UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1995
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM ________ TO ________
COMMISSION FILE NUMBER 1-3551
EQUITABLE RESOURCES, INC.
(Exact name of registrant as specified in its charter)
PENNSYLVANIA 25-0464690
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
420 BOULEVARD OF THE ALLIES 15219
PITTSBURGH, PENNSYLVANIA (Zip Code)
(Address of principal executive offices)
Registrant's telephone number, including area code: (412) 261-3000
Securities registered pursuant to Section 12(b) of the Act:
NAME OF EACH EXCHANGE
TITLE OF EACH CLASS ON WHICH REGISTERED
Common Stock, no par value New York Stock Exchange
Philadelphia Stock
Exchange
7 1/2% Debentures due July 1, 1999 New York Stock Exchange
9 1/2% Convertible Subordinated
Debentures due 2006 New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act:
None
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter periods
that the registrant was required to file such reports), and (2) has
been subject to such filing requirements for the past 90 days.
Yes X No
Indicate by check mark if disclosure of delinquent filers pursuant
to Item 405 of Regulation S-K is not contained herein, and will not
be contained, to the best of registrant's knowledge, in definitive
proxy or information statements incorporated by reference in Part III of
this Form 10-K or any amendment to this Form 10-K. [X]
The aggregate market value of voting stock held by nonaffiliates of the
registrant as of February 29, 1996: $1,002,415,784
The number of shares outstanding of the issuer's classes of common
stock as of February 29, 1996: 35,018,892
DOCUMENTS INCORPORATED BY REFERENCE
Part III, a portion of Item 10 and Items 11, 12, and 13 are incorporated by
reference to the Proxy Statement for the Annual Meeting of Stockholders on May
23, 1996, to be filed with the Commission within 120 days after the close of the
Company's fiscal year ended December 31, 1995.
Index to Exhibits - Page 60
<PAGE>
TABLE OF CONTENTS
PART I PAGE
Item 1 Business 1
Item 2 Properties 9
Item 3 Legal Proceedings 11
Item 4 Submission of Matters to a Vote of Security Holders 11
Item 10 Directors and Executive Officers of the Registrant 12
PART II
Item 5 Market for Registrant's Common Equity and Related
Stockholder Matters 14
Item 6 Selected Financial Data 15
Item 7 Management's Discussion and Analysis of Financial
Condition and Results of Operations 16
Item 8 Financial Statements and Supplementary Data 25
Item 9 Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure 55
PART III
Item 10 Directors and Executive Officers of the Registrant 56
Item 11 Executive Compensation 56
Item 12 Security Ownership of Certain Beneficial Owners
and Management 56
Item 13 Certain Relationships and Related Transactions 56
PART IV
Item 14 Exhibits, Financial Statement Schedules and Reports
on Form 8-K 57
Index to Financial Statements and Financial Statement
Schedules Covered by Report of Independent Auditors 58
Index to Exhibits 60
Signatures 64
<PAGE>
PART I
ITEM 1. BUSINESS
(a) Equitable Resources, Inc. ("Equitable" or the "Company") was formed
under the laws of Pennsylvania by the consolidation and merger in 1925 of two
constituent companies, the older of which was organized in 1888. The Company
directly, or through other wholly-owned subsidiaries, owns all the capital stock
of the following principal operating subsidiaries: Equitable Resources Energy
Company ("Equitable Resources Energy"), Kentucky West Virginia Gas Company, LLC
("Kentucky West"), Equitrans, LP ("Equitrans"), Nora Transmission Company
("Nora"), Equitable Resources Marketing Company ("ERMCO"), Andex Energy, Inc.
("Andex"), Louisiana Intrastate Gas Company LLC ("LIG"), Equitable Storage
Company ("Equitable Storage"), and Independent Energy Corporation ("IEC"). The
Company and all such subsidiaries are referred to as the "Company and its
Subsidiaries" or the "Companies." The Companies operate in the Appalachian area
and, to a lesser extent, in the Rocky Mountain, Southwest, Louisiana and Gulf
Coast offshore areas, the Canadian Rockies and have interests in Colombia, South
America. The Companies engage primarily in the exploration for, development,
production, purchase, transmission, storage, distribution and marketing of
natural gas, the extraction of natural gas liquids, the exploration for,
development, production and sale of oil, contract drilling, and the marketing of
electricity and cogeneration development.
(b) The Company's business is comprised of four business segments:
exploration and production, energy marketing, natural gas distribution and
natural gas transmission. Financial information by business segment is presented
in Note N to the consolidated financial statements contained in Part II.
(b) (1) and (2) Not applicable.
(c) (1) EXPLORATION AND PRODUCTION. Exploration and production activities
are conducted by Equitable Resources Energy Company through its divisions, and
Andex. Its activities are principally in the Appalachian area where it explores
for, develops, produces and sells natural gas and oil, extracts and markets
natural gas liquids and performs contract drilling and well maintenance
services. The exploration and production segment also conducts operations in the
Rocky Mountain area including the Canadian Rockies where it explores for,
develops and produces oil, and to a lesser extent natural gas. In the Southwest
and Gulf Coast offshore areas, this segment participates in exploration and
development of gas and oil projects. The exploration and production segment also
owns an interest in two natural gas liquids plants in Texas. Andex participates
in ventures to explore for and develop oil in Colombia, South America.
<PAGE>
ITEM 1. BUSINESS (CONTINUED)
ENERGY MARKETING. Energy marketing activities are conducted by ERMCO and
its subsidiaries, and IEC. Its activities include marketing of natural gas and
electricity, extraction and sale of natural gas liquids, intrastate
transportation, cogeneration development and central facility plant operations.
ERMCO operates nationwide as a full-service natural gas marketing and supply
company providing a full range of energy services, including monthly "spot" and
longer-term contracts, peak shaving and transportation arrangements. In 1994,
ERMCO was granted a Federal Energy Regulatory Commission (FERC) certificate for
electricity wholesaling. In Louisiana, LIG provides intrastate transportation of
gas and extracts and markets natural gas liquids and Equitable Storage provides
underground gas storage services. IEC, which was acquired in July 1995, is
engaged in the development, construction, operation and ownership of private
power and cogeneration projects.
NATURAL GAS DISTRIBUTION. Natural gas distribution activities comprise the
operations of Equitable Gas Company, the Company's state-regulated local
distribution company. Equitable Gas is regulated by state public utility
commissions in Pennsylvania, West Virginia and Kentucky and is engaged in the
purchase, distribution, marketing and transportation of natural gas. The
territory served by Equitable Gas embraces principally the city of Pittsburgh
and surrounding municipalities in southwestern Pennsylvania, a few
municipalities in northern West Virginia and field line sales in eastern
Kentucky. Natural gas distribution services are provided to more than 266,000
customers located mainly in the city of Pittsburgh and its environs. Residential
and commercial sales volumes reflect annual variations which are primarily
related to weather.
NATURAL GAS TRANSMISSION. Natural gas transmission activities are conducted
by three FERC-regulated gas pipelines: Kentucky West, Equitrans, and Nora.
Activities include gas transportation, gathering, storage, and marketing
activities. Kentucky West is an open access natural gas pipeline company which
provides transportation service to Equitable Gas, the exploration and production
segment, and other industrial end-users. Marketed gas sales are to the
exploration and production segment and nonaffiliated customers. Kentucky West's
pipelines are not physically connected with those of Equitrans or Equitable Gas
and deliveries are made to Columbia Gas Transmission Corporation, a
nonaffiliate, which in turn delivers like quantities to Equitrans in West
Virginia and Pennsylvania under a Transportation and Exchange Agreement.
Equitrans has production, storage and transmission facilities in Pennsylvania
and West Virginia. Equitrans provides transportation service for Equitable Gas
Company and nonaffiliates including customers in off-system markets. Storage
services are provided for Equitable Gas Company and nine nonaffiliated
customers. Marketed gas sales are to Equitable Gas Company and nonaffiliated
customers. Nora transports the exploration and production segment's gas produced
in Virginia and Kentucky.
<PAGE>
ITEM 1. BUSINESS (CONTINUED)
(c) (1) (i) Operating revenues as a percentage of total operating revenues
for each of the four business segments during the years 1993 through 1995 are as
follows:
1995 1994 1993
---- ---- ----
Exploration and Production:
Natural gas production 6% 9% 10%
Oil 2 2 3
Natural gas liquids 1 1 2
Contract drilling 1 1 1
Other 3 - 1
--- ---- ---
Total Exploration and Production 13 13 17
--- ---- ---
Energy Marketing:
Natural gas marketing 53 51 45
Natural gas liquids 4 4 2
Transportation 1 1 1
--- ---- ---
Total Energy Marketing 58 56 48
--- ---- ---
Natural Gas Distribution:
Residential 19 19 23
Commercial 3 5 5
Industrial and utility 1 2 1
Transportation 2 2 2
--- ---- ---
Total Natural Gas Distribution 25 28 31
--- ---- ---
Natural Gas Transmission:
Marketed gas 1 1 1
Transportation 1 1 2
Storage 1 1 1
Other 1 - -
--- ---- ---
Total Natural Gas Transmission 4 3 4
--- ---- ---
Total Revenues 100% 100% 100%
=== ==== ===
See Note N to the consolidated financial statements in Part II regarding
financial information by business segment.
(c) (1) (ii)Not applicable.
(c) (1) (iii) The following pages (4, 5 and 6) summarize gas supply
and disposition, gas transportation, and sales of oil and natural gas liquids
for the years 1993 through 1995.
<PAGE>
<TABLE>
<CAPTION>
ITEM 1. BUSINESS (CONTINUED)
1995
Exploration Energy Natural Gas Natural Gas Intersegment
and Production Marketing Distribution Transmission Eliminations Consolidated
<S> <C> <C> <C> <C> <C> <C>
Gas Produced, Purchased and
Sold (MMcf):
Produced 64,984 140 2,560 67,684
--------- -------- ------- -------- -------- --------
Purchased:
Other producers 463,551 41,926 8,036 513,513
Inter-segment purchases 3,146 53,556 13,549 (70,251)
--------- -------- ------- -------- -------- --------
Total purchases 3,146 517,107 55,475 8,036 (70,251) 513,513
--------- -------- ------- -------- -------- --------
Total produced and purchased 68,130 517,107 55,615 10,596 (70,251) 581,197
Deduct:
Net increase (decrease) in gas
in storage (1,395) (276) (1,671)
Extracted natural gas liquids
(equivalent gas volumes) 1,871 6,540 8,411
System use and unaccounted for 557 1,650 5,031 (275) 6,963
--------- -------- ------- --------- -------- --------
Total 65,702 508,917 51,979 11,147 (70,251) 567,494
========= ======== ======= ======== ======== ========
Gas Sales (MMcf):
Residential 29,494 29,494
Commercial 4,494 4,494
Industrial and Utility 17,991 (10,349) 7,642
Production 64,984 (465) 64,519
Marketing 718 508,917 11,147 (59,437) 461,345
--------- -------- ------- -------- -------- --------
Total 65,702 508,917 51,979 11,147 (70,251) 567,494
========= ======== ======= ======== ======== ========
Natural Gas Transported (MMcf) 122,405 16,103 119,090 (98,398) 159,200
======== ======= ======== ======== ========
Oil Produced and Sold
(thousands of bls) 1,932 1,932
========= ========
Natural Gas Liquids Sold
(thousands of gallons) 63,047 197,940 260,987
========= ======== ========
Average Selling Price:
Residential Gas Sales (per Mcf) $9.048
Commercial Gas Sales 8.857
Industrial and Utility Gas Sales 2.069
Produced Natural Gas $1.587
Marketed Natural Gas 1.604 $1.623 $2.001
Oil (per barrel) 16.435
Natural Gas Liquids (per gallon) .327 .268
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ITEM 1. BUSINESS (CONTINUED)
1994
Exploration Energy Natural Gas Natural Gas Intersegment
and Production Marketing Distribution Transmission Eliminations Consolidated
<S> <C> <C> <C> <C> <C> <C>
Gas Produced, Purchased and
Sold (MMcf):
Produced 62,507 143 1,871 64,521
--------- -------- -------- -------- --------- --------
Purchased:
Other producers 389,710 45,632 7,263 442,605
Inter-segment purchases 2,523 47,920 12,963 472 (63,878)
--------- -------- -------- -------- --------- --------
Total purchases 2,523 437,630 58,595 7,735 (63,878) 442,605
--------- -------- -------- -------- --------- --------
Total produced and purchased 65,030 437,630 58,738 9,606 (63,878) 507,126
Deduct:
Net increase (decrease) in gas
in storage 241 (181) 60
Extracted natural gas liquids
(equivalent gas volumes) 1,546 6,377 7,923
System use and unaccounted for 480 1,602 6,391 268 8,741
--------- -------- -------- -------- --------- --------
Total 63,004 429,651 52,106 9,519 (63,878) 490,402
========= ======== ======== ======== ========= ========
Gas Sales (MMcf):
Residential 29,570 29,570
Commercial 9,681 9,681
Industrial and Utility 12,855 388 (3,576) 9,667
Production 62,507 (7,237) 55,270
Marketing 497 429,651 9,131 (53,065) 386,214
--------- -------- -------- -------- --------- --------
Total 63,004 429,651 52,106 9,519 (63,878) 490,402
========= ======== ======== ======== ========= ========
Natural Gas Transported (MMcf) 103,726 8,611 123,472 (100,472) 135,337
======== ======== ======== ========= ========
Oil Produced and Sold
(thousands of bls) 1,986 1,986
========= ========
Natural Gas Liquids Sold
(thousands of gallons) 51,032 194,493 245,525
========= ======== ========
Average Selling Price:
Residential Gas Sales (per Mcf) $8.974
Commercial Gas Sales 6.916
Industrial and Utility Gas Sales 2.478 $5.951
Produced Natural Gas $ 1.949
Marketed Natural Gas 1.873 $1.932 2.327
Oil (per barrel) 14.723
Natural Gas Liquids (per gallon) .299 .263
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ITEM 1. BUSINESS (CONTINUED)
1993
Exploration Energy Natural Gas Natural Gas Intersegment
and Production Marketing Distribution Transmission Eliminations Consolidated
<S> <C> <C> <C> <C> <C> <C>
Gas Produced, Purchased and
Sold (MMcf):
Produced 53,550 144 1,828 55,522
--------- -------- -------- ------ -------- --------
Purchased:
Other producers 221,948 21,583 30,287 273,818
Inter-segment purchases 3,598 35,531 24,773 6,227 (70,129)
--------- -------- ------- ------ -------- --------
Total purchases 3,598 257,479 46,356 36,514 (70,129) 273,818
--------- -------- ------- ------ -------- --------
Total produced and purchased 57,148 257,479 46,500 38,342 (70,129) 329,340
Deduct:
Net increase (decrease) in
gas in storage 3,904 2,300 6,204
Extracted natural gas liquids
(equivalent gas volumes) 3,005 3,162 6,167
System use and unaccounted for 294 801 2,614 5,645 9,354
--------- -------- ------- ------ -------- --------
Total 53,849 253,516 39,982 30,397 (70,129) 307,615
========= ======== ======= ====== ======== ========
Gas Sales (MMcf):
Residential 29,980 29,980
Commercial 8,235 8,235
Industrial and Utility 1,767 25,387 (23,872) 3,282
Production 53,550 (3,719) 49,831
Marketing 299 253,516 4,052 (41,580) 216,287
--------- -------- ------- ------ -------- --------
Total gas sales 53,849 253,516 39,982 29,439 (69,171) 307,615
Processed gas extracted 958 (958)
--------- -------- ------- ------ -------- --------
Total 53,849 253,516 39,982 30,397 (70,129) 307,615
========= ======== ======= ====== ======== ========
Natural Gas Transported (MMcf) 50,659 10,986 88,550 (67,892) 82,303
======== ======= ====== ======== ========
Oil Produced and Sold
(thousands of bls) 2,112 2,112
========= ========
Natural Gas Liquids Sold
(thousands of gallons) 60,973 101,218 162,191
========= ======== ========
Average Selling Price:
Residential Gas Sales (per Mcf) $8.247
Commercial Gas Sales 7.171
Industrial and Utility Gas Sales 4.537 $4.237
Produced Natural Gas $ 2.236
Marketed Natural Gas 2.659 $2.231 2.517
Oil (per barrel) 16.182
Natural Gas Liquids (per gallon) .321 .272
</TABLE>
<PAGE>
ITEM 1. BUSINESS (CONTINUED)
During 1995, a total of 581,197 MMcf of gas was produced and purchased by
the Companies compared with 507,126 MMcf in 1994. The increase reflects greater
marketing activity and increased production.
GAS PURCHASES. Total purchases in 1995 amounted to 513,513 MMcf, of which
461,345 MMcf was applicable to marketing operations and 52,168 MMcf was for
system supply, compared with 386,214 MMcf for marketing operations and 56,391
MMcf for system supply in 1994. Through gas purchase contracts for system
supply, the Company controls proved reserves on acreage developed by independent
producers. The majority of these contracts cover the productive lives of the
wells.
NATURAL GAS AND OIL PRODUCTION. Natural gas production by the exploration
and production segment in 1995 of 64,984 MMcf increased 2,477 MMcf over the 1994
total of 62,507 MMcf. Other production by transmission and distribution segments
in 1995 was 2,700 MMcf compared with the 1994 total of 2,014 MMcf.
Production of crude oil in 1995 was 1,932,000 barrels, compared with
1,986,000 barrels in 1994.
In 1995, the Company drilled 70 gross wells (46.1 net wells). The primary
focus of drilling activity was in Virginia for gas and coalbed methane and in
the Rockies for oil.
The Company has been able to develop gas reserves at costs which make it
very competitive in marketing its gas to pipeline and commercial buyers. As a
result, even in periods of surplus gas supply, the Company has been able to sell
all gas production at a profit.
NATURAL GAS AND OIL RESERVES. The Company's estimate of proved developed
and undeveloped gas reserves for the exploration and production segment
comprised 845.8 Bcf as of December 31, 1995. These reserves included 739.2 Bcf
of proved developed reserves. The Company's oil reserves at December 31, 1995
consisted of 18.2 million barrels of proved developed and undeveloped reserves;
proved developed oil reserves amounted to 16.8 million barrels. Of the total
reserves, 79 percent is in the Appalachian area, 19 percent in the Rockies and 2
percent in the Gulf. See Note T to the consolidated financial statements in Part
II for details of gas and oil producing activities.
STORAGE. Net storage withdrawals for system use during the 1994-95 heating
season were 5.9 Bcf, compared with 7.1 Bcf the previous heating season. Net
withdrawals for storage service customers of 12.1 Bcf were made during the
1994-95 heating season compared with 14.1 Bcf the previous heating season.
SUPPLY OUTLOOK. The Company's near-term gas supply for distribution
operations is excellent. The long-range gas supply outlook also is very
favorable. Annual gas supply is forecasted to exceed demand at least for the
next decade.
<PAGE>
ITEM 1. BUSINESS (CONTINUED)
The energy marketing segment has also been in a favorable supply position
and reserves for the exploration and production segment have continued to
increase. However, the rate of purchase of future supplies or development of
reserves will depend largely on energy prices.
(c) (1) (iv) Equitable Gas is regulated by the Pennsylvania Public Utility
Commission and the Public Service Commissions of West Virginia and Kentucky; LIG
is regulated by the Louisiana Public Service Commission; Kentucky West,
Equitrans, Nora, LIG and Equitable Resources Energy are regulated by the Federal
Energy Regulatory Commission under the Natural Gas Act and the Natural Gas
Policy Act. Equitable Gas, Kentucky West, Equitrans, Nora, LIG and Equitable
Resources Energy are also subject to regulation by the Department of
Transportation under the Natural Gas Pipeline Safety Act of 1968 with respect to
safety requirements in the design, construction, operation and maintenance of
pipelines and related facilities.
(c) (1) (v) and (vi) Approximately 65 percent of natural gas distribution
revenue is recorded during the winter heating season from November through
March. Significant quantities of purchased gas are placed in underground storage
inventory during the off-peak season to accommodate high customer demands during
the winter heating season. Funds required to finance this inventory are obtained
through short-term loans.
The exploration and production and energy marketing segments' revenues are
not subject to seasonal variation to the same degree as natural gas distribution
revenues. However, they are subject to price fluctuations, particularly during
the summer months.
(c) (1) (vii) Not applicable.
(c) (1) (viii) Not applicable.
(c) (1) (ix) Not applicable.
(c) (1) (x) Equitable Gas is in competition with others for the purchase of
natural gas and Equitable Resources Energy is in competition with others for the
acquisition of gas and oil leases.
Equitable Gas competes for gas sales with other utilities in its service
area, as well as with other fuels and forms of energy and other sources of
marketed natural gas available to existing or potential customers.
The natural gas distribution segment has been successful in meeting
competition with aggressive marketing which retained load and added new
residential, commercial and off-system customers in areas served by two or more
energy suppliers. This has been achieved by responding to market requirements
with a portfolio of firm and interruptible services at competitive prices.
(c) (1) (xi) Not material.
<PAGE>
ITEM 1. BUSINESS (CONTINUED)
(c) (1) (xii) The Company and its Subsidiaries are subject to federal,
state and local environmental laws and regulations. Principal concerns are with
respect to oil and thermal pollution of waterways, storage and disposal of
hazardous wastes and liquids, and erosion and sedimentation control in pipeline
construction work. For further discussion of environmental matters, see
Management's Discussion and Analysis of Financial Condition and Results of
Operations and Note R to the consolidated financial statements in Part II.
(c) (1) (xiii) The Companies had 2,054 regular employees at the end
of 1995.
(d) Not material.
ITEM 2. PROPERTIES
Principal facilities are owned by the Company's business segments with the
exception of several office locations and warehouse buildings. The terms of the
leases on these facilities expire at various times from 1996 through 2014. All
leases contain adequate renewal options for various periods. A minor portion of
equipment is also leased. With few exceptions, transmission, storage and
distribution pipelines are located on or under (1) public highways under
franchises or permits from various governmental authorities, or (2) private
properties owned in fee, or occupied under perpetual easements or other rights
acquired for the most part without examination of underlying land titles. The
Company's facilities have adequate capacity, are well maintained and, where
necessary, are replaced or expanded to meet operating requirements.
NATURAL GAS DISTRIBUTION. Equitable Gas owns and operates natural gas
distribution properties as well as other general property and equipment in
Pennsylvania, West Virginia and Kentucky.
NATURAL GAS TRANSMISSION. Equitrans owns and operates production,
underground storage and transmission facilities as well as other general
property and equipment in Pennsylvania and West Virginia. Kentucky West owns and
operates gathering and transmission properties as well as other general property
and equipment in Kentucky.
ENERGY MARKETING. This segment owns an intrastate pipeline system and four
hydrocarbon extraction plants in Louisiana. It also has completed construction
of a high-deliverability gas storage facility in Louisiana and a 15-mile
interchange system that interconnects the storage facility to LIG.
EXPLORATION AND PRODUCTION. This business segment owns or controls and
operates substantially all of the Company's gas and oil production properties,
the majority of which are located in the Appalachian area. This segment also
owns hydrocarbon extraction facilities in Kentucky with a 100-mile liquid
products pipeline which extends into West Virginia and an interest in two
hydrocarbon extraction plants in Texas.
<PAGE>
ITEM 2. PROPERTIES (CONTINUED)
This business segment owns or controls acreage of proved developed and
undeveloped gas and oil lands located principally in the Appalachian area and,
to a lesser extent, in the Rocky Mountain area including the Canadian Rockies,
the Southwest and Gulf Coast offshore areas and in Colombia, South America. The
acquisition of Canadian properties in 1993 is described in Note Q to the
consolidated financial statements contained in Part II. Information relating to
Company estimates of natural gas and oil reserves and future net cash flows is
summarized in Note T to the consolidated financial statements in Part II.
No report has been filed with any Federal authority or agency reflecting a
five percent or more difference from the Company's estimated total reserves.
Gas and Oil Production (Exploration and Production):
1995 1994 1993
------ ------ -----
Gas - MMcf 64,984 62,507 53,550
Oil - Thousands of Barrels 1,932 1,986 2,112
Natural Gas:
Average field sales price of natural gas produced during 1995, 1994 and
1993 was $1.59, $1.95 and $2.24 per Mcf, respectively.
Average production cost (lifting cost) of natural gas during 1995, 1994
and 1993 was $.389, $.424 and $.458 per Mcf, respectively.
Oil:
Average sales price of oil produced during 1995, 1994 and 1993 was
$16.44,$14.72 and $16.18 per barrel, respectively. Average production
cost (lifting cost) of oil during 1995, 1994 and 1993 was $3.30, $3.73
and $4.30 per barrel, respectively.
Gas Oil
Total productive wells at December 31, 1995:
Total gross productive wells 4,359 677
Total net productive wells 3,901 433
Total acreage at December 31, 1995:
Total gross productive acres 604,000
Total net productive acres 504,000
Total gross undeveloped acres 2,680,000
Total net undeveloped acres 1,903,000
<PAGE>
ITEM 2. PROPERTIES (CONTINUED)
Number of net productive and dry exploratory wells and number of net
productive and dry development wells drilled:
1995 1994 1993
------ ------ -----
Exploratory wells:
Productive 1.6 7.0 12.0
Dry 2.8 5.7 6.7
Development wells:
Productive 39.1 126.9 123.4
Dry 2.6 5.3 10.6
As of December 31, 1995, the Company had 1 gross well (.06 net wells)
in the process of being drilled.
ITEM 3. LEGAL PROCEEDINGS
LIG is a party to certain claims involving its gas purchase contracts,
including take-or-pay liabilities. As more fully described in Note Q to the
consolidated financial statements in Part II, the seller, and/or the previous
owner of LIG, have provided indemnifications for the Company.
There are no other material pending legal proceedings, other than those
which are adequately covered by insurance, to which the Company or any of its
subsidiaries is a party, or to which any of their property is subject.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of the Company's security holders
during the last quarter of its fiscal year ended December 31, 1995.
<PAGE>
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
(b) Identification of executive officers
- -------------------------- ------------------------ ===========================
Name and Age Title Business Experience
- -------------------------- ------------------------ ===========================
- -------------------------- ------------------------ ===========================
Frederick H. Abrew (58) President and Chief First elected to present
Executive Officer position January 1, 1995;
President and Chief
Operating Officer from
December 17, 1993; Executive
Vice President and Chief
Operating Officer from June
1, 1992; Executive Vice
President from June 1, 1991;
Executive Vice President -
Utility Services from June
1, 1988.
- -------------------------- ------------------------ ===========================
- -------------------------- ------------------------ ===========================
A. Mark Abramovic (47) Vice President and First elected to present
Chief Financial Officer position November 1,
1994; Vice President
Corporate Development from
June 1, 1994; Assistant to
the President from November
1993; Vice President Finance
and Chief Financial Officer
of Connecticut Natural Gas
Corporation, Hartford, CT,
from January 1991; Vice
President - Finance of the
Peoples Natural Gas Company,
Pittsburgh, PA, from
September 1986.
- -------------------------- ------------------------ ===========================
- -------------------------- ------------------------ ===========================
Robert E. Daley (56) Vice President and First elected to position
Treasurer (Retired May 22, 1986.
11/30/95)
- -------------------------- ------------------------ ===========================
- -------------------------- ------------------------ ===========================
Dan C. Eaton (47) Vice President - First elected to present
Strategic and position May 26, 1995;
Financial Planning Director - Finance
Analysis, H.J. Heinz,
Pittsburgh, PA, from April
1994; Vice President -
Finance of Weight Watchers
Foods, Pittsburgh, PA, from
August 1992; Vice President
- Finance of Heinz Canada
LTD, Toronto, Canada, from
June 1991; Vice President -
Finance of the Hubinger Co.,
Keokuk, IA, from May 1990 (a
subsidiary of H.J. Heinz).
- -------------------------- ------------------------ ===========================
- -------------------------- ------------------------ ===========================
Joseph L.Giebel (65) Vice President - First elected to position
Accounting and February 1, 1991; Vice
Administration President - Accounting
(Retired 6/30/95) from May 1, 1981.
- -------------------------- ------------------------ ===========================
<PAGE>
- -------------------------- ------------------------ ===========================
Name and Age Title Business Experience
- -------------------------- ------------------------ ===========================
John C. Gongas, Jr. (51) Vice President - First elected to present
Corporate Operations position May 26, 1995;
Vice President - Utility
Group from January 1, 1994;
Vice President Utility
Services from June 1, 1992;
President of Kentucky West
Virginia Gas Company since
April 20, 1992; President of
Equitrans, Inc., from
February 26, 1988.
- -------------------------- ------------------------ ===========================
Augustine A. Mazzei, Jr. Senior Vice President First elected to present
(59) and Chief Legal Officer position May 26, 1995;
Senior Vice President and
General Counsel from
June 1, 1988.
- -------------------------- ------------------------ ===========================
- -------------------------- ------------------------ ===========================
Audrey C. Moeller (60) Vice President and First elected to present
Corporate Secretary position May 22, 1986.
- -------------------------- ------------------------ ===========================
- -------------------------- ------------------------ ===========================
Richard Riazzi (41) Vice President - First elected to position
Corporate Marketing May 26, 1995; Vice
(Resigned 12/31/95) President - Energy Group
from January 1, 1994;
Vice President -
Corporate Development
from August 1, 1991;
Director - Special
Projects from October 1,
1990; President -
Equitable Resources
Marketing Company from
February 27, 1989.
- -------------------------- ------------------------ ===========================
------------------------- ------------------------ ===========================
Gregory R. Spencer (47) Vice President - Human First elected to present
Resources and position May 26, 1995;
Administration Vice President - Human
Resources from October 10,
1994; Vice President of
Human Resources
Administration of AMSCO
International, Inc.,
Pittsburgh, PA, from May
1993 (integrated
manufacturer of
sterilization and
decontamination equipment
for health care and
scientific customers);
General Manager - Human
Resources of U.S. Steel
Group of USX Corporation,
Pittsburgh, PA, from October
1991; Director Personnel,
U.S. Steel Group of USX
Corporation, Pittsburgh, PA,
from July 1987.
------------------------- ------------------------ ===========================
------------------------- ------------------------ ===========================
Jeffrey C. Swoveland Treasurer First elected to present
(40) position December 15,
1995; Director of
Alternative Finance from
September 27, 1994; Vice
President - Global Corporate
Banking of Mellon Bank,
Pittsburgh, PA, from June
1993; Assistant Vice
President - Global Corporate
Banking of Mellon Bank,
Pittsburgh, PA, from June,
1989.
------------------------- ------------------------ ===========================
===============================================================================
Officers are elected annually to serve during the ensuing year or until their
successors are chosen and qualified. Except as indicated, the officers
listed above were elected on May 26, 1995.
===============================================================================
<PAGE>
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
a) The Company's common stock is listed on the New York Stock Exchange and
the Philadelphia Stock Exchange. The high and low sales prices reflected in the
New York Stock Exchange Composite Transactions as reported by The Wall Street
Journal and the dividends declared and paid per share are summarized as follows:
1995 1994
------------------------ -------------------------
High Low Dividend High Low Dividend
1st Quarter 29 5/8 26 7/8 $.295 38 3/4 34 $.285
2nd Quarter 31 1/4 27 5/8 .295* 37 32 1/4 .285*
3rd Quarter 30 3/4 25 7/8 .295 35 5/8 29 .285
4th Quarter 31 3/8 28 3/4 .295 31 1/8 25 1/2 .295
* Actually declared near the end of the preceding quarter.
(b) As of December 31, 1995, there were 8,338 shareholders of record of
the Company's common stock.
(c)(1) The indentures under which the Company's long-term debt is
outstanding contain provisions limiting the Company's right to declare or pay
dividends and make certain other distributions on, and to purchase any shares
of, its common stock. Under the most restrictive of such provisions,
$369,357,000 of the Company's consolidated retained earnings at December 31,
1995, was available for declarations or payments of dividends on, or purchases
of, its common stock.
(c)(2) The Company anticipates dividends will continue to be paid on a
regular quarterly basis.
<PAGE>
===============================================================================
ITEM 6. SELECTED FINANCIAL DATA
===============================================================================
1995 1994 1993 1992 1991
(Thousands Except Per Share Amounts)
Operating
revenues $1,425,990 $1,397,280 $1,094,794 $ 812,374 $ 679,631
========== ========== ========== ========== ==========
Net income $ 1,548(a) $ 60,729 $ 73,455 $ 60,026 $ 64,168
========== ========== ========= ========= =========
Earnings per
share of
common stock $.04 $1.76 $2.27 $1.92 $2.05
==== ===== ===== ===== =====
Total assets $1,961,808 $2,019,122 $1,946,907 $1,468,424 $1,440,593
Long-term debt $ 415,527 $ 398,282 $ 378,845 $ 346,693 $ 346,818
Cash dividends
paid per share
of common stock $1.18 $1.15 $1.10 $1.04 $1.00
(a) Includes charge for impairment of assets and nonrecurring gains. See Notes
B, C and D to the consolidated financial statements.
<PAGE>
===============================================================================
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
===============================================================================
OVERVIEW
Equitable's consolidated net income for 1995 was $1.5 million or $.04 per
share, compared with $60.7 million or $1.76 per share for 1994, and $73.5
million or $2.27 per share for 1993. Earnings for 1995 include an after-tax
charge of $74.2 million or $2.12 per share due to the recognition of impairment
of assets of $121.1 million pursuant to the methodology of Statement of
Financial Accounting Standards No. 121 "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to Be Disposed Of", as more fully
described in Note B to the consolidated financial statements. The results for
1995 also include a nonrecurring after-tax gain of $29.1 million or $.83 per
share related to the Columbia Gas Transmission (Columbia) bankruptcy settlement
and $6.6 million or $.19 per share, resulting from regulatory approval for
accelerated recovery of future gas costs as described in Notes D and C,
respectively, to the consolidated financial statements.
The decrease in earnings for 1995 compared to 1994, excluding the charge
for impairment of assets and the effect of the settlements, is due primarily to
a 19 percent decline in the average wellhead price for produced natural gas,
increased operating expenses and higher interest costs. The decrease in earnings
for 1994 compared to 1993 is due to a 13% decline in average wellhead prices for
natural gas, increased operating and interest expense, and lower margins from
the Company's Louisiana Intrastate Gas subsidiary, partially offset by a 17%
increase in natural gas production.
RESULTS OF OPERATIONS
This discussion supplements the detailed financial information by business
segment presented in Note N to the consolidated financial statements.
EXPLORATION AND PRODUCTION
Operating revenues, which are derived primarily from the sale of produced
natural gas, oil and natural gas liquids and from contract drilling, were $234.9
million in 1995 compared with $195.8 million in 1994 and $202.4 million in 1993.
The 1995 revenues include $40.2 million of nonrecurring amounts from the
Columbia bankruptcy settlement, and $11.0 million of additional revenue from
direct bill settlements as described in Notes D and C, respectively, to the
consolidated financial statements. The decrease in revenues for 1995 compared to
1994, excluding the nonrecurring amounts, is due primarily to a 19 percent
decline in average wellhead prices for natural gas which was partially offset by
increased production of natural gas, higher oil prices and increased production
and prices for natural gas liquids. The decrease in revenues for 1994 compared
to 1993 is due primarily to lower wellhead prices for natural gas and oil, and
lower selling prices and production of natural gas liquids which were partially
offset by increased gas production.
<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
EXPLORATION AND PRODUCTION 1995 1994 1993
OPERATING REVENUES (THOUSANDS):
Natural Gas......................... $ 103,113 $ 121,810 $ 119,746
Oil................................. 31,753 29,239 34,176
Natural Gas Liquids................. 20,601 15,244 19,545
Contract Drilling................... 14,324 15,427 14,611
Direct Billing Settlements.......... 32,582 7,815 7,815
Other............................... 32,492 6,260 6,529
---------- ---------- ----------
Total Revenues.................... $ 234,865 $ 195,795 $ 202,422
========== ========== ==========
SALES QUANTITIES:
Natural Gas (MMcf).................. 64,984 62,507 53,550
Oil (MBls).......................... 1,932 1,986 2,112
Natural Gas Liquids
(thousands of gallons)............. 63,047 51,032 60,973
Gas purchased amounted to $10.9 million in 1995 compared with $10.6
million in 1994 and $17.0 million in 1993. The increase in gas purchased for
1995 compared to 1994 is due to higher requirements, reflecting increased
production of natural gas liquids, offset by lower prices. The decrease in gas
purchased for 1994 compared to 1993 is due to the lower requirements attributed
to decreased production of natural gas liquids.
Other operating expenses were $237.8 million in 1995, $154.4 million in
1994, and $142.9 million in 1993. Other operating expenses for 1995 include a
charge of $73.9 million for impairment of assets. The increase in other
operating expenses for 1995 compared to 1994, excluding the charge, and the
increase for 1994 compared to 1993 is due to increased depreciation and
depletion reflecting higher production.
Operating results were a loss of $13.8 million in 1995, income of $30.8
million in 1994, and income of $42.5 million in 1993. The decrease in operating
income for 1995 compared to 1994, excluding the effect of nonrecurring items,
reflects lower wellhead prices for natural gas which was partially offset by
increased production of natural gas, higher oil prices and increased prices and
production of natural gas liquids. The decrease in operating income for 1994
compared to 1993 reflects lower wellhead prices for natural gas and oil, and
lower selling prices and production of natural gas liquids which were partially
offset by increased gas production.
Average wellhead natural gas prices for 1995 decreased 19% from the 1994
level while prices for oil and natural gas liquids increased over the 1994
average prices. Natural gas production increased to a record level in 1995
reflecting the on-going development of Appalachian properties, which are the
foundation of the segment's activities, as well as a 45% increase in production
from the offshore Gulf Coast area.
The 1996 capital expenditure program of $63.8 million for exploration and
production includes $15.2 million for development of Appalachian holdings, $17.8
million for the Rocky Mountain area, $29.2 million for offshore drilling in the
Gulf of Mexico, and $1.6 million for exploration in South America. Market and
price trends will continue to be the principal factors for the economic
justification of drilling investments under the 1996 program.
ITEM 7 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (CONTINUED)
ENERGY MARKETING
Operating revenues, which are derived primarily from the marketing of
natural gas, sale of produced natural gas liquids, and intrastate transportation
of natural gas in Louisiana, were $889.3 million in 1995 compared with $890.8
million in 1994 and $599.6 million in 1993. Operating revenues for 1995 compared
to 1994 remained substantially the same. A 16% decrease in the average price of
marketed gas was offset by an increase in marketed gas volumes and higher
production and prices for natural gas liquids. The increase in revenues for 1994
compared to 1993 is attributed primarily to the acquisition of Louisiana
Intrastate Gas Company (LIG) on June 30, 1993, as more fully described in Note Q
to the consolidated financial statements.
ENERGY MARKETING 1995 1994 1993
OPERATING REVENUES (THOUSANDS):
Natural Gas Marketing............... $ 826,143 $ 830,082 $ 565,605
Natural Gas Liquids................. 53,019 51,113 27,576
Transportation...................... 9,405 9,266 6,247
Other............................... 736 317 196
---------- ---------- ----------
Total Revenues.................... $ 889,303 $ 890,778 $ 599,624
========== ========== ==========
SALES QUANTITIES:
Marketed Natural Gas (MMcf)......... 508,917 429,651 253,516
Natural Gas Liquids
(thousands of gallons)............ 197,940 194,493 101,218
Gas purchased amounted to $854.4 million in 1995 compared with $857.4
million in 1994 and $575.7 million in 1993. The decrease in purchased gas for
1995 compared to 1994 reflects lower prices for purchased gas partially offset
by higher volumes of marketed gas and requirements for the higher production of
natural gas liquids. The increased cost for 1994 compared to 1993 reflects the
increase in volume of marketed natural gas and higher requirements for liquids
production.
Other operating expenses were $53.7 million in 1995, $29.3 million in
1994, and $12.2 million in 1993. Other operating expenses for 1995 include a
charge of $21.2 million for impairment of assets. The increase in other
operating expenses for 1995 compared to 1994, excluding the charge, reflects
marketing operations in Canada which began in October 1994 and marketing and
administrative expenses in 1995 associated with the gas storage service
that began in early 1996. The increase for 1994 compared to 1993 reflects
the acquisition of LIG.
<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (CONTINUED)
Operating results for 1995 were a loss of $18.8 million in 1995, income of
$4.1 million in 1994, and income of $11.7 million in 1993. The decrease in
operating income for 1995 compared to 1994, excluding the charge for impairment
of assets, is due to lower margins for marketed gas sales, partially offset by
higher prices and production of natural gas liquids. The decrease in operating
income for 1994 compared to 1993 reflects lower prices for natural gas liquids.
The 1996 capital expenditure program of $30.7 million for marketing
operations includes $3.2 million for completion of the gas storage system, $4.5
million for improvement of LIG's pipeline and gathering system, and $23.0
million for development of new business.
NATURAL GAS DISTRIBUTION
Operating revenues, which are derived from the sale and transportation of
natural gas primarily to retail customers at state-regulated rates, were $381.1
million in 1995 compared with $390.5 million in 1994 and $335.1 million in 1993.
The decrease in revenues for 1995 compared to 1994 is due to the effect of
commercial customers switching from gas sales to transportation service and a
change in the mix of industrial and utility gas sales. The increase in revenues
for 1994 compared to 1993 is due primarily to higher retail rates to pass
through increased purchased gas costs to customers, increased sales to
utilities, and increased commercial and industrial sales reflecting some
transportation customers switching service.
NATURAL GAS DISTRIBUTION 1995 1994 1993
OPERATING REVENUES (THOUSANDS):
Residential Gas Sales.............. $ 266,855 $ 265,356 $ 247,238
Commercial Gas Sales............... 39,804 66,956 59,057
Industrial and Utility Gas Sales... 37,228 31,853 8,017
Transportation Service............. 31,730 21,750 16,526
Other.............................. 5,433 4,560 4,311
--------- ---------- ----------
Total Revenues................... $ 381,050 $ 390,475 $ 335,149
========= ========== ==========
SALES QUANTITIES (MMCF):
Residential Gas Sales.............. 29,494 29,570 29,980
Commercial Gas Sales............... 4,494 9,681 8,235
Industrial and Utility Gas Sales... 17,991 12,855 1,767
Transportation Deliveries.......... 16,103 8,611 10,986
Heating Degree Days
(Normal - 5,968) ................ 5,748 5,607 5,628
<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (CONTINUED)
NATURAL GAS DISTRIBUTION (CONTINUED)
Gas purchased amounted to $221.7 million in 1995, $232.9 million in 1994,
and $182.8 million in 1993. The decrease in gas costs for 1995 compared to 1994
is due to the effect of commercial customers switching from gas sales to
transportation service, partially offset by the pass-through of higher costs in
rates to retail customers. The increase in gas costs for 1994 compared to 1993
reflects the pass-through of higher costs in rates to retail customers and the
increase in sales to commercial, industrial, and utility customers.
Other operating expenses amounted to $135.9 million in 1995, $114.4
million in 1994, and $106.6 million in 1993. Other operating expenses for 1995
include a charge of $20.8 million for impairment of assets. Other operating
expenses for 1995 compared to 1994, excluding the charge, remained substantially
the same. The increase in 1994 compared to 1993 is due principally to increased
labor, sales and marketing, distribution, and uncollectible account expenses.
Operating income was $23.5 million in 1995 compared with $43.2 million in
1994 and $45.7 million in 1993. Operating income for 1995 compared to 1994,
excluding the charge for impairment of assets, remained substantially the same.
The decrease in operating income in 1994 compared to 1993 is due primarily to
increased operating expenses, which more than offset the higher margins being
realized.
The operating results of the distribution operations continue to be
impacted by the effects of weather on gas sales, primarily to residential
customers. However, increased sales to utility customers and the continuing
expansion of new gas-using technologies such as cogeneration, natural gas
vehicles, and natural gas-fired cooling have served to retain system throughput.
The 1996 capital expenditure program of $24.6 million for distribution
operations includes $18.7 million for the distribution system and $5.9 million
for other items.
