-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, jQ9pfiaGl3pblLCxwULrtYvaBNKrz75LwSipDP/LOkslPezDdCIjwekdffjGIO8p jHXGx3ZZzligV8uFQD4xCQ== 0000070145-95-000018.txt : 19950515 0000070145-95-000018.hdr.sgml : 19950515 ACCESSION NUMBER: 0000070145-95-000018 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19941230 FILED AS OF DATE: 19950210 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: NATIONAL FUEL GAS CO CENTRAL INDEX KEY: 0000070145 STANDARD INDUSTRIAL CLASSIFICATION: NATURAL GAS DISTRIBUTION [4924] IRS NUMBER: 131086010 STATE OF INCORPORATION: NJ FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-03880 FILM NUMBER: 95508558 BUSINESS ADDRESS: STREET 1: 30 ROCKEFELLER PLZ CITY: NEW YORK STATE: NY ZIP: 10112 BUSINESS PHONE: 2125417533 10-Q 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) [ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Quarterly Period Ended December 31, 1994 OR [ ] 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 1-3880 NATIONAL FUEL GAS COMPANY (Exact name of registrant as specified in its charter) New Jersey 13-1086010 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 10 Lafayette Square Buffalo, New York 14203 (Address of principal executive offices) (Zip Code) (716) 857-6980 (Registrant's telephone number, including area code) 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 period 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 the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. Common stock, $1 par value, outstanding at January 31, 1995: 37,410,963 shares. Company or Group of Companies for which Report is Filed: NATIONAL FUEL GAS COMPANY (Company or Registrant) SUBSIDIARIES: National Fuel Gas Distribution Corporation (Distribution Corporation) National Fuel Gas Supply Corporation (Supply Corporation) Seneca Resources Corporation (Seneca) Utility Constructors, Inc. (UCI) Highland Land & Minerals, Inc. (Highland) Leidy Hub, Inc. (Leidy Hub) Data-Track Account Services, Inc. (Data-Track) National Fuel Resources, Inc. (NFR) INDEX Part I. Financial Information Page Item 1. Financial Statements a. Consolidated Statements of Income and Earnings Reinvested in the Business - Three Months Ended December 31, 1994 and 1993 3 b. Consolidated Balance Sheets - December 31, 1994 and September 30, 1994 4 - 5 c. Consolidated Statement of Cash Flows - Three Months Ended December 31, 1994 and 1993 6 d. Notes to Consolidated Financial Statements 7 - 11 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 12 - 21 Part II. Other Information Item 1. Legal Proceedings 22 - 25 Item 2. Changes in Securities * Item 3. Defaults Upon Senior Securities * Item 4. Submission of Matters to a Vote of Security Holders * Item 5. Other Information * Item 6. Exhibits and Reports on Form 8-K 25 Signature 26 *The Company has nothing to report under this item. Part I. - Financial Information Item 1. - Financial Statements National Fuel Gas Company Consolidated Statements of Income and Earnings Reinvested in the Business (Unaudited) Three Months Ended December 31, 1994 1993 (Thousands of Dollars) INCOME Operating Revenues $ 271,548 $310,131 Operating Expenses Purchased Gas 103,407 144,158 Operation Expense 66,843 63,547 Maintenance 5,892 5,416 Property, Franchise and Other Taxes 23,066 25,283 Depreciation, Depletion and Amortization 18,329 17,885 Income Taxes - Net 15,433 15,097 232,970 271,386 Operating Income 38,578 38,745 Other Income 844 1,039 Income Before Interest Charges 39,422 39,784 Interest Charges Interest on Long-Term Debt 10,373 8,883 Other Interest 3,188 3,101 13,561 11,984 Income Before Cumulative Effect 25,861 27,800 Cumulative Effect of Change in Accounting for Income Taxes - 3,826 Net Income Available for Common Stock 25,861 31,626 EARNINGS REINVESTED IN THE BUSINESS Balance at October 1 363,854 335,907 389,715 367,533 Dividends on Common Stock (1994 - $.395; 1993 - $.385) 14,702 14,191 Balance at December 31 $ 375,013 $353,342 Earnings Per Common Share Income Before Cumulative Effect $ .69 $ .76 Cumulative Effect of Change in Accounting for Income Taxes - .10 Net Income Available for Common Stock $ .69 $ .86 Weighted Average Common Shares Outstanding 37,326,041 36,752,985 See Notes to Consolidated Financial Statements Item 1. - Financial Statements (Cont.) National Fuel Gas Company Consolidated Balance Sheets December 31, 1994 September 30, (Unaudited) 1994 (Thousands of Dollars) ASSETS Property, Plant and Equipment $2,209,617 $2,166,256 Less - Accumulated Depreciation, Depletion and Amortization 638,006 623,517 1,571,611 1,542,739 Current Assets Cash and Temporary Cash Investments 20,945 29,016 Receivables - Net 118,868 95,993 Unbilled Utility Revenue 52,151 17,311 Gas Stored Underground 20,878 34,711 Materials and Supplies - at average cost 24,251 23,796 Unrecovered Purchased Gas Costs 178 - Prepayments 18,119 20,111 255,390 220,938 Other Assets Recoverable Future Taxes 99,381 99,742 Unamortized Debt Expense 27,826 28,396 Other Regulatory Assets 43,446 47,737 Deferred Charges 14,140 15,796 Other 29,824 26,309 214,617 217,980 $2,041,618 $1,981,657 See Notes to Consolidated Financial Statements Item 1. - Financial Statements (Cont.) National Fuel Gas Company Consolidated Balance Sheets December 31, 1994 September 30, (Unaudited) 1994 (Thousands of Dollars) CAPITALIZATION AND LIABILITIES Capitalization: Common Stock Equity Common Stock, $1 Par Value Authorized - 100,000,000 Shares; Issued and Outstanding - 37,365,668 Shares and 37,278,409 Shares, Respectively $ 37,366 $ 37,278 Paid In Capital 381,426 379,156 Earnings Reinvested in the Business 375,013 363,854 Total Common Stock Equity 793,805 780,288 Long-Term Debt, Net of Current Portion 404,000 462,500 Total Capitalization 1,197,805 1,242,788 Current and Accrued Liabilities Notes Payable to Banks and Commercial Paper 154,600 112,500 Current Portion of Long-Term Debt 154,500 96,000 Accounts Payable 53,465 66,667 Amounts Payable to Customers 34,324 38,714 Other Accruals and Current Liabilities 79,357 61,368 476,246 375,249 Deferred Credits Accumulated Deferred Income Taxes 276,758 273,560 Taxes Refundable to Customers 31,688 31,688 Unamortized Investment Tax Credit 13,886 14,057 Other Deferred Credits 45,235 44,315 367,567 363,620 Commitments and Contingencies - - $2,041,618 $1,981,657 See Notes to Consolidated Financial Statements Item 1. - Financial Statements (Cont.) National Fuel Gas Company Consolidated Statement of Cash Flows (Unaudited) Three Months Ended December 31, 1994 1993 (Thousands of Dollars) OPERATING ACTIVITIES Net Income Available for Common Stock $ 25,861 $ 31,626 Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities: Effect of Noncash Adjustments: Cumulative Effect of Change in Accounting for Income Taxes - (3,826) Depreciation, Depletion and Amortization 18,329 17,885 Deferred Income Taxes 2,607 7,673 Other 1,452 1,820 48,249 55,178 Change in: Receivables and Unbilled Utility Revenue (57,715) (98,833) Gas Stored Underground and Materials and Supplies 13,378 5,730 Unrecovered Purchased Gas Costs (178) (15,490) Prepayments 1,992 (331) Accounts