-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, AraQtYBbjNvEEcXXUg1sidSVVIJq8XKtbvkM6UOOVcVUX7ixK04keMkh3bzcdvml /1olrKPAWOell+xUYULgvw== 0000950109-00-001631.txt : 20000428 0000950109-00-001631.hdr.sgml : 20000428 ACCESSION NUMBER: 0000950109-00-001631 CONFORMED SUBMISSION TYPE: U5B PUBLIC DOCUMENT COUNT: 8 FILED AS OF DATE: 20000427 FILER: COMPANY DATA: COMPANY CONFORMED NAME: DOMINION RESOURCES INC /VA/ CENTRAL INDEX KEY: 0000715957 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRIC SERVICES [4911] IRS NUMBER: 541229715 STATE OF INCORPORATION: VA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: U5B SEC ACT: SEC FILE NUMBER: 001-08489 FILM NUMBER: 610136 BUSINESS ADDRESS: STREET 1: 120 TREDEGAR STREET STREET 2: P O BOX 26532 CITY: RICHMOND STATE: VA ZIP: 23219 BUSINESS PHONE: 8048192000 MAIL ADDRESS: STREET 1: P O BOX 26532 STREET 2: 901 EAST BYRD STREET CITY: RICHMOND STATE: VA ZIP: 23261 U5B 1 FORM UB5 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION Washington, D.C. ---------------- FORM U5B REGISTRATION STATEMENT Filed Pursuant to Section 5 of the Public Utility Holding Company Act of 1935 ---------------- Dominion Resources, Inc. Name of Registrant ---------------- Patricia A. Wilkerson Vice President and Corporate Secretary Dominion Resources, Inc. 120 Tredegar Street Richmond, VA 23219 Name, Title and Address of Officer to whom Notices and Correspondence concerning this Statement should be Addressed - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Glossary of Defined Terms When used herein, the following terms shall have the meanings set forth below: Act........................ Public Utility Holding Company Act of 1935, as amended CNG........................ Consolidated Natural Gas Company CNG Svc.................... Consolidated Natural Gas Service Company, Inc. CNG Transmission or Dominion Transmission ..... Dominion Transmission, Inc. (formerly CNG Transmission Corporation) CNG Iroquois............... CNG Iroquois, Inc. CNG Producing or Dominion Dominion Exploration & Production, Inc. (formerly E&P........................ CNG Producing Company) CNG Pipeline............... CNG Pipeline Company CNG Main Pass.............. CNG Main Pass Gas Gathering Corporation CNG Oil Gathering.......... CNG Oil Gathering Corporation CNG Retail................. CNG Retail Services Corporation CNG Power.................. CNG Power Company CNG MCS.................... CNG Market Center Services, Inc. CNG Kauai.................. CNG Kauai Corporation CNG Bear Mountain.......... CNG Bear Mountain, Inc. CNG Products & Services.... CNG Products and Services, Inc. CNG Technologies........... CNG Technologies, Inc. CNG FS or Dominion FS...... Dominion Field Services, Inc. (formerly CNG Field Services Company) CNG PSC.................... CNG Power Services Corporation CNGI....................... CNG International Corporation CNG Cayman One............. CNG Cayman One Ltd. CNGI Australia............. CNGI Australia Pty Limited CNG Cayman Three........... CNG Cayman Three Ltd. CNG Argentina.............. CNG Argentina SA CNG Research............... CNG Research Company CNG Coal................... CNG Coal Company 2 CNG Financial.............. CNG Financial Services, Inc. DCI/Dominion Capital....... Dominion Capital Inc. DEI........................ Dominion Energy, Inc. DOE........................ Department of Energy Dominion/DRI............... Dominion Resources, Inc. East Ohio Gas.............. The East Ohio Gas Company EPA........................ Environmental Protection Agency EPACT...................... Energy Policy Act of 1992 Evantage................... Evantage, Inc. FERC....................... Federal Energy Regulatory Commission Granite Road............... Granite Road CoGen, Inc. Hope Gas................... Hope Gas, Inc. ISO........................ Independent system operators LNG........................ Consolidated System LNG Company Merger..................... The consolidation of business partners, CNG and DRI Merger U-1................. The Form U-1 Application/Declaration filed by DRI, File No. 70-09477. NRC........................ Nuclear Regulatory Commission NWF........................ Nuclear Waste Fund North Carolina North Carolina Utilities Commission Commission................. OASIS...................... Open access same-time information system Peoples Natural Gas........ The Peoples Natural Gas Company RPX........................ Regional Power Exchanges RTE........................ Regional Transmission Entity SEC/Commission............. Securities and Exchange Commission SNF........................ Spent Nuclear Fuel Virginia Commission........ Virginia State Corporation Commission Virginia Power/VP.......... Virginia Electric and Power Company VPEM....................... Virginia Power Energy Marketing VPNS....................... Virginia Power Nuclear Services Company VPSC....................... VPS Communications, Inc. VPSE....................... Virginia Power Services Energy Corp., Inc. VP Property................ VP Property, Inc. VP Services/VPS, Inc. ..... Virginia Power Services, Inc. VNG........................ Virginia Natural Gas, Inc. 3 REGISTRATION STATEMENT The undersigned holding company hereby submits its registration statement to the Commission pursuant to Section 5 of the Act. 1. Exact name of registrant: Dominion Resources, Inc. 2. Address of principle executive offices: 120 Tredegar Street, Richmond, Virginia 23219 3. Name and address of chief accounting officer: James L. Trueheart Group Vice President and Controller 120 Tredegar Street Richmond, VA 23219 4. Certain information as to the registrant and each subsidiary company thereof:
State of Location of Name of Company Organization Organization Type of Business Business --------------- ------------ ------------ ------------------------ --------------- Dominion Resources, Inc............................ Corp. Virginia Holding Company Richmond, VA Consolidated Natural Gas Company.................. Corp. Delaware Holding Company Pittsburgh, PA CNG Coal Company................................ Corp. Delaware Held Coal Properties New Orleans, LA CNG Financial Services, Inc. ................... Corp. Delaware Finances gas powered Pittsburgh, PA equipment CNG International Corporation................... Corp. Delaware Energy-related Reston, VA activities outside US CNG Cayman One Ltd. .......................... Corp. Cayman Is. Interests in Australian Cayman Islands gas Investments CNGI Australia Pty. Limited................. Corp. Australia Interests in natural gas Australia pipelines Epic Energy Pty. ......................... Corp. Australia Owns gas pipelines in Australia eastern Australia CNG Cayman Three Ltd. ........................ Corp. Cayman Is. Utility interests in Cayman Islands South America CNG Argentina............................... Corp. Argentina Intermediate Holding Argentina Company Sodigas Pampeana............................ Corp. Argentina Intermediate Holding Argentina Company Camuzzi Gas Pampeana S.A. ................ Corp. Argentina Owns & operates gas Argentina distribution concession Sodigas Sur S.A. ........................... Corp. Argentina Intermediate holding Argentina company Camuzzi Gas Del Sur S.A. ................. Corp. Argentina Owns & operates gas Argentina distribution concession Buenos Aires Energy......................... Corp. Argentina Intermediate holding Argentina company Invesora Electria de Buenos Aires S.A. ... Corp. Argentina Intermediate holding Argentina company Empresa Distribuidora de Energia Atlantica S.A. .......................... Corp. Argentina Electric distribution Argentina company DBNGP Finance Co. LLC......................... Corp. Delaware Financing facility Australia CNG Cayman Two Ltd. ........................ Corp. Cayman Is. Interests in Australian Cayman Islands investments CNG Labuan One Limited.................... Corp. Malaysia Equity interest in Trust Malaysia Epic Energy Australia Nominees Pty Ltd.. Trust Australia Owns gas pipelines in Australia western Australia
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State of Name of Company Organization Organization Type of Business Location of Business --------------- ------------ ------------- ----------------------------------- --------------------- CNG Kauai, Inc. ..... Corp. Delaware Develop elect. generation--Hawaii Reston, VA CNG Main Pass Gas Corp. Delaware Partnership interest--gas gathering New Orleans, LA Gathering Corporation........... CNG Oil Gathering Corp. Delaware New Orleans, LA Corporation........... Partnership interest--oil gathering CNG Power Company..... Corp. Delaware Co-generation facility Pittsburgh, PA CNG Market Center Services, Inc. ...... Corp. Delaware Interest in gas hub services Pittsburgh, PA CNG Bear Mountain, Inc. ................ Corp. Delaware (inactive) Pittsburgh, PA Granite Road Cogen, Corp. Texas Inc. ............... (inactive) Pittsburgh, PA CNG Power Services Corp. Delaware Pittsburgh, PA Corporation.......... Electric power marketing CNG Producing Corp. Delaware Oil & gas exploration/ New Orleans, LA Company.............. production CNG Pipeline Co. .... Corp. Texas Holds a 3.3% interest in a New Orleans, LA pipeline CNG Products and Corp. Delaware Markets energy related Pittsburgh, PA Services, Inc........ services CNG Technologies, Corp. Delaware Develops gas Pittsburgh, PA Inc. ............... technologies CNG Research Company.. Corp. Delaware Administers research Pittsburgh, PA CNG Retail Services Corporation.......... Corp. Delaware Energy marketing Pittsburgh, PA CNG Transmission Corporation.......... Corp. Delaware Gas transmission Clarksburg, WV CNG Iroquois, Inc. .. Corp. Delaware Owns general partnership Clarksburg, WV interest CNG Telecom, Inc. .... Corp. Delaware Inactive Pittsburgh, PA Consolidated Natural Gas Service Company, Inc.......... Corp. Delaware Service company Pittsburgh, PA Consolidated System Corp. Delaware Inactive--Liquified natural Pittsburgh, PA LNG Company........... gas Dominion Field Services, Inc. ...... Corp. Delaware Gas storage Clarksburg, WV Hope Gas, Inc. ....... Corp. West Virginia Gas Utility Clarksburg, WV The East Ohio Gas Company.............. Corp. Ohio Gas Utility Cleveland, OH The Peoples Natural Gas Company.......... Corp. Pennsylvania Gas Utility Pittsburgh, PA Virginia Natural Gas, Inc. ................ Corp. Virginia Gas Utility Norfolk, VA Dominion Capital, Corp. Virginia Financial services/Land Richmond, VA Inc. ................. Development Catalyst Old River Hydroelectric Limited Partnership... Part. Louisiana Electric Power Production Vidalia, LA Dominion Capital Financial, Inc....... Corp. Virginia Financial Services Richmond, VA Dominion Capital Corp. Virginia Middle Market Richmond, VA Ventures Corporation.. Commercial Lending First Dominion LLC Delaware Middle Market New York, NY Capital, LLC........ Commercial Lending First Dominion Securities, LLC..... LLC Delaware Registered Broker/Dealer New York, NY Dominion Financing Corp. Virginia Medium Term Note Richmond, VA Services, Inc. ...... Financing Subsidiary Dominion Land Management Company... Corp. Virginia Real Estate Management Richmond, VA Bridgeway Management Company.............. Corp. Virginia Real Estate Management Suffolk, VA Dominion Land Management Company-- Williamsburg......... Corp. Virginia Real Estate Management James City County, VA Old North State Management Company... Corp. Virginia Real Estate Management New London, NC
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State of Name of Company Organization Organization Type of Business Location of Business --------------- ------------ -------------- -------------------------- ----------------------- Stonehouse Management Company (Inactive).......... Corp. Virginia Real Estate Management Toano, VA Waterford Management Company..................... Corp. Virginia Real Estate Management Houston, TX Dominion Lands, Inc. ........ Corp. Virginia Land Development Richmond, VA Chesterfield Land, Inc. .... Corp. Virginia Land Development Chesterfield, VA Chesterfield Land Associates................ Part. Virginia Land Development Chesterfield County, VA Dominion Lands-- Williamsburg, Inc. ......... Corp. Virginia Land Development James City County, VA Governor's Land Associates................ Part. Virginia Land Development Williamsburg, VA Dominion Construction Management Company, LLC .. LLC Virginia Construction Company Williamsburg, VA The Governor's Land Foundation................ Corp. Virginia Homeowners Association Williamsburg, VA Two Rivers Club at The Governor's Land........... Corp. Delaware Country Club Williamsburg, VA Old North, Inc. ............ Corp. Virginia Land Development New London, NC Lake Badin Associates...... Part. Virginia Land Development Montgomery County, NC Uwharrie Point Building Company, LLC.............. LLC Virginia Construction Management New London, NC Uwharrie Point Community Association, Inc. ........ Corp. North Carolina Homeowners Association New London, NC Stonehouse Development Company, LLC................ LLC Virginia Land Development James City County, VA Widewater Associates........ Part. Virginia Land Development Stafford County, VA Dominion Mortgage Services, Inc. ....................... Corp. Virginia Mortgage Services Richmond, VA America's MoneyLine, Inc. .. Corp. Virginia Direct Marketing of Home Glen Allen, VA Mortgages and Home Equity Lines Meritech Mortgage Services, Corp. Texas Ft. Worth, TX Inc. ...................... Services Mortgage Loans Mortgage Finance, Inc. ..... Corp. Virginia Broker/Lender Services Glen Allen, VA Saxon Mortgage, Inc. ....... Corp. Virginia Originates Mortgages Glen Allen, VA Saxon Asset Allocation Corporation................ Corp. Virginia Special Purpose Entity for Glen Allen, VA Transfer of Financial Assets Saxon Asset Securities Company.................... Corp. Virginia Performs Securitization of Glen Allen, VA Mortgages & Home Equity Products Saxon Capital Corporation.. Corp. Virginia Special Purpose Entity for Glen Allen, VA Transfer of Financial Assets Saxon Loan Investment Corporation................ Corp. Virginia Owns Loans Glen Allen, VA Dominion Venture Investments, Corp. Virginia Middle Market Richmond, VA Inc. ....................... Commercial Lending Cambrian Capital Corporation................ Corp. Delaware Oil/Gas Financial Lending Houston, TX Triassic Energy Corporation............... Corp. Delaware Oil/Gas Financial Lending Houston, TX Cambrian Capital Partners LP ........................ Part. Delaware Oil/Gas Financial Lending Houston, TX Triassic Energy Partners, LP ....................... Part. Delaware Oil/Gas Financial Lending Houston, TX Edgen, Inc. ................. Corp. Delaware Real Estate Holding Richmond, VA Company H-W Properties, Inc. ....... Corp. Delaware Real Estate Investment Houston, TX Waterford Harbor Realty, Inc. ..................... Corp. Texas Real Estate Development Houston, TX Electronic Lighting, Inc. ... Corp. Delaware Lighting Control Systems Newark, CA
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State of Name of Company Organization Organization Type of Business Location of Business --------------- ------------ ------------ ----------------------- -------------------- First Source Equity Holdings, Inc........ Corp. Virginia Holding Company Prospect Heights, IL FS Warrant, LP....... LP Virginia Equity Holding Company Prospect Heights, IL First Source Corp. Delaware Middle Market Prospect Heights, IL Financial, Inc. ..... Commercial Lending FSFI/Dakotah Direct, Inc.................. Corp. Virginia Holding Company Prospect Heights, IL Dakotah Direct II, LLC ................ LLC Delaware Telemarketing Company Spokane, WA Louisiana Hydroelectric Capital Corporation........... Corp. Virginia Investment Company Richmond, VA NH Capital, Inc....... Corp. Delaware Shell Company Richmond, VA OptaCor Financial Corp. Virginia Direct Mail Unsecured Linthieum, MD Services Company..... Consumer Loans Rincon Securities, Inc. ................ Corp. New York Investment Company Richmond, VA Shoulders Hill/DCI Properties, Inc. .... Corp. Virginia Real Estate Investment Richmond, VA Stanton Associates, Corp. Virginia Real Estate Holding Norfolk, VA Inc. ................ Company Goodman Segar Hogan, Inc. ............... Corp. Virginia Real Estate Company Norfolk, VA Air Cargo Part. Virginia Operating Partnership-- Norfolk, VA Associates......... Real Estate Baxter Road Part. Virginia Operating Partnership-- Norfolk, VA Associates......... Real Estate Denbigh Shopping Part. Virginia Own 37.5% of Norfolk, VA Center Associates... Turnbarr Associates Turnbarr Part. Virginia Operating Partnership-- Norfolk, VA Associates........ Real Estate Goodman Segar Hogan Corp. Virginia Operating Partnership-- Norfolk, VA of Orlando, Inc..... Real Estate Curry Ford Associates........ Part Florida Real Estate Investment Orlando, FL University Square Associates, LP. ... Part. Florida Real Estate Investment Orlando, FL Goodman Segar Hogan of Southern Shopping Corp. Virginia Only has cash as asset, Norfolk, VA Center, Inc. ....... owns no real estate Goodman Segar Hogan of World Trade Center, Inc......... Corp. Virginia Real Estate Investment Norfolk, VA World Trade Center Part. Virginia Operating Partnership-- Norfolk, VA Associates, LP .... Real Estate Historic Town Square Part. Virginia Operating Partnership-- Norfolk, VA Company............ Real Estate Hogan Stanton, Inc. .............. Corp. Virginia Real Estate Investment Norfolk, VA HS Advisors, Ltd... Part. Virginia Real Estate Investment Norfolk, VA Hogan Stanton Investments, Inc. .............. Corp. Virginia Real Estate Investment Norfolk, VA HS Advisors, II, Ltd. ............ Part. Virginia Real Estate Investment Norfolk, VA Hogan Stanton Properties, Inc.... Corp. Virginia Real Estate Investment Norfolk, VA HS Advisors III, Ltd. ............. Part. Virginia Real Estate Investment Norfolk, VA Stanton Associates One................ Part. Virginia Real Estate Investment Norfolk, VA Brown Farm Operating Partnership-- Associates........ Part. Virginia Real Estate Norfolk, VA Stanton Associates Two................ Part. Virginia Real Estate Investment Norfolk, VA Salem Lakes Part. Virginia Commercial Operating Partnership-- Associates........ Real Estate Norfolk, VA Stonehouse, LLC....... LLC Virginia Real Estate Investment Toano, VA Stonehouse Communication, LLC.. LLC Virginia Cable Franchise Toano, VA Stonehouse Realty LLC Virginia Real Estate Toano, VA Company, LLC........ Sales/Marketing The Association at Stonehouse, Inc. .... Corp. Virginia Homeowners Association Toano, VA Trilon Dominion LLC Delaware Venture Capital New York, NY Partners, LLC ....... Investments
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State of Name of Company Organization Organization Type of Business Location of Business --------------- ------------ ------------ ------------------------------ --------------------- EPL Technologies, Corp. Colorado Food Processing West Conshohocken, PA Inc. ............... Technologies InstantVision........ Corp. Pennsylvania Manufacture/Market Sarasota, FL Vision correction systems NutriCept, Inc. ..... Corp. Delaware Nutriceuticals Dallas, TX Wilshire Technologies, Inc. ............... Corp. California Medical Supplies Carlsbad, CA Vidalia Audit, Inc. .. Corp. Virginia Audit Company for Richmond, VA Hydroelectric Project Virginia Financial Corp. Virginia Richmond, VA Ventures, Inc. ...... Commercial Finance First Source Part. Illinois Middle Market Prospect Heights, IL Financial, LLP ..... Commercial Lending First Source Financial CLO (Delaware), LLC .... LLC Delaware Special Purpose Entity Prospect Heights, IL First Source Financial (Caymans), LP ..... LP Cayman Is. Special Purpose Entity Prospect Heights, IL First Source LLC Cayman Is. Prospect Heights, IL Financial, Ltd. ... Special Purpose Entity Williams Court/DCI Properties, Inc. .... Corp. Virginia Real Estate Investment Richmond, VA Dominion Energy, Corp. Virginia Nonutility Power Richmond, VA Inc. ................. Production and Oil & Gas Development Caithness BLM Group Part. New Jersey Ridgecrest, CA LP .................. Geothermal Electric Generation Caithness Navy II Part. New Jersey Geothermal Electric Invo County, CA Group LP ............ Generation DEI Cayman Holding Corp. Virginia Holding Company Richmond, VA Company.............. (Inactive) Dominion Energy Holding Cayman Company LDC.......... Corp. Cayman Is. Shell Company Cayman Island Dominion do Brasil Brazilian Brazil Shell Company Brazil Ltda. ............. Limitada (Inactive) SRL DOMA............... Brazilian Brazil Bid Company (Inactive) Brazil Limitada SRL Dominion Armstrong, Inc. ................ Corp. Delaware Holding Company Richmond, VA Armstrong Energy, Corp. Delaware Future Electrical Pennsylvania LLC................. Generation Facility located in the State of PA Dominion Black Warrior Basin, Inc. ......... Corp. Alabama Methane Gas Production Tuscaloosa, AL Dominion Cogen, Inc. ................ Corp. Virginia Cogeneration HQ in Richmond, VA Dominion Energy Interamerican Holding Company LDC.......... Corp. Cayman Is. Shell Company Cayman Island DEI Holding Cayman Company Limited..... Corp. Cayman Is. Shell Company Cayman Island (Inactive) DEI Interamerican Holding Company Limited............. Corp. Cayman Is. Shell Company Cayman Island Inversiones Dominion Bolivia S.A. .............. Corp. Bolivia Equity Holding Bolivia Empresa Electrica Corani, S.A. ..... Corp. Bolivia Electric Power Production Cochabama, Bolivia Inversiones Dominion Panama S.A. ........ Corp. Panama Shell Company Panama Dominion Cogen NY, Corp. Virginia Cogeneration in the State HQ in Richmond, VA Inc. ................ of NY Middle Falls Limited Part. New York Glens Falls, NY Partnership......... Small Power Producer
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State of Location of Name of Company Organization Organization Type of Business Business --------------- ------------ ------------- -------------------------- ------------------ NYSD Limited Part New York Glens Falls, NY Partnership......... Small Power Producer Sissonville Limited Part. New York Glens Falls, NY Partnership......... Small Power Producer Dominion Cogen WV, Corp. Virginia Cogeneration in State of HQ in Richmond, VA Inc. ................ West Virginia Morgantown Energy Part. West Virginia Morgantown, WV Associates.......... Cogeneration Plant Dominion Elwood, Corp. Delaware Richmond, VA Inc. ................ Shell Company Elwood Energy, LLC... LLC Delaware Power Generation in the Illinois State of IL Dominion Elwood Corp. Delaware Richmond, VA Marketing, Inc. ..... Electricity Marketing Elwood Marketing, LLC Delaware Illinois LLC................. Electricity Marketing Dominion Elwood Corp. Virginia Operation and Richmond, VA Services Company, Maintenance Services Inc.................. for Elwood Energy, Inc. Dominion Energy Corp. Virginia Richmond, VA Construction General Contractor for Company.............. Kincaid Dominion Energy Direct Corp. Virginia Richmond, VA Sales, Inc. ......... Gas and Electric Marketing Dominion Energy Corp. Virginia Richmond, VA Management, Inc. .... Shell Company Dominion Energy Peru Corp. Virginia Operation and Richmond, VA Holdings, Inc. ...... Maintenance Services for Nonutility Dominion Energy Corp. Virginia Operation and Richmond, VA Services Company, Maintenance Services for Inc. ................ Nonutility Power Projects Dominion Fitzpatrick, Corp. Virginia Richmond, VA Inc. ................ Shell Company Dominion Indian Point, Corp. Virginia Richmond, VA Inc. ................ Shell Company Dominion Jefferson, Corp. Delaware Richmond, VA Inc. ................ Holding Company Jefferson Energy, Corp. Delaware Future Electrical Ohio LLC................. Generation Facility located in the State of OH Dominion Kincaid, Corp. Virginia Richmond, VA Inc. ................ Equity Holding Company Kincaid Generation, LLC Virginia Power Generation in the Illinois LLC ................ State of IL Dominion Pleasants, Corp. Virginia Richmond, VA Inc. ................ Holding Company Pleasants Energy, Corp. Delaware Future Electrical West Virginia LLC................. Generation Facility located in the State of WV Dominion Reserves, Corp. Virginia Richmond, VA Inc. ................ Oil & Gas Development Carthage Energy Corp. Michigan Traverse City, MI Services, Inc. ..... Gas Marketing Company Phoenix Dominion LLC Virginia Pittsburgh, PA Energy LLC......... Gas Marketing Company Cypress Energy, Corp. Virginia Oil & Gas Development in Richmond, VA Inc. ............... Louisiana--Onshore Dominion Appalachian Development, Inc. ... Corp. Virginia Oil & Gas Development Clarksburg, WV Dominion Appalachian Development Properties, LLC...... LLC Virginia Oil & Gas Development Clarksburg, WV Dominion Gas Corp. Virginia Natural Gas Processing Richmond, VA Processing MI, in Michigan Inc................. Frederic HOF Limited Part. Virginia Gaylord, MI Partnership........ Natural Gas Processing Wilderness Energy, LC Michigan Natural Gas Gathering Gaylord, MI LC ................ and Processing Wilderness Energy Services Limited Part. Michigan Natural Gas Gathering Gaylord, MI Partnership........ and Processing Dominion Midwest Corp. Michigan Oil & Gas Development Grand Rapids, MI Energy, Inc.........
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State of Name of Company Organization Organization Type of Business Location of Business --------------- ------------ ------------ -------------------------- -------------------- Dominion Reserves Corp. Virginia Oil & Gas Development Richmond, VA Gulf Coast, Inc. ... Dominion Reserves-- Corp. Virginia Oil & Gas Development Indiana Indiana, Inc........ GTG Pipeline Corp. Virginia Corydon, IN Corporation........ Gas Pipeline Great Lakes Compression, Inc., DBA Great Lakes Oil Field Service, Inc. ................ Corp. Michigan Oil & Gas Development Grand Rapids, MI Dominion Reserves-- Corp. Utah Methane Gas Production Richmond, VA Utah, Inc. .......... in Utah Dominion San Juan, Corp. Virginia Richmond, VA Inc. ................ Holding Company San Juan Partners, LLC Texas Oil & Gas Investments Richmond, VA LLC ................ Dominion Storage, Corp. Virginia Richmond, VA Inc. ................ Equity Holding Company Dominion Energy Corp. Alberta Gas & Oil Exploration Calgary, Alberta, Canada Limited...... and Development Hub Canada Domcan East Alberta Corp. Alberta Gas & Oil Exploration and Calgary, Alberta, Ltd. .............. Development, including Canada Compressor Manufacturing and Alberta Storage Hub Domcan Boundary Corp. Alberta Gas & Oil Exploration and Calgary, Alberta, Corp............... Development Canada Domcan Boundary Corp. Alberta Holding Company Calgary, Alberta, Holdings, Ltd. ... Canada Dangerfield Resources (U.S.A.), Corp. Montana (Inactive) Calgary, Alberta, Inc. .............. Canada Dangerfield Corp. Alberta (Inactive) Calgary, Alberta, Resources, Inc.... Canada Dominion Troy, Inc. .. Corp. Delaware Holding Company Richmond, VA Troy Energy, LLC. ... Corp. Delaware Future Electrical Ohio Generation Facility located in the State of OH Luz Solar Partners Part. California Los Angeles, CA Ltd. VII, LP ........ Solar Electric Generation Niton US, Inc. ....... Corp. Virginia Equity Holding Company Richmond, VA Remington, LLC ....... LLC Virginia Holding Company Alberta, Calgary Domcan NS1ULC........ ULC Nova Scotia Special Purpose Alberta, Calgary Remington Energy Part. Alberta Calgary, Alberta, Partnership......... Canada Rumford Cogeneration Part. Maine Rumford, ME Company, Ltd. ....... Cogeneration Dominion Generation, Corp. Virginia Electric Power Generation Richmond, VA Inc................... Holding Company Dominion Equipment, Corp. Virginia Holding Company Richmond, VA Inc.................. (Synthetic Lease-- Land/Turbines) Dominion Elwood II, Corp. Delaware Generation Expansion Elwood, IL Inc. ................ Project Elwood Energy II, LLC Delaware Electrical Generation Elwood, IL LLC................. Expansion Projects Dominion Elwood III, Corp. Delaware Generation Expansion Elwood, IL Inc.................. Project Elwood Energy III, LLC Delaware Electrical Generation Elwood, IL LLC................. Expansion Project Dominion Lincoln, Corp. Virginia Holding Company Richmond, VA Inc.................. Lincoln Generation, LLC Delaware Kincaid Generation Richmond, VA LLC................. Expansion Dominion Resources Corp. Virginia Services Company Richmond, VA Services, Inc......... Dominion Resources Corp. Delaware Business Trust--East Richmond, VA Capital Trust I....... Midlands
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State of Name of Company Organization Organization Type of Business Location of Business --------------- ------------ ------------ --------------------------- --------------------- Dominion U.K. Holding, Corp. Virginia Holding Company Richmond, VA Inc................... DEI U.K., Inc......... Corp. Virginia Equity Holding Richmond, VA Elgar, LLC .......... LLC Virginia Equity Holding Richmond, VA DR Group Holdings... Corp. UK Financing & Holding United Kingdom Company DR Nottingham Corp. UK Financing & Holding United Kingdom Investments....... Company DR Corby Limited... Corp. UK Holding Company United Kingdom East Midlands Electricity Generation (Corby) Limited........... Corp. UK Holding Company United Kingdom Corby Power Corp. UK Gas Electric Generation United Kingdom Limited......... Dominion Energy U.K., Corp. Virginia Equity Holding Queensland, Australia Inc. ................ Virginia Electric and Corp. Virginia Electric Utility Virginia and Power Company......... North Carolina Virginia Power Fuel Corp. Virginia Nuclear Fuel Procurement Richmond, VA Corporation.......... Virginia Power Corp. Virginia Holding Company Richmond, VA Services, Inc........ Evantage, Inc........ Corp. Virginia Energy Services Richmond, VA Virginia Power Energy Corp. Virginia Fuel Procurement Richmond, VA Marketing........... Virginia Power Services Energy Corp., Inc........... Corp. Virginia Fuel Procurement Richmond, VA Virginia Power Nuclear Services Corp. Virginia Nuclear Management and Richmond, VA Company.............. Operations Services VP Property, Inc..... Corp. Virginia Real Estate Holding Company Richmond, VA VPS Communications, Corp. Virginia Telecommunication Services Richmond, VA Inc. ................
11 BUSINESS 5. (a) The general character of the business done by the registrant and its subsidiaries, separated as between the holding companies, public utility subsidiaries (as defined in the Act) and the various nonutility subsidiaries. Dominion Dominion Resources, Inc. (Dominion), a diversified utility holding company, has its principal office at 120 Tredegar Street, Richmond, Virginia 23219, telephone (804) 819-2000. Its principal subsidiaries are Virginia Electric and Power Company (Virginia Power), a regulated public utility engaged in the generation, transmission, distribution and sale of electric energy in Virginia and northeastern North Carolina and with the completion of the merger on January 28, 2000, Consolidated Natural Gas Company (CNG), a producer, transporter, distributor and retail marketer of natural gas, serving customers in Pennsylvania, Ohio, Virginia, West Virginia, New York and other cities focused in the Northeast and Mid-Atlantic regions of the United States. Dominion's other major subsidiaries are Dominion Energy, Inc. (DEI), its independent power and natural gas subsidiary, and Dominion Capital, Inc. (Dominion Capital), its diversified financial services company. Dominion also owns and operates a 365 Mw natural gas fired generating facility in the United Kingdom. Dominion was incorporated in 1983 as a Virginia corporation. Dominion and its subsidiaries (excluding CNG) had 11,035 full-time employees as of December 31, 1999. CNG CNG operates in all phases of the natural gas industry including exploration for and production of oil and natural gas in the United States as well as Canada. Its various retail gas subsidiaries serve approximately 1.9 million residential, commercial, industrial and transportation customers in Ohio, Pennsylvania, Virginia and West Virginia. Its interstate gas transmission pipeline system services each of its distribution subsidiaries and non-affiliated utilities and end use customers in the Midwest, the Mid- Atlantic and the Northeast states. CNG has an equity ownership interest in a pipeline extending from Canada to New York and New England. Utility Operations (Gas)--VNG, Hope Gas, Peoples Natural Gas and East Ohio Gas VNG, Hope Gas, Peoples Natural Gas and East Ohio Gas are the four public utility subsidiaries of CNG. Principal cities served at retail are: Cleveland, Akron, Youngstown, Canton, Warren, Lima, Ashtabula and Marietta in Ohio; Pittsburgh (a portion), Altoona and Johnstown in Pennsylvania; Norfolk, Newport News, Virginia Beach, Chesapeake, Hampton and Williamsburg in Virginia; and Clarksburg and Parkersburg in West Virginia. At December 31, 1999, CNG served at retail approximately two million residential, commercial and industrial gas sales and transportation customers. Generally, these gas distribution subsidiaries operate in long-established service areas and have extensive facilities already in place. Growth in CNG's traditional service areas in Ohio, Pennsylvania and West Virginia is limited in that natural gas is already the fuel of choice for heating and for most significant industrial applications. These areas have experienced minimal population growth in recent years, and almost all customers have become more energy efficient, resulting in lower gas usage per customer. In addition, the economies of these areas, which were formerly based mainly on heavy industry, have diversified with increased emphasis on high technology and service- oriented firms. Utility Operations (Electric)--Virginia Power Virginia Electric and Power Company is a public utility engaged in the power generation and electric service delivery business within a 30,000 square-mile service territory in Virginia and northeastern North Carolina. Virginia Power supplies energy at retail to approximately two million customers. In addition, Virginia Power sells 12 electricity at wholesale to rural electric cooperatives, power marketers and certain municipalities. The term "Virginia Power" refers to the entirety of Virginia Electric and Power Company, including its Virginia and North Carolina operations and all of its subsidiaries. In Virginia, Virginia Power trades under the name "Virginia Power." The Virginia service area comprises about 65 percent of Virginia's total land area, but accounts for over 80 percent of its population. In North Carolina, Virginia Power trades under the name "North Carolina Power" and serves retail customers located in the northeastern region of the state, excluding certain municipalities. Virginia Power also engages in off-system wholesale purchases of sales of electricity and purchases and sales of natural gas and is developing trading relationships beyond the geographic limits of its retail service territory. The Federal Energy Regulatory Commission (FERC), the State Corporation Commission of Virginia (the Virginia Commission) and the North Carolina Utilities Commission (the North Carolina Commission) are the principal regulators of Virginia Power's electric operations. Various factors are currently affecting the electric utility industry, including increasing competition and related regulatory changes, costs to comply with environmental regulations, and the potential for new business opportunities outside of traditional rate-regulated operations. To meet the challenges of this new competitive environment, Virginia Power continues to consider new business opportunities, particularly those which allow it to use the expertise and resources developed through its regulated utility experience. Over the past several years Virginia Power has developed a broad array of "non-traditional" products and services. Examples of non-traditional services include wholesale power marketing and telecommunications. Virginia Power also markets its services to other utilities in areas such as nuclear consulting and management and power distribution (i.e., transmission, distribution, engineering and metering services). Virginia Power is continuing to focus on new and existing programs to enhance customer satisfaction and energy efficiency. Virginia Power maintains major interconnections with Carolina Power and Light Company, American Electric Power-Virginia (AEP), Allegheny Energy, Inc., and the utilities in the Pennsylvania-New Jersey-Maryland Power Pool. Through this major transmission network, it has arrangements with these utilities for coordinated planning, operation, emergency assistance and exchanges of capacity and energy. In June 1999, Virginia Power, together with AEP, Consumers Energy Company, The Detroit Edison Company and First Energy Corporation, on behalf of themselves and their public utility operating company subsidiaries (Alliance Companies), filed with FERC applications under Sections 205 and 203 of the Federal Power Act for approval of the proposed Alliance Regional Transmission Organization (Alliance RTO). In December 1999, FERC issued an Order under Section 203 of the Federal Power Act granting the application, subject to certain conditions and requirements discussed in the Order and directing the Alliance Companies to submit a compliance filing as discussed in the Order. On January 19, 2000, the Alliance Companies filed an application seeking rehearing of certain conditions and requirements of the Order. In February 2000, the Alliance Companies filed amendments to the Alliance RTO documents to comply with certain conditions and requirements of the Order. Non-Utility Operations--Dominion Energy, Inc. DEI, the entity in which Dominion's non-utility generation operations are conducted, is active in the competitive electric power generation business. Dominion's non-utility operations are involved in power projects in five states, including the Kincaid Power Station, a 1,108 Mw coal-fired station in Illinois and Elwood Energy, a 600 Mw gas fired peaking facility in Illinois; two geothermal projects and one solar project in California; three small hydroelectric projects in New York; a waste coal-fueled project in West Virginia; and a waste-wood and coal-fueled project in Maine. As a result of Dominion's focus in the Midwest, Northeast and Mid-Atlantic quadrant of the U.S., DEI reached an agreement in 1999 to sell its interests in approximately 1,200 megawatts of gross generation capacity located in Latin America. Duke Energy International is purchasing the interests for approximately $405 million. 13 The interests being sold are located in Argentina, Belize, Bolivia and Peru and generate electricity from hydroelectric, natural gas and diesel fuel sources. DEI completed the sale of its interests in Belize and Peru in November 1999, Argentina in March 2000 and expects to complete the sale of its interests in Bolivia in the second quarter of 2000, following receipt of certain regulatory approvals. DEI is active in the development, exploration and production of oil and natural gas reserves. DEI is involved in oil and natural gas development and exploration in Canada, the Appalachian Basin, the Michigan Basin, the Illinois Basin, the Black Warrior Basin, the Uinta Basin, the San Juan Basin, the Gulf Coast and the Mid-Continent, and owns net proved oil and natural gas reserves in key regions of the United States and Canada. Other Businesses Dominion Capital Dominion Capital is a diversified financial services company with several operating subsidiaries in the commercial lending, merchant banking and residential lending business. Its principal subsidiaries are First Source Financial, LLP, First Dominion Capital LLC and Saxon Mortgage, Inc. Dominion Capital also owns a 46 percent interest in Cambrian Capital LLP. First Source Financial provides cash-flow and asset-based financing to middle-market companies seeking to expand, recapitalize or undertake buyouts. First Dominion Capital is an integrated merchant banking and asset management business located in New York. Saxon Mortgage and its affiliates originate home equity and mortgage loans to individuals and securitize them. Cambrian Capital provides financing to small and mid-sized independent oil and natural gas producers undertaking acquisitions, refinancings and expansions. Under the SEC's order approving the CNG merger, Dominion must divest itself of Dominion Capital within three years. No formal plan of divestiture has been adopted. However, Dominion has begun identifying suitable buyers. Until Dominion Capital is sold, Dominion Capital will continue to operate these financial services in its ordinary course of business, therefore requiring little or de minimis support from Dominion Resources Services Company, Inc. CNG CNG Transmission Corporation operates a regional interstate pipeline system and provides gas transportation and storage services to each of CNG's public utility subsidiaries and to non-affiliated utilities, end-users and others in the Midwest, the Mid-Atlantic states and the Northeast. Through its wholly owned subsidiary, CNG Iroquois, Inc., CNG Transmission Corporation holds a 16 percent general partnership interest in the Iroquois Gas Transmission System, L.P., that owns and operates an interstate natural gas pipeline extending from the Canada-United States border near Iroquois, Ontario, to Long Island, New York. The Iroquois pipeline transports Canadian gas to utility and power generation customers in metropolitan New York and New England. Exploration and production operations are conducted by CNG Producing in several of the major gas and oil producing basins in the United States, both onshore and offshore. In this highly competitive business, CNG Producing competes with a large number of entities ranging in size from large international oil companies with extensive financial resources to small, cash flow-driven independent producers. CNG Retail Services Corporation was created in 1997 to market natural gas, electricity and related products and services to residential, commercial and small industrial customers. CNG Products and Services, Inc. also provides energy-related services to customers of CNG's local distribution subsidiaries and others. CNG International Corporation was formed by CNG in 1996 to invest in foreign energy activities. CNG International Corporation currently owns interests in natural gas pipeline companies in Australia, and gas and electric utility companies in Argentina. 14 CNG's gas supply is obtained from various sources including: purchases from major and independent producers in the Southwest and Midwest regions; purchases from local producers in the Appalachian area; purchases from gas markets; production from company-owned wells in the Appalachian area, the Southwest, Midwest and offshore; and withdrawals from CNG's and third party underground storage fields. Regulatory actions, economic factors and changes in customers and their preferences continue to reshape CNG's gas sales markets. A significant number of industrial and commercial customers and a growing number of residential customers currently purchase a large portion of their gas supplies from producers and marketers, and contract with the transmission and/or distribution subsidiaries for transportation and other services. Since these customers are less reliant on the distribution subsidiaries for sales service, the volume of gas that these subsidiaries must obtain to meet sales requirements has been reduced. This trend is likely to continue as the state regulators continue unbundling services at the retail level. With the exception of Hope Gas, the distribution subsidiaries continue to purchase gas supplies for their remaining merchant customers and recover the costs through their approved rates. CNG Retail and Hope Gas (under a negotiated rate moratorium through December 31, 2001) have the responsibility and assume the price risk for obtaining their own gas supplies to meet customer needs. CNG continues to purchase volumes from the accessible producing basins using its firm capacity resources. These purchased supplies include Appalachian resources in Ohio, Pennsylvania and West Virginia, and production from the Gulf Coast, Mid-Continent and offshore areas. Gas purchase contract terms have continued to undergo transformation initiated with the removal of CNG Transmission and other gas pipelines from the merchant function. Much of the supply is purchased under the seasonal or spot purchase agreements. While the average term of CNG's gas purchase agreements has declined, the reliability of supply has been adequate. The availability of supplies and heightened competition have forged a viable market which has proven capable of satisfying the firm delivery requirements for supplies to CNG's markets in a highly reliable manner. CNG's underground storage facilities play an important part in balancing gas supply with sales demand and are essential to servicing CNG's large volume of space-heating business. In addition, storage capacity is an important element in the effective management of both gas supply and pipeline transport capacity. CNG operates 26 underground gas storage fields located in Ohio, Pennsylvania, West Virginia and New York. CNG owns 21 of these storage fields and has joint-ownership with other companies in the remaining five fields. The total designed capacity of the storage fields is approximately 885 Bcf. CNG's share of the total capacity is about 669 Bcf. About one-half of the total capacity is base gas which remains in the reservoirs at all times to provide the primary pressure which enables the balance of the gas to be withdrawn as needed. For a general description of the nature and location of Dominion and its subsidiaries businesses see Item 4 above. Further information regarding the general business of Dominion and its subsidiaries may be found in the Merger Form U-1 previously filed. In addition, a more detailed business description of Dominion and its subsidiaries may be found in the following documents which are hereby incorporated by reference herein: the Annual Reports of Dominion Resources, Inc. (File No. 1-8489) filed as Exhibit F-1 hereto, Virginia Electric and Power Company (File No. 1-2255) filed as Exhibit F-2 hereto, and Consolidated Natural Gas Company (File No. 1-3196) filed as Exhibit F-3 hereto, all on Forms 10-K for the year ended December 31, 1999 as contained in Item 1 thereof. Information regarding statistical information relating to kilowatt hour and mcf sales, operating revenues by classes of customers, can be found in the 1998 Statistical Summary and Financial Forecast of Dominion Resources, Inc. and its subsidiaries (the 1999 Statistical Summary and Financial Forecast will be filed as an amendment hereto) while similar information can be found in the Annual Report of Consolidated Natural Gas Company on Form 10-K (File No. 1-3196) for the year ended December 31, 1999, contained in Item 1 and filed as Exhibit F-3 hereto. (b) Any substantial changes which may have occurred in the general character of the business of such companies during the preceding five years. No substantial changes have occurred out of the ordinary course of business for Dominion and its subsidiaries during the preceding five years excluding the deregulation of the electric utility industry. 15 PROPERTY 6. Describe briefly the general character and location of the principal plants, properties, and other important physical units of the registrant and its subsidiaries, showing separately (a) public utility and (b) other properties. If any principal plant or important unit is not held in fee, so state and describe how held. Information regarding the principal plants, properties and other important physical units of Dominion and its subsidiaries is set forth in the following documents, which are hereby incorporated by reference herein: Items 1 and 2 of the Annual Report of Dominion on Form 10-K for the year ended December 31, 1999 (File No. 1-8489); and Item 2 of the Annual Report of CNG on Form 10-K for the year ended December 31, 1999 (File No. 1-3196). Copies of which are filed as exhibits F-1 and F-3, respectively. INTERSTATE TRANSACTIONS 7. For each public utility company in the holding company system of the registrant which is engaged in the transmission of electric energy or gas in interstate commerce, furnish the following information for the last calendar year: Total annual sales of Electric Energy (MWH) and Gas (DTH). There are five public utility companies in the Dominion holding company system which are engaged in the transmission of electric energy or gas. These companies include Virginia Power, East Ohio Gas, Peoples Natural Gas, Hope Gas and VNG. The activities of the gas public utilities are contained within their respective states, as follows: East Ohio Gas Ohio Peoples Natural Gas Pennsylvania Hope Gas West Virginia VNG Virginia Each gas company noted above has on file with their respective state commissions information relevant to their gas distribution operations. These reports for East Ohio Gas, Peoples Natural Gas, Hope Gas, and VNG, have been provided as Exhibits G-5, G-6, G-8 and G-7, respectively. Virginia Power has on file with the Federal Energy Regulatory Commission their 1999 FERC Form No. 1 which includes information related to the transmission of electric energy. This report has also been provided as Exhibit G-1. The following table includes sales and purchases made by Virginia Power and its wholly-owned subsidiaries.
MWH ELECTRIC ENERGY ---------- Total Annual Sales................................................... 54,951,379 Total Annual Purchases............................................... 51,688,517 Alabama Delivered out of state............................................... 38,410 Received from out of state........................................... 300 Arkansas Delivered out of state............................................... 7,314,000 Received from out of state........................................... 7,320,464 Illinois Delivered out of state............................................... 209,450 Received from out of state........................................... 204,800 Indiana Delivered out of state............................................... 22,734 Received from out of state........................................... 250
16
MWH ELECTRIC ENERGY ----------- Maryland Delivered out of state.............................................. 5,866,065 Received from out of state.......................................... 3,716,218 North Carolina Delivered out of state.............................................. 371,523 Received from out of state.......................................... 297,793 New York Delivered out of state.............................................. 550 Received from out of state.......................................... 1,100 Ohio Delivered out of state.............................................. 17,612,580 Received from out of state.......................................... 16,306,241 Pennsylvania Delivered out of state.............................................. 19,498,785 Received from out of state.......................................... 19,695,469 South Carolina Delivered out of state.............................................. 5,012 Received from out of state.......................................... 250 Tennessee Delivered out of state.............................................. 2,660,346 Received from out of state.......................................... 2,587,840 Texas Delivered out of state.............................................. 717,600 Received from out of state.......................................... 717,600 Virginia Delivered out of state.............................................. 634,324 Received out of state............................................... 840,192 DTH GAS ----------- Total Annual Sales.................................................. 282,989,083 Total Annual Purchases.............................................. 309,841,694 Delaware Delivered out of state.............................................. 142,371 Illinois Delivered out of state.............................................. 7,105,712 Received from out of state.......................................... 7,105,712 Kentucky Delivered out of state.............................................. 288,344 Received from out of state.......................................... 170,550 Louisiana Delivered out of state.............................................. 291,829,611 Received from out of state.......................................... 79,634,115 Maryland Delivered out of state.............................................. 3,189,665 Received from out of state.......................................... 212,000
17
DTH GAS ----------- Michigan Delivered out of state.............................................. 701,306 Received from out of state.......................................... 1,086,932 Mississippi Delivered out of state.............................................. 1,795,449 Received from out of state.......................................... 1,912,389 North Carolina Delivered out of state.............................................. 15,479 Received from out of state.......................................... 18,292 New Jersey Delivered out of state.............................................. 89,439 Received from out of state.......................................... 11,900 New York Delivered out of state.............................................. 17,515,020 Received from out of state.......................................... 16,397,832 Ohio Delivered out of state.............................................. 3,618,148 Received from out of state.......................................... 6,551,477 Pennsylvania Delivered out of state.............................................. 5,637,767 Received from out of state.......................................... 8,144,612 Texas Delivered out of state.............................................. 2,135,000 Received from out of state.......................................... 2,135,000 Virginia Delivered out of state.............................................. 11,941,709 Received from out of state.......................................... 4,792,928 Wisconsin Delivered out of state.............................................. 401,250 Received from out of state.......................................... 401,250 West Virginia Delivered out of state.............................................. 152,587,813 Received from out of state.......................................... 181,266,705
SECURITIES OUTSTANDING 8. Submit the following information concerning the registrant and each subsidiary thereof as of the latest available date: FUNDED DEBT (a) For each issue or series of funded debt secured by liens on property owned, whether or not such debt has been assumed: (Do not include here any contingent liabilities reported under paragraph 8 (c)). 18 As of December 31, 1999 By permission of the Staff, columns E through I have been omitted
Amount Issued Amount Authorized Less Retired Name of Obligor Title of Issue (000) (000) (a) (b) (c) (d) --------------- -------------- ----------------- ------------- DRI Secured Promissory Note, due 12/16/04..................... $ 18,100 $ 18,100 Dominion Obligated Mandatorily Resources Redeemable Preferred 250,000 250,000 Capital Securities Trust 1 1997 Series, 7.83%, due 12/15/27..................... VP First and Refunding Mortgage Bonds Series 1991-A, 8.75%, due 4/1/21....................... 100,000 100,000 VP First and Refunding Mortgage Bonds Series 1992-C, 8.00%, due 3/1/04....................... 250,000 250,000 VP First and Refunding Mortgage Bonds Series 1992-D, 7.625%, due 7/1/07....................... 215,000 215,000 VP First and Refunding Mortgage Bonds Series 1992-E, 7.375%, due 7/1/02....................... 155,000 155,000 VP First and Refunding Mortgage Bonds Series 1993-A, 7.25%, due 2/1/23....................... 100,000 100,000 VP First and Refunding Mortgage Bonds Series 1993-B, 6.625%, due 4/1/03....................... 200,000 200,000 VP First and Refunding Mortgage Bonds Series 1993-C, 5.875%, due 4/1/00....................... 135,000 135,000 VP First and Refunding Mortgage Bonds Series 1993-D, 7.50%, due 6/1/23....................... 200,000 189,280 VP First and Refunding Mortgage Bonds Series 1993-E, 6.00%, due 8/1/01....................... 100,000 100,000 VP First and Refunding Mortgage Bonds Series 1993-F, 6.00%, due 8/1/02....................... 100,000 100,000 VP First and Refunding Mortgage Bonds Series 1993-G, 6.75%, due 10/1/23...................... 200,000 200,000 VP First and Refunding Mortgage Bonds Series 1994-A, 7.00%, due 1/1/24....................... 125,000 125,000 VP First and Refunding Mortgage Bonds Series 1994-B, 8.625%, due 10/1/24...................... 200,000 200,000 VP First and Refunding Mortgage Bonds Series 1995-A, 8.25%, due 3/1/25....................... 200,000 187,000 VP First and Refunding Mortgage Bonds Series 1997-A, 6.75%, due 2/1/07....................... 200,000 200,000 VP Money Market Municipal Securities Chesapeake 1985, 3.792%, due 2/1/08*...................... 30,000 30,000 VP Money Market Municipal Securities Chesterfield 1985, 3.771%, due 10/1/09*................. 40,000 40,000 VP Money Market Municipal Securities Chesterfield 1987 Series A, 3.838%, due 6/1/17*.......... 40,000 40,000 VP Money Market Municipal Securities Chesterfield 1987 Series B, 3.838%, due 6/1/17*.......... 35,000 35,000 VP Money Market Municipal Securities Chesterfield 1987 Series C, 3.703%, due 12/1/07*......... 15,000 15,000
19
Amount Issued Amount Authorized Less Retired Name of Obligor Title of Issue (000) (000) (a) (b) (c) (d) --------------- -------------- ----------------- ------------- VP Money Market Municipal Securities Grant 1986, 3.794%, due 8/1/16*...................... $ 7,400 $ 7,400 VP Money Market Municipal Securities Grant 1994, 3.650%, due 9/1/24*...................... 19,500 19,500 VP Money Market Municipal Securities Grant 1996, 3.800%, due 3/1/26*...................... 24,500 24,500 VP Money Market Municipal Securities Halifax 1992, 3.812%, due 11/1/27*..................... 56,000 56,000 VP Money Market Municipal Securities Louisa 1984, 3.942%, due 12/1/08*..................... 60,000 60,000 VP Money Market Municipal Securities Louisa 1985, 3.718%, due 12/1/08*..................... 62,000 62,000 VP Money Market Municipal Securities Louisa 1987, 3.799%, due 12/1/15*..................... 18,000 18,000 VP Money Market Municipal Securities Prince William 1986, 3.770%, due 8/1/16*.................. 11,200 11,200 VP Money Market Municipal Securities York 1985, 3.762%, due 7/1/09*...................... 70,000 70,000 VP Fixed Interest Rate Bonds Louisa 1994, 5.450%, due 1/1/24....................... 19,500 19,500 VP Convertible Interest Rate Bonds Louisa 1997, 5.150%, due 3/30/22...................... 10,000 10,000 Virginia Obligated Mandatorily Power Redeemable Preferred 135,000 135,000 Capital Securities Trust 1 1995 Series A, 8.05%, due 9/30/25...................... DEI Senior Secured Bonds, 7.33%, due 6/15/20.................. 265,000 265,000
- -------- (*) Interest rates vary based on the short-term money market municipal tax- exempt rates. CAPITAL STOCK (b) For each class of capital stock including certificates of beneficial interest give information both in number of shares and in dollar amounts: (Do not include here any warrants, options, or other securities reported under paragraph 8(d)). As of December 31, 1999 By permission of the Staff, columns G through J have been omitted
Amount Reserved for Options, Warrants, Additional Amount Conversions & Amount Amount Name of Issuer Title of Issue Authorized Other Rights Unissued Issued (a) (b) (c) (d) (e) (f) -------------- -------------- ---------- ------------- ---------- -------- (Thousands) DRI Common Stock, no par value.................. 500,000 7,147 306,553 186,300 Preferred Stock......... 20,000 -- 20,000 None
20
Amount Reserved for Options, Warrants, Additional Amount Conversions & Amount Amount Name of Issuer Title of Issue Authorized Other Rights Unissued Issued (a) (b) (c) (d) (e) (f) -------------- -------------- ----------- ------------- ----------- ------ (Thousands) CNG Common Stock, par value $2.75.................. 400,000 -- 304,052 95,948 Preferred Stock, $100 par value.............. 5,000 -- 5,000 None VP Common Stock, no par value.................. 300 -- 129 171 VP Money Market Preferred, Jan. 1987(1)........... (2) -- -- 500 VP Money Market Preferred, Jun. 1987(1)........... (2) -- -- 750 VP Money Market Preferred, Jun. 1989(1)........... (2) -- -- 750 VP Money Market Preferred, Oct. 1988(1)........... (2) -- -- 750 VP Money Market Preferred, Sept. 1992, Series A(1)............ (2) -- -- 500 VP Money Market Preferred, Sept. 1992, Series B(1)............ (2) -- -- 500 VP Preferred Stock, $100 par value, $4.04 Series........... (2) -- -- 12 VP Preferred Stock, $100 par value, $4.12 Series........... (2) -- -- 32 VP Preferred Stock, $100 par value, $4.20 Series........... (2) -- -- 14 VP Preferred Stock, $100 par value, $4.80 Series........... (2) -- -- 73 VP Preferred Stock, $100 par value, $5.00 Series........... (2) -- -- 106 VP Preferred Stock, $100 par value, $6.98 Series........... (2) -- -- 600 VP Preferred Stock, $100 par value, $7.05 Series........... (2) -- -- 500 VP Preferred Stock, $100 par value, $5.58 Series........... (2) -- -- 400 VP Preferred Stock, $100 par value, $6.35 Series........... (2) -- -- 1,400
- -------- Note: (1) Money Market Preferred stock dividend rates are variable and are set every 49 days via an auction. (2) The total number of authorized shares for Virginia Power preferred stock (whether or not subject to mandatory redemption) is 10 million shares. CONTINGENT LIABILITIES (c) A brief outline of the nature and amount of each contingent liability on account of endorsement or other guarantees of any securities. Information regarding contingent liabilities is set forth in the following documents, copies of which are incorporated herein by reference in the stated Exhibits: . Note Q to the Consolidated Financial Statements as of and for the year ended December 31, 1999, of Dominion Resources, Inc. included in Dominion's Form 10-K for the year ended December 31, 1999 (File No. 1- 8489) (Exhibit F-1). 21 . Notes 17 and 18 to the Consolidated Financial Statements as of and for the year ended December 31, 1999, of Consolidated Natural Gas Company included in CNG's Form 8-K, filed January 27, 2000, File No. 1-3196 (Exhibit F-6) and CNG's Form 10-K for the year ended December 31, 1999, File No. 1-3196 (Exhibit F-3). . Note R to the Consolidated Financial Statements as of and for the year ended December 31, 1999 of Virginia Electric and Power Company included in the Form 10-K for the year ended December 31, 1999, File No. 1-2255 (Exhibit F-2). Status of contingent liabilities will also be presented in the Form 10-Q filings for the period ended March 31, 2000 for each of Dominion, Virginia Power and CNG. OTHER SECURITIES (d) A statement of the amount of warrants, rights, or options and of any class of securities of the registrant and subsidiary companies not elsewhere herein described which is outstanding and/or authorized. A brief description of the provisions thereof should be included. Information need not be set forth under this item as to notes, drafts, bills of exchange or bankers' acceptances which mature within nine months. Information regarding other securities is set forth in Dominion's Annual Report on Form 10-K for the fiscal year ended December 31, 1999 (File No. 1- 8489) and filed herewith as Exhibit F-1. INVESTMENTS IN SYSTEM SECURITIES 9. Give a tabulation showing the principal amount, par or stated value, the cost to the system company originally acquiring such security, and the number of shares or units, of each security described under Item 8 that is held by the registrant and by each subsidiary company thereof as the record (or beneficial) owner, and the amounts at which the same are carried on the books of each such owner. This information should be given as of the same date as the information furnished in answer to Item 8.
Number of Common Shares Issuer's Owner's Name of Company Owned Book Value Book Value --------------- --------- ---------- ---------- (Thousands of Dollars) Dominion Resources, Inc. Dominion Energy, Inc. ........... Common Stock 10 $612,611 $612,611 Oil and Gas Companies Dominion Reserves, Inc. ........ Common Stock 100 200,224 200,224 Carthage Energy Services, Inc. ......................... Common Stock 500 4,380 4,380 Phoenix Dominion Energy, LLC.. N/A 3,423 3,423 Cypress Energy Inc. ........... Common Stock 500 (5,784) (5,784) Dominion Appalachian Development, Inc. ............ Common Stock 10 (4,674) (4,674) Dominion Appalachian Development Properties LLC.... N/A 6,654 6,654 Dominion Gas Processing Michigan, Inc. ............... Common Stock 10 5,530 5,350 Frederic HOF LP............... N/A 15,527 14,594 Wilderness Energy Services LP........................... N/A 11,664 5,832 Dominion Midwest Energy, Inc. ......................... Common Stock 10 15,191 15,191 Great Lakes Compression, Inc. ......................... Common Stock 10 2,639 2,639 Dominion Reserves Gulf Coast, Inc. ......................... Common Stock 10 48,239 48,239 Dominion Reserves Indiana, Inc. ......................... Common Stock 10 (2,773) (2,773) Dominion Black Warrior Basin, Inc. ........................... Common Stock 10 6,702 6,702 Dominion Reserves Utah, Inc. .... Common Stock 10 27,908 27,908 San Juan Partners, LLC........... N/A 56,902 56,902 Dominion Storage, Inc. .......... Common Stock 10 358 358 Dominion Energy Canada Limited.. Common Stock 73,886 92,991 92,991
22
Number of Common Shares Issuer's Owner's Name of Company Owned Book Value Book Value --------------- --------- ---------- ---------- (Thousands of Dollars) Power Generation Companies Dominion Cogen, Inc. ....... Common Stock 100 $ 63,895 $ 63,895 Dominion Cogen NY, Inc. .... Common Stock 100 (351) (351) Dominion Cogen WV........... Common Stock 100 19,313 19,313 Morgantown Energy Associates................ N/A 20,269 10,135 Dominion Elwood, Inc. ...... Common Stock 100 94,853 94,853 Elwood Energy LLC.......... N/A 199,524 99,762 Dominion Elwood Services, Inc. ...................... Common Stock 10 132 132 Dominion Kincaid, Inc. ..... Common Stock 10 81,858 81,858 Kincaid Generation, LLC.... N/A 97,528 97,528 Dominion Energy Services Company Inc. .............. Common Stock 10 5,370 5,370 Dominion Energy Construction Company, Inc. ............. Common Stock 100 -- -- Dominion Energy Management, Inc. ...................... Common Stock 10 (114) (114) Dominion Generation, Inc. .. Common Stock 100 (301) (301) DR Capital Trust............ Common Stock 7,732 7,732 Dominion UK Holding, Inc.... (9,498) (9,498) Virginia Power.............. Common Stock 3,742,342 3,742,342 VP Fuel Corp. ............. Common Stock 1 1 1 VP Services................ Common Stock 1,100 8,919 8,919 Evantage.................. Common Stock N/A -- -- VPEM...................... Common Stock 1,000 9,475 9,475 VPSE...................... Common Stock 1 16 16 VPNS...................... Common Stock 100 (876) (876) VP Property............... Common Stock N/A -- -- VPSC....................... Common Stock 41 12,336 12,336 VP Capital Trust I......... Common Stock 167,000 4,175 4,175 Preferred Stock 5,400,000 -- -- Dominion Capital............ Common Stock -- 740,912 740,912 Dominion Capital Financial, Inc. ..................... Common Stock 100 -- -- Dominion Capital Ventures Corporation............... Common Stock 100 148,123 148,123 Dominion Financing Services, Inc. ........... Common Stock 10 -- -- Dominion Land Management Company, Inc. ............ Common Stock 100 (1,762) (1,762) Dominion Lands, Inc. ...... Common Stock 10 24,915 24,915 Dominion Mortgage Services, Inc. ..................... Common Stock 100 345,657 345,657 Dominion Venture Investments, Inc. ........ Common Stock 100 50,337 50,337 Edgen, Inc. ............... Common Stock 541 21,365 21,365 Louisiana Hydroelectric Capital Corp. ............ Common Stock 10 6,681 6.681 Catalyst Old River Hydroelectric Ltd. ....... N/A 26,599 32,237 Optacor Financial Services Co. Inc. ................. Common Stock 1,000 931 931 Rincon Securities, Inc. ... Common Stock 1 74,662 74,662 Stanton Associates, Inc. .. Common Stock 529,411 9,731 9,731 Stonehouse Development Company, LLC.............. N/A 1,738 1,738 Trilon Dominion Partners, LLC....................... N/A 37,084 48,257 Vidalia Audit, Inc. ....... Common Stock 100 (187) (187) Virginia Financial Ventures, Inc. ........... Common Stock 100 312,783 312,783
- -------- Note: Foreign holding companies are not included since they have been or will be sold. 23
Number of Common Shares Issuer's Owner's Name of Company Owned Book Value Book Value --------------- --------- ---------- ---------- (Thousands of Dollars) Consolidated Natural Gas Company CNG Service..................... Common Stock 100 $ 10 $ 10 6.75% non-negotiable note 1,612 1,612 9.50% non-negotiable notes 1,265 1,265 6.10% non-negotiable note 795 795 7.50% non-negotiable note 20,000 20,000 CNG Transmission................ Common Stock 60,100 722,476 720,477 6.20% non-negotiable note 50,000 50,000 6.95% non-negotiable note 14,000 14,000 6.75% non-negotiable note 13,959 13,959 9.50% non-negotiable notes 10,960 10,960 7.40% non-negotiable notes 75,000 75,000 8.95% non-negotiable notes 35,000 35,000 6.10% non-negotiable note 59,541 59,541 6.80% non-negotiable notes 57,793 57,793 8.75% non-negotiable note 27,000 27,000 CNG Iroquois................. Common Stock 2,394 39,709 39,709 East Ohio Gas................... Common Stock 4,759,353 414,702 394,076 6.95% non-negotiable note 40,000 40,000 6.75% non-negotiable note 4,640 4,640 9.50% non-negotiable notes 3,643 3,643 7.40% non-negotiable notes 35,000 35,000 8.95% non-negotiable notes 20,000 20,000 6.10% non-negotiable notes 30,220 30,220 6.80% non-negotiable notes 29,946 29,946 8.75% non-negotiable note 2,250 2,250 6.20% non-negotiable note 80,000 80,000 7.50% non-negotiable note 55,000 55,000 Peoples Natural Gas............. Common Stock 1,835,350 248,881 238,882 6.95% non-negotiable note 9,000 9,000 6.75% non-negotiable note 3,437 3,437 9.50% non-negotiable notes 2,699 2,699 8.95% non-negotiable notes 14,000 14,000 7.40% non-negotiable notes 15,000 15,000 6.80% non-negotiable notes 37,430 37,430 6.10% non-negotiable note 26,039 26,039 6.85% non-negotiable note 25,000 25,000 Virginia Natural Gas............ Common Stock 5,273 208,737 209,111 6.20% non-negotiable note 55,000 55,000 6.85% non-negotiable note 24,000 24,000 7.50% non-negotiable note 37,000 37,000
24
Number of Common Shares Issuer's Owner's Name of Company Owned Book Value Book Value --------------- --------- ---------- ---------- (Thousands of Dollars) Hope Gas................ Common Stock 449,000 $ 57,466 $ 56,258 6.95% non-negotiable note 3,000 3,000 6.75% non-negotiable note 1,505 1,505 9.50% non-negotiable notes 1,182 1,182 7.40% non-negotiable notes 5,000 5,000 8.95% non-negotiable notes 3,000 3,000 6.10% non-negotiable note 6,420 6,420 6.80% non-negotiable notes 12,097 12,097 6.85% non-negotiable note 1,000 1,000 7.50% non-negotiable note 4,200 4,200 CNG Producing........... Common Stock 43,900 679,256 683,413 6.20% non-negotiable note 25,000 25,000 6.95% non-negotiable note 30,000 30,000 6.75% non-negotiable note 50,000 50,000 8.95% non-negotiable notes 44,550 44,550 6.10% non-negotiable note 71,075 71,075 6.80% non-negotiable note 8,500 8,500 6.85% non-negotiable note 100,000 100,000 7.50% non-negotiable note 195,000 195,000 CNG Pipeline.......... Common Stock 12,000 1,441 1,441 CNG Main Pass........... Common Stock 1 3,002 3,002 CNG Oil Gathering....... Common Stock 1 3,606 3,606 CNG Retail.............. Common Stock 600 (2,845) (2,845) CNG Power............... Common Stock 8,360 9,185 9,185 CNG Market Center Services............... Common Stock 10 1,448 1,448 CNG Bear Mountain..... Common Stock 1 22 22 Granite Road.......... Common Stock 1,000 1 1 CNG Products and Services............... Common Stock 399 59 59 CNG Technologies...... Common Stock 200 611 611 CNG Field Services...... Common Stock 1,367 21,956 21,772 CNG Power Services...... Common Stock 1,552 (2,667) (2,667) CNG International....... Common Stock 23,855 228,352 228,352 6.20% non-negotiable note 15,000 15,000 CNG Cayman One........ Common Stock 990 38,232 38,232 CNGI Australia...... Common Stock 100 34,306 38,232 CNG Cayman Three...... Common Stock 100 130,518 130,518 CNG Argentina....... Common Stock 12,000 979 979 CNG Kauai............. Common Stock 1 1,797 1,797
25
Number of Common Shares Issuer's Owner's Name of Company Owned Book Value Book Value --------------- --------- ---------- ---------- (Thousands of Dollars) CNG LNG............................ Common Stock 100 $1,002 $1,002 CNG Research....................... Common Stock 1,558 78 78 CNG Coal........................... Common Stock 2,236 6,869 6,869 CNG Financial...................... Common Stock 5 35 35
INVESTMENTS IN OTHER COMPANIES 10. Give a tabulation showing all investments of the registrant and of each subsidiary thereof in holding companies and in public utility companies which are not subsidiary companies of the registrant. Also show all other investments of the registrant and of each subsidiary thereof in the securities of any other enterprise, if the book value of the investment in any such enterprise exceeds 2% of the total debit accounts shown on the balance sheet of the company owning such investment or an amount in excess of $25,000 (whichever amount is the lesser). Give principal amount and number of shares or units and the cost of each issue of such securities to the system company originally acquiring such security, and amount at which carried on the books of the owner. List all such securities pledged as collateral for loans or other obligations and identify loans and obligations for which pledge. This information should be given as of the same date as the information furnished in answer to Item 8. (a) Investments of the registrant and of each subsidiary thereof in holding companies and in public utility companies which are not subsidiary companies of the registrant: None. (b) By permission of the Staff, Dominion has presented below all other investments held by Dominion or any of its subsidiaries in the securities of any other enterprise, if the book value of the investment in any such enterprise exceeds 2% of the total debit accounts shown on the balance sheet of the company owing such investment or an amount in excess of $1,000,000 (whichever amount is the greater). This item is applicable to investments held by the registrant or its 50% or greater owned subsidiaries with the following exceptions: (1) Any interests held by EWG subsidiaries may be aggregated by facility; (2) Dominion Capital may report at the first tier subsidiary level except that any interests held by its hydro facility must be separately presented; and (3) Any interests held by foreign subsidiaries subject to a pending sale may be aggregated.
Number of Registrant/ Common Ownership Book Subsidiary Other Company Shares Owned Percentage Value ----------- ------------- ------------ ---------- ------- ($000) Dominion Energy, Inc................ Coso Power Developers N/A 11.10% $30,540 Coso Energy Developers N/A 9.50% 26,959 Luz Solar Partners Ltd. VII N/A 15.00% 8,866 Rumford Cogeneration Company Limited Partnership N/A 10.20% 9,481 Dominion Venture Investments, Inc... Cambrian Capital Corporation N/A 45.80% 50,282 Dominion Gas Processing Alberta Hub Joint Michigan, Inc...................... Venture N/A 40.00% 14,632 Wilderness Chester Gas Processing Limited Partnership N/A 45.20% 2,597 CNG Iroquois........................ Iroquois Gas Transmission System, LP N/A 16.00% 38,498 CNG Main Pass....................... Dauphin Island Gathering Partners N/A 13.58% 33,390
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Number of Registrant/ Common Ownership Book Subsidiary Other Company Shares Owned Percentage Value ----------- ------------- ------------ ---------- ------- ($000) CNG Oil Gathering........... Main Pass Oil Gathering Company N/A 33.30% $17,420 CNG Market Center Services.. CNG/Sabine Center N/A 50.00% 612 CNG International........... DBNGP Finance Company LLC N/A 50.00% 54,490* Buenos Aires Energy Company 25,421,525 25.00% 31,407 The Latin American Energy and Electricity Fund I, LP N/A 16.50% 8,266 FondElec General Partner, LP N/A 8.29% 43 Kauai Power Partners, LP N/A 1.00% 18 CNGI Australia Pty Ltd...... EPIC Energy Pty, LTD 150,000,030 30.00% 34,182 CNG Cayman Three Ltd........ Sodigas Pampeana SA 26,180,062 21.55% 78,059 Sodigas Sur SA 18,918,540 21.55% 51,215 CNG Kauai, Inc. ............ Kauai Power Partners, LP N/A 99.00% 1,787
- -------- * In 1998, DBNGP Finance borrowed $250 million under a Senior Term Loan Facility (Term Loan). The Term Loan matures in 2001, can be extended in one- year increments to 2003 and bears interest at a variable rate. Of the gross proceeds received by DBNGP Finance under the Term Loan, $100 million was distributed to CNG International. In connection with the Term Loan, CNG International entered into an Equity Contribution Agreement with DBNGP Finance. CNG International is contractually obligated to make equity contributions to DBNGP Finance equal to the Term Loan proceeds distributed to CNG International, plus interest on such proceeds, in the event that DBNGP Finance is unable to service this debt. CNG is contractually obligated to cause CNG International to make such equity contributions. INDEBTEDNESS OF SYSTEM COMPANIES 11. List each indebtedness of the registrant and of each subsidiary company thereof (other than indebtedness reported under Item 8, but as of the same date) where the aggregate debt owed by any such company to any one person exceeds $25,000 or an amount exceeding 2% of the total of the debit accounts shown on the balance sheet of the debtor (which amount is the lesser) but not including any case in which such aggregate indebtedness is less than $5,000, and give the following additional information as to each such indebtedness: (a) Debts owed to associate companies at December 31, 1999.
Rate of Date of Amount Interest Maturity Name of Debtor Name of Creditor Owed (Note 1) (Note 2) -------------- ---------------- -------- -------- -------- ($000) Dominion--First Tier Dominion Energy.............. Dominion Resources $ 4,251 None N/A Dominion Resources 120,712 6.4% N/A Dominion Capital 3 None N/A Dominion Generation 210 None N/A Dominion Resources........... Virginia Power 1,424 None N/A DRI Capital Trust 257,732 7.83% 2027 Dominion Capital Trust I..... Dominion Resources 219,097 5.4645% N/A Dominion Generation.......... Dominion Energy 505 None N/A
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Rate of Date of Amount Interest Maturity Name of Debtor Name of Creditor Owed (Note 1) (Note 2) -------------- ---------------- -------- -------- -------- ($000) Dominion Capital Dominion Capital............ Edgen, Inc. $ 7,452 6.5545% Revolver Louisiana Hydroelectric Capital Corp. 1,381 6.5545% Revolver Rincon Securities, Inc. 97,576 6.5545% Revolver Virginia Financial Ventures, Inc. 2,711 6.5545% Revolver Dominion Capital Ventures Corporation................ Dominion Capital 200,266 6.5545% Revolver Dominion Land Management Company.................... Dominion Capital 1,222 6.5545% Revolver Dominion Lands, Inc......... Dominion Capital 51,143 6.5545% Revolver Dominion Mortgage Services, Inc........................ Dominion Capital 121,865 6.5545% Revolver Stanton Associates Inc...... Dominion Capital 2,039 6.5545% Revolver Vidalia Audit, Inc. ........ Dominion Capital 232 6.5545% Revolver Virginia Financial Ventures, Inc. ...................... Dominion Capital 84,947 6.5545% Revolver Dominion Capital............ Dominion Resources 807 None N/A Dominion Capital Ventures Corporation................ Dominion Resources 212 None N/A Dominion Land Management Company, Inc............... Dominion Resources 52 None N/A Dominion Capital Ventures Corporation................ Dominion Capital 221 None N/A Dominion Lands, Inc......... Dominion Land 41 None N/A Management Co., Inc. Dominion Mortgage Services, Inc........................ Dominion Capital 74 None N/A Dominion Energy--Power Generation Companies Dominion Cogen, Inc......... Dominion Energy 648 None N/A Dominion Cogen, NY.......... Dominion Energy 182 None N/A Dominion Energy............. Dominion Cogen, WV 2,162 None N/A Dominion Cogen WV 17,526 6.4% N/A Dominion Kincaid, Inc....... Dominion Energy 3,400 None N/A Dominion Energy 3,125 6.4% N/A Dominion Energy............. Kincaid Generation LLC 11,358 6.4% N/A Kincaid Generation LLC 37,676 None N/A Kincaid Generation LLC...... Dominion Energy Services Company, Inc. 4,099 None N/A Dominion Elwood, Inc........ Dominion Energy 3,200 None N/A Dominion Energy............. Elwood Energy LLC 91 None N/A Elwood Energy LLC 3,466 6.4% N/A Dominion Energy Services Co......................... Dominion Energy 264 None N/A Kincaid Generation.......... Dominion Energy Services Co. 1,894 None N/A Morgantown Energy Dominion Energy Associates................. Services Co. 1,308 None N/A Dominion Energy Services Co. 3,527 11.5% N/A Dominion Energy............. Dominion Energy Services Co., Inc. 2,706 6.4% N/A Dominion Energy Construction Company 3,131 None N/A Dominion Energy Construction Company 1,642 6.4% N/A
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Rate of Date of Amount Interest Maturity Name of Debtor Name of Creditor Owed (Note 1) (Note 2) -------------- ---------------- -------- -------- -------- ($000) Kincaid Generation LLC...... Dominion Energy Construction Company $ 225 None N/A Dominion Elwood Services Co......................... Dominion Energy 151 None N/A Elwood Energy, Inc.......... Dominion Elwood Services Co. 387,585 None N/A Dominion Elwood Services Co. ....................... Dominion Resources 17,344 None N/A Morgantown Energy Associates................. Dominion Energy 638 11% N/A Dominion Energy--Oil and Gas Companies Dominion Energy............. Dominion Reserves 25,379 None N/A Dominion Reserves 26,494 6.4% N/A Dominion Black Warrior Basin, Inc. 1,719 None N/A Dominion Black Warrior Basin, Inc................. Dominion Energy 7,012 6.4% N/A Dominion Reserves--Utah, Inc........................ Dominion Energy 2,613 None N/A Dominion Energy 17,087 6.4% N/A Dominion Energy............. Dominion Reserves-- Indiana, Inc. 282 None N/A Dominion Reserves--Indiana, Inc........................ Dominion Energy 14,757 6.4% N/A Dominion Energy............. Dominion Reserves Gulf Coast Inc. 258 None N/A Dominion Reserves Gulf Coast Inc. 48,539 6.4% N/A Cypress Energy, Inc. 470 None N/A Cypress Energy, Inc......... Dominion Energy 8,134 6.4% N/A Dominion Appalachian Development, Inc. ......... Dominion Energy 3,999 None N/A Dominion Energy 7,884 6.4% N/A Dominion Appalachian Development Properties, LLC............ Dominion Energy 3,348 None N/A Dominion Energy 54,462 6.4% N/A Dominion Energy............. Dominion Midwest Energy, Inc. 5,567 None N/A Dominion Midwest Energy, Carthage Energy Inc........................ Services, Inc. 37 None N/A Dominion Energy............. Dominion Midwest Energy, Inc. 13,653 6.4% N/A Dominion Midwest Energy, Carthage Energy Inc........................ Services, Inc. 41 None N/A Dominion Energy............. Dominion Reserves 5,557 None N/A Dominion Reserves........... Dominion Energy 77,192 6.4% N/A Dominion Energy............. Great Lakes Compression, Inc. 1,017 None N/A Great Lakes Compression, Inc........................ Dominion Energy 4,643 6.4% N/A Dominion Energy............. San Juan Partners, LLC 11,187 None N/A San Juan Partners, LLC...... Dominion Energy 64,194 6.4% N/A Dominion Midwest Energy, Carthage Energy Inc........................ Services, Inc. 857 None N/A Dominion Reserves........... Carthage Energy Services, Inc. 798 None N/A
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Rate of Date of Amount Interest Maturity Name of Debtor Name of Creditor Owed (Note 1) (Note 2) -------------- ---------------- -------- -------- -------- ($000) Carthage Energy Services, Inc........................ Dominion Energy $ 3,771 None N/A Dominion Energy 1,942 6.4% N/A Dominion Energy............. Phoenix Dominion Energy, LLC 987 None N/A Phoenix Dominion Energy, LLC........................ Dominion Energy 993 6.4% N/A Dominion Energy............. Dominion Gas Processing Michigan, Inc. 1,741 None N/A Dominion Gas Processing Michigan, Inc.............. Dominion Energy 15,466 6.4% N/A Dominion Energy Canada, Ltd. ...................... Dominion Energy 16,310 6.4% N/A Virginia Power Virginia Power.............. VPS Communications 1,564 None N/A VP Services 8,310 None N/A VP Capital Trust I 30 None N/A VP Capital Trust I 139,175 None N/A VP Services Energy 22,933 None N/A VP Fuels.................... Virginia Power 34,656 None N/A VPS Communications.......... Virginia Power 4,545 None N/A VP Services................. VP Energy Marketing 23,281 None N/A Virginia Power 93,814 None N/A Virginia Power 94,031 None N/A VP Services Energy.......... VP Services 13,448 None N/A VP Services 54,458 None N/A VP Energy Marketing......... VP Services Energy 9,810 None N/A VP Services 39,672 None N/A VP Nuclear Services......... VP Services 1,381 None N/A VP Services 216 None N/A Consolidated Natural Gas Consolidated Natural Gas.... CNG Service Company 23,935 None N/A CNG Transmission 57 None N/A Virginia Natural Gas 4,125 None N/A CNG Retail 34 None N/A CNG Service Company......... CNG 134 None N/A CNG Service Company 899 None N/A CNG Transmission 514 None N/A East Ohio Gas 550 None N/A Peoples Natural Gas 284 None N/A Hope Gas 504 None N/A CNG Retail 68 None N/A CNG Transmission............ CNG 38,663 None N/A CNG Service Company 4,374 None N/A East Ohio Gas 106 None N/A Peoples Natural Gas 70 None N/A Hope Gas 771 None N/A CNG Field Services 1,609 None N/A CNG Power 207 None N/A CNG Iroquois................ CNG Transmission 1,431 None N/A
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Rate of Date of Amount Interest Maturity Name of Debtor Name of Creditor Owed (Note 1) (Note 2) -------------- ---------------- ------- -------- -------- ($000) East Ohio Gas.................. CNG $27,259 None N/A CNG Service Company 8,146 None N/A CNG Transmission 8,118 None N/A Peoples Natural Gas 130 None N/A Virginia Natural Gas 166 None N/A Hope Gas 129 None N/A CNG Retail 1,444 None N/A CNG Products and Services 440 None N/A Peoples Natural Gas............ CNG 13,631 None N/A CNG Service Company 2,501 None N/A CNG Transmission 1,977 None N/A Virginia Natural Gas 36 None N/A CNG Producing 770 None N/A CNG Retail 8,435 None N/A CNG Products and Services 175 None N/A Virginia Natural Gas........... CNG 1,263 None N/A CNG Service Company 1,479 None N/A CNG Transmission 989 None N/A East Ohio Gas 35 None N/A Hope Gas....................... CNG 1,186 None N/A CNG Service Company 1,148 None N/A CNG Transmission 2,217 None N/A East Ohio Gas 107 None N/A CNG Producing 473 None N/A CNG Field Services 627 None N/A CNG Producing.................. CNG 5,407 None N/A CNG Service Company 2,213 None N/A Peoples Natural Gas 210 None N/A Hope Gas 91 None N/A CNG Field Services 259 None N/A CNG Pipeline 54 None N/A CNG Pipeline................... CNG Producing 84 None N/A CNG Field Services............. CNG 4,000 None N/A CNG Service Company 46 None N/A CNG Transmission 3,169 None N/A East Ohio Gas 1,713 None N/A CNG Producing 1,732 None N/A CNG Retail 146 None N/A CNG Retail..................... CNG Service Company 330 None N/A East Ohio Gas 2,480 None N/A Peoples Natural Gas 1,272 None N/A CNG Power Services 1,659 None N/A CNG Field Services 4,370 None N/A CNG Power...................... CNG Service Company 25 None N/A CNG Transmission 83 None N/A CNG Bear Mountain 35 None N/A
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Rate of Date of Amount Interest Maturity Name of Debtor Name of Creditor Owed (Note 1) (Note 2) -------------- ---------------- ------ -------- -------- ($000) CNG International.............. CNG 232 None N/A CNG Service Company 95 None N/A CNG Cayman Three............... CNG International 26 None N/A CNG Products and Services...... CNG Service Company 25 None N/A East Ohio Gas 111 None N/A Peoples Natural Gas 32 None N/A CNG Retail 424 None N/A
- -------- Notes (1) Rates of interest herein represent the average December 1999 rate and are generally based on LIBOR plus a spread. (2)Intercompany payables and receivables are generally billed and settled monthly. The following table provides information on the investments and borrowings of participants in the CNG System Money Pool (Pool) at December 31, 1999. The Pool is administered by CNG Service Company on behalf of the participants. The operation of the Pool was authorized by the SEC in the Act Release Nos. 24128, 24399, 26021 and 26742. (File No. 70-7258):
Amount Interest Date of Debtor Creditor Owed Rate Maturity ------ -------- -------- -------- -------- ($000) Consolidated Natural CNG Service Company....... Gas $616,656 (Note 1) (Note 3) CNG Iroquois 10,757 (Note 1) (Note 3) CNG Producing 12,139 (Note 1) (Note 3) CNG Pipeline 1,145 (Note 1) (Note 3) Consolidated LNG 1,012 (Note 1) (Note 3) CNG Research 71 (Note 1) (Note 3) CNG Coal 3,718 (Note 1) (Note 3) CNG Products and Services 536 (Note 1) (Note 3) CNG Technologies 145 (Note 1) (Note 3) CNG Power 4,664 (Note 1) (Note 3) CNG Market Center Services 947 (Note 1) (Note 3) CNG Transmission.......... CNG Service Company 46,976 (Note 2) (Note 4) East Ohio Gas............. CNG Service Company 288,170 (Note 2) (Note 4) Peoples Natural Gas....... CNG Service Company 94,076 (Note 2) (Note 4) Virginia Natural Gas...... CNG Service Company 47,117 (Note 2) (Note 4) Hope Gas.................. CNG Service Company 29,934 (Note 2) (Note 4) CNG Producing............. CNG Service Company 1,577 (Note 2) (Note 4) CNG Power Services........ CNG Service Company 3,434 (Note 2) (Note 4) CNG International......... CNG Service Company 9,890 (Note 2) (Note 4) CNG Field Services........ CNG Service Company 2,709 (Note 2) (Note 4) CNG Main Pass............. CNG Service Company 25,878 (Note 2) (Note 4) CNG Oil Gathering......... CNG Service Company 11,496 (Note 2) (Note 4) CNG Retail................ CNG Service Company 27,811 (Note 2) (Note 4)
- -------- Notes: (1) Participants investing in the Pool share in the interest earned on the Pool's investments on a basis proportionate to their investment. (2) Participants borrowing from the Pool pay interest generally at a rate equivalent to the effective cost of short-term borrowings to Consolidated Natural Gas. 32 (3) Participants may withdraw their investments in the Pool at any time. (4) Borrowings from the Pool are payable on demand, and may be prepaid at any time without premium or penalty. (b) Debts owed to others at December 31, 1999 (millions, except interest rates):
Amount Rate of Maturity Debtor Creditor Owed Interest Date ------ -------- ------ -------- -------- Dominion................................ Various $ 300 Variable Various Virginia Power.......................... Various 422 5.7-10.0 2000-2008 Virginia Power.......................... Various 375 6.7-7.1 2004-2008 Dominion UK............................. Bayerische 54 Variable 2000-2007 Landesbank Girozentrale Dominion Energy......................... Various 303 5.6-6.0 2002, 2005 Various 363 5.7-6.7 2001 Various 39 4.5-6.6 2000-2024 Various 3 5.4 Various Dominion Capital........................ Various 96 6.1-7.6 2000-2003 Various 159 6.5-12.1 2000-2012 Various 48 6.2 2000 Various 44 6.2 2000 Various 298 6.5 2002-2006 Various 64 5.6 Various Various 1,492 5.9 Various Consolidated Natural Gas................ Various 400 7.25 2004 Various 200 6 2010 Various 300 6.8 2027 Various 150 6.625 2008 Various 150 6.875 2026 Various 150 7.375 2005 Various 150 6.625 2013 Various 150 5.75 2003 Various 129 8.75 2019
PRINCIPAL LEASES 12. Describe briefly the principal features of each lease (omitting oil and gas leases) to which the registrant or any subsidiary company thereof is a party, which involves rental at an annual rate of more than $50,000 or an amount exceeding 1% of the annual gross operating revenue of such party to said lease during its last fiscal year (whichever of such sums is the lesser) but not including any leases involving rental at a rate of less than $5,000 per year. Dominion and CNG paid approximately $39.9 million and $35.2 million, respectively, related to routine operating leases in 1999. Such leases primarily related to land and buildings, office space, office furniture and equipment, computer equipment, transportation, pipeline facilities and other miscellaneous items used in operations. Certain of these leases are used by several Dominion entities with costs being shared in accordance with state regulations, as applicable. Dominion owns Virginia Power's headquarters building and leases it to Virginia Power under a capital lease with annual rentals approximating $3 million. This lease expires in 2006 and was entered into at terms approved by the Virginia Commission. Virginia Power paid approximately $8.7 million under other capital leases in 1999, primarily related to computer and related equipment. 33 Virginia Power's subsidiary, VPS Communications, leases fiber optic capacity from Virginia Power at rates subject to the approval of the Virginia Commission. Such lease payments approximated $600,000 in 1999. VPS Communications leases fiber optic capacity, including the capacity leased from Virginia Power, to other parties. Activity under these leases approximated $3.4 million in 1999. In addition, Virginia Power serves as the lessor in various capital leases which resulted in receipts of approximately $2.4 million in 1999. Such leases primarily related to land and buildings, office space and certain energy services projects. CNG Transmission leases from CNG Field Services (formerly CNG Storage Service Company) approximately 9 billion cubic feet of natural gas that serves as a portion of the base gas required for CNG Transmission to operate the North Summit Storage Pool in Fayette County, Pennsylvania. Such lease payments approximated $3.5 million in 1999. This lease expires in 2011. (See Act Release No. 25311, File No. 70-7729). SECURITIES SOLD 13. If, during the last five years, the registrant or any subsidiary company thereof has issued, sold, or exchanged either publicly or privately any securities having a principal amount, par, stated or declared value exceeding $1,000,000 or exceeding an amount equal to 10% of the total liabilities as shown by the balance sheet of issuer at the time of such issue (whichever of such sums is the lesser), give the following information with respect to each such issue or sale: By permission of the Staff, information required to be disclosed pursuant to this item is not set forth herein. AGREEMENT FOR FUTURE DISTRIBUTION OF SECURITIES 14. (a) Summarize the terms of any existing agreement to which the registrant or any associate or affiliate company thereof is a party or in which any such company has a beneficial interest with respect to future distribution of securities of the registrant or of any subsidiary. Certain information regarding agreements with respect to future distribution of securities of DRI and its subsidiaries is set forth in the following documents, the applicable portions of which are hereby incorporated herein by reference: Items B.1 through B.3 of the Application/Declaration of DRI and CNG on Form U-1, as amended in File No. 70-9517; Items E.1 through E.4 of the Application/Declaration of DRI and CNG on Form U-1, as amended in File No. 70- 9517; and the Registration Statement of DRI on Form S-3 (File No. 333-93187) with respect to the registration of $4.5 billion of senior debt securities, junior subordinated debentures, trust preferred securities and related guarantee, common stock, preferred stock, stock purchase contracts and stock purchase units and the Registration Statement of CNG on Form S-3 (File No. 333-92765) with respect to $1 billion of debt securities. Since the closing of Dominion's merger with CNG, the following financings have been executed by Dominion or its affiliates: 1. Virginia Electric and Power Company's issuance, on March 22, 2000, of $20 million in aggregate principal amount of its Series F, Medium-Term Notes, bearing interest at a variable rate of LIBOR plus 15 basis points, maturing March 22, 2002. 2. Virginia Electric and Power Company's issuance, on March 22, 2000, of $200 million in aggregate principal amount of its Series G, Medium-Term Notes, bearing interest at a variable rate of LIBOR plus 15 basis points, maturing March 22, 2002. 34 The following financing activities are expected during the next 12 months, however, the specific timing, execution and choice of security will be based upon actual market conditions and cash flow needs of the companies: 1. Replacement of approximately $3.1 billion in aggregate principal of Dominion's short-term bridge financing for the acquisition of CNG. The following securities are contemplated for execution based upon then- prevailing market conditions: . $700 million in aggregate principal amount of senior notes with a maturity of 10 years . $700 million in aggregate principal amount of senior notes with a maturity of 5 years . $400 million in aggregate principal amount of senior notes with a maturity of 3 years . $700 million in aggregate principal amount of synthetic put bonds effecting a security with a maturity of 10 years or more and a mandatory put option at 3 years or less . $250 million in aggregate principal amount of trust preferred securities . $350 million in aggregate principal amount of mandatory convertible securities The authority to issue these proposed securities is provided under the SEC Registration Statement, File No. 333-93187 referred to above. 2. Replacement of $150 million of mandatory debt and preferred stock maturities and approximately $250 million of additional capital requirements, not currently expected to be covered through internal cash flows, of Virginia Electric and Power Company. Authority to be requested under a new SEC Registration Statement to be filed during the 2nd Quarter 2000. 3. Potentially replace a portion of CNG's short-term, commercial paper with long-term debt securities based upon then-prevailing market conditions. Authority provided under SEC Registration Statement, File No. 333-92765 referred to above. (b) Describe briefly the nature of any financial interest (other than the ownership of securities acquired as a dealer for the purpose of resale) which any person with whom such agreement exists, has in the registrant or in any associate or affiliate company thereof. See response to 14 (a) above. 35 TWENTY LARGEST HOLDERS OF CAPITAL STOCKS 15. (a) As of a recent date (indicating such date for each class) give the following information with respect to the holders of each class of stock and/or certificates of beneficial interest of the registrant: Dominion shares can be held by certificate, through a dividend reinvestment plan, through employee investment plans, through investment companies and other street name and nominee accounts. Dominion has no way to determine, without an unreasonable amount of time and money, the number of shares held by each holder of beneficial interest. Therefore, Dominion is only able to provide information as to shares registered on its books. The following table lists Dominion's twenty largest registered shareholders on its books at the close of business on March 1, 2000:
Numbers of % of Shareholder and Address Shares Held Outstanding ----------------------- ----------- ----------- Cede................................................. 172,039,308 72.18 Box 20 Bowling Green Station New York NY 10004 Dresco............................................... 31,089,520 13.04 PO Box 26532 Richmond VA 23261 Trustees ESOP CNG.................................... 359,612 .15 625 Liberty Avenue Pittsburgh PA 15222 Thomas E. Capps...................................... 302,581 .13 PO Box 23532 Richmond VA 23261 Thomas F. Farrell II................................. 140,162 .06 9019 Norwick Road Richmond VA 23229 Edgar M. Roach, Jr................................... 139,112 .06 3142 Monument Avenue Richmond VA 23221 George A. Davidson, Jr............................... 103,938 .04 420 Woodland Road Sewickley PA 15143 Thomas N. Chewning................................... 99,769 .04 4800 Lockgreen Circle Richmond VA 23226 James Patrick O'Hanlon............................... 99,235 .04 5968 Old Greenway Road Glen Allen VA 23059 James L. Trueheart................................... 83,798 .04 4255 Cheyenne Road Richmond VA 23235 James L. Sanderlin................................... 71,243 .03 1810 Fox Downs Lane Oilville VA 23129
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Numbers of % of Shareholder and Address Shares Held Outstanding ----------------------- ----------- ----------- James F. Stutts...................................... 59,269 .02 2561 Maidens Road Maidens VA 23102 Graham Scott Hetzer.................................. 52,376 .02 118 Paxton Road Richmond VA 23226 Gibson Equipment Co., Inc............................ 52,252 .02 981 Scott Street Norfolk VA 23502 Godfrey E. Lake, Jr.................................. 51,566 .02 3212 Swanhollow Way Richmond 23233 E. Wayne Harrell..................................... 50,783 .02 25966 Independence Road Unionville VA 22567 William C. Hall, Jr.................................. 42,723 .02 28 Old Mill Road Richmond VA 23226 Edward J. Rivas, Jr.................................. 42,708 .02 14322 Regatta Point Road Midlothian VA 23112 Robert E. Rigsby..................................... 41,713 .02 9806 Kingsbridge Road Richmond VA 23233 Malcolm G. Deacon, Jr................................ 40,019 .02 13512 Castleway Road Midlothian VA 23113 Total.............................................. 204,961,689 85.99
(b) Number of shareholders of record each holding 1,000 shares or more, and aggregate number of shares so held. On March 1, 2000, there were 13,571 shareholders holding 1,000 shares or more. The aggregate number of shares held by these shareholders was 206,160,720. (c) Number of shareholders of record each holding less than 1,000 shares and the aggregate number of shares so held. On March 1, 2000, there were 187,434 shareholders holding less than 1,000 shares. The aggregate number of shares held by these shareholders was 29,437,910. OFFICERS, DIRECTORS AND EMPLOYEES 16. (a) Positions and Compensation of Officers and Directors. Give name and address of each director and officer (including any person who performs similar functions) of the registrant, of each subsidiary company thereof, and of each mutual service company which is a member of the same holding company system. Opposite the name of each such individual give the title of every such position held by him and briefly describe each other employment of such individual by each such company. 37 State the present rate of compensation on an annual basis for each director whose aggregate compensation from all such companies exceeds $1,000 per year, and of each officer whose aggregate compensation from such companies is at the rate of $20,000 or more per year. In the event any officer devotes only part of his time to a company or companies in the system this fact should be indicated by appropriate footnote. Such compensation for such part time should be computed on an annual rate and if such annual rate exceeds $20,000 the actual compensation as well as annual rate should also be reported. (b) Compensation of Certain Employees. As to regular employees of such companies who are not directors or officers of any of them, list the name, address, and aggregate annual rate of compensation of all those who receive $20,000 or more per year from all such companies. (c) Indebtedness to System Companies. As to every such director, trustee or officer as aforesaid, who is indebted to any one of such companies, or on whose behalf any such company has now outstanding and effective any obligation to assume or guarantee payment of any indebtedness to another, and whose total direct and contingent liability to such company exceeds the sum of $1,000, give the name of such director, trustee, or officer, the name of such company, and describe briefly the nature and amount of such direct and contingent obligations. (d) Contracts. If any such director, trustee, or officer as aforesaid: (1) has an existing contract with any such company (exclusive of an employment contract which provides for no compensation other than that set forth in paragraph (a) of this Item); or, (2) either individually or together with the members of his immediate family, owns, directly or indirectly, 5% or more of the voting securities of any third person with whom any such company has an existing contract; or (3) has any other beneficial interest in an existing contract to which any such company is a party; describe briefly the nature of such contract, the names of the parties thereto, the terms thereof, and the interest of such officer, trustee, or director therein. By permission of the Staff, the information required to be disclosed in Item 16(a) through (d) has not been included. However, this information can be found in Dominion's 2000 Proxy Statement, dated March 16, 2000, File No. 1- 8489, filed as Exhibit F-4 hereto, in connection with its 2000 Annual Meeting of Shareholders or Dominion's Annual Report on Form 10-K for the fiscal year ended December 31, 1999 (File No. 1-8489), filed as Exhibit F-5 hereto, and Virginia Electric and Power Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1999 (File No. 1-2255), filed as Exhibit F-2 hereto, which reports are hereby incorporated by reference herein. (e) Banking Connections. If any such director, trustee, or officer is an executive officer, director, partner, appointee, or representative of any bank, trust company, investment banker, or banking association or firm, or of any corporation a majority of whose stock having the unrestricted right to vote for the election of directors, is owned by any bank, trust company, investment banker, or banking association or firm, state the name of such director or officer, describe briefly such other positions held by him and indicate which of the rules under Section 17(c) authorizes the registrant and subsidiary companies of which he is a director or officer to retain him in such capacity. 38 Information concerning all officers and directors of Dominion who have financial connections within the provisions of Section 17(c) of the Act as of March 1, 2000, follows:
Position Held Name of Officer or Name and Location of Financial in Financial Applicable Director Institution Institution Exemption Rule ------------------ ------------------------------ ------------- -------------- John B. Bernhardt....... Resource Bank Shares Director 70(a) Virginia Beach, Virginia George A. Davidson, Jr..................... PNC Bank Corp. Director 70(a)(c)(e)(f) Pittsburgh, Pennsylvania Benjamin J. Lambert, III.................... Consolidated Bank and Trust Company Director 70(a) Richmond, Virginia Steven A. Minter........ KeyCorp Director 70(a) Cleveland, Ohio Frank S. Royal.......... SunTrust Banks, Inc. Director 70(b) Atlanta, Georgia
INTERESTS OF TRUSTEES IN SYSTEM COMPANIES 17. Describe briefly the nature of any substantial interest which any trustee under indentures executed in connection with any outstanding issue of securities of the registrant or any subsidiary thereof, has in either the registrant or such subsidiary, and any claim which any such trustee may have against registrant or any subsidiary; provided, however, that it shall not be necessary to include in such description any evidences of indebtedness owned by such trustee which were issued pursuant to such an indenture. To the best knowledge of Dominion's management, there is no such interest. SERVICE, SALES AND CONSTRUCTION CONTRACTS 18. As to each service, sales, or construction contract (as defined in paragraphs (19) to (21) of Section 2(a) of the Act) which the registrant and any subsidiary company thereof has had in effect within the last three months, describe briefly the nature of such contract, the name and address of the parties thereto, the dates of execution and expiration, and the compensation to be paid thereunder. Attach typical forms of any such contracts as an exhibit to this registration statement. If the other party to any such contract is a mutual service company or a subsidiary service company which is a member of the same holding company system as the registrant and as to which the Commission has made a favorable finding in accordance with Rule 13-22, specific reference may be made to the application or declaration filed by such company pursuant to Rule 13-22 and no further details need be given as to such contracts. The affiliate contracts listed below are attached as Exhibits H-1 through H- 31 hereto:
Exhibit Description -------- ----------- H-1 Form of Service Agreement between Dominion Resources Services, Inc./Consolidated Natural Gas Service Company, Inc. and affiliates listed in Exhibit H-1, dated January 28, 2000 (filed as Exhibit K-1.1 to the Form U-1 Application, as amended, in File No. 70-09477). H-2 Service Agreement between Dominion Resources Services, Inc./Consolidated Natural Gas Service Company, Inc. and Virginia Electric and Power Company dated January 1, 2000 (filed in the form of Exhibit K-1.1 to the Form U-1 Application, as amended, in File No. 70-09477). H-3 Support Agreement between Virginia Electric and Power Company and Dominion Resources Services, Inc./Consolidated Natural Gas Service Company, Inc. dated January 1, 2000 (filed as Exhibit K- 1.2 to the Form U-1 Application, as amended, in File No. 70-09477).