<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (CONTINUED)
NATURAL GAS TRANSMISSION
Operating revenues, which are derived from the interstate transportation
and storage of natural gas subject to federal regulation, and the marketing of
natural gas, were $118.9 million in 1995 compared with $116.8 million in 1994
and $188.9 million in 1993. Operating revenues for 1995 include $4.8 million
related to the Columbia bankruptcy settlement, as described in Note D to the
consolidated financial statements. The decrease in revenues for 1995 compared to
1994, excluding the effect of the settlement, is due primarily to lower selling
prices for marketed natural gas. The decrease in revenues between 1994 and 1993
reflects the impact of FERC Order 636 restructuring which took effect in the
middle of 1993.
NATURAL GAS TRANSMISSION 1995 1994 1993
OPERATING REVENUES (THOUSANDS):
Industrial and Utility Gas Sales.... $ 1,451 $ 2,309 $ 114,867
Marketed Gas Sales.................. 22,308 21,244 10,200
Transportation Service.............. 67,966 69,958 47,534
Storage Service..................... 15,909 16,993 10,014
Other............................... 11,227 6,265 6,267
---------- ---------- ----------
Total Revenues.................... $ 118,861 $ 116,769 $ 188,882
========== ========== ==========
SALES QUANTITIES (MMCF):
Industrial and Utility Gas Sales.... - 388 26,345
Marketed Gas Sales.................. 11,147 9,131 4,052
Transportation Deliveries........... 119,090 123,472 88,550
Gas purchased amounted to $17.4 million in 1995, $18.2 million in 1994,
and $95.9 million in 1993. The decrease in gas purchased for 1995 compared to
1994 reflects lower prices for marketed gas. The decrease in gas costs between
1994 and 1993 reflects the elimination of pipeline gas sales pursuant to FERC
Order 636 restructuring.
Other operating expenses amounted to $70.6 million in 1995, $66.4 million
in 1994, and $62.3 million in 1993. Other operating expenses for 1995 include a
charge of $5.2 million for impairment of assets. Other operating expenses for
1995 compared to 1994, excluding the charge, remained substantially the same.
The increase in expenses between 1994 and 1993 is due primarily to provisions
for possible refunds to customers.
Operating income was $30.9 million in 1995 compared with $32.2 million in
1994 and $30.7 million in 1993. Operating income of $33.0 million for 1995,
excluding the effect of the Columbia settlement and the charge for
impairment of assets, remained substantially the same as 1994. The increase in
operating income between 1994 and 1993 is due primarily to the restructuring of
tariff rates pursuant to FERC Order 636 whereby all fixed costs are now
recovered in the demand portion of pipeline rates.
The 1996 capital expenditure program of $10.4 million for transmission
operations includes $6.6 million for maintaining and expanding the transmission
system, $1.5 million for expansion of gas storage facilities, and $2.3 million
for other items.
<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (CONTINUED)
CAPITAL RESOURCES AND LIQUIDITY
OPERATING ACTIVITIES
Cash required for operations is impacted primarily by the seasonal nature
of the Company's distribution operations. Gas purchased for storage during the
nonheating season is financed with short-term loans, which are repaid as gas is
withdrawn from storage and sold during the heating season. In addition,
short-term loans are used to provide other working capital requirements during
the nonheating season.
INVESTING ACTIVITIES
The Company's business requires major ongoing expenditures for
replacements, improvements, and additions to its distribution and transmission
plant and continuing development and expansion of its resource production
activities. Such expenditures during 1995 were $118.1 million. A total of $129.5
million has been authorized for the 1996 capital expenditure program.
Short-term loans are also used as interim financing for a portion of
capital expenditures. The Company expects to finance its 1996 capital
expenditures with cash generated from operations and temporarily with short-term
loans.
Capital expenditures, including acquisitions, totaled about $939 million
during the five-year period ended December 31, 1995, of which 61 percent was
financed from operations.
FINANCING ACTIVITIES
The Company has adequate borrowing capacity to meet its financing
requirements. Bank loans and commercial paper, supported by available credit,
are used to meet short-term financing requirements. Interest rates on these
short-term loans ranged from 5.44 percent to 6.75 percent during 1995. At
December 31, 1995, $135.0 million of commercial paper was outstanding at an
average interest rate of 5.68 percent. In January 1995, the Company established
a five-year revolving Credit Agreement with a group of banks providing $500
million of available credit. The agreement requires a facility fee of one-tenth
of one percent. Adequate credit is expected to continue to be available in the
future.
In October 1995, the Company sold most of its gas and oil properties in
the northern Appalachian basin areas of New York, Pennsylvania and West
Virginia. The properties comprised less than four percent of the exploration and
production segment's total gas and oil production reserves. The Company
previously operated the majority of these properties, with its working interest
averaging approximately 25 percent. Proceeds from the sale were approximately
$17.3 million.
<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (CONTINUED)
FINANCING ACTIVITIES (CONTINUED)
In November 1995, the Company sold an interest in its Appalachian gas
properties which produce nonconventional fuels. The Company will retain an
interest in the properties that will increase based on performance. Proceeds to
the Company were $133.5 million.
In November 1995, the Company received $45.0 million in Columbia's
bankruptcy settlement related to various claims the Company had against Columbia
for abrogation of contracts to purchase gas from the Company, collection of FERC
Order 636 transition costs and the direct billing settlements.
The after-tax proceeds received from the sale of properties and the
Columbia bankruptcy settlement described above were used to repay short-term
debt.
The Company intends to file a shelf registration with the Securities and
Exchange Commission in April 1996 to issue $250 million of long-term debt. The
proceeds from issuance of this debt is expected to be used to retire the 8 1/4%
Debentures and provide funds for the possible tender or defeasance of the 9.9%
Debentures.
FEDERAL INCOME TAX PROVISIONS
Cash flow has been affected by the Alternative Minimum Tax (AMT) since
1988. Despite the availability of nonconventional fuels tax credit, the Company
has incurred an AMT liability in each of the years 1988 through 1995. Although
AMT payments can be carried forward indefinitely and applied to income tax
liabilities in future periods, they reduce cash generated from operations. At
December 31, 1995, the Company has available $74.8 million of AMT credit
carryforwards. The impact of AMT on future cash flow will depend on the level of
taxable income. AMT is not expected to affect the Company's ability to finance
future capital requirements.
Under current law, wells drilled after 1992 do not qualify for the
nonconventional fuels tax credit. While production from qualified wells drilled
in the Appalachian area will generate tax credits through the year 2002, it is
anticipated that the amount of such credits will decline as the related reserves
are depleted. The credits recorded in 1995, 1994, and 1993 reduced the Company's
federal income tax provisions by $13.1 million, $16.4 million, and $20.6
million, respectively. The sale of an interest in properties producing
nonconventional fuels, as described above, will significantly reduce the
generation of credits in the future. Therefore, the Company expects accelerated
utilization of AMT credit carryforwards.
ENVIRONMENTAL MATTERS
Management does not know of any environmental liabilities that will have a
material effect on the Company's financial position or results of operations.
The Company has identified situations that require remedial action for which
$2.7 million is accrued at December 31, 1995. Environmental matters are
described in Note R to the consolidated financial statements.
<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (CONTINUED)
BALANCE SHEET CHANGES
The increase in accounts receivable is due to the higher sales of marketed
and produced gas. The increase in other assets is due primarily to the approval
for accelerated collection of gas costs as described in Note C
to the consolidated financial statements. The increase in accounts payable
reflects higher gas purchased for marketing. The decrease in deferred income
taxes is due primarily to the recognition of the impairment of assets as
described in Note B to the consolidated financial statements. The change in
deferred revenues is described in Note P to the consolidated financial
statements.
AUDIT COMMITTEE
The Audit Committee, composed entirely of outside directors, meets
periodically with the Company's independent auditors, its internal auditor, and
management to review the Company's financial statements and the results of audit
activities. The Audit Committee, in turn, reports to the Board of Directors on
the results of its review and recommends the selection of independent auditors.
<PAGE>
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
PAGE REFERENCE
Report of Independent Auditors 26
Statements of Consolidated Income
for each of the three years in
the period ended December 31, 1995 27
Statements of Consolidated Cash Flows
for each of the three years in the
period ended December 31, 1995 28
Consolidated Balance Sheets
December 31, 1995 and 1994 29 & 30
Statements of Common Stockholders'
Equity for each of the three
years in the period ended
December 31, 1995 31
Long-term Debt, December 31,
1995 and 1994 32
Notes to Consolidated Financial
Statements 33 - 54
<PAGE>
REPORT OF INDEPENDENT AUDITORS
The Board of Directors and Stockholders
Equitable Resources, Inc.
We have audited the accompanying consolidated balance sheets and statements
of long-term debt of Equitable Resources, Inc., and Subsidiaries at December 31,
1995 and 1994, and the related consolidated statements of income, common
stockholders' equity and cash flows for each of the three years in the period
ended December 31, 1995. Our audits also included the financial statement
schedule listed in the Index at Item 14(a). These financial statements and
schedule are the responsibility of the Company's management. Our responsibility
is to express an opinion on these financial statements and schedule based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of Equitable
Resources, Inc., and Subsidiaries at December 31, 1995 and 1994, and the
consolidated results of their operations and their cash flows for each of the
three years in the period ended December 31, 1995 in conformity with generally
accepted accounting principles. Also, in our opinion, the related financial
statement schedule, when considered in relation to the basic financial
statements taken as a whole, presents fairly in all material respects the
information set forth therein.
s/ Ernst & Young LLP
Ernst & Young LLP
Pittsburgh, Pennsylvania
February 13, 1996
<PAGE>
<TABLE>
<CAPTION>
EQUITABLE RESOURCES, INC. AND SUBSIDIARIES
STATEMENTS OF CONSOLIDATED INCOME
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
1995 1994 1993
------------------------------------------------
(Thousands Except Per Share Amounts)
<S> <C> <C> <C>
Operating Revenues $ 1,425,990 $ 1,397,280 $ 1,094,794
Cost of Energy Purchased 911,357 926,905 644,157
--------------- -------------- --------------
Net operating revenues 514,633 470,375 450,637
--------------- -------------- --------------
Operating Expenses:
Operation 198,502 192,799 174,420
Maintenance 26,635 31,737 29,024
Depreciation and depletion 104,625 93,347 76,894
Impairment of assets 121,081 - -
Taxes other than income 41,838 42,244 39,802
--------------- -------------- --------------
Total operating expenses 492,681 360,127 320,140
--------------- -------------- --------------
Operating Income 21,952 110,248 130,497
Other Income 387 3,163 1,706
Interest Charges 50,098 43,905 38,728
--------------- -------------- --------------
Income (Loss) Before Income Taxes (27,759) 69,506 93,475
Income Taxes (Benefits) (29,307) 8,777 20,020
---------------- -------------- --------------
Net Income $ 1,548 $ 60,729 $ 73,455
=============== ============== ==============
Average Common Shares Outstanding 34,793 34,509 32,359
=============== ============== ==============
Earnings Per Share of Common Stock $ .04 $ 1.76 $ 2.27
=============== ============== ==============
See notes to consolidated financial statements
Pages 33 to 54, inclusive
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EQUITABLE RESOURCES, INC. AND SUBSIDIARIES
STATEMENTS OF CONSOLIDATED CASH FLOWS
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
1995 1994 1993
----------- ---------- ----------
(Thousands)
<S> <C> <C> <C>
Cash Flows from Operating Activities:
Net income $ 1,548 $ 60,729 $ 73,455
---------- ---------- ----------
Adjustments to reconcile net income to net cash
provided by operating activities:
Impairment of assets 121,081 - -
Depreciation and depletion 104,625 93,347 76,894
Deferred income taxes (benefits) (74,348) (5,059) 756
Other - net (767) 1,566 1,319
Changes in other assets and liabilities:
Accounts receivable and unbilled revenues (74,275) 723 (22,352)
Gas stored underground 5,179 2,958 (5,076)
Material and supplies 154 (615) (709)
Deferred purchased gas cost 14,730 (7,742) (14,024)
Regulatory assets 1,810 (1,363) (18,657)
Accounts payable 58,791 (20,414) 18,747
Accrued taxes (1,481) 4,230 1,024
Refunds due customers (6,252) 8,049 2,537
Deferred revenue 129,874 - -
Other - net (867) (1,274) (4,588)
---------- ---------- ----------
Total adjustments 278,254 74,406 35,871
---------- ---------- ----------
Net cash provided by operating activities 279,802 135,135 109,326
---------- ---------- ----------
Cash Flows from Investing Activities:
Capital expenditures (118,112) (146,174) (339,411)
Proceeds from sale of property 24,610 1,195 1,270
---------- ---------- ----------
Net cash used in investing activities (93,502) (144,979) (338,141)
---------- ---------- ----------
Cash Flows from Financing Activities:
Issuance of common stock 2,756 1,791 112,412
Purchase of treasury stock (240) (395) (28)
Dividends paid (41,098) (39,686) (35,279)
Proceeds from issuance of long-term debt 17,836 43,083 31,702
Repayments and retirements of long-term debt (24,500) (1,971) (16,445)
Increase (decrease) in short-term loans (134,300) 15,400 139,900
-------- ---------- ----------
Net cash provided (used) by financing activities (179,546) 18,222 232,262
-------- ---------- ----------
Net Increase in Cash and Cash Equivalents 6,754 8,378 3,447
Cash and Cash Equivalents at Beginning of Year 23,415 15,037 11,590
---------- ---------- ----------
Cash and Cash Equivalents at End of Year $ 30,169 $ 23,415 $ 15,037
========== ========== ==========
Cash Paid During the Year for:
Interest (net of amount capitalized) $ 46,359 $ 40,105 $ 34,592
========== ========== ==========
Income taxes $ 41,272 $ 13,098 $ 27,547
========== ========== ==========
See notes to consolidated financial statements
Pages 33 to 54, inclusive
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EQUITABLE RESOURCES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS, DECEMBER 31, 1995 AND 1994
ASSETS
1995 1994
-------------------------------
(Thousands)
<S> <C> <C>
Current Assets:
Cash and cash equivalents $ 30,169 $ 23,415
Accounts receivable (less accumulated provision for
doubtful accounts: 1995, $10,539; 1994, $10,890) 240,846 172,178
Unbilled revenues 31,752 25,794
Gas stored underground - current inventory 9,922 15,101
Material and supplies 12,577 12,876
Deferred purchased gas cost 10,160 24,890
Prepaid expenses and other 42,323 33,569
------------- -------------
Total current assets 377,749 307,823
------------- -------------
Property, Plant and Equipment:
Exploration and production (successful
efforts method) 869,329 983,328
Energy marketing 295,061 309,579
Natural gas distribution 568,272 552,789
Natural gas transmission 388,986 387,921
------------- -------------
Total property, plant and equipment 2,121,648 2,233,617
Less accumulated depreciation and depletion 664,065 637,951
------------- -------------
Net property, plant and equipment 1,457,583 1,595,666
------------- -------------
Other Assets:
Regulatory assets 85,241 88,387
Other 41,235 27,246
-------------- -------------
Total other assets 126,476 115,633
------------- -------------
Total $ 1,961,808 $ 2,019,122
============= =============
See notes to consolidated financial statements
Pages 33 to 54, inclusive
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EQUITABLE RESOURCES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS, DECEMBER 31, 1995 AND 1994
CAPITALIZATION AND LIABILITIES
1995 1994
-------------------------------
(Thousands)
<S> <C> <C>
Current Liabilities:
Long-term debt payable within one year $ - $ 24,500
Short-term loans 135,000 269,300
Accounts payable 182,185 123,394
Accrued taxes 18,107 19,588
Accrued interest 14,842 13,032
Refunds due customers 16,003 22,255
Customer credit balances 9,759 10,427
Other 13,383 16,399
------------- -------------
Total current liabilities 389,279 498,895
------------- -------------
Long-Term Debt 415,527 398,282
------------- -------------
Deferred and Other Credits:
Deferred income taxes 265,737 326,597
Deferred investment tax credits 20,991 22,082
Deferred revenue 129,874 -
Other 25,321 23,264
------------- -------------
Total deferred and other credits 441,923 371,943
------------- -------------
Commitments and Contingencies - -
------------- -------------
Common Stockholders' Equity 715,079 750,002
------------- -------------
Total $ 1,961,808 $ 2,019,122
============= =============
See notes to consolidated financial statements
Pages 33 to 54, inclusive
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EQUITABLE RESOURCES, INC. AND SUBSIDIARIES
STATEMENTS OF COMMON STOCKHOLDERS' EQUITY
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
Common Stock (a) Foreign Common
Shares No Retained Currency Stockholders'
Outstanding Par Value Earnings Translation Equity
-------------------------------------------------------------------
(Thousands)
<S> <C> <C> <C> <C> <C>
Balance, January 1, 1993 31,386 $ 95,300 $ 482,257 $ - $ 577,557
Net income for the year 1993 73,455
Dividends ($1.10 per share) (35,279)
Foreign currency translation (581)
Stock issued:
New stock issuance 3,000 111,570
Conversion of 9 1/2% debentures 51 564
Restricted stock option plan 29 850
Cash paid in lieu of fractional shares (78)
Treasury stock (1) (28)
------ --------- --------- --------
Balance, December 31, 1993 (b) 34,465 208,178 520,433 (581) 728,030
Net income for the year 1994 60,729
Dividends ($1.15 per share) (39,686)
Foreign currency translation (923)
Stock issued:
Conversion of 9 1/2% debentures 31 345
Restricted stock option plan 8 313
Dividend reinvestment plan 47 1,504
Treasury stock (10) (310)
------ --------- --------- --------
Balance, December 31, 1994 (b) 34,541 210,030 541,476 (1,504) 750,002
Net income for the year 1995 1,548
Dividends ($1.18 per share) (41,098)
Foreign currency translation 366
Adjustment for Independent Energy
Corporation pooling of interests 233 26 110
Stock issued:
Conversion of 9 1/2% debentures 146 1,611
Restricted stock option plan 43 1,232
Dividend reinvestment plan 52 1,524
Treasury stock (8) (242)
------ --------- --------- --------
Balance, December 31, 1995 (b)(c)(d) 35,007 $ 214,181 $ 502,036 $ (1,138) $715,079
====== ========= ========= ======== ========
<FN>
(a) Shares authorized: Common - 80,000,000 shares, Preferred - 3,000,000 shares.
(b) Net of treasury stock: 1995 - 407,000 shares ($9,673,000);
1994 - 632,000 shares ($14,933,000); 1993 - 622,000 shares ($14,623,000).
(c) A total of 2,618,000 shares of authorized but unissued common stock was
reserved for the conversion of the 9 1/2% convertible subordinated
debentures, for issuance under the key employee restricted stock option and
stock appreciation rights incentive compensation plan, the long-term
incentive plan, the non-employee directors' stock incentive plan, and for
issuance under the Company's dividend reinvestment and stock purchase plan.
(d) Retained earnings of $369,357,000 is available for dividends on, or
purchase of, common stock pursuant to restrictions imposed by indentures
securing long-term debt.
</FN>
See notes to consolidated financial statements
Pages 33 to 54, inclusive
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EQUITABLE RESOURCES, INC. AND SUBSIDIARIES
LONG-TERM DEBT
DECEMBER 31, 1995 AND 1994
Annual Debt Maturities After
Maturities One Year
1995 1994 1995 1994
(Thousands)
<S> <C> <C> <C> <C>
8 1/4% Debentures, due July 1, 1996 (a) $ - $ - $ 75,000 $ 75,000
7 1/2% Debentures, due July 1, 1999
($75,000 principal amount, net of
unamortized original issue discount) (b) - - 71,322 70,466
9 1/2% Convertible subordinated
debentures, due January 15, 2006 - - 705 2,316
9.9% Debentures, due April 15, 2013 (c) - - 75,000 75,000
Medium-term notes:
7.2% to 9.0% Series A, due 1998 thru 2021 - - 100,000 100,000
5.1% to 7.6% Series B, due 2003 thru 2023 - 24,500 75,500 75,500
6.8% to 7.6% Series C, due 2007 thru 2018 - - 18,000 -
---------- ---------- ----------- ------------
Total $ - $ 24,500 $ 415,527 $ 398,282
========== ========== =========== ============
<FN>
(a) 8 1/4% Debentures will be retired with proceeds from issuance of new
long-term debt. See Note J to the consolidated financial statements.
(b) Not redeemable prior to maturity.
(c) Annual sinking fund payments of $3,750,000 are required beginning in 1999.
</FN>
See notes to consolidated financial statements
Pages 33 to 54, inclusive
</TABLE>
<PAGE>
EQUITABLE RESOURCES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1995
A. Summary of Significant Accounting Policies
(1) PRINCIPLES OF CONSOLIDATION: The consolidated financial statements
include the accounts of Equitable Resources, Inc., and Subsidiaries (the
"Company" or "Companies"). All subsidiaries are 100% owned.
(2) PROPERTIES, DEPRECIATION AND DEPLETION: The cost of property additions,
replacements and improvements capitalized includes labor, material and overhead.
The cost of property retired, plus removal costs less salvage, is charged to
accumulated depreciation.
Depreciation for financial reporting purposes is provided on the
straight-line method at composite rates based on estimated service lives, except
for most gas and oil production properties as explained below.
Depreciation rates are based on periodic studies.
The Company uses the successful efforts method of accounting for
exploration and production activities. Under this method, the cost of productive
wells and development dry holes, as well as productive acreage, are capitalized
and depleted on the unit-of-production method.
(3) ALLOWANCE FOR FUNDS USED DURING CONSTRUCTION: The Federal Energy
Regulatory Commission (FERC) prescribes a formula to be used for computing
overhead allowances for funds used during construction (AFC). AFC applicable to
equity funds capitalized is included in other income and amounted to $1.0
million in 1995, $.9 million in 1994 and $1.0 million in 1993. AFC applicable to
borrowed funds, as well as other interest capitalized for the nonregulated
companies, is applied as a reduction of interest charges and amounted to $2.5
million in 1995, $2.1 million in 1994 and $1.8 million in 1993.
(4) INVENTORIES: Inventories are stated at cost which is below market. Gas
stored underground--current inventory is stated at cost under the average cost
method. Material and supplies are stated generally at average cost.
(5) INCOME TAXES: The Companies file a consolidated federal income tax
return. The current provision for income taxes represents amounts paid or
payable. Deferred income tax assets and liabilities are determined based on
differences between financial reporting and tax bases of assets and liabilities.
Where deferred tax liabilities will be passed through to customers in regulated
rates, the Companies establish a corresponding regulatory asset for the increase
in future revenues that will result when the temporary differences reverse.
Investment tax credits realized in prior years were deferred and are being
amortized over the estimated service lives of the related properties where
required by ratemaking rules.
<PAGE>
A. Summary of Significant Accounting Policies (Continued)
(6) DEFERRED PURCHASED GAS COST: Where permitted by regulatory authority
under purchased gas adjustment clauses or similar tariff provisions, the Company
defers the difference between purchased gas cost, less refunds, and the billing
of such cost and amortizes the deferral over subsequent periods in which
billings either recover or repay such amounts.
(7) REGULATORY ASSETS: Certain costs, which will be passed through to
customers under ratemaking rules for regulated operations, are deferred by the
Company as regulatory assets. The amounts deferred relate primarily to the
accounting for income taxes.
(8) DERIVATIVE FINANCIAL INSTRUMENTS: The Company uses exchange-traded
natural gas and crude oil futures contracts and options and over-the-counter
(OTC) natural gas and crude oil swap agreements and options to hedge exposures
to energy price changes. Exchange-traded instruments are generally settled with
off-setting positions but may be settled by delivery of commodities. OTC
arrangements require settlement in cash. The margin accounts for exchange-traded
futures contracts, which reflect daily settlements as market values change, are
recorded in other current assets.Premiums on all options contracts are initially
recorded in other current assets based on the amount exchanged. The Company
sells options to reduce the overall cost of hedging. Unrealized losses on sold
options are deferred to the extent of unamortized premiums. The fair values of
swap agreements are generally recognized only when settled. Changes in market
value of derivative financial instruments which qualify as hedges of firm
commitments or anticipated transactions are deferred and recognized in net
operating revenues when hedged transactions occur. Cash flows from derivatives
accounted for as hedges are considered operating activities. The Company also
uses exchange-traded natural gas futures contracts for speculative trading
purposes. Realized and unrealized gains and losses on these contracts are
recorded in other income in the period in which the changes occur.
(9) STOCK OPTIONS: The Company follows Accounting Principles Board
Opinion No. 25, "Accounting for Stock Issued to Employees" and related
interpretations in accounting for stock options. No compensation expense is
recognized on stock options because the exercise price equals the market
price of the underlying stock on the date of grant.
(10) USE OF ESTIMATES: The preparation of financial statements in
conformity with generally accepted accounting principles requires management to
make estimates and assumptions that affect the amounts reported in the financial
statements and accompanying notes. Actual results could differ from those
estimates.
(11) CASH FLOWS: The Company considers all highly liquid investments
with a maturity of three months or less when purchased to be cash equivalents.
<PAGE>
B. Impairment of Assets
In 1995, the Company evaluated the carrying value of long-lived assets for
impairment of value pursuant to the methodology prescribed in Statement of
Financial Accounting Standards No. 121 "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to be Disposed of." Primarily as a
result of the sustained decrease in gas and oil prices, the Company recognized a
write-down in the carrying value of assets of $121.1 million which decreased net
income by $74.2 million. The write-down includes $73.9 million for exploration
and production properties, $21.2 million for intrastate transmission facilities
included in the energy marketing segment, $20.8 million for information systems
and other assets reflected in the natural gas distribution segment and $5.2
million for storage development projects and other assets reflected in the
natural gas transmission segment. The fair value of the assets was determined
based upon estimated future net cash flows or an evaluation of recoverability of
amounts invested.
C. Direct Billing Settlements
Kentucky West Virginia Gas Company received FERC approval of settlement
agreements with all customers for the direct billing to recover the higher
Natural Gas Policy Act (NGPA) prices, which the FERC had denied on natural gas
produced from exploration and production properties between 1978 and 1983. The
portion of the settlement with Equitable Gas Division has been subject to
Pennsylvania Public Utility Commission (PUC) review. The PUC approved Equitable
Gas Company's collection of $18.8 million in September 1995 and $7.8 million in
September 1994 and 1993 related to the direct billing settlement. The 1995
amount includes $11.0 million for accelerated collection of amounts that would
have otherwise been subject to approval by the PUC, and recognized in income, in
later years. As a result of the PUC approvals, net income for 1995 includes
approximately $11.3 million and net income for 1994 and 1993 includes
approximately $4.7 million related to the settlement. Approximately $18 million
from the settlement remains to be recovered in future gas costs filings with the
PUC over the next three years.
In November 1995, Kentucky West Virginia Gas Company received $13.8 million
from Columbia Gas Transmission Company (Columbia) as settlement, in Columbia's
bankruptcy proceeding, of Kentucky West's claim for $19 million related to the
direct billing settlements. Net income for 1995 includes $8.9 million related to
the settlement.
D. Columbia Gas Transmission Bankruptcy Settlement
In addition to the direct billing settlement described above, the Company
had various claims against Columbia for abrogation of contracts to purchase gas
from the Company and collection of FERC Order 636 transition costs. In November
1995, the Company received $31.2 million in Columbia's bankruptcy settlement
related to these items which increased net income for 1995 by $20.2 million.
<PAGE>
E. Income Taxes
The following table summarizes the source and tax effects of temporary
differences between financial reporting and tax bases of assets and liabilities:
December 31,
1995 1994
(Thousands)
Deferred tax liabilities (assets):
Exploration and development costs
expensed for income tax reporting........ $ 59,321 $ 141,479
Tax depreciation in excess of
book depreciation ....................... 257,642 255,683
Regulatory temporary differences........... 33,815 37,319
Deferred purchased gas cost................ 1,308 6,397
Alternative minimum tax.................... (74,829) (82,925)
Investment tax credit...................... (8,438) (9,306)
Other...................................... (4,587) (17,606)
--------- ---------
Total (including amounts classified as
current liabilities of $(1,505) for 1995
and $4,444 for 1994)................... $ 264,232 $ 331,041
========= =========
As of December 31, 1995 and 1994, $76.1 million and $76.2 million,
respectively, of the net deferred tax liabilities are related to rate-regulated
operations and have been deferred as regulatory assets.
Income tax expense (benefit) is summarized as follows:
Years Ended December 31,
1995 1994 1993
(Thousands)
Current:
Federal........................ $ 36,681 $ 11,196 $ 15,577
State.......................... 8,360 2,640 3,687
Deferred:
Federal........................ (56,953) (6,848) (2,758)
State.......................... (17,395) 1,789 3,514
------- -------- -------
Total........................ $(29,307) $ 8,777 $ 20,020
======== ========= ========
<PAGE>
E. Income Taxes (Continued)
Provisions for income taxes are less than amounts computed at the federal
statutory rate of 35% on pretax income. The reasons for the difference are
summarized as follows:
Years Ended December 31,
1995 1994 1993
(Thousands)
Tax at statutory rate........... $ (9,716) $ 24,327 $ 32,716
State income taxes.............. (5,866) 3,069 4,332
Increase in federal income tax rate - - 5,070
Nonconventional fuels tax credit (13,114) (16,442) (20,600)
Other........................... (611) (2,177) (1,498)
-------- -------- --------
Income tax expense (benefit)... $(29,307) $ 8,777 $ 20,020
======== ======== ========
Effective tax (benefit) rate.... (105.6)% 12.6% 21.4%
====== ==== ====
In August 1993, the Omnibus Budget Reconciliation Act of 1993 (Act) was
signed into law. One of the provisions of the Act was to raise the maximum
corporate income tax rate from 34% to 35%. The effect of this tax rate change
increased deferred tax liabilities by approximately $11 million and increased
regulatory assets by approximately $6 million.
The consolidated federal income tax liability of the Companies has been
settled through 1992.
The Company has available $74.8 million of alternative minimum tax credit
carryforward which has no expiration date. In addition, the Company has net
operating loss carryforwards for federal income tax purposes of $11.0 million
which begin to expire in 2006. The net operating loss carryforwards apply to
Louisiana Intrastate Gas.
Amortization of deferred investment tax credits amounted to $1.1 million
for 1995 and 1994, and $1.4 million for 1993.
F. Employee Pension Benefits
The Companies have several trusteed retirement plans covering substantially
all employees. The Companies' annual contributions to the plans are based on a
25-year funding level. Plans covering union members generally provide benefits
of stated amounts for each year of service. Plans covering salaried employees
use a benefit formula which is based upon employee compensation and years of
service to determine benefits to be provided. Plan assets consist principally of
equity and debt securities.
<PAGE>
F. Employee Pension Benefits (Continued)
The following table sets forth the plans' funded status and amounts
recognized in the Company's consolidated balance sheets:
December 31,
1995 1994
(Thousands)
Actuarial present value of benefit obligations:
Vested benefit obligation.................. $ 127,758 $ 120,763
========== ==========
Accumulated benefit obligation............. $ 131,405 $ 123,877
========== ==========
Market value of plan assets................. $ 159,607 $ 143,121
Projected benefit obligation................ 146,078 134,111
---------- ----------
Excess of plan assets over projected
benefit obligation......................... 13,529 9,010
Unrecognized net asset...................... (2,208) (2,905)
Unrecognized net gain....................... (20,194) (15,606)
Unrecognized prior service cost............. 9,864 9,512
---------- ----------
Prepaid pension cost recognized in
the consolidated balance sheets............ $ 991 $ 11
========== ==========
At year-end the discount rate used in determining the actuarial present
value of benefit obligations was 7 1/2% for 1995, 8 1/4% for 1994 and 7 1/4% for
1993. The assumed rate of increase in compensation levels was 4 1/2% for all
three years.
The Companies' pension cost, using a 9% average rate of return on plan
assets, comprised the following:
Years Ended December 31,
1995 1994 1993
(Thousands)
Service cost benefits earned
during the period.............. $ 3,452 $ 3,916 $ 2,806
Interest cost on projected benefit
obligation..................... 11,165 10,752 10,472
Actual loss (return) on assets.. (34,054) 2,757 (17,224)
Net amortization and deferral... 19,806 (14,680) 5,486
-------- -------- --------
Net periodic pension cost...... $ 369 $ 2,745 $ 1,540
======== ======== ========
<PAGE>
G. Other Postretirement Benefits
In addition to providing pension benefits, the Companies provide certain
health care and life insurance benefits for retired employees and their
dependents. Substantially all employees are eligible for these benefits upon
retirement from the Companies. The Company's transition obligation is being
amortized through 2012. In determining the accumulated postretirement benefit
obligation at December 31, 1995, the Company used a beginning inflation factor
of 10% decreasing gradually to 4 3/4% after 14 years and a discount rate of 7
1/2%. At December 31, 1994, the beginning inflation factor was 10 1/2%
decreasing gradually to 4 3/4% after 15 years and the discount rate was 8 1/4%.
The following summarizes the status of the Company's accrued postretirement
benefit costs (OPEBS):
December 31,
1995 1994
(Thousands)
Accumulated postretirement benefit obligation:
Retired employees....................... $ 31,555 $ 21,269
Active employees:
Fully eligible........................ 10,902 9,158
Other................................. 14,728 13,459
--------- ---------
Total obligation .................... 57,185 43,886
Trust assets ............................. 2,632 -
--------- ---------
Obligation in excess of trust assets...... 54,553 43,886
Unrecognized net gain (loss) ............. (6,298) 5,160
Unrecognized transition obligation........ (39,195) (41,501)
--------- ---------
Accrued postretirement benefit cost $ 9,060 $7,545
========= =========
The net periodic cost for postretirement health care and life insurance
benefits includes the following:
Years Ended December 31,
1995 1994 1993
(Thousands)
Service cost.......................... $ 993 $ 1,049 $ 1,065
Interest cost......................... 4,200 3,423 3,936
Amortization of transition obligation. 2,306 2,305 2,306
--------- -------- ---------
Periodic cost....................... $ 7,499 $ 6,777 $ 7,307
========= ======== =========
As of December 31, 1995 and 1994, $4.0 million and $3.5 million,
respectively, of the accrued OPEBS related to rate-regulated operations have
been deferred as regulatory assets. Rate recovery has begun in several
jurisdictions which require the Company to place agreed upon accrual amounts in
trust when collected in rates until such time as they are applied to retiree
benefits or returned to ratepayers. Trust assets consist principally of equity
and debt securities.
<PAGE>
G. Other Postretirement Benefits (Continued)
An increase of one percent in the assumed medical cost inflation rate would
increase the accumulated postretirement benefit obligation by 5% and would
increase the periodic cost by 4%.
H. Common Stock
(1) COMMON STOCK ISSUANCE
On September 29, 1993, the Company issued 3 million shares of common stock
at a price of $38.50 per share. Net proceeds after underwriters' commissions and
other issuance costs were approximately $111.6 million. The proceeds were used
to repay a portion of the short-term debt incurred to purchase the stock of
Louisiana Intrastate Gas Company as described in Note Q.
(2)LONG-TERM INCENTIVE PLAN
The Equitable Resources, Inc. Long-Term Incentive Plan provides for the
granting of shares of common stock to officers and key employees of the Company.
These grants may be made in the form of stock options, restricted stock, stock
appreciation rights and other types of stock-based or performance-based awards
as determined by the Compensation Committee of the Board of Directors at the
time of each grant. Stock awarded under the Plan, or purchased through the
exercise of options, and the value of stock appreciation units, are restricted
and subject to forfeiture should an optionee terminate employment prior to
specified vesting dates. The maximum number of shares which could have been
granted under the Plan during 1994 was 763,500 shares. In each subsequent year,
an additional number of shares equal to 1% of the total outstanding shares as of
the preceding December 31 will be available for grant. In no case may the number
of shares granted under the Plan exceed 1,725,500 shares. No awards may be made
under the Plan after May 27, 1999. In May 1994, 363,400 stock options were
granted to purchase common stock at $33.81 per share, which was the mean of the
high and the low trading prices of the common stock on the date of grant. These
options expire five years from the date of grant. In July 1995, 739,000 stock
options were granted to purchase common stock at $28.563 per share, which was
the mean of the high and the low trading price on the date of grant. These
options expire ten years from the date of grant but contain vesting provisions
which are based upon Company performance. At December 31, 1995, 1,725,500 shares
of common stock were reserved for issuance under the Plan.
<PAGE>
H. Common Stock (Continued)
(3) KEY EMPLOYEE RESTRICTED STOCK OPTION PLAN
The Equitable Resources, Inc., Key Employee Restricted Stock Option and
Stock Appreciation Rights Incentive Compensation Plan is nonqualified and
provided for the granting of restricted stock awards or options to purchase
common stock of the Company at prices ranging from 75% to 100% of market value
on the date of grant. Options expire five years from the date of grant. Stock
awarded under the Plan or purchased through the exercise of options, and the
value of certain stock appreciation units, are restricted and subject to risk of
forfeiture should an optionee terminate employment prior to specified vesting
dates. The following schedule summarizes the stock option activity:
Years Ended December 31,
1995 1994 1993
Options outstanding January 1........... 241,818 253,068 139,725
Granted................................. - - 148,543
Exercised............................... (54,100) (7,650) (33,325)
Canceled, forfeited, surrendered
or expired............................. (43,593) (3,600) (1,875)
-------- ------ --------
Options outstanding December 31......... 144,125 241,818 253,068
======== ======= ========
Average price of options
exercised during the year.............. $20.01 $22.48 $18.97
At December 31:
Prices of options outstanding.......... $20.13 $18.81 $17.50
to to to
$36.50 $36.50 $36.50
Average option price................... $31.57 $29.82 $29.69
Shares reserved for issuance .......... 610,226 663,699 671,349
No future grants may be made under the Plan which was replaced by the
Long-Term Incentive Plan effective May 27, 1994 as described above.
<PAGE>
H. Common Stock (Continued)
(4)NON-EMPLOYEE DIRECTORS' STOCK INCENTIVE PLAN
The Equitable Resources, Inc. Non-Employee Directors' Stock Incentive Plan
provides for the granting of up to 80,000 shares of common stock in the form of
stock option grants and restricted stock awards to non-employee directors of the
Company. Each Director received 450 shares of restricted stock on February 3,
1994. On June 1, 1994 and 1995, each director was granted an option for 500
shares of common stock at $34.625 and $29.875 per share, respectively. On the
first business day of June, in each year from 1996 through 1998, each Director
will be granted an option for 500 additional shares of common stock. The
exercise price for each share is 100% of the mean of the high and the low
trading prices of the common stock on the date of grant. Each option is
exercisable upon the earlier of three years from the date of grant or a
Director's retirement, disability or death. No option may be exercised more than
five years after date of grant. At December 31, 1995, 76,400 shares of common
stock were reserved for issuance under the Plan.
(5)EMPLOYEE STOCK PURCHASE PLAN
In October 1995, the Company implemented an Employee Stock Purchase Plan,
subject to shareholder approval at the annual meeting to be held in May 1996.
The Plan provides for employees to purchase shares of the Company's common stock
at a 10 percent discount through payroll deductions.
(6)DIVIDEND REINVESTMENT AND STOCK PURCHASE PLAN
Pursuant to this Plan, stockholders may reinvest dividends and make
limited additional cash investments to purchase shares of common stock. Shares
issued through the Plan may be acquired on the open market or by issuance of
previously unissued shares. At December 31, 1995, 141,714 shares of common stock
were reserved for issuance under the Plan.
(7)STOCK REPURCHASE PROGRAM
In 1995, the Board of Directors of the Company authorized the
repurchase of up to one million shares of outstanding common stock. Through
December 31, 1995, no shares have been repurchased.
<PAGE>
I. Short-Term Loans
Maximum lines of credit available to the Company were $500 million during
1995, $325 million during 1994 and $360 million during 1993. The Company is not
required to maintain compensating bank balances. Commitment fees averaging
one-tenth of one percent were paid to maintain credit availability. In January
1995, the Company established a five-year revolving Credit Agreement with a
group of banks providing $500 million of available credit. The agreement
requires a facility fee of one-tenth of one percent.
At December 31, 1995, short-term loans consisted of $135.0 million of
commercial paper at a weighted average annual interest rate of 5.68%; and at
December 31, 1994, $256.0 million of commercial paper and $13.3 million of bank
loans, at a weighted average annual interest rate of 5.94%. The maximum amount
of outstanding short-term loans was $314.6 million in 1995, $269.3 million in
1994 and $339.0 million in 1993. The average daily total of short-term loans
outstanding was approximately $214.2 million during 1995, $204.6 million during
1994 and $174.9 million during 1993; weighted average annual interest rates
applicable thereto were 6.0% in 1995, 4.4% in 1994 and 3.3% in 1993.
J. Long-Term Debt
The Company filed a shelf registration with the Securities and Exchange
Commission effective June 9, 1994 to issue $100 million of Medium-Term
Notes--Series C to be used to retire short-term loans. As of December 31, 1995,
$18 million of Series C Notes have been issued.
The 9 1/2% Convertible Subordinated Debentures are convertible at any time
into common stock at a conversion price of $11.06 per share. During 1995, 1994
and 1993, $1,611,000, $345,000 and $564,000 of these debentures were converted
into 145,635 shares, 31,187 shares and 50,983 shares of common stock,
respectively. At December 31, 1995, 64,096 shares of common stock were reserved
for conversions.
Interest expense on long-term debt amounted to $36.5 million in 1995,
$35.5 million in 1994 and $33.2 million in 1993. Aggregate maturities of
long-term debt will be $75.0 million in 1996, none in 1997, $5.0 million in
1998, $78.8 million in 1999, and $3.8 million in 2000. The 1996 maturities will
be retired with proceeds from issuance of long-term debt.
<PAGE>
K. Derivative Financial Instruments
The Company is exposed to risk from fluctuations in energy prices in the
normal course of business. The Company uses exchange-traded natural gas and
crude oil futures contracts and options and over-the-counter (OTC) natural gas
and crude oil swap agreements and options to hedge exposures to energy price
changes, primarily relating to its gas marketing operations. The Company also
trades in energy futures. Exchange-traded energy futures contracts are
commitments to either purchase or sell a designated commodity, generally natural
gas or crude oil, at a future date for a specified price. These instruments are
generally settled with off-setting positions, but may be settled by delivery of
commodities. OTC arrangements require settlement in cash. The exchange-traded
contracts used by the Company cover one-month periods from one to eighteen
months in the future. The OTC agreements cover one-month periods for up to five
years in the future. Initial margin requirements are met in cash or other
instruments, and changes in contract values are settled daily. Energy futures
contracts have minimal credit risk because futures exchanges are the
counterparties. The Company manages the credit risk of the other financial
instruments by limiting dealings to those counterparties who meet the Company's
criteria for credit and liquidity strength.
The following table summarizes the outstanding derivative financial
instruments:
Notional Unrealized
Quantity Deferred
Purchase Sale Gain/(Loss)
-------- ------ ------------
(Bcf Equivalent) ($ Millions)
DECEMBER 31, 1995
Exchange traded
Futures................. 4.8 1.9 $ .4
Options................. 18.2 11.4 (1.4)
------ ------ ------
Total................. 23.0 13.3 $ (1.0)
====== ====== ======
OTC
Swaps................... 27.3 52.8 $ (.3)
Options................. 13.5 21.1 1.0
------ ------ ------
Total................. 40.8 73.9 $ .7
====== ====== ======
DECEMBER 31, 1994
Exchange traded
Futures................. 10.8 3.7 $ (1.5)
Options................. .5 .4 .1
------ ------ ------
Total................. 11.3 4.1 $ (1.4)
====== ====== ======
<PAGE>
K. Derivative Financial Instruments (Continued)
Deferred realized gains (losses) from hedging firm commitments and
anticipated transactions were $(2.8) million and $(.5) million at December 31,
1995 and 1994, respectively. These amounts are included in other current assets
and recognized in earnings when the future transactions occur.
