service Company, Inc.
For the Year Ended December 31, 1999
(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
accommodation 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 of
Description of Year Year
Account 146 - Accounts Receivable from Associate
Companies
Consolidated Natural Gas Company $ 125 $ 23,818
The East Ohio Gas Company 350,176 296,315
The Peoples Natural Gas Company 44,926 96,578
CNG Transmission Corporation 4,257 51,351
Hope Gas, Inc. 32,026 31,082
CNG Producing Company 25,403 3,792
CNG Power Company 3,789 25
Consolidated System LNG Corporation - 1
CNG Research Company - 1
Virginia Natural Gas, Inc. 41,040 48,595
CNG Field Services Company 2,548 2,755
CNG Power Services Corporation 6,229 3,457
CNG Retail Services Corporation 29,719 28,141
CNG Products & Services, Inc. 1,349 25
CNG International Corporation 135 9,985
CNG Oil Gathering Corporation 25,918 25,880
CNG Main Pass Gas Gathering Corporation 12,981 11,502
TOTAL RECEIVABLES $580,621 $633,303
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<PAGE>
ANNUAL REPORT OF: Consolidated Natural Gas Service Company, Inc.
For the Year Ended December 31, 1999
(In Thousands)
SCHEDULE V - ACCOUNTS RECEIVABLE FROM ASSOCIATE COMPANIES
Total
Analysis of Convenience or Accommodation Payments: Payments
Consolidated Natural Gas Company $ 200
The East Ohio Gas Company 7,945
The Peoples Natural Gas Company 2,293
CNG Transmission Corporation 5,076
Hope Gas, Inc. 807
CNG Producing Company 4,177
CNG Power Company 7
Virginia Natural Gas, Inc. 1,013
CNG Field Services Corporation 93
CNG Research Company 4
CNG Financial Services Company 4
CNG Power Services Corporation 6
CNG Retail Services Corporation 312
CNG Products & Services, Inc. 30
CNG Oil Gathering Corporation 11
CNG Main Pass Gas Gathering Corporation 14
CNG International Corporation 127
TOTAL PAYMENTS $ 22,119
The majority of these payments were for system insurance, system employee
benefit plans, system memberships, common financial system (CFS) consulting,
and training.
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<PAGE>
ANNUAL REPORT OF: Consolidated Natural Gas Service Company, Inc.
For the Year Ended December 31, 1999
(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 $ - $ - $ -
TOTAL $ - $ - $ -
Summary:
Not Applicable
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<PAGE>
ANNUAL REPORT OF: Consolidated Natural Gas Service Company, Inc.
For the Year Ended December 31, 1999
(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 $ - $ - $ -
TOTAL $ - $ - $ -
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<PAGE>
ANNUAL REPORT OF: Consolidated Natural Gas Service Company, Inc.
For the Year Ended December 31, 1999
(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 of
Description of Year Year
Account 174 - Miscellaneous Current and
Accrued Assets $ - $ -
TOTAL $ - $ -
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<PAGE>
ANNUAL REPORT OF: Consolidated Natural Gas Service Company, Inc.
For the Year Ended December 31, 1999
(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 of
Description of Year Year
Account 186 - Miscellaneous Deferred Debits
Prepaid Pension Costs $ 16,322 $ 17,882
Deferred Compensation Expense 30 -
Miscellaneous 46 11
TOTAL $ 16,398 $ 17,893
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<PAGE>
ANNUAL REPORT OF: Consolidated Natural Gas Service Company, Inc.
For the Year Ended December 31, 1999
(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 $ -
TOTAL $ -
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<PAGE>
ANNUAL REPORT OF: Consolidated Natural Gas Service Company, Inc.
For the Year Ended December 31, 1999
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 $ -
Account 215 - Appropriated Retained Earnings $ -
TOTAL $ -
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 of
Description of Year (Loss) Paid Year
Account 216 - Unappropriated
Retained
Earnings
$ - $ - $ - $ -
TOTAL $ - $ - $ - $ -
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<TABLE>
ANNUAL REPORT OF: Consolidated Natural Gas Service Company, Inc.
For the Year Ended December 31, 1999
(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 At
Class & Series of Interest Amount Beginning Deductions Close of
of Obligation Maturity Rate Authorized of Year Additions (1) Year
Account 223 - Advances from
Associate Companies:
<S> <C> <C> <C> <C> <C> <C> <C>
Consolidated Natural
Gas Company 1999-2005 9.50% $ 3,836 $ 1,266 $ - 240 $ 1,026
Consolidated Natural
Gas Company 2003 6.10% 795 795 - - 795
Consolidated Natural
Gas Company 2004 7.50% 20,000 - 20,000 - 20,000
Consolidated Natural
Gas Company 2008 6.75% 1,611 1,611 - - 1,611
Account 224 - Other Long-Term Debt: - - - - -
TOTAL $26,242 $ 3,672 $20,000 $ 240 $23,432
<FN>
(1) GIVE AN EXPLANATION OF DEDUCTIONS:
Current portion of the 9.5 % Long-Term Debt
moved to Account 233 - Notes Payable to Associate Companies.
</TABLE>
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<PAGE>
ANNUAL REPORT OF: Consolidated Natural Gas Service Company, Inc.
For the Year Ended December 31, 1999
(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 of
Description of Year Year
Account 233 - Notes Payable to Associate Companies
Consolidated Natural Gas Company $565,806 $611,780
CNG Transmission Corporation 14,815 -
CNG Iroquois, Inc. 9,158 10,708
Consolidated System LNG Company 15,540 1,007
CNG Producing Company - 12,139
CNG Pipeline 1,335 1,139
CNG Research Company 40 71
CNG Coal Company 3,445 3,698
CNG Products & Services, Inc. - 531
CNG International Corporation 1,768 -
CNG Technologies - 144
CNG Power Company 47,715 4,642
CNG Market Center Services 235 942
TOTAL $659,857 $646,801
Account 234 - Accounts Payable to Associate Companies
Consolidated Natural Gas Company $ 6,379 $ 5,249
The East Ohio Gas Company 4,936 550
The Peoples Natural Gas Company 1,875 284
CNG Transmission Corporation (65) 514
CNG Iroquois, Inc. 38 49
Hope Gas, Inc. 217 504
Consolidated System LNG Company 70 5
CNG Producing Company 80 (136)
CNG Pipeline 6 6
CNG Coal Company 15 19
Virginia Natural Gas, Inc. 623 (19)
CNG Power Company 198 24
CNG International Corporation (41) (50)
CNG Retail Servcies Corporation (32) 68
CNG Market Center Services 2 5
CNG Products & Services, Inc. - 6
TOTAL $ 14,301 $ 7,078
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<PAGE>
ANNUAL REPORT OF: Consolidated Natural Gas Service Company, Inc.
For the Year Ended December 31, 1999
(In Thousands)
SCHEDULE XIII - CURRENT AND ACCRUED LIABILITIES
(Concluded)
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 of
Description of Year Year
Account 242 - Miscellaneous Current and Accrued Liabilities
Accrued Vacation Pay $ 3,172 $ 2,979
Non-Qualified Pension Plans Liability 1,262 - (A)
Incentive Compensation 666 293
Lump Sum Severance Liability 100 -
Supplemental Pension Plans Liability (73) - (A)
Miscellaneous (4) 25
TOTAL $ 5,123 $ 3,297
Note: (A) Reclassified and moved to account 253.
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ANNUAL REPORT OF: Consolidated Natural Gas Service Company, Inc.
For the Year Ended December 31, 1999
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 amended, as required
by the Public Utility Holding Company Act of 1935 (PUHCA).