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Exhibit Description -------- ----------- H-4 Affiliated Transaction Agreement between CNG Transmission (formerly Consolidated Gas Supply Corporation) (Service Provider) and CNG Producing (Receiving Company) dated January 1, 1981 for management services. Contract is terminable on 30- days notice. Services to be provided at cost. H-5 Call Center Services Agreement between CNG Retail Services (Service Provider) and Dominion Resources Services, Inc. (Receiving Company) dated March 1, 2000 for the provision of call center services. Contract is for initial one-year term commencing on March 15, 2000 and is renewable on an annual basis. CNG Retail is to be compensated at $20 per hour. H-6 Form of Ancillary Service Agreement between affiliates listed in Exhibit H-6 for the provision of services listed therein (filed as Exhibit K-1.3 to the Form U-1 Application, as amended, in File No. 70-09477). Contract is terminable on 60 days notice. Services will be provided at cost. H-7 Agreement between Virginia Electric and Power Company and Virginia Power Fuel Corporation dated June 30, 1995 for purchase and sale of enriched uranium. Contract expires September 28, 2014. Services to be provided at cost. H-8 Agreement between Virginia Electric and Power Company and VPS Communications, Inc. dated September 2, 1997 for provision of certain administrative and telecommunications services. Contract is terminable on 90-days notice. Services to be provided at cost. H-9 Affiliate Services Agreement between Virginia Electric and Power Company and Virginia Power Services, Inc. dated September 3, 1997 for provision of administrative services (together with first and second amendments each dated October 30, 1998 and third amendment dated October 1, 1999.) Contract is terminable on 90-days notice. Services to be provided at cost. H-10 Agreement between Virginia Electric and Power Company and Virginia Power Services Energy Corp., Inc. dated October 30, 1998 providing for fuel management and associated risk management services. Contract is terminable on 90-days notice. Services to be provided at cost. H-11 Operating Agreement between Virginia Electric and Power Company and Virginia Power Property, Inc. dated December 31, 1999 for management and use of certain real property. Contract is terminable on 90-days notice. Services to be provided at cost. H-12 Fuel Agency and Service Agreement dated October 30, 1998 between Virginia Power Services Energy Corp., Inc. and Virginia Power Energy Marketing, Inc. providing for fuel management and associated risk management services. Contract is terminable on 60-days notice. Services to be provided at cost. H-13 Microwave Service Agreement between CNG Transmission Corporation (as Service Provider) and Consolidated Natural Gas Company, Consolidated Natural Gas Service Company, Inc., The Peoples Natural Gas Company and CNG Producing Company, effective as of January 1, 1991 for the operation and maintenance of a microwave system. Contract continues in effect until terminated by either party. Services to be provided at cost, allocated among parties based on usage. H-14 Agreement between CNG Producing Company (as Service Provider) and CNG Transmission Corporation (formerly Consolidated Gas Supply Corporation) dated January 1, 1981 for the provision of certain operating and administrative services. Contract is terminable on 30-days notice. Services to be provided at cost.
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Exhibit Description -------- ----------- H-15 Agreement between CNG Producing Company (as Service Provider) and CNG Trading Company dated August 1, 1990 for the provision of certain operating and administrative services. Contract is terminable upon 30-days notice. Services to be provided at cost. H-16 Agreement between CNG Transmission Corporation (as Service Provider) and CNG Iroquois, Inc. effective as of January 1, 1991 for the provision of certain operating and administrative services. Contract is terminable on 60-days notice. Services to be provided at cost. H-17 Agreement between CNG Transmission Corporation (as Service Provider) and CNG Storage Service Company, effective as of July 1, 1991 for the provision of certain operating and administrative services. Contract is terminable on 60-days notice. Services to be provided at cost. H-18 Agreement between The Peoples Natural Gas Company (as Service Provider) and Consolidated Natural Gas Service Company, Inc., effective as of January 1, 1992 for the provision of certain operating and administrative services. Contract is terminable on 60-days notice. Services to be provided at cost. H-19 Agreement between CNG Gas Services Corporation (as Service Provider) and CNG Energy Company effective as of January 1, 1994 for the provision of certain operating and administrative services. Contract is terminable upon 30-days notice. Services to be provided at cost. H-20 Agreement between The Peoples Natural Gas Company (as Service Provider) and Consolidated Natural Gas Service Company, Inc. dated November 1, 1993 for the provision of certain operating and related services associated with maintaining the service company's fuel cell power plant. Contract is terminable on 60- days notice. Services to be provided at cost. H-21 Agreement between CNG Gas Services Corporation (as Service Provider) and CNG Producing Company effective as of February 1, 1993 for the provision of certain operating and administrative services. Contract is terminable on 60-days notice. Services to be provided at cost. H-22 Agreement between The Peoples Natural Gas Company (as Service Provider) and Consolidated Natural Gas Service Company, Inc. effective January 1, 1995 for the provision of certain administrative services relating to medical and associated services. Contract is terminable on 60-days notice. Services to be provided at cost. H-23 Agreement between The Peoples Natural Gas Company (as Service Provider) and Consolidated Natural Gas Service Company, Inc. effective January 1, 1995 for the provision of certain administrative and related services associated with mail services. Contract is terminable on 60-days notice. Services to be provided at cost. H-24 Agreement between The Peoples Natural Gas Company (as Service Provider) and The East Ohio Gas Company, Virginia Natural Gas, Inc., Hope Gas, Inc. and West Ohio Gas Company effective as of June 1, 1995 for the provision of certain marketing-related services associated with natural gas vehicles and gas-fired appliances. Contract is terminable on 60-days notice. Services to be provided at cost. H-25 Agreement between CNG Producing Company (as Service Provider) and Consolidated Natural Gas Service Company effective as of January 1, 1995 for the provision of certain information services. Contract renews on a year-to-year basis unless terminated prior to December 1 of the applicable renewal term. CNG Service Company is to pay a monthly amount for information services equal to a portion of the Total Applicable IS Cost allocated to the service company in accordance with the terms of the Agreement.
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Exhibit Description -------- ----------- H-26 Agreement between The East Ohio Company (as Service Provider) and The Peoples Natural Gas Company, Virginia Natural Gas, Inc., Hope Gas, Inc., and West Ohio Gas Company effective as of January 1, 1996, for the provision of marketing communications and advertising services. Contract is terminable on 60-days notice. Services to be provided at cost. H-27 Agreement between The Peoples Natural Gas Company (as Service Provider) and CNG Products and Services, Inc., effective as of January 1, 1996, for the provision of service line repair and replacement services. Contract is terminable on 60-days notice. Services to be provided at cost. H-28 Agreement between The Peoples Natural Gas Company (as Service Provider) and Consolidated Natural Gas Service Company, Inc., effective as of November 1, 1996, for the provision of certain managerial and administrative services. Contract is terminable on 60-days notice. Services to be provided at cost. H-29 Agreement between CNG Products and Services, Inc. (as Service Provider) and CNG Retail Services Corporation, effective as of February 1, 1997, for the provision of certain administrative and marketing services. Contract is terminable on 60-days notice. Services to be provided at cost. H-30 Agreement between The Peoples Natural Gas Company (as Service Provider) and Consolidated Natural Gas Service Company, effective as of March 1, 1996, for the provision of certain floor space and office supplies. Contract is terminable on 60-days notice. Services to be provided at cost. H-31 Agreement between The Peoples Natural Gas Company (as Service Provider) and Consolidated Natural Gas Service Company, effective as of March 1, 1996, for the provision of certain floor space and office supplies to enable third-party contractors to conduct information technology services. Contract is terminable on 60- days notice. Services to be provided at cost.
LITIGATION 19. Describe briefly any existing litigation of the following descriptions, to which the registrant or any subsidiary company thereof is a party, or of which the property of the registrant or any such subsidiary company is the subject, including the names of the parties and the court in which such litigation is pending: (1) Proceedings to enforce or to restrain enforcement of any order of a State commission or other governmental agency; (2) Proceedings involving any franchise claimed by any such company; (3) Proceedings between any such company and any holder, in his capacity as such, of any funded indebtedness or capital stock issued, or guaranteed by such company, or between any such company and any officer thereof; (4) Proceedings in which any such company sues in its capacity as owner of capital stock or funded indebtedness issued or guaranteed by any other company; (5) Each other proceeding in which the matter in controversy, exclusive of interest and costs, exceeds an amount equal to 2% of the debit accounts shown on the most recent balance sheet of such company. From time to time, Dominion and its subsidiaries are alleged to be in violation or in default under orders, statutes, rules or regulations relating to the environment, compliance plans imposed upon or agreed to by us, or permits issued by various local, state and federal agencies for the construction or operation of facilities. From 42 time to time, there may be administrative proceedings on these matters pending. In addition, in the normal course of business, Dominion and its subsidiaries are involved in various legal proceedings. Management believes that the ultimate resolution of these proceedings will not have a material adverse effect on the company's financial position, liquidity or results of operations. In April 1999, Virginia Power was notified by the Department of Justice of alleged noncompliance with the EPA's oil spill prevention, control and countermeasures (SPCC) plans and facility response plan (FRP) requirements at one of its power stations. If, in a legal proceeding, such instances of noncompliance are deemed to have occurred, Virginia Power may be required to remedy any alleged deficiencies and pay civil penalties. Settlement of this matter is currently in negotiation and is not expected to have a material impact on Virginia Power's financial condition or results of operations. In August 1999, Virginia Power identified matters at certain other power stations that the EPA might view as not in compliance with the SPCC and FRP requirements. Virginia Power reported these matters to the EPA and in December 1999 submitted revised FRP and SPCC plans. Presently, the EPA has not assessed any penalties against Virginia Power pending its review of Virginia Power's disclosure information. Future resolution of these matters is not expected to have a material impact on Virginia Power's financial condition or results of operations. In November 1999 and September 1999, Virginia Power received notices from the Attorney Generals of Connecticut and New York, respectively, of their intention to file suit against Virginia Power for alleged violations of the Clean Air Act. The notices question whether modifications at certain Virginia Power generating facilities were properly permitted under the Clean Air Act and allege that emissions from these facilities have damaged public health and the environment in the Northeast. To date, no suits have been filed. Virginia Power believes that it is one of a number of companies with fossil fuel power generating stations in the southeast and central U.S. to have received such notifications. Virginia Power believes that it has obtained the permits necessary in connection with its generating facilities and that any suits filed by the Attorney Generals will not have a material impact on its financial condition or results of operations. In August 1990, CNG Transmission entered into a Consent Order and Agreement with the Commonwealth of Pennsylvania Department of Environment Protection (DEP) in which CNG Transmission has agreed with the DEP's determination of certain violations of the Pennsylvania Solid Waste Management Act, the Pennsylvania Clean Streams law and the rules and regulations promulgated thereunder. No civil penalties have been assessed. Pursuant to the Order and Agreement, CNG Transmission continues to perform sampling, testing and analysis, and conducts a program of remediation at some of its Pennsylvania facilities. Total remediation costs in connection with these sites and the Order and Agreement are not expected to be material with respect to CNG's financial position, results of operations or cash flows. CNG has recognized an estimated liability amounting to $6.7 million at December 1999, for future costs expected to be incurred to remediate or mitigate hazardous substances at these sites and at facilities covered by the Order and Agreement. The DEP has proposed a penalty of $380,000 related to a hydrocarbon spill in February 1998 at a CNG Transmission facility in Aliquippa, Beaver County, Pennsylvania. CNG Transmission has agreed to settle the matter by contributing $280,000 to a Supplemental Environmental Program (SEP) and $100,000 directly to the DEP. Under the SEP, several environmental programs will be undertaken which are intended to benefit the Conversation District of Beaver County, Pennsylvania. In April 1999, CNG was served with a purported Class Action Complaint, Civil Action No. 17114-NC, styled Gerold Garfinkel v. Raymond E. Galvin, Paul E. Lego, Margaret A. McKenna, William S. Barrack, Jr., Steven A. Minter, J. W. Connolly, George A. Davidson, Jr., Richard P. Simmons, and Consolidated Natural Gas Company. The Complaint was filed in the Delaware Court of Chancery in April 1999. The Complaint seeks injunctive relief in the form of an order to the individual Board members to sell CNG for the highest value to the shareholders, an accounting of any damages resulting from any failure to sell it for the highest value, a determination with respect to the reasonableness of the break-up fee in the agreement with Dominion and other miscellaneous relief. The Complaint also seeks an award of costs and attorneys' fees. Several additional 43 purported Class Action Complaints against CNG and its directors seeking essentially the same relief have been combined with this action. CNG has moved to dismiss. In February 2000, the plaintiff filed a status report indicating they will circulate a stipulation for dismissal without prejudice. A qui tam action (one in which the plaintiff sues for the government as well as for itself, and gets to keep part of the recovery) was brought by Jack Grynberg, an oil and gas entrepreneur, against a major part of the gas industry, including CNG and several of its subsidiaries. The complaint, which was filed in July 1997, was under seal pending Department of Justice review. The Department of Justice declined to intervene and the seal was lifted in May 1999. CNG was served in the Western District of Louisiana in May 1999. The suit alleges fraudulent mismeasurement of gas volumes and underreporting of gas royalties from gas production taken from federal leases. The cases have been removed to the Eastern District of Wyoming, where a motion to dismiss is pending. A class action was filed by Quinque Operating Co. and others against approximately 300 defendants, including CNG and several of its subsidiaries, in Stevens County, Kansas. The complaint, which was served on CNG and its subsidiaries in September 1999, alleged fraud, misrepresentation, conversion and assorted other claims, in the measurement and payment of gas royalties from privately held gas leases. The cases have been consolidated with the Grynberg case and have been stayed pending the ruling on the motion to dismiss. CNG believes the above complaints to be without merit and believes that the ultimate resolution of the issues will not have a material adverse effect on CNG's financial position, results of operations, or cash flows. EXHIBITS Exhibit A. Furnish a corporate chart showing graphically relationships existing between the registrant and all subsidiary companies thereof as of the same date as the information furnished in the answer to Item 8. The chart should show the percentage of each class voting securities of each subsidiary owned by the registrant and by each subsidiary company. See Exhibit A hereto. Exhibit B. With respect to the registrant and each subsidiary company thereof, furnish a copy of the charter, articles of incorporation, trust agreement, voting trust agreement, or other fundamental document of organization, and a copy of its bylaws, rules, and regulations, or other instruments corresponding thereto. If such documents do not set forth fully the rights, priorities, and preferences of the holders of each class of capital stock described in the answer to Item 8(b) and those of the holders of any warrants, options or other securities described in the answer to Item 8(d), and of any limitations on such rights, there shall also be included a copy of each certificate, resolution, or other document establishing or defining such rights and limitations. Each such document shall be in the amended form effective at the date of filing the registration statement or shall be accompanied by copies of any amendments to it then in effect. The Articles of Incorporation and Bylaws, as amended for Dominion and its first tier subsidiaries and certain operating companies listed below are filed as Exhibit B-1 through Exhibit B-18 hereto:
Exhibit Company ------- ------- B-1 Dominion Resources, Inc. (a) Articles of Incorporation, as amended and restated, effective August 9, 1999. (b) Bylaws, as amended, effective October 15, 1999. B-2 Dominion Capital, Inc. (a) Articles of Incorporation, as amended and restated, effective July 28, 1986. (b) Bylaws, as amended, effective October 15, 1999.
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Exhibit Company ------- ------- B-3 Dominion Energy, Inc. (a) Articles of Restatement, effective April 14, 1989. (b) Bylaws, as amended, effective October 15, 1999. B-4 Dominion Exploration & Production, Inc. (a) Certificate of Incorporation, as amended, effective April 12, 2000. (b) By-laws, as amended, effective April 12, 2000. B-5 Dominion Transmission, Inc. (a) Certificate of Incorporation, as amended, effective April 11, 2000. (b) Bylaws, as amended, effective April 11, 2000. B-6 Dominion Field Services, Inc. (a) Certificate of Incorporation, as amended, effective April 1, 2000. (b) Bylaws, as amended, effective April 1, 2000. B-7 Dominion Generation, Inc. (a) Articles of Incorporation, dated May 1, 1999. (b) Bylaws, as amended, effective October 15, 1999. B-8 Dominion Resources Services, Inc. (a) Articles of Incorporation dated, October 14, 1999. (b) Bylaws, effective October 14, 1999. B-9 Dominion U.K. Holding, Inc. (a) Articles of Incorporation effective December 18, 1996. (b) Bylaws, as amended and restated, effective July 8, 1997. B-10 Consolidated Natural Gas Company (a) Certificate of Incorporation, as amended, effective January 28, 2000. (b) Bylaws, as amended, effective January 28, 2000. B-11 Consolidated Natural Gas Service Company (a) Certificate of Incorporation, as amended November 30, 1982. (b) Bylaws, as last amended March 1, 1993. B-12 CNG International Corporation (a) Certificate of Incorporation, effective January 22, 1996. (b) Bylaws, effective August 1, 1996. B-13 CNG Retail Services Corporation (a) Certificate of Incorporation, effective January 30, 1997. (b) Bylaws, effective February 10, 1997. B-14 The East Ohio Gas Company (a) Articles of Incorporation, as amended, effective June 17, 1993. (b) Regulations, as amended, effective September 15, 1999. B-15 Hope Gas, Inc. (a) Articles of Incorporation, as amended, effective October 13, 1994. (b) Bylaws, as amended, effective June 1, 1998. B-16 The Peoples Natural Gas Company (a) Articles of Incorporation, as amended, effective September 2, 1993. (b) Bylaws, as amended, effective March 15, 1990. B-17 Virginia Electric and Power Company (a) Articles of Incorporation, as amended and restated, effective May 6, 1999. (b) Bylaws, as amended and restated, effective January 21, 2000. B-18 Virginia Natural Gas, Inc. (a) Articles of Incorporation, as amended, effective December 26, 1990. (b) Bylaws, as amended, effective April 26, 1991.
45 Exhibit C. (a) With respect to each class of funded debt shown in the answers to Items 8(a) and 8(c), submit a copy of the indenture or other fundamental document defining the rights of the holders of such security, and a copy of each contract or other instrument evidencing the liability of the registrant or a subsidiary company thereof as endorser or guarantor of such security. Include a copy of each amendment of such document and of each supplemental agreement, executed in connection therewith. If there have been any changes of trustees thereunder, such changes, unless otherwise shown, should be indicated by notes on the appropriate documents. No such indenture or other document need be filed in connection with any such issue if the total amount of securities that are now, or may at any time hereafter, be issued and outstanding thereunder does not exceed either $1,000,000 or an amount equal to 10% of the total of the debit accounts shown on the most recent balance sheet of the registrant or subsidiary company which issued or guaranteed such securities or which is the owner of property subject to the lien of such securities, whichever of said sums is the lesser. Omitted by permission of the Staff (b) As to each outstanding and uncompleted contract or agreement entered into by registrant or any subsidiary company thereof relating to the acquisition of any securities, utility assets (as defined in section 2(a)(18) of the Act), or any other interest in any business, submit a copy of such contract or agreement and submit details of any supplementary understandings or arrangements that will assist in securing an understanding of such transactions. Omitted by permission of the Staff Exhibit D. A consolidating statement of income and surplus of the registrant and its subsidiary companies for its last fiscal year ending prior to the date of filing this registration statement, together with a consolidating balance sheet of the registrant and its subsidiary companies as of the close of such fiscal year. See Exhibit D hereto. Exhibit E. For each public utility company and natural gas producing and pipe line property in the holding company system of the registrant, furnish the following maps (properties of associate companies operating in contiguous or nearby areas may be shown on the same map, provide property and service areas of each company are shown distinctively). (1) Map showing service area in which electric service is furnished indicating the names of the companies servicing contiguous areas. See Exhibit E-1 hereto. (2) Electric system map showing location of electric property (exclusive of local distribution lines) owned and/or operated, and information as follows: (a) Generating plants--kind and capacity; (b) Transmission lines--voltage, number of circuits, kind of supports, kind and size of conductors; (c) Transmission substations--capacity. (d) Distribution substations--capacity. (e) Points of interconnection with all other electric utility companies and with all electrical enterprises operated by municipal or governmental agencies, giving names of such companies and enterprises; The information requested in item (2) can be found on the map included as Exhibit E-1. (3) Map showing service area in which gas service is furnished, indicating the names of companies serving contiguous areas; See Exhibit E-2 hereto. 46 (4) Gas system map showing location of gas property (exclusive of low pressure local distribution lines) owned and/or operated, and information as follows: (a) Generating plants--kind and daily capacity; (b) Holders--kind and capacity; (c) Compressor stations--capacity in horsepower; (d) Transmission pipe lines--size, approximate average transmission pressure and the estimated daily delivery capacity of the system; (e) Points of interconnection with all other private and public gas utilities, pipe lines, or producing enterprises; giving names of such companies and other enterprises; (f) General location and outline of gas producing and reserve areas and diagrammatic location of gathering lines. See Exhibit E-2 hereto. Exhibit F. Furnish an accurate copy of each annual report for the last fiscal year ending prior to the date of the filing of this registration statement, which the registrant and each subsidiary company thereof has previously submitted to its stockholders. For companies for which no reports are submitted the reason for omission should be indicated; provided that electronic filers shall submit such reports in paper format only under cover of Form SE.
Exhibit Report ------- ------ F-1 Dominion Resources, Inc. Annual Report on Form 10-K for the fiscal year ended December 31, 1999 (File No. 1-8489) F-2 Virginia Electric and Power Company Annual Report on Form 10-K for the fiscal year ended December 31, 1999 (File No. 1-2255) F-3 Consolidated Natural Gas Company Annual Report on Form 10-K for the fiscal year ended December 31, 1999 (File No. 1-3196) F-4 Dominion Resources, Inc. 2000 Proxy Statement dated March 16, 2000 (File No. 1-8489) F-5 Dominion Resources, Inc. 1999 Annual Report to Shareholders. F-6 Consolidated Natural Gas Company Act, Form 8-K, dated January 27, 2000 (File No. 1-3196) F-7 Dominion Resources, Inc. 1998 Statistical Summary & Financial Forecast
Exhibit G. Furnish a copy of each annual report which the registrant and each public utility subsidiary company thereof shall have filed with any State Commission having jurisdiction to regulate public utility companies for the last fiscal year ending prior to the date of filing this registration statement. If any such company shall have filed similar reports with more than one such State commission, the registrant need file a copy of only one of such reports provided that notation is made of such fact, giving the names of the different commissions with which such report was filed, and setting forth any differences between the copy submitted and the copies filed with such other commissions. In the event any company submits an annual report to the Federal Power Commission but not to a State commission, a copy of such report should be furnished. In the case of a registrant or any public utility subsidiary company for which no report is appended the reasons for such omission should be indicated such as "No such reports required or filed" provided that electronic filers shall submit such reports in paper format only under cover of Form SE.
Exhibit Report ------- ------ G-1 1999 Annual Report of Virginia Electric and Power Company to the Federal Energy Regulatory Commission--FERC Form 1 G-2 1999 Annual Financial and Operating Report of Virginia Electric and Power Company to the State Corporation Commission of the Commonwealth of Virginia
47
Exhibit Report ------- ------ G-3 Virginia Electric and Power Company Annual Report for the calendar year 1999 to the North Carolina Public Staff Utilities Commission G-4 1998 Annual Report of CNG Transmission Corporation to the Federal Energy Regulatory Commission--FERC Form 2 G-5 1998 Annual Report of the East Ohio Gas Company to the Public Utilities Commission of the State of Ohio G-6 1999 Annual Report of The Peoples Natural Gas Company to the Pennsylvania Public Utility Commission G-7 1999 Annual Report of Virginia Natural Gas, Inc. to the State Corporation Commission of the Commonwealth of Virginia G-8 1998 Annual Report of Hope Gas, Inc. to the West Virginia Public Service Commission
Exhibit H. Typical forms of service, sales, or construction contracts described in answer to Item 18. See Exhibit H-1 through H-31. Exhibit I. Other U5S Information for Consolidated Natural Gas Company. See Exhibit I hereto This registration statement comprises: (a) Pages numbered 1 to 48 consecutively. (b) The following Exhibits: the Exhibits shown on the attached exhibit index beginning on page 50. 48 SIGNATURE Pursuant to the requirements of the Public Utility Holding Company Act of 1935, the registrant has caused this registration statement to be duly signed on its behalf in the City of Richmond and State of Virginia, on the 27th day of April, 2000. Dominion Resources, Inc. /s/ James L. Trueheart By:__________________________________ James L. Trueheart Group Vice President and Principal Accounting Officer Attest: /s/ Patricia A. Wilkerson By___________________________________ Patricia A. Wilkerson Vice President and Corporate Secretary VERIFICATION State of Virginia City of Richmond ss The undersigned, being duly sworn, deposes and says that he has duly executed the attached registration statement dated April 27, 2000, for and on behalf of Dominion Resources, Inc.; that he is the Group Vice President and Principal Accounting Officer of such company; and that all action by stockholders, directors, and other bodies necessary to authorize deponent to execute and file such instrument has been taken. Deponent further says that he is familiar with such instrument and the contents thereof, and that the facts therein set forth are true to the best of his knowledge, information and belief. /s/ W. H. Riggs, Jr. By___________________________________ W. H. Riggs, Jr. Subscribed and sworn to before me this 27th day of April, 2000. - ------------------------------------- My commission expires: February 28, 2002 49 INDEX OF EXHIBITS
Exhibit Number Description ------- ----------- A Corporate chart of Dominion Resources, Inc. and its subsidiaries (filed herewith on Form SE). B-1 Dominion Resources, Inc. (a) Articles of Incorporation, as amended and restated, effective August 9, 1999 (filed herewith on Form SE). (b) Bylaws, as amended, effective October 15, 1999 (filed herewith on Form SE). B-2 Dominion Capital, Inc. (a) Articles of Incorporation, as amended and restated, effective July 28, 1986 (filed herewith on Form SE). (b) Bylaws, as amended, effective October 15, 1999 (filed herewith on Form SE). B-3 Dominion Energy, Inc. (a) Articles of Restatement, effective April 14, 1989 (filed herewith on Form SE). (b) Bylaws, as amended, effective October 15, 1999 (filed herewith on Form SE). B-4 Dominion Exploration & Production, Inc. (a) Certificate of Incorporation, as amended, effective April 12, 2000 (filed herewith on Form SE). (b) By-Laws, as amended, effective April 12, 2000 (filed herewith on Form SE). B-5 Dominion Transmission, Inc. (a) Certificate of Incorporation, as amended, effective April 11, 2000 (filed herewith on Form SE). (b) Bylaws, as amended, effective April 11, 2000 (filed herewith on Form SE). B-6 Dominion Field Services, Inc. (a) Certificate of Incorporation, as amended April 1, 2000 (filed herewith on Form SE). (b) Bylaws, as amended April 1, 2000 (filed herewith on Form SE). B-7 Dominion Generation, Inc. (a) Articles of Incorporation, dated May 1, 1999 (filed herewith on Form SE). (b) Bylaws, as amended, effective October 15, 1999 (filed herewith on Form SE). B-8 Dominion Resources Services, Inc. (a) Articles of Incorporation, dated October 14, 1999 (filed herewith on Form SE). (b) Bylaws, effective October 14, 1999 (filed herewith on Form SE). B-9 Dominion U.K. Holding, Inc. (a) Articles of Incorporation effective December 18, 1996 (filed herewith on Form SE). (b) Bylaws, as amended and restated, effective July 8, 1997 (filed herewith on Form SE). B-10 Consolidated Natural Gas Company (a) Certificate of Incorporation, as amended, effective January 28, 2000 (filed herewith on Form SE). (b) Bylaws, as amended, effective January 28, 2000 (filed herewith on Form SE). B-11 Consolidated Natural Gas Service Company (a) Certificate of Incorporation, as amended November 30, 1982 (filed herewith on Form SE). (b) Bylaws, as last amended March 1, 1993 (filed herewith on Form SE). B-12 CNG International Corporation (a) Certificate of Incorporation, effective January 22, 1996 (filed herewith on Form SE). (b) Bylaws, effective August 1, 1996 (filed herewith on Form SE). B-13 CNG Retail Services Corporation (a) Certificate of Incorporation, effective January 30, 1997 (filed herewith on Form SE). (b) Bylaws, effective February 10, 1997 (filed herewith on Form SE).
50
Exhibit Number Description ------- ----------- B-14 The East Ohio Gas Company (a) Articles of Incorporation, as amended, effective June 17, 1993 (filed herewith on Form SE). (b) Regulations, as amended, effective September 15, 1999 (filed herewith on Form SE). B-15 Hope Gas, Inc. (a) Certificate of Incorporation, as amended, effective October 13, 1994 (filed herewith on Form SE). (b) Bylaws, as amended, effective June 1, 1998 (filed herewith on Form SE). B-16 The Peoples Natural Gas Company (a) Articles of Incorporation, as amended, effective September 2, 1993 (filed herewith on Form SE). (b) Bylaws, as amended, effective March 15, 1990 (filed herewith on Form SE). B-17 Virginia Electric and Power Company (a) Articles of Incorporation, as amended and restated, effective May 6, 1999 (filed herewith on Form SE). (b) Bylaws, as amended and restated, effective January 21, 2000 (filed herewith on Form SE). B-18 Virginia Natural Gas, Inc. (a) Articles of Incorporation, as amended, effective December 26, 1990 (filed herewith on Form SE). (b) Bylaws, as amended, effective April 26, 1991 (filed herewith on Form SE). D Consolidating financial statements of Dominion Resources, Inc. and its subsidiaries for the fiscal year ended December 31, 1999 (filed herewith). E-1 Service area map of Virginia Electric and Power Company including generating plants, transmission lines, interconnections (filed herewith on Form SE). E-2 Service area map of Consolidated Natural Gas Company including pipelines, delivery and receipt connections and compressor stations (filed herewith on Form SE). F-1 Dominion Resources, Inc. Annual Report on Form 10-K for the fiscal year ended December 31, 1999 (File No. 1-8489) (filed herewith on Form SE). F-2 Virginia Electric and Power Company Annual Report on Form 10-K for the fiscal year ended December 31, 1999 (File No. 1-2255) (filed herewith on Form SE). F-3 Consolidated Natural Gas Company Annual Report on Form 10-K for the fiscal year ended December 31, 1999 (File No. 1-3196) (filed herewith on Form SE). F-4 Dominion Resources, Inc. 2000 Proxy Statement dated March 16, 2000 (File No. 1-8489) (filed herewith on Form SE). F-5 Dominion Resources, Inc. 1999 Annual Report to Shareholders (filed herewith on Form SE). F-6 Consolidated Natural Gas Company, Form 8-K, dated January 27, 2000 (File No. 1-3196) (filed herewith on Form SE). F-7 Dominion Resources, Inc. 1998 Statistical Summary & Financial Forecast (filed herewith on Form SE). 1999 report to be filed by amendment in June 2000. G-1 1999 Annual Report of Virginia Electric and Power Company to the Federal Energy Regulatory Commission--FERC Form 1 (filed herewith on Form SE). G-2 1999 Annual Financial and Operating Report of Virginia Electric and Power Company to the State Corporation Commission of the Commonwealth of Virginia (filed herewith on Form SE).
51
Exhibit Number Description ------- ----------- G-3 Virginia Electric and Power Company Annual Report for the calendar year 1999 to the North Carolina Public Staff Utilities Commission (filed herewith on Form SE). G-4 1998 Annual Report of CNG Transmission Corporation to the Federal Energy Regulatory Commission--FERC Form 2 (filed herewith on Form SE) (1999 report to be filed by amendment). G-5 1998 Annual Report of The East Ohio Gas Company to the Public Utilities Commission of the State of Ohio (filed herewith on Form SE) (1999 report to be filed by amendment). G-6 1999 Annual Report of the Peoples Natural Gas Company to the Pennsylvania Public Utility Commission (filed herewith on Form SE). G-7 1999 Annual Report of Virginia Natural Gas, Inc. to the State Corporation Commission of the Commonwealth of Virginia (filed herewith on Form SE). G-8 1998 Annual Report of Hope Gas, Inc. to the West Virginia Public Service Commission (filed herewith on Form SE) (1999 report to be filed by amendment). H-1 Form of Service Agreement between Dominion Resources Services, Inc./Consolidated Natural Gas Service Company, Inc. and the below listed affiliates, dated January 28, 2000 (filed as Exhibit K-1.1 to the Form U-1 Application as amended in File No. 70-9477 and filed herewith on Form SE).
Affiliates CNG Coal Company Dominion Energy, Inc. CNG Field Services Company Dominion Generation, Inc. CNG Financial Services, Inc. Dominion MidWest Energy, Inc. CNG International Corporation Dominion Resources, Inc. CNG Main Pass Gathering Evantage, Inc. Corporation Hope Gas, Inc. CNG Oil Gathering Corporation Market Center Services, Inc. CNG Power Corporation The East Ohio Gas Company CNG Power Services Corporation The Peoples Natural Gas Company CNG Producing Company Virginia Power Energy Marketing, CNG Products and Services, Inc. Inc. CNG Research Company Virginia Power Fuel Corporation CNG Retail Services Corporation Virginia Power Nuclear Services CNG Transmission Corporation Company Consolidated Natural Gas Company Virginia Power Services Energy Consolidated System LNG Company Corp., Inc. Dominion Applachian Development, Virginia Power Services, Inc. Inc. VP Property, Inc. Dominion Energy Canada, Inc. VPS Communications, Inc. Dominion Capital, Inc.
H-2 Service Agreement between Dominion Resources Services, Inc./Consolidated Natural Gas Service Company, Inc. and Virginia Electric and Power Company dated January 1, 2000 (filed in the Form of Exhibit K-1.1 to the Form U-1 Application, as amended, in File No. 70-09477 and filed herewith on Form SE). H-3 Support Agreement between Virginia Electric and Power Company and Dominion Resources Services, Inc./Consolidated Natural Gas Service Company, Inc. dated January 1, 2000 (filed as Exhibit K-1.2 to the Form U-1 Application, as amended, in File No. 70-09477 and filed herewith on Form SE). H-4 Affiliated Transaction Agreement between CNG Transmission (formerly Consolidated Gas Supply Corporation) (Service Provider) and CNG Producing (Receiving Company) dated January 1, 1981 for management services. Contract is terminable on 30-days notice. Services to be provided at cost. (filed herewith on Form SE).
52
Exhibit Number Description ------- ----------- H-5 Call Center Services Agreement between CNG Retail Services (Service Provider) and Dominion Resources Services, Inc. (Receiving Company) dated March 1, 2000 for the provision of call center services. (filed herewith on Form SE). H-6 Form of Ancillary Service Agreement between affiliates listed below for the provision of services listed therein. (filed as Exhibit K-1.3 to the Form U-1 Application, as amended, in File No. 70-09477 and filed herewith on Form SE).
Service Provider Receiving Company CNG Retail Services Dominion Resources Services Dominion Transmission Peoples Natural Gas Dominion Transmission East Ohio Gas Dominion Transmission Hope Gas East Ohio Gas Peoples Natural Gas East Ohio Gas Hope Gas East Ohio Gas Dominion Transmission Hope Gas Peoples Natural Gas Hope Gas East Ohio Gas Hope Gas CNG Transmission Peoples Natural Gas East Ohio Gas Peoples Natural Gas Hope Gas Peoples Natural Gas Dominion Transmission
H-7 Agreement between Virginia Electric and Power Company and Virginia Power Fuel Corporation dated June 30, 1995 for purchase and sale of enriched uranium. (filed herewith on Form SE). H-8 Agreement between Virginia Electric and Power Company and VPS Communications, Inc. dated September 2, 1997 for provision of certain administrative and telecommunications services. (filed herewith on Form SE). H-9 Affiliate Services Agreement between Virginia Electric and Power Company and Virginia Power Services, Inc. dated September 3, 1997 for provision of administrative services (together with first and second amendments each dated October 30, 1998 and third amendment dated October 1, 1999.) (filed herewith on Form SE). H-10 Agreement between Virginia Electric and Power Company and Virginia Power Services Energy Corp., Inc. dated October 30, 1998 providing for fuel management and associated risk management services. (filed herewith on Form SE). H-11 Operating Agreement between Virginia Electric and Power Company and Virginia Power Property, Inc. dated December 31, 1999 for management and use of certain real property. (filed herewith on Form SE). H-12 Fuel Agency and Service Agreement dated October 30, 1998 between Virginia Power Services Energy Corp., Inc. and Virginia Power Energy Marketing, Inc. providing for fuel management and associated risk management services. (filed herewith on Form SE). H-13 Microwave Service Agreement between CNG Transmission Corporation (as Service Provider) and Consolidated Natural Gas Company, Consolidated Natural Gas Service Company, Inc., The Peoples Natural Gas Company and CNG Producing Company, effective as of January 1, 1991 for the operation and maintenance of a microwave system (filed herewith on Form SE).
53
Exhibit Number Description ------- ----------- H-14 Agreement between CNG Producing Company (as Service Provider) and CNG Transmission Corporation (formerly Consolidated Gas Supply Corporation) dated January 1, 1981 for the provision of certain operating and administrative services (filed herewith on Form SE). H-15 Agreement between CNG Producing Company (as Service Provider) and CNG Trading Company dated August 1, 1990 for the provision of certain operating and administrative services (filed herewith on Form SE). H-16 Agreement between CNG Transmission Corporation (as Service Provider) and CNG Iroquois, Inc. effective as of January 1, 1991 for the provision of certain operating and administrative services (filed herewith on Form SE). H-17 Agreement between CNG Transmission Corporation (as Service Provider) and CNG Storage Service Company, effective as of July 1, 1991 for the provision of certain operating and administrative services (filed herewith on Form SE). H-18 Agreement between The Peoples Natural Gas Company (as Service Provider) and Consolidated Natural Gas Service Company, Inc., effective as of January 1, 1992 for the provision of certain operating and administrative services (filed herewith on Form SE). H-19 Agreement between CNG Gas Services Corporation (as Service Provider) and CNG Energy Company effective as of January 1, 1994 for the provision of certain operating and administrative services (filed herewith on Form SE). H-20 Agreement between The Peoples Natural Gas Company (as Service Provider) and Consolidated Natural Gas Service Company, Inc. dated November 1, 1993 for the provision of certain operating and related services associated with maintaining the service company's fuel cell power plant (filed herewith on Form SE). H-21 Agreement between CNG Gas Services Corporation (as Service Provider) and CNG Producing Company effective as of February 1, 1993 for the provision of certain operating and administrative services (filed herewith on Form SE). H-22 Agreement between The Peoples Natural Gas Company (as Service Provider) and Consolidated Natural Gas Service Company, Inc. effective as of January 1, 1995 for the provision of certain administrative services relating to medical and associated services (filed herewith on Form SE). H-23 Agreement between The Peoples Natural Gas Company (as Service Provider) and Consolidated Natural Gas Service Company Inc. effective as of January 1, 1995 for the provision of certain administrative and related services associated with mail services (filed herewith on Form SE). H-24 Agreement between The Peoples Natural Gas Company (as Service Provider) and The East Ohio Gas Company, Virginia Natural Gas, Inc., Hope Gas, Inc. and West Ohio Gas Company effective as of June 1, 1995 for the provision of certain marketing-related services associated with natural gas vehicles and gas-fired appliances (filed herewith on Form SE). H-25 Agreement between CNG Producing Company (as Service Provider) and Consolidated Natural Gas Service Company effective as of January 1, 1995 for the provision of certain information services (filed herewith on Form SE). H-26 Agreement between The East Ohio Company (as Service Provider) and The Peoples Natural Gas Company, Virginia Natural Gas, Inc., Hope Gas, Inc., West Ohio Gas Company effective as of January 1, 1996, for the provision of marketing communications and advertising services (filed herewith on Form SE). H-27 Agreement between The Peoples Natural Gas Company (as Service Provider) and CNG Products and Services, Inc., effective as of January 1, 1996, for the provision of service line repair and replacement services (filed herewith on Form SE).
54
Exhibit Number Description ------- ----------- H-28 Agreement between The Peoples Natural Gas Company (as Service Provider) and Consolidated Natural Gas Service Company, Inc., effective as of November 1, 1996, for the provision of certain managerial and administrative services (filed herewith on Form SE). H-29 Agreement between CNG Products and Services, Inc. (as Service Provider) and CNG Retail Services Corporation, effective as of February 1, 1997, for the provision of certain administrative and marketing services (filed herewith on Form SE). H-30 Agreement between The Peoples Natural Gas Company (as Service Provider) and Consolidated Natural Gas Service Company, effective as of March 1, 1996, for the provision of certain floor space and office supplies (filed herewith on Form SE). H-31 Agreement between The Peoples Natural Gas Company (as Service Provider) and Consolidated Natural Gas Service Company, effective as of March 1, 1996, for the provision of certain floor space and office supplies to enable third-party contractors to conduct information technology services (filed herewith on Form SE). I Other U5S Information for Consolidated Natural Gas Company (filed herewith). I-F Item 10--Schedule of Utility Plant, Depreciation and Amortization, Other Property and Investments for CNG Transmission, East Ohio Gas, Peoples Natural Gas, Virginia Natural Gas and Hope Gas (filed herewith on Form SE).
55 EX-27.1 2 FINANCIAL DATA SCHEDULE
OPUR1 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE CONSOLIDATED FINANCIAL STATEMENTS INCLUDED IN ITEM 10 OF CONSOLIDATED NATURAL GAS COMPANY'S ANNUAL REPORT ON FORM U5S FOR THE YEAR ENDED DECEMBER 31, 1999 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 YEAR DEC-31-1999 DEC-31-1999 PER-BOOK 2,688,645 1,538,616 1,437,611 516,552 353,795 6,535,219 263,858 527,102 1,545,664 2,376,310 0 0 1,763,678 0 0 685,731 0 0 0 0 1,749,186 6,535,219 3,074,350 73,581 2,541,330 2,614,911 459,439 (198,262) 261,177 124,417 136,760 0 136,760 185,859 124,424 368,182 1.43 1.42
EX-27.2 3 FINANCIAL DATA SCHEDULE
OPUR1 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE CONSOLIDATED FINANCIAL STATEMENTS INCLUDED IN ITEM 10 OF CONSOLIDATED NATURAL GAS COMPANY'S ANNUAL REPORT ON FORM U5S FOR THE YEAR ENDED DECEMBER 31, 1999 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 05 EAST OHIO GAS 1,000 YEAR DEC-31-1999 JAN-01-1999 DEC-31-1999 PER-BOOK 915,470 0 417,806 212,619 782 1,546,677 237,968 435 156,759 414,702 0 0 298,259 0 0 0 0 0 0 0 853,256 1,546,677 1,022,971 8,184 963,620 971,804 51,167 (10,853) 40,314 27,008 13,306 0 13,306 49,877 0 29,752 0 0
EX-27.3 4 FINANCIAL DATA SCHEDULE
OPUR1 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE CONSOLIDATED FINANCIAL STATEMENTS INCLUDED IN ITEM 10 OF CONSOLIDATED NATURAL GAS COMPANY'S ANNUAL REPORT ON FORM U5S FOR THE YEAR ENDED DECEMBER 31, 1999 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 06 PEOPLES NATURAL GAS 1,000 YEAR DEC-31-1999 JAN-01-1999 DEC-31-1999 PER-BOOK 449,441 0 126,389 189,364 0 765,194 183,535 0 65,346 248,881 0 0 131,344 0 0 0 0 0 0 0 384,969 765,194 303,053 9,689 242,128 251,817 51,236 (5,013) 46,223 11,787 34,436 0 34,436 44,866 0 19,942 0 0
EX-27.4 5 FINANCIAL DATA SCHEDULE
OPUR1 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE CONSOLIDATED FINANCIAL STATEMENTS INCLUDED IN ITEM 10 OF CONSOLIDATED NATURAL GAS COMPANY'S ANNUAL REPORT ON FORM U5S FOR THE YEAR ENDED DECEMBER 31, 1999 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 07 VIRGINIA NATURAL GAS 1,000 YEAR DEC-31-1999 JAN-01-1999 DEC-31-1999 PER-BOOK 390,910 0 58,535 3,488 56 452,989 148,697 1,083 2,437 208,737 0 0 116,000 0 0 0 0 0 0 0 184,772 452,989 202,835 4,868 177,413 182,281 20,554 (4,602) 15,952 9,188 6,764 0 6,764 7,525 0 20,190 0 0
EX-27.5 6 FINANCIAL DATA SCHEDULE
OPUR1 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE CONSOLIDATED FINANCIAL STATEMENTS INCLUDED IN ITEM 10 OF CONSOLIDATED NATURAL GAS COMPANY'S ANNUAL REPORT ON FORM U5S FOR THE YEAR ENDED DECEMBER 31, 1999 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 08 HOPE GAS 1,000 YEAR DEC-31-1999 JAN-01-1999 DEC-31-1999 PER-BOOK 116,189 0 45,405 24,437 1,125 187,156 44,900 0 12,566 57,466 0 0 36,930 0 0 0 0 0 0 0 92,760 187,156 111,285 163 104,552 104,715 6,570 (1,622) 4,948 4,165 783 0 783 1,020 0 478 0 0
EX-99.1 7 EXHIBIT D AS REFLECTED ON UB5 EXHIBIT INDEX EXHIBIT D. By permission of the Staff, Dominion has presented consolidating balance sheets as of December 31, 1999, and consolidating statements of income for the year then ended for the registrant and its subsidiaries. Dominion Capital financial statements are presented for its first tier subsidiaries as allowed by the Staff. In addition, CNG financial statements for the year ended December 31, 1999, include consolidating statements of cash flows and retained earnings and are provided at Exhibit D-6. The accompanying consolidating financial statements should be reviewed in conjunction with Dominion's Form 8-K/A, filed with the SEC on March 23, 2000, which included certain proforma financial information for the merged company. Certain proforma information has been included at Exhibit D-1. In addition, the financial statements should be reviewed in conjunction with Dominion Resources, Inc.'s Form 10-K, filed March 7, 2000, included as Exhibit F-1, CNG's Form 8-K, filed with the SEC on January 27, 2000, included as Exhibit F- 6, and Virginia Power's Form 10-K, included as Exhibit F-2, filed with the SEC on March 7, 2000. D-1 EXHIBIT D. FINANCIAL STATEMENTS Financial Statements as of and for the year ended December 31, 1999 INDEX
Page ------ EXHIBIT D-1 Proforma Dominion, including CNG Consolidating Balance Sheet............................................ D-1-1 Consolidating Income Statement......................................... D-1-3 EXHIBIT D-2 Report of Independent Accountants........................................ D-2-1 Notes to Exhibit D-2 through Exhibit D-5................................. D-2-2 Dominion Resources, Inc. Consolidating Balance Sheet............................................ D-2-5 Consolidating Income Statement......................................... D-2-7 EXHIBIT D-3 Dominion Capital, Inc. Consolidating Balance Sheet............................................ D-3-1 Consolidating Income Statement......................................... D-3-5 EXHIBIT D-4 Dominion Energy, Inc. Consolidating Balance Sheet............................................ D-4-1 Consolidating Income Statement......................................... D-4-3 EXHIBIT D-4-1 Dominion Energy, Inc.--Oil and Gas Consolidating Balance Sheet............................................ D-4-4 Consolidating Income Statement......................................... D-4-6 EXHIBIT D-4-1(a) Dominion Reserves, Inc. Consolidating Balance Sheet............................................ D-4-7 Consolidating Income Statement......................................... D-4-9 EXHIBIT D-4-1(b) Dominion Energy Canada Consolidating Balance Sheet............................................ D-4-11 Consolidating Income Statement......................................... D-4-13 EXHIBIT D-4-1(c) Dominion Gas Processing Michigan, Inc. Consolidating Balance Sheet............................................ D-4-14 Consolidating Income Statement......................................... D-4-16 EXHIBIT D-4-2 Dominion Energy, Inc.--Domestic Power Generation Consolidating Balance Sheet............................................ D-4-17 Consolidating Income Statement......................................... D-4-19
D-2 EXHIBIT D. FINANCIAL STATEMENTS Financial Statements as of and for the year ended December 31, 1999 INDEX
Page ------ EXHIBIT D-4-2(a) Dominion Cogen WVA, Inc. Consolidating Balance Sheet............................................ D-4-20 Consolidating Income Statement......................................... D-4-22 EXHIBIT D-4-2(b) Dominion Elwood, Inc. Consolidating Balance Sheet............................................ D-4-23 Consolidating Income Statement......................................... D-4-25 EXHIBIT D-4-3 Dominion Energy, Inc.--Foreign Power Generation Consolidating Balance Sheet............................................ D-4-26 Consolidating Income Statement......................................... D-4-28 EXHIBIT D-5 Virginia Power Consolidating Balance Sheet............................................ D-5-1 Consolidating Income Statement......................................... D-5-3 EXHIBIT D-5(a) VP Services, Inc. Consolidating Balance Sheet............................................ D-5-4 Consolidating Income Statement......................................... D-5-6 EXHIBIT D-6 Consolidated Natural Gas Company Index of Consolidating Financial Statements.............................. D-6-1
The Notes to the Consolidated Financial Statements are an integral part of these consolidating statements. See Notes on page D-2-2. D-3 EXHIBIT D-1 DOMINION RESOURCES, INC. UNAUDITED PRO FORMA COMBINED CONSOLIDATING BALANCE SHEET AS OF DECEMBER 31, 1999
Proforma Proforma DRI DRI CNG CNG Combined Adjustments (Exhibit D-2) Reclassifications (Audited) Revised Reclassifications (Exhibit D-6) -------- ----------- ------------- ----------------- --------- ------- ----------------- ------------- (millions) ASSETS Current assets: Cash and cash equivalents..... $ 374 $ 280 $ 280 $ 94 $ 94 Accounts receivable: Customers, less allowance...... 1,071 $ (8) 664 664 415 $ 86 329 Unbilled and other.......... (198) 198 Other........... 381 269 269 112 112 Receivables from affiliated companies Materials and supplies, at average cost or less: Plant and general........ 163 143 143 20 20 Fossil fuel..... 111 111 111 Gas stored...... 86 86 86 Unrecovered gas costs........... 38 38 38 Deferred income taxes--current.. 50 49 49 1 1 Mortgage loans in warehouse....... 119 119 119 Commodity contract assets.......... 362 362 362 Finance receivables held for sale........ 15 15 15 Net assets held for sale........ 372 372 372 Prepayments and other current assets.......... 480 180 180 300 300 ------- ------ ------- ------- ------ ----- ------ Total current assets......... 3,622 (8) 2,192 2,192 1,438 -- 1,438 ------- ------ ------- ------- ------ ----- ------ Investments: Loans receivable, net............. 2,034 2,034 2,034 Available for sale securities...... 512 512 512 Nuclear decommissioning trust funds..... 818 818 818 Investments in real estate..... 86 86 86 Stocks of subsidiary companies, at equity.......... 433 433 433 Notes of subsidiary companies....... Other............ 688 334 334 354 354 ------- ------- ------- ------ ----- ------ Total investments.... 4,571 4,217 4,217 354 -- 354 ------- ------- ------- ------ ----- ------ Property, plant and equipment: Utility plant.... 21,137 16,489 16,489 4,648 4,648 Exploration and production properties...... 5,420 (99) 1,127 1,127 4,392 4,392 Other--non- utility......... 1,030 1,030 1,030 Acquisition adjustment...... 3,497 3,497 ------- ------ ------- ------- ------ ----- ------ Total property, plant and equipment...... 31,084 3,398 18,646 18,646 9,040 -- 9,040 ------- ------ ------- ------- ------ ----- ------ Less accumulated depreciation, depletion and amortization.... 12,695 7,882 7,882 4,813 4,813 ------- ------ ------- ------- ------ ----- ------ Net property, plant and equipment....... 18,389 3,398 10,764 10,764 4,227 -- 4,227 ------- ------ ------- ------- ------ ----- ------ Deferred charges and other assets: Regulatory assets, net..... 520 80 221 221 219 219 Goodwill, net.... 132 132 132 Prepaid pension cost............ 1,375 1,140 235 235 Other............ 196 (25) 221 221 62 (235) 297 ------- ------ ------- ------- ------ ----- ------ Total deferred charges and other assets... 2,285 1,195 574 574 516 -- 516 ------- ------ ------- ------- ------ ----- ------ Total assets.... $28,867 $4,585 $17,747 $17,747 $6,535 $ -- $6,535 ======= ====== ======= ======= ====== ===== ======
The Notes to Consolidated Financial Statements are an integral part of this statement (see Notes on page D-2-2). D-1-1 EXHIBIT D-1 DOMINION RESOURCES, INC UNAUDITED PROFORMA COMBINED CONSOLIDATING BALANCE SHEET AS OF DECEMBER 31, 1999
Proforma Proforma DRI DRI CNG CNG Combined Adjustments (Exhibit D-2) Reclassifications (Audited) Revised Reclassifications (Exhibit D-6) -------- ----------- ------------- ----------------- --------- ------- ----------------- ------------- (millions) LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Securities due within one year............ $ 536 $ 536 $ 536 Short-term debt.. 5,816 $4,260 870 870 $ 686 $ 686 Accounts payable, trade........... 1,091 45 711 711 335 335 Payables to affiliated companies....... Accrued taxes.... 223 89 $(214) 303 134 134 Estimated rate contingencies and refunds..... 45 45 45 Amounts payable to customers.... 4 4 4 Dividends declared........ 46 46 46 Commodity contract liabilities..... 347 347 347 Other current liabilities..... 648 99 446 214 232 103 103 ------- ------ ------- ----- ------- ------ --- ------ Total current liabilities.... 8,756 4,404 2,999 2,999 1,353 1,353 ------- ------ ------- ----- ------- ------ --- ------ Long-term debt... 8,680 (20) 6,936 6,936 1,764 1,764 ------- ------ ------- ----- ------- ------ --- ------ Deferred credits and other liabilities: Deferred income taxes........... 2,867 360 1,699 1,699 808 808 Investment tax credits......... 167 147 147 20 20 Other............ 520 84 222 222 214 214 ------- ------ ------- ----- ------- ------ --- ------ Total deferred credits and other liabilities.... 3,554 444 2,068 2,068 1,042 1,042 ------- ------ ------- ----- ------- ------ --- ------ Total liabilities.... 20,989 4,828 12,002 12,002 4,159 4,159 ------- ------ ------- ----- ------- ------ --- ------ Minority interest........ 99 99 99 Commitments and contingencies Obligated mandatorily redeemable preferred securities of subsidiary trusts.......... 385 385 385 Preferred stock not subject to mandatory redemption...... 509 509 509 Common shareholders' equity: Common stock.... 5,674 1,849 3,561 3,561 264 264 Additional paid in capital..... 16 (567) 16 16 567 567 Treasury stock.. 1 (1) (1) Retained earnings....... 1,210 (1,526) 1,190 1,190 1,546 1,546 Accumulated other comprehensive income......... (15) (15) (15) ------- ------ ------- ----- ------- ------ --- ------ Total common shareholders' equity......... 6,885 (243) 4,752 4,752 2,376 2,376 ------- ------ ------- ----- ------- ------ --- ------ Total liabilities and shareholders' equity......... $28,867 $4,585 $17,747 $17,747 $6,535 $6,535 ======= ====== ======= ===== ======= ====== === ======
The Notes to Consolidated Financial Statements are an integral part of this statement (see Notes on page D-2-2). D-1-2 EXHIBIT D-1 DOMINION RESOURCES, INC. UNAUDITED PROFORMA COMBINED CONSOLIDATING INCOME STATEMENT FOR THE YEAR ENDED DECEMBER 31, 1999
Proforma Proforma DRI CNG Combined Adjustments (Exhibit D-2) (Exhibit D-6) -------- ----------- ------------- -------------- (millions) Operating revenue and income: Domestic electric utility service....... $4,274 $4,274 Domestic gas utility service............... 1,397 $1,397 Gas transportation and storage............... 567 567 Other.................. 2,356 1,246 1,110 ------ ----- ------ ------ Total operating revenue and income............ 8,594 5,520 3,074 ------ ----- ------ ------ Expenses: Electric fuel and purchased energy, net................... 996 996 Purchased gas.......... 912 912 Purchased power capacity, net......... 809 809 Liquids, capacity and other products purchased............. 280 280 Other operation and maintenance........... 2,160 $ 3 1,384 773 Depreciation, depletion and amortization...... 1,159 64 716 379 Taxes, other than income................ 501 304 197 ------ ----- ------ ------ Total operating expenses.............. 6,817 67 4,209 2,541 ------ ----- ------ ------ Income from operations.. 1,777 (67) 1,311 533 ------ ----- ------ ------ Other income and expense: Interest revenue....... Merger-related costs... 29 213 29 (213) Other, net............. 59 (18) 62 15 ------ ----- ------ ------ Total other income and expense............... 88 195 91 (198) ------ ----- ------ ------ Income before fixed charges and income taxes.................. 1,865 128 1,402 335 Fixed charges: Interest charges....... 897 266 507 124 Distributions-preferred securities and preferred stock....... 67 67 ------ ----- ------ ------ Total fixed charges.... 964 266 574 124 ------ ----- ------ ------ Income before provision for income taxes, minority interests and extraordinary item..... 901 (138) 828 211 Provision for income taxes.................. 396 63 259 74 Minority interests...... 18 18 ------ ----- ------ ------ Income from continuing operations............. $ 487 $(201) $ 551 $ 137 ====== ===== ====== ====== Earnings per common share Basic.................. $ 1.98 $ 2.88 $ 1.43 Diluted................ $ 1.98 $ 2.81 $ 1.42
The Notes to Consolidated Financial Statements are an integral part of this statement (see Notes on page D-2-2). D-1-3 INDEPENDENT AUDITORS' CONSENT We consent to the incorporation by reference in this Registration Statement of Dominion Resources, Inc. on Form U5B for the year ended December 31, 1999, filed pursuant to the Public Utility Holding Company Act of 1935, of our report dated January 28, 2000, on the consolidated financial statements of Dominion Resources, Inc., appearing in the Annual Report on Form 10-K of Dominion Resources, Inc. for the year ended December 31, 1999. Deloitte & Touche LLP Richmond, Virginia April 27, 2000 D-2-1 NOTES TO CONSOLIDATING FINANCIAL STATEMENTS INCLUDED IN EXHIBIT D-2 through EXHIBIT D-5
Note Reference Schedule Discussion --------- -------- ---------- General Exhibits D-2 The Notes to Consolidated Financial Statements appearing through D-5 on pages 39 to 57 of Dominion Resources, Inc.'s Form 10- K, filed with the SEC on March 7, 2000, and on pages 39 to 60 of Virginia Electric and Power Company's Form 10-K, filed with the SEC on March 7, 2000, are incorporated herein by reference. Dominion's Annual Report on Form 10- K for the year ended December 31, 1999 (File No. 1-8489) has been provided at Exhibit F-1. General Exhibits D-2 The consolidating entries in the attached exhibits through D-5 primarily relate to the elimination of inter-company advances or borrowings and of investments in subsidiary companies. The eliminating journal entries pertaining to these consolidating financial statements are prepared in detail form, showing the amounts pertaining to the Registrant and each subsidiary company, and are preserved with the Registrant's copy of this Form U5B. Note A Exhibit D-2 Dominion Generation, Inc. had minimal development activity in 1999. General Exhibit D-2 DRI New Sub I, Inc. and DRI New Sub II, Inc. were established for purposes to effect the merger. The companies have not been included herein as there was no activity in 1999. Note B Exhibit D-3 Dominion Capital includes the accounts of Williams Court/DCI Properties, Inc. and Shoulders Hill DCI/Properties,Inc. Note C Exhibit D-3 Virginia Financial Ventures, Inc. includes the accounts NH Capital, Inc., FSFI/Dakotah Direct, Inc., First Source Equity Holding, Inc. and First Source Financial, Inc. General Exhibit D-4 Dominion Energy has included intercompany receivables and payables in "Accounts receivable' and "Accounts payable, trade,' respectively. A detail of these intercompany amounts is included in Item 11, Indebtedness of System Companies. There are no intercompany amounts between Dominion Energy and any of the regulated utility companies within the Dominion system, including CNG. Further, such amounts are generally billed and settled monthly. Intercompany notes receivable and notes payable are separately presented herein with relevant maturity dates and interest rates included in Item 11. General Exhibit D-4 REVALUATIONS: The following table presents a detail of Dominion Energy's acquisitions accounted for under the purchase method of accounting by year: 1999--Owners' interests in San Juan Partners LLC 1999--All outstanding stock of Remington Energy, Ltd. 1998--All outstanding stock of Archer Resources Ltd. 1998--Certain assets of Phoenix Energy Sales Company 1996--Partnership interests in Kimball-Trippe Associates
D-2-2
Note Reference Schedule Discussion --------- -------- ---------- 1996--Purchased oil and gas reserves from Zilkha Energy Company 1994--All outstanding stock of Telesis Petroleums, Inc. 1992--Purchased natural gas reserves of River Gas Corporation and Emerald Gas Corporation A detail of the relative values for the above acquisitions is preserved with the Registrants copy of this Form U5B. Note D Exhibit D-4-1 Niton US, Inc., and Dominion Storage, Inc., own 1% and 85%, respectively, of Dominion Energy Canada Limited, presented herein. Niton US, Inc. has no other activity and is not presented herein. Note E Exhibit D-4-1 San Juan Partners, LLC, is owned through Dominion San Juan, Inc. which is not presented herein. Note F Exhibit D-4-1(a) Phoenix Dominion Energy is owned 99% by Dominion Reserves, Inc. and 1% by Carthage Energy Services, Inc. Note G Exhibit D-4-1(a) Dominion Appalachian Development Properties, LLC, is owned 99% by Dominion Reserves, Inc., and 1% by Dominion Appalachian Development, Inc. Note H Exhibit D-4-1(b) Certain long-term debt of Domcan Boundary Corp. is owed to Domcan NS1 ULC. Domcan NS1 ULC is a special purpose entity owned 99% by Remington LLC and 1% by Dominion Energy. Remington LLC is a special purpose entity owned 100% by Dominion Energy. The only activity of Domcan NS1 ULC is to borrow funds from a bank and to loan those funds to Domcan Boundary Corp. The financial statements of Domcan NS1 ULC and Remington LLC are not presented since their only activity relates to borrowings on behalf of Domcan Boundary Corp. The external debt and related interest expense are presented in the financial statements of Domcan Boundary Corp. Note I Exhibit D-4-1(c) Dominion Gas Processing Michigan, Inc., owns 94% of Frederic HOF LP. Note J Exhibit D-4-1(c) Dominion Gas Processing Michigan, Inc. (DGPMI), effectively owns 50% of Wilderness Energy Services, LP. DGPMI directly owns 24.5% of Wilderness Energy Services, LP. DGPMI also owns 50% of Wilderness LC, which owns 51% of Wilderness Energy Services, LP. Note K Exhibit D-4-2 Dominion Cogen NY owns 1% general partnership interest in Middle Falls, NYSD and Sissonville hydropower plants and DEI owns a 49% interest. All investments in these plants have been written down to zero. Note L Exhibit D-4-2 Dominion Cogen WV, Inc. is a wholly-owned subsidiary of DEI that holds a 50% interest in Morgantown Energy Associates. This column reflects the consolidated balances of Dominion Cogen WV, Inc. and Morgantown Energy Associates (See Exhibit D-4-2 (a) for consolidation). Note M Exhibit D-4-2 Dominion Elwood, Inc. is a wholly-owned subsidiary of DEI that holds a 50% interest in Elwood Energy LLC. This column reflects the consolidated balances of Dominion Elwood and Elwood Energy (See Exhibit D-4-2 (b) for consolidation).
D-2-3
Note Reference Schedule Discussion --------- -------- ---------- Note N Exhibit D-4-2 Dominion Kincaid, Inc. is a wholly-owned subsidiary of DEI that holds a 99% interest in Kincaid Generation LLC with DEI owning the remaining 1% interest. This column reflects consolidated balances assuming a 100% ownership by Dominion Kincaid, Inc. of Kincaid Generation LLC. Note O Exhibit D-4-3 Dominion Energy Interamerican Holding Company LDC is 98% owned by DEI and 1% owned by Dominion Cogen, Inc and 1% owned by Dominion Reserves, Inc., both of which are wholly-owned subsidiaries of DEI. Dominion Energy Interamerican Holding Company owns a 96% interest in a special purpose subsidiary which owns a 50% interest in a Bolivian generation company which is scheduled to be sold in 2000. Note P Exhibit D-4-3 Dominion Energy Company (Cayman Islands) through various ownership interests holds a 54% and 98% ownership interest in two separate Argentine generation companies. These interests were sold effective March 9, 2000. Note Q Exhibit D-4-3 Dominion Holdings, Inc. Peru SAC and Dominion Energy Central America, Inc. were sold effective November 9, 1999. Therefore, only income statement activity is applicable. General Exhibit D-5 DEPRECIATION: Virginia Power's FERC Form 1, included as Exhibit G-1, and prior year FERC filings, along with Virginia Power's Form 10-K for the year ended December 31, 1999, filed with the SEC on March 7, 2000, discuss depreciation policies and reserves. General Exhibit D-5 Evantage, Inc. and VP Property, Inc. are not included herein as these entities had no activity in 1999.
D-2-4 EXHIBIT D-2 DOMINION RESOURCES, INC. CONSOLIDATING BALANCE SHEET As of December 31, 1999
DRI Dominion Consolidated Dominion Dominion Dominion Dominion Resources (Exhibit D- Consolidating Capital, Inc Energy, Inc Generation, Inc Resources Capital 1) Entries DRI (Exhibit D-3) (Exhibit D-4) (Note A) Services, Inc Trust I ------------ ------------- ---------- ------------- ------------- --------------- ------------- --------- (thousands) ASSETS Current assets: Cash and cash equivalents...... $ 279,855 $ 27,606 $ 124,942 $ 61,555 Accounts receivable: Customers, less allowance....... 663,520 Other........... 268,650 7,505 14,899 179,961 Receivables from affiliated companies........ $ (36,212) 29,567 505 $210 Materials and supplies, at average cost or less: Plant and general......... 143,020 419 18,730 Fossil fuel..... 110,844 Deferred income taxes--current... 49,525 Mortgage loans in warehouse........ 118,595 118,595 Commodity contract assets.. 362,218 Finance receivables held for sale......... 15,000 15,000 Net assets held for sale......... Prepayments and other current assets........... 180,523 (5,680) 14,687 36,937 34,305 $ 1,631 ----------- ----------- ---------- ---------- ---------- ---- --- -------- Total current assets.......... 2,191,750 (41,892) 79,365 310,792 295,056 210 1,631 ----------- ----------- ---------- ---------- ---------- ---- --- -------- Investments: Loans receivable, net.............. 2,034,475 2,034,475 Available for sale securities.. 511,663 511,663 Nuclear decommissioning trust funds...... 818,072 Investments in real estate...... 85,914 85,914 Stocks of subsidiary companies, at equity........... 432,578 (5,355,992) 5,098,260 192,680 209,227 257,732 Notes of subsidiary companies........ (339,809) 339,809 Other............ 334,343 16,783 160,467 104,625 ----------- ----------- ---------- ---------- ---------- ---- --- -------- Total investments..... 4,217,045 (5,695,801) 5,454,852 2,985,199 313,852 257,732 ----------- ----------- ---------- ---------- ---------- ---- --- -------- Property, plant and equipment: Utility plant.... 16,489,207 Exploration and production properties....... 1,127,325 1,127,325 Other--non- utility.......... 1,029,681 (2,398) 42,485 61,177 928,323 34 Acquisition adjustment....... ----------- ----------- ---------- ---------- ---------- ---- --- -------- Total property, plant and equipment....... 18,646,213 (2,398) 42,485 61,177 2,055,708 34 ----------- ----------- ---------- ---------- ---------- ---- --- -------- Less accumulated depreciation, depletion and amortization..... 7,882,222 16,357 22,711 432,605 2 ----------- ----------- ---------- ---------- ---------- ---- --- -------- Net property, plant and equipment........ 10,763,991 (2,398) 26,128 38,466 1,623,103 32 ----------- ----------- ---------- ---------- ---------- ---- --- -------- Deferred charges and other assets: Regulatory assets, net...... 221,137 Goodwill, net.... 132,007 78,656 15,136 Other............ 220,636 (18,660) 36,814 142,497 ----------- ----------- ---------- ---------- ---------- ---- --- -------- Total deferred charges and other assets.... 573,780 (18,660) 36,814 221,153 15,136 ----------- ----------- ---------- ---------- ---------- ---- --- -------- Total assets.... $17,746,566 $(5,758,751) $5,597,159 $3,555,610 $2,247,147 $242 $259,363 =========== =========== ========== ========== ========== ==== === ======== Virginia Electric and Power Company UK Holding (Exhibit D-5) ---------- ------------- ASSETS Current assets: Cash and cash equivalents...... $ 4,007 $ 61,745 Accounts receivable: Customers, less allowance....... 663,520 Other........... 273 66,012 Receivables from affiliated companies........ 4,506 1,424 Materials and supplies, at average cost or less: Plant and general......... 123,871 Fossil fuel..... 110,844 Deferred income taxes--current... 49,525 Mortgage loans in warehouse........ Commodity contract assets.. 362,218 Finance receivables held for sale......... Net assets held for sale......... Prepayments and other current assets........... 3,475 95,168 ---------- ------------- Total current assets.......... 12,261 1,534,327 ---------- ------------- Investments: Loans receivable, net.............. Available for sale securities.. Nuclear decommissioning trust funds...... 818,072 Investments in real estate...... Stocks of subsidiary companies, at equity........... 30,671 Notes of subsidiary companies........ Other............ 52,468 ---------- ------------- Total investments..... 30,671 870,540 ---------- ------------- Property, plant and equipment: Utility plant.... 16,489,207 Exploration and production properties....... Other--non- utility.......... Acquisition adjustment....... ---------- ------------- Total property, plant and equipment....... 16,489,207 ---------- ------------- Less accumulated depreciation, depletion and amortization..... 7,410,547 ---------- ------------- Net property, plant and equipment........ 9,078,660 ---------- ------------- Deferred charges and other assets: Regulatory assets, net...... 221,137 Goodwill, net.... 38,215 Other............ 59,985 ---------- ------------- Total deferred charges and other assets.... 38,215 281,122 ---------- ------------- Total assets.... $81,147 $11,764,649 ========== =============
The Notes to Consolidated Financial Statements are an integral part of this statement (see Notes on page D-2-2). D-2-5 DOMINION RESOURCES, INC. CONSOLIDATING BALANCE SHEET--(Continued) As of December 31, 1999
DRI Dominion Consolidated Dominion Dominion Dominion Dominion Resources (Exhibit D- Consolidating Capital, Inc Energy, Inc Generation, Inc Resources Capital 1) Entries DRI (Exhibit D-3) (Exhibit D-4) (Note A) Services, Inc Trust I ------------ ------------- ---------- ------------- ------------- --------------- ------------- --------- (thousands) LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Securities due within one year.. $ 536,262 $ $ 151,953 $ 8,850 Short-term debt.. 870,067 196,976 237,931 57,181 Accounts payable, trade............ 710,718 6,509 9,793 160,820 Payables to affiliated companies........ $ (36,212) 5,930 1,060 4,461 $505 Accrued interest, payroll and taxes............ 303,344 (3,758) 21,611 17,473 24,804 38 Deferred income taxes-current.... Dividends declared......... Commodity contract liabilities...... 347,093 Other current liabilities...... 231,354 (2,661) 21,117 16,261 30,907 $ 1,631 ----------- ----------- ---------- ---------- ---------- ---- --- -------- Total current liabilities..... 2,998,838 (42,631) 252,143 434,471 287,023 543 1,631 ----------- ----------- ---------- ---------- ---------- ---- --- -------- Long-term debt... 6,936,308 318,100 2,047,635 965,081 ----------- ----------- ---------- ---------- ---------- ---- --- -------- Notes payable to affiliates....... (597,541) 257,732 219,097 120,712 ----------- ----------- ---------- ---------- ---------- ---- --- -------- Deferred credits and other liabilities: Deferred income taxes............ 1,698,567 9,505 99,058 131,318 Investment tax credits.......... 146,518 Other............ 222,117 (18,601) 1,852 9,440 36,862 ----------- ----------- ---------- ---------- ---------- ---- --- -------- Total deferred credits and other liabilities..... 2,067,202 (18,601) 11,357 108,498 168,180 ----------- ----------- ---------- ---------- ---------- ---- --- -------- Total liabilities..... 12,002,348 (658,773) 839,332 2,809,701 1,540,996 543 1,631 ----------- ----------- ---------- ---------- ---------- ---- --- -------- Minority interest......... 98,537 4,997 93,540 Commitments and contingencies.... Obligated mandatorily redeemable preferred securities of subsidiary trusts........... 385,000 250,000 Preferred stock not subject to mandatory redemption....... 509,014 Common shareholders' equity: Common stock..... 3,561,148 (2,745,355) 3,561,148 8 208 7,732 Additional paid in capital....... 16,226 (1,330,760) 16,226 693,160 570,942 Retained earnings......... 1,189,218 (1,038,788) 1,195,378 62,899 38,276 (301) Accumulated other comprehensive income........... (14,925) 14,925 (14,925) (15,155) 3,185 ----------- ----------- ---------- ---------- ---------- ---- --- -------- Total common shareholders' equity.......... 4,751,667 (5,099,978) 4,757,827 740,912 612,611 (301) 7,732 ----------- ----------- ---------- ---------- ---------- ---- --- -------- Total liabilities and shareholders' equity.......... $17,746,566 $(5,758,751) $5,597,159 $3,555,610 $2,247,147 $242 $259,363 =========== =========== ========== ========== ========== ==== === ======== Virginia Electric and Power Company UK Holding (Exhibit D-5) ---------- ------------- LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Securities due within one year.. $ 375,459 Short-term debt.. 377,979 Accounts payable, trade............ 533,596 Payables to affiliated companies........ $23,700 556 Accrued interest, payroll and taxes............ 5,761 237,415 Deferred income taxes-current.... Dividends declared......... Commodity contract liabilities...... 347,093 Other current liabilities...... 464 163,635 ---------- ------------- Total current liabilities..... 29,925 2,035,733 ---------- ------------- Long-term debt... 54,210 3,551,282 ---------- ------------- Notes payable to affiliates....... ---------- ------------- Deferred credits and other liabilities: Deferred income taxes............ 6,500 1,452,186 Investment tax credits.......... 146,518 Other............ 192,564 ---------- ------------- Total deferred credits and other liabilities..... 6,500 1,791,268 ---------- ------------- Total liabilities..... 90,635 7,378,283 ---------- ------------- Minority interest......... Commitments and contingencies.... Obligated mandatorily redeemable preferred securities of subsidiary trusts........... 135,000 Preferred stock not subject to mandatory redemption....... 509,014 Common shareholders' equity: Common stock..... 2,737,407 Additional paid in capital....... 49,771 16,887 Retained earnings......... (56,304) 988,058 Accumulated other comprehensive income........... (2,955) ---------- ------------- Total common shareholders' equity.......... (9,488) 3,742,352 ---------- ------------- Total liabilities and shareholders' equity.......... $81,147 $11,764,649 ========== =============
The Notes to Consolidated Financial Statements are an integral part of this statement (see Notes on page D-2-2). D-2-6 EXHIBIT D-2 DOMINION RESOURCES, INC. CONSOLIDATING INCOME STATEMENT For the Year Ended December 31, 1999
Dominion DRI Dominion Dominion Dominion Dominion Resources Consolidated Consolidating Capital, Inc. Energy, Inc. Generation, Inc. Resources Capital (Exhibit D-1) Entries DRI (Exhibit D-3) (Exhibit D-4) (Note A) Services, Inc. Trust I ------------- ------------- -------- ------------- ------------- ---------------- -------------- --------- (thousands) Consolidating Income Statement Operating revenue and income: Domestic electric utility service......... $4,274,192 Other........... 1,246,118 $ 473,364 $ 456,033 ---------- --------- -------- --------- --------- ----- --- ------- Total operating revenue and income.......... 5,520,310 473,364 456,033 ---------- --------- -------- --------- --------- ----- --- ------- Expenses: Electric fuel and purchased energy, net..... 996,020 9,881 Purchased power capacity, net... 808,924 Other operation and maintenance..... 1,384,228 $ 30,524 170,470 222,724 $ 463 Depreciation, depletion and amortization.... 715,765 1,628 31,951 131,332 Taxes, other than income..... 304,331 1,350 5,459 15,706 ---------- --------- -------- --------- --------- ----- --- ------- Total operating expenses........ 4,209,268 33,502 207,880 379,643 463 ---------- --------- -------- --------- --------- ----- --- ------- Income from operations....... 1,311,042 (33,502) 265,484 76,390 (463) ---------- --------- -------- --------- --------- ----- --- ------- Other income and expense: Interest revenue......... 29,248 2,688 15,659 Equity in earnings of subsidiary companies....... $(318,955) 318,955 Interest revenue from subsidiary companies....... (45,507) 25,932 $19,575 Merger-related costs........... 29,091 29,091 Other, net...... 32,141 6,107 ---------- --------- -------- --------- --------- ----- --- ------- Total other income and expense......... 90,480 (364,462) 353,682 44,750 19,575 ---------- --------- -------- --------- --------- ----- --- ------- Income before fixed charges and income taxes..... 1,401,522 (364,462) 320,180 265,484 121,140 (463) 19,575 ---------- --------- -------- --------- --------- ----- --- ------- Fixed charges: Interest charges......... 506,544 (25,932) 21,341 151,966 78,207 Distributions-- preferred securities and preferred stock........... 67,488 (19,575) 19,575 19,575 ---------- --------- -------- --------- --------- ----- --- ------- Total fixed charges......... 574,032 (45,507) 40,916 151,966 78,207 19,575 ---------- --------- -------- --------- --------- ----- --- ------- Income before provision for income taxes, minority interests and extraordinary item............. 827,490 (318,955) 279,264 113,518 42,933 (463) Provision for income taxes.... 259,026 (16,560) 35,226 (16,711) (162) Minority interests....... 17,814 17,814 ---------- --------- -------- --------- --------- ----- --- ------- Income before extraordinary item............. 550,650 (318,955) 295,824 78,292 41,830 (301) Extraordinary item, net of income taxes..... 254,826 ---------- --------- -------- --------- --------- ----- --- ------- Net income....... $ 295,824 $(318,955) $295,824 $ 78,292 $ 41,830 $(301) $ ========== ========= ======== ========= ========= ===== === ======= Virginia Electric and Power Company UK Holding (Exhibit D-5) ---------- ------------- Consolidating Income Statement Operating revenue and income: Domestic electric utility service......... $4,274,192 Other........... 316,721 ---------- ------------- Total operating revenue and income.......... 4,590,913 ---------- ------------- Expenses: Electric fuel and purchased energy, net..... 986,139 Purchased power capacity, net... 808,924 Other operation and maintenance..... $ 975 959,072 Depreciation, depletion and amortization.... 2,457 548,397 Taxes, other than income..... 281,816 ------------- Total operating expenses........ 3,432 3,584,348 ---------- ------------- Income from operations....... (3,432) 1,006,565 ---------- ------------- Other income and expense: Interest revenue......... 2,544 8,357 Equity in earnings of subsidiary companies....... Interest revenue from subsidiary companies....... Merger-related costs........... Other, net...... 9,518 16,516 ---------- ------------- Total other income and expense......... 12,062 24,873 ---------- ------------- Income before fixed charges and income taxes..... 8,630 1,031,438 ---------- ------------- Fixed charges: Interest charges......... 3,140 277,822 Distributions-- preferred securities and preferred stock........... 47,913 ---------- ------------- Total fixed charges......... 3,140 325,735 ---------- ------------- Income before provision for income taxes, minority interests and extraordinary item............. 5,490 705,703 Provision for income taxes.... (800) 258,033 Minority interests....... ---------- ------------- Income before extraordinary item............. 6,290 447,670 Extraordinary item, net of income taxes..... 254,826 ---------- ------------- Net income....... $ 6,290 $ 192,844 ========== =============
The Notes to Consolidated Financial Statements are an integral part of this statement (see Notes on page D-2-2). D-2-7 EXHIBIT D-3 DOMINION CAPITAL, INC. CONSOLIDATING BALANCE SHEET As of December 31, 1999
Dominion Dominion Dominion Capital, Inc. Dominion Capital Land Dominion Consolidated Consolidating Capital Ventures Management Dominion Mortgage Dominion Venture (Exhibit D-2) Entries (Note B) Corp. Company Lands, Inc. Services, Inc. Investments, Inc. ------------- ------------- ---------- -------- ---------- ----------- -------------- ----------------- (thousands) ASSETS Current assets: Cash and cash equivalents....... $ 124,942 $ (16,003) $ 3 $ 60,638 $ 952 $ (485) Accounts receiv- able: Customers, less allowance........ (3,327) Other............ 14,899 4,631 660 4,508 3,909 Receivables from affiliated compa- nies.............. (5,183) 5,114 $41 27 Materials and sup- plies, at average cost or less: Plant and gener- al............... 419 419 Fossil fuel...... Deferred income taxes--current.... Mortgage loans in warehouse......... 118,595 118,595 Commodity contract assets............ Finance receiv- ables held for sale.............. 15,000 15,000 Prepayments and other current as- sets.............. 36,937 (9,297) 7,689 4,116 29 665 12,383 ---------- ----------- ---------- -------- --- ------- -------- ------- Total current as- sets............. 310,792 (13,760) 13,466 69,262 70 5,553 130,493 ---------- ----------- ---------- -------- --- ------- -------- ------- Investments: Loans receivable, net............... 2,034,475 (15,000) 34,565 176,659 1,099 Available for sale securities........ 511,663 630 58,376 327,144 Nuclear decommissioning trust funds....... Investments in real estate....... 85,914 (14,841) 14,366 53,329 Stocks of subsidi- ary companies, at equity............ 192,680 (826,982) 993,415 Notes of subsidi- ary companies..... (570,833) 461,713 Other............. 160,467 (204,383) 119,762 64,695 $50,282 ---------- ----------- ---------- -------- --- ------- -------- ------- Total invest- ments............ 2,985,199 (1,632,039) 1,624,451 299,730 54,428 327,144 50,282 ---------- ----------- ---------- -------- --- ------- -------- ------- Property, plant and equipment: Utility plant..... Exploration and production proper- ties.............. Other--non-utili- ty................ 61,177 (554,159) 1,300 5,936 34 23,983 20,636 Acquisition ad- justment.......... ---------- ----------- ---------- -------- --- ------- -------- ------- Total property, plant and equipment........ 61,177 (554,159) 1,300 5,936 34 23,983 20,636 Less accumulated depreciation, de- pletion and amor- tization.......... (22,711) 121,332 (786) (742) (27) (6,157) (10,005) ---------- ----------- ---------- -------- --- ------- -------- ------- Net property, plant and equip- ment............. 38,466 (432,827) 514 5,194 7 17,826 10,631 ---------- ----------- ---------- -------- --- ------- -------- ------- Deferred charges and other assets: Regulatory assets, net............... Goodwill, net..... 78,656 48,358 Other............. 142,497 (510,747) 320 340 121,918 204 ---------- ----------- ---------- -------- --- ------- -------- ------- Total deferred charges and other assets........... 221,153 (510,747) 320 340 170,276 204 ---------- ----------- ---------- -------- --- ------- -------- ------- Total assets.... $3,555,610 $(2,589,373) $1,638,751 $374,186 $77 $78,147 $638,544 $50,486 ========== =========== ========== ======== === ======= ======== ======= Edgen, Inc. ----------- ASSETS Current assets: Cash and cash equivalents....... $ 51 Accounts receiv- able: Customers, less allowance........ Other............ 143 Receivables from affiliated compa- nies.............. Materials and sup- plies, at average cost or less: Plant and gener- al............... Fossil fuel...... Deferred income taxes--current.... Mortgage loans in warehouse......... Commodity contract assets............ Finance receiv- ables held for sale.............. Prepayments and other current as- sets.............. 762 ----------- Total current as- sets............. 956 ----------- Investments: Loans receivable, net............... 2,936 Available for sale securities........ Nuclear decommissioning trust funds....... Investments in real estate....... 9,264 Stocks of subsidi- ary companies, at equity............ Notes of subsidi- ary companies..... 7,452 Other............. 133 ----------- Total invest- ments............ 19,785 ----------- Property, plant and equipment: Utility plant..... Exploration and production proper- ties.............. Other--non-utili- ty................ 170 Acquisition ad- justment.......... ----------- Total property, plant and equipment........ 170 Less accumulated depreciation, de- pletion and amor- tization.......... (75) ----------- Net property, plant and equip- ment............. 95 ----------- Deferred charges and other assets: Regulatory assets, net............... Goodwill, net..... Other............. ----------- Total deferred charges and other assets........... ----------- Total assets.... $20,836 ===========
The Notes to Consolidated Financial Statements are an integral part of this statement (see Notes on page D-2-2). D-3-1 EXHIBIT D-3 DOMINION CAPITAL, INC. CONSOLIDATING BALANCE SHEET--(Continued) As of December 31, 1999
Louisiana Optacor Hydroelectric Old Financial Stanton Trilon Capital River Services Rincon Associates Dominion Vidalia Corporation Catalyst Company Securities, Inc. Inc. Stonehouse, LLC Partners, LLC Audit, Inc. ------------- -------- --------- ---------------- ---------- --------------- ------------- ----------- ASSETS Current assets: Cash and cash equivalents....... $ 16,209 $225 $ 568 $ 361 $ 17 $ 262 Accounts receiv- able: Customers, less allowance........ 3,327 Other............ 6 256 113 $159 Receivables from affiliated compa- nies.............. 1 Materials and sup- plies, at average cost or less: Plant and gener- al............... Fossil fuel...... Deferred income taxes--current.... Mortgage loans in warehouse......... Commodity contract assets............ Finance receiv- ables held for sale.............. Prepayments and other current as- sets.............. $ 1,306 380 58 1,625 6,088 5 ------- -------- ---- -------- ------- ------- ------- ---- Total current as- sets............. 1,306 19,916 289 2,193 6,705 130 267 160 ------- -------- ---- -------- ------- ------- ------- ---- Investments: Loans receivable, net............... 587 798 Available for sale securities........ 125,453 Nuclear decommissioning trust funds....... Investments in real estate....... 8,955 14,841 Stocks of subsidi- ary companies, at equity............ Notes of subsidi- ary companies..... 1,381 97,576 Other............. 75,919 3,819 3 37,948 ------- -------- ---- -------- ------- ------- ------- ---- Total invest- ments............ 77,300 587 226,848 9,753 14,844 37,948 ------- -------- ---- -------- ------- ------- ------- ---- Property, plant and equipment: Utility plant..... Exploration and production proper- ties.............. Other--non-utili- ty................ 553,848 8,317 311 Acquisition ad- justment.......... ------- -------- ---- -------- ------- ------- ------- ---- Total property, plant and equipment........ 553,848 8,317 311 Less accumulated depreciation, de- pletion and amor- tization.......... (121,206) (4,702) (126) ------- -------- ---- -------- ------- ------- ------- ---- Net property, plant and equip- ment............. 432,642 3,615 185 ------- -------- ---- -------- ------- ------- ------- ---- Deferred charges and other assets: Regulatory assets, net............... Goodwill, net..... 4,140 Other............. 1,957 510,734 2,636 913 14 ------- -------- ---- -------- ------- ------- ------- ---- Total deferred charges and other assets........... 1,957 510,734 6,776 913 14 ------- -------- ---- -------- ------- ------- ------- ---- Total assets.... $80,563 $963,292 $876 $235,817 $20,986 $15,159 $38,229 $160 ======= ======== ==== ======== ======= ======= ======= ==== Virginia Financial Ventures, Inc. (Note C) -------------- ASSETS Current assets: Cash and cash equivalents....... $ 62,144 Accounts receiv- able: Customers, less allowance........ Other............ 514 Receivables from affiliated compa- nies.............. Materials and sup- plies, at average cost or less: Plant and gener- al............... Fossil fuel...... Deferred income taxes--current.... Mortgage loans in warehouse......... Commodity contract assets............ Finance receiv- ables held for sale.............. Prepayments and other current as- sets.............. 11,128 -------------- Total current as- sets............. 73,786 -------------- Investments: Loans receivable, net............... 1,832,831 Available for sale securities........ 60 Nuclear decommissioning trust funds....... Investments in real estate....... Stocks of subsidi- ary companies, at equity............ 26,247 Notes of subsidi- ary companies..... 2,711 Other............. 12,289 -------------- Total invest- ments............ 1,874,138 -------------- Property, plant and equipment: Utility plant..... Exploration and production proper- ties.............. Other--non-utili- ty................ 801 Acquisition ad- justment.......... -------------- Total property, plant and equipment........ 801 Less accumulated depreciation, de- pletion and amor- tization.......... (217) -------------- Net property, plant and equip- ment............. 584 -------------- Deferred charges and other assets: Regulatory assets, net............... Goodwill, net..... 26,158 Other............. 14,208 -------------- Total deferred charges and other assets........... 40,366 -------------- Total assets.... $1,988,874 ==============
The Notes to Consolidated Financial Statements are an integral part of this statement (see Notes on page D-2-2). D-3-2 EXHIBIT D-3 DOMINION CAPITAL, INC. CONSOLIDATING BALANCE SHEET--(Continued) As of December 31, 1999
Dominion Dominion Dominion Dominion Capital, Inc. Dominion Capital Land Mortgage Consolidated Consolidating Capital Ventures Management Dominion Services, Dominion Venture (Exhibit D-2) Entries (Note B) Corp. Company Lands, Inc. Inc. Investments, Inc. ------------- ------------- ---------- -------- ---------- ----------- --------- ----------------- (thousands) LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Securities due within one year... $ 151,953 $ 60,488 $ 91,465 Short-term debt... 237,931 $ 237,931 Accounts payable, trade............. 9,793 4,669 13 $ 864 $ 456 2,716 Payables to affiliated companies......... 1,060 (5,086) 5,508 433 $ 56 60 74 Accrued interest, payroll and taxes............. 17,473 (35,092) 7,645 5,682 604 203 4,379 $ 380 Deferred income taxes-current..... Dividends declared.......... Commodity contract liabilities Other current liabilities....... 16,261 11,147 226 100 508 55 ---------- ----------- ---------- -------- ------- -------- -------- -------- Total current liabilities...... 434,471 36,126 251,323 7,079 660 1,227 98,689 380 ---------- ----------- ---------- -------- ------- -------- -------- -------- Long-term debt.... 2,047,635 (848,314) 297,534 19,181 Notes payable to affiliates........ 219,097 (570,833) 328,216 200,266 1,222 51,143 121,865 ---------- ----------- ---------- -------- ------- -------- -------- -------- Total Long-term Debt............. 2,266,732 (1,419,147) 625,750 200,266 1,222 51,143 141,046 ---------- ----------- ---------- -------- ------- -------- -------- -------- Deferred credits and other liabilities: Deferred income taxes............. 99,058 20,738 3,054 (44) 562 52,534 (230) Investment tax credits........... Other............. 9,440 (66,577) 29 9,755 300 618 ---------- ----------- ---------- -------- ------- -------- -------- -------- Total deferred credits and other liabilities...... 108,498 (66,577) 20,767 12,809 (44) 862 53,152 (230) Total liabilities...... 2,809,701 (1,449,598) 897,840 220,154 1,838 53,232 292,887 150 ---------- ----------- ---------- -------- ------- -------- -------- -------- Minority interest.......... 4,997 5,909 Commitments and contingencies..... Obligated mandatorily redeemable preferred securities of subsidiary trusts............ Preferred stock not subject to mandatory redemption........ Common shareholders' equity: Common stock..... 8 (62,837) 8 10 Additional paid in capital....... 693,160 (855,553) 693,160 122,273 1,346 58,089 254,113 63,265 Retained earnings......... 62,899 (235,628) 62,899 27,002 (3,108) (33,184) 97,944 (12,929) Accumulated other comprehensive income........... (15,155) 14,243 (15,155) (1,152) (6,400) ---------- ----------- ---------- -------- ------- -------- -------- -------- Total common shareholders' equity........... 740,912 (1,139,775) 740,912 148,123 (1,762) 24,915 345,657 50,336 ---------- ----------- ---------- -------- ------- -------- -------- -------- Total liabilities and shareholders' equity.......... $3,555,610 $(2,589,373) $1,638,751 $374,186 $ 77 $ 78,147 $638,544 $ 50,486 ========== =========== ========== ======== ======= ======== ======== ======== Edgen, Inc. ----------- LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Securities due within one year... Short-term debt... Accounts payable, trade............. $ 375 Payables to affiliated companies......... 15 Accrued interest, payroll and taxes............. 74 Deferred income taxes-current..... Dividends declared.......... Commodity contract liabilities Other current liabilities....... 116 ----------- Total current liabilities...... 580 ----------- Long-term debt.... Notes payable to affiliates........ ----------- Total Long-term Debt............. ----------- Deferred credits and other liabilities: Deferred income taxes............. (1,108) Investment tax credits........... Other............. ----------- Total deferred credits and other liabilities...... (1,108) Total liabilities...... (528) ----------- Minority interest.......... Commitments and contingencies..... Obligated mandatorily redeemable preferred securities of subsidiary trusts............ Preferred stock not subject to mandatory redemption........ Common shareholders' equity: Common stock..... 1 Additional paid in capital....... 28,397 Retained earnings......... (7,034) Accumulated other comprehensive income........... ----------- Total common shareholders' equity........... 21,364 ----------- Total liabilities and shareholders' equity.......... $20,836 ===========
The Notes to Consolidated Financial Statements are an integral part of this statement (see Notes on page D-2-2). D-3-3 DOMINION CAPITAL, INC. CONSOLIDATING BALANCE SHEET--(Continued) As of December 31, 1999