Payable (13,202) 22,885 Amounts Payable to Customers (4,390) (8,562) Other Accruals and Current Liabilities 18,550 42,647 Other Assets and Liabilities - Net 3,504 (1,617) Net Cash Provided by Operating Activities 10,188 1,607 INVESTING ACTIVITIES Capital Expenditures (49,783) (31,124) Other 2,681 2,986 Net Cash Used in Investing Activities (47,102) (28,138) FINANCING ACTIVITIES Change in Notes Payable to Banks and Commercial Paper 42,100 41,800 Proceeds from Issuance of Common Stock 1,414 3,033 Dividends Paid on Common Stock (14,671) (14,102) Net Cash Provided by Financing Activities 28,843 30,731 Net Increase (Decrease) in Cash and Temporary Cash Investments (8,071) 4,200 Cash and Temporary Cash Investments at October 1 29,016 13,595 Cash and Temporary Cash Investments at December 31 $ 20,945 $ 17,795 See Notes to Consolidated Financial Statements Item 1. Financial Statements (cont.) National Fuel Gas Company Notes to Consolidated Financial Statements Note 1 - Summary of Significant Accounting Policies Quarterly Earnings. The Company, in its opinion, has included all adjustments that are necessary for a fair statement of the results of operations for the periods. The fiscal 1995 consolidated financial statements will be examined by the Company's independent accountants after the end of the fiscal year. The consolidated financial statements and notes thereto, included herein, should be read in conjunction with the financial statements and notes for the years ended September 30, 1994, 1993 and 1992, that are included in the Company's 1994 Annual Report to the Securities and Exchange Commission (SEC) on Form 10-K. The earnings for the three months ended December 31, 1994, should not be taken as a prediction for the fiscal year ending September 30, 1995, as most of the Company's business is seasonal in nature and is influenced by weather conditions. Because of the seasonal nature of the Company's heating business, earnings during the winter months normally represent a substantial part of earnings for the entire fiscal year. The impact of abnormal weather on earnings during the heating season is partially reduced by the operation of a weather normalization clause included in Distribution Corporation's New York tariff. The weather normalization clause is effective for October through May billings. In addition, Supply Corporation's straight fixed variable rate design, which allows for recovery of substantially all fixed costs in the demand or reservation charge, reduces the earnings impact of weather. Rate Refunds. Supply Corporation collects revenues subject to refund if a final rate case settlement is pending. Estimated rate refunds are recorded which reflect management's current estimate as to the ultimate outcome of each rate case. Consolidated Statement of Cash Flows. For purposes of the Consolidated Statement of Cash Flows, the Company considers all highly liquid debt instruments purchased with a maturity of generally three months or less to be cash equivalents. Cash interest payments during the three months ended December 31, 1994 and 1993, amounted to $9,538,000 and $10,626,000, respectively. Income taxes paid during the three months ended December 31, 1994 and 1993 amounted to $4,536,000 and $864,000, respectively. Financial Instruments. Seneca has entered into certain price swap agreements that effectively hedge a portion of the market risk associated with fluctuations in the price of natural gas and crude oil. These agreements are not held for trading purposes. The price swap agreements call for Seneca to receive monthly payments from (or make payments to) other parties based upon the differential between a fixed and a variable price as specified by the agreement. At December 31, 1994, Seneca had natural gas price swap agreements which run through December 1996 and have an aggregate notional amount of approximately 20.4 billion cubic feet (Bcf) of natural gas equivalent. Of this Item 1. Financial Statements (cont.) Seneca also had crude oil price swap agreements at December 31, 1994, which run through September 1997 and have an aggregate notional amount of 622,000 barrels of crude oil equivalent. Gains or losses from these price swap agreements are reflected in operating revenues on the Consolidated Statement of Income at the time of settlement with the other parties, which is when the underlying hedged commodity transaction occurs. Seneca is at risk in the event of nonperformance by counterparties on natural gas and crude oil price swap agreements, but Seneca does not anticipate nonperformance by any of these counterparties. The Company has SEC authority to enter into interest rate swaps associated with short-term borrowings up to a notional amount of $200,000,000. The Company has requested authorization from the SEC for additional authority to enter into interest rate swaps associated with long-term borrowings up to a notional amount of $350,000,000 along with certain other derivative instruments. Currently, no such agreements are outstanding. NOTE 2 - Regulatory Matters FERC Order 636 Transition Costs. As a result of the industrywide restructuring under the FERC's Order 636, Distribution Corporation is incurring transition costs billed by Supply Corporation and other upstream pipeline companies. At December 31, 1994, Distribution Corporation's estimate of its exposure to outstanding transition cost claims is in the range of $4,600,000 to $80,100,000. The majority of these costs relate to gas supply realignment (GSR) costs and stranded costs and is exclusive of any potential stranded costs related to production plant or gathering facilities which pipeline companies, including Supply Corporation, may file for at a future date, and any potential GSR costs claimed by an upstream supplier, which are subject to the outcome of its bankruptcy and FERC proceedings. At December 31, 1994, the Company has recorded the minimum liability and corresponding regulatory asset of $4,600,000. Distribution Corporation has authorization from the State of New York Public Service Commission (PSC) to recover up to $11,000,000 annually of transition costs from sales customers in New York through the monthly Gas Adjustment Clause (GAC). Distribution Corporation will defer, for recovery in future periods, any amounts that may exceed the $11,000,000 annual amount. The recovery of transition costs from transportation customers in New York was addressed in the December 20, 1994 PSC order issued in a generic restructuring case (the Generic Case). In the Generic Case, the PSC authorized gas utilities to file revised tariffs, subject to PSC approval, providing that transportation customers be assigned a per-unit charge that is equal to 50% of the per-unit charge being collected from sales customers for GSR and stranded costs. At December 31, 1994, Distribution Corporation had deferred transition costs related to transportation customers in its New York jurisdiction amounting to $2,145,000. Of this amount, Distribution Corporation has calculated, based upon the PSC order in the Generic Case, that approximately $770,000 is allocable to, and recoverable from, sales customers and the Item 1. Financial Statements (Cont.) remaining approximate $1,375,000 is allocable to, and recoverable from transportation customers. In its Pennsylvania jurisdiction, Distribution Corporation is recovering GSR and stranded costs from its customers through a separate surcharge. At December 31, 1994, Distribution Corporation had deferred GSR and stranded costs related to its Pennsylvania jurisdiction of approximately $323,000. Distribution Corporation will recover these costs through a volumetric true-up mechanism and is allowed to update its surcharge on a quarterly basis. Distribution Corporation is recovering under-recovered purchased gas transition costs from its Pennsylvania sales customers through its gas cost recovery rates. Distribution Corporation will continue to actively challenge relevant FERC filings made by the upstream pipeline companies to ensure the eligibility and prudency of all transition cost claims. This industrywide issue will potentially involve years of rate proceedings before the FERC, state commissions and the courts. Management believes that any transition costs resulting from the implementation of Order 636 which have been determined to be both eligible and prudently incurred should be fully recoverable from the respective customers of Supply Corporation and Distribution Corporation. Gathering Rates. Supply Corporation has approximately $19,000,000 of production and gathering facilities used, in part, to gather natural gas of local producers, including the Company's production in the Appalachian Region. Currently, Supply Corporation has a gathering rate in place under an interim settlement with customers and local producers. In its restructuring orders, the FERC has directed Supply Corporation to fully unbundle its gathering rate effective July 1, 1995. Supply Corporation submitted an offer of settlement (the Settlement) which if approved would provide for a ten-year transition to fully unbundle rates beginning July 1, 1995. Comments on the Settlement have been filed by the parties. Such comments were generally favorable. However, opposition came largely from offsystem customers claiming that they should not have any cost responsibility for the production and gathering plant because it is not necessary to provide service to them. The Settlement currently awaits a FERC decision. The FERC had directed Supply Corporation to file a fully unbundled rate by December 31, 1994, that would become immediately effective on July 1, 1995. However, after receiving Supply Corporation's request for an extension of the December deadline to April 28, 1995, the FERC, on December 13, 1994, granted an extension of the deadline until 30 days after a FERC order on the Settlement. NOTE 3 - Income Taxes On October 1, 1993, the Company adopted Financial Accounting Standards No. 109, "Accounting for Income Taxes" (SFAS 109). The cumulative effect of this change increased net income for the three months ended December 31, 1993 by $3,826,000 as a result of the reduction in deferred income taxes associated with the Company's nonregulated operations. Item 1. Financial Statements (Cont.) At December 31, 1994, the deferred tax liabilities (assets) were comprised of the following (in thousands): Accumulated Deferred Deferred Income Taxes Income Taxes Current* Deferred Tax Liabilities: Excess of tax over book depreciation $175,385 $ - Exploration and intangible well drilling costs 81,150 - Other 62,081 - Total Deferred Tax Liabilities 318,616 - Deferred Tax Assets: Deferred investment tax credits (8,388) - Overheads capitalized for tax purposes (9,544) - Provisions for rate contingencies and refunds - (686) Unrecovered purchased gas costs - (4,761) Other (23,926) - Total Deferred Tax Assets (41,858) (5,447) Total Net Deferred Income Taxes $276,758 $(5,447) * Included on the Consolidated Balance Sheets in "Other Accruals and Current Liabilities." The components of federal and state income taxes included in the Consolidated Statement of Income are as follows (in thousands): Three Months Ended December 31, 1994 1993 Operating Expenses: Current Income Taxes - Federal $11,204 $ 7,884 State 1,622 (460) Deferred Income Taxes 2,607 7,673 15,433 15,097 Other Income: Deferred Investment Tax Credit (172) (172) Cumulative effect prior to October 1, 1993 of applying SFAS No. 109 - (3,826) Total Income Taxes $15,261 $11,099 Item 1. Financial Statements (Concl.) Total income taxes as reported differ from the amounts that were computed by applying the federal income tax rate to income before income taxes. The following is a reconciliation of this difference (in thousands): Three Months Ended December 31, 1994 1993 Net income available for common stock $25,861 $31,626 Total income taxes 15,261 11,099 Income before income taxes $41,122 $42,725 Income tax expense, computed at statutory rate of 35% in 1994 and 1993 14,393 14,954 Increase (reduction) in taxes resulting from: Current state income taxes 1,054 (299) Depreciation 555 425 Production tax credits (283) (432) Adoption of SFAS 109 - (3,826) Miscellaneous (458) 277 Total Income Taxes $15,261 $11,099 NOTE 4 - Capitalization Common Stock. During the three months ended December 31, 1994, the Company issued 31,549 shares of common stock under the Company's Customer Stock Purchase Plan and 46,600 shares to participants in the Company's section 401(k) plans. In December 1994, 8,000 shares of restricted stock were awarded under the 1993 Award and Option Plan. Restrictions on these shares will lapse respecting approximately one-fourth of such shares on each January 2, for the years 2002 through 2005. NOTE 5 - Commitments and Contingencies In addition to the litigation discussed in Part II, Item 1 of this report, the Company is involved in litigation arising in the normal course of business. In addition to the regulatory matters discussed in Note 2, the Company is involved in other regulatory matters arising in the normal course of business that involve rate base, cost of service and purchased gas cost issues. While the resolution of such litigation or other regulatory matters could have a material effect on earnings and cash flows, none of this litigation, and none of these other regulatory matters, is expected to have a material effect on the financial condition of the Company at this time. Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations RESULTS OF OPERATIONS Earnings. Earnings were $25.9 million, or $.69 per common share, during the quarter ended December 31, 1994. This compares with earnings of $31.6 million, or $.86 per common share, during the quarter ended December 31, 1993. The quarter ended December 31, 1993 included earnings of $3.8 million, or $.10 per common share, related to the cumulative effect of a required change in accounting for income taxes adopted October 1, 1993, in accordance with the Financial Accounting Standards Board's (FASB) Statement of Financial Accounting Standards No. 109, "Accounting for Income Taxes" (SFAS 109). Earnings before the cumulative effect of the change in accounting for income taxes amounted to $27.8 million, or $.76 per common share. The decrease in earnings, before the cumulative effect of the change in accounting for income taxes, is attributable to a decline in earnings of the Company's regulated operations, which outweighed the increase in the earnings of its nonregulated operations. Earnings from the Company's Utility Operation were down because of warmer weather while the earnings of the Pipeline and Storage segment decreased because the first quarter of fiscal 1994 benefited from the nonrecurring receipt of refunds of prior costs related to joint storage sites. The increase in earnings from the Company's nonregulated operations resulted primarily from the positive performance of its pipeline construction subsidiary and higher earnings from its gas marketing and timber operations. This increase was partly offset by a slight decline in earnings from the Company's Exploration and Production segment. The Company's earnings were also impacted by higher income tax and interest expense. Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations (Cont.) OPERATING INCOME (LOSS) BEFORE INCOME TAXES (in thousands) Three Months Ended December 31, 1994 1993 % Change Regulated Utility Operation $33,348 $33,632 (.8) Pipeline and Storage 15,502 16,729 (7.3) Nonregulated Exploration and Production 3,749 3,584 4.6 Other 2,103 635 231.2 5,852 4,219 38.7 Corporate (691) (738) 6.4 $54,011 $53,842 .3 OPERATING REVENUES (in thousands) Three Months Ended December 31, 1994 1993 % Change Regulated Utility Operation Retail Revenues: Residential $166,578 $196,660 (15.3) Commercial 39,702 50,361 (21.2) Industrial 5,467 8,394 (34.9) 211,747 255,415 (17.1) Off-System Sales 2,227 - - Transportation 8,880 8,212 8.1 Other 1,271 1,071 18.7 224,125 264,698 (15.3) Pipeline and Storage Storage Service 14,890 14,553 2.3 Transportation 22,277 22,682 (1.8) Other 900 881 2.2 38,067 38,116 (.1) Nonregulated Exploration and Production 14,274 14,332 (.4) Other 17,089 14,786 15.6 31,363 29,118 7.7 Less-Intersegment Revenues 22,007 21,801 .9 $271,548 $310,131 (12.4) Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations (Cont.) Utility Operation. Operating income before income taxes for the Utility Operation decreased $0.3 million for the quarter ended December 31, 1994, compared with the same period a year ago. This resulted primarily from warmer weather, which contributed to a 6.3 Bcf reduction in throughput. A decrease in operating revenues of $40.6 million for this segment reflects decreased gas costs mainly because of lower throughput as well as a decline in the average cost of purchased gas. The impact of warmer weather was greatest in the Pennsylvania jurisdiction since Pennsylvania does not have a weather normalization clause (WNC). The impact of weather in the New York jurisdiction was mitigated by that jurisdiction's WNC, which preserved pretax operating income of $4.3 million for the current quarter. In the first quarter of fiscal 1994, the WNC resulted in a benefit to customers of $1.1 million, as weather was colder than normal. Degree Days Three Months Ended December 31: Percent Colder (Warmer) Than Normal 1994 1993 Normal Last Year Buffalo 2,260 1,936 2,327 (14.3) (16.8) Erie 1,956 1,715 2,183 (12.3) (21.4) SYSTEM THROUGHPUT (millions of cubic feet-MMcf) Three Months Ended December 31, 1994 1993 % Change Utility Operation Retail Sales: Residential 22,834 26,997 (15.4) Commercial 6,212 7,722 (19.6) Industrial 1,353 1,716 (21.2) 30,399 36,435 (16.6) Transportation 12,042 12,258 (1.8) 42,441 48,693 (12.8) Pipeline and Storage Transportation 71,575 79,771 (10.3) Less-Intersegment Throughput: Transportation 42,719 50,121 (14.8) Total System Throughput 71,297 78,343 (9.0) Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations (Cont.) Pipeline and Storage. Operating income before income taxes for the Pipeline and Storage segment decreased $1.2 million for the quarter ended December 31, 1994, as compared with the same period a year ago. This resulted primarily because last year's first quarter benefited from the nonrecurring receipt of approximately $1.3 million in refunds from upstream pipeline companies for the correction of prior period overbillings on joint storage operations. While throughput for the current quarter declined 8.2 Bcf from the first quarter of fiscal 1994, the decrease in throughput did not have a significant impact on earnings as a result of Supply Corporation's straight fixed-variable (SFV) rate design. Exploration and Production. Operating income before income taxes from the Company's Exploration and Production operations increased $0.2 million compared with the same period a year ago. While natural gas production increased by 0.6 Bcf, or 12%, this increase was offset by lower gas prices. The weighted average price received for natural gas in the current quarter was $1.72 per Mcf compared with $2.28 per Mcf in the first quarter of fiscal 1994. The weighted average price received for oil in the current quarter was $15.67 per barrel compared with $13.74 per barrel in the first quarter of fiscal 1994. Oil production was down slightly. The impact of the fluctuations in oil and gas prices was stabilized by the Company's hedging program, which contributed $1.5 million to operating revenues during the current quarter. The Company is delaying expenditures for some drilling, workovers and recompletions in this segment pending higher prices for gas. In addition, it may also delay bringing certain production on line this spring, including its West Cameron 552 well, again dependent upon the price of gas. PRODUCTION VOLUMES Exploration and Production Three Months Ended December 31, 1994 1993 % Change Gas Production - (MMcf) Gulf Coast 3,748 3,076 21.8 West Coast 165 208 (20.7) Appalachia 1,521 1,574 (3.4) 5,434 4,858 11.9 Oil Production - (Thousands of Barrels) Gulf Coast 89 99 (10.1) West Coast 103 102 1.0 Appalachia 3 3 - 195 204 (4.4) Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations (Cont.) Other Nonregulated. Operating income before income taxes associated with this segment increased $1.5 million for the quarter ended December 31, 1994, compared with the same period of the prior year. This was mainly due to a positive performance by UCI, the Company's pipeline construction subsidiary, as a result of higher margins on its construction jobs. In addition, NFR, the Company's gas marketing subsidiary, had higher pretax operating income as a result of increased volumes marketed and improved margins. Highland, the Company's sawmill operation, also contributed to the increase through higher lumber sales. Income Taxes. Although pretax income was down for the quarter ended December 31, 1994, compared with the same period of the prior year, income taxes increased $0.3 million. This is due in part to a reduction of approximately $150,000 in the Section 29 nonconventional fuel tax credits related to production from qualified gas wells. In addition, the Utility Operation had higher Pennsylvania state income taxes