2. MERGER
On February 22, 1999, Consolidated Natural Gas Company (CNG), parent of the
Company, and Dominion Resources, Inc. (DRI) announced that a definitive merger
agreement was approved by the boards of directors of both companies. DRI is
a holding company with businesses in regulated and competitive electric power,
natural gas and oil development and selected financial services. DRI's
principal business subsidiary is Virginia Electric and Power Company, a
regulated public utility engaged in the generation, transmission, distribution
and sale of electric energy in Virginia and northeastern North Carolina.
22
<PAGE>
ANNUAL REPORT OF: Consolidated Natural Gas Service Company, Inc.
For the Year Ended December 31, 1999
SCHEDULE XIV - NOTES TO FINANCIAL STATEMENTS (Continued)
CNG announced on May 11, 1999 that, after careful consideration, its Board
of Directors had unanimously rejected an unsolicited merger proposal from
Columbia Energy Group. In addition, on May 11, 1999, CNG announced that its
Board of Directors had unanimously approved an Amended and Restated Agreement
and Plan of Merger (Amended Plan of Merger) with DRI. Under the Amended Plan
of Merger and at the time of the merger (see subsequent event below), CNG's
shareholders received a combination of DRI common stock and cash with an
aggregate firm value of $66.60 per share of common stock. Up to 60% of the
consideration to CNG's shareholders was in the form of DRI common stock and
the balance was in cash.
On June 30, 1999, the shareholders of both CNG and DRI voted to approve the
merger of the two companies.
Regulatory Approval
In its order dated December 15, 1999, the SEC approved the merger under the
PUHCA.
Merger Expenses
Shareholder approval of the merger constituted a change of control as defined
in CNG's stock incentive plans. Accordingly, the vesting of stock options and
certain other stock awards was accelerated pursuant to the provisions of the
plans and/or award agreements. Also, the change of control effectively granted
limited stock appreciation rights to holders of vested stock options and certain
other stock awards. Specifically, the plan and/or award agreements permitted the
holder to elect, during the period July 1, 1999 through August 29, 1999, to
receive a cash payment in exchange for surrendering vested stock options and
awards. This provision covered outstanding vested stock options granted since
1989 to approximately 280 Company employees. The amount to be paid to the
holders was based on the value determined per the associated plans, which
considered the option exercise price, award value, and the change of control
price as defined in the plans. Based on the value of the vested options and
awards expected to be surrendered and cashed out, the Company recognized a
charge to salaries (Account 920) of $ 92.3 million.
During 1999, the Company also recorded charges to taxes of $1.3 million
(Account 408) related to the surrender of stock awards and $ 27.3 million of
benefit costs (Account 926) associated with certain executive employment
agreements.
Subsequent Event
On January 28, 2000, CNG and DRI completed the merger of CNG into a
wholly-owned Subsidiary of DRI (New CNG). DRI became a registered holding
company under PUHCA at the time of the merger. CNG's subsidiaries became
subsidiaries of New CNG, while New CNG became a registered holding company
under PUHCA.
23
<PAGE>
ANNUAL REPORT OF: Consolidated Natural Gas Service Company, Inc.
For the Year Ended December 31, 1999
SCHEDULE XIV - NOTES TO FINANCIAL STATEMENTS (Continued)
3. PENSION AND OTHER BENEFIT PROGRAMS
Pension Program
All employees of the Company are covered under the Consolidated Natural Gas
System's (the System) 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 tax 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 nonqualified
employee benefit plans. Certain of these nonqualified benefit plans are funded
through contributions to a grantor trust.
Pension expense (or credit), which includes the costs of defined benefit
pension plans and pension supplements, was $(1,157,000) and $(874,000) for the
years ended December 31, 1998 and 1999, 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.
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 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 and cost sharing features are adjusted annually.
24
<PAGE>
ANNUAL REPORT OF: Consolidated Natural Gas Service Company, Inc.
For the Year Ended December 31, 1999
SCHEDULE XIV - NOTES TO FINANCIAL STATEMENTS (Continued)
The Company is amortizing the accumulated postretirement benefit obligation
at January 1, 1993 (transition obligation) over a 20-year period. Net periodic
postretirement benefit cost for the year ended December 31, 1998 and 1999 was
$1,757,000 and $1,688,000 respectively, as determined by an independent
actuary.
4. LONG-TERM DEBT
The aggregate principal amounts of the Company's long-term debt maturing in
the years 2000 through 2004 are: $239,800, $239,800, $239,800, $239,800, and
$21,034,800.
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 1998 and 1999 was $7,697,000 and $7,747,000, 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
$59,800,000 and for the years 2000 through 2004 are: $7,504,000;
$7,519,000; $7,491,000; $7,488,000 and $7,646,000. 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 2000 amounts to approximately $ 7,699,000.
In this connection, the Company has entered into certain contractual
commitments.
25
<PAGE>
ANNUAL REPORT OF: Consolidated Natural Gas Service Company, Inc.
For the Year Ended December 31, 1999
SCHEDULE XIV - NOTES TO FINANCIAL STATEMENTS (Continued)
6. MONEY POOL
The Parent Company and its subsidiaries participate in the 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 PUHCA 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.
26
<PAGE>
ANNUAL REPORT OF: Consolidated Natural Gas Service Company, Inc.
For the Year Ended December 31, 1999
SCHEDULE XIV - NOTES TO FINANCIAL STATEMENTS (Continued)
At December 31, 1999, the detail of the pool was as follows:
Investment in Pool (including interest)
Consolidated Natural Gas Company $616,656,000
CNG Producing Company 12,139,000
CNG Iroquois, Inc. 10,757,000
Consolidated System LNG Company 1,012,000
CNG Pipeline Company 1,145,000
CNG Research Company 71,000
CNG Coal Company 3,717,000
CNG Products & Services, Inc. 536,000
CNG Power Company 4,664,000
CNG Technologies, Inc. 145,000
CNG Market Center Services, Inc. 947,000
SUBTOTAL $651,789,000
Less:
Borrowings from Pool (including interest)
The East Ohio Gas Company $288,170,000
The Peoples Natural Gas Company 94,076,000
CNG Transmission Corporation 46,976,000
Hope Gas, Inc. 29,934,000
Virginia Natural Gas, Inc. 47,116,000
CNG International Corporation 9,890,000
CNG Producing Company 1,577,000
CNG Field Services Company 2,709,000
CNG Power Services Corporation 3,440,000
CNG Retail Services Corporation 27,811,000
CNG Oil Gathering Corporation 11,496,000
CNG Main Pass Gas Gathering Corporation 25,878,000 589,073,000
Consolidated Natural Gas Service Company 899,000
SUBTOTAL 589,972,000
TOTAL $ 61,817,000
Temporary Cash Investments $ 61,817,000
Interest Receivable - Money Pool -
TOTAL $ 61,817,000
27
<PAGE>
ANNUAL REPORT OF: Consolidated Natural Gas Service Company, Inc.
For the Year Ended December 31, 1999
SCHEDULE XIV - NOTES TO FINANCIAL STATEMENTS (Concluded)
7. AFFILIATED ACCOUNTS
The amounts reported in this Form U-13-60 are on a general ledger account
basis and exclude the Service Company's Money Pool receivable due from the
Service Company as agent for the Pool and the payable amount due the pool at
December 31, 1999. The balance of the Service Company's portion of the pool
is detailed on page 28. The amounts reported in Form U5S include these
balances. A reconciliation of affiliated receivables and payables at
December 31, 1999, is as follows:
As Reported As Reported
Affiliated Accounts in Form U-13-60 in Form U5S Difference
Accounts Receivable $633,303,000 $634,202,000 $ 899,000
Notes Payable $646,801,000 - $646,801,000
Accounts Payable 7,078,000 - 7,078,000
Payables to Affiliated Companies - $654,778,000 (654,778,000)
$ 899,000
28
<PAGE>
ANNUAL REPORT OF: Consolidated Natural Gas Service Company, Inc.