Louisiana Optacor Hydroelectric Old Financial Trilon Capital River Services Rincon Stanton Dominion Vidalia Corporation Catalyst Company Securities, Inc. Associates Inc. Stonehouse, LLC Partners, LLC Audit, Inc. ------------- -------- --------- ---------------- --------------- --------------- ------------- ----------- (thousands) LIABILITIES AND HAREHOLDERS'SEQUITY Current liabilities: Securities due within one year... Short-term debt... Accounts payable, trade............. $ 50 $ 4 $ 85 $ 561 Payables to affiliated companies......... Accrued interest, payroll and taxes............. $ 1,087 $ 13,434 992 13 $129 Deferred income taxes-current..... Dividends declared.......... Commodity contract liabilities Other current liabilities....... 1,915 155 67 102 ------- -------- ------- -------- ------- ------- ------- ---- Total current liabilities...... 1,087 15,349 50 1,151 165 663 129 ------- -------- ------- -------- ------- ------- ------- ---- Long-term debt.... 44,617 776,861 159,955 10,292 10,965 Notes payable to affiliates........ 2,039 232 ------- -------- ------- -------- ------- ------- ------- ---- Total Long-term Debt............. 44,617 776,861 159,955 12,331 10,965 232 ------- -------- ------- -------- ------- ------- ------- ---- Deferred credits and other liabilities: Deferred income taxes............. 27,998 (105) 49 836 (14) Investment tax credits........... Other............. 64,688 (1,166) 1,793 ------- -------- ------- -------- ------- ------- ------- ---- Total deferred credits and other liabilities...... 27,998 64,688 (105) 49 (330) 1,793 (14) Total liabilities...... 73,702 856,898 (55) 161,155 12,166 13,421 347 ------- -------- ------- -------- ------- ------- ------- ---- Minority interest.......... (912) Commitments and contingencies..... Obligated mandatorily redeemable preferred securities of subsidiary trusts............ Preferred stock not subject to mandatory redemption........ Common shareholders' equity: Common stock..... 1 1,000 10,199 1,526 Additional paid in capital....... 106,394 12,201 16,168 (1,649) $38,229 Retained earnings......... 6,860 (11,270) 64,183 1,182 212 (187) Accumulated other comprehensive income........... (6,689) ------- -------- ------- -------- ------- ------- ------- ---- Total common shareholders' equity........... 6,861 106,394 931 74,662 9,732 1,738 38,229 (187) ------- -------- ------- -------- ------- ------- ------- ---- Total liabilities and shareholders' equity.......... $80,563 $963,292 $ 876 $235,817 $20,986 $15,159 $38,229 $160 ======= ======== ======= ======== ======= ======= ======= ==== Virginia Financial Ventures, Inc. (Note C) -------------- LIABILITIES AND HAREHOLDERS'SEQUITY Current liabilities: Securities due within one year... Short-term debt... Accounts payable, trade............. Payables to affiliated companies......... Accrued interest, payroll and taxes............. $ 17,943 Deferred income taxes-current..... Dividends declared.......... Commodity contract liabilities Other current liabilities....... 1,870 -------------- Total current liabilities...... 19,813 -------------- Long-term debt.... 1,576,544 Notes payable to affiliates........ 84,947 -------------- Total Long-term Debt............. 1,661,491 -------------- Deferred credits and other liabilities: Deferred income taxes............. (5,212) Investment tax credits........... Other............. -------------- Total deferred credits and other liabilities...... (5,212) Total liabilities...... 1,676,092 -------------- Minority interest.......... Commitments and contingencies..... Obligated mandatorily redeemable preferred securities of subsidiary trusts............ Preferred stock not subject to mandatory redemption........ Common shareholders' equity: Common stock..... 50,100 Additional paid in capital....... 156,727 Retained earnings......... 105,957 Accumulated other comprehensive income........... (2) -------------- Total common shareholders' equity........... 312,782 -------------- Total liabilities and shareholders' equity.......... $1,988,874 ==============
The Notes to Consolidated Financial Statements are an integral part of this statement (see Notes on page D-2-2). D-3-4 EXHIBIT D-3 DOMINION CAPITAL, INC. CONSOLIDATING INCOME STATEMENT For the Year Ended December 31, 1999
Dominion Dominion Dominion Dominion Capital, Inc. Dominion Capital Land Mortgage Consolidated Consolidating Capital Ventures Management Dominion Services, Dominion Venture (Exhibit D-2) Entries (Note B) Corp. Company Lands, Inc. Inc. Investments, Inc. Edgen, Inc. ------------- ------------- -------- -------- ---------- ----------- --------- ----------------- ----------- (thousands) Operating revenue and income: Domestic electric utility service......... Other........... $473,364 $ 89,250 $ (4,562) $51,308 $ 9 $36,070 $137,523 $3,579 $ 2,929 -------- --------- -------- ------- ----- ------- -------- ------ ------- Total operating revenue and income.......... 473,364 89,250 (4,562) 51,308 9 36,070 137,523 3,579 2,929 -------- --------- -------- ------- ----- ------- -------- ------ ------- Expenses: Electric fuel and purchased energy, net..... Purchased power capacity, net... Other operation and maintenance..... 170,470 (24,846) 8,793 22,730 859 39,810 70,036 3,863 Depreciation, depletion and amortization.... 31,951 (13,882) 1,050 661 9 19 26,725 144 15 Taxes, other than income..... 5,459 (1,742) 265 236 57 563 4,088 176 -------- --------- -------- ------- ----- ------- -------- ------ ------- Total operating expenses........ 207,880 (40,470) 10,108 23,627 925 40,392 100,849 144 4,054 -------- --------- -------- ------- ----- ------- -------- ------ ------- Income from operations....... 265,484 129,720 (14,670) 27,681 (916) (4,322) 36,674 3,435 (1,125) -------- --------- -------- ------- ----- ------- -------- ------ ------- Other income and expense: Interest revenue......... (220,100) 951 20,903 94 42,582 (21) 606 Equity in earnings of subsidiary companies....... (93,923) 93,923 Interest revenue from subsidiary companies....... (29,684) 24,218 Merger-related costs........... Other, net...... 8,579 -------- --------- -------- ------- ----- ------- -------- ------ ------- Total other income and expense......... (335,128) 119,092 20,903 94 42,582 (21) 606 -------- --------- -------- ------- ----- ------- -------- ------ ------- Income before fixed charges and income taxes..... 265,484 (205,408) 104,422 48,584 (916) (4,228) 79,256 3,414 (519) Fixed charges: Interest charges......... 151,966 (110,314) 44,085 10,363 79 2,554 21,380 1 Distributions-- preferred securities and preferred stock........... -------- --------- -------- ------- ----- ------- -------- ------ ------- Total fixed charges......... 151,966 (110,314) 44,085 10,363 79 2,554 21,380 1 -------- --------- -------- ------- ----- ------- -------- ------ ------- Income before provision for income taxes, minority interests and extraordinary item............ 113,518 (95,094) 60,337 38,221 (995) (6,782) 57,876 3,414 (520) Provision for income taxes.... 35,226 (17,955) 14,606 (353) (2,343) 21,228 1,197 (228) Minority interests....... (1,527) 1,451 -------- --------- -------- ------- ----- ------- -------- ------ ------- Income before extraordinary item............ 78,292 (93,567) 78,292 22,164 (642) (4,439) 36,648 2,217 (292) Extraordinary item, net of income taxes.... -------- --------- -------- ------- ----- ------- -------- ------ ------- Net income...... $ 78,292 $ (93,567) $ 78,292 $22,164 $(642) $(4,439) $ 36,648 $2,217 $ (292) ======== ========= ======== ======= ===== ======= ======== ====== =======
The Notes to Consolidated Financial Statements are an integral part of this statement (see Notes on page D-2-2). D-3-5 EXHIBIT D-3 DOMINION CAPITAL, INC. CONSOLIDATING INCOME STATEMENT--(Continued) For the Year Ended December 31, 1999
Louisiana Optacor Hydroelectric Old Financial Trilon Capital River Services Rincon Stanton Dominion Vidalia Corporation Catalyst Company Securities, Inc Associates Inc Stonehouse, LLC Partners, LLC Audit, Inc ------------- -------- --------- --------------- -------------- --------------- ------------- ---------- Operating revenue and income: Domestic elec- tric utility service......... Other........... $119,405 $10,272 $3,916 $6,787 $295 ------ -------- ------- ------- ------ ------ ------- ---- Total operating revenue and income.......... 119,405 10,272 3,916 6,787 295 ------ -------- ------- ------- ------ ------ ------- ---- Expenses: Electric fuel and purchased energy, net..... Purchased power capacity, net... Other operation and mainte- nance........... 19,866 $ 2,148 508 1,115 5,822 $ 685 65 Depreciation, depletion and amortization.... $ 59 13,788 32 1,173 499 88 5 Taxes, other than income..... 1,687 67 2 56 4 ------ -------- ------- ------- ------ ------ ------- ---- Total operating expenses........ 59 35,341 2,247 1,681 1,616 5,966 690 69 ------ -------- ------- ------- ------ ------ ------- ---- Income from oper- ations........... (59) 84,064 (2,247) 8,591 2,300 821 (690) 226 ------ -------- ------- ------- ------ ------ ------- ---- Other income and expense: Interest reve- nue............. 7,913 4,505 153 4 3 153 Equity in earnings of subsidiary companies....... Interest revenue from subsidiary companies....... 45 5,421 Merger-related costs........... Other, net...... (8,579) ------ -------- ------- ------- ------ ------ ------- ---- Total other in- come and ex- pense........... 7,958 4,505 153 5,425 3 (8,426) ------ -------- ------- ------- ------ ------ ------- ---- Income before fixed charges and income taxes..... 7,899 88,569 (2,094) 14,016 2,303 821 (9,116) 226 Fixed charges: Interest charges......... 5,431 79,921 153 10,104 1,072 679 30 15 Distributions-- preferred securities and preferred stock........... ------ -------- ------- ------- ------ ------ ------- ---- Total fixed charges......... 5,431 79,921 153 10,104 1,072 679 30 15 ------ -------- ------- ------- ------ ------ ------- ---- Income before provision for income taxes, minority interests and extraordinary item............ 2,468 8,648 (2,247) 3,912 1,231 142 (9,146) 211 Provision for income taxes.... 992 (783) 974 (125) 75 Minority inter- ests............ 76 ------ -------- ------- ------- ------ ------ ------- ---- Income before extraordinary item............ 1,476 8,648 (1,464) 2,938 1,280 142 (9,146) 136 Extraordinary item, net of income taxes.... ------ -------- ------- ------- ------ ------ ------- ---- Net income...... $1,476 $ 8,648 $(1,464) $ 2,938 $1,280 $ 142 $(9,146) $136 ====== ======== ======= ======= ====== ====== ======= ==== Virginia Financial Ventures, Inc. -------------- (Note B) Operating revenue and income: Domestic elec- tric utility service......... Other........... $16,583 -------------- Total operating revenue and income.......... 16,583 -------------- Expenses: Electric fuel and purchased energy, net..... Purchased power capacity, net... Other operation and mainte- nance........... 19,016 Depreciation, depletion and amortization.... 1,566 Taxes, other than income..... -------------- Total operating expenses........ 20,582 -------------- Income from oper- ations........... (3,999) -------------- Other income and expense: Interest reve- nue............. 142,254 Equity in earnings of subsidiary companies....... Interest revenue from subsidiary companies....... Merger-related costs........... Other, net...... -------------- Total other in- come and ex- pense........... 142,254 -------------- Income before fixed charges and income taxes..... 138,255 Fixed charges: Interest charges......... 86,413 Distributions-- preferred securities and preferred stock........... -------------- Total fixed charges......... 86,413 -------------- Income before provision for income taxes, minority interests and extraordinary item............ 51,842 Provision for income taxes.... 17,941 Minority inter- ests............ -------------- Income before extraordinary item............ 33,901 Extraordinary item, net of income taxes.... -------------- Net income...... $33,901 ==============
The Notes to Consolidated Financial Statements are an integral part of this statement (see Notes on page D-2-2). D-3-6 EXHIBIT D-4 DOMINION ENERGY, INC. CONSOLIDATING BALANCE SHEET As of December 31, 1999
Foreign Dominion Domestic Power Power Dominion Energy, Inc Dominion Oil & Gas Generation Generation Energy Consolidated Consolidating Energy, Consolidated Consolidated Consolidated Management (Exhibit D-2) Entries Inc. (Exhibit D-4-1) (Exhibit D-4-2) (Exhibit D-4-3) Inc. ------------- ------------- ---------- --------------- --------------- --------------- ---------- (thousands) ASSETS Current assets: Cash and cash equivalents.......... $ 61,555 $ (2,916) $ 9,744 $ 12 $ 54,715 Accounts receivable: Customers, less allowance............ Other................. 179,961 $ (695,233) 332,619 478,673 49,488 14,247 $167 Receivables from affiliated companies............ 505 505 Materials and supplies, at average cost or less: Plant and general..... 18,730 15,266 3,311 153 Fossil fuel........... Deferred income taxes--current....... Mortgage loans in warehouse............ Commodity contract assets............... Finance receivables held for sale........ Prepayments and other current assets....... 34,305 (6,973) 10,346 11,204 1,636 18,092 ---------- ----------- ---------- ---------- -------- -------- ---- Total current assets.. 295,056 (702,206) 340,554 514,887 54,447 87,207 167 ---------- ----------- ---------- ---------- -------- -------- ---- Investments: Loans receivable, net.................. Available for sale securities........... Nuclear decommissioning trust funds................ Investments in real estate............... Stocks of subsidiary companies, at equity............... 209,227 (837,947) 913,784 23,044 110,346 Notes of subsidiary companies............ Other................. 104,625 (377,302) 306,356 58,162 95,304 22,105 ---------- ----------- ---------- ---------- -------- -------- ---- Total investments..... 313,852 (1,215,249) 1,220,140 81,206 205,650 22,105 ---------- ----------- ---------- ---------- -------- -------- ---- Property, plant and equipment: Utility plant......... Exploration and production properties........... 1,127,325 1,127,325 Other--non-utility.... 928,383 13,782 79,221 356,299 479,081 Acquisition adjustment........... ---------- ----------- ---------- ---------- -------- -------- ---- Total property, plant and equipment........ 2,055,708 13,782 1,206,546 356,299 479,081 Less accumulated depreciation, depletion and amortization......... 432,605 2,273 273,680 13,846 142,806 ---------- ----------- ---------- ---------- -------- -------- ---- Net property, plant and equipment........ 1,623,103 11,509 932,866 342,453 336,275 Deferred charges and other assets: Regulatory assets, net.................. Goodwill, net......... 15,136 15,793 (657) Prepaid pension costs................ Other investments..... Other................. ---------- ----------- ---------- ---------- -------- -------- ---- Total deferred charges and other assets..... 15,136 15,793 (657) ---------- ----------- ---------- ---------- -------- -------- ---- Total assets.......... $2,247,147 $(1,917,455) $1,572,203 $1,544,752 $602,550 $444,930 $167 ========== =========== ========== ========== ======== ======== ====
The Notes to Consolidated Financial Statements are an integral part of this statement (see Notes on page D-2-2). D-4-1 EXHIBIT D-4 DOMINION ENERGY, INC. CONSOLIDATING BALANCE SHEET--(Continued) As of December 31, 1999
Foreign Dominion Domestic Power Power Dominion Energy, Inc. Dominion Oil & Gas Generation Generation Energy Consolidated Consolidating Energy, Consolidated Consolidated Consolidated Management (Exhibit D-2) Entries Inc. (Exhibit D-4-1) (Exhibit D-4-2) (Exhibit D-4-3) Inc. ------------- ------------- ---------- --------------- --------------- --------------- ---------- (thousands) Liabilities and Shareholders' Equity Current liabilities: Securities due within one year.............. $ 8,850 $ 6,213 $ 2,637 Short-term debt........ 57,181 $ (4,726) 61,907 Accounts payable, trade................. 160,820 (695,810) $ 365,867 $ 436,556 47,088 6,780 $ 339 Payables to affiliated companies............. 4,461 4,461 Accrued interest, payroll and taxes..... 24,804 (4,117) 2,515 5,362 5,255 15,847 (58) Deferred income taxes-- current............... Dividends declared..... Commodity contract liabilities........... Other current liabilities........... 30,907 3,273 17,213 8,304 2,117 ---------- ----------- ---------- ---------- -------- -------- ----- Total current liabilities.......... 287,023 (704,653) 376,116 459,131 66,860 89,288 281 ---------- ----------- ---------- ---------- -------- -------- ----- Long-term debt......... 965,081 288,466 380,951 258,787 36,877 ---------- ----------- ---------- ---------- -------- -------- ----- Notes payable to affiliates............ 120,712 (390,396) 206,494 256,569 (1,223) 49,268 ---------- ----------- ---------- ---------- -------- -------- ----- Deferred credits and other liabilities: Deferred income taxes.. 131,318 42,597 66,831 19,480 2,410 Investment tax credits............... Other.................. 36,862 45,919 (1,323) (7,401) (333) ---------- ----------- ---------- ---------- -------- -------- ----- Total deferred credits and other liabilities.......... 168,180 88,516 65,508 12,079 2,077 ---------- ----------- ---------- ---------- -------- -------- ----- Total liabilities..... 1,540,996 (1,095,049) 959,592 1,162,159 336,503 177,510 281 ---------- ----------- ---------- ---------- -------- -------- ----- Minority interest...... 93,540 14,566 931 976 77,067 Commitments and contingencies......... Obligated mandatorily redeemable preferred securities of subsidiary trusts..... Preferred stock not subject to mandatory redemption............ Common shareholders' equity: Common stock.......... 208 (194,057) 208 35,003 159,054 Additional paid in capital.............. 570,942 (386,628) 570,942 219,077 167,174 377 Retained earnings..... 38,276 (259,519) 38,276 165,817 62,894 30,922 (114) Accumulated other comprehensive income............... 3,185 3,232 3,185 (3,232) ---------- ----------- ---------- ---------- -------- -------- ----- Total common shareholders' equity............... 612,611 (836,972) 612,611 381,662 265,071 190,353 (114) ---------- ----------- ---------- ---------- -------- -------- ----- Total liabilities and shareholders' equity............... $2,247,147 $(1,917,455) $1,572,203 $1,544,752 $602,550 $444,930 $ 167 ========== =========== ========== ========== ======== ======== =====
The Notes to Consolidated Financial Statements are an integral part of this statement (see Notes on page D-2-2). D-4-2 EXHIBIT D-4 DOMINION ENERGY, INC. CONSOLIDATING INCOME STATEMENT For the Year Ended December 31, 1999
Dominion Domestic Power Foreign Power Dominion Energy, Inc. Dominion Oil & Gas Generation Generation Energy Consolidated Consolidating Energy, Consolidated Consolidated Consolidated Management (Exhibit D-2) Entries Inc. (Exhibit D-1-4) (Exhibit D-4-2) (Exhibit D-4-3) Inc. ------------- ------------- -------- --------------- --------------- --------------- ---------- (thousands) Operating revenue and income: Domestic electric utility service Other................. $456,033 $ (479) $ 1,589 $256,097 $92,368 $106,458 -------- -------- -------- -------- ------- -------- ----- Total operating revenue and income.... 456,033 (479) 1,589 256,097 92,368 106,458 -------- -------- -------- -------- ------- -------- ----- Expenses: Electric fuel and purchased energy, net................... 9,881 9,881 Purchased power capacity, net Other operation and maintenance........... 222,724 (748) 33,548 115,478 29,472 44,802 $ 172 Depreciation, depletion and amortization...... 131,332 4,275 93,126 9,764 24,167 Taxes, other than income................ 15,706 (1,296) 9,929 3,496 3,574 3 -------- -------- -------- -------- ------- -------- ----- Total operating expenses.............. 379,643 (748) 46,408 218,533 42,732 72,543 175 -------- -------- -------- -------- ------- -------- ----- Income from operations.. 76,390 269 (44,819) 37,564 49,636 33,915 (175) -------- -------- -------- -------- ------- -------- ----- Other income and expense: Interest revenue........ 15,659 (22,276) 19,556 4,029 6,629 7,721 Equity in earnings of subsidiary companies... (90,464) 90,464 Interest revenue from subsidiary companies Merger-related costs Other, net............. 29,091 3,008 21,862 194 4,027 -------- -------- -------- -------- ------- -------- ----- Total other income and expense............... 44,750 (112,740) 113,028 25,891 6,823 11,748 -------- -------- -------- -------- ------- -------- ----- Income before fixed charges and income taxes.................. 121,140 (112,471) 68,209 63,455 56,459 45,663 (175) Fixed charges: Interest charges....... 78,207 (23,510) 33,037 33,199 15,348 20,133 Distributions--preferred securities and preferred stock........ -------- -------- -------- -------- ------- -------- ----- Total fixed charges.... 78,207 (23,510) 33,037 33,199 15,348 20,133 -------- -------- -------- -------- ------- -------- ----- Income before provision for income taxes, minority interests and extraordinary item..... 42,933 (88,961) 35,172 30,256 41,111 25,530 (175) Provision for income taxes.................. (16,711) (6,730) (23,058) 15,200 (2,062) (61) Minority interests...... 17,814 1,305 71 138 198 16,102 -------- -------- -------- -------- ------- -------- ----- Income before extraordinary item..... 41,830 (90,266) 41,831 53,176 25,713 11,490 (114) Extraordinary item, net of income taxes -------- -------- -------- -------- ------- -------- ----- Net income.............. $ 41,830 $(90,266) $ 41,831 $ 53,176 $25,713 $ 11,490 $(114) ======== ======== ======== ======== ======= ======== =====
The Notes to Consolidated Financial Statements are an integral part of this statement (see Notes on page D-2-2). D-4-3 EXHIBIT D-4-1 DOMINION ENERGY, INC.-OIL AND GAS CONSOLIDATING BALANCE SHEET As of December 31, 1999
Dominion San Juan Energy Canada Oil & Gas Dominion Reserves Black Dominion Partners Dominion Limited Consolidated Consolidating Inc Warrior Reserves- LLC Storage Inc. Consolidated (Exhibit D-4) Entries (Exhibit D-4-1(a)) Basin, Inc Utah (Note E) (Note D) (Exhibit D-4-1(b)) ------------- ------------- ------------------ ---------- --------- -------- ------------ ------------------ (thousands) ASSETS Current assets: Cash and cash equivalents..... $ 9,744 $ 1,521 $ 1,824 $ 1 $ 6,398 Accounts receivable: Customers, less allowance....... Other............ 478,673 $ (838) 426,938 5,120 $12,699 $ 20,016 14,738 Receivables from affiliated companies....... Materials and supplies, at average cost or less: Plant and general........ 15,266 10,247 115 982 3,922 Fossil fuel..... Deferred income taxes--current.. Mortgage loans in warehouse....... Commodity contract assets.......... Finance receivables held for sale........ Prepayments and other current assets.......... 11,204 3,031 4,035 2,610 1,528 ---------- ------- -------- ------- ------- -------- ---- -------- Total current assets......... 514,887 (838) 441,737 11,094 16,291 20,016 1 26,586 ---------- ------- -------- ------- ------- -------- ---- -------- Investments: Loans receivable, net............. Available for sale securities...... Nuclear decommissioning trust funds..... Investments in real estate..... Stocks of subsidiary companies, at equity.......... 23,044 (3,423) 11,844 14,623 Notes of subsidiary companies....... Other............ 58,162 64,849 (7,012) 300 25 ---------- ------- -------- ------- ------- -------- ---- -------- Total investments.... 81,206 (3,423) 76,693 (7,012) 300 14,648 ---------- ------- -------- ------- ------- -------- ---- -------- Property, plant and equipment: Utility plant.... Exploration and production properties...... 1,127,325 436,446 9,272 42,753 123,164 515,690 Other--non- utility......... 79,221 55,806 3,324 17,105 2,986 Acquisition adjustment...... ---------- ------- -------- ------- ------- -------- ---- -------- Total property, plant and equipment...... 1,206,546 492,252 12,596 59,858 123,164 518,676 Less accumulated depreciation, depletion and amortization.... 273,680 205,266 4,742 12,949 15,309 35,414 ---------- ------- -------- ------- ------- -------- ---- -------- Net property, plant and equipment...... 932,866 286,986 7,854 46,909 107,855 483,262 ---------- ------- -------- ------- ------- -------- ---- -------- Deferred charges and other assets: Regulatory assets, net..... Goodwill, net.... 15,793 13,740 2,053 Prepaid pension costs........... Other investments..... Other............ ---------- ------- -------- ------- ------- -------- ---- -------- Total deferred charges and other assets... 15,793 13,740 2,053 ---------- ------- -------- ------- ------- -------- ---- -------- Total assets.... $1,544,752 $(4,261) $819,156 $11,936 $63,200 $127,871 $301 $526,549 ========== ======= ======== ======= ======= ======== ==== ========
D-4-4 EXHIBIT D-4-1 DOMINION ENERGY, INC.-OIL AND GAS CONSOLIDATING BALANCE SHEET--(Continued) As of December 31, 1999
Dominion Energy Canada San Juan Limited Oil & Gas Dominion Reserves Black Dominion Partners Dominion Consolidated Consolidated Consolidating Inc Warrior Reserves- LLC Storage, Inc. (Exhibit D-4-1 (Exhibit D-4) Entries (Exhibit D-4-1(a)) Basin, Inc Utah (Note E) (Note D) (b)) ------------- ------------- ------------------ ---------- --------- -------- ------------- -------------- (thousands) LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Securities due within one year............ Short-term debt.. Accounts payable, trade........... $ 436,556 $ (838) $392,935 $ 4,816 $12,021 $ 3,976 $ 23,646 Payables to affiliated companies....... Accrued interest, payroll and taxes........... 5,362 2,766 (123) (1,148) 2,355 $(58) 1,570 Deferred income taxes--current.. Dividends declared........ Commodity contract liabilities..... Other current liabilities..... 17,213 6,820 10,393 ---------- ------- -------- ------- ------- -------- ---- -------- Total current liabilities.... 459,131 (838) 402,521 4,693 10,873 6,331 (58) 35,609 ---------- ------- -------- ------- ------- -------- ---- -------- Long-term debt... 380,951 69 380,882 ---------- ------- -------- ------- ------- -------- ---- -------- Notes payable to affiliates...... 256,569 158,978 17,087 64,194 16,310 ---------- ------- -------- ------- ------- -------- ---- -------- Deferred credits and other liabilities: Deferred income taxes........... 66,831 59,605 541 7,978 535 (1,828) Investment tax credits......... Other............ (1,323) (3,172) (646) (91) 2,586 ---------- ------- -------- ------- ------- -------- ---- -------- Total deferred credits and other liabilities.... 65,508 56,433 541 7,332 444 758 ---------- ------- -------- ------- ------- -------- ---- -------- Total liabilities.... 1,162,159 (838) 618,001 5,234 35,292 70,969 (58) 433,559 ---------- ------- -------- ------- ------- -------- ---- -------- Minority interest........ 931 931 Commitments and contingencies... Obligated mandatorily redeemable preferred securities of subsidiary trusts.......... Preferred stock not subject to mandatory redemption...... Common shareholders' equity: Common stock.... Additional paid in capital..... 219,077 (2,980) 72,336 8,500 49,122 (108) 92,207 Retained earnings....... 165,817 (443) 127,888 6,702 19,408 7,780 467 4,015 Accumulated other comprehensive income......... (3,232) (3,232) ---------- ------- -------- ------- ------- -------- ---- -------- Total common shareholders' equity......... 381,662 (3,423) 200,224 6,702 27,908 56,902 359 92,990 ---------- ------- -------- ------- ------- -------- ---- -------- Total liabilities and shareholders' equity......... $1,544,752 $(4,261) $819,156 $11,936 $63,200 $127,871 $301 $526,549 ========== ======= ======== ======= ======= ======== ==== ========
D-4-5 EXHIBIT D-4-1 DOMINION ENERGY, INC.-OIL AND GAS CONSOLIDATING INCOME STATEMENT For the Year Ended December 31, 1999
Dominion Energy Canada Dominion San Juan Dominion Limited Oil & Gas Reserves Inc. Black Dominion Partners Storage, Consolidated Consolidated Consolidating (Exhibit D-4- Warrior Reserves- LLC Inc. (Exhibit (Exhibit D-4) Entries 1(a)) Basin, Inc. Utah (Note E) (Note D) D-4-1(b)) ------------- ------------- ------------- ----------- --------- -------- -------- ------------- (thousands) Operating revenue and income: Domestic electric utility service....... Other................. $256,097 $103,135 $12,098 $22,039 $ 22,219 $96,606 -------- ----- -------- ------- ------- -------- ----- ------- Total operating revenue and income.... 256,097 103,135 12,098 22,039 22,219 96,606 -------- ----- -------- ------- ------- -------- ----- ------- Expenses: Electric fuel and purchased energy, net................... Purchased power capacity, net......... Other operation and maintenance........... 115,478 53,366 9,860 5,750 8,006 38,496 Depreciation, depletion and amortization.......... 93,126 42,527 829 3,796 15,319 $ 133 30,522 Taxes, other than income................ 9,929 4,729 677 485 1,639 2,399 -------- ----- -------- ------- ------- -------- ----- ------- Total operating expenses.............. 218,533 100,622 11,366 10,031 24,964 133 71,417 -------- ----- -------- ------- ------- -------- ----- ------- Income from operations............. 37,564 2,513 732 12,008 (2,745) (133) 25,189 -------- ----- -------- ------- ------- -------- ----- ------- Other income and expense: Interest revenue...... 4,029 3,324 517 52 136 Equity in earnings of subsidiary companies.. $(388) 388 Interest revenue from subsidiary companies.. Merger--related costs................. Other, net............ 21,862 17,160 32 37 4,633 -------- ----- -------- ------- ------- -------- ----- ------- Total other income and expense............... 25,891 (388) 20,872 549 37 52 4,769 -------- ----- -------- ------- ------- -------- ----- ------- Income before fixed charges and income taxes.................. 63,455 (388) 23,385 1,281 12,045 (2,693) (133) 29,958 -------- ----- -------- ------- ------- -------- ----- ------- Fixed charges: Interest charges...... 33,199 9,505 751 3,640 19,304 Distributions-- preferred securities and preferred stock... -------- ----- -------- ------- ------- -------- ----- ------- Total fixed charges... 33,199 9,505 751 3,640 19,304 -------- ----- -------- ------- ------- -------- ----- ------- Income before provision for income taxes, minority interests and extraordinary item..... 30,256 (388) 13,880 1,281 11,294 (6,333) (133) 10,654 Provision for income taxes................. (23,058) (11,792) (4,749) 2,300 (14,112) (173) 5,468 Minority interests.... 138 138 -------- ----- -------- ------- ------- -------- ----- ------- Income before extraordinary item..... 53,176 (388) 25,534 6,030 8,995 7,779 40 5,186 Extraordinary item, net of income taxes........ -------- ----- -------- ------- ------- -------- ----- ------- Net income............. $ 53,176 $(388) $ 25,534 $ 6,030 $ 8,995 $ 7,779 $ 40 $ 5,186 ======== ===== ======== ======= ======= ======== ===== =======
D-4-6 EXHIBIT D-4-1(a) DOMINION RESERVES, INC. CONSOLIDATING BALANCE SHEET As of December 31, 1999
Dominion Dominion Carthage Dominion Appalachian Dominion Gas Reserves, Dominion Energy Cypress Appalachian Development Processing Dominion Consolidated Consolidating Reserves Services Energy Development Properties LLC Michigan, Inc. Midwest (Exhibit D-4-1) Entries Inc. Inc. Inc. Inc. (Note G) (Exhibit D-4-1(c)) Energy --------------- ------------- -------- -------- ------- ----------- -------------- ------------------ -------- (thousands) ASSETS Current assets: Cash and cash equivalents...... $ 1,521 $ 1,031 $ 71 $ 233 $ 188 $ (63) Accounts receivable: Customers, less allowance....... Other........... 426,938 63,067 176,315 $507 31,773 $ 34,056 3,175 37,939 Receivables from affiliated companies........ Materials and supplies, at average cost or less: Plant and general......... 10,247 386 7,254 515 Fossil fuel..... Deferred income taxes--current... Mortgage loans in warehouse........ Commodity contract assets.. Finance receivables held for sale......... Prepayments and other current assets........... 3,031 1,521 401 1,106 24 2 -------- --------- -------- -------- ---- ------- -------- ------- ------- Total current assets.......... 441,737 66,005 184,041 507 33,112 34,056 3,387 38,393 -------- --------- -------- -------- ---- ------- -------- ------- ------- Investments: Loans receivable, net.............. Available for sale securities.. Nuclear decommissioning trust funds...... Investments in real estate...... Stocks of subsidiary companies, at equity........... 11,844 $(139,626) 142,939 34 67 8,430 Notes of subsidiary companies........ Other............ 64,849 1,398 1,209 50 13,653 -------- --------- -------- -------- ---- ------- -------- ------- ------- Total investments..... 76,693 (139,626) 144,337 1,243 117 8,430 13,653 -------- --------- -------- -------- ---- ------- -------- ------- ------- Property, plant and equipment: Utility plant.... Exploration and production properties....... 436,446 290,137 1,137 135,846 Other--non- utility.......... 55,806 5,405 416 28 5,969 27,330 1,263 Acquisition adjustment....... -------- --------- -------- -------- ---- ------- -------- ------- ------- Total property, plant and equipment....... 492,252 295,542 416 28 7,106 135,846 27,330 1,263 Less accumulated depreciation, depletion and amortization..... 205,266 128,117 270 18 1,688 56,046 13,117 677 -------- --------- -------- -------- ---- ------- -------- ------- ------- Net property, plant and equipment........ 286,986 167,425 146 10 5,418 79,800 14,213 586 -------- --------- -------- -------- ---- ------- -------- ------- ------- Deferred charges and other assets: Regulatory assets, net...... Goodwill, net.... 13,740 4,181 801 2,110 Prepaid pension costs............ Other investments...... Other............ -------- --------- -------- -------- ---- ------- -------- ------- ------- Total deferred charges and other assets.... 13,740 4,181 801 2,110 -------- --------- -------- -------- ---- ------- -------- ------- ------- Total assets.... $819,156 $(139,626) $377,767 $189,611 $517 $39,448 $115,966 $26,030 $52,632 ======== ========= ======== ======== ==== ======= ======== ======= ======= Dominion Phoenix Reserves Dominion Dominion Great Lakes Gulf Reserves Energy Compression Coast Indiana (Note F) ----------- -------- --------- -------- ASSETS Current assets: Cash and cash equivalents...... $ 15 $ 29 $ 17 Accounts receivable: Customers, less allowance....... Other........... 3,637 $ 807 669 74,993 Receivables from affiliated companies........ Materials and supplies, at average cost or less: Plant and general......... 307 1,785 Fossil fuel..... Deferred income taxes--current... Mortgage loans in warehouse........ Commodity contract assets.. Finance receivables held for sale......... Prepayments and other current assets........... 21 3 (98) 51 ----------- -------- --------- -------- Total current assets.......... 3,980 810 600 76,846 ----------- -------- --------- -------- Investments: Loans receivable, net.............. Available for sale securities.. Nuclear decommissioning trust funds...... Investments in real estate...... Stocks of subsidiary companies, at equity........... Notes of subsidiary companies........ Other............ 48,539 ----------- -------- --------- -------- Total investments..... 48,539 ----------- -------- --------- -------- Property, plant and equipment: Utility plant.... Exploration and production properties....... 674 1,137 7,515 Other--non- utility.......... 8,048 7,207 140 Acquisition adjustment....... ----------- -------- --------- -------- Total property, plant and equipment....... 8,722 1,137 14,722 140 Less accumulated depreciation, depletion and amortization..... 1,715 1,095 2,468 55 ----------- -------- --------- -------- Net property, plant and equipment........ 7,007 42 12,254 85 ----------- -------- --------- -------- Deferred charges and other assets: Regulatory assets, net...... Goodwill, net.... 218 6,430 Prepaid pension costs............ Other investments...... Other............ ----------- -------- --------- -------- Total deferred charges and other assets.... 218 6,430 ----------- -------- --------- -------- Total assets.... $11,205 $49,391 $12,854 $83,361 =========== ======== ========= ========
D-4-7 EXHIBIT D-4-1(a) DOMINION RESERVES, INC. CONSOLIDATING BALANCE SHEET--(Continued) As of December 31, 1999
Dominion Carthage Appalachian Dominion Energy Dominion Development Dominion Gas Reserves, Dominion Services Cypress Appalachian Properties Processing Dominion Consolidated Consolidating Reserves Inc. Energy Development LLC Michigan, Inc. Midwest (Exhibit D-4-1) Entries Inc (A) Inc. Inc. (Note G) (Exhibit D-4-1(c)) Energy --------------- ------------- -------- -------- ------- ----------- ----------- ------------------ -------- (thousands) LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Securities due within one year.. Short-term debt.. Accounts payable, trade............ $392,935 $ 25,218 $184,054 $ 411 $34,991 $ 33,905 $ 333 $32,332 Payables to affiliated companies........ Accrued interest, payroll and taxes............ 2,766 3,258 (988) (2,075) 76 1,133 (9) 1,002 Deferred income taxes-current.... Dividends declared......... Commodity contract liabilities...... Other current liabilities...... 6,820 117 1,700 987 2,812 -------- --------- -------- -------- ------- ------- -------- ------- ------- Total current liabilities..... 402,521 28,593 184,766 (1,664) 36,054 35,038 324 36,146 -------- --------- -------- -------- ------- ------- -------- ------- ------- Long-term debt... 69 -------- --------- -------- -------- ------- ------- -------- ------- ------- Notes payable to affiliates....... 158,978 50,698 1,942 8,134 7,884 54,462 15,465 -------- --------- -------- -------- ------- ------- -------- ------- ------- Deferred credits and other liabilities: Deferred income taxes............ 59,605 33,773 (1,469) (169) 240 19,812 3,779 1,295 Investment tax credits.......... Other............ (3,172) (2,322) (9) (56) -------- --------- -------- -------- ------- ------- -------- ------- ------- Total deferred credits and other liabilities..... 56,433 31,451 (1,478) (169) 184 19,812 3,779 1,295 -------- --------- -------- -------- ------- ------- -------- ------- ------- Total liabilities..... 618,001 110,742 185,230 6,301 44,122 109,312 19,568 37,441 -------- --------- -------- -------- ------- ------- -------- ------- ------- Minority interest......... 931 931 Commitments and contingencies.... Obligated mandatorily redeemable preferred securities of subsidiary trusts........... Preferred stock not subject to mandatory redemption....... Common shareholders' equity: Common stock.... Additional paid in capital...... 72,336 $ (67,159) 98,349 6,202 853 202 5,858 11 2,404 Retained earnings........ 127,888 (72,467) 168,676 (1,821) (6,637) (4,876) 796 5,520 12,787 Accumulated other comprehensive income.......... -------- --------- -------- -------- ------- ------- -------- ------- ------- Total common shareholders' equity.......... 200,224 (139,626) 267,025 4,381 (5,784) (4,674) 6,654 5,531 15,191 -------- --------- -------- -------- ------- ------- -------- ------- ------- Total liabilities and shareholders' equity.......... $819,156 $(139,626) $377,767 $189,611 $ 517 $39,448 $115,966 $26,030 $52,632 ======== ========= ======== ======== ======= ======= ======== ======= ======= Dominion Phoenix Reserves Dominion Dominion Great Lakes Gulf Reserves Energy Compression Coast Indiana (Note F) ----------- -------- --------- --------- LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Securities due within one year.. Short-term debt.. Accounts payable, trade............ $ 2,568 $ 584 $ 191 $78,348 Payables to affiliated companies........ Accrued interest, payroll and taxes............ (68) 305 13 119 Deferred income taxes-current.... Dividends declared......... Commodity contract liabilities...... Other current liabilities...... 718 486 ----------- -------- --------- --------- Total current liabilities..... 3,218 889 204 78,953 ----------- -------- --------- --------- Long-term debt... 69 ----------- -------- --------- --------- Notes payable to affiliates....... 4,643 14,757 993 ----------- -------- --------- --------- Deferred credits and other liabilities: Deferred income taxes............ 637 157 1,558 (8) Investment tax credits.......... Other............ 106 (891) ----------- -------- --------- --------- Total deferred credits and other liabilities..... 637 263 667 (8) ----------- -------- --------- --------- Total liabilities..... 8,567 1,152 15,628 79,938 ----------- -------- --------- --------- Minority interest......... Commitments and contingencies.... Obligated mandatorily redeemable preferred securities of subsidiary trusts........... Preferred stock not subject to mandatory redemption....... Common shareholders' equity: Common stock.... Additional paid in capital...... 50 21,937 649 2,980 Retained earnings........ 2,588 26,302 (3,423) 443 Accumulated other comprehensive income.......... ----------- -------- --------- --------- Total common shareholders' equity.......... 2,638 48,239 (2,774) 3,423 ----------- -------- --------- --------- Total liabilities and shareholders' equity.......... $11,205 $49,391 $12,854 $83,361 =========== ======== ========= =========
D-4-8 EXHIBIT D-4-1(a) DOMINION RESERVES, INC. CONSOLIDATING INCOME STATEMENT For the Year Ended December 31, 1999
Dominion Dominion Dominion Gas Reserves, Appalachian Processing Inc. Carthage Dominion Development Michigan, Consolidated Dominion Energy Cypress Appalachian Properties Inc. Dominion (Exhibit Consolidating Reserves, Services Energy Development LLC (Exhibit Midwest D-4-1) Entries Inc. Inc. Inc. Inc. (Note G) D-4-1(c)) Energy ------------ ------------- --------- -------- ------- ----------- ----------- ---------- -------- (thousands) Operating revenue and income: Domestic electric utility service.... Other.............. $103,135 $ 65,145 $ 411 $ 1,734 $16,557 $6,721 $ 70 -------- -------- -------- ------- ------- ------- ------- ------ ------ Total operating revenue and income............. 103,135 65,145 411 1,734 16,557 6,721 70 Expenses: Electric fuel and purchased energy, net................ Purchased power capacity, net...... Other operation and maintenance........ 53,366 27,890 6,118 $ 3,596 2,246 5,393 1,781 (1,325) Depreciation, depletion and amortization....... 42,527 28,959 479 9 588 7,475 1,619 176 Taxes, other than income............. 4,729 2,697 76 194 1,267 114 -------- -------- -------- ------- ------- ------- ------- ------ ------ Total operating expenses........... 100,622 59,546 6,673 3,605 3,028 14,135 3,400 (1,035) -------- -------- -------- ------- ------- ------- ------- ------ ------ Income from operations.......... 2,513 5,599 (6,262) (3,605) (1,294) 2,422 3,321 1,105 -------- -------- -------- ------- ------- ------- ------- ------ ------ Other income and expense: Interest revenue... 3,324 35 39 6 22 856 Equity in earnings of subsidiary companies.......... 388 $(25,791) 26,125 4 50 Interest revenue from subsidiary companies.......... Merger-related costs.............. Other, net......... 17,160 5,528 (15) 67 1,816 47 -------- -------- -------- ------- ------- ------- ------- ------ ------ Total other income and expense........ 20,872 (25,791) 31,688 28 123 1,816 22 903 -------- -------- -------- ------- ------- ------- ------- ------ ------ Income before fixed charges and income taxes............... 23,385 (25,791) 37,287 (6,234) (3,605) (1,171) 4,238 3,343 2,008 -------- -------- -------- ------- ------- ------- ------- ------ ------ Fixed charges: Interest charges... 9,505 3,851 2 418 548 2,950 814 Distributions-- preferred securities and preferred stock.... -------- -------- -------- ------- ------- ------- ------- ------ ------ Total fixed charges............ 9,505 3,851 2 418 548 2,950 814 -------- -------- -------- ------- ------- ------- ------- ------ ------ Income before provision for income taxes, minority interests and extraordinary item.. 13,880 (25,791) 33,436 (6,236) (4,023) (1,719) 1,288 2,529 2,008 Provision for income taxes....... (11,792) (10,065) (2,046) (1,408) (571) (3,754) 836 766 Minority interests.......... 138 138 -------- -------- -------- ------- ------- ------- ------- ------ ------ Income before extraordinary item.. 25,534 (25,791) 43,501 (4,190) (2,615) (1,148) 5,042 1,555 1,242 -------- -------- -------- ------- ------- ------- ------- ------ ------ Extraordinary item, net of income taxes............... Net income.......... $ 25,534 $(25,791) $ 43,501 $(4,190) $(2,615) $(1,148) $ 5,042 $1,555 $1,242 ======== ======== ======== ======= ======= ======= ======= ====== ======
D-4-9 EXHIBIT D-4-1(a) DOMINION RESERVES, INC. CONSOLIDATING INCOME STATEMENT--(Continued) For the Year Ended December 31, 1999
Dominion Phoenix Reserves Dominion Dominion Great Lakes Gulf Reserves- Energy Compression Coast Indiana (Note F) ----------- -------- --------- -------- (thousands) Operating revenue and income: Domestic electric utility service.... Other................................ $6,387 $ 2,679 $ 1,085 $2,346 ------ ------- ------- ------ Total operating revenue and income... 6,387 2,679 1,085 2,346 Expenses: Electric fuel and purchased energy, net.................................. Purchased power capacity, net........ Other operation and maintenance...... 3,592 1,371 1,628 1,076 Depreciation, depletion and amortization......................... 604 1,154 907 557 Taxes, other than income............. 321 18 42 ------ ------- ------- ------ Total operating expenses............. 4,517 2,525 2,553 1,675 ------ ------- ------- ------ Income from operations................ 1,870 154 (1,468) 671 ------ ------- ------- ------ Other income and expense: Interest revenue..................... 4 2,339 23 Equity in earnings of subsidiary companies............................ Interest revenue from subsidiary companies............................ Merger-related costs................. Other, net........................... (32) 10,056 (307) ------ ------- ------- ------ Total other income and expense....... (28) 12,395 (307) 23 ------ ------- ------- ------ Income before fixed charges and income taxes................................. 1,842 12,549 (1,775) 694 Fixed charges: Interest charges..................... 223 668 31 Distributions--preferred securities and preferred stock ------ ------- ------- ------ Total fixed charges.................. 223 668 31 Income before provision for income taxes, minority interests and extraordinary item.................... 1,619 12,549 (2,443) 663 Provision for income taxes........... 636 4,392 (851) 273 Minority interests................... ------ ------- ------- ------ Income before extraordinary item...... 983 8,157 (1,592) 390 ------ ------- ------- ------ Extraordinary item, net of income taxes................................. Net income............................ $ 983 $ 8,157 $(1,592) $ 390 ====== ======= ======= ======
D-4-10 Exhibit D-4-1(b) DOMINION ENERGY CANADA CONSOLIDATING BALANCE SHEET As of December 31, 1999
Dominion Energy Canada Limited Domcan Consolidated Domcan Boundary (Exhibit D-4- Consolidating East Alberta Corp. 1) Entries Ltd. (Note H) ------------- ------------- ------------ -------- (thousands) ASSETS Current assets: Cash and cash equivalents.... $ 6,398 $ 2,606 $ 3,792 Accounts receivable: Customers, less allowance... Other....................... 14,738 $(7,005) 12,026 9,716 Receivables from affiliated companies................... Materials and supplies, at average cost or less: Plant and general........... 3,922 1,740 2,182 Fossil fuel................. Deferred income taxes-- current..................... Mortgage loans in warehouse.. Commodity contract assets.... Finance receivables held for sale........................ Prepayments and other current assets...................... 1,528 1,528 -------- ------- -------- -------- Total current assets........ 26,586 (7,005) 17,900 15,690 -------- ------- -------- -------- Investments: Loans receivable, net........ Available for sale securities.................. Nuclear decommissioning trust funds....................... Investments in real estate... Stocks of subsidiary companies, at equity........ 14,623 14,623 Notes of subsidiary companies................... Other........................ 25 25 -------- ------- -------- -------- Total investments........... 14,648 14,648 -------- ------- -------- -------- Property, plant and equipment: Utility plant................ Exploration and production properties.................. 515,690 223,106 292,584 Other-non-utility............ 2,986 2,986 Acquisition adjustment....... -------- ------- -------- -------- Total property, plant and equipment.................. 518,676 226,092 292,584 Less accumulated depreciation, depletion and amortization................ 35,414 22,849 12,564 -------- ------- -------- -------- Net property, plant and equipment.................. 483,262 203,243 280,020 Deferred charges and other assets: Regulatory assets, net....... Goodwill, net................ 2,053 2,053 Prepaid pension costs........ Other investments............ Other........................ -------- ------- -------- -------- Total deferred charges and other assets............... 2,053 2,053 -------- ------- -------- -------- Total assets................ $526,549 $(7,005) $237,844 $295,710 ======== ======= ======== ========
D-4-11 Exhibit D-4-1(b) DOMINION ENERGY CANADA CONSOLIDATING BALANCE SHEET--(Continued) As of December 31, 1999
Dominion Energy Canada Limited Domcan Domcan Consolidated East Boundary (Exhibit D-4- Consolidating Alberta Corp. 1) Entries Ltd. (Note H) ------------- ------------- -------- -------- (thousands) LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Securities due within one year.......................... Short-term debt................ Accounts payable, trade........ $ 23,646 $(7,005) $ 1,302 $ 29,348 Payables to affiliated companies..................... Accrued interest, payroll and taxes......................... 1,570 1,570 Deferred income taxes-- current....................... Dividends declared............. Commodity contract liabilities................... Other current liabilities...... 10,393 10,393 -------- ------- -------- -------- Total current liabilities..... 35,609 (7,005) 13,265 29,348 Long-term debt................. 380,882 169,046 228,146 Notes payable to affiliates.... 16,310 Deferred credits and other liabilities: Deferred income taxes.......... (1,828) 40,674 (42,502) Investment tax credits......... Other.......................... 2,586 1,717 869 -------- ------- -------- -------- Total deferred credits and other liabilities............ 758 42,391 (41,633) -------- ------- -------- -------- Total liabilities............. 433,559 (7,005) 224,702 215,861 -------- Minority interest.............. Commitments and contingencies.. Obligated mandatorily redeemable preferred securities of subsidiary trusts........................ Preferred stock not subject to mandatory redemption.......... Common shareholders' equity: Common stock................... Additional paid in capital..... 92,207 14,521 77,686 Retained earnings.............. 4,015 327 3,688 Accumulated other comprehensive income........................ (3,232) (1,706) (1,525) -------- ------- -------- -------- Total common shareholders' equity....................... 92,990 13,142 79,849 -------- ------- -------- -------- Total liabilities and shareholders' equity......... $526,549 $(7,005) $237,844 $295,710 ======== ======= ======== ========
D-4-12 EXHIBIT D-4-1(b) DOMINION ENERGY CANADA CONSOLIDATING INCOME STATEMENT For the Year Ended December 31, 1999
Dominion Energy Canada Limited Domcan Consolidated Domcan Boundary (Exhibit Consolidating East Alberta Corp. D-4-1) Entries Ltd. (Note H) ------------- ------------- ------------ --------- (thousands) Operating revenue and income: Domestic electric utility service.................. Other..................... $96,606 $42,109 $54,497 ------- --- ------- ------- Total operating revenue and income............. 96,606 42,109 54,497 ------- --- ------- ------- Expenses: Electric fuel and purchased energy, net.... Purchased power capacity, net...................... Other operation and maintenance.............. 38,496 12,634 25,862 Depreciation, depletion and amortization......... 30,522 16,905 13,617 Taxes, other than income.. 2,399 1,875 524 ------- --- ------- ------- Total operating expenses............... 71,417 31,414 40,003 ------- --- ------- ------- Income from operations...... 25,189 10,695 14,494 ------- --- ------- ------- Other income and expense: Interest revenue.......... 136 125 11 Equity in earnings of subsidiary companies..... Interest revenue from subsidiary companies..... Merger--related costs..... Other, net................ 4,633 (112) 4,745 ------- --- ------- ------- Total other income and expense................ 4,769 13 4,756 ------- --- ------- ------- Income before fixed charges and income taxes........... 29,958 10,708 19,250 ------- --- ------- ------- Fixed charges: Interest charges.......... 19,304 8,608 10,696 Distributions--preferred securities and preferred stock.................... ------- --- ------- ------- Total fixed charges..... 19,304 8,608 10,696 ------- --- ------- ------- Income before provision for income taxes, minority interests and extraordinary item....................... 10,654 2,100 8,554 Provision for income taxes.................... 5,468 602 4,866 Minority interests........ ------- --- ------- ------- Income before extraordinary item....................... 5,186 1,498 3,688 ------- --- ------- ------- Extraordinary item, net of income taxes............... Net income.................. $ 5,186 $ 1,498 $ 3,688 ======= === ======= =======
D-4-13 Exhibit D-4-1(c) DOMINION GAS PROCESSING MICHIGAN, INC. CONSOLIDATING BALANCE SHEET As of December 31, 1999
Dominion Gas Dominion Processing Gas Wilderness Michigan, Inc. Processing Frederic Energy Consolidated Consolidating Michigan, HOF, LP Services, LP (Exhibit D-4-1(a)) Entries Inc. (Note I) (Note J) ------------------ ------------- ---------- -------- ------------ (thousands) ASSETS Current assets: Cash and cash equivalents............ $ 188 $ (566) $ 188 $ 566 Accounts receivable: Customers, less allowance............ Other................. 3,175 (764) $ 1,945 1,230 764 Receivables from affiliated companies... Materials and supplies, at average cost or less: Plant and general..... Fossil fuel........... Deferred income taxes-- current................ Mortgage loans in warehouse.............. Commodity contract assets................. Finance receivables held for sale............... Prepayments and other current assets......... 24 24 ------- -------- ------- ------- ------- Total current assets............. 3,387 (1,330) 1,945 1,442 1,330 Investments: Loans receivable, net... Available for sale securities............. Nuclear decommissioning trust funds............ Investments in real estate................. Stocks of subsidiary companies, at equity... 8,430 (14,595) 23,025 Notes of subsidiary companies.............. Other................... ------- -------- ------- ------- ------- Total investments... 8,430 (14,595) 23,025 Property, plant and equipment: Utility plant........... Exploration and production properties.. Other--non-utility...... 27,330 (15,043) 27,330 15,043 Acquisition adjustment.. ------- -------- ------- ------- ------- Total property, plant and equipment.......... 27,330 (15,043) 27,330 15,043 Less accumulated depreciation, depletion and amortization....... 13,117 (4,709) 13,117 4,709 ------- -------- ------- ------- ------- Net property, plant and equipment...... 14,213 (10,334) 14,213 10,334 Deferred charges and other assets: Regulatory assets, net.. Goodwill, net........... Prepaid pension costs... Other investments....... Other................... Total deferred charges and other assets............. ------- -------- ------- ------- ------- Total assets........ $26,030 $(26,259) $24,970 $15,655 $11,664 ======= ======== ======= ======= =======
D-4-14 Exhibit D-4-1(c) DOMINION GAS PROCESSING MICHIGAN, INC. CONSOLIDATING BALANCE SHEET--(Continued) As of December 31, 1999
Dominion Gas Processing Wilderness Michigan, Inc Dominion Gas Frederic Energy Consolidated Consolidating Processing HOF, LP Services, LP (Exhibit D-4-1(a)) Entries Michigan, Inc. (Note I) (Note J) ------------------ ------------- -------------- -------- ------------ (thousands) LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Securities due within one year............... Short-term debt......... Accounts payable, trade.................. $ 333 $ 204 $ 129 Payables to affiliated companies.............. Accrued interest, payroll and taxes...... (9) (9) Deferred income taxes- current................ Dividends declared...... Commodity contract liabilities............ Other current liabilities............ ------- -------- ------- ------- ------- Total current liabilities........ 324 195 129 ------- -------- ------- ------- ------- Long-term debt.......... 15,465 15,465 ------- -------- ------- ------- ------- Notes payable to affiliates............. Deferred credits and other liabilities: Deferred income taxes... 3,779 3,779 Investment tax credits.. Other................... ------- -------- ------- ------- ------- Total deferred credits and other liabilities........ 3,779 3,779 ------- -------- ------- ------- ------- Total liabilities... 19,568 19,439 129 ------- -------- ------- ------- ------- Minority interest....... 931 $ 931 Commitments and contingencies.......... Obligated mandatorily redeemable preferred securities of subsidiary trusts...... Preferred stock not subject to mandatory redemption............. Common shareholders' equity: Common stock.......... Additional paid in capital.............. 11 (13,218) 11 13,218 Retained earnings..... 5,520 (13,972) 5,520 2,308 $11,664 Accumulated other comprehensive income............... ------- -------- ------- ------- ------- Total common shareholders' equity............. 5,531 (27,190) 5,531 15,526 11,664 ------- -------- ------- ------- ------- Total liabilities and shareholders' equity............. $26,030 $(26,259) $24,970 $15,655 $11,664 ======= ======== ======= ======= =======
D-4-15 EXHIBIT D-4-1(c) DOMINION GAS PROCESSING MICHIGAN, INC. CONSOLIDATING INCOME STATEMENT For the Year Ended December 31, 1999
Dominion Gas Processing Wilderness Michigan, Inc. Dominion Gas Frederic Energy Consolidated Consolidating Processing HOF, LP Services, LP (Exhibit D-4-1(a)) Entries Michigan, Inc. (Note I) (Note J) ------------------ ------------- -------------- -------- ------------ (thousands) Operating revenue and income: Domestic electric utility service....... Other.................. $6,721 $(3,409) $1,040 $5,682 $3,409 ------ ------- ------ ------ ------ Total operating revenue and income............ 6,721 (3,409) 1,040 5,682 3,409 ------ ------- ------ ------ ------ Expenses: Electric fuel and purchased energy, net................... Purchased power capacity, net......... Other operation and maintenance........... 1,781 (632) 4 1,777 632 Depreciation, depletion and amortization...... 1,619 (898) 1,619 898 Taxes, other than income................ ------ ------- ------ ------ ------ Total operating expenses.............. 3,400 (1,530) 4 3,396 1,530 ------ ------- ------ ------ ------ Income from operations.. 3,321 (1,879) 1,036 2,286 1,879 ------ ------- ------ ------ ------ Other income and expense: Interest revenue....... 22 22 Equity in earnings of subsidiary companies.. Interest revenue from subsidiary companies.. Merger-related costs... Other, net............. 9 (9) ------ ------- ------ ------ ------ Total other income and expense............... 22 9 22 (9) ------ ------- ------ ------ ------ Income before fixed charges and income taxes.................. 3,343 (1,870) 1,036 2,308 1,870 ------ ------- ------ ------ ------ Fixed charges: Interest charges....... 814 814 Distributions-- preferred securities and preferred stock... ------ ------- ------ ------ ------ Total fixed charges.... 814 814 ------ ------- ------ ------ ------ Income before provision for income taxes, minority interests and extraordinary item..... 2,529 (1,870) 222 2,308 1,870 Provision for income taxes................. 836 836 Minority interests..... 138 (138) ------ ------- ------ ------ ------ Income before extraordinary item..... 1,555 (2,008) (615) 2,308 1,870 Extraordinary item, net of income taxes........ ------ ------- ------ ------ ------ Net income.............. $1,555 $(2,008) $ (615) $2,308 $1,870 ====== ======= ====== ====== ======
D-4-16 EXHIBIT D-4-2 DOMINION ENERGY, INC.--DOMESTIC POWER GENERATION CONSOLIDATING BALANCE SHEET As of December 31, 1999
Dominion Cogen Domestic WVA Inc. Dominion Dominion Power Dominion (Exhibit Elwood Inc. Dominion Energy Generation Cogen D-4- (Exhibit Elwood Dominion Services Consolidated Consolidating Dominion NY Inc. 2(a)) D-4-2(b)) Services, Kincaid, Inc. Company, (Exhibit D-4) Entries Cogen Inc (Note K) (Note L) (Note M) Inc (Note N) Inc. ------------- ------------- --------- -------- -------- ----------- --------- ------------- -------- (thousands) ASSETS Current assets: Cash and cash equivalents........ $ 12 $ 10 $ 2 Accounts receivable: Customers, less allowance......... Other............. 49,488 $(2,119) $ 300 $600 $ 1,469 $ 700 $658 8,815 10,070 Receivables from affiliated companies.......... Materials and supplies, at average cost or less: Plant and general........... 3,311 3,311 Fossil fuel....... Deferred income taxes--current..... Mortgage loans in warehouse.......... Commodity contract assets............. Finance receivables held for sale...... Prepayments and other current assets............. 1,636 692 496 448 -------- ------- ------- ---- ------- -------- ---- -------- ------- Total current assets............ 54,447 (2,119) 300 600 2,161 700 658 12,632 10,520 -------- ------- ------- ---- ------- -------- ---- -------- ------- Investments: Loans receivable, net................ Available for sale securities......... Nuclear decommissioning trust funds........ Investments in real estate............. Stocks of subsidiary companies, at equity............. 110,346 10,584 99,762 Notes of subsidiary companies.......... Other.............. 95,304 66,420 17,526 11,358 -------- ------- ------- ---- ------- -------- ---- -------- ------- Total investments....... 205,650 66,420 28,110 99,762 11,358 -------- ------- ------- ---- ------- -------- ---- -------- ------- Property, plant and equipment: Utility plant...... Exploration and production properties......... Other--non- utility............ 356,299 356,299 Acquisition adjustment......... -------- ------- ------- ---- ------- -------- ---- -------- ------- Total property, plant and equipment......... 356,299 356,299 -------- ------- ------- ---- ------- -------- ---- -------- ------- Less accumulated depreciation, depletion and amortization....... 13,846 13,846 -------- ------- ------- ---- ------- -------- ---- -------- ------- Net property, plant and equipment......... 342,453 342,453 Deferred charges and other assets: Regulatory assets, net................ Goodwill, net...... Prepaid pension costs.............. Other investments.. Other.............. -------- ------- ------- ---- ------- -------- ---- -------- ------- Total deferred charges and other assets............ -------- ------- ------- ---- ------- -------- ---- -------- ------- Total assets.... $602,550 $(2,119) $66,720 $600 $30,271 $100,462 $658 $366,443 $10,520 ======== ======= ======= ==== ======= ======== ==== ======== ======= Dominion Energy Construction Co, Inc. ------------ ASSETS Current assets: Cash and cash equivalents........ Accounts receivable: Customers, less allowance......... Other............. $28,995 Receivables from affiliated companies.......... Materials and supplies, at average cost or less: Plant and general........... Fossil fuel....... Deferred income taxes--current..... Mortgage loans in warehouse.......... Commodity contract assets............. Finance receivables held for sale...... Prepayments and other current assets............. ------------ Total current assets............ 28,995 ------------ Investments: Loans receivable, net................ Available for sale securities......... Nuclear decommissioning trust funds........ Investments in real estate............. Stocks of subsidiary companies, at equity............. Notes of subsidiary companies.......... Other.............. ------------ Total investments....... ------------ Property, plant and equipment: Utility plant...... Exploration and production properties......... Other--non- utility............ Acquisition adjustment......... ------------ Total property, plant and equipment......... ------------ Less accumulated depreciation, depletion and amortization....... ------------ Net property, plant and equipment......... Deferred charges and other assets: Regulatory assets, net................ Goodwill, net...... Prepaid pension costs.............. Other investments.. Other.............. ------------ Total deferred charges and other assets............ ------------ Total assets.... $28,995 ============
D-4-17 EXHIBIT D-4-2 DOMINION ENERGY, INC.--DOMESTIC POWER GENERATION CONSOLIDATING BALANCE SHEET--(CONTINUED) As of December 31, 1999
Dominion Cogen Domestic WVA Inc. Dominion Dominion Power Dominion (Exhibit Elwood Inc. Dominion Energy Generation Cogen D-4- (Exhibit Elwood Dominion Services Consolidated Consolidating Dominion NY Inc. 2(a)) D-4-2(b)) Services, Kincaid, Inc. Company, (Exhibit D-4) Entries Cogen Inc. (Note K) (Note L) (Note M) Inc. (Note N) Inc. ------------- ------------- ---------- -------- -------- ----------- --------- ------------- -------- (thousands) LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Securities due within one year... $ 6,213 $ 6,213 Short-term debt... Accounts payable, trade............. 47,088 $(2,119) $ 2,400 $ 781 $ 3,900 $433 12,114 $ 3,940 Payables to affiliated companies......... Accrued interest, payroll and taxes............. 5,255 477 (115) $ 289 1,071 67 3,404 62 Deferred income taxes--current.... Dividends declared.......... Commodity contract liabilities....... Other current liabilities....... 8,304 38 612 2,656 -------- ------- ------- ----- ------- -------- ---- -------- ------- Total current liabilities....... 66,860 (2,119) 2,877 666 289 4,971 538 22,343 6,658 -------- ------- ------- ----- ------- -------- ---- -------- ------- Long-term debt..... 258,787 258,787 -------- ------- ------- ----- ------- -------- ---- -------- ------- Notes payable to affiliates......... (1,223) 3,125 (2,706) -------- ------- ------- ----- ------- -------- ---- -------- ------- Deferred credits and other liabilities: Deferred income taxes............. 19,480 (52) 285 12,739 638 (12) 6,157 (275) Investment tax credits........... Other............. (7,401) (2,071) (6,803) 1,473 -------- ------- ------- ----- ------- -------- ---- -------- ------- Total deferred credits and other liabilities....... 12,079 (52) 285 10,668 638 (12) (646) 1,198 -------- ------- ------- ----- ------- -------- ---- -------- ------- Total liabilities..... 336,503 (2,119) 2,825 951 10,957 5,609 526 283,609 5,150 -------- ------- ------- ----- ------- -------- ---- -------- ------- Minority interest.. 976 976 Commitments and contingencies...... Obligated mandatorily redeemable preferred securities of subsidiary trusts.. Preferred stock not subject to mandatory redemption......... Common shareholders' equity: Common stock...... 35,003 35,000 1 1 1 Additional paid in capital........... 167,174 1,723 (311) 21,997 87,336 56,429 Retained earnings.......... 62,894 27,172 (41) (2,684) 7,517 132 25,429 5,369 Accumulated other comprehensive income............ -------- ------- ------- ----- ------- -------- ---- -------- ------- Total common shareholders' equity............ 265,071 63,895 (351) 19,314 94,853 132 81,858 5,370 -------- ------- ------- ----- ------- -------- ---- -------- ------- Total liabilities and shareholders' equity.......... $602,550 $(2,119) $66,720 $ 600 $30,271 $100,462 $658 $366,443 $10,520 ======== ======= ======= ===== ======= ======== ==== ======== ======= Dominion Energy Construction Co, Inc. ------------ LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Securities due within one year... Short-term debt... Accounts payable, trade............. $25,639 Payables to affiliated companies......... Accrued interest, payroll and taxes............. Deferred income taxes--current.... Dividends declared.......... Commodity contract liabilities....... Other current liabilities....... 4,998 ------------ Total current liabilities....... 30,637 ------------ Long-term debt..... ------------ Notes payable to affiliates......... (1,642) ------------ Deferred credits and other liabilities: Deferred income taxes............. Investment tax credits........... Other............. ------------ Total deferred credits and other liabilities....... ------------ Total liabilities..... 28,995 ------------ Minority interest.. Commitments and contingencies...... Obligated mandatorily redeemable preferred securities of subsidiary trusts.. Preferred stock not subject to mandatory redemption......... Common shareholders' equity: Common stock...... Additional paid in capital........... Retained earnings.......... Accumulated other comprehensive income............ ------------ Total common shareholders' equity............ ------------ Total liabilities and shareholders' equity.......... $28,995 ============
D-4-18 EXHIBIT D-4-2 DOMINION ENERGY, INC-DOMESTIC POWER GENERATION CONSOLIDATING INCOME STATEMENT For the Year Ended December 31, 1999
Dominion Cogen Domestic WVA Inc. Dominion Dominion Power Dominion (Exhibit Elwood Inc. Dominion Energy Generation Cogen D-4- (Exhibit Elwood Dominion Services Consolidated Consolidating Dominion NY Inc. 2(a)) D-4-2(b)) Services, Kincaid, Inc. Company, (Exhibit D-4) Entries Cogen Inc. (Note K) (Note L) (Note M) Inc. (Note N) Inc. ------------- ------------- ---------- -------- -------- ----------- --------- ------------- -------- (thousands) Operating revenue and income: Domestic electric utility service Other........... $92,368 $93 $ (79) $12,426 $238 $74,249 $5,441 ------- --- ------ --- ------ ------- ---- ------- ------ Total operating revenue and income.......... 92,368 93 (79) 12,426 238 74,249 5,441 ------- --- ------ --- ------ ------- ---- ------- ------ Expenses: Electric fuel and purchased energy, net..... Purchased power capacity, net... Other operation and maintenance..... 29,472 25 29,580 1,889 Depreciation, depletion and amortization.... 9,764 74 9,690 Taxes, other than income..... 3,496 26 565 883 ------- --- ------ --- ------ ------- ---- ------- ------ Total operating expenses........ 42,732 74 51 39,835 2,772 ------- --- ------ --- ------ ------- ---- ------- ------ Income from operations....... 49,636 93 (153) 12,426 187 34,414 2,669 ------- --- ------ --- ------ ------- ---- ------- ------ Other income and expense: Interest revenue......... 6,629 $4,812 939 588 290 Equity in earnings of subsidiary companies....... Interest revenue from subsidiary companies....... Merger-related costs........... Other, net...... 194 194 ------- --- ------ --- ------ ------- ---- ------- ------ Total other income and expense......... 6,823 4,812 939 782 290 ------- --- ------ --- ------ ------- ---- ------- ------ Income before fixed charges and income taxes..... 56,459 4,812 93 786 12,426 187 35,196 2,959 ------- --- ------ --- ------ ------- ---- ------- ------ Fixed charges: Interest charges......... 15,348 10 15,402 (64) Distributions-- preferred securities and preferred stock........... ------- --- ------ --- ------ ------- ---- ------- ------ Total fixed charges......... 15,348 10 15,402 (64) Income before provision for income taxes, minority interests and extraordinary item............. 41,111 4,812 83 786 12,426 187 19,794 3,023 Provision for income taxes.... 15,200 1,684 29 (316) 4,909 55 7,778 1,061 Minority interests....... 198 198 ------- --- ------ --- ------ ------- ---- ------- ------ Income before extraordinary item............. 25,713 3,128 54 1,102 7,517 132 11,818 1,962 Extraordinary item, net of income taxes..... ------- --- ------ --- ------ ------- ---- ------- ------ Net income....... $25,713 $3,128 $54 $1,102 $ 7,517 $132 $11,818 $1,962 ======= === ====== === ====== ======= ==== ======= ====== Dominion Energy Construction Co, Inc. ------------ Operating revenue and income: Domestic electric utility service Other........... ------------ Total operating revenue and income.......... ------------ Expenses: Electric fuel and purchased energy, net..... Purchased power capacity, net... Other operation and maintenance..... $(2,022) Depreciation, depletion and amortization.... Taxes, other than income..... 2,022 ------------ Total operating expenses........ ------------ Income from operations....... ------------ Other income and expense: Interest revenue......... Equity in earnings of subsidiary companies....... Interest revenue from subsidiary companies....... Merger-related costs........... Other, net...... ------------ Total other income and expense......... ------------ Income before fixed charges and income taxes..... ------------ Fixed charges: Interest charges......... Distributions-- preferred securities and preferred stock........... ------------ Total fixed charges......... Income before provision for income taxes, minority interests and extraordinary item............. Provision for income taxes.... Minority interests....... ------------ Income before extraordinary item............. Extraordinary item, net of income taxes..... ------------ Net income....... $ ============
D-4-19 EXHIBIT D-4-2(a) DOMINION COGEN WVA, INC. CONSOLIDATING BALANCE SHEET As of December 31, 1999
Dominion Cogen WVA Inc. Dominion Morgantown Consolidated Consolidating Cogen Energy (Exhibit D-4-2) Entries WVA, Inc. Associates --------------- ------------- -------- ---------- (thousands) ASSETS Current assets: Cash and cash equivalents.............. $ (15,517) $ 15,517 Accounts receivable: Customers, less allowance................ Other..................... $ 1,469 (2,525) $ 1,469 2,525 Receivables from affiliated companies.................. Materials and supplies, at average cost or less: Plant and general......... (1,856) 1,856 Fossil fuel............... Deferred income taxes-- current.................... Mortgage loans in warehouse.................. Commodity contract assets... Finance receivables held for sale....................... Prepayments and other current assets............. 692 (389) 692 389 ------- --------- ------- -------- Total current assets.... 2,161 (20,287) 2,161 20,287 ------- --------- ------- -------- Investments: Loans receivable, net....... Available for sale securities................. Nuclear decommissioning trust funds................ Investments in real estate.. Stocks of subsidiary companies, at equity....... 10,584 10,584 Notes of subsidiary companies.................. Other....................... 17,526 17,526 ------- --------- ------- -------- Total investments....... 28,110 28,110 ------- --------- ------- -------- Property, plant and equipment: Utility plant............... Exploration and production properties................. Other--non-utility.......... (168,804) 168,804 Acquisition adjustment...... ------- --------- ------- -------- Total property, plant and equipment.......... (168,804) 168,804 ------- --------- ------- -------- Less accumulated depreciation, depletion and amortization............... (34,223) 34,223 ------- --------- ------- -------- Net property, plant and equipment.............. (134,581) 134,581 Deferred charges and other assets: Regulatory assets, net.... Goodwill, net............. Prepaid pension costs..... Other investments......... Other..................... ------- --------- ------- -------- Total deferred charges and other assets....... ------- --------- ------- -------- Total assets.......... $30,271 $(154,868) $30,271 $154,868 ======= ========= ======= ========
D-4-20 EXHIBIT D-4-2(a) DOMINION COGEN WVA, INC. CONSOLIDATING BALANCE SHEET--(Continued) As of December 31, 1999
Dominion Cogen WVA Inc. Dominion Morgantown Consolidated Consolidating Cogen Energy (Exhibit D-4-2) Entries WVA Inc. Associates --------------- ------------- -------- ---------- (thousands) LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Securities due within one year...................... $ (4,531) $ 4,531 Short-term debt............ Accounts payable, trade.... (6,101) 6,101 Payables to affiliated companies................. Accrued interest, payroll and taxes................. $ 289 (3,339) $ 289 3,339 Deferred income taxes-- current................... Dividends declared......... Commodity contract liabilities............... Other current liabilities.. (1,280) 1,280 ------- --------- ------- -------- Total current liabilities............. 289 (15,251) 289 15,251 ------- --------- ------- -------- Long-term debt............... (119,738) 119,738 ------- --------- ------- -------- Notes payable to affiliates.. (638) 638 ------- --------- ------- -------- Deferred credits and other liabilities: Deferred income taxes...... 12,739 12,739 Investment tax credits..... Other...................... (2,071) 1,028 (2,071) (1,028) ------- --------- ------- -------- Total deferred credits and other liabilities... 10,668 1,028 10,668 (1,028) ------- --------- ------- -------- Total liabilities........ 10,957 (134,599) 10,957 134,599 ------- --------- ------- -------- Minority interest............ Commitments and contingencies............... Obligated mandatorily redeemable preferred securities of subsidiary trusts...................... Preferred stock not subject to mandatory redemption..... Common shareholders' equity: Common stock............... 1 1 Additional paid in capital................... 21,997 (20,269) 21,997 20,269 Retained earnings.......... (2,684) (2,684) Accumulated other comprehensive income...... ------- --------- ------- -------- Total common shareholders' equity.... 19,314 (20,269) 19,314 20,269 ------- --------- ------- -------- Total liabilities and shareholders' equity.. $30,271 $(154,868) $30,271 $154,868 ======= ========= ======= ========
D-4-21 EXHIBIT D-4-2(a) DOMINION COGEN WVA, INC. CONSOLIDATING INCOME STATEMENT For The Year Ended December 31, 1999
Dominion Cogen WVA Inc. Consolidated Morgantown (Exhibit D-4- Consolidating Dominion Energy 2) Entries Cogen WVA, Inc. Associates -------------- ------------- --------------- ---------- (thousands) Operating revenue and income: Domestic electric utility service...... Other................. $ (79) $(29,321) $ (79) $29,321 ------ -------- ------ ------- Total operating rev- enue and income.... (79) (29,321) (79) 29,321 ------ -------- ------ ------- Expenses: Electric fuel and purchased energy, net.................. (5,293) 5,293 Purchased power capacity, net........ Other operation and maintenance.......... (10,246) 10,246 Depreciation, depletion and amortization......... 74 74 Taxes, other than income............... ------ -------- ------ ------- Total operating expenses........... 74 (15,539) 74 15,539 ------ -------- ------ ------- Income from operations.. (153) (13,782) (153) 13,782 ------ -------- ------ ------- Other income and expense: Interest revenue...... 939 (634) 939 634 Equity in earnings of subsidiary companies............ Interest revenue from subsidiary companies............ Merger-related costs.. Other, net............ 4,924 (4,924) ------ -------- ------ ------- Total other income and expense........ 939 4,290 939 (4,290) ------ -------- ------ ------- Income before fixed charges and income taxes.................. 786 (9,492) 786 9,492 ------ -------- ------ ------- Fixed charges: Interest charges...... 9,523 (9,523) Distributions-- preferred securities and preferred stock.. ------ -------- ------ ------- Total fixed charges............ 9,523 (9,523) ------ -------- ------ ------- Income before provision for income taxes, minority interests and extraordinary item..... 786 31 786 (31) Provision for income taxes................ (316) (316) Minority interests.... ------ -------- ------ ------- Income before extraordinary item..... 1,102 31 1,102 (31) Extraordinary item, net of income taxes........ ------ -------- ------ ------- Net income.............. $1,102 $ 31 $1,102 $ (31) ====== ======== ====== =======
D-4-22 EXHIBIT D-4-2(b) DOMINION ELWOOD, INC. CONSOLIDATING BALANCE SHEET As of December 31, 1999
Dominion Elwood Inc Consolidated Consolidating Dominion Elwood (Exhibit D-4-2) Entries Elwood, Inc Energy, LLC --------------- ------------- ----------- ----------- (thousands) ASSETS Current assets: Cash and cash equivalents........... $ (110) $ 110 Accounts receivable: Customers, less allowance............. Other.................. $ 700 (12,498) $ 700 12,498 Receivables from affiliated companies... Materials and supplies, at average cost or less: Plant and general...... Fossil fuel............ Deferred income taxes-- current............... Mortgage loans in warehouse............. Commodity contract assets................ Finance receivables held for sale......... Prepayments and other current assets........ (1,638) 1,638 -------- --------- -------- --------- Total current assets... 700 (14,246) 700 14,246 -------- --------- -------- --------- Investments: Loans receivable, net.. Available for sale securities............ Nuclear decommissioning trust funds........... Investments in real estate................ Stocks of subsidiary companies, at equity.. 99,762 99,762 Notes of subsidiary companies............. (3,466) 3,466 Other.................. -------- --------- -------- --------- Total investments...... 99,762 (3,466) 99,762 3,466 -------- --------- -------- --------- Property, plant and equipment: Utility plant.......... Exploration and production properties............ Other-non-utility...... (192,148) 192,148 Acquisition adjustment............ -------- --------- -------- --------- Total property, plant and equipment......... (192,148) 192,148 -------- --------- -------- --------- Less accumulated depreciation, depletion and amortization....... (4,056) 4,056 -------- --------- -------- --------- Net property, plant and equipment......... (188,092) 188,092 Deferred charges and other assets: Regulatory assets, net.. Goodwill, net........... Prepaid pension costs... Other investments....... Other................... -------- --------- -------- --------- Total deferred charges and other assets...... -------- --------- -------- --------- Total assets......... $100,462 $(205,803) $100,462 $(205,803) ======== ========= ======== =========
D-4-23 EXHIBIT D-4-2(b) DOMINION ELWOOD, INC. LIABILITIES AND SHAREHOLDERS' EQUITY As of December 31, 1999
Dominion Elwood Inc. Consolidated Consolidating Dominion Elwood (Exhibit D-4-2) Entries Elwood Inc. Energy LLC --------------- ------------- ----------- ---------- (thousands) LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Securities due within one year.................... Short-term debt.......... Accounts payable, trade.. $ 3,900 $ (6,425) $ 3,900 $ 6,425 Payables to affiliated companies............... Accrued interest, payroll and taxes............... 1,071 (96) 1,071 96 Deferred income taxes-- current................. Dividends declared....... Commodity contract liabilities............. Other current liabilities............. (61) 61 -------- --------- -------- -------- Total current liabilities............. 4,971 (6,582) 4,971 6,582 -------- --------- -------- -------- Long-term debt............ Notes payable to affiliates............... Deferred credits and other liabilities: Deferred income taxes.... 638 638 Investment tax credits... Other.................... 303 (303) -------- --------- -------- -------- Total deferred credits and other liabilities... 638 303 638 (303) -------- --------- -------- -------- Total liabilities...... 5,609 (6,279) 5,609 6,279 -------- --------- -------- -------- Minority interest......... Commitments and contingencies............ Obligated mandatorily redeemable preferred securities of subsidiary trusts................... Preferred stock not subject to mandatory redemption............... Common shareholders' equity: Common stock............. Additional paid in capital................. 87,336 (174,672) 87,336 174,672 Retained earnings........ 7,517 (24,852) 7,517 24,852 Accumulated other comprehensive income.... -------- --------- -------- -------- Total common shareholders' equity.... 94,853 (199,524) 94,853 199,524 -------- --------- -------- -------- Total liabilities and shareholders' equity.. $100,462 $(205,803) $100,462 $205,803 ======== ========= ======== ========
D-4-24 EXHIBIT D-4-2(b) DOMINION ELWOOD, INC. CONSOLIDATING INCOME STATEMENT For the Year Ended December 31, 1999
Dominion Elwood Inc. Dominion Elwood Consolidated Consolidating Elwood, Energy, (Exhibit D-4-2) Entries Inc. LLC --------------- ------------- -------- ------- (thousands) Operating revenue and income: Domestic electric utility service....................... Other.......................... $12,426 $(42,088) $12,426 $42,088 ------- -------- ------- ------- Total operating revenue and income........................ 12,426 (42,088) 12,426 42,088 Expenses: Electric fuel and purchased energy, net................... (11,450) 11,450 Purchased power capacity, net.. Other operation and maintenance................... (2,447) 2,447 Depreciation, depletion and amortization.................. (4,074) 4,074 Taxes, other than income....... (169) 169 ------- -------- ------- ------- Total operating expenses....... (18,140) 18,140 -------- ------- Income from operations.......... 12,426 (23,948) 12,426 23,948 ------- -------- ------- ------- Other income and expense: Interest revenue............... (184) 184 Equity in earnings of subsidiary companies.......... Interest revenue from subsidiary companies.......... Merger-related costs........... Other, net..................... (721) 721 ------- -------- ------- ------- Total other income and expense....................... (905) 905 -------- ------- Income before fixed charges and income taxes................... 12,426 (24,853) 12,426 24,853 ------- -------- ------- ------- Fixed charges: Interest charges............... Distributions--preferred securities and preferred stock......................... ------- -------- ------- ------- Total fixed charges............ Income before provision for income taxes, minority interests and extraordinary item........................... 12,426 (24,853) 12,426 24,853 Provision for income taxes..... 4,909 4,909 Minority interests............. ------- -------- ------- ------- Income before extraordinary item........................... 7,517 (24,853) 7,517 24,853 Extraordinary item, net of income taxes................... ------- -------- ------- ------- Net income...................... $ 7,517 $(24,853) $ 7,517 $24,853 ======= ======== ======= =======
D-4-25 EXHIBIT D-4-3 DOMINION ENERGY, INC.--FOREIGN POWER GENERATION CONSOLIDATED CONSOLIDATING BALANCE SHEET As of December 31, 1999
Foreign Entites Pending Sale Foreign Entities Sold -------------------------------------------- ---------------------------- Dominion Foreign Power Energy Dominion Dominion Generation Interamerican Energy Company Dominion Holdings Inc. Dominion Consolidated Consolidating Holding Co LDC (Caymen Islands) Management Peru SAC Energy Central (Exhibit D-4) Entries (Note O) (Note P) Argentina SA (Note Q) America, Inc. ------------- ------------- -------------- ---------------- ------------ ------------- -------------- (thousands) ASSETS Current assets: Cash and cash equivalents........ $ 54,715 $ 49,156 $ 5,465 $ 94 Accounts receivable: Customers, less allowance......... Other............. 14,247 3,585 10,474 188 Receivables from affiliated companies.......... Materials and supplies, at average cost or less: Plant and general........... 153 73 80 Fossil fuel....... Deferred income taxes--current..... Mortgage loans in warehouse.......... Commodity contract assets............. Finance receivables held for sale...... Prepayments and other current assets 18,092 61 17,995 36 -------- --- -------- -------- ---- --- --- Total current assets............ 87,207 52,875 34,014 318 -------- --- -------- -------- ---- --- --- Investments: Loans receivable, net................ Available for sale securities......... Nuclear decommissioning trust funds........ Investments in real estate............. Stocks of subsidiary companies, at equity............. Notes of subsidiary companies.......... Other.............. 22,105 16,012 6,093 -------- --- -------- -------- ---- --- --- Total investments....... 22,105 16,012 6,093 -------- --- -------- -------- ---- --- --- Property, plant and equipment: Utility plant...... Exploration and production properties......... Other--non- utility............ 479,081 205,908 272,313 860 Acquisition adjustment......... -------- --- -------- -------- ---- --- --- Total property, plant and equipment......... 479,081 205,908 272,313 860 -------- --- -------- -------- ---- --- --- Less accumulated depreciation, depletion and amortization 142,806 83,542 59,063 201 -------- --- -------- -------- ---- --- --- Net property, plant and equipment......... 336,275 122,366 213,250 659 Deferred charges and other assets: Regulatory assets, net................ Goodwill, net...... (657) 11,033 (11,690) Prepaid pension costs.............. Other investments.. Other.............. -------- --- -------- -------- ---- --- --- Total deferred charges and other assets............ (657) 11,033 (11,690) -------- --- -------- -------- ---- --- --- Total assets...... $444,930 $202,286 $241,667 $977 ======== === ======== ======== ==== === ===
D-4-26 EXHIBIT D-4-3 DOMINION ENERGY, INC.--FOREIGN POWER GENERATION CONSOLIDATED CONSOLIDATING BALANCE SHEET--(CONTINUED) As of December 31, 1999
Foreign Entites Pending Sale Foreign Entities Sold -------------------------------------------- ---------------------------- Dominion Foreign Power Energy Dominion Dominion Generation Interamerican Energy Company Dominion Holdings Inc. Dominion Consolidated Consolidating Holding Co LDC (Caymen Islands) Management Peru S.A.C Energy Central (Exhibit D-4) Entries (Note O) (Note P) Argentina SA (Note Q) America Inc. ------------- ------------- -------------- ---------------- ------------ ------------- -------------- (thousands) LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Securities due within one year.... $ 2,637 $ 2,637 Short-term debt.... 61,907 $ 61,907 Accounts payable, trade.............. 6,780 1,816 4,871 $ 93 Payables to affiliated companies.......... Accrued interest, payroll and taxes.. 15,847 4,201 11,633 13 Deferred income taxes--current..... Dividends declared........... Commodity contract liabilities........ Other current liabilities........ 2,117 2,003 114 -------- --- -------- -------- ----- --- --- Total current liabilities....... 89,288 8,654 80,414 220 -------- --- -------- -------- ----- --- --- Long-term debt..... 36,877 36,877 Notes payable to affiliates......... 49,268 49,268 Deferred credits and other liabilities: Deferred income taxes.............. 2,410 2,697 (287) Investment tax credits............ Other.............. (333) (333) -------- --- -------- -------- ----- --- --- Total deferred credits and other liabilities....... 2,077 (333) 2,697 (287) -------- --- -------- -------- ----- --- --- Total liabilities....... 177,510 45,198 132,379 (67) -------- --- -------- -------- ----- --- --- Minority interest.. 77,067 70,404 6,663 Commitments and contingencies...... Obligated mandatorily redeemable preferred securities of subsidiary trusts Preferred stock not subject to mandatory redemption......... Common shareholders' equity: Common stock...... 159,054 58,796 98,627 1,631 Additional paid in capital........... 377 377 Retained earnings.......... 30,922 27,511 3,998 (587) Accumulated other comprehensive income -------- --- -------- -------- ----- --- --- Total common shareholders' equity............ 190,353 86,684 102,625 1,044 -------- --- -------- -------- ----- --- --- Total liabilities and shareholders' equity............ $444,930 $202,286 $241,667 $ 977 ======== === ======== ======== ===== === ===
D-4-27 EXHIBIT D-4-3 DOMINION ENERGY, INC.--FOREIGN POWER GENERATION CONSOLIDATED CONSOLIDATING INCOME STATEMENT For the Year Ended December 31, 1999
Foreign Entities Foreign Entities Pending Sale Sold ------------------------------------------- ------------------ Foreign Dominion Dominion Dominion Power Energy Dominion Holdings, Energy Generation Interamerican Energy Company Dominion Inc. Central Consolidated Consolidating Holding Co. (Cayman Islands) Management Peru SAC America, (Exhibit D-4) Entries LDC (Note O) (Note P) Argentina SA (Note Q) Inc. ------------- ------------- ------------- ---------------- ------------ --------- -------- (thousands) Operating revenue and income: Domestic electric utility service........ Other.................. $106,458 $21,204 $35,030 $ 600 $43,593 $6,031 -------- --- ------- ------- ----- ------- ------ Total operating revenue and income............. 106,458 21,204 35,030 600 43,593 6,031 -------- --- ------- ------- ----- ------- ------ Expenses: Electric fuel and purchased energy, net.. Purchased power capacity, net.......... Other operation and maintenance............ 44,802 4,711 19,625 1,035 18,336 1,095 Depreciation, depletion and amortization....... 24,167 3,722 9,234 43 9,709 1,459 Taxes, other than income................. 3,574 16 3,296 20 242 -------- --- ------- ------- ----- ------- ------ Total operating expenses............... 72,543 8,449 32,155 1,098 28,287 2,554 -------- --- ------- ------- ----- ------- ------ Income from operations.. 33,915 12,755 2,875 (498) 15,306 3,477 Other income and expense: Interest revenue....... 7,721 4,141 882 22 2,576 100 Equity in earnings of subsidiary companies... Interest revenue from subsidiary companies... Merger-related costs... Other, net............. 4,027 2,290 2,431 369 (1,095) 32 -------- --- ------- ------- ----- ------- ------ Total other income and expense................ 11,748 6,431 3,313 391 1,481 132 -------- --- ------- ------- ----- ------- ------ Income before fixed charges and income taxes................... 45,663 19,186 6,188 (107) 16,787 3,609 Fixed charges: Interest charges....... 20,133 2,286 12,572 1 3,027 2,247 Distributions-- preferred securities and preferred stock.... -------- --- ------- ------- ----- ------- ------ Total fixed charges.... 20,133 2,286 12,572 1 3,027 2,247 -------- --- ------- ------- ----- ------- ------ Income before provision for income taxes, minority interests and extraordinary item...... 25,530 16,900 (6,384) (108) 13,760 1,363 Provision for income taxes.................. (2,062) 3,863 (3,614) (2,382) 71 Minority interests..... 16,101 6,585 (982) 10,498 -------- --- ------- ------- ----- ------- ------ Income before extraordinary item...... 11,490 6,451 (1,788) (108) 5,644 1,292 Extraordinary item, net of income taxes......... -------- --- ------- ------- ----- ------- ------ Net income.............. $ 11,490 $ 6,451 $(1,788) $(108) $ 5,644 $1,292 ======== === ======= ======= ===== ======= ======
D-4-28 EXHIBIT D-5 VIRGINIA ELECTRIC AND POWER COMPANY CONSOLIDATING BALANCE SHEET As of December 31, 1999
Virginia Electric VP and Power Company Services VP Consolidated Consolidating Virginia VP Fuel (Exhibit Capital (Exhibit D-2) Entries Power Corp. D-5(a)) VPSC Trust ----------------- ------------- ----------- ------- -------- ------- -------- (thousands) ASSETS Current assets: Cash and cash equivalents............ $ 61,745 $ 58,043 $ 1 $ 3,042 $ 659 Accounts receivable: Customers, less allowance............. 663,520 592,303 69,267 1,950 Other.................. 66,012 66,012 1,564 $139,205 Receivables from affiliated companies... 1,424 $(240,497) 69,904 31,248 Materials and supplies, at average cost or less: Plant and general...... 123,871 123,300 571 Fossil fuel............ 110,844 45,543 65,301 Deferred income taxes-- current................ 49,525 49,485 40 Mortgage loans in warehouse.............. Commodity contract assets................. 362,218 107,610 254,608 Finance receivables held for sale............... Prepayments and other current assets......... 95,168 93,481 1,192 495 ----------- --------- ----------- ------- -------- ------- -------- Total current assets... 1,534,327 (240,497) 1,205,681 1 424,698 5,239 139,205 ----------- --------- ----------- ------- -------- ------- -------- Investments: Loans receivable, net... Available for sale securities............. Nuclear decommissioning trust funds............ 818,072 818,072 Investments in real estate................. Stocks of subsidiary companies, at equity... (25,331) 25,331 Notes of subsidiary companies.............. (93,814) 93,814 Other................... 52,468 52,240 28 200 ----------- --------- ----------- ------- -------- ------- -------- Total investments...... 870,540 (119,145) 989,457 28 200 ----------- --------- ----------- ------- -------- ------- -------- Property, plant and equipment: Utility plant........... 16,489,207 16,434,952 40,970 13,285 Exploration and production properties.. Other--non-utility...... Acquisition adjustment.. ----------- --------- ----------- ------- -------- ------- -------- Total property, plant and equipment......... 16,489,207 16,434,952 40,970 13,285 ----------- --------- ----------- ------- -------- ------- -------- Less accumulated depreciation, depletion and amortization.......... 7,410,547 7,409,501 1,046 ----------- --------- ----------- ------- -------- ------- -------- Net property, plant and equipment.............. 9,078,660 9,025,451 40,970 12,239 ----------- --------- ----------- ------- -------- ------- -------- Deferred charges and other assets: Regulatory assets, net.. 221,137 221,137 Goodwill, net........... Prepaid pension costs... Other investments....... Other................... 59,985 51,580 8,405 ----------- --------- ----------- ------- -------- ------- -------- Total deferred charges and other assets...... 281,122 272,717 8,405 ----------- --------- ----------- ------- -------- ------- -------- Total assets........... $11,764,649 $(359,642) $11,493,306 $40,971 $433,131 $17,678 $139,205 =========== ========= =========== ======= ======== ======= ========
The Notes to Consolidated Financial Statements are an integral part of this statement (see Notes on page D-2-2). D-5-1 EXHIBIT D-5 VIRGINIA ELECTRIC AND POWER COMPANY LIABILITIES AND SHAREHOLDERS' EQUITY As of December 31, 1999
Virginia Electric VP and Power Company Services VP Consolidated Consolidating Virginia VP Fuel (Exhibit Capital (Exhibit D-2) Entries Power Corp. D-5(a)) VPSC Trust ----------------- ------------- ----------- ------- -------- ------- -------- (thousands) LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Securities due within one year............... $ 375,459 $ 375,459 Short-term debt......... 377,979 377,979 Accounts payable, trade.................. 533,596 460,126 $ 73,360 $ 110 Payables to affiliated companies.............. 556 (211,435) 172,790 $34,656 4,545 Accrued interest, payroll and taxes...... 237,415 237,073 342 Deferred income taxes-- current................ (1,015) 1,015 Dividends declared...... Commodity contract liabilities............ 347,093 92,923 254,170 Other current liabilities............ 163,635 157,225 6,314 66 $ 30 ----------- --------- ----------- ------- -------- ------- -------- Total current liabilities........... 2,035,733 (211,435) 1,872,560 40,970 328,953 4,655 30 ----------- --------- ----------- ------- -------- ------- -------- Long-term debt.......... 3,551,282 3,551,282 ----------- --------- ----------- ------- -------- ------- -------- Notes payable to affiliates............. (93,814) 93,814 ----------- --------- ----------- ------- -------- ------- -------- Deferred credits and other liabilities: Deferred income taxes... 1,452,186 1,451,851 63 272 Investment tax credits.. 146,518 146,518 Other................... 192,564 190,667 1,482 415 ----------- --------- ----------- ------- -------- ------- -------- Total deferred credits and other liabilities........... 1,791,268 1,789,036 1,545 687 ----------- --------- ----------- ------- -------- ------- -------- Total liabilities...... 7,378,283 (305,249) 7,212,878 40,970 424,312 5,342 30 ----------- --------- ----------- ------- -------- ------- -------- Minority interest....... Commitments and contingencies.......... Obligated mandatorily redeemable preferred securities of subsidiary trusts...... 135,000 135,000 Preferred stock not subject to mandatory redemption............. 509,014 509,014 Common shareholders' equity: Common stock........... 2,737,407 (8,241) 2,737,407 1 11,000 3,816 4,175 Additional paid in capital............... 16,887 (9,459) 16,887 9,459 Retained earnings...... 988,058 (36,693) 1,017,120 (2,181) (939) Accumulated other comprehensive income.. ----------- --------- ----------- ------- -------- ------- -------- Total common shareholders' equity.. 3,742,352 (54,393) 3,771,414 1 8,819 12,336 4,175 ----------- --------- ----------- ------- -------- ------- -------- Total liabilities and shareholders' equity.. $11,764,649 $(359,642) $11,493,306 $40,971 $433,131 $17,678 $139,205 =========== ========= =========== ======= ======== ======= ========