compared to the first quarter of fiscal 1994. This relates to a change in the methodology in the recording of Pennsylvania state income tax on unbilled revenues, which was implemented in March 1994, creating a timing difference. This timing difference is expected to reverse in the second quarter of fiscal 1995. Interest Charges. Total interest charges increased $1.6 million for the quarter ended December 31, 1994, compared with the same quarter of last year. Interest on long-term debt increased $1.5 million mainly because of a higher average amount of long-term debt compared to the same period of a year ago. Other interest increased $0.1 million over the same quarter of last year primarily because of increases in short-term borrowing rates offset in part by lower interest expense on rate refunds to customers. CAPITAL RESOURCES AND LIQUIDITY The Company's primary sources of cash during the three month period consisted of cash provided by operating activities and short-term bank loans and commercial paper. These sources were supplemented by issuances of common stock under the Company's Customer Stock Purchase Plan and section 401(k) Plans. Operating Cash Flow Internally generated cash from operating activities consists of net income available for common stock, adjusted for noncash expenses, noncash income and changes in operating assets and liabilities. Noncash items include depreciation, depletion and amortization, deferred income taxes and allowance for funds used during construction. For the three months ended December 31, Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations (Cont.) 1993, a noncash income item also included the cumulative effect of a required change in accounting for income taxes in accordance with SFAS 109. Cash provided by operating activities in the Utility Operation and the Pipeline and Storage segments may vary substantially from period to period because of supplier refunds, the impact of rate cases and for the Utility Operation, fluctuations in weather and over- or under-recovered purchased gas costs. The impact of weather on cash flow is tempered in the Utility Operation's New York rate jurisdiction by its WNC. The Pipeline and Storage segment's cash flow is not significantly impacted by weather because of Supply Corporation's SFV rate design. Because of the seasonal nature of the Company's heating business, revenues are relatively high during the quarter ended December 31 and receivables and unbilled utility revenue historically increase from September to December with the beginning of winter weather. The storage gas inventory normally declines during the first and second quarters of the fiscal year and is replenished during the third and fourth quarters. Under the last-in, first-out (LIFO) method of accounting, the current cost of replacing gas withdrawn from storage is recorded in the Consolidated Statement of Income and a reserve for gas replacement is recorded in the Consolidated Balance Sheet and is included under the caption "Other Accruals and Current Liabilities." Such reserve is reduced as the inventory is replenished. Net cash provided by operating activities totaled $10.2 million for the quarter ended December 31, 1994, an increase of $8.6 million compared with $1.6 million provided by operating activities in the quarter ended December 31, 1993. Higher cash flow reflects a significantly lower increase in the accounts receivable balances of the Utility Operation for the three months ended December 31, 1994 compared with the same period of the prior year, mainly due to lower throughput and warmer weather in the current quarter. This was partly offset by the change in the accounts payable balances, which went up for the three months ended December 31, 1993, but decreased for the three months ended December 31, 1994. Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations (Cont.) Investing Cash Flow Capital Expenditures The Company's capital expenditures totaled $49.8 million during the three month period. Total expenditures for the quarter represent 27% of the total capital expenditure budget for fiscal 1995 of $183 million. The following table presents first quarter capital expenditures by business segment: (in thousands) Percentage Utility Operation $16,305 32.8% Pipeline and Storage 13,328 26.8 Exploration and Production 13,698 27.5 Other Nonregulated 6,452 12.9 $49,783 100.0% The bulk of the Utility Operation's capital expenditures were made for replacement of mains and main extensions, as well as for the replacement of service lines and, to a minor extent, the installation of new services. Pipeline and Storage capital expenditures during the quarter included $1.6 million in connection with its link with the Empire State Pipeline at Grand Island, New York and $1.7 million related to compressor engine emission controls necessary to comply with the Clean Air Act Amendments of 1990. In addition, capital expenditures were made for additions, improvements, and replacements to this segment's transmission and storage systems. In a January 23, 1995 letter to the FERC, Supply Corporation informed the FERC that it no longer intends to phase its Laurel Fields project, but rather intends to seek authorization to construct the project as a whole. The timing of this project is still not finalized. The Exploration and Production segment's capital expenditures were made almost entirely for the exploration and development of oil and gas properties in the Gulf of Mexico and in the Northeast Clay field in central Texas. The Company is delaying expenditures for some drilling, workovers and recompletions in this segment pending higher prices for gas. Other Nonregulated capital expenditures consisted primarily of timberland purchases. The Company's capital expenditure program is under continuous review. The amounts are subject to modification for opportunities in the natural gas industry such as the acquisition of attractive oil and gas properties or storage facilities and the expansion of transmission line capacities. While Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations (Cont.) the majority of capital expenditures in the Utility Operation are necessitated by the continued need for replacement and upgrading of mains and service lines, the magnitude of future capital expenditures in the Company's other business segments depends, to a large degree, upon market conditions. Expenditures in the Pipeline and Storage segment are also dependent on adequate rate relief. Other Cash received on the sale of the Company's investment in property, plant and equipment is reflected as a cash flow from investing activities. Approximately $2.1 million of cash was received in the first quarter of fiscal 1995, related to the sale of certain gas reserves in the Gulf of Mexico. Financing Cash Flow Consolidated short-term debt increased by $42.1 million during the first quarter. The Company considers short-term bank loans and commercial paper important sources of cash for temporarily financing construction expenditures, gas in storage inventory, unrecovered purchased gas