For the Years Ended December 31, 1999 and 1998
(In Thousands)
SCHEDULE XV - COMPARATIVE STATEMENT OF INCOME
Current Prior
Description Year Year
Account 1999 1998
INCOME
457 Services rendered to associate companies $257,425 $126,911
458 Services rendered to nonassociate companies - -
421 Miscellaneous income or loss 14 26
TOTAL INCOME $257,439 $104,242
EXPENSE
912-13 Marketing and Advertising $ 4,115 $ 3,491
920 Salaries and wages 148,551 48,122
921 Office supplies and expenses 29,921 17,642
922 Administrative expense transferred - credit - (3)
923 Outside services employed 9,716 26,461
924 Property insurance 30 15
925 Injuries and damages 220 191
926 Employee pensions and benefits 40,376 9,455
928 Regulatory commission expense - -
930.1 General advertising expenses - -
930.2 Miscellaneous general expenses 1,397 1,920
931 Rents 7,747 7,697
932 Maintenance of structures and equipment 814 1,710
403 Depreciation and amortization expense 5,835 4,835
408 Taxes other than income taxes 5,955 3,587
409 Income taxes (4,555) 30
410 Provision for deferred income taxes 11,661 1,358
411 Provision for deferred income taxes - credit (7,106) (1,358)
411.5 Investment tax credit - -
426.1 Donations - -
426.5 Other deductions 158 30
427 Interest on long-term debt - -
430 Interest on debt to associate companies 2,314 1,637
431 Other interest expense 290 147
TOTAL EXPENSE $257,439 $126,937
NET INCOME OR (LOSS) $ - $ -
29
<PAGE>
ANNUAL REPORT OF: Consolidated Natural Gas Service Company, Inc.
For the Year Ended December 31, 1999
(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 $ 28,847 $ 1,638 $ 80 $ 30,565
The East Ohio Gas Company 62,397 16,088 787 79,272
The Peoples Natural Gas Company 23,086 6,263 307 29,656
CNG Transmission Corporation 44,651 10,606 519 55,776
Hope Gas, Inc. 8,078 2,347 115 10,540
CNG Producing Company 22,981 5,110 250 28,341
CNG Power Company 317 90 4 411
Virginia Natural Gas, Inc. 12,815 3,481 170 16,466
CNG Field Services Company 468 151 8 627
CNG Power Services Corporation 48 40 2 90
CNG Products & Services, Inc. 352 84 4 440
CNG International Corporation 519 188 9 716
CNG Retail Services Corporation 3,176 1,192 58 4,426
CNG Main Pass Oil Gathering Corp. 76 14 1 91
CNG Main Pass Gas Gathering Corp. 4 4 - 8
(A) The amount of indirect costs
charged of $47,296 is net of
$14 miscellaneous income.
TOTAL $207,815 $ 47,296 $ 2,314 $257,425
30
<PAGE>
ANNUAL REPORT OF: Consolidated Natural Gas Service Company, Inc.
For the Year Ended December 31, 1999
(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
TOTAL $ - $ - $ - $ - $ - $ -
INSTRUCTION: Provide a brief description of the services rendered to
each nonassociate company:
Not Applicable
31
<PAGE>
<TABLE>
ANNUAL REPORT OF: Consolidated Natural Gas Service Company, Inc.
For the Year Ended December 31, 1999
(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>
912-13 Marketing and Advertising $ 4,115 $ - $ 4,115 $ - $ - $ - $ 4,115 $ - $ 4,115
920 Salaries and Wages 123,338 25,213 148,551 - - - 123,338 25,213 148,551
921 Office Supplies and Expenses 29,412 509 29,921 - - - 29,412 509 29,921
922 Administrative Expense Transferred -
Credit - - - - - - - - -
923 Outside Services Employed 9,682 34 9,716 - - - 9,682 34 9,716
924 Property Insurance 7 23 30 - - - 7 23 30
925 Injuries and Damages - 220 220 - - - - 220 220
926 Employee Pensions and Benefits 27,325 13,051 40,376 - - - 27,325 13,051 40,376
928 Regulatory Commission Expense - - - - - - - - -
930.1 General Advertising Expenses - - - - - - - - -
930.2 Miscellaneous General Expenses 1,290 107 1,397 - - - 1,290 107 1,397
931 Rents 6,716 1,031 7,747 - - - 6,716 1,031 7,747
932 Maintenance of Structures and
Equipment 638 176 814 - - - 638 176 814
403 Depreciation and Amortization
Expense 5,058 777 5,835 - - - 5,058 777 5,835
408 Taxes Other than Income Taxes 102 5,853 5,955 - - - 102 5,853 5,955
409 Income Taxes - (4,555) (4,555) - - - - (4,555) (4,555)
410 Provision for Deferred Income Taxes - 11,661 11,661 - - - - 11,661 11,661
411 Provision for Deferred Income Taxes Cr. - (7,106) (7,106) - - - - (7,106) (7,106)
411.5 Investment Tax Credit - - - - - - - - -
426.1 Donations - - - - - - - - -
426.5 Other Deductions 146 12 158 - - - 146 12 158
427 Interest on Long-Term Debt - - - - - - - - -
431 Other Interest Expense - 290 290 - - - - 290 290
TOTAL EXPENSES $207,829 $47,296 $255,125 $ - $ - $ - $207,829 $47,296 $255,125
Compensation for Use of Equity Capital
430 Interest on Debt to Associate
Companies 2,314 - - - - 2,314 2,314
TOTAL COST OF SERVICE $257,439 $ - $ - $ - $207,829 $49,610 $257,439
INSTRUCTION: Total cost of service will equal for associate and nonassociate companies the total amount billed under their
separate anaylsis of billing schedules.
32
</TABLE>
<PAGE>
<TABLE>
ANNUAL REPORT OF: Consolidated Natural Gas Service Company, Inc.
For the Year Ended December 31, 1999
(In Thousands)
SCHEDULE XVII - SCHEDULE OF EXPENSE DISTRIBUTION
BY
DEPARTMENT OR SERVICE FUNCTION
<CAPTION>
Total Executive Corporate Legal Secretary's Legal
Description of Items Amount Overhead Office Commun. Washington Pittsburgh
<S> <C> <C> <C> <C> <C> <C> <C>
912-13 Marketing and Advertising $ 4,115 $ - $ - $ - $ - $ - $ -
920 Salaries and Wages 148,551 6,285 25,044 1,262 2,710 478 5,961
921 Office Supplies and Expenses 29,921 506 296 346 166 28 142
922 Administrative Expense
Transferred Credit - - - - - - -
923 Outside Services Employed 9,716 30 235 (237) 40 - 1,154
924 Property Insurance 30 24 - - - - -
925 Injuries and Damages 220 220 - - - - -
926 Employee Pensions and Benefits 40,376 6,984 14,698 - - - -
928 Regulatory Commission Expense - - - - - - -
930.1 General Advertising Expense - - - - - - -
930.2 Miscellaneous General Expenses 1,397 104 64 321 - 577 24
931 Rents 7,747 59 859 159 107 87 371
932 Maintenance of Structures
and Equipment 814 178 2 7 3 2 16
403 Depreciation and
Amortization Expense 5,835 (132) 325 84 100 43 174
408 Taxes Other Than Income Taxes 5,955 5,853 - - 2 - -
409 Income Taxes (4,555) (4,555) - - - - -
410 Provision for Deferred
Income Taxes 11,661 11,661 - - - - -
411 Provision for Deferred
Income Taxes - Credit (7,106) (7,106) - - - - -
411.5 Investment Tax Credit - - - - - - -
426.1 Donations - - - - - - -
426.5 Other Deductions 158 13 - - - - -
427 Interest on Long-Term Debt - - - - - - -
430 Interest on Debt to
Associate Companies 2,314 2,314 - - - - -
431 Other Interest Expense 290 290 - - - - -
TOTAL EXPENSES $257,439 $ 22,728 $ 41,523 $ 1,942 $ 3,128 $ 1,215 $ 7,842
33
</TABLE>
<PAGE>
<TABLE>
ANNUAL REPORT OF: Consolidated Natural Gas Service Company, Inc.