The Notes to Consolidated Financial Statements are an integral part of this statement (see Notes on page D-2-2). D-5-2 EXHIBIT D-5 VIRGINIA ELECTRIC AND POWER COMPANY CONSOLIDATING INCOME STATEMENT For the Year Ended December 31, 1999
Virginia Electric VP and Power Company VP Services VP Consolidated Consolidating Virginia Fuel (Exhibit Capital (Exhibit D-2) Entries Power Corp. D-5(a)) VPSC Trust ----------------- ------------- ---------- ----- -------- ------ ------- (thousands) Operating revenue and income: Domestic electric utility service....... $4,274,192 $4,274,186 $ 6 Other.................. 316,721 306,515 5,944 $4,262 ---------- -------- ---------- ------- ------ Total operating revenue and income............ 4,590,913 4,580,701 5,950 4,262 ---------- -------- ---------- ------- ------ Expenses: Electric fuel and purchased energy, net................... 986,139 986,055 84 Purchased power capacity, net......... 808,924 808,924 Other operation and maintenance........... 959,072 $(11,162) 959,626 7,082 3,190 $ 336 Depreciation, depletion and amortization...... 548,397 547,867 530 Taxes, other than income................ 281,816 281,506 261 49 ---------- -------- ---------- ------- ------ ------ Total operating expenses.............. 3,584,348 (11,162) 3,583,978 7,427 3,769 336 ---------- -------- ---------- ------- ------ ------ Income from operations.. 1,006,565 11,162 996,723 (1,477) 493 (336) ---------- -------- ---------- ------- ------ ------ Other income and expense: Interest revenue....... 8,357 (11,204) 8,111 246 11,204 Equity in earnings of subsidiary companies.. 378 (378) Interest revenue from subsidiary companies.. (336) 336 Merger-related costs... Other, net............. 16,516 16,585 (2) (67) ---------- -------- ---------- ------- ------ ------ Total other income and expense............... 24,873 (11,162) 24,654 244 (67) 11,204 ---------- -------- ---------- ------- ------ ------ Income before fixed charges and income taxes.................. 1,031,438 1,021,377 (1,233) 426 10,868 ---------- -------- ---------- ------- ------ ------ Fixed charges: Interest charges....... 277,822 277,821 1 Distributions-- preferred securities and preferred stock... 47,913 37,045 10,868 ---------- -------- ---------- ------- ------ ------ Total fixed charges.... 325,735 314,866 1 10,868 ---------- -------- ---------- ------- ------ ------ Income before provision for income taxes, minority interests and extraordinary item..... 705,703 706,511 (1,234) 426 Provision for income taxes................. 258,033 258,461 (470) 42 Minority interests..... ---------- -------- ---------- ------- ------ ------ Income before extraordinary item..... 447,670 448,050 (764) 384 ---------- -------- ---------- ------- ------ ------ Extraordinary item, net of income taxes........ 254,826 254,826 ---------- -------- ---------- ------- ------ ------ Net income.............. $ 192,844 $ $ 193,224 $ (764) $ 384 $ ========== ======== ========== ======= ====== ======
The Notes to Consolidated Financial Statements are an integral part of this statement (see Notes on page D-2-2). D-5-3 EXHIBIT D-5(a) VIRGINIA POWER SERVICES, INC. CONSOLIDATING BALANCE SHEET As of December 31, 1999
Virginia Power Services, Inc. Consolidated Consolidating VPS, (Exhibit D-5) Entries Inc. VPEM VPSE VPNS -------------- ------------- -------- -------- ------- ---- (thousands) ASSETS Current assets: Cash and cash equivalents........... $ 3,042 $ 11 $ 2,800 $231 Accounts receivable: Customers, less allowance............. 69,267 $ 66,485 2,628 154 Other.................. Receivables from affiliated companies... 31,248 $ 47,935 23,159 33,091 22,933 Materials and supplies, at average cost or less: Plant and general...... Fossil fuel............ 65,301 16,859 48,442 Deferred income taxes-- current................ 40 27 13 Mortgage loans in warehouse............. Commodity contract assets................. 254,608 253,447 1,161 Finance receivables held for sale............... Prepayments and other current assets......... 1,192 (4,484) 5,666 10 -------- -------- -------- -------- ------- ---- Total current assets... 424,698 47,935 23,170 365,425 83,630 408 -------- -------- -------- -------- ------- ---- Investments: Loans receivable, net.. Available for sale securities............ Nuclear decommissioning trust funds........... Investments in real estate................ Stocks of subsidiary companies, at equity.. Notes of subsidiary companies............. 94,346 94,346 Other.................. 28 28 -------- -------- -------- -------- ------- ---- Total investments...... 28 94,346 94,346 28 -------- -------- -------- -------- ------- ---- Property, plant and equipment: Utility plant.......... Exploration and production properties............ Other-non-utility...... Acquisition adjustment............ -------- -------- -------- -------- ------- ---- Total property, plant and equipment......... -------- -------- -------- -------- ------- ---- Less accumulated depreciation, depletion and amortization....... Net property, plant and equipment............. Deferred charges and other assets: Regulatory assets, net................... Goodwill, net.......... Prepaid pension costs.. Other investments...... Other.................. 8,405 16 5,861 2,474 54 -------- -------- -------- -------- ------- ---- Total deferred charges and other assets...... 8,405 16 5,861 2,474 54 -------- -------- -------- -------- ------- ---- Total assets........... $433,131 $142,281 $117,532 $371,286 $86,104 $490 ======== ======== ======== ======== ======= ====
D-5-4 EXHIBIT D-5(a) VIRGINIA POWER SERVICES, INC. CONSOLIDATING BALANCE SHEET--(Continued) As of December 31, 1999
Virginia Power Services, Inc. Consolidated Consolidating VPS, (Exhibit D-5) Entries Inc. VPEM VPSE VPNS -------------- ------------- -------- -------- ------- ------ (thousands) LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Securities due within one year.............. Short-term debt........ Accounts payable, trade................. $ 73,360 $ 64,879 $ 8,481 Payables to affiliated companies............. $ 47,934 $ 23,300 23,258 $1,376 Accrued interest, payroll and taxes..... 342 (4) 1,254 (729) (179) Deferred income taxes-- current............... 1,015 983 32 Dividends declared..... Commodity contract liabilities........... 254,170 253,191 979 Other current liabilities........... 66 6 60 -------- -------- -------- -------- ------- ------ Total current liabilities........... 328,953 47,934 23,296 320,313 32,021 1,257 -------- -------- -------- -------- ------- ------ Long-term debt.......... Notes payable to affiliates............. 93,814 94,347 94,031 39,672 54,458 Deferred credits and other liabilities: Deferred income taxes.. 63 63 Investment tax credits............... Other.................. 1,482 1 1,826 (391) 46 -------- -------- -------- -------- ------- ------ Total deferred credits and other liabilities........... 1,545 1 1,826 (391) 109 -------- -------- -------- -------- ------- ------ Total liabilities...... 424,312 142,281 117,328 361,811 86,088 1,366 -------- -------- -------- -------- ------- ------ Minority interest....... Commitments and contingencies.......... Obligated mandatorily redeemable preferred securities of subsidiary trusts...... Preferred stock not subject to mandatory redemption............. Common shareholders' equity: Common stock........... 11,000 249 10,000 1 750 Additional paid in capital............... Retained earnings...... (2,181) (45) (525) 15 (1,626) Accumulated other comprehensive income.. -------- -------- -------- -------- ------- ------ Total common shareholders' equity.. 8,819 204 9,475 16 (876) -------- -------- -------- -------- ------- ------ Total liabilities and shareholders' equity.. $433,131 $142,281 $117,532 $371,286 $86,104 $ 490 ======== ======== ======== ======== ======= ======
D-5-5 EXHIBIT D-5(a) VIRGINIA POWER SERVICES, INC. CONSOLIDATING INCOME STATEMENT For The Year Ended December 31, 1999
Virginia Power Services, Inc. Consolidated Consolidating VPS, (Exhibit D-5) Entries Inc. VPEM VPSE VPNS -------------- ------------- ---- ------ ---- ------ (thousands) Operating revenue and income: Domestic electric utility service...... $ 6 $ 6 Other................. 5,944 3,565 $2,379 ------- ----- ---- ------ ---- ------ Total operating revenue and income............. 5,950 3,571 2,379 ------- ----- ---- ------ ---- ------ Expenses: Electric fuel and purchased energy, net.................. 84 $ 84 Purchased power capacity, net........ Other operation and maintenance.......... 7,082 $ 63 4,270 (83) 2,832 Depreciation, depletion and amortization......... Taxes, other than income............... 261 180 81 ------- ----- ---- ------ ---- ------ Total operating expenses........... 7,427 63 4,450 1 2,913 ------- ----- ---- ------ ---- ------ Income from operations.. (1,477) (63) (879) (1) (534) Other income and expense: Interest revenue...... 246 12 59 11 164 Equity in earnings of subsidiary companies............ Interest revenue from subsidiary companies............ Merger-related costs.. Other, net............ (2) (2) ------- ----- ---- ------ ---- ------ Total other income and expense........ 244 12 57 11 164 ------- ----- ---- ------ ---- ------ Income before fixed charges and income taxes.................. (1,233) (51) (822) 10 (370) Fixed charges: Interest charges...... 1 1 Distributions-- preferred securities and preferred stock.. ------- ----- ---- ------ ---- ------ Total fixed charges............ 1 1 ------- ----- ---- ------ ---- ------ Income before provision for income taxes, minority interests and extraordinary item..... (1,232) (51) (821) 10 (370) Provision for income taxes................ (470) (18) (296) (5) (151) Minority interests.... ------- ----- ---- ------ ---- ------ Income before extraordinary item..... (762) (33) (525) 15 (219) ------- ----- ---- ------ ---- ------ Extraordinary item, net of income taxes........ Net income.............. $ (762) $(33) $ (525) $ 15 $ (219) ======= ===== ==== ====== ==== ======
D-5-6 EXHIBIT D-6 FINANCIAL STATEMENTS CONSOLIDATED NATURAL GAS COMPANY Financial statements as of and for the year ended December 31, 1999 INDEX
Page ------ Report of Independent Accountants........................................ D-6-2 Consolidating Balance Sheet.............................................. D-6-3 Consolidating Income Statement........................................... D-6-7 Consolidating Statement of Retained Earnings............................. D-6-9 Consolidating Statement of Cash Flows.................................... D-6-11 Consolidating Balance Sheet Supplement................................... D-6-15 Consolidating Income Statement Supplement................................ D-6-17 Consolidating Statement of Retained Earnings Supplement.................. D-6-18 Consolidating Statement of Cash Flows Supplement......................... D-6-19 CNG Transmission Corporation: Consolidating Balance Sheet............................................ D-6-20 Consolidating Income Statement......................................... D-6-22 Consolidating Statement of Retained Earnings........................... D-6-23 Consolidating Statement of Cash Flows.................................. D-6-24 CNG Producing Company: Consolidating Balance Sheet............................................ D-6-25 Consolidating Income Statement......................................... D-6-27 Consolidating Statement of Retained Earnings........................... D-6-28 Consolidating Statement of Cash Flows.................................. D-6-29 CNG Power Company: Consolidating Balance Sheet............................................ D-6-30 Consolidating Income Statement......................................... D-6-32 Consolidating Statement of Retained Earnings........................... D-6-33 Consolidating Statement of Cash Flows.................................. D-6-34 CNG International Corporation: Consolidating Balance Sheet............................................ D-6-36 Consolidating Income Statement......................................... D-6-38 Consolidating Statement of Retained Earnings........................... D-6-39 Consolidating Statement of Cash Flows.................................. D-6-40 CNG Cayman One Ltd: Consolidating Balance Sheet............................................ D-6-42 Consolidating Income Statement......................................... D-6-44 Consolidating Statement of Retained Earnings........................... D-6-45 Consolidating Statement of Cash Flows.................................. D-6-46 CNG Cayman Three Ltd: Consolidating Balance Sheet............................................ D-6-48 Consolidating Income Statement......................................... D-6-50 Consolidating Statement of Retained Earnings........................... D-6-51 Consolidating Statement of Cash Flows.................................. D-6-52 CNG Products and Services, Inc.: Consolidating Balance Sheet............................................ D-6-54 Consolidating Income Statement......................................... D-6-56 Consolidating Statement of Retained Earnings........................... D-6-57 Consolidating Statement of Cash Flows.................................. D-6-58
Note: The Notes to Consolidated Financial Statements appearing on pages 26 to 55 of Exhibit I to Consolidated Natural Gas Company's Form 8-K filed with the SEC on January 27, 2000, are incorporated herein by reference. D-6-1 EXHIBIT D-6 REPORT OF INDEPENDENT ACCOUNTANTS To the Board of Directors and Stockholders of Consolidated Natural Gas Company In our opinion, the consolidating financial statements of Consolidated Natural Gas Company listed in the accompanying index on page D-6-1 of Exhibit D-6 together with the Notes thereto incorporated by reference to the Company's Annual Report on Form 10-K for the year ended December 31, 1999 present fairly, in all material respects, the consolidated financial position of Consolidated Natural Gas Company and its subsidiaries at December 31, 1999, and the results of their operations and their cash flows for the year then ended, in conformity with accounting principles generally accepted in the United States. These financial statements are the responsibility of the Company's management; our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit of these statements in accordance with auditing standards generally accepted in the United States which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for the opinion expressed above. Our audit was made for the purpose of forming an opinion on the consolidated financial statements taken as a whole. The consolidating information on pages D-6-3 through D-6-59 is presented for purposes of complying with the requirements of the Public Utility Holding Company Act of 1935 rather than to present financial position, results of operations, and cash flows of the individual companies. Accordingly, we do not express an opinion on the financial position, results of operations and cash flows of the individual companies. However, the consolidating information on pages D-6-3 through D-6- 59 has been subjected to the auditing procedures applied in the audit of the consolidated financial statements and, in our opinion, is fairly stated in all material respects in relation to the consolidated financial statements taken as a whole. PRICEWATERHOUSECOOPERS LLP 600 Grant Street Pittsburgh, Pennsylvania 15219-9954 January 26, 2000 D-6-2 EXHIBIT D-6 CONSOLIDATED NATURAL GAS COMPANY CONSOLIDATING BALANCE SHEET At December 31, 1999
CONSOLIDATED SUBSIDIARIES ------------ --------------------------------------------- Eliminations CNG and and Combined CNGT Subsidiaries Adjustments* Total CNG CNGSvc (Page D-6-20) EOG PNG ------------ ------------ ----------- ---------- -------- ------------- ---------- --------- (Thousands of Dollars) ASSETS Property, Plant and Equipment (Note 6) Gas utility and other plant................... $ 4,648,120 $ (548,328) $ 5,196,448 $ -- $ 43,981 $2,109,020 $1,572,453 $ 690,703 Accumulated depreciation and amortization........ (1,959,475) 155,566 (2,115,041) -- (19,763) (952,939) (656,983) (241,262) ----------- ----------- ----------- ---------- -------- ---------- ---------- --------- Net gas utility and other plant............ 2,688,645 (392,762) 3,081,407 -- 24,218 1,156,081 915,470 449,441 ----------- ----------- ----------- ---------- -------- ---------- ---------- --------- Exploration and production properties... 4,392,319 -- 4,392,319 -- -- 228,132 -- -- Accumulated depreciation and amortization........ (2,853,703) 24,733 (2,878,436) -- -- (208,609) -- -- ----------- ----------- ----------- ---------- -------- ---------- ---------- --------- Net exploration and production properties.. 1,538,616 24,733 1,513,883 -- -- 19,523 -- -- ----------- ----------- ----------- ---------- -------- ---------- ---------- --------- Net property, plant and equipment.............. 4,227,261 (368,029) 4,595,290 -- 24,218 1,175,604 915,470 449,441 ----------- ----------- ----------- ---------- -------- ---------- ---------- --------- Investments Stocks of subsidiary companies, at equity-- consolidated............ -- (2,570,661) 2,570,661 2,570,661 -- -- -- -- Notes of subsidiary companies-- consolidated............ -- (1,478,066) 1,478,066 1,478,066 -- -- -- -- ----------- ----------- ----------- ---------- -------- ---------- ---------- --------- Total investments...... -- (4,048,727) 4,048,727 4,048,727 -- -- -- -- ----------- ----------- ----------- ---------- -------- ---------- ---------- --------- Current Assets Cash and temporary cash investments............. 93,891 (231) 94,122 2 62,229 95 7,285 4,046 Accounts receivable Customers.............. 349,818 (18,922) 368,740 535 -- 43,862 183,878 72,889 Unbilled revenues and other.................. 198,324 (17,198) 215,522 37 851 2,721 75,971 10,872 Allowance for doubtful accounts............... (21,240) 152 (21,392) (535) -- -- (7,561) (6,452) Receivables from affiliated companies-- consolidated............ -- (1,445,441) 1,445,441 723,125 634,202 27,990 5,422 1,897 Inventories, at cost Gas stored--current portion (Note 10)...... 86,312 (15,180) 101,492 -- -- -- 54,222 9,064 Materials and supplies (average cost method).. 20,336 (537) 20,873 -- -- 9,063 5,587 2,133 Unrecovered gas costs (Note 5)................ 38,074 -- 38,074 -- -- 19,856 -- 18,218 Deferred income taxes-- current (net) (Note 9).. 674 (10,299) 10,973 -- -- 4,514 4,295 -- Net assets held for sale (Note 2)................ 371,508 371,508 -- -- -- -- -- -- Prepayments and other current assets.......... 299,914 (2,468) 302,382 67,617 1,883 62,606 88,707 13,722 ----------- ----------- ----------- ---------- -------- ---------- ---------- --------- Total current assets... 1,437,611 (1,138,616) 2,576,227 790,781 699,165 170,707 417,806 126,389 ----------- ----------- ----------- ---------- -------- ---------- ---------- --------- Regulatory and Other Assets Other investments....... 353,795 (56) 353,851 2,500 -- 38,498 782 -- Deferred charges and other assets (Notes 5, 7, 8, 9 and 17)......... 516,552 (83,414) 599,966 53,722 17,880 95,150 212,619 189,364 ----------- ----------- ----------- ---------- -------- ---------- ---------- --------- Total regulatory and other assets........... 870,347 (83,470) 953,817 56,222 17,880 133,648 213,401 189,364 ----------- ----------- ----------- ---------- -------- ---------- ---------- --------- Total assets........... $ 6,535,219 $(5,638,842) $12,174,061 $4,895,730 $741,263 $1,479,959 $1,546,677 $ 765,194 =========== =========== =========== ========== ======== ========== ========== =========
- ---- * The elimination journal entries pertaining to this consolidating financial statement are prepared in detail form, showing the amounts pertaining to the Registrant and each subsidiary company, and are preserved with the Registrant's copy of this Form U5B. ( ) denotes negative amount. The Notes to Consolidated Financial Statements are an integral part of this statement (see Note on page D-6-1). D-6-3 EXHIBIT D-6 CONSOLIDATED NATURAL GAS COMPANY CONSOLIDATING BALANCE SHEET--(Continued) At December 31, 1999
SUBSIDIARIES ----------------------------------------------------------------------------------------------- CNG Other CNGP Field CNG CNG Power CNGI Subsidiaries VNG HGI (Page D-6-25) Services Retail (Page D-6-30) (Page D-6-36) (Page D-6-15) --------- -------- ------------- -------- ------- ------------- ------------- ------------- (Thousands of Dollars) ASSETS Property, Plant and Equipment (Note 6) Gas utility and other plant................... $ 546,100 $194,771 $ -- $21,063 $ 8,065 $ 5,845 $ 818 $ 3,629 Accumulated depreciation and amortization........ (155,190) (78,582) -- -- (3,410) (2,804) (479) (3,629) --------- -------- ----------- ------- ------- ------- -------- ------- Net gas utility and other plant............ 390,910 116,189 -- 21,063 4,655 3,041 339 -- --------- -------- ----------- ------- ------- ------- -------- ------- Exploration and production properties... -- -- 4,164,187 -- -- -- -- -- Accumulated depreciation and amortization........ -- -- (2,669,827) -- -- -- -- -- --------- -------- ----------- ------- ------- ------- -------- ------- Net exploration and production properties.. -- -- 1,494,360 -- -- -- -- -- --------- -------- ----------- ------- ------- ------- -------- ------- Net property, plant and equipment.............. 390,910 116,189 1,494,360 21,063 4,655 3,041 339 -- --------- -------- ----------- ------- ------- ------- -------- ------- Investments Stocks of subsidiary companies, at equity-- consolidated............ -- -- -- -- -- -- -- -- Notes of subsidiary companies-- consolidated............ -- -- -- -- -- -- -- -- --------- -------- ----------- ------- ------- ------- -------- ------- Total investments...... -- -- -- -- -- -- -- -- --------- -------- ----------- ------- ------- ------- -------- ------- Current Assets Cash and temporary cash investments............. 231 2,937 15,971 4 4 1 1,246 71 Accounts receivable Customers.............. 18,922 17,793 4,587 14,235 9,016 1,862 -- 1,161 Unbilled revenues and other.................. 17,198 12,149 95,003 (58) 62 -- 665 51 Allowance for doubtful accounts............... (152) (1,262) (1,000) (2,233) (2,024) -- -- (173) Receivables from affiliated companies-- consolidated............ 4,131 1,503 16,127 6,941 10,554 5,819 (28) 7,758 Inventories, at cost Gas stored--current portion (Note 10)...... 13,118 7,308 -- -- 17,780 -- -- -- Materials and supplies (average cost method).. 537 584 2,933 -- -- 36 -- -- Unrecovered gas costs (Note 5)................ -- -- -- -- -- -- -- -- Deferred income taxes-- current (net) (Note 9).. 2,082 -- 82 -- -- -- -- -- Net assets held for sale (Note 2)................ -- -- -- -- -- -- -- -- Prepayments and other current assets.......... 2,468 4,393 34,876 22,649 3,352 2 7 100 --------- -------- ----------- ------- ------- ------- -------- ------- Total current assets... 58,535 45,405 168,579 41,538 38,744 7,720 1,890 8,968 --------- -------- ----------- ------- ------- ------- -------- ------- Regulatory and Other Assets Other investments....... 56 1,125 -- -- -- 613 259,467 50,810 Deferred charges and other assets (Notes 5, 7, 8, 9 and 17)......... 3,488 24,437 (465) (40) -- -- -- 3,811 --------- -------- ----------- ------- ------- ------- -------- ------- Total regulatory and other assets........... 3,544 25,562 (465) (40) -- 613 259,467 54,621 --------- -------- ----------- ------- ------- ------- -------- ------- Total assets........... $ 452,989 $187,156 $ 1,662,474 $62,561 $43,399 $11,374 $261,696 $63,589 ========= ======== =========== ======= ======= ======= ======== =======
- ---- * The elimination journal entries pertaining to this consolidating financial statement are prepared in detail form, showing the amounts pertaining to the Registrant and each subsidiary company, and are preserved with the Registrant's copy of this Form U5B. ( ) denotes negative amount. The Notes to Consolidated Financial Statements are an integral part of this statement (see Note on page D-6-1). D-6-4 EXHIBIT D-6 CONSOLIDATED NATURAL GAS COMPANY CONSOLIDATING BALANCE SHEET At December 31, 1999
CONSOLIDATED SUBSIDIARIES ------------ ---------------------------------------- Eliminations CNG and and Combined CNGT (Page Subsidiaries Adjustments* Total CNG CNGSvc D-6-21) EOG PNG ------------ ------------ ----------- ---------- -------- ---------- ---------- -------- (Thousands of Dollars) STOCKHOLDERS' EQUITY AND LIABILITIES Capitalization Common stockholders' equity (Note 11) Common stock, par value $2.75 per share Authorized--400,000,000 shares Issued--95,948,452 shares................. $ 263,858 $(1,980,190) $ 2,244,048 $ 263,858 $ 10 $ 601,000 $ 237,968 $183,535 Capital in excess of par value.............. 567,382 (39,887) 607,269 527,417 -- 2,254 19,975 -- Retained earnings, per accompanying statement (Note 13).............. 1,545,664 (540,118) 2,085,782 1,548,224 -- 119,222 156,759 65,346 Treasury stock, at cost (10,443 shares)........ (594) -- (594) (594) -- -- -- -- ---------- ----------- ----------- ---------- -------- ---------- ---------- -------- Total common stockholders' equity... 2,376,310 (2,560,195) 4,936,505 2,338,905 10 722,476 414,702 248,881 ---------- ----------- ----------- ---------- -------- ---------- ---------- -------- Long-term debt (Note 14) Debentures and Notes... 1,763,678 -- 1,763,678 1,763,678 -- -- -- -- Notes payable to Registrant-- consolidated........... -- (1,478,066) 1,478,066 -- 23,432 337,426 298,259 131,344 ---------- ----------- ----------- ---------- -------- ---------- ---------- -------- Total long-term debt... 1,763,678 (1,478,066) 3,241,744 1,763,678 23,432 337,426 298,259 131,344 ---------- ----------- ----------- ---------- -------- ---------- ---------- -------- Total capitalization... 4,139,988 (4,038,261) 8,178,249 4,102,583 23,442 1,059,902 712,961 380,225 ---------- ----------- ----------- ---------- -------- ---------- ---------- -------- Current Liabilities Commercial paper (Note 15)..................... 685,731 -- 685,731 685,731 -- -- -- -- Accounts payable........ 334,956 (12,030) 346,986 246 9,709 23,863 95,231 28,503 Payables to affiliated companies-- consolidated............ -- (1,445,441) 1,445,441 28,179 654,778 98,616 336,445 122,886 Estimated rate contingencies and refunds (Note 5)........ 44,914 (1,638) 46,552 -- -- 32,639 11,962 289 Amounts payable to customers (Note 5)...... 3,955 (3,867) 7,822 -- -- -- 3,955 -- Taxes accrued........... 134,257 (1,851) 136,108 4,636 (363) 33,731 87,576 1,028 Deferred income taxes-- current (net) (Note 9).. -- (8,217) 8,217 -- -- -- -- 8,192 Dividends declared...... 46,530 -- 46,530 46,530 -- -- -- -- Other current liabilities............. 102,883 (11,069) 113,952 26,664 3,300 18,140 19,475 15,760 ---------- ----------- ----------- ---------- -------- ---------- ---------- -------- Total current liabilities............ 1,353,226 (1,484,113) 2,837,339 791,986 667,424 206,989 554,644 176,658 ---------- ----------- ----------- ---------- -------- ---------- ---------- -------- Deferred Credits Deferred income taxes (Note 9)................ 808,031 (6,897) 814,928 (15,815) 1,740 190,236 194,539 150,614 Accumulated deferred investment tax credits.. 19,524 (2,684) 22,208 -- -- -- 9,615 7,743 Deferred credits and other liabilities (Notes 5, 8 and 9)............. 214,450 (106,887) 321,337 16,976 48,657 22,832 74,918 49,954 ---------- ----------- ----------- ---------- -------- ---------- ---------- -------- Total deferred credits................ 1,042,005 (116,468) 1,158,473 1,161 50,397 213,068 279,072 208,311 ---------- ----------- ----------- ---------- -------- ---------- ---------- -------- Commitments and Contingencies (Note 18)..................... ---------- ----------- ----------- ---------- -------- ---------- ---------- -------- Total stockholders' equity and liabilities............ $6,535,219 $(5,638,842) $12,174,061 $4,895,730 $741,263 $1,479,959 $1,546,677 $765,194 ========== =========== =========== ========== ======== ========== ========== ========
- ---- * The elimination journal entries pertaining to this consolidating financial statement are prepared in detail form, showing the amounts pertaining to the Registrant and each subsidiary company, and are preserved with the Registrant's copy of this Form U5B. ( ) denotes negative amount. The Notes to Consolidated Financial Statements are an integral part of this statement (see Note on page D-6-1). D-6-5 EXHIBIT D-6 CONSOLIDATED NATURAL GAS COMPANY CONSOLIDATING BALANCE SHEET--(Continued) At December 31, 1999
SUBSIDIARIES ------------------------------------------------------------------------------ CNG Other CNG Power CNGI Subsidiaries CNGP (Page Field CNG (Page Page (Page VNG HGI D-6-26) Services Retail D-6-31) (D-6-37) D-6-16) -------- -------- ---------- -------- ------- ------- -------- ------------ (Thousands of Dollars) STOCKHOLDERS' EQUITY AND LIABILITIES Capitalization Common stockholders' equity (Note 11) Common stock, par value $2.75 per share Authorized--400,000,000 shares Issued--95,948,452 shares................. $148,697 $ 44,900 $ 439,000 $13,670 $ 6,000 $ 8,360 $238,550 $58,500 Capital in excess of par value.............. 57,603 -- -- -- -- -- -- 20 Retained earnings, per accompanying statement (Note 13).............. 2,437 12,566 240,256 8,286 (8,845) 825 (12,758) (46,536) Treasury stock, at cost (10,443 shares)........ -- -- -- -- -- -- -- -- -------- -------- ---------- ------- ------- ------- -------- ------- Total common stockholders' equity... 208,737 57,466 679,256 21,956 (2,845) 9,185 225,792 11,984 -------- -------- ---------- ------- ------- ------- -------- ------- Long-term debt (Note 14) Debentures and Notes... -- -- -- -- -- -- -- -- Notes payable to Registrant-- consolidated........... 116,000 36,930 519,675 -- -- -- 15,000 -- -------- -------- ---------- ------- ------- ------- -------- ------- Total long-term debt... 116,000 36,930 519,675 -- -- -- 15,000 -- -------- -------- ---------- ------- ------- ------- -------- ------- Total capitalization... 324,737 94,396 1,198,931 21,956 (2,845) 9,185 240,792 11,984 -------- -------- ---------- ------- ------- ------- -------- ------- Current Liabilities Commercial paper (Note 15)..................... -- -- -- -- -- -- -- -- Accounts payable........ 12,030 14,604 136,347 17,159 7,357 381 242 1,314 Payables to affiliated companies-- consolidated............ 50,902 36,178 14,231 13,530 37,924 109 10,228 41,435 Estimated rate contingencies and refunds (Note 5)........ 1,638 24 -- -- -- -- -- -- Amounts payable to customers (Note 5)...... 3,867 -- -- -- -- -- -- -- Taxes accrued........... 1,860 2,508 2,999 109 421 935 574 94 Deferred income taxes-- current (net) (Note 9).. -- 25 -- -- -- -- -- -- Dividends declared...... -- -- -- -- -- -- -- -- Other current liabilities............. 11,075 2,752 5,671 8,475 390 -- 127 2,123 -------- -------- ---------- ------- ------- ------- -------- ------- Total current liabilities............ 81,372 56,091 159,248 39,273 46,092 1,425 11,171 44,966 -------- -------- ---------- ------- ------- ------- -------- ------- Deferred Credits Deferred income taxes (Note 9)................ 15,265 16,005 250,506 (831) (951) 764 6,217 6,639 Accumulated deferred investment tax credits.. 2,684 2,166 -- -- -- -- -- -- Deferred credits and other liabilities (Notes 5, 8 & 9)............... 28,931 18,498 53,789 2,163 1,103 -- 3,516 -- -------- -------- ---------- ------- ------- ------- -------- ------- Total deferred credits................ 46,880 36,669 304,295 1,332 152 764 9,733 6,639 -------- -------- ---------- ------- ------- ------- -------- ------- Commitments and Contingencies (Note 18)..................... -------- -------- ---------- ------- ------- ------- -------- ------- Total stockholders' equity and liabilities............ $452,989 $187,156 $1,662,474 $62,561 $43,399 $11,374 $261,696 $63,589 ======== ======== ========== ======= ======= ======= ======== =======
- ---- * The elimination journal entries pertaining to this consolidating financial statement are prepared in detail form, showing the amounts pertaining to the Registrant and each subsidiary company, and are preserved with the Registrant's copy of this Form U5B. ( ) denotes negative amount. The Notes to Consolidated Financial Statements are an integral part of this statement (see Note on page D-6-1). D-6-6 EXHIBIT D-6 CONSOLIDATED NATURAL GAS COMPANY CONSOLIDATING INCOME STATEMENT For the Year Ended December 31, 1999
CONSOLIDATED SUBSIDIARIES ------------ -------------------------------------------- Eliminations CNG and and Combined CNGT Subsidiaries Adjustments* Total CNG CNGSvc (Page D-6-22) EOG PNG ------------ ------------ ---------- -------- --------- ------------- --------- -------- (Thousands of Dollars) Operating Revenues Regulated gas sales..... $1,397,200 $ (1,211) $1,398,411 $ -- $ -- $ -- $ 910,501 $196,378 Nonregulated gas sales.. 607,943 (98,104) 706,047 -- -- 32,357 -- -- ---------- --------- ---------- -------- --------- -------- --------- -------- Total gas sales...... 2,005,143 (99,315) 2,104,458 -- -- 32,357 910,501 196,378 Gas transportation and storage................. 566,811 (115,416) 682,227 -- -- 471,089 98,931 98,817 Other................... 502,396 (271,100) 773,496 -- 257,425 43,532 13,539 7,858 ---------- --------- ---------- -------- --------- -------- --------- -------- Total operating revenues (Note 5).... 3,074,350 (485,831) 3,560,181 -- 257,425 546,978 1,022,971 303,053 ---------- --------- ---------- -------- --------- -------- --------- -------- Operating Expenses Purchased gas........... 911,652 (216,362) 1,128,014 -- -- 13,804 558,868 112,035 Liquids, capacity and other products purchased............... 279,929 (2,233) 282,162 -- -- 56,935 -- -- Operation expense (Note 7)...................... 670,048 (267,236) 937,284 35,658 122,446 160,689 233,047 74,097 Maintenance............. 103,559 -- 103,559 -- 814 29,379 23,975 20,206 Depreciation and amortization (Note 6)... 378,710 (168) 378,878 -- 5,835 60,928 43,291 16,399 Taxes, other than income taxes................... 197,432 -- 197,432 3,045 4,666 37,465 104,439 19,391 ---------- --------- ---------- -------- --------- -------- --------- -------- Subtotal............. 2,541,330 (485,999) 3,027,329 38,703 133,761 359,200 963,620 242,128 ---------- --------- ---------- -------- --------- -------- --------- -------- Operating income before income taxes.. 533,020 168 532,852 (38,703) 123,664 187,778 59,351 60,925 Income taxes (Note 9)... 73,581 61 73,520 (20,936) -- 58,054 8,184 9,689 ---------- --------- ---------- -------- --------- -------- --------- -------- Operating income..... 459,439 107 459,332 (17,767) 123,664 129,724 51,167 51,236 ---------- --------- ---------- -------- --------- -------- --------- -------- Other Income (Deductions) Interest revenues....... 2,406 (4,165) 6,571 563 1 311 3,763 119 Merger expense (Note 2)...................... (212,750) -- (212,750) (16,711) (120,916) (12,003) (10,632) (4,144) Other--net.............. 12,082 -- 12,082 (114) (145) 5,299 (3,984) (988) Equity in earnings of subsidiary companies-- consolidated............ -- (190,444) 190,444 190,444 -- -- -- -- Interest revenues from affiliated companies-- consolidated............ -- (120,973) 120,973 117,653 -- 1,105 -- -- ---------- --------- ---------- -------- --------- -------- --------- -------- Total other income (deductions)......... (198,262) (315,582) 117,320 291,835 (121,060) (5,288) (10,853) (5,013) ---------- --------- ---------- -------- --------- -------- --------- -------- Income before interest charges..... 261,177 (315,475) 576,652 274,068 2,604 124,436 40,314 46,223 ---------- --------- ---------- -------- --------- -------- --------- -------- Interest Charges Interest on long-term debt.................... 108,252 (85,321) 193,573 108,051 484 24,841 16,231 9,737 Other interest expense.. 28,623 (39,817) 68,440 29,257 2,120 1,624 12,718 2,392 Allowance for funds used during construction..... (12,458) -- (12,458) -- -- (1,110) (1,941) (342) ---------- --------- ---------- -------- --------- -------- --------- -------- Total interest charges.............. 124,417 (125,138) 249,555 137,308 2,604 25,355 27,008 11,787 ---------- --------- ---------- -------- --------- -------- --------- -------- Net Income.............. $ 136,760 $(190,337) $ 327,097 $136,760 $ -- $ 99,081 $ 13,306 $ 34,436 ========== ========= ========== ======== ========= ======== ========= ======== Basic Diluted ---------- --------- Earnings per common share (Note 4).......... $ 1.43 $ 1.42
- ---- * The elimination journal entries pertaining to this consolidating financial statement are prepared in detail form, showing the amounts pertaining to the Registrant and each subsidiary company, and are preserved with the Registrant's copy of this Form U5B. ( ) denotes negative amount. The Notes to Consolidated Financial Statements are an integral part of this statement (see Note on page D-6-1). D-6-7 EXHIBIT D-6 CONSOLIDATED NATURAL GAS COMPANY--(Continued) CONSOLIDATING INCOME STATEMENT For the Year Ended December 31, 1999
SUBSIDIARIES ----------------------------------------------------------------------------------------------- CNG Other CNGP Field CNG CNG Power CNGI Subsidiaries VNG HGI (Page D-6-27) Services Retail (Page D-6-32) (Page D-6-38) (Page D-6-17) -------- -------- ------------- -------- -------- ------------- ------------- ------------- (Thousands of Dollars) Operating Revenues Regulated gas sales..... $190,213 $101,319 $ -- $ -- $ -- $ -- $ -- $ -- Nonregulated gas sales.. -- -- 423,800 146,494 103,396 -- -- -- -------- -------- -------- -------- -------- ------- ------- ------- Total gas sales...... 190,213 101,319 423,800 146,494 103,396 -- -- -- Gas transportation and storage................. 6,116 6,464 462 348 -- -- -- -- Other................... 6,506 3,502 395,807 3,398 19,793 13,821 1,452 6,863 -------- -------- -------- -------- -------- ------- ------- ------- Total operating revenues (Note 5).... 202,835 111,285 820,069 150,240 123,189 13,821 1,452 6,863 -------- -------- -------- -------- -------- ------- ------- ------- Operating Expenses Purchased gas........... 99,419 55,221 51,796 132,835 104,036 -- -- -- Liquids, capacity and other products purchased............... -- -- 206,569 1,929 8,509 8,220 -- -- Operation expense (Note 7)...................... 47,349 29,105 200,404 8,648 8,561 3,306 5,568 8,406 Maintenance............. 6,195 5,645 16,964 -- 365 -- 16 -- Depreciation and amortization (Note 6)... 14,063 5,929 230,482 -- 1,602 210 139 -- Taxes, other than income taxes................... 10,387 8,652 8,047 253 797 45 260 (15) -------- -------- -------- -------- -------- ------- ------- ------- Subtotal............. 177,413 104,552 714,262 143,665 123,870 11,781 5,983 8,391 -------- -------- -------- -------- -------- ------- ------- ------- Operating income before income taxes.. 25,422 6,733 105,807 6,575 (681) 2,040 (4,531) (1,528) Income taxes (Note 9)... 4,868 163 8,151 1,908 (1,511) 1,649 2,694 607 -------- -------- -------- -------- -------- ------- ------- ------- Operating income..... 20,554 6,570 97,656 4,667 830 391 (7,225) (2,135) -------- -------- -------- -------- -------- ------- ------- ------- Other Income (Deductions) Interest revenues....... -- 12 959 196 175 32 270 170 Merger expense (Note 2)...................... (4,567) (812) (32,990) (946) (2,814) -- (6,215) -- Other--net.............. (40) (822) 54 -- -- 781 8,362 3,679 Equity in earnings of subsidiary companies-- consolidated............ -- -- -- -- -- -- -- -- Interest revenues from affiliated companies-- consolidated............ 5 -- 68 111 -- 1,695 1 335 -------- -------- -------- -------- -------- ------- ------- ------- Total other income (deductions)......... (4,602) (1,622) (31,909) (639) (2,639) 2,508 2,418 4,184 -------- -------- -------- -------- -------- ------- ------- ------- Income before interest charges..... 15,952 4,948 65,747 4,028 (1,809) 2,899 (4,807) 2,049 -------- -------- -------- -------- -------- ------- ------- ------- Interest Charges Interest on long-term debt.................... 6,490 2,362 24,358 -- -- 88 931 -- Other interest expense.. 2,881 1,916 11,566 251 1,148 32 507 2,028 Allowance for funds used during construction..... (183) (113) (8,769) -- -- -- -- -- -------- -------- -------- -------- -------- ------- ------- ------- Total interest charges.............. 9,188 4,165 27,155 251 1,148 120 1,438 2,028 -------- -------- -------- -------- -------- ------- ------- ------- Net Income.............. $ 6,764 $ 783 $ 38,592 $ 3,777 $ (2,957) $ 2,779 $(6,245) $ 21 ======== ======== ======== ======== ======== ======= ======= =======
- ---- * The elimination journal entries pertaining to this consolidating financial statement are prepared in detail form, showing the amounts pertaining to the Registrant and each subsidiary company, and are preserved with the Registrant's copy of this Form U5B. ( ) denotes negative amount. The Notes to Consolidated Financial Statements are an integral part of this statement (see Note on page D-6-1). D-6-8 EXHIBIT D-6 CONSOLIDATED NATURAL GAS COMPANY CONSOLIDATING STATEMENT OF RETAINED EARNINGS For the Year Ended December 31, 1999
CONSOLIDATED SUBSIDIARIES ------------ --------------------------------------- CNG Eliminations and and Combined CNGT Subsidiaries Adjustments* Total CNG CNGSvc (Page D-6-23) EOG PNG ------------ ------------ ---------- ---------- ------ ------------- -------- -------- (Thousands of Dollars) Retained Earnings Balance at December 31, 1998.................... $1,591,543 $(594,969) $2,186,512 $1,596,821 $-- $ 142,141 $193,330 $ 75,776 Net income for the year 1999 per accompanying income statement........ 136,760 (190,337) 327,097 136,760 -- 99,081 13,306 34,436 ---------- --------- ---------- ---------- ---- --------- -------- -------- Total................ 1,728,303 (785,306) 2,513,609 1,733,581 -- 241,222 206,636 110,212 Dividends declared on common stock--cash (Note 11)..................... (185,859) 245,188 (431,047) (185,859) -- (122,000) (49,877) (44,866) Pension liability adjustment (Note 8)..... 350 -- 350 350 -- -- -- -- Foreign currency translation adjustment.. 2,718 -- 2,718 -- -- -- -- -- Other................... 152 -- 152 152 -- -- -- -- ---------- --------- ---------- ---------- ---- --------- -------- -------- Balance at December 31, 1999 (Note 13).......... $1,545,664 $(540,118) $2,085,782 $1,548,224 $-- $ 119,222 $156,759 $ 65,346 ========== ========= ========== ========== ==== ========= ======== ========
- ---- * The elimination journal entries pertaining to this consolidating financial statement are prepared in detail form, showing the amounts pertaining to the Registrant and each subsidiary company, and are preserved with the Registrant's copy of this Form U5B. ( ) denotes negative amount. The Notes to Consolidated Financial Statements are an integral part of this statement (see Note on page D-6-1). D-6-9 EXHIBIT D-6 CONSOLIDATED NATURAL GAS COMPANY CONSOLIDATING STATEMENT OF RETAINED EARNINGS--(Continued) For the Year Ended December 31, 1999
SUBSIDIARIES -------------------------------------------------------------------------------------------- CNG Other CNGP Field CNG CNG Power CNGI Subsidiaries VNG HGI (Page D-6-28) Services Retail (Page D-6-33) (Page D-6-39) (Page D-6-18) ------- ------- ------------- -------- ------- ------------- ------------- ------------- (Thousands of Dollars) Retained Earnings Balance at December 31, 1998.................... $ 3,198 $12,803 $201,664 $ 8,509 $(5,888) $ 13,946 $ (9,231) $(46,557) Net income for the year 1999 per accompanying income statement........ 6,764 783 38,592 3,777 (2,957) 2,779 (6,245) 21 ------- ------- -------- ------- ------- -------- -------- -------- Total................ 9,962 13,586 240,256 12,286 (8,845) 16,725 (15,476) (46,536) Dividends declared on common stock -- cash (Note 11)............... (7,525) (1,020) -- (4,000) -- (15,900) -- -- Pension liability adjustment (Note 8)..... -- -- -- -- -- -- -- -- Foreign currency translation adjustment.. -- -- -- -- -- -- 2,718 -- Other................... -- -- -- -- -- -- -- -- ------- ------- -------- ------- ------- -------- -------- -------- Balance at December 31, 1999 (Note 13).......... $ 2,437 $12,566 $240,256 $8,286 $(8,845) $ 825 $(12,758) $(46,536) ======= ======= ======== ======= ======= ======== ======== ========
- ---- * The elimination journal entries pertaining to this consolidating financial statement are prepared in detail form, showing the amounts pertaining to the Registrant and each subsidiary company, and are preserved with the Registrant's copy of this Form U5B. ( ) denotes negative amount. The Notes to Consolidated Financial Statements are an integral part of this statement (see Note on page D-6-1). D-6-10 EXHIBIT D-6 CONSOLIDATED NATURAL GAS COMPANY CONSOLIDATING STATEMENT OF CASH FLOWS For the Year Ended December 31, 1999
CONSOLIDATED SUBSIDIARIES ------------ -------------------------------------- Eliminations CNGT CNG and and Combined (Page Subsidiaries Adjustments* Total CNG CNGSvc D-6-24) EOG PNG ------------ ------------ ----------- --------- -------- -------- -------- -------- (Thousands of Dollars) Cash Flows From Operating Activities Net income.............. $136,760 $(190,337) $ 327,097 $ 136,760 $ -- $ 99,081 $ 13,306 $ 34,436 Adjustments to reconcile net income to net cash provided by (used in) operating activities Depreciation and amortization.......... 378,710 (168) 378,878 -- 5,835 60,928 43,291 16,399 Pension cost (credit)-- net................... (71,823) -- (71,823) 1,446 (920) (20,380) (37,478) (16,314) Stock award amortization.......... 1,525 -- 1,525 328 22 12 19 -- Deferred income taxes-- net................... 47,038 61 46,977 (7,556) 4,555 3,670 28,230 5,340 Investment tax credit.. (2,267) -- (2,267) -- -- (120) (1,356) (502) Changes in current assets and current liabilities Accounts receivable-- net................... (7,073) 7,126 (14,199) 1,180 5,789 3,901 3,074 (5,755) Receivables from affiliated companies-- consolidated.......... -- (11,773) 11,773 9,509 (7,263) 393 524 3,725 Inventories............ 19,707 (8,595) 28,302 -- 15 1,779 13,109 4,986 Unrecovered gas costs.. (3,214) -- (3,214) -- -- 10,660 -- (13,874) Accounts payable....... (52,327) 11,170 (63,497) (1,503) (5,789) (31,108) (14,209) (2,654) Payables to affiliated companies-- consolidated.......... -- 10,051 (10,051) 26,916 (23,853) (1,829) (5,909) (1,857) Estimated rate contingencies and refunds............... (31,275) 439 (31,714) -- -- (24,307) (4,159) (2,833) Amounts payable to customers............. (38,469) 2,048 (40,517) -- -- -- (38,469) -- Taxes accrued.......... 9,189 (4,050) 13,239 4,049 43 5,523 10,053 (2,650) Other--net............. (80,204) 2,467 (82,671) (677) (3,499) (33,339) 17,778 133 Net assets held for sale.................. (2,910) (2,910) -- -- -- -- -- -- Changes in other assets and other liabilities........... 64,817 (6,204) 71,021 (19,239) 30,127 41,844 1,934 1,999 Excess of equity in earnings of subsidiary companies over their cash dividends paid-- consolidated.......... -- (53,040) 53,040 53,040 -- -- -- -- Other--net............. 54 -- 54 704 (13) -- 14 (637) -------- --------- ----------- --------- -------- -------- -------- -------- Net cash provided by (used in) continuing operations............ 368,238 (243,715) 611,953 204,957 5,049 116,708 29,752 19,942 Net cash provided by (used in) discontinued operations............ (56) -- (56) -- -- -- -- -- -------- --------- ----------- --------- -------- -------- -------- -------- Net cash provided by (used in) operating activities............ 368,182 (243,715) 611,897 204,957 5,049 116,708 29,752 19,942 -------- --------- ----------- --------- -------- -------- -------- -------- Cash Flows From Investing Activities Plant construction and other property additions Acquisition of exploration and production assets..... (165,844) -- (165,844) -- -- -- -- -- Other.................. (444,081) -- (444,081) -- (3,053) (47,356) (60,401) (21,567) Proceeds from dispositions of prop., plant and equip.--net.. 7,491 -- 7,491 -- 28 (1,523) (5,598) (1,051) Cost of other investments--net....... (42,530) -- (42,530) (875) -- (1,326) -- -- Intrasystem long-term financing--net......... -- 390,887 (390,887) (390,887) -- -- -- -- Intrasystem money pool investments--net....... -- 20,735 (20,735) (50,975) (28,790) 13,265 -- -- Property transfers to (from) affiliates...... -- -- -- -- -- -- -- -- -------- --------- ----------- --------- -------- -------- -------- -------- Net cash provided by (used in) continuing operations............ (644,964) 411,622 (1,056,586) (442,737) (31,815) (36,940) (65,999) (22,618) Net cash provided by (used in) discontinued operations............. -- -- -- -- -- -- -- -- -------- --------- ----------- --------- -------- -------- -------- -------- Net cash provided by (used in) investing activities............ (644,964) 411,622 (1,056,586) (442,737) (31,815) (36,940) (65,999) (22,618) -------- --------- ----------- --------- -------- -------- -------- --------
- ------- * The eliminations and adjustments are those required to eliminate transactions among affiliated companies and otherwise give effect to the adjusting and reclassifying entries to the consolidating balance sheets, income statements and statements of retained earnings of the Registrant and its subsidiaries. ( ) denotes negative amount. The Notes to Consolidated Financial Statements are an integral part of this statement (see Note on page D-6-1). D-6-11 EXHIBIT D-6 CONSOLIDATED NATURAL GAS COMPANY CONSOLIDATING STATEMENT OF CASH FLOWS--(Continued) For the Year Ended December 31, 1999
CONSOLIDATED SUBSIDIARIES ------------ ------------------------------------ Eliminations CNGT CNG and and Combined (Page Subsidiaries Adjustments* Total CNG CNGSvc D-6-24) EOG PNG ------------ ------------ -------- -------- ------- -------- -------- ------- (Thousands of Dollars) Cash Flows From Financing Activities Issuance of common stock--Registrant...... 196 -- 196 196 -- -- -- -- Issuance of notes-- Registrant............. 396,680 -- 396,680 396,680 -- -- -- -- Repayments of long-term debt................... (125,375) -- (125,375) (121,375) -- -- -- -- Commercial paper--net... 125,858 -- 125,858 125,858 -- -- -- -- Dividends paid-- Registrant............. (185,606) -- (185,606) (185,606) -- -- -- -- Intrasystem long-term financing--net......... -- (390,887) 390,887 -- 14,760 (2,077) 119,310 (10,511) Intrasystem money pool borrowings (repayments)--net...... -- (23,338) 23,338 -- (8,055) 46,765 (53,161) 52,079 Dividends paid-- subsidiary companies-- consolidated........... -- 243,484 (243,484) -- -- (128,313) (39,549) (40,626) Purchase of treasury stock.................. (12,205) -- (12,205) (12,205) -- -- -- -- Sale of treasury stock.. 33,013 -- 33,013 33,013 -- -- -- -- -------- --------- -------- -------- ------- -------- -------- ------- Net cash provided by (used in) continuing operations............ 232,561 (170,741) 403,302 236,561 6,705 (83,625) 26,600 942 Net cash provided by (used in) discontinued operations............. -- 2,603 (2,603) -- -- -- -- -- -------- --------- -------- -------- ------- -------- -------- ------- Net cash provided by (used in) financing activities............ 232,561 (168,138) 400,699 236,561 6,705 (83,625) 26,600 942 -------- --------- -------- -------- ------- -------- -------- ------- Net increase (decrease) in cash and TCIs...... (44,221) (231) (43,990) (1,219) (20,061) (3,857) (9,647) (1,734) Cash and TCIs at January 1, 1999................ 138,112 -- 138,112 1,221 82,290 3,952 16,932 5,780 -------- --------- -------- -------- ------- -------- -------- ------- Cash and TCIs at December 31, 1999...... $ 93,891 $ (231) $ 94,122 $ 2 $62,229 $ 95 $ 7,285 $ 4,046 ======== ========= ======== ======== ======= ======== ======== ======= Continuing operations... $ 93,891 $ (231) $ 94,122 $ 2 $62,229 $ 95 $ 7,285 $ 4,046 Discontinued operations............. -- -- -- -- -- -- -- -- -------- --------- -------- -------- ------- -------- -------- ------- Total cash and TCIs at December 31........... $ 93,891 $ (231) $ 94,122 $ 2 $62,229 $ 95 $ 7,285 $ 4,046 ======== ========= ======== ======== ======= ======== ======== ======= Supplemental Cash Flow Information Cash paid for Interest (net of amounts capitalized).. $121,158 $(116,816) $237,974 $128,774 $ 2,604 $ 24,240 $ 25,719 $11,692 Income taxes (net of refunds).............. $ 30,714 $ -- $ 30,714 $(15,208) $(4,585) $ 52,288 $(26,315) $12,763 Non-cash investing activities Investment in partnership......... $ 1,795 $ -- $ 1,795 $ -- $ -- $ -- $ -- $ -- Non-cash financing activities Issuance of common stock under benefit plans................. $ 257 $ -- $ 257 $ 257 $ -- $ -- $ -- $ --
- -------- * The eliminations and adjustments are those required to eliminate transactions among affiliated companies and otherwise give effect to the adjusting and reclassifying entries to the consolidating balance sheets, income statements and statements of retained earnings of the Registrant and its subsidiaries. ( ) denotes negative amount. The Notes to Consolidated Financial Statements are an integral part of this statement (see Note on page D-6-1). D-6-12 EXHIBIT D-6 CONSOLIDATED NATURAL GAS COMPANY CONSOLIDATING STATEMENT OF CASH FLOWS--(Continued) For the Year Ended December 31, 1999
SUBSIDIARIES -------------------------------------------------------------------------------- CNG Other CNGP CNG Power CNGI Subsidiaries (Page Field CNG (Page (Page (Page VNG HGI D-6-29) Services Retail D-6-34) D-6-40) D-6-19) -------- ------- --------- -------- ------- ------- -------- ------------ (Thousands of Dollars) Cash Flows From Operating Activities Net income.............. $ 6,764 $ 783 $ 38,592 $ 3,777 $(2,957) $ 2,779 $ (6,245) $ 21 Adjustments to reconcile net income to net cash provided by (used in) operating activities Depreciation and amortization.......... 14,063 5,929 230,482 -- 1,602 210 139 -- Pension cost (credit)-- net................... 4,041 (4,505) 1,700 -- 357 -- 230 -- Stock award amortization.......... -- -- 1,134 -- 10 -- -- -- Deferred income taxes-- net................... 5,608 5,955 (6,714) (831) (46) 241 7,833 692 Investment tax credit.. (152) (137) -- -- -- -- -- -- Changes in current assets and current liabilities Accounts receivable-- net................... (7,126) (557) (10,814) (601) (2,477) (781) (276) 244 Receivables from affiliated companies-- consolidated.......... (2,935) 1,142 215 2,178 2,422 (32) (13) 1,908 Inventories............ 8,595 2,487 (1,341) -- (2,848) 1,520 -- -- Unrecovered gas costs.. -- -- -- -- -- -- -- -- Accounts payable....... (9,448) (1,022) (288) 3,483 (918) (156) (485) 600 Payables to affiliated companies-- consolidated.......... (467) (2,212) (3,631) 1,501 2,519 (266) (341) (622) Estimated rate contingencies and refunds............... (439) 24 -- -- -- -- -- -- Amounts payable to customers............. (2,048) -- -- -- -- -- -- -- Taxes accrued.......... 4,050 (4,292) (2,511) (882) (876) (451) 304 879 Other--net............. (2,466) (1,682) (49,448) (10,919) 1,419 17 (314) 326 Net assets held for sale.................. -- -- -- -- -- -- -- -- Changes in other assets and other liabilities........... 2,164 (1,435) 12,448 1,759 3,343 446 (6,730) 2,361 Excess of equity in earnings of subsidiary companies over their cash dividends paid-- consolidated.......... -- -- -- -- -- -- -- -- Other--net............. (14) -- -- -- -- -- -- -- -------- ------- --------- -------- ------- ------- -------- ------- Net cash provided by (used in) continuing operations............ 20,190 478 209,824 (535) 1,550 3,527 (5,898) 6,409 Net cash provided by (used in) discontinued operations............ -- -- -- -- -- -- -- (56) -------- ------- --------- -------- ------- ------- -------- ------- Net cash provided by (used in) operating activities............ 20,190 478 209,824 (535) 1,550 3,527 (5,898) 6,353 -------- ------- --------- -------- ------- ------- -------- ------- Cash Flows From Investing Activities Plant construction and other property additions Acquisition of exploration and production assets..... -- -- (165,844) -- -- -- -- -- Other.................. (21,398) (7,098) (282,552) -- (55) -- (601) -- Proceeds from dispositions of prop., plant and equip.--net.. 1,801 (310) 14,144 -- -- -- -- -- Cost of other investments--net....... -- -- -- -- -- -- (37,262) (3,067) Intrasystem long-term financing--net......... -- -- -- -- -- -- -- -- Intrasystem money pool investments--net....... -- -- (11,943) -- -- 42,366 1,768 13,574 Property transfers to (from) affiliates...... -- -- -- -- -- 43 (43) -- -------- ------- --------- -------- ------- ------- -------- ------- Net cash provided by (used in) continuing operations............ (19,597) (7,408) (446,195) -- (55) 42,409 (36,138) 10,507 Net cash provided by (used in) discontinued operations............. -- -- -- -- -- -- -- -- -------- ------- --------- -------- ------- ------- -------- ------- Net cash provided by (used in) investing activities............ (19,597) (7,408) (446,195) -- (55) 42,409 (36,138) 10,507 -------- ------- --------- -------- ------- ------- -------- -------
- ------- * The eliminations and adjustments are those required to eliminate transactions among affiliated companies and otherwise give effect to the adjusting and reclassifying entries to the consolidating balance sheets, income statements and statements of retained earnings of the Registrant and its subsidiaries. ( ) denotes negative amount. The Notes to Consolidated Financial Statements are an integral part of this statement (see Note on page D-6-1). D-6-13 EXHIBIT D-6 CONSOLIDATED NATURAL GAS COMPANY CONSOLIDATING STATEMENT OF CASH FLOWS--(Continued) For the Year Ended December 31, 1999
SUBSIDIARIES ------------------------------------------------------------------------------------------- CNG Other CNGP Field CNG CNG Power CNGI Subsidiaries VNG HGI (Page D-6-29) Services Retail (Page D-6-35) (Page D-6-41) (Page D-6-19) ------- ------- ------------- -------- ------- ------------- ------------- ------------- (Thousands of Dollars) Cash Flows From Financing Activities Issuance of common stock--Registrant...... -- -- -- -- -- -- -- -- Issuance of notes-- Registrant............. -- -- -- -- -- -- -- -- Repayments of long-term debt................... (4,000) -- -- -- -- -- -- -- Commercial paper--net... -- -- -- -- -- -- -- -- Dividends paid-- Registrant............. -- -- -- -- -- -- -- -- Intrasystem long-term financing--net......... 3,682 7,976 268,550 -- -- (26,403) 23,000 (7,400) Intrasystem money pool borrowings (repayments)--net...... 7,863 (837) (23,080) 173 (1,636) (3,755) 9,835 (2,853) Dividends paid-- subsidiary companies-- consolidated........... (9,925) (2,171) -- -- -- (15,900) -- (7,000) Purchase of treasury stock.................. -- -- -- -- -- -- -- -- Sale of treasury stock.. -- -- -- -- -- -- -- -- ------- ------- -------- ------ ------- -------- ------- -------- Net cash provided by (used in) continuing operations............ (2,380) 4,968 245,470 173 (1,636) (46,058) 32,835 (17,253) Net cash provided by (used in) discontinued operations............. -- -- -- -- -- -- -- (2,603) ------- ------- -------- ------ ------- -------- ------- -------- Net cash provided by (used in) financing activities............ (2,380) 4,968 245,470 173 (1,636) (46,058) 32,835 (19,856) ------- ------- -------- ------ ------- -------- ------- -------- Net increase (decrease) in cash and TCIs...... (1,787) (1,962) 9,099 (362) (141) (122) (9,201) (2,996) Cash and TCIs at January 1, 1999................ 2,018 4,899 6,872 366 145 123 10,447 3,067 ------- ------- -------- ------ ------- -------- ------- -------- Cash and TCIs at December 31, 1999...... $ 231 $ 2,937 $ 15,971 $ 4 $ 4 $ 1 $ 1,246 $ 71 ------- ------- -------- ------ ------- -------- ------- -------- Continuing operations... $ 231 $ 2,937 $ 15,971 $ 4 $ 4 $ 1 $ 1,246 $ 71 Discontinued operations............. -- -- -- -- -- -- -- -- ------- ------- -------- ------ ------- -------- ------- -------- Total cash and TCIs at December 31........... $ 231 $ 2,937 $ 15,971 $ 4 $ 4 $ 1 $ 1,246 $ 71 ======= ======= ======== ====== ======= ======== ======= ======== Supplemental Cash Flow Information Cash paid for Interest (net of amounts capitalized).. $ 8,584 $ 4,116 $ 27,376 $ 218 $ 1,140 $ 273 $ 1,208 $ 2,030 Income taxes (net of refunds).............. $(3,601) $(1,503) $ 18,529 $3,766 $ (504) $ 1,745 $(5,460) $ (1,201) Non-cash investing activities Investment in partnership............ $ -- $ -- $ -- $ -- $ -- $ -- $ 1,795 $ -- Non-cash financing activities Issuance of common stock under benefit plans.... $ -- $ -- $ -- $ -- $ -- $ -- $ -- $ --
- -------- * The eliminations and adjustments are those required to eliminate transactions among affiliated companies and otherwise give effect to the adjusting and reclassifying entries to the consolidating balance sheets, income statements and statements of retained earnings of the Registrant and its subsidiaries. ( ) denotes negative amount. The Notes to Consolidated Financial Statements are an integral part of this statement (see Note on page D-6-1). D-6-14 EXHIBIT D-6 CONSOLIDATED NATURAL GAS COMPANY CONSOLIDATING BALANCE SHEET SUPPLEMENT At December 31, 1999
Other CNG CNG CNG Subsidiaries Prod. & Serv Main Oil CNG CNG CNG Total (Page D-6-54) Pass Gathering CNGPSC LNG Coal Research Financial ------------ ------------- ------- --------- ------ ------ ------ -------- --------- (Thousands of Dollars) ASSETS Property, Plant and Equipment (Note 6) Gas utility and other plant...... $ 3,629 $ -- $ -- $ -- $3,629 $ -- $ -- $-- $-- Accumulated depreciation and amortization.. (3,629) -- -- -- (3,629) -- -- -- -- ------- ------ ------- ------- ------ ------ ------ ---- ---- Net gas utility and other plant.......................... -- -- -- -- -- -- -- -- -- ------- ------ ------- ------- ------ ------ ------ ---- ---- Exploration and production properties...................... -- -- -- -- -- -- -- -- -- Accumulated depreciation and amortization.................... -- -- -- -- -- -- -- -- -- ------- ------ ------- ------- ------ ------ ------ ---- ---- Net exploration and production properties..................... -- -- -- -- -- -- -- -- -- ------- ------ ------- ------- ------ ------ ------ ---- ---- Net property, plant and equipment...................... -- -- -- -- -- -- -- -- -- ------- ------ ------- ------- ------ ------ ------ ---- ---- Investments Stocks of subsidiary companies, at equity-- consolidated........ -- -- -- -- -- -- -- -- -- Notes of subsidiary companies-- consolidated.................... -- -- -- -- -- -- -- -- -- ------- ------ ------- ------- ------ ------ ------ ---- ---- Total investments............... -- -- -- -- -- -- -- -- -- ------- ------ ------- ------- ------ ------ ------ ---- ---- Current Assets Cash and temporary cash investments..................... 71 5 -- -- -- 1 23 1 41 Accounts receivable Customers....................... 1,161 566 -- -- 595 -- -- -- -- Unbilled revenues and other..... 51 -- -- -- (2) -- 53 -- -- Allowance for doubtful accounts....................... (173) (173) -- -- -- -- -- -- -- Receivables from affiliated companies-- consolidated........ 7,758 1,295 -- 3 1,659 1,012 3,718 71 -- Inventories, at cost Gas stored--current portion (Note 10)...................... -- -- -- -- -- -- -- -- -- Materials and supplies (average cost method)................... -- -- -- -- -- -- -- -- -- Unrecovered gas costs (Note 5)... -- -- -- -- -- -- -- -- -- Deferred income taxes--current (net) (Note 9).................. -- -- -- -- -- -- -- -- -- Net assets held for sale (Note 2).............................. -- -- -- -- -- -- -- -- -- Prepayments and other current assets.......................... 100 -- 7 11 -- 2 80 -- -- ------- ------ ------- ------- ------ ------ ------ ---- ---- Total current assets............ 8,968 1,693 7 14 2,252 1,015 3,874 72 41 ------- ------ ------- ------- ------ ------ ------ ---- ---- Regulatory and Other Assets Other investments................ 50,810 -- 33,390 17,420 -- -- -- -- -- Deferred charges and other assets (Notes 5, 7, 8, 9 and 17)....... 3,811 -- -- -- -- -- 3,798 13 -- ------- ------ ------- ------- ------ ------ ------ ---- ---- Total regulatory and other assets......................... 54,621 -- 33,390 17,420 -- -- 3,798 13 -- ------- ------ ------- ------- ------ ------ ------ ---- ---- Total assets.................... $63,589 $1,693 $33,397 $17,434 $2,252 $1,015 $7,672 $ 85 $ 41 ======= ====== ======= ======= ====== ====== ====== ==== ====
- -------- ( ) denotes negative amount. The Notes to Consolidated Financial Statements are an integral part of this statement (see Note on page D-6-1). D-6-15 EXHIBIT D-6 CONSOLIDATED NATURAL GAS COMPANY CONSOLIDATING BALANCE SHEET SUPPLEMENT At December 31, 1999
CNG Other Prod. & Serv. CNG CNG Subsidiaries (Page Main Oil CNG Total D-6-55) Pass Gathering CNGPSC LNG CNG Coal Research ------------ ------------- ------- --------- -------- ------ -------- -------- (Thousands of Dollars) STOCKHOLDERS' EQUITY AND LIABILITIES Capitalization Common stockholders' equity (Note 11) Common stock, par value $2.75 per share Authorized--400,000,000 shares Issued--95,948,452 shares................... $ 58,500 $ 3,990 $ -- $ -- $ 15,520 $1,000 $ 22,360 $ 15,580 Capital in excess of par value.................... 20 -- 10 10 -- -- -- -- Retained earnings, per accompanying statement (Note 13)................ (46,536) (3,931) 2,992 3,596 (18,187) 2 (15,491) (15,502) Treasury stock, at cost (10,443 shares).......... -- -- -- -- -- -- -- -- -------- ------- ------- ------- -------- ------ -------- -------- Total common stockholders' equity..... 11,984 59 3,002 3,606 (2,667) 1,002 6,869 78 -------- ------- ------- ------- -------- ------ -------- -------- Long-term debt (Note 14) Debentures and Notes...... -- -- -- -- -- -- -- -- Notes payable to Registrant-- consolidated............. -- -- -- -- -- -- -- -- -------- ------- ------- ------- -------- ------ -------- -------- Total long-term debt...... -- -- -- -- -- -- -- -- -------- ------- ------- ------- -------- ------ -------- -------- Total capitalization...... 11,984 59 3,002 3,606 (2,667) 1,002 6,869 78 -------- ------- ------- ------- -------- ------ -------- -------- Current Liabilities Commercial paper (Note 15)....................... -- -- -- -- -- -- -- -- Accounts payable........... 1,314 865 -- -- 450 -- (1) -- Payables to affiliated companies-- consolidated.. 41,435 592 25,880 11,502 3,457 1 1 1 Estimated rate contingencies and refunds (Note 5).................. -- -- -- -- -- -- -- -- Amounts payable to customers (Note 5)........ -- -- -- -- -- -- -- -- Taxes accrued.............. 94 (53) (115) (95) 90 11 245 6 Deferred income taxes-- current (net) (Note 9).... -- -- -- -- -- -- -- -- Dividends declared......... -- -- -- -- -- -- -- -- Other current liabilities.. 2,123 1,177 -- -- 945 1 -- -- -------- ------- ------- ------- -------- ------ -------- -------- Total current liabilities.............. 44,966 2,581 25,765 11,407 4,942 13 245 7 -------- ------- ------- ------- -------- ------ -------- -------- Deferred Credits Deferred income taxes (Note 9)........................ 6,639 (947) 4,630 2,421 (23) -- 558 -- Accumulated deferred investment tax credits.... -- -- -- -- -- -- -- -- Deferred credits and other liabilities (Notes 5, 8 and 9)........ -- -- -- -- -- -- -- -- -------- ------- ------- ------- -------- ------ -------- -------- Total deferred credits.... 6,639 (947) 4,630 2,421 (23) -- 558 -- -------- ------- ------- ------- -------- ------ -------- -------- Commitments and Contingencies (Note 18)... -------- ------- ------- ------- -------- ------ -------- -------- Total stockholders' equity and liabilities... $ 63,589 $ 1,693 $33,397 $17,434 $ 2,252 $1,015 $ 7,672 $ 85 ======== ======= ======= ======= ======== ====== ======== ======== CNG Financial --------- STOCKHOLDERS' EQUITY AND LIABILITIES Capitalization Common stockholders' equity (Note 11) Common stock, par value $2.75 per share Authorized--400,000,000 shares Issued--95,948,452 shares................... $ 50 Capital in excess of par value.................... -- Retained earnings, per accompanying statement (Note 13)................ (15) Treasury stock, at cost (10,443 shares).......... -- --------- Total common stockholders' equity..... 35 --------- Long-term debt (Note 14) Debentures and Notes...... -- Notes payable to Registrant-- consolidated............. -- --------- Total long-term debt...... -- --------- Total capitalization...... 35 --------- Current Liabilities Commercial paper (Note 15)....................... -- Accounts payable........... -- Payables to affiliated companies-- consolidated.. 1 Estimated rate contingencies and refunds (Note 5).................. -- Amounts payable to customers (Note 5)........ -- Taxes accrued.............. 5 Deferred income taxes-- current (net) (Note 9).... -- Dividends declared......... -- Other current liabilities.. -- --------- Total current liabilities.............. 6 --------- Deferred Credits Deferred income taxes (Note 9)........................ -- Accumulated deferred investment tax credits.... -- Deferred credits and other liabilities (Notes 5, 8 and 9)........ -- --------- Total deferred credits.... -- --------- Commitments and Contingencies (Note 18)... --------- Total stockholders' equity and liabilities... $ 41 =========
- -------- ( ) denotes negative amount. The Notes to Consolidated Financial Statements are an integral part of this statement (see Note on page D-6-1). D-6-16 EXHIBIT D-6 CONSOLIDATED NATURAL GAS COMPANY CONSOLIDATING INCOME STATEMENT SUPPLEMENT For the Year Ended December 31, 1999
CNG Products and Other Services CNG CNG Subsidiaries (Page Main Oil CNG CNG CNG Total D-6-56) Pass Gathering CNGPSC LNG Coal Research Financial ------------ ------------ ------ --------- ------ ----- ----- -------- --------- (Thousands of Dollars) Operating Revenues Regulated gas sales..... $ -- $ -- $ -- $ -- $-- $ -- $ -- $-- $-- Nonregulated gas sales.. -- -- -- -- -- -- -- -- -- ------- ------- ------ ------- ---- ----- ----- ---- ---- Total gas sales........ -- -- -- -- -- -- -- -- -- Gas transportation and storage................ -- -- -- -- -- -- -- -- -- Other................... 6,863 6,863 -- -- -- -- -- -- -- ------- ------- ------ ------- ---- ----- ----- ---- ---- Total operating revenues (Note 5)..... 6,863 6,863 -- -- -- -- -- -- -- ------- ------- ------ ------- ---- ----- ----- ---- ---- Operating Expenses Purchased gas........... -- -- -- -- -- -- -- -- -- Liquids, capacity and other products purchased.............. -- -- -- -- -- -- -- -- -- Operation expense (Note 7)..................... 8,406 8,257 20 107 -- 5 9 4 4 Maintenance............. -- -- -- -- -- -- -- -- -- Depreciation and amortization (Note 6).. -- -- -- -- -- -- -- -- -- Taxes, other than income taxes.................. (15) (17) -- -- -- -- 2 -- -- ------- ------- ------ ------- ---- ----- ----- ---- ---- Subtotal............... 8,391 8,240 20 107 -- 5 11 4 4 ------- ------- ------ ------- ---- ----- ----- ---- ---- Operating income before income taxes.......... (1,528) (1,377) (20) (107) -- (5) (11) (4) (4) Income taxes (Note 9)... 607 (1,230) 338 1,008 -- 370 121 -- -- ------- ------- ------ ------- ---- ----- ----- ---- ---- Operating income....... (2,135) (147) (358) (1,115) -- (375) (132) (4) (4) ------- ------- ------ ------- ---- ----- ----- ---- ---- Other Income (Deductions) Interest revenues....... 170 -- -- -- -- 4 166 -- -- Merger expense (Note 2)..................... -- -- -- -- -- -- -- -- -- Other--net.............. 3,679 (2,265) 2,313 3,631 -- -- -- -- -- Equity in earnings of subsidiary companies-- consolidated........... -- -- -- -- -- -- -- -- -- Interest revenues from affiliated companies-- consolidated........... 335 37 -- -- -- 112 184 2 -- ------- ------- ------ ------- ---- ----- ----- ---- ---- Total other income (deductions).......... 4,184 (2,228) 2,313 3,631 -- 116 350 2 -- ------- ------- ------ ------- ---- ----- ----- ---- ---- Income before interest charges............... 2,049 (2,375) 1,955 2,516 -- (259) 218 (2) (4) ------- ------- ------ ------- ---- ----- ----- ---- ---- Interest Charges Interest on long-term debt................... -- -- -- -- -- -- -- -- -- Other interest expense.. 2,028 10 1,361 657 -- -- -- -- -- Allowance for funds used during construction.... -- -- -- -- -- -- -- -- -- ------- ------- ------ ------- ---- ----- ----- ---- ---- Total interest charges............... 2,028 10 1,361 657 -- -- -- -- -- ------- ------- ------ ------- ---- ----- ----- ---- ---- Net Income.............. $ 21 $(2,385) $ 594 $ 1,859 $-- $(259) $ 218 $ (2) $ (4) ======= ======= ====== ======= ==== ===== ===== ==== ====
- -------- ( ) denotes negative amount. The Notes to Consolidated Financial Statements are an integral part of this statement (see Note on page D-6-1). D-6-17 EXHIBIT D-6 CONSOLIDATED NATURAL GAS COMPANY CONSOLIDATING STATEMENT OF RETAINED EARNINGS SUPPLEMENT For the Year Ended December 31, 1999
CNG Products and Other Services CNG Subsidiaries (Page Main CNG Oil CNG CNG Total D-6-57) Pass Gathering CNGPSC LNG CNG Coal Research Financial ------------ ------------ ------ --------- -------- ----- -------- -------- --------- (Thousands of Dollars) Retained Earnings Balance at December 31, 1998................... $(46,557) $(1,546) $2,398 $1,737 $(18,187) $ 261 $(15,709) $(15,500) $(11) Net income for the year 1999 per accompanying income statement....... 21 (2,385) 594 1,859 -- (259) 218 (2) (4) -------- ------- ------ ------ -------- ----- -------- -------- ---- Total.................. (46,536) (3,931) 2,992 3,596 (18,187) 2 (15,491) (15,502) (15) Dividends declared on common stock-- cash (Note 11).............. -- -- -- -- -- -- -- -- -- Pension liability adjustment (Note 8).... -- -- -- -- -- -- -- -- -- Foreign currency translation adjustment............. -- -- -- -- -- -- -- -- -- Other................... -- -- -- -- -- -- -- -- -- -------- ------- ------ ------ -------- ----- -------- -------- ---- Balance at December 31, 1999 (Note 13)......... $(46,536) $(3,931) $2,992 $3,596 $(18,187) $ 2 $(15,491) $(15,502) $(15) ======== ======= ====== ====== ======== ===== ======== ======== ====
- -------- ( ) denotes negative amount. The Notes to Consolidated Financial Statements are an integral part of this statement (see Note on page D-6-1). D-6-18 EXHIBIT D-6 CONSOLIDATED NATURAL GAS COMPANY CONSOLIDATING STATEMENT OF CASH FLOWS SUPPLEMENT For the Year Ended December 31, 1999
CNG Other Products and CNG Subsidiaries Services Main CNG Oil CNG CNG CNG Total (Page D-6-58) Pass Gathering CNGPSC LNG Coal Research Financial ------------ ------------- ------ --------- ------ ------- ---- -------- --------- (Thousands of Dollars) Cash Flows From Operating Activities Net income.............. $ 21 $(2,385) $ 594 $1,859 $ -- $ (259) $218 $ (2) $ (4) Adjustments to reconcile net income to net cash provided by (used in) operating activities Depreciation and amortization........... -- -- -- -- -- -- -- -- -- Pension cost (credit)-- net.................... -- -- -- -- -- -- -- -- -- Stock award amortization........... -- -- -- -- -- -- -- -- -- Deferred income taxes-- net.................... 692 (805) 1,063 428 -- -- 6 -- -- Investment tax credit... -- -- -- -- -- -- -- -- -- Changes in current assets and current liabilities Accounts receivable-- net................... 244 248 -- -- -- -- (4) -- -- Receivables from affiliated companies-- consolidated.......... 1,908 1,850 -- (3) -- 65 (4) -- -- Inventories............ -- -- -- -- -- -- -- -- -- Unrecovered gas costs.. -- -- -- -- -- -- -- -- -- Accounts payable....... 600 604 -- -- -- -- (4) -- -- Payables to affiliated companies-- consolidated.......... (622) (649) 18 7 -- 1 (1) 1 1 Estimated rate contingencies and refunds............... -- -- -- -- -- -- -- -- -- Amounts payable to customers............. -- -- -- -- -- -- -- -- -- Taxes accrued.......... 879 512 75 315 -- 10 (28) (5) -- Other--net............. 326 343 (8) (11) -- -- 2 -- -- Net assets held for sale.................. -- -- -- -- -- -- -- -- -- Changes in other assets and other liabilities.. 2,361 2,168 1,335 (1,198) -- -- 56 -- -- Excess of equity in earnings of subsidiary companies over their cash dividends paid-- consolidated........... -- -- -- -- -- -- -- -- -- Other--net.............. -- -- -- -- -- -- -- -- -- ------- ------- ------ ------ ------ ------- ---- ---- ---- Net cash provided by (used in) continuing operations............ 6,409 1,886 3,077 1,397 -- (183) 241 (6) (3) Net cash provided by (used in) discontinued operations............ (56) -- -- -- (56) -- -- -- -- ------- ------- ------ ------ ------ ------- ---- ---- ---- Net cash provided by (used in) operating activities............. 6,353 1,886 3,077 1,397 (56) (183) 241 (6) (3) ------- ------- ------ ------ ------ ------- ---- ---- ---- Cash Flows From Investing Activities Plant construction and other property additions Acquisition of exploration and production assets...... -- -- -- -- -- -- -- -- -- Other................... -- -- -- -- -- -- -- -- -- Proceeds from dispositions of prop., plant and equip.--net.. -- -- -- -- -- -- -- -- -- Cost of other investments--net....... (3,067) 46 (3,113) -- -- -- -- -- -- Intrasystem long-term financing--net......... -- -- -- -- -- -- -- -- -- Intrasystem money pool investments--net....... 13,574 (675) -- -- -- 14,533 (253) (31) -- Property transfers to (from) affiliates...... -- -- -- -- -- -- -- -- -- ------- ------- ------ ------ ------ ------- ---- ---- ---- Net cash provided by (used in) continuing operations............. 10,507 (629) (3,113) -- -- 14,533 (253) (31) -- Net cash provided by (used in) discontinued operations............. -- -- -- -- -- -- -- -- -- ------- ------- ------ ------ ------ ------- ---- ---- ---- Net cash provided by (used in) investing activities............. 10,507 (629) (3,113) -- -- 14,533 (253) (31) -- ------- ------- ------ ------ ------ ------- ---- ---- ---- Cash Flows From Financing Activities Issuance of common stock--Registrant...... -- -- -- -- -- -- -- -- -- Issuance of notes-- Registrant............. -- -- -- -- -- -- -- -- -- Repayments of long-term debt................... -- -- -- -- -- -- -- -- -- Commercial paper--net... -- -- -- -- -- -- -- -- -- Dividends paid-- Registrant............. -- -- -- -- -- -- -- -- -- Intrasystem long-term financing--net......... (7,400) -- -- -- -- (7,400) -- -- -- Intrasystem money pool borrowings (repayments)--net...... (2,853) (1,310) (56) (1,487) -- -- -- -- -- Dividends paid-- subsidiary companies-- consolidated........... (7,000) -- -- -- -- (7,000) -- -- -- Purchase of treasury stock.................. -- -- -- -- -- -- -- -- -- Sale of treasury stock.. -- -- -- -- -- -- -- -- -- ------- ------- ------ ------ ------ ------- ---- ---- ---- Net cash provided by (used in) continuing operations............. (17,253) (1,310) (56) (1,487) -- (14,400) -- -- -- Net cash provided by (used in) discontinued operations ............ (2,603) -- -- -- (2,603) -- -- -- -- ------- ------- ------ ------ ------ ------- ---- ---- ---- Net cash provided by (used in) financing activities............. (19,856) (1,310) (56) (1,487) (2,603) (14,400) -- -- -- ------- ------- ------ ------ ------ ------- ---- ---- ---- Net increase (decrease) in cash and TCIs....... (2,996) (53) (92) (90) (2,659) (50) (12) (37) (3) Cash and TCIs at January 1, 1999................ 3,067 58 92 90 2,659 51 35 38 44 ------- ------- ------ ------ ------ ------- ---- ---- ---- Cash and TCIs at December 31, 1999...... $ 71 $ 5 $ -- $ -- $ -- $ 1 $ 23 $ 1 $ 41 ======= ======= ====== ====== ====== ======= ==== ==== ==== Continuing operations... $ 71 $ 5 $ -- $ -- $ -- $ 1 $ 23 $ 1 $ 41 Discontinued operations............. -- -- -- -- -- -- -- -- -- ------- ------- ------ ------ ------ ------- ---- ---- ---- Total cash and TCIs at December 31............ $ 71 $ 5 $ -- $ -- $ -- $ 1 $ 23 $ 1 $ 41 ======= ======= ====== ====== ====== ======= ==== ==== ==== Supplemental Cash Flow Information Cash paid for Interest (net of amounts capitalized)........... $ 2,030 $ 17 $1,345 $ 655 $ 13 $ -- $-- $-- $-- Income taxes (net of refunds)............... $(1,201) $ (968) $ (800) $ 265 $ (225) $ 362 $160 $ 5 $-- Non-cash investing activities Investment in partnership......... $ -- $ -- $ -- $ -- $ -- $ -- $-- $-- $-- Non-cash financing activities Issuance of common stock under benefit plans.......... $ -- $ -- $ -- $ -- $ -- $ -- $-- $-- $--
- ------- ( )denotes negative amount. The Notes to Consolidated Financial Statements are an integral part of this statement (see Note on page D-6-1). D-6-19 EXHIBIT D-6 CNG TRANSMISSION CORPORATION CONSOLIDATING BALANCE SHEET At December 31, 1999
CNGT Eliminations and and Combined CNG Subsidiary Adjustments Total CNGT Iroquois ---------- ------------ ---------- ---------- -------- (Thousands of Dollars) ASSETS Property, Plant and Equipment Gas utility and other plant.................. $2,109,020 $ -- $2,109,020 $2,109,020 $ -- Accumulated depreciation and amortization....... (952,939) -- (952,939) (952,939) -- ---------- -------- ---------- ---------- ------- Net gas utility and other plant........... 1,156,081 -- 1,156,081 1,156,081 -- ---------- -------- ---------- ---------- ------- Exploration and produc- tion properties........ 228,132 -- 228,132 228,132 -- Accumulated depreciation and amortization....... (208,609) -- (208,609) (208,609) -- ---------- -------- ---------- ---------- ------- Net exploration and production proper- ties.................. 19,523 -- 19,523 19,523 -- ---------- -------- ---------- ---------- ------- Net property, plant and equipment............. 1,175,604 -- 1,175,604 1,175,604 -- ---------- -------- ---------- ---------- ------- Investments Stock of subsidiary company, at equity-- consolidated........... -- (39,709) 39,709 39,709 -- Notes of subsidiary com- pany--consolidated..... -- -- -- -- -- ---------- -------- ---------- ---------- ------- Total investments...... -- (39,709) 39,709 39,709 -- ---------- -------- ---------- ---------- ------- Current Assets Cash and temporary cash investments............ 95 -- 95 94 1 Accounts receivable Customers.............. 43,862 -- 43,862 43,862 -- Unbilled revenues and other................. 2,721 -- 2,721 2,721 -- Allowance for doubtful accounts.............. -- -- -- -- -- Receivables from affiliated companies-- consolidated........... 27,990 (1,431) 29,421 18,664 10,757 Inventories, at cost Gas stored--current portion............... -- -- -- -- -- Materials and supplies (average cost method)............... 9,063 -- 9,063 9,063 -- Unrecovered gas costs... 19,856 -- 19,856 19,856 -- Deferred income taxes-- current................ 4,514 -- 4,514 4,514 -- Prepayments and other current assets......... 62,606 -- 62,606 62,604 2 ---------- -------- ---------- ---------- ------- Total current assets... 170,707 (1,431) 172,138 161,378 10,760 ---------- -------- ---------- ---------- ------- Regulatory and Other As- sets Other investments....... 38,498 -- 38,498 -- 38,498 Deferred charges and other assets........... 95,150 -- 95,150 95,150 -- ---------- -------- ---------- ---------- ------- Total regulatory and other assets.......... 133,648 -- 133,648 95,150 38,498 ---------- -------- ---------- ---------- ------- Total assets........... $1,479,959 $(41,140) $1,521,099 $1,471,841 $49,258 ========== ======== ========== ========== =======
- -------- ( ) denotes negative amount. D-6-20 EXHIBIT D-6 CNG TRANSMISSION CORPORATION CONSOLIDATING BALANCE SHEET At December 31, 1999
Eliminations CNGT and and Combined CNG Subsidiary Adjustments Total CNGT Iroquois ---------- ------------ ---------- ---------- -------- (Thousands of Dollars) STOCKHOLDER'S EQUITY AND LIABILITIES Capitalization Common stockholder's equity Common stock.......... $ 601,000 $(23,940) $ 624,940 $ 601,000 $23,940 Capital in excess of par value............ 2,254 -- 2,254 2,254 -- Retained earnings, per accompanying statement............ 119,222 (15,769) 134,991 119,222 15,769 Treasury stock, at cost................. -- -- -- -- -- ---------- -------- ---------- ---------- ------- Total common stockholder's equity............. 722,476 (39,709) 762,185 722,476 39,709 ---------- -------- ---------- ---------- ------- Long-term debt Debentures and Notes.. -- -- -- -- -- Notes payable to Parent Company....... 337,426 -- 337,426 337,426 -- ---------- -------- ---------- ---------- ------- Total long-term debt............... 337,426 -- 337,426 337,426 -- ---------- -------- ---------- ---------- ------- Total capitalization..... 1,059,902 (39,709) 1,099,611 1,059,902 39,709 ---------- -------- ---------- ---------- ------- Current Liabilities Commercial paper........ -- -- -- -- -- Accounts payable........ 23,863 -- 23,863 23,863 -- Payables to affiliated companies-- consolidated........... 98,616 (1,431) 100,047 98,615 1,432 Estimated rate contingencies and refunds................ 32,639 -- 32,639 32,639 -- Amounts payable to customers.............. -- -- -- -- -- Taxes accrued........... 33,731 -- 33,731 34,116 (385) Deferred income taxes-- current................ -- -- -- -- -- Dividends declared...... -- -- -- -- -- Other current liabilities............ 18,140 -- 18,140 18,140 -- ---------- -------- ---------- ---------- ------- Total current liabilities........ 206,989 (1,431) 208,420 207,373 1,047 ---------- -------- ---------- ---------- ------- Deferred Credits Deferred income taxes... 190,236 -- 190,236 181,734 8,502 Accumulated deferred investment tax credits................ -- -- -- -- -- Deferred credits and other liabilities...... 22,832 -- 22,832 22,832 -- ---------- -------- ---------- ---------- ------- Total deferred credits............ 213,068 -- 213,068 204,566 8,502 ---------- -------- ---------- ---------- ------- Commitments and Contingencies ---------- -------- ---------- ---------- ------- Total stockholder's equity and liabilities........ $1,479,959 $(41,140) $1,521,099 $1,471,841 $49,258 ========== ======== ========== ========== =======
- -------- ( ) denotes negative amount. D-6-21 EXHIBIT D-6 CNG TRANSMISSION CORPORATION CONSOLIDATING INCOME STATEMENT For the Year Ended December 31, 1999
Eliminations CNGT and and Combined CNG Subsidiary Adjustments Total CNGT Iroquois ---------- ------------ -------- -------- -------- (Thousands of Dollars) Operating Revenues Regulated gas sales...... $ -- $ -- $ -- $ -- $ -- Nonregulated gas sales... 32,357 -- 32,357 32,357 -- -------- ------- -------- -------- ------- Total gas sales........ 32,357 -- 32,357 32,357 -- Gas transportation and storage................. 471,089 -- 471,089 471,089 -- Other.................... 43,532 -- 43,532 43,532 -- -------- ------- -------- -------- ------- Total operating revenues.............. 546,978 -- 546,978 546,978 -- -------- ------- -------- -------- ------- Operating Expenses Purchased gas............ 13,804 -- 13,804 13,804 -- Liquids, capacity and other products purchased............... 56,935 -- 56,935 56,935 -- Operation expense........ 160,689 -- 160,689 160,667 22 Maintenance.............. 29,379 -- 29,379 29,379 -- Depreciation and amortization............ 60,928 -- 60,928 60,928 -- Taxes, other than income taxes................... 37,465 -- 37,465 37,295 170 -------- ------- -------- -------- ------- Subtotal............... 359,200 -- 359,200 359,008 192 -------- ------- -------- -------- ------- Operating income before income taxes.......... 187,778 -- 187,778 187,970 (192) Income taxes............. 58,054 -- 58,054 55,772 2,282 -------- ------- -------- -------- ------- Operating income....... 129,724 -- 129,724 132,198 (2,474) -------- ------- -------- -------- ------- Other Income (Deductions) Interest revenues........ 311 -- 311 305 6 Merger expense........... (12,003) -- (12,003) (12,003) -- Other--net............... 5,299 -- 5,299 (412) 5,711 Equity in earnings of subsidiary company-- consolidated............ -- (3,669) 3,669 3,669 -- Interest revenues from affiliated companies-- consolidated............ 1,105 -- 1,105 679 426 -------- ------- -------- -------- ------- Total other income (deductions).......... (5,288) (3,669) (1,619) (7,762) 6,143 -------- ------- -------- -------- ------- Income before interest charges............... 124,436 (3,669) 128,105 124,436 3,669 -------- ------- -------- -------- ------- Interest Charges Interest on long-term debt.................... 24,841 -- 24,841 24,841 -- Other interest expense... 1,624 -- 1,624 1,624 -- Allowance for funds used during construction..... (1,110) -- (1,110) (1,110) -- -------- ------- -------- -------- ------- Total interest charges............... 25,355 -- 25,355 25,355 -- -------- ------- -------- -------- ------- Net Income............... $ 99,081 $(3,669) $102,750 $ 99,081 $ 3,669 ======== ======= ======== ======== =======
- -------- ( ) denotes negative amount. D-6-22 EXHIBIT D-6 CNG TRANSMISSION CORPORATION CONSOLIDATING STATEMENT OF RETAINED EARNINGS For the Year Ended December 31, 1999
Eliminations CNGT and and Combined CNG Subsidiary Adjustments Total CNGT Iroquois ---------- ------------ --------- --------- -------- (Thousands of Dollars) Retained Earnings Balance at December 31, 1998................... $ 142,141 $(14,925) $ 157,066 $ 142,141 $14,925 Net income for the year 1999 per accompanying income statement ...... 99,081 (3,669) 102,750 99,081 3,669 --------- -------- --------- --------- ------- Total................. 241,222 (18,594) 259,816 241,222 18,594 Dividends declared on common stock--cash..... (122,000) 2,825 (124,825) (122,000) (2,825) --------- -------- --------- --------- ------- Balance at December 31, 1999................... $ 119,222 $(15,769) $ 134,991 $ 119,222 $15,769 ========= ======== ========= ========= =======
- -------- ( ) denotes negative amount. D-6-23 EXHIBIT D-6 CNG TRANSMISSION CORPORATION CONSOLIDATING STATEMENT OF CASH FLOWS For the Year Ended December 31, 1999
CNGT Eliminations and and Combined CNG Subsidiary Adjustments Total CNGT Iroquois ---------- ------------ --------- --------- -------- (Thousands of Dollars) Cash Flows From Operating Activities Net income.............. $ 99,081 $(3,669) $ 102,750 $ 99,081 $ 3,669 Adjustments to reconcile net income to net cash provided by (used in) operating activities Depreciation and amortization.......... 60,928 -- 60,928 60,928 -- Pension cost (credit)-- net................... (20,380) -- (20,380) (20,380) -- Stock award amortization.......... 12 -- 12 12 -- Deferred income taxes-- net................... 3,670 -- 3,670 2,020 1,650 Investment tax credit.. (120) -- (120) (120) -- Changes in current assets and current liabilities Accounts receivable-- net................... 3,901 -- 3,901 3,901 -- Receivables from affiliated companies-- consolidated.......... 393 19 374 385 (11) Inventories............ 1,779 -- 1,779 1,779 -- Unrecovered gas costs.. 10,660 -- 10,660 10,660 -- Accounts payable....... (31,108) -- (31,108) (31,108) -- Payables to affiliated companies-- consolidated.......... (1,829) (19) (1,810) (1,830) 20 Estimated rate contingencies and refunds............... (24,307) -- (24,307) (24,307) -- Amounts payable to customers............. -- -- -- -- -- Taxes accrued.......... 5,523 -- 5,523 6,231 (708) Other--net............. (33,339) -- (33,339) (33,346) 7 Changes in other assets and other liabilities........... 41,844 -- 41,844 42,231 (387) Excess of equity in earnings of subsidiary companies over their cash dividends paid-- consolidated.......... -- 2,256 (2,256) (2,256) -- Other--net............. -- -- -- -- -- --------- ------- --------- --------- ------- Net cash provided by (used in) continuing operations............ 116,708 (1,413) 118,121 113,881 4,240 Net cash provided by (used in) discontinued operations............. -- -- -- -- -- --------- ------- --------- --------- ------- Net cash provided by (used in) operating activities............ 116,708 (1,413) 118,121 113,881 4,240 --------- ------- --------- --------- ------- Cash Flows From Investing Activities Plant construction and other property additions.............. (47,356) -- (47,356) (47,356) -- Proceeds from dispositions of prop., plant and equip.--net.. (1,523) -- (1,523) (1,523) -- Cost of other investments--net....... (1,326) -- (1,326) -- (1,326) Intrasystem long-term financing--net......... -- -- -- -- -- Intrasystem money pool investments--net....... 13,265 -- 13,265 14,815 (1,550) Property transfers to (from) affiliates...... -- -- -- -- -- --------- ------- --------- --------- ------- Net cash provided by (used in) continuing operations............ (36,940) -- (36,940) (34,064) (2,876) Net cash provided by (used in) discontinued operations............. -- -- -- -- -- --------- ------- --------- --------- ------- Net cash provided by (used in) investing activities............ (36,940) -- (36,940) (34,064) (2,876) --------- ------- --------- --------- ------- Cash Flows From Financing Activities Issuance of common stock.................. -- -- -- -- -- Issuance of notes....... -- -- -- -- -- Repayments of long-term debt................... -- -- -- -- -- Commercial paper--net... -- -- -- -- -- Dividends paid.......... -- -- -- -- -- Intrasystem long-term financing--net......... (2,077) -- (2,077) (2,077) -- Intrasystem money pool borrowings (repayments)--net...... 46,765 -- 46,765 46,765 -- Dividends paid-- subsidiary companies-- consolidated........... (128,313) 1,413 (129,726) (128,313) (1,413) Purchase of treasury stock.................. -- -- -- -- -- Sale of treasury stock.. -- -- -- -- -- --------- ------- --------- --------- ------- Net cash provided by (used in) continuing operations............ (83,625) 1,413 (85,038) (83,625) (1,413) Net cash provided by (used in) discontinued operations............. -- -- -- -- -- --------- ------- --------- --------- ------- Net cash provided by (used in) financing activities............ (83,625) 1,413 (85,038) (83,625) (1,413) --------- ------- --------- --------- ------- Net increase (decrease) in cash and TCIs...... (3,857) -- (3,857) (3,808) (49) Cash and TCIs at January 1, 1999................ 3,952 -- 3,952 3,902 50 --------- ------- --------- --------- ------- Cash and TCIs at December 31, 1999...... $ 95 $ -- $ 95 $ 94 $ 1 ========= ======= ========= ========= ======= Continuing operations... $ 95 $ -- $ 95 $ 94 $ 1 Discontinued operations............. -- -- -- -- -- --------- ------- --------- --------- ------- Total cash and TCIs at December 31........... $ 95 $ -- $ 95 $ 94 $ 1 ========= ======= ========= ========= ======= Supplemental Cash Flow Information Cash paid for Interest (net of amounts capitalized).. $ 24,240 $ -- $ 24,240 $ 24,240 $ -- Income taxes (net of refunds).............. $ 52,288 $ -- $ 52,288 $ 50,965 $ 1,323
- -------- ( ) denotes negative amount. D-6-24 EXHIBIT D-6 CNG PRODUCING COMPANY CONSOLIDATING BALANCE SHEET At December 31, 1999
CNGP Eliminations and and Combined CNG Subsidiary Adjustments Total CNGP Pipeline ----------- ------------ ----------- ----------- -------- (Thousands of Dollars) ASSETS Property, Plant and Equipment Gas utility and other plant.................. $ -- $ -- $ -- $ -- $ -- Accumulated depreciation and amortization....... -- -- -- -- -- ----------- ------- ----------- ----------- ------- Net gas utility and other plant........ -- -- -- -- -- ----------- ------- ----------- ----------- ------- Exploration and production properties.. 4,164,187 -- 4,164,187 4,159,660 4,527 Accumulated depreciation and amortization....... (2,669,827) -- (2,669,827) (2,665,653) (4,174) ----------- ------- ----------- ----------- ------- Net exploration and production properties......... 1,494,360 -- 1,494,360 1,494,007 353 ----------- ------- ----------- ----------- ------- Net property, plant and equipment...... 1,494,360 -- 1,494,360 1,494,007 353 ----------- ------- ----------- ----------- ------- Investments Stock of subsidiary company, at equity-- consolidated........... -- (1,441) 1,441 1,441 -- Notes of subsidiary company--consolidated.. -- -- -- -- -- ----------- ------- ----------- ----------- ------- Total investments... -- (1,441) 1,441 1,441 -- ----------- ------- ----------- ----------- ------- Current Assets Cash and temporary cash investments............ 15,971 -- 15,971 15,935 36 Accounts receivable Customers............. 4,587 -- 4,587 4,587 -- Unbilled revenues and other................ 95,003 -- 95,003 94,967 36 Allowance for doubtful accounts............. (1,000) -- (1,000) (1,000) -- Receivables from affiliated companies-- consolidated........... 16,127 (138) 16,265 15,066 1,199 Inventories, at cost Gas stored--current portion.............. -- -- -- -- -- Materials and supplies (average cost method).............. 2,933 -- 2,933 2,933 -- Unrecovered gas costs... -- -- -- -- -- Deferred income taxes-- current................ 82 -- 82 82 -- Prepayments and other current assets......... 34,876 -- 34,876 34,822 54 ----------- ------- ----------- ----------- ------- Total current assets............. 168,579 (138) 168,717 167,392 1,325 ----------- ------- ----------- ----------- ------- Regulatory and Other Assets Other investments....... -- -- -- -- -- Deferred charges and other assets........... (465) -- (465) (465) -- ----------- ------- ----------- ----------- ------- Total regulatory and other assets....... (465) -- (465) (465) -- ----------- ------- ----------- ----------- ------- Total assets........ $ 1,662,474 $(1,579) $ 1,664,053 $ 1,662,375 $ 1,678 =========== ======= =========== =========== =======
- -------- ( ) denotes negative amount. D-6-25 EXHIBIT D-6 CNG PRODUCING COMPANY CONSOLIDATING BALANCE SHEET At December 31, 1999
CNGP Eliminations and and Combined CNG Subsidiary Adjustments Total CNGP Pipeline ---------- ------------ ---------- ---------- -------- (Thousands of Dollars) STOCKHOLDER'S EQUITY AND LIABILITIES Capitalization Common stockholder's equity Common stock.......... $ 439,000 $(1,200) $ 440,200 $ 439,000 $1,200 Capital in excess of par value............ -- -- -- -- -- Retained earnings, per accompanying statement............ 240,256 (241) 240,497 240,256 241 Treasury stock, at cost................. -- -- -- -- -- ---------- ------- ---------- ---------- ------ Total common stockholder's equity............. 679,256 (1,441) 680,697 679,256 1,441 ---------- ------- ---------- ---------- ------ Long-term debt Debentures and Notes.. -- -- -- -- -- Notes payable to Parent Company....... 519,675 -- 519,675 519,675 -- ---------- ------- ---------- ---------- ------ Total long-term debt............... 519,675 -- 519,675 519,675 -- ---------- ------- ---------- ---------- ------ Total capitalization..... 1,198,931 (1,441) 1,200,372 1,198,931 1,441 ---------- ------- ---------- ---------- ------ Current Liabilities Commercial paper........ -- -- -- -- -- Accounts payable........ 136,347 -- 136,347 136,327 20 Payables to affiliated companies-- consolidated........... 14,231 (138) 14,369 14,284 85 Estimated rate contingencies and refunds................ -- -- -- -- -- Amounts payable to customers.............. -- -- -- -- -- Taxes accrued........... 2,999 -- 2,999 2,991 8 Deferred income taxes-- current................ -- -- -- -- -- Dividends declared...... -- -- -- -- -- Other current liabilities............ 5,671 -- 5,671 5,671 -- ---------- ------- ---------- ---------- ------ Total current liabilities........ 159,248 (138) 159,386 159,273 113 ---------- ------- ---------- ---------- ------ Deferred Credits Deferred income taxes... 250,506 -- 250,506 250,382 124 Accumulated deferred investment tax credits................ -- -- -- -- -- Deferred credits and other liabilities...... 53,789 -- 53,789 53,789 -- ---------- ------- ---------- ---------- ------ Total deferred credits............ 304,295 -- 304,295 304,171 124 ---------- ------- ---------- ---------- ------ Commitments and Contingencies ---------- ------- ---------- ---------- ------ Total stockholder's equity and liabilities........ $1,662,474 $(1,579) $1,664,053 $1,662,375 $1,678 ========== ======= ========== ========== ======
- -------- ( )denotes negative amount. D-6-26 EXHIBIT D-6 CNG PRODUCING COMPANY CONSOLIDATING INCOME STATEMENT For the Year Ended December 31, 1999