costs and other working capital needs. The Company, through Seneca, is engaged in certain price swap agreements as a means of managing a portion of the market risk associated with fluctuations in the market price of natural gas and crude oil. In addition, the Company has Securities and Exchange Commission (SEC) authority to enter into certain interest rate swap agreements. For further discussion, see disclosure under "Financial Instruments" in Note 1, "Summary of Significant Accounting Policies." The Company's previous authorization to issue debentures and/or medium-term notes expired on December 31, 1994, and the Company has filed with the SEC, under the Public Utility Holding Company Act of 1935, as amended, for authority to issue up to $350 million of debentures and/or medium-term notes, through December 31, 1997. SEC approval is expected shortly. The Company currently has an effective shelf registration under the Securities Act of 1933, as amended, to issue and sell up to $220 million of debentures and/or medium term notes. Depending on market conditions and the requirements of the Company, the Company may issue and sell as much as approximately $100 million of the debentures and/or medium-term notes within the remainder of fiscal 1995. The proceeds of such sales would be used to replace outstanding short-term borrowings, to finance a portion of the Company's capital expenditures and/or for other general corporate purposes. In addition to the litigation discussed in Part II, Item 1, of this report, the Company is involved in litigation arising in the normal course of business. In addition to the regulatory matters discussed in Note 2, the Company is involved in other regulatory matters arising in the normal course of business that involve rate base, cost of service and purchased gas cost issues, among other things. While the resolution of such litigation or other regulatory matters could have a material effect on earnings and cash flows, none of this other litigation and none of these other regulatory matters are expected to change materially the Company's present liquidity position. Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations (Cont.) The Company's present liquidity position is believed to be adequate to satisfy known demands. Under the Company's covenants contained in its indenture covering long-term debt, at December 31, 1994, the Company would have been permitted to issue up to a maximum of $370 million in additional long-term unsecured indebtedness, subject to maturity and long-term interest rates. In addition, at December 31, 1994, the Company had regulatory authorizations and unused short-term credit lines that would have permitted it to borrow an additional $245.4 million of short-term debt. RATE MATTERS Utility Operation New York Jurisdiction In October 1994, Distribution Corporation filed in its New York jurisdiction a request for an annual rate increase of $56.5 million, or 8.9%, with a requested return on equity of 12.85%. Proceedings in this rate case are ongoing and management cannot predict their outcome. New rates are expected to become effective in August or September 1995. In August 1993, Distribution Corporation filed in its New York jurisdiction a request for an annual rate increase of $55.4 million, or 8.5%, with a return on equity of 12.16%. Included in the requested rate increase was an initial amount of $24.9 million for the recovery of transition costs arising from the FERC's Order 636, which represented 3.8% of the total 8.5% requested increase. On July 19, 1994, the PSC issued an order authorizing a base rate increase of $11.1 million, or 1.7%, with a return on equity of 10.7%. In addition, the PSC authorized recovery of transition costs arising from the FERC's Order 636 of up to $11 million annually from sales customers through the monthly Gas Adjustment Clause (GAC). Distribution Corporation will defer, for recovery in future periods, any amounts that may exceed the $11 million annual amount. New rates became effective July 24, 1994. The recovery of transition costs from transportation customers in New York was addressed in the December 20, 1994 PSC Order issued in a generic restructuring case (the Generic Case). In the Generic Case, the PSC authorized gas utilities to file revised tariffs, subject to PSC approval, providing that transportation customers be assigned a per-unit charge that is equal to 50% of the per-unit charge being collected from sales customers for gas supply realignment (GSR) costs and stranded costs. At December 31, 1994, Distribution Corporation had deferred transition costs related to transportation customers in its New York jurisdiction amounting to approximately $2.1 million. Of this amount, Distribution Corporation has calculated, based upon the PSC Order in the Generic Case, that approximately $0.7 million is allocable to, and Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations (Concl.) recoverable from, sales customers and the remaining approximate $1.4 million is allocable to, and recoverable from, transportation customers. In addition to addressing transition cost recovery related to transportation customers, the December 20, 1994 PSC Order in the Generic Case addresses key issues such as unbundling, rate design and the extent of state regulation. Implementation will likely be achieved by each utility on a case-by-case basis. In addition, the PSC has convened a generic proceeding to develop, among other things, an appropriate performance-based gas cost incentive mechanism and address concepts of affordability in utility service. Pennsylvania Jurisdiction On March 8, 1994, Distribution Corporation filed in its Pennsylvania jurisdiction a request for an annual rate increase of $16 million, or 6.8%, with a return on equity of 12.25%. A proposal for a WNC was included in this filing. On December 6, 1994, an order was issued by the PaPUC authorizing an annual rate increase of $4.8 million, or 2.0 %, with a return on equity of 11.0% and without a WNC. The new rates became effective as of December 7, 1994. General rate increases do not reflect the recovery of purchased gas costs. Such costs are recovered through operation of the purchased gas adjustment clauses of the regulatory authorities having jurisdiction. Pipeline and Storage. For a discussion of Supply Corporation's gathering rates, refer to Note 2 - Regulatory Matters. On October 31, 1994, Supply Corporation filed for an annual rate increase of $21 million, with a requested return on equity of 12.6%. This rate case was filed as a result of the FERC's order issued on October 28, 1994, rejecting Supply Corporation's rate case filed on September 30, 1994. The FERC rejected the September 30, 1994 filing because it disagreed with the proposed method of rolling-in rates for the storage service previously offered by Penn-York (Penn-York was merged into Supply Corporation effective July 1, 1994). Proceedings in this rate case are ongoing and management cannot predict their outcome. Part II. Other Information Item 1. Legal Proceedings Paragon/TGX Litigation