For the Year Ended December 31, 1999
(In Thousands)
SCHEDULE XVII - SCHEDULE OF EXPENSE DISTRIBUTION
BY
DEPARTMENT OR SERVICE FUNCTION
<CAPTION>
External
Affairs & Common Corporate Regulated Risk
Policy Corporate Financial General Fixed Measurement
Description of Items Development Affairs Systems Controller's Accounting Assets & Control
<S> <C> <C> <C> <C> <C> <C> <C>
912-13 Marketing and Advertising $ - $ - $ - $ - $ - $ - $ -
920 Salaries and Wages 4,414 896 55 5,672 1,424 702 10
921 Office Supplies and Expenses 699 291 31 196 57 80 3
922 Administrative Expense
Transferred Credit - - - - - - -
923 Outside Services Employed 488 - 6 23 - 29 -
924 Property Insurance - - - - - - -
925 Injuries and Damages - - - - - - -
926 Employee Pensions and Benefits - - - 1,584 - - -
928 Regulatory Commission Expense - - - - - - -
930.1 General Advertising Expense - - - - - - -
930.2 Miscellaneous General Expenses - 5 - 7 1 - -
931 Rents 190 91 47 302 137 72 1
932 Maintenance of Structures
and Equipment 2 3 - 5 - 2 -
403 Depreciation and
Amortization Expense 95 38 241 202 203 36 -
408 Taxes Other Than Income Taxes 2 - - - - - -
409 Income Taxes - - - - - - -
410 Provision for Deferred
Income Taxes - - - - - - -
411 Provision for Deferred
Income Taxes - Credit - - - - - - -
411.5 Investment Tax Credit - - - - - - -
426.1 Donations - - - - - - -
426.5 Other Deductions 140 2 - 3 - - -
427 Interest on Long-Term Debt - - - - - - -
430 Interest on Debt to
Associate Companies - - - - - - -
431 Other Interest Expense - - - - - - -
TOTAL EXPENSES $ 6,030 $ 1,326 $ 380 $ 7,994 $ 1,822 $ 921 $ 14
34
</TABLE>
<PAGE>
<TABLE>
ANNUAL REPORT OF: Consolidated Natural Gas Service Company, Inc.
For the Year Ended December 31, 1999
(In Thousands)
SCHEDULE XVII - SCHEDULE OF EXPENSE DISTRIBUTION
BY
DEPARTMENT OR SERVICE FUNCTION
<CAPTION>
Business &
Internal Human Employee Operations
Description of Items Auditing Resources Benefits Treasurer's Tax Services
<S> <C> <C> <C> <C> <C> <C>
912-13 Marketing and Advertising $ - $ - $ - $ - $ - $ -
920 Salaries and Wages 1,879 2,998 2,025 7,696 4,860 172
921 Office Supplies and Expenses 150 389 633 272 80 1
922 Administrative Expense
Transferred Credit - - - - - -
923 Outside Services Employed 8 339 7 91 165 -
924 Property Insurance - - - 6 - -
925 Injuries and Damages - - - - - -
926 Employee Pensions and Benefits - - 6,068 2,146 1,671 -
928 Regulatory Commission Expense - - - - - -
930.1 General Advertising Expense - - - - - -
930.2 Miscellaneous General Expenses - - - 5 - -
931 Rents 182 236 243 265 156 8
932 Maintenance of Structures
and Equipment 7 1 3 6 1 -
403 Depreciation and
Amortization Expense 96 121 125 618 74 3
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 - - - - - -
426.1 Donations - - - - - -
426.5 Other Deductions - - - - - -
427 Interest on Long-Term Debt - - - - - -
430 Interest on Debt to
Associate Companies - - - - - -
431 Other Interest Expense - - - - - -
TOTAL EXPENSES $ 2,322 $ 4,084 $ 9,104 $ 11,105 $ 7,007 $ 184
35
</TABLE>
<PAGE>
<TABLE>
ANNUAL REPORT OF: Consolidated Natural Gas Service Company, Inc.
For the Year Ended December 31, 1999
(In Thousands)
SCHEDULE XVII - SCHEDULE OF EXPENSE DISTRIBUTION
BY
DEPARTMENT OR SERVICE FUNCTION
<CAPTION>
System I/T Project
Investor Asset New York Services Monty Trainnng & Planning &
Description of Items Relations Management Office Staff Development Development
<S> <C> <C> <C> <C> <C> <C> <C>
912-13 Marketing and Advertising $ - $ - $ - $ - $ - $ - $ -
920 Salaries and Wages 1,266 7 - 5,455 700 434 955
921 Office Supplies and Expenses 42 - - 246 378 442 115
922 Administrative Expense
Transferred Credit - - - - - - -
923 Outside Services Employed 3 - - 220 3 3 -
924 Property Insurance - - - - - - -
925 Injuries and Damages - - - - - - -
926 Employee Pensions and Benefits - - - 1,399 - - -
928 Regulatory Commission Expense - - - - - - -
930.1 General Advertising Expense - - - - - - -
930.2 Miscellaneous General Expenses 85 - - - - - -
931 Rents 54 1 99 167 130 54 113
932 Maintenance of Structures
and Equipment - - 25 2 1 - -
403 Depreciation and
Amortization Expense 26 - - 73 62 26 56
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 - - - - - - -
426.1 Donations - - - - - - -
426.5 Other Deductions - - - - - - -
427 Interest on Long-Term Debt - - - - - - -
430 Interest on Debt to
Associate Companies - - - - - - -
431 Other Interest Expense - - - - - - -
TOTAL EXPENSES $ 1,476 $ 8 $ 124 $ 7,562 $ 1,274 $ 959 $ 1,239
36
</TABLE>
<PAGE>
<TABLE>
ANNUAL REPORT OF: Consolidated Natural Gas Service Company, Inc.
For the Year Ended December 31, 1999
(In Thousands)
SCHEDULE XVII - SCHEDULE OF EXPENSE DISTRIBUTION
BY
DEPARTMENT OR SERVICE FUNCTION
<CAPTION>
Data Secutity/
Description of Items Information Purchasing Facility Network Center Operations System
Services Services Services Operations Support Admin.
<S> <C> <C> <C> <C> <C> <C> <C>
912-13 Marketing and Advertising $ - $ - $ - $ - $ - $ - $ -
920 Salaries and Wages 346 1,957 1,422 1,133 2,313 644 675
921 Office Supplies and Expenses 85 385 58 2,782 4,097 124 1,868
922 Administrative Expense
Transferred Credit - - - - - - -
923 Outside Services Employed - 63 68 1,176 - - -
924 Property Insurance - - - - - - -
925 Injuries and Damages - - - - - - -
926 Employee Pensions and Benefits - - - - - - -
928 Regulatory Commission Expense - - - - - - -
930.1 General Advertising Expense - - - - - - -
930.2 Miscellaneous General Expenses - 12 - 1 - - -
931 Rents 31 131 121 362 221 63 37
932 Maintenance of Structures
and Equipment - - 198 265 1 - 1
403 Depreciation and
Amortization Expense 25 64 52 162 1,244 53 26
408 Taxes Other Than Income Taxes 1 - - - 95 - -
409 Income Taxes - - - - - - -
410 Provision for Deferred
Income Taxes - - - - - - -
411 Provision for Deferred
Income Taxes - Credit - - - - - - -
411.5 Investment Tax Credit - - - - - - -
426.1 Donations - - - - - - -
426.5 Other Deductions - - - - - - -
427 Interest on Long-Term Debt - - - - - - -
430 Interest on Debt to
Associate Companies - - - - - - -
431 Other Interest Expense - - - - - - -
TOTAL EXPENSES $ 488 $ 2,612 $ 1,919 $ 5,881 $ 7,971 $ 884 $ 2,607
37
</TABLE>
<PAGE>
<TABLE>
ANNUAL REPORT OF: Consolidated Natural Gas Service Company, Inc.