At December 31, 1995 and 1994, there were no outstanding energy futures
contracts held for trading purposes. During 1995 and 1994, the average fair
value of traded contracts was $(40,000) and $30,000, respectively. Trading
activity resulted in a net loss of $1.9 million for 1995 and a net gain of $1.5
million for 1994. The value of these financial instruments is subject to
fluctuations in market prices for natural gas. Exposure to this risk is managed
by maintaining open positions within defined trading limits.
L. Fair Value of Financial Instruments
The carrying value of cash and cash equivalents as well as short-term
loans approximates fair value due to the short maturity of the instruments.
The estimated fair value of long-term debt, including the portion due
within one year, at December 31, 1995 and 1994 would be $465.1 million and
$430.2 million, respectively. The fair value was estimated based on the quoted
market prices as well as the discounted values using a current discount rate
reflective of the remaining maturity.
The Company's 8 1/4% Debentures and 7 1/2% Debentures may not be redeemed
prior to maturity. The 9.9% Debentures require payment of premiums for early
redemption, exclusive of annual sinking fund requirements.
The derivative financial instruments described in Note K are reflected in
other current assets at fair value of $(3.3) million and $(1.5) million at
December 31, 1995 and 1994, respectively.
M. Concentrations of Credit Risk
Revenues and related accounts receivable from exploration and production
operations are generated primarily from the sale of produced natural gas to
utility and industrial customers located mainly in the Appalachian area; the
sale of produced oil to refinery customers in the Rocky Mountain and Appalachian
areas; and the sale of produced natural gas liquids to a refinery customer in
Kentucky.
Energy marketing operating revenues and related accounts receivable are
generated from the nationwide marketing of natural gas to brokers and large
volume utility and industrial customers; and the sale of produced natural gas
liquids and intrastate transportation of natural gas in Louisiana.
M. Concentrations of Credit Risk (Continued)
Natural gas distribution operating revenues and related accounts
receivable are generated from state-regulated utility natural gas sales and
transportation to more than 266,000 residential, commercial and industrial
customers located in southwest Pennsylvania and parts of West Virginia and
Kentucky. Under state regulations, the utility is required to provide continuous
gas service to residential customers during the winter heating season.
Natural gas transmission operating revenues and related accounts
receivable are generated from FERC-regulated interstate pipeline transportation
and storage service for the affiliated utility, Equitable Gas, as well as other
utility and end-user customers located in nine mid-Atlantic and northeastern
states.
The Company is not aware of any significant credit risks which have not
been recognized in provisions for doubtful accounts.
N. Financial Information by Business Segment
The Company reports it operations in four segments. Exploration and
production activities comprise the exploration, development, production and sale
of natural gas and oil, extraction and sale of natural gas liquids and contract
drilling. Energy marketing activities comprise marketing of natural gas and
electricity, extraction and sale of natural gas liquids, intrastate
transportation, cogeneration development and central facility plant operations.
Natural gas distribution activities comprise the operations of the Company's
state-regulated local distribution company. Natural gas transmission activities
comprise gas transportation, gathering, storage and marketing activities
involving the Company's three FERC-regulated gas pipelines.
<PAGE>
N. Financial Information by Business Segment (Continued)
The following table sets forth financial information for each of the
business segments:
Years Ended December 31,
1995 1994 1993
(Thousands)
OPERATING REVENUES:
Exploration and production......... $ 234,865 $ 195,795 $ 202,422
Energy marketing................... 889,303 890,778 599,624
Natural gas distribution........... 381,050 390,475 335,149
Natural gas transmission........... 118,861 116,769 188,882
Sales between segments............. (198,089) (196,537) (231,283)
---------- ---------- ----------
Total............................ $1,425,990 $1,397,280 $1,094,794
========== ========== ==========
OPERATING INCOME (LOSS):
Exploration and production......... $ (13,823) $ 30,843 $ 42,453
Energy marketing................... (18,845) 4,089 11,700
Natural gas distribution........... 23,521 43,180 45,714
Natural gas transmission........... 31,099 32,136 30,630
---------- ---------- ----------
Total............................ $ 21,952 $ 110,248 $ 130,497
========== ========== ==========
IDENTIFIABLE ASSETS:
Exploration and production......... $ 596,478 $ 724,144 $ 699,322
Energy marketing................... 465,262 396,166 386,040
Natural gas distribution........... 685,912 690,068 660,889
Natural gas transmission........... 268,993 297,140 302,102
Eliminations....................... (54,837) (88,396) (101,446)
---------- ---------- ----------
Total............................ $1,961,808 $2,019,122 $1,946,907
========== ========== ==========
DEPRECIATION AND DEPLETION:
Exploration and production......... $ 66,893 57,196 $ 47,645
Energy marketing................... 11,551 11,702 5,778
Natural gas distribution........... 16,442 15,196 14,624
Natural gas transmission........... 9,739 9,253 8,847
---------- ---------- ----------
Total............................ $ 104,625 $ 93,347 $ 76,894
========== ========== ==========
CAPITAL EXPENDITURES:
Exploration and production......... $ 44,786 $ 84,460 $ 101,203
Energy marketing................... 24,164 15,765 195,042
Natural gas distribution........... 42,195 32,712 26,077
Natural gas transmission........... 6,967 13,237 17,089
---------- ---------- ----------
Total............................ $ 118,112 $ 146,174 $ 339,411
========== ========== ==========
<PAGE>
O. Sale Of Property
In October 1995, the Company sold most of its gas and oil properties in
the northern Appalachian basin areas of New York, Pennsylvania and West
Virginia. The properties comprised less than four percent of the exploration and
production segment's total gas and oil production and reserves. The Company
previously operated the majority of these properties with its working interest
averaging approximately 25 percent. Proceeds from the sale were approximately
$17.3 million.
P. Deferred Revenue
In November 1995, the Company sold an interest in certain Appalachian gas
properties, the production from which qualifies for nonconventional fuels tax
credit. The Company retained an interest in the properties that will increase
based on performance. As such, the proceeds of $133.5 million were recorded as
deferred revenues and will be recognized in income as financial targets are met.
Q. Acquisitions
In July 1995, the Company acquired all of the outstanding stock of
Independent Energy Corporation (IEC) in exchange for 232,564 shares of the
Company's common stock held in treasury. IEC is engaged in the development,
construction, operation and ownership of private power and cogeneration
projects. The acquisition is being accounted for as a pooling of interests. The
effect on the Company's financial statements is not material.
On June 30, 1993, the Company purchased the outstanding common stock of
Louisiana Intrastate Gas Company (LIG) for $191 million. LIG owns a 1,900 mile
intrastate pipeline system in Louisiana, four natural gas processing plants and
is also engaged in gas marketing. The purchase was funded initially with
short-term debt, a portion of which was repaid with the proceeds from the
issuance of common stock as described in Note H to the consolidated financial
statements. Under terms of the purchase agreement, the seller, and/or the
previous owner of LIG, have indemnified the Company against any losses resulting
from claims of liability under the gas purchase contracts and substantially all
environmental liabilities attributable to operation of LIG prior to June 30,
1993.
On July 8, 1993, the Company purchased all of the outstanding stock of
Hershey Oil Corporation (Hershey) for approximately $18 million. Hershey's
assets consist primarily of approximately 68 billion cubic feet of proved
natural gas reserves and 17,000 net undeveloped acres in Alberta, Canada.
The 1993 acquisitions were accounted for under the purchase method and are
included in the energy marketing segment and exploration and production segment,
respectively. Had the purchases occurred as of the beginning of 1993, unaudited
proforma consolidated results for the Company would have been: revenues of
$1,119 million; net income of $74.0 million; and earnings per share of $2.29.
<PAGE>
R. Commitments and Contingencies
Rent expense was $9.9 million in 1995, $9.7 million in 1994 and $9.8
million in 1993. Long-term leases are principally for division operating
headquarters and warehouse buildings and computer hardware and have renewal
options ranging to 18 years from December 31, 1995. Future minimum rentals for
all noncancelable long-term leases at December 31, 1995 are as follows: 1996,
$5.6 million; 1997, $5.2 million; 1998, $3.9 million; 1999, $3.0 million; 2000,
$2.2 million and $15.0 million thereafter for a total of $34.9 million.
The Company has annual commitments of approximately $35 million for demand
charges under existing long-term contracts with pipeline suppliers for periods
extending up to 17 years at December 31, 1995, which relate to gas distribution
operations. However, substantially all of these costs are recoverable in
customer rates.
The Company is subject to federal, state and local environmental laws and
regulations. These laws and regulations, which are constantly changing, can
require expenditures for remediation and may in certain instances result in
assessment of fines. The Company has established procedures for on-going
evaluation of its operations to identify potential environmental exposures and
assure compliance with regulatory policies and procedures. The estimated costs
associated with identified situations that require remedial action are accrued.
However, certain of these costs are deferred as regulatory assets when
recoverable through regulated rates. On-going expenditures for compliance with
environmental laws and regulations, including investments in plant and
facilities to meet environmental requirements, have not been material.
Management believes that any such required expenditures will not be
significantly different in either their nature or amount in the future and does
not know of any environmental liabilities that will have a material effect on
the Company's financial position or results of operations.
<PAGE>
S. Interim Financial Information (Unaudited)
The following quarterly summary of operating results reflects variations
due primarily to the seasonal nature of the Company's business:
March June September December
31 30 30 31
(Thousands except per share amounts)
1995
Operating revenues $ 404,691 $ 316,534 $ 270,992 $ 433,773
Operating income (loss) 48,312 5,032 14,458 (45,850)
Net income (loss) 27,754 (1,162) 1,684 (26,728)
Earnings (loss) per share $.80 $(.03) $.05 $(.76)
1994
Operating revenues $ 439,538 $ 316,122 $ 297,712 $ 343,908
Operating income 60,979 10,054 12,847 26,368
Net income 36,359 6,057 2,381 15,932
Earnings per share $1.05 $.18 $.07 $.46
T. Natural Gas and Oil Producing Activities
The supplementary information summarized below presents the results of
natural gas and oil activities for the exploration and production segment in
accordance with Statement of Financial Accounting Standards No. 69,
"Disclosures About Oil and Gas Producing Activities."
The information presented excludes data associated with natural gas
reserves related to rate-regulated operations. These reserves (proved developed)
are less than 5% of total Company proved reserves for the years presented.
<PAGE>
T. Natural Gas and Oil Producing Activities (Continued)
(1)PRODUCTION COSTS
The following table presents the costs incurred relating to natural gas
and oil production activities:
1995 1994 1993
(Thousands)
At December 31:
Capitalized costs.............. $ 803,124 $ 909,443 $ 836,638
Accumulated depreciation
and depletion................ 311,524 304,835 256,508
--------- --------- ---------
Net capitalized costs........... $ 491,600 $ 604,608 $ 580,130
========= ========= =========
Costs incurred :
Property acquisition........... $ 222 $ 8,335 $ 29,345
Exploration.................... 14,844 22,783 13,928
Development.................... 31,802 60,690 62,336
(2) RESULTS OF OPERATIONS FOR PRODUCING ACTIVITIES
The following table presents the results of operations related to natural
gas and oil production, including the effect in 1995 of impairment of assets as
described in Note B:
1995 1994 1993
(Thousands)
Revenues:
Affiliated..................... $ 20,619 $ 16,564 $ 15,467
Nonaffiliated ................. 114,247 136,029 140,380
Production costs................ 31,626 33,891 33,620
Exploration expenses............ 13,312 16,634 13,559
Depreciation and depletion...... 62,212 52,505 43,841
Impairment of assets............ 65,563 - -
Income tax expense (benefit).... (27,992) 3,602 5,039
--------- --------- ---------
Results of operations from
producing activities
(excluding corporate
overhead) $ (9,855) $ 45,961 $ 59,788
========== ========== ==========
<PAGE>
T. Natural Gas and Oil Producing Activities (Continued)
(3) RESERVE INFORMATION (UNAUDITED)
The information presented below represents estimates of proved gas and oil
reserves prepared by Company engineers. Proved developed reserves represent only
those reserves expected to be recovered from existing wells and support
equipment. Proved undeveloped reserves represent proved reserves expected to be
recovered from new wells after substantial development costs are incurred.
Substantially all reserves are located in the United States.
NATURAL GAS 1995 1994 1993
(Millions of Cubic Feet)
Proved developed and undeveloped reserves:
Beginning of year.................... 874,964 822,583 720,032
Revision of previous estimates....... 16,999 18,663 9,399
Purchase (sale) of natural gas
in place - net (a) (31,729) 6,307 86,113
Extensions, discoveries and other additions 50,521 89,918 60,589
Production........................... (64,984) (62,507) (53,550)
-------- -------- --------
End of year (b)...................... 845,771 874,964 822,583
======== ======== ========
Proved developed reserves:
Beginning of year.................... 771,635 759,282 665,194
End of year (c)...................... 739,249 771,635 759,282
(a) Includes purchases in Canada of 68,000 MMcf in 1993.
(b) Includes proved reserves in Canada of 70,000 MMcf in 1995,
67,000 MMcf in 1994and 70,000 MMcf in 1993.
(c) Includes proved developed reserves in Canada of 46,000 MMcf
in 1995, 43,000 MMcf in 1994 and 46,000 MMcf in 1993.
<PAGE>
T. Natural Gas and Oil Producing Activities (Continued)
OIL 1995 1994 1993
(Thousands of Barrels)
Proved developed and undeveloped reserves:
Beginning of year.................... 18,283 16,468 20,023
Revision of previous estimates....... (356) 2,601 (4,876)
Purchase (sale) of oil in place
- net (a) (1,071) (169) 418
Extensions, discoveries and other additions 3,278 1,369 3,015
Production........................... (1,933) (1,986) (2,112)
------- ------ ------
End of year (b)...................... 18,201 18,283 16,468
======= ====== ======
Proved developed reserves:
Beginning of year.................... 18,110 16,442 18,540
End of year (c)...................... 16,834 18,110 16,442
(a) Includes purchases in Canada of 68,000 barrels in 1993.
(b) Includes proved reserves in Canada of 91,000 barrels in 1995,
75,000 barrels in 1994 and 65,000 barrels in 1993.
(c) Includes proved developed reserves in Canada of 64,000
barrels in 1995, 50,000 barrels in 1994 and 39,000 barrels in 1993.
<PAGE>
T. Natural Gas and Oil Producing Activities (Continued)
(4) STANDARD MEASURE OF DISCOUNTED FUTURE CASH FLOW (UNAUDITED)
Management cautions that the standard measure of discounted future cash
flows should not be viewed as an indication of the fair market value of gas and
oil producing properties, nor of the future cash flows expected to be generated
therefrom. The information presented does not give recognition to future changes
in estimated reserves, selling prices or costs and has been discounted at an
arbitrary rate of 10%. Estimated future net cash flows from natural gas and oil
reserves based on selling prices and costs at year-end price levels are as
follows:
1995 1994 1993
(Thousands)
Future cash inflows................. $ 2,279,509 $ 1,983,757 $ 2,140,151
Future production costs............. (635,540) (562,841) (598,707)
Future development costs............ (51,081) (46,985) (24,579)
Future income tax expenses.......... (539,106) (361,486) (434,362)
------------ ----------- -----------
Future net cash flow................ 1,053,782 1,012,445 1,082,503
10% annual discount for estimated
timing of cash flows.............. (535,921) (471,778) (515,023)
------------ ----------- -----------
Standardized measure of discounted
future net cash flows (a)......... $ 517,861 $ 540,667 $ 567,480
============ =========== ===========
(a) Includes $11,293,000 in 1995, $10,043,000 in 1994 and $31,267,000 in
1993 related to Canada.
Summary of changes in the standardized measure of discounted future net
cash flows:
1995 1994 1993
(Thousands)
Sales and transfers of gas
and oil produced - net............ $ (103,240) $ (118,702) $ (122,227)
Net changes in prices, production
and development costs............. 54,806 (135,742) (80,256)
Extensions, discoveries, and
improved recovery, less related costs 65,603 74,900 90,035
Development costs incurred.......... 18,620 16,037 18,482
Purchase (sale) of minerals in place - net (22,990) 9,627
62,843
Revisions of previous quantity estimates 5,278 19,189 (14,910)
Accretion of discount............... 64,875 72,058 69,284
Net change in income taxes.......... (97,808) 45,012 (8,584)
Other .............................. (7,950) (9,192) 4,491
------------ ----------- -----------
Net increase (decrease)............. (22,806) (26,813) 19,158
Beginning of year................... 540,667 567,480 548,322
------------ ----------- -----------
End of year......................... $ 517,861 $ 540,667 $ 567,480
============ =========== ===========
<PAGE>
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
Not Applicable.
<PAGE>
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Information required by Item 10 with respect to directors is
incorporated herein by reference to the section describing "Election of
Directors" in the Company's definitive proxy statement relating to the annual
meeting of stockholders to be held on May 23, 1996, which will be filed with the
Commission within 120 days after the close of the Company's fiscal year ended
December 31, 1995.
Information required by Item 10 with respect to executive officers is
included herein after Item 4 at the end of Part I.
ITEM 11. EXECUTIVE COMPENSATION
Information required by Item 11 is incorporated herein by reference to
the section describing "Executive Compensation", "Employment Contracts and
Change-In-Control Arrangements" and "Pension Plan" in the Company's definitive
proxy statement relating to the annual meeting of stockholders to be held on May
23, 1996.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Information required by Item 12 is incorporated herein by reference to
the section describing "Voting Securities and Record Date" in the Company's
definitive proxy statement relating to the annual meeting of stockholders to be
held on May 23, 1996.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Information required by Item 13 is incorporated herein by reference to
the section describing "Certain Relationships and Related Transactions" in the
Company's definitive proxy statement relating to the annual meeting of
stockholders to be held on May 23, 1996.
<PAGE>
PART IV
ITEM 14. EXHIBITS AND REPORTS ON FORM 8-K
(a) 1. Financial statements
The financial statements listed in the accompanying index to
financial statements (see below) are filed as part of this annual
report.
2. Financial Statement Schedule
The financial statement schedule listed in the accompanying index to
financial statements and financial schedule (see below) is filed as
part of this annual report.
3. Exhibits
The exhibits listed on the accompanying index to exhibits (pages 60
through 63) are filed as part of this annual report.
(b) Reports on Form 8-K filed during the quarter ended December 31,
1995.
None
(c) Each management contract and compensatory arrangement in which any
director or any named executive officer participates has been marked
with an asterisk (*) in the Index to Exhibits.
<PAGE>
EQUITABLE RESOURCES, INC.
INDEX TO FINANCIAL STATEMENTS COVERED
BY REPORT OF INDEPENDENT AUDITORS
(ITEM 14 (A))
1. The following consolidated financial statements of Equitable Resources,
Inc. and Subsidiaries are included in Item 8:
PAGE REFERENCE
Statements of Consolidated Income
for each of the three years in
the period ended December 31, 1995 27
Statements of Consolidated Cash Flows
for each of the three years in the
period ended December 31, 1995 28
Consolidated Balance Sheets
December 31, 1995 and 1994 29 & 30
Statements of Common Stockholders'
Equity for each of the three years in the
period ended December 31, 1995 31
Long-term Debt, December 31, 1995 and 1994 32
Notes to Consolidated Financial Statements 33 thru 54
2. Schedule for the Years Ended December 31,
1995, 1994 and 1993 included in Part IV:
II - Valuation and Qualifying
Accounts and Reserves 59
All other schedules are omitted since the subject matter thereof is either
not present or is not present in amounts sufficient to require submission
of the schedules.
<PAGE>
EQUITABLE RESOURCES, INC. AND SUBSIDIARIES
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
FOR THE THREE YEARS ENDED DECEMBER 31, 1995
Column A Column B Column C Column D Column E
- -------------------------------------------------------------------------------
Balance At Additions Charged Balance
Beginning To Costs At End
Description Of Period and Expenses Deductions Of Period
- -------------------------------------------------------------------------------
(Thousands)
1995
Accumulated Provision
for Doubtful Accounts $ 10,890 $ 10,810 $11,161(A) $ 10,539
1994
Accumulated Provision
for Doubtful Accounts $ 10,106 $ 10,010 $ 9,226(A) $ 10,890
1993
Accumulated Provision
for Doubtful Accounts $ 9,503 $ 9,352 $ 8,749(A) $ 10,106
Note:
(A) Customer accounts written off, less recoveries.
<PAGE>
INDEX TO EXHIBITS
EXHIBITS DESCRIPTION METHOD OF FILING
- -------------- -------------------------------- ===============================
3.01 Restated Articles of Filed as Exhibit 3.01 to Form
Incorporation of the Company 10-K for the year ended
dated May 21, 1993 (effective December 31, 1993
May 27, 1993)
- -------------- -------------------------------- ===============================
- -------------- -------------------------------- ===============================
3.02 By-Laws of the Company Filed as Exhibit 3.02 to form
(amended through December 16, 10-K for the year ended
1994) December 31, 1994
- -------------- -------------------------------- ===============================
- -------------- -------------------------------- ===============================
4.01 (a) Indenture dated as of April 1, Filed as Exhibit 4.01
1983 between the Company and (Revised) to Post-Effective
Pittsburgh National Bank Amendment No. 1 to
relating to Debt Securities Registration Statement
(Registration No. 2-80575)
- -------------- -------------------------------- ===============================
- -------------- -------------------------------- ===============================
4.01 (b) Instrument appointing Bankers Filed as Exhibit 4.01 (b) to
Trust Company as successor Form 10-K for the year ended
trustee to Pittsburgh National December 31, 1993
Bank
- -------------- -------------------------------- ===============================
- -------------- -------------------------------- ===============================
4.01 (c) Resolution adopted June 26, Filed as Exhibit 4.01 (c) to
1986 by the Finance Committee Form 10-K for the year ended
of the Board of Directors of December 31, 1993
the Company establishing the
term of the $75,000,000 of
debentures, 8 1/4% Series due
July 1, 1996
- -------------- -------------------------------- ===============================
- -------------- -------------------------------- ===============================
4.01 (d) Resolutions adopted June 22, Filed as Exhibit 4.01 (d) to
1987 by the Finance Committee Form 10-K for the year ended
of the Board of Directors of December 31, 1993
the Company establishing the
terms of the 75,000 units
(debentures with warrants)
issued July 1, 1987
- -------------- -------------------------------- ===============================
- -------------- -------------------------------- ===============================
4.01 (e) Resolution adopted April 6, Filed as Exhibit 4.01 (e) to
1988 by the Ad Hoc Finance Form 10-K for the year ended
Committee of the Board of December 31, 1993
Directors of the Company
establishing the terms and
provisions of the 9.9%
Debentures issued April 14,
1988
- -------------- -------------------------------- ===============================
- -------------- -------------------------------- ===============================
4.01 (f) Supplemental indenture dated Filed as Exhibit 4.3 to Form
March 15, 1991 with Bankers S-3 (Registration Statement
Trust Company eliminating 33-39505) filed August 21,
limitations on liens and 1991
additional funded debt
- -------------- -------------------------------- ===============================
- -------------- -------------------------------- ===============================
4.01 (g) Resolution adopted August 19, Filed as Exhibit 4.05 to Form
1991 by the Ad Hoc Finance 10-K for the year ended
Committee of the Board of December 31, 1991
Directors of the Company
Addenda Nos. 1 thru 27,
establishing the terms and
provisions of the Series A
Medium-Term Notes
- -------------- -------------------------------- ===============================
4.01 (h) Resolutions adopted July 6, Filed as Exhibit 4.05 to Form
1992 and February 19, 1993 by 10-K for the year ended
the Ad Hoc Finance Committee December 31, 1992
of the Board of Directors of
the Company and Addenda Nos. 1
thru 8, establishing the terms
and provisions of the Series B
Medium-Term Notes
- -------------- -------------------------------- ===============================
<PAGE>
- -------------- -------------------------------- ===============================
4.01 (i) Resolution adopted July 14, Filed herewith as Exhibit
1994 by the Ad Hoc Finance 4.01(i)
Committee of the Board of
Directors of the Company and
Addenda Nos. 1 and 2,
establishing the terms and
provisions of the Series C
Medium-Term Notes
- -------------- -------------------------------- ===============================
- -------------- -------------------------------- ===============================
* 10.01 Equitable Resources, Inc. Key Filed as Exhibit 10.01 to
Employee Restricted Stock Form 10-K for the year ended
Option and Stock Appreciation December 31, 1994
Rights Incentive Compensation
Plan (as amended through March
17, 1989)
- -------------- -------------------------------- ===============================
* 10.02 Employment Agreement dated as Filed herewith as Exhibit
of March 18, 1988 and restated 10.02
as of March 15, 1996, with
Frederick H. Abrew
- -------------- -------------------------------- ===============================
- -------------- -------------------------------- ===============================
* 10.03 Employment Agreement dated as Filed herewith as Exhibit
of March 18, 1988 and restated 10.03
as of March 15, 1996, with
Augustine A. Mazzei, Jr.
- -------------- -------------------------------- ===============================
- -------------- -------------------------------- ===============================
* 10.04 (a) Agreement dated December 15, Filed as Exhibit 10.04 (a) to
1989 with Barbara B. Sullivan Form 10-K for the year ended
for deferred payment of 1990 December 31, 1994
director fees
- -------------- -------------------------------- ===============================
- -------------- -------------------------------- ===============================
* 10.04 (b) Agreement dated December 21, Refiled herewith as Exhibit
1990 with Barbara B. Sullivan 10.04 (b) pursuant to Rule 24
for deferred payment of 1991 of SEC's Rules of Practice
director fees
- -------------- -------------------------------- ===============================
- -------------- -------------------------------- ===============================
* 10.04 (c) Agreement dated December 13, Filed as Exhibit 10.16 to
1991 with Barbara B. Sullivan Form 10-K for the year ended
for deferred payment of 1992 December 31, 1991
director fees
- -------------- -------------------------------- ===============================
- -------------- -------------------------------- ===============================
* 10.04 (d) Agreement dated December 16, Filed as Exhibit 10.04 (e) to
1994 with Barbara B. Sullivan Form 10-K for the year ended
for deferred payment of 1995 December 31, 1994
director fees
- -------------- -------------------------------- ===============================
- -------------- -------------------------------- ===============================
* 10.04 (e) Agreement dated December 15, Filed herewith as Exhibit
1995 with Barbara B. Sullivan 10.04 (e)
for deferred payment of 1996
director fees
- -------------- -------------------------------- ===============================
* 10.05 Supplemental Executive Filed herewith as Exhibit
Retirement Plan (as amended 10.05
and restated through October
20, 1995)
- -------------- -------------------------------- ===============================
- -------------- -------------------------------- ===============================
* 10.06 Retirement Program for the Filed as Exhibit 10.06 to
Board of Directors of Form 10-K for the year ended
Equitable Resources, Inc. (as December 31, 1994
amended through August 1, 1989)
- -------------- -------------------------------- ===============================
* 10.07 Supplemental Pension Plan (as Filed as Exhibit 10.07 to
amended and restated through Form 10-K for the year ended
December 16, 1994) December 31, 1994
- -------------- -------------------------------- ===============================
<PAGE>
- -------------- -------------------------------- ===============================
* 10.08 Policy to Grant Supplemental Filed as Exhibit 10.08 to
Deferred Compensation Benefits Form 10-K for the year ended
in Selected Instances to a December 31, 1994
Select Group of Management or
Highly Compensated Employees
(as amended and restated
through August 1, 1989)
- -------------- -------------------------------- ===============================
- -------------- -------------------------------- ===============================
* 10.09 Equitable Resources, Inc. and Filed as Exhibit 10.22 to
Subsidiaries Short-Term Form 10-K for the year ended
Incentive Compensation Plan as December 31, 1992
amended February 17, 1993
- -------------- -------------------------------- ===============================
- -------------- -------------------------------- ===============================
* 10.10 (a) Agreement dated December 31, Filed as Exhibit 10.10 (a) to
1987 with Malcolm M. Prine for Form 10-K for the year ended
deferred payment of 1988 December 31, 1993
director fees
- -------------- -------------------------------- ===============================
- -------------- -------------------------------- ===============================
* 10.10 (b) Agreement dated December 30, Filed as Exhibit 10.10 (b) to
1988 with Malcolm M. Prine for Form 10-K for the year ended
deferred payment of 1989 December 31, 1993
director fees
- -------------- -------------------------------- ===============================
- -------------- -------------------------------- ===============================
10.11 Trust Agreement with Filed as Exhibit 10.12 to
Pittsburgh National Bank to Form 10-K for the year ended
act as Trustee for December 31, 1994
Supplemental Pension Plan,
Supplemental Deferred
Compensation Benefits,
Retirement Program for Board
of Directors, and Supplemental
Executive Retirement Plan
- -------------- -------------------------------- ===============================
- -------------- -------------------------------- ===============================
* 10.12 Equitable Resources, Inc. Filed as Exhibit 10.13 to
Non-Employee Directors' Stock Form 10-K for the year ended
Incentive Plan December 31, 1994
- -------------- -------------------------------- ===============================
- -------------- -------------------------------- ===============================
* 10.13 Equitable Resources, Inc. Filed as Exhibit 10.14 to
Long-Term Incentive Plan Form 10-K for the year ended
December 31, 1994
- -------------- -------------------------------- ===============================
- -------------- -------------------------------- ===============================
* 10.14 (a) Agreement dated December 31, Filed as Exhibit 10.15 to
1994 with Donald I. Moritz for Form 10-K for the year ended
consulting services December 31, 1994
- -------------- -------------------------------- ===============================
- -------------- -------------------------------- ===============================
* 10.14 (b) Letter agreement dated Filed herewith as Exhibit
December 15, 1995 amending 10.14 (b)
agreement with Donald I.
Moritz for consulting services
- -------------- -------------------------------- ===============================
- -------------- -------------------------------- ===============================
* 10.15 Change in Control Agreement Filed herewith as Exhibit
executed with certain key 10.15
employees
- -------------- -------------------------------- ===============================
- -------------- -------------------------------- ===============================
* 10.16 Equitable Resources, Inc. and Filed herewith as Exhibit
Subsidiaries Deferred 10.16
Compensation Plan
- -------------- -------------------------------- ===============================
11.01 Statement re Computation of Filed herewith as Exhibit
Earnings Per Share 11.01
- -------------- -------------------------------- ===============================
<PAGE>
- -------------- -------------------------------- ===============================
21 Schedule of Subsidiaries Filed herewith as Exhibit 21
- -------------- -------------------------------- ===============================
- -------------- -------------------------------- ===============================
23.01 Consent of Independent Auditors Filed herewith as Exhibit
23.01
- -------------- -------------------------------- ===============================
99.01 (a) Equitable Resources, Inc. Filed herewith as Exhibit
Employees Savings Plan Form 99.01 (a)
11-K Annual Report for the
year ended October 31, 1995
- -------------- -------------------------------- ===============================
- -------------- -------------------------------- ===============================
99.01 (b) Equitable Resources, Inc. Filed herewith as Exhibit
Employees Savings Plan Form 99.01 (b)
11-K Annual Report for the
period ended December 31, 1995
- -------------- -------------------------------- ===============================
99.02 Equitable Resources, Inc. Filed herewith as Exhibit
Employees Stock Purchase Plan 99.02
Form 11-K Annual Report
- -------------- -------------------------------- ===============================
The Company agrees to furnish to the Commission, upon request, copies of
instruments with respect to long-term debt which have not previously been filed.
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
EQUITABLE RESOURCES, INC.
(Registrant)
By: s/ Frederick H. Abrew
Frederick H. Abrew
President and Chief Executive Officer
Date: March 21, 1996
Pursuant to the requirements of the Securities and Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
President and Chief Executive
Officer and Director
s/ Frederick H. Abrew (Principal Executive Officer) March 21, 1996
- ---------------------------
Frederick H. Abrew
Vice President and
s/ A. Mark Abramovic Chief Financial Officer March 21, 1996
- ---------------------------
A. Mark Abramovic
Vice President
Strategic and
Financial Planning
s/ Dan C. Eaton (Chief Accounting Officer) March 21, 1996
- ---------------------------
Dan C. Eaton
Director
Merle E. Gilliand
s/ E. Lawrence Keyes, Jr. Director March 21, 1996
- ---------------------------
E. Lawrence Keyes, Jr.
<PAGE>
SIGNATURES (Continued)
s/ Thomas A. McConomy Director March 21, 1996
- ---------------------------
Thomas A. McConomy
s/ Donald I. Moritz Director March 21, 1996
- ---------------------------
Donald I. Moritz
s/ Malcolm M. Prine Director March 21, 1996
- ---------------------------
Malcolm M. Prine
s/ David S. Shapira Director March 21, 1996
- ---------------------------
David S. Shapira
s/ Barbara Boyle Sullivan Director March 21, 1996
Barbara Boyle Sullivan
s/ J. Michael Talbert Director March 21, 1996
- --------------------------------
J. Michael Talbert
EQUITABLE RESOURCES, INC.
Ad Hoc Finance Committee Meeting
Pittsburgh, PA
July 14, 1994
A meeting of the Ad Hoc Finance Committee of the Board of Directors
of Equitable Resources, Inc., was held at Farmington, Pennsylvania, on Thursday,
July 14, 1994, at 7:10 a.m., Eastern Daylight Time.
Committee members present: Messrs. Merle E. Gilliand,
E. Lawrence Keyes, Jr., Malcolm M. Prine, Daniel M. Rooney and Mrs.
Barbara B. Sullivan. Mr. Rooney attended via conference telephone.
Also present: Messrs. Donald I. Moritz, Chairman and Chief
Executive Officer; Frederick H. Abrew, President and Chief Operating
Officer; Robert E. Daley, Vice President and Treasurer; and Ms. Audrey
C. Moeller, Vice President and Corporate Secretary.
Mr. Malcolm M. Prine, Chairman of the Committee, acted as
Chairman of the meeting and Ms. Audrey C. Moeller acted as Secretary of
the meeting.
Mr. Moritz stated that the purpose of the meeting was to adopt
resolutions establishing certain terms and provisions of an additional series of
securities of the Company to be issued from time to time under the Indenture
dated as of April 1, 1983, from Equitable Resources, Inc., to Bankers Trust
Company, as successor Trustee, as amended by the 1991 Supplemental Indenture
dated as of March 15, 1991; and as contemplated by resolutions adopted by the
Board of Directors on March 18, 1994, to authorize the Vice President and
Treasurer of the Company to take certain other action on the Committee's behalf.
A draft of the resolutions was distributed to the Committee members.
Mr. Daley was then asked to review the text of the resolutions. Prior
to reviewing the material, Mr. Daley distributed a report of the issuance of the
Medium-Term Notes, Series B, the principal amount being $100,000,000 issued at
an average interest rate of 6.60 percent at an average maturity of 12.61 years.
He also distributed material showing multiple historic yield curves. Mr. Daley
then distributed a Prospectus dated June 10, 1994 covering the new Notes which
would be issued from time to time and designated Medium-Term Notes, Series C. He
pointed out that the Prospectus and all necessary governmental and regulatory
approvals authorized the issuance of up to $100,000,000 of the Notes but that
management currently is requesting authorization to issue only $50,000,000
within the next six to nine months. He said maturities could range from nine (9)
months to forty (40) years from the date of issue; that the Notes may be
redeemed prior to maturity; shall not be convertible; that the Company has no
obligation to repay the Notes prior to maturity; and that management would be
negotiating with Agents, Morgan Stanley & Co. Incorporated and Lehman Brothers
in fixing the interest rate on each issue of Notes, although the Company has
reserved the right to issue Notes without the par-ticipation of the Agents. Mr.
Daley said the proceeds would be used to retire short-term debt.
After full discussion, on motion duly made and seconded, the
following resolution was unanimously adopted:
RESOLVED, That, in accordance with Section 301 of the Indenture dated
as of April 1, 1983 (the "Original Indenture") from Equitable Resources, Inc.
(the "Company") to Bankers Trust Company, as successor Trustee (the "Trustee"),
as amended by the 1991 Supplemental Indenture dated as of March 15, 1991 (the
Original Indenture as so amended, the "Indenture"), and as authorized by those
certain resolutions of the Board of Directors of the Company dated March 18,
1994, there is hereby established for authentication and delivery by the Trustee
an additional series of Securities of the Company (such series being referred to
herein as the "Notes") to be issued from time to time under the Indenture,
having the following terms and provisions in addition to the terms and
provisions established by the Indenture, and to be in substantially the form
annexed to this Board resolution:
1. Title. The title of the Notes shall be "Medium-Term
Notes, Series C."
2. Principal Amount. The aggregate principal amount of Notes which
may be authenticated and delivered (except for Notes authenticated and delivered
upon registration of transfer of, or in exchange for, or in lieu of, other Notes
pursuant to Section 304, 305, 306, 906 or 1107 of the Indenture) shall initially
be limited to $50,000,000. Notes may be issued at any time or from time to time
in such principal amounts as shall be specified in one or more Addenda hereto
(individually an "Addendum" and collectively Addenda") which may be executed at
any time or from time to time by the Chairman, the President or the Vice
President and Treasurer of the Company. Each Addendum shall be in substantially
the form annexed to this Board resolution and shall be deemed to have been, and
hereby is, adopted by this Committee, and may be certified by the Secretary or
Assistant Secretary of the Company as a part of this Board resolution. For
purposes of each issue of Notes established pursuant to any Addendum, all
references in Sections 304, 305, 306, 906 and 1107 of the Indenture to the
Securities of any "series" shall be deemed to be references solely to the issue
of Notes so established.
3. Maturity. The principal of the Notes shall be payable
on such date as shall be nine (9) months to forty (40) years from the
date of issue, as shall be specified in any applicable Addendum.
4.1 Interest Rate. The Notes shall bear interest at such fixed rate
per annum as shall be specified in any applicable Addendum, in each case until
the principal thereof is paid or made available for payment and (to the extent
that the payment of such interest shall be legally enforceable) at the same rate
per annum on any overdue principal and premium and on any overdue installment of
interest.
4.2 Interest Accrual. Interest on the Notes shall accrue from the
date of the original issue of such Notes or from the most recent Interest
Payment Date (as specified in Section 4.3 below) to which interest has been paid
or duly provided for.
4.3 Interest Payment Dates. Unless otherwise specified in any
applicable Addendum, the Interest Payment Dates on which interest on the Notes
shall be paid or duly provided for shall be semiannually on July 15 and January
15 in each year, commencing on such date as shall be specified in any applicable
Addendum.
4.4 Regular Record Dates. Unless otherwise specified in any
applicable Addendum, the Regular Record Dates for the interest on the Notes so
payable on any Interest Payment Date (as specified in Section 4.3 above) shall
be the July 1 or January 1 (whether or not a Business Day), as the case may be,
preceding such Interest Payment Date.
5. Place of Payment. Principal of, and premium, if any, on, and
interest payable upon maturity or earlier redemption of, the Notes shall be
payable at the office or agency of the Company maintained for that purpose in
the Borough of Manhattan, the City of New York, New York (the "Paying Agent").
Interest on the Notes, other than interest payable at maturity or earlier
redemption, shall be payable by check mailed to the registered address of the
holder of record on the Regular Record Date for such interest payment. Unless
otherwise designated by the Company in a written notice to the Trustee, the
office or agency in the Borough of Manhattan for the above purpose shall be the
Corporate Trust Office of the Trustee. Notwithstanding the foregoing, (a)
interest on any Note held in the name of a nominee of the Depositary (as defined
in Section 13.2 below) shall be payable by wire transfer of immediately
available funds and (b) interest on any Certificated Note (as defined in Section
13.2 below) held by a holder of $10,000,000 or more in aggregate principal
amount of Certificated Notes having the same Interest Payment Dates shall be
entitled to receive payments of interest by wire transfer of immediately
available funds upon written request to the Paying Agent not later than 15
calendar days prior to the applicable Interest Payment Date.
6. Redemption. The Notes may be subject to redemption prior to
Maturity at the option of the Company, as a whole at any time or in part from
time to time, otherwise than through operation of a sinking fund, at such
Redemption Prices (expressed as per- centages of the principal amount)
prevailing during such periods of time as shall be specified in any applicable
Addendum, in each case together with accrued interest to the Redemption Date.
7. Sinking Fund. The Notes may be entitled to the benefit of a
sinking fund requiring payments by the Company to the Trustee at such times, in
amounts sufficient to redeem such principal amount of the Notes at such sinking
fund redemption price, with such right of the Company to increase such payments
or to deliver Notes or to apply Notes previously delivered in satisfaction of
such sinking fund requirements, and with such credit to the Company for
previously increased sinking fund payments, in each case as shall be specified
in any applicable Addendum.
8. Denominations. Unless otherwise specified in any
applicable Addendum, the Notes shall be issuable in denominations of
$100,000 or any amount in excess thereof which is an integral multiple
of $1,000.
9. Convertibility. The Notes shall not be convertible
into shares of capital stock or other securities of the Company.
10. Repayment. Except as provided in Sections 7 and 11
hereof, the Company shall have no obligation to repay the Notes (at the
option of Holders or otherwise) prior to the Maturity of the Notes (as
specified in Section 3 above).
11. Acceleration. The entire principal amount of the Notes
(and not a portion thereof) shall be payable upon declaration of
acceleration of the Maturity of any Note pursuant to Section 502 of the
Indenture.
12. Section 403 of Indenture. Section 403 of the Indenture
shall apply to the Notes.
13.1 Additional Covenants. No additional covenants shall be
applicable in respect of the Notes.
13.2 Notes Issuable as Global Securities. Each Note will be
represented (i) either by a "Global Note" registered in the name of a nominee
of, and deposited with, The Depository Trust Company, New York, New York, as
Depositary (the "Depositary"), and representing "Book-Entry Notes", (ii) or by a
certificate issued in definitive or temporary form (a "Certificated Note"), in
each case as specified in the applicable Addendum. Certificated Notes will not
be exchangeable for Book-Entry Notes and, except under the circumstances
described below, Book-Entry Notes will not be exchangeable for Certificated
Notes and will not otherwise be issuable as Certificated Notes.
So long as the Depositary's nominee is the registered owner of a
Global Note, such nominee will be considered to be the sole owner or Holder of
the Notes represented by such Global Note for all purposes of the Indenture.
Except as set forth below, owners of beneficial interests in a Global Note will
not be entitled to have the Notes represented by such Global Note registered in
their names, will not receive or be entitled to receive physical delivery of
such Notes in definitive form, and will not be considered to be the owners or
Holders thereof under the Indenture.
If the Depositary is at any time unwilling or unable to continue to
act as Depositary, and a successor depositary is not appointed by the Company
within 90 days, the Company will issue Certificated Notes in definitive form in
exchange for the Global Note or Notes previously deposited with the Depositary.
In addition, the Company may at any time in its sole discretion determine not to
have the Notes represented by one or more Global Notes and, in such event, will
issue Certificated Notes in defin- itive form in exchange for such Global Note
or Notes.
13.3 Other Provisions. The Notes shall have no other terms than as
set forth in this Board resolution (including any Addenda) and the Indenture or
as may be set forth in any indenture or indentures supplemental to the
Indenture.
13.4 Indemnification. The Company agrees to indemnify the Trustee
for, and to hold it harmless against, any loss, liability or expense incurred
without negligence or bad faith on its part, arising out of or in connection
with the acceptance or administration of the duties set forth in those certain
Administrative Procedures, which comprise a part of that certain Distribution
Agreement dated June 10, 1994, between the Company and the Agents named therein
(the "Administrative Procedures"), relating to the Notes, as though such
Administrative Procedures were set forth in the Indenture.
Capitalized terms used in this Board resolution have the meanings set
forth in the Indenture unless otherwise indicated or the context otherwise
requires.
On motion duly made and seconded, the following reso- lutions were
unanimously adopted:
RESOLVED, That Robert E. Daley, Vice President and Treasurer, is
hereby appointed as this Committee's agent to act in its name, place and stead
with regard to the determination of all the terms and conditions of the
$50,000,000 aggregate principal amount of the Notes to be issued under the
Indenture dated as of April 1, 1983, as amended, from Equitable Resources, Inc.
to Bankers Trust Company, as Trustee, and under this Company's Form S-3
Registration Statement No. 33-53703, including without limitation, the interest
rates and maturity dates and other terms of sale thereof, so long as the
maturity period of any such Notes is no less than nine (9) months nor more than
forty (40) years from the date of issuance.