A. New York Litigation On November 30, 1984, Distribution Corporation commenced an action against Paragon Resources, Inc. (Paragon) and TGX Corp. (collectively Paragon/TGX), in the United States District Court for the Western District of New York (the District Court) seeking a declaratory judgment concerning the contract effect of a December 20, 1983 PSC order (the Disapproval Order) which, among other things, disapproved a 1974 gas purchase agreement between Distribution Corporation's predecessor in interest, Iroquois Gas Corporation, and Paragon (the Paragon Contract). Paragon/TGX counterclaimed for (i) a declaration that the Disapproval Order did not affect the Paragon Contract in any way, whatsoever, (ii) approximately $4,400,000 in respect of take-or-pay claims, and (iii) unquantified amounts in respect of other alleged breaches of the Paragon Contract. Commencing with its payment for production received in September 1984, Distribution Corporation has paid Paragon/TGX for Paragon Contract gas at prices below those developed by the Paragon Contract's price formula, as the same have been impacted, from time to time, by the Natural Gas Policy Act of 1978 (NGPA). On the basis of a Memorandum and Order dated December 10, 1988, the District Court in January 1991 issued a partial summary judgment which declared that, whereas the Disapproval Order abrogated only the Paragon Contract's price term, the legal consequence of such abrogation was to render the Paragon Contract "void and no longer of any force or effect" as of December 20, 1983. On December 3, 1991 the U. S. Court of Appeals for the Second Circuit (the Second Circuit) reversed the District Court's partial summary judgment and remanded the case to the District Court for further proceedings. The Second Circuit agreed with the District Court that the Disapproval Order had "voided the Contract's price term," but did not agree that the Paragon Contract as a whole was "voided by the cancellation of the price term." Rather, the Second Circuit found that Paragon/TGX had elected an option available to it under the Paragon Contract to continue that contract, in the aftermath of the Disapproval Order, at "a price consistent with" that order. In a letter dated December 13, 1991, TGX demanded that Distribution Corporation pay it $21,874,042 (including interest), alleged to represent the difference between the amount received by Paragon/TGX in respect of Paragon Contract gas delivered during the period September 1984 through October 1991, and the amount allegedly due TGX in respect of such gas during such period. Distribution Corporation rejected TGX's demand. By Order entered March 23, 1992, the District Court granted Distribution Corporation permission to amend its reply to Paragon/TGX's counterclaims to allege, among other things, (i) Distribution Corporation's "termination" of the Paragon Contract by letter effective February 1, 1988; (ii) Paragon's pre- September 1984 repudiation of the Paragon Contract; and (iii) the PSC's "primary jurisdiction" to interpret the Disapproval Order as respects "a price consistent" therewith. With respect to (iii) above, Distribution Corporation Item 1. Legal Proceedings (Cont.) notes that the New York State Public Service Law provides that no charge for gas made pursuant to a contract with a New York gas utility shall exceed the "just and reasonable charge" for such gas. In response to Distribution Corporation's motion for partial summary judgment in respect of the defense denominated (ii) above, the District Court, in a Memorandum and Order entered July 10, 1992, as revised by a Memorandum and Order entered March 1, 1993, denied Distribution Corporation's summary judgment motion (due to a perceived question of fact as to the occurrence of a condition precedent to Paragon's pre-September 1984 contract repudiation), but confirmed Distribution Corporation's right to assert the repudiation defense upon the trial of the action. On January 4, 1993, the District Court entered a non-final order purportedly responsive to a February 13, 1992 Paragon/TGX motion. The order purports to declare that, by voiding the Paragon Contract price escalation mechanism effective December 31, 1983, the PSC's 1983 Disapproval Order effectively capped the Paragon Contract price, at the lesser, from time to time, of (i) the 1983 Paragon Contract summer/winter "base prices," or (ii) the applicable "Natural Gas Ceiling Prices" set forth in 18 CFR paragraph 271.101 Table I. Under date of January 19, 1993 Distribution Corporation sought rehearing, reargument, reconsideration and clarification of the January 4, 1993 order. On July 12, 1993, the District Court filed a Memorandum and Order granting in part the January 19, 1993 motion. The July 12, 1993 Order stated that, while the January 4, 1993 Memorandum and Order did determine that an obligation on Distribution Corporation's part to pay for gas purchased pursuant to the gas purchase agreement at the applicable NGPA ceiling price arose out of the conduct of the parties after the NGPA became effective and that the Disapproval Order did not relieve Distribution Corporation of such obligation, it did not determine the just and reasonable price for the gas pursuant to Public Service Law section 110(4), set a contract price for the duration of the contract, resolve any defenses presented by Distribution Corporation, determine whether such obligation continues until the present time, or rule on any deregulation issues. Effective January 14, 1994, TGX purportedly effected a partial assignment of its interest under the Paragon Contract to an unaffiliated third-party, with whom Distribution Corporation subsequently negotiated agreements to supersede the terms of the Paragon Contract, prospectively. These transactions did not materially increase (and potentially may have decreased) Distribution Corporation's exposure in the New York Litigation. On September 29, 1994, Paragon/TGX served an amended answer and counterclaim. That pleading restates Paragon/TGX's claims for unquantified money damages respecting Distribution Corporation's alleged (i) breach of contract price and "take-or-pay" provisions, (ii) "lack of good faith...material breach" of the contract, and (iii) repudiation of the contract. The pleading also adds two new, but unquantified claims - (i) consequential damages suffered upon the sale of properties and assignment of the Paragon Contract at less than full value, and (ii) damages related to the allegation that Distribution Corporation "tortiously and with intent injured TGX in the conduct of its business." Distribution Corporation filed a timely reply to Paragon/TGX's claims. Item 1. Legal Proceedings (Cont.) TGX in the conduct of its business." Distribution Corporation filed a timely reply to Paragon/TGX's claims. The parties are awaiting a scheduling order from the magistrate regarding discovery and the trial of this proceeding. B. Louisiana Litigation On February 22, 1990, TGX, the purported assignee of the Paragon Contract, filed a voluntary petition pursuant to