For the Year Ended December 31, 1999
(In Thousands)
SCHEDULE XVII - SCHEDULE OF EXPENSE DISTRIBUTION
BY
DEPARTMENT OR SERVICE FUNCTION
<CAPTION>
Tele- Retail LDC
Description of Items commun- Company CNGP Shared EOG PNG
ications IT IT Systems IT IT
<S> <C> <C> <C> <C> <C> <C>
912-13 Marketing and Advertising $ - $ - $ - $ - $ - $ -
920 Salaries and Wages 1,357 917 1,328 1,100 465 1,097
921 Office Supplies and Expenses 154 507 1,112 424 1,057 762
922 Administrative Expense
Transferred Credit - - - - - -
923 Outside Services Employed 3 145 1,094 354 1,304 680
924 Property Insurance - - - - - -
925 Injuries and Damages - - - - - -
926 Employee Pensions and Benefits - - - - - -
928 Regulatory Commission Expense - - - - - -
930.1 General Advertising Expense - - - - - -
930.2 Miscellaneous General Expenses 60 - - - - -
931 Rents 51 - - 7 - -
932 Maintenance of Structures
and Equipment 21 - 6 2 - -
403 Depreciation and
Amortization Expense 22 9 6 - 1 1
408 Taxes Other Than Income Taxes - - - - - 2
409 Income Taxes - - - - - -
410 Provision for Deferred
Income Taxes - - - - - -
411 Provision for Deferred
Income Taxes - Credit - - - - - -
411.5 Investment Tax Credit - - - - - -
426.1 Donations - - - - - -
426.5 Other Deductions - - - - - -
427 Interest on Long-Term Debt - - - - - -
430 Interest on Debt to
Associate Companies - - - - - -
431 Other Interest Expense - - - - - -
TOTAL EXPENSES $ 1,668 $ 1,578 $ 3,546 $ 1,887 $ 2,827 $ 2,542
38
</TABLE>
<PAGE>
<TABLE>
ANNUAL REPORT OF: Consolidated Natural Gas Service Company, Inc.
For the Year Ended December 31, 1999
(In Thousands)
SCHEDULE XVII - SCHEDULE OF EXPENSE DISTRIBUTION
BY
DEPARTMENT OR SERVICE FUNCTION
<CAPTION>
Hope VNG Corporate SCADA Year
Description of Items IT IT IT CAMP CFS /GM 2000
<S> <C> <C> <C> <C> <C> <C> <C>
912-13 Marketing and Advertising $ - $ - $ - $ - $ - $ - $ -
920 Salaries and Wages 47 407 828 1,118 1,321 1,084 646
921 Office Supplies and Expenses 3 169 349 316 1,929 521 252
922 Administrative Expense
Transferred Credit - - - - - - -
923 Outside Services Employed 102 335 - (337) 128 5 5
924 Property Insurance - - - - - - -
925 Injuries and Damages - - - - - - -
926 Employee Pensions and Benefits - - - - - - -
928 Regulatory Commission Expense - - - - - - -
930.1 General Advertising Expense - - - - - - -
930.2 Miscellaneous General Expenses - - - - - - -
931 Rents - - 113 5 202 - 175
932 Maintenance of Structures
and Equipment - - 1 - 98 - 2
403 Depreciation and
Amortization Expense 1 - 68 5 - - 83
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 - - - - - - -
426.1 Donations - - - - - - -
426.5 Other Deductions - - - - - - -
427 Interest on Long-Term Debt - - - - - - -
430 Interest on Debt to
Associate Companies - - - - - - -
431 Other Interest Expense - - - - - - -
TOTAL EXPENSES $ 153 $ 911 $ 1,359 $ 1,107 $ 3,678 $ 1,610 $ 1,163
39
</TABLE>
<PAGE>
<TABLE>
ANNUAL REPORT OF: Consolidated Natural Gas Service Company, Inc.
For the Year Ended December 31, 1999
(In Thousands)
SCHEDULE XVII - SCHEDULE OF EXPENSE DISTRIBUTION
BY
DEPARTMENT OR SERVICE FUNCTION
<CAPTION>
Trans- CNGT Cash Mgmt.
portation CNGT Engineering Accounts General & Customer
Description of Items /GSS IT & Field Ops. Payable Services Payroll Payment
<S> <C> <C> <C> <C> <C> <C> <C>
912-13 Marketing and Advertising $ - $ - $ - $ - $ - $ - $ -
920 Salaries and Wages 1,023 655 1,261 484 512 686 991
921 Office Supplies and Expenses 417 1,592 137 42 841 85 79
922 Administrative Expense
Transferred Credit - - - - - - -
923 Outside Services Employed 70 1,118 12 - - - -
924 Property Insurance - - - - - - -
925 Injuries and Damages - - - - - - -
926 Employee Pensions and Benefits - - - - - - -
928 Regulatory Commission Expense - - - - - - -
930.1 General Advertising Expense - - - - - - -
930.2 Miscellaneous General Expenses - - - - - - -
931 Rents 1 - 68 139 580 155 202
932 Maintenance of Structures
and Equipment 21 - - 1 3 1 1
403 Depreciation and
Amortization Expense - - 8 64 267 77 96
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 - - - - - - -
426.1 Donations - - - - - - -
426.5 Other Deductions - - - - - - -
427 Interest on Long-Term Debt - - - - - - -
430 Interest on Debt to
Associate Companies - - - - - - -
431 Other Interest Expense - - - - - - -
TOTAL EXPENSES $ 1,532 $ 3,365 $ 1,486 $ 730 $ 2,203 $ 1,004 $ 1,369
40
</TABLE>
<PAGE>
<TABLE>
ANNUAL REPORT OF: Consolidated Natural Gas Service Company, Inc.
For the Year Ended December 31, 1999
(In Thousands)
SCHEDULE XVII - SCHEDULE OF EXPENSE DISTRIBUTION
BY
DEPARTMENT OR SERVICE FUNCTION
<CAPTION>
Large Market
System Marketing Mass Customer Technical Planning &
Description of Items Fleet Staff Marketing Market Marketing Analysis
<S> <C> <C> <C> <C> <C> <C>
912-13 Marketing and Advertising $ - $ 7 $ 1,819 $ 55 $ 65 $ 10
920 Salaries and Wages 263 863 690 701 338 350
921 Office Supplies and Expenses 206 273 103 308 288 726
922 Administrative Expense
Transferred Credit - - - - - -
923 Outside Services Employed 19 2 - (4) (35) 16
924 Property Insurance - - - - - -
925 Injuries and Damages - - - - - -
926 Employee Pensions and Benefits - - - - - -
928 Regulatory Commission Expense - - - - - -
930.1 General Advertising Expense - - - - - -
930.2 Miscellaneous General Expenses - 1 - 27 51 2
931 Rents 36 303 - - 1 -
932 Maintenance of Structures
and Equipment 1 - - - - -
403 Depreciation and
Amortization Expense 37 251 - - - -
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 - - - - - -
426.1 Donations - - - - - -
426.5 Other Deductions - - - - - -
427 Interest on Long-Term Debt - - - - - -
430 Interest on Debt to
Associate Companies - - - - - -
431 Other Interest Expense - - - - - -
TOTAL EXPENSES $ 562 $ 1,700 $ 2,612 $ 1,087 $ 708 $ 1,104
41
</TABLE>
<PAGE>
<TABLE>
ANNUAL REPORT OF: Consolidated Natural Gas Service Company, Inc.