RESOLVED FURTHER, That the issuance of such Notes on the terms
established by Robert E. Daley is hereby authorized, and, in furtherance of the
foregoing, Mr. Daley is hereby authorized, empowered and directed to complete
the text of a resolution of this Committee establishing the terms of any such
Note as provided by Section 301 of the said Indenture, and any such resolution
when so completed shall be deemed to have been, and hereby is, adopted by this
Committee, and the Secretary or any Assistant Secretary of the Company is hereby
authorized, empowered and directed to certify the adoption of any such
resolution as though the same were presented to and adopted at a duly convened
meeting of this Committee, any such resolution to be inserted in the minute book
of the Company as part of the minutes of the Company.
The meeting adjourned at 7:20 a.m.
s/ Audrey C. Moeller
Secretary
<PAGE>
EQUITABLE RESOURCES, INC.
ADDENDUM NO. 1 TO BOARD RESOLUTION
Establishing Certain Terms and Provisions
of an Issue of Medium-Term Notes, Series C
Pursuant to the Board Resolution
Adopted March 18, 1994 and the
Ad Hoc Finance Committee Resolution dated July 14, 1994
RESOLVED, That, as contemplated by the Board Resolution adopted March 18,
1994 and the Ad Hoc Finance Committee Resolution dated July 14, 1994, there is
hereby established for authentication and delivery by the Trustee an issue of
the Medium-Term Notes, Series C of the Company having the following terms and
provisions in addition to the terms and provisions established by the Indenture
and the aforesaid Board Resolution:
1. Principal Amount. $8,000,000.
2. Maturity Date. January 15, 2018.
3.1. Interest Rate. 7.60% per annum.
3.2. Interest Payment Dates. January 15 and July 15, commencing
July 15, 1995.
4. Notes Issuable as Global Securities. The Notes of this
issue shall be issuable only as Global Notes, except under the
circumstances described in the Board Resolution.
5. Price to the Public. 99.25%.
Capitalized terms used in this Addendum to Board Resolution have the
meanings set forth in the Board Resolution unless otherwise indicated or the
context otherwise requires.
In response to certain provisions of the Orders of the Pennsylvania
Public Utility Commission and the Kentucky Public Service Commission, it is
noted that the interest rate set forth above represents a premium of 62.5 basis
points over the corres-ponding
Treasury rate.
WITNESS the due execution hereof this 19th day of May, 1995.
Robert E. Daley
Vice President & Treasurer
<PAGE>
EQUITABLE RESOURCES, INC.
ADDENDUM NO. 2 TO BOARD RESOLUTION
Establishing Certain Terms and Provisions
of an Issue of Medium-Term Notes, Series C
Pursuant to the Board Resolution
Adopted March 18, 1994 and the
Ad Hoc Finance Committee Resolution dated July 14, 1994
RESOLVED, That, as contemplated by the Board Resolution adopted March 18,
1994 and the Ad Hoc Finance Committee Resolution dated July 14, 1994, there is
hereby established for authentication and delivery by the Trustee an issue of
the Medium-Term Notes, Series C of the Company having the following terms and
provisions in addition to the terms and provisions established by the Indenture
and the aforesaid Board Resolution:
1. Principal Amount. $10,000,000.
2. Maturity Date. July 5, 2007.
3.1. Interest Rate. 6.78% per annum.
3.2. Interest Payment Dates. January 15 and July 15, commencing
July 15, 1995.
4. Notes Issuable as Global Securities. The Notes of this
issue shall be issuable only as Global Notes, except under the
circumstances described in the Board Resolution.
5. Price to the Public. 99.375%.
Capitalized terms used in this Addendum to Board Resolution have the
meanings set forth in the Board Resolution unless otherwise indicated or the
context otherwise requires.
In response to certain provisions of the Orders of the Pennsylvania
Public Utility Commission and the Kentucky Public Service Commission, it is
noted that the interest rate set forth above represents a premium of 70 basis
points over the corres-ponding
Treasury rate.
WITNESS the due execution hereof this 7th day of June, 1995.
Robert E. Daley
Vice President & Treasurer
<PAGE>
EXCERPT FROM THE MINUTES OF A MEETING OF THE
FINANCE COMMITTEE OF THE BOARD OF DIRECTORS
OF EQUITABLE RESOURCES, INC. HELD OCTOBER 19, 1995
WHEREAS, on July 14, 1994, The Finance Committee, pursuant to
authority granted by the Board of Directors of the Company on March 18, 1994,
authorized the issuance of $50 million of Medium Term Notes, Series C, and
appointed Robert E. Daley, Vice President and Treasurer, to act as the
Committee's Agent in determining the terms and conditions pursuant to which such
Notes would be issued; and
WHEREAS, the Committee wishes to extend such previous authorizations
to cover all of the Series C Notes which the Company has registered with the
Securities and Exchange Commission.
NOW, THEREFORE, BE IT RESOLVED, That the aggregate principal amount
of Medium Term Notes, Series C, which the Company may authenticate and deliver
is $100 million.
RESOLVED FURTHER, That Robert E. Daley, Vice President and Treasurer,
is appointed the Committee's Agent to determine the terms and conditions
pursuant to which the entire $100 million of such Notes will be issued.
RESOLVED FURTHER, That all other provisions of the Committee's July
14, 1994 resolutions shall remain in full force and effect.
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") dated as of the day of
March 18, 1988, and amended and restated as of March 15, 1996 (the "Effective
Date") between Equitable Resources, Inc., a Pennsylvania corporation, with its
principal executive offices at 420 Boulevard of the Allies, Pittsburgh,
Pennsylvania 15219 (the "Company"), and Frederick H. Abrew, an individual and
resident of Bridgeville, Pennsylvania (the "Executive").
WHEREAS, the Company desires to secure the continued
employment of the Executive in accordance with the provisions of
the Agreement;
WHEREAS, the Executive desires and is willing to accept
continued employment with the Company in accordance herewith, and
WHEREAS, this Agreement has been amended in certain respects as of
the Effective Date and restated in its entirety, and the parties hereto
expressly acknowledge the adequacy of the mutual consideration for such
amendments, with the intention to be bound by them;
NOW, THEREFORE, in consideration of the mutual covenants herein
contained and intending to be legally bound, the Company and the Executive
hereby amend and restate their agreement relating to the Executive's employment
with the Company as follows:
Position and Duties.
The Company hereby agrees to, and hereby does, continue to employ the
Executive, for the term of this Agreement, to render services to the Company as
President and Chief Executive Officer of the Company and in connection therewith
to perform such duties as the Executive is now performing and such other duties,
commensurate with such position, as the Executive may reasonably be directed to
perform by the Board of Directors of the Company provided, however, that without
the prior written consent of the Executive there shall be no geographic change
from Pittsburgh, Pennsylvania or its environs or transfer of the office or place
of performance of the Executive's service or duties. Except to the extent that
the Board of Directors of the Company delegates the duties and assigns the
positions described below with respect to subsidiaries of the Company to such
other person or persons as the Board of Directors of the Company, in its
discretion, shall determine, the Executive will continue to serve as the
President and Chief Executive Officer of such of the subsidiaries of the Company
and in connection therewith to perform such duties as the Executive is now
performing and such other duties, commensurate with such position as President
and Chief Executive Officer of such subsidiaries, as the Executive may
reasonably be directed to perform by the Board of Directors of the Company. The
Executive shall have the right to devote a reasonable amount of time and effort
to industry, community or charity organizations, and, subject to the provisions
of Section 11 and Section 12 hereof, the Executive may serve as a director of
other companies with the consent of the Board of Directors which consent case
shall not be unreasonably withheld.
The Executive hereby accepts such employment and agrees faithfully to
perform to the best of his ability the duties described in Section l(a).
Term. Subject to Section 4 hereof, the term of the employment of the
Executive under this Agreement shall commence on the Effective Date and shall
terminate on the last day of the calendar month in which occurs the earlier of
(i) the date of the Executive's retirement in accordance with the provisions of
the Company's retirement policy as set forth in its Management Manual or (ii)
unless further extended as hereinafter set forth, the date which is 36 calendar
months after the Effective Date. Commencing on the last day of the first full
calendar month after the Effective Date and on the last day of each succeeding
calendar month, the term of this Agreement shall be automatically extended
without further action by either party (but not beyond the Executive's 65th
birthday) for one additional calendar month unless one party notifies the other
in writing that such party does not wish to extend the term of this Agreement.
In the event that such notice shall have been delivered, the term hereof shall
no longer be subject to automatic extension and the term hereof shall expire on
the date which is 36 calendar months after the last day of the month in which
such written notice is received. (The last day of the calendar month in which
the term hereof, as extended from time to time, shall end is hereinafter
referred to as the "Expiration Date").
Compensation. In consideration of the Executive's agreements contained
herein and as compensation to the Executive for the performance of the services
required hereunder, the Company shall pay or grant to him the following salary
and other compensation and benefits:
a base salary, payable in equal installments not less frequently than
monthly, at such annual rate, not less than the current salary per year, as is
determined from time to time by the Board or an appropriate committee thereof,
provided, however, that the Executive's base salary shall be periodically
reviewed by the Board and shall be increased if the Board determines that an
increase is appropriate on the basis of the types of factors it generally takes
into account in increasing the salaries of executive officers of the Company;
an annual incentive compensation payment equal to the amount, if any,
payable to the Executive under the terms and conditions of the Company's
Short-Term Incentive Compensation Plan as in effect for each annual period
during the term of this
Agreement;
such other awards under the Company's Key Employee Restricted Stock
Option and Stock Appreciation Rights Incentive Compensation Plan (the "Option
Plan") or under any other stock option, incentive compensation or other
compensation plan, program or arrangement, now existing or hereafter adopted as
applicable to executive officers of the Company, as the Board, or an appropriate
committee thereof administering such plan, program or arrangement, may determine
appropriate in light of the duties and responsibilities of the Executive in
respect to other executive officers;
participation on the same terms and conditions as all other employees
in all employee benefit plans, whether or not qualified within the meaning of
Section 401(a) of the Internal Revenue Code of 1986, as may be amended from time
to time (the "Code"), as may be now or hereafter sponsored or maintained for all
employees of the Company and participation on the same terms and conditions as
other executive officers in such other plan, program or arrangement as may be
now or hereafter sponsored or maintained for executive officers of the Company;
reimbursement for reasonable travel and other expenses incurred by
Executive in performing his obligations hereunder pursuant to the terms and
conditions of the Company's policy in respect thereto; and
reasonable vacations, absences on account of temporary illness and
fringe benefits customarily enjoyed by employees or executive officers of the
Company under the terms and conditions of the Company's policy in respect
thereto.
Nothing contained in this Agreement shall prevent the Board from
amending or otherwise altering the Short-Term Incentive Plan, the Option Plan or
any other plan, program or arrangement so long as such amendment or alteration
(i) is accomplished pursuant to the terms thereof as in effect on the Effective
Date or on the date such is adopted, if later, and (ii) equitably affects all
employees, executive or otherwise, previously covered thereunder.
Termination of Employment. This Agreement shall terminate upon the
Expiration Date or upon the death of the Executive. Prior to the occurrence of a
Change of Control and the Expiration Date, the Company may terminate this
Agreement and the Executive's employment hereunder for "Disability" or "Cause"
and the Executive may terminate the Agreement prior to the Expiration Date and
his employment hereunder pursuant to his "Resignation for Good Reason" or
"Retirement for Good Reason" as such terms are hereinafter defined. Following
the occurrence of a Change of Control and prior to the Expiration Date, the
Company may terminate this Agreement and the Executive's employment hereunder
for "Disability", "Cause" or without "Cause" and Executive may terminate this
Agreement and his employment hereunder pursuant to Retirement for Good Reason or
Resignation for Good Reason. Termination of this Agreement for any reason not
set forth above shall not be deemed a permitted termination and shall be deemed
a breach of this Agreement. In the event of any termination of this Agreement
prior to the Expiration Date, whether a permitted termination or otherwise, the
provisions of Section 5 of this Agreement shall determine the amount, if any, of
any compensation thereafter due the Executive in respect to such termination.
As used in this Agreement, the following terms shall have the
meanings set forth:
Disability. The Executive shall be entitled to leaves of absence from
the Company in accordance with the Company's policy generally applicable to
executives for illness or other temporary disabilities for a period or periods
not exceeding an aggregate of six months in any calendar year, and his
compensation and status as an employee hereunder shall continue during any such
period or periods. If, as a result of the Executive's incapacity due to physical
or mental illness, the Executive shall have been absent from his duties with the
Company on a full-time basis for six consecutive months, and within thirty days
after written notice of termination is given by the Company, the Executive shall
not have returned to the full-time daily performance of his duties, the
Executive shall be deemed to have experienced a Disability and the Company may
terminate the Executive's employment hereunder.
Cause. Termination by the Company of employment for
"Cause" shall mean termination upon:
the willful and continued failure by the Executive to substantially
perform his duties with the Company (other than (A) any such failure
resulting from his incapacity due to physical or mental illness or
(B) any such actual or anticipated failure resulting from his
Resignation for Good Reason or Retirement for Good Reason), after a
written demand for substantial performance is delivered to the
Executive by the Board which specifically identifies the manner in
which the Board believes that the Executive has not substantially
performed his duties, and which failure has not been cured within
thirty days after such written demand; or
the willful and continued engaging by the Executive in
conduct which is demonstrably and materially injurious
to the Company, monetarily or otherwise; or
the breach by the Executive of the Noncompetition
clause in Section 11 hereof or the Confidentiality
clause in Section 12 hereof.
For purposes of this Subsection (b), no act, or failure to act, on the
Executive's part shall be considered "willful" unless done, or omitted to be
done, by the Executive in bad faith and without reasonable belief that such
action or omission was in the best interest of the Company. Notwithstanding the
foregoing, the Executive shall not be deemed to have been terminated for Cause
unless and until there shall have been delivered to him a copy of a resolution
duly adopted by the affirmative vote of not less than three-quarters of the
entire membership of the Board at a meeting of the Board called and held for
that purpose (after reasonable notice to the Executive and an opportunity for
the Executive, together with his counsel, to be heard before the Board), finding
that in the good faith opinion of the Board the Executive was guilty of conduct
set forth above in clauses (i), (ii) or (iii) of the first sentence of this
Subsection (b) and specifying the particulars thereof in detail.
Retirement for Good Reason. For purposes of this Agreement
"Retirement for Good Reason" shall mean the Executive's election to retire under
the terms of the Company's Pension Plan for Salaried Employees as a result of
the occurrence of one of the events referred to in Subsection (e) below.
Resignation for Good Reason. For purposes of this Agreement,
"Resignation for Good Reason" shall mean the Executive's election to resign as a
result of the occurrence of one of the events referred to in Subsection (e)
below.
Good Reason. For purposes of this Agreement, "Good
Reason" shall, absent the Executive's prior express written
consent to the contrary, mean:
removal of the Executive as President and Chief Executive Officer of
the Company, (by reason other than death, Disability or Cause), or
any other material breach by the Company of its obligations contained
in this Agreement;
the assignment to the Executive of any duties inconsistent with his
status as President and Chief Executive Officer of the Company or a
substantial alteration in the nature or status of the Executive's
responsibilities which renders the Executive's position to be of less
dignity, responsibility or scope;
a reduction by the Company in the Executive's annual base salary as
in effect on the Effective Date or as the same may be increased from
time to time, except for proportional across-the-board salary
reductions similarly affecting all executives of the Company and all
executives of any person in control of the Company, provided,
however, that in no event shall the Executive's annual base salary be
reduced by an amount equal to ten percent or more of the Executive's
annual base salary as of the end of the calendar year immediately
preceding the year in which the Executive's employment with the
Company is terminated without the Executive's prior written consent;
the failure to grant the Executive an annual salary increase
reasonably necessary to maintain such salary as reasonably comparable
to salaries of senior executives holding positions equivalent to the
Executive's in the industry in which the Company's then principal
business activity is conducted;
the relocation of the Company's principal executive offices to a
location outside the Pittsburgh, Pennsylvania Metropolitan Area or
the Company's requiring the Executive to be based anywhere other than
the Company's principal executive offices except for required travel
on the Company's business to an extent substantially consistent with
the Executive's present business travel obligations;
the failure by the Company to continue in effect any compensation
plan, program or arrangement in which the Executive participates,
unless an equitable arrangement reasonably acceptable to the
Executive (embodied in an ongoing substitute or alternative plan,
program or arrangement) has been made with respect to such plan, or
the failure by the Company to continue the Executive's participation
therein;
any material reduction by the Company of the benefits enjoyed by the
Executive under any of the Company's pension, retirement, profit
sharing, savings, life insurance, medical, health-and-accident,
disability or other employee benefit plans, programs or arrangements,
the taking of any action by the Company which would directly or
indirectly materially reduce any of such benefits or deprive the
Executive of any material fringe benefits, or the failure by the
Company to provide the Executive with the number of paid vacation
days to which he is entitled on the basis of years of service with
the Company in accordance with the Company's normal vacation policy,
provided that this Section (vii) shall not apply to any proportional
across-the-board reduction or action similarly affecting all
executives of the Company and all executives of any person in control
of the Company;
the failure of the Company to obtain a satisfactory agreement from
any successor to assume and agree to perform this Agreement, as
contemplated in Section 15(b)(ii) hereof; or
any purported termination of the Executive's employment which is not
effected pursuant to a Notice of Termination satisfying the
requirements of Subsection (f) below and, if applicable, Subsection
(b) above, and for purposes of this Agreement, no such purported
termination shall be effective.
Notice of Termination. Any purported termination of this Agreement by
the Company or the Executive shall be communicated by written Notice of
Termination to the other party hereto in accordance with Section 14 hereof. For
purposes of this Agreement, a "Notice of Termination" shall mean a notice which
shall indicate the specific termination, resignation or retirement provision in
this Agreement relied upon and shall set forth in reasonable detail the facts
and circumstances claimed to provide a basis for such termination, resignation
or retirement under the provision so indicated.
Date of Termination, Etc. "Date of Termination" shall mean (i) if the
Executive's employment is terminated for Disability, thirty days after Notice of
Termination is given (provided that the Executive shall not have returned to the
performance of the Executive's duties on a full-time daily basis during such
thirty-day period), and (ii) if the Executive's employment is terminated for any
other reason, the date specified in the Notice of Termination (which shall not
be less than thirty days nor more than sixty days, from the date such Notice of
Termination is given); provided that if within thirty days after any Notice of
Termination is given the party receiving such Notice of Termination notifies the
other party that a dispute exists concerning the termination, the Date of
Termination shall be the date on which the dispute is finally determined by
mutual written agreement of the parties, by a binding arbitration award, or by a
final judgment, order or decree of a court of competent jurisdiction (the time
for appeal therefrom having expired and no appeal having been perfected). Any
party giving notice of a dispute shall pursue the resolution of such dispute
with reasonable diligence. Notwithstanding the pendency of any such dispute, the
Company will continue to pay the Executive his full compensation in effect when
the notice giving rise to the dispute was given (including, but not limited to,
base salary) and continue the Executive as a participant in all compensation,
employee benefit and insurance plans, programs and arrangements in which the
Executive was participating when the notice giving rise to the dispute was
given, until the dispute is finally resolved in accordance with this Subsection
(g).
Compensation Upon Termination.
Death. If the Executive's employment hereunder terminates by reason
of his death, the Company shall be obligated to pay to his surviving widow, or
to his legal representatives if he leaves no surviving widow or if his surviving
widow dies prior to fulfillment of the Company's obligations, (i) the
Executive's then current base salary for a six-month period commencing on the
first day of the month following the Executive's death, or until the Expiration
Date, whichever shall be the first to occur, and (ii) any benefits to which the
Executive is entitled under any insurance policies on the life of the Executive,
under the Company's insurance programs and other employee benefit plans,
programs and arrangements then in effect and under the Company's Pension Plan
for Salaried Employees.
Disability. If the Executive's employment hereunder terminates by
reason of his Disability, the Company shall pay to the Executive, in monthly
installments, such amount as shall aggregate 70% of the Executive's then current
base salary for the lesser of a six-month period or until such time as the
Executive has reached the age at which he would be entitled to retire under the
Company's retirement policies and the Pension Plan for Salaried Employees.
Benefits otherwise receivable by the Executive pursuant to this Subsection (b)
shall be reduced to the extent other benefits are received by the Executive
pursuant to any disability income or income protection plan, policy or
arrangement, the premiums for which or benefits under which are paid by the
Company. If the Executive dies prior to the date on which such additional
amounts would have ceased to be payable under this Subsection (b), the amount
that would have been payable by the Company had he lived shall continue to be
paid by the Company to his surviving widow, for a period of 12 months following
the Executive's death, at the same times and rates as it would have been payable
to him.
Cause. If the Executive's employment hereunder is terminated by the
Company for Cause, the Company shall pay to the Executive his full base salary
through the Date of Termination at the rate in effect at the time Notice of
Termination is given and the Company shall have no further obligations to the
Executive under this Agreement.
Voluntary Resignation or Retirement. In the event the Executive
voluntarily retires or resigns other than pursuant to his Retirement for Good
Reason or Resignation for Good Reason, the Company shall pay to the Executive
his full base salary through the Date of Termination at the rate in effect at
the time Notice of Termination is given and, except as provided in Section 10,
the Company shall have no further obligations to the Executive under this
Agreement.
Upon a Change of Control. Notwithstanding anything herein to the
contrary, in the event that either the Company, without Cause, or the Executive,
with Good Reason, shall terminate the Executive's employment hereunder by giving
notice of termination in accordance with this Agreement within two years
following the occurrence of a Change of Control, the Company shall pay the
Executive the following:
payment of sum equal to three times Executive's annual
base salary;
payment of an amount of cash equal to three (3) times the average
incentive earned over the prior three year period;
immediate vesting of all previously unvested cash
awards and stock incentives;
immediate delivery of Company stock or payment of an amount of cash
equal to three (3) times the value of the average grants received by
Executive over the preceding five (5) years under the applicable
Company long term incentive plans;
provision to Executive and his eligible dependents of medical,
disability, dental and life insurance coverage (to the extent such
coverage was in effect immediately prior to the Change of Control)
for thirty-six (36) months;
immediate granting to Executive of thirty-six (36) months of service
and age credit for determining benefit amounts and any early
retirement reductions with respect to all applicable Company
retirement benefit plans; in addition, no early retirement reductions
will be imposed on the retirement benefits if age at termination
equals or exceeds 55;
reimbursement to Executive of reasonable costs incurred by Executive
for outplacment services in the thirty-six (36) month period
following termination of Executive's employment in connection with a
Change of Control (the foregoing amounts shall be hereinafter
sometimes collectively referred to as the "Salary and Benefits
Continuation Payments") All amounts payable by the Company to the
Executive in
cash pursuant to Section 5(e)(i), (ii), (iii) and (iv) shall be made in a lump
sum unless the Executive otherwise elects and notifies the Company in writing
prior to the termination of his employment of his desire to have all payments
made in accordance with the Company's regular salary and benefit payment
practices, provided that the lump sum payment or first payment is made within
thirty (30) days after the Executive's termination hereunder. All other amounts
payable by the Company to the Executive pursuant to this Section 5 (e) shall be
paid or provided in accordance with the Company's standard payroll and
reimbursement procedures, as in effect immediately prior to the Change of
Control. In the event that medical, disability, dental and life insurance
benefits cannot be provided under appropriate Company group insurance policies,
an amount equal to the premium necessary for the Executive to purchase directly
the same level of coverage in effect immediately prior to the Change of Control
shall be added to the Company's salary payments to Executive.
The Executive's right to receive Salary and Benefits Continuation
Payments shall continue as provided, notwithstanding the subsequent expiration
of this Agreement pursuant to Section 2 hereof. The Executive's subsequent death
or disability within the thirty-six (36) month period following the termination
of Executive's employment in connection with a Change of Control shall not
affect the Company's obligation to continue making Salary and Benefits
Continuation Payments. The right to Salary and Benefits Continuation Payments
shall be in addition to whatever other benefits the Executive may be entitled to
under any other agreement or compensation plan, program or arrangement of the
Company. The Company shall be authorized to withhold from any payment to the
Executive, his estate or his beneficiaries hereunder all such amounts, if any,
that the Company may reasonably determine it is required to withhold pursuant to
any applicable law or regulation.
In the event the Executive obtains subsequent employment within the
thirty-six (36) month period for which the Executive is receiving Salary and
Benefits Continuation Payments, the Salary and Benefits Continuation Payments
shall be reduced in amount equal to: (i) any compensation earned by the
Executive as the result of employment by another employer and (ii) any
comparable benefits actually received by the Executive from another employer.
Notwithstanding anything herein to the contrary, if the Executive's
employment with the Company is terminated prior to the date on which a Change of
Control occurs either (i) by the Company other than for Cause or (ii) by the
Executive for Good Reason, and it is reasonably demonstrated by Executive that
such termination of employment (a) was at the request of a third party who has
taken steps reasonably calculated to effect the Change of Control, or (b)
otherwise arose in connection with or anticipation of the Change of Control,
then for all purposes of this Agreement the termination shall be deemed to have
occurred upon a Change of Control and the Executive will be entitled to Salary
and Benefits Continuation Payments as provided for in this Section 5 hereof.
For purposes of this Agreement, "Change of Control" shall mean any of
the following events (each of such events being herein referred to as a "Change
of Control"):
(i) The sale or other disposition by the Company of all or
substantially all of its assets to a single purchaser or to a group
of purchasers, other than to a corporation with respect to which,
following such sale or disposition, more than eighty percent (80%)
of, respectively, the then outstanding shares of Company common stock
and the combined voting power of the then outstanding voting
securities entitled to vote generally in the election of the Board of
Directors is then owned beneficially, directly or indirectly, by all
or substantially all of the individuals and entities who were the
beneficial owners, respectively, of the outstanding Company common
stock and the combined voting power of the then outstanding voting
securities immediately prior to such sale or disposition in
substantially the same proportion as their ownership of the
outstanding Company common stock and voting power immediately prior
to such sale or disposition; (ii) The acquisition in one or more
transactions by any person or group, directly or indirectly, of
beneficial ownership of twenty percent (20%) or more of the
outstanding shares of Company common stock or the combined voting
power of the then outstanding voting securities of the Company
entitled to vote generally in the election of the Board of Directors;
provided, however, that any acquisition by (x) the Company or any of
its subsidiaries, or any employee benefit plan (or related trust)
sponsored or maintained by the Company or any of its subsidiaries or
(y) any person that is eligible, pursuant to Rule 13d-1(b) under the
Exchange Act (as such rule is in effect as of November 1, 1995), to
file a statement on Schedule 13G with respect to its beneficial
ownership of Company common stock and other voting securities whether
or not such person shall have filed a statement on Schedule 13G,
unless such person shall have filed a statement on Schedule 13D with
respect to beneficial ownership of fifteen percent (15%) or more of
the Company's voting securities, shall not constitute a Change of
Control; (iii). The Company's termination of its business and
liquidation of its assets; (iv) The reorganization, merger or
consolidation of the Company into or with another person or entity,
by which reorganization, merger or consolidation the persons who held
one hundred percent (100%) of the voting securities of the Company
prior to such reorganization, merger or consolidation receive or
continue to hold less than sixty (60%) of the outstanding voting
shares of the new or continuing corporation; or (v) If, during any
two-year period, less than a majority of the members of the Board of
Directors are persons who were either (i) nominated or recommended
for election by at least two-thirds vote of the persons who were
members of the Board of Directors or Nominating Committee of the
Board of Directors at the beginning of the period, or (ii) elected by
at least a two-thirds vote of the persons who were members of the
Board of Directors at the beginning of the period.
Other. If the Executive's employment hereunder is terminated prior to
the occurrence of a Change of Control (1) by the Company other than for Cause or
Disability or (2) by the Executive pursuant to his Retirement for Good Reason or
Resignation for Good Reason, then the Executive shall be entitled to the
benefits provided below:
the Company shall pay the Executive his full base salary through the
Date of Termination at the rate in effect at the time Notice of
Termination is given;
in lieu of any further salary payments to the Executive for periods
subsequent to the Date of Termination, the Company shall pay as
severance pay to the Executive, not later than the fifteenth day
following the Date of Termination, a lump sum severance payment equal
to the Executive's full base salary for the then remaining term of
this Agreement (without regard to the date of such Notice of
Termination) at the rate then in effect, discounted to present value
at a discount rate of 7% per annum applied to each future payment
from the time it would have become payable;
in lieu of shares of common stock issuable upon exercise of
outstanding options ("Options"), if any, or any stock appreciation
rights ("SAR"), if any, whether or not such Options or SARs are
vested or then exercisable pursuant to their respective terms,
granted to the Executive under the Company's stock option or stock
appreciation rights plans or otherwise (which Options and SARs shall
be canceled upon the making of the payment referred to below), the
Executive shall receive, not later than the fifteenth day following
the Date of Termination, an amount in cash equal to the product of
(i) the difference (to the extent that such difference is a positive
number) obtained by subtracting the per share exercise price of each
Option and each SAR held by the Executive, whether or not then fully
exercisable, from the closing price of the Common Stock (the "Closing
Price") as reported on the New York Stock Exchange on the Date of
Termination (or if not traded on the Date of Termination, the closing
price on the next preceding business day on which the Common Stock
traded), and (ii) the number of shares of Common Stock covered by
each such Option or SAR;
for a period of time remaining until the Expiration Date, the Company
shall arrange to provide the Executive with and shall pay the cost or
premiums when due for life, disability and health-and-accident
insurance benefits substantially similar to those which the Executive
is receiving immediately prior to the Notice of Termination.
The payments provided for in this Subsection (f), shall be made not
later than the fifteenth day following the Date of Termination,
provided, however, that if the amounts of such payments cannot be
finally determined on or before such day, the Company shall pay to
the Executive on such day an estimate, as determined in good faith by
the Company, of the minimum amount of such payments and shall pay the
remainder of such payments (together with interest at the rate
provided in Section 1274(b)(2)(B) of the Code) as soon as the amount
thereof can be determined but in no event later than the thirtieth
day after the Date of Termination. In the event that the amount of
the estimated payments exceeds the amount subsequently determined to
have been due, such excess shall constitute a loan by the Company to
the Executive payable on the fifth day after demand by the Company
(together with interest at the rate provided in Section 1274(b)(2)(B)
of the Code).
Reimbursement of Certain Fees and Expenses The Company shall also pay to
the Executive all legal and accounting fees and expenses incurred by the
Executive in contesting or disputing any such termination or in seeking to
obtain or enforce any right or benefit provided by this Agreement or in
connection with any tax audit or proceeding to the extent attributable to the
application of Section 4999 of the Code to any payment or benefit provided
hereunder.
Contest of Certain Payments. In the event that it is asserted by any
governmental agency, in any tax audit, administrative proceeding or otherwise,
that any payments (the "Severance Payments") provided under Section 5(e) are or
will be subject to the tax (the "Excise Tax") imposed by Section 4999 of the
Code and/or that a federal income tax deduction for amounts paid as Severance
Payments will not be allowed to the Company for any year by reason of Section
28OG of the Code, the Executive may contest or refute such assertion with
respect to the Excise Tax in any appropriate forum (the "Executive's Contest")
and the Company shall diligently and vigorously contest or refute such assertion
with respect to the disallowance of such deduction in all administrative
proceedings and in the federal district court or the Tax Court, whichever shall
have jurisdiction (the "Company's Contest"). The Executive's Contest and the
Company's Contest shall be conducted and presented separately unless the
Executive, in his discretion but with the consent of the Company, joins in the
Company's Contest. In any event, the Executive shall be entitled to retain
attorneys and other experts deemed necessary or appropriate by the Executive to
the proper presentation of the Executive's Contest and shall not be compelled by
the Company to compromise, settle or otherwise terminate the Executive's Contest
without his written consent thereto. The Company and the Executive shall
cooperate one with the other and each shall provide to the other copies of all
documents relevant to or useful in connection with either the Executive's
Contest or the Company's Contest as may reasonably be requested by the other.
The Executive shall attend any hearing, deposition or other proceeding at which
his attendance in person is material to the Company's Contest. The Company shall
cause the appropriate authorized officer or officers of the Company to attend
any hearing, deposition or other matter at which the Company's appearance is
requested by any party.
Executive's Duty to Mitigate. The Executive shall not be required to
mitigate the amount of any payment provided for in this Section 5(a), (b), (c),
(d) and (f) by seeking other employment or otherwise, nor shall the amount of
any payment provided for in this Section 5(a), (b), (c), (d) and (f) be reduced
by any compensation earned by the Executive as the result of employment by
another employer, or otherwise. Benefits otherwise receivable by the Executive
pursuant to Section 5(f)(iv) above shall be reduced to the extent comparable
benefits are actually received by the Executive during the period of time
remaining until the Expiration Date from the plan or plans of any subsequent
employer or from any program maintained by any governmental body not requiring
contribution by the Executive, and any such benefits actually received by the
Executive shall be reported to the Company.
Right to Additional Benefits. In addition to all other amounts payable to
the Executive under Section 5, the Executive shall be entitled to receive all
benefits payable to him under the Company's Pension Plan for Salaried Employees,
the Employee Savings Plan, and any other plan, program or arrangement relating
to retirement, profit sharing, or other benefits including, without limitation,
any employee stock ownership plan or any plan established as a supplement to any
of the aforenamed plans. No amount payable to the Executive under Sections 5(e)
or 5(f) shall be considered for any benefit calculation under the Company's
Pension Plan for Salaried Employees.
Retirement Under Circumstances Not Constituting Retirement For Good
Reason. Nothing contained in this Agreement shall be deemed to limit the
Executive's ability to retire under the Company's retirement policies and
Pension Plan for Salaried Employees under circumstances not constituting
Retirement for Good Reason and to receive all benefits payable to him under the
Company's Pension Plan for Salaried Employees, the Company's Employee Savings
Plan and any other plan, program or arrangement relating to retirement.
Non-Competition. During the term of this Agreement and for one year
thereafter, the Executive shall refrain from competing with the Company or any
subsidiary of the Company except with the Company's prior written consent. The
phrase "refrain from competing with the Company or any subsidiary of the
Company" shall mean that the Executive will not engage, directly or indirectly
(including, by way of example only, as a principal, partner, venture, employee
or agent) nor have any direct or indirect interest in any enterprise (a
"Competing Enterprise") which competes with the Company or any subsidiary
thereof by engaging in the production, transmission, storage or distribution of
natural gas or natural gas liquids or the ownership or operation of a central
plant heating system in the Company's distribution area or in substantial and
direct competition with any other business operation actively conducted by the
Company or its subsidiaries at the date of termination. It is agreed that the
foregoing provisions shall not restrict the Executive from either (i) subject to
the provisions of Subsection 12(a) hereof, being a director of or having any
investments or other interests in an enterprise which is not a competing
enterprise or (ii) having any investments in any competing enterprise the stock
of which is listed on a national securities exchange or traded publicly
over-the-counter so long as such investment does not give the Executive more
than one percent (1%) of the voting stock of such company.
Confidentiality. The Executive agrees:
To keep secret all confidential matters of the Company and its
subsidiaries and affiliates specifically indicated to be such by the Company or
established as such by written Company policy, and not to disclose them to any
one outside the Company or its subsidiaries and affiliates, either during or
after his employment with the Company, except with the Company's prior written
consent or as required by law; and
To deliver promptly to the Company on termination of employment of
the Executive by the Company all memoranda, notes, records, reports and other
documents (and all copies thereof) with respect to any such confidential matters
and other proprietary information (such as customers lists, suppliers lists,
etc.) which the Executive may then possess or have under his control.
Arbitration. Any disputes hereunder shall be settled by arbitration in
Pittsburgh, Pennsylvania under the auspices of, and in accordance with the rules
of, the American Arbitration Association, and the decision in such arbitration
shall be final and conclusive on the parties and judgment upon such decision may
be entered in any court having jurisdiction thereof.
Notices. All notices and other communications which are required or may be
given under this Agreement shall be in writing and shall be delivered personally
or by registered or certified mail addressed to the party concerned at the
following addresses:
If to the Company:
Equitable Resources, Inc.
420 Boulevard of Allies
Pittsburgh, PA 15219
If to the Executive:
Mr. Frederick H. Abrew
107 Links View Drive
Bridgeville, PA 15017
or to such other address as shall be designated by notice in writing to the
other party in accordance herewith. Notices and other communications hereunder
shall be deemed effectively given when personally delivered, or, if mailed, 48
hours after deposit in the United States mail.
Miscellaneous.
This Agreement supersedes all prior agreements, arrangements and
undertakings, written or oral, relating to the subject matter hereof.
(i) This arrangement shall inure to the benefit of the Executive's
heirs, representatives or estate to the extent stated herein.
(ii) The Company shall require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business or assets of the Company, by agreement in form
and substance satisfactory to the Executive, expressly to assume and agree to
perform this Agreement in the same manner and to the same extent that the
Company would be required to perform if no such succession had taken place. As
used in this Agreement, "Company" shall mean the Company as defined in the
preamble to this Agreement and any successor to its business or assets which
executes and delivers the agreement provided for in this Subsection 15 (b) (ii)
or which otherwise becomes bound by all the terms and provisions of this
Agreement by operation of law.
This Agreement may be amended, modified, superseded, canceled,
renewed or extended and the terms or covenants hereof may be waived, only by a
written instrument executed by both of the parties hereto, or in the case of a
waiver, by the party waiving compliance. The failure of either party at any time
or times to require performance of any provisions hereof shall in no manner
affect the right at a later time to enforce such provisions thereafter. No
waiver by either party of the breach of any term or covenant contained in this
Agreement, whether by conduct or otherwise, in any one or more instances, shall
be deemed to be, or construed as, a further or continuing waiver of any such
breach or a waiver of the breach of any other term or covenant contained in this
Agreement.
In the event any one or more of the covenants, terms or provisions
contained in this Agreement shall be invalid, illegal or unenforceable in any
respect, the validity of the remaining covenants, terms and provisions contained
herein shall be in no way affected, prejudiced or disturbed thereby.
This Agreement is personal in nature and neither of the parties
hereto shall, without the consent of the other, assign or transfer this
Agreement or any rights or obligations hereunder, except as provided in
Subsection 15(b) above. Without limiting the foregoing, the Executive's right to
receive payments hereunder shall not be assignable or transferable, whether by
pledge, creation of a security interest or otherwise, other than a transfer by
his will or by the laws of descent or distribution, and in the event of any
attempted assignment or transfer contrary to this Subsection 15(e) the Company
shall have no liability to pay any amount so attempted to be assigned or
transferred.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed and delivered.
ATTEST: EQUITABLE RESOURCES, INC.
-----------------------------
By:________________________ By: E. Lawrence Keyes
Secretary Title: Chairman, Compensation Committee
Board of Directors
WITNESS:
By_________________________ ______________________________
Frederick H. Abrew
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") dated as of the day of
March 18, 1988, and amended and restated as of March 15, 1996 (the "Effective
Date") between Equitable Resources, Inc., a Pennsylvania corporation, with its
principal executive offices at 420 Boulevard of the Allies, Pittsburgh,
Pennsylvania 15219 (the "Company"), and Augustine A. Mazzei, Jr., an individual
and resident of Monroeville, Pennsylvania (the "Executive").
WHEREAS, the Company desires to secure the continued
employment of the Executive in accordance with the provisions of
the Agreement;
WHEREAS, the Executive desires and is willing to accept
continued employment with the Company in accordance herewith, and
WHEREAS, this Agreement has been amended in certain respects as of
the Effective Date and restated in its entirety, and the parties hereto
expressly acknowledge the adequacy of the mutual consideration for such
amendments, with the intention to be bound by them;
NOW, THEREFORE, in consideration of the mutual covenants herein
contained and intending to be legally bound, the Company and the Executive
hereby amend and restate their agreement relating to the Executive's employment
with the Company as follows:
Position and Duties.
The Company hereby agrees to, and hereby does, continue to employ the
Executive, for the term of this Agreement, to render services to the Company as
Senior Vice President and General Counsel of the Company and in connection
therewith to perform such duties as the Executive is now performing and such
other duties, commensurate with such position, as the Executive may reasonably
be directed to perform by the President and Chief Executive Officer of the
Company provided, however, that without the prior written consent of the
Executive there shall be no geographic change from Pittsburgh, Pennsylvania or
its environs or transfer of the office or place of performance of the
Executive's service or duties. Except to the extent that the President and Chief
Executive Officer of the Company delegates the duties and assigns the positions
described below with respect to subsidiaries of the Company to such other person
or persons as the President and Chief Executive Officer of the Company, in his
discretion, shall determine, the Executive will continue to serve as the Senior
Vice President and General Counsel of such of the subsidiaries of the Company
and in connection therewith to perform such duties as the Executive is now
performing and such other duties, commensurate with such position as Senior Vice
President and General Counsel of such subsidiaries, as the Executive may
reasonably be directed to perform by the President and Chief Executive Officer
of the Company. The Executive shall have the right to devote a reasonable amount
of time and effort to industry, community or charity organizations, and, subject
to the provisions of Section 11 and Section 12 hereof, the Executive may serve
as a director of other companies with the consent of the President and Chief
Executive Officer of the Company and of the Board which consent in either case
shall not be unreasonably withheld.
The Executive hereby accepts such employment and agrees faithfully to
perform to the best of his ability the duties described in Section l(a).
Term. Subject to Section 4 hereof, the term of the employment of the
Executive under this Agreement shall commence on the Effective Date and shall
terminate on the last day of the calendar month in which occurs the earlier of
(i) the date of the Executive's retirement in accordance with the provisions of
the Company's retirement policy as set forth in its Management Manual or (ii)
unless further extended as hereinafter set forth, the date which is 36 calendar
months after the Effective Date. Commencing on the last day of the first full
calendar month after the Effective Date and on the last day of each succeeding
calendar month, the term of this Agreement shall be automatically extended
without further action by either party (but not beyond the Executive's 65th
birthday) for one additional calendar month unless one party notifies the other
in writing that such party does not wish to extend the term of this Agreement.
In the event that such notice shall have been delivered, the term hereof shall
no longer be subject to automatic extension and the term hereof shall expire on
the date which is 36 calendar months after the last day of the month in which
such written notice is received. (The last day of the calendar month in which
the term hereof, as extended from time to time, shall end is hereinafter
referred to as the "Expiration Date").
Compensation. In consideration of the Executive's agreements contained
herein and as compensation to the Executive for the performance of the services
required hereunder, the Company shall pay or grant to him the following salary
and other compensation and benefits:
a base salary, payable in equal installments not less frequently
than monthly, at such annual rate, not less than the current salary per year, as
is determined from time to time by the Board or an appropriate committee
thereof, provided, however, that the Executive's base salary shall be
periodically reviewed by the Board and shall be increased if the Board
determines that an increase is appropriate on the basis of the types of factors
it generally takes into account in increasing the salaries of executive officers
of the Company;
an annual incentive compensation payment equal to the amount, if any,
payable to the Executive under the terms and conditions of the Company's
Short-Term Incentive Compensation Plan as in effect for each annual period
during the term of this
Agreement;
such other awards under the Company's Key Employee Restricted Stock
Option and Stock Appreciation Rights Incentive Compensation Plan (the "Option
Plan") or under any other stock option, incentive compensation or other
compensation plan, program or arrangement, now existing or hereafter adopted as
applicable to executive officers of the Company, as the Board, or an appropriate
committee thereof administering such plan, program or arrangement, may determine
appropriate in light of the duties and responsibilities of the Executive in
respect to other executive officers;
participation on the same terms and conditions as all other employees
in all employee benefit plans, whether or not qualified within the meaning of
Section 401(a) of the Internal Revenue Code of 1986, as may be amended from time
to time (the "Code"), as may be now or hereafter sponsored or maintained for all
employees of the Company and participation on the same terms and conditions as
other executive officers in such other plan, program or arrangement as may be
now or hereafter sponsored or maintained for executive officers of the Company;
reimbursement for reasonable travel and other expenses incurred by
Executive in performing his obligations hereunder pursuant to the terms and
conditions of the Company's policy in respect thereto; and
reasonable vacations, absences on account of temporary illness and
fringe benefits customarily enjoyed by employees or executive officers of the
Company under the terms and conditions of the Company's policy in respect
thereto.