CNGP Eliminations and and Combined CNG Subsidiary Adjustments Total CNGP Pipeline ---------- ------------ -------- -------- -------- (Thousands of Dollars) Operating Revenues Regulated gas sales...... $ -- $ -- $ -- $ -- $-- Nonregulated gas sales... 423,800 -- 423,800 423,800 -- -------- ----- -------- -------- ---- Total gas sales........ 423,800 -- 423,800 423,800 -- Gas transportation and storage................. 462 (768) 1,230 462 768 Other.................... 395,807 -- 395,807 395,764 43 -------- ----- -------- -------- ---- Total operating revenues.............. 820,069 (768) 820,837 820,026 811 -------- ----- -------- -------- ---- Operating Expenses Purchased gas............ 51,796 -- 51,796 51,796 -- Liquids, capacity and other products purchased............... 206,569 (768) 207,337 207,337 -- Operation expense........ 200,404 -- 200,404 200,187 217 Maintenance.............. 16,964 -- 16,964 16,964 -- Depreciation and amortization............ 230,482 -- 230,482 230,394 88 Taxes, other than income taxes................... 8,047 -- 8,047 8,041 6 -------- ----- -------- -------- ---- Subtotal............... 714,262 (768) 715,030 714,719 311 -------- ----- -------- -------- ---- Operating income before income taxes.......... 105,807 -- 105,807 105,307 500 Income taxes............. 8,151 -- 8,151 7,952 199 -------- ----- -------- -------- ---- Operating income....... 97,656 -- 97,656 97,355 301 -------- ----- -------- -------- ---- Other Income (Deductions) Interest revenues........ 959 -- 959 958 1 Merger expense........... (32,990) -- (32,990) (32,990) -- Other--net............... 54 -- 54 54 -- Equity in earnings of subsidiary company-- consolidated............ -- (365) 365 365 -- Interest revenues from affiliated companies-- consolidated............ 68 -- 68 5 63 -------- ----- -------- -------- ---- Total other income (deductions).......... (31,909) (365) (31,544) (31,608) 64 -------- ----- -------- -------- ---- Income before interest charges............... 65,747 (365) 66,112 65,747 365 -------- ----- -------- -------- ---- Interest Charges Interest on long-term debt.................... 24,358 -- 24,358 24,358 -- Other interest expense... 11,566 -- 11,566 11,566 -- Allowance for funds used during construction..... (8,769) -- (8,769) (8,769) -- -------- ----- -------- -------- ---- Total interest charges............... 27,155 -- 27,155 27,155 -- -------- ----- -------- -------- ---- Net Income............... $ 38,592 $(365) $ 38,957 $ 38,592 $365 ======== ===== ======== ======== ====
- -------- ( ) denotes negative amount. D-6-27 EXHIBIT D-6 CNG PRODUCING COMPANY CONSOLIDATING STATEMENT OF RETAINED EARNINGS For the Year Ended December 31, 1999
CNGP Eliminations and and Combined CNG Subsidiary Adjustments Total CNGP Pipeline ---------- ------------ -------- -------- -------- (Thousands of Dollars) Retained Earnings Balance at December 31, 1998...................... $201,664 $(296) $201,960 $201,664 $296 Net income for the year 1999 per accompanying in- come statement............ 38,592 (365) 38,957 38,592 365 -------- ----- -------- -------- ---- Total..................... 240,256 (661) 240,917 240,256 661 Dividends declared on com- mon stock--cash........... -- 420 (420) -- (420) -------- ----- -------- -------- ---- Balance at December 31, 1999...................... $240,256 $(241) $240,497 $240,256 $241 ======== ===== ======== ======== ====
- -------- ( ) denotes negative amount. D-6-28 EXHIBIT D-6 CNG PRODUCING COMPANY CONSOLIDATING STATEMENT OF CASH FLOWS For the Year Ended December 31, 1999
Eliminations CNGP and and Combined CNG Subsidiary Adjustments Total CNGP Pipeline ---------- ------------ -------- -------- -------- (Thousands of Dollars) Cash Flows From Operating Activities Net income............... $ 38,592 $(365) $ 38,957 $ 38,592 $365 Adjustments to reconcile net income to net cash provided by (used in) operating activities Depreciation and amortization........... 230,482 -- 230,482 230,394 88 Pension cost (credit)-- net.................... 1,700 -- 1,700 1,700 -- Stock award amortization........... 1,134 -- 1,134 1,134 -- Deferred income taxes-- net.................... (6,714) -- (6,714) (6,683) (31) Investment tax credit... -- -- -- -- -- Changes in current assets and current liabilities Accounts receivable-- net.................. (10,814) -- (10,814) (10,816) 2 Receivables from affiliated companies-- consolidated......... 215 (406) 621 582 39 Inventories........... (1,341) -- (1,341) (1,341) -- Unrecovered gas costs................ -- -- -- -- -- Accounts payable...... (288) -- (288) (239) (49) Payables to affiliated companies-- consolidated......... (3,631) 406 (4,037) (3,853) (184) Estimated rate contingencies and refunds.............. -- -- -- -- -- Amounts payable to customers............ -- -- -- -- -- Taxes accrued......... (2,511) -- (2,511) (2,466) (45) Other--net............ (49,448) -- (49,448) (49,498) 50 Changes in other assets and other liabilities............ 12,448 -- 12,448 12,462 (14) Excess of equity in earnings of subsidiary companies over their cash dividends paid-- consolidated........... -- (55) 55 55 -- Other--net.............. -- -- -- -- -- -------- ----- -------- -------- ---- Net cash provided by (used in) continuing operations........... 209,824 (420) 210,244 210,023 221 Net cash provided by (used in) discontinued operations.............. -- -- -- -- -- -------- ----- -------- -------- ---- Net cash provided by (used in) operating activities............. 209,824 (420) 210,244 210,023 221 -------- ----- -------- -------- ---- Cash Flows From Investing Activities Plant construction and other property additions Acquisition of exploration and production assets...... (165,844) -- (165,844) (165,844) -- Other................... (282,552) -- (282,552) (282,552) -- Proceeds from dispositions of prop., plant and equip.--net... 14,144 -- 14,144 14,144 -- Cost of other investments--net........ -- -- -- -- -- Intrasystem long-term financing--net.......... -- -- -- -- -- Intrasystem money pool investments--net........ (11,943) -- (11,943) (12,139) 196 Property transfers to (from) affiliates....... -- -- -- -- -- -------- ----- -------- -------- ---- Net cash provided by (used in) continuing operations........... (446,195) -- (446,195) (446,391) 196 Net cash provided by (used in) discontinued operations.............. -- -- -- -- -- -------- ----- -------- -------- ---- Net cash provided by (used in) investing activities........... (446,195) -- (446,195) (446,391) 196 -------- ----- -------- -------- ---- Cash Flows From Financing Activities Issuance of common stock................... -- -- -- -- -- Issuance of notes........ -- -- -- -- -- Repayments of long-term debt.................... -- -- -- -- -- Commercial paper--net.... -- -- -- -- -- Dividends paid........... -- -- -- -- -- Intrasystem long-term financing--net.......... 268,550 -- 268,550 268,550 -- Intrasystem money pool borrowings (repayments)--net....... (23,080) -- (23,080) (23,080) -- Dividends paid-- subsidiary companies-- consolidated............ -- 420 (420) -- (420) Purchase of treasury stock................... -- -- -- -- -- Sale of treasury stock... -- -- -- -- -- -------- ----- -------- -------- ---- Net cash provided by (used in) continuing operations........... 245,470 420 245,050 245,470 (420) Net cash provided by (used in) discontinued operations.............. -- -- -- -- -- -------- ----- -------- -------- ---- Net cash provided by (used in) financing activities........... 245,470 420 245,050 245,470 (420) -------- ----- -------- -------- ---- Net increase (decrease) in cash and TCIs............. 9,099 -- 9,099 9,102 (3) Cash and TCIs at January 1, 1999................. 6,872 -- 6,872 6,833 39 -------- ----- -------- -------- ---- Cash and TCIs at December 31, 1999................ $ 15,971 $ -- $ 15,971 $ 15,935 $ 36 ======== ===== ======== ======== ==== Continuing operations.... $ 15,971 $ -- $ 15,971 $ 15,935 $ 36 -------- ----- -------- -------- ---- Discontinued operations.. -- -- -- -- -- -------- ----- -------- -------- ---- Total cash and TCIs at December 31.......... $ 15,971 $ -- $ 15,971 $ 15,935 $ 36 ======== ===== ======== ======== ==== Supplemental Cash Flow Information Cash paid for Interest (net of amounts capitalized)... $ 27,376 $ -- $ 27,376 $ 27,376 $-- Income taxes (net of refunds)............... $ 18,529 $ -- $ 18,529 $ 18,253 $276
- -------- ( ) denotes negative amount. D-6-29 EXHIBIT D-6 CNG POWER COMPANY CONSOLIDATING BALANCE SHEET At December 31, 1999
CNG Power Eliminations and and Combined CNG CNG Bear Granite Subsidiaries Adjustments Total Power CNGMCS Mountain Road ------------ ------------ -------- ------- ------ -------- ------- (Thousands of Dollars) ASSETS Property, Plant and Equipment Gas utility and other plant.................. $ 5,845 $ -- $ 5,845 $ 5,845 $ -- $-- $-- Accumulated depreciation and amortization....... (2,804) -- (2,804) (2,804) -- -- -- ------- ------- ------- ------- ------ ---- ---- Net gas utility and other plant........ 3,041 -- 3,041 3,041 -- -- -- ------- ------- ------- ------- ------ ---- ---- Exploration and production properties.. -- -- -- -- -- -- -- Accumulated depreciation and amortization....... -- -- -- -- -- -- -- ------- ------- ------- ------- ------ ---- ---- Net exploration and production properties......... -- -- -- -- -- -- -- ------- ------- ------- ------- ------ ---- ---- Net property, plant and equipment...... 3,041 -- 3,041 3,041 -- -- -- ------- ------- ------- ------- ------ ---- ---- Investments Stocks of subsidiary companies, at equity-- consolidated........... -- (1,471) 1,471 1,471 -- -- -- Notes of subsidiary companies-- consolidated........... -- -- -- -- -- -- -- ------- ------- ------- ------- ------ ---- ---- Total investments... -- (1,471) 1,471 1,471 -- -- -- ------- ------- ------- ------- ------ ---- ---- Current Assets Cash and temporary cash investments............ 1 -- 1 1 -- -- -- Accounts receivable Customers............. 1,862 -- 1,862 1,862 -- -- -- Unbilled revenues and other................ -- -- -- -- -- -- -- Allowance for doubtful accounts............. -- -- -- -- -- -- -- Receivables from affiliated companies-- consolidated........... 5,819 (35) 5,854 4,872 947 35 -- Inventories, at cost Gas stored--current portion.............. -- -- -- -- -- -- -- Materials and supplies (average cost method).............. 36 -- 36 36 -- -- -- Unrecovered gas costs... -- -- -- -- -- -- -- Deferred income taxes-- current................ -- -- -- -- -- -- -- Prepayments and other current assets......... 2 -- 2 2 -- -- -- ------- ------- ------- ------- ------ ---- ---- Total current assets............. 7,720 (35) 7,755 6,773 947 35 -- ------- ------- ------- ------- ------ ---- ---- Regulatory and Other Assets Other investments....... 613 -- 613 -- 612 -- 1 Deferred charges and other assets........... -- -- -- -- -- -- -- ------- ------- ------- ------- ------ ---- ---- Total regulatory and other assets....... 613 -- 613 -- 612 -- 1 ------- ------- ------- ------- ------ ---- ---- Total assets........ $11,374 $(1,506) $12,880 $11,285 $1,559 $ 35 $ 1 ======= ======= ======= ======= ====== ==== ====
- ------- ( ) denotes negative amount. D-6-30 EXHIBIT D-6 CNG POWER COMPANY CONSOLIDATING BALANCE SHEET At December 31, 1999
CNG Power Eliminations and and Combined CNG CNG Bear Granite Subsidiaries Adjustments Total Power CNGMCS Mountain Road ------------ ------------ -------- ------- ------ -------- ------- (Thousands of Dollars) STOCKHOLDER'S EQUITY AND LIABILITIES Capitalization Common stockholder's equity Common stock.......... $ 8,360 $ (111) $ 8,471 $ 8,360 $ 100 $10 $ 1 Capital in excess of par value............ -- -- -- -- -- -- -- Retained earnings, per accompanying statement............ 825 (1,360) 2,185 825 1,348 12 -- Treasury stock, at cost................. -- -- -- -- -- -- -- ------- ------- ------- ------- ------ --- --- Total common stockholder's equity............. 9,185 (1,471) 10,656 9,185 1,448 22 1 ------- ------- ------- ------- ------ --- --- Long-term debt Debentures and Notes.. -- -- -- -- -- -- -- Notes payable to Parent Company....... -- -- -- -- -- -- -- ------- ------- ------- ------- ------ --- --- Total long-term debt............... -- -- -- -- -- -- -- ------- ------- ------- ------- ------ --- --- Total capitalization..... 9,185 (1,471) 10,656 9,185 1,448 22 1 ------- ------- ------- ------- ------ --- --- Current Liabilities Commercial paper........ -- -- -- -- -- -- -- Accounts payable........ 381 -- 381 381 -- -- -- Payables to affiliated companies-- consolidated........... 109 (35) 144 143 1 -- -- Estimated rate contingencies and refunds................ -- -- -- -- -- -- -- Amounts payable to customers.............. -- -- -- -- -- -- -- Taxes accrued........... 935 -- 935 811 111 13 -- Deferred income taxes-- current................ -- -- -- -- -- -- -- Dividends declared...... -- -- -- -- -- -- -- Other current liabilities............ -- -- -- -- -- -- -- ------- ------- ------- ------- ------ --- --- Total current liabilities........ 1,425 (35) 1,460 1,335 112 13 -- ------- ------- ------- ------- ------ --- --- Deferred Credits Deferred income taxes... 764 -- 764 765 (1) -- -- Accumulated deferred investment tax credits................ -- -- -- -- -- -- -- Deferred credits and other liabilities...... -- -- -- -- -- -- -- ------- ------- ------- ------- ------ --- --- Total deferred credits............ 764 -- 764 765 (1) -- -- ------- ------- ------- ------- ------ --- --- Commitments and Contingencies ------- ------- ------- ------- ------ --- --- Total stockholder's equity and liabilities........ $11,374 $(1,506) $12,880 $11,285 $1,559 $35 $ 1 ======= ======= ======= ======= ====== === ===
- -------- ( ) denotes negative amount. D-6-31 EXHIBIT D-6 CNG POWER COMPANY CONSOLIDATING INCOME STATEMENT For the Year Ended December 31, 1999
CNG Power Eliminations and and Combined CNG CNG Bear Granite Subsidiaries Adjustments Total Power CNGMCS Mountain Road ------------ ------------ -------- ------- ------ -------- ------- (Thousands of Dollars) Operating Revenues Regulated gas sales..... $ -- $ -- $ -- $ -- $ -- $-- $-- Nonregulated gas sales.. -- -- -- -- -- -- -- ------- ----- ------- ------- ----- ---- ---- Total gas sales....... -- -- -- -- -- -- -- Gas transportation and storage................ -- -- -- -- -- -- -- Other................... 13,821 -- 13,821 13,821 -- -- -- ------- ----- ------- ------- ----- ---- ---- Total operating reve- nues................. 13,821 -- 13,821 13,821 -- -- -- ------- ----- ------- ------- ----- ---- ---- Operating Expenses Purchased gas........... -- -- -- -- -- -- -- Liquids, capacity and other products purchased.............. 8,220 -- 8,220 8,220 -- -- -- Operation expense....... 3,306 -- 3,306 3,193 113 -- -- Maintenance............. -- -- -- -- -- -- -- Depreciation and amorti- zation................. 210 -- 210 210 -- -- -- Taxes, other than income taxes.................. 45 -- 45 44 1 -- -- ------- ----- ------- ------- ----- ---- ---- Subtotal.............. 11,781 -- 11,781 11,667 114 -- -- ------- ----- ------- ------- ----- ---- ---- Operating income before income taxes.. 2,040 -- 2,040 2,154 (114) -- -- Income taxes............ 1,649 -- 1,649 1,388 261 -- -- ------- ----- ------- ------- ----- ---- ---- Operating income...... 391 -- 391 766 (375) -- -- ------- ----- ------- ------- ----- ---- ---- Other Income (Deduc- tions) Interest revenues....... 32 -- 32 31 1 -- -- Merger expense.......... -- -- -- -- -- -- -- Other--net.............. 781 -- 781 -- 781 -- -- Equity in earnings of subsidiary companies-- consolidated........... -- (441) 441 441 -- -- -- Interest revenues from affiliated companies-- consolidated........... 1,695 -- 1,695 1,660 35 -- -- ------- ----- ------- ------- ----- ---- ---- Total other income (deductions)......... 2,508 (441) 2,949 2,132 817 -- -- ------- ----- ------- ------- ----- ---- ---- Income before interest charges.............. 2,899 (441) 3,340 2,898 442 -- -- ------- ----- ------- ------- ----- ---- ---- Interest Charges Interest on long-term debt................... 88 -- 88 88 -- -- -- Other interest expense.. 32 -- 32 31 1 -- -- Allowance for funds used during construction.... -- -- -- -- -- -- -- ------- ----- ------- ------- ----- ---- ---- Total interest charges.............. 120 -- 120 119 1 -- -- ------- ----- ------- ------- ----- ---- ---- Net Income.............. $ 2,779 $(441) $ 3,220 $ 2,779 $ 441 $-- $-- ======= ===== ======= ======= ===== ==== ====
- -------- ( ) denotes negative amount. D-6-32 EXHIBIT D-6 CNG POWER COMPANY CONSOLIDATING STATEMENT OF RETAINED EARNINGS For the Year Ended December 31, 1999
CNG Power Eliminations and and Combined CNG CNG Bear Granite Subsidiaries Adjustments Total Power CNGMCS Mountain Road ------------ ------------ -------- -------- ------ -------- ------- (Thousands of Dollars) Retained Earnings Balance at December 31, 1998................... $ 13,946 $ (919) $ 14,865 $ 13,946 $ 907 $12 $-- Net income for the year 1999 per accompanying income statement....... 2,779 (441) 3,220 2,779 441 -- -- -------- ------- -------- -------- ------ --- ---- Total.................. 16,725 (1,360) 18,085 16,725 1,348 12 -- Dividends declared on common stock -- cash... (15,900) -- (15,900) (15,900) -- -- -- -------- ------- -------- -------- ------ --- ---- Balance at December 31, 1999................... $ 825 $(1,360) $ 2,185 $ 825 $1,348 $12 $-- ======== ======= ======== ======== ====== === ====
- -------- ( ) denotes negative amount. D-6-33 EXHIBIT D-6 CNG POWER COMPANY CONSOLIDATING STATEMENT OF CASH FLOWS For the Year Ended December 31, 1999
CNG Power Eliminations and and Combined CNG CNG Bear Granite CNG Subsidiaries Adjustments Total Power CNGMCS Mountain Road Kauai ------------ ------------ -------- ------ ------ -------- ------- ----- (Thousands of Dollars) Cash Flows From Operating Activities Net income.............. $2,779 $(441) $3,220 $2,779 $441 $-- $-- $-- Adjustments to reconcile net income to net cash provided by (used in) operating activities Depreciation and amortization.......... 210 -- 210 210 -- -- -- -- Pension cost (credit)-- net................... -- -- -- -- -- -- -- -- Stock award amortization.......... -- -- -- -- -- -- -- -- Deferred income taxes-- net................... 241 -- 241 243 (2) -- -- -- Investment tax credit.. -- -- -- -- -- -- -- -- Changes in current assets and current liabilities Accounts receivable-- net................... (781) -- (781) (781) -- -- -- -- Receivables from affiliated companies-- consolidated.......... (32) (190) 158 64 (2) 96 -- -- Inventories............ 1,520 -- 1,520 1,520 -- -- -- -- Unrecovered gas costs.. -- -- -- -- -- -- -- -- Accounts payable....... (156) -- (156) (161) 5 -- -- -- Payables to affiliated companies-- consolidated.......... (266) 190 (456) (361) 1 (96) -- -- Estimated rate contingencies and refunds............... -- -- -- -- -- -- -- -- Amounts payable to customers............. -- -- -- -- -- -- -- -- Taxes accrued.......... (451) -- (451) (283) (167) (1) -- -- Other--net............. 17 -- 17 16 -- 1 -- -- Changes in other assets and other liabilities........... 446 -- 446 29 417 -- -- -- Excess of equity in earnings of subsidiary companies over their cash dividends paid-- consolidated.......... -- 441 (441) (441) -- -- -- -- Other--net............. -- -- -- -- -- -- -- -- ------ ----- ------ ------ ---- ---- ---- ---- Net cash provided by (used in) continuing operations............ 3,527 -- 3,527 2,834 693 -- -- -- Net cash provided by (used in) discontinued operations............. -- -- -- -- -- -- -- -- ------ ----- ------ ------ ---- ---- ---- ---- Net cash provided by (used in) operating activities............ 3,527 -- 3,527 2,834 693 -- -- -- ------ ----- ------ ------ ---- ---- ---- ----
D-6-34 EXHIBIT D-6 CNG POWER COMPANY CONSOLIDATING STATEMENT OF CASH FLOWS--(Continued) For the Year Ended December 31, 1999
CNG Power Eliminations and and Combined CNG CNG Bear Granite CNG Subsidiaries Adjustments Total Power CNGMCS Mountain Road Kauai ------------ ------------ -------- ------- ------ -------- ------- ----- (Thousands of Dollars) Cash Flows From Investing Activities Plant construction and other property additions.............. -- -- -- -- -- -- -- -- Proceeds from dispositions of prop., plant and equip.--net.. -- -- -- -- -- -- -- -- Cost of other investments--net....... -- -- -- -- -- -- -- -- Intrasystem long-term financing--net......... -- 10 (10) (10) -- -- -- -- Intrasystem money pool investments--net....... 42,366 -- 42,366 43,073 (707) -- -- -- Property transfers to (from) affiliates...... 43 -- 43 43 -- -- -- -- Sale of subsidiary and related cash transfer.. -- -- -- 10 -- -- -- (10) ------- ---- ------- ------- ---- ---- ---- ---- Net cash provided by (used in) continuing operations............ 42,409 10 42,399 43,116 (707) -- -- (10) Net cash provided by (used in) discontinued operations............. -- -- -- -- -- -- -- -- ------- ---- ------- ------- ---- ---- ---- ---- Net cash provided by (used in) investing activities............ 42,409 10 42,399 43,116 (707) -- -- (10) ------- ---- ------- ------- ---- ---- ---- ---- Cash Flows From Financing Activities Issuance of common stock.................. -- -- -- -- -- -- -- -- Issuance of notes....... -- -- -- -- -- -- -- -- Repayments of long-term debt................... -- -- -- -- -- -- -- -- Commercial paper--net... -- -- -- -- -- -- -- -- Dividends paid.......... -- -- -- -- -- -- -- -- Intrasystem long-term financing--net......... (26,403) (10) (26,393) (26,403) -- -- -- 10 Intrasystem money pool borrowings (repayments)--net...... (3,755) -- (3,755) (3,755) -- -- -- -- Dividends paid-- subsidiary companies-- consolidated........... (15,900) -- (15,900) (15,900) -- -- -- -- Purchase of treasury stock.................. -- -- -- -- -- -- -- -- Sale of treasury stock.. -- -- -- -- -- -- -- -- ------- ---- ------- ------- ---- ---- ---- ---- Net cash provided by (used in) continuing operations............ (46,058) (10) (46,048) (46,058) -- -- -- 10 Net cash provided by (used in) discontinued operations............. -- -- -- -- -- -- -- -- ------- ---- ------- ------- ---- ---- ---- ---- Net cash provided by (used in) financing activities............ (46,058) (10) (46,048) (46,058) -- -- -- 10 ------- ---- ------- ------- ---- ---- ---- ---- Net increase (decrease) in cash and TCIs...... (122) -- (122) (108) (14) -- -- -- Cash and TCIs at January 1, 1999................ 123 -- 123 109 14 -- -- -- ------- ---- ------- ------- ---- ---- ---- ---- Cash and TCIs at December 31, 1999...... $ 1 $-- $ 1 $ 1 $-- $-- $-- $-- ======= ==== ======= ======= ==== ==== ==== ==== Continuing operations... $ 1 $-- $ 1 $ 1 $-- $-- $-- $-- Discontinued operations............. -- -- -- -- -- -- -- -- ------- ---- ------- ------- ---- ---- ---- ---- Total cash and TCIs at December 31........... $ 1 $-- $ 1 $ 1 $-- $-- $-- $-- ======= ==== ======= ======= ==== ==== ==== ==== Supplemental Cash Flow Information Cash paid for Interest (net of amounts capitalized).. $ 273 $-- $ 273 $ 273 $-- $-- $-- $-- Income taxes (net of refunds).............. $ 1,745 $-- $ 1,745 $ 1,304 $441 $-- $-- $--
- -------- ( ) denotes negative amount. D-6-35 EXHIBIT D-6 CNG INTERNATIONAL CORPORATION CONSOLIDATING BALANCE SHEET At December 31, 1999
Eliminations CNG Cayman CNG Cayman CNGI and and Combined One Three CNG Subsidiaries Adjustments Total CNGI (Page D-6-42) (Page D-6-48) Kauai ------------ ------------ -------- -------- ------------- ------------- ------ (Thousands of Dollars) ASSETS Property, Plant and Equipment Gas utility and other plant.................. $ 818 $ -- $ 818 $ 818 $ -- $ -- $ -- Accumulated depreciation and amortization....... (479) -- (479) (479) -- -- -- -------- --------- -------- -------- ------- -------- ------ Net gas utility and other plant........... 339 -- 339 339 -- -- -- -------- --------- -------- -------- ------- -------- ------ Exploration and production properties.. -- -- -- -- -- -- -- Accumulated depreciation and amortization....... -- -- -- -- -- -- -- -------- --------- -------- -------- ------- -------- ------ Net exploration and production properties............ -- -- -- -- -- -- -- -------- --------- -------- -------- ------- -------- ------ Net property, plant and equipment............. 339 -- 339 339 -- -- -- -------- --------- -------- -------- ------- -------- ------ Investments Stocks of subsidiary companies, at equity-- consolidated........... -- (170,547) 170,547 170,547 -- -- -- Notes of subsidiary companies-- consolidated........... -- -- -- -- -- -- -- -------- --------- -------- -------- ------- -------- ------ Total investments...... -- (170,547) 170,547 170,547 -- -- -- -------- --------- -------- -------- ------- -------- ------ Current Assets Cash and temporary cash investments............ 1,246 -- 1,246 423 -- 803 20 Accounts receivable Customers.............. -- -- -- -- -- -- -- Unbilled revenues and other................. 665 -- 665 146 -- 519 -- Allowance for doubtful accounts.............. -- -- -- -- -- -- -- Receivables from affiliated companies-- consolidated........... (28) (26) (2) (2) -- -- -- Inventories, at cost Gas stored--current portion............... -- -- -- -- -- -- -- Materials and supplies (average cost method)............... -- -- -- -- -- -- -- Unrecovered gas costs... -- -- -- -- -- -- -- Deferred income taxes-- current................ -- -- -- -- -- -- -- Prepayments and other current assets......... 7 -- 7 7 -- -- -- -------- --------- -------- -------- ------- -------- ------ Total current assets... 1,890 (26) 1,916 574 -- 1,322 20 -------- --------- -------- -------- ------- -------- ------ Regulatory and Other Assets Other investments....... 259,467 -- 259,467 94,224 34,182 129,274 1,787 Deferred charges and other assets........... -- -- -- -- -- -- -- -------- --------- -------- -------- ------- -------- ------ Total regulatory and other assets.......... 259,467 -- 259,467 94,224 34,182 129,274 1,787 -------- --------- -------- -------- ------- -------- ------ Total assets........... $261,696 $(170,573) $432,269 $265,684 $34,182 $130,596 $1,807 ======== ========= ======== ======== ======= ======== ======
- -------- ( ) denotes negative amount. D-6-36 EXHIBIT D-6 CNG INTERNATIONAL CORPORATION CONSOLIDATING BALANCE SHEET--(Continued) At December 31, 1999
CNG CNG Eliminations Cayman Cayman CNGI and and Combined One Three CNG Subsidiaries Adjustments Total CNGI (Page D-6-43) (Page D-6-49) Kauai ------------ ------------ -------- -------- ------------- ------------- ------ (Thousands of Dollars) STOCKHOLDER'S EQUITY AND LIABILITIES Capitalization Common stockholder's equity Common stock........... $238,550 $ (10) $238,560 $238,550 $ -- $ -- $ 10 Capital in excess of par value............. -- (155,703) 155,703 -- 35,950 117,966 1,787 Retained earnings, per accompanying statement............. (12,758) (13,468) 710 (10,198) (1,644) 12,552 -- Treasury stock, at cost.................. -- -- -- -- -- -- -- -------- --------- -------- -------- ------- -------- ------ Total common stockholder's equity.. 225,792 (169,181) 394,973 228,352 34,306 130,518 1,797 -------- --------- -------- -------- ------- -------- ------ Long-term debt Debentures and Notes... -- -- -- -- -- -- -- Notes payable to Parent Company............... 15,000 -- 15,000 15,000 -- -- -- -------- --------- -------- -------- ------- -------- ------ Total long-term debt... 15,000 -- 15,000 15,000 -- -- -- -------- --------- -------- -------- ------- -------- ------ Total capitalization... 240,792 (169,181) 409,973 243,352 34,306 130,518 1,797 -------- --------- -------- -------- ------- -------- ------ Current Liabilities Commercial paper........ -- -- -- -- -- -- -- Accounts payable........ 242 -- 242 175 -- 57 10 Payables to affiliated companies-- consolidated........... 10,228 (26) 10,254 10,228 -- 26 -- Estimated rate contingencies and refunds................ -- -- -- -- -- -- -- Amounts payable to customers.............. -- -- -- -- -- -- -- Taxes accrued........... 574 -- 574 703 (124) (5) -- Deferred income taxes-- current................ -- -- -- -- -- -- -- Dividends declared...... -- -- -- -- -- -- -- Other current liabilities............ 127 -- 127 127 -- -- -- -------- --------- -------- -------- ------- -------- ------ Total current liabilities........... 11,171 (26) 11,197 11,233 (124) 78 10 -------- --------- -------- -------- ------- -------- ------ Deferred Credits Deferred income taxes... 6,217 (1,366) 7,583 7,583 -- -- -- Accumulated deferred investment tax credits................ -- -- -- -- -- -- -- Deferred credits and other liabilities...... 3,516 -- 3,516 3,516 -- -- -- -------- --------- -------- -------- ------- -------- ------ Total deferred credits............... 9,733 (1,366) 11,099 11,099 -- -- -- -------- --------- -------- -------- ------- -------- ------ Commitments and Contingencies -------- --------- -------- -------- ------- -------- ------ Total stockholder's equity and liabilities........... $261,696 $(170,573) $432,269 $265,684 $34,182 $130,596 $1,807 ======== ========= ======== ======== ======= ======== ======
- -------- ( ) denotes negative amount. D-6-37 EXHIBIT D-6 CNG INTERNATIONAL CORPORATION CONSOLIDATING INCOME STATEMENT For the Year Ended December 31, 1999
CNG CNG CNGI Eliminations Cayman Cayman and and Combined One Three CNG Subsidiaries Adjustments Total CNGI (Page D-6-44) (Page D-6-50) Kauai ------------ ------------ -------- ------- ------------- ------------- ----- (Thousands of Dollars) Operating Revenues Regulated gas sales..... $ -- $ -- $ -- $ -- $ -- $ -- $-- Nonregulated gas sales.. -- -- -- -- -- -- -- ------- ------- ------- ------- ------ ------ ---- Total gas sales........ -- -- -- -- -- -- -- Gas transportation and storage................ -- -- -- -- -- -- -- Other................... 1,452 (460) 1,912 751 -- 1,161 -- ------- ------- ------- ------- ------ ------ ---- Total operating revenues.............. 1,452 (460) 1,912 751 -- 1,161 -- ------- ------- ------- ------- ------ ------ ---- Operating Expenses Purchased gas........... -- -- -- -- -- -- -- Liquids, capacity and other products purchased.............. -- -- -- -- -- -- -- Operation expense....... 5,568 (460) 6,028 4,895 466 667 -- Maintenance............. 16 -- 16 16 -- -- -- Depreciation and amortization........... 139 -- 139 139 -- -- -- Taxes, other than income taxes.................. 260 -- 260 215 -- 45 -- ------- ------- ------- ------- ------ ------ ---- Subtotal............... 5,983 (460) 6,443 5,265 466 712 -- ------- ------- ------- ------- ------ ------ ---- Operating income before income taxes.......... (4,531) -- (4,531) (4,514) (466) 449 -- Income taxes............ 2,694 -- 2,694 2,458 (104) 340 -- ------- ------- ------- ------- ------ ------ ---- Operating income....... (7,225) -- (7,225) (6,972) (362) 109 -- ------- ------- ------- ------- ------ ------ ---- Other Income (Deductions) Interest revenues....... 270 -- 270 22 111 137 -- Merger expense.......... (6,215) -- (6,215) (6,215) -- -- -- Other--net.............. 8,362 -- 8,362 328 1,061 6,973 -- Equity in earnings of subsidiary companies-- consolidated........... -- (8,029) 8,029 8,029 -- -- -- Interest revenues from affiliated companies-- consolidated........... 1 -- 1 1 -- -- -- ------- ------- ------- ------- ------ ------ ---- Total other income (deductions).......... 2,418 (8,029) 10,447 2,165 1,172 7,110 -- ------- ------- ------- ------- ------ ------ ---- Income before interest charges............... (4,807) (8,029) 3,222 (4,807) 810 7,219 -- ------- ------- ------- ------- ------ ------ ---- Interest Charges Interest on long-term debt................... 931 -- 931 931 -- -- -- Other interest expense.. 507 -- 507 507 -- -- -- Allowance for funds used during construction.... -- -- -- -- -- -- -- ------- ------- ------- ------- ------ ------ ---- Total interest charges............... 1,438 -- 1,438 1,438 -- -- -- ------- ------- ------- ------- ------ ------ ---- Net Income.............. $(6,245) $(8,029) $ 1,784 $(6,245) $ 810 $7,219 $-- ======= ======= ======= ======= ====== ====== ====
- -------- ( ) denotes negative amount. D-6-38 EXHIBIT D-6 CNG INTERNATIONAL CORPORATION CONSOLIDATING STATEMENT OF RETAINED EARNINGS For the Year Ended December 31, 1999
Eliminations CNG Cayman CNG Cayman CNGI and and Combined One Three CNG Subsidiaries Adjustments Total CNGI (Page D-6-45) (Page D-6-51) Kauai ------------ ------------ -------- -------- ------------- ------------- ----- (Thousands of Dollars) Retained Earnings Balance at December 31, 1998................... $ (9,231) $ (6,805) $(2,426) $ (3,953) $(3,806) $ 5,333 $-- Net income for the year 1999 per accompanying income statement....... (6,245) (8,029) 1,784 (6,245) 810 7,219 -- -------- -------- ------- -------- ------- ------- ---- Total.................. (15,476) (14,834) (642) (10,198) (2,996) 12,552 -- Dividends declared on common stock--cash..... -- -- -- -- -- -- -- Foreign currency translation adjustment............. 2,718 1,366 1,352 -- 1,352 -- -- -------- -------- ------- -------- ------- ------- ---- Balance at December 31, 1999................... $(12,758) $(13,468) $ 710 $(10,198) $(1,644) $12,552 $-- ======== ======== ======= ======== ======= ======= ====
- -------- ( ) denotes negative amount. D-6-39 EXHIBIT D-6 CNG INTERNATIONAL CORPORATION CONSOLIDATING STATEMENT OF CASH FLOWS For the Year Ended December 31, 1999
CNG CNG Cayman Cayman Eliminations One Three CNGI and and Combined (Page (Page CNG Subsidiaries Adjustments Total CNGI D-6-46) D-6-52) Kauai ------------ ------------ -------- -------- ------- ------- ----- (Thousands of Dollars) Cash Flows From Operating Activities Net income.............. $ (6,245) $(8,029) $ 1,784 $ (6,245) $ 810 $ 7,219 $-- Adjustments to reconcile net income to net cash provided by (used in) operating activities Depreciation and amortization.......... 139 -- 139 139 -- -- -- Pension cost (credit)-- net................... 230 -- 230 230 -- -- -- Stock award amortization.......... -- -- -- -- -- -- -- Deferred income taxes-- net................... 7,833 -- 7,833 7,833 -- -- -- Investment tax credit.. -- -- -- -- -- -- -- Changes in current assets and current liabilities Accounts receivable-- net................... (276) -- (276) 38 -- (314) -- Receivables from affiliated companies-- consolidated.......... (13) (33) 20 20 -- -- -- Inventories............ -- -- -- -- -- -- -- Unrecovered gas costs.. -- -- -- -- -- -- -- Accounts payable....... (485) -- (485) (344) -- (151) 10 Payables to affiliated companies-- consolidated.......... (341) 33 (374) (342) (33) 1 -- Estimated rate contingencies and refunds............... -- -- -- -- -- -- -- Amounts payable to customers............. -- -- -- -- -- -- -- Taxes accrued.......... 304 -- 304 433 (124) (5) -- Other--net............. (314) -- (314) (314) -- -- -- Changes in other assets and other liabilities........... (6,730) -- (6,730) 2,002 (1,759) (6,973) -- Excess of equity in earnings of subsidiary companies over their cash dividends paid-- consolidated.......... -- 8,029 (8,029) (8,029) -- -- -- Other--net............. -- -- -- -- -- -- -- Net cash provided by (used in) continuing operations............ (5,898) -- (5,898) (4,579) (1,106) (223) 10 Net cash provided by (used in) discontinued operations............ -- -- -- -- -- -- -- -------- ------- -------- -------- ------- ------- ---- Net cash provided by (used in) operating activities............ (5,898) -- (5,898) (4,579) (1,106) (223) 10 -------- ------- -------- -------- ------- ------- ---- Cash Flows From Investing Activities Plant construction and other property additions.............. (601) -- (601) (601) -- -- -- Proceeds from dispositions of prop, plant and equip--net... -- -- -- -- -- -- -- Cost of other investments--net....... (37,262) -- (37,262) (4,729) -- (32,523) (10) Intrasystem long-term financing--net......... -- 24,247 (24,247) (24,247) -- -- -- Intrasystem money pool investments--net....... 1,768 -- 1,768 1,768 -- -- -- Property transfers to (from) affiliates...... (43) -- (43) (43) -- -- -- Purchase of subsidiary and related cash transfer............... -- -- -- (10) -- -- 10 -------- ------- -------- -------- ------- ------- ---- Net cash provided by (used in) continuing operations............ (36,138) 24,247 (60,385) (27,862) -- (32,523) -- Net cash provided by (used in) discontinued operations............. -- -- -- -- -- -- -- -------- ------- -------- -------- ------- ------- ---- Net cash provided by (used in) investing activities............ (36,138) 24,247 (60,385) (27,862) -- (32,523) -- -------- ------- -------- -------- ------- ------- ----
- -------- ( )denotes negative amount. D-6-40 EXHIBIT D-6 CNG INTERNATIONAL CORPORATION CONSOLIDATING STATEMENT OF CASH FLOWS--(Continued) For the Year Ended December 31, 1999
CNG CNG Cayman Cayman Eliminations One Three CNGI and and Combined (Page (Page CNG Subsidiaries Adjustments Total CNGI D-6-47) D-6-53) Kauai ------------ ------------ -------- ------- ------- ------- ------ (Thousands of Dollars) Cash Flows From Financing Activities Issuance of common stock.................. -- -- -- -- -- -- -- Issuance of notes....... -- -- -- -- -- -- -- Repayments of long-term debt................... -- -- -- -- -- -- -- Commercial paper--net... -- -- -- -- -- -- -- Dividends paid.......... -- -- -- -- -- -- -- Intrasystem long-term financing--net......... 23,000 (24,247) 47,247 23,000 (2,781) 27,018 10 Intrasystem money pool borrowings (repayments)--net...... 9,835 -- 9,835 9,835 -- -- -- Dividends paid-- subsidiary companies-- consolidated........... -- -- -- -- -- -- -- Purchase of treasury stock.................. -- -- -- -- -- -- -- Sale of treasury stock.. -- -- -- -- -- -- -- ------- -------- ------- ------- ------- ------- ------ Net cash provided by (used in) continuing operations............ 32,835 (24,247) 57,082 32,835 (2,781) 27,018 10 Net cash provided by (used in) discontinued operations............. -- -- -- -- -- -- -- ------- -------- ------- ------- ------- ------- ------ Net cash provided by (used in) financing activities............ 32,835 (24,247) 57,082 32,835 (2,781) 27,018 10 ------- -------- ------- ------- ------- ------- ------ Net increase (decrease) in cash and TCIs...... (9,201) -- (9,201) 394 (3,887) (5,728) 20 Cash and TCIs at January 1, 1999................ 10,447 -- 10,447 29 3,887 6,531 -- ------- -------- ------- ------- ------- ------- ------ Cash and TCIs at December 31, 1999...... $ 1,246 $ -- $ 1,246 $ 423 $ -- $ 803 $ 20 ======= ======== ======= ======= ======= ======= ====== Continuing operations... $ 1,246 $ -- $ 1,246 $ 423 $ -- $ 803 $ 20 Discontinued operations............. -- -- -- -- -- -- -- ------- -------- ------- ------- ------- ------- ------ Total cash and TCIs at December 31........... $ 1,246 $ -- $ 1,246 $ 423 $ -- $ 803 $ 20 ======= ======== ======= ======= ======= ======= ====== Supplemental Cash Flow Information Cash paid for Interest (net of amounts capitalized).. $ 1,208 $ -- $ 1,208 $ 1,208 $ -- $ -- $ -- Income taxes (net of refunds).............. $(5,460) $ -- $(5,460) $(5,825) $ 20 $ 345 $ -- Non-cash investing activities Investment in partnership........... $ 1,795 $ -- $ 1,795 $ 18 $ -- $ -- $1,777 Non-cash financing activities Capital contribution to (from) affiliate...... $ -- $ -- $ -- $(1,777) $ -- $ -- $1,777
- -------- ( ) denotes negative amount. D-6-41 EXHIBIT D-6 CNG CAYMAN ONE LTD. CONSOLIDATING BALANCE SHEET At December 31, 1999
Eliminations CNG CNGI CNG and Combined Cayman Australia Cayman One Adjustments Total One Pty Ltd. ---------- ------------ -------- ------- --------- (Thousands of Dollars) ASSETS Property, Plant and Equipment Gas utility and other plant..................... $ -- $ -- $ -- $ -- $ -- Accumulated depreciation and amortization.......... -- -- -- -- -- ------- -------- ------- ------- ------- Net gas utility and other plant................... -- -- -- -- -- ------- -------- ------- ------- ------- Exploration and production properties................ -- -- -- -- -- Accumulated depreciation and amortization.......... -- -- -- -- -- ------- -------- ------- ------- ------- Net exploration and production properties... -- -- -- -- -- ------- -------- ------- ------- ------- Net property, plant and equipment............... -- -- -- -- -- ------- -------- ------- ------- ------- Investments Stock of subsidiary company, at equity-- consolidated.............. -- (38,232) 38,232 38,232 -- Notes of subsidiary company--consolidated..... -- -- -- -- -- ------- -------- ------- ------- ------- Total investments........ -- (38,232) 38,232 38,232 -- ------- -------- ------- ------- ------- Current Assets Cash and temporary cash investments............... -- -- -- -- -- Accounts receivable Customers................ -- -- -- -- -- Unbilled revenues and other................... -- -- -- -- -- Allowance for doubtful accounts................ -- -- -- -- -- Receivables from affiliated companies--consolidated... -- -- -- -- -- Inventories, at cost Gas stored--current portion................. -- -- -- -- -- Materials and supplies (average cost method)... -- -- -- -- -- Unrecovered gas costs...... -- -- -- -- -- Deferred income taxes-- current................... -- -- -- -- -- Prepayments and other current assets............ -- -- -- -- -- ------- -------- ------- ------- ------- Total current assets..... -- -- -- -- -- ------- -------- ------- ------- ------- Regulatory and Other Assets Other investments.......... 34,182 -- 34,182 -- 34,182 Deferred charges and other assets.................... -- -- -- -- -- ------- -------- ------- ------- ------- Total regulatory and other assets............ 34,182 -- 34,182 -- 34,182 ------- -------- ------- ------- ------- Total assets............. $34,182 $(38,232) $72,414 $38,232 $34,182 ======= ======== ======= ======= =======
- -------- ( ) denotes negative amount. D-6-42 EXHIBIT D-6 CNG CAYMAN ONE LTD. CONSOLIDATING BALANCE SHEET (Continued) At December 31, 1999
CNG Eliminations CNG CNGI Cayman and Combined Cayman Australia One Adjustments Total One Pty Ltd. ------- ------------ -------- ------- --------- (Thousands of Dollars) STOCKHOLDER'S EQUITY AND LIABILITIES Capitalization Common stockholder's equity Common stock................ $ -- $ -- $ -- $ -- $ -- Capital in excess of par value...................... 35,950 (35,950) 71,900 35,950 35,950 Retained earnings, per accompanying statement..... (1,644) (2,282) 638 2,282 (1,644) Treasury stock, at cost..... -- -- -- -- -- ------- -------- ------- ------- ------- Total common stockholder's equity................... 34,306 (38,232) 72,538 38,232 34,306 ------- -------- ------- ------- ------- Long-term debt Debentures and Notes........ -- -- -- -- -- Notes payable to Parent Company.................... -- -- -- -- -- ------- -------- ------- ------- ------- Total long-term debt...... -- -- -- -- -- ------- -------- ------- ------- ------- Total capitalization...... 34,306 (38,232) 72,538 38,232 34,306 ------- -------- ------- ------- ------- Current Liabilities Commercial paper.............. -- -- -- -- -- Accounts payable.............. -- -- -- -- -- Payables to affiliated companies--consolidated...... -- -- -- -- -- Estimated rate contingencies and refunds.................. -- -- -- -- -- Amounts payable to customers.. -- -- -- -- -- Taxes accrued................. (124) -- (124) -- (124) Deferred income taxes-- current...................... -- -- -- -- -- Dividends declared............ -- -- -- -- -- Other current liabilities..... -- -- -- -- -- ------- -------- ------- ------- ------- Total current liabilities.............. (124) -- (124) -- (124) ------- -------- ------- ------- ------- Deferred Credits Deferred income taxes......... -- -- -- -- -- Accumulated deferred investment tax credits....... -- -- -- -- -- Deferred credits and other liabilities.................. -- -- -- -- -- ------- -------- ------- ------- ------- Total deferred credits.... -- -- -- -- -- ------- -------- ------- ------- ------- Commitments and Contingencies................ ------- -------- ------- ------- ------- Total stockholder's equity and liabilities.......... $34,182 $(38,232) $72,414 $38,232 $34,182 ======= ======== ======= ======= =======
- -------- ( ) denotes negative amount. D-6-43 EXHIBIT D-6 CNG CAYMAN ONE LTD. CONSOLIDATING INCOME STATEMENT For the Year Ended December 31, 1999
CNG Cayman Eliminations CNG CNGI One and and Combined Cayman Australia Subsidiary Adjustments Total One Pty Ltd. ---------- ------------ -------- ------ --------- (Thousands of Dollars) Operating Revenues Regulated gas sales......... $ -- $ -- $ -- $-- $ -- Nonregulated gas sales...... -- -- -- -- -- ------ ----- ------ ---- ------ Total gas sales......... -- -- -- -- -- Gas transportation and storage.................... -- -- -- -- -- Other....................... -- -- -- -- -- ------ ----- ------ ---- ------ Total operating revenues............... -- -- -- -- -- ------ ----- ------ ---- ------ Operating Expenses Purchased gas............... -- -- -- -- -- Liquids, capacity and other products purchased......... -- -- -- -- -- Operation expense........... 466 -- 466 -- 466 Maintenance................. -- -- -- -- -- Depreciation and amortization............... -- -- -- -- -- Taxes, other than income taxes...................... -- -- -- -- -- ------ ----- ------ ---- ------ Subtotal................ 466 -- 466 -- 466 ------ ----- ------ ---- ------ Operating income before income taxes........... (466) -- (466) -- (466) Income taxes................ (104) -- (104) -- (104) ------ ----- ------ ---- ------ Operating income........ (362) -- (362) -- (362) ------ ----- ------ ---- ------ Other Income (Deductions) Interest revenues........... 111 -- 111 -- 111 Merger expense.............. -- -- -- -- -- Other--net.................. 1,061 -- 1,061 -- 1,061 Equity in earnings of subsidiary company-- consolidated............... -- (810) 810 810 -- Interest revenues from affiliated companies-- consolidated............... -- -- -- -- -- ------ ----- ------ ---- ------ Total other income (deductions)........... 1,172 (810) 1,982 810 1,172 ------ ----- ------ ---- ------ Income before interest charges................ 810 (810) 1,620 810 810 ------ ----- ------ ---- ------ Interest Charges Interest on long-term debt.. -- -- -- -- -- Other interest expense...... -- -- -- -- -- Allowance for funds used during construction........ -- -- -- -- -- ------ ----- ------ ---- ------ Total interest charges.. -- -- -- -- -- ------ ----- ------ ---- ------ Net Income.................. $ 810 $(810) $1,620 $810 $ 810 ====== ===== ====== ==== ======
- -------- ( ) denotes negative amount. D-6-44 EXHIBIT D-6 CNG CAYMAN ONE LTD. CONSOLIDATING STATEMENT OF RETAINED EARNINGS For the Year Ended December 31, 1999
CNG Cayman Eliminations CNG CNGI One and and Combined Cayman Australia Subsidiary Adjustments Total One Pty Ltd. ---------- ------------ -------- ------ --------- (Thousands of Dollars) Retained Earnings Balance at December 31, 1998...................... $(3,806) $(1,472) $(2,334) $1,472 $(3,806) Net income for the year 1999 per accompanying income statement.......... 810 (810) 1,620 810 810 ------- ------- ------- ------ ------- Total.................... (2,996) (2,282) (714) 2,282 (2,996) Dividends declared on common stock--cash........ -- -- -- -- -- Foreign currency translation adjustment.... 1,352 -- 1,352 -- 1,352 ------- ------- ------- ------ ------- Balance at December 31, 1999...................... $(1,644) $(2,282) $ 638 $2,282 $(1,644) ======= ======= ======= ====== =======
- -------- ( ) denotes negative amount. D-6-45 EXHIBIT D-6 CNG CAYMAN ONE LTD. CONSOLIDATING STATEMENT OF CASH FLOWS For the Year Ended December 31, 1999
CNG Cayman One Eliminations CNG CNGI and and Combined Cayman Australia Subsidiary Adjustments Total One Pty Ltd. ---------- ------------ -------- ------ --------- (Thousands of Dollars) Cash Flows From Operating Activities Net income................... $ 810 $ (810) $ 1,620 $ 810 $ 810 Adjustments to reconcile net income to net cash provided by (used in) operating activities Depreciation and amortization............... -- -- -- -- -- Pension cost (credit)--net.. -- -- -- -- -- Stock award amortization.... -- -- -- -- -- Deferred income taxes--net.. -- -- -- -- -- Investment tax credit....... -- -- -- -- -- Changes in current assets and current liabilities Accounts receivable--net.... -- -- -- -- -- Receivables from affiliated companies--consolidated.... -- (33) 33 33 -- Inventories................. -- -- -- -- -- Unrecovered gas costs....... -- -- -- -- -- Accounts payable............ -- -- -- -- -- Payables to affiliated companies--consolidated.... (33) 33 (66) (33) (33) Estimated rate contingencies and refunds................ -- -- -- -- -- Amounts payable to customers.................. -- -- -- -- -- Taxes accrued............... (124) -- (124) -- (124) Other--net.................. -- -- -- -- -- Changes in other assets and other liabilities.......... (1,759) -- (1,759) -- (1,759) Excess of equity in earnings of subsidiary companies over their cash dividends paid--consolidated......... -- 810 (810) (810) -- Other--net.................. -- -- -- -- -- ------- ------- ------- ----- ------ Net cash provided by (used in) continuing operations.. (1,106) -- (1,106) -- (1,106) Net cash provided by (used in) discontinued operations.................. -- -- -- -- -- ------- ------- ------- ----- ------ Net cash provided by (used in) operating activities... (1,106) -- (1,106) -- (1,106) ------- ------- ------- ----- ------ Cash Flows From Investing Activities Plant construction and other property additions.......... -- -- -- -- -- Proceeds from dispositions of prop, plant and equip.-- net......................... -- -- -- -- -- Cost of other investments-- net......................... -- -- -- -- -- Intrasystem long-term financing--net.............. -- (2,781) 2,781 2,781 -- Intrasystem money pool investments--net............ -- -- -- -- -- Property transfers to (from) affiliates.................. -- -- -- -- -- ------- ------- ------- ----- ------ Net cash provided by (used in) continuing operations.. -- (2,781) 2,781 2,781 -- Net cash provided by (used in) discontinued operations.................. -- -- -- -- -- ------- ------- ------- ----- ------ Net cash provided by (used in) investing activities... -- (2,781) 2,781 2,781 -- ------- ------- ------- ----- ------
D-6-46 EXHIBIT D-6 CNG CAYMAN ONE LTD. CONSOLIDATING STATEMENT OF CASH FLOWS--(Continued) For the Year Ended December 31, 1999
CNG Cayman One Eliminations CNGI and and Combined CNG Australia Subsidiary Adjustments Total Cayman One Pty Ltd. ---------- ------------ -------- ---------- --------- (Thousands of Dollars) Cash Flows From Financing Activities Issuance of common stock.................. -- -- -- -- -- Issuance of notes....... -- -- -- -- -- Repayments of long-term debt................... -- -- -- -- -- Commercial paper--net... -- -- -- -- -- Dividends paid.......... -- -- -- -- -- Intrasystem long-term financing--net......... (2,781) 2,781 (5,562) (2,781) (2,781) Intrasystem money pool borrowings (repayments)--net...... -- -- -- -- -- Dividends paid-- subsidiary companies-- consolidated........... -- -- -- -- -- Purchase of treasury stock.................. -- -- -- -- -- Sale of treasury stock.. -- -- -- -- -- ------ ----- ------ ------- ------- Net cash provided by (used in) continuing operations............ (2,781) 2,781 (5,562) (2,781) (2,781) Net cash provided by (used in) discontinued operations............. -- -- -- -- -- ------ ----- ------ ------- ------- Net cash provided by (used in) financing activities............ (2,781) 2,781 (5,562) (2,781) (2,781) ------ ----- ------ ------- ------- Net increase (decrease) in cash and TCIs...... (3,887) -- (3,887) -- (3,887) Cash and TCIs at January 1, 1999................ 3,887 -- 3,887 -- 3,887 ------ ----- ------ ------- ------- Cash and TCIs at December 31, 1999...... $ -- $ -- $ -- $ -- $ -- ====== ===== ====== ======= ======= Continuing operations... $ -- $ -- $ -- $ -- $ -- Discontinued operations............. -- -- -- -- -- ------ ----- ------ ------- ------- Total cash and TCIs at December 31........... $ -- $ -- $ -- $ -- $ -- ====== ===== ====== ======= ======= Supplemental Cash Flow Information Cash paid for Interest (net of amounts capitalized).. $ -- $ -- $ -- $ -- $ -- Income taxes (net of refunds).............. $ 20 $ -- $ 20 $ -- $ 20 Non-cash investing activities Investment in partnership........... $ -- $ -- $ -- $ -- $ --
- -------- ( ) denotes negative amount. D-6-47 EXHIBIT D-6 CNG CAYMAN THREE LTD. CONSOLIDATING BALANCE SHEET At December 31, 1999
CNG Cayman Eliminations CNG CNG Three and and Combined Cayman Argentina Subsidiary Adjustments Total Three S.A. ---------- ------------ -------- -------- --------- (Thousands of Dollars) ASSETS Property, Plant and Equipment Gas utility and other plant.................... $ -- $ -- $ -- $ -- $ -- Accumulated depreciation and amortization......... -- -- -- -- -- -------- ----- -------- -------- ------ Net gas utility and other plant................... -- -- -- -- -- -------- ----- -------- -------- ------ Exploration and production properties............... -- -- -- -- -- Accumulated depreciation and amortization......... -- -- -- -- -- -------- ----- -------- -------- ------ Net exploration and production properties... -- -- -- -- -- -------- ----- -------- -------- ------ Net property, plant and equipment............... -- -- -- -- -- -------- ----- -------- -------- ------ Investments Stock of subsidiary company, at equity-- consolidated............. -- (979) 979 979 -- Notes of subsidiary company--consolidated.... -- -- -- -- -- -------- ----- -------- -------- ------ Total investments........ -- (979) 979 979 -- -------- ----- -------- -------- ------ Current Assets Cash and temporary cash investments.............. 803 -- 803 291 512 Accounts receivable Customers................ -- -- -- -- -- Unbilled revenues and other................... 519 -- 519 -- 519 Allowance for doubtful accounts................ -- -- -- -- -- Receivables from affiliated companies-- consolidated............. -- -- -- -- -- Inventories, at cost Gas stored--current portion................. -- -- -- -- -- Materials and supplies (average cost method)... -- -- -- -- -- Unrecovered gas costs..... -- -- -- -- -- Deferred income taxes-- current.................. -- -- -- -- -- Prepayments and other current assets........... -- -- -- -- -- -------- ----- -------- -------- ------ Total current assets..... 1,322 -- 1,322 291 1,031 -------- ----- -------- -------- ------ Regulatory and Other Assets Other investments......... 129,274 -- 129,274 129,274 -- Deferred charges and other assets................... -- -- -- -- -- -------- ----- -------- -------- ------ Total regulatory and other assets............ 129,274 -- 129,274 129,274 -- -------- ----- -------- -------- ------ Total assets............. $130,596 $(979) $131,575 $130,544 $1,031 ======== ===== ======== ======== ======
- -------- ( ) denotes negative amount. D-6-48 EXHIBIT D-6 CNG CAYMAN THREE LTD. CONSOLIDATING BALANCE SHEET--(Continued) At December 31, 1999
CNG Cayman Eliminations CNG CNG Three and and Combined Cayman Argentina Subsidiary Adjustments Total Three S.A. ---------- ------------ -------- -------- --------- (Thousands of Dollars) STOCKHOLDER'S EQUITY AND LIABILITIES Capitalization Common stockholder's equity Common stock............. $ -- $ (12) $ 12 $ -- $ 12 Capital in excess of par value................... 117,966 (300) 118,266 117,966 300 Retained earnings, per accompanying statement.. 12,552 (667) 13,219 12,552 667 Treasury stock, at cost.. -- -- -- -- -- -------- ----- -------- -------- ------ Total common stockholder's equity.... 130,518 (979) 131,497 130,518 979 -------- ----- -------- -------- ------ Long-term debt Debentures and Notes..... -- -- -- -- -- Notes payable to Parent Company................. -- -- -- -- -- -------- ----- -------- -------- ------ Total long-term debt..... -- -- -- -- -- -------- ----- -------- -------- ------ Total capitalization..... 130,518 (979) 131,497 130,518 979 -------- ----- -------- -------- ------ Current Liabilities Commercial paper.......... -- -- -- -- -- Accounts payable.......... 57 -- 57 -- 57 Payables to affiliated companies--consolidated.. 26 -- 26 26 -- Estimated rate contingencies and refunds.................. -- -- -- -- -- Amounts payable to customers................ -- -- -- -- -- Taxes accrued............. (5) -- (5) -- (5) Deferred income taxes-- current.................. -- -- -- -- -- Dividends declared........ -- -- -- -- -- Other current liabilities.............. -- -- -- -- -- -------- ----- -------- -------- ------ Total current liabilities............. 78 -- 78 26 52 -------- ----- -------- -------- ------ Deferred Credits Deferred income taxes..... -- -- -- -- -- Accumulated deferred investment tax credits... -- -- -- -- -- Deferred credits and other liabilities.............. -- -- -- -- -- -------- ----- -------- -------- ------ Total deferred credits... -- -- -- -- -- -------- ----- -------- -------- ------ Commitments and Contingencies............ -------- ----- -------- -------- ------ Total stockholder's equity and liabilities.. $130,596 $(979) $131,575 $130,544 $1,031 ======== ===== ======== ======== ======
- -------- ( ) denotes negative amount. D-6-49 EXHIBIT D-6 CNG CAYMAN THREE LTD. CONSOLIDATING INCOME STATEMENT For the Year Ended December 31, 1999
CNG Cayman Three Eliminations CNG CNG and and Combined Cayman Argentina Subsidiary Adjustments Total Three S.A. ------------ ------------ -------- ------ --------- (Thousands of Dollars) Operating Revenues Regulated gas sales...... $ -- $ -- $ -- $ -- $ -- Nonregulated gas sales... -- -- -- -- -- ------ ----- ------ ------ ------ Total gas sales........ -- -- -- -- -- Gas transportation and storage................. -- -- -- -- -- Other.................... 1,161 -- 1,161 -- 1,161 ------ ----- ------ ------ ------ Total operating revenues.............. 1,161 -- 1,161 -- 1,161 ------ ----- ------ ------ ------ Operating Expenses Purchased gas............ -- -- -- -- -- Liquids, capacity and other products purchased............... -- -- -- -- -- Operation expense........ 667 -- 667 2 665 Maintenance.............. -- -- -- -- -- Depreciation and amortization............ -- -- -- -- -- Taxes, other than income taxes................... 45 -- 45 -- 45 ------ ----- ------ ------ ------ Subtotal............... 712 -- 712 2 710 ------ ----- ------ ------ ------ Operating income before income taxes.......... 449 -- 449 (2) 451 Income taxes............. 340 -- 340 -- 340 ------ ----- ------ ------ ------ Operating income....... 109 -- 109 (2) 111 ------ ----- ------ ------ ------ Other Income (Deductions) Interest revenues........ 137 -- 137 137 -- Merger expense........... -- -- -- -- -- Other--net............... 6,973 -- 6,973 6,973 -- Equity in earnings of subsidiary company-- consolidated............ -- (111) 111 111 -- Interest revenues from affiliated companies-- consolidated............ -- -- -- -- -- ------ ----- ------ ------ ------ Total other income (deductions).......... 7,110 (111) 7,221 7,221 -- ------ ----- ------ ------ ------ Income before interest charges............... 7,219 (111) 7,330 7,219 111 ------ ----- ------ ------ ------ Interest Charges Interest on long-term debt.................... -- -- -- -- -- Other interest expense... -- -- -- -- -- Allowance for funds used during construction..... -- -- -- -- -- ------ ----- ------ ------ ------ Total interest charges............... -- -- -- -- -- ------ ----- ------ ------ ------ Net Income............... $7,219 $(111) $7,330 $7,219 $ 111 ====== ===== ====== ====== ======
- -------- ( ) denotes negative amount. D-6-50 EXHIBIT D-6 CNG CAYMAN THREE LTD. CONSOLIDATING STATEMENT OF RETAINED EARNINGS For the Year Ended December 31, 1999
CNG Cayman Eliminations CNG CNG Three and and Combined Cayman Argentina Subsidiary Adjustments Total Three S.A. ---------- ------------ -------- ------- --------- (Thousands of Dollars) Retained Earnings Balance at December 31, 1998....................... $ 5,333 $(556) $ 5,889 $ 5,333 $556 Net income for the year 1999 per accompanying income statement.................. 7,219 (111) 7,330 7,219 111 ------- ----- ------- ------- ---- Total...................... 12,552 (667) 13,219 12,552 667 Dividends declared on common stock--cash................ -- -- -- -- -- Foreign currency translation adjustment................. -- -- -- -- -- ------- ----- ------- ------- ---- Balance at December 31, 1999....................... $12,552 $(667) $13,219 $12,552 $667 ======= ===== ======= ======= ====
- -------- ( ) denotes negative amount. D-6-51 EXHIBIT D-6 CNG CAYMAN THREE LTD. CONSOLIDATING STATEMENT OF CASH FLOWS For the Year Ended December 31, 1999
CNG Cayman Eliminations CNG CNGI Three and and Combined Cayman Argentina Subsidiary Adjustments Total Three S.A. ---------- ------------ -------- -------- --------- (Thousands of Dollars) Cash Flows From Operating Activities Net income.............. $ 7,219 $(111) $ 7,330 $ 7,219 $ 111 Adjustments to reconcile net income to net cash provided by (used in) operating activities Depreciation and amortization.......... -- -- -- -- -- Pension cost (credit)-- net................... -- -- -- -- -- Stock award amortization.......... -- -- -- -- -- Deferred income taxes-- net................... -- -- -- -- -- Investment tax credit.. -- -- -- -- -- Changes in current assets and current liabilities Accounts receivable-- net................... (314) -- (314) 205 (519) Receivables from affiliated companies-- consolidated.......... -- (12) 12 -- 12 Inventories............ -- -- -- -- -- Unrecovered gas costs.. -- -- -- -- -- Accounts payable....... (151) -- (151) -- (151) Payables to affiliated companies-- consolidated.......... 1 12 (11) (11) -- Estimated rate contingencies and refunds............... -- -- -- -- -- Amounts payable to customers............. -- -- -- -- -- Taxes accrued.......... (5) -- (5) -- (5) Other--net............. -- -- -- -- -- Changes in other assets and other liabilities........... (6,973) -- (6,973) (6,973) -- Excess of equity in earnings of subsidiary companies over their cash dividends paid-- consolidated.......... -- 111 (111) (111) -- Other--net............. -- -- -- -- -- -------- ----- -------- -------- ----- Net cash provided by (used in) continuing operations............ (223) -- (223) 329 (552) Net cash provided by (used in) discontinued operations............. -- -- -- -- -- -------- ----- -------- -------- ----- Net cash provided by (used in) operating activities............ (223) -- (223) 329 (552) -------- ----- -------- -------- ----- Cash Flows From Investing Activities Plant construction and other property additions.............. -- -- -- -- -- Proceeds from dispositions of prop., plant and equip.--net.. -- -- -- -- -- Cost of other investments--net....... (32,523) -- (32,523) (32,523) -- Intrasystem long-term financing--net......... -- 300 (300) (300) -- Intrasystem money pool investments--net....... -- -- -- -- -- Property transfers to (from) affiliates...... -- -- -- -- -- -------- ----- -------- -------- ----- Net cash provided by (used in) continuing operations............ (32,523) 300 (32,823) (32,823) -- Net cash provided by (used in) discontinued operations............. -- -- -- -- -- -------- ----- -------- -------- ----- Net cash provided by (used in) investing activities............ (32,523) 300 (32,823) (32,823) -- -------- ----- -------- -------- -----
- -------- ( ) denotes negative amount. D-6-52 EXHIBIT D-6 CNG CAYMAN THREE LTD. CONSOLIDATING STATEMENT OF CASH FLOWS--(Continued) For the Year Ended December 31, 1999
CNG Cayman Eliminations CNG CNGI Three and and Combined Cayman Argentina Subsidiary Adjustments Total Three S.A. ---------- ------------ -------- ------- --------- (Thousands of Dollars) Cash Flows From Financing Activities Issuance of common stock................... $ -- $ -- $ -- $ -- $ -- Issuance of notes........ -- -- -- -- -- Repayments of long-term debt.................... -- -- -- -- -- Commercial paper--net.... -- -- -- -- -- Dividends paid........... -- -- -- -- -- Intrasystem long-term financing--net.......... 27,018 (300) 27,318 27,018 300 Intrasystem money pool borrowings (repayments)--net....... -- -- -- -- -- Dividends paid-- subsidiary companies-- consolidated............ -- -- -- -- -- Purchase of treasury stock................... -- -- -- -- -- Sale of treasury stock... -- -- -- -- -- ------- ----- ------- ------- ----- Net cash provided by (used in) continuing operations............. 27,018 (300) 27,318 27,018 300 Net cash provided by (used in) discontinued operations.............. -- -- -- -- -- ------- ----- ------- ------- ----- Net cash provided by (used in) financing activities............. 27,018 (300) 27,318 27,018 300 ------- ----- ------- ------- ----- Net increase (decrease) in cash and TCIs....... (5,728) -- (5,728) (5,476) (252) Cash and TCIs at January 1, 1999................. 6,531 -- 6,531 5,767 764 ------- ----- ------- ------- ----- Cash and TCIs at December 31, 1999................ $ 803 $ -- $ 803 $ 291 $ 512 ======= ===== ======= ======= ===== Continuing operations.... $ 803 $ -- $ 803 $ 291 $ 512 Discontinued operations.. -- -- -- -- -- ------- ----- ------- ------- ----- Total cash and TCIs at December 31............ $ 803 $ -- $ 803 $ 291 $ 512 ======= ===== ======= ======= ===== Supplemental Cash Flow Information Cash paid for Interest (net of amounts capitalized)........... $ -- $ -- $ -- $ -- $ -- Income taxes (net of refunds)............... $ 345 $ -- $ 345 $ -- $ 345
- -------- ( ) denotes negative amount. D-6-53 EXHIBIT D-6 CNG PRODUCTS AND SERVICES, INC. CONSOLIDATING BALANCE SHEET At December 31, 1999
CNG Products and Eliminations CNG Services and and Combined Products and CNG Subsidiary Adjustments Total Services Technologies ------------ ------------ -------- ------------ ------------ (Thousands of Dollars) ASSETS Property, Plant and Equipment Gas utility and other plant.................. $ -- $ -- $ -- $ -- $-- Accumulated depreciation and amortization....... -- -- -- -- -- ------ ----- ------ ------ ---- Net gas utility and other plant.......... -- -- -- -- -- ------ ----- ------ ------ ---- Exploration and production properties.. -- -- -- -- -- Accumulated depreciation and amortization....... -- -- -- -- -- ------ ----- ------ ------ ---- Net exploration and production properties........... -- -- -- -- -- ------ ----- ------ ------ ---- Net property, plant and equipment........ -- -- -- -- -- ------ ----- ------ ------ ---- Investments Stock of subsidiary company, at equity-- consolidated........... -- (611) 611 611 -- Notes of subsidiary company--consolidated.. -- -- -- -- -- ------ ----- ------ ------ ---- Total investments..... -- (611) 611 611 -- ------ ----- ------ ------ ---- Current Assets Cash and temporary cash investments............ 5 -- 5 4 1 Accounts receivable Customers.............. 566 -- 566 566 -- Unbilled revenues and other................. -- -- -- -- -- Allowance for doubtful accounts.............. (173) -- (173) (173) -- Receivables from affiliated companies-- consolidated........... 1,295 -- 1,295 1,150 145 Inventories, at cost Gas stored--current portion............... -- -- -- -- -- Materials and supplies (average cost method)............... -- -- -- -- -- Unrecovered gas costs... -- -- -- -- -- Deferred income taxes-- current................ -- -- -- -- -- Prepayments and other current assets......... -- -- -- -- -- ------ ----- ------ ------ ---- Total current assets.. 1,693 -- 1,693 1,547 146 ------ ----- ------ ------ ---- Regulatory and Other As- sets Other investments....... -- -- -- -- -- Deferred charges and other assets........... -- -- -- -- -- ------ ----- ------ ------ ---- Total regulatory and other assets......... -- -- -- -- -- ------ ----- ------ ------ ---- Total assets.......... $1,693 $(611) $2,304 $2,158 $146 ====== ===== ====== ====== ====
- -------- ( ) denotes negative amount. D-6-54 EXHIBIT D-6 CNG PRODUCTS AND SERVICES, INC. CONSOLIDATING BALANCE SHEET At December 31, 1999
CNG Products and Eliminations CNG Services and and Combined Products and CNG Subsidiary Adjustments Total Services Technologies ------------ ------------ -------- ------------ ------------ (Thousands of Dollars) STOCKHOLDER'S EQUITY AND LIABILITIES Capitalization Common stockholder's equity Common stock........... $ 3,990 $(2,000) $ 5,990 $ 3,990 $ 2,000 Capital in excess of par value............. -- -- -- -- -- Retained earnings, per accompanying statement............. (3,931) 1,389 (5,320) (3,931) (1,389) Treasury stock, at cost.................. -- -- -- -- -- ------- ------- ------- ------- ------- Total common stockholder's equity............... 59 (611) 670 59 611 ------- ------- ------- ------- ------- Long-term debt Debentures and Notes... -- -- -- -- -- Notes payable to Parent Company............... -- -- -- -- -- ------- ------- ------- ------- ------- Total long-term debt.. -- -- -- -- -- ------- ------- ------- ------- ------- Total capitalization.. 59 (611) 670 59 611 ------- ------- ------- ------- ------- Current Liabilities Commercial paper........ -- -- -- -- -- Accounts payable........ 865 -- 865 834 31 Payables to affiliated companies-- consolidated........... 592 -- 592 592 -- Estimated rate contingencies and refunds................ -- -- -- -- -- Amounts payable to customers.............. -- -- -- -- -- Taxes accrued........... (53) -- (53) 36 (89) Deferred income taxes-- current................ -- -- -- -- -- Dividends declared...... -- -- -- -- -- Other current liabilities............ 1,177 -- 1,177 1,177 -- ------- ------- ------- ------- ------- Total current liabilities.......... 2,581 -- 2,581 2,639 (58) ------- ------- ------- ------- ------- Deferred Credits Deferred income taxes... (947) -- (947) (540) (407) Accumulated deferred investment tax credits................ -- -- -- -- -- Deferred credits and other liabilities...... -- -- -- -- -- ------- ------- ------- ------- ------- Total deferred credits.............. (947) -- (947) (540) (407) ------- ------- ------- ------- ------- Commitments and Contingencies.......... ------- ------- ------- ------- ------- Total stockholder's equity and liabilities.......... $ 1,693 $ (611) $ 2,304 $ 2,158 $ 146 ======= ======= ======= ======= =======
- -------- ( ) denotes negative amount. D-6-55 EXHIBIT D-6 CNG PRODUCTS AND SERVICES, INC. CONSOLIDATING INCOME STATEMENT For the Year Ended December 31, 1999
CNG Products and Eliminations CNG Services and and Combined Products and CNG Subsidiary Adjustments Total Services Technologies ------------ ------------ -------- ------------ ------------ (Thousands of Dollars) Operating Revenues Regulated gas sales..... $ -- $ -- $ -- $ -- $ -- Nonregulated gas sales.. -- -- -- -- -- ------- ------ ------- ------- ------- Total gas sales....... -- -- -- -- -- Gas transportation and storage................ -- -- -- -- -- Other................... 6,863 -- 6,863 6,863 -- ------- ------ ------- ------- ------- Total operating revenues............. 6,863 -- 6,863 6,863 -- ------- ------ ------- ------- ------- Operating Expenses Purchased gas........... -- -- -- -- -- Liquids, capacity and other products purchased.............. -- -- -- -- -- Operation expense....... 8,257 -- 8,257 8,257 -- Maintenance............. -- -- -- -- -- Depreciation and amortization........... -- -- -- -- -- Taxes, other than income taxes.................. (17) -- (17) 21 (38) ------- ------ ------- ------- ------- Subtotal.............. 8,240 -- 8,240 8,278 (38) ------- ------ ------- ------- ------- Operating income before income taxes.. (1,377) -- (1,377) (1,415) 38 Income taxes............ (1,230) -- (1,230) (558) (672) ------- ------ ------- ------- ------- Operating income...... (147) -- (147) (857) 710 ------- ------ ------- ------- ------- Other Income (Deductions) Interest revenues....... -- -- -- -- -- Merger expense.......... -- -- -- -- -- Other--net.............. (2,265) -- (2,265) (204) (2,061) Equity in earnings of subsidiary company-- consolidated........... -- 1,350 (1,350) (1,350) -- Interest revenues from affiliated companies-- consolidated........... 37 -- 37 36 1 ------- ------ ------- ------- ------- Total other income (deductions)......... (2,228) 1,350 (3,578) (1,518) (2,060) ------- ------ ------- ------- ------- Income before interest charges.............. (2,375) 1,350 (3,725) (2,375) (1,350) ------- ------ ------- ------- ------- Interest Charges Interest on long-term debt................... -- -- -- -- -- Other interest expense.. 10 -- 10 10 -- Allowance for funds used during construction.... -- -- -- -- -- ------- ------ ------- ------- ------- Total interest charges.............. 10 -- 10 10 -- ------- ------ ------- ------- ------- Net Income.............. $(2,385) $1,350 $(3,735) $(2,385) $(1,350) ======= ====== ======= ======= =======
- -------- ( ) denotes negative amount. D-6-56 EXHIBIT D-6 CNG PRODUCTS AND SERVICES, INC. CONSOLIDATING STATEMENT OF RETAINED EARNINGS For the Year Ended December 31, 1999
CNG Products and Eliminations CNG Services and and Combined Products and CNG Subsidiary Adjustments Total Services Technologies ------------ ------------ -------- ------------ ------------ (Thousands of Dollars) Retained Earnings Balance at December 31, 1998................... $(1,546) $ 39 $(1,585) $(1,546) $ (39) Net income for the year 1999 per accompanying income statement....... (2,385) 1,350 (3,735) (2,385) (1,350) ------- ------ ------- ------- ------- Total................. (3,931) 1,389 (5,320) (3,931) (1,389) Dividends declared on common stock--cash..... -- -- -- -- -- ------- ------ ------- ------- ------- Balance at December 31, 1999................... $(3,931) $1,389 $(5,320) $(3,931) $(1,389) ======= ====== ======= ======= =======
- -------- ( ) denotes negative amount. D-6-57 EXHIBIT D-6 CNG PRODUCTS AND SERVICES, INC. CONSOLIDATING STATEMENT OF CASH FLOWS For the Year Ended December 31, 1999
CNG Products and Eliminations CNG Services and and Combined Products and CNG Subsidiary Adjustments Total Services Technologies ------------ ------------ -------- ------------ ------------ (Thousands of Dollars) Cash Flows From Operating Activities Net income.............. $(2,385) $1,350 $(3,735) $(2,385) $(1,350) Adjustments to reconcile net income to net cash provided by (used in) operating activities Depreciation and amortization.......... -- -- -- -- -- Pension cost (credit)-- net................... -- -- -- -- -- Stock award amortization.......... -- -- -- -- -- Deferred income taxes-- net................... (805) -- (805) (158) (647) Investment tax credit.. -- -- -- -- -- Changes in current assets and current liabilities Accounts receivable-- net................... 248 -- 248 248 -- Receivables from affiliated companies-- consolidated.......... 1,850 (73) 1,923 1,772 151 Inventories............ -- -- -- -- -- Unrecovered gas costs.. -- -- -- -- -- Accounts payable....... 604 -- 604 632 (28) Payables to affiliated companies-- consolidated.......... (649) 73 (722) (708) (14) Estimated rate contingencies and refunds............... -- -- -- -- -- Amounts payable to customers............. -- -- -- -- -- Taxes accrued.......... 512 -- 512 474 38 Other--net............. 343 -- 343 343 -- Changes in other assets and other liabilities........... 2,168 -- 2,168 173 1,995 Excess of equity in earnings of subsidiary companies over their cash dividends paid-- consolidated.......... -- (1,350) 1,350 1,350 -- Other--net............. -- -- -- -- -- ------- ------ ------- ------- ------- Net cash provided by (used in) continuing operations............ 1,886 -- 1,886 1,741 145 Net cash provided by (used in) discontinued operations............. -- -- -- -- -- ------- ------ ------- ------- ------- Net cash provided by (used in) operating activities............ 1,886 -- 1,886 1,741 145 ------- ------ ------- ------- ------- Cash Flows From Investing Activities Plant construction and other property additions.............. -- -- -- -- -- Proceeds from dispositions of prop., plant and equip.--net.. -- -- -- -- -- Cost of other investments--net....... 46 -- 46 46 -- Intrasystem long-term financing--net......... -- -- -- -- -- Intrasystem money pool investments--net....... (675) -- (675) (531) (144) Property transfers to (from) affiliates...... -- -- -- -- -- ------- ------ ------- ------- ------- Net cash provided by (used in) continuing operations............ (629) -- (629) (485) (144) Net cash provided by (used in) discontinued operations............. -- -- -- -- -- ------- ------ ------- ------- ------- Net cash provided by (used in) investing activities............ (629) -- (629) (485) (144) ------- ------ ------- ------- -------
D-6-58 EXHIBIT D-6 CNG PRODUCTS AND SERVICES, INC. CONSOLIDATING STATEMENT OF CASH FLOWS--(Continued) For the Year Ended December 31, 1999
CNG Products and Eliminations CNG Services and and Combined Products and CNG Subsidiary Adjustments Total Services Technologies ------------ ------------ -------- ------------ ------------ (Thousands of Dollars) Cash Flows From Financing Activities Issuance of common stock.................. -- -- -- -- -- Issuance of notes....... -- -- -- -- -- Repayments of long-term debt................... -- -- -- -- -- Commercial paper--net... -- -- -- -- -- Dividends paid.......... -- -- -- -- -- Intrasystem long-term financing--net......... -- -- -- -- -- Intrasystem money pool borrowings (repayments)--net...... (1,310) -- (1,310) (1,310) -- Dividends paid-- subsidiary companies-- consolidated........... -- -- -- -- -- Purchase of treasury stock.................. -- -- -- -- -- Sale of treasury stock.. -- -- -- -- -- ------- ---- ------- ------- ---- Net cash provided by (used in) continuing operations............ (1,310) -- (1,310) (1,310) -- Net cash provided by (used in) discontinued operations............. -- -- -- -- -- ------- ---- ------- ------- ---- Net cash provided by (used in) financing activities............ (1,310) -- (1,310) (1,310) -- ------- ---- ------- ------- ---- Net increase (decrease) in cash and TCIs...... (53) -- (53) (54) 1 Cash and TCIs at January 1, 1999................ 58 -- 58 58 -- ------- ---- ------- ------- ---- Cash and TCIs at December 31, 1999...... $ 5 $-- $ 5 $ 4 $ 1 ======= ==== ======= ======= ==== Continuing operations... $ 5 $-- $ 5 $ 4 $ 1 Discontinued operations............. -- -- -- -- -- ------- ---- ------- ------- ---- Total cash and TCIs at December 31........... $ 5 $-- $ 5 $ 4 $ 1 ======= ==== ======= ======= ==== Supplemental Cash Flow Information Cash paid for Interest (net of amounts capitalized).. $ 17 $-- $ 17 $ 17 $-- Income taxes (net of refunds).............. $ (968) $-- $ (968) $ (875) $(93)
- -------- ( ) denotes negative amount. D-6-59 EX-99.2 8 EXHIBIT I AS REFLECTED ON UB5 EXHIBIT INDEX EXHIBIT I Other U5S Information for Consolidated Natural Gas Company The information presented below is provided as part of this Form U5B in lieu of Consolidated Natural Gas Company filing a separate Form U5S for the year ended December 31, 1999. This information consists of the item numbers and captions of each item of Form U5S, along with the related disclosures. If the information required by an item has been provided in this Form U5B, the appropriate cross-reference is provided. Item 1. System Companies and Investment Therein at December 31, 1999 The information required under Item 1 for Consolidated Natural Gas Company and its subsidiaries is included in Item 4 and Item 9 of Dominion Resources' Registration Statement on Form U5B, and reference is made thereto as follows: Name of Company and Business--Item 4 Number of Common Shares Owned, Issuer's Book Value and Owner's Book Value-- Item 9 Consolidated Natural Gas Company has 100 percent voting power in its subsidiaries, and each of its subsidiary companies has 100 percent voting power in their subsidiaries. In September 1999, CNG Power provided the initial financing to its new subsidiary company, CNG Kauai. CNG Kauai was incorporated in Delaware on March 7, 1997, as a special purpose subsidiary to hold Consolidated's interest in an independent power project under development on the Hawaiian island of Kauai. In October 1999, CNG Power sold its investment in CNG Kauai to CNG International at net book value. CNG Kauai is an exempt wholesale generator. Item 2. Acquisitions or Sales of Utility Assets None. Item 3. Issue, Sale, Pledge, Guarantee or Assumption of System Securities CNG Transmission had during 1999 several letters of credit outstanding to provide security to the Commonwealth of Pennsylvania for the company's obligation to plug and reclaim gas wells as part of the process of abandonment of gas storage properties. One-half the cost of one letter of credit is shared by nonaffiliated pipeline companies. The maximum balance on CNG Transmission's portion of all letters of credit during 1999 was $8,000,000 with $3,000,000 remaining outstanding as of December 31, 1999. The Company has issued guarantees to the states of Pennsylvania, Virginia and West Virginia to maintain worker's compensation self-insured status for CNG Transmission, Virginia Natural Gas and Hope Gas. Self-insured status means that the subsidiary pays the worker's compensation claims directly instead of paying into the state maintained fund. In recent years these states have revised their worker's compensation programs and now require parent company guarantees--in addition to surety bonds--for subsidiary companies to maintain self-insured status. All of the above transactions are exempt pursuant to Rule 45(b)(6). I-1 Item 4. Acquisition, Redemption or Retirement of System Securities Calendar Year 1999 (Thousands of Dollars)
Number of Shares or Principal Number of Amount Shares or Redeemed Name of Company Principal or Name of Issuer and Acquiring, Redeeming or Amount Retired Commission Title of Issue Retiring Securities Acquired (Note 1) Consideration Authorization (Note 2) ------------------ ------------------------ --------- --------- ------------- ---------------------- Registered Holding Company: Consolidated Natural Gas Common stock, par value $2.75 per share........ Consolidated Natural Gas 225,356 $ 12,205 Rule 42 (Note 3) shares (Note 3) Service Company: 7.5% Non-negotiable note due 9/30/04...... Consolidated Natural Gas $ 20,000 $ 20,000 Rule 52 East Ohio Gas: 6.2% Non-negotiable note due 9/30/10...... Consolidated Natural Gas $ 80,000 $ 80,000 Rule 52 7.5% Non-negotiable note due 9/30/04...... Consolidated Natural Gas $ 55,000 $ 55,000 Rule 52 Virginia Natural Gas: 7.5% Non-negotiable note due 9/30/04...... Consolidated Natural Gas $ 37,000 $ 37,000 Rule 52 Hope Gas: Capital stock, par value $100 per share.. Consolidated Natural Gas 40,000 $ 4,000 Rule 52 shares 7.5% Non-negotiable note due 9/30/04...... Consolidated Natural Gas $ 4,200 $ 4,200 Rule 52 CNG Producing: Capital stock, par value $10,000 per share................. Consolidated Natural Gas 11,300 $113,000 Rule 52 shares 7.5% Non-negotiable note due 9/30/04...... Consolidated Natural Gas $195,000 $195,000 Rule 52 CNG International: Capital stock, par value $10,000 per share................. Consolidated Natural Gas 2,300 $ 23,000 Rule 52 shares -------- Total Consolidated Natural Gas........... $543,405 ======== Subsidiaries of Registered Holding Company: CNG Service Company: 8.9% Non-negotiable note due 5/31/99...... CNG Service Company $ 5,000 $ 5,000 Rule 42 9.5% Non-negotiable note due 11/30/99..... CNG Service Company $ 240 $ 240 Rule 42 CNG Transmission: 9.5% Non-negotiable note due 11/30/99..... CNG Transmission $ 2,077 $ 2,077 Rule 42 East Ohio Gas: 8.9% Non-negotiable note due 5/31/99...... East Ohio Gas $15,000 $ 15,000 Rule 42 9.5% Non-negotiable note due 11/30/99..... East Ohio Gas $ 690 $ 690 Rule 42 Peoples Natural Gas: 8.9% Non-negotiable note due 5/31/99...... Peoples Natural Gas $10,000 $ 10,000 Rule 42 9.5% Non-negotiable note due 11/30/99..... Peoples Natural Gas $ 511 $ 511 Rule 42 Virginia Natural Gas: 9.94% Unsecured loan due 1/1/99............ Virginia Natural Gas $ 4,000 $ 4,000 Rule 42 8.9% Non-negotiable note due 5/31/99...... Virginia Natural Gas $33,318 $ 33,318 Rule 42 Hope Gas: 9.5% Non-negotiable note due 11/30/99..... Hope Gas $ 224 $ 224 Rule 42 CNG Producing: 8.9% Non-negotiable note due 5/31/99...... CNG Producing $35,000 $ 35,000 Rule 42 8.95% Non-negotiable note due 9/30/99...... CNG Producing $ 4,450 $ 4,450 Rule 42
I-2
Number of Shares or Principal Number of Amount Name of Company Shares or Redeemed Acquiring, Redeeming Principal or Name of Issuer and or Retiring Amount Retired Commission Title of Issue Securities Acquired (Note 1) Consideration Authorization (Note 2) ------------------ -------------------- --------- --------- ------------- ---------------------- CNG Power: Capital stock, par value $1,000 per share....... CNG Power 14,100 $ 14,100 Rule 42 shares 6.75% Non-negotiable note due 11/30/08..... CNG Power $ 223 $ 223 Rule 42 7.4% Non-negotiable notes due 11/30/00 to 11/30/15.............. CNG Power $ 2,160 $ 2,160 Rule 42 8.75% Non-negotiable notes due 11/30/99 to 11/30/14.............. CNG Power $ 5,712 $ 5,712 Rule 42 8.95% Non-negotiable notes due 9/30/09 to 9/30/19............... CNG Power $ 4,000 $ 4,000 Rule 42 9.5% Non-negotiable notes due 11/30/99 to 11/30/05.............. CNG Power $ 208 $ 208 Rule 42 Consolidated LNG: Capital stock, par value $10,000 per share...... Consolidated LNG 740 $ 7,400 Rule 42 shares -------- Total subsidiaries..... $144,313 ======== CNG Power: CNG Kauai Capital stock, par CNG Power 1 $ 10 Acquisition of an value $10,000 per share ======== interest in an share................. (Note 4) exempt wholesale generator pursuant to Section 32 (g) of the Act Capital stock, par CNG Power 1 $ 10 Rule 43(b) value $10,000 per share ======== share................. (Note 4) CNG International: CNG Kauai Capital stock, par CNG International 1 $ 10 Acquisition of an value $10,000 per share ======== interest in an share................. (Note 4) exempt wholesale generator pursuant to Section 32 (g) of the Act
- ------- Notes: (1) Except as noted, all securities redeemed or retired have been cancelled. (2) Public Utility Holding Company Act of 1935. (3) Consolidated Natural Gas acquired 225,356 shares of treasury stock during 1999 at a cost of $12,205,000, or an average price of $54.16 a share. During 1999, 710,036 shares of treasury stock were sold to the System's employee incentive plans at an average price of $53.48, which amounted to $37,970,000. At December 31, 1999, a total of 10,443 shares were being held as treasury stock. (4) In September 1999, CNG Power provided the initial financing to its new subsidiary, CNG Kauai. In October 1999, CNG Power sold its investment in CNG Kauai to CNG International. I-3 Item 5. Investments in Securities of Non-System Companies The aggregate amounts of investments at December 31, 1999, in persons operating in the system's retail service area are shown below.
Number Aggregate Name of Owner of Persons Business of Persons Investment - ------------- ---------- ------------------- ---------- CNG Transmission.......... One State Development Fund $ 100,000 Hope Gas.................. One State Development Fund $ 100,000 Hope Gas.................. One Economic Development Small $1,125,000 Business Investment Company (Note) Virginia Natural Gas...... One State Development Fund $ 56,367
- -------- Note: Investment made pursuant to the West Virginia Capital Companies Act and under Rule 40(a)(5). The above do not include investments in securities of non-system companies which have been authorized by Commission order under the Public Utility Holding Company Act of 1935 and which are subject to Rule 24 Certificate filing requirements. Item 6. Officers and Directors By permission of the Staff, information required to be disclosed pursuant to Item 6 has been omitted. Information regarding the officers and directors of Dominion Resources is included in Item 16 of Form U5B or in Dominion Resources' 2000 Proxy Statement dated March 16, 2000, which is included as Exhibit F-4 to this Form U5B. Item 7. Contributions and Public Relations Tabulated below for each system company are the expenditures, disbursements, or payments made during the year 1999, directly or indirectly, to or for the account of any citizens group, or public relations counsel. There were no payments made to any political party, candidate for public office or holder of such office, or any committee or agent therefor by the system companies during the year 1999.
Accounts Charged Name or Number Per Books of Name of Company of Beneficiary(ies) Purpose Disbursing Company Amount - --------------- ------------------- --------- ------------------ ------- Parent Company.......... Democratic Leadership Civic Other income deductions $10,000 Council (Note 1) Parent Company.......... Hayes & Associates Public Other income deductions $13,000 Relations East Ohio Gas........... Four beneficiaries (Note 1) Civic Other income deductions $ 5,500
- -------- Notes: (1) Beneficiaries are nonprofit and nonpartisan civic organizations tax- exempt under Section 501(c)(4) of the Internal Revenue Code. (2) The information set forth above with respect to the subsidiary companies of Consolidated Natural Gas is based upon memoranda submitted to Consolidated Natural Gas for such purpose by each of its subsidiary companies, which memoranda are in the certified form required by Instruction 2 to ITEM 7. Consolidated Natural Gas is preserving such memoranda. I-4 Item 8. Service, Sales and Construction Contracts Part I. Contracts for services, including engineering or construction services, or goods supplied or sold between system companies during the year 1999 are as follows:
Date of Contract(s) Transaction (Note 1) Serving Company Receiving Company Compensation (Note 2) - -------------------- ---------------- ------------------- ------------ --------------- Management services..... CNG Transmission Hope Gas $1,425,576 January 1, 1984 Management services..... CNG Transmission CNG Field Services $ 566,247 July 1, 1991 Management services..... CNG Transmission CNG Power $ 125,264 August 15, 1983 Management services..... CNB Transmission Peoples Natural Gas $ 211,542 June 16, 1989
- -------- Notes: (1) Contracts for management services with aggregate consideration passing between the same companies of less than $100,000 have been omitted. (2) All contracts were in effect at December 31, 1999. Part II. Contracts to purchase services or goods between any system company and any affiliate (other than a system company) or any company in which any officer or director of the receiving company is a partner or owns 5 percent or more of any class of equity securities: None. Part III. Employment of any person by any system company for the performance on a continuing basis of management, supervisory or financial advisory services: None. Item 9. Wholesale Generators and Foreign Utility Companies Part I. Information concerning the interests held by system companies in exempt wholesale generators or foreign utility companies: 1. Information concerning the interests held by system companies in exempt wholesale generators follows. (a) Kauai Power Partners, L.P. CNG International holds a 1% limited partnership interest in Kauai Power Partners, L.P. (KPP), and CNG Kauai, a subsidiary of CNG International, holds a 1% general partnership interest and a 98% limited partnership interest in KPP. KPP is involved in the greenfield development of a 26-megawatt advanced steam-injected combustion turbine power plant on the island of Kauai, Hawaii. The name and business address of KPP are as follows: Kauai Power Partners, L.P. 11921 Freedom Drive Suite 600 Reston, VA 20190 (b) At December 31, 1999, CNG International's and CNG Kauai's investment in KPP totaled $1,805,000, which represents primarily costs incurred for the project prior to construction. I-5 (c) KPP has a capital structure consisting of equity contributed by its partners and has no debt. Accordingly, there is no meaningful debt to equity ratio for KPP. Since the facility is currently in the planning stage, KPP had no earnings for the year ended December 31, 1999. (d) At December 31, 1999, there were no service, sales or construction contracts between KPP and any CNG system company. 2. Information concerning the interests held by system companies in a foreign utility company (FUCO) follows. (a) Latin America Fund CNG International holds a 16.5% limited partnership interest in The Latin America Energy and Electricity Fund I, L.P. (Latin America Fund), a Cayman Islands exempted limited partnership, and an 8.29% general partnership interest in FondElec General Partner, L.P. (FondElec). FondElec holds a 1% general partnership interest in the Latin America Fund. The Latin America Fund's business is limited to investing in FUCOs in Latin America. As part of the transaction, CNG International obtains an ownership interest, equal to its percentage ownership interest in the partnership, in each of the Latin America Fund's investments. The Latin America Fund had investments in two FUCOs as of December 31, 1999. The name and business address of the Latin America Fund are as follows: The Latin America Energy and Electricity Fund I, L.P. Stamford Harbor Park 333 Ludlow Street Stamford, CT 06902 (b) At December 31, 1999, CNG International's investment in the Latin America Fund totaled $8,309,000. CNG International's total commitment for investment in the Latin America Fund was originally $10,000,000. The investment program has been completed. There have been no transfers of assets from a CNG affiliate to any FUCO in which the Latin America Fund has an interest. (c) The Latin America Fund is an equity investment fund and as such has a capital structure consisting of equity funds contributed by its partners. Accordingly, there is no meaningful debt to equity ratio for the Latin America Fund. The Latin America Fund had net income of $763,815 for the year ended December 31, 1999. (d) There are no service, sales or construction contracts between the Latin America Fund, or any FUCOs in which the Latin America Fund has an interest, and a CNG system company. 3. Information concerning the interests held by system companies in a FUCO follows. (a) Argentine FUCOs At December 31, 1999, CNG International had a 21.55% ownership interest in each of two gas utility holding companies, Sodigas Pampeana and Sodigas Sur, and a 25% ownership interest in an electric utility holding company, Buenos Aires Energy company (BAECO). The gas utility holding companies have ownership interests in two gas distribution companies, Camuzzi Gas Pampeana S.A. (Camuzzi Pampeana) and Camuzzi Gas del Sur S.A. (Camuzzi del Sur), and BAECO has an ownership interest in an electric distribution company, Empresa Distribuidora de Energia Atlantica S.A. (EDEA). Camuzzi Pampeana, Camuzzi del Sur and EDEA are FUCOs. Camuzzi Pampeana serves approximately 864,000 customers in Buenos Aires province (but not in the city of Buenos Aires itself). Camuzzi del Sur serves approximately 398,000 customers in Argentina to the south of Buenos Aires. Camuzzi Pampeana and Camuzzi del Sur own, in the aggregate, approximately 3,900 miles of natural gas pipelines and 15,000 miles of natural gas distribution mains and networks. Camuzzi Pampeana and Camuzzi del Sur together sell approximately 235 Bcf of natural gas per year. EDEA serves approximately 407,000 electric customers in the province of Buenos Aires, delivering about 1,800 gigawatt-hours a year. EDEA's electrical distribution network consists of approximately 5,900 miles of I-6 high-, medium-, and low-tension power lines with approximately 3,000 supporting substations which transform energy to lower tensions for connection to many of EDEA's customers. The name and business address of the Argentine FUCOs are as follows: Camuzzi Pampeana andCamuzzi del Sur: Av. Alicia Moreau de Justo 240 3rd Floor (1107) Buenos Aires Argentina EDEA: Av. Pedro Luro 2937 7th Floor (7600) Mar del Plata Buenos Aires Argentina (b) At December 31, 1999, CNG International's investment in the Argentine holding companies was as follows: Sodigas Pampeana................................................ $ 78,059,000 Sodigas Sur..................................................... 51,215,000 BAECO........................................................... 31,407,000 ------------ Total........................................................... $160,681,000 ============
In July 1999, CNG International made a capital contribution to retire debt at Sodigas Pampeana and Sodigas Sur. The capital contribution increased CNG International's equity investment in the two companies but did not change its ownership interest. There have been no transfers of assets from a CNG affiliate to any of the FUCOs in which Sodigas Pampeana, Sodigas Sur or BAECO has an interest. (c) The capital structure and earnings for the Argentine holding companies as of and for the year ended December 31, 1999, are as follows:
Capital Structure ------------ Earnings Debt Equity (Loss) ---- ------ ----------- (In Pesos) Sodigas Pampeana.................................... 24% 76% $18,573,870 Sodigas Sur......................................... 21% 79% $21,476,596 BAECO............................................... 72% 28% $(5,142,748)
(d) There are no service, sales or construction contracts between the Argentine holding companies, or any FUCOs in which they hold an interest, and a CNG system company. Part II. Relationship of exempt wholesale generators and foreign utility companies to system companies, and financial data: An organization chart showing the relationship of the EWG to other system companies is filed as Attachment H-1 to this Exhibit I. Organization charts showing the relationship of the FUCOs to other system companies are filed as Attachment H-2 to this Exhibit I. The balance sheet of the EWG is filed as Attachment I-1 to this Exhibit I (there was no income activity during 1999). Financial statements of the FUCOs are filed as Attachments I-2 through I-5 to this Exhibit I. I-7 Part III. Investment in exempt wholesale generators and foreign utility companies: The Company's aggregate investment in the Latin America Fund and the Argentine holding companies totaled $168,990,000 at December 31, 1999. The ratio of the Registrant's aggregate investment in the FUCOs to the Registrant's aggregate capital investment in its domestic public utility subsidiaries was 11.2% at December 31, 1999. Item 10. Financial Statements and Exhibits Financial Statements The consolidating financial statements of Consolidated Natural Gas Company are included as Exhibit D to this Form U5B. Exhibits
SEC Exhibit Reference Description of Exhibit --------- ---------------------- A. Consolidated Natural Gas Company's Form 10-K Annual Report for the year ended December 31, 1999, is hereby incorporated by reference to the filing made on March 7, 2000 under File No. 1-3196, which is included as Exhibit F-4 to this Form U5B. B. A copy of the charter, as amended, and copy of the by-laws, as amended, of Consolidated Natural Gas Company and each subsidiary company thereof, unless otherwise indicated on the list filed herewith, are incorporated in this report by reference to previous filings with the Commission, as shown on such list. C.(a) The indentures of Consolidated Natural Gas Company are hereby incorporated by reference to previously filed material as indicated on the list filed herewith as Attachment C.(a). (b) Not applicable. D. Pursuant to Rule 45(c) under the Public Utility Holding Company Act of 1935, the Agreement among system companies concerning the allocation of current federal income taxes (Agreement) is incorporated in this report by reference to Consolidated Natural Gas Company's Annual Report on Form U5S for the year ended December 31, 1995 (File No. 30-203). First Amendment to the Agreement is incorporated in this report by reference to Consolidated Natural Gas Company's Annual Report on Form U5S for the year ended December 31, 1996 (File No. 30-203). Second Amendment to the Agreement is incorporated in this report by reference to Consolidated Natural Gas Company's Annual Report on Form U5S for the year ended December 31, 1998 (File No. 30-203). E. Pursuant to Rule 16(c) under the Public Utility Holding Company Act of 1935, the annual report of the Iroquois Gas Transmission System, L.P., for the year ended December 31, 1999, is filed herewith as Attachment E. F. Schedules supporting items of this report: (1) ITEM 10--Schedule of utility plant and related depreciation or amortization accounts, together with schedules of other property or investments, are filed herewith on Form SE, if applicable, for: CNG Transmission East Ohio Gas Peoples Natural Gas Virginia Natural Gas Hope Gas
I-8
SEC Exhibit Reference Description of Exhibit --------- ---------------------- G. Financial Data Schedules for the CNG companies have been filed as Exhibit 27 to this Form U5B (filed herewith). H. (1) Organization chart showing the relationship of the exempt wholesale generator in which the system holds an interest to other system companies, is filed herewith as Attachment H-1. (2) Organization charts showing the relationship of the foreign utility companies in which the system holds an interest to other system companies, are filed herewith as Attachment H-2. I. Financial statements of the exempt wholesale generator and foreign utility companies are filed herewith as Attachments I-1 through I-5.