For the Year Ended December 31, 1999
(In Thousands)
SCHEDULE XVII - SCHEDULE OF EXPENSE DISTRIBUTION
BY
DEPARTMENT OR SERVICE FUNCTION
<CAPTION>
Regulated RBL RBL RBL RBL
Marketing Bus. Sup. Leadership Commercial Asset Tech. &
Description of Items Commun. Group Team Operations Operations Implement.
<S> <C> <C> <C> <C> <C> <C>
912-13 Marketing and Advertising $ 2,159 $ - $ - $ - $ - $ -
920 Salaries and Wages 484 4,001 173 6,401 8,897 5,341
921 Office Supplies and Expenses 26 36 90 462 315 270
922 Administrative Expense
Transferred Credit - - - - - -
923 Outside Services Employed 12 5 193 430 10 75
924 Property Insurance - - - - - -
925 Injuries and Damages - - - - - -
926 Employee Pensions and Benefits - - - - 2,300 3,526
928 Regulatory Commission Expense - - - - - -
930.1 General Advertising Expense - - - - - -
930.2 Miscellaneous General Expenses - - - - 1 -
931 Rents - 98 43 3 11 1
932 Maintenance of Structures
and Equipment - - 1 9 10 2
403 Depreciation and
Amortization Expense - 44 5 17 17 18
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 - - - - - -
426.1 Donations - - - - - -
426.5 Other Deductions - - - - - -
427 Interest on Long-Term Debt - - - - - -
430 Interest on Debt to
Associate Companies - - - - - -
431 Other Interest Expense - - - - - -
TOTAL EXPENSES $ 2,681 $ 4,184 $ 505 $ 7,322 $ 11,561 $ 9,233
42
</TABLE>
<PAGE>
<TABLE>
ANNUAL REPORT OF: Consolidated Natural Gas Service Company, Inc.
For the Year Ended December 31, 1999
(In Thousands)
SCHEDULE XVII - SCHEDULE OF EXPENSE DISTRIBUTION
BY
DEPARTMENT OR SERVICE FUNCTION
<CAPTION>
RBL Engineering Engineering Engineering
Organization Materials Engineering Codes and Environ- Technical
Description of Items & Fin Perf. Management Staff Standards mental Support
<S> <C> <C> <C> <C> <C> <C>
912-13 Marketing and Advertising $ - $ - $ - $ - $ - $ -
920 Salaries and Wages 3,437 305 862 494 1,386 571
921 Office Supplies and Expenses 143 2 83 47 105 74
922 Administrative Expense
Transferred Credit - - - - - -
923 Outside Services Employed 7 - 1 3 8 8
924 Property Insurance - - - - - -
925 Injuries and Damages - - - - - -
926 Employee Pensions and Benefits - - - - - -
928 Regulatory Commission Expense - - - - - -
930.1 General Advertising Expense - - - - - -
930.2 Miscellaneous General Expenses - 17 5 2 14 11
931 Rents 13 12 60 44 67 42
932 Maintenance of Structures
and Equipment 1 - - - - -
403 Depreciation and
Amortization Expense 17 5 30 21 27 25
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 - - - - - -
426.1 Donations - - - - - -
426.5 Other Deductions - - - - - -
427 Interest on Long-Term Debt - - - - - -
430 Interest on Debt to
Associate Companies - - - - - -
431 Other Interest Expense - - - - - -
TOTAL EXPENSES $ 3,618 $ 341 $ 1,041 $ 611 $ 1,607 $ 731
43
</TABLE>
<PAGE>
<TABLE>
ANNUAL REPORT OF: Consolidated Natural Gas Service Company, Inc.
For the Year Ended December 31, 1999
(In Thousands)
SCHEDULE XVII - SCHEDULE OF EXPENSE DISTRIBUTION
BY
DEPARTMENT OR SERVICE FUNCTION
<CAPTION>
Gas Supply Gas Supply Gas Supply Gas
Area Mkt. Area Gas Supply Reg. Support Supply
Description of Items Acquisition Acquisition Planning & Accounting Staff
<S> <C> <C> <C> <C> <C>
912-13 Marketing and Advertising $ - $ - $ - $ - $ -
920 Salaries and Wages 434 549 863 444 1,527
921 Office Supplies and Expenses 50 42 7 112 417
922 Administrative Expense
Transferred Credit - - 83 - -
923 Outside Services Employed - 3 - (60) 8
924 Property Insurance - - - - -
925 Injuries and Damages - - - - -
926 Employee Pensions and Benefits - - - - -
928 Regulatory Commission Expense - - - - -
930.1 General Advertising Expense - - - - -
930.2 Miscellaneous General Expenses - 6 - - -
931 Rents - - - - 154
932 Maintenance of Structures
and Equipment - - - - -
403 Depreciation and
Amortization Expense - - 7 - 192
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 - - - - -
426.1 Donations - - - - -
426.5 Other Deductions - - - - -
427 Interest on Long-Term Debt - - - - -
430 Interest on Debt to
Associate Companies - - - - -
431 Other Interest Expense - - - - -
TOTAL EXPENSES $ 484 $ 600 $ 960 $ 496 $ 2,298
44
</TABLE>
<PAGE>
ANNUAL REPORT OF: Consolidated Natural Gas Service Company, Inc.
For the Year Ended December 31, 1999
(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 Company Associates Associates Year
Regular Services
Executive Office $25,044 $ 893 $24,151 $ - 8
Corporate Communications 1,262 30 1,232 - 7
Legal - Washington 2,710 4 2,706 - 4
Secretary's 478 31 447 - 5
Legal - Pittsburgh 5,961 589 5,372 - 15
External Affairs and
Policy Development 4,414 11 4,403 - 11
Corporate Affairs 896 - 896 - 3
Common Financial Systems 55 - 55 - -
Controller's 5,672 196 5,476 - 14
Corp. General Accounting 1,424 68 1,356 - 19
Regulated Fixed Assets 702 - 702 - 10
Risk Measurement & Control 10 - 10 - -
Internal Auditing 1,879 25 1,854 - 14
Human Resources 2,998 7 2,991 - 12
Employee Benefits 2,025 - 2,025 - 9
Treasurer's 7,696 505 7,191 - 10
Tax 4,860 161 4,699 - 9
Business and Operations
Services 172 1 171 - -
Investor Relations 1,266 17 1,249 - 2
Asset Management 7 2 5 - -
SUBTOTAL $69,531 $ 2,540 $66,991 $ - 152
System Services Group
(SSG) (Page 46) 33,624 56 33,568 - 391
Regulated Business Support
Group (RBSG) (Page 48) 39,111 31 39,080 - 122
TOTAL $142,266 $ 2,627 $139,639 $ - 665
45
<PAGE>
ANNUAL REPORT OF: Consolidated Natural Gas Service Company, Inc.