Nothing contained in this Agreement shall prevent the Board from
amending or otherwise altering the Short-Term Incentive Plan, the Option Plan or
any other plan, program or arrangement so long as such amendment or alteration
(i) is accomplished pursuant to the terms thereof as in effect on the Effective
Date or on the date such is adopted, if later, and (ii) equitably affects all
employees, executive or otherwise, previously covered thereunder.
Termination of Employment. This Agreement shall terminate upon the
Expiration Date or upon the death of the Executive. Prior to the occurrence of a
Change of Control and the Expiration Date, the Company may terminate this
Agreement and the Executive's employment hereunder for "Disability" or "Cause"
and the Executive may terminate the Agreement prior to the Expiration Date and
his employment hereunder pursuant to his "Resignation for Good Reason" or
"Retirement for Good Reason" as such terms are hereinafter defined. Following
the occurrence of a Change of Control and prior to the Expiration Date, the
Company may terminate this Agreement and the Executive's employment hereunder
for "Disability", "Cause" or without "Cause" and Executive may terminate this
Agreement and his employment hereunder pursuant to Retirement for Good Reason or
Resignation for Good Reason. Termination of this Agreement for any reason not
set forth above shall not be deemed a permitted termination and shall be deemed
a breach of this Agreement. In the event of any termination of this Agreement
prior to the Expiration Date, whether a permitted termination or otherwise, the
provisions of Section 5 of this Agreement shall determine the amount, if any, of
any compensation thereafter due the Executive in respect to such termination.
As used in this Agreement, the following terms shall have the
meanings set forth:
Disability. The Executive shall be entitled to leaves of absence from
the Company in accordance with the Company's policy generally applicable to
executives for illness or other temporary disabilities for a period or periods
not exceeding an aggregate of six months in any calendar year, and his
compensation and status as an employee hereunder shall continue during any such
period or periods. If, as a result of the Executive's incapacity due to physical
or mental illness, the Executive shall have been absent from his duties with the
Company on a full-time basis for six consecutive months, and within thirty days
after written notice of termination is given by the Company, the Executive shall
not have returned to the full-time daily performance of his duties, the
Executive shall be deemed to have experienced a Disability and the Company may
terminate the Executive's employment hereunder.
Cause. Termination by the Company of employment for
"Cause" shall mean termination upon:
the willful and continued failure by the Executive to substantially
perform his duties with the Company (other than (A) any such failure
resulting from his incapacity due to physical or mental illness or
(B) any such actual or anticipated failure resulting from his
Resignation for Good Reason or Retirement for Good Reason), after a
written demand for substantial performance is delivered to the
Executive by the Board which specifically identifies the manner in
which the Board believes that the Executive has not substantially
performed his duties, and which failure has not been cured within
thirty days after such written demand; or
the willful and continued engaging by the Executive in
conduct which is demonstrably and materially injurious
to the Company, monetarily or otherwise; or
the breach by the Executive of the Noncompetition
clause in Section 11 hereof or the Confidentiality
clause in Section 12 hereof.
For purposes of this Subsection (b), no act, or failure to act, on the
Executive's part shall be considered "willful" unless done, or omitted to be
done, by the Executive in bad faith and without reasonable belief that such
action or omission was in the best interest of the Company. Notwithstanding the
foregoing, the Executive shall not be deemed to have been terminated for Cause
unless and until there shall have been delivered to him a copy of a resolution
duly adopted by the affirmative vote of not less than three-quarters of the
entire membership of the Board at a meeting of the Board called and held for
that purpose (after reasonable notice to the Executive and an opportunity for
the Executive, together with his counsel, to be heard before the Board), finding
that in the good faith opinion of the Board the Executive was guilty of conduct
set forth above in clauses (i), (ii) or (iii) of the first sentence of this
Subsection (b) and specifying the particulars thereof in detail.
Retirement for Good Reason. For purposes of this Agreement
"Retirement for Good Reason" shall mean the Executive's election to retire under
the terms of the Company's Pension Plan for Salaried Employees as a result of
the occurrence of one of the events referred to in Subsection (e) below.
Resignation for Good Reason. For purposes of this Agreement,
"Resignation for Good Reason" shall mean the Executive's election to resign as a
result of the occurrence of one of the events referred to in Subsection (e)
below.
Good Reason. For purposes of this Agreement, "Good
Reason" shall, absent the Executive's prior express written
consent to the contrary, mean:
removal of the Executive as Senior Vice President and General Counsel
of the Company, (by reason other than death, Disability or Cause), or
any other material breach by the Company of its obligations contained
in this Agreement;
the assignment to the Executive of any duties inconsistent with his
status as Senior Vice President and General Counsel of the Company or
a substantial alteration in the nature or status of the Executive's
responsibilities which renders the Executive's position to be of less
dignity, responsibility or scope;
a reduction by the Company in the Executive's annual base salary as
in effect on the Effective Date or as the same may be increased from
time to time, except for proportional across-the-board salary
reductions similarly affecting all executives of the Company and all
executives of any person in control of the Company, provided,
however, that in no event shall the Executive's annual base salary be
reduced by an amount equal to ten percent or more of the Executive's
annual base salary as of the end of the calendar year immediately
preceding the year in which the Executive's employment with the
Company is terminated without the Executive's prior written consent;
the failure to grant the Executive an annual salary increase
reasonably necessary to maintain such salary as reasonably comparable
to salaries of senior executives holding positions equivalent to the
Executive's in the industry in which the Company's then principal
business activity is conducted;
the relocation of the Company's principal executive offices to a
location outside the Pittsburgh, Pennsylvania Metropolitan Area or
the Company's requiring the Executive to be based anywhere other than
the Company's principal executive offices except for required travel
on the Company's business to an extent substantially consistent with
the Executive's present business travel obligations;
the failure by the Company to continue in effect any compensation
plan, program or arrangement in which the Executive participates,
unless an equitable arrangement reasonably acceptable to the
Executive (embodied in an ongoing substitute or alternative plan,
program or arrangement) has been made with respect to such plan, or
the failure by the Company to continue the Executive's participation
therein;
any material reduction by the Company of the benefits enjoyed by the
Executive under any of the Company's pension, retirement, profit
sharing, savings, life insurance, medical, health-and-accident,
disability or other employee benefit plans, programs or arrangements,
the taking of any action by the Company which would directly or
indirectly materially reduce any of such benefits or deprive the
Executive of any material fringe benefits, or the failure by the
Company to provide the Executive with the number of paid vacation
days to which he is entitled on the basis of years of service with
the Company in accordance with the Company's normal vacation policy,
provided that this Section (vii) shall not apply to any proportional
across-the-board reduction or action similarly affecting all
executives of the Company and all executives of any person in control
of the Company;
the failure of the Company to obtain a satisfactory agreement from
any successor to assume and agree to perform this Agreement, as
contemplated in Section 15(b)(ii) hereof; or
any purported termination of the Executive's employment which is not
effected pursuant to a Notice of Termination satisfying the
requirements of Subsection (f) below and, if applicable, Subsection
(b) above, and for purposes of this Agreement, no such purported
termination shall be effective.
Notice of Termination. Any purported termination of this Agreement by
the Company or the Executive shall be communicated by written Notice of
Termination to the other party hereto in accordance with Section 14 hereof. For
purposes of this Agreement, a "Notice of Termination" shall mean a notice which
shall indicate the specific termination, resignation or retirement provision in
this Agreement relied upon and shall set forth in reasonable detail the facts
and circumstances claimed to provide a basis for such termination, resignation
or retirement under the provision so indicated.
Date of Termination, Etc. "Date of Termination" shall mean (i) if the
Executive's employment is terminated for Disability, thirty days after Notice of
Termination is given (provided that the Executive shall not have returned to the
performance of the Executive's duties on a full-time daily basis during such
thirty-day period), and (ii) if the Executive's employment is terminated for any
other reason, the date specified in the Notice of Termination (which shall not
be less than thirty days nor more than sixty days, from the date such Notice of
Termination is given); provided that if within thirty days after any Notice of
Termination is given the party receiving such Notice of Termination notifies the
other party that a dispute exists concerning the termination, the Date of
Termination shall be the date on which the dispute is finally determined by
mutual written agreement of the parties, by a binding arbitration award, or by a
final judgment, order or decree of a court of competent jurisdiction (the time
for appeal therefrom having expired and no appeal having been perfected). Any
party giving notice of a dispute shall pursue the resolution of such dispute
with reasonable diligence. Notwithstanding the pendency of any such dispute, the
Company will continue to pay the Executive his full compensation in effect when
the notice giving rise to the dispute was given (including, but not limited to,
base salary) and continue the Executive as a participant in all compensation,
employee benefit and insurance plans, programs and arrangements in which the
Executive was participating when the notice giving rise to the dispute was
given, until the dispute is finally resolved in accordance with this Subsection
(g).
Compensation Upon Termination.
Death. If the Executive's employment hereunder terminates by reason
of his death, the Company shall be obligated to pay to his surviving widow, or
to his legal representatives if he leaves no surviving widow or if his surviving
widow dies prior to fulfillment of the Company's obligations, (i) the
Executive's then current base salary for a six-month period commencing on the
first day of the month following the Executive's death, or until the Expiration
Date, whichever shall be the first to occur, and (ii) any benefits to which the
Executive is entitled under any insurance policies on the life of the Executive,
under the Company's insurance programs and other employee benefit plans,
programs and arrangements then in effect and under the Company's Pension Plan
for Salaried Employees.
Disability. If the Executive's employment hereunder terminates by
reason of his Disability, the Company shall pay to the Executive, in monthly
installments, such amount as shall aggregate 70% of the Executive's then current
base salary for the lesser of a six-month period or until such time as the
Executive has reached the age at which he would be entitled to retire under the
Company's retirement policies and the Pension Plan for Salaried Employees.
Benefits otherwise receivable by the Executive pursuant to this Subsection (b)
shall be reduced to the extent other benefits are received by the Executive
pursuant to any disability income or income protection plan, policy or
arrangement, the premiums for which or benefits under which are paid by the
Company. If the Executive dies prior to the date on which such additional
amounts would have ceased to be payable under this Subsection (b), the amount
that would have been payable by the Company had he lived shall continue to be
paid by the Company to his surviving widow, for a period of 12 months following
the Executive's death, at the same times and rates as it would have been payable
to him.
Cause. If the Executive's employment hereunder is terminated by the
Company for Cause, the Company shall pay to the Executive his full base salary
through the Date of Termination at the rate in effect at the time Notice of
Termination is given and the Company shall have no further obligations to the
Executive under this Agreement.
Voluntary Resignation or Retirement. In the event the Executive
voluntarily retires or resigns other than pursuant to his Retirement for Good
Reason or Resignation for Good Reason, the Company shall pay to the Executive
his full base salary through the Date of Termination at the rate in effect at
the time Notice of Termination is given and, except as provided in Section 10,
the Company shall have no further obligations to the Executive under this
Agreement.
Upon a Change of Control. Notwithstanding anything herein to the
contrary, in the event that either the Company, without Cause, or the Executive,
with Good Reason, shall terminate the Executive's employment hereunder by giving
notice of termination in accordance with this Agreement within two years
following the occurrence of a Change of Control, the Company shall pay the
Executive the following:
payment of sum equal to two times Executive's annual
base salary;
payment of an amount of cash equal to two (2) times the average
incentive earned over the prior three year period;
immediate vesting of all previously unvested cash
awards and stock incentives;
immediate delivery of Company stock or payment of an amount of cash
equal to two (2) times the value of the average grants received by
Executive over the preceding five (5) years under the applicable
Company long term incentive plans;
provision to Executive and his eligible dependents of medical,
disability, dental and life insurance coverage (to the extent such
coverage was in effect immediately prior to the Change of Control)
for twenty-four (24) months;
immediate granting to Executive of twenty-four (24) months of service
and age credit for determining benefit amounts and any early
retirement reductions with respect to all applicable Company
retirement benefit plans; in addition, no early retirement reductions
will be imposed on the retirement benefits if age at termination
equals or exceeds 55;
reimbursement to Executive of reasonable costs incurred by Executive
for outplacment services in the twenty-four (24) month period
following termination of Executive's employment in connection with a
Change of Control (the foregoing amounts shall be hereinafter
sometimes collectively referred to as the "Salary and Benefits
Continuation Payments") All amounts payable by the Company to the
Executive in
cash pursuant to Section 5(e)(i), (ii), (iii) and (iv) shall be made in a lump
sum unless the Executive otherwise elects and notifies the Company in writing
prior to the termination of his employment of his desire to have all payments
made in accordance with the Company's regular salary and benefit payment
practices, provided that the lump sum payment or first payment is made within
thirty (30) days after the Executive's termination hereunder. All other amounts
payable by the Company to the Executive pursuant to this Section 5 (e) shall be
paid or provided in accordance with the Company's standard payroll and
reimbursement procedures, as in effect immediately prior to the Change of
Control. In the event that medical, disability, dental and life insurance
benefits cannot be provided under appropriate Company group insurance policies,
an amount equal to the premium necessary for the Executive to purchase directly
the same level of coverage in effect immediately prior to the Change of Control
shall be added to the Company's salary payments to Executive.
The Executive's right to receive Salary and Benefits Continuation
Payments shall continue as provided, notwithstanding the subsequent expiration
of this Agreement pursuant to Section 2 hereof. The Executive's subsequent death
or disability within the twenty-four (24) month period following the termination
of Executive's employment in connection with a Change of Control shall not
affect the Company's obligation to continue making Salary and Benefits
Continuation Payments. The right to Salary and Benefits Continuation Payments
shall be in addition to whatever other benefits the Executive may be entitled to
under any other agreement or compensation plan, program or arrangement of the
Company. The Company shall be authorized to withhold from any payment to the
Executive, his estate or his beneficiaries hereunder all such amounts, if any,
that the Company may reasonably determine it is required to withhold pursuant to
any applicable law or regulation.
In the event the Executive obtains subsequent employment within the
twenty-four (24) month period for which the Executive is receiving Salary and
Benefits Continuation Payments, the Salary and Benefits Continuation Payments
shall be reduced in amount equal to: (i) any compensation earned by the
Executive as the result of employment by another employer and (ii) any
comparable benefits actually received by the Executive from another employer.
Notwithstanding anything herein to the contrary, if the Executive's
employment with the Company is terminated prior to the date on which a Change of
Control occurs either (i) by the Company other than for Cause or (ii) by the
Executive for Good Reason, and it is reasonably demonstrated by Executive that
such termination of employment (a) was at the request of a third party who has
taken steps reasonably calculated to effect the Change of Control, or (b)
otherwise arose in connection with or anticipation of the Change of Control,
then for all purposes of this Agreement the termination shall be deemed to have
occurred upon a Change of Control and the Executive will be entitled to Salary
and Benefits Continuation Payments as provided for in this Section 5 hereof.
For purposes of this Agreement, "Change of Control" shall mean any of
the following events (each of such events being herein referred to as a "Change
of Control"):
(i) The sale or other disposition by the Company of all or
substantially all of its assets to a single purchaser or to a group
of purchasers, other than to a corporation with respect to which,
following such sale or disposition, more than eighty percent (80%)
of, respectively, the then outstanding shares of Company common stock
and the combined voting power of the then outstanding voting
securities entitled to vote generally in the election of the Board of
Directors is then owned beneficially, directly or indirectly, by all
or substantially all of the individuals and entities who were the
beneficial owners, respectively, of the outstanding Company common
stock and the combined voting power of the then outstanding voting
securities immediately prior to such sale or disposition in
substantially the same proportion as their ownership of the
outstanding Company common stock and voting power immediately prior
to such sale or disposition; (ii) The acquisition in one or more
transactions by any person or group, directly or indirectly, of
beneficial ownership of twenty percent (20%) or more of the
outstanding shares of Company common stock or the combined voting
power of the then outstanding voting securities of the Company
entitled to vote generally in the election of the Board of Directors;
provided, however, that any acquisition by (x) the Company or any of
its subsidiaries, or any employee benefit plan (or related trust)
sponsored or maintained by the Company or any of its subsidiaries or
(y) any person that is eligible, pursuant to Rule 13d-1(b) under the
Exchange Act (as such rule is in effect as of November 1, 1995), to
file a statement on Schedule 13G with respect to its beneficial
ownership of Company common stock and other voting securities whether
or not such person shall have filed a statement on Schedule 13G,
unless such person shall have filed a statement on Schedule 13D with
respect to beneficial ownership of fifteen percent (15%) or more of
the Company's voting securities, shall not constitute a Change of
Control; (iii). The Company's termination of its business and
liquidation of its assets;
(iv) The reorganization, merger or consolidation of the Company into
or with another person or entity, by which reorganization, merger or
consolidation the persons who held one hundred percent (100%) of the
voting securities of the Company prior to such reorganization, merger
or consolidation receive or continue to hold less than sixty (60%) of
the outstanding voting shares of the new or continuing corporation;
or (v) If, during any two-year period, less than a majority of the
members of the Board of Directors are persons who were either (i)
nominated or recommended for election by at least two-thirds vote of
the persons who were members of the Board of Directors or Nominating
Committee of the Board of Directors at the beginning of the period,
or (ii) elected by at least a two-thirds vote of the persons who were
members of the Board of Directors at the beginning of the period.
Other. If the Executive's employment hereunder is terminated prior to
the occurrence of a Change of Control (1) by the Company other than for Cause or
Disability or (2) by the Executive pursuant to his Retirement for Good Reason or
Resignation for Good Reason, then the Executive shall be entitled to the
benefits provided below:
the Company shall pay the Executive his full base salary through the
Date of Termination at the rate in effect at the time Notice of
Termination is given;
in lieu of any further salary payments to the Executive for periods
subsequent to the Date of Termination, the Company shall pay as
severance pay to the Executive, not later than the fifteenth day
following the Date of Termination, a lump sum severance payment equal
to the Executive's full base salary for the then remaining term of
this Agreement (without regard to the date of such Notice of
Termination) at the rate then in effect, discounted to present value
at a discount rate of 7% per annum applied to each future payment
from the time it would have become payable;
in lieu of shares of common stock issuable upon exercise of
outstanding options ("Options"), if any, or any stock appreciation
rights ("SAR"), if any, whether or not such Options or SARs are
vested or then exercisable pursuant to their respective terms,
granted to the Executive under the Company's stock option or stock
appreciation rights plans or otherwise (which Options and SARs shall
be canceled upon the making of the payment referred to below), the
Executive shall receive, not later than the fifteenth day following
the Date of Termination, an amount in cash equal to the product of
(i) the difference (to the extent that such difference is a positive
number) obtained by subtracting the per share exercise price of each
Option and each SAR held by the Executive, whether or not then fully
exercisable, from the closing price of the Common Stock (the "Closing
Price") as reported on the New York Stock Exchange on the Date of
Termination (or if not traded on the Date of Termination, the closing
price on the next preceding business day on which the Common Stock
traded), and (ii) the number of shares of Common Stock covered by
each such Option or SAR;
for a period of time remaining until the Expiration Date, the Company
shall arrange to provide the Executive with and shall pay the cost or
premiums when due for life, disability and health-and-accident
insurance benefits substantially similar to those which the Executive
is receiving immediately prior to the Notice of Termination.
The payments provided for in this Subsection (f), shall be made not
later than the fifteenth day following the Date of Termination,
provided, however, that if the amounts of such payments cannot be
finally determined on or before such day, the Company shall pay to
the Executive on such day an estimate, as determined in good faith by
the Company, of the minimum amount of such payments and shall pay the
remainder of such payments (together with interest at the rate
provided in Section 1274(b)(2)(B) of the Code) as soon as the amount
thereof can be determined but in no event later than the thirtieth
day after the Date of Termination. In the event that the amount of
the estimated payments exceeds the amount subsequently determined to
have been due, such excess shall constitute a loan by the Company to
the Executive payable on the fifth day after demand by the Company
(together with interest at the rate provided in Section 1274(b)(2)(B)
of the Code).
Reimbursement of Certain Fees and Expenses The Company shall also pay to
the Executive all legal and accounting fees and expenses incurred by the
Executive in contesting or disputing any such termination or in seeking to
obtain or enforce any right or benefit provided by this Agreement or in
connection with any tax audit or proceeding to the extent attributable to the
application of Section 4999 of the Code to any payment or benefit provided
hereunder.
Contest of Certain Payments. In the event that it is asserted by any
governmental agency, in any tax audit, administrative proceeding or otherwise,
that any payments (the "Severance Payments") provided under Section 5(e) are or
will be subject to the tax (the "Excise Tax") imposed by Section 4999 of the
Code and/or that a federal income tax deduction for amounts paid as Severance
Payments will not be allowed to the Company for any year by reason of Section
28OG of the Code, the Executive may contest or refute such assertion with
respect to the Excise Tax in any appropriate forum (the "Executive's Contest")
and the Company shall diligently and vigorously contest or refute such assertion
with respect to the disallowance of such deduction in all administrative
proceedings and in the federal district court or the Tax Court, whichever shall
have jurisdiction (the "Company's Contest"). The Executive's Contest and the
Company's Contest shall be conducted and presented separately unless the
Executive, in his discretion but with the consent of the Company, joins in the
Company's Contest. In any event, the Executive shall be entitled to retain
attorneys and other experts deemed necessary or appropriate by the Executive to
the proper presentation of the Executive's Contest and shall not be compelled by
the Company to compromise, settle or otherwise terminate the Executive's Contest
without his written consent thereto. The Company and the Executive shall
cooperate one with the other and each shall provide to the other copies of all
documents relevant to or useful in connection with either the Executive's
Contest or the Company's Contest as may reasonably be requested by the other.
The Executive shall attend any hearing, deposition or other proceeding at which
his attendance in person is material to the Company's Contest. The Company shall
cause the appropriate authorized officer or officers of the Company to attend
any hearing, deposition or other matter at which the Company's appearance is
requested by any party.
Executive's Duty to Mitigate. The Executive shall not be required to
mitigate the amount of any payment provided for in this Section 5(a), (b), (c),
(d) and (f) by seeking other employment or otherwise, nor shall the amount of
any payment provided for in this Section 5(a), (b), (c), (d) and (f) be reduced
by any compensation earned by the Executive as the result of employment by
another employer, or otherwise. Benefits otherwise receivable by the Executive
pursuant to Section 5(f)(iv) above shall be reduced to the extent comparable
benefits are actually received by the Executive during the period of time
remaining until the Expiration Date from the plan or plans of any subsequent
employer or from any program maintained by any governmental body not requiring
contribution by the Executive, and any such benefits actually received by the
Executive shall be reported to the Company.
Right to Additional Benefits. In addition to all other amounts payable to
the Executive under Section 5, the Executive shall be entitled to receive all
benefits payable to him under the Company's Pension Plan for Salaried Employees,
the Employee Savings Plan, and any other plan, program or arrangement relating
to retirement, profit sharing, or other benefits including, without limitation,
any employee stock ownership plan or any plan established as a supplement to any
of the aforenamed plans. No amount payable to the Executive under Sections 5(e)
or 5(f) shall be considered for any benefit calculation under the Company's
Pension Plan for Salaried Employees.
Retirement Under Circumstances Not Constituting Retirement For Good
Reason. Nothing contained in this Agreement shall be deemed to limit the
Executive's ability to retire under the Company's retirement policies and
Pension Plan for Salaried Employees under circumstances not constituting
Retirement for Good Reason and to receive all benefits payable to him under the
Company's Pension Plan for Salaried Employees, the Company's Employee Savings
Plan and any other plan, program or arrangement relating to retirement.
Non-Competition. During the term of this Agreement and for one year
thereafter, the Executive shall refrain from competing with the Company or any
subsidiary of the Company except with the Company's prior written consent. The
phrase "refrain from competing with the Company or any subsidiary of the
Company" shall mean that the Executive will not engage, directly or indirectly
(including, by way of example only, as a principal, partner, venture, employee
or agent) nor have any direct or indirect interest in any enterprise (a
"Competing Enterprise") which competes with the Company or any subsidiary
thereof by engaging in the production, transmission, storage or distribution of
natural gas or natural gas liquids or the ownership or operation of a central
plant heating system in the Company's distribution area or in substantial and
direct competition with any other business operation actively conducted by the
Company or its subsidiaries at the date of termination. It is agreed that the
foregoing provisions shall not restrict the Executive from either (i) subject to
the provisions of Subsection 12(a) hereof, being a director of or having any
investments or other interests in an enterprise which is not a competing
enterprise or (ii) having any investments in any competing enterprise the stock
of which is listed on a national securities exchange or traded publicly
over-the-counter so long as such investment does not give the Executive more
than one percent (1%) of the voting stock of such company.
Confidentiality. The Executive agrees:
To keep secret all confidential matters of the Company and its
subsidiaries and affiliates specifically indicated to be such by the Company or
established as such by written Company policy, and not to disclose them to any
one outside the Company or its subsidiaries and affiliates, either during or
after his employment with the Company, except with the Company's prior written
consent or as required by law; and
To deliver promptly to the Company on termination of employment of
the Executive by the Company all memoranda, notes, records, reports and other
documents (and all copies thereof) with respect to any such confidential matters
and other proprietary information (such as customers lists, suppliers lists,
etc.) which the Executive may then possess or have under his control.
Arbitration. Any disputes hereunder shall be settled by arbitration in
Pittsburgh, Pennsylvania under the auspices of, and in accordance with the rules
of, the American Arbitration Association, and the decision in such arbitration
shall be final and conclusive on the parties and judgment upon such decision may
be entered in any court having jurisdiction thereof.
Notices. All notices and other communications which are required or may be
given under this Agreement shall be in writing and shall be delivered personally
or by registered or certified mail addressed to the party concerned at the
following addresses:
If to the Company:
Equitable Resources, Inc.
420 Boulevard of Allies
Pittsburgh, PA 15219
If to the Executive:
Mr. Augustine A. Mazzei, Jr.
119 Trotwood Drive
Monroeville, PA 15146
or to such other address as shall be designated by notice in writing to the
other party in accordance herewith. Notices and other communications hereunder
shall be deemed effectively given when personally delivered, or, if mailed, 48
hours after deposit in the United States mail.
Miscellaneous.
This Agreement supersedes all prior agreements, arrangements and
undertakings, written or oral, relating to the subject matter hereof.
(i) This arrangement shall inure to the benefit of the Executive's
heirs, representatives or estate to the extent stated herein.
(ii) The Company shall require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business or assets of the Company, by agreement in form
and substance satisfactory to the Executive, expressly to assume and agree to
perform this Agreement in the same manner and to the same extent that the
Company would be required to perform if no such succession had taken place. As
used in this Agreement, "Company" shall mean the Company as defined in the
preamble to this Agreement and any successor to its business or assets which
executes and delivers the agreement provided for in this Section 15 (b) (ii) or
which otherwise becomes bound by all the terms and provisions of this Agreement
by operation of law.
This Agreement may be amended, modified, superseded, canceled,
renewed or extended and the terms or covenants hereof may be waived, only by a
written instrument executed by both of the parties hereto, or in the case of a
waiver, by the party waiving compliance. The failure of either party at any time
or times to require performance of any provisions hereof shall in no manner
affect the right at a later time to enforce such provisions thereafter. No
waiver by either party of the breach of any term or covenant contained in this
Agreement, whether by conduct or otherwise, in any one or more instances, shall
be deemed to be, or construed as, a further or continuing waiver of any such
breach or a waiver of the breach of any other term or covenant contained in this
Agreement.
In the event any one or more of the covenants, terms or provisions
contained in this Agreement shall be invalid, illegal or unenforceable in any
respect, the validity of the remaining covenants, terms and provisions contained
herein shall be in no way affected, prejudiced or disturbed thereby.
This Agreement is personal in nature and neither of the parties
hereto shall, without the consent of the other, assign or transfer this
Agreement or any rights or obligations hereunder, except as provided in
Subsection 15(b) above. Without limiting the foregoing, the Executive's right to
receive payments hereunder shall not be assignable or transferable, whether by
pledge, creation of a security interest or otherwise, other than a transfer by
his will or by the laws of descent or distribution, and in the event of any
attempted assignment or transfer contrary to this Section 15(e) the Company
shall have no liability to pay any amount so attempted to be assigned or
transferred.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed and delivered.
ATTEST: EQUITABLE RESOURCES, INC.
By:________________________ By:_________________________
Secretary Frederick H. Abrew
President and Chief
Executive Officer
WITNESS:
By_________________________ ___________________________
Augustine A. Mazzei, Jr.
EQUITABLE RESOURCES, INC.
Board of Directors
Deferred Compensation Agreement
THIS AGREEMENT, made and executed this 21st day of December, 1990, by and
between Equitable Resources, Inc., herein designated as "Equitable", and Barbara
B. Sullivan, herein designated as the "Participant."
WITNESSETH:
WHEREAS, the Participant is currently a member of the Board
of Directors of Equitable as a Director or an Advisory Director;
and
WHEREAS, Equitable and the Participant desire to defer all of the fees
arising from the above-stated relationship.
NOW, THEREFORE, the parties hereby agree as follows:
Section 1 - Account
1.1) Effective January 1, 1991, the Participant herein elects to defer,
under the terms of this Agreement, all compensation earned for his/her service
as a Director or an Advisory Director of Equitable for the calendar year 1991.
1.2) Equitable shall establish a bookkeeping account, hereinafter referred
to as the "Account", and shall credit to the Account the amounts of the deferred
fees.
1.3) Interest shall be credited to the Account monthly. The rate of
interest shall be the same as the yield for 30-day Treasury Bills applicable to
the first day of such month.
Section 2 - Payment
2.1) All amounts credited to the Account on the Participant's behalf shall
be payable in one lump sum by Equitable to the Participant on _________________
(date selected by the Participant) but in no event later than sixty (60) days
after the Participant ceases to be a Director or an Advisory Director of
Equitable. Unless a date specific is selected by the Participant, the
distribution will be made within sixty (60) days after the Participant ceases to
be a Director or an Advisory Director of Equitable; provided, however, that
nothing contained in this Section 2.1 shall negate the provisions of Section 2.3
below.
2.2) In the event of the death of the Participant, such payment shall be
made to the Participant's beneficiary. For purposes of the Agreement,
"beneficiary" means any person(s) or trust(s) or combination of these, last
designated by the Participant to receive benefits provided under this Agreement.
Such designation shall be in writing filed with the Compensation Committee of
the Board of Directors (the "Committee") and shall be revocable at any time
through written instrument similarly filed without consent of any beneficiary.
In the absence of any designation, the beneficiary shall be the Participant's
spouse, if surviving, otherwise, all amounts payable hereunder shall be
delivered by Equitable to the executors and administrators of the Participant's
estate for administration as a part thereof.
2.3) For financial reasons, the Participant may apply to the Committee for
withdrawal from the Agreement prior to the Payment Date. Such early withdrawal
shall lie within the absolute discretion of the Committee. Upon approval from
the Committee, and within fifteen (15) days thereafter, the Participant will be
deemed to have withdrawn from the Agreement and a distribution, in the amount
necessary, will be made in a one-time payment. Amounts still payable to the
Participant after the application of this Paragraph 2.3 shall be distributed
pursuant to the foregoing Paragraphs of this Section 2.
Section 3 - Miscellaneous Provisions
3.1) Nothing contained in this Agreement and no action taken pursuant to
the provisions of this Agreement shall create or be construed to create a trust
of any kind, or a fiduciary relationship between Equitable and the Participant,
his/her designated beneficiary or any other person. Any fees deferred under the
provisions of this Agreement shall continue for all purposes to be a part of the
general funds of Equitable. To the extent that any person acquires a right to
receive payment from Equitable under this Agreement, such right shall be no
greater than the right of any unsecured general creditor of Equitable.
3.2) The right of the Participant or any other person to the payment of
deferred fees under this Agreement shall not be assigned, transferred, pledged
or encumbered except by will or by the laws of descent and distribution.
3.3) If the Committee shall find that any person to whom any payment is
payable under this Agreement is unable to care for his/her affairs because of
illness or accident, or is a minor, any payment due (unless a prior claim
therefor shall have been made by a duly appointed guardian, committee or other
legal representative) may be paid to the spouse, child, a parent, or a brother
or sister, or to any person deemed by the Committee to have incurred expense for
such person otherwise entitled to payment, in such manner and proportions as the
Committee may determine. Any such payment shall be a complete discharge of the
liabilities of Equitable under this Agreement.
3.4) Nothing contained herein shall be construed as conferring upon the
Participant the right to continue in the service of Equitable as a member of the
Board of Directors.
3.5) This Agreement shall be binding upon and inure to the benefit of
Equitable, its successors and assigns and the Participant and his/her heirs,
executors, administrators and legal representatives.
3.6) Equitable may terminate this Plan at any time. Upon such
termination, the Committee shall dispose of any benefits of the Participant as
provided in Section 2.
Equitable may also amend the provisions of this Plan at any time; provided,
however, that no amendment shall affect the rights of the Participant, or
his/her beneficiaries, to the receipt of payment of benefits to the extent of
any compensation deferred before the time of the amendment.
This Agreement shall terminate when the payment due under this Agreement
is made.
3.7) This Agreement shall be construed in accordance with and governed
by the laws of the Commonwealth of Pennsylvania.
Section 4 - Committee
4.1) The Committee's interpretation and construction of the Agreement, and
the actions thereunder, including the amount or recipient of the payment to be
made therefrom, shall be binding and conclusive on all persons for all purposes.
The Committee members shall not be liable to any person for any action taken or
omitted in connection with the interpretation and administration of this
Agreement unless attributable to his/her own willful misconduct or lack of good
faith.
IN WITNESS WHEREOF, Equitable has caused this Agreement to be executed by
its duly authorized officers and the Participant has hereunto set his/her hand
as of the date first above written.
ATTEST: EQUITABLE RESOURCES, INC.
s/ Audrey C. Moeller s/ Frederick H. Abrew
Vice President and President and
Corporate Secretary Chief Executive Officer
WITNESS: (Participant)
s/ Janice A. Haas s/ Barbara B.Sullivan
EQUITABLE RESOURCES, INC.
Board of Directors
Deferred Compensation Agreement
THIS AGREEMENT, made and executed this 15th day of December, 1995, by and
between Equitable Resources, Inc., herein designated as "Equitable", and Barbara
B. Sullivan, herein designated as the "Participant."
WITNESSETH:
WHEREAS, the Participant is currently a member of the Board
of Directors of Equitable as a Director or an Advisory Director;
and
WHEREAS, Equitable and the Participant desire to defer all of the fees
arising from the above-stated relationship.
NOW, THEREFORE, the parties hereby agree as follows:
Section 1 - Account
1.1) Effective January 1, 1996, the Participant herein elects to defer,
under the terms of this Agreement, all compensation earned for his/her service
as a Director or an Advisory Director of Equitable for the calendar year 1996.
1.2) Equitable shall establish a bookkeeping account, hereinafter referred
to as the "Account", and shall credit to the Account the amounts of the deferred
fees.
1.3) Interest shall be credited to the Account monthly. The rate of
interest shall be the same as the yield for 30-day Treasury Bills applicable to
the first day of such month.
Section 2 - Payment
2.1) All amounts credited to the Account on the Participant's behalf shall
be payable in one lump sum by Equitable to the Participant on January 1, 1997
(date selected by the Participant) but in no event later than sixty (60) days
after the Participant ceases to be a Director or an Advisory Director of
Equitable. Unless a date specific is selected by the Participant, the
distribution will be made within sixty (60) days after the Participant ceases to
be a Director or an Advisory Director of Equitable; provided, however, that
nothing contained in this Section 2.1 shall negate the provisions of Section 2.3
below.
2.2) In the event of the death of the Participant, such payment shall be
made to the Participant's beneficiary. For purposes of the Agreement,
"beneficiary" means any person(s) or trust(s) or combination of these, last
designated by the Participant to receive benefits provided under this Agreement.
Such designation shall be in writing filed with the Compensation Committee of
the Board of Directors (the "Committee") and shall be revocable at any time
through written instrument similarly filed without consent of any beneficiary.
In the absence of any designation, the beneficiary shall be the Participant's
spouse, if surviving, otherwise, all amounts payable hereunder shall be
delivered by Equitable to the executors and administrators of the Participant's
estate for administration as a part thereof.
2.3) For financial reasons, the Participant may apply to the Committee for
withdrawal from the Agreement prior to the Payment Date. Such early withdrawal
shall lie within the absolute discretion of the Committee. Upon approval from
the Committee, and within fifteen (15) days thereafter, the Participant will be
deemed to have withdrawn from the Agreement and a distribution, in the amount
necessary, will be made in a one-time payment. Amounts still payable to the
Participant after the application of this Paragraph 2.3 shall be distributed
pursuant to the foregoing Paragraphs of this Section 2.
Section 3 - Miscellaneous Provisions
3.1) Nothing contained in this Agreement and no action taken pursuant to
the provisions of this Agreement shall create or be construed to create a trust
of any kind, or a fiduciary relationship between Equitable and the Participant,
his/her designated beneficiary or any other person. Any fees deferred under the
provisions of this Agreement shall continue for all purposes to be a part of the
general funds of Equitable. To the extent that any person acquires a right to
receive payment from Equitable under this Agreement, such right shall be no
greater than the right of any unsecured general creditor of Equitable.
3.2) The right of the Participant or any other person to the payment of
deferred fees under this Agreement shall not be assigned, transferred, pledged
or encumbered except by will or by the laws of descent and distribution.
3.3) If the Committee shall find that any person to whom any payment is
payable under this Agreement is unable to care for his/her affairs because of
illness or accident, or is a minor, any payment due (unless a prior claim
therefor shall have been made by a duly appointed guardian, committee or other
legal representative) may be paid to the spouse, child, a parent, or a brother
or sister, or to any person deemed by the Committee to have incurred expense for
such person otherwise entitled to payment, in such manner and proportions as the
Committee may determine. Any such payment shall be a complete discharge of the
liabilities of Equitable under this Agreement.
3.4) Nothing contained herein shall be construed as conferring upon the
Participant the right to continue in the service of Equitable as a member of the
Board of Directors.
3.5) This Agreement shall be binding upon and inure to the benefit of
Equitable, its successors and assigns and the Participant and his/her heirs,
executors, administrators and legal representatives.
3.6) Equitable may terminate this Plan at any time. Upon such
termination, the Committee shall dispose of any benefits of the Participant as
provided in Section 2.
Equitable may also amend the provisions of this Plan at any time; provided,
however, that no amendment shall affect the rights of the Participant, or
his/her beneficiaries, to the receipt of payment of benefits to the extent of
any compensation deferred before the time of the amendment.
This Agreement shall terminate when the payment due under this Agreement
is made.
3.7) This Agreement shall be construed in accordance with and governed
by the laws of the Commonwealth of Pennsylvania.
Section 4 - Committee
4.1) The Committee's interpretation and construction of the Agreement, and
the actions thereunder, including the amount or recipient of the payment to be
made therefrom, shall be binding and conclusive on all persons for all purposes.
The Committee members shall not be liable to any person for any action taken or
omitted in connection with the interpretation and administration of this
Agreement unless attributable to his/her own willful misconduct or lack of good
faith.
IN WITNESS WHEREOF, Equitable has caused this Agreement to be executed by
its duly authorized officers and the Participant has hereunto set his/her hand
as of the date first above written.
ATTEST: EQUITABLE RESOURCES, INC.
s/ Audrey C. Moeller s/ Frederick H. Abrew
Vice President and President and
Corporate Secretary Chief Executive Officer
WITNESS: (Participant)
s/ Janice A. Haas s/ Barbara B.Sullivan
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
EQUITABLE RESOURCES, INC.
Effective Date: January 1, 1989
As Amended and Restated
Through October 20, 1995
<PAGE>
I. EFFECTIVE DATE OF PLAN
1.1. EFFECTIVE DATE. The effective date of the Plan is
January 1, 1989.
II. DEFINITIONS
2.1 AFFILIATED COMPANY: Any company which is wholly-
owned or less than wholly-owned but is controlled
by the Company, and any other organization so
designated by the Company.
2.2 BENEFICIARY: The spouse or other beneficiary entitled to a
benefit under the applicable Qualified Plan in the event of the
death of a participant in such Qualified Plan.
2.3 COMPANY: Equitable Resources, Inc., or any
corporation which succeeds to the position of
Equitable Resources, Inc.
2.4 INTERNAL REVENUE CODE: The Internal Revenue Code,
as amended, or as it may be amended from time to
time, and any regulations issued thereunder.
2.5 PARTICIPANT: All salaried employees of the Company or Affiliated
Company who participate in a Qualified Plan, who are deemed part
of a select group of management or highly compensated employees,
and who are chosen to participate in the Plan by the
Compensation Committee of the Company's Board of Directors. A
Participant may be also referred to as "a Member" herein.
2.6 PLAN: The Equitable Resources, Inc. Supplemental
Executive Retirement Plan as set forth herein, and
as may be hereafter amended.
2.7 QUALIFIED PLAN: Any defined benefit pension plan
of the Company or an Affiliated Company which is
qualified under Section 401 of the Internal
Revenue Code.
2.8 Capitalized terms not defined herein shall have the meaning
given to such terms in the Retirement Plan for Non-Union
Employees of Equitable Resources, Inc., Equitable Resources
Energy Company, Equitrans, Inc. and Equitable Resources
Marketing Company, as amended and restated.
III. PLAN BENEFIT
3.1 The monthly benefit payable to any individual Participant shall
be an amount equal to the sum of (a) [reduced by (b) and (c)]
follows:
(a) The amount of retirement benefit that would have been
payable to the Participant under any Qualified Plan in
which he participates if that Qualified Plan
(1) had provided a retirement benefit without regard to
any applicable maximum benefit limitations under
Section 415 of the Internal Revenue Code or any
limitation as to the maximum amount of annual
compensation which may be taken into account under
Section 401(a)(17) of the Internal Revenue Code or any
limitation on the maximum number of years of a
Participant's service for which an unrestricted amount
of benefit accruals may be taken into account under
Section 401(1) of the Internal Revenue Code; and
(2) had included payments made under the
Company's Short-Term Incentive
Compensation Plan in its definition of
Compensation.
reduced by
(b) The amount of retirement benefit payable to the Participant
under any Qualified Plan in which he participates taking
into account any applicable maximum benefit limitations
under Sections 415, 401(a)(17) and 401(1) of the Internal
Revenue Code; and
(c) The amount of retirement benefit payable to the Participant
under the Company's Supplemental Pension Plan.
3.2 The Company's Employee Pension Committee (the "Committee") may,
in its sole discretion, award any Participant additional service
under this Plan for periods of employment with prior employers,
and any such additional service shall be counted under this Plan
toward benefits otherwise payable under any Qualified Plan for
both vesting and benefit accrual purposes. In determining
whether or not to award additional service credit for periods of
prior employment, the Committee shall consider the individual
facts and circumstances and shall have no duty to arrive at the
same or similar determination based on the Committee's action in
a prior or subsequent case.
IV. FORM OF PAYMENT OF BENEFITS
4.1 NORMAL FORM: The normal form of retirement benefit shall be a
single life annuity, payable monthly, for the life of the
Member. If a Member dies prior to the receipt of the full
actuarial value of such annuity determined at the time of
retirement, the remaining value of the annuity shall be paid in
a lump sum to the Member's beneficiary or to the Member's estate
if the beneficiary should predecease the Member.