I-9 ATTACHMENT B CHARTERS AND BY-LAWS
Annual Report on Form U5S (File No. 30-203) Year Ended December 31, Other Commission Filing ----------------- ----------------------- Consolidated Natural Gas Company Certificate of Incorporation as amended January 28, 2000......... Exhibit B-10(a) to this Form U5B By-Laws as amended January 28, 2000................. Exhibit B-10(b) to this Form U5B Consolidated Natural Gas Service Company, Inc. Charter as amended November 30, 1982........ Exhibit B-11(a) to this Form U5B By-Laws as amended March 1, 1993.................. Exhibit B-11(b) to this Form U5B Dominion Transmission, Inc. (formerly CNG Transmission Corporation) Charter as amended April 11, 2000................. Exhibit B-5(a) to this Form U5B By-Laws as amended April 11, 2000................. Exhibit B-5(b) to this Form U5B Hope Gas, Inc. Charter as amended October 13, 1994................. Exhibit B-15(a) to this form U5B By-Laws as amended June 1, 1998..................... Exhibit B-15(b) to this Form U5B The East Ohio Gas Company Charter as amended June 17, 1993................. Exhibit B-14(a) to this Form U5B Regulations as amended June 17, 1993............ Exhibit B-14(b) for this Form U5B The Peoples Natural Gas Company Charter as amended September 2, 1993........ Exhibit B-16(a) to this Form U5B By-Laws as amended March 15, 1990................. Exhibit B-16(b) to this Form U5B Dominion Exploration & Production, Inc. (formerly CNG Producing Company) Charter as amended April 12, 2000................. Exhibit B-4(a) to this Form U5B By-Laws as amended April 12, 2000................. Exhibit B-4(b) to this Form U5B Consolidated System LNG Company Charter--Composite Certificate of Incorporation as amended July 27, 1993............ 1993 By-Laws as amended March 17, 1997................. 1997 CNG Research Company Certificate of Incorporation dated June 26, 1975................. 1975 Charter Amendment dated May 25, 1982............. 1982 Charter Amendment effective August 23, 1991..................... 1991 (Form SE dated April 24, 1992) By-Laws as last amended May 19, 1997............. 1997 CNG Coal Company Certificate of Incorporation dated October 4, 1976.......... 1977 Charter Amendment dated July 20, 1990............ 1990 (Form SE dated April 25, 1991) Charter Amendment effective August 23, 1991..................... 1991 (Form SE dated April 24, 1992) By-Laws as last amended June 11, 1990............ 1990 (Form SE dated April 25, 1991)
I-10
Annual Report on Form U5S (File No. 30-203) Year Ended December 31, Other Commission Filing ----------------- ----------------------- CNG Retail Services Corporation Certificate of Incorporation dated January 30, 1997.......... Exhibit B-13(a) to this Form U5B By-Laws as adopted February 10, 1997.................. Exhibit B-13(b) to this Form U5B CNG Financial Services, Inc. Certificate of Incorporation dated March 1, 1989................... 1989 (Form SE dated April 25, 1990) By-Laws as adopted May 26, 1989...................... 1989 (Form SE dated April 25, 1990) Virginia Natural Gas, Inc. Amended and Restated Articles of Incorporation dated December 26, 1990... Exhibit B-18(a) to this Form U5B By-Laws as last amended April 26, 1991............ Exhibit B-18(b) to this Form U5B CNG Power Services Corporation Certificate of Incorporation as amended December 30, 1996......... 1996 By-Laws as adopted August 8, 1994................... 1994 CNG International Corporation Certificate of Incorporation dated January 22, 1996.......... Exhibit B-12(a) to this Form U5B By-Laws as adopted August 1, 1996................... Exhibit B-12(b) to this Form U5B Dominion Field Services, Inc. (formerly CNG Field Services Company Certificate of Incorporation as last amended April 1, 2000..... Exhibit B-6(a) to this Form U5B By-Laws as last amended April 1, 2000............. Exhibit B-6(b) to this Form U5B
I-11 ATTACHMENT C.(a) INDENTURES OF CONSOLIDATED NATURAL GAS COMPANY The Indentures, Supplemental Indentures and Securities Resolutions between Consolidated Natural Gas Company and its debenture Trustees, as listed below, are incorporated by reference to material previously filed with the Commission as indicated: Manufacturers Hanover Trust Company (now The Chase Manhattan Bank) Indenture dated as of May 1, 1971 (Exhibit (5) to Certificate of Notification at Commission File No. 70-5012) Fifteenth Supplemental Indenture thereto dated as of October 1, 1989 (Exhibit (5) to Certificate of Notification at Commission File No. 70- 7651) Seventeenth Supplemental Indenture thereto dated as of August 1, 1993 (Exhibit (4) to Certificate of Notification at Commission File No. 70- 8167) Eighteenth Supplemental Indenture thereto dated as of December 1, 1993 (Exhibit (4) to Certificate of Notification at Commission File No. 70- 8167) Nineteenth Supplemental Indenture dated as of January 28, 2000 among Consolidated Natural Gas Company, DRI New Sub II and The Chase Manhattan Bank, successor to Manufacturers Hanover Trust Company, as trustee (Exhibit 4A(iii) to Form 10-K for the year ended December 31, 1999, File No. 1-3196) United States Trust Company of New York Indenture dated as of April 1, 1995 (Exhibit (4) to Certificate of Notification at Commission File No. 70-8107) First Supplemental Indenture dated as of January 28, 2000 among Consolidated Natural Gas Company, DRI New Sub II and United States Trust Company of New York, as trustee (Exhibit 4A(ii) to Form 10-K for the year ended December 31, 1999, File No. 1-3196) Securities Resolution No. 1 effective as of April 12, 1995 (Exhibit 2 to Form 8-A filed April 21, 1995 under file No. 1-3196 and relating to the 7 3/8% Debentures Due April 1, 2005) Securities Resolution No. 2 effective as of October 16, 1996 (Exhibit 2 to Form 8-A filed October 18, 1996 under file No. 1-3196 and relating to the 6 7/8% Debentures Due October 15, 2026) Securities Resolution No. 3 effective as of December 10, 1996 (Exhibit 2 to Form 8-A filed December 12, 1996 under file No. 1-3196 and relating to the 6 5/8% Debentures Due December 1, 2008) Securities Resolution No. 4 effective as of December 9, 1997 (Exhibit 2 to Form 8-A filed December 12, 1997 under file No. 1-3196 and relating to the 6.80% Debentures Due December 15, 2027) Securities Resolution No. 5 effective as of October 20, 1998 (Exhibit 2 to Form 8-A filed October 22, 1998 under file No. 1-3196 and relating to the 6% Debentures Due October 15, 2010) Securities Resolution No. 6 effective as of September 21, 1999 under Indenture dated as of April 1, 1995 between the Company and United States Trust Company of New York, as trustee (Exhibit 4A (iv) to Form 10-K for the year ended December 31, 1999, File No. 1-3196) I-12 ATTACHMENT E REPORT OF INDEPENDENT ACCOUNTANTS TO THE PARTNERS OF IROQUOIS GAS TRANSMISSION SYSTEM, L.P.: In our opinion, the accompanying consolidated balance sheets and the related consolidated statements of income, changes in partners' equity and of cash flows present fairly, in all material respects, the financial position of Iroquois Gas Transmission System, L.P. and its subsidiaries at December 31, 1999 and 1998, and the results of their operations and their cash flows for the years then ended in conformity with accounting principles generally accepted in the United States. These financial statements are the responsibility of the Company's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with auditing standards generally accepted in the United States, which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for the opinion expressed above. Hartford, Connecticut February 11, 2000 I-13 IROQUOIS GAS TRANSMISSION SYSTEM, L.P. CONSOLIDATED STATEMENTS OF INCOME
For the Years Ended December 31 1999 1998 - ------------------------------- -------- -------- (thousands of dollars) NET OPERATING REVENUES.......................................... $123,919 $140,371 OPERATING EXPENSES: Operations.................................................... 21,534 21,703 Depreciation and amortization................................. 21,976 29,795 Taxes other than income taxes................................. 11,449 10,390 -------- -------- TOTAL OPERATING EXPENSES.................................... 54,959 61,888 -------- -------- OPERATING INCOME................................................ 68,960 78,483 -------- -------- OTHER INCOME AND (EXPENSES): Interest income............................................... 1,644 1,908 Allowance for equity funds used during construction........... -- 457 Other, net.................................................... (225) 4,393 -------- -------- 1,419 6,758 -------- -------- INCOME BEFORE INTEREST CHARGES AND TAXES........................ 70,379 85,241 INTEREST EXPENSE: Interest expense.............................................. 30,621 33,169 Allowance for borrowed funds used during construction......... -- (693) -------- -------- NET INTEREST EXPENSE........................................ 30,621 32,476 -------- -------- INCOME BEFORE TAXES............................................. 39,758 52,765 PROVISION FOR TAXES............................................. 15,580 20,788 -------- -------- NET INCOME...................................................... $ 24,178 $ 31,977 ======== ========
The accompanying notes are an integral part of these financial statements. I-14 IROQUOIS GAS TRANSMISSION SYSTEM, L.P. CONSOLIDATED BALANCE SHEETS
Assets at December 31 1999 1998 - --------------------- --------- --------- (thousands of dollars) CURRENT ASSETS: Cash and temporary cash investments..................... $ 27,375 $ 27,356 Accounts receivable--trade.............................. 6,938 7,191 Accounts receivable--affiliates......................... 5,440 3,835 Other current assets.................................... 3,422 2,490 --------- --------- TOTAL CURRENT ASSETS.................................. 43,175 40,872 --------- --------- NATURAL GAS TRANSMISSION PLANT: Natural gas plant in service............................ 773,588 770,118 Construction work in progress........................... 3,292 1,868 --------- --------- 776,880 771,986 Accumulated depreciation and amortization............... (242,074) (223,154) --------- --------- NET NATURAL GAS TRANSMISSION PLANT.................... 534,806 548,832 --------- --------- OTHER ASSETS AND DEFERRED CHARGES: Regulatory assets--income tax related................... 12,767 13,838 Regulatory assets--other................................ 2,226 2,414 Other assets and deferred charges....................... 1,877 914 --------- --------- TOTAL ASSETS AND DEFERRED CHARGES..................... 16,870 17,166 --------- --------- TOTAL ASSETS.......................................... $ 594,851 $ 606,870 ========= =========
The accompanying notes are an integral part of these financial statements. I-15 IROQUOIS GAS TRANSMISSION SYSTEM, L.P. CONSOLIDATED BALANCE SHEETS
Liabilities and Partners' Equity at December 31 1999 1998 - ----------------------------------------------- -------- -------- (thousands of dollars) CURRENT LIABILITIES: Accounts payable.......................................... $ 3,645 $ 4,228 Accrued interest.......................................... 4,781 5,211 Short-term borrowings..................................... 3,500 -- Current portion of long-term debt......................... 28,789 28,723 Other current liabilities................................. 5,290 5,177 -------- -------- TOTAL CURRENT LIABILITIES............................... 46,005 43,339 -------- -------- LONG-TERM DEBT.............................................. 307,875 336,665 OTHER NON-CURRENT LIABILITIES............................... 816 398 -------- -------- 308,691 337,063 -------- -------- AMOUNTS EQUIVALENT TO DEFERRED INCOME TAXES: Generated by Partnership.................................. 70,037 62,274 Payable by Partners....................................... (57,270) (48,436) -------- -------- TOTAL AMOUNTS EQUIVALENT TO DEFERRED INCOME TAXES........... 12,767 13,838 -------- -------- COMMITMENTS AND CONTINGENCIES (NOTE 6)...................... -- -- TOTAL LIABILITIES....................................... 367,463 394,240 -------- -------- PARTNERS' EQUITY............................................ 227,388 212,630 -------- -------- TOTAL LIABILITIES AND PARTNERS' EQUITY.................. $594,851 $606,870 ======== ========
The accompanying notes are an integral part of these financial statements. I-16 IROQUOIS GAS TRANSMISSION SYSTEM, L.P. CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Years Ended December 31 1999 1998 - ------------------------------- -------- -------- (thousands of dollars) CASH FLOWS FROM OPERATING ACTIVITIES: Net Income................................................... $ 24,178 $ 31,977 Adjusted for the following: Depreciation and amortization.............................. 21,976 29,795 Allowance for equity funds used during construction........ -- (457) Deferred regulatory assets--income tax related............. 1,071 548 Amounts equivalent to deferred income taxes................ (1,071) (548) Income and other taxes payable by Partners................. 15,580 20,788 Other assets and deferred charges.......................... (1,007) (28) Changes in working capital: Accounts receivable...................................... (1,352) 3,276 Other current assets..................................... (932) (323) Accounts payable......................................... (583) (679) Accrued interest......................................... (430) (402) Other liabilities........................................ 531 (48) -------- -------- NET CASH PROVIDED BY OPERATING ACTIVITIES...................... 57,961 83,899 -------- -------- CASH FLOWS FROM INVESTING ACTIVITIES: Capital expenditures......................................... (7,718) (14,172) -------- -------- NET CASH USED FOR INVESTING ACTIVITIES..................... (7,718) (14,172) -------- -------- CASH FLOWS FROM FINANCING ACTIVITIES: Partner distributions........................................ (25,000) (40,000) Repayments of long-term debt................................. (28,724) (28,723) Short term borrowings........................................ 3,500 -- -------- -------- NET CASH USED FOR FINANCING ACTIVITIES..................... (50,224) (68,723) NET INCREASE IN CASH AND TEMPORARY CASH INVESTMENTS............ 19 1,004 CASH AND TEMPORARY CASH INVESTMENTS AT BEGINNING OF YEAR....... 27,356 26,352 -------- -------- CASH AND TEMPORARY CASH INVESTMENTS AT END OF YEAR............. $ 27,375 $ 27,356 ======== ======== Supplemental disclosure of cash flow information: Cash paid for interest....................................... $ 31,051 $ 33,571 ======== ========
The accompanying notes are an integral part of these financial statements. I-17 IROQUOIS GAS TRANSMISSION SYSTEM, L.P. STATEMENT OF CHANGES IN PARTNERS' EQUITY
(thousands of dollars) PARTNERS' EQUITY BALANCE AT DECEMBER 31, 1997........................... $199,865 Net income 1998........................................ 31,977 Taxes payable by Partners: Federal income taxes................................. 17,440 State income taxes................................... 2,127 Other state taxes.................................... 1,221 -------- 20,788 Equity distributions to Partners....................... (40,000) -------- PARTNERS' EQUITY BALANCE AT DECEMBER 31, 1998........................... 212,630 Net income 1999........................................ 24,178 Taxes payable by Partners: Federal income taxes................................. 13,367 State income taxes................................... 1,089 Other state taxes.................................... 1,124 -------- 15,580 Equity distributions to Partners....................... (25,000) -------- PARTNERS' EQUITY BALANCE AT DECEMBER 31, 1999........................... $227,388 ========
The accompanying notes are an integral part of these financial statements. I-18 IROQUOIS GAS TRANSMISSION SYSTEM, L.P. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 1 DESCRIPTION OF PARTNERSHIP: Iroquois Gas Transmission System, L.P., ("Iroquois" or "Company") is a Delaware limited partnership formed for the purpose of constructing, owning and operating a natural gas transmission pipeline from the Canada--United States border near Waddington, NY, to South Commack, Long Island, NY. In accordance with the limited partnership agreement, the Partnership shall continue in existence until October 31, 2089, and from year to year thereafter, until the Partners elect to dissolve the Partnership and terminate the limited partnership agreement. Effective December 31, 1998, Alenco Iroquois Pipeline, Inc. sold its interest in the Company to TCPL Northeast Ltd. The partners consist of TransCanada Iroquois Ltd. (29.0%), North East Transmission Co. (19.4%), CNG Iroquois, Inc. (16.0%), ANR Iroquois, Inc. (9.4%), ANR New England Pipeline Co. (6.6%), TCPL Northeast Ltd. (6.0%), JMC-Iroquois, Inc. (4.93%), TEN Transmission Company (4.87%), NJNR Pipeline Company (2.8%), and LILCO Energy Systems, Inc. (1.0%). The Iroquois Pipeline Operating Company, a wholly-owned subsidiary, is the administrative operator of the pipeline. Income and expenses are allocated to the Partners and credited to their respective equity accounts in accordance with the partnership agreements and their respective percentage interests. Distributions to Partners are made concurrently to all Partners in proportion to their respective partnership interests. Total cash distributions of $25.0 million and $40.0 million were made during 1999 and 1998, respectively. NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: Basis of Presentation The consolidated financial statements of the Company are prepared in accordance with generally accepted accounting principles and with accounting for regulated public utilities prescribed by the Federal Energy Regulatory Commission ("FERC"). Generally accepted accounting principles for regulated entities allow the Company to give accounting recognition to the actions of regulatory authorities in accordance with the provisions of Statement of Financial Accounting Standards ("SFAS") No. 71, "Accounting for the Effects of Certain Types of Regulation". In accordance with SFAS No. 71, the Company has deferred recognition of costs (a regulatory asset) or has recognized obligations (a regulatory liability) if it is probable that such costs will be recovered or obligation relieved in the future through the rate-making process. Principles of Consolidation The consolidated financial statements include the accounts of the Company and Iroquois Pipeline Operating Company, a wholly- owned subsidiary. Intercompany transactions have been eliminated in consolidation. Cash and Temporary Cash Investments Iroquois considers all highly liquid temporary cash investments purchased with an original maturity date of three months or less to be cash equivalents. Cash and temporary cash investments of $27.4 million in 1999, consisting primarily of low-risk mutual funds, are carried at cost, which approximates market. At December 31, 1999 and 1998, $9.7 million and $11.0 million, respectively, of cash and temporary cash investments were held to satisfy the terms of the Loan Agreement (refer to Note 3). Natural Gas Plant In Service Natural gas plant in service is carried at original cost. The majority of the natural gas plant in service is categorized as natural gas transmission plant which was depreciated over 20 years I-19 IROQUOIS GAS TRANSMISSION SYSTEM, L.P. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued) on a straight line basis from the in-service date through January 31, 1995. Commencing February 1, 1995, transmission plant was depreciated over 25 years on a straight-line basis as a result of a rate case settlement. Effective August 31, 1998 the depreciation rate was changed to 2.77% (36 years average life) in accordance with the FERC rate order issued July 29, 1998. The general plant is depreciated on a straight-line basis over five years. Construction Work In Progress At December 31, 1999, construction work in progress included preliminary construction costs relating to the proposed Eastchester expansion project and other on-going minor capital projects. Allowance for Funds Used During Construction The allowance for funds used during construction ("AFUDC") represents the cost of funds used to finance natural gas transmission plant under construction. The AFUDC rate includes a component for borrowed funds as well as equity. The AFUDC is capitalized as an element of natural gas plant in service. Provision for Taxes The payment of income taxes is the responsibility of the Partners and such taxes are not normally reflected in the financial statements of partnerships. Iroquois' approved rates, however, include an allowance for taxes (calculated as if it were a corporation) and the FERC requires Iroquois to record such taxes in the Partnership records to reflect the taxes payable by the Partners as a result of Iroquois' operations. These taxes are recorded without regard as to whether each Partner can utilize its share of the Iroquois tax deductions. Iroquois' rate base, for rate-making purposes, is reduced by the amount equivalent to accumulated deferred income taxes in calculating the required return. The Company accounts for income taxes under Statement of Financial Accounting Standards ("SFAS") No. 109, "Accounting for Income Taxes". Under SFAS No. 109, deferred taxes are provided based upon, among other factors, enacted tax rates which would apply in the period that the taxes become payable, and by adjusting deferred tax assets or liabilities for known changes in future tax rates. SFAS No. 109 requires recognition of a deferred income tax liability for the equity component of AFUDC. Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Reclassifications Certain prior year amounts have been reclassified to conform with current year classifications. NOTE 3 FINANCING: On June 11, 1991, Iroquois entered into a loan agreement which provided a loan facility totaling $522.6 million to be amortized over a 14-year period commencing November 1, 1992. On August 30, 1992, the total amount of the loan became non-recourse to the Partners. However, the Partners' equity interest remained pledged until December 7, 1993, at which time the required conditions were met and the liens were extinguished. I-20 IROQUOIS GAS TRANSMISSION SYSTEM, L.P. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued) During 1993, Iroquois entered into Expansion Loan Agreement No. 1 in the amount of $17.6 million to construct the Wright Compressor Station. The expansion loan conditions are substantially the same as those of the base loan and are non-recourse with respect to the Partners. The loan will mature in November 2007. During 1995, Iroquois entered into Expansion Loan Agreement No. 2 in the amount of $13.4 million to finance the Croghan Compressor Station. This loan is subject to similar provisions as the above noted loans. The loan will mature in November 2008. As of December 31, 1999, Iroquois was party to interest rate swap transactions for aggregate notional principal amounts of $537.6 million. The interest rate swaps relating to the original loan and Expansion Loan No. 1 are $537.6 million which are being amortized over 14 years in accordance with the principal repayment schedule provided in the Loan Agreement. The interest rate and margin over the term of the swaps average 7.615% and 1.159%, respectively. The interest rate swap for Expansion Loan No. 2 expired November 2, 1998 at which time the interest rate became based upon daily LIBOR plus an average margin of 1.153% over the term of the loan. The Original Loan Agreement requires that at least 50% of the original debt is hedged by interest rate swaps. The fair value of interest rate swaps is the estimated amount that Iroquois would receive or pay to terminate the swap agreements at the reporting date, taking into account current interest rates and current credit worthiness of the swap counterparties. The fair value of the interest rate swaps were ($8.6) million and ($39.2) million at December 31, 1999 and 1998, respectively. Iroquois is subject to risk from non-performance of the counterparties of the swap agreements. In the event of non-performance, the Company would be required to pay interest subject to the original terms of the loan agreement. This risk is substantially mitigated by the fact that the counterparties are large, highly-rated financial institutions. At December 31, 1999 the largest single swap agreement subject to exposure was $4.3 million. At December 31, 1999, the outstanding principal was $313.6 million on the base loan, $12.0 million on Expansion Loan Agreement No. 1 and $11.1 million on Expansion Loan No. 2 for total long-term debt of $336.7 million. The combined schedule of repayments is as follows (in millions):
Year Scheduled Repayment ---- ------------------- 2000..................... $ 28.8 2001..................... $ 26.7 2002..................... $ 26.7 2003..................... $ 26.7 2004..................... $ 26.7 Thereafter............... $201.1
The loan agreements are collateralized by all the assets of the Partnership and subject Iroquois to certain restrictions and covenants related to, among other things, indebtedness, investments, certain expenditures, financial ratios, and limitations on distributions to Partners. At December 31, 1999, the Company had an outstanding letter of credit in the amount of $28.9 million, which is guaranteed by the Partners. The short-term borrowings consist of an unsecured line of credit which permits borrowings up to a maximum of $10 million at a rate equal to the lower of the lenders' alternate base rate or one, two or three month LIBOR plus 3/8% per annum. This facility is reviewed on an annual basis with the current agreement expiring in May 2000. As of December 31, 1999, $3.5 million was outstanding under this agreement at an annual interest rate of 6.8363%. The line of credit contains a subjective acceleration clause as its most restrictive covenant. I-21 IROQUOIS GAS TRANSMISSION SYSTEM, L.P. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued) Subsequent to December 31, 1999, the Company cancelled two interest rate swap agreements totaling $2.2 million. Under the provisions of SFAS No. 71, the Company intends to recover these costs and therefore will defer and amortize these amounts over the life of the existing debt agreements. NOTE 4 CONCENTRATIONS OF CREDIT RISK: Iroquois' cash and temporary cash investments and trade accounts receivable represent concentrations of credit risk. Management believes that the credit risk associated with cash and temporary cash investments is mitigated by its practice of limiting its investments to low-risk mutual funds, rated Aaa by Moody's Investors Services and AAA by Standard and Poor's, and its cash deposits to large, highly-rated financial institutions. Management also believes that the credit risk associated with trade accounts receivable is mitigated by the restrictive terms of the FERC gas tariff which requires customers to pay for service within 20 days after the end of the month of service delivery. NOTE 5 GAS TRANSPORTATION CONTRACTS: As of December 31, 1999, Iroquois was providing multi-year firm reserved transportation service to 34 shippers of 987.5 MDth/d of natural gas which breaks down as follows:
Quantity in Remaining Term in Years MDth/d ----------------------- ----------- 3-10............................. 109.2 11-15............................ 758.8 16-20............................ 119.5 ----- Total.......................... 987.5 =====
The long-term firm service gas transportation contracts expire between October 31, 2011 and August 1, 2018. NOTE 6 COMMITMENTS AND CONTINGENCIES: Regulatory Proceedings FERC Docket No. RP97-126 On November 29, 1996, Iroquois submitted a general rate change application to the Federal Energy Regulatory Commission ("FERC" or "Commission") in Docket No. RP97-126-000. In an order issued on December 31, 1996 ("Suspension Order"), the Commission accepted and suspended the rates, permitted them to become effective (with one exception noted below) on January 1, 1997, and established a hearing. Pursuant to that Suspension Order, the Presiding Administrative Law Judge conducted a hearing on all issues raised by Iroquois' filing, which was concluded on August 28, 1997. Following the December 31, 1997 issuance of an Initial Decision ("1997 Initial Decision") by the Presiding Administrative Law Judge, on January 30, 1998 Iroquois filed its brief on exceptions vigorously opposing certain aspects of the 1997 Initial Decision. On July 29, 1998 the Commission issued its "Order Affirming in Part and Reversing in Part Initial Decision" ("July 29 Order") which modified significant portions of the 1997 Initial I-22 IROQUOIS GAS TRANSMISSION SYSTEM, L.P. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued) Decision. Iroquois' filing in compliance with the July 29 Order was accepted and the lower rates became effective on August 31, 1998. In addition, on August 28, 1998 Iroquois filed a request for rehearing of the July 29 Order. By order issued March 11, 1999 ("March 11 Order") the Commission granted rehearing on one aspect of the July 29 Order. The March 11 Order reversed the earlier decision on Iroquois' capital structure and permitted Iroquois to utilize an equity structure of 35.21% (in place of the 31.85% required by the July 29 Order) in designing its rates. This resulted in an increase of approximately 1c (*) per dekatherm in Iroquois' 100% load factor interzone rate. All other requests for rehearing of the July 29 Order were denied. Iroquois filed a petition for review of these orders in the United States Court of Appeals for the District of Columbia Circuit docketed as DC Cir. No. 99-1175. This case has been consolidated with DC Cir. No. 99-1177, which involves a petition for review of these same orders that was filed by Selkirk Cogen Partners, L.P. and MassPower (customers of Iroquois). These matters are before the court, but the parties have agreed to stay the procedural schedule pending Commission approval of the rate settlement described below. As a result of the Commision's February 10, 2000 approval of that settlement, the petitions for review are expected to be withdrawn in March, 2000. The Suspension Order granted summary disposition on one issue: as a result of the Commission's December 20 Opinion in Docket No. RP94-72 (discussed below), Iroquois was ordered to remove approximately $11.7 million in plant and associated costs from its proposed rate base. This resulted in an additional reduction in Iroquois' test-period revenues of approximately $2.0 million from those set forth in the filing. Iroquois sought rehearing (on January 30, 1997) of the Suspension Order. This was denied by the Commission by an order issued August 5, 1997 ("August 5 Order"). On September 3, 1997, Iroquois filed a Petition for Review of the Commission's Suspension and August 5 Orders in the United States Court of Appeals for the District of Columbia Circuit, docketed as D.C. Cir. No. 97-1533, which was consolidated with D.C. Cir. No. 97-1276 (discussed below). FERC Docket No. RP94-72 The Commission, on June 19, 1995, approved a Stipulation and Consent Agreement in Iroquois' prior rate proceeding in Docket No. RP94-72, which resolved all issues except for the accounting and recovery of legal defense costs incurred in connection with certain criminal and civil investigations into the initial construction of the Iroquois facility. A hearing was held on this reserved issue on April 5, 1995. On July 19, 1995 the Presiding Administrative Law Judge issued an Initial Decision ("1995 Initial Decision") that would have permitted Iroquois to capitalize those legal defense costs and recover $4.1 million (the dollar amount of such costs which Iroquois filed to recover in Docket No. RP94-72) from its customers. Various participants, including the Commission Staff, filed exceptions to the 1995 Initial Decision with the Commission (which were opposed by Iroquois on September 7, 1995). On December 20, 1996 the Commission issued an order reversing the 1995 Initial Decision and disallowing recovery of the legal defense costs at issue. Iroquois filed a request for rehearing of the Commission's December 20 Order on January 21, 1997. By Order issued March 3, 1997, the Commission denied rehearing. Consolidated Proceedings Iroquois filed a petition for review of the December 20 and March 3 Orders in the United States Court of Appeals for the District of Columbia Circuit on April 18, 1997 in D.C. Cir. No. 97-1276. Following oral argument on May 14, 1998, the court on July 21, 1998 issued a decision reversing the Commission's December 20 and March 3 Orders as well as the Suspension and August 5 Orders and remanded the matter to the agency for further proceedings. The court subsequently denied rehearing of its opinion on November 13, 1998 and issued its mandate. On June 16, 1999 the Commission issued an "Order on Remand and Establishing Rehearing" ("June 16 Order"). The June 16 Order concluded that a hearing was necessary to determine whether Iroquois' incurrence of the legal expenditures was prudent and set forth the procedures and burdens which were to govern that hearing. A preliminary conference to establish a procedural schedule and to clarify the positions of the participants was convened on July 12, 1999. As a result of the Commission's February 10, 2000 approval of the rate settlement described below, these issues have been resolved, subject to rehearing of such order. I-23 IROQUOIS GAS TRANSMISSION SYSTEM, L.P. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued) Settlement After extensive negotiations, on December 17, 1999 Iroquois, with the support of all active participants, filed with the Commission a settlement of all of the above outstanding rate matters. Pursuant to the settlement the parties have agreed to a rate moratorium whereby, with limited exceptions, no new rates could be placed in effect on Iroquois' system until January 1, 2004. During the period of the moratorium, Iroquois would reduce its 100% load factor inter-zone rate by approximately 4.8c(*) per dekatherm (approximately 1c(*) in 2001, an additional 2.4c(*) in 2002 and an additional 1.4c(*) in 2003). Based on 1999 long-term firm service contracts the settlement will result in the following reductions in revenues: $2.3 million in 2001, $5.7 million in 2002, and $3.4 million in 2003. In addition, Iroquois would not seek in any future rate proceedings to recover defense costs associated with the criminal and civil investigations into the initial construction of the Iroquois facility. These costs have been removed from the proposed rate base and reflected in the Company's results from operations in previous years, therefore there is no impact on the results from operations for the year ending December 31, 1999. Finally, Iroquois, Selkirk Cogen Partners, L.P. and MassPower would withdraw their petitions for review in DC Cir. Nos. 99-1175 and 99-1177. No comments in opposition to the settlement were filed. By letter order issued February 10, 2000, the Commission approved the rate settlement without modification. Any interested party may seek rehearing of such order within 30 days of the date of such order. If no rehearing is sought, the settlement becomes effective on March 10, 2000. - -------- (*) Figures rounded to the nearest hundredth Legal Proceedings--Other Iroquois is party to various other legal actions incident to its business. However, management believes that no material losses will result from such proceedings. Leases Iroquois leases its office space under operating lease arrangements. The leases expire at various dates through 2003 and are renewable at Iroquois' option. Iroquois also leases a right-of-way easement on Long Island, New York, from the Long Island Lighting Company ("LILCO"), a general partner, which requires annual payments escalating 5% a year over the 39-year term of the lease. In addition, Iroquois leases various equipment under non-cancelable operating leases. During the years ended December 31, 1999 and 1998, Iroquois made payments of $1.0 million and $0.9 million respectively, under operating leases which were recorded as rental expense. Future minimum rental payments under operating lease arrangements are as follows (millions of dollars):
Year Amount ---- ------ 2000.................................. $0.8 2001.................................. $0.7 2002.................................. $0.7 2003.................................. $0.4 2004.................................. $0.1 Thereafter............................ $4.6
NOTE 7 INCOME TAXES: Deferred income taxes which are the result of operations will become the obligation of the Partners when the temporary differences related to those items reverse. The Company recognizes a decrease in the Amounts Equivalent to Deferred Income Taxes account for these amounts and records a corresponding increase to Partners' equity. Deferred income taxes with respect to the equity component of AFUDC remain on the accounts of the Partnership until the related deferred regulatory asset is recognized. I-24 IROQUOIS GAS TRANSMISSION SYSTEM, L.P. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued) Total income tax expense includes the following components (thousands of dollars):
U.S. State- 1999 Federal State Other Total ---- ------- ------ ------ ------- Current..................................... $ 5,082 $ 540 $1,124 $ 6,746 Deferred.................................... 8,285 549 -- 8,834 ------- ------ ------ ------- Total..................................... $13,367 $1,089 $1,124 $15,580 ======= ====== ====== ======= U.S. State- 1998 Federal State Other Total ---- ------- ------ ------ ------- Current..................................... $ 8,910 $1,793 $1,221 $11,924 Deferred.................................... 8,530 334 -- 8,864 ------- ------ ------ ------- Total..................................... $17,440 $2,127 $1,221 $20,788 ======= ====== ====== =======
For the years ended December 31, 1999 and 1998, the effective tax rate differs from the Federal statutory rate due principally to the impact of state taxes. Deferred income taxes included in the income statement relate to the following (thousands of dollars):
1999 1998 ------ ------ Depreciation.............................................. $8,930 $4,224 Deferred regulatory asset................................. (70) (71) Property taxes............................................ 23 27 Legal costs............................................... (16) 104 Accrued expenses.......................................... 16 (104) Alternative minimum tax credit............................ (37) 4,487 Other..................................................... (12) 197 ------ ------ Total deferred taxes.................................... $8,834 $8,864 ====== ======
The components of the net deferred tax liability are as follows (thousands of dollars):
At December 31 1999 1998 -------------- -------- -------- DEFERRED TAX ASSETS: Alternative minimum tax credit....................... $ 2,773 $ 1,407 Accrued expenses..................................... 5,474 5,490 -------- -------- Total deferred tax assets.......................... 8,247 6,897 DEFERRED TAX LIABILITIES: Depreciation and related items....................... (59,072) (48,834) Deferred regulatory asset............................ (883) (953) Property taxes....................................... (879) (856) Legal costs.......................................... (4,662) (4,678) Other................................................ (707) (719) -------- -------- Total deferred tax liabilities..................... (66,203) (56,040) Net deferred tax liabilities......................... (57,956) (49,143) Less deferral of tax rate change..................... 686 707 Deferred taxes-operations............................ (57,270) (48,436) Deferred tax related to equity AFUDC................. (12,081) (13,131) Deferred tax related to change in tax rate........... (686) (707) -------- -------- Total deferred taxes............................... $(70,037) $(62,274) ======== ========
I-25 IROQUOIS GAS TRANSMISSION SYSTEM, L.P. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued) NOTE 8 RELATED PARTY TRANSACTIONS: Operating revenues and amounts due from related parties were primarily for gas transportation services. Amounts due from related parties are shown net of payables, if any. The following table summarizes Iroquois' related party transactions (millions of dollars):
Payments Due from Revenue to Related Related from Related 1999 Parties Parties Parties ---- ---------- -------- ------------ TransCanada Iroquois Ltd. ............... $0.5 $1.3 $ 7.7 North East Transmission Company.......... -- -- -- CNG Iroquois, Inc........................ -- -- -- ANR Iroquois, Inc........................ -- 0.3 3.7 JMC-Iroquois, Inc........................ -- 1.4 16.4 TEN Transmission Company................. -- 0.6 9.0 NJNR Pipeline Company.................... -- 0.7 7.1 LILCO Energy Systems, Inc. .............. 0.1 1.0 11.4 ---- ---- ----- Totals................................. $0.6 $5.3 $55.3 ==== ==== ===== Payments Due from Revenue to Related Related from Related 1998 Parties Parties Parties ---- ---------- -------- ------------ TransCanada Iroquois Ltd. ............... $0.5 $0.2 $ 0.5 North East Transmission Company.......... -- -- 15.0 CNG Iroquois, Inc........................ -- -- 2.7 ANR Iroquois, Inc........................ -- 0.4 2.8 JMC-Iroquois, Inc........................ -- 0.9 12.7 TEN Transmission Company................. -- 0.4 5.4 NJNR Pipeline Company.................... -- 0.6 8.6 LILCO Energy Systems, Inc. .............. 0.1 1.0 14.5 ---- ---- ----- Totals................................. $0.6 $3.5 $62.2 ==== ==== =====
NOTE 9 RETIREMENT BENEFIT PLANS: During 1997, the Company established a noncontributory retirement plan ("Plan") covering substantially all employees. Pension benefits are based on years of credited service and employees' career earnings, as defined in the Plan. The Company's funding policy is to contribute, annually, an amount at least equal to that which will satisfy the minimum funding requirements of the Employee Retirement Income Security Act plus such additional amounts, if any, as the Company may determine to be appropriate from time to time. During 1997 and 1998 the Company also adopted excess benefit plans (EBPs) that provide retirement benefits to executive officers and other key management staff. The EBPs recognize total compensation and service that would otherwise be disregarded due to Internal Revenue Code limitations on compensation in determining benefits under the regular retirement plan. The EBPs are not funded and benefits are paid when due from general corporate assets. I-26 IROQUOIS GAS TRANSMISSION SYSTEM, L.P. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued) The following table represents the two plans' combined funded status and amounts included in the Consolidated balance sheets (thousands of dollars):
At December 31 1999 1998 -------------- ------ ------ Benefit obligation....................................... $1,456 $ 926 Less: fair value of plan assets.......................... 862 315 ------ ------ Funded status............................................ $ (594) $ (611) ------ ------ Accrued benefit cost..................................... $ 361 $ (323) ====== ======
Net Pension costs for the two plans included in the consolidated statement of income include the following components (thousands of dollars):
At December 31 1999 1998 -------------- ----- ----- Benefit cost.................................................. $ 435 $ 367 Employer contribution......................................... $ 520 $ 323 Benefits paid................................................. $ 20 $ 33 ===== =====
The assumptions used in determining the pension obligation at December 31, 1999 and 1998 were: Discount rate....................................................... 7.00% Compensation progression rate....................................... 5.00% Expected long-term rate of return................................... N/A
The Company offers a defined contribution retirement plan with a 401(k) provision to its employees working over 1,000 hours, with over one year of service. The employees' contributions are matched dollar for dollar by Iroquois up to 5% of base pay. These costs are recognized on a monthly basis and funding is made on a pay-as-you-go basis. The Company's matching contributions to the 401(k) plan during 1999 and 1998 were $253.9 thousand and $236.5 thousand, respectively. Iroquois does not provide post-retirement health or life insurance benefits. I-27 ATTACHMENT H-1 CONSOLIDATED NATURAL GAS COMPANY RELATIONSHIP OF EXEMPT WHOLESALE GENERATOR TO OTHER SYSTEM COMPANIES CONSOLIDATED NATURAL GAS COMPANY (Wholly owned subsidiary) CNG INTERNATIONAL CORPORATION (Wholly owned subsidiary) CNG KAUAI, INC. (1% Limited (1% General Partnership Partnership Interest Interest) and 98% Limited Partnership Interest) KAUAI POWER PARTNERS, L.P. I-28 ATTACHMENT H-2 (a) CONSOLIDATED NATURAL GAS COMPANY RELATIONSHIP OF LATIN AMERICA FOREIGN UTILITY COMPANY TO OTHER SYSTEM COMPANIES CONSOLIDATED NATURAL GAS COMPANY (Wholly owned subsidiary CNG INTERNATIONAL CORPORATION (8.29% (16.5% General Limited Partnership Partnership Interest) Interest) FONDELEC GENERAL PARTNER, L.P. (1% General Partnership Interest) THE LATIN AMERICA ENERGY AND ELECTRICITY FUND I, L.P. I-29 ATTACHMENT H-2(b) CONSOLIDATED NATURAL GAS COMPANY RELATIONSHIP OF ARGENTINE FOREIGN UTILITY COMPANIES TO OTHER SYSTEM COMPANIES CONSOLIDATED NATURAL GAS COMPANY (Wholly owned subsidiary) CNG INTERNATIONAL CORPORATION CNG CAYMAN THREE LTD (21.55% Ownership (21.55% Ownership (25% Ownership Interest) Interest) Interest) SODIGAS PAMPEANA S.A. SODIGAS SUR S.A. BUENOS AIRES ENERGY COMPANY S.A. (70% Ownership (90% Ownership (55% Ownership Interest) Interest) Interest) CAMUZZI GAS CAMUZZI GAS INVERSORA ELECTRIA PAMPEANA S.A. DEL SUR S.A. DE BUENOS AIRES S.A. (90% Ownership Interest) EMPRESA DISTRIBUIDORA DE ENERGIA ATLANTICA S.A.
I-30 Attachment I-1 KAUAI POWER PARTNERS, L.P. BALANCE SHEET (Unaudited)
December 31, 1999 ------------- ASSETS Property, Plant and Equipment Construction work in progress.................................... $1,795,459.86 ------------- Current Assets Cash............................................................. -- Accounts receivable--CNG International........................... 100.00 Accounts receivable--CNG Kauai, Inc.............................. 9,900.00 ------------- Total current assets........................................... 10,000.00 ------------- Total assets................................................... $1,805,459.86 ============= LIABILITIES AND PARTNERS' EQUITY Partners' Equity Capital--CNG Kauai, Inc.--Limited Partnership.................... $1,769,350.66 Capital--CNG Kauai, Inc.--General Partnership.................... 18,054.60 Capital--CNGI--Limited Partnership............................... 18,054.60 ------------- Total partners' equity......................................... 1,805,459.86 Current Liabilities.............................................. -- ------------- Total partners' equity and liabilities......................... $1,805,459.86 =============
I-31 Attachment I-2 THE LATIN AMERICA ENERGY AND ELECTRICITY FUND I, L.P. FINANCIAL STATEMENTS As of December 31, 1999 and 1998 Together with Auditors' Report I-32 REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS TO THE PARTNERS OF THE LATIN AMERICA ENERGY AND ELECTRICITY FUND I, L.P.: We have audited the accompanying statements of assets, liabilities and partners' capital, including the schedules of investments, of The Latin America Energy and Electricity Fund I, L.P. (a Cayman Islands exempted limited partnership) as of December 31, 1999 and 1998, and the related statements of operations, changes in partners' capital and cash flows for the years then ended. These financial statements are the responsibility of the Fund's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States. 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. As discussed in Note 2, the financial statements include investment securities valued at $48,518,997 (98 percent of net assets) and $50,126,986 (96 percent of net assets) as of December 31, 1999 and 1998, respectively, whose values have been estimated by the Fund Manager in the absence of readily ascertainable market values. However, because of the inherent uncertainty of valuation, the Fund Manager's estimated values may differ from the values that would have been used had a ready market existed for the securities and the differences could be material. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of The Latin America Energy and Electricity Fund I, L.P. as of December 31, 1999 and 1998, and the results of its operations and its cash flows for the years then ended in conformity with accounting principles generally accepted in the United States. ARTHUR ANDERSEN LLP Grand Cayman, B.W.I. March 3, 2000 I-33 THE LATIN AMERICA ENERGY AND ELECTRICITY FUND I, L.P. STATEMENTS OF ASSETS, LIABILITIES AND PARTNERS' CAPITAL December 31, 1999 and 1998
Assets 1999 1998 - ------ ----------- ----------- INVESTMENTS IN SECURITIES, at fair value (cost $48,555,763 and $50,854,467 at December 31, 1999 and 1998, respectively).................................... $48,518,997 $50,126,986 CASH AND CASH EQUIVALENTS............................... 1,039,347 2,010,018 DUE FROM FUND MANAGER (Note 5).......................... 206,400 223,878 ORGANIZATIONAL COSTS, net of accumulated amortization of $510,000 and $390,000 at December 31, 1999 and 1998, respectively (Note 2).................................. 90,000 210,000 ----------- ----------- TOTAL ASSETS........................................ $49,854,744 $52,570,882 =========== =========== Liabilities and Partners' Capital - --------------------------------- LIABILITIES: Accrued liabilities................................... $ 83,860 $ 72,141 Due to Fund Manager (Note 5).......................... 241,573 237,367 ----------- ----------- TOTAL LIABILITIES................................... 325,433 309,508 ----------- ----------- PARTNERS' CAPITAL: General Partner....................................... 495,293 522,614 Limited Partners...................................... 49,034,018 51,738,760 ----------- ----------- TOTAL PARTNERS' CAPITAL............................. 49,529,311 52,261,374 ----------- ----------- TOTAL LIABILITIES AND PARTNERS' CAPITAL............. $49,854,744 $52,570,882 =========== ===========
The accompanying notes are an integral part of these statements. I-34 THE LATIN AMERICA ENERGY AND ELECTRICITY FUND I, L.P. STATEMENTS OF OPERATIONS For the Years Ended December 31, 1999 and 1998
1999 1998 ---------- ----------- INVESTMENT INCOME: Interest............................................ $ 52,279 $ 155,708 Dividends........................................... 505,735 817,833 ---------- ----------- TOTAL INVESTMENT INCOME........................... 558,014 973,541 ---------- ----------- EXPENSES: Management fees (Note 5)............................ 753,788 753,788 Administrative expenses (Note 5).................... 230,630 399,490 Expenses related to investments not consummated..... -- 392,893 Amortization of organization costs.................. 120,000 120,000 ---------- ----------- TOTAL EXPENSES.................................... 1,104,418 1,666,171 ---------- ----------- NET INVESTMENT LOSS............................... (546,404) (692,630) ---------- ----------- NET GAIN (LOSS) ON INVESTMENTS: Net realized gain on investments.................... 619,505 1,056,601 Net change in unrealized appreciation (depreciation) in value of investments............................ 690,715 (3,211,509) ---------- ----------- NET GAIN (LOSS) ON INVESTMENTS.................... 1,310,220 (2,154,908) ---------- ----------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS.................................. $ 763,816 $(2,847,538) ========== ===========
The accompanying notes are an integral part of these statements. I-35 THE LATIN AMERICA ENERGY AND ELECTRICITY FUND I, L.P. STATEMENTS OF CHANGES IN PARTNERS' CAPITAL For the Years Ended December 31, 1999 and 1998
General Limited Partner Partners Total -------- ----------- ----------- BALANCE, DECEMBER 31, 1997................. $431,979 $42,765,969 $43,197,948 Capital contributions.................... 159,025 15,743,523 15,902,548 Distributions............................ (39,915) (3,951,669) (3,991,584) Net decrease in net assets resulting from operations.............................. (28,475) (2,819,063) (2,847,538) -------- ----------- ----------- BALANCE, DECEMBER 31, 1998................. 522,614 51,738,760 52,261,374 Distributions............................ (34,959) (3,460,920) (3,495,879) Net increase in net assets resulting from operations.............................. 7,638 756,178 763,816 -------- ----------- ----------- BALANCE, DECEMBER 31, 1999................. $495,293 $49,034,018 $49,529,311 ======== =========== ===========
The accompanying notes are an integral part of these statements. I-36 THE LATIN AMERICA ENERGY AND ELECTRICITY FUND I, L.P. STATEMENTS OF CASH FLOWS For the Years Ended December 31, 1999 and 1998
1999 1998 ----------- ------------ CASH FLOWS FROM OPERATING ACTIVITIES: Net increase (decrease) in net assets resulting from operations.................................. $ 763,816 $ (2,847,538) Adjustments to reconcile net increase (decrease) in net assets resulting from operations to net cash provided by (used in) operating activities-- Net realized gain on sale of securities......... (619,505) (1,056,601) Net change in unrealized (appreciation) depreciation in value of investments........... (690,715) 3,211,509 Amortization of organization costs.............. 120,000 120,000 Purchases of securities......................... (1,060,014) (13,934,603) Sales of securities............................. 3,978,224 3,573,006 Changes in operating assets and liabilities: Dividend and interest receivable.............. -- 245,018 Other assets.................................. -- 382,953 Accrued liabilities........................... 11,719 (66,913) Due to Fund Manager........................... 4,205 102,920 ----------- ------------ NET CASH USED IN OPERATING ACTIVITIES............... 2,507,730 (10,270,249) ----------- ------------ CASH FLOWS FROM FINANCING ACTIVITIES: Capital contributions............................. -- 15,902,548 Distributions..................................... (3,495,879) (3,991,584) Proceeds from note due from Fund Manager.......... 17,478 22,838 ----------- ------------ NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES......................................... (3,478,401) 11,933,802 ----------- ------------ NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS........................................ (970,671) 1,663,553 CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR........ 2,010,018 346,465 ----------- ------------ CASH AND CASH EQUIVALENTS, END OF YEAR.............. $ 1,039,347 $ 2,010,018 =========== ============
The accompanying notes are an integral part of these statements. I-37 THE LATIN AMERICA ENERGY AND ELECTRICITY FUND I, L.P. NOTES TO FINANCIAL STATEMENTS December 31, 1999 and 1998 1. ORGANIZATION The Latin America Energy and Electricity Fund I, L.P. (the "Fund"), a Cayman Islands exempted limited partnership, was formed on July 17, 1995, and commenced operations on October 31, 1995, pursuant to an amended and restated partnership agreement (the "Partnership Agreement") as of that date. The Fund was organized to invest in companies whose primary business is generating, transmitting and distributing electric power in Latin or South America. The General Partner of the Fund is FondElec General Partner, L.P. (the "General Partner"), a Cayman Islands exempted limited partnership. The Fund shall terminate on October 31, 2003. Its term may be extended for an additional period of up to two years by the General Partner with the approval of the investment committee, or it may be terminated earlier under certain circumstances, as described in the Partnership Agreement. The Fund is managed by FondElec Group, Inc. (the "Fund Manager"). The General Partner of the Fund, subject to certain conditions, has the power to carry out any and all of the objectives and purposes of the Fund. The General Partner must receive approval from the investment committee (consisting of representatives of the strategic limited partners of the Fund) prior to taking certain investment and administrative actions for the Fund. 2. SIGNIFICANT ACCOUNTING POLICIES 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 reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Cash and Cash Equivalents The Fund considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents. At December 31, 1999 and 1998, cash equivalents consist of certificates of deposit and are stated at cost, which approximate market. Investment Risks A significant portion of the Fund's assets are invested in nonmarketable securities. Because of the absence of any liquid trading market for these investments, the Fund may take longer to liquidate these positions than would be the case for marketable securities. These securities may be resold in privately negotiated or public sale transactions, and the prices realized on such sales could be less than those originally paid by the Fund. Further, companies whose securities are not marketable may not be subject to the disclosure and other investor-protection requirements applicable to companies whose securities are publicly traded. The value of nonmarketable securities, totaling $48,518,997 (98 percent of net assets) and $50,126,986 (96 percent of net assets) at December 31, 1999 and 1998, respectively, have been estimated by the Fund Manager in the absence of readily ascertainable market values. However, because of the inherent uncertainty of valuation, those estimated values may differ significantly from the values that would have been used had a ready market for the securities existed and the differences could be material. Additionally, a significant portion of the net assets of the Fund is invested in companies whose principal operations are located outside the United States, primarily in South America. Such investments are subject to the risks associated with, among other factors, the economic and political environments of those countries, which can change rapidly and have a significant impact on the ability of the Fund to realize the value of its investments. I-38 THE LATIN AMERICA ENERGY AND ELECTRICITY FUND I, L.P. NOTES TO THE FINANCIAL STATEMENTS--(Continued) Investment Valuation Unquoted securities are stated at their estimated fair value at December 31, 1999 and 1998, as determined by the Fund Manager. Investment Transactions The cost of securities sold is determined on the first-in, first-out basis. During 1999 and 1998, the Fund sold portions of its interest in Ontario- Quinta which had cost bases of approximately $3,400,00 and $2,516,000, respectively. These sales generated net proceeds of approximately $4,019,000 and $3,573,000 and net realized gains of approximately $619,000 and $1,057,000, respectively. Deferred Investment Costs Expenses incurred in connection with the due diligence investigations of potential investments and related costs incurred are capitalized. Such costs are either added to the cost of the investment when consummated or expensed when the decision is made not to pursue the opportunity any further. No such costs are capitalized as of December 31, 1999 or December 31, 1998. Foreign Currency Transactions The functional currency of the Fund is the U.S. dollar. Assets and liabilities denominated in foreign currencies, if any, are translated into U.S. dollar equivalents using the prevailing year-end spot exchange rate with the resulting gains and losses included in net unrealized gain on investment. Organization Costs Costs incurred in the organization of the Fund totaling $600,000 have been capitalized and are being amortized on a straight-line basis over a period of five years. In April 1998, the American Institute of Certified Public Accountants issued Statement of Position ("SOP") 98-5, "Reporting on the Costs of Start-Up Activities". SOP 98-5 requires the organization costs to be expensed as incurred for fiscal years beginning after December 15, 1998 and generally requires that the initial application of this SOP be reported as the cumulative effect of a change in accounting principle. In accordance with the provisions of SOP 98-5 the Fund, as permitted due to the nature of the entity, will adopt the requirements prospectively, and will continue to amortize deferred costs over the remaining life of the original amortization period. Income Taxes No provision is made for U.S. federal income or excise taxes as the Fund is organized in the Cayman Islands and does not operate in the United States. Presently, there is no direct taxation in the Cayman Islands. As such, interest, distributions and gains received by the Fund are free of all Cayman Islands taxes. 3. PARTNERS' CAPITAL Capital Contributions Aggregate capital contributions totaled $60,303,030 at December 31, 1999 and 1998, net of capital drawn for unconsummated investments subsequently returned and capital drawn by the admission of additional limited partners and reimbursed to the original limited partners. Total capital commitments of the partners are fully drawn. I-39 THE LATIN AMERICA ENERGY AND ELECTRICITY FUND I, L.P. NOTES TO THE FINANCIAL STATEMENTS--(Continued) Distributions Distributions shall be made to the partners in proportion to the allocation of investment proceeds no more than 60 days after the end of the fiscal quarter in which such investment proceeds were received by the Fund. During 1999 and 1998, the distributions to General Partner and Limited Partners represented distributions of earnings on investments as well as a return of invested capital and proceeds from the partial sale of an asset. Allocations of Proceeds Pursuant to the terms of the Partnership Agreement, investment proceeds (as defined in the Partnership Agreement) as to each investment are allocated proportionately among the partners participating in such investment. Such proceeds are further allocated between each Limited Partner and the General Partner as follows: a. The amount necessary to return the Limited Partner's required contribution in such investment and to return any realized or unrealized losses that partner has incurred on other investments will be allocated to the Limited Partner. b. Any investment proceeds in excess of the amount in a. above will be allocated to the Limited Partner to provide a preferred return at the rate of 9% per annum on net cash investment made in such investment or any unpaid preferred return on other investments. c. Any remaining investment proceeds will be allocated to the General Partner until the General Partner receives 25% of the amount allocated in b. d. Any remaining investment proceeds will be allocated 80% to the Limited Partner and 20% to the General Partner. The Partnership Agreement provides for a final allocation at the termination of the Fund related to all investments of each Limited Partner. To the extent that the final allocation to any Limited Partner exceeds the amounts previously allocated, the General Partner shall, subject to certain limitations, refund such amount to the Fund for distribution to the Limited Partner. Profits and losses shall be allocated so that the capital account of each partner is as equal as possible to the distribution that would be made if the Fund were dissolved immediately after making such allocation. Withdrawal and Admission of Partners A Limited Partner shall not have the right to withdraw any of his capital from the Fund except with the prior written consent of the General Partner. 4. INVESTMENTS The Fund is permitted to invest in privately placed securities. These securities may be resold in transactions exempt, under certain conditions, from U.S. or local security registration. However, prompt sale of such securities at an acceptable price may be difficult. As of December 31, 1999 and 1998, approximately 98% and 96% of the Fund's net assets, respectively, were invested in such securities. Significant investment activities and valuation considerations relating to nonmarketable securities for the years ended December 31, 1999 and 1998, were as follows: Ontario-Quinta A.V.V. The investment in Ontario-Quinta represented an equity interest in a holding company which controls Luz del Sur, a Peruvian utility company that was privatized in 1994 and went public in 1996, and Tecsur, a services I-40 THE LATIN AMERICA ENERGY AND ELECTRICITY FUND I, L.P. NOTES TO THE FINANCIAL STATEMENTS--(Continued) company that was spun out of Luz del Sur and is publicly traded. The investment was purchased on December 29, 1995. Under the terms of the Shareholders Agreement of Ontario-Quinta, in August 1999, Ontario-Quinta was liquidated. In January 1998, the Fund sold 43% of its investment in Ontario-Quinta for $3,573,005, or $1.68 per share. At December 31, 1998, the remaining holdings were valued at the underlying publicly traded pro rata market value of Luz del Sur and Tecsur, an aggregate of $2,672,086, or $0.93 per Ontario-Quinta share. In connection with the liquidation of Ontario-Quinta in August 1999, the Fund received net proceeds of $4,019,000 consisting of $3,978,000 in cash and 286,653 shares of Tecsur valued at $41,000 in exchange for its remaining Ontario-Quinta shares. At December 31, 1999, the Tecsur shares are valued based on their quoted market price. Entre Rios S.A. In May 1996, the Fund invested in Entre Rios, the private holding company of Empresa Distribuidora de Entre Rios S.A. ("EDEER"). EDEER is a distributor and transmitter of electric power in Argentina. At December 31, 1999 and 1998, the investment was valued at cost. The valuations were based on, among other factors, the consideration that the shares are not publicly traded, transactions that have occurred between other shareholders, and interests in future sales transactions, have been at prices above the Fund's cost, and no other matters have come to the attention of the Fund Manager that would create a better estimate of current value than the original cost. Cataguazes-Leopoldina On October 2, 1997, the Fund invested $21,300,613, including costs incurred, for preferred and common shares in Companhia Forca e Luz Cataguazes-Leopoldina ("Cataguazes"), a Brazilian energy and utility company. During 1998, the Fund invested an additional $1,986,101 to purchase additional preferred shares. The investment was carried at cost at December 31, 1999 and 1998. The average cost per share of the investment is approximately $2.68 (per 1,000 shares) and the Fund's investment represents approximately 5.99% of the common voting shares of Cataguazes and 7.37% of the preferred nonvoting shares as of December 31, 1999. At the time of its investment, the Fund and an affiliated fund entered into a Shareholders Agreement with the other main shareholders of Cataguazes, whereby the Fund may unilaterally exercise a significant number of control provisions over the affairs of Cataguazes; in addition, the Fund and the affiliated fund nominated a Director to the Board. Although Cataguazes is publicly traded on Brazilian stock exchanges, it is traded at very low volumes as compared to the level of shares owned by the fund. As such, based on the significance of the holdings of the Fund, the investment is currently considered nonmarketable. The determination to value the investment at cost was based on, among other factors, the consideration that the shares are infrequently traded and that the public market price, in any event, does not represent a price at which the control provisions exercised by the Fund would be valued; there were corporate transactions consummated in early 2000 which resulted in a third party valuation opinion that indicates a value in excess of the Fund's cost; the Fund Manager's belief that the present value of the investment is significantly in excess of cost; and no other matters have come to the attention of the Fund Manager that would create a better estimate of current value than the original cost. In its consideration of present value, the Fund Manager considered, among many factors, the financial results of Cataguazes, the January 1999 devaluation of the Brazilian Real, continued high interest rates in Brazil, an increase in Brazilian inflation as a result of the devaluation, a potential slowdown in the growth rate of electricity sales, and the future prospects of Cataguazes, including the expected evolution of electricity tariffs in response to recent events. I-41 THE LATIN AMERICA ENERGY AND ELECTRICITY FUND I, L.P. NOTES TO THE FINANCIAL STATEMENTS--(Continued) Transredes S.A. In two transactions in July 1998 and December 1998, the Fund purchased 302,736 common shares of Transredes S.A. ("Transredes") for $11,948,502, including expenses, or a total cost of $39.47 per share. During January 1999, the Fund purchased an additional 29,459 shares at approximately $34.50 per share. An affiliated fund also made an additional investment in Transredes at that time. Transredes is a Bolivian pipeline and petroleum products transportation company which was privatized in May 1997. At December 31, 1999 and 1998, the Fund's investment represents approximately 3.3% and 3% of the outstanding common shares of Transredes, respectively. As of December 31, 1999 and 1998, the Fund's investment was carried at cost. Transredes is currently owned by Bolivian pension funds, current and former workers, Enron Corp. and Shell Oil Company. The shares are not currently listed on any exchange. The determination to value the investment at cost at December 31, 1999 and 1998, was based on, among other factors, the consideration that the shares are not publicly traded, few transactions have occurred among other shareholders (there was a transaction with another party in December 1999 at a value approximately 15% greater than the Fund's cost) and no other matters have come to the attention of the Fund Manager that would create a better estimate of current value than the original cost. 5. RELATED PARTY TRANSACTIONS Note Receivable During 1995, the Fund received a note from the Fund Manager for $250,000. The note is payable any time without penalty or upon termination of the management agreement between the Fund and the Fund Manager. The note bears interest at the rate of the three-month LIBOR. At December 31, 1999 and 1998, the balance outstanding under this note was $206,400 and $223,878, respectively. Interest income included in investment income in the accompanying statements of operations for the years ended December 31, 1999 and 1998, was $12,011 and $12,970, respectively. Management Fee Effective October 31, 1995, the Fund Manager receives 1.25% of the Fund's committed capital, which is generally paid quarterly in advance, as a management fee. For the years ended December 31, 1999 and 1998, management fees of $753,788 have been recorded in the statements of operations. Regional Advisor In 1996, the Fund entered into an advisory agreement with FondElec America Latina, Inc. (the "Regional Advisor"), an affiliate of the Fund Manager. The advisory agreement provided that the Fund shall pay the Regional Advisor $125,000 per annum plus reasonable out-of-pocket costs for a period of three years. For the year ended December 31, 1998, advisory fees of $125,000 were paid to the Regional Advisor and are included in administrative expenses in the statements of operations. The advisory agreement was terminated as of January 1, 1999. Technical Advisor The Fund has entered into a technical advisory agreement with a Limited Partner pursuant to which the technical advisor shall assist the Fund in evaluating proposed investments. The technical advisory agreement provides that the Fund shall annually pay the technical advisor reasonable employee overhead and out-of-pocket expenses. There were no technical advisory fees incurred for the years ended December 31, 1999 and 1998. I-42 THE LATIN AMERICA ENERGY AND ELECTRICITY FUND I, L.P. NOTES TO THE FINANCIAL STATEMENTS--(Continued) Due to Fund Manager The Fund Manager incurs certain administrative costs on behalf of the Fund. Certain costs are incurred directly for the Fund and passed through by the Fund Manager, and certain costs are allocations of a percentage of general costs incurred by the Fund Manager on behalf of the Fund, as well as other affiliated entities. At December 31, 1999 and 1998, amounts remaining to be reimbursed to the Fund Manager were $241,573 and $237,367, respectively. I-43 THE LATIN AMERICA ENERGY AND ELECTRICITY FUND I, L.P. SCHEDULES OF INVESTMENTS December 31, 1999 and 1998
1999 -------------------------------------------------------------------------- Current Value at Number of December 31, Percent of Geographic Security Units Cost Basis 1999 Net Assets Region Industry - -------- ------------- ------------ ------------ ---------- ------------- --------- NONMARKETABLE SECURITIES: Inversora en Distribucion de Entre Rios S.A.............. 900 $ 12,219,684 $12,219,684 25% South America Utilities Cataguazes............. 8,704,949,248 23,286,714 23,286,714 47 South America Utilities Transredes............. 332,193 13,008,517 13,008,517 26 South America Utilities Tecsur................. 286,653 40,848 4,082 -- South America Utilities ------------ ----------- --- $ 48,555,763 $48,518,997 98% ============ =========== ===
1998 ------------------------------------------------------------------------- Current Value at Number of December 31, Percent of Geographic Security Units Cost Basis 1998 Net Assets Region Industry - -------- ------------- ----------- ------------ ---------- ------------- --------- NONMARKETABLE SECURITIES: Ontario-Quinta A.V.V... 2,873,211 $ 3,399,567 $ 2,672,086 5% South America Utilities Inversora en Distribucion de Entre Rios S.A.............. 900 12,219,684 12,219,684 23 South America Utilities Cataguazes............. 8,704,949,248 23,286,714 23,286,714 45 South America Utilities Transredes............. 302,736 11,948,502 11,948,502 23 South America Utilities ----------- ----------- --- $50,854,467 $50,126,986 96% =========== =========== ===
The accompanying notes are an integral part of these schedules. I-44 Attachment I-3 SODIGAS SUR S.A. AND ITS SUBSIDIARY COMPANY CONSOLIDATED GENERAL BALANCE SHEET As of December 31, 1999 and 1998 (Notes 1 and 2)
1999 1998 ----------- ----------- (Pesos) ASSETS Current assets Cash and banks (Note 4.a).............................. 802,038 3,636,582 Investments (Schedule C and D)......................... 6,582,106 424,574 Trade accounts receivable (Note 4.b)................... 75,069,314 63,130,284 Intercompany receivables (Note 5)...................... 2,606,444 2,734,130 Other accounts receivable (Note 4.c)................... 3,656,056 3,491,567 Inventories (Schedule F)............................... 1,038,084 655,120 ----------- ----------- Total current assets................................... 89,754,042 74,072,257 ----------- ----------- Non-current assets Trade accounts receivable (Note 4.b)................... 1,954,721 1,954,721 Other accounts receivable (Note 4.c)................... 6,850,922 6,246,249 Fixed assets (Schedule A).............................. 260,700,509 251,639,202 Intangible assets (Schedule B)......................... 873,608 1,075,778 ----------- ----------- Total non-current assets............................... 270,379,760 260,915,950 ----------- ----------- TOTAL ASSETS........................................... 360,133,802 334,988,207 =========== =========== LIABILITIES Current liabilities Suppliers (Note 4.d)................................... 18,529,940 15,471,900 Loans (Notes 4.e and 7)................................ 12,503,306 68,469,733 Intercompany payable (Note 5).......................... 1,576,064 1,794,525 Salaries and social security liabilities (Note 4.f).... 1,798,468 1,858,157 Taxes payable (Notes 4.g and 10)....................... 8,280,678 5,621,745 Other liabilities (Note 4.h)........................... 4,534,653 3,756,206 Provisions (Schedule E)................................ 3,943,581 3,781,802 ----------- ----------- Total current liabilities.............................. 51,166,690 100,754,068 ----------- ----------- Non-current liabilities Loans (Notes 4.e and 7)................................ 50,557,000 50,557,000 Taxes payable (Notes 4.g and 10)....................... -- 10,807 Other liabilities (Note 4.h)........................... 16,002,178 8,339,888 ----------- ----------- Total non-current liabilities.......................... 66,559,178 58,907,695 ----------- ----------- TOTAL LIABILITIES...................................... 117,725,868 159,661,763 ----------- ----------- Minority interests in subsidiaries..................... 23,980,657 23,510,969 ----------- ----------- SHAREHOLDERS' EQUITY................................... 218,427,277 151,815,475 ----------- ----------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY............. 360,133,802 334,988,207 =========== ===========
The accompanying notes and schedules are an integral part of these consolidated financial statements. I-45 SODIGAS SUR S.A. AND ITS SUBSIDIARY COMPANY CONSOLIDATED STATEMENTS OF INCOME For the Fiscal years Ended December 31, 1999 and 1998 (Notes 1 and 2)
1999 1998 ------------ ------------ (Pesos) Net sales (Note 4.i)................................ 222,504,279 201,362,284 Cost of sales (Schedule F).......................... (160,318,152) (144,050,684) ------------ ------------ Gross profit...................................... 62,186,127 57,311,600 ------------ ------------ Marketing expenses (Schedule H)..................... (6,355,603) (6,499,126) Administrative expenses (Schedule H)................ (15,325,366) (13,950,169) ------------ ------------ Operating profit.................................. 40,505,158 36,862,305 ------------ ------------ Other income and expenses (Note 4.k)................ 284,872 (1,874,292) Financial and holding gain/(loss) (Note 4.j) Generated by assets............................... 1,917,756 2,603,317 Generated by liabilities.......................... (8,839,348) (12,181,055) Income tax.......................................... (12,944,274) (12,113,835) Minority interests in subsidiaries.................. (2,472,362) (1,937,345) ------------ ------------ Income for the year............................... 18,451,802 11,359,095 ============ ============
The accompanying notes and schedules are an integral part of these consolidated financial statements. I-46 SODIGAS SUR S.A. AND ITS SUBSIDIARY COMPANY CONSOLIDATED STATEMENTS OF CASH FLOWS For the Fiscal years Ended December 31, 1999 and 1998 (Notes 1 and 2)
1999 1998 ----------- ----------- (Pesos) CHANGES IN FUNDS Funds at beginning of year.......................... 4,061,156 16,905,486 Increase/(decrease) in funds........................ 3,322,988 (12,844,330) ----------- ----------- Funds at end of year................................ 7,384,144 4,061,156 =========== =========== Sources of funds Income for the year................................. 18,451,802 11,359,095 Plus: Items not entailing the use of funds Decrease in inventories........................... -- 373,621 Fixed asset depreciation.......................... 9,846,567 8,731,519 Residuary value of deductions of fixed assets..... 1,926,310 1,706,008 Intangible asset amortization..................... 512,148 653,140 Accrued vacations and bonuses..................... 1,362,918 1,386,073 Accrued gross sales tax........................... 1,202,215 1,232,307 Accrued income tax................................ 12,944,274 10,831,650 Accrued business indebtedness cost tax............ 393,293 37,496 Accrued net financial loss pending payment........ 283,691 250,117 Accrued purchases pending payment................. 19,817,074 13,890,515 Accrued intercompany purchases pending payment.... 13,216 23,766 Intercompany fees and expenses.................... 1,013,572 1,462,304 Other liabilities and fees pending payment........ -- 31,249 Technical assistance agreement.................... 333,356 330,300 Increase in the provision for lawsuits............ 306,366 2,169,041 Increase in allowance for defaulting debtors...... 903,507 1,173,346 ----------- ----------- 50,858,507 44,282,452 Less: Items not entailing the sources of funds Other income...................................... -- (250) Recovery of intercompany expenses................. (455,254) (357,764) Accrued sales pending collection.................. (73,668,542) (62,543,591) Intercompany sales................................ (2,299,625) (2,410,867) ----------- ----------- (76,423,421) (65,312,472) Minority interests in subsidiaries.................. 2,472,362 1,937,345 ----------- ----------- Funds originated/(applied to) from operations--Car- ried forward....................................... (4,640,750) (7,733,580) ----------- -----------
I-47 SODIGAS SUR S.A. AND ITS SUBSIDIARY COMPANY CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
1999 1998 ----------- ----------- (Pesos) Funds originated/(applied to) from operations-- Brought forward (4,640,750) (7,733,580) ----------- ----------- Other applications of funds Increase in inventories........................... (382,964) -- Acquisition of fixed assets....................... (19,130,031) (21,338,001) Increase in other accounts receivable............. (870,724) (5,659,591) Addition of intangible assets..................... (309,978) (4,296) Changes in tax credits and debts.................. (13,254,763) (14,571,246) Decrease in intercompany liabilities.............. (1,643,239) (2,488,385) Decrease in salaries and social security liabilities...................................... (1,422,607) (1,231,851) Payment of bank and financial loans............... (5,200,143) (5,216,423) Distribution of dividends......................... (1,242,674) (18,172,414) Interest paid in advance.......................... -- (105,000) Decrease in other accounts payable and other liabilities...................................... (997,257) (529,474) Decrease in allowances............................ (144,587) (627,193) Decrease in suppliers............................. (18,120,049) (10,551,270) ----------- ----------- Total other applications of funds................... (62,719,016) (80,495,144) ----------- ----------- Total applications of funds......................... (67,359,766) (88,228,724) ----------- ----------- Sources of funds Decrease in intercompany receivables.............. 3,167,338 3,356,675 Decrease in interest paid in advance.............. 105,000 -- Increase in banking loans......................... 3,950,026 8,011,771 Decrease in investments........................... -- 60,000 Decrease in trade accounts receivable............. 63,460,390 63,955,948 ----------- ----------- Total sources of funds.............................. 70,682,754 75,384,394 ----------- ----------- Increase/(decrease) in funds........................ 3,322,988 (12,844,330) =========== =========== Operations not entailing sources nor application of funds Increase in other liabilities..................... 9,271,788 5,520,304 Decrease in minority interests in subsidiaries.... (760,000) -- Acquisition of gas distribution networks with liabilities...................................... (1,671,788) (5,520,304) Withdrawal of the Subsidiary Company's voluntary reserve.......................................... (6,840,000) -- Decrease in loans................................. 55,000,000 -- Irrevocable contribution on account of future payments......................................... (55,000,000) -- ----------- ----------- Total operations not entailing sources nor applica- tion of funds...................................... -- -- ----------- -----------
The accompanying notes and schedules are an integral part of these financial statements. I-48 SODIGAS SUR S.A. AND ITS SUBSIDIARY COMPANY NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the Fiscal years Ended December 31, 1999 and 1998 NOTE 1: FINANCIAL STATEMENT PRESENTATION As required by General Resolution No. 290/97 of the Comision Nacional de Valores (the "CNV"), which establishes that consolidated financial statements must be submitted following the procedure outlined in Technical Resolution No. 4 of the Argentine Federation of Professional Councils of Economic Sciences, the December 31, 1999 and 1998, Balance Sheets of the Company and the Statements of Income and Cash Flows for the fiscal years then ended have been consolidated on a line-by-line basis with the financial statements of the Subsidiary Company. Non-monetary items included in the financial statements at December 31, 1999 and 1998, have been restated in current Pesos up to August 31, 1995. No adjustments have been applied since such date. The financial information at December 31, 1998, has been reclassified, for comparative purpose, in order to be consistent with that of the current fiscal year. The December 31, 1999 and 1998 financial statements of the Subsidiary Company, Camuzzi Gas del Sur S.A., which cover the same period as that of its controlled company, Sodigas Sur S.A., have been used in order to determine the equity value and carry out the consolidation. NOTE 2: VALUATION CRITERIA The financial statements of the Subsidiary Company have been prepared based on criteria consistent with those applied for preparing the financial statements of Sodigas Sur S.A. In addition, the principal valuation and disclosure criteria used for preparing the consolidated financial statements are described below: a.Local currency assets and liabilities The local currency assets and liabilities have been stated at their face value at the balance sheet date, including accrued interest. The implicit cost of financing contained in the monetary assets and liabilities has not been segregated as it is not deemed significant. b.Foreign currency assets and liabilities Foreign currency assets and liabilities were translated at the exchange rate prevailing at the balance sheet date, including accrued interest. c.Current Investments These are the following: --Fixed-term deposits, which have been valued at their original amount, plus interest accrued up to the closing date. --Shares and interests in mutual investments funds, which have been valued at their market value as of the balance sheet date. I-49 SODIGAS SUR S.A. AND ITS SUBSIDIARY COMPANY NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(Continued) d.Inventories These have been valued at their replacement cost as of the end of the fiscal year; the values thereof do not exceed their recoverable value. e.Fixed assets The fixed assets transferred by Gas del Estado at the beginning of operations of Camuzzi Gas del Sur S.A. on December 28, 1992, have been valued in an overall manner, according to the Contract for the Transfer of the Subsidiary Company's shares of Gas del Estado. This value has been restated in current Pesos at August 31, 1995. The aforementioned value was recalculated for each individual fixed asset, based on the inventory and valuation carried out during the year ended December 31, 1993 by independent consultants. Additions carried out after such date and up to August 31, 1995, were valued at their acquisition cost, restated in current Pesos at such date. As from September 1, 1995, additions have been valued at their acquisition cost in current Pesos of the corresponding fiscal year. Up to September 30, 1995, additions of gas distribution networks made free of charge were recorded at their replacement cost at the time of the transfer under the item "Other Income". According to resolutions of the CNV adopted in the meetings held on July 28 and August 10, 1995, the gas distribution networks transferred after December 31, 1995, by users free of charge or partially funded by third parties, shall be recorded at the lower of their construction cost or the cost fixed for transfer, or the cost of their value to the business. In the case that the value of the asset added exceeds the value of the consideration assumed by the Licensee, or if such consideration does not exist (free of charge), a cross-entry shall be recorded in an adjustment account, which is shown deducted from the Fixed Assets, whose depreciation criteria is equivalent to that of the asset added. The obligation to partially or totally compensate third parties is recorded as a liability of the Company. The values thus determined are disclosed net of the corresponding accumulated depreciation, calculated using the straight-line method, based on the estimated useful lives of the assets. The Subsidiary Company defers the net costs derived from the financing with third party capitals of construction works which extends in time until they are in start-up conditions. The amount capitalized in fixed assets was Ps. 712,323 during the fiscal year ended December 31, 1999. The value of the Fixed Assets, taken as a whole, does not exceed their recoverable value. f.Intangible assets This caption includes the acquisition of software and expenses in relation to the programs for the issuance of the Notes by Sodigas Sur S.A. and its Subsidiary Company, to be amortized over a five-year period. Intangible assets added up to August 31, 1995 are recorded at their acquisition cost restated in current Pesos at such date, while additions carried out after September 1, 1995 are disclosed at their acquisition cost in current Pesos of the corresponding period, in both cases net of their corresponding cumulative amortization, calculated according to the straight- line method. I-50 SODIGAS SUR S.A. AND ITS SUBSIDIARY COMPANY NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(Continued) g.Shareholders' equity The Capital Stock has been stated at its nominal value. The Capital Stock Adjustment represents the difference between the nominal value of the capital stock and its value adjusted, based on the fluctuation in the general wholesale price index up to August 31, 1995. Changes in net worth prior to August 31, 1995 are restated as of that date, while subsequent changes are stated in the currency value of the corresponding period. h.Profit/(loss) accounts Profit/(loss) for the period is disclosed at historical values, except for the charges for assets consumed (fixed asset depreciation and intangible asset amortization), which were determined according to the values of such assets. i.Accounting recognition of income The income stemming from gas distribution activities is recognized when the service is rendered and charged to the "Unbilled gas consumption" account. j.Statement of Cash Flows The Consolidated Statement of Cash Flows is presented using the Indirect Method of Alternative D of Technical Resolution No. 9 of the Argentine Federation of Professional Councils of Economic Sciences, considering Cash and Banks and Short-Term Investments as funds. k.Accounting estimates The preparation of these financial statements as of a specified date requires that the Subsidiary Company's management performs estimates and assessments that affect the amount of the recorded assets and liabilities and the contingent assets and liabilities disclosed as of the date of these financial statements, as well as the income and expenses recorded during the period. The Subsidiary Company's management makes estimates so as to calculate, among other things, the income tax charge, the unbilled gas consumptions, the discounts to be made to users and the provisions for contingencies, as of a certain date. The actual future results may differ from the estimates and assessments made as of the date of the financial statements. NOTE 3: CORPORATE CONTROL Sodigas Sur S.A. owns 90% of the shares of Camuzzi Gas del Sur S.A. NOTE 4: BREAKDOWN OF ITEMS Balance Sheet a.Cash and banks
As of December 31, ----------------- 1999 1998 ------- --------- (Pesos) Imprest fund............................................... 100,994 93,765 Banks (Schedule G)......................................... 701,044 3,542,817 ------- --------- Total...................................................... 802,038 3,636,582 ======= =========
I-51 SODIGAS SUR S.A. AND ITS SUBSIDIARY COMPANY NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(Continued) b.Trade accounts receivable
As of December 31, ---------------------- 1999 1998 ---------- ---------- (Pesos) Current Trade debtors....................................... 17,263,224 13,443,865 Subsidies receivable................................ 54,911,456 47,895,944 Unbilled gas consumption............................ 9,610,937 7,761,292 ---------- ---------- Subtotal............................................ 81,785,617 69,101,101 Less: Allowance for defaulting debtors (Schedule E)................................................. (6,716,303) (5,970,817) ---------- ---------- Total............................................... 75,069,314 63,130,284 ---------- ---------- Non-current Subsidies receivable................................ 1,954,721 1,954,721 ---------- ---------- Total............................................... 1,954,721 1,954,721 ---------- ---------- Total trade accounts receivable..................... 77,024,035 65,085,005 ========== ========== c.Other accounts receivable As of December 31, ---------------------- 1999 1998 ---------- ---------- (Pesos) Current Tax credits......................................... 2,698,908 3,168,967 Receivables to be recovered from LPG Plants......... 207,626 -- Guarantee deposits.................................. 86,668 63,690 Receivables to be recovered as per Section 41 Law 24,076 (Note 10.c.2)...................................... 22,854 24,191 Miscellaneous advances.............................. 35,276 4,966 Prepaid expenses.................................... 418,985 164,758 Miscellaneous....................................... 185,739 64,995 ---------- ---------- Total............................................... 3,656,056 3,491,567 ---------- ---------- Non-current Judicial deposits................................... 5,561,508 5,296,417 Receivables to be recovered from LPG Plants......... 311,785 -- Receivables to be recovered as per Section 41 Law 24,076 (Note 14.c.2)...................................... 892,010 903,598 Prepaid expenses.................................... 63,138 30,845 Restricted availability funds....................... 19,917 -- Miscellaneous....................................... 2,564 15,389 ---------- ---------- Total............................................... 6,850,922 6,246,249 ---------- ---------- Total other accounts receivable..................... 10,506,978 9,737,816 ========== ==========
I-52 SODIGAS SUR S.A. AND ITS SUBSIDIARY COMPANY NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(Continued) d.Suppliers
As of December 31, ---------------------- 1999 1998 ---------- ----------- (Pesos) Suppliers (Schedule G)................................ 5,408,823 3,826,607 Accrued invoices to be received....................... 13,121,117 11,645,293 ---------- ----------- Total................................................. 18,529,940 15,471,900 ========== =========== e.Loans As of December 31, ---------------------- 1999 1998 ---------- ----------- (Pesos) Current Bank debts (Schedule G)............................... 11,700,000 7,700,000 Notes (Schedule G).................................... -- 60,000,000 Letters of credit (Schedule G)........................ 519,615 519,615 Accrued interest (Schedule G)......................... 283,691 250,118 ---------- ----------- Total................................................. 12,503,306 68,469,733 ---------- ----------- Non-current Notes (Schedule G).................................... 50,557,000 50,557,000 ---------- ----------- Total................................................. 50,557,000 50,557,000 ---------- ----------- Total loans........................................... 63,060,306 119,026,733 ========== =========== f.Salaries and social security As of December 31, ---------------------- 1999 1998 ---------- ----------- (Pesos) Social security liabilities payable................... 187,315 211,951 Allowance for vacations............................... 944,148 824,863 Allowance for bonuses................................. 636,020 698,027 Others................................................ 30,985 123,316 ---------- ----------- Total................................................. 1,798,468 1,858,157 ========== ===========
I-53 SODIGAS SUR S.A. AND ITS SUBSIDIARY COMPANY NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(Continued) g.Taxes payable
As of December 31, --------------------- 1999 1998 ---------- ---------- (Pesos) Current Value added tax...................................... 713,265 592,185 Gross revenue tax.................................... 1,164,799 1,181,161 Income tax........................................... 5,942,686 3,784,120 Provincial taxes..................................... 448 439 Municipal rates...................................... 5,407 9,910 Tax on cost of business indebtedness................. 393,293 37,496 Tax amnesty.......................................... 10,807 16,434 Others............................................... 49,973 -- ---------- ---------- Total................................................ 8,280,678 5,621,745 ---------- ---------- Non-current Tax amnesty.......................................... -- 10,807 ---------- ---------- Total................................................ -- 10,807 ---------- ---------- Total taxes payables................................. 8,280,678 5,632,552 ========== ========== h.Other liabilities As of December 31, --------------------- 1999 1998 ---------- ---------- (Pesos) Current Gas-in-kind payables................................. 2,014,044 2,080,856 Consumer reconnection deposits....................... 166,641 161,689 Reimbursements to be passed through on account of additional transportation charges................... 860,024 653,678 Other accounts payable............................... 1,493,944 859,983 ---------- ---------- Total................................................ 4,534,653 3,756,206 ---------- ---------- Non-current Gas-in-kind payables................................. 16,001,178 8,338,888 Other accounts payable............................... 1,000 1,000 ---------- ---------- Total................................................ 16,002,178 8,339,888 ---------- ---------- Total other liabilities.............................. 20,536,831 12,096,094 ========== ==========
I-54 SODIGAS SUR S.A. AND ITS SUBSIDIARY COMPANY NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(Continued) Statement of income i.Net sales
For the fiscal years ended December 31, ------------------------ 1999 1998 ----------- ----------- (Pesos) Gas sales.......................................... 224,823,270 203,196,225 Sales of other items............................... 2,070,903 1,825,996 Direct taxes on sales.............................. (4,389,894) (3,659,937) ----------- ----------- Total.............................................. 222,504,279 201,362,284 =========== =========== j.Financial and holding gain/(loss) For the fiscal years ended December 31, ------------------------ 1999 1998 ----------- ----------- (Pesos) Generated by assets Interest........................................... 1,683,187 2,418,054 Income from investments............................ 215,290 157,119 Exchange differences............................... -- 24,761 Miscellaneous...................................... 19,279 3,383 ----------- ----------- Total.............................................. 1,917,756 2,603,317 ----------- ----------- Generated by liabilities Financial interest................................. (7,586,619) (10,970,077) Interest on tax debts.............................. (3,628) (1,198,889) Business indebtedness cost tax..................... (1,221,952) -- Exchange difference................................ (6,666) (1,508) Miscellaneous...................................... (20,483) (10,581) ----------- ----------- Total.............................................. (8,839,348) (12,181,055) ----------- ----------- Financial and holding (loss), net.................. (6,921,592) (9,577,738) =========== ===========
I-55 SODIGAS SUR S.A. AND ITS SUBSIDIARY COMPANY NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(Continued) k.Other income and (expenses), net
For the fiscal years ended December 31, -------------------- 1999 1998 -------- ---------- (Pesos) Other income Leases................................................. 788,701 715,122 Fees from third parties' collections................... 109 156 Miscellaneous.......................................... 139,228 998,815 -------- ---------- Total.................................................. 928,038 1,714,093 -------- ---------- Other expenses Provisions for lawsuits (Schedule E)................... (190,510) (1,886,609) Miscellaneous expenses................................. (452,656) (1,701,776) -------- ---------- Total.................................................. (643,166) (3,588,385) -------- ---------- Total other income and (expenses), net................. 284,872 (1,874,292) ======== ==========
NOTE 5: INTERCOMPANY BALANCES AND OPERATIONS
As of December 31, ------------------- 1999 1998 --------- --------- (Pesos) Receivables Energia del Sur S.A...................................... 2,560,086 2,704,977 Empresa de Energia de Rio Negro S.A...................... 46,358 29,153 --------- --------- 2,606,444 2,734,130 ========= ========= Liabilities Distribuidora Gesell Gas S.A............................. 29,905 -- Sodigas Pampeana S.A. ................................... 26,110 147,510 Camuzzi Gas Pampeana S.A................................. 433,653 732,219 Camuzzi Argentina S.A.................................... 986,396 864,796 Sempra Energy International Chile Holdings I.B.V......... 50,000 25,000 CNG...................................................... 50,000 25,000 --------- --------- 1,576,064 1,794,525 ========= =========
I-56 SODIGAS SUR S.A. AND ITS SUBSIDIARY COMPANY NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
For the fiscal years ended December 31, ---------------------- 1999 1998 ---------- ---------- (Pesos) Income/(loss) accounts Camuzzi Gas Pampeana S.A. Gas transportation................................. 8,428 -- Propane gas purchases(*)........................... (1,078,645) (204,325) Administrative and personnel services(*)........... (3,458,401) (3,304,509) Assistance service for natural gas transportation.. (2,540,571) -- Sodigas Pampeana S.A. Personnel services................................. (206,030) (147,510) Expenses reimbursement............................. (99,796) -- Financial interest................................. (1,518) -- Camuzzi Argentina S.A. Technical assistance and professional fees......... (3,187,728) (2,777,147) Maintenance service of computer systems............ (52,527) (414,390) Administrative expenses recovery(*)................ 578 3,560 Expenses reimbursement............................. (50,000) (50,000) Work inspection service fees(*).................... -- (58,380) Loma Negra C.I.A.S.A. Gas sales(1)....................................... -- 315,123 Energia del Sur S.A. Gas sales.......................................... 9,288,517 9,828,542 Empresa de Energia de Rio Negro S.A. Gas sales(*)....................................... 559,482 306,016 Purchase of electricity(*)......................... (39,808) (34,996) General expenses(*)................................ (6,000) (7,500) Sempra Energy International Chile Holdings I.B.V. Expenses reimbursement............................. (25,000) (25,000) CNG Expenses reimbursement............................. (25,000) (25,000) Distribuidora Gesell Gas S.A. Personnel and administrative services.............. 2,134 -- Other Operations Camuzzi Argentina S.A. Capitalized fees paid on account of work inspection services (*)...................................... -- 410,164 Software purchase(*)............................... -- 59,547 Distribuidora Gesell Gas S.A. Storage material sale(*)........................... 325 -- Regulators purchase(*)............................. 32,364 -- Camuzzi Gas Pampeana S.A. Miscellaneous...................................... 36,890 127,222
- -------- (*) Corresponds to operations pending approval by the Board of Directors. (1) On March 26, 1998, Loma Negra C.I.A.S.A. sold its interest in Sodigas Sur S.A. I-57 SODIGAS SUR S.A. AND ITS SUBSIDIARY COMPANY NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(Continued) Explanatory note: The Subsidiary Company, together with Camuzzi Gas Pampeana S.A. is currently involved in a dispute with Camuzzi Argentina S.A., in regard to the ownership of the invoicing and collection system (AG system) and others. As of the date hereof, the parties are negotiating a resolution to the dispute. The parties have agreed that if they cannot settle the dispute, the dispute shall be submitted to an arbitrator for resolution. In the opinion of the Subsidiary Company and its legal counsel, an adverse decision in relation to the aforementioned dispute is considered improbable. I-58 SODIGAS SUR S.A. AND ITS SUBSIDIARY COMPANY NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(Continued) NOTE 6: MANDATORY INVESTMENTS OF THE SUBSIDIARY COMPANY Chapter IV of the License states that the Subsidiary Company, Camuzzi Gas del Sur S.A., must undertake a five-year plan from 1993 to 1997, which includes investments in network pipelines, services, protection against rust and corrosion, communications equipment and SCADA (centralized telemeasurement and control equipment system). The amounts of the investments, as set by the License for each year, are as follows:
Year U.S.$ ---- ---------- 1993.............................. 2,704,000 1994.............................. 2,704,000 1995.............................. 2,150,000 1996.............................. 1,925,000 1997.............................. 1,925,000 ---------- Total............................. 11,408,000 ==========