For the Year Ended December 31, 1999
(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 Company Associates Associates Year
System Services Group (SSG)
System Services Staff $ 5,455 $ 22 $ 5,433 $ - 12
Monty 700 - 700 - 10
I/T Tranning & Development 434 1 433 - 9
Project & Financial Planning 955 - 955 - 12
Information Services 346 - 346 - -
Purchasing 1,957 1 1,956 - 22
Facility Services 1,422 2 1,420 - 10
Network Services 1,133 - 1,133 - 10
Data Center Operations 2,313 - 2,313 - 43
Security / Operations
Support 644 - 644 - 9
System Administration 675 - 675 - 11
Telecommunications 1,357 - 1,357 - 20
Retail Company -
Information Technology 917 - 917 - 4
CNGP - Information
Technology 1,328 - 1,328 - 17
LDC Shared Systems 1,100 - 1,100 - 8
Information Technology:
EOG 465 - 465 - 4
PNG 1,097 - 1,097 - 20
Hope 47 - 47 - -
VNG 407 - 407 - 4
Corporate 828 16 812 - 8
CAMP 1,118 - 1,118 - 24
CFS 1,321 2 1,319 - 15
SCADA/GM 1,084 - 1,084 - 14
Year 2000 646 1 645 - 6
Transportation/GSS 1,023 - 1,023 - 15
CNGT - Information -
Technology 655 - 655 - 8
CNGT - Engineering and -
Field Operations 1,261 - 1,261 - 15
Processing Services
Group (See page 47) 2,936 11 2,925 - 61
SUBTOTAL SSG $33,624 $ 56 $33,568 $ - 391
46
<PAGE>
ANNUAL REPORT OF: Consolidated Natural Gas Service Company, Inc.
For the Year Ended December 31, 1999
(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 Company Associates Associates Year
System Services Group (SSG)
(Continued)
Processing Services Group (PSG)
Accounts Payable $ 484 $ - $ 484 - 12
General Services 512 - 512 - 9
Payroll 686 - 686 - 15
Cash Management and -
Customer Payment 991 11 980 - 22
System Fleet 263 - 263 - 3
SUBTOTAL PSG $ 2,936 $ 11 $ 2,925 $ - 61
47
<PAGE>
ANNUAL REPORT OF: Consolidated Natural Gas Service Company, Inc.
For the Year Ended December 31, 1999
(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 Company Associates Associates Year
Regulated Business Support Group (RBSG)
Marketing Staff $ 863 $ - $ 863 $ - 4
Mass Marketing 690 - 690 - 6
Large Customer Market 701 - 701 - 7
Technical Marketing 338 - 338 - 4
Market Planning and
Analysis 350 350 - 5
Marketing Communications 484 - 484 - 4
Regulated Business Support
Group 4,001 - 4,001 - 2
Regulated Bususiness
Leadership Team 173 - 173 - -
RBL Commercial Operations 6,401 1 6,400 - 8
RBL Asset Operations 8,897 - 8,897 - 6
RBL Tech.& Implementaion 5,341 30 5,311 - 7
RBL Organization &
Financial Control 3,437 - 3,437 - 9
Materials Management 305 - 305 - 3
Engineering Staff 862 - 862 - 6
Engineering Codes and
Standards 494 - 494 - 3
Engineering Environmental 1,386 - 1,386 - 14
Engineering Technical
Support 571 571 - 6
Gas Supply Area Acquisition 434 - 434 - 4
Gas Supply Market Area
Acquisition 549 - 549 - 6
Gas Supply Planning 863 - 863 - 3
Gas Supply Regulatory
Support and Accounting 444 - 444 - 10
Gas Supply Staff 1,527 - 1,527 - 5
SUBTOTAL RBSG $39,111 $ 31 $39,080 $ - 122
48
<PAGE>
ANNUAL REPORT OF: Consolidated Natural Gas Service Company, Inc.
For the Year Ended December 31, 1999
(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 $100,000, 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 Description Associate Amount
Legal Services:
Cahill, Gordon & Reindel Legal Servcies NA $ 296
Buchanan Ingersoll, P.C. Legal Services NA 160
Mezzullo & McCandish Legal Servcies NA 107
Miscellaneous (14 items
less than $100,000) - NA 372
TOTAL $ 935
Tax Services:
Ivins, Phillips & Barker Tax Consultants NA $ 143
Miscellaneous (One item
less than $100,000) 7
TOTAL $ 150
Auditing Services:
Miscellaneous (1 item
less than $100,000) Audit Services NA $ 16
TOTAL $ 16
49
<PAGE>
ANNUAL REPORT OF: Consolidated Natural Gas Service Company, Inc.
For the Year Ended December 31, 1999
(In Thousands)
OUTSIDE SERVICES EMPLOYED - ACCOUNT 923 (Concluded)
Relationship
"A"=Associate
"NA"=Non
From Whom Purchased Description Associate Amount
Other Special Services:
Wang Laboratories, Inc. Computer Consultants/ NA $ 5,214
Services
Oracle Corporation Computer Consultants/ NA 515
Services
Lukens Consulting Group Computer Consultants/ NA 464
Services
Hewitt Associates, LLC Human Resources, NA 253
Compensation & Benefits
Ascent Tempories, Inc. Computer Consultants/ NA 242
Temporary Services
Miz Data Systems, Inc. Computer Consultants/ NA 179
Temporary Services
PricewaterhouseCoopers Computer Consultants/ NA 145
Services
Programmer Resources, Inc. Computer Consultants/ NA 104
Services
Associate Services (3 itmes
less than $100,000) - A 44
IBM Corporation Computer Consultants/ NA (327)
Services
Miscellaneous (168 items
less than $100,000) - NA 1,632
TOTAL $ 8,465
GRAND TOTAL $ 9,566
50
<PAGE>
ANNUAL REPORT OF: Consolidated Natural Gas Service Company, Inc.
For the Year Ended December 31, 1999
(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
Change of Control - Severance and Pensions $ 27,332
Employee Benefit Outsourcing 5,815
Medical Benefit & Insurance Plans 2,890
Thrift Plans 2,366
Retirement Benefits 1,704
ERISA Contributions 856
Employee Moving & Relocation 150
Education Refunds 125
Financial Planning 86
Employee Stock Ownership Plan (ESOP) 77
Long Term Disability Insurance 52
Employee Appliance Purchase Plan 44
Other 293
Pension Expense (874)
Employee Contributions (540)
TOTAL $ 40,376
51
<PAGE>
ANNUAL REPORT OF: Consolidated Natural Gas Service Company, Inc.
For the Year Ended December 31, 1999
(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
$ -
TOTAL $ -
52
<PAGE>
ANNUAL REPORT OF: Consolidated Natural Gas Service Company, Inc.
For the Year Ended December 31, 1999
(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 $ 309
Transfer Agent Expenses 365
Other Miscellaneous Expenses 327
Annual Meeting Expenses 167
Other Shareholder and SEC Reports 85
Debenture Trustee Expenses 57
Stock Listing Fees 52
Security Analyst Meeting Expenses 16
Other Shareholder Expenses 19
TOTAL $ 1,397
53
<<PAGE>
ANNUAL REPORT OF: Consolidated Natural Gas Service Company, Inc.
For the Year Ended December 31, 1999
(In Thousands)
RENT - 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 $ 6,929
Office Equipment Rental 301
Automobile Leasing 264
Garage Rents 123
Apartment Rents 75
Miscellaneous Rents 55
TOTAL $ 7,747
54
<PAGE>
ANNUAL REPORT OF: Consolidated Natural Gas Service Company, Inc.
For the Year Ended December 31, 1999
(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 $ 188
Real & Personal Property Taxes 102
Other Miscellaneous Taxes 111
SUBTOTAL $ 401
(B) U. S. Government Taxes
Federal Social Security Tax $ 5,507
Federal Unemployment Tax 47
SUBTOTAL $ 5,554
TOTAL $ 5,955
55
<PAGE>
ANNUAL REPORT OF: Consolidated Natural Gas Service Company, Inc.