4.2 QUALIFIED JOINT AND SURVIVOR ANNUITY: If a Member is married on
the later of his applicable Retirement Date or the date his
retirement benefit payments commence under the Plan, his
retirement benefit payment shall be in the form of a Qualified
Joint and Survivor Annuity which is the Actuarial Equivalent of
the normal form of retirement benefit payment. A Member who
would receive the Qualified Joint Survivor Annuity as provided
herein may elect to receive his retirement benefit in the normal
form or in one of the following survivorship optional forms and
any such election shall be an affirmative election not to
receive his benefit in the Qualified Joint and Survivor Annuity
form; provided, however, that any such election shall be made
prior to the commencement of a Member's services with the
Company for which benefits are to be provided under this Plan;
and provided that any such election (other than an election to
make the spouse a Joint Annuitant pursuant to Section 4.3 to
receive a monthly benefit after the death of the Member equal to
75% or 100% of the pension paid to the Member) made after
December 31, 1984 shall be effective only if the Member obtains
his spouse's consent thereto. If both the Member and his
Beneficiary die prior to their joint receipt of the full
actuarial value of such annuity determined at the time of
retirement, the remaining value of the annuity shall be paid to
the Member's estate.
4.3 SURVIVORSHIP OPTIONS: A Member may elect in the manner
hereinafter provided to have the value of his retirement benefit
payment apply to the payment of a reduced pension to him during
his life, and after his death to his designated surviving Joint
Annuitant in an amount equal to 100% of, or 75% of, or 50% of,
or 25% of such reduced pension. The reduced pensions to be paid
to the Member and to the surviving Joint Annuitant shall be
determined on the basis of actuarial values selected by the
Committee according to the ages of the Member and of the
Member's designated Joint Annuitant at the time the Member
retires. If both the Member and his Beneficiary die prior to
their joint receipt of the full actuarial value of such annuity
determined at the time of retirement, the remaining value of the
annuity shall be paid to the Member's estate.
In order for an effective election of an optional form of
benefit to be made hereunder, the following requirements must be
met. The present value of benefit payments to be made to the
Member determined as of the date benefit payments will commence
must exceed fifty percent (50%) of the present value of all
payments to be made under the option, except where the
designated Joint Annuitant is the Member's spouse. The Member
must furnish all information requested by the Committee at the
times and in the form and manner required by it, including
specific designation of the percentage of the benefit payable to
the Member under the option which is to be paid to the Joint
Annuitant. A Member may designate only one Joint Annuitant with
respect to his election of an option. Any election shall be made
prior to the commencement of a Member's services with the
Company for which benefits are to be provided under this Plan.
4.4 PRE-RETIREMENT SPOUSE'S BENEFIT:
(a) DEATH ON OR AFTER AGE FIFTY-FIVE OR
--------------------------------------------
COMPLETION OF TWENTY-FIVE YEARS: Effective
----------------------------------
on and after March 1, 1985, if a Member who
is married on the date of his death and who
has attained age fifty-five or completed
twenty-five years of Continuous Service dies
while actively employed by the Company, his
spouse shall receive a benefit, payable in
the form of a single life annuity, in an
amount equal to fifty percent (50%) of the
Member's Accrued Benefit determined as of the
first day of the calendar month in which he
died but without reduction for age due to
benefit commencement prior to the date such
Member would have attained age sixty-five, if
applicable.
(b) ELIGIBILITY FOR ALTERNATIVE BENEFITS:
---------------------------------------------
Effective on and after August 23, 1984, if a
Member who is credited with at least one hour
of service (or one hour of paid leave) on or
after August 23, 1984, is legally married on
the date of his death (a "Qualified Spouse")
and who has ten (10) or more years of
Continuous Service and a nonforfeitable right
to a benefit under the Plan, and who dies
prior to said benefit's annuity starting
date, his Qualified Spouse shall receive the
Survivor's Benefit provided herein in an
amount determined in paragraph (c).
(c) AMOUNT: The amount of the Survivor's Benefit
payable in the form of a life annuity to the
surviving Qualified Spouse of Members
satisfying (b) shall equal (1) or (2)
whichever applies:
(1) DEATH ON OR AFTER AGE FIFTY-FIVE OR COMPLETION OF
TWENTY-FIVE YEARS OF SERVICE: An amount computed in
accordance with Section 4.4(a) without regard to
whether the Member dies while actively employed by the
Company.
(2) DEATH BEFORE AGE FIFTY-FIVE OR COMPLETION OF
TWENTY-FIVE YEARS OF SERVICE: An amount equal to the
survivor's portion of the Qualified Joint and Survivor
Annuity which the Member would have received computed
as if he had terminated employment with the Company on
the date of his death with a Deferred Vested Benefit,
survived to age Fifty-Five (55) and made an election
under a Qualified Plan for immediate commencement of
benefit payments subject to the reduction, if any,
provided in such Qualified Plan for early commencement
of benefit payments, commenced receipt of his Deferred
Vested Benefit in the form of said Qualified Joint and
Survivor Annuity on the first day of the next month
and then died the next day.
4.5 COMMENCEMENT AND TERMINATION OF BENEFIT: Retirement benefits
shall commence on the Member's Retirement Date. The Survivor
Annuity payable to a spouse and the Survivor Annuity payable to
the Member's designated Joint Annuitant shall commence on the
first day of the month next succeeding the month in which the
Member's death occurs. The pre-retirement spouse's benefit
payable under Section 4.4 above shall commence on the first day
of the month next succeeding the month in which the Member would
have attained age fifty-five (55) or the month which he died,
whichever is the later to occur. All benefit payments shall
cease with payment due immediately preceding the date of death
of the last person entitled to benefits under the form of
benefit payment being made. Notwithstanding the foregoing, in
the event no effective election of a date for commencement of
benefits is made by a Member, the payment of benefits hereunder
shall commence within thirty (30)days after the close of the
Plan Year in which occurs the latest of:
(a) attainment of the Member's Normal Retirement
Date or if the Member is not an employee his
sixty-fifth (65) birthday;
(b) the Member's termination of employment with the Company;
provided, however, the retirement benefit payments under
the Plan shall commence no later than April 1 of the
calendar year following the calendar year in which the
Member retires.
At the first day of the month succeeding the month in which such
Member's sixty-fifth (65) birthday occurred, in the event the
whereabouts of a Member whose only entitlement is to a Deferred
Vested Benefit are not known, a reasonable effort will be made
by the Committee to locate such Member. In the event the Member
cannot be located, the Member's benefit payments shall be held
by the Plan until the earlier of the time the whereabouts of the
Member are made known to the Committee by the Member or his
lawful agent or seven (7) years subsequent to his Normal
Retirement Date, after which such Member shall be presumed dead
and any other benefit which becomes payable by reason of such
death under the rules of the Plan relating to form of benefit
payment shall be paid thereafter.
4.6 PAYMENTS IN THE EVENT OF INCAPACITY: In the EVENT it is
determined that a Member, retired Member or other person
entitled to benefits under the Plan, in the judgement of the
Committee, is unable to care for his affairs because of illness,
accident, or incapacity (either mental or physical), or for any
other reason, the Committee shall cause any payment of a benefit
or refund of contributions to be paid in the form of a life
annuity, payable monthly to a duly appointed guardian,
committee, or other legal representative of such person, or, if
there is no such legal representative, to his spouse or child or
such other object of natural bounty as the Committee may
determined, or to such person, persons or institutions as, in
the judgement of the Committee, are then maintaining or have
custody of such Member, retired Member or other person entitled
to benefits.
4.7 NONFORFEITABILITY OF BENEFITS: Except as provided
------------------------------
by the Plan, all Member retirement benefits in pay
status and all benefits after attainment of the
Normal Retirement Age shall be nonforfeitable
except in the event of death, which shall result
in a forfeiture of all such Member's benefits.
These provisions shall have no application to any
survivorship annuities, including the Qualified
Joint and Survivor Annuity which may be payable by
reason of the operation of the rules of this Plan,
which benefits shall terminate by reason of the
death of the survivor annuitant. All benefits
provided by the Plan are personal in nature and
shall be payable only to and during the life of
the applicable recipient and no other person shall
inure to any right therein. For purposes of this
Section, "Normal Retirement Age" shall mean the
date on which the Member attains age sixty-five
(65).
4.8 SPECIAL RULE FOR SMALL PAYMENTS: If a benefit otherwise payable
under this Plan is ten dollars ($10.00) or less per month, it
shall be paid annually in a lump sum equal to its commuted
value.
Where the present value of any benefit otherwise payable under
the Plan, including without limiting the foregoing, any
pre-retirement surviving spouse's benefit, does not exceed
$3,500 (and payment of the benefit has not commenced) the
Committee shall direct the Trustee to distribute the entire
present value in one lump sum payment.
As used herein, "present value" shall mean the value of a
benefit determined as of the date of distribution utilizing an
interest rate not greater than the interest rate which would be
used (as of the date of the distribution) by the Pension Benefit
Guaranty Corporation for purposes of determining the present
value of a lump sum distribution on Plan termination.
4.9 A Participant may request at any time to be granted his entire
benefit under this Plan in a lump sum form (whether or not he
has commenced receiving an annuity under the Plan). An election
of a lump sum payment of benefits hereunder must be approved by
the Compensation Committee of the Board of Directors at its sole
discretion. However, if the Internal Revenue Service determines
at any time that a Participant has constructively received, for
any reason and under any rationale, the total value of his
benefit payable under this Plan, the Participant shall have an
absolute right to elect to receive his benefit in a lump sum
form without any action required by the Compensation Committee
of the Board of Directors.
V. DEATH BENEFITS
5.1 The monthly death benefit payable to the Beneficiary of a
Participant, if any, shall be determined in accordance with
Section 3.1 above assuming that the term "Beneficiary" has been
substituted for the term "Participant" each place it appears.
5.2 Any death benefit payable to the Beneficiary of a Participant
under Section 5.1 shall be paid to the Beneficiary in the form
of a monthly annuity for the life of the Beneficiary.
VI. COST OF THE PLAN
6.1 The entire cost of benefits and administrative expenses for this
Plan shall be paid for by the Company as incurred. No
contributions by Participants will be permitted or required.
VII. ADMINISTRATION
7.1 This Plan shall be administered by the Administrator appointed
under the Qualified Plan. In addition, the terms of the
Qualified Plan shall govern in situations not specifically
provided for herein, but only to the extent such terms are not
inconsistent with the provisions and intent of this Plan.
VIII.GENERAL PROVISIONS
8.1 This Plan is intended to be a plan maintained by the Company for
the purpose of providing deferred compensation to a select group
of management or highly compensated employees.
8.2 This Plan is purely voluntary on the part of the Company. The
Company expects and intends to continue the Plan indefinitely,
but necessarily reserves the right to amend, alter, suspend or
terminate the Plan in whole or in part, at any time.
8.3 All rights of a Participant or a Beneficiary under this Plan
shall be mere unsecured creditors' rights against the Company,
with no rights to the assets of the Company (or any trust in
which assets are held for purposes of this Plan) superior to
that of any other general unsecured creditor.
8.4 Participant's rights payable under the Plan are not subject in
any manner to anticipation, alienation, sale, transfer,
assignment, pledge or encumbrance. Such rights may not be
subject to the debts, contracts, liabilities, engagements or
torts of the Participants or the Participant's beneficiaries.
eg\benefits\serp
December 15, 1995
Mr. Donald I. Moritz
Chairman of the Executive Committee
Equitable Resources, Inc.
420 Boulevard of the Allies
Pittsburgh, PA 15219
Dear Mr. Moritz:
This is to advise you that on December 14, 1995, the Compensation Committee of
the Board of Directors of the Company adopted a resolution authorizing the
payment of $60,000 to you for consulting services for the period January 1, 1996
through June 30, 1996, such payment to be made in the amount of $10,000 monthly.
The Agreement for Consulting Services dated December 31, 1994, between you and
Equitable Resources, inc., is therefore amended by adoption of the resolution
and said Agreement will terminate as of June 30, 1996.
Please indicate your acceptance of this amendment by signing below.
Very truly yours,
EQUITABLE RESOURCES, INC.
- -----------------------------------------------------------
By Frederick H. Abrew
President and Chief Executive Officer
APPROVED AND ACCEPTED
- ----------------------------------------------------------
Donald I. Moritz
The Company has executed Change-in-Control Agreements with the
following executive officers of the Company: A. Mark Abramovic,
John C. Gongas, Jr., Dan C. Eaton, Audrey C. Moeller, Gregory R.
Spencer and Jeffrey C. Swoveland. Mr. Abramovic's and Mr.
Gongas' Agreements provide for 24 months of severance benefits
while all other contracts provide for 18 months of severance
benefits.
<PAGE>
CHANGE OF CONTROL AGREEMENT
THIS AGREEMENT (the "Agreement") dated as of the ___ day of January,
1996 (the "Effective Date") by and between EQUITABLE RESOURCES, INC., a
Pennsylvania corporation with its principal place of business at Pittsburgh,
Pennsylvania (the "Company"), and____________________________, an individual
(the "Employee");
WHEREAS, the Board of Directors of the Company (the "Board"), has
determined that it is in the best interest of the Company and its shareholders
to assure that the Company will have the continued dedication of the Employee,
notwithstanding the possibility, threat or occurrence of a Change of Control (as
defined below) of the Company. The Board believes it is imperative to diminish
the inevitable distraction of the Employee by virtue of the personal
uncertainties and risks created by a pending or threatened Change of Control and
to encourage the Employee's full attention and dedication to the Company
currently and in the event of any threatened or pending Change of Control, and
to provide the Employee with compensation and benefits arrangements upon a
Change of Control which ensure that the compensation and benefits expectations
of the Employee will be satisfied and which are competitive with those of other
corporations in the industry in which the Company's principal business activity
is conducted. Therefore, in order to accomplish these objectives, the Board has
caused the Company to enter into this Agreement.
NOW THEREFORE, in consideration of the premises and mutual covenants
contained herein, and intending to be legally bound hereby, the parties hereto
agree as follows:
1. Term. The term of this Agreement shall commence on the Effective
Date hereof and expire on the earlier of (i) the date of the Employee's
retirement in accordance with the provisions of the Company's retirement policy
as set forth in the Company Management Manual; or (ii) unless further extended
as hereinafter set forth, the date which is thirty-six (36) months after the
Effective Date. Commencing on the last day of the first full calendar month
after the Effective Date and on the last day of each succeeding calendar month,
the term of this Agreement shall be automatically extended without further
action by either party (but not beyond the date of Employee's retirement in
accordance with the provisions of the Company's retirement policy) for one (1)
additional month unless one party provides written notice to the other party
that such party does not wish to extend the term of this Agreement. In the event
that such notice shall have been delivered, the term of this Agreement shall no
longer be subject to automatic extension and the term hereof shall expire on the
date which is thirty-six (36) calendar months after the last day of the month in
which such written notice is received. Notwithstanding the foregoing, the
Employee shall serve in said office(s) at the pleasure of the Board, and the
Employee may be removed from said office(s) at any time with or without Cause
(as hereinafter defined); provided, that such removal shall be without prejudice
to any rights the Employee may have to Salary and Benefits Continuation (as
hereinafter defined) hereunder.
2. Change of Control. Change of Control shall mean
any of the following events (each of such events being herein
referred to as a "Change of Control"):
(a) The sale or other disposition by the Company of all or
substantially all of its assets to a single purchaser or to a group
of purchasers, other than to a corporation with respect to which,
following such sale or disposition, more than eighty percent (80%)
of, respectively, the then outstanding shares of Company common stock
and the combined voting power of the then outstanding voting
securities entitled to vote generally in the election of the Board of
Directors is then owned beneficially, directly or indirectly, by all
or substantially all of the individuals and entities who were the
beneficial owners, respectively, of the outstanding Company common
stock and the combined voting power of the then outstanding voting
securities immediately prior to such sale or disposition in
substantially the same proportion as their ownership of the
outstanding Company common stock and voting power immediately prior
to such sale or disposition;
(b) The acquisition in one or more transactions by any person
or group, directly or indirectly, of beneficial ownership of twenty
percent (20%) or more of the outstanding shares of Company common
stock or the combined voting power of the then outstanding voting
securities of the Company entitled to vote generally in the election
of the Board of Directors; provided, however, that any acquisition by
(x) the Company or any of its subsidiaries, or any employee benefit
plan (or related trust) sponsored or maintained by the Company or any
of its subsidiaries or (y) any person that is eligible, pursuant to
Rule 13d-1(b) under the Exchange Act (as such rule is in effect as of
November 1, 1995), to file a statement on Schedule 13G with respect
to its beneficial ownership of Company common stock and other voting
securities whether or not such person shall have filed a statement on
Schedule 13G, unless such person shall have filed a statement on
Schedule 13D with respect to beneficial ownership of fifteen percent
(15%) or more of the Company's voting securities, shall not
constitute a Change of Control;
(c) The Company's termination of its business
and liquidation of its assets;
(d) The reorganization, merger or consolidation of the Company
into or with another person or entity, by which reorganization,
merger or consolidation the persons who held one hundred percent
(100%) of the voting securities of the Company prior to such
reorganization, merger or consolidation receive or continue to hold
less than sixty percent (60%) of the outstanding voting shares of the
new or continuing corporation; or
(e) If, during any two-year period, less than a majority of
the members of the Board of Directors are persons who were either (i)
nominated or recommended for election by at least two-thirds vote of
the persons who were members of the Board of Directors or Nominating
Committee of the Board of Directors at the beginning of the period,
or (ii) elected by at least a two-thirds vote of the persons who were
members of the Board of Directors at the beginning of the period.
3. Salary and Benefits Continuation. "Salary and Benefits
Continuation" shall be defined to mean the following: (i) payment of sum equal
to Employee's base salary for a twenty-four (24) month period; (ii) payment of
an amount of cash equal to two (2) times the average incentive earned over the
prior three year period; (iii) immediate vesting of all previously unvested cash
awards and stock incentives; (iv) immediate delivery of Company stock or payment
of an amount of cash equal to two (2) times the value of the average grants
received by Employee over the preceding five (5) years under the applicable
Company long term incentive plans; (v) provision to Employee and his eligible
dependents of medical, disability, dental and life insurance coverage (to the
extent such coverage was in effect immediately prior to the Change of Control)
for twenty-four (24) months; (vi) immediate granting to Employee of twenty-four
(24) months of service and age credit for determining benefit amounts and any
early retirement reductions with respect to all applicable Company retirement
benefit plans; in addition, no early retirement reductions will be imposed on
the retirement benefits if age at termination equals or exceeds 55; (vii)
reimbursement to Employee of reasonable costs incurred by Employee for
outplacement services in the twenty-four (24) month period following termination
of Employee's employment in connection with a Change of Control.
All amounts payable by the Company to the Employee in cash pursuant
to Section 3(i), (ii), (iii) and (iv) shall be made in a lump sum unless the
Employee otherwise elects and notifies the Company in writing prior to the
termination of his employment of his desire to have all payments made in
accordance with the Company's regular salary and benefit payment practices,
provided that the lump sum payment or first payment is made within thirty (30)
days after the Employee's termination hereunder. All other amounts payable by
the Company to the Employee pursuant to Section 3 shall be paid or provided in
accordance with the Company's standard payroll and reimbursement procedures, as
in effect immediately prior to the Change of Control. In the event that medical,
disability, dental and life insurance benefits cannot be provided under
appropriate Company group insurance policies, an amount equal to the premium
necessary for the Employee to purchase directly the same level of coverage in
effect immediately prior to the Change of Control shall be added to the
Company's salary payments to Employee.
If there is a Change of Control as defined above, the Company will
provide Salary and Benefits Continuation if at any time during the first
twenty-four (24) months following the consummation of a Change of Control,
either (i) the Company terminates the Employee's employment other than for Cause
as defined in Section 4 below or (ii) the Employee terminates his/her employment
for "Good Reason."
For purposes of this Agreement, "Good Reason" is defined as:
(a) Removal of the Employee from the position he held
immediately prior to the Change of Control (by reason other than
death, disability or Cause), or any other material breach by the
Company of its obligations contained in this Agreement;
(b) The assignment to the Employee of any duties inconsistent
with those performed by the Employee immediately prior to the Change
of Control or a substantial alteration in the nature or status of the
Employee's responsibilities which renders the Employee's position to
be of less dignity, responsibility or scope;
(c) A reduction by the Company in the Employee's annual base
salary as in effect on the date hereof or as the same may be
increased from time to time, except for proportional across-the-board
salary reductions similarly affecting all executives of the Company
and all executives of any person in control of the Company, provided,
however, that in no event shall the Employee's annual base salary be
reduced by an amount equal to ten percent or more of the Employee's
annual base salary as of the end of the calendar year immediately
preceding the year in which the Change of Control occurs, without the
Employee's consent;
(d) The failure to grant the Employee an annual salary increase
reasonably necessary to maintain such salary as reasonably comparable
to salaries of senior executives holding positions equivalent to the
Employee's in the industry in which the Company's then principal
business activity is conducted;
(e) The Company requiring the Employee to be based anywhere
other than the Company's principal executive offices in the city in
which the Employee is principally located immediately prior to the
Change of Control, except for required travel on the Company's
business to an extent substantially consistent with the Employee's
present business travel obligations;
(f) Any material reduction by the Company of the benefits
enjoyed by the Employee under any of the Company's pension,
retirement, profit sharing, savings, life insurance, medical, health
and accident, disability or other employee benefit plans, programs or
arrangements, the taking of any action by the Company which would
directly or indirectly materially reduce any of such benefits or
deprive the Employee of any material fringe benefits, or the failure
by the Company to provide the Employee with the number of paid
vacation days to which he is entitled on the basis of years of
service with the Company in accordance with the Company's normal
vacation policy, provided that this paragraph (f) shall not apply to
any proportional across-the-board reduction or action similarly
affecting all executives of the Company and all executives of any
person in control of the Company; or
(g) The failure of the Company to obtain a satisfactory
agreement from any successor to assume and agree to perform this
Agreement, as contemplated in Section 14 hereof.
The Employee's right to Salary and Benefits Continuation shall accrue upon the
occurrence of either of the events specified in (i) or (ii) of the preceding
sentence and shall continue as provided, notwithstanding the subsequent
expiration of this Agreement pursuant to Section 1 hereof. The Employee's
subsequent employment, death or disability within the twenty-four (24) month
period following the Employee's termination of employment in connection with a
Change of Control shall not affect the Company's obligation to continue making
Salary and Benefits Continuation payments. The Employee shall not be required to
mitigate the amount of any payment provided for in this Section 3 by seeking
employment or otherwise. The rights to Salary and Benefits Continuation shall be
in addition to whatever other benefits the Employee may be entitled to under any
other agreement or compensation plan, program or arrangement of the Company. The
Company shall be authorized to withhold from any payment to the Employee, his
estate or his beneficiaries hereunder all such amounts, if any, that the Company
may reasonably determine it is required to withhold pursuant to any applicable
law or regulation.
4. Termination of Employee for Cause. Upon or
following a Change of Control, the Company may at any time
terminate the Employee's employment for Cause. Termination of
employment by the Company for "Cause" shall mean termination upon:
(i) the willful and continued failure by the Employee to
substantially perform his duties with the Company (other than (A) any
such failure resulting from Employee's disability or (B) any such
actual or anticipated failure resulting from Employee's termination
of his/her employment for Good Reason), after a written demand for
substantial performance is delivered to the Employee by the Board of
Directors which specifically identifies the manner in which the Board
of Directors believes that the Employee has not substantially
performed his duties, and which failure has not been cured within
thirty days (30) after such written demand; or
(ii) the willful and continued engaging by the
Employee in conduct which is demonstrably and
materially injurious to the Company, monetarily or
otherwise, or
(iii) the breach by the Employee of the
Confidentiality provision set forth in Section 8 hereof.
For purposes of this Section 4, no act, or failure to
act, on the Employee's part shall be considered "willful" unless done, or
omitted to be done, by the Employee in bad faith and without reasonable belief
that such action or omission was in the best interest of the Company.
Notwithstanding the foregoing, the Employee shall not be deemed to have been
terminated for Cause unless and until there shall have been delivered to him a
copy of a resolution duly adopted by the affirmative vote of not less than
three-quarters of the entire membership of the Board of Directors at a meeting
of the Board of Directors called and held for that purpose (after reasonable
notice to the Employee and an opportunity for the Employee, together with his
counsel, to be heard before the Board of Directors) finding that in the good
faith opinion of the Board of Directors the Employee is guilty of the conduct
set forth above in clauses (i), (ii) or (iii) of this Section 4 and specifying
the particulars thereof in detail.
5. Prior Termination. Anything in this Agreement to the contrary
notwithstanding, if the Employee's employment with the Company is terminated
prior to the date on which a Change of Control occurs either (i) by the Company
other than for Cause or (ii) by the Employee for Good Reason, and it is
reasonably demonstrated by Employee that such termination of employment (a) was
at the request of a third party who has taken steps reasonably calculated to
effect the Change of Control, or (b) otherwise arose in connection with or
anticipation of the Change of Control, then for all purposes of this Agreement
the termination shall be deemed to have occurred upon a Change of Control and
the Employee will be entitled to Salary and Benefits Continuation as provided
for in Section 3 hereof.
6. Employment at Will. This Agreement contains the entire
understanding of the Company and the Employee with respect to the subject matter
hereof and, subject to the provisions of any other agreement between the
Employee and the Company, the Employee shall remain an employee at will and
nothing herein shall confer upon the Employee any right to continued employment
and shall not affect the right of the Company to terminate the Employee for any
reason not prohibited by law; provided, however, that any such removal shall be
without prejudice to any rights the Employee may have to Salary and Benefits
Continuation hereunder.
7. Construction of Agreement.
Governing Law. This Agreement shall be
governed by and construed under the laws of the
Commonwealth of Pennsylvania without regard to its
conflict of law provisions.
Severability. In the event that any one or more of the
provisions of this Agreement shall be held to be invalid, illegal or
unenforceable, the validity, legality or enforceability of the
remaining provisions shall not in any way be affected or impaired
thereby.
Headings. The descriptive headings of the
several paragraphs of this Agreement are inserted for
convenience of reference only and shall not constitute
a part of this Agreement.
8. Covenant as to Confidential Information.
(a) Confidentiality of Information and Nondisclosure. The
Employee acknowledges and agrees that his employment by the Company
under this Agreement necessarily involves his knowledge of and access
to confidential and proprietary information pertaining to the
business of the Company and its subsidiaries. Accordingly, the
Employee agrees that at all times during the term of this Agreement
and for a period of two (2) years after the termination of the
Employee's employment hereunder, he will not, directly or indirectly,
without the express written authority of the Company, unless directed
by applicable legal authority having jurisdiction over the Employee,
disclose to or use, or knowingly permit to be so disclosed or used,
for the benefit of himself, any person, corporation or other entity
other than the Company, (i) any information concerning any financial
matters, customer relationships, competitive status, supplier
matters, internal organizational matters, current or future plans, or
other business affairs of or relating to the Company and its
subsidiaries, (ii) any management, operational, trade, technical or
other secrets or any other proprietary information or other data of
the Company or its subsidiaries, or (iii) any other information
related to the Company or its subsidiaries or which the Employee
should reasonably believe will be damaging to the Company or its
subsidiaries which has not been published and is not generally known
outside of the Company. The Employee acknowledges that all of the
foregoing, constitutes confidential and proprietary information,
which is the exclusive property of the Company.
(b) Company Remedies. The Employee acknowledges and agrees
that any breach of this Agreement by him will result in immediate and
irreparable harm to the Company, and that the Company cannot be
reasonably or adequately compensated by damages in an action at law.
In the event of an actual or threatened breach by the Employee of the
provisions of this Section 8, the Company shall be entitled, to the
extent permissible by law, immediately to cease to pay or provide the
Employee or his dependents any compensation or benefit being, or to
be, paid or provided to him pursuant to Section 3 of this Agreement,
and also to obtain immediate injunctive relief restraining the
Employee from conduct in breach or threatened breach of the covenants
contained in this Section 8. Nothing herein shall be construed as
prohibiting the Company from pursuing any other remedies available to
it for such breach or threatened breach, including the recovery of
damages from the Employee.
9. Reimbursement of Fees. The Company agrees to pay, to the full
extent permitted by law, all legal fees and expenses which the Employee may
reasonably incur as a result of any contest by the Company, Internal Revenue
Service or others regarding the validity or enforceability of, or liability
under, any provision of this Agreement or any guarantee of performance thereof
(including as a result of any contest by the Employee about the amount of any
payment pursuant to Section 3 of this Agreement) or in connection with any
dispute arising from this Agreement, regardless of whether Employee prevails in
any such contest or dispute.
10. Certain Reductions of Payments by the Company. Notwithstanding
anything herein to the contrary, if the aggregate of the amounts due the
Employee under this Agreement and any other plan or program of the Company
constitutes a "Parachute Payment," as such term is defined in Section 280G of
the Internal Revenue Code of 1986, as amended, then the payments to be made to
the Employee under this Agreement which are contingent on a Change of Control
shall be reduced to an amount which, when added to the aggregate of all other
payments to be made to the Employee which are contingent on a Change of Control,
as a result of the termination of his employment, will make the total amount of
such payment equal to 2.99 times his Base Amount. The determinations to be made
with respect to this paragraph shall be made by an independent auditor (the
"Auditor") jointly selected by the Employee and the Company and paid by the
Company. In the event the payments to be made to the Employee are required to be
reduced pursuant to the limitations in this Section 10, the Company shall allow
the Employee to select which payment or benefits Employee wants the Company to
reduce in order that the total amount of such payment is equal to 2.99 times
such Employee's Base Amount. The Auditor shall be a nationally recognized United
States public accounting firm that has not, during the two years preceding the
date of its selection, acted in any way on behalf of the Company or any of its
subsidiaries.
11. Resolution of Differences Over Breaches of Agreement. Except as
otherwise provided herein, in the event of any controversy, dispute or claim
arising out of, or relating to this Agreement, or the breach thereof, or arising
out of any other matter relating to the Employee's employment with the Company
or the termination of such employment, the parties may seek recourse only for
temporary or preliminary injunctive relief to the courts having jurisdiction
thereof and if any relief other than injunctive relief is sought, the Company
and the Employee agree that such underlying controversy, dispute or claim shall
be settled by arbitration conducted in Pittsburgh, Pennsylvania in accordance
with this Section 11 of this Agreement and the Commercial Arbitration Rules of
the American Arbitration Association ("AAA"). The matter shall be heard and
decided, and awards rendered by a panel of three (3) arbitrators (the
"Arbitration Panel"). The Company and the Employee shall each select one
arbitrator from the AAA National Panel of Commercial Arbitrators (the
"Commercial Panel") and AAA shall select a third arbitrator from the Commercial
Panel. The award rendered by the Arbitration Panel shall be final and binding as
between the parties hereto and their heirs, executors, administrators,
successors and assigns, and judgment on the award may be entered by any court
having jurisdiction thereof.
12. Release. The Employee hereby acknowledges and agrees that prior
to the occurrence of the Employee's or his dependents' right to receive from the
Company or any of its representatives or agents any compensation or benefit to
be paid or provided to him or his dependents pursuant to Section 3 of this
Agreement, the Employee may be required by the Company, in its sole discretion,
to execute a release in a form reasonably acceptable to the Company, which
releases any and all claims (other than amounts to be paid to Employee as
expressly provided for under this Agreement) the Employee has or may have
against the Company or its subsidiaries, agents, officers, directors, successors
or assigns with respect to matters relating to his employment and termination of
employment.
13. Waiver. The waiver by a party hereto of any
breach by the other party hereto of any provision of this
Agreement shall not operate or be construed as a waiver of any
subsequent breach by a party hereto.
14. Assignment. This Agreement shall be binding upon and inure to the
benefit of the successors and assigns of the Company. The Company shall be
obligated to require any successor (whether direct or indirect, by purchase,
merger, consolidation or otherwise) to all or substantially all of the Company's
business or assets, by a written agreement in form and substance satisfactory to
the Employee, to expressly assume and agree to perform this Agreement in the
same manner and to the same extent that the Company would be required to perform
if no succession had taken place. This Agreement shall inure to the extent
provided hereunder to the benefit of and be enforceable by the Employee or his
legal representatives, executors, administrators, successors, heirs,
distributees, devisees and legatees. The Employee may not delegate any of his
duties, responsibilities, obligations or positions hereunder to any person and
any such purported delegation by him shall be void and of no force and effect
with respect to matters relating to his employment and termination of
employment. Without limiting the foregoing, the Employee's rights to receive
payments and benefits hereunder shall not be assignable or transferable, other
than a transfer by Employee's will or by the laws of descent and distribution.
15. Notices. Any notices required or permitted to be given under this
Agreement shall be sufficient if in writing, and if personally delivered or when
sent by first class certified or registered mail, postage prepaid, return
receipt requested -- in the case of the Employee, to his residence address as
set forth below, and in the case of the Company, to the address of its principal
place of business as set forth below, in care of the Chairman of the Board -- or
to such other person or at such other address with respect to each party as such
party shall notify the other in writing.
16. Pronouns. Pronouns stated in either the
masculine, feminine or neuter gender shall include the masculine,
feminine and neuter.
17. Entire Agreement. This Agreement contains the entire agreement of
the parties concerning the matters set forth herein and all promises,
representations, understandings, arrangements and prior agreements on such
subject are merged herein and superseded hereby. The provisions of this
Agreement may not be amended, modified, repealed, waived, extended or discharged
except by an agreement in writing signed by the party against whom enforcement
of any amendment, modification, repeal, waiver, extension or discharge is
sought. No person acting other than pursuant to a resolution of the Board of
Directors shall have authority on behalf of the Company to agree to amend,
modify, repeal, waive, extend or discharge any provision of this Agreement or
anything in reference thereto or to exercise any of the Company's rights to
terminate or to fail to extend this Agreement.
IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed by its officers thereunto duly authorized, and the Employee has
hereunto set his hand, all as of the day and year first above written.
ATTEST: EQUITABLE RESOURCES, INC.
_________________________ _________________________________
By:
Frederick H. Abrew
President and
Chief Executive Officer
WITNESS:
__________________________ __________________________________
Address: ________________________
________________________
Exhibit 11.01
EQUITABLE RESOURCES, INC. AND SUBSIDIARIES
COMPUTATION OF EARNINGS PER COMMON SHARE
FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
1995 1994 1993
EARNINGS:
Net income .................................. $ 1,548 $60,729 $73,455
Interest net of applicable income taxes on
9 1/2% convertible subordinated debentures 52 146 89
------- ------- -------
Adjusted earnings ....................... $ 1,600 $60,875 $73,544
======= ======= =======
SHARES:
Average common shares outstanding ........... 34,793 34,509 32,359
Dilutive effect of conversion of 9 1/2%
convertible subordinated debentures ....... 84 220 257
Dilutive effect of stock options outstanding 11 11 61
------- ------- -------
Total ................................... 34,888 34,740 32,677
======= ======= =======
PRIMARY EARNINGS PER SHARE .................... $ .04 $ 1.76 $ 2.27
======= ======= =======
FULLY DILUTED EARNINGS PER SHARE .............. $ .04 $ 1.75 $ 2.25
======= ======= =======
EQUITABLE RESOURCES, INC.
SUBSIDIARY COMPANIES
Andex Energy, Inc.
Current Automation, Inc.
EQT Capital Corporation
Equitable Gas-Energy Company
Equitable Pipeline Company
Equitable Power Services Company
Equitable Resources (Argentina) Company
Equitable Resources (Canada) Limited
Equitable Resources (Ecuador) Company
Equitable Resources Energy Company
Equitable Resources Marketing Company
Equitable Resources (Netherlands) Company
Equitable Storage Company
Equitrans, L.P.
EREC Capital Corporation
EREC Nevada, Inc.
ERI Global Partners, Inc.
ERI Incorporated
ERI Investments, Inc.
ERI Realty, Inc.
ERI Trading Company
ET Avoca Company
ET Blue Grass Company
ET Storage Company
420 Energy Investments, Inc.
Hershey Oil Corporation
IEC Energy Systems, Incorporated
IEC Financial, Inc.
IEC Hunterdon, Inc.
IEC Kingston, Inc.
IEC Management Services, Inc.
IEC Montclair, Inc.
IEC Plymouth, Inc.
Independent Energy Corporation
Independent Energy Finance Corporation
Independent Energy Operations, Inc.
Kentucky West Virginia Gas Company, L.L.C.
LIG Chemical Company
LIG, Inc.
LIG Liquids Company L.L.C.
Louisiana Intrastate Gas Company L.L.C.
Nora Transmission Company
Tuscaloosa Pipeline Company
[Companies as of 12/31/95]
Exhibit 23.01
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference of our report dated February
13, 1996, with respect to the consolidated financial statements and schedule of
Equitable Resources, Inc. included in this Annual Report (Form 10-K) for the
year ended December 31, 1995 in the Prospectus part of the following
Registration Statements:
Registration Statement No. 33-52151 on Form S-8
pertaining to the 1994 Equitable Resources, Inc.
Long-Term Incentive Plan;
Registration Statement No. 33-52137 on Form S-8
pertaining to the 1994 Equitable Resources, Inc.
Non-Employee Directors' Stock Incentive Plan;
Registration Statement on Form S-8 filed on March 22, 1996,
pertaining to the Equitable Resources, Inc.
Employee Stock Purchase Plan;
Post-Effective Amendment No. 2 to Registration
Statement No. 2-69010 on Form S-8 pertaining to the
Equitable Resources, Inc. Key Employee Restricted Stock
Option and Stock Appreciation Rights Incentive
Compensation Plan;
Post-Effective Amendment No. 1 to Registration
Statement No. 33-00252 on Form S-8 pertaining to the
Equitable Resources, Inc. Employee Savings Plan;
Post-Effective Amendment No. 1 to Registration
Statement No. 33-10508 on Form S-8 pertaining to the
Equitable Resources, Inc. Key Employee Restricted Stock
Option and Stock Appreciation Rights Incentive
Compensation Plan;
Registration Statement No. 33-53703 on Form S-3
pertaining to the registration of $100,000,000 Medium
Term Notes, Series C of Equitable Resources, Inc.
We also consent to the incorporation by reference of our report dated
March 8, 1996 with respect to the financial statements and schedules of the
Equitable Resources, Inc. Employee Savings Plan included in the Annual Report
(Form 11-K) for the year ended October 31, 1995, included in Exhibit 99.01(a) to
this Annual Report (Form 10-K) into Post-Effective Amendment No. 1 to
Registration Statement No. 33-00252 on Form S-8 pertaining to the Equitable
Resources, Inc. Employee Savings Plan.
We also consent to the incorporation by reference of our report dated
March 8, 1996 with respect to the financial statements and schedules of the
Equitable Resources, Inc. Employee Savings Plan included in the Transition
Period Report (Form 11-K) for the two-month period ended December 31, 1995,
included in Exhibit 99.01(b) to this Annual Report (Form 10-K) into
Post-Effective Amendment No. 1 to Registration Statement No. 33-00252 on Form
S-8 pertaining to the Equitable Resources, Inc.
Employee Savings Plan.
We also consent to the incorporation by reference of our report dated
March 8, 1996 with respect to the financial statements of the Equitable
Resources, Inc. Employee Stock Purchase Plan included in the Annual Report (Form
11-K) for the three-month period ended December 31, 1995, included in Exhibit
99.02 to this Annual Report (Form 10-K) into the Registration Statement on Form
S-8 filed on March 22, 1996, pertaining to the Equitable Resources, Inc.
Employee Stock Purchase Plan.
By /s/ Ernst & Young LLP
Ernst & Young LLP
Pittsburgh, Pennsylvania
March 22, 1996
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000033213
<NAME> M D BRIGGS
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
<CASH> 30,169
<SECURITIES> 0
<RECEIVABLES> 272,598
<ALLOWANCES> 10,539
<INVENTORY> 22,499
<CURRENT-ASSETS> 377,749
<PP&E> 2,121,648
<DEPRECIATION> 664,065
<TOTAL-ASSETS> 1,961,808
<CURRENT-LIABILITIES> 389,279
<BONDS> 415,527
0
0
<COMMON> 214,181
<OTHER-SE> 500,898
<TOTAL-LIABILITY-AND-EQUITY> 1,961,808
<SALES> 433,773
<TOTAL-REVENUES> 433,773
<CGS> 0
<TOTAL-COSTS> 479,623
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 3,137
<INTEREST-EXPENSE> 11,880
<INCOME-PRETAX> (55,752)
<INCOME-TAX> (29,024)
<INCOME-CONTINUING> (26,728)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (26,728)
<EPS-PRIMARY> (.76)
<EPS-DILUTED> (.76)
</TABLE>
Exhibit 99.01(a)
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 11-K
FOR ANNUAL REPORTS OF EMPLOYEE STOCK PURCHASE, SAVINGS
AND SIMILAR PLANS PURSUANT TO SECTION 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
[X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended October 31, 1995
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ________ to ________
Commission file number 1-3551
EQUITABLE RESOURCES, INC. EMPLOYEE SAVINGS PLAN
(Full title of the Plan and address of the Plan,
if different from that of the issuer named below)
EQUITABLE RESOURCES, INC.
420 Boulevard of the Allies,
Pittsburgh, Pennsylvania 15219
(Name of issuer of the securities held pursuant to the
plan and the address of principal executive office)
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
members of the Administrative Committee of the Plan have duly caused this annual
report to be signed on its behalf by the undersigned hereunto duly authorized.
EQUITABLE RESOURCES, INC.
EMPLOYEE SAVINGS PLAN
(Name of Plan)
By: s/ Dan C. Eaton
Dan C. Eaton
Vice President -
Strategic and Financial Planning
March 8, 1996
<PAGE>
REPORT OF INDEPENDENT AUDITORS
Administrative Committee
Equitable Resources, Inc. Employee Savings Plan
We have audited the accompanying statements of net assets available for
plan benefits of the Equitable Resources, Inc. Employee Savings Plan (the Plan)
as of October 31, 1995 and 1994, and the related statements of changes in net
assets available for plan benefits for the years then ended. These financial
statements are the responsibility of the Plan's management. Our responsibility
is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the net assets available for plan benefits of the Plan
as of October 31, 1995 and 1994, and the changes in net assets available for
plan benefits for the years then ended, in conformity with generally accepted
accounting principles.
Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The accompanying supplemental schedules
of assets held for investment as of October 31, 1995, and transactions or series
of transactions in excess of 5% of the current value of plan assets for the year
then ended, are presented for purposes of complying with the Department of
Labor's Rules and Regulations for Reporting and Disclosure under the Employee
Retirement Income Security Act of 1974, and are not a required part of the basic
financial statements. The Fund Information in the statement of net assets
available for benefits and the statement of changes in net assets available for
benefits is presented for purposes of additional analysis rather than to present
the net assets available for benefits and changes in net assets available for
benefits of each Fund. The supplemental schedules and Fund Information have been
subjected to the auditing procedures applied in our audits of the financial
statements and, in our opinion, are fairly stated in all material respects in
relation to the financial statements taken as a whole.
s/ Ernst & Young LLP
Ernst & Young LLP
Pittsburgh, Pennsylvania
March 8, 1996
<PAGE>
EQUITABLE RESOURCES, INC.
EMPLOYEE SAVINGS PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR PLAN BENEFITS
October 31
1995 1994
Investments, at fair value-Note 3:
The George Putnam Fund of Boston $ 4,752,239 $ -
The Putnam Fund for Growth and Income 3,809,163 -
Putnam Income Fund 1,370,664 -
Putnam Voyager Fund 3,583,911 -
Putnam Asset Allocation-Growth
Portfolio 66,882 -
Putnam Asset Allocation-Balanced
Portfolio 17,351 -
Putnam Asset Allocation-Conservative
Portfolio 3,970 -
Putnam Overseas Growth Fund 69,236 -
Loan Fund 714,588 -
Putnam Stable Value Fund 6,312,011 -
Employer Stock Fund 4,049,947 4,143,410
Fixed Income Fund - 4,813,884
Balanced Fund - 4,689,620
Aggressive Stock Fund - 2,086,435
Common Stock Fund - 2,647,575
Bond Fund - 1,377,416
Short-term investments - 252,422
------------ -------------
TOTAL INVESTMENTS 24,749,962 20,010,762
Receivables:
Participants loans - 779,726
Interest - 897
------------ -------------
TOTAL RECEIVABLES - 780,623
------------ -------------
TOTAL ASSETS 24,749,962 20,791,385
Payables:
Participants - 127,799
Others - 7,162
------------ -------------
TOTAL PAYABLES - 134,961
------------ -------------
Net Assets Available for Plan Benefits $ 24,749,962 $ 20,656,424
============ =============
SEE ACCOMPANYING NOTES.