Furthermore, the Licensee has fulfilled in due time and manner the mandatory investments for 1993, 1994, 1995 and 1996, and was notified of such fulfillment by ENARGAS following an operating audit of such investments. Mandatory investments for the year 1997 are pending approval by the Regulatory Authority. NOTE 7: ISSUANCE OF NOTES BY THE SUBSIDIARY COMPANY On December 11, 1996, together with Camuzzi Gas Pampeana S.A., Camuzzi Gas del Sur S.A. issued Notes not convertible into shares under a Medium-Term-Note Program which was approved by Certificate No. 136 of the CNV dated December 6, 1996. Such issue was approved by the Board of Directors of the Licensee on November 12, 1996; the main purpose of this issue was to provide Camuzzi Gas del Sur S.A. with an important flow of funds in order to (i) refinance Series B Notes for an amount of U.S.$90,000,000 co-issued between Camuzzi Gas Pampeana S.A. and Camuzzi Gas del Sur S.A. under a short- and medium-term note program created by the shareholders at the Shareholders' Meeting dated October 25, 1993; (ii) develop its investment plans; (iii) pay up working capital and (iv) refinance other liabilities. The conditions for the issuance are as follows: . Aggregate principal amount: U.S.$130,000,000 . Percentage corresponding to Camuzzi Gas del Sur S.A.: 38.89% . Interest rate: 9 1/4%, payable semiannually in arrears. . Price: 99.80% . Maturity of principal: December 15, 2001. The aforementioned program was created under a joint issuance with Camuzzi Gas Pampeana S.A., and the two companies will be jointly and severally liable for the payment of interest and principal. On May 9, 1997, the issued Notes were registered before the United States Securities and Exchange Commission (SEC). I-59 SODIGAS SUR S.A. AND ITS SUBSIDIARY COMPANY NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(Continued) The main restrictions under the offering circular for the issuance of Notes are the following: (a) Limitations on Liens: Neither of the Issuers shall, nor shall either of the Issuers permit any of their respective Subsidiaries to, incur, assume or suffer the existence of, any Lien upon its property, assets or revenues, whether now owned or hereinafter acquired, securing any indebtedness of any other person, unless the Notes are equally and ratably secured by such liens, except for: (i) Liens existing on the Issue Date of the Notes; (ii) Liens for taxes or other governmental charges not yet due or which are being contested in good faith by appropriate proceedings; provided that adequate reserves with respect thereto are maintained on the books of such Issuer or such Subsidiary Company, as the case may be, in conformity with Argentine professional accounting standards; (iii) Liens on all or part of any property, assets (including, without limitation, equity interests) or revenues to secure indebtedness incurred solely for purposes of financing the acquisition, construction or installation thereof incurred concurrently with or within 120 days after the completion of such acquisition, construction or installation, or liens on any property, assets (including, without limitation, equity interests) or revenues existing on the date of the acquisition thereof; (iv) Liens arising in the ordinary course of business which do not secure indebtedness and which (A) are not in effect for a period of more than 60 days, (B) are being contested in good faith by appropriate proceedings, which have the effect of preventing the forfeiture or sale of the property or assets subject to any such lien, or (C) secure an obligation of less than U.S.$1,000,000; (v) Any attachment or judgment lien, unless (A) within 60 days after the entry thereof, its discharge has not been filed or execution thereof stayed pending appeal, (B) shall not have been discharged within 60 days after the expiration of any such stay or (C) is for an amount less than U.S.$1,000,000; (vi) Liens created or deposits made to secure the performance of bids, trade contracts, leases, statutory obligations, surety and appeal bonds and other obligations of a like nature incurred in the ordinary course of business; (vii) Any liens imposed by operation of mandatory provisions of applicable law that do not materially affect the shareholders' equity Issuer's ability to perform its respective obligations under the Notes or Indenture; (viii) Liens other than those described in the foregoing clauses (i) through (vii) upon the property, assets or revenues of either or both of the Issuers or any of their respective Subsidiaries securing indebtedness in an aggregate principal amount not in excess of U.S.$10,000,000 (or its equivalent in other currencies) at any time outstanding; and (ix) Any extension, renewal or replacement, in whole or in part, of any lien described in the foregoing clauses (i) through (viii), provided that (A) such extension, renewal or replacement does not extend to any property other than that originally subject to the liens being extended, renewed or replaced and (B) the principal amount of the indebtedness secured by such lien is not increased. (b) Maintenance of the Net Worth to Consolidated Indebtedness Ratio: Neither of the Issuers shall permit the ratio of its Net Worth to its Consolidated Indebtedness to be less than 1 to 1. (c) Restrictions on Sale and Lease-Back Agreement: Neither of the Issuers shall, nor shall either of the Issuers permit any Subsidiary Company to, enter into any Sale and Lease-Back Agreement with respect to any property unless (i) such agreement involves a lease for a term of no more than three years by the end of which it is intended that the use of such property by the lessee shall be discontinued, (ii) such agreement I-60 SODIGAS SUR S.A. AND ITS SUBSIDIARY COMPANY NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(Continued) is between the Issuers, or between either or both of the Issuers and a Subsidiary Company, or between Subsidiaries, (iii) the Issuers or any Subsidiary Company would not be entitled to incur indebtedness secured by a mortgage on the property involved in such agreement at least equal in amount to the Attributable Debt with respect to such Sale and Lease-Back Agreement, without equally and ratably securing the Notes, (iv) the proceeds of such agreement are at least equal to the fair market value thereof (as determined in good faith by the Board of Directors of each of the Issuers) and the Issuers apply an amount equal to the greater of the net proceeds of such sale or the Attributable Debt with respect to such Sale and Lease-Back Agreement within 180 days of such sale to either (or a combination of) (A) the amortization (other than any mandatory amortization, mandatory prepayment or sinking fund payment or by payment at maturity) of debt for borrowed money of either or both of the Issuers or a Subsidiary Company (other than debt that is subordinated to the Notes or debt to either or both of the Issuers or a Subsidiary Company) that matures more than 12 months after the creation of such debt or (B) the purchase, construction or development of other comparable property, or (v) such agreement is entered into within 120 days after the initial acquisition by such Issuer or the Subsidiary Company, as the case may be, of the property subject to such agreement. (d) Merger, Consolidation or Sale of Assets: Neither of the Issuers will merge into or consolidate with any person or sell, lease, transfer or otherwise convey or dispose of all or substantially all of its assets, whether by one transaction or a series of transactions, to any person, (a) unless, in the case of any such merger or consolidation, (i) such Issuer is the successor person and (ii) any Noteholder who elects to be guaranteed or repaid upon such merger or consolidation pursuant to Argentine law is so guaranteed or repaid by either of the Issuers, or (b) unless, in the case of any such other transaction, (i) immediately after giving effect to such transaction or series of transactions, no Event of Default or event which, after the giving of notice or the lapse of time or both, would constitute an Event of Default, will have occurred and be continuing, (ii) the successor person is a corporation that will expressly assume the obligations of such Issuer under the Notes and the Indenture, and (iii) such Issuer shall have delivered to the Trustee an officer's certificate and an opinion of counsel stating that such merger, consolidation, sale, lease, transfer or other conveyance or disposition complies with the Notes and that all conditions precedent therein relating to such transaction have been met. Upon the occurrence of any such merger, consolidation, sale, lease, transfer or other conveyance or disposition of all or substantially all of such Issuer's assets, the successor person will succeed to and become substituted for the Issuer or both Issuers, as the case may be, and may exercise every right and power of such Issuer with the same effect as if it had been named in the Notes and the Indenture and, thereafter, such Issuer will be released from its liability as obligor on the Debt Securities and under the Indenture. NOTE 8: RESTRICTIONS ON THE SUBSIDIARY COMPANY'S ASSETS (a)Assets essential for the rendering of service Pursuant to the provisions of the terms and conditions for the privatization of the natural gas distribution services, Camuzzi Gas del Sur S.A. must obtain ENARGAS' prior consent to sell, assign, encumber or dispose of assets which are essential for the rendering of service. Failure to secure such consent may result in the revocation of the License. (b)Restriction on funds As set forth in Note 10.c.1 and 10.c.2 as of December 31, 1999, attachments over the Company's assets included a Ps. 4,509,691 attachment levied by the Direccion General de Rentas de la Provincia de Rio Negro (the General Revenue Board of the Province of Rio Negro) and Ps. 787,026 mainly corresponding to the I-61 SODIGAS SUR S.A. AND ITS SUBSIDIARY COMPANY NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(Continued) attachments levied by several municipalities in connection with the lawsuits related to municipal taxes on use of the easements (Note 10.b.). NOTE 9: RECORDABLE ASSETS As regards the real estate transferred under the Transfer Contract, the Subsidiary Company has effected the corresponding deeds with the Argentine General Notary Public, and only isolated and irrelevant cases are pending. Additionally, the Subsidiary Company completed the transfer of all the vehicles. NOTE 10: LEGAL AND TAX MATTERS a.Income tax On January 30, 1998, the Subsidiary Company filed an amended tax return to modify the depreciation of fixed assets transferred to the Subsidiary Company without consideration. The amended return takes into account a change in the tax rules governing valuation of networks incorporated by the Subsidiary Company prior to June 1995, by reference to valuation rules specified in resolutions of the Ente Nacional Regulador del Gas (ENARGAS) with respect to the transfer of networks from third parties to the Operating Companies. The criteria applied by the Subsidiary Company in its amended return was not acknowledged by the Argentine Tax Authority ("AFIP") and, on July 6, 1999, the AFIP notified the Subsidiary Company of an assessment for taxes on income related to gas networks transferred without consideration. The assessment totalled Ps. 11.1 million in income tax owed, plus Ps. 22.7 million in interest and fines. On August 11, 1999, the Subsidiary Company filed an appeal with the Argentine Tax Court. The Subsidiary Company believes, based on the advice of its legal counsel, that the filing of the amended return and application of the ENARGAS criteria for tax purposes should have resolved the assessment, and therefore any attempt of the AFIP to continue with the case would not be successful. b.Municipal taxes Municipal tax regulations generally include a tax on the use of easements. The imposition of such tax conflicts with federal regulations. The distribution license grants the Licensee underground rights of way free of charge. The license authorizes the Licensee to pass through to consumers any cost increase attributable to a municipal tax levied and ratified by a court. Clause 6.1 of the License states: "while the Licensee is in charge of the service, the Licensee shall have the right to use free of charge any street, avenue, square, bridge, road and any other public place, including the subjacent and air spaces, necessary for the installation of facilities for the licensed service, including communication lines and interconnections with third parties". Nonetheless, if a court, pursuant to a final non-appealable judgment, upholds a provincial or municipal tax levied on the Licensee's underground right of way, the Licensee may pass through such additional cost to consumers residing within the jurisdiction in which such tax is applicable. The Regulatory Entity is required to act in accordance with Clause 9.6.2 of the License, without any right of claim against the Licensor or Gas del Estado. I-62 SODIGAS SUR S.A. AND ITS SUBSIDIARY COMPANY NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(Continued) Furthermore, under the Argentine Budget Law No. 24,624/95 applicable to the year 1996, in order to be entitled to the subsidies set forth in such law, the municipal rates for the use of subjacent space have to be abolished as from January 1, 1996. The following are the most relevant current disputes related to taxes on underground rights: Municipality of Viedma, Province of Rio Negro: This municipality brought a claim for payment of tax on underground right of way totalling Ps. 246,400, not including penalties and other assessments. The Court of Appeals upheld a lower court judgment sustaining the tax. The Subsidiary Company appealed to the Supreme Court of the Province of Rio Negro, which denied appeal. Subsequently, the Subsidiary Company filed a recurso extraordinario (request for reconsideration), which was denied, followed by an appeal to the Federal Supreme Court of Justice, which motion is currently pending resolution. The Federal Supreme Court requested the docket from Viedma, indicating its hearing of the appeal. Deposits with the court to pay judicial taxes in 1996, totalling Ps. 263,362, plus Ps. 62,720 in interest and legal costs, continue to be maintained. The Subsidiary Company has established a provision for the total amount of the claim. The Federal Supreme Court of Justice reversed the judgment rendered by the Supreme Court of the Province of Rio Negro. The Federal Supreme Court of Justice subsequently remanded the case to the Supreme Court of the Province with an order that the provincial court determine jurisdiction over the matter and remit the case to the applicable court. On rehearing, the Supreme Court of the Province granted the Subsidiary Company's request for reconsideration. In addition, the Municipality has brought an action against the Subsidiary Company for Ps. 148,148 for taxes (not including interest or penalties) on underground right of way due for 1995, which Camuzzi Gas del Sur S.A. opposed. Judgment was entered against the Subsidiary Company and the Subsidiary Company appealed. The appellate court reaffirmed the lower court decision and the Subsidiary Company petitioned for reconsideration, which was denied. The Subsidiary Company petitioned the Supreme Court of Justice of the Province for review, which has been granted. The Subsidiary Company reserved Ps. 95,545, which is included under "Provisions". Municipality of Neuquen: The amount of the claim is Ps. 66,524, not including penalties and other expenses. The Municipality appealed the Court of Appeals' decision on the grounds that it lacked jurisdiction. The Supreme Court reversed and ordered the case heard on the merits. The Subsidiary Company petitioned for review of the decision of rehearing, which was denied. The claimant filed a revised schedule of the Subsidiary Company's debt, including principal, interest and court fees, which, together with the original claim totals Ps. 150,746. The claimant's attorneys continue to pursue collection of the debt through judicial action. As of December 31, 1999, Ps. 99,774 have been deposited with the court. The Subsidiary Company has reserved Ps. 120,000, which is included under "Provisions". In addition, the Municipality filed another claim for the period April 1996--May 1997 for an amount of Ps. 97,421, not including interest and penalties. The claim was answered by certified letter in which the Subsidiary Company demanded that the Municipality desist from its threatened suspension of subsidies to satisfy the claim. The Municipality has decided to suspend any further proceeding until the Supreme Court of Justice of the Province decides the case of the Subsidiary Company against said Municipality in connection with taxes imposed on the use of easements. I-63 SODIGAS SUR S.A. AND ITS SUBSIDIARY COMPANY NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(Continued) Municipality of Comodoro Rivadavia: The Municipality has claimed the payment of taxes on use of easements during the first six months of 1996, which total Ps. 56,032 (not including taxes and penalties). The claim has been timely answered by the Subsidiary Company. Municipality of Zapala: The principal amount of the claim totals Ps. 816,073 corresponding to the periods between 1993, 1994, 1995 and January to November 1996. The Subsidiary Company has filed a motion for reconsidering such claim. Municipality of Villa Regina: The principal amount of the claim totals Ps. 1,939,343, not including penalties and other expenses. The Subsidiary Company has filed its response to such claim. Municipality of Cutral-Co: The Municipality filed a claim for the payment of Ps. 133,992, in respect of taxes on rights to public space as from January 1993 through October 1996, net of interest and legal costs. The Subsidiary Company contested the proceeding. The judgment entered by the lower court rejected the Subsidiary Company's argument and the Subsidiary Company appealed. The Court of Appeals affirmed the judgment and, consequently, an extraordinary motion has been filed. The Subsidiary Company reserved Ps. 71,296, which is included under "Provisions". Municipality of Piedra del Aguila: The amount of the claim totals Ps. 1,900. The Subsidiary Company filed a motion for reconsidering such claim. Municipality of Ingeniero Jacobacci: The claim totals Ps. 8,649. The Subsidiary Company has answered the claim and has reserved 50% of the claim, which is included under "Provisions". In the opinion of the Subsidiary Company, except for the lawsuits with the Municipalities of Viedma, Cutral Co, Neuquen and Ingeniero Jacobacci, for which reserves have been established, an adverse decision in relation to the aforementioned claims is unlikely. c.Gross sales tax c.1 The Subsidiary Company has received several claims from certain provincial tax authorities for payment of gross sales taxes on subsidies. As of December 31, 1999, the maximum estimated amount of gross sales tax applicable to such subsidies is Ps. 12 million, assuming that all provinces involved elect to pursue their claim. The Subsidiary Company believes, based on the advice of its legal counsel, that claims for gross sales tax are without merit, as the subsidy is granted by the Federal Government. The claims for gross sales tax received as of the date hereof are: Province of Chubut: The Subsidiary Company filed a Motion for Reconsideration with the General Revenue Board of the Province of Chubut in response to the Board's challenge of gross sales tax returns filed for 1993, 1994, 1995 through March 1996, which assessed past taxes of Ps. 1,509,291, not including interest or penalties. On April 20, 1999, the Subsidiary Company was notified of the General Revenue Board's rejection of the Motion for Reconsideration. On June 1, 1999, the Subsidiary Company filed a Motion to Quash and Appeal in accordance with the Provincial Tax Code. I-64 SODIGAS SUR S.A. AND ITS SUBSIDIARY COMPANY NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(Continued) In addition, the Subsidiary Company has submitted its response to the General Revenue Board's challenge of gross sales tax returns filed for 1993, 1994, 1995 through March 1996, which assessed past taxes of Ps. 265,000, not including interest or penalties. The claim arises from a different interpretation of criteria related to the valuation of income from networks transferred without consideration. The Subsidiary Company has also moved to quash service of a claim for Ps. 28,892 arising out of differences in the determination of the gross sales tax returns for the period January-March 1993. As of the date hereof, the amount claimed remains deposited with the Court. Province of Tierra del Fuego: The Subsidiary Company was notified by the Provincial General Revenue Board of the rejecting of the Subsidiary Company's Motion for Reconsideration. The notice requested the payment of approximately Ps. 962,748, in respect of principal, of which approximately Ps. 596,000 correspond to gross sales tax on subsidies for the period from 1993 to June 1996. In addition, the Ministry of Economy and Public Works and Services has denied the appeal of the Board's decision, thereby enabling the Subsidiary Company to file a claim with the courts in connection with this matter. On December 5, 1997, the Camuzzi Gas del Sur S.A. filed a petition with the governor of the Province of Tierra del Fuego, which was rejected. As a result, the Subsidiary Company filed a claim (recurso contencioso administrativo) in the amount of Ps. 897,608, of which Ps. 595,919 correspond to the principal amount of the tax and Ps. 301,689, to interest thereon. The Subsidiary Company was required to pay such amounts to pursue its claim and seek reimbursement. Furthermore, on April 18, 1997, a fine of Ps. 481,374 was imposed on the Subsidiary Company as a penalty for the non-payment of the gross sales tax. The Subsidiary Company filed a motion for reconsideration which was rejected and an appeal was filed. Province of Santa Cruz: The final audit has been submitted assessing Ps. 1,209,457 for gross sales tax on subsidies, not including interest and penalties. On September 25, 1998, the Subsidiary Company filed a Motion for Reconsideration of Ruling No. 860/98 issued to enforce the audit. Province of Neuquen: The General Revenue Board of the Province of Neuquen filed a record to settle accounts claiming differences in favor of the government for Ps. 1,078,484, for the period January 1993--September 1996, not including interests and penalties. The Subsidiary Company has duly filed its response to such claim. Province of Rio Negro: Camuzzi Gas del Sur has filed a response to the notices of the commencement of administrative proceedings brought by the General Revenue Board of the Province of Rio Negro challenging the gross sales tax returns of the Subsidiary Company for the years 1993 to 1995 and through August 1996, claiming differences in favor of the State amounting to Ps. 2,691,781, of which approximately Ps. 1,091,000 correspond to the claim related to the tax on income deriving from subsidies, not including interest or penalties. As regards the period from January 1993 to February 1996, a tax collection proceeding was filed against the Subsidiary Company for Ps. 3,250,539 for the principal outstanding, recalculated through March 31, 1997, which includes the tax owed due to a difference in the tax basis described in paragraph c.2. below. The Subsidiary Company's response included a motion to join the State as a third-party to the proceeding, which was rejected by the lower court. The Subsidiary Company appealed the decision. The lower court entered a judgment in favor of the revenue board and levied an attachment of up to Ps. 4,509,691 over the Subsidiary Company's assets in relation to the claim for gross sales tax on subsidies and the difference in the tax basis described in paragraph c.2. below and interest and court fees. I-65 SODIGAS SUR S.A. AND ITS SUBSIDIARY COMPANY NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(Continued) The Subsidiary Company unsuccessfully appealed to the Court of Appeals of Viedma. In response, the Subsidiary Company filed an appeal for nullification with the Supreme Court of the Province. The Province withdrew from the scope of the attachment an amount equal to the tax (excluding interest, costs and penalties), despite the Subsidiary Company's opposition. The court denied the appeal for nullification and, consequently the Subsidiary Company filed an appeal for the rejection of the nullification before the Supreme Court of the Province. Then, an extraordinary appeal was filed. Such appeal was rejected and, the Subsidiary Company subsequently filed an appeal for nullification with the Argentine Supreme Court of Justice. The Subsidiary Company is making deals in order to obtain the acknowledgment by the Province as regards the non-assessability of subsidies and the issue of a definitive decision as regards the position of the province in connection with the tax basis, in order to pass-trough the tariffs for all the claimed period (not only as from January 1997) and to make a debts set-off, on account of the obtention of a favorable decision from the arbitral court as regards the unpaid subsidies balances by the province. On November 12, 1998, the General Revenue Board of the Province of Rio Negro notified the Subsidiary Company of Resolution No. 093/98, which establishes a fine of Ps. 2,060,205, as a penalty for the non-payment of the gross sales tax on subsidies and sets forth the method for calculating the tax basis. The Subsidiary Company filed a Motion for Reconsideration which was denied on February 16, 1999. On March 4, 1999, the Subsidiary Company proceeded to file an administrative appeal against such resolution. For the periods March 1996 to June 1996 and July 1996 to August 1996, the Subsidiary Company also filed motions to reconsider the resolutions entered by the General Revenue Board of the Province of Rio Negro. On January 6, 1999, the Subsidiary Company was notified of resolution 1355/98, which rejected the Subsidiary Company's motion to reconsider filed with respect to Resolution No. 007/98, which set forth an amount of Ps. 313,916 due in connection with the gross sales tax on subsidies and calculation of the tax basis for the period from March to June 1996, of which approximately Ps. 116,000 corresponds to the claim for gross sales tax on subsidies. Further, the Subsidiary Company was notified of Resolution No. 1356/98, which, as in the prior resolution, sought Ps. 317,660 for the period from July to August 1996, of which approximately Ps. 152,000 corresponds to the claim for gross sales tax on subsidies. The Subsidiary Company has filed administrative appeals of such resolution. On November 17, 1998, the General Revenue Board of the Province of Rio Negro notified the Subsidiary Company of Resolution No. 090/98, requiring the payment of Ps. 890,997 in respect of gross sales tax on subsidies for the period from September 1996 to December 1997 and for the tax basis for the period from September 1996 to December 1996, plus a fine of Ps. 1,251,580, for the non-payment of such amounts; the Subsidiary Company has filed an appeal for reconsideration of such resolution. Such reconsideration was rejected, and then, an administrative appeal was filed. Since such appeal was rejected, the Subsidiary Company filed an appeal for nullification in relation to the rejected remedy before Civil Court No. 1, Clerk's Office No. 2 of the city of Viedma, as evidenced in file No. 159,870- E-97. c.2 Camuzzi Gas del Sur S.A. has received several tax assessments issued by the tax authorities of the Province of Buenos Aires and the Province of Rio Negro related to differences in the determination of the tax basis of gross sales tax. Such difference arises mainly from the tax authorities' claim that the tax basis for computing gross sales taxes is based on the entire invoiced amount, although a portion of such amount represents the pass through of the cost of supply and transportation of natural gas. The Subsidiary Company contends that the tax basis is the difference between the price at which gas is purchased and sold. I-66 SODIGAS SUR S.A. AND ITS SUBSIDIARY COMPANY NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(Continued) Below, there is a description of the situation with each of the provinces involved: Province of Buenos Aires: The Province of Buenos Aires Revenue Board (the "DPRPBA") has challenged the Subsidiary Company's gross sales tax returns, and has assessed claims of Ps. 27,027 and Ps. 16,003 for the periods from December 1992 through February 1995, and from March 1995 to June 1996, respectively, not including fines and accessory charges. On November 25, 1996, the General Revenue Board issued a final opinion stating that, in its opinion the Subsidiary Company must pay gross sales tax on its total sales and not on the distribution margin. On December 13, 1996, the General Revenue Board further explained some points of the opinion indicating that, according to such body's interpretation, the change on the tax criterion had derived from the fact that as from the takeover of the natural gas distribution service by the Licensees, the regulations set forth under the Tax Code (Section 136, Subsection (e) and Section 141, Subsection (a)) are not valid, since the Government, upon withdrawing from the business, no longer regulates the official selling prices. Although the Subsidiary Company's legal counsel advised the Subsidiary Company of the soundness of its position, the final opinion issued by the General Revenue Board, which explicitly adopts the tax criteria adopted by the Province of Buenos Aires, substantially changed the tax burden of the Licensee. Therefore, because Camuzzi Gas del Sur S.A. is not legally required to participate in a judicial proceeding, the results of which cannot be assured in spite of its sound defense, on December 19, 1996, the Subsidiary Company availed itself of a tax amnesty program pursuant to the provisions of the Provincial Law 11,808 (Official Gazette July 10, 1996). The foregoing implementation of new criteria altered the Licensee's tax burden generating a cost fluctuation and clearly constituting a "tax change". This event was considered a non-recurring tariff adjustment pursuant to clause 9.6.2. of the Distribution License and by law 24,076. Through Resolution No. 544 dated November 17, 1997 and pursuant to applicable regulations, ENARGAS authorized the pass-through to the tariffs of the tax liabilities incurred as a result of the legal changes in the payment of the tax in accordance with the methodology set forth by such Regulatory Authority in its note No. 108 dated January 12, 1998. The decision on the pass-through to the tariffs applicable to sub-distributors and GNC stations remains pending, although such decision is immaterial. As mentioned above, because a "change in tax rules" generates a right for the Subsidiary Company to pass through the added cost to the tariffs as envisaged in clause 9.6.2. of the Distribution License and in Law No. 24,076, Camuzzi Gas del Sur S.A. accounted for the amounts recognized as tax payable, together with the payments made for the tax basis of all income from gas sales, with a balancing entry in the form of a receivable to be collected from the users in future billings. As of December 31, 1999, the receivable to be recovered (which includes the amounts accrued during the first semester of 1998) totalled Ps. 95,276 of which, Ps. 22,854 were recorded under "Other Current Accounts Receivable" and Ps. 72,422 under "Other Non-Current Accounts Receivable". Province of Rio Negro: Provincial Law No. 3069, promulgated by Decree No. 2198/96 dated December 30, 1996, amended the Tax Code by abrogating paragraph (d) of section 12 of Law No. 1301. According to the interpretation of the Subsidiary Company and its legal counsel, the tax basis is the difference between the purchase and sale prices. Consequently, on April 14, 1998, the Subsidiary Company paid Ps. 682,364 in respect of the tax difference derived from the change in the tax basis for January 1997-February 1998 period. I-67 SODIGAS SUR S.A. AND ITS SUBSIDIARY COMPANY NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(Continued) As mentioned above, because a "change in tax rules" generates a right for the Subsidiary Company to pass through the added cost to the tariffs as envisaged in clause 9.6.2. of the Distribution License and in Law No. 24,076, Camuzzi Gas del Sur S.A. accounted for the amounts recognized as a tax increase for the period January 1997 to February 1998, as well as the increased tax accrued thereafter, for the calculation of the tax basis of all income from gas sales, with an offsetting entry in the form of a receivable to be collected from the users in future billings. As of December 31, 1999, the receivables to be recovered totalled Ps. 819,588, and have been recorded under "Other Non-Current Accounts Receivable". As mentioned in paragraph c.1. above, the provincial tax authority has filed a claim for Ps. 2,691,781, including the gross sales tax on subsidies, and differences in the tax basis. The amount claimed for differences in the tax basis totals approximately Ps. 1,601,000 and corresponds to the period from January 1993 through August 1996, prior to the amendment of the Tax Code. As set forth in paragraph c.1 above, the amounts related to this claim are subject to an attachment levied by the Provincial Revenue Board. With respect to the periods from March 1996 to June 1996 and July 1996 to August 1996, the amounts of the claims for gross sales tax predicated on a different tax basis are approximately Ps. 198,000 and Ps. 165,000, respectively, and the comments included in paragraph c.1 for these periods are applicable hereto. The same comments included in paragraph c.1 above are applicable for the period from September 1996 to December 1997, the amount of the claim for gross sales tax predicated on a different tax basis are approximately Ps. 241,000 for the period from September 1996 to December 1996 (see first and second paragraphs of this note). To pass-through this higher cost consistent with its rights, the Subsidiary Company has undertaken steps to obtain the relevant tariff adjustment from the Regulatory Authority. The Subsidiary Company believes, based on the advice of its legal counsel, that a decision not to pass through the higher cost attributable to the gross sales tax is unlikely. c.3 The Subsidiary Company accepted the claim of the Province of Tierra del Fuego with respect to differences in the determination of the tax basis corresponding to the tax on sales to industrial users ("0" rate), entailing the payment of the Ps. 864,213 in taxes, plus Ps. 233,543 in interest, totalling Ps. 1,097,756. The Subsidiary Company has reserved Ps. 1,097,756, which includes all applicable principal and interest. d.Stamp tax As regards stamp tax the situation is as follows: d.1Province of Rio Negro: d.1.1 The Subsidiary Company has filed for declaratory relief and a preliminary injunction with the Federal Judge in response to the assessment of stamp tax under a Decree of the Executive Branch, whose amount has yet to be determined. d.1.2 The Province of Rio Negro's Revenue Board served Transportadora de Gas del Sur S.A. with a notice claiming stamp tax on natural gas transport agreements entered into with the Subsidiary Company. I-68 SODIGAS SUR S.A. AND ITS SUBSIDIARY COMPANY NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(Continued) As of the date of these financial statements, the Subsidiary Company has not been served with notice of any claim from the Province of Rio Negro's Revenue Board. Nonetheless, in the event of a claim being filed by the Tax Authority and an adverse judgement, Camuzzi Gas del Sur S.A. would pay fifty per cent of the tax applicable to the operations performed subsequent to the takeover, which would amount to Ps. 7.8 million. Furthermore, Transportadora de Gas del Sur S.A. could seek confirmation from the Subsidiary Company, if the transporter were obliged to pay the full tax amount claimed. Furthermore, Transportadora de Gas del Sur S.A. has received a claim for the payment of the stamp tax on agreements transferred by Gas del Estado, for Ps. 0.3 million, where the Argentine Government appears as the only responsible party. d.1.3 On December 3, 1999, the Province of Rio Negro's Revenue Board served notice of the administrative proceedings, assessing a debt in relation to stamp tax on offers to customers to purchase gas for an aggregate amount of Ps. 192,551; of such amount, Ps. 102,026 are payable by Camuzzi Gas del Sur S.A. On December 28, 1999, the Subsidiary Company filed the applicable defense in relation to the action brought. In the opinion of the Subsidiary Company and its legal counsel, considering the manner in which the agreements were documented, in relation to paragraphs d.1.2. and d.1.3. above, the Subsidiary Company has sound grounds for presenting a defense at court. d.2 Province of Tierra del Fuego: The Subsidiary Company filed an answer to the Previous Notice made by the Revenue Board of the Province of Tierra del Fuego, Antartida and South Atlantic Islands, claiming the assessment of stamp tax under a Decree of the provincial Executive Branch, amounting to Ps. 140,000, not including interest or penalties. d.3Province of Neuquen: d.3.1 The Revenue Board of the Province of Neuquen has computed a stamp tax on the gas purchase agreements entered into jointly with Camuzzi Gas Pampeana S.A. for an amount of Ps. 1,656,205. Subsequently, the Revenue Board of the Province of Neuquen amended its computation to Ps. 10,400,134. The notice was answered and the resolution was suspended as a result of the moratorium decrees. Further, statements were filed with the Argentine Ministry of Economy asking for an opinion in connection with such matter. The province issued Special Decree No. 3534 allowing the regulated companies to avail themselves to a moratorium until November 6, 1998 subsequently extended to January 11, 1999. On January 7, 1999, the ENARGAS submitted a report to the Argentine Ministry of Economy, expressing that "the taxes claimed by Neuquen, shall unfailingly lead to a tariff increase, with a serious damage to the users". The deadline expired on January 11, 1999 and has not been further extended. The Licensee Subsidiary Company is waiting for an opinion from the Ministry of Economy as regards this issue. As of December 31, 1999, the Subsidiary Company has reserved Ps. 597,548 in such regard. On September 24, 1999, the Subsidiary Company was served a notice informing it that the audit performed by independent public accountants engaged by the Province of Neuquen's Revenue Board had been closed. The assessment of the debt for stamp tax on natural gas purchase agreements entered into jointly with Camuzzi Gas Pampeana S.A. amounted to Ps. 5,017,021, not including penalties or other charges. On January 18, 2000, the Subsidiary Company was notified of the amendment of the initial amount, I-69 SODIGAS SUR S.A. AND ITS SUBSIDIARY COMPANY NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(Continued) which, as amended, totalled Ps. 5,028,358, of which Ps. 4,155,331 are included in the original notice. The aggregate claim for both companies amounts to Ps. 11,273,161. As of the date hereof, the Subsidiary Company has not received further notice from the Revenue Board. d.3.2 Additionally, the Revenue Board has filed claims totalling Ps. 1,827,518 for the payment of stamp tax on the transfer of assets affected to the service. This claim was filed jointly against Gas del Estado and the Subsidiary Company. Camuzzi Gas del Sur S.A. has filed its response. d.3.3 On December 15, 1999, the Revenue Board notified the final assessment of the stamp tax for an amount of Ps. 719,622, derived from the gas transport agreements entered into with Transportadora de Gas del Sur S.A., before privatization, and when Gas del Estado S.E. was the only shareholder of the Subsidiary Company. The Subsidiary Company has notified the Direccion Nacional de Normalizacion Patrimonial, the Liquidation Entities Coordinator and Gas del Estado S.E. that, in accordance with the provisions of the Transfer Agreement, any national, provincial or municipal stamp tax assessed on agreements related thereto shall be borne by Gas del Estado S.E. or the Argentine Government. On December 29, 1999, the Subsidiary Company filed a Motion for Reconsideration against the Revenue Board determination. Also, the Subsidiary Company believes that these agreements were not subject to provincial stamp tax due to the fact that the parties who entered into said agreements were Argentine state-owned companies, and are therefore exempted from such tax. Even though such agreements were subject to stamp tax, the Subsidiary Company considers that Gas del Estado S.E. would be the party liable for the payment of this tax, in accordance with the provisions of the Transfer Agreement. The Subsidiary Company believes, based on the advice of its legal counsel, that, other than as described in paragraph d.3.1, it is unlikely that such claims will be resolved unfavorably for the Subsidiary Company. d.4Province of Santa Cruz: d.4.1. On December 29, 1999, the Revenue Board of the Province of Santa Cruz served a notice of administrative proceedings, assessing a debt in relation to the stamp tax on gas purchase agreements entered into jointly with Camuzzi Gas Pampeana S.A. for an amount of Ps. 1,466,120 of which Ps. 7,512,904 are payable by Camuzzi Gas del Sur S.A. On January 20, 2000, the Subsidiary Company filed its defense in relation to the notice received. The Subsidiary Company contends that the stamp tax does not apply to gas purchase agreements, which it believes are not instruments subject to the tax. d.4.2. The Revenue Board of the Province of Santa Cruz has notified Transportadora Gas del Sur S.A. of a claim for a stamp tax on natural gas transport agreements entered into with the Subsidiary Company. As of the date hereof, the Subsidiary Company has received no notice in relation thereto from the Revenue Board of the Province of Santa Cruz. However, in the event a claim filed by the Revenue Board were decided against the Subsidiary Company, Camuzzi Gas del Sur S.A. would have to pay 50% of the tax corresponding to the operations conducted after the privatization, which tax would amount to Ps. 0.9 million. In addition, Transportadora de Gas del Sur S.A. could seek contribution from the Subsidiary Company, if it were obliged to pay the claimed tax in full. I-70 SODIGAS SUR S.A. AND ITS SUBSIDIARY COMPANY NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(Continued) The Subsidiary Company believes, based on the advice of its legal counsel, that it has a strong defense to the matters described in paragraphs d.4.1 and d.4.2. above in light of the manner in which the agreements were documented. e.Regulatory aspects On March 24, 1998, the ENARGAS, through resolution 588/98, requested Camuzzi Gas del Sur S.A. to reimburse approximately Ps. 4.5 million to the users for "non-compliance with the gas quality standards set forth in the License and Resolution 113/94, under the terms of Chapter X of the License", for the period from January 1996 to March 1997. The Regulatory Authority's methods for determining the amount of the claim were objected by the Subsidiary Company with the Secretariat of Energy. Furthermore, on January 7, 1999, the Secretariat of Energy issued a preliminary technical ruling pursuant to which it interpreted that the requirements of ENARGAS apply to the period from September 1996 to March 1997. In accordance with the foregoing, the Subsidiary Company reserved approximately Ps. 0.9 million, calculated in accordance with the methodology set forth in such preliminary ruling. It should be highlighted that the amount provisioned has been reimbursed to users, although reimbursement of the portion corresponding to the subsidy is still pending. In October 1999, the Subsidiary Company filed an affidavit with the Province, whose amount would be deducted from the subsidy payable to the Subsidiary Company. As of the date hereof, the issue of the final judgment by such entity is pending. f.Others On August 8, 1998, the Ministry of Economy, Works and Public Services filed a claim for Ps. 656,485 for differences in amounts collected on overdue invoices. Schedule XXI of the Share Transfer Agreement provides that Camuzzi Gas del Sur S.A. is responsible for collecting such amounts for Gas del Estado S.E. The Subsidiary Company duly set up an allowance of Ps. 175,000 to satisfy the claim. The Subsidiary Company considers such amount to be sufficient. NOTE 11: SUBSIDIARY'S ESSENTIAL ASSETS INVENTORY In compliance with ENARGAS' Resolution No. 60, the Subsidiary Company made an inventory of its essential assets as of December 31, 1997. Such inventory was certified by an independent expert specialized in that field on October 26, 1998. As a result of said work finished during 1998, differences were detected between the physical inventory value and the book value of the assets which reduced the assets previously recorded in an amount of approximately Ps. 5.5 million. Due to the fact that the Subsidiary Company maintains a voluntary reserve consisting of gas distribution networks financed by third parties and transferred free of charge, the Subsidiary Company offset the aforementioned difference against the voluntary reserve. I-71 SODIGAS SUR S.A. AND ITS SUBSIDIARY COMPANY NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(Continued) NOTE 12: CONSTRUCTION FUNDED BY THIRD PARTIES Constructions funded by third parties, incorporated into the Subsidiary Company's network during the fiscal years ended December 31, 1999 and 1998, were the following:
For the fiscal years ended December 31, ------------------- 1999 1998 --------- --------- (Pesos) . For valuable consideration............................. 1,671,788 3,324,866
On February 8, 1996, ENARGAS issued Resolution No. 269/96, which sets forth that regarding constructions fully or partially funded by third party users, such users should receive a discount based on the difference between the value of the construction and the amount actually discounted for, if any. By means of ENARGAS' Resolution No. 389, dated October 23, 1996, the Regulatory Authority established the amounts to be recognized to the users mentioned above, according to the business value determined by such entity. In compliance with this resolution, as regards networks transferred without monetary consideration, during the 1996 fiscal year, the Subsidiary Company recorded a liability in an amount estimated as the payment price in cubic meters of gas, which was debited from a reserve set up in previous periods for this purpose. In the case of those projects in which the payments made by the Licensee differed from those set forth by the Regulatory Authority, the liability corresponding to such difference was accounted for. Both liabilities were valued at current tariffs. Furthermore, on February 3, 1997, by means of Resolution 422 the Regulatory Authority set the charges that the Gas Distribution Companies shall have to recognize to third party users financing network extension works; such amount results from the business value set forth by ENARGAS. This Resolution was only applicable to the works transferred to the Licensee Companies during the year 1996. As regards works to be financed by future customers, which may be commenced and transferred to the network of the licensees during the 1997 fiscal year, the Regulatory Authority issued Rule No. 587, dated March 16, 1998, whereby it established the consideration to be given to the users in accordance with the methodological guidelines included therein. As of the date hereof, the Subsidiary Company is taking the necessary steps to implement the reimbursement of the cubic meters duly suggested by the ENARGAS. Subsequently, the ENARGAS, through Order No. 4,688 dated December 30, 1997, modified the criterion previously established by its Resolutions No. 389/96 and 422/96 and Order No. 1877/96, in connection with the obligation of the Distribution Service Licensees to grant provisions to third party users who totally or partially paid undertakings related to new networks or extensions thereof. This amendment consists, basically, in the replacement of the obligation of such users to file the documentation evidencing their contribution, as called for by the above-mentioned resolutions, by the execution of an affidavit in relation thereof. The above-mentioned order of ENARGAS has been appealed by the Subsidiary Company on the grounds that it affects its legitimate rights. However, the Subsidiary Company undertook a study to determine its liability in connection with the compliance with such order. Such study revealed that if the existing users and the potential I-72 SODIGAS SUR S.A. AND ITS SUBSIDIARY COMPANY NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(Continued) users which have transferred assets without monetary compensation are entitled to the discounts set forth in the ENARGAS' resolutions, the maximum increase in the liabilities would amount to Ps. 7.6 million. This amount has been reflected in these Financial Statements as a withdrawal from the voluntary reserve. In addition, it should be noted that such liability may be substantially lesser due to the fact that such liabilities were calculated considering that all the users would request such discounts and the addition of users to such works are complied. Once the term fixed by the regulatory authority for the granting of discounts is finished, an analysis of the actual value of each project shall be made upon the basis of the users really added and of the value to the business, increasing or decreasing the value of the liability as applicable. As regards the networks transferred for a consideration, the liability shall be fixed at the amounts agreed to by the third party transferors. NOTE 13: FIVE-YEAR TARIFF REVIEW On December 31, 1997, the Ente Nacional Regulador del Gas issued Resolution No. 468 whereby it approved the five-year tariff review and established new values for the K and X factors corresponding to each component of the tariff. Such values will be applicable during the 1998-2002 five-year period. The incorporation of these two factors (with K representing the Investment factor and X representing the Efficiency factor) has been contemplated within the existing tariff scheme. Such factors will be added and subtracted respectively from the distribution margin and, therefore, will affect the final tariff for the next five-year period. During 1997, the Subsidiary Company submitted its proposed investments for the determination of the K factor, which, once reviewed by the ENARGAS, were approved at the end of October 1997 for the Buenos Aires Sur, Tierra del Fuego, and Santa Cruz subareas. Likewise, and due to the particularities of the area, it has been decided the creation of the Cordilleran subarea with a K factor related to support works in the respective pipeline. ENARGAS defined an efficiency factor (X) of 4.6 % for Camuzzi Gas del Sur S.A. as from January 1, 1998, which considers the improvements to be achieved in that respect in the next five-year period, thus maintaining the fair and reasonable profitability set forth by the Gas Law. NOTE 14: INFORMATION SYSTEMS ADAPTATION PROCESS (NOT INCLUDED IN THE AUDITORS' REPORT) The Subsidiary Company began a process to update its information systems and related technologies, which has been given priority by the Board of Directors. The work methodology adopted assigns different teams to make the administrative, invoicing, human resources, hardware and software systems year 2000 compliant. Upon commencement of the year 2000, no failures have been detected in the administrative, invoicing, human resources, hardware and software systems in relation to the Y2K. (See Note 16) I-73 SODIGAS SUR S.A. AND ITS SUBSIDIARY COMPANY CONSOLIDATED FIXED ASSETS For the Fiscal Years Ended December 31, 1999 and 1998 Schedule A
DEPRECIATION -------------------------------------------- Accumulated Value as of Value as as of Accumulated Principal beginning of end of beginning as of end account of year Additions Transfers Write-offs period of year Amount(1) Write-offs of period --------- ----------- ---------- ---------- ---------- ----------- ----------- --------- ---------- ----------- (Pesos) (Pesos) (Pesos) (Pesos) (Pesos) (Pesos) (Pesos) (Pesos) (Pesos) Land............ 1,551,940 -- 160,388 -- 1,712,328 -- -- -- -- Condominiums.... 83,553 -- 4,097,420 (10,373) 4,170,600 39,258 85,598 -- 124,856 Buildings....... 11,029,849 2,047 (3,877,005) (1,212) 7,153,679 1,754,819 250,542 -- 2,005,361 Facilities...... 8,254,800 5,498 442,685 -- 8,702,983 1,359,693 309,888 -- 1,669,581 Gas pipelines... 81,373,380 -- (5,236,153) -- 76,137,227 20,023,224 1,765,227 -- 21,788,451 Main and secondary pipelines....... 30,427,238 -- 4,882,428 -- 35,309,666 5,132,687 897,241 -- 6,029,928 Distribution networks........ 127,859,146 2,384,111 472,663 -- 130,715,920 20,822,416 3,924,081 -- 24,746,497 Machinery and equipment....... 2,000,812 264,968 (4,487) -- 2,261,293 556,610 77,470 -- 634,080 Pressure reduction stations........ 9,195,895 -- 570,890 -- 9,766,785 1,074,306 265,482 -- 1,339,788 Processing equipment....... 6,357,859 -- 2,232,051 -- 8,589,910 1,694,204 357,516 -- 2,051,720 Vehicles........ 3,614,703 316,979 3,176 -- 3,934,858 2,524,923 325,304 -- 2,850,227 Furniture and office equipment....... 809,149 86,989 423 -- 896,561 230,957 61,662 -- 292,619 Gas meters...... 19,296,219 58,681 1,750,106 (325,133) 20,779,873 5,418,726 941,255 (134,761) 6,225,220 Gas cylinders... 411,153 -- 29,623 -- 440,776 98,953 24,093 -- 123,046 Works in progress........ 3,906,399 13,480,350 (3,390,681) -- 13,996,068 -- -- -- -- Computer equipment....... 882,810 737,858 (2,184) -- 1,618,484 744,852 126,025 -- 870,877 Communications equipment....... 4,277,890 36,204 (2,024) -- 4,312,070 1,351,936 435,183 -- 1,787,119 Material at warehouses...... 2,606,358 2,677,784 (1,708,845) (1,724,353) 1,850,944 -- -- -- -- Advances to suppliers....... 527,613 782,715 (420,474) -- 889,854 -- -- -- -- ----------- ---------- ---------- ---------- ----------- ---------- --------- -------- ---------- Total as of December 31, 1999............ 314,466,766 20,834,184 -- (2,061,071) 333,239,879 62,827,564 9,846,567 (134,761) 72,539,370 ----------- ---------- ---------- ---------- ----------- ---------- --------- -------- ---------- Total as of December 31, 1998............ 297,568,044 24,796,273 -- (7,897,551) 314,466,766 54,767,284 8,731,519 (671,239) 62,827,564 =========== ========== ========== ========== =========== ========== ========= ======== ========== Net carrying value as of December 31, ----------------------- Principal account 1999 1998 --------- ----------- ----------- (Pesos) (Pesos) Land............ 1,712,328 1,551,940 Condominiums.... 4,045,744 44,295 Buildings....... 5,148,318 9,275,030 Facilities...... 7,033,402 6,895,107 Gas pipelines... 54,348,776 61,350,156 Main and secondary pipelines....... 29,279,738 25,294,551 Distribution networks........ 105,969,423 107,036,730 Machinery and equipment....... 1,627,213 1,444,202 Pressure reduction stations........ 8,426,997 8,121,589 Processing equipment....... 6,538,190 4,663,655 Vehicles........ 1,084,631 1,089,780 Furniture and office equipment....... 603,942 578,192 Gas meters...... 14,554,653 13,877,493 Gas cylinders... 317,730 312,200 Works in progress........ 13,996,068 3,906,399 Computer equipment....... 747,607 137,958 Communications equipment....... 2,524,951 2,925,954 Material at warehouses...... 1,850,944 2,606,358 Advances to suppliers....... 889,854 527,613 ----------- ----------- Total as of December 31, 1999............ 260,700,509 -- ----------- ----------- Total as of December 31, 1998............ -- 251,639,202 =========== ===========
- ---- Note: (1) The accounting allocation of depreciation charges for the period is described in Schedule H. I-74 SODIGAS SUR S.A. AND ITS SUBSIDIARY COMPANY CONSOLIDATED INTANGIBLE ASSETS For the Fiscal Years Ended December 31, 1999 and 1998 Schedule B
Amortization ------------------------------------------------------ Current year Value as ------------------ Value as of of end of Accumulated as of Rate per Accumulated as of Principal Account beginning of year Increases year beginning of year annum Amount(1) end of year ----------------- ----------------- --------- --------- ----------------- -------- --------- ----------------- (Pesos) (Pesos) (Pesos) (Pesos) % (Pesos) (Pesos) Organization and pre-operating expenses and expenses relating to the issuance of Notes............. 3,088,028 11,008 3,099,036 2,175,856 20 476,908 2,652,764 Software.......... 238,690 298,970 537,660 75,084 20 35,240 110,324 --------- ------- --------- --------- --- ------- --------- Total as of December 31, 1999............ 3,326,718 309,978 3,636,696 2,250,940 -- 512,148 2,763,088 ========= ======= ========= ========= === ======= ========= Total as of December 31, 1998............ 3,262,875 63,843 3,326,718 1,597,800 -- 653,140 2,250,940 ========= ======= ========= ========= === ======= ========= Net carrying value as of December 31, ----------------- Principal Account 1999 1998 ----------------- ------- --------- (Pesos) (Pesos) Organization and pre-operating expenses and expenses relating to the issuance of Notes............. 446,272 912,172 Software.......... 427,336 163,606 ------- --------- Total as of December 31, 1999............ 873,608 -- ======= ========= Total as of December 31, 1998............ -- 1,075,778 ======= =========
- ---- Note: (1) The accounting allocation of amortization charges for the year is described in Schedule H. I-75 SODIGAS SUR S.A. AND ITS SUBSIDIARY COMPANY CONSOLIDATED INVESTMENTS General Balance as of December 31, 1999 and 1998 Schedule C
Value Recorded as of December 31, ----------------- Number Market Issuer and securities F.V. value 1999 1998 --------------------- --------- -------- --------- ------- (Pesos) (Pesos) CURRENT INVESTMENTS Mutual Investment Funds Banco Supervielle Societe Generale....... 2,411,446 1.286966 3,103,449 -- Banque Nationale de Paris................ 484,895 1.091589 529,306 -- Banco Rio................................ 578,378 1.695379 980,569 -- Shares INDUPA S.A.I.C........................... 14,710 0.86 12,651 9,562 --------- ----- TOTAL CURRENT INVESTMENTS.............. 4,625,975 9,562 --------- ----- TOTAL INVESTMENTS...................... 4,625,975 9,562 ========= =====
I-76 SODIGAS SUR AND ITS SUBSIDIARY COMPANY OTHER CONSOLIDATED INVESTMENTS General Balance as of December 31, 1999 and 1998 Schedule D
Value recorded as of December 31, ----------------- Principal account and characteristics 1999 1998 - ------------------------------------- --------- ------- (Pesos) (Pesos) CURRENT INVESTMENTS Fixed-term deposits in local currency......................... 1,956,131 415,012 --------- ------- Total....................................................... 1,956,131 415,012 ========= =======
I-77 SODIGAS SUR S.A. AND ITS SUBSIDIARY COMPANY CONSOLIDATED ALLOWANCES For the Fiscal Years Ended December 31, 1999 and 1998 Schedule E
Balances as of December 31, Balances as of -------------------- Item beginning of year Additions Decreases 1999 1998 ---- ----------------- --------- --------- ---------- --------- (Pesos) (Pesos) (Pesos) (Pesos) (Pesos) DEDUCTED FROM ASSETS Allowance for defaulting debtors... 5,970,817(1) 903,507 158,021 6,716,303 5,970,817 DEDUCTED FROM LIABILITIES Provisions for lawsuits............. 3,781,802(2) 306,366(2) 144,587 3,943,581 3,781,802 --------- --------- ------- ---------- --------- Total............... 9,752,619 1,209,873 302,608 10,659,884 9,752,619 ========= ========= ======= ========== =========
- -------- Notes: (1) Amount charged to Marketing Expenses (Schedule H). (2) Pesos 58,438 are charged to Other Expenses (Note 4.k). I-78 SODIGAS SUR S.A. AND ITS SUBSIDIARY COMPANY CONSOLIDATED COST OF SALES For the Fiscal Years Ended December 31, 1999 and 1998 Schedule F
For the Fiscal Year ended December 31, ----------------------- 1999 1998 ----------- ----------- (Pesos) (Pesos) Inventories at the beginning of the year................ 655,120 1,028,741 Plus: Gas purchases......................................... 111,028,599 98,808,203 Acquisition of transportation capacity................ 22,051,412 20,435,568 Expenses (per breakdown in Schedule H)................ 27,621,105 24,433,292 Less: Inventories at the end of the year.................... 1,038,084 655,120 ----------- ----------- Cost of sales........................................... 160,318,152 144,050,684 =========== ===========
I-79 SODIGAS SUR S.A. AND ITS SUBSIDIARY COMPANY FOREIGN CURRENCY ASSETS AND LIABILITIES General Balance as of December 31, 1999 and 1998 Schedule G
Amount in Argentine currency as of December 31, ---------------------- Type and amount of Current foreign exchange currency rate 1999 1998 ---------- -------- ---------- ----------- U.S.$ (Pesos) (Pesos) CURRENT ASSETS Cash and banks..................... 133,343 1.0000 133,343 200,810 Other receivables.................. -- -- -- 105,000 ---------- ------ ---------- ----------- Total current assets............. 133,343 -- 133,343 305,810 ---------- ------ ---------- ----------- Total assets..................... 133,343 -- 133,343 305,810 ========== ====== ========== =========== CURRENT LIABILITIES Suppliers.......................... 591,890 1.0000 591,890 527,785 Loans Banco Rio.......................... 4,730,533 1.0000 4,730,533 8,261,888 Banque Nationale de Paris.......... 7,039,164 1.0000 7,039,164 -- Notes.............................. -- 1.0000 -- 60,000,000 Bank Boston--Letter of credit...... 525,764 1.0000 525,764 -- Notes--Interest.................... 207,845 1.0000 207,845 207,845 ---------- ------ ---------- ----------- Total current liabilities........ 13,095,196 -- 13,095,196 68,997,518 ---------- ------ ---------- ----------- NON-CURRENT LIABILITIES Notes--Principal................... 50,557,000 1.0000 50,557,000 50,557,000 ---------- ------ ---------- ----------- Total non-current liabilities.... 50,557,000 -- 50,557,000 50,557,000 ---------- ------ ---------- ----------- Total liabilities................ 63,652,196 -- 63,652,196 119,554,518 ========== ====== ========== ===========
I-80 SODIGAS SUR S.A. AND ITS SUBSIDIARY COMPANY INFORMATION REQUIRED UNDER ART. 64, CLAUSE (B) OF LAW 19,550 For the Fiscal Years Ended December 31, 1999 and 1998 Schedule H
Total as of Total as of December 31, Costs of Cost of Administrative Marketing December 31, Items 1999 services sales Expenses Expenses 1998 ----- ------------ -------- ---------- -------------- --------- ------------ (Pesos) (Pesos) (Pesos) (Pesos) (Pesos) Fees for services....... 5,746,969 -- 3,182,495 2,564,474 -- 3,601,965 Salaries and wages...... 13,822,582 -- 5,805,484 5,252,581 2,764,517 12,857,027 Contributions........... 3,626,019 -- 1,522,928 1,377,887 725,204 3,566,656 Transportation expenses............... 898,211 -- 377,249 341,320 179,642 799,973 Taxes and assessments... 1,802,255 -- 391,274 1,215,344 195,637 2,354,513 Depreciation of fixed assets................. 9,846,567 -- 9,075,980 513,725 256,862 8,731,519 Amortization of intangible assets...... 512,148 -- -- 512,148 -- 653,140 Hired services.......... 4,074,621 200,978 2,389,429 1,095,690 388,524 4,345,596 Postage, communications and data processing.... 1,243,450 -- 371,089 686,816 185,545 1,278,182 Liquid processing....... 1,825,343 -- 1,825,343 -- -- 1,222,537 Defaulting debtors...... 852,964 -- -- -- 852,964 1,173,346 Advertising............. 159,378 -- -- -- 159,378 175,356 Miscellaneous........... 5,092,545 -- 2,679,834 1,765,381 647,330 4,275,327 ---------- ------- ---------- ---------- --------- ---------- Total as of December 31, 1999............. 49,503,052 200,978 27,621,105 15,325,366 6,355,603 -- ---------- ------- ---------- ---------- --------- ---------- Total as of December 31, 1998............. -- 152,550 24,433,292 13,950,169 6,499,126 45,035,137 ========== ======= ========== ========== ========= ==========
I-81 SODIGAS SUR S.A. US GAAP RECONCILIATION Reconciliation of Net Income Annex II
Year ended December 31, 1999 -------------- Net income as reported under Argentine GAAP..................... Ps. 18,451,802 US GAAP adjustments: Depreciation expense.......................................... 1,469,579 Intangible asset amortization................................. 136,492 Gross sales tax settlement.................................... 15,825 Regulatory issues............................................. (326,886) Deferred income taxes......................................... 2,168,414 Technical assistance fee...................................... (101,054) Deferred expenses............................................. 10,281 Minority interest............................................. (345,857) -------------- US GAAP adjustments, net........................................ Ps. 3,024,794 -------------- Net income under US GAAP........................................ Ps. 21,476,596 ==============
I-82 SODIGAS SUR S.A. US GAAP RECONCILIATION Reconciliation of Shareholders' Equity Annex II(cont)
Year ended December 31, 1999 -------------- Shareholders' Equity as reported under Argentine GAAP.......... Ps.218,427,277 US GAAP adjustments: Initial carrying value of assets............................. (18,508,860) Contribution of gas networks................................. (28,390,741) Capitalization of interest................................... 2,647,901 Depreciation expense......................................... 9,173,374 Intangible assets amortization............................... 15,880 Gross sales tax settlement................................... (914,864) Regulatory issues............................................ (451,053) Deferred income taxes........................................ 2,770,811 Technical assistance fee..................................... 3,284,792 Deferred expenses............................................ (30,846) Minority interest............................................ 3,041,948 -------------- US GAAP adjustments, net....................................... Ps.(27,361,658) -------------- Shareholders' Equity under US GAAP............................. Ps.191,065,619 ==============
I-83 ATTACHMENT I-4 SODIGAS PAMPEANA S.A. AND ITS SUBSIDIARY COMPANY CONSOLIDATED GENERAL BALANCE SHEET As of December 31, 1999 and 1998 (Notes 1 and 2)
1999 1998 ----------- ----------- (Pesos) ASSETS Current assets Cash and banks (Note 4.a).............................. 2,284,952 1,881,096 Investments (Schedules C and D)........................ 32,590,334 13,237,019 Trade accounts receivable (Note 4.b)................... 35,210,279 34,151,480 Intercompany receivables (Note 5)...................... 2,567,260 24,292,347 Other accounts receivable (Note 4.c)................... 4,661,345 6,269,382 Inventories (Schedule F)............................... 81,333 161,545 Other assets (Note 4.d)................................ 86,400 -- ----------- ----------- Total current assets................................. 77,481,903 79,992,869 ----------- ----------- Non-current assets Trade accounts receivable (Note 4.b)................... 426,000 426,000 Other accounts receivable (Note 4.c)................... 26,573,434 25,780,764 Investments (Note 12 and Schedule C)................... 246 -- Fixed assets (Schedule A).............................. 501,773,379 487,639,816 Intangible assets (Schedule B)......................... 1,768,989 2,243,504 Other assets (Note 4.d)................................ 1,637,710 1,217,472 ----------- ----------- Total non-current assets............................. 532,179,758 517,307,556 ----------- ----------- TOTAL ASSETS......................................... 609,661,661 597,300,425 ----------- ----------- LIABILITIES Current liabilities Suppliers (Note 4.e)................................... 33,929,766 32,744,490 Loans (Notes 4.f and 7)................................ 369,066 96,311,373 Intercompany payables (Note 5)......................... 1,010,084 1,163,309 Salaries and social security liabilities (Note 4.g).... 3,743,602 3,946,835 Taxes payable (Notes 4.h and 15)....................... 20,752,752 20,187,126 Other liabilities (Note 4.i)........................... 7,566,891 6,018,736 Provisions (Schedule E)................................ 2,601,689 2,914,472 ----------- ----------- Total current liabilities............................ 69,973,850 163,286,341 ----------- ----------- Non-current liabilities Loans (Notes 4.f and 7)................................ 79,443,000 79,485,324 Taxes payable (Notes 4.h and 15)....................... -- 4,119,816 Other liabilities (Note 4.i)........................... 10,720,648 8,969,626 ----------- ----------- Total non-current liabilities........................ 90,163,648 92,574,766 ----------- ----------- TOTAL LIABILITIES.................................... 160,137,498 255,861,107 ----------- ----------- Minority interests in subsidiary companies............. 126,245,235 127,442,886 SHAREHOLDERS' EQUITY................................... 323,278,928 213,996,432 ----------- ----------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY............. 609,661,661 597,300,425 =========== ===========
The accompanying notes and schedules are an integral part of these consolidated financial statements. I-84 SODIGAS PAMPEANA S.A. AND ITS SUBSIDIARY COMPANY CONSOLIDATED STATEMENTS OF INCOME For the Fiscal years Ended December 31, 1999 and 1998 (Notes 1 and 2)
1999 1998 ------------ ------------ (Pesos) Net sales (Note 4.j)................................ 362,593,961 367,730,669 Cost of sales (Schedule F).......................... (275,913,558) (282,239,494) ------------ ------------ Gross profit...................................... 86,680,403 85,491,175 ------------ ------------ Marketing expenses (Schedule H)..................... (10,097,695) (10,810,689) Administrative expenses (Schedule H)................ (25,327,162) (21,693,788) ------------ ------------ Operating profit.................................. 51,255,546 52,986,698 ------------ ------------ Other income and expenses, net (Note 4.l)........... 355,928 (1,857,769) Financial and holding gain/(loss) (Note 4.k) Generated by assets............................... 6,736,462 4,743,357 Generated by liabilities.......................... (13,984,217) (19,455,575) Income tax.......................................... (18,956,933) (22,129,579) Minority interests in subsidiary companies.......... (9,338,245) (7,240,946) ------------ ------------ Ordinary income................................... 16,068,541 7,046,186 Extraordinary loss (Notes 4.m and 9)................ (820,443) (327,434) Minority interests in subsidiary companies.......... 239,058 96,637 ------------ ------------ Net income for the year........................... 15,487,156 6,815,389 ============ ============
The accompanying notes and schedules are an integral part of these consolidated financial statements. I-85 SODIGAS PAMPEANA S.A. AND ITS SUBSIDIARY COMPANY CONSOLIDATED STATEMENTS OF CASH FLOWS For the Fiscal years Ended December 31, 1999 and 1998 (Notes 1 and 2)
1999 1998 ----------- ----------- (Pesos) CHANGES IN FUNDS Funds as of beginning of year........................ 15,130,484 34,426,993 Increase/(Decrease) in funds......................... 19,744,802 (19,308,878) ----------- ----------- Funds at end of year................................. 34,875,286 15,118,115 =========== =========== Sources of funds Ordinary income for the year......................... 16,068,541 7,046,186 Plus: Items not entailing the use of funds Fixed assets depreciation.......................... 19,575,586 19,380,111 Decrease in inventories............................ 84,625 -- Decrease in permanent investments.................. 288 -- Residuary value of deductions of fixed assets...... 3,197,014 2,663,351 Intangible asset amortization...................... 976,199 1,238,434 Allowance for vacations and bonuses................ 2,639,662 2,695,432 Accrued gross income tax........................... 1,594,629 2,056,436 Accrued income tax................................. 18,956,933 19,519,597 Miscellaneous allowances........................... 5,600 -- Accrued interest on notes.......................... 4,725,000 -- Accrued net financial loss pending payment......... 326,742 576,726 Accrued purchases pending payment.................. 26,388,562 29,248,888 Intercompany fees and expenses pending payment..... 980,626 1,412,566 Accrued business indebtedness cost tax............. 600,126 -- Technical assistance agreement..................... 216,048 678,051 Other liabilities and fees pending payment......... 435,426 41,595 Increase in provision for lawsuits................. 339,884 2,912,052 Increase in tax credits............................ 6,534 -- Increase in allowance for defaulting debtors....... 1,899,726 2,898,836 ----------- ----------- 82,949,210 85,322,075 Less: Items not entailing sources of funds Accrued sales pending collection................... (30,107,412) (29,552,793) Intercompany sales pending collection.............. (131,049) (20,182,698) Recovery of intercompany expenses.................. (1,490,950) (3,217,221) Other income....................................... -- (250) Accrued interest pending collection................ (487,328) -- Increase in other receivables...................... (3,000) -- ----------- ----------- (32,219,739) (52,952,962) Minority interests in subsidiary companies......... 9,338,247 7,240,946 ----------- ----------- Funds originated from ordinary operations.......... 76,136,259 46,656,245 ----------- ----------- Extraordinary loss of the year....................... (581,385) (230,797) Plus: Items not entailing the use of funds Allowance for uncollectible Mercobank S.A. Series C Certificates...................................... 151,325 36,000 Depreciation of Mercobank S.A. shares.............. 669,118 291,434 Minority interests in subsidiary companies......... (239,058) (96,637) ----------- ----------- Funds originated from extraordinary operations....... -- -- Funds originated from operations--Carried forward.... 76,136,259 46,656,245 ----------- -----------
I-86 SODIGAS PAMPEANA S.A. AND ITS SUBSIDIARY COMPANY CONSOLIDATED STATEMENTS OF CASH FLOWS--(Continued) For the Fiscal years Ended December 31, 1999 and 1998 (Notes 1 and 2)
1999 1998 ------------ ------------ (Pesos) Funds originated from operations--Brought forward.......................................... 76,136,259 46,656,245 ------------ ------------ Other sources of funds Irrevocable contribution on account of future payments....................................... 3,775,000 -- Changes in other receivables.................... 4,237,574 -- Decrease in intercompany receivables............ 22,837,135 15,141,821 Increase in bank loans.......................... -- 1,738,054 Decrease in other assets........................ -- 124,862 Decrease in interest paid in advance............ 157,500 -- Decrease in investments......................... -- 60,000 Decrease in trade accounts receivable........... 30,141,556 34,968,692 ------------ ------------ Total other sources of funds...................... 61,148,765 52,033,429 ------------ ------------ Total sources of funds............................ 137,285,024 98,689,674 ------------ ------------ Applications of funds Increase in investments......................... (8,256,877) -- Acquisition of fixed assets..................... (34,473,097) (22,731,329) Increase in other accounts receivable........... (11,837) (133,779) Changes in inventories.......................... -- (124,403) Additions of intangible assets.................. (500,160) (145,809) Changes in taxes payables and receivables....... (26,217,482) (31,770,721) Decrease in intercompany payables............... (1,117,498) (1,861,227) Decrease in salaries and social security liabilities.................................... (2,877,307) (1,509,623) Payment of financial and bank loans............. (6,311,373) (12,807,125) Distribution of dividends....................... (8,198,331) (19,214,837) Interest paid in advance........................ -- (157,500) Decrease in other accounts payable and other liabilities.................................... (1,251,582) (1,654,752) Decrease in allowances.......................... (681,367) (841,146) Decrease in suppliers........................... (27,643,311) (25,046,301) ------------ ------------ Total applications of funds....................... (117,540,222) (117,998,552) ------------ ------------ Increase/(Decrease) in funds...................... 19,744,802 (19,308,878) ============ ============ Operations not entailing sources nor application of funds Increase in other liabilities................... 4,240,632 12,764,430 Withdrawal of the Subsidiary Company's voluntary reserve........................................ (1,204,660) (12,764,430) Decrease in minority interests.................. (495,340) -- Acquisition of gas distribution networks with liabilities.................................... (2,540,632) -- Acquisition of fixed assets..................... (11,971) -- Addition of intangible assets................... (144,989) -- Increase in intercompany payables............... 156,960 -- Decrease in loans (principal plus interest)..... 94,725,000 -- Irrevocable contribution on account of future payments....................................... (94,725,000) -- ------------ ------------ Total operations not entailing sources nor application of funds............................. -- -- ------------ ------------
The accompanying notes are an integral part of these consolidated financial statements. I-87 SODIGAS PAMPEANA S.A. AND ITS SUBSIDIARY COMPANY NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the Fiscal Years Ended December 31, 1999 and 1998 NOTE 1: FINANCIAL STATEMENT PRESENTATION As required by General Resolution No. 290/97 of the Comision Nacional de Valores (the "CNV"), which establishes that consolidated financial statements must be submitted following the procedure outlined in Technical Resolution No. 4 of the Argentine Federation of Professional Councils of Economic Sciences, the Balance Sheets of the Company at December 31, 1999 and 1998, and the Statements of Income and Cash Flows for the fiscal years then ended have been consolidated on a line-by-line basis with the financial statements of the Subsidiary Company. Non-monetary items included in the Financial Statements at December 31, 1999 and 1998, have been restated in current Pesos up to August 31, 1995. No adjustments have been applied since such date. Although the Consolidated Financial Statements of our Subsidiary Company, Camuzzi Gas Pampeana S.A. are not presented in comparative form due to the fact that the Financial Statements of the Subsidiary Company I.V. Invergas S.A. as of December 31, 1998 apply to an irregular 14-day period (commenced on December 18, 1998) but taking into consideration that the effect of the Financial Statements of I.V. Invergas S.A. on the Consolidated Financial Statements of Camuzzi Gas Pampeana S.A. is not significant, these Financial Statements are presented in comparative form. The information as of December 31, 1998, has been reclassified, for comparative purposes, in order to be consistent with that of the current year. The December 31, 1999 and 1998 financial statements of the Subsidiary Company, Camuzzi Gas Pampeana S.A., which cover the same period as that of its Controlling Company, Sodigas Pampeana S.A., have been used in order to determine the equity value and carry out the consolidation. NOTE 2: VALUATION CRITERIA The financial statements of the Subsidiary Company have been prepared based on criteria consistent with those applied for preparing the financial statements of Sodigas Pampeana S.A. In addition, the principal valuation and disclosure criteria used for the preparation of the consolidated financial statements at December 31, 1999 and 1998, are as follows: a.Local currency assets and liabilities The local currency assets and liabilities have been stated at their face value at the balance sheet date, including accrued interest. The implicit cost of financing contained in the monetary assets and liabilities has not been segregated as it is not deemed significant. b.Foreign currency assets and liabilities Foreign currency assets and liabilities were translated at the exchange rate prevailing on the balance sheet date, including accrued interest. I-88 SODIGAS PAMPEANA S.A. AND ITS SUBSIDIARY COMPANY NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(Continued) c.Investments Current These are the following: -- Shares and participation in investment funds which have been valued at their market value or at their acquisition value as of the balance sheet date. -- Fixed-term deposits, which have been valued at their original amount plus interest accrued up to the closing date. Non-current These represent the investment in I.V. Invergas S.A., owner of 99.99% of the shares and voting rights of Distribuidora Gesell Gas S.A. (see Note 10). As of December 31, 1999, such investment has been valued at its acquisition cost. d.Receivables to be recovered from customers These assets stem from agreements signed by Camuzzi Gas Pampeana S.A. with provinces, municipalities and other entities, to be recovered from customers who are currently connected, or will be connected in the future, to the network pursuant to the agreements. These were agreed upon in cubic meters of gas and have been valued at the average tariff for gas distributed. e.Contribution of improvements receivables The works related to the gas distribution network of the Subsidiary Company are financed through the contribution of improvements applicable to the frontage landowners or holders of the plots of land of the city of Villa Gesell. The works performed are mandatorily payable by the owners or holders of the benefited premises. Such obligation is instrumented through debt certificates issued by Distribuidora Gesell Gas S.A. and submitted to the Municipality of Villa Gesell for their confirmation. The Municipality certifies that the network construction work has been performed by granting the certificate the nature of a liquid, due and unconditional debt (titulo ejecutivo) in accordance with section 521 of the Argentine Civil Code. The collection of the contribution of improvements receivables is enforceable within ten days after the notice of the liquidation approved by the Municipality. In order for such notice to be effective it must be published in the Official Gazette (Boletin Oficial). The contribution of improvements receivables are stated at their face value at the balance sheet date, including accrued interest. f.Inventories These have been valued at their replacement cost as of the end of the year; the value thereof does not exceed their recoverable value. I-89 SODIGAS PAMPEANA S.A. AND ITS SUBSIDIARY COMPANY NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(Continued) g.Other assets Current -- LPG storage and vaporization Plant assigned to the Subsidiary Company Distribuidora Gesell Gas S.A. during the spin-off, which has been segregated for its sale. The plant is valued at its estimated recovery value. Non-current -- Other assets include Class "C" shares and bonds issued by Mercobank S.A.; these securities were received in exchange for deposits made with Banco de Credito Provincial S.A., at the time of its suspension, as mentioned in Note 9 to the Consolidated Financial Statements. These assets were valued at their estimated recovery value. -- Includes the proportion of the cost of the work related to income to be acknowledged in connection with the debt certificates for the contribution of improvements held by the Municipality of Villa Gesell (see Note 10). Other non-current assets also includes the costs of the works performed in relation to the second tranche of the works agreed upon with the Municipality of Villa Gesell. Once operative, such costs will constitute a receivable to be recovered on account of contribution of improvements (see Note 2.e). h.Fixed assets The fixed assets transferred by Gas del Estado at the beginning of the operations of Camuzzi Gas Pampeana S.A. have been valued in an overall manner, according to the contract for the transfer of the Company's shares by Gas del Estado. This value has been restated in current Pesos as at August 31, 1995. The aforementioned value was recalculated for each individual fixed asset, based on the stocktaking and valuation carried out during the fiscal year ended December 31, 1993 by independent consultants. Additions carried out after such date and up to August 31, 1995, were valued at their acquisition cost, restated in current Pesos at such date. As from September 1, 1995, additions have been valued at their acquisition cost in current Pesos of the corresponding period. Up to December 31, 1995, additions of gas distribution networks in favor of the Licensee Company made free of charge, were recorded at their replacement cost at the time of the transfer under the item "Other Income". According to resolutions of the CNV adopted in the meetings held on July 28 and August 10, 1995, the gas distribution networks transferred free of charge or partially funded by third parties after December 31, 1995 shall be recorded at the lower of their construction cost or the cost set for the transfer and their value to the business. In the case that the value of the asset added exceeds the value of the consideration assumed by the Licensee, or if such consideration does not exist (free of charge), a cross-entry shall be recorded in an adjustment account, which is shown deducted from the Fixed Assets, whose depreciation criteria is equivalent to that of the asset added. The obligation to partially or totally compensate third parties is recorded as a liability of the Subsidiary Company. The values thus determined are disclosed net of the corresponding accumulated depreciation, calculated using the straight-line method, based on the estimated useful lives of the assets. I-90 SODIGAS PAMPEANA S.A. AND ITS SUBSIDIARY COMPANY NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(Continued) The Subsidiary Company defers the net costs derived from the financing with third party capitals of construction works which extends in time until they are in start-up conditions. The amount capitalized in fixed assets amounted to Ps. 1,202,029 during the fiscal year ended December 31, 1999. Also, includes the Fixed Assets transferred to the Subsidiary Company, Distribuidora Gesell Gas S.A., as a result of the spin-off, and additions carried out subsequently and up to December 31, 1999. Fixed Assets transferred at the beginning of the fiscal year have been restated up to August 31, 1995 and the additions were valued at their acquisition cost, restated in current Pesos at such date. The value of the Fixed Assets, taken as a whole, does not exceed their recoverable value. i.Intangible assets Correspond to: -- The purchase of computer software and expenses in relation to the programs for the issuance of the Notes by Sodigas Pampeana S.A. and its Subsidiary Company, to be amortized over a five-year period. -- Organization expenses of the Subsidiary Company, Distribuidora Gesell Gas S.A., related to the home gas distribution network conversion, in order to enable the distribution of natural gas, and are amortized over a three-year period. Additions of Intangible Assets made up to August 31, 1995 are recorded at their acquisition cost restated in current Pesos at such date, while additions carried out after September 1, 1995 are disclosed at their acquisition cost in current Pesos of the corresponding period, in both cases net of their corresponding cumulative amortization, calculated according to the straight- line method. j.Shareholders' equity The Capital Stock has been stated at its nominal value. The Capital Stock Adjustment represents the difference between the nominal value of the capital stock and its value adjusted, based on the fluctuation in the general wholesale price index up to August 31, 1995. Changes in net worth prior to August 31, 1995 are restated as of that date, while subsequent changes are stated in the currency value of the corresponding fiscal year. k.Profit/(loss) accounts Profit/(loss) for the year is disclosed at historical values, except for the charges for assets consumed (fixed asset depreciation and intangible asset amortization), which were determined according to the values of such assets. l.Accounting recognition of income The income stemming from gas distribution activities is recognized when the service is rendered and charged to the "Unbilled gas consumption" account. m.Statement of Cash Flows The Statement of Cash Flows is presented using the Indirect Method of Alternative D of Technical Resolution No. 9 of the Argentine Federation of Professional Councils of Economic Sciences, considering Cash and Banks and Short-Term Investments as funds. I-91 SODIGAS PAMPEANA S.A. AND ITS SUBSIDIARY COMPANY NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(Continued) n.Accounting estimates The preparation of these financial statements as of a specified date requires that the Subsidiary Company's management performs estimates and assessments that affect the amount of the recorded assets and liabilities and the contingent assets and liabilities disclosed as of the date of these financial statements, as well as the income and expenses recorded during the year. The Subsidiary Company's management makes estimates so as to calculate, among other things, the income tax charge, the unbilled gas consumptions, the discounts to be made to users and the provisions for contingencies, as of a certain date. The actual future results may differ from the estimates and assessments made as of the date of the financial statements. NOTE 3: CORPORATE CONTROL Sodigas Pampeana S.A. owns 70.862335% of the shares of Camuzzi Gas Pampeana S.A. NOTE 4: BREAKDOWN OF ITEMS Balance Sheet a.Cash and banks
As of December 31, ----------------------- 1999 1998 ----------- ---------- (Pesos) Imprest fund...................................... 123,773 93,549 Banks (Schedule G)................................ 2,161,179 1,787,547 ----------- ---------- Total........................................... 2,284,952 1,881,096 =========== ========== b.Trade accounts receivable As of December 31, ----------------------- 1999 1998 ----------- ---------- (Pesos) Current Trade debtors..................................... 23,825,582 22,312,546 Subsidies receivable.............................. 3,783,730 3,869,186 Unbilled gas consumption.......................... 17,610,221 17,543,890 ----------- ---------- Subtotal........................................ 45,219,533 43,725,622 Less: Allowance for defaulting debtors (Schedule E)............................................... (10,009,254) (9,574,142) ----------- ---------- Total........................................... 35,210,279 34,151,480 ----------- ---------- Non current Subsidies receivable.............................. 426,000 426,000 ----------- ---------- Total........................................... 426,000 426,000 ----------- ---------- Total trade accounts receivable................. 35,636,279 34,577,480 =========== ==========
I-92 SODIGAS PAMPEANA S.A. AND ITS SUBSIDIARY COMPANY NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(Continued) c.Other accounts receivable
As of December 31, ---------------------- 1999 1998 ---------- ---------- (Pesos) Current Receivables to be recovered from customers (Note 2.d)............................................... 207,130 584,852 Contribution of improvements receivables (Note 2.e)............................................... 327,598 -- Guarantee deposits.................................. 307,502 293,775 Receivables to be recovered as per Section 41 Law 24,076 (Note 15.b)................................. 3,057,091 4,509,822 Miscellaneous advance payments...................... 119,819 172,059 Prepaid expenses.................................... 421,339 249,136 Miscellaneous....................................... 335,457 459,738 ---------- ---------- Subtotal.......................................... 4,775,936 6,269,382 ---------- ---------- less: Allowance for uncollectibility of contribution of improvements receivables (Schedule E)........... (114,591) -- ---------- ---------- Total............................................. 4,661,345 6,269,382 ---------- ---------- Non-current Judicial deposits................................... 551,410 159,215 Receivables to be recovered from customers (Note 2.d)............................................... 223,436 117,140 Receivables to be recovered as per Section 41 Law 24,076 (Note 15.b)................................. 22,354,184 25,402,907 Contribution of improvements receivables (Note 2.e)............................................... 4,385,658 -- Prepaid expenses.................................... 55,363 64,155 Restricted availability funds....................... 64,330 -- Miscellaneous....................................... 35,468 37,347 ---------- ---------- Subtotal.......................................... 27,669,849 25,780,764 ---------- ---------- less: Allowance for uncollectibility of contribution of improvements receivables (Schedule E)........... (1,096,415) -- ---------- ---------- Total............................................. 26,573,434 25,780,764 ---------- ---------- Total Other accounts receivable................... 31,234,779 32,050,146 ========== ==========
I-93 SODIGAS PAMPEANA S.A. AND ITS SUBSIDIARY COMPANY NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(Continued) d.Other assets
As of December 31, ---------------------- 1999 1998 ---------- ---------- (Pesos) Current Fixed assets segregated for sale................... 86,400 -- ---------- ---------- Total............................................ 86,400 -- ---------- ---------- Non-current Works in progress (Note 2.g and 10)................ 1,240,682 -- Series C Certificates, Mercobank S.A. (Note 9)..... 667,325 667,325 Fixed-term deposits with Mercobank S.A. (Note 9)... -- 517,455 Mercobank S.A.'s shares (Note 9)................... 1,038,639 840,126 ---------- ---------- Subtotal......................................... 2,946,646 2,024,906 ---------- ---------- less: Allowance for depreciation of Mercobank S.A.'s shares (Note 9 and Schedule E).................. (641,611) (291,434) Allowance for uncollectibility of Series C Certificates (Note 9 and Schedule E)............ (667,325) (516,000) ---------- ---------- Subtotal......................................... (1,308,936) (807,434) ---------- ---------- Total............................................ 1,637,710 1,217,472 ---------- ---------- Total other accounts receivable.................. 1,724,110 1,217,472 ========== ========== e.Suppliers As of December 31, ---------------------- 1999 1998 ---------- ---------- (Pesos) Suppliers (Schedule G)............................. 7,861,246 4,020,134 Accrued invoices to be received.................... 26,068,520 28,724,356 ---------- ---------- Total............................................ 33,929,766 32,744,490 ========== ==========
f.Loans
As of December 31, ---------------------- 1999 1998 ---------- ----------- (Pesos) Current Bank debts............................................ -- 2,150,000 Notes (Schedule G).................................... -- 90,000,000 Letters of credit (Schedule G)........................ 42,467 3,585,024 Accrued interest (Schedule G)......................... 326,599 576,349 ---------- ----------- Total............................................... 369,066 96,311,373 ---------- ----------- Non-current Letters of credit (Schedule G)........................ -- 42,324 Notes (Schedule G).................................... 79,443,000 79,443,000 ---------- ----------- Total............................................... 79,443,000 79,485,324 ---------- ----------- Total loans......................................... 79,812,246 175,796,697 ========== ===========
I-94 SODIGAS PAMPEANA S.A. AND ITS SUBSIDIARY COMPANY NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(Continued) g.Salaries and social security
As of December 31, --------------------- 1999 1998 ---------- ---------- (Pesos) Social security liabilities payable.................. 809,376 901,436 Allowance for vacations.............................. 1,647,601 1,650,772 Allowance for bonuses................................ 1,242,220 1,322,973 Others............................................... 44,405 71,654 ---------- ---------- Total.............................................. 3,743,602 3,946,835 ========== ========== h.Taxes payable As of December 31, --------------------- 1999 1998 ---------- ---------- (Pesos) Current Value added tax...................................... 2,522,347 3,041,545 Gross revenue tax.................................... 1,592,845 2,040,654 Income tax........................................... 8,202,578 7,956,479 Provincial taxes..................................... 1,792,672 1,645,507 Municipal rates...................................... 1,489,293 1,365,903 Tax on cost of business indebtedness................. 600,126 86,263 Tax amnesty.......................................... 4,119,246 4,023,808 Others............................................... 433,645 26,967 ---------- ---------- Total.............................................. 20,752,752 20,187,126 ---------- ---------- Non-current Tax amnesty.......................................... -- 4,119,816 ---------- ---------- Total.............................................. -- 4,119,816 ---------- ---------- Total tax payables................................. 20,752,752 24,306,942 ========== ========== i.Other liabilities As of December 31, --------------------- 1999 1998 ---------- ---------- (Pesos) Current Gas-in-kind payables................................. 2,362,240 2,548,780 Consumer reconnection deposits....................... 161,317 184,743 Reimbursements to be passed through on account of additional transportation charges................... 1,704,223 1,032,802 Other accounts payable............................... 3,339,111 2,252,411 ---------- ---------- Total.............................................. 7,566,891 6,018,736 ---------- ---------- Non-current Gas-in-kind payables................................. 10,719,648 8,968,626 Other accounts payable............................... 1,000 1,000 ---------- ---------- Total.............................................. 10,720,648 8,969,626 ---------- ---------- Total other liabilities............................ 18,287,539 14,988,362 ========== ==========
I-95 SODIGAS PAMPEANA S.A. AND ITS SUBSIDIARY COMPANY NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(Continued) Statement of income j.Net sales
For the fiscal years ended December 31, ------------------------ 1999 1998 ----------- ----------- (Pesos) Gas sales............................................. 371,278,212 375,138,727 Sales of other items.................................. 3,481,234 2,243,917 Direct taxes on sales................................. (12,165,485) (9,651,975) ----------- ----------- Total............................................... 362,593,961 367,730,669 =========== =========== k.Financial and holding gain/(loss) For the fiscal years ended December 31, ------------------------ 1999 1998 ----------- ----------- (Pesos) Generated by assets Interest.............................................. 6,217,283 4,341,758 Income from investments............................... 513,135 391,747 Exchange differences.................................. 3,529 720 Listing differences................................... -- 1,953 Discounts obtained.................................... 2,515 7,179 ----------- ----------- Total............................................... 6,736,462 4,743,357 ----------- ----------- Generated by liabilities Financial interest.................................... (11,299,922) (17,282,651) Interest on tax debts................................. (828,061) (2,151,331) Business indebtedness cost tax........................ (1,837,815) -- Exchange differences.................................. (4,084) (8,517) Miscellaneous......................................... (14,335) (13,076) ----------- ----------- Total............................................... (13,984,217) (19,455,575) ----------- ----------- Financial (loss), net............................... (7,247,755) (14,712,218) =========== ===========
I-96 SODIGAS PAMPEANA S.A. AND ITS SUBSIDIARY COMPANY NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(Continued) l.Other income and (expenses), net
For the fiscal years ended December 31, ---------------------- 1999 1998 ---------- ---------- (Pesos) Other income Leases income...................................... 396,200 255,900 Engineering services income........................ 898,142 -- Commissions for collection charges on behalf of third parties..................................... 83,875 85,767 Income from fixed assets sale...................... 32,364 -- Miscellaneous...................................... 318,684 1,457,075 ---------- ---------- Total............................................ 1,729,265 1,798,742 ---------- ---------- Other expenses Provision for lawsuits (Schedule "E").............. (375,820) (2,843,200) Miscellaneous...................................... (810,008) (813,311) Loss from non-current investments purchase......... (187,509) -- ---------- ---------- Total............................................ (1,373,337) (3,656,511) ---------- ---------- Total other income and (expenses), net........... 355,928 (1,857,769) ========== ========== m.Extraordinary (loss) Uncollectibility of Series "C" Certificates (Schedule E)...................................... (151,325) (36,000) Depreciation of Mercobank S.A.'s shares (Schedule E)................................................ (669,118) (291,434) ---------- ---------- Total (loss)..................................... (820,443) (327,434) ========== ========== NOTE 5: INTERCOMPANY BALANCES AND OPERATIONS As of December 31, ---------------------- 1999 1998 ---------- ---------- (Pesos) Receivables Empresa de Energia de Rio Negro S.A................ 29,217 -- Aguas de Balcarce S.A.............................. 216 1,449 Aguas de Laprida S.A............................... 2,000 6,155 Camuzzi Gas del Sur S.A............................ 463,558 732,219 Sodigas Sur S.A.................................... 26,110 147,510 Empresa Distribuidora de Energia Atlantica S.A..... -- 83,341 Inversora Electrica de Buenos Aires S.A............ 167,341 590,000 Central Piedrabuena S.A.(2)........................ 1,878,554 22,731,673 CNG Argentina S.A.................................. 264 -- ---------- ---------- Total............................................ 2,567,260 24,292,347 ========== ========== Payables CNG................................................ 50,000 25,000 Camuzzi Argentina S.A.............................. 906,874 1,113,309 Empresa Distribuidora de Energia Atlantica S.A..... 3,210 -- Sempra Energy International Chile Holdings I.B.V... 50,000 25,000 ---------- ---------- Total............................................ 1,010,084 1,163,309 ========== ==========
I-97 SODIGAS PAMPEANA S.A. AND ITS SUBSIDIARY COMPANY NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
For the fiscal years ended December 31, ---------------------- 1999 1998 ---------- ---------- (Pesos) Income/(loss) accounts Camuzzi Gas del Sur S.A. Propane gas sales (*)................................. 990,674 187,454 Administrative and personnel services (*)............. 3,458,401 3,304,509 Gas transportation.................................... (8,428) -- Assistance service for natural gas transportation..... 2,540,571 -- Regulators sale (*)................................... 32,364 -- Camuzzi Argentina S.A. Technical assistance and professional fees............ (4,038,111) (4,067,930) Work inspection service fees.......................... -- (339,209) Maintenance service of computer systems............... (241,022) (626,662) Recovery of expenses incurred for administrative financial advice (*)................................. 283,959 986,890 Financial and administrative advisory services (*).... (183,399) (499,704) Leases income (*)..................................... 421,131 255,900 Administrative expenses recovery (*).................. 183,532 272,412 Recovery of expenses.................................. (50,000) (50,000) Loma Negra C.I.A.S.A Gas sales (1)......................................... -- 4,180,508 Aguas de Balcarce S.A. Administrative and personnel services (*)............. 7,074 7,440 Aguas de Laprida S.A. Administrative and personnel services (*)............. 20,207 3,096 Empresa Distribuidora de Energia Atlantica S.A. Gas sales............................................. 12,612 10,559 Purchases of electricity.............................. (50,715) (55,121) Administrative expenses recovery (*).................. 68,338 133,730 Empresa de Energia de Rio Negro S.A. Administrative and personnel services (*)............. 17,222 -- Administrative and financial advisory fees (*)........ 6,925 -- Central Piedrabuena S.A. Gas sales............................................. 23,700,701 52,271,752 Sempra Energy International Chile Holdings I.B.V. Recovery of expenses.................................. (25,000) (25,000) CNG Recovery of expenses.................................. (25,000) (25,000) Sodigas Sur S.A. Personnel services.................................... 206,030 147,510 Recovery of expenses.................................. 99,796 -- Financial interest.................................... 1,518 -- Inversora Electrica de Buenos Aires S.A. Financial advisory services recovery.................. -- 100,000 Administrative services (*)........................... 183,564 490,000 Other Operations Camuzzi Argentina S.A. Technical advisory services capitalized in works in progress (*)......................................... 331,983 181,396 Work inspection and direction services fees (*)....... -- 161,293 Software acquisition (*).............................. 56,800 129,624 Sale of vehicles (*).................................. -- 45,125 Miscellaneous (*)..................................... 51,614 40,782 Aguas de Balcarce S.A. Sale of vehicles (*).................................. 1,650 -- Camuzzi Gas del Sur S.A. Storage material acquisition.......................... 36,890 -- Administrative and personnel services................. 325 -- Miscellaneous......................................... 2,134 127,222 CNG Argentina S.A. Miscellaneous (*)..................................... 264 -- Empresa Distribuidora de Energia Atlantica S.A. Miscellaneous......................................... 803 38,244 Central Piedrabuena S.A. Miscellaneous......................................... -- 3,420 IEBA S.A. Miscellaneous......................................... 10,059 --
(Notes appear on the following page) I-98 SODIGAS PAMPEANA S.A. AND ITS SUBSIDIARY COMPANY NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(Continued) - -------- (*) Corresponds to operations which approval is pending by the Board of Directors of the Company. (1) On March 26, 1998, Loma Negra C.I.A.S.A. sold its interest in Sodigas Pampeana S.A., the controlling company of Camuzzi Gas Pampeana S.A. (2) Central Piedrabuena S.A. made payments under protest for approximately Ps. 2.0 million and additionally, it has not recorded approximately Ps. 1.9 million, which were originated by amounts due under the gas purchase agreement in force as of the time of the approval of the service. As of the date hereof, the dispute has been submitted to arbitration by the Regulatory Authority. Furthermore, the payment condition in force as of the time of the approval of the service is pending approval by the Board of Directors. In the opinion of the Subsidiary Company and its legal counsel, an adverse decision in relation to the aforementioned dispute is considered improbable. Clarifying note: The Subsidiary Company, Camuzzi Gas Pampeana S.A., together with Camuzzi Gas del Sur S.A. is currently involved in a dispute with Camuzzi Argentina S.A., in regard to the ownership of the invoicing and collection system (AG system). As of the date hereof, the parties are negotiating a resolution to solve the dispute. The parties have agreed that if they cannot settle the dispute, the dispute will be submitted to an arbitrator for resolution. In the opinion of the Subsidiary Company and its legal counsel, an adverse decision regarding the aforementioned claim is considered not probable. NOTE 6: MANDATORY INVESTMENTS OF THE SUBSIDIARY COMPANY Chapter IV of the Distribution License states that the Subsidiary Company, Camuzzi Gas Pampeana S.A., must undertake a five-year plan from 1993 to 1997, which includes investments in network pipelines, services, protection against rust and corrosion, communications equipment and SCADA (centralized telemeasurement and control equipment system). The amounts of the investments, as set by the License for each year, are the following:
Year U.S.$ ---- ---------- 1993............................................................ 6,104,000 1994............................................................ 7,793,000 1995............................................................ 7,460,000 1996............................................................ 7,074,000 1997............................................................ 8,679,000 ---------- Total......................................................... 37,110,000 ==========
Additionally, the Licensee has fulfilled in due time and manner the mandatory investments for 1993, 1994, and 1996, and was notified of such fulfillment by ENARGAS following an operating audit of such investments. As a consequence of the differences in criteria regarding the investments corresponding to the year 1995, the Regulatory Authority has required Camuzzi Pampeana S.A. to post a U.S.$216,400 guarantee until the situation is settled. Mandatory investments for the year 1997 are pending approval by the Regulatory Authority. NOTE 7: ISSUANCE OF NOTES BY THE SUBSIDIARY COMPANY On December 11, 1996, together with Camuzzi Gas del Sur S.A., Camuzzi Gas Pampeana S.A. issued jointly and severally Notes not convertible into shares under a Medium-Term-Note Program which was approved by Resolution No. 136 of the CNV dated December 6, 1996. I-99 SODIGAS PAMPEANA S.A. AND ITS SUBSIDIARY COMPANY NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(Continued) Such issue was approved by the Board of Directors of the Licensee on November 12, 1996; the main purpose of this issue was to provide Camuzzi Gas Pampeana S.A. with an important availability of funds in order to (i) refinance Series B of the Notes in an aggregate principal amount of U.S.$90,000,000 issued jointly and severally with Camuzzi Gas del Sur S.A. under the Note Program approved by the Company's Shareholders' Meeting dated October 25, 1993; (ii) develop its investment plans; (iii) pay up working capital and (iv) refinance other liabilities. The conditions for the issuance are as follows: . Aggregate principal amount: U.S.$130,000,000 . Percentage corresponding to Camuzzi Gas Pampeana S.A.: 61.11% . Interest rate: 9 1/4%, payable semi-annually in arrears. . Price: 99.80%. . Maturity of principal: December 15, 2001. The aforementioned program was created under a joint issuance with Camuzzi Gas del Sur S.A., and the two companies will be jointly and severally liable for the payment of interest and principal. On May 9, 1997, the issued Notes were registered before the United States Securities and Exchange Commission (SEC). The main restrictions under the offering circular for the issuance of Notes are the following: (a) Limitations on Liens: neither of the Issuers shall, nor shall either of the Issuers permit any of their respective Subsidiaries to, incur, assume or suffer the existence of, any lien upon its property, assets or revenues, whether now owned or hereafter acquired, securing any indebtedness of any person, unless the Notes are equally and ratably secured by such Liens, except for: (i) Liens existing on the Issue Date of the Notes: (ii) Liens for taxes or other governmental charges not yet due or which are being contested in good faith by appropriate proceedings; provided that adequate reserves with respect thereto are maintained on the books of such Issuer or such Subsidiary Company, as the case may be, in conformity with Argentine professional accounting standards; (iii) Liens on all or part of any property, assets (including, without limitation, equity interests) or revenues to secure indebtedness incurred solely for purposes of financing the acquisition, construction or installation thereof incurred concurrently with or within 120 days after the completion of such acquisition, construction or installation, or liens on any property, assets (including, without limitation, equity interests) or revenues existing on the date of the acquisition thereof; (iv) Liens arising in the ordinary course of business which do not secure indebtedness and which (A) are not in effect for a period of more than 60 days, (B) are being contested in good faith by appropriate proceedings, which have the effect of preventing the forfeiture or sale of the property or the assets subject to any such lien, or (C) secure an obligation of less than U.S.$1,000,000; (v) Any attachment or judgment lien, unless (A) within 60 days after the entry thereof, its discharge has not been filed or execution thereof stayed pending appeal, (B) shall not have been discharged within 60 days after the expiration of any such stay or (C) is for an amount less than U.S.$1,000,000; I-100 SODIGAS PAMPEANA S.A. AND ITS SUBSIDIARY COMPANY NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(Continued) (vi) Liens created or deposits made to secure the performance of bids, trade contracts, leases, statutory obligations, surety and appeal bonds and other obligations of a like nature incurred in the ordinary course of business; (vii) Any lien imposed by operation of mandatory provisions of applicable law that do not materially affect the Shareholders' Equity of the Issuers to perform their respective obligations under the Notes or Indenture; (viii) Liens other than those described in the foregoing clauses (i) through (vii) upon the property, assets or revenues of either or both of the Issuers or any of their respective Subsidiaries securing indebtedness in an aggregate principal amount not in excess of U.S.$10,000,000 (or its equivalent in other currencies) at any time outstanding; and (ix) Any extension, renewal or replacement, in whole or in part, of any lien described in the foregoing clauses (i) through (viii), provided that (A) such extension, renewal or replacement does not extend to any property other than that originally subject to the liens being extended, renewed or replaced and (B) the principal amount of the indebtedness secured by such lien is not increased. (b) Maintenance of the Net Worth to Consolidated Indebtedness Ratio: Neither of the Issuers shall permit the ratio of its Net Worth to its Consolidated Indebtedness to be less than 1 to 1. (c) Restrictions on Sale and Lease-Back Agreement: Neither of the Issuers shall, nor shall either of the Issuers permit any Subsidiary Company to, enter into any Sale and Lease-Back Agreement with respect to any property unless (i) such agreement involves a lease for a term of no more than three years by the end of which it is intended that the use of such property by the lessee shall be discontinued, (ii) such agreement is between the Issuers, or between either or both of the Issuers and a Subsidiary Company, or between Subsidiaries, (iii) the Issuers or any Subsidiary Company would not be entitled to incur indebtedness secured by a mortgage on the property involved in such agreement at least equal in amount to the Attributable Debt with respect to such Sale and Lease-Back Agreement, without equally and ratably securing the Notes, (iv) the proceeds of such agreement are at least equal to the fair market value thereof (as determined in good faith by the Board of Directors of each of the Issuers) and the Issuers apply an amount equal to the greater of the net proceeds of such sale or the Attributable Debt with respect to such Sale and Lease-Back Agreement within 180 days of such sale to either (or a combination of) (A) the amortization (other than any mandatory amortization, mandatory prepayment or sinking fund payment or by payment at maturity) of debt for borrowed money of either or both of the Issuers or a Subsidiary Company (other than debt that is subordinated to the Notes or debt to either or both of the Issuers or a Subsidiary Company) that matures more than 12 months after the creation of such debt or (B) the purchase, construction or development of other comparable property, or (v) such agreement is entered into within 120 days after the initial acquisition by such Issuer or the Subsidiary Company, as the case may be, of the property subject to such agreement. (d) Merger, Consolidation or Sale of Assets: Neither of the Issuers will merge into or consolidate with any person or sell, lease, transfer or otherwise convey or dispose of all or substantially all of its assets, whether by one transaction or a series of transactions, to any person, (a) unless, in the case of any such merger or consolidation, (i) such Issuer is the successor person and (ii) any Noteholder who elects to be guaranteed or repaid upon such merger or consolidation pursuant to Argentine law is so guaranteed or repaid by either of the Issuers, or (b) unless, in the case of any such other transaction, (i) immediately after giving effect to such transaction or series of transactions, no Event of Default or event which, after the giving of notice or the lapse of time or both, would constitute an Event of Default, will have occurred and be continuing, (ii) the successor person is a company that will expressly assume the obligations of such Issuer under the Notes and the Indenture, and (iii) such Issuer shall have delivered to the Trustee an officer's certificate and an opinion of counsel stating that such merger, consolidation, sale, lease, transfer or other conveyance or disposition complies with the Notes I-101 SODIGAS PAMPEANA S.A. AND ITS SUBSIDIARY COMPANY NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(Continued) and that all conditions precedent therein relating to such transaction have been met. Upon the occurrence of any such merger, consolidation, sale, lease, transfer or other conveyance or disposition of all or substantially all of such Issuer's assets, the successor person will succeed to and become substituted for the Issuer or both Issuers, as the case may be, and may exercise every right and power of such Issuer with the same effect as if it had been named in the Notes and the Indenture and, thereafter, such Issuer will be released from its liability as obligor on the Debt Securities and under the Indenture. NOTE 8: RESTRICTIONS ON THE SUBSIDIARY COMPANY'S ASSETS Assets essential for the rendering of the service Pursuant to the provisions of the terms and conditions for the privatization of the natural gas distribution services, the Company must obtain ENARGAS's prior consent to sell, assign, encumber or dispose of assets essential for the service. Failure to secure such consent may result in the revocation of the License. NOTE 9: AMOUNTS TO BE RECOVERED BY CAMUZZI GAS PAMPEANA S.A. FROM BANCO MERCOBANK S.A. The Central Bank of the Argentine Republic (the "Central Bank"), through Resolution No. 365 dated August 20, 1997, suspended Banco Credito Provincial S.A. from operating as an authorized banking company, except with respect to those transactions with the Central Bank relating to from monetary and/or exchange regulation transactions; purchase and credit card transactions in effect as at such date; credit collection transactions, transactions involving fund management or related to the compliance with labor, social security or tax obligations; and the payment of pensions with funds provided for by the National Social Security Administration. In addition, on December 18, 1997, the Central Bank pursuant to Resolution No. 741, authorized a group of Banco Credito Provincial S.A.'s most significant depositors to acquire interests in Mercobank S.A., a retail commercial bank created pursuant to section 7 of the Argentine Financial Institutions Law. In exchange for the remaining outstanding deposits not assumed by Mercobank S.A., Camuzzi Gas Pampeana S.A. received Ps. 861,401 in Series C Certificates issued by the trust created by Mercobank S.A., with Promotora Fiduciaria S.A. serving as trustee, representing 40% of the amounts due from Banco Credito Provincial S.A. On August 25, 1998, Mercobank S.A. capitalized 22.53% of the amounts corresponding to the Series C Certificates in shares. Accordingly, 194,076 ordinary shares have been subscribed, with a par value of Ps. 1 (one peso) each. On April 30, 1999, the Ordinary and Extraordinary Shareholders' Meeting of Mercobank S.A. approved a capital increase of Ps. 40,000,000, through the capitalization of the fixed term deposits made by the shareholders. Furthermore, a capital decrease of Ps. 20,144,000 was approved in order to absorb accumulated losses. Consequently, as of December 31, 1999, the amount of the shares and Series "C" Certificates totalled Ps. 1,038,639 and Ps. 667,325, respectively. The Subsidiary Company set up an allowance of Ps. 667,325 corresponding to the portion of doubtful collectibility of the Series C Certificates it received. Regarding the shares held by the Subsidiary Company, as mentioned in Note 2.f., the same were valued at their estimated recovery value, and, consequently, an allowance for depreciation amounting to Ps. 641,611 was set up. I-102 SODIGAS PAMPEANA S.A. AND ITS SUBSIDIARY COMPANY NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(Continued) NOTE 10: DEBT CERTIFICATES RELATED TO THE CONTRIBUTION OF IMPROVEMENTS HELD BY THE MUNICIPALITY OF VILLA GESELL As of the date of these Financial Statements, the Municipality of Villa Gesell holds debt certificates related to the contribution of improvements belonging to Distribuidora Gesell Gas S.A. for an aggregate amount of Ps. 1,573,488, which have been timely submitted for confirmation, their collection not being due as of December 31, 1999. (see Note 2.e). Furthermore, Ps. 708,064 are included under Other non-current assets caption for the proportion of the cost of the work related to income to be acknowledged at the time of the confirmation of such certificates enforcement. (see Note 2.g). NOTE 11: ADJUSTMENTS TO THE INITIAL FINANCIAL STATEMENTS OF I.V. INVERGAS S.A. This note makes reference to the adjustments to the Special Balance Sheet prepared in relation to the corporate spin-off upon which Distribuidora Gesell Gas S.A., subsidiary company of I.V. Invergas S.A., was originated. On November 20, 1999, the revision process of the Spin-off Special Balance Sheet as of December 31, 1998 of the subsidiary company Distribuidora Gesell Gas S.A. was completed. As a result of such revision process, certain adjustments to the above- mentioned Spin-off Special Balance Sheet have arisen, the effect of which has been recognized as a higher value of the investments in the Financial Statements of the Subsidiary Company as of December 31, 1999. NOTE 12: NON-CURRENT INVESTMENTS OF THE SUBSIDIARY COMPANY On May 28, 1999, the Subsidiary Company acquired 100% of the shares of I.V. Invergas S.A. for Ps. 2,950,000. I.V. Invergas S.A. holds 100% of the shares and voting rights of Distribuidora Gesell Gas S.A. (the "New Company"), which was created as a result of a spin-off by Coarco S.C.A. Such acquisition was made subject to the approval of the Ente Nacional Regulador del Gas. The principal assets of the New Company are: (a) the concession for the distribution of gas in the city of Villa Gesell, Province of Buenos Aires; (b) all of the assets used in the gas subdistribution activities under the Concession Agreement; and (c) the right to collect any and all the sums (and proprietary rights over any and all such sums) from debtors for improvements, whether due or to become due, made pursuant to works performed under the Concession Agreement. On July 6, 1999, the Ente Nacional Regulador del Gas approved the Agreement entered into between Coarco S.C.A. and the Municipality of Villa Gesell, pursuant to which the Municipality transferred the concession of such subdistribution service to Coarco S.C.A. On August 26, 1999, the Camuzzi Gas Pampeana S.A. decided to sell one share of I.V. Invergas S.A. to Sodigas Pampeana S.A. Consequently, the Subsidiary Company's interest in I.V. Invergas S.A. represents 99.991667% of its capital stock. NOTE 13: RECORDABLE ASSETS OF THE SUBSIDIARY COMPANY As regards the real estate transferred under the Transfer Contract, the Subsidiary Company has effected the corresponding deeds with the Argentine General Notary Public, and only isolated and irrelevant cases are pending. Additionally, the Subsidiary Company completed the transfer of all the vehicles. I-103 SODIGAS PAMPEANA S.A. AND ITS SUBSIDIARY COMPANY NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(Continued) NOTE 14: CONSTRUCTION FUNDED BY THIRD PARTIES BY THE SUBSIDIARY COMPANY, CAMUZZI GAS PAMPEANA S.A. Constructions funded by third parties, incorporated into the Subsidiary Company's network during the fiscal years ended December 31, 1999 and 1998, were the following:
For the fiscal years ended December 31, --------------------- 1999 1998 ---------- ---------- (Pesos) . For valuable consideration......................... 2,540,632 3,188,972
On February 8, 1996, ENARGAS issued Resolution No. 268/96, which sets forth that regarding construction fully or partially financed by third party users, such users should receive a discount based on the difference between the value of the construction and the amount actually discounted, if any. By means of ENARGAS' Resolution No. 356, dated August 22, 1996, the Regulatory Authority established the amounts to be recognized to the users mentioned above according to the business value determined by such entity. In compliance with this resolution, regarding networks transferred free of charge, during the fiscal year 1996, the Subsidiary Company recorded a liability in an amount estimated as the payment price in m/3/ of gas which was debited from a reserve set up in previous years for this purpose. In those projects in which the payments made by the Licensee differed from those set forth by the Regulatory Authority, the liability corresponding to such difference was accounted for. Both liabilities were valued at current tariffs. Furthermore, on February 3, 1997, by means of Resolution No. 422 the Regulatory Authority set the charges that the Gas Distribution Companies shall have to pay to third party users financing network extension works; such amount resulted from the business value set forth by ENARGAS. This resolution was only applicable to works transferred to the Licensee Companies in 1996. As regards works to be financed by future clients, commenced and transferred to the net worth of the Licensees in 1997, the Regulatory Authority issued Resolution No. 587, dated March 16, 1998, whereby it established the consideration to be granted to the clients, in accordance with the methodological guidelines included therein. As of the date hereof the Subsidiary Company has taken the necessary steps to implement the reimbursement of the cubic meters duly suggested by the ENARGAS. Subsequently, the ENARGAS, through Order No. 4,688 dated December 30, 1997, modified the criteria previously established by its Resolutions No. 356/96 and 422/96 and Order No. 1877/96, in connection with the obligation of the Distribution Service Licensees to grant provisions to third party users who totally or partially paid undertakings related to new networks or extensions thereof. This amendment consists, basically, in the replacement of the obligation of such users to file the documentation evidencing their contribution, as called for by the above-mentioned resolutions, by the execution of an affidavit in relation thereof. The above-mentioned order of ENARGAS has been challenged by the Subsidiary Company on the grounds that it affects its legitimate rights. However, the Subsidiary Company undertook a study to determine its liability in connection with the compliance with such order. Such study revealed that if the existing users and the potential I-104 SODIGAS PAMPEANA S.A. AND ITS SUBSIDIARY COMPANY NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(Continued) users which have transferred assets without monetary compensation are entitled to the discounts set forth in the ENARGAS' resolutions, the maximum increase in the liabilities would amount to Ps. 1.7 million. This amount has been reflected in these Financial Statements as a withdrawal from the voluntary reserve. In addition, it should be noted that such liability may be substantially lower due to the fact that it was calculated considering that all the users would request such discounts and the addition of users to such works are complied. Once the term fixed by the regulatory authority for the granting of discounts is finished, an analysis of the actual value of in project shall be made upon the basis of the users really added and of the value to the business, increasing or decreasing the value of the liability as applicable. As regards the networks transferred for a consideration, the liability shall also be fixed at the amounts agreed to with the third party transferors. NOTE 15: LEGAL AND TAX MATTERS a. Income tax On January 30, 1998, the Subsidiary Company filed an amended tax return to modify the depreciation of fixed assets transferred to the Subsidiary Company without consideration. The amended return takes into account a change in the tax rules governing valuation of networks incorporated by the Subsidiary Company prior to June 1995, by reference to valuation rules specified in resolutions of the Ente Nacional Regulador del Gas (ENARGAS) with respect to the transfer of networks funded by third parties to the Operating Companies. The criteria applied by the Subsidiary Company in its amended return was not acknowledged by the Argentine Tax Authority ("AFIP") and on July 6, 1999 the AFIP notified the Subsidiary Company of an assessment for taxes on income related to gas networks transferred without consideration. The assessment totalled Ps. 21.7 million in income tax owed plus Ps. 40.3 million in interest and fines. On August 11, 1999, the Subsidiary Company filed an appeal with the Argentine Tax Court. The Subsidiary Company believes, based on the advice of its legal counsel, that the filing of the amended return and application of the ENARGAS criteria for tax purposes should have resolved the assessment, and therefore any attempt of the AFIP to continue with the case would not be succesful. b.Gross sales tax--Province of Buenos Aires The Province of Buenos Aires Revenue Board (the "DPRPBA") has challenged the Subsidiary Company's gross sales tax returns, and has assessed claims of Ps. 8,853,585 and Ps. 7,386,021 for the fiscal years from December 1992 through February 1995, and from March 1995 to June 1996, respectively, not including fines and accessory charges. Such difference arises mainly from the fact that the tax authority claims that the tax base on which the tax rate should be applied for computing gross sales taxes on gas sales should include all revenue obtained, as gas prices are no longer regulated by the State after the privatization and as such the tax base is no longer regulated by the provisions of Section 141(a) of the Tax Code. The Subsidiary Company contends that the tax basis is the difference between the purchase and sale price. On November 25, 1996, the General Revenue Board issued a final opinion stating that, in its opinion, Camuzzi Gas Pampeana S.A. must pay gross sales tax on its total sales and not on the distribution margin. On December 13, 1996, the General Revenue Board further explained some points of the opinion indicating that, according to such body, the change of criterion had derived from the fact that as from the takeover of the natural gas distribution service by the Licensees, the regulations set forth under the Tax Code (Section 136, Subsection I-105 SODIGAS PAMPEANA S.A. AND ITS SUBSIDIARY COMPANY NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(Continued) (e) and Section 141, Subsection (a)) are not valid, since the Government, upon withdrawing from the business, no longer regulates the official selling prices. Although the Subsidiary Company's legal counsel advised the Subsidiary Company of the soundness of its position, the final opinion issued by the General Revenue Board, which explicitly adopts the tax criteria adopted by the Province of Buenos Aires, substantially changed the tax burden of the Licensee. Therefore, because the Subsidiary Company is not legally required to participate in a judicial proceeding, the results of which cannot be assured in spite of its sound defense, and because its property would be subject to attachment throughout the course of such proceeding, on December 19, 1996, the Subsidiary Company availed itself of a tax amnesty program pursuant to the provisions of the Provincial Law 11,808 (Official Gazette July 10, 1996). The foregoing implementation of new criteria altered the Licensee's tax burden generating a cost fluctuation and clearly constituting a "tax change". This event was considered as a non-recurring tariff adjustment pursuant to clause 9.6.2. of the Distribution License and by law 24,076. Through Resolution No. 544 dated November 17, 1997 and pursuant to the applicable regulations, ENARGAS authorized the pass-through to the tariffs of the tax liabilities incurred as a result of the legal changes in the payment of the tax in accordance with the methodology set forth by such Regulatory Authority in its note No. 108 dated January 12, 1998. As mentioned above, because a "change of tax rules" generates a right for the Subsidiary Company to pass through the added cost to the tariffs as envisaged in clause 9.6.2. of the Distribution License and in Law No. 24,076, Camuzzi Gas Pampeana S.A. accounted for the amounts recognized as tax payable, together with the payments made for the taxable basis of all income from gas sales, with a balancing entry in the form of a receivable to be collected from the users in future billings. On October 8, 1999, the Subsidiary Company received Order No. 4,107 issued by ENARGAS which provides a new calculation for tax charges based on Resolution 544/97. Camuzzi Gas Pampeana S.A. believes that the claim is unfounded and filed a Motion for Reconsideration contending that the order is inconsistent with the provisions of Resolution 544/97 and with Order No. 108 dated January 12, 1998 issued by ENARGAS, which sets forth the amounts authorized to be passed through to the tariff. As of December 31, 1999, the receivable to be recovered totalled Ps. 25,411,276, of which, Ps. 3,057,091 were recorded under "Other Current Accounts Receivable" and Ps. 22,354,184 under "Other Non-Current Accounts Receivable". c.Municipal taxes Municipal tax regulations generally include a tax on the use of easements. The imposition of such tax conflicts with Federal Regulations. The distribution license grants the Licensee underground rights of way free of charge. The license authorizes the Licensee to pass through to consumers any cost increase attributable to a municipal tax levied and ratified by a court. Clause 6.1 of the Distribution License states: "while the Licensee is in charge of the service, the Licensee shall have the right to use free of charge any street, avenue, square, bridge, road and any other public place, including the subjacent and air spaces, necessary for the installation of facilities for the licensed service, including communication lines and interconnections with third parties". I-106 SODIGAS PAMPEANA S.A. AND ITS SUBSIDIARY COMPANY NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(Continued) Nonetheless, if a court, pursuant to a final non-appealable judgment, upholds a provincial or municipal tax levied on the Licensee's underground right of way, the Licensee may pass through such additional cost to consumers residing within the jurisdiction in which such tax is applicable. The Regulatory Entity is required to act in accordance with the Clause 9.6.2 of the License, without any right of claim against the Subsidiary Company or Gas del Estado. In addition, under the Argentine Budget Law No. 24,624/95 applicable to the year 1996, in order to be entitled to the subsidies set forth in such law, the municipal rates for the use of subjacent space have to be abolished as from January 1, 1996. The following are the most relevant current disputes related to taxes on underground rights: Municipality of La Plata, Province of Buenos Aires: On October 19, 1995, the Subsidiary Company was served an official assessment from the Municipality of La Plata for the payment of Ps. 2,730,141, not including penalties and other expenses. The Subsidiary Company timely contested the claim with the applicable administrative authorities. Municipality of Realico, Province of La Pampa: The principal amount assessed by the Municipality of Realico totals Ps. 4,137. The Subsidiary Company contested the assessment, which was denied. Municipality of Coronel Suarez, Province of Buenos Aires: The principal amount claimed totals Ps. 6,300. The Subsidiary Company has filed a Motion for Reconsideration. Municipality of Necochea, Province of Buenos Aires: The Municipality claimed the payment of taxes on the permanent tourism fund amounting to Ps. 119,240, including interest, for the February 1993 through February 1999. The Subsidiary Company contested the claim by filing a Recurso de Revocatoria con Recurso Jerarquico en subsidio. Municipality of Mar del Plata, Province of Buenos Aires: The Subsidiary Company entered into an agreement with the Municipality, pursuant to which the Municipality granted an exemption (previously granted to Gas del Estado S.E.), to the payment of municipal taxes, rights and liens prior to the last quarter of 1998. As of such period, the Subsidiary Company has undertaken to pay the aforementioned items, except for those corresponding to use and occupation of public spaces, which will be deferred until the matter is resolved by the applicable administrative and/or judicial proceedings. Municipality of Las Flores, Provincia de Buenos Aires: The amount claimed totals Ps. 20,083, and Ps. 10,000 were budgeted for interest and legal costs. As the Subsidiary Company was served with a complaint in executory proceedings, the Subsidiary Company contested the claim and filed a motion to dismiss the case. The judgement rendered favored the Subsidiary Company; therefore, the Municipality appealed to the Court of Appeal, which agreed to hear the case. In addition, the Municipality levied an attachment of the Subsidiary Company's assets in the amount of the claim. The Subsidiary Company has set up a Ps. 22,500 provision, which is accounted for under the "Provisions" caption. In the opinion of the Subsidiary Company, except for the pending action with the Municipality of Las Flores, for which a provision has been set up, an adverse decision in relation to the aforementioned claims is unlikely. I-107 SODIGAS PAMPEANA S.A. AND ITS SUBSIDIARY COMPANY NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(Continued) d.Stamp tax d.1. The Revenue Board of the Province of Neuquen notified Camuzzi Gas del Sur S.A. that it had computed a stamp tax on the gas purchase agreements entered into jointly with the Subsidiary Company, in the amount of Ps. 10,400,134. The notice was responded to and the resolution was interrupted on account of the moratorium decrees. Subsequently, statements were filed with the Argentine Ministry of Economy asking for an opinion in connection with such matter. The province issued Special Decree No. 3534 allowing the regulated companies to avail themselves to a moratorium until November 6, 1998, subsequently extended to January 11, 1999. Additionally, on January 7, 1999, the ENARGAS submitted a report to the Argentine Ministry of Economy, stating that "the taxes claimed by Neuquen, will unfailingly lead to a tariff increase, with a serious damage to the users". The deadline expired on January 11, 1999 and has not been further extended. On September 24, 1999, the Subsidiary Company was served a notice informing it that the audit performed by independent public accountants engaged by the Province of Neuquen's Revenue Board had been closed. The assessment of the debt for stamp tax on natural gas purchase agreements entered into jointly with Camuzzi Gas del Sur S.A. amounted to Ps. 5,017,021, not including penalties or other charges. As of December 31, 1999, the Subsidiary Company has reserved Ps. 1,536,551 in such regard. On January 18, 2000, the Subsidiary Company was notified of the amendment of the initial amount, which, as amended, totalled Ps. 5,028,358, of which Ps. 4,155,331 are included in the original notice. The aggregate claim for both companies amounts to Ps. 11,273,161. At the date hereof, the Subsidiary Company has not received further notice from the Revenue Board. Currently, the Licensee is waiting for a ruling by the Ministry of Economy. d.2 On December 15, 1999, the Revenue Board notified the final assessment of stamp tax for an amount of Ps. 6,089,767, derived from the gas transport agreements entered into with Transportadora de Gas del Sur S.A., before the privatization, when Gas del Estado S.E. was the only shareholder of the Subsidiary Company. The Subsidiary Company has notified the Direccion Nacional de Normalizacion Patrimonial, the Liquidation Entities Coordinator and Gas del Estado S.E. that, in accordance with the provisions of the Transfer Agreement, any national, provincial or municipal stamp tax assessed on agreements related thereto, shall be borne by Gas del Estado S.E. or the Argentine Government. Camuzzi Gas Pampeana S.A. believes that these agreements were not subject to provincial stamp tax due to the fact that the parties who entered into said agreements were Argentine state-owned companies, and are therefore exempt from such tax. Although such agreements were subject to stamp tax, Camuzzi Gas Pampeana S.A. considers that Gas del Estado S.E. would be the party liable for the payment of this tax, in accordance with the provisions of the Transfer Agreement. On December 29, 1999, the Subsidiary Company filed a Motion for Reconsideration against the Revenue Board determination. The Subsidiary Company believes, based on the advice of its legal counsel, that, other than as described in paragraph d.1., it is unlikely that such claim will be resolved unfavorably for the Subsidiary Company. I-108 SODIGAS PAMPEANA S.A. AND ITS SUBSIDIARY COMPANY NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(Continued) d.3 On December 29, 1999, the Revenue Board of the Province of Santa Cruz served a notice of administrative proceedings assessing Ps. 1,466,120 against the Subsidiary Company in relation to the stamp tax on gas purchase agreements entered into jointly with Camuzzi Gas del Sur S.A. On January 20, 2000, the Subsidiary Company filed its defense in relation to the notice received. The Subsidiary Company contends that the stamp tax does not apply to gas purchase agreements, which it believes are not instruments subject to the tax. d.4 The Revenue Board of the Province of Rio Negro served Transportadora de Gas del Sur S.A. with a notice claiming stamp tax as due with respect to natural gas transport agreements entered into with the Subsidiary Company. As of the date of these financial statements, the Subsidiary Company has not received any notice from the Revenue Board of the Province of Rio Negro that a claim has been filed. Nonetheless, in the event a claim is filed by the Tax Authority and an adverse judgement is made, Camuzzi Gas Pampeana S.A. would have to pay 50% of the tax applicable to the operations performed after the takeover amounting to approximately Ps. 15.1 million. In addition, Transportadora de Gas del Sur S.A. could bring an action for reimbursement against the Subsidiary Company, if it were obligated to pay the entire amount claimed. Furthermore, Transportadora de Gas del Sur S.A. has received a claim for payment of Ps. 2.1 million for stamp taxes with respect to agreements transferred by Gas del Estado which set forth the Argentine Government as the sole responsible party. d.5 The Revenue Board of the Province of Santa Cruz has notified Transportadora Gas del Sur S.A. of a claim for stamp tax on the natural gas transport agreements entered into with the Subsidiary Company. As of the date hereof, the Subsidiary Company has received no notice in relation thereto from the Revenue Board of the Province of Santa Cruz. However, if the claim filed by the Revenue Board were decided against the Subsidiary Company, Camuzzi Gas Pampeana S.A. would have to pay 50% of the tax corresponding to the operations conducted after the privatization, which tax would amount to Ps. 1.1 million. In addition, Transportadora de Gas del Sur S.A. could seek contribution from the Subsidiary Company, if it were obliged to pay the claimed tax in full. Also, Transportadora de Gas del Sur S.A. has received a Ps. 0.6 million claim for payment of stamp taxes with respect to the agreements transferred by Gas del Estado, which set forth Gas del Estado as the sole responsible party. The Subsidiary Company believes, based on the advice of its legal counsel, that it has a strong defense to the matters described in paragraphs d.3, d.4 and d.5 above in light of the manner in which the agreements were documented, and therefore, an adverse decision in relation to the aforementioned claims is not deemed probable. e.Others On August 8, 1998, the Ministry of Economy and Public Works and Services filed a claim for Ps. 656,485 for differences in amounts collected on overdue invoices. Schedule XXI of the Share Transfer Agreement provides that Camuzzi Gas Pampeana S.A. is responsible for collecting such amounts for Gas del Estado S.E. The Subsidiary Company duly set up an allowance of Ps. 220,000 to satisfy the claim. The Subsidiary Company considers such amount to be sufficient. NOTE 16: CAMUZZI GAS PAMPEANA S.A.'S ESSENTIAL ASSETS INVENTORY In compliance with ENARGAS' Resolution No. 60, the Subsidiary Company made an inventory of its essential assets as of December 31, 1997, which was certified on October 26, 1998 by an independent expert specialized in that field. I-109 SODIGAS PAMPEANA S.A. AND ITS SUBSIDIARY COMPANY NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(Continued) As a result of said work finished during 1998, differences were detected between the recorded value and the book value of the assets which reduced the assets timely recorded in an amount of approximately Ps. 12.8 million. Due to the fact that the Subsidiary Company maintained a voluntary reserve account consisting of gas distribution networks financed by third parties and transferred free of charge, Camuzzi Gas Pampeana S.A. offset the aforementioned difference against the voluntary reserve. NOTE 17: FIVE-YEAR TARIFF REVIEW On December 31, 1997, the Ente Nacional Regulador del Gas issued Resolution No. 468 whereby it approved the five-year tariff review and established new values for the K and X factors corresponding to each component of the tariff. Such values were applicable during the 1998-2002 five-year period. The incorporation of these two factors (with K representing the Investment factor and X representing the Efficiency factor) has been contemplated within the existing tariff scheme. Such factors will be added and subtracted respectively from the margin of distribution and, therefore, will affect the final tariff for the next five-year period. During the year 1997, the Subsidiary Company submitted its proposed investments for the determination of the K factor, which, once reviewed by the ENARGAS, were approved at the end of October 1997 for the La Pampa Norte subarea, and which will be in force as from the second semester of 1998. Simultaneously, the ENARGAS defined an efficiency factor (X) of 4.5% for the Subsidiary Company as from January 1, 1998, which considers the improvements to be achieved in that respect in the next five-year period. NOTE 18: CAMUZZI GAS PAMPEANA S.A.'S SALES OF LIQUIDS As required by ENARGAS through its note No. 3299 dated October 26, 1994, the Subsidiary Company's sales of extracted liquids and their respective costs for the fiscal year ended December 31, 1999 are disclosed below:
(Pesos) ---------- Net sales....................................................... 17,899,004 Direct costs of sales........................................... 15,554,421
NOTE 19: SALE OF THE SHARES AFFECTED TO THE EMPLOYEE STOCK OWNERSHIP PLAN OF THE SUBSIDIARY COMPANY In September, 1999, the Executive Committee of the Employee Stock Ownership Plan resolved to sell its aggregate shareholding in the Subsidiary Company, therefor engaging Lopez Manan, Fravega & Asoc., a consulting company. On December 13, 1999, offers were first made and such holdings were awarded to Camuzzi Argentina S.A. As of the date hereof, the process has not been completed and therefore, the shares have not yet been transferred. I-110 SODIGAS PAMPEANA S.A. AND ITS SUBSIDIARY COMPANY NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(Continued) NOTE 20: INFORMATION SYSTEMS ADAPTATION PROCESS OF THE SUBSIDIARY COMPANY, CAMUZZI GAS PAMPEANA S.A. (NOT INCLUDED IN THE AUDITORS' REPORT) The Subsidiary Company began a process to update its information systems and related technologies, which has been given priority by the Board of Directors. The work methodology adopted assigns different teams to make the administrative, invoicing, human resources, hardware and software systems year 2000 compliant. Upon commencement of the year 2000, no failures have been detected in the administrative, invoicing, human resources, hardware and software systems in relation to the Y2K. I-111 SODIGAS PAMPEANA S.A. AND ITS SUBSIDIARY COMPANY FIXED ASSETS For the Fiscal Years Ended December 31, 1999 and 1998 Schedule A
Depreciation of the Year ---------------------------------------------- Accumulated Value as of as of Accumulated beginning Value as of beginning as of end Principal account of year Additions Transfers Write-offs end of year of year Amount(1) Write-offs of year ----------------- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ---------- ----------- (Pesos) (Pesos) (Pesos) (Pesos) (Pesos) (Pesos) (Pesos) (Pesos) (Pesos) Land.............. 4,711,706 -- (6,771) -- 4,704,935 -- -- -- -- Condominiums...... 816,147 -- (192,258) -- 623,889 101,722 18,132 -- 119,854 Buildings......... 14,263,215 -- 470,849 -- 14,734,064 1,985,688 388,044 -- 2,373,732 Facilities........ 7,677,688 17,388 151,384 -- 7,846,460 936,665 258,586 -- 1,195,251 Gas pipelines..... 178,167,520 -- 11,112,537 -- 189,280,057 34,835,174 5,000,158 -- 39,835,332 Main and secondary pipelines......... 37,620,144 -- 9,790,977 -- 47,411,121 7,988,758 1,203,312 -- 9,192,070 Distribution networks.......... 270,962,397 3,742,661 (14,678,041) -- 260,027,017 47,303,309 8,150,699 -- 55,454,008 Machinery and equipment......... 3,286,582 565,255 (41,455) -- 3,810,382 647,556 155,850 -- 803,406 Pressure reduction stations.......... 12,070,606 -- 393,687 -- 12,464,293 2,093,697 422,124 -- 2,515,821 Processing equipment......... 783,721 -- 64,404 -- 848,125 23,462 15,629 -- 39,091 Vehicles.......... 6,762,713 498,541 480 -- 7,261,734 4,309,130 517,300 -- 4,826,430 Furniture and office equipment.. 1,861,014 99,064 (1,018) -- 1,959,060 496,567 133,480 -- 630,047 Gas meters........ 45,202,832 71,024 3,170,178 (528,301) 47,915,733 12,136,061 2,242,809 (232,072) 14,146,798 Gas cylinders..... 1,189 -- 3 -- 1,192 359 60 -- 419 Works in progress.......... 7,583,211 20,705,883 (4,336,802) -- 23,952,292 -- -- -- -- Computer equipment......... 5,899,793 1,976,835 1,015 -- 7,877,643 5,419,688 512,516 -- 5,932,204 Communications equipment......... 5,715,339 74,144 (23,479) -- 5,766,004 1,779,456 556,887 -- 2,336,343 Material at warehouses........ 3,631,391 5,882,846 (4,182,011) (2,848,075) 2,484,151 -- -- -- -- Advances to suppliers......... 702,426 3,249,996 (1,693,679) (52,710) 2,206,033 -- -- -- -- ----------- ---------- ----------- ----------- ----------- ----------- ---------- ---------- ----------- Total as of December 31, 1999............ 607,719,634 36,883,637 -- (3,429,086) 641,174,185 120,057,292 19,575,586 (232,072) 139,400,806 ----------- ---------- ----------- ----------- ----------- ----------- ---------- ---------- ----------- Total as of December 31, 1998............ 598,578,008 26,189,135 -- (17,070,035) 607,697,108 102,319,435 19,380,111 (1,642,254) 120,057,292 =========== ========== =========== =========== =========== =========== ========== ========== =========== Net carrying value as of December 31, ----------------------- Principal account 1999 1998 ----------------- ----------- ----------- (Pesos) (Pesos) Land.............. 4,704,935 4,711,706 Condominiums...... 504,035 714,425 Buildings......... 12,360,332 12,277,527 Facilities........ 6,651,209 6,740,613 Gas pipelines..... 149,444,725 143,332,346 Main and secondary pipelines......... 38,219,051 29,631,386 Distribution networks.......... 204,573,009 223,659,088 Machinery and equipment......... 3,006,976 2,637,722 Pressure reduction stations.......... 9,948,472 9,976,909 Processing equipment......... 809,034 760,259 Vehicles.......... 2,435,304 2,441,748 Furniture and office equipment.. 1,329,013 1,361,188 Gas meters........ 33,768,935 33,066,771 Gas cylinders..... 773 830 Works in progress.......... 23,952,292 7,583,211 Computer equipment......... 1,945,439 475,457 Communications equipment......... 3,429,661 3,934,813 Material at warehouses........ 2,484,151 3,631,391 Advances to suppliers......... 2,206,033 702,426 ----------- ----------- Total as of December 31, 1999............ 501,773,379 -- ----------- ----------- Total as of December 31, 1998............ -- 487,639,816 =========== ===========
- ---- Note: (1) The accounting allocation of depreciation charges for the year is described in Schedule H. I-112 SODIGAS PAMPEANA S.A. AND ITS SUBSIDIARY COMPANY INTANGIBLE ASSETS For the Fiscal Years Ended December 31, 1999 and 1998 Schedule B
Amortization --------------------------------------- Net carrying value Current year as of December 31, --------------- ------------------- Value as Accumulated of Value as as of Rate Accumulated beginning of end of beginning per as of end Principal account of year Additions year of year annum Amount(1) of year 1999 1998 ----------------- --------- --------- --------- ----------- ----- --------- ----------- --------- --------- (Pesos) (Pesos) (Pesos) (Pesos) % (Pesos) (Pesos) (Pesos) (Pesos) Expenses relating to the issuance of Notes....... 5,434,886 57,425 5,492,311 3,810,681 20 843,908 4,654,589 837,722 1,624,205 Software................ 892,647 305,233 1,197,880 273,348 20 124,566 397,914 799,966 619,299 Organization expenses... -- 139,026 139,026 -- -- 7,725 7,725 131,301 -- --------- ------- --------- --------- --- --------- --------- --------- --------- Total as of December 31, 1999.................... 6,327,533 501,684 6,829,217 4,084,029 -- 976,199 5,060,228 1,768,989 -- --------- ------- --------- --------- --- --------- --------- --------- --------- Total as of December 31, 1998.................... 6,052,100 275,433 6,327,533 2,845,595 -- 1,238,434 4,084,029 -- 2,243,504 ========= ======= ========= ========= === ========= ========= ========= =========
- ---- Note: (1) The accounting allocation of depreciation charges for the year is described in Schedule H. I-113 SODIGAS PAMPEANA S.A. AND ITS SUBSIDIARY COMPANY INVESTMENTS General Balance Sheet as of December 31, 1999 and 1998 Schedule C
Value Recorded as of December 31, ------------------ Number Market Issuer and securities F.V. Value 1999 1998 --------------------- --------- -------- ---------- ------- (Pesos) (Pesos) CURRENT INVESTMENTS Mutual Investment Funds Banco Rio............................... 5,917,065 1.695379 10,031,668 Banco Supervielle Societe Generale...... 610,885 1.146721 700,515 -- Banque Nationale de Paris............... 1,397,211 1.091589 1,525,180 -- Banca Nazionale del Lavoro.............. 3,658,526 1.286966 4,708,398 Shares INDUPA S.A.I.C.......................... 90,881 0.860000 78,158 59,073 FO.GA.BA. S.A.P.E.M..................... 10,000 1.000000 10,000 -- ---------- ------ TOTAL CURRENT INVESTMENTS............... 17,053,919 59,073 ---------- ------ NON-CURRENT INVESTMENTS I.V. Invergas S.A......................... 246 1.000000 246 -- ---------- ------ TOTAL NON-CURRENT INVESTMENTS........... 246 -- ---------- ------ TOTAL INVESTMENTS....................... 17,054,165 59,073 ========== ======
I-114 SODIGAS PAMPEANA S.A.AND ITS SUBSIDIARY COMPANY OTHER INVESTMENTS General Balance Sheet as of December 31, 1999 and 1998 Schedule D
Value Recorded as of December 31, --------------------- Principal account 1999 1998 ----------------- ---------- ---------- (Pesos) (Pesos) CURRENT INVESTMENTS Fixed-term deposits................................... 15,536,415 13,177,946 ---------- ---------- Total................................................ 15,536,415 13,177,946 ========== ==========
I-115 SODIGAS PAMPEANA S.A. AND ITS SUBSIDIARY COMPANY CONSOLIDATED ALLOWANCES For the Fiscal Years Ended December 31, 1999 and 1998 Schedule E
Adjustments to the Special Adjusted Balances Spin-off balances Balances as of as of Balance as of December 31, beginning Sheet beginning --------------------- Item of year (Note 10) of year Additions Decreases 1998 ---- ---------- ----------- ---------- ----------- ----------- 1999 ---------- (Pesos) (Pesos) (Pesos) (Pesos) (Pesos) (Pesos) (Pesos) DEDUCTED FROM ASSETS Allowance for defaulting receivables............. 9,574,142 59,256 9,633,398 (1) 1,376,453 10,009,254 9,574,142 Allowance for uncollectible Mercobank S.A. Series "C" Certificates............ 516,000 -- 516,000 (2) 151,325 -- 667,325 516,000 Allowance for depreciation of Mercobank S.A.'s shares.................. 291,434 -- 291,434 (2) 669,118 318,941 641,611 291,434 Allowance for uncollectibility of certificates corresponding to contribution of improvements receivables............. -- 1,063,589 1,063,589 (1) 147,417 -- 1,211,006 -- DEDUCTED FROM LIABILITIES Provisions for lawsuits................ 2,914,472 28,700 2,943,172 (3) 339,884 (3) 681,367 2,601,689 2,914,472 ---------- --------- ---------- ----------- ----------- ---------- ---------- Total.................. 13,296,048 1,151,545 14,447,593 3,060,053 2,376,761 15,130,885 13,296,048 ========== ========= ========== =========== =========== ========== ==========
- ---- Notes: (1) Charged to Marketing Expenses in Schedule H. (2) Charged to Extraordinary Income (Note 4.m.) (3) Pesos 40,000 charged to Other Expenses (Note 4.l.) I-116 SODIGAS PAMPEANA S.A. AND ITS SUBSIDIARY COMPANY COST OF SALES For the Fiscal Years Ended December 31, 1999 and 1998 Schedule F
For the Fiscal Years ended December 31, ------------------------ 1999 1998 ----------- ----------- (Pesos) (Pesos) Inventories at beginning of year...................... 1,951,983 -- Adjustment to the Special Spin-off Balance Sheet...... (1,786,025) -- ----------- ----------- Adjusted inventories at beginning of year............. 165,958 37,142 ----------- ----------- Plus: Gas purchases....................................... 146,163,383 155,228,445 Acquisition of transportation capacity.............. 79,999,642 80,354,997 Expenses per breakdown in Schedule H................ 49,665,908 46,780,455 Less: Inventories at end of year.......................... 81,333 161,545 ----------- ----------- COST OF SALES....................................... 275,913,558 282,239,494 =========== ===========
I-117 SODIGAS PAMPEANA S.A. AND ITS SUBSIDIARY COMPANY FOREIGN CURRENCY ASSETS AND LIABILITIES General Balance Sheet as of December 31, 1999 and 1998 Schedule G
Amount in Argentine currency as of December 31, ---------------------- Type and amount of Current foreign exchange currency rate 1999 1998 ------------- -------- ---------- ----------- (Pesos) (Pesos) CURRENT ASSETS Cash and banks.................... U$S 107,900 1.0000 107,900 317,874 Other receivables................. U$S -- -- -- 157,500 ------------- ------ ---------- ----------- Total current assets............ 107,900 -- 107,900 475,374 ------------- ------ ---------- ----------- Total assets.................... 107,900 -- 107,900 475,374 ------------- ------ ---------- ----------- CURRENT LIABILITIES Suppliers......................... U$S 200,397 1.0000 200,397 37,711 Bank loans Loan from Banco Rio............. U$S -- 1.0000 -- 1,901,533 Loan from Banco Boston.......... U$S -- 1.0000 -- 250,119 Bank Boston--Eximbank........... U$S 42,467 1.0000 42,467 85,024 Notes--Interest................. U$S 326,599 1.0000 326,599 326,599 BNL Letters of credit........... U$S -- -- 3,748,098 Financial loans Notes........................... U$S -- 90,000,000 ------------- ------ ---------- ----------- Total current liabilities..... 569,463 -- 569,463 96,349,084 ------------- ------ ---------- ----------- NON-CURRENT LIABILITIES Financial and banking loans Notes--Principal.................. U$S79,443,000 1.0000 79,443,000 79,443,000 Bank Boston--Eximbank............. U$S -- 1.0000 -- 42,324 ------------- ------ ---------- ----------- Total non-current liabilities... 79,443,000 -- 79,443,000 79,485,324 ------------- ------ ---------- ----------- Total liabilities............... 80,012,463 -- 80,012,463 175,834,408 ============= ====== ========== ===========
I-118 SODIGAS PAMPEANA S.A. AND ITS SUBSIDIARY COMPANY INFORMATION REQUIRED UNDER ART. 64, CLAUSE (B) OF LAW 19,550 For the Fiscal Years Ended December 31, 1999 and 1998 Schedule H
Total as of Total as of December 31, Services Administrative Marketing December 31, Items 1999 Sales Cost Cost Expenses Expenses 1998 ----- ------------ ---------- -------- -------------- ---------- ------------ (Pesos) (Pesos) (Pesos) (Pesos) (Pesos) (Pesos) Fees for services....... 8,806,423 4,027,369 -- 4,779,054 -- 5,959,902 Salaries and wages...... 21,234,960 8,793,964 427,114 7,878,980 4,134,902 19,359,328 Contributions........... 6,158,885 2,586,732 -- 2,340,376 1,231,777 5,912,403 Transportation expenses............... 1,409,719 592,082 -- 535,694 281,943 1,171,965 Taxes and assessments... 3,052,526 597,068 -- 2,156,924 298,534 2,750,272 Depreciation of fixed assets................. 19,575,586 18,306,316 -- 846,180 423,090 19,380,111 Amortization of intangible assets...... 976,199 7,725 -- 968,474 -- 1,238,434 Hired services.......... 7,479,345 4,304,761 -- 2,558,417 616,167 7,101,145 Postage, communications and data processing.... 1,746,602 521,667 -- 966,394 258,541 1,907,693 Processing of liquids... 6,307,337 6,307,337 -- -- -- 5,652,797 Overheads............... 6,770,941 3,620,887 -- 2,296,669 853,385 5,965,924 Defaulting debtors...... 1,674,809 -- -- -- 1,674,809 2,898,836 Advertising............. 324,547 -- -- -- 324,547 310,314 ---------- ---------- ------- ---------- ---------- ---------- Total as of December 31, 1999............. 85,517,879 49,665,908 427,114 25,327,162 10,097,695 -- ---------- ---------- ------- ---------- ---------- ---------- Total as of December 31, 1998............. -- 46,780,455 324,192 21,693,788 10,810,689 79,609,124 ========== ========== ======= ========== ========== ==========
- -------- Note: (1) Charged to "Miscellaneous" under the caption "Other Expenses" (Note 4.l) I-119 SODIGAS PAMPEANA S.A. US GAAP RECONCILIATION Reconciliation of Net Income ANNEX I
Year Ended December 31, 1999 ------------- Net income as reported under Argentine GAAP...................... Ps.15,487,156 US GAAP adjustments: Depreciation expense........................................... 2,900,219 Intangible asset............................................... (244,148) Intangible asset amortization.................................. 377,072 Gross sales tax settlement..................................... 2,768,773 Regulatory issues.............................................. 318,885 Deferred income taxes.......................................... (800,491) Technical assistance fee....................................... (458,423) Deferred expenses.............................................. 43,958 Minority interest.............................................. (1,842,703) Available for sale securities.................................. 227,615 Allocation of negative goodwill................................ (204,043) ------------- US GAAP adjustments, net......................................... Ps. 3,086,714 ------------- Net income under US GAAP......................................... Ps.18,573,870 =============
I-120 SODIGAS PAMPEANA S.A. US GAAP RECONCILIATION Reconciliation of Shareholders' Equity ANNEX I(cont).
Year Ended December 31, 1999 -------------- Shareholders' Equity as reported under Argentine GAAP.......... Ps.323,278,928 US GAAP adjustments: Initial carrying value of assets............................. (38,565,393) Contribution of gas networks................................. (63,721,063) Capitalization of interest................................... 4,019,596 Depreciation expense......................................... 16,895,086 Intangible assets............................................ (127,314) Intangible assets amortization............................... 15,660 Gross sales tax settlement................................... (23,964,755) Regulatory issues............................................ (1,610,384) Deferred income taxes........................................ 5,763,059 Technical assistance fee..................................... 7,411,052 Deferred expenses............................................ (41,582) Minority interest............................................ 27,433,060 Allocation of negative goodwill.............................. (204,043) -------------- US GAAP adjustments, net....................................... Ps.(66,697,019) -------------- Shareholders' Equity under US GAAP............................. Ps.256,581,909 ==============
I-121 ATTACHMENT I-5 BUENOS AIRES ENERGY COMPANY S.A. CONSOLIDATED FINANCIAL STATEMENTS For the fiscal year commenced January 1, 1999 and 1998 and ended December 31, 1999 and 1998 I-122 BUENOS AIRES ENERGY COMPANY S.A. AND ITS SUBSIDIARY COMPANY CONSOLIDATED BALANCE SHEETS AT DECEMBER 31, 1999 AND 1998 (Notes 1 and 2)
December 31, December 31, 1999 1998 ------------ ------------ (Pesos) (Pesos) ASSETS Current Assets Cash and banks (Note 3.a)........................... 1,350,212 2,523,248 Investments (Schedule C)............................ 1,051,157 544,113 Trade accounts receivable (Note 3.b)................ 50,779,880 49,981,623 Other receivables (Note 3.c)........................ 3,416,038 3,391,004 ------------ ------------ Total current assets................................ 56,597,287 56,439,988 ------------ ------------ Non-current assets Trade accounts receivable (Note 3.b)................ 2,446,381 3,028,167 Other receivables (Note 3.c)........................ 37,944,014 37,502,967 Fixed assets (Schedule A)........................... 425,110,853 419,916,748 Intangible assets (Schedule B)...................... 19,315,322 20,179,721 Other Assets (Note 3.d.)............................ 256,352 1,332,206 ------------ ------------ Total non-current assets............................ 485,072,922 481,959,809 ------------ ------------ TOTAL ASSETS........................................ 541,670,209 538,399,797 ============ ============ LIABILITIES Current Liabilities Commercial liabilities (Note 3.e)................... 17,115,830 20,072,630 Bank and financial loans (Note 3.f)................. 54,511,727 34,070,622 Intercompany liabilities (Note 3.g)................. 7,232,393 6,820,807 Social security liabilities (Note 3.h).............. 4,114,433 4,051,454 Tax liabilities (Note 3.i).......................... 11,062,994 14,671,523 Other liabilities (Note 3.j)........................ 592,783 739,049 Allowances (Schedule E)............................. -- 120,000 ------------ ------------ Total current liabilities........................... 94,630,160 80,546,085 ------------ ------------ Non-current liabilities Bank and financial loans (Note 3.f)................. 230,000,000 230,000,000 Intercompany liabilities (Note 3.g)................. -- 1,380,000 Tax liabilities (Note 3.i).......................... 282,467 -- Other liabilities (Note 3.j)........................ 2,830,864 1,939,328 ------------ ------------ Total non-current liabilities....................... 233,113,331 233,319,328 ------------ ------------ TOTAL LIABILITIES................................... 327,743,491 313,865,413 ------------ ------------ Minority interests in subsidiaries.................. 120,115,434 125,227,021 ------------ ------------ SHAREHOLDERS' EQUITY................................ 93,811,284 99,307,363 ------------ ------------ TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY.......... 541,670,209 538,399,797 ============ ============
The accompanying notes and schedules are an integral part of these consolidated financial statements. I-123 BUENOS AIRES ENERGY COMPANY S.A. AND ITS SUBSIDIARY COMPANY CONSOLIDATED STATEMENT OF INCOME/(LOSS) For the fiscal year commenced January 1, 1999 and 1998 and ended December 31, 1999 and 1998 (Notes 1 and 2)
December 31, December 31, 1999 1998 ------------ ------------ (Pesos) (Pesos) Net sales......................................... 189,866,120 200,836,538 Cost of sales (Schedule H)........................ (147,145,027) (149,993,368) ------------ ------------ Gross profit.................................... 42,721,093 50,843,170 ------------ ------------ Marketing expenses (Schedule H)................... (14,669,638) (15,032,060) Administrative expenses (Schedule H).............. (8,490,594) (8,113,198) Financial gain/(loss) (Note 18) Generated by assets............................. 2,542,874 2,417,783 Generated by liabilities........................ (27,493,335) (23,675,722) Other income , Net (Note 19)...................... 1,726,154 2,915,742 Income tax (1).................................... (4,198,000) (10,343,847) Ordinary loss on minority interests in subsidiaries..................................... 2,897,914 (687,449) ------------ ------------ Ordinary loss................................... (4,963,532) (1,675,581) Extraordinary loss (Note 17)...................... (1,075,854) (543,202) Extraordinary income from minority interests in subsidiaries..................................... 543,307 274,317 ------------ ------------ Net loss for the year........................... (5,496,079) (1,944,466) ============ ============
- -------- (1) Includes $ 9,621 and $ 13,892 of Baeco S.A. and $ 457,056 and $ 504,465 of IEBA S.A. corresponding to Tax on Minimum Hypothetical Income at December 31, 1999 and 1998 respectively. The accompanying notes and schedules are an integral part of these consolidated financial statements. I-124 BUENOS AIRES ENERGY COMPANY S.A. AND ITS SUBSIDIARY COMPANY CONSOLIDATED STATEMENT OF CASH FLOWS For the fiscal year commenced January 1, 1999 and 1998 and ended December 31, 1999 and 1998 (Notes 1 and 2)
December December 31, 1999 31, 1998 ----------- ----------- (Pesos) (Pesos) CHANGES IN FUNDS Funds at beginning of year........................... 3,067,361 2,783,222 (Decrease)/Increase funds............................ (665,992) 284,139 ----------- ----------- Funds at end of year................................. 2,401,369 3,067,361 =========== =========== CAUSES OF CHANGES IN FUNDS Sources of Funds Ordinary loss for the year........................... (4,963,532) (1,675,581) Plus: Items not entailing applications of funds Intangible asset amortization...................... 2,691,497 2,441,832 Accrued intercompany liabilities pending payment... 1,653,776 2,670,693 Accrued expenses and purchases pending payment..... 15,695,259 17,235,483 Accrued social security and taxes pending payment.. 3,999,163 4,032,531 Accrued tax liabilities pending payment............ 3,753,977 9,843,332 Accrued net financial income/(loss) pending payment........................................... 6,930,941 6,120,622 Controlled, controlling and/or related company accrued net financial/(loss) pending payment...... 152,892 14,033 Fixed asset depreciation........................... 11,981,409 11,213,573 Labor contingencies under art. 26 accrued in the year.............................................. 529,306 444,330 Net book value of fixed assets written off......... 228,285 11,737 Materials used up and others....................... 1,445,007 1,280,736 Bad debt allowance (Net increase).................. 2,393,564 695,153 Tax on minimum hypothetical income................. 466,677 518,357 Tax on financial cost.............................. 890,312 890,312 Less: Items not entailing sources of funds Accrued controlled, controlling and/or related company sales pending collection.................. (20,931) (3,919) Intangible assets written off...................... -- (32,973) Accrued interest pending collections............... -- (1,552) Sales pending collection........................... (40,704,411) (43,314,667) Provision for lawsuits............................. (120,000) 120,000 Gain/(Loss) from Minority Equity in Controlled Companies......................................... (2,897,914) 687,449 ----------- ----------- Funds generated by ordinary operations............... 4,105,277 13,191,481 ----------- ----------- Extraordinary loss for the year...................... (532,547) (268,885) Plus: Items not entailing applications of funds Allowances other assets............................ 1,075,854 560,293 ----------- ----------- Less: Items not entailing sources of funds Increase in other receivables...................... -- (17,091) Income on minority interest in subsidiaries........ (543,307) (274,317) ----------- ----------- Funds generated by extraordinary operations.......... -- -- ----------- ----------- Funds generated by operations (Carried forward)...... 4,105,277 13,191,481 =========== ===========
I-125 BUENOS AIRES ENERGY COMPANY S.A. AND ITS SUBSIDIARY COMPANY CONSOLIDATED STATEMENT OF CASH FLOWS For the fiscal year commenced January 1, 1999 and 1998 and ended December 31, 1999 and 1998 (Notes 1 and 2)--(Continued)
December December 31, 1999 31, 1998 ----------- ----------- (Pesos) (Pesos) Funds generated by operations (Brought forward)..... 4,105,277 13,191,481 ----------- ----------- Other sources of funds Bank and financial loans, net of payments........... 19,445,694 14,870,460 Collections of receivables at beginning of year/Transferred................................... 48,622,161 43,044,391 Collection of intercompany receivables at beginning of year............................................ 6,540 70,801 Increase in other liabilities....................... -- 161,838 Collection of interest at beginning of year......... 1,552 -- ----------- ----------- Total other sources of funds........................ 68,075,947 58,147,490 ----------- ----------- Total sources of funds.............................. 72,181,224 71,338,971 ----------- ----------- Applications of funds Increase in other receivables....................... (181,147) (93,456) Increase in fixed assets............................ (18,136,806) (21,693,713) Payment of salaries and social security charges at beginning of year.................................. (3,936,184) (3,874,715) Payment of other liabilities at beginning of year... (256,682) (803,255) Payment of commercial debts at beginning of year.... (19,989,772) (19,153,142) Payment of financial loans at beginning of year..... (5,935,530) (5,539,722) Payment of intercompany liabilities at beginning of year............................................... (3,434,726) (5,347,509) Net variation tax liabilities....................... (18,190,343) (10,739,177) Dividends paid...................................... (1,670,366) (1,922,493) Increase in intangible assets....................... (1,115,660) (1,887,650) ----------- ----------- Total applications of funds......................... (72,847,216) (71,054,832) ----------- ----------- (Decrease)/Increase in funds........................ (665,992) 284,139 =========== ===========
The accompanying notes and schedules are an integral part of these consolidated financial statements. I-126 BUENOS AIRES ENERGY COMPANY S.A. AND ITS SUBSIDIARY COMPANY NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the fiscal year commenced January 1, 1999 and 1998 and ended December 31, 1999 and 1998 NOTE 1: CONSOLIDATED FINANCIAL STATEMENTS The Company has consolidated its balance sheet at December 31, 1999 and 1998, the statements of income/(loss) and cash flows for the fiscal years commenced January 1, 1999 and 1998 and ended December 31, 1999 and 1998, with the balance sheet at December 31, 1999 and 1998 and the statements of income/(loss) and cash flows for the fiscal years commenced January 1, 1999 and 1998 and ended December 31, 1999 and 1998 of its Subsidiary Company Inversora Electrica de Buenos Aires S.A. on a line-by-line basis, following the procedure established by Technical Resolution No. 4 of the Argentine Federation of Professional Councils of Economic Sciences (FACPCE). The following data reflect the corporate control:
Subsidiary Principal line of business Percentage held ---------- -------------------------- --------------- Inversora Electrica de Equity interest in Empresa Distribuidora de 55% Buenos Aires S.A. Energia Atlantica S.A. (EDEA S.A.). It holds the corporate control (90%).
NOTE 2: FINANCIAL STATEMENT PRESENTATION AND ACCOUNTING POLICIES The financial statements of the subsidiary have been prepared based on criteria consistent with those applied by Buenos Aires Energy Company S.A. for preparing its financial statements. For purposes of comparison, the balances at December 31, 1998 have been reclassified to state them on a consistent basis with those of the Current year. In addition, the principal valuation and disclosure criteria used for preparing the consolidated financial statements of the subsidiary at December 31, 1999, which have not been explained in the note on accounting policies of the Controlling Company, are as follows: a.Investments These correspond to units in mutual funds, which have been valued at their quotation value at closing date. b.Fixed assets The value of the fixed assets transferred to EDEA S.A. for the rendering of public utility services has been determined considering the purchase price paid by the majority shareholder (Buenos Aires Energy Company Sociedad Anonima) for the capital stock, less the assets and liabilities transferred by the Licensor. Based on a technical appraisal report issued by independent experts, EDEA S.A. has assigned the total value to the different captions forming part of the fixed assets transferred, as well as their remaining useful life. Depreciation has been calculated following the straight-line method. Additions carried out subsequently have been disclosed at their acquisition cost, net of the corresponding accumulated depreciation charges calculated on the straight-line method, using an estimated useful life. Materials and spare parts in stock at closing date, considered as fixed assets, were valued at their estimated replacement cost at that date. Consumption of such assets is included in the cost of sales for the year in which they were used up. I-127 BUENOS AIRES ENERGY COMPANY S.A AND ITS SUBSIDIARY COMPANY NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(Continued) The value of EDEA S.A.'s Fixed Assets, taken as a whole, does not exceed their estimated recoverable value, as disclosed by business projections taken as a whole. c.Intangible assets This caption includes the following items: --EDEA S.A.'s obligation to bear certain costs and/or expenses, in accordance with the License agreement. --Pre-operating and organization expenses of EDEA S.A. --Labor commitments with EDEA S.A.'s personnel determined through actuarial estimates, as described in Note 16 to the consolidated financial statements. --EDEA S.A.'s Systems development expenses. Intangible assets will be amortized based on the straight-line method over fifteen years calculated on a monthly basis, considering the first management period, mentioned in Note 9 to the consolidated financial statements as provided in Art. Nos. 6 to 12 of the License Agreement, with the exception of the systems development expenses which will be amortized based on the straight-line method over a maximum five-year period. Furthermore, this caption includes the following items: --Payment made for Consulting work and expenses engaged for purposes of the International Public Bid for the purchase of the Share Capital of Empresa Distribuidora de Energia Atlantica Sociedad Anonima--#11.3.j. of the Terms and Conditions for the Bid. These expenses are amortized under the straight-line method over fifteen years calculated on a monthly basis, considering the first management period mentioned in Note 9 to the consolidated financial statements. --Other expenses relating to the International Public Bid mentioned above, in addition to those provided for in #11.3.j. of the Terms and Conditions for the Bid, which are amortized under the same method and over the same period. --Other expenses relating to the bridge loan granted by Citibank N.A. Bahamas Branch to make the irrevocable contribution to EDEA S.A.. These expenses are amortized in line with the straight-line method, over the life of the negotiable bond program (5 and 7 years)--Note 7 -, which replaced the loan mentioned, calculated on a monthly basis. --Expenses connected with the issuance of the Negotiable Bonds--Note 7 -. These expenses are amortized in line with the straight-line method, over the life of the negotiable bond program (5 and 7 years), calculated on a monthly basis. d)Other assets Includes shares and bonds received from Mercobank S.A. as settlement of EDEA S.A.'s restricted savings account and current account balances deposited with Banco Credito Provincial, as mentioned in note 17 to the consolidated financial statements. These assets are disclosed at their estimated recoverable value. e)Income and Expenditure Accounts The consolidated net income/(loss) for the year have been disclosed in the currency values, except for the charges for assets consumed (depreciation of fixed assets, consumption of materials and spare parts and amortization of intangible assets), which were determined based on the values of those assets. I-128 BUENOS AIRES ENERGY COMPANY S.A AND ITS SUBSIDIARY COMPANY NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(Continued) NOTE 3: BREAKDOWN OF BALANCE SHEET CAPTIONS Balance Sheet As at December 31, 1999 and 1998, the breakdown of balance sheet captions is as follows: a.Cash and Banks
December 31, December 31, 1999 1998 ------------ ------------ (Pesos) (Pesos) Cash.................................................. 2,424 16,047 Imprest fund.......................................... 46,646 42,568 Funds collected to be deposited....................... -- 203,862 Banks................................................. 1,301,142 2,260,467 Bank in foreign currency (Schedule G)................. -- 304 --------- --------- Total................................................. 1,350,212 2,523,248 ========= =========
b.Trade receivables Current Trade debtors (1)................................... 47,484,356 40,947,429 Controlled, controlling and/or related company debtors: --Empresa de Energia de Rio Negro S.A............. 20,834 -- --Camuzzi Gas Pampeana S.A........................ 3,331 -- Energy supplied pending invoicing................... 17,156,000 19,721,000 Others.............................................. 6,776,906 6,792,656 ----------- ----------- Subtotal............................................ 71,441,427 67,461,085 Less: Bad debt allowance (Schedule E)............... (20,661,547) (17,479,462) ----------- ----------- Subtotal............................................ 50,779,880 49,981,623 ----------- ----------- Non-current Trade debtors (1)................................... 6,080,381 7,483,705 Less: Bad debt allowance (Schedule E)............... (3,634,000) (4,455,538) ----------- ----------- Subtotal............................................ 2,446,381 3,028,167 ----------- ----------- Total............................................... 53,226,261 53,009,790 =========== ===========
- -------- (1) Includes refinanced agreements I-129 BUENOS AIRES ENERGY COMPANY S.A AND ITS SUBSIDIARY COMPANY NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(Continued) c.Other receivables
December 31, December 31, 1999 1998 ------------ ------------ (Pesos) (Pesos) Current Documents with first maturity following April 1, 1997 (less than 60-day default as at June 2, 1997).............................................. -- 403,288 Non-transferred documents included in Circular No. 88 of the Terms of Reference and Conditions........ -- 873,695 Miscellaneous....................................... -- 12,000 ---------- ---------- Subtotal............................................ -- 1,288,983 Bad debt allowance (Schedule E)..................... -- (1,288,982) Employees Stock Ownership Plan (Note 5)............. 1,238,600 1,559,972 VAT credit.......................................... 50,783 358,747 Miscellaneous advance payments...................... 255,355 127,095 Intercompany receivables United Utilities Int. LTD......................... -- 2,621 Receivables from the staff.......................... 143,876 187,149 Tax to be recovered................................. 632,198 -- Receivables from ESEBA S.A.......................... -- 903,028 Income Tax.......................................... 709,943 74,490 Other receivables................................... 385,283 177,901 ---------- ---------- Subtotal............................................ 3,416,038 3,391,004 ---------- ---------- Non-current Miscellaneous advances.............................. 22,500 -- Loans to personnel.................................. 215,606 354,633 Employee Stock Ownership Plan (Note 5).............. 35,999,784 37,148,334 Tax on Minimum Hypothetical Income.................. 1,329,364 -- Other receivables................................... 376,760 -- ---------- ---------- Subtotal............................................ 37,944,014 37,502,967 ---------- ---------- Total............................................... 41,360,052 40,893,971 ========== ==========
d.Other assets
December 31, December 31, 1999 1998 ------------ ------------ (Pesos) (Pesos) Time deposit with Mercobank (Note 17)................. -- 574,351 Mercobank S.A. shares (Note 17)....................... 1,152,590 933,384 Valuation allowance (Note 17 and Schedule E).......... (896,238) (323,808) Mercobank S.A. Bond "C" (Note 17)..................... 741,397 741,397 Bad debt allowance (Note 17 and Schedule E)........... (741,397) (593,118) --------- --------- Total................................................. 256,352 1,332,206 ========= =========
I-130 BUENOS AIRES ENERGY COMPANY S.A AND ITS SUBSIDIARY COMPANY NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(Continued) e.Commercial liabilities In local currency Suppliers............................................... 2,372,863 8,251,465 Provisions for invoices to be received.................. 8,948,956 5,842,853 ---------- ---------- Subtotal.................................................. 11,321,819 14,094,318 ---------- ---------- In foreign currency (Schedule G) Suppliers............................................... 5,713,571 4,856,990 Provisions for invoices to be received.................. 80,440 1,121,322 ---------- ---------- Subtotal.................................................. 5,794,011 5,978,312 ---------- ---------- Total..................................................... 17,115,830 20,072,630 ========== ==========
f.Bank and financial loans
December 31, December 31, 1999 1998 ------------ ------------ (Pesos) (Pesos) Current In foreign currency (Schedule G) Citibank (1)........................................ 2,500,000 9,800,000 Banco Rio de la Plata (1)........................... 5,000,000 4,550,000 Banco del Buen Ayre (1)............................. 2,100,000 8,000,000 Banco Frances (1)................................... 19,980,000 -- Bank Boston (1)..................................... 18,000,000 5,600,000 Accrued bank interest............................... 995,526 185,092 Accrued negotiable obligations interest............. 5,935,415 5,935,415 ----------- ----------- Subtotal.............................................. 54,510,941 34,070,507 ----------- ----------- In local currency Bank Boston--overdraft.............................. -- 115 Banco Velox--overdraft.............................. 786 -- ----------- ----------- Subtotal.............................................. 54,511,727 34,070,622 ----------- ----------- Non-current Negotiable Bonds (Schedule G)......................... 230,000,000 230,000,000 ----------- ----------- Subtotal.............................................. 230,000,000 230,000,000 ----------- ----------- Total................................................. 284,511,727 264,070,622 =========== ===========
- -------- (1) They are being renegotiated so as to obtain financing terms of between 120 and 365 days. I-131 BUENOS AIRES ENERGY COMPANY S.A AND ITS SUBSIDIARY COMPANY NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(Continued) g.Intercompany liabilities
December 31, December 31, 1999 1998 ------------ ------------ (Pesos) (Pesos) Current Camuzzi Gas Pampeana S.A............................ 137,919 673,341 Sodigas Pampeana S.A................................ 29,494 -- Central Piedra Buena S.A. (Schedule G).............. 791,444 -- Camuzzi Argentina S.A............................... 914,295 673,585 Camuzzi Argentina S.A. (Note 6 and Schedule G) --Principal....................................... 3,037,500 2,565,000 --Interest........................................ 97,361 8,131 United Utilities International Argentina S.A. (Schedule G)....................................... -- 110,912 United Utilities International Argentina S.A........ 436,349 1,208,936 United Utilities International LTD (Note 6 and Schedule G) --Principal....................................... 720,000 720,000 --Interest........................................ 23,078 3,191 CNG International Corporation (Note 6 and Schedule G) --Principal....................................... 1,012,500 855,000 --Interest........................................ 32,453 2,711 --------- --------- Subtotal............................................ 7,232,393 6,820,807 --------- --------- Non-Current Camuzzi Argentina S.A. (Note 6 and Schedule G)...... -- 765,000 CNG International Corporation (Note 6 and Schedule G)................................................. -- 255,000 United Utilities International LTD (Note 6 and Schedule G)........................................ -- 360,000 --------- --------- Subtotal............................................ -- 1,380,000 --------- --------- Total............................................... 7,232,393 8,200,807 ========= =========
h.Social security liabilities Salaries payable............................................ 1,762 1,762 Social security charges payable............................. 1,062,590 1,008,784 Accrued vacations........................................... 1,223,581 1,169,669 Provision for annual bonus based on efficiency.............. 1,657,496 1,669,991 Provision for tourism assignment............................ 49,308 50,047 Provision for PPAP bond..................................... 119,696 151,201 --------- --------- Total....................................................... 4,114,433 4,051,454 ========= =========
I-132 BUENOS AIRES ENERGY COMPANY S.A AND ITS SUBSIDIARY COMPANY NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(Continued) i.Tax payables
December 31, December 31, 1999 1998 ------------ ------------ (Pesos) (Pesos) National taxes Law 23,681.......................................... 81,044 82,654 VAT Debit........................................... 1,913,719 1,175,429 Tax on financial cost............................... 1,039,641 912,337 Income tax.......................................... 1,735,249 8,080,059 Payment facility plans--VAT......................... 242,115 -- Other............................................... 2,613 -- ---------- ---------- Subtotal.............................................. 5,014,381 10,250,479 ---------- ---------- Provincial taxes Law 7,290........................................... 1,392,646 877,367 Law 9,038........................................... 765,750 481,234 Law 11,769 section 72 bis........................... 586,182 353,381 Gross revenue tax................................... 131,341 150,608 ---------- ---------- Subtotal.............................................. 2,875,919 1,862,590 ---------- ---------- Municipal taxes Law 11,769 Section 72/Ter........................... 1,869,510 1,750,765 Law 10,740.......................................... 1,303,184 807,689 ---------- ---------- Subtotal.............................................. 3,172,694 2,558,454 ---------- ---------- Subtotal.............................................. 11,062,994 14,671,523 ========== ========== Non-current National taxes Payment facility plan--VAT............................ 282,467 -- ---------- ---------- Subtotal.............................................. 282,467 -- ---------- ---------- Total................................................. 11,345,461 14,671,523 ========== ==========
j.Other liabilities Current Labor commitment towards personnel (Note 16)................ 56,771 38,424 User guarantee deposit...................................... 409,868 229,507 Miscellaneous............................................... 126,144 471,118 --------- --------- Subtotal.................................................... 592,783 739,049 --------- --------- Non-current Labor commitment forwards personnel (Note 16)............... 2,828,864 1,937,328 Miscellaneous............................................... 2,000 2,000 --------- --------- Subtotal.................................................... 2,830,864 1,939,328 --------- --------- Total....................................................... 3,423,647 2,678,377 ========= =========
I-133 BUENOS AIRES ENERGY COMPANY S.A AND ITS SUBSIDIARY COMPANY NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(Continued) NOTE 4: FIXED ASSETS TRANSFERRED According to the Terms of Reference and Conditions for the International and National Public Bid called for all the shares of Empresa Distribuidora de Energia Atlantica S.A. and the License Agreement, the fixed assets transferred by the Licensor to EDEA S.A. include, among others, Properties, Vehicles, Transformation Stations, Works in Progress, Materials and Spare Parts and any other assets necessary for the rendering of the public utility service existing at the moment in which EDEA S.A. started its operations. These assets shall only be used in connection with the rendering of the public utility service, and shall be transferred to the Province of Buenos Aires upon expiration of the License. NOTE 5: EMPLOYEE STOCK OWNERSHIP PROGRAM Class C shares of EDEA S.A., representing 10% of its capital stock, were transferred to Inversora Electrica de Buenos Aires to be held by Banco de la Provincia de Buenos Aires as trustee, until the Employee Stock Ownership Participation Program is implemented with them. Pursuant to Chapter XII of the Terms of Reference and Conditions and to Clause Nine of Circular No. 36 for the privatization of EDEA S.A., the employees of such Company who elect to participate in the Stock Ownership Program shall pay the purchase price of Ordinary Class C shares to the Licensees, with the full amount of annual dividends corresponding to such shares, net of the Trustee's fees and the creation of a Guarantee and Repurchase Fund. Accordingly, the classification as current and non-current of such receivable is included in Note 3.c., and was made based on the projection of dividends distributed and to be distributed by EDEA S.A. NOTE 6: LOANS FROM THE SHAREHOLDERS OF THE CONTROLLED COMPANY On May 27, 1997, IEBA S.A. requested the financial assistance of its shareholders, pro rata to their shareholdings, for the payment of the price balance of the shares in Empresa Distribuidora de Energia Atlantica S.A.. The amounts obtained were as follows: Buenos Aires Energy Company S.A. U.S.$16,500,000 United Utilities International Limited U.S.$13,500,000 These loans were partially settled with the proceeds of the issuance of Negotiable Bonds mentioned in Note 7 to the consolidated financial statements and the balance was renegotiated as follows: Loan from United Utilities International Limited for U.S.$13,500,000 --U.S.$9,450,000 plus interest were settled on September 24, 1997, with the proceeds of the Negotiable Bonds. --U.S.$2,250,000 were allocated to an irrevocable contribution. --U.S.$1,800,000 were refinanced in 5 semiannual installments of U.S.$360,000 each, due as from March 31, 1998. Interest rate: LIBOR, 180- day rate. Loan from the shareholders of BAECO S.A. for U.S.$16,500,000 --U.S.$11,400,000 plus interest were settled after September 30, 1997, with the proceeds of the Negotiable Bonds. I-134 BUENOS AIRES ENERGY COMPANY S.A AND ITS SUBSIDIARY COMPANY NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(Continued) --U.S.$5,100,000 were refinanced in 5 semiannual installments of U.S.$1,020,000 each, maturing on March 31, 1998. Interest rate: LIBOR, 180-day rate. NOTE 7: ISSUANCE OF NEGOTIABLE BONDS On September 24, 1997, IEBA S.A. issued Negotiable Bonds non-convertible into shares, under the Negotiable Bond Program approved by the CNV through Resolutions Nos. 11,880 and 11,898 dated September 8 and September 18, respectively. The conditions of the issuance were as follows: Class A securities .Face value: U.S.$100,000,000 .Annual interest rate: 8.65% payable semi-annually in arrears .Maturity of principal: September 16, 2002. Class B securities .Face value: U.S.$130,000,000 .Annual interest rate: 9.00%, payable semi-annually in arrears .Maturity of principal: September 16, 2004. The main restrictions under the conditions for the issuance of the Negotiable Bonds are the following: Limitation on Additional indebtedness: The Issuer shall not, create, incur, assume or issue either, directly or indirectly, guarantee or in any manner become, either directly or indirectly, liable for or with respect to it ("incur") or tolerate any Indebtedness (including the Acquired Indebtedness), except for Indebtedness falling within at least one of the following categories: (i) Indebtedness under the Securities and the Trust Agreement; (ii) Indebtedness of the Issuer and of the Restricted Subsidiaries outstanding at the Issue Date after giving effect to the application of the proceeds of the sale of Securities; (iii) Indebtedness of the Issuer or of any Restricted Subsidiary; provided that, following such Indebtedness and after giving effect thereto, (a) no Default or Event of Default shall have occurred and be continuing, (b) the Consolidated EBITDA Coverage Ratio of the Issuer determined on a pro forma basis, for the last four fiscal quarters, taken as a whole, and assuming such Indebtedness had been incurred on the first day of such fourth quarter, had been at least 2.0 to 1.0; (iv) the Indebtedness incurred between the Issuer and any Restricted Subsidiary; (v) Indebtedness incurred in Interest Rate Agreements or Currency Agreements entered into with the purpose of hedging the fluctuations of interest rates or currency with respect to such Indebtedness and not for speculation purposes; (vi) (a) the Indebtedness of the Issuer regarding (1) the purchase price of the property acquired in the ordinary course of business or (2) obligations under other transactions related to capital investments; and (b) additional Indebtedness of EDEA provided that (x) such Indebtedness is assumed in relation to EDEA's business and operations, (y) such Indebtedness is not incurred in relation to a Permitted Investment under subsections (vi) or (vii) of the corresponding definition; and (z) immediately after the assumption of an Indebtedness and after giving effect thereto, the ratio (A) of the aggregate sum of EDEA's Total Consolidated Indebtedness plus any Indebtedness of the Issuer then incurred pursuant to subsection (a) above, to (B) EDEA's Total Consolidated Capitalization, does not exceed 0.40 to 1.00; and (vii) the replacements, renewals, refinancing and extensions of the Indebtedness described in clauses (i) through (vii) above; provided, however, that any such I-135 BUENOS AIRES ENERGY COMPANY S.A AND ITS SUBSIDIARY COMPANY NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(Continued) replacements, renewals, refinancing and extension (a) shall not provide for any mandatory redemption, amortization or sinking fund requirement in an amount in excess of the amounts or at a date prior to the dates specified in the Indebtedness being replaced, renewed, refinanced or extended, and (b) shall not exceed the principal amount (plus accrued interest, prepayment premium and costs of operations, if any) of the Indebtedness. Limitation on Restricted Payments: The Issuer shall not make, and shall not permit any of the Restricted Subsidiaries to, directly or indirectly, make any Restricted Payment unless: (i) no Default or Event of Default had occurred and be continuing at the time or after giving effect to such Restricted Payment; (ii) (A) up to September 30, 2000, the Consolidated EBITDA Coverage Ratio is at least 1.75 to 1.0 and (B) thereafter the Issuer may incur an additional Indebtedness of U.S.$1.00 pursuant to clause (iii) of the "Limitation on Additional Indebtedness" covenant; and (iii) immediately after giving effect to such Restricted Payment, the aggregate of all Restricted Payments declared or made after the Issue Date does not exceed the sum of: (a) the difference between the sum of (1) 100% of cumulative Consolidated EBITDA (or if such consolidated cumulative EBITDA is negative, less 100% of such amount) and (2) the result of multiplying 1.5 times the Consolidated Net Interest Expense, in each instance calculated for the fiscal year (taken as one accounting period) commenced on June 2, 1997 and ended on the last day of the last full fiscal quarter immediately preceding such Restricted Payment for which quarterly or annual financial statements of the Issuer are available, and (b) 100% of the aggregate Net Proceeds received by the Issuer from the issuance or sale, after the Issue Date, of Capital Stock (other than Disqualified Capital Stock) of the Issuer or any Indebtedness or other securities of the Issuer convertible into Capital Stock (other than Disqualified Capital Stock) or exercisable or exchangeable for Capital Stock of the Issuer which have been so converted, exercised or exchanged, as the case may be. For purposes of determining the amounts expended for Restricted Payments, cash distributed shall be valued at the face value thereof and property other than cash shall be valued at its Fair Market Value. Notwithstanding the foregoing, the Company may make Permitted Payments. "Permitted Payments" include: (x) the payment of any dividend within 60 calendar days after the date of declaration thereof, if at such date of such declaration the payment complied with the provisions of the Trust Agreement, (y) the withdrawal of any Capital Stock or Subordinated Indebtedness of the Issuer or of any Restricted Subsidiary by conversion into or by exchange for, shares of Capital Stock of the Issuer or of any Restricted Subsidiary (other than Disqualified Capital Stock), or out of the proceeds of the substantially concurrent sale (other than to a Restricted Subsidiary of the Issuer) of Capital Stock (other than Disqualified Capital Stock) of the Issuer; and (z) the withdrawal of any Subordinated Indebtedness of the Issuer by exchange for or out of the proceeds of the substantially concurrent sale (other than to a Restricted Subsidiary) of Subordinated Indebtedness of the Issuer permitted to be incurred in accordance with the "Limitation on Additional Indebtedness" covenant herein. In determining the amount of Restricted Payments permissible under clause (iii) above, amounts expended pursuant to clauses (x), (y) and (z) in the preceding paragraph shall be included as Restricted Payments. Limitation on liens. The Issuer shall not, whether indirectly or directly, and shall not permit any of its Restricted Subsidiaries to create, incur, assume or suffer to exist any Lien (other than a Permitted Lien) of any kind upon any of their respective property or assets now owned or hereafter acquired (including any Capital I-136 BUENOS AIRES ENERGY COMPANY S.A AND ITS SUBSIDIARY COMPANY NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(Continued) Stock) or proceeds therefrom securing any Indebtedness, unless the Securities and all the amounts due under the Trust Agreement are equally and ratably secured by such Lien upon such property, assets or proceeds, together with (or prior to, in the event the obligation or liability to be secured with such a Lien were a Subordinate Indebtedness) the obligation or liability secured by such Lien. Ownership of voting stock of EDEA. The Issuer shall at all times maintain ownership of at least 90% of the securities of EDEA entitled to vote. In addition to the aforementioned restrictions, there are other restrictions related to the following: Limitation on dividends and other payment restrictions affecting the Subsidiaries. I-137 BUENOS AIRES ENERGY COMPANY S.A. AND ITS SUBSIDIARY COMPANY NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(Continued) Disposal of the proceeds of sales of assets. Limitation on transactions with affiliates. Limitation on mergers, mergers by absorption and sales of assets. Limitation on designation of unrestricted Subsidiaries. NOTE 8: CALCULATION OF THE CONSOLIDATED EBITDA AND CONSOLIDATED EBITDA COVERAGE RATIO In accordance with the commitments under the issuance of Negotiable Bonds, the breakdown of the calculation of the EBITDA shall be the following: Net consolidated loss of subsidiary................ (9,694,369) Plus: Income tax......................................... 4,188,379 Financial gain/(loss).............................. 27,359,051 Depreciation and Amortization...................... 14,839,390 Minority interest.................................. 921,246 Extraordinary loss................................. 1,075,854 48,383,920 ---------- ---------- Less: Dividends from the minority interest (Net of corresponding payments received from the PPAP).... (200,444) Financial gain/(loss) (1).......................... (657,251) Amortization of negative goodwill.................. -- Extraordinary income............................... -- (857,695) ---------- ---------- 37,831,856 ==========
- -------- (1)Does not include charges for late payment According to the commitments undertaken under the negotiable Bond Issuance Program, the breakdown of the calculation of the consolidated EBITDA coverage Ratio is as follows: Consolidated EBITDA (last four quarters).............. 28,957,535 Proforma Consolidated interest expenses + Dividends 37,831,856 = 1.306 paid to third parties................................
NOTE 9: MANAGEMENT PERIOD OF EDEA S.A. In accordance with the provisions of Sections 6 through 12 of the License Agreement, the term thereof shall be divided into management periods. The first period shall extend for fifteen years, as from takeover, and the remaining eight periods shall be for ten years each, as from the end of the preceding management period. At least six months prior to the end of each management period, Inversora Electrica de Buenos Aires S.A. shall be able to sell its holding of Class A shares of the Licensee -EDEA S.A.- through an International Public Bidding called for by the Ministry of Works and Public Services of the Province of Buenos Aires. I-138 BUENOS AIRES ENERGY COMPANY S.A. AND ITS SUBSIDIARY COMPANY NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(Continued) NOTE 10: SECURITIES GRANTED BY THE CONTROLLED COMPANY In compliance with section 38 of the License Agreement, Class A Shares of EDEA, owned by Inversora Electrica de Buenos Aires S.A., are pledged in security for the performance of the obligations undertaken thereunder, under the following terms and conditions: * The pledged Class A shares shall be delivered to the Licensor. * The holders of Class A shares shall undertake the obligation to increase this security by creating a similar pledge on any Class A shares acquired thereafter by the Licensee, as a result of new capital contributions or capitalization of profits and/or balances of capital adjustments and/or share dividends. * The pledge thus created shall be maintained during the term of the License and such lien shall survive the succeeding transfers of Class A shares. NOTE 11: RESTRICTIONS ON THE TRANSFER OF SHARES According to Section 16 of the License Agreement, Inversora Electrica de Buenos Aires S.A., as majority shareholder of the Class A shares of EDEA, shall not modify its holding of such shares or sell then for five (5) years as from the date of the enforcement of the License Agreement (June 2, 1997). Following such five-year period, Inversora Electrica de Buenos Aires S.A. shall be able to modify or sell its shareholding, prior authorization of the Competent Authority. Pursuant to Section 16 in fine of the License agreement and to Section 9 of the By-laws, the shareholders of Inversora Electrica de Buenos Aires S.A. are restricted over a five-year period as from the enforcement of the License (June 2, 1997) from modifying their holding of such shares or selling the shares of such Investment Company by a proportion and amount exceeding FORTY NINE PERCENT (49%) of their respective shareholdings of the Investment Company. Following such five-year period, the shareholders will be allowed to dispose of their shareholdings upon prior notice to the Provincial Executive Power through the Relevant Authority, as provided for in Provincial Law No. 11,769. In addition, the technical operator of EDEA S.A. shall not, over a five-year period as from the takeover (June 2, 1997) modify his holding of such shares or sell its Class A shares by a proportion and amount exceeding 39.20% of the total shares representing the capital stock of the Company. Following such five-year period, EDEA S.A. shall be able to modify its shareholding or sell its Class A Shares subject to the ordinary regulations set forth in connection with any of the Company's shareholders. NOTE 12: FORWARD CONTRACTS At December 31, 1999, EDEA S.A. has energy sale forward contracts, some of which were received as a result of the privatization process, as follows: -- 29 contracts with cooperatives, maturing on year 2001, -- 15 contracts with large customers maturing between 2000 and 2002. NOTE 13: INVESTMENTS AND ELECTRIC ENERGY SUPPLY SYSTEM It is EDEA S.A.'s responsibility to make the necessary investments to ensure the rendering of the public service in conformity with the quality levels set in the license agreement, as well as to execute block energy I-139 BUENOS AIRES ENERGY COMPANY S.A. AND ITS SUBSIDIARY COMPANY NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(Continued) purchase and sale contracts that it considers necessary to cover the current and future demand within the licensed area, in addition to the energy purchase and sale contracts with Central Termica San Nicolas S.A. and the cold reserve contract with Eseba Generacion and Eseba S.A. or their predecessors, which are a requirement of the license, and the lack of supply cannot be given as a reason to be exempt from the responsibility concerning its obligation to provide the service. NOTE 14: RESTRICTIONS ARISING FROM THE LICENSE AGREEMENT The rights and obligations of EDEA S.A. arising from the license agreement may not be assigned to any third party without the prior consent of the Provincial Executive Power. However, the prior consent of the Provincial Executive Power shall not be necessary to assign to a third party, for the purpose of granting a security, the economic rights arising from the actual rendering of the utility service regarding which the Licensee is entitled to render pursuant to the license agreement. NOTE 15: RESTRICTED ASSETS EDEA S.A. shall be forbidden to create any mortgage, pledge, lien or security interest in favor of third parties upon the assets essential for the service. Notwithstanding the foregoing, EDEA S.A. shall dispose without restrictions of those assets which in the future may be deemed inadequate or unnecessary for such purpose. This restriction shall not extend to the creation of real property rights granted by EDEA S.A. upon an asset at the moment of its acquisition, as a security for the compliance of the payment of the purchase price. NOTE 16: LABOR COMMITMENTS TOWARDS EDEA S.A.'S PERSONNEL In accordance with the provisions of Section 26 of the Collective Bargaining Agreement, every employee availing himself of the pension benefit plan, as well as his beneficiaries, in the case of employees who may have died while rendering services, shall be granted a bonus based on his monthly remuneration and seniority. According to the foregoing, the total cost recorded under income for the period, based on actuarial estimates, is made up of the following items:
(Pesos) ------- Costs of services.................................................... 183,340 Interest costs....................................................... 109,695 Amortization of initial commitment................................... 236,271 ------- Total................................................................ 529,306 =======
where Costs of Services represent the current estimated actuarial value of the portion of indemnity attributable to the year, Interest Cost corresponds to the interest on the Projected Commitment and the Amortization is the portion corresponding to the Initial Liabilities at June 2, 1997, which amounted to Pesos 2,435,196, to be amortized in 15 equal annual installments. At December 31, 1999, the Projected Commitment has been calculated in a total of Pesos 3,967,886 and the Cumulative Commitment (current actuarial value of the portion of indemnity attributable to past services) totalled Pesos 2,885,635. Considering that the Cumulative Commitment should be disclosed as a minimum, the Minimum Additional Liabilities are recorded as a balancing entry under the Intangible Assets caption, for a total of Pesos 1,777,742 at December 31, 1999. I-140 BUENOS AIRES ENERGY COMPANY S.A. AND ITS SUBSIDIARY COMPANY NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(Continued) NOTE 17: RESTRICTION ON FUNDS The Argentine Central Bank (the "BCRA") resolved, under Resolution No. 365 dated August 20, 1997, the complete suspension of the transactions of Banco Credito Provincial S.A., except for those transactions related to the Central Bank derived from monetary regulation and/or exchange transactions; transactions related to purchase and credit cards existing at that date; credit collection transactions, mere custody administrative transactions or those related to the compliance with labor, social security or fiscal obligations; and the payment of pension and survivors' benefits with funds provided by the National Administration of Social Security. In addition, on December 18, 1997, the BCRA through Resolution No. 741 authorized the group of mayor depositors of Banco Credito Provincial S.A., to integrate a retail commercial bank named Mercobank S.A., created pursuant to the provisions of section 7 of the Financial Institutions Law. Mercobank S.A. acknowledged EDEA S.A. deposits for Pesos 1,435,528 equivalent to 60% of the total amount owed by Banco Credito Provincial, and EDEA, as major depositor, instructed the institution about the application of these deposits for an amount of up to Pesos 717,764 earmarked for the subscription of 717,764 ordinary shares, with a face value of Pesos 1 each, as irrevocable capital contribution. In exchange for the difference in this connection, on May 19, 1998 the company received from Mercobank S.A. a certificate covering a time deposit and on June 3, 1998 it collected the coupon No. 1 plus interest accrued for Pesos 147,560. Pesos 574,351 are still pending collection. In exchange for the balance of privileged liabilities for deposits not assumed by Mercobank S.A., EDEA S.A. would receive Pesos 957,017 in Class C Participation Certificates of the trust set up by Mercobank S.A., of which Promotora Fiduciaria S.A. is the trustee; those certificates are equivalent to 40% of the total amount owed by Banco Credito Provincial S.A. On August 25, 1998, Mercobank S.A. subscribed 215,620 ordinary shares, with a face value of Pesos 1 each, through the capitalization of Pesos 215,620 of the amount of the Class C Participation Certificates of the trust mentioned in the preceding paragraph. In view of this, the balance of those certificates totals Pesos 741,397. At December 31, 1999, EDEA S.A. had determined to provision all the class C certificates. On April 30, 1999 the Shareholders' Meeting of Mercobank S.A. resolved to reduce the capital in approximately $ 20,144,000 in order to absorb the accumulated negative results generated up to December 31, 1998. This decrease was applied prorata amongst all the Bank's shareholders. Furthermore, it was resolved to increase capital through the subscription of shares for the amount of the time deposit certificates which the shareholders received from Mercobank S.A. and which to-date have not expired. As a result of what is mentioned in the preceding paragraph, on December 31, 1999, EDEA holds 1,152,590 shares with a face value of $ 1 (one peso). EDEA has decided to set up a provision for $ 896,238 for the valuation of estimated recovery value of the shares held in Mercobank S.A.'s portfolio. At December 31, 1999, the Extraordinary Net Income/(Loss) caption includes $ 1,075,854, which is the devaluation of the shares and the increase in uncollectibility of the Class C certificates during the year. I-141 BUENOS AIRES ENERGY COMPANY S.A. AND ITS SUBSIDIARY COMPANY NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(Continued) NOTE 18: FINANCIAL INCOME/(LOSS) The breakdown of this caption at December 31, 1999 and 1998 is as follows:
December 31, 1999 December 31, 1998 (Pesos) (Pesos) ----------------- ----------------- Generated by assets Surcharges for late payment.............. 1,885,525 1,609,225 Interest................................. 658,035 736,715 Exchange differences and others.......... (686) 71,843 ----------- ----------- Subtotal................................. 2,542,874 2,417,783 ----------- ----------- Generated by liabilities Bank fees and expenses................... (201,624) (642,662) Interest on bank loans and others........ (23,662,637) (22,108,084) Tax on financial cost.................... (3,615,328) (912,337) Exchange differences..................... (13,746) (12,639) ----------- ----------- Subtotal................................. (27,493,335) (23,675,722) ----------- ----------- Total.................................... (24,950,461) (21,257,939) =========== ===========
NOTE 19: OTHER INCOME (EXPENDITURE), NET At December 31, 1999 and 1998 the breakdown of this caption is as follows:
December 31, 1999 December 31, 1998 (loss)/income (loss)/income (Pesos) (Pesos) ----------------- ----------------- Recovery of bad debt allowance (Schedule E).......................... 855,907 2,851,000 Recovery/(Loss) Provision for lawsuits (Schedule E).......................... 120,000 (120,000) Income from sales of fixed assets...... 724,816 -- Others................................. 25,431 184,742 --------- --------- Total.................................. 1,726,154 2,915,742 ========= =========
NOTE 20: INTERCOMPANY TRANSACTIONS As at December 31, 1999 and 1998, intercompany transactions are as follows:
December 31, 1999 December 31, 1998 (Pesos) (Pesos) ----------------- ----------------- Transactions loss/(Income) Camuzzi Gas Pampeana S.A............... 240,140 734,289 Camuzzi Gas Pampeana S.A............... (50,715) (55,121) Camuzzi Argentina S.A. 1,335,549 (1) 1,222,939 (2) Central Piedra Buena S.A............... 4,115,644 6,109,488 CNG International Corporation.......... 44,070 61,394 Sodigas Pampeana S.A................... 24,375 -- Empresa de Energia Rio Negro S.A....... (17,600) -- United Utilities International Argentina S.A......................... 1,339,597 1,421,379 United Utilities International Ltd..... 34,380 103,435
I-142 BUENOS AIRES ENERGY COMPANY S.A. AND ITS SUBSIDIARY COMPANY NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(Continued) - -------- (1) Includes Pesos 268,000 in Intangible Assets and $ 32,000 in Fixed Assets (Works in Progress) (2)Includes Pesos 207,708 in Intangible Assets. NOTE 21: TAX ON MINIMUM HYPOTHETICAL INCOME. The Company filed a Declaratory Action of Unconstitutionality as a precautionary measure, so as to avoid payments of the tax corresponding to the Minimum Hypothetical Income for the year ended December 31, 1998. During February and March 1999 the first two prepayments of this tax were paid under protest; and the Company expressly reserves the right to claim the recovery of what had been paid, which amounts to $ 304,888. This amount is disclosed net of the debt for said tax in the caption Tax Liabilities. Additionally, the Company did not pay the third and last prepayment of $ 152,444 at its due date (April 15, 1999). NOTE 22: ADVANCED DIVIDENDS On July 27, 1999 the Board of Directors of EDEA S.A. proposed the distribution of dividends in advance for Pesos 7,544,700, subject to the approval of the Shareholders' Meeting, of which Pesos 6,790,230 corresponded to IEBA S.A. which had collected them in their entirety at the closing date of these financial statements. I-143 BUENOS AIRES ENERGY COMPANY S.A. AND ITS SUBSIDIARY FIXED ASSETS For the fiscal years commenced January 1, 1999 and 1998 and ended December 31, 1999 and 1998 Schedule A
OPENING VALUE DEPRECIATION ------------------------------------------------------------ -------------------------------------------------- For the year -------------------------------------- Value at Accumulated beginning Additions at Accumulated of year for the Value at beginning at end of Item (Note 2.b) year Transfers Deletions end of year of year Rate Amount(2) Deletions year ---- ----------- ---------- ----------- --------- ----------- ----------- ----- ---------- --------- ----------- (Pesos) (Pesos) (Pesos) (Pesos) (Pesos) (Pesos) % (Pesos) (Pesos) (Pesos) Lines........... 237,294,808 -- 8,244,764 219,105 245,320,467 8,705,850 2,32 5,627,693 8,992 14,324,551 Connections..... 79,089,755 -- 1,114,620 -- 80,204,375 2,881,698 2,30 1,842,874 -- 4,724, 572 Transformers.... 5,758,100 -- 725,080 -- 6,483,180 278,003 3,05 189,953 -- 467,956 Operation devices......... 26,262,121 -- 2,649,668 -- 28,911,789 1,268,571 3,00 853,604 -- 2,122,175 Substations..... 12,092,951 -- 1,339,725 -- 13,432,676 536,180 2,80 365,185 -- 901,365 Operating Equipment....... 3,074,271 374,050 1,714,747 -- 5,163,068 831,123 12,75 618,064 -- 1,449,187 Control Systems......... -- -- 535,241 -- 535,241 -- 9,00 59,471 -- 59,471 Materials and spare parts..... 8,334,030 4,150,387 (4,065,109) 1,445,007(1) 6,974,301 -- -- -- -- -- Meters in use... 18,543,278 -- 830,626 -- 19,373,904 1,793,208 6,46 1,217,520 -- 3,010,728 Tools........... 303,282 194,857 6,089 -- 504,228 74,339 33,33 143,595 -- 217,934 Devices and instruments..... 137,002 60,503 -- -- 197,505 6,085 20,00 36,583 -- 42,668 Computer equipment....... 1,251,697 249,106 -- -- 1,500,803 418,600 33,33 473,064 -- 891664 Communications equipment....... 108,275 94,408 27,886 -- 230,569 34,799 33,33 66,655 -- 101,454 Facilities...... 143,422 34,287 -- -- 177,709 34,081 33,33 57,386 -- 91,467 Furniture and fixtures........ 231,512 8,508 -- -- 240,020 46,068 20,00 47,341 -- 93,409 Vehicles........ 2,158,543 603,767 -- 21,200 2,741,110 214,189 20,00 351,930 3,028 563,091 Works in progress........ 17,981,309 12,395,935 (13,629,921) -- 16,747,323 -- -- -- -- -- Land............ 2,632,974 162,000 -- -- 2,794,974 -- -- -- -- -- Buildings....... 21,473,466 518,000 640,284 -- 22,631,750 22,163 2,00 30,491 -- 52,654 Advances to suppliers....... 190,909 2,998 (133,700) -- 60,207 -- -- -- -- -- ----------- ---------- ----------- --------- ----------- ---------- ----- ---------- ------ ---------- Total at December 31, 1999............ 437,061,705 18,848,806 -- 1,685,312 454,225,199 17,144,957 -- 11,981,409 12,020 29,114,346 =========== ========== =========== ========= =========== ========== ===== ========== ====== ========== Total at December 31, 1998............ 415,951,841 22,402,742 -- 1,292,878 437,061,705 5,931,789 -- 11,213,573 405 17,144,957 =========== ========== =========== ========= =========== ========== ===== ========== ====== ========== Net Net carrying carrying value at value at Item 12.31.99 12.31.98 ---- ----------- ----------- (Pesos) (Pesos) Lines........... 230,995,916 228,588,958 Connections..... 75,479,803 76,208,057 Transformers.... 6,015, 224 5,480,097 Operation devices......... 26, 789,614 24,993,550 Substations..... 12, 531,311 11,556,771 Operating Equipment....... 3,713,881 2,243,148 Control Systems......... 475,770 -- Materials and spare parts..... 6,974,301 8, 334,030 Meters in use... 16,363,176 16,750,070 Tools........... 286,294 228,943 Devices and instruments..... 154,837 130,917 Computer equipment....... 609,139 833,097 Communications equipment....... 129,115 73,476 Facilities...... 86,242 109,341 Furniture and fixtures........ 146,611 185,444 Vehicles........ 2,178,019 1,944,354 Works in progress........ 16,747,323 17,981,309 Land............ 2,794,974 2,632,974 Buildings....... 22,579,096 21,451,303 Advances to suppliers....... 60,207 190,909 ----------- ----------- Total at December 31, 1999............ 425,110,853 -- =========== =========== Total at December 31, 1998............ -- 419,916,748 =========== ===========
- ---- Note: (1) Includes consumption of materials and spare parts for Pesos 1,303,671 (included in Schedule H and Expenses and Services for Maintenance and Operation) and Other Expenditures for Pesos 141,336. (2) Included in Schedule H. I-144 BUENOS AIRES ENERGY COMPANY S.A. AND ITS SUBSIDIARY INTANGIBLE ASSETS For the fiscal years commenced January 1, 1999 and 1998 and ended December 31, 1999 and 1998 Schedule B
OPENING VALUE DEPRECIATION ------------------------------------------ ----------------------------------------------------------- For the year --------------------------------- Accumulated Value at Additions Value at at Accumulated Principal beggining for the end of beginning at end of Account of year year Deletions year of year Rate Amount(1) Deletions (1) year --------- ---------- --------- --------- ---------- ----------- ----------- --------- ------------- ----------- (Pesos) (Pesos) (Pesos) (Pesos) (Pesos) % (Pesos) (Pesos) Pre-operating and organization expenses........ 2,821,829 487,307 -- 3,309,136 212,396 6,67 216,764 -- 429,160 Consulting fees and other expenses re. international public bidding for the purchase of EDEA S.A's shareholding.... 5,765,495 -- -- 5,765,495 608,583 6,67 384,367 -- 992,950 Expenses re. the issue of Negotiable Bonds........... 4,233,826 -- -- 4,233,826 946,696 20,00/14,30 710,021 -- 1,656,717 Expenses re. Loan from Citibank........ 4,636,232 -- -- 4,636,232 1,180,217 20,00/14,30 745,398 -- 1,925,615 Costs and Expenses assumed under the License Agreement....... 3,596,330 -- -- 3,596,330 345,926 6,67 243,330 -- 589,256 Labor undertakings as per Section 26 Collective Bargaining Agreement (Note 16)....... 1,733,370 609,922 -- 2,343,292 399,066 -- 166,484 -- 565,550 Systems development..... 1,057,648 177,477 -- 1,235,125 133,845 20,00 226,268 -- 360,113 Licenses for software........ 239,711 718,876 -- 958,587 77,991 33,33 165,349 -- 243,340 ---------- --------- -------- ---------- --------- ----------- --------- ------- --------- Total at December 31, 1999............ 24,084,441 1,993,582 -- 26,078,023 3,904,720 -- 2,857,981 -- 6,762,701 ========== ========= ======== ========== ========= =========== ========= ======= ========= Total at December 31, 1998............ 22,344,253 1,887,650 (147,462) 24,084,441 1,237,827 -- 2,699,866 (32,973) 3,904,720 ========== ========= ======== ========== ========= =========== ========= ======= ========= Net book Net book Principal value at value at Account 12.31.99 12.31.98 --------- ---------- ---------- (Pesos) (Pesos) Pre-operating and organization expenses........ 2,879,976 2,609,433 Consulting fees and other expenses re. international public bidding for the purchase of EDEA S.A's shareholding.... 4,772,545 5,156,912 Expenses re. the issue of Negotiable Bonds........... 2,577,109 3,287,130 Expenses re. Loan from Citibank........ 2,710, 617 3,456,015 Costs and Expenses assumed under the License Agreement....... 3,007,074 3,250,404 Labor undertakings as per Section 26 Collective Bargaining Agreement (Note 16)....... 1,777,742 1,334,304 Systems development..... 875,012 923,803 Licenses for software........ 715,247 161,720 ---------- ---------- Total at December 31, 1999............ 19,315,322 -- ========== ========== Total at December 31, 1998............ -- 20,179,721 ========== ==========
- ---- Note: (1) Includes Pesos 2,691,497 and 2,408,859 for Amortization of Intangible Assets and Pesos 166,484 and 258,034 under Salaries and Wages in Schedule H for 1999 and 1998 respectively. I-145 BUENOS AIRES ENERGY COMPANY S.A. AND ITS SUBSIDIARY COMPANY INVESTMENTS Consolidated Balance Sheet at December 31, 1999 and 1998 Schedule C
Book Book Value Value At At Item 12.31.99 12.31.98 ---- --------- ---------- (Pesos) (Pesos) CURRENT INVESTMENTS Mutual funds Provinfondos.......................................... 442,000 544,113 BankBoston 1784....................................... 609,157 -- --------- ------- TOTAL CURRENT INVESTMENTS............................... 1,051,157 544,113 --------- ------- TOTAL INVESTMENTS....................................... 1,051,157 544,113 ========= =======
I-146 BUENOS AIRES ENERGY COMPANY S.A. AND ITS SUBSIDIARY COMPANY ALLOWANCES For the fiscal years commenced January 1, 1999 and 1998 and ended December 31, 1999 and 1998 Schedule E
Net book Net book Opening Additions for value at value at Item Balances the year Decrease 12.31.99 12.31.98 ---- ---------- ------------- --------- ---------- ---------- (Pesos) (Pesos) (Pesos) (Pesos) (Pesos) DEDUCTED FROM ASSETS Allowance for trade receivables............ 21,935,000 3,249,471(1) 888,924(2) 24,295,547 21,935,000 Allowance for other receivables............ 1,288,982 -- 1,288,982(4) -- 1,288,982 Allowance for other assets................. 916,926 1,075,854(3) 355,145(4) 1,637,635 916,926 ---------- --------- --------- ---------- ---------- Total at December 31, 1999................... 24,140,908 4,325,325 2,533,051 25,933,182 -- ---------- --------- --------- ---------- ---------- Total at December 31, 1998................... 22,885,462 4,390,866(5) 3,135,420(6) -- 24,140,908 ---------- --------- --------- ---------- ---------- CARRIED UNDER LIABILI- TIES For lawsuits............ 120,000 -- 120,000(7) -- 120,000 ---------- --------- --------- ---------- ---------- Total at December 31, 1999................... 120,000 -- 120,000 -- -- ---------- --------- --------- ---------- ---------- Total at December 31, 1998................... -- 120,000(7) -- -- 120,000 ========== ========= ========= ========== ==========
- -------- Note: (1) Included in Schedule H. (2) Pesos 855,907 were included in Other income/(expenditure), net (note 19) and Pesos 33,017 correspond to allowances used during the year. (3) Included in Extraordinary Net income/(loss) (Note 17). (4) Uses during the year. (5) Pesos 3,830,573 are included in Schedule H and Pesos 560,293 in Extraordinary Net income/(loss) (Note 17) net of differences of Pesos 17,091 recognized by Mercobank. (6) Pesos 2,851,000 are included in Other income/(expenditure), net (Note 19) and Pesos 284,420 correspond to uses during the year. (7) Included in Other Income Net (Note 19). I-147 BUENOS AIRES ENERGY COMPANY S.A. AND ITS SUBSIDIARY COMPANY FOREIGN CURRENCY ASSETS AND LIABILITIES Consolidated Balance Sheet at December 31, 1999 and 1998 Schedule G
Amount in Amount in Argentine Argentine Type and amount of Exchange currency at currency at ITEMS foreign currency rate (1) 12.31.99 12.31.98 ----- ------------------ -------- ----------- ----------- (Pesos) (Pesos) CURRENT ASSETS Cash and banks........... -- -- -- 304 ----------- ----------- Total current assets.............. -- 304 ----------- ----------- Total assets......... -- 304 =========== =========== CURRENT LIABILITIES Commercial liabilities... U.S.$ 5,794,011 1.0000 5,794,011 5,978,312 Bank and financial loans (including interest).... U.S.$ 54,510,941 1.0000 54,510,941 34,070,507 Intercompany liabilities United Utilities International LTD..... U.S.$ 743,078 1.0000 743,078 723,191 United Utilities International Argentina S.A......... -- -- -- 110,912 Central Piedra Buena... U.S.$ 791,444 1.0000 791,444 -- Camuzzi Argentina S.A................... U.S.$ 3,134,861 1.0000 3,134,861 2,573,131 CNG International Corporation........... U.S.$ 1,044,953 1.0000 1,044,953 857,711 ----------- ----------- Total current liabilities......... 66,019,288 44,313,764 ----------- ----------- NON-CURRENT LIABILITIES Bank and financial Loans Negotiable bonds-- Principal............. U.S.$230,000,000 1.0000 230,000,000 230,000,000 Intercompany liabilities United Utilities International LTD..... -- -- -- 360,000 Camuzzi Argentina S.A................... -- -- -- 765,000 CNG International Corporation........... -- -- -- 255,000 ----------- ----------- Total non-current liabilities......... 230,000,000 231,380,000 =========== =========== Total liabilities.... 296,019,288 275,693,764 =========== ===========
- -------- (1) Banco Nacion official rate of exchange at 12.31.99 for U.S. Dollars. I-148 BUENOS AIRES ENERGY COMPANY S.A. AND ITS SUBSIDIARY COMPANY INFORMATION REQUIRED UNDER ART. 64, CLAUSE (b) OF LAW 19,550 For the fiscal years commenced January 1, 1999 and 1998 and ended December 31, 1999 and 1998 Schedule H
Cost of Administrative Marketing Total at Total at Items sales expenses expenses 12.31.99 12.31.98 ----- ----------- -------------- ---------- ----------- ----------- (Pesos) (Pesos) (Pesos) (Pesos) (Pesos) Purchase of energy and power.................. 112,236,923 -- -- 112,236,923 114,354,252 Fees for services....... 1,653,897 1,157,166 606,859 3,417,922 3,671,794 Salaries and wages...... 14,933,894 2,261,941 4,718,051 21,913,886 22,048,834 Traveling expenses...... 216,397 242,666 80,887 539,950 730,941 Taxes and charges....... 1,562,129 870 196,627 1,759,626 2,492,553 Fixed Asset depreciation........... 11,382,339 299,535 299,535 11,981,409 11,213,573 Intangible Asset amortization........... 340,685 2,095,299 255,513 2,691,497 2,408,859 Expenses and Services hired for maintanance and operation.......... 4,060,304 1,026,448 1,769,984 6,856,736 7,024,116 Postage, communications and data processing.... 148,061 704,164 3,021,195 3,873,420 4,251,862 General expenses for operation.............. 610,398 702,505 218,720 1,531,623 782,612 Bad debts............... -- -- 3,249,471 3,249,471 3,830,573 Advertising............. -- -- 252,796 252,796 328,657 ----------- --------- ---------- ----------- ----------- Total at December 31, 1999................. 147,145,027 8,490,594 14,669,638 170,305,259 -- ----------- --------- ---------- ----------- ----------- Total at December 31, 1998................. 149,993,368 8,113,198 15,032,060 -- 173,138,626 =========== ========= ========== =========== ===========
I-149 Free translation of the report issued for Argentine purposes in accordance with local generally accepted accounting principles Auditors' Report To the President and Directors of Buenos Aires Energy Company S.A. In our capacity as independent public accountants, we report on the audit we performed of the financial statements of Buenos Aires Energy Company S.A., detailed in point 1. below. The preparation and issuance of these financial statements are the responsibility of the Company's Board of Directors, in the exercise of its exclusive functions. Our responsibility is to issue a report on such financial statements, based on our examination performed with the scope mentioned in point 2. below. 1. FINANCIAL STATEMENTS AUDITED We have examined the Balance Sheets of Buenos Aires Energy Company S.A. at December 31, 1999 and 1998, as well as the Statements of Income, Changes in Shareholders' Equity and Cash Flows for the financial years then ended, together with notes 1 to 11 and schedules C and G. In addition, we have examined the Consolidated Balance Sheets of Buenos Aires Energy Company S.A. and its subsidiary Inversora Electrica de Buenos Aires S.A. at December 31, 1999 and 1998, as well as the Consolidated Statements of Income and Cash Flows for the financial years then ended, together with notes 1 to 22 and consolidated schedules A, B, C, E, G and H. 2. SCOPE OF THE AUDIT WORK Our examination was conducted in accordance with auditing standards in force in Argentina, as approved by the Professional Council of Economic Sciences. Those standards require that the auditor plan and perform the audit to form an opinion about the fairness of the significant information contained in the financial statements. An audit includes the examination, on a selective test basis, of the judgmental elements supporting the information disclosed in the financial statements and the evaluation of the accounting standards used in their preparation and, as a part thereof, the fairness of the estimates made by the Board of Directors. 3. OPINION In our opinion, the financial statements referred to in point 1. present fairly, in all material respects, the net worth and financial condition of the Company at December 31, 1999 and 1998, the results of its operations, changes in its shareholders' equity and cash flows for the financial years then ended, as well as the consolidated net worth and financial condition of the Company, the consolidated results of operations and consolidated cash flows of the Company and its subsidiary, in accordance with professional accounting standards in force in Argentina. 4. SPECIAL INFORMATION CALLED FOR BY EXISTING REGULATIONS As called for by regulations in force, we report that: 4.1. The financial statements mentioned in point 1. above are recorded in the Inventories and Balances book and stem from accounting records kept in all formal respects in accordance with legal standards. 4.2. The financial statements mentioned in point 1. have been prepared in accordance with the provisions of Law 19,550 and 22,903, as well as Resolution N 290/97 of the National Securities Commission, except for the non-presentation of the Informative Review, as required by that Resolution. I-150 4.3. At December 31, 1999, there no liabilities accrued in respect of employer contributions and employee withholdings towards the Integrated Pension and Survivors' Benefit System, according to the Company's accounting records. Buenos Aires, February 17, 2000. PRICEWATERHOUSECOOPERS (Partner) _____________________________________ Alberto Boruchowicz I-151 Buenos Aires Energy Company S.A. US GAAP RECONCILIATION
As of December 31, 1999 ------------ Reconciliation of shareholders' equity: Total shareholders' equity under Argentine GAAP.......... $93,811,284 U.S. GAAP Adjustments: Deferred Income taxes.................................... (2,570,335)(a) Deferral of expenses..................................... (3,457,755)(b) Depreciation expenses.................................... 308,196 (c)(d) Financing costs.......................................... (2,710,617)(e) Minority interest........................................ 4,108,324 (f) ----------- Total Shareholders' Equity under U.S. GAAP............... 89,489,097 -----------
Twelve-month period ended December 31, 1999 ------------ Reconciliation of net loss: Net loss under Argentine GAAP............................ $(5,496,079) U.S. GAAP Adjustments: Deferred Income taxes.................................... (765,721)(a) Deferral of expenses..................................... (225,568)(b) Depreciation expenses.................................... 125,193 (c)(d) Financing costs.......................................... 745,398 (e) Investments.............................................. 372,079 (g) Minority interest........................................ 101,950 (f) ----------- Net Loss under U.S. GAAP................................. (5,142,748) -----------
Twelve-month period ended December 31, 1999 ------------ Analysis of changes in shareholders' equity under U.S. GAAP: Balance of shareholders' equity as of December 31, 1998........... $95,003,924 Net income........................................................ (5,42,748) Unrealized holding loss in available for sale securities.......... (372,079) ----------- Balance of shareholders' equity as of December 31, 1999........... 89,489,097 -----------
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