For the Year Ended December 31, 1999
(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
TOTAL $ -
56
<PAGE>
ANNUAL REPORT OF: Consolidated Natural Gas Service Company, Inc.
For the Year Ended December 31, 1999
(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
Lobbying Expenses Various $ 146
Miscellaneous 12
TOTAL $ 158
57
<PAGE>
ANNUAL REPORT OF: Consolidated Natural Gas Service Company, Inc.
For the Year Ended December 31, 1999
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 22-28.
58
<PAGE>
ANNUAL REPORT OF: Consolidated Natural Gas Service Company, Inc.
ORGANIZATION CHART - 1999
See Exhibit I filed herewith.
59
<PAGE>
ANNUAL REPORT OF: Consolidated Natural Gas Service Company, Inc.
METHODS OF ALLOCATION
See Exhibit II filed herewith.
60
<PAGE>
ANNUAL REPORT OF: Consolidated Natural Gas Service Company, Inc.
(In Thousands)
For The Year Ended December 31, 1999
ANNUAL STATEMENT OF COMPENSATION FOR USE OF CAPITAL BILLED
(Continued)
Total Annual
Indirect Costs Allocation
Company Billed Percent of Interest
Consolidated Natural Gas
Company $ 1,718 4% $ 80
The East Ohio Gas Company 16,875 34% 787
The Peoples Natural Gas
Company 6,570 13% 307
CNG Transmission Corporation 11,125 22% 519
Hope Gas, Inc. 2,462 5% 115
CNG Producing Company 5,360 11% 250
CNG Power Company 94 - 4
Virginia Natural Gas, Inc. 3,651 7% 170
CNG Field Services Company 159 - 8
CNG Power Services Corporation 42 - 2
CNG Products & Services, Inc. 88 - 4
CNG International Corporation 197 1% 9
CNG Retail Services Corporation 1,250 3% 58
CNG Main Pass Oil Gathering
Corporation 15 - 1
CNG Mina Pass Gas Gathering
Corporation 4 - -
TOTAL $ 49,610 100% $ 2,314
61
<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: March 30, 2000
62
CONSOLIDATED NATURAL GAS SERVICE COMPANY, INC. Exhibit I
Organization Chart
Board of Directors
Chairman and
Chief Executive Officer
Senior Vice President Non-Regulated Business
and Chief Financial Officer
Vice President,
Accounting and Financial Control
Controller
Vice President,Taxes
Vice President and Treasurer
Vice President, System Services Group
Vice President, Corporate Planning
Vice President, Investor Relations
Vice President, Regulated Energy Management
Senior Vice President and General Counsel
Vice President and
Assistant General Counsel-Washington, DC
Vice President,
External Affairs & Policy Development
Vice President,
Corporate Human Resources
Corporate Secretary
Effective December 31, 1999
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 Group 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 Group A employees, and
(ii) all other expenses of the department.
(c) There will be attributed to each dollar of a Group 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 Group A salaries and wages of that department.
(d) Group 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 Group 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 Group 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 Group 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
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.
Corporate Planning:
- Capital Budgets Total investment in utility plant (as defined
by FERC and State Commissions) booked at
preceding December 31st.
- - Operating & Total operating expenses, excluding purchase gas
Maintenance Budgets expense, other purchased products and royalties,
for the preceding year ended December 31st.
3
<PAGE>
CONSOLIDATED NATURAL GAS SERVICE COMPANY, INC. Exhibit II
(Continued)
Methods of Allocation
Service Department
or Function Basis of Allocation
Business and Operations Throughput gas volumes for CNG Affiliates for
Services the preceding year ended December 31st.
Risk Management Insurance premiums for the preceding year
ended December 31st.
Rates Total regulated company operating expenses, excluding
purchase gas expense, other purchased products
and royalties, for 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 for the
prior years ended December 31st.
System Services Group:
Information Technology:
LDC Computer Applications Number of residential and commercial
customers at the end of the preceding
year ended December 31st.
Other Computer Number of users or usage of specific computer
Applications system at the end of the preceding year ended
December 31st.
Network Computer Number of network devises at the end of the
Applications preceding year ended December 31st.
Telecommunication Number of telecommunication units at the end
Applications of the preceding year ended December 31st.
Facility Services: Square footage of office space as of the
Building Services preceding year ended December 31st.
4
<PAGE>
CONSOLIDATED NATURAL GAS SERVICE COMPANY, INC. Exhibit II
(Continued)
Methods of Allocation
Service Department
or Function Basis of Allocation
Processing Services:
Payroll Number of employees at December 31st.
Cash Management & Number of customer payments processed during
Customer Payment the preceding year ended December 31st.
Processing
Accounts Payable Number of accounts payable documents processed
during the preceding year ended December 31st.
Fleet Administration Number of vehicles at December 31st.
Purchasing Dollar value of national contract purchases for
the preceding year ended December 31st.
Regulated Business Support Group:
Engineering Services:
General Services Pipeline footage as of the preceding year
ended December 31st.
Transportation and Total investment in storage and transmission
Storage Services plant as of the preceding year ended
December 31st
Gas Supply: Gas volumes purchased for each affiliate for the
preceding year ended December 31st.
LDC Marketing:
Shared Projects Annual marketing plan budget for the current
year of allocation.
Other Indirect Costs Total marketing direct and shared project costs
billed to each affiliate for the preceding year
ended December 31st.
Materials Management Material inventory assets as of the preceding
ended December 31st.
System Accounting:
Financial Accounting and Number of journal entries processed, reports
Reporting generated and account code combinations for the
preceding year ended December 31st.
Regulated Fixed Assets Regulated companies fixed assets added, retired
or transferred during the preceding year ended
December 31st.
5
<PAGE>
CONSOLIDATED NATURAL GAS SERVICE COMPANY, INC. Exhibit II
(Continued)
Methods of Allocation
(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 Total operating expenses, excluding purchased
all System Companies gas expense, other purchased products and
except Service royalties, for the preceding year ended
Company) December 31st.
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.
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.
6
<TABLE> <S> <C>
<ARTICLE> OPUR2
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> DEC-31-1999
<BOOK-VALUE> PER-BOOK
<NET-SERVICE-COMPANY-PROPERTY> 24,218
<TOTAL-INVESTMENTS> 0
<TOTAL-CURRENT-ASSETS> 698,263
<TOTAL-DEFERRED-DEBITS> 21,887
<OTHER-ASSETS-AND-DEBITS> 0
<TOTAL-ASSETS-AND-DEBITS> 744,368
<TOTAL-PROPRIETARY-CAPITAL> 10
<TOTAL-LONG-TERM-DEBT> 23,432
<NOTES-PAYABLE> 0
<NOTES-PAYABLE-ASSOCIATE-COMP> 646,801
<OTHER-CURR-AND-ACCRUED-LIAB> 43,162
<TOTAL-DEFERRED-CREDITS> 48,728
<DEFERRED-INCOME-TAX> 5,677
<TOT-LIABIL-AND-PROPRIET-CAP> 744,368
<SERVICES-ASSOCIATE-COMPANIES> 257,425
<SERVICES-NON-ASSOCIATE-COMP> 0
<MISC-INCOME-OR-LOSS> 14
<TOTAL-INCOME> 257,439
<SALARIES-AND-WAGES> 148,551
<EMPLOYEE-PENSION-AND-BENEFIT> 29,921
<OTHER-EXPENSES> 78,967
<TOTAL-EXPENSES> 257,439
<NET-INCOME> 0
<TOTAL-EXPENSES-DIRECT-COST> 207,829
<TOTAL-EXPENSES-INDIRECT-COST> 49,610
<TOT-EXP-DIRECT-AND-INDIRECT> 257,439
<PERSONNEL-END-OF-YEAR> 665
</TABLE>