<PAGE>
EQUITABLE RESOURCES, INC.
EMPLOYEE SAVINGS PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS,
WITH FUND INFORMATION
YEAR ENDED OCTOBER 31, 1995
Fixed Aggressive
Income Balanced Stock
Fund Fund Fund
Additions to net assets attributed to:
Investment income:
Interest and dividends $ 255,722 $ 4,245 $ 3,489
Interest on participant loans 47,812 - -
---------- ----------- ----------
Total investment income 303,534 4,245 3,489
Gain realized on sale or distribution of Equitable
Resources, Inc. Common Stock
Unrealized depreciation of investment in
Equitable Resources, Inc. Common Stock
Unrealized appreciation (depreciation)
in value of investment 3,568 391,338 396,848
Contributions 473,816 390,925 302,918
Participant rollovers 41,356 24,929 8,914
---------- ----------- ----------
Total additions 822,274 811,437 712,169
Deductions from net assets attributed to:
Withdrawals by participants 29,707 122,698 104,756
Purchase of life insurance - - -
Expenses 12,376 10,659 5,230
---------- ----------- ----------
Total deductions 42,083 133,357 109,986
Transfers from (to) funds 665,525 (662,484) 96,642
---------- ----------- ----------
Net increase (decrease) in net assets
available for plan benefits 1,445,716 15,596 698,825
Net assets available for plan benefits:
At beginning of year 5,635,939 4,715,623 2,133,491
Transfers between investment
options (Note 1) (7,081,655) (4,731,219) (2,832,316)
----------- ---------- ----------
At end of year $ - $ - $ -
========== =========== ==========
SEE ACCOMPANYING NOTES.
<PAGE>
EQUITABLE RESOURCES, INC.
EMPLOYEE SAVINGS PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS,
WITH FUND INFORMATION
YEAR ENDED OCTOBER 31, 1995
The Putnam
Common The George Fund for Putnam
Stock Bond Putnam Fund Growth and Income
Fund Fund of Boston Income Fund
$ 4,626 $ 1,052 $ 43,001 $ 22,432 $ 19,846
- - - - -
--------- ----------- ---------- ----------- ----------
4,626 1,052 43,001 22,432 19,846
484,958 116,821 149,822 116,794 25,245
400,287 95,970 83,637 135,958 42,504
103,722 421 - - -
--------- ----------- ---------- ----------- ----------
993,593 214,264 276,460 275,184 87,595
122,740 186,369 119,077 45,557 16,798
- - - - -
6,829 3,029 - - -
--------- ----------- ---------- ----------- ----------
129,569 189,398 119,077 45,557 16,798
45,107 (153,967) (136,363) (14,305) 47,333
--------- ----------- ---------- ----------- ----------
909,131 (129,101) 21,020 215,322 118,130
2,684,710 1,381,635 - - -
(3,593,841) (1,252,534) 4,731,219 3,593,841 1,252,534
---------- ----------- ---------- ----------- ----------
$ - $ - $4,752,239 $ 3,809,163 $1,370,664
========= =========== ========== =========== ==========
SEE ACCOMPANYING NOTES.
<PAGE>
EQUITABLE RESOURCES, INC.
EMPLOYEE SAVINGS PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS
YEAR ENDED OCTOBER 31, 1995
Putnam
Voyager Growth Balanced Conservative
Fund Portfolio Portfolio Portfolio
Additions to net assets
attributed to:
Investment income:
Interest and dividends $ - $ - $ - $ -
Interest on participant loans - - - -
--------- --------- --------- ---------
Total investment income - - - -
Gain realized on sale or
distribution of
Equitable Resources, Inc.
Common Stock
Unrealized depreciation of
investment in
Equitable Resources, Inc.
Common Stock
Unrealized appreciation
(depreciation)
in value of investment 209,684 (464) (43) 17
Contributions 225,706 27,930 13,982 3,530
Participant rollovers - - - -
--------- --------- --------- ---------
Total additions 435,390 27,466 13,939 3,547
Deductions from net assets
attributed to:
Withdrawals by participants 37,434 - - -
Purchase of life insurance - - - -
Expenses - - - -
----- ------ ----- -------
Total deductions 37,434 - - -
Transfers from (to) funds 353,639 39,416 3,412 423
--------- --------- --------- ---------
Net increase (decrease)
in net assets available
for plan benefits 751,595 66,882 17,351 3,970
Net assets available for
plan benefits:
At beginning of year - - - -
Transfers between investment
options (Note 1) 2,832,316 - - -
--------- --------- --------- ---------
At end of year $3,583,911 $ 66,882 $ 17,351 $ 3,970
========== ========= ========= =========
SEE ACCOMPANYING NOTES.
<PAGE>
EQUITABLE RESOURCES, INC.
EMPLOYEE SAVINGS PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS
YEAR ENDED OCTOBER 31, 1995
Putnam Putnam Employer Life
Overseas Loan Stable Stock Insurance Combined
Growth Fund Fund Value Fund Fund Funds Funds
$ - $ - $ 92,274 $ 168,091 $ $ 614,778
- 13,095 - - 60,907
--------- --------- --------- --------- --------- ----------
- 13,095 92,274 168,091 675,685
125,122 125,122
(281,824) - (281,824)
179 - - - - 1,894,767
23,667 265 98,024 349,774 41,541 2,710,434
- - - 23,998 - 203,340
--------- --------- --------- --------- --------- ----------
23,846 13,360 190,298 385,161 41,541 5,327,524
- - 182,577 189,344 - 1,157,057
- - - - 38,806 38,806
- - - - - 38,123
--------- --------- --------- --------- --------- ----------
- - 182,577 189,344 38,806 1,233,986
45,390 (76,204) 67 (250,896) (2,735) -
--------- --------- --------- --------- --------- ----------
69,236 (62,844) 7,788 (55,079) 4,093,538
- - - 4,105,026 20,656,424
- 777,432 6,304,223 - -
--------- --------- --------- --------- --------- ----------
$ 69,236 $ 714,588 $6,312,011 $4,049,947 $ $24,749,962
========= ========= ========== ========== ========= ===========
SEE ACCOMPANYING NOTES.
<PAGE>
EQUITABLE RESOURCES, INC.
EMPLOYEE SAVINGS PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS,
WITH FUND INFORMATION
YEAR ENDED OCTOBER 31, 1994
Fixed Aggressive
Income Balanced Stock
Fund Fund Fund
Additions to net assets attributed to:
Investment income:
Interest and dividends $ 2,470 $ 2,587 $ 1,793
Interest on participant loans 60,485
---------- ---------- ---------
Total investment income 62,955 2,587 1,793
Gain realized on sale or
distribution of Equitable
Resources, Inc. Common Stock
Unrealized depreciation of investment in
Equitable Resources, Inc. Common Stock
Unrealized appreciation (depreciation)
in value of investment 238,766 (233,804) (9,893)
Contributions 508,954 564,349 359,716
Participant rollovers 72,135 40,928 47,247
---------- ----------- ----------
Total additions 882,810 374,060 398,863
Deductions from net assets attributed to:
Withdrawals by participants 163,103 242,256 56,150
Purchase of life insurance - - -
Expenses 13,256 28,780 11,213
---------- ----------- ----------
Total deductions 176,359 271,036 67,363
Transfers from (to) funds 460,598 (121,432) (8,059)
---------- ----------- ----------
Net increase (decrease) in net
assets available for plan benefits 1,167,049 (18,408) 323,441
Net assets available for plan benefits:
At beginning of year 4,468,890 4,734,031 1,810,050
---------- ----------- ----------
At end of year $5,635,939 $ 4,715,623 $2,133,491
========== =========== ==========
SEE ACCOMPANYING NOTES.
<PAGE>
EQUITABLE RESOURCES, INC.
EMPLOYEE SAVINGS PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS,
WITH FUND INFORMATION
YEAR ENDED OCTOBER 31, 1994
Common Employer Life
Stock Bond Stock Insurance Combined
Fund Fund Fund Fund Funds
$ 2,207 $ 889 $ 148,445 $ $ 158,391
60,485
----------- ---------- ----------- ----------- ----------
2,207 889 148,445 218,876
62,859 62,859
(1,194,729) (1,194,729)
97,686 (47,870) 44,885
447,849 172,477 352,423 50,010 2,455,778
49,736 3,478 10,639 224,163
----------- ----------- ----------- ----------- ----------
597,478 128,974 (620,363) 50,010 1,811,832
82,937 202,419 170,233 917,098
54,711 54,711
13,113 10,932 77,294
----------- ----------- ----------- ----------- ----------
96,050 213,351 170,233 54,711 1,049,103
168,013 (427,849) (75,972) 4,701
----------- ----------- ----------- ----------- ----------
669,441 (512,226) (866,568) 762,729
2,015,269 1,893,861 4,971,594 19,893,695
----------- ----------- ----------- ----------- ----------
$ 2,684,710 $ 1,381,635 $ 4,105,026 $ $20,656,424
=========== =========== =========== =========== ===========
SEE ACCOMPANYING NOTES.
<PAGE>
EQUITABLE RESOURCES, INC.
EMPLOYEE SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
OCTOBER 31, 1995 AND 1994
1. Description of the Plan
The following description of the Equitable Resources, Inc. Employee Savings
Plan (Plan) provides only general information. Participants should refer to
the Plan agreement for a more complete description of the Plan's
provisions.
General
The Plan is a defined contribution profit sharing and savings plan, with a
401(k) salary reduction feature, implemented on September 1, 1985 by
Equitable Resources, Inc. and certain subsidiaries (the Company or
Companies).
All regular, full-time, non-union employees of the Companies who complete a
certain service requirement are eligible to participate. The Plan is
subject to the provisions of the Employee Retirement Income Security Act of
1974 (ERISA).
In December 1995, the Company changed the Plan year to a calendar year from
the previous Plan year of October 31. This change had no effect on net
assets available for plan benefits.
Effective January 1, 1996, all regular, full-time, non-union employees of
the Companies are eligible to participate in the Plan immediately upon
hire.
Contributions
The Companies make contributions to the Plan equal to the amount by which
participants agree to reduce their salaries (Contract Contributions). These
contributions are considered to be Company (as opposed to employee)
contributions to the Plan. In addition, the Companies may, at their
discretion, contribute an additional amount to the Plan (Discretionary
Contributions). All contributions are allocated to individual participant
accounts. No Discretionary Contributions were made for the Plan years ended
October 31, 1995 and 1994.
As a result of the purchase of Louisiana Intrastate Gas Corporation (LIG)
by Equitable Resources, Inc., employees of LIG became participants in the
Plan in July 1993. As part of the purchase of LIG, the Company agreed to
continue, through December 1993, discretionary contributions matching
contributions made by LIG employees up to a maximum of six percent of gross
earnings. The discretionary contribution made was $38,058 for the Plan year
ended October 31, 1994.
Effective January 1, 1996, the Companies began matching 50 percent of the
first six percent of Contract Contributions made (Matching Contributions)
in lieu of making Discretionary Contributions.
<PAGE>
1. Description of Plan (Continued)
Rollover Contributions
Participants are allowed to make rollover contributions (contributions
transferred to the Plan from other qualified retirement plans), subject to
certain requirements.
Vesting
Participants are 100% vested in the value of Contract Contributions made,
and any rollover contributions.
If employment is terminated for any reason other than retirement, death, or
total and permanent disability, a participant is entitled to receive the
vested value of any Discretionary Contributions, as determined in
accordance with the following schedule:
Years of Continuous Service Vested Interest
Less than five years 0%
Five years or more 100%
Amounts forfeited by participants upon termination will be used to reduce
the amount of the Company's future Matching Contributions to the Plan.
Upon retirement, death, total and permanent disability or termination of
the Plan, a participant is entitled to receive the full value of any
Discretionary or Matching Contributions, regardless of years of continuous
service.
Withdrawals by Participants
Payments to participants are made in one of two ways: a single cash payment
or distribution of stock (mandatory for participants who are terminated for
a reason other than retirement, death or disability) or equal periodic
payments over the lesser of:
a) the life expectancy of the participant and beneficiary or
b) twenty (20) years.
<PAGE>
1. Description of the Plan (Continued)
Loans to Participants
A participant may borrow money from the Plan in amounts up to 50 percent of
the value of the participant's account, plus the vested portion of
Discretionary Contributions, subject to certain limitations. All loans are
at a rate consistent with rates charged by commercial lenders for similar
loans. One half of the participant's nonforfeitable interest in the Plan at
the time of the loan is pledged as collateral. As of October 31, 1995 and
1994, collateral for participant loans amounted to $2,739,262 and
$2,780,245, respectively.
Investment of Contributions
Prior to July 31, 1995, contributions were initially deposited with PNC
Bank (Trustee), and were invested in a short-term fund until allocated. The
Plan authorized the participants to direct the Trustee to invest their
accounts in various combinations of the investment funds described below:
a. The Fixed Income Fund - comprised of a single type of fixed income
investment where the principal and interest are fixed. The Company
entered into an ongoing contract with Equitable Life Assurance Society
(Equitable Life) to provide this and other investment vehicles and
manage the respective funds. On July 31, 1995, the investment assets of
the Fund were transferred to the Putnam Stable Value Fund described
below. Outstanding participant loan balances of $777,432 included in
the Fixed Income Fund were transferred to the Putnam Loan Fund
effective July 31, 1995.
b. The Balanced Fund - invests in various types of securities: primarily
common stocks, securities convertible into common stocks, publicly
traded bonds, and short-term money market investments. The Company's
contract with Equitable Life provides this investment vehicle and fund
management. On July 31, 1995, the assets of the Fund were transferred
to The George Putnam Fund of Boston described below.
c. The Aggressive Stock Fund - invests primarily in common stocks of
medium and smaller sized companies and also in securities not generally
defined as growth stocks, but with unusual value or potential. The
Company's contract with Equitable Life provides this investment vehicle
and fund management. On July 31, 1995, the assets of the Fund were
transferred to the Putnam Voyager Fund described below.
<PAGE>
1. Description of the Plan (Continued)
Investment of Contributions (Continued)
d. The Common Stock Fund - invests primarily in common stocks and other
equity-type securities. The Company's contract with Equitable Life
provides this investment vehicle and fund management. On July 31, 1995,
the assets of the Fund were transferred to the Putnam Fund for Growth
and Income described below.
e. The Bond Fund - invests primarily in publicly-traded fixed income
securities, such as bonds, debentures and notes. The Company's contract
with Equitable Life provides this investment vehicle and fund
management. On July 31, 1995, the assets of the Fund were transferred
to the Putnam Income Fund described below.
Effective August 1, 1995, the Plan changed its trustee and investment
options available to participants. Contributions are initially deposited
with the Plan's trustee, Putnam Investments (Putnam). The Plan authorizes
the participants to direct Putnam to invest their accounts in various
combinations of the investments funds described below:
a. The George Putnam Fund of Boston - is a mutual fund that consists of a
portfolio balanced between stocks and bonds.
b. The Putnam Fund for Growth and Income - is a mutual fund that invests
primarily in common stocks that offer potential for capital growth,
current income, or both.
c. Putnam Income Fund - is a mutual fund that invests primarily in
income-producing securities, including both government and corporate
obligations, preferred stocks, and dividend-paying common stocks.
d. Putnam Voyager Fund - is a mutual fund that invests primarily in common
stocks of smaller and newer companies expected to grow substantially
faster than that of the market averages.
e. Putnam Asset Allocation: Growth Portfolio - is a mutual fund focusing on
capital appreciation by investing in a range of both equity and fixed
income securities. Equity securities can range between 65-95% of the
total assets of the Fund with fixed income securities ranging between
5-35% of the total assets of the Fund.
f. Putnam Asset Allocation: Balanced Portfolio - is a mutual fund focusing
on total return by investing in a range of both equity and fixed income
securities. Equity securities can range between 25-50% of the total
assets of the Fund with fixed income securities ranging between 25-50%
of the total assets of the Fund.
<PAGE>
1. Description of the Plan (Continued)
Investment of Contributions (Continued)
g. Putnam Asset Allocation: Conservative Portfolio - is a mutual fund
focusing on total return consistent with preservation of capital; the
Fund invests in a range of both equity and fixed income securities.
Equity securities can range between 25-45% of the total assets of the
Fund with fixed income securities ranging between 55-75% of the total
assets of the Fund.
h. Putnam Overseas Growth Fund - is a mutual fund that invests primarily in
a diversified portfolio of stocks of companies located outside North
America.
i. Putnam Stable Value Fund - is a collective investment trust which
invests primarily in high-quality fixed-income investments that offer price
stability and liquidity; these investments may include guaranteed
investment contracts (GICs) that are guaranteed by an insurance company or
bank and generally provide a fixed rate of return for a specified time
period. Should the underlying insurance companies and banks which issued
the investments experience inadequate financial return on their assets, it
could potentially affect the investment return or principal of the Plan's
investments. Presently, the Plan is not aware of any situation which would
cause this to occur. Withdrawals from the Fund may be temporarily delayed
at Putnam's discretion due to the liquidity of the assets underlying the
Fund.
The Employer Stock Fund invests in the Common Stock of the Company. The
Fund is managed by the Plan Trustee (Putnam effective July 31, 1995). The
Life Insurance Fund is comprised solely of life insurance contracts issued
on the lives of participants. This option is subject to a limitation that
no more than 25% of the contributions allocated to a participant may be
allocated to the purchase of insurance. The Company's contract with
Equitable Life provides this investment vehicle and fund management.
2. Summary of Significant Accounting Policies
Investments
Short-term investments are valued at cost, which approximates market. The
Equitable Resources, Inc. common stock is valued at market price as quoted
on the New York Stock Exchange. The fixed income fund contract and
contracts included in the Stable Value Fund are valued at face value, which
approximates market. Other investments are valued at market.
<PAGE>
2. Summary of Significant Accounting Policies (Continued)
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements
and accompanying notes. Actual results could differ from those estimates.
3. Investments
Investments at October 31, 1995 and 1994 are comprised of:
1995
Fair Original
Value Cost
Equitable Resources, Inc., Common Stock** $ 4,049,947 $ 3,297,497
The George Putnam Fund of Boston* 4,752,239 4,752,239
The Putnam Fund for Growth and Income* 3,809,163 3,809,163
Putnam Income Fund* 1,370,664 1,370,664
Putnam Voyager Fund* 3,583,911 3,583,911
Putnam Asset Allocation-
Growth Portfolio* 66,882 66,882
Putnam Asset Allocation-
Balanced Portfolio* 17,351 17,351
Putnam Asset Allocation-
Conservative Portfolio* 3,970 3,970
Putnam Overseas Growth Fund* 69,236 69,236
Loan Fund 714,588 714,588
Putnam Stable Value Fund* 6,312,011 6,312,011
---------- ---------
Total $24,749,962 $23,997,512
=========== ===========
<PAGE>
3. Investments (Continued)
1994
Fair Original
Value Cost
Equitable Resources, Inc.,
Common Stock** $ 4,143,410 $ 3,114,846
Fixed Income Fund* 4,813,884 4,813,884
Balanced Fund* 4,689,620 4,689,620
Aggressive Stock Fund* 2,086,435 2,086,435
Common Stock Fund* 2,647,575 2,647,575
Bond Fund* 1,377,416 1,377,416
Short-Term Investment 252,422 252,422
---------- ---------
Total $20,010,762 $18,982,198
=========== ===========
The annual interest rate for the Fixed Income Fund was 6.50% for the 1995
period prior to the transfer of assets (Note 1), and 6.00% for the 1994
fiscal year. The annual interest rate for the Putnam Stable Value Fund was
5.80%.
*Securities investments are provided by contract through a pooled
investment account; fair market value is used as original cost.
**Represents 138,460 and 135,826 shares of common stock at October 31, 1995
and 1994, respectively.
<PAGE>
4. Gain Realized on Sale/Distribution of Stock
During the year ended October 31, 1995, 17,093 shares of Equitable
Resources, Inc. Common Stock with a market value of $501,513 were sold at
an average price of $29.34 per share. The cost of the shares sold was
$404,610 ($23.67 per share) calculated using the "average cost" method. In
addition, 4,497 shares of Equitable Resources, Inc. Common Stock with a
market value of $133,224 were distributed during the year ended October 31,
1995. The cost of the shares distributed was $105,005.
During the year ended October 31, 1994, 4,769 shares of Equitable
Resources, Inc. Common Stock with a market value of $168,878 were sold at
an average price of $35.41 per share. The cost of the shares sold was
$106,019 ($22.23 per share) calculated using the "average cost" method.
5. Plan Termination
Although it has not expressed any intent to do so, the Company has the
right under the Plan to discontinue its contributions at any time and to
terminate the Plan subject to the provisions of ERISA. In the event of Plan
termination, the interests of all affected participants will become fully
vested.
6. Income Tax Status of Plan
The Internal Revenue Service has determined that the Plan is qualified
under Section 401(a) of the Internal Revenue Code and exempt under Section
501(a) of the Code. Future amendments will be made to the Plan as necessary
so that the Plan remains qualified and tax exempt under the Code.
7. Federal Income Tax Status - Employee
Contributions by the employer to the Plan (including those resulting from
salary reduction) and all dividends and interest earned on such
contributions are not taxable to the participant for federal income tax
purposes until distributed.
The tax consequences, to participants, of a distribution from the Plan are
dependent upon the circumstances existing at the time of distribution.
Delinquent and unpaid loans are considered distributions from the Plan. In
general, a participant is subject to federal income tax on a distribution
in the year received. Special rules applicable to lump sum distributions
may result in deferral of taxation in whole or in part.
<PAGE>
SUPPLEMENTARY INFORMATION
<PAGE>
<TABLE>
<CAPTION>
EQUITABLE RESOURCES, INC. SCHEDULE 1
EMPLOYEE SAVINGS PLAN
ASSETS HELD FOR INVESTMENT
OCTOBER 31, 1995
CURRENT
IDENTITY OF ISSUE DESCRIPTION OF INVESTMENT COST VALUE
<S> <C> <C> <C>
The George Putnam Fund of Boston 308,988 units $4,572,2393 $4,752,239
The Putnam Fund for Growth and Income 241,545 units $3,809,1633 $3,809,163
Putnam Income Fund 193,870 units $1,370,6643 $1,370,664
Putnam Voyager Fund 234,243 units $3,583,9113 $3,583,911
Putnam Asset Allocation-Growth Portfolio 6,722 units $ 66,8823 $ 66,882
Putnam Asset Allocation-Balanced Portfolio 1,804 units $ 17,3513 $ 17,351
Putnam Asset Allocation-Conservative Portfolio 431 units $ 3,9703 $ 3,970
Putnam Overseas Growth Fund 5,371 units $ 69,2363 $ 69,236
Loan Fund 8% - 10% N/A $ 714,588
Putnam Stable Value Fund 5.80% per annum2 $6,312,0113 $6,312,011
Employer Stock Fund1 138,460 shares common stock $3,297,497 $4,049,947
<FN>
1Party in interest to the Plan.
2Rate in effect for Plan year subsequent to the transfer of assets.
3Fair market value is used as original cost.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EQUITABLE RESOURCES, INC. SCHEDULE 2
EMPLOYEE SAVINGS PLAN
TRANSACTIONS OR SERIES OF TRANSACTIONS IN EXCESS OF 5%
OF THE CURRENT VALUE OF PLAN ASSETS
YEAR ENDED OCTOBER 31, 1995
NUMBER OF TOTAL NUMBER TOTAL SALES ORIGINAL NET GAIN
PARTY INVOLVED DESCRIPTION OF INVESTMENT PURCHASES PURCHASES OF SALES PROCEEDS COST OR (LOSS)
<S> <C> <C> <C> <C> <C> <C> <C>
CATEGORY (I) - INDIVIDUAL TRANSACTIONS IN EXCESS OF 5 PERCENT OF PLAN ASSETS
* The Fixed Income Fund None None 1 $7,081,655 $7,081,655 -
* The Balanced Fund None None 1 $4,731,219 $3,432,125 $1,299,094
* The Aggressive Stock Fund None None 1 $2,832,316 $2,136,058 $696,258
* The Common Stock Fund None None 1 $3,593,841 $2,671,970 $ 921,871
* The Bond Fund None None 1 $1,252,534 $1,087,136 $ 165,398
** Putnam Stable Value Fund 1 $7,081,655 - - $7,081,655 -
** The George Putnam Fund of Boston 1 $4,731,219 - - $3,432,125 -
** Putnam Voyager Fund 1 $2,832,316 - - $2,136,058 -
** Putnam Fund for Growth and Income 1 $3,593,841 - - $2,671,970 -
** Putnam Income Fund 1 $1,252,534 - - $1,087,136 -
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EQUITABLE RESOURCES, INC. SCHEDULE 2
EMPLOYEE SAVINGS PLAN
TRANSACTIONS OR SERIES OF TRANSACTIONS IN EXCESS OF 5%
OF THE CURRENT VALUE OF PLAN ASSETS
YEAR ENDED OCTOBER 31, 1995
NUMBER OF TOTAL NUMBER TOTAL SALES ORIGINAL NET GAIN
PARTY INVOLVED DESCRIPTION OF INVESTMENT PURCHASES PURCHASES OF SALES PROCEEDS COST OR (LOSS)
<S> <C> <C> <C> <C> <C> <C> <C>
CATEGORY (III) - SERIES OF TRANSACTIONS IN EXCESS OF 5 PERCENT OF PLAN ASSETS
* Short Term Investments 179 $7,576,016 113 $7,843,813 $7,843,813 -
* The Fixed Income Fund 12 $1,388,409 - - $1,388,409 -
* The Fixed Income Fund - - 4 $7,110,312 $7,110,312 -
* The Balanced Fund - - 10 $5,556,639 $4,066,634 $1,490,005
* The Aggressive Stock Fund - - 8 $3,017,380 $2,295,365 $ 722,015
* The Common Stock Fund - - 8 $3,814,811 $2,855,494 $ 959,317
* The Bond Fund - - 10 $1,905,657 $1,656,544 $ 249,113
** Putnam Stable Value Fund 10 $7,173,448 - - $7,173,448 -
** The George Putnam Fund of Boston 12 $4,855,480 - - $3,556,386 -
** Putnam Voyager Fund 12 $3,031,758 - - $2,335,500 -
** Putnam Fund for Growth and Income 11 $3,732,213 - - $2,810,342 -
** Putnam Income Fund 12 $1,298,894 - - $1,133,496 -
<FN>
* The above transactions were carried out by the Trustee, PNC Bank.
** The above transactions were carried out by the Successor Trustee, Putnam Investments.
There were no (ii) or (iv) reportable transactions during 1995.
</FN>
</TABLE>
Exhibit 99.01(b)
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 11-K
FOR ANNUAL REPORTS OF EMPLOYEE STOCK PURCHASE, SAVINGS
AND SIMILAR PLANS PURSUANT TO SECTION 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
[ ] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
[X] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from November 1, 1995 to December 31, 1995
Commission file number 1-3551
EQUITABLE RESOURCES, INC. EMPLOYEE SAVINGS PLAN
(Full title of the Plan and address of the Plan,
if different from that of the issuer named below)
EQUITABLE RESOURCES, INC.
420 Boulevard of the Allies,
Pittsburgh, Pennsylvania 15219
(Name of issuer of the securities held pursuant to the
plan and the address of principal executive office)
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
members of the Administrative Committee of the Plan have duly caused this annual
report to be signed on its behalf by the undersigned hereunto duly authorized.
EQUITABLE RESOURCES, INC.
EMPLOYEE SAVINGS PLAN
(Name of Plan)
By s/ Dan C. Eaton
Dan C. Eaton
Vice President -
Strategic and Financial Planning
March 8, 1996
<PAGE>
REPORT OF INDEPENDENT AUDITORS
Administrative Committee
Equitable Resources, Inc. Employee Savings Plan
We have audited the accompanying statements of net assets available for
plan benefits of the Equitable Resources, Inc. Employee Savings Plan (the Plan)
as of December 31, 1995 and October 31, 1995, and the related statement of
changes in net assets available for plan benefits for the period November 1,
1995 to December 31, 1995. These financial statements are the responsibility of
the Plan's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the net assets available for plan benefits of the Plan
as of December 31, 1995 and October 31, 1995, and the changes in net assets
available for plan benefits for the period November 1, 1995 to December 31,
1995, in conformity with generally accepted accounting principles.
Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The accompanying supplemental schedules
of assets held for investment as of December 31, 1995, and transactions or
series of transactions in excess of 5% of the current value of plan assets for
the period November 1, 1995 to December 31, 1995, are presented for purposes of
complying with the Department of Labor's Rules and Regulations for Reporting and
Disclosure under the Employee Retirement Income Security Act of 1974, and are
not a required part of the basic financial statements. The Fund Information in
the statement of net assets available for benefits and the statement of changes
in net assets available for benefits is presented for purposes of additional
analysis rather than to present the net assets available for benefits and
changes in net assets available for benefits of each fund. The supplemental
schedules and Fund Information have been subjected to the auditing procedures
applied in our audits of the financial statements and, in our opinion, are
fairly stated in all material respects in relation to the financial statements
taken as a whole.
s/ Ernst & Young LLP
Ernst & Young LLP
Pittsburgh, Pennsylvania
March 8, 1996
<PAGE>
EQUITABLE RESOURCES, INC.
EMPLOYEE SAVINGS PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR PLAN BENEFITS
December 31 October 31
1995 1995
Investments, at fair value-Note 3:
The George Putnam Fund of Boston $ 4,931,626 $ 4,752,239
The Putnam Fund for Growth and Income 4,394,710 3,809,163
Putnam Income Fund 1,425,773 1,370,664
Putnam Voyager Fund 4,277,817 3,583,911
Putnam Asset Allocation-Growth Portfolio 125,276 66,882
Putnam Asset Allocation-Balanced
Portfolio 99,230 17,351
Putnam Asset Allocation-Conservative
Portfolio 9,158 3,970
Putnam Overseas Growth Fund 144,009 69,236
Loan Fund 747,089 714,588
Putnam Stable Value Fund 5,916,904 6,312,011
Employer Stock Fund 4,194,752 4,049,947
------------ -------------
Net Assets Available for Plan Benefits $ 26,266,344 $ 24,749,962
============ =============
SEE ACCOMPANYING NOTES.
<PAGE>
<TABLE>
<CAPTION>
EQUITABLE RESOURCES, INC.
EMPLOYEE SAVINGS PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS,
WITH FUND INFORMATION
FOR THE PERIOD NOVEMBER 1, 1995 TO DECEMBER 31, 1995
The Putnam
The George Fund for Putnam Putnam
Putnam Fund Growth Income Voyager Growth
of Boston and Income Fund Fund Portfolio
<S> <C> <C> <C> <C> <C>
Additions to plan equity
attributed to:
Investment income
Interest and dividends $ 239,193 $ 208,560 $ 15,529 $ 223,624 $ 5,001
Interest on participant
loans - - - -
---------- ---------- --------- ---------- --------
Total investment income 239,193 208,560 15,529 223,624 5,001
Gain realized on sale or
distribution of
Equitable Resources, Inc.
Common Stock
Unrealized depreciation of
investment in Equitable
Resources, Inc. Common Stock
Unrealized appreciation
(depreciation)
in value of investment 44,212 102,561 31,130 (16,251) 125
Contributions 67,411 103,078 27,099 166,547 21,375
---------- ---------- ---------- ---------- --------
Total additions 350,816 414,199 73,758 373,920 26,501
Deductions from plan equity
attributed to:
Withdrawals by participants 41,619 2,438 36,442 37,120 -
Purchase of life insurance - - - - -
Expenses 554 350 164 393 4
---------- ---------- ---------- ---------- --------
Total deductions 42,173 2,788 36,606 37,513 4
Transfers from (to) funds (129,256) 174,136 17,957 357,499 31,897
---------- ---------- ---------- ---------- --------
Net increase (decrease)
in net assets available
for plan benefits 179,387 585,547 55,109 693,906 58,394
Net assets available for
plan benefits:
At beginning of year 4,752,239 3,809,163 1,370,664 3,583,911 66,882
---------- ---------- ---------- ---------- --------
At end of year $4,931,626 $4,394,710 $1,425,773 $4,277,817 $125,276
========== ========== ========== ========== ========
</TABLE>
SEE ACCOMPANYING NOTES.
<PAGE>
<TABLE>
<CAPTION>
EQUITABLE RESOURCES, INC.
EMPLOYEE SAVINGS PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS,
WITH FUND INFORMATION
FOR THE PERIOD NOVEMBER 1, 1995 TO DECEMBER 31, 1995
Putnam Putnam Life
Balanced Conservative Overseas Loan Stable Employer Insurance Combined
Portfolio Portfolio Growth Fund Fund Value Fund Stock Fund Fund Funds
<C> <C> <C> <C> <C> <C> <C> <C>
$ 3,822 $ 545 $ 2,063 $ - $ 60,977 $ 40,024 $ - $ 799,338
- - - 10,765 - - - 10,765
--------- --------- --------- --------- -------- ---------- -------- ----------
3,822 545 2,063 10,765 60,977 40,024 - 810,103
58,078 - 58,078
209,238 - 209,238
(338) (305) 2,062 - 1,334 - - 164,530
12,715 3,258 24,595 - 83,467 54,636 5,811 569,992
--------- --------- --------- --------- -------- ---------- -------- ----------
16,199 3,498 28,720 10,765 145,778 361,976 5,811 1,811,941
--------- --------- --------- --------- -------- ---------- -------- ----------
- - - 41,595 110,670 17,556 - 287,440
- - - - - - 5,811 5,811
3 2 - - 805 33 - 2,308
--------- --------- --------- --------- -------- ---------- -------- ----------
3 2 - 41,595 111,475 17,589 5,811 295,559
65,683 1,692 46,053 63,331 (429,410) (199,582) - -
--------- --------- --------- --------- --------- ---------- -------- ----------
81,879 5,188 74,773 32,501 (395,107) 144,805 - 1,516,382
17,351 3,970 69,236 714,588 6,312,011 4,049,947 - 24,749,962
--------- --------- --------- --------- ---------- ---------- -------- ----------
$ 99,230 $ 9,158 $ 144,009 $ 747,089 $5,916,904 $4,194,752 $ - $26,266,344
========= ========= ========= ========= ========== ========== ======== ===========
</TABLE>
SEE ACCOMPANYING NOTES.
<PAGE>
EQUITABLE RESOURCES, INC.
EMPLOYEE SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1995
1. Description of the Plan
The following description of the Equitable Resources, Inc. Employee Savings
Plan (Plan) provides only general information. Participants should refer to
the Plan agreement for a more complete description of the Plan's
provisions.
General
The Plan is a defined contribution profit sharing and savings plan, with a
401(k) salary reduction feature, implemented on September 1, 1985 by
Equitable Resources, Inc. and certain subsidiaries (the Company or
Companies).
All regular, full-time, non-union employees of the Companies who complete a
certain service requirement are eligible to participate. The Plan is
subject to the provisions of the Employee Retirement Income Security Act of
1974 (ERISA).
In December 1995, the Company changed the Plan year to a calendar year from
the previous Plan year of October 31. The change had no effect on net
assets available for plan benefits.
Effective January 1, 1996, all regular, full-time, non-union employees of
the Companies are eligible to participate in the Plan immediately upon
hire.
Contributions
The Companies make contributions to the Plan equal to the amount by which
participants agree to reduce their salaries (Contract Contributions). These
contributions are considered to be Company (as opposed to employee)
contributions to the Plan. In addition, the Companies may, at their
discretion, contribute an additional amount to the Plan (Discretionary
Contributions). All contributions are allocated to individual participant
accounts. No Discretionary Contributions were made for the period ended
December 31, 1995.
Effective January 1, 1996, the Companies began matching 50 percent of the
first six percent of Contract Contributions made (Matching Contributions)
in lieu of making Discretionary Contributions.
Rollover Contributions
Participants are allowed to make rollover contributions (contributions
transferred to the Plan from other qualified retirement plans), subject to
certain requirements.
<PAGE>
1. Description of Plan (Continued)
Vesting
Participants are 100% vested in the value of Contract Contributions made,
and any rollover contributions.
If employment is terminated for any reason other than retirement, death, or
total and permanent disability, a participant is entitled to receive the
vested value of any Discretionary Contributions, as determined in
accordance with the following schedule:
Years of Continuous Service Vested Interest
Less than five years 0%
Five years or more 100%
Amounts forfeited by participants upon termination will be used to reduce
the amount of the Company's future Matching Contributions to the Plan.
Upon retirement, death, total and permanent disability or termination of
the Plan, a participant is entitled to receive the full value of any
Discretionary or Matching Contributions, regardless of years of continuous
service.
Withdrawals by Participants
Payments to participants are made in one of two ways: a single cash payment
or distribution of stock (mandatory for participants who are terminated for
a reason other than retirement, death or disability) or equal periodic
payments over the lesser of:
a) the life expectancy of the participant and beneficiary or
b) twenty (20) years.
Loans to Participants
A participant may borrow money from the Plan in amounts up to 50 percent of
the value of the participant's account, plus the vested portion of
Discretionary Contributions, subject to certain limitations. All loans are
at a rate consistent with rates charged by commercial lenders for similar
loans. One half of the participant's nonforfeitable interest in the Plan at
the time of the loan is pledged as collateral. As of December 31, 1995 and
October 31, 1995, collateral for participant loans amounted to $2,862,297
and $2,739,262, respectively.
<PAGE>
1. Description of Plan (Continued)
Investment of Contributions
Contributions are initially deposited with the Plan's trustee, Putnam
Investments (Putnam). The Plan authorizes the participants to direct Putnam
to invest their accounts in various combinations of the investments funds
described below:
a. The George Putnam Fund of Boston - is a mutual fund that consists of a
portfolio balanced between stocks and bonds.
b. The Putnam Fund for Growth and Income - is a mutual fund that invests
primarily in common stocks that offer potential for capital growth,
current income, or both.
c. Putnam Income Fund - is a mutual fund that invests primarily in
income-producing securities, including both government and corporate
obligations, preferred stocks, and dividend-paying common stocks.
d. Putnam Voyager Fund - is a mutual fund that invests primarily in common
stocks of smaller and newer companies expected to grow substantially
faster than that of the market averages.
e. Putnam Asset Allocation: Growth Portfolio - is a mutual fund focusing on
capital appreciation by investing in a range of both equity and fixed
income securities. Equity securities can range between 65-95% of the
total assets of the Fund with fixed income securities ranging between
5-35% of the total assets of the Fund.
f. Putnam Asset Allocation: Balanced Portfolio - is a mutual fund focusing
on total return by investing in a range of both equity and fixed income
securities. Equity securities can range between 25-50% of the total
assets of the Fund with fixed income securities ranging between 25-50%
of the total assets of the Fund.
g. Putnam Asset Allocation: Conservative Portfolio - is a mutual fund
focusing on total return consistent with preservation of capital; the
Fund invests in a range of both equity and fixed income securities.
Equity securities can range between 25-45% of the total assets of the
Fund with fixed income securities ranging between 55-75% of the total
assets of the Fund.
h. Putnam Overseas Growth Fund - is a mutual fund that invests primarily in
a diversified portfolio of stocks of companies located outside North
America.
<PAGE>
1. Description of Plan (Continued)
Investment of Contributions (Continued)
i. Putnam Stable Value Fund - is a collective investment trust which
invests primarily in high-quality fixed-income investments that offer
price stability and liquidity; these investments may include guaranteed
investment contracts (GICs) that are guaranteed by an insurance company
or bank and generally provide a fixed rate of return for a specified
time period. Should the underlying insurance companies and banks which
issued the investments experience inadequate financial return on their
assets, it could potentially affect the investment return or principal
of the Plan's investments. Presently, the Plan is not aware of any
situation which would cause this to occur. Withdrawals from this Fund
may be temporarily delayed at Putnam's discretion due to the liquidity
of the assets underlying this Fund.
The Employer Stock Fund invests in the Common Stock of the Company. The
Fund is managed by the Plan Trustee. The Life Insurance Fund is comprised
solely of life insurance contracts issued on the lives of participants.
This option is subject to a limitation that no more than 25% of the
contributions allocated to a participant may be allocated to the purchase
of insurance. The Company's contract with Equitable Life provides this
investment vehicle and fund management.
2. Summary of Significant Accounting Policies
Investments
Short-term investments are valued at cost, which approximates market. The
Equitable Resources, Inc. common stock is valued at market price as quoted
on the New York Stock Exchange. The contracts included in the Stable Value
Fund are valued at face value, which approximates market. Other investments
are valued at market.
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements
and accompanying notes. Actual results could differ from those estimates.
<PAGE>
3. Investments
Investments are comprised of:
DECEMBER 31, 1995
Fair Original
Value Cost
Equitable Resources, Inc., Common Stock** $4,194,752 $3,233,707
The George Putnam Fund of Boston* 4,931,626 4,931,626
The Putnam Fund for Growth and Income* 4,394,710 4,394,710
Putnam Income Fund* 1,425,773 1,425,773
Putnam Voyager Fund* 4,277,817 4,277,817
Putnam Asset Allocation - Growth Portfolio* 125,276 125,276
Putnam Asset Allocation - Balanced Portfolio* 99,230 99,230
Putnam Asset Allocation - Conservative
Portfolio* 9,158 9,158
Putnam Overseas Growth Fund* 144,009 144,009
Loan Fund 747,089 747,089
Putnam Stable Value Fund* 5,916,904 5,916,904
---------- ----------
Total $26,266,344 $25,305,299
=========== ===========
OCTOBER 31, 1995
Fair Original
Value Cost
Equitable Resources, Inc., Common Stock** $4,049,947 $3,297,497
The George Putnam Fund of Boston* 4,752,239 4,752,239
The Putnam Fund for Growth and Income* 3,809,163 3,809,163
Putnam Income Fund* 1,370,664 1,370,664
Putnam Voyager Fund* 3,583,911 3,583,911
Putnam Asset Allocation - Growth Portfolio* 66,882 66,882
Putnam Asset Allocation - Balanced Portfolio* 17,351 17,351
Putnam Asset Allocation - Conservative
Portfolio* 3,970 3,970
Putnam Overseas Growth Fund* 69,236 69,236
Loan Fund 714,588 714,588
Putnam Stable Value Fund* 6,312,011 6,312,011
---------- ----------
Total $24,749,962 $23,997,512
=========== ===========
The annual interest rate for the Stable Value Fund was 5.88% for the period
ended December 31, 1995 and 5.80% for the period ended October 31, 1995.
*Securities investments are provided by contract through a pooled
investment account; fair market value is used as original cost.
**Represents 134,232 and 138,460 shares of common stock at December 31
and October 31, 1995, respectively.
<PAGE>
4. Gain Realized on Sale/Distribution of Stock
During the two-month period ended December 31, 1995, 10,211 shares of
Equitable Resources, Inc. Common Stock with a market value of $302,658 were
sold at an average price of $29.64 per share. The cost of the shares sold
was $244,580 ($23.95 per share) calculated using the "average cost" method.
5. Plan Termination
Although it has not expressed any intent to do so, the Company has the
right under the Plan to discontinue its contributions at any time and to
terminate the Plan subject to the provisions of ERISA. In the event of Plan
termination, the interests of all affected participants will become fully
vested.
6. Income Tax Status of Plan
The Internal Revenue Service has determined that the Plan is qualified
under Section 401(a) of the Internal Revenue Code and exempt under Section
501(a) of the Code. Future amendments will be made to the Plan as necessary
so that the Plan remains qualified and tax exempt under the Code.
7. Federal Income Tax Status - Employee
Contributions by the employer to the Plan (including those resulting from
salary reduction) and all dividends and interest earned on such
contributions are not taxable to the participant for federal income tax
purposes until distributed.
The tax consequences, to participants, of a distribution from the Plan are
dependent upon the circumstances existing at the time of distribution.