Chapter 11 of the United States Bankruptcy Code in the United States Bankruptcy Court for the Western District of Louisiana (the Bankruptcy Court). Thereafter TGX commenced a "turnover" proceeding against Distribution Corporation, premised upon TGX's December 13, 1991 payment demand described above under "New York Litigation." Pursuant to a partial settlement agreement between TGX and Distribution Corporation, approved by the Bankruptcy Court in August 1992, TGX has withdrawn the "turnover" proceeding and Distribution Corporation has paid to TGX $2,940,000 in consideration of, among other things, TGX's release of Distribution Corporation from the cause of action asserted in the "turnover" proceeding. TGX is still free to pursue its breach of contract counterclaims in the New York Litigation. However, the $2,940,000 paid by Distribution Corporation to TGX will be credited against the amount, if any, which is ultimately adjudged due TGX and/or Paragon in the New York Litigation. C. State Commission Proceedings By its "Order Instituting Proceeding," issued in Case 93-G-0352, et al., and effective April 28, 1993, the PSC granted Distribution Corporation deferral authority in respect of the New York allocable share ($2,006,000) of the partial settlement payment described above under "Louisiana Litigation" and instituted a proceeding designed to address Distribution Corporation's request for recovery authority in respect of that amount. Distribution Corporation received authority to treat the Pennsylvania allocable share ($934,000) of the partial settlement payment as a gas cost experienced during the twelve (12) month period ending November 30, 1992. The PSC proceeding is also expected to address Distribution Corporation's recovery in New York of gas costs incurred in respect of the Paragon Contract during the reconciliation period September 1, 1991 through August 30, 1992. Finally, the PSC proceeding is expected to include the review of the Paragon Contract in light of the "just and reasonable" standard of the New York Public Service Law. Under date of October 25, 1994, the Administrative Law Judge (ALJ) in this proceeding issued a recommended decision (RD). The RD seemingly recommends that the maximum price Paragon/TGX should be authorized to receive for gas delivered in respect of the contract should be $3.714 per Mcf. The ALJ noted that Distribution Corporation might owe approximately $9.6 million more to Paragon/TGX under this scenario. The ALJ also found that payments previously made by Distribution Corporation were prudent and reasonable. Nonetheless, he recommended that Distribution Corporation be allowed to recover from ratepayers only one-half of the $2,006,000 payment referred to above and one-half of Item 1. Legal Proceedings (Concl.) future amounts that might be paid to Paragon/TGX. The ALJ's recommendations are not binding on the PSC or the courts. All parties to the proceedings have taken exception to various portions of the RD. The PSC is expected to issue its decision in this proceeding during 1995. Item 6. Exhibits and Reports on Form 8-K (a) Exhibits Exhibit Number Description of Exhibit (12) Statements regarding Computation of Ratios: Ratio of Earnings to Fixed Charges for the Twelve Months Ended December 31, 1994. (27) Financial Data Schedule (99) National Fuel Gas Company Consolidated Statement of Income for the Twelve Months Ended December 31, 1994 and 1993. (b) Reports on Form 8-K None SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the under- signed thereunto duly authorized. NATIONAL FUEL GAS COMPANY (Registrant) /S/ Joseph P. Pawlowski Joseph P. Pawlowski Treasurer and Principal Accounting Officer Date: February 10, 1995 EX-12 2
EXHIBIT 12 NATIONAL FUEL GAS COMPANY COMPUTATION OF ACTUAL RATIO OF EARNINGS TO FIXED CHARGES (UNAUDITED) (Thousands of Dollars) Twelve Months Ended Year Ended September 30 12/31/94 1994 1993 1992 1991 1990 EARNINGS: Income Before Interest Charges(1) $127,495 $127,885 $125,742 $118,222 $110,240 $109,781 Allowance for Borrowed Funds Used in Construction 224 209 174 1,088 2,278 1,273 Federal Income Tax 39,952 36,630 21,148 17,680 (3,929) 17,435 State Income Tax 8,391 6,309 2,979 3,426 342 2,419 Deferred Income Taxes - Net(3) (209) 4,857 16,923 14,130 26,880 7,657 Investment Tax Credit - Net (685) (685) (698) (711) (746) (798) Rentals(2) 5,576 5,730 5,621 5,857 4,915 4,915 $180,744 $180,935 $171,889 $159,692 $139,980 $142,682 FIXED CHARGES: Interest and Amortization of Premium and Discount on Funded Debt $ 38,188 $ 36,699 $ 38,507 $ 39,949 $ 41,916 $ 37,236 Interest on Commercial Paper and Short-Term Notes Payable 5,592 5,599 7,465 12,093 11,933 12,521 Other Interest(1) 3,443 3,361 4,727 6,958 9,679 9,298 Rentals(2) 5,576 5,730 5,621 5,857 4,915 4,915 $ 52,799 $ 51,389 $ 56,320 $ 64,857 $ 68,443 $ 63,970 Ratio of Earnings to Fixed Charges 3.42 3.52 3.05 2.46 2.05 2.23 Note: (1) For the twelve months ended 12/31/94, fiscal 1994 and fiscal 1993 reflect the reclassification of the $1,702, $1,674 and $1,374, respectively, representing the loss on reacquired debt amortized during each period, from Other Interest Charges to Operation Expense. (2) Rentals shown above represent the portion of all rentals (other than delay rentals) deemed representative of the interest factor. (3) Deferred Income Taxes - Net for the twelve months ended 12/31/94 and the fiscal year ended 9/30/94 excludes the cumulative effect of changes in accounting.
EX-99 3 EXHIBIT 99 NATIONAL FUEL GAS COMPANY CONSOLIDATED STATEMENT OF INCOME (UNAUDITED) Twelve Months Ended December 31, 1994 1993 (Thousands of Dollars) INCOME Operating Revenues $1,102,745 $1,036,294 Operating Expenses Purchased Gas 456,935 419,149 Operation Expense 263,707 260,476 Maintenance 31,455 23,871 Property, Franchise and Other Taxes 101,574 96,091 Depreciation, Depletion and Amortization 75,208 70,772 Income Taxes - Net 48,130 43,358 977,009 913,717 Operating Income 125,736 122,577 Other Income 3,460 4,363 Income Before Interest Charges 129,196 126,940 Interest Charges Interest on Long-Term Debt 38,188 37,320 Other Interest 10,512 12,544 48,700 49,864 Income Before Cumulative Effect 80,496 77,076 Cumulative Effect of Changes in Accounting (589) 3,826 Net Income Available for Common Stock $ 79,907 $ 80,902 Earnings Per Common Share Income Before Cumulative Effect $2.16 $2.16 Cumulative Effect of Changes in Accounting (.02) .11 Net Income Available for Common Stock $2.14 $2.27 Weighted Average Common Shares Outstanding 37,190,689 35,655,517 EX-27 4 WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
UT THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM NATIONAL FUEL GAS COMPANY'S CONSOLIDATED FINANCIAL STATEMENTS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 03-MOS SEP-30-1995 OCT-01-1994 DEC-31-1994 PER-BOOK 1,571,611 0 255,390 14,140 200,477 2,041,618 37,366 381,426 375,013 793,805 0 0 404,000 154,600 0 0 154,500 0 0 0 534,713 2,041,618 271,548 15,433 217,537 232,970 38,578 844 39,422 13,561 25,861 0 25,861 14,702 0 10,188 .69 .69
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