Delinquent and unpaid loans are considered distributions from the Plan. In
general, a participant is subject to federal income tax on a distribution
in the year received. Special rules applicable to lump sum distributions
may result in deferral of taxation in whole or in part.
<PAGE>
SUPPLEMENTARY INFORMATION
<PAGE>
<TABLE>
<CAPTION>
EQUITABLE RESOURCES, INC. SCHEDULE 1
EMPLOYEE SAVINGS PLAN
ASSETS HELD FOR INVESTMENT
DECEMBER 31, 1995
CURRENT
IDENTITY OF ISSUE DESCRIPTION OF INVESTMENT COST VALUE
<S> <C> <C> <C>
The George Putnam Fund of Boston 318,169 units $4,931,6261 $4,931,626
The Putnam Fund for Growth and Income 271,446 units $4,394,7101 $4,394,710
Putnam Income Fund 197,202 units $1,425,7731 $1,425,773
Putnam Voyager Fund 280,513 units $4,277,8171 $4,277,817
Putnam Asset Allocation-Growth
Portfolio 12,528 units $125,2761 $125,276
Putnam Asset Allocation-Balanced
Portfolio 10,304 units $99,2301 $99,230
Putnam Asset Allocation-Conservative
Portfolio 993 units $9,1581 $9,158
Putnam Overseas Growth Fund 10,976 units $144,0091 $144,009
Loan Fund 9.75% N/A $747,089
Putnam Stable Value Fund 5.88 % per annum2 $5,916,9041 $5,916,904
Employer Stock Fund3 134,232 shares common stock $3,233,707 $4,194,752
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EQUITABLE RESOURCES, INC. SCHEDULE 2
EMPLOYEE SAVINGS PLAN
TRANSACTIONS OR SERIES OF TRANSACTIONS IN EXCESS OF 5%
OF THE CURRENT VALUE OF PLAN ASSETS
FOR THE PERIOD ENDED NOVEMBER 1, 1995 TO DECEMBER 31, 1995
NUMBER OF TOTAL NUMBER TOTAL SALES ORIGINAL NET GAIN
PARTY INVOLVED DESCRIPTION OF INVESTMENT PURCHASES PURCHASES OF SALES PROCEEDS COST OR (LOSS)
<S> <C> <C> <C> <C> <C> <C>
SERIES TRANSACTIONS:
None
<FN>
- --------
1 Fair market value is used as original cost.
2 Rate in effect for the period ended December 31, 1995.
3 Party in interest to the Plan.
</FN>
</TABLE>
Exhibit 99.02
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 11-K
FOR ANNUAL REPORTS OF EMPLOYEE STOCK PURCHASE
PLAN PURSUANT TO SECTION 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
[ ] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
[X] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from October 1, 1995
(Date of Inception) to December 31, 1995
Commission file number 1-3551
EQUITABLE RESOURCES, INC. EMPLOYEE STOCK PURCHASE PLAN
(Full title of the Plan and address of the Plan,
if different from that of the issuer named below)
EQUITABLE RESOURCES, INC.
420 Boulevard of the Allies,
Pittsburgh, Pennsylvania 15219
(Name of issuer of the securities held pursuant to the
plan and the address of principal executive office)
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
members of the Administrative Committee of the Plan have duly caused this annual
report to be signed on its behalf by the undersigned hereunto duly authorized.
EQUITABLE RESOURCES, INC.
EMPLOYEE STOCK PURCHASE PLAN
(Name of Plan)
By s/ Dan C. Eaton
Dan C. Eaton
Vice President -
Strategic and Financial Planning
March 8, 1996
<PAGE>
REPORT OF INDEPENDENT AUDITORS
Administrative Committee
Equitable Resources, Inc. Employee Stock Purchase Plan
We have audited the accompanying statement of net assets available for
plan benefits of the Equitable Resources, Inc. Employee Stock Purchase Plan (the
Plan) as of December 31, 1995, and the related statement of changes in net
assets available for plan benefits for the period October 1, 1995 (Date of
Inception) to December 31, 1995. These financial statements are the
responsibility of the Plan's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the net assets available for plan benefits of
the Plan as of December 31, 1995, and the changes in net assets available for
plan benefits for the period October 1, 1995 (Date of Inception) to December 31,
1995, in conformity with generally accepted accounting principles.
s/ Ernst & Young LLP
Ernst & Young LLP
Pittsburgh, Pennsylvania
March 8, 1996
<PAGE>
EQUITABLE RESOURCES, INC.
EMPLOYEE STOCK PURCHASE PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR PLAN BENEFITS
December 31,
1995
Cash $ 15,355
Investment in Equitable Resources, Inc.
Common Stock
(781 shares at Fair Value - Note 2) 24,406
Contribution Receivable - Employer 1,773
----------
Net Assets Available for Plan Benefits $ 41,534
==========
SEE ACCOMPANYING NOTES
<PAGE>
EQUITABLE RESOURCES, INC.
EMPLOYEE STOCK PURCHASE PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS
FOR THE PERIOD OCTOBER 1, 1995 (DATE OF INCEPTION) TO DECEMBER 31, 1995
Contributions:
Employee $ 36,519
Employer 4,430
Unrealized gain on investments 585
Net increase in net
assets available for plan benefits 41,534
Net assets available for plan benefits:
At beginning of period 0
-------------
At end of period $ 41,534
=============
SEE ACCOMPANYING NOTES.
<PAGE>
EQUITABLE RESOURCES, INC.
EMPLOYEE STOCK PURCHASE PLAN
NOTES TO FINANCIAL STATEMENTS FOR THE PERIOD
OCTOBER 1, 1995 (DATE OF INCEPTION) TO DECEMBER 31, 1995
1. Description of the Plan
The following description of the Equitable Resources, Inc. Employee
Stock Purchase Plan (Plan) provides only general information.
Participants should refer to the Plan agreement for a more complete
description of the Plan's provisions.
General
The Plan is an employee stock purchase plan implemented on October 1,
1995 by Equitable Resources, Inc. and subsidiaries (the Company or
Companies). The Plan is subject to approval by a majority of the common
stock of the Company present and represented at a special or annual
meeting of shareholders to be held on or before September 30, 1996.
The Plan provides a method whereby employees of the Company may purchase
shares of the Company's common stock at a 10 percent discount through
payroll deductions.All non-represented employees of the Companies are
eligible to participate in the Plan immediately upon employment.
Represented employee eligibility is subject to collective bargaining. At
December 31, 1995, there were 83 active participants in the Plan.
Contributions and Purchase of Stock
Eligible employees can contribute from 1 to 10 percent of their annual
base pay to the Plan on an after-tax basis. No interest will accrue or
be payable with respect to any of the payroll deductions of a
participant in the Plan. Contributions are initially deposited with
Putnam Investments (Trustee) and are used to purchase shares of the
Company's common stock in accordance with the provisions set forth in
the Plan agreement.
The price of stock purchased for a participant is 90% of the closing
price of the stock on the second business day after the close of each
monthly period. The initial monthly period of the Plan began on October
1, 1995. The Plan holds contributions as cash pending the purchase of
shares of the Company's common stock.
The Company contributes the remaining 10 percent of the stock price and
pays fees for the administration of the Plan and any commission charges
associated with the purchase of the stock.
<PAGE>
1. Description of the Plan (Continued)
Dividends on Stock
Dividends on stock are automatically used to purchase additional shares
for all participants. Participants may, however, make a written request
to receive a cash distribution of dividend payments.
Sale of Stock
Participants are required to hold any shares purchased through the Plan
for a minimum of one year. Participants may elect withdrawals, subject
to the holding period restriction, of shares of stock or cash from the
proceeds of sale of shares. Participants are responsible for all costs
associated with the sale of stock from their individual accounts.
Termination of Employment
Upon termination of the participant's employment for any reason, payroll
deductions credited to the participant's account(s) which have not yet
been used to purchase stock will be returned to the participant. The
participant has the option of either selling the total number of shares
in their account or receiving a certificate for their holdings until a
future time of sale. Terminated participants are not permitted to
purchase shares through the Plan.
2. Summary of Significant Accounting Policies
Investments
The Equitable Resources, Inc. common stock is valued at market price as
quoted on the New York Stock Exchange.
Investments at December 31, 1995 are comprised of:
1995
Fair Original Unrealized
Shares Value Cost Appreciation
Equitable Resources, Inc.,
Common Stock 781 $ 24,406 $ 23,821 $ 585
======== ======== =====
<PAGE>
2. Summary of Significant Accounting Policies (Continued)
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements
and accompanying notes.
Actual results could differ from those estimates.
3. Plan Termination
Although it has not expressed any intent to do so, the Company has the
right to terminate or to amend the Plan at any time. Upon dissolution or
liquidation of the Company, or upon a reorganization, merger or
consolidation of which the Company is not the surviving corporation,
participants will be entitled to receive on the last day of the offering
period the cash and/or securities determined to be owed as of the date
of such transaction.
4. Income Tax Status of Plan
It is the intention of the Company to have the Plan qualify under
Section 423 of the Internal Revenue Code. The provisions of the Plan
have been construed to extend and limit participation in a manner
consistent with the requirements of that section of the Code.
5. Federal Income Tax Status - Employee
In general, a participant is subject to federal and, in certain
instances, state income taxes on all dividends, in addition to the gains
(losses) realized resulting from the sale of the stock.
EQUITABLE RESOURCES, INC.
DEFERRED COMPENSATION PLAN
EFFECTIVE - JANUARY 1, 1996
<PAGE>
EQUITABLE RESOURCES, INC.
DEFERRED COMPENSATION PLAN
Table of Contents
ARTICLE I...................................................5
1.1 Statement of Purpose..............................5
ARTICLE II..................................................6
DEFINITIONS.................................................6
2.1 Account...........................................6
2.2 Base Salary.......................................6
2.3 Beneficiary.......................................6
2.4 Board.............................................6
2.5 Bonus.............................................6
2.6 Change in Control.................................7
2.7 Code..............................................7
2.8 Committee.........................................7
2.9 Compensation......................................7
2.10 Company Matching Account.........................8
2.11 Company Matching Amount..........................8
2.12 Company..........................................8
2.13 Credited Service.................................8
2.14 Deferral Account.................................8
2.15 Deferral Benefit.................................8
2.16 Deferral Election................................8
2.17 Disability.......................................8
2.18 Early Retirement.................................8
2.19 Eligible Employee................................9
2.20 Employer.........................................9
2.21 Hardship Withdrawal..............................9
2.22 Investment Return Rate...........................9
2.23 Participant......................................9
2.24 Participation Agreement..........................9
2.25 Plan.............................................9
2.26 Plan Year........................................9
2.27 Savings Plan.....................................10
2.28 Selected Affiliate...............................10
2.29 Retirement.......................................10
2.30 Valuation Date...................................10
ARTICLE III.................................................11
ELIGIBILITY AND PARTICIPATION...............................11
3.1 Eligibility.......................................11
3.2 Participation.....................................11
3.3 Change in Participation Status....................11
3.4 Ineligible Participant............................11
ARTICLE IV..................................................12
DEFERRAL OF COMPENSATION....................................12
4.1 Amount of Deferral................................12
4.2 Company Matching Amounts..........................12
4.3 Crediting Deferred Compensation and Company
Matching Amounts. 12
ARTICLE V...................................................13
BENEFIT ACCOUNTS............................................13
5.1 Valuation of Account..............................13
5.2 Crediting of Investment Return....................13
5.3 Statement of Accounts.............................13
5.4 Vesting of Account................................13
5.5 Transfer of Deferral Account Balances.............14
ARTICLE VI..................................................15
PAYMENT OF BENEFITS.........................................15
6.1 Payment of Deferral Benefit upon Death,
Disability or Retirement.....................15
6.2 Payment of Deferral Benefit upon Termination......15
6.3 Payments to Beneficiaries.........................15
6.4 In-Service Distribution...........................15
6.5 Hardship Withdrawal...............................16
6.6 Form of Payment...................................16
6.7 Commencement of Payments..........................16
6.8 Small Benefit.....................................17
ARTICLE VII.................................................18
BENEFICIARY DESIGNATION.....................................18
7.1 Beneficiary Designation...........................18
7.2 Change of Beneficiary Designation.................18
7.3 No Designation....................................18
7.4 Effect of Payment.................................18
ARTICLE VIII................................................19
ADMINISTRATION..............................................19
8.1 Committee.........................................19
8.2 Agents............................................19
8.3 Binding Effect of Decisions.......................19
8.4 Indemnification of Committee......................19
ARTICLE IX..................................................20
AMENDMENT AND TERMINATION OF PLAN...........................20
9.1 Amendment.........................................20
9.2 Termination.......................................20
ARTICLE X...................................................21
MISCELLANEOUS...............................................21
10.1 Funding..........................................21
10.2 Nonassignability.................................21
10.3 Legal Fees and Expenses..........................22
10.4 Captions.........................................22
10.5 Governing Law....................................22
10.6 Successors.......................................22
10.7 Right to Continued Service.......................23
EXHIBIT A...................................................24
EXHIBIT B...................................................25
EXHIBIT C...................................................26
<PAGE>
ARTICLE I
1.1 STATEMENT OF PURPOSE
This is the Equitable Resources, Inc. Deferred Compensation Plan (the "Plan")
made in the form of this Plan and in related agreements between the Employer and
certain management or highly compensated employees. The purpose of the Plan is
to provide management and highly compensated employees of the Employer with the
option to defer the receipt of portions of their compensation payable for
services rendered to the Employer. It is intended that the Plan will assist in
attracting and retaining qualified individuals to serve as officers and managers
of the Employer. The Plan is effective as of January 1, 1996.
<PAGE>
ARTICLE II
DEFINITIONS
When used in this Plan and initially capitalized, the following words and
phrases shall have the meanings indicated:
2.1 ACCOUNT.
"Account" means the sum of a Participant's Deferral Account and Company
Contribution Account.
2.2 BASE SALARY.
"Base Salary" means a Participant's base earnings paid by an Employer to a
Participant without regard to any increases or decreases in base earnings as a
result of (i) an election to defer base earnings under this Plan or (ii) an
election between benefits or cash provided under a Plan of an Employer
maintained pursuant to Section 125 or 401(k) of the Code and as limited in
Exhibit B attached hereto.
2.3 BENEFICIARY.
"Beneficiary" means the person or persons designated or deemed to be designated
by the Participant pursuant to Article VII to receive benefits payable under the
Plan in the event of the Participant's death.
2.4 BOARD.
"Board" means the Board of Directors of the Company.
2.5 BONUS.
"Bonus" means a Participant's bonus or sales commission paid by the Employer to
a Participant under the plans listed in Exhibit B attached hereto and to the
degree limited in Exhibit B, as applicable, without regard to any decreases as a
result of (i) an election to defer all or any portion of a bonus under this Plan
or (ii) an election between benefits or cash provided under a plan of the
Employer maintained pursuant to Section 401(k) of the Code.
2.6 CHANGE IN CONTROL.
A "Change in Control" shall occur or be deemed to have occurred only if any of
the following events occur (each of such events being herein referred to as a
"Change of Control"):
(a) The sale or other disposition by the Company of all or substantially
all of its assets to a single purchaser or to a group of purchasers, other than
to a corporation with respect to which, following such sale or disposition, more
than eighty percent (80%) of, respectively, the then outstanding shares of
Company common stock and the combined voting power of the then outstanding
voting securities entitled to vote generally in the election of the Board of
Directors is then owned beneficially, directly or indirectly, by all or
substantially all of the individuals and entities who were the beneficial
owners, respectively, of the outstanding Company common stock and the combined
voting power of the then outstanding voting securities immediately prior to such
sale or disposition in substantially the same proportion as their ownership of
the outstanding Company common stock and voting power immediately prior to such
sale or disposition;
(b) The acquisition in one or more transactions by any person or group,
directly or indirectly, of beneficial ownership of twenty percent (20%) or more
of the outstanding shares of Company common stock or the combined voting power
of the then outstanding voting securities of the Company entitled to vote
generally in the election of the Board of Directors; provided, however, that any
acquisition by (x) the Company or any of its subsidiaries, or any employee
benefit plan (or related trust) sponsored or maintained by the Company or any of
its subsidiaries or (y) any person that is eligible, pursuant to Rule 13d-1(b)
under the Exchange Act (as such rule is in effect as of November 1, 1995), to
file a statement on Schedule 13G with respect to its beneficial ownership of
Company common stock and other voting securities whether or not such person
shall have filed a statement on Schedule 13G, unless such person shall have
filed a statement on Schedule 13D with respect to beneficial ownership of
fifteen percent (15%) or more of the Company's voting securities, shall not
constitute a Change of Control;
(c) The Company's termination of its business and liquidation of its
assets;
(d) The reorganization, merger or consolidation of the Company into or
with another person or entity, by which reorganization, merger or consolidation
the persons who held one hundred percent (100%) of the voting securities of the
Company prior to such reorganization, merger or consolidation receive or
continue to hold less than sixty percent (60%) of the outstanding voting shares
of the new or continuing corporation; or
(e) If, during any two-year period, less than a majority of the members
of the Board of Directors are persons who were either (i) nominated or
recommended for election by at least two-thirds vote of the persons who were
members of the Board of Directors or Nominating Committee of the Board of
Directors at the beginning of the period, or (ii) elected by at least a
two-thirds vote of the persons who were members of the Board of Directors at the
beginning of the period.
2.7 CODE.
"Code" means the Internal Revenue Code of 1986, as amended.
2.8 COMMITTEE.
"Committee" has the meaning set forth in Section 8.1.
2.9 COMPENSATION.
"Compensation" means the Base Salary and Bonus payable with respect to an
Eligible Employee for each plan year.
2.10 COMPANY MATCHING ACCOUNT.
"Company Matching Account" means the account maintained on the books of the
Employer for the purpose of accounting for the Company Matching Amount and for
the amount of investment return credited thereto for each Participant pursuant
to Article V.
2.11 COMPANY MATCHING AMOUNT.
"Company Matching Amount" means the amount credited to a Participant's Company
Matching Account under Section 4.2.
2.12 COMPANY.
"Company" means Equitable Resources, Inc. and any successor thereto.
2.13 CREDITED SERVICE.
"Credited Service" means the sum of all periods of a Participant's employment by
the Company or a Selected Affiliate for which service credit is given under the
Equitable Resources Pension Plan.
2.14 DEFERRAL ACCOUNT.
"Deferral Account" means the account maintained on the books of the Employer for
the purpose of accounting for the amount of Compensation that each Participant
elects to defer under the Plan and for the amount of investment return credited
thereto for each Participant pursuant to Article V.
2.15 DEFERRAL BENEFIT.
"Deferral Benefit" means the benefit payable to a Participant or his or her
Beneficiary pursuant to Article VI.
2.16 DEFERRAL ELECTION.
"Deferral Election" means the written election made by a Participant to defer
Compensation pursuant to Article IV.
2.17 DISABILITY.
"Disability" means a Participant's Disability as defined under the Company's
Long Term Disability Plan or its successors.
2.18 EARLY RETIREMENT.
"Early Retirement" will be granted by the Committee at its sole discretion.
2.19 ELIGIBLE EMPLOYEE.
"Eligible Employee" means a highly compensated or management employee of the
Company who is designated by the Committee, by name or group or description, in
accordance with Section 3.1 as eligible to participate in the Plan.
2.20 EMPLOYER.
"Employer" means, with respect to a Participant, the Company or the Selected
Affiliate which pays such Participant's Compensation.
2.21 HARDSHIP WITHDRAWAL.
"Hardship Withdrawal" has the meaning set forth in Section 6.5.
2.22 INVESTMENT RETURN RATE.
"Investment Return Rate" means:
(a) In the case of an investment named in Exhibit C of a fixed income
nature, the interest deemed to be credited,
(b) In the case of an investment named in Exhibit C of an equity
investment nature, the increase and decrease in deemed value and
dividends deemed to be credited.
2.23 PARTICIPANT.
"Participant" means any Eligible Employee who elects to participate by filing a
Participant Agreement or who is automatically enrolled as provided in Section
3.2.
2.24 PARTICIPATION AGREEMENT.
"Participation Agreement" means the agreement filed by a Participant, in the
form prescribed by the Committee, pursuant to Section 3.2.
2.25 PLAN.
"Plan" means the Equitable Resources, Inc. Deferred Compensation Plan, as
amended from time to time.
2.26 PLAN YEAR.
"Plan Year" means a twelve-month period commencing January 1 and ending the
following December 31.
2.27 SAVINGS PLAN.
"Savings Plan" means, with respect to a Participant, the Equitable Resources,
Inc. Employee Savings Plan, or its successor, as Amended and Restated
________________, or as may be amended from time to time.
2.28 SELECTED AFFILIATE.
"Selected Affiliate" means (1) any Company in an unbroken chain of companies
beginning with the Company if each of the companies other than the last company
in the chain owns or controls, directly or indirectly, stock possessing not less
than 50 percent of the total combined voting power of all classes of stock in
one of the other companies, or (2) any partnership or joint venture in which one
or more of such companies is a partner or venturer, each of which shall be
selected by the Committee.
2.29 RETIREMENT
"Retirement" means the termination of a Participant who has reached age 65.
2.30 VALUATION DATE.
"Valuation Date" means a date on which the amount of a Participant's Account is
valued as provided in Article V. The Valuation Date shall be the end of the Plan
year and any other date determined by the Committee.
<PAGE>
ARTICLE III
ELIGIBILITY AND PARTICIPATION
3.1 ELIGIBILITY.
Eligibility to participate in the Plan is limited to Eligible Employees. From
time to time, and subject to Section 3.4, the Committee shall prepare, and
attach to the Plan as Exhibit A, a complete list of the Eligible Employees, by
individual name or by reference to an identifiable group of persons or by
descriptions of the components of compensation of an individual which would
qualify individuals which are eligible to participate and all of whom shall be a
select group of management or highly compensated employees.
3.2 PARTICIPATION.
Participation in the Plan shall be limited to Eligible Employees who elect to
participate in the Plan by filing a Participation Agreement with the Committee.
An Eligible Employee shall commence participation in the Plan upon the first day
of his or her first payroll period following the receipt of his or her
Participation Agreement by the Committee.
3.3 CHANGE IN PARTICIPATION STATUS.
A Participant may change a previously elected percentage of deferral of Base
Salary or elect to terminate his or her participation in the Plan at any time by
filing a written notice thereof with the Committee. Changes will only become
effective as of the beginning of the next payroll period in the month following
receipt of the change in election by the Committee and in accordance with the
Company's prevailing administrative procedures. Amounts credited to such
Participant's Account with respect to periods prior to the effective date of
such termination shall continue to be payable pursuant to, receive investment
credit on, and otherwise be governed by, the terms of the Plan. A participant
may change a previously elected percentage of deferral of Bonus, or elect to
terminate future Bonus deferrals, by filing a written notice thereof with the
Committee prior to the start of the next Bonus measurement period.
3.4 INELIGIBLE PARTICIPANT.
Notwithstanding any other provisions of this Plan to the contrary, if the
Committee determines that any Participant may not qualify as a "management or
highly compensated employee" within the meaning of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"), or regulations thereunder,
the Committee may determine, in its sole discretion, that such Participant shall
cease to be eligible to participate in this Plan. Upon such determination, the
Employer shall make a sum payment to the Participant equal to the vested amount
credited to his Account as soon as administratively practicable. Upon such
payment, no benefit shall thereafter be payable under this Plan either to the
Participant or any Beneficiary, and all of the Participant's elections as to the
time and manner of payment of his Account will be deemed to be canceled.
ARTICLE IV
DEFERRAL OF COMPENSATION
4.1 AMOUNT OF DEFERRAL.
With respect to each Plan Year, a Participant may elect to defer a specified
percentage of his or her Compensation up to the percentage of compensation
defined and the terms described in Exhibit B attached hereto. A Participant may
change the percentage of his or her Compensation to be deferred by filing a
written notice thereof with the Committee. Any such change shall be effective as
of the first day of the Plan Year immediately following the Plan Year in which
such notice is filed with the Committee.
4.2 COMPANY MATCHING AMOUNTS.
If the Committee authorizes a Matching Amount with respect to, and preceding,
any Plan Year(s), the Employer shall provide Matching Amounts under this Plan
with respect to each Participant who is eligible to be allocated matching
contributions under the Savings Plan. The total Matching Amounts under this Plan
on behalf of a Participant for each Plan Year shall not exceed the difference
between (i) the matching percentage of the Compensation deferred by a
Participant under this Plan and of the Participant's pre-tax elective deferrals
for the Plan Year under the Savings Plan, less (ii) the Employer matching
contributions allocated to the Participant under the Savings Plan for such Plan
Year.
4.3 CREDITING DEFERRED COMPENSATION AND COMPANY MATCHING AMOUNTS.
The amount of Compensation that a Participant elects to defer under the Plan
shall be credited by the Employer to the Participant's Deferral Account
periodically, the frequency of which will be determined by the Committee. To the
extent that the Employer is required to withhold any taxes or other amounts from
a Participant's deferred Compensation pursuant to any state, federal or local
law, such amounts shall be withheld only from the Participant's compensation
before such amounts are credited. The Company Matching Amount under the Plan for
each Participant shall be credited by the Employer periodically, the frequency
of which will be determined by the Committee.
<PAGE>
ARTICLE V
BENEFIT ACCOUNTS
5.1 VALUATION OF ACCOUNT.
As of each Valuation Date, a Participant's Account shall consist of the balance
of the Participant's Account as of the immediately preceding Valuation Date,
plus the Participant's Deferred Compensation and Company Contribution Amount
credited pursuant to Section 4.2 since the immediately preceding Valuation Date,
plus investment return credited as of such Valuation Date pursuant to Section
5.2, minus the aggregate amount of distributions, if any, made from such Account
since the immediately preceding Valuation Date.
5.2 CREDITING OF INVESTMENT RETURN.
As of each Valuation Date, each Participant's Deferral Account and Company
Contribution shall be increased by the amount of investment return earned since
the immediately preceding Valuation Date. Investment return shall be credited at
the Investment Return Rate as of such Valuation Date based on the average
balance of the Participant's Deferral Account and Company Contribution,
respectively, since the immediately preceding Valuation Date, but after such
Accounts have been adjusted for any contributions or distributions to be
credited or deducted for such period. Investment return for the period prior to
the first Valuation Date applicable to a Deferral Account or an Company
Contribution shall be deemed earned ratably over such period. Until a
Participant or his or her Beneficiary receives his or her entire Account, the
unpaid balance thereof shall earn an investment return as provided in this
Section 5.2.
5.3 STATEMENT OF ACCOUNTS.
The Committee shall provide to each Participant, within 30 days after the close
of each calendar quarter, a statement setting forth the balance of such
Participant's Account as of the last day of the preceding calendar quarter and
showing all adjustments made thereto during such calendar quarter.
5.4 VESTING OF ACCOUNT.
Except as provided in Sections 10.1 and 10.2, a Participant shall be 100% vested
in his or her Deferral Account at all times. A Participant's interest in his or
her Company Contribution shall be 100% vested as of a Change in Control. Prior
to this event, a Participant's interest in his or her Company Contribution shall
vest under the vesting schedule for Company Contribution under the Savings Plan.
Any nonvested portion of a Participant's Company Contribution shall be forfeited
at termination. Forfeitures under the Plan shall be for the benefit of the
Employer and shall not be credited to other Participants.
5.5 TRANSFER OF DEFERRAL ACCOUNT BALANCES
Once every month a Participant may, by appropriate direction which is properly
received by the Company or the Committee, in accordance with uniform rules
established by the Company, elect to transfer in increments of 10% all or part
of the deemed value of his or her Deferral Account credits, except as may be
limited by the Committee, from any one or more investment options to any one or
more other such investment options as listed in Exhibit C. Such a transfer shall
not constitute a change in the Participant's current investment election.
The effective date of any transfer above shall be the date for which the
appropriate direction to the Company or its designee has been properly received
in accordance with uniform rules established by the Company. The Company
reserves the right to refuse to honor any Participant direction related to
investments or withdrawals, including transfers among investment options, where
necessary or desirable to assure compliance with applicable law including U.S.
and other securities laws. However, the Company does not assume any
responsibility for compliance by officers or others with any such laws, and any
failure by the Company to delay or dishonor any such direction shall not be
deemed to increase the Company's legal exposure to the Participant or third
parties.
<PAGE>
ARTICLE VI
PAYMENT OF BENEFITS
6.1 PAYMENT OF DEFERRAL BENEFIT UPON DEATH, DISABILITY OR RETIREMENT.
Upon the death, Disability, Early Retirement, or Retirement of a Participant,
the Employer shall pay to the Participant or his Beneficiary a Deferral Benefit
equal to the balance of his or her vested Account determined pursuant to Article
V, less any amounts previously distributed, based on his written election
pursuant to Section 6.6
6.2 PAYMENT OF DEFERRAL BENEFIT UPON TERMINATION.
Upon the termination of service of the Participant as an employee of the
Employer and all Selected Affiliates for reasons other than death, Disability,
or Retirement, the Employer shall pay to the Participant a Deferral Benefit in a
lump sum equal to the balance of his or her vested Account determined pursuant
to Article V, less any amounts previously distributed, as soon as
administratively practical.
6.3 PAYMENTS TO BENEFICIARIES.
In the event of the Participant's death prior to his or her receipt of all
elected annual installments, his or her Beneficiary will receive the remaining
annual installments at such times as such installments would have become
distributable to the Participant.
6.4 IN-SERVICE DISTRIBUTION
A participant may elect to receive an in-service distribution of a portion or
all of his or her Deferral Account only beginning at any time not less than one
year after the end of the Plan Year in which such Compensation was deferred. A
Participant's election for an in-service distribution shall be filed annually in
writing with the Committee at the same time his or her Deferral Election is
made. The Participant may elect to receive such Compensation as an in-service
distribution in lump sum only, the amount of which will be the lesser of the
distribution election for that year or the Deferral Account balance attributable
to that year's deferral. Any benefits paid to the Participant as an in-service
distribution shall reduce the amount of Deferral Benefit otherwise payable to
the Participant under the Plan.
6.5 HARDSHIP WITHDRAWAL.
In the event that the Committee, under written request of a Participant,
determines, in its sole discretion, that the Participant has suffered an
unforeseeable financial emergency, the Employer shall pay to the Participant, as
soon as practicable following such determination, an amount necessary to meet
the emergency (the "Hardship Withdrawal"), but not exceeding the aggregate
balance of such Participant's Deferral Account as of the date of such payment.
For purposes of this Section 6.5, an "unforeseeable financial emergency" shall
mean an event that the Committee determines to give rise to an unexpected need
for cash arising from an illness, casualty loss, sudden financial reversal or
other such unforeseeable occurrence. Amounts of Hardship Withdrawal may not
exceed the amount the Committee reasonably determines to be necessary to meet
such emergency needs (including taxes incurred by reason of a taxable
distribution). The amount of the Deferral Benefit otherwise payable under the
Plan to such Participant shall be adjusted to reflect the early payment of the
Hardship Withdrawal.
6.6 FORM OF PAYMENT.
The Deferral Benefit payable pursuant to Section 6.1 shall be paid in one of the
following forms, as elected by the Participant in his or her Participant
Agreement on file as of one (1) year and one (1) day prior to the date of
termination or death:
(a) Annual payments of a fixed amount which shall amortize the vested
Account balance of the payment commencement date over a period not to
exceed ten (10) years (together, in the case of each annual payment,
with interest thereon credited after the payment commencement date
pursuant to Section 5.2).
(b) A lump sum as soon as administratively practical. In the event a
Participant fails to make a distribution election, his or her vested Account
Balance shall be distributed as a lump sum distribution as soon as
administratively practical after his or her termination, death or Disability.
6.7 COMMENCEMENT OF PAYMENTS.
Commencement of payments under Section 6.1 of the Plan shall begin within 60
days following receipt of written notice by the Committee of an event which
entitles a Participant (or a Beneficiary) to payments under the Plan.
6.8 SMALL BENEFIT.
In the event the Committee determines that the balance of a Participant's
Account is less than $3,500 at the time of commencement of payments, or the
portion of the balance of the Participant's Account payable to any Beneficiary
is less than $3,500 at the time of commencement of payments, the Committee may
inform the Employer and the Employer, in its discretion, may choose to pay the
benefit in the form of a lump sum payment, notwithstanding any provision of the
Plan or a Participant election to the contrary. Such lump sum payment shall be
equal to the balance of the Participant's Account or the portion thereof payable
to a Beneficiary.
<PAGE>
ARTICLE VII
BENEFICIARY DESIGNATION
7.1 BENEFICIARY DESIGNATION.
Each Participant shall have the sole right, at any time, to designate any person
or persons as his Beneficiary to whom payment under the Plan shall be made in
the event of his or her death prior to complete distribution to the Participant
of his or her Account. Any Beneficiary designation shall be made in a written
instrument provided by the Committee. All Beneficiary designations must be filed
with the Committee and shall be effective only when received in writing by the
Committee. In the event that a Beneficiary form has not been filed, the
Beneficiary to whom payment has been designated under the Savings Plan shall be
used.
7.2 CHANGE OF BENEFICIARY DESIGNATION.
Any Beneficiary designation may be changed by a Participant by the filing of a
new Beneficiary designation, which will cancel all Beneficiary designations
previously filed. The designation of a Beneficiary may be made or changed at any
time without the consent of any person.
7.3 NO DESIGNATION.
If a Participant fails to designate a Beneficiary as provided above, or if all
designated Beneficiaries predecease the Participant, then the Participant's
designated Beneficiary shall be deemed to be the Participant's estate.
7.4 EFFECT OF PAYMENT.
Payment to a Participant's Beneficiary (or, upon the death of a primary
Beneficiary, to the contingent Beneficiary or, if none, to the Participant's
estate) shall completely discharge the Employer's obligations under the Plan.
<PAGE>
ARTICLE VIII
ADMINISTRATION
8.1 COMMITTEE.
The administrative committee for the Plan (the "Committee") shall be those
members of the Employee Pension Committee as long as there are at least three
such members. If there are not at least three such non-participating persons on
the Committee, the Chief Executive Officer of the Company shall appoint other
Company officers to serve on the Committee. The Committee shall have complete
discretion to i) supervise the administration and operation of the Plan, ii)
adopt rules and procedures governing the Plan from time to time and iii) shall
have authority to give interpretive rulings with respect to the Plan.
8.2 AGENTS.
The Committee may appoint an individual, who may be an employee of the Company,
to be the Committee's agent with respect to the day-to-day administration of the
Plan. In addition, the Committee may, from time to time, employ other agents and
delegate to them such administrative duties as it sees fit, and may from time to
time consult with counsel who may be counsel to the Company.
8.3 BINDING EFFECT OF DECISIONS.
Any decision or action of the Committee with respect to any question arising out
of or in connection with the administration, interpretation and application of
the Plan shall be final and binding upon all persons having any interest in the
Plan.
8.4 INDEMNIFICATION OF COMMITTEE.
The Company shall indemnify and hold harmless the members of the Committee and
their duly appointed agents under Section 8.2 against any and all claims, loss,
damage, expense or liability arising from any action or failure to act with
respect to the Plan, except in the case of gross negligence or willful
misconduct by any such member or agent of the Committee.
<PAGE>
ARTICLE IX
AMENDMENT AND TERMINATION OF PLAN
9.1 AMENDMENT.
The Company, on behalf of itself and of each Selected Affiliate may at any time
amend, suspend or reinstate any or all of the provisions of the Plan, except
that no such amendment, suspension or reinstatement may adversely affect any
Participant's Account, as it existed as of the day before the effective date of
such amendment, suspension or reinstatement, without such Participant's prior
written consent. Written notice of any amendment or other action with respect to
the Plan shall be given to each Participant.
9.2 TERMINATION.
The Company, on behalf of itself and of each Selected Affiliate, in its sole
discretion, may terminate this Plan at any time and for any reason whatsoever.
Upon termination of the Plan, the Committee shall take those actions necessary
to administer any Accounts existing prior to the effective date of such
termination; provided, however, that a termination of the Plan shall not
adversely affect the value of a Participant's Account, the crediting of
investment return under Section 5.2 or the timing or method of distribution of a
Participant's Account, without the Participant's prior written consent.
Notwithstanding the foregoing, a termination of the Plan shall not give rise to
accelerated or automatic vesting of any Participant's Matching Account.
<PAGE>
ARTICLE X
MISCELLANEOUS
10.1 FUNDING.
Participants, their Beneficiaries, and their heirs, successors and assigns,
shall have no secured interest or claim in any property or assets of the
Employer. The Employer's obligation under the Plan shall be merely that of an
unfunded and unsecured promise of the Employer to pay money in the future.
Notwithstanding the foregoing, in the event of a Change in Control, the Company
shall create an irrevocable trust, or before such time the Company may create an
irrevocable or revocable trust, to hold funds to be used in payment of the
obligations of Employers under the Plan. In the event of a Change in Control or
prior thereto, the Employers shall fund such trust in an amount equal to not
less than the total value of the Participants' Accounts under the Plan as of the
Valuation Date immediately preceding the Change in Control, provided that any
funds contained therein shall remain liable for the claims of the respective
Employer's general creditors.
10.2 NONASSIGNABILITY.
No right or interest under the Plan of a Participant or his or her Beneficiary
(or any person claiming through or under any of them) shall be assignable or
transferable in any manner or be subject to alienation, anticipation, sale,
pledge, encumbrance or other legal process or in any manner be liable for or
subject to the debts or liabilities of any such Participant or Beneficiary. If
any Participant or Beneficiary shall attempt to or shall transfer, assign,
alienate, anticipate, sell, pledge or otherwise encumber his or her benefits
hereunder or any part thereof, or if by reason of his or her bankruptcy or other
event happening at any time such benefits would devolve upon anyone else or
would not be enjoyed by him or her, then the Committee, in its discretion, may
terminate his or her interest in any such benefit (including the Deferral
Account) to the extent the Committee considers necessary or advisable to prevent
or limit the effects of such occurrence. Termination shall be effected by filing
a written "termination declaration" with the Clerk of the Company and making
reasonable efforts to deliver a copy to the Participant or Beneficiary whose
interest is adversely affected (the "Terminated Participant"). As long as the
Terminated Participant is alive, any benefits affected by the termination shall
be retained by the Employer and, in the Committee's sole and absolute judgment,
may be paid to or expended for the benefit of the Terminated Participant, his or
her spouse, his or her children or any other person or persons in fact dependent
upon him or her in such a manner as the Committee shall deem proper. Upon the
death of the Terminated Participant, all benefits withheld from him or her and
not paid to others in accordance with the preceding sentence shall be disposed
of according to the provisions of the Plan that would apply if he or she died
prior to the time that all benefits to which he or she was entitled were paid to
him or her.
10.3 LEGAL FEES AND EXPENSES.
It is the intent of the Company and each Selected Affiliate that no Eligible
Employee or former Eligible Employee be required to incur the expenses
associated with the enforcement of his or her rights under this Plan by
litigation or other legal action because the cost and expense thereof would
substantially detract from the benefits intended to be extended to an Eligible
Employee hereunder. Accordingly, if after a Change in Control it should appear
that the Employer has failed to comply with any of its obligations under this
Plan or in the event that the Employer or any other person takes any action to
declare this Plan void or unenforceable, or institutes any litigation designed
to deny, or to recover from, the Eligible Employee the benefits intended to be
provided to such Eligible Employee hereunder, the Employer irrevocably
authorizes such Eligible Employee from time to time to retain counsel of his or
her choice, at the expense of the Employer as hereafter provided, to represent
such Eligible Employee in connection with the initiation or defense of any
litigation or other legal action, whether by or against the Employer or any
director, officer, stockholder or other person affiliated with the Employer in
any jurisdiction. Notwithstanding any existing or prior attorney-client
relationship between the Employer and such counsel, the Employer irrevocably
consents to such Eligible Employee's entering into an attorney-client
relationship with such counsel, and in that connection the Employer and such
Eligible Employee agree that a confidential relationship shall exist between
such Eligible Employee and such counsel. The Employer shall pay and be solely
responsible for any and all attorneys' and related fees and expenses incurred by
such Eligible Employee as a result of the Employer's failure to perform under
this Plan or any provision thereof; or as a result of the Employer or any person
contesting the validity or enforceability of this Plan or any provision thereof.
10.4 CAPTIONS.
The captions contained herein are for convenience only and shall not control or
affect the meaning or construction hereof.
10.5 GOVERNING LAW.
The provisions of the Plan shall be construed and interpreted according to the
laws of the Commonwealth of Pennsylvania.
10.6 SUCCESSORS.
The provisions of the Plan shall bind and inure to the benefit of the Company,
its Selected Affiliates, and their respective successors and assigns. The term
successors as used herein shall include any corporate or other business entity
which shall, whether by merger, consolidation, purchase or otherwise, acquire
all or substantially all of the business and assets of the Company or a Selected
Affiliate and successors of any such Company or other business entity.
10.7 RIGHT TO CONTINUED SERVICE.
Nothing contained herein shall be construed to confer upon any Eligible Employee
the right to continue to serve as an Eligible Employee of the Employer or in any
other capacity.
EXECUTED THIS 1ST DAY OF JANUARY, 1996.
EQUITABLE RESOURCES, INC.
BY: GREGORY R. SPENCER
TITLE: VICE PRESIDENT, HUMAN RESOURCES AND ADMINISTRATION
<PAGE>
EXHIBIT A
RE: SECTION 3.1 - DESCRIPTION OF ELIGIBLE EMPLOYEES
Date: January 1, 1996.
THE COMMITTEE HAS DETERMINED THAT THE FOLLOWING NAMED INDIVIDUALS OR GROUPS
OF PERSONS OR DESCRIPTIONS OF THE COMPONENTS OF COMPENSATION OF AN INDIVIDUAL
WHICH WOULD QUALIFY INDIVIDUALS WHICH ARE ELIGIBLE TO PARTICIPATE IN THE PLAN
AS ELIGIBLE EMPLOYEES:
Employees eligible to receive bonus payments under the Equitable
Resources Short-term Bonus Plan
<PAGE>
EXHIBIT B
RE: SECTION 4.1 - AMOUNT OF DEFERRAL
--------------------------------
Dated: January 1, 1996
AS OF THE DATE ABOVE, AND EFFECTIVE UNTIL THIS EXHIBIT IS MODIFIED BY THE
COMMITTEE, THE TABLE BELOW INDICATES THE TYPES OF COMPENSATION WHICH ARE
ELIGIBLE FOR INCOME DEFERRAL AT THE ASSIGNED PERCENTAGES AS NOTED:
- ---------------------------------------------------------------
TYPE OF COMPENSATION MAXIMUM PERCENTAGE OTHER LIMITATIONS
THAT CAN BE DEFERRED
- ---------------------------------------------------------------
- ---------------------------------------------------------------
Base Salary N/A Any amount over
IRS limit
- ---------------------------------------------------------------
- ---------------------------------------------------------------
Bonus 100% In increments of
10% or the entire
amount of the
Bonus awarded in
excess of a stated
dollar amount.
- ---------------------------------------------------------------
<PAGE>
EXHIBIT C
RE: SECTION 2.18 - INVESTMENT RETURN RATE
-------------------------------------
Date: January 1, 1996
The following indicate the investment account equivalents available as of the
date indicated that are used in determining the Investment Return Rate.
--------------------------------------------------
Account Name Effective Date
--------------------------------------------------
Equitable Resources Common 1/1/96
Stock Fund
--------------------------------------------------
--------------------------------------------------
Putnam Overseas Growth Fund 1/1/96
--------------------------------------------------
--------------------------------------------------
Putnam Voyager Fund 1/1/96
--------------------------------------------------
--------------------------------------------------
The Putnam Fund for Growth and 1/1/96
Income
--------------------------------------------------
--------------------------------------------------
The George Putnam Fund of 1/1/96
Boston
--------------------------------------------------
--------------------------------------------------
Putnam Income Fund 1/1/96
--------------------------------------------------
--------------------------------------------------
Putnam Stable Value Fund 1/1/96
--------------------------------------------------
