EX-99.2 BYLAWS 4 cngexhibit992.htm CNG EXHIBIT 99.2 CONSOLIDATED NATURAL GAS COMPANY

EXHIBIT 99.2

CONSOLIDATED NATURAL GAS COMPANY

UNAUDITED PRO FORMA COMBINED CONDENSED CONSOLIDATED
STATEMENTS OF INCOME FROM CONTINUING OPERATIONS

                  Year Ended December 31, 2000                    


CNG (As Reported)

Louis
Dreyfus (As Reported) (A)


Pro Forma Adjustments

Pro
Forma Combined

(Millions)

Operating Revenue

$     4,012

$          474

$     4,486

Operating Expenses:

     Purchased gas, net

1,705

1,705

     Liquids, pipeline capacity and other purchases

328

328

     Restructuring and other acquisition-related costs

270

270

     Other operations and maintenance

586

117

$         (36)

(G)

667

     Depreciation, depletion and amortization

443

129

16 

(E)

588

     Other taxes

        203

             31

                 

         234

     Total operating expenses

       3,535

            277

          (20)

       3,792

Income from operations

477

197

20 

694

Other income

45

3

48

Interest and related charges

         162

              41

           53 

(B)

        256

Income before income taxes

360

159

(33)

486

Income taxes

         147

              61

           (13)

(D3)

        195

Income from continuing operations

$       213

$            98

$         (20)

$       291

See Notes to Unaudited Pro Forma Combined Condensed Consolidated Financial Data

PAGE 2

CONSOLIDATED NATURAL GAS COMPANY

UNAUDITED PRO FORMA COMBINED CONDENSED CONSOLIDATED
STATEMENTS OF INCOME FROM CONTINUING OPERATIONS

                       Nine Months Ended September 30, 2001                


CNG (As Reported)

Louis
Dreyfus (As Reported) (A)


Pro Forma Adjustments

Pro
Forma Combined

(Millions)

Operating Revenue

$      3,198

$           509

$      3,707

Operating Expenses:

     Purchased gas, net

1,541

1,541

     Liquids, pipeline capacity and other purchases

209

209

     Other operations and maintenance

438

103

$       (27)

(G)

514

     Depreciation, depletion and amortization

287

97

17 

(E)

401

     Other taxes

         123

              23

                 

        146

     Total operating expenses

       2,598

             223

        (10)

      2,811

Income from operations

600

286

10 

896

Other income

21

2

23

Interest and related charges

         124

             24

           40 

(B)

        188

Income before income taxes

497

264

(30)

731

Income taxes

         169

            101

         (11)

(D3)

        259

Income from continuing operations

$        328

$           163

         (19)

$        472

See Notes to Unaudited Pro Forma Combined Condensed Consolidated Financial Data

PAGE 3

CONSOLIDATED NATURAL GAS COMPANY

UNAUDITED PRO FORMA COMBINED CONDENSED CONSOLIDATED BALANCE SHEET

                                At September 30, 2001                                   


CNG (As Reported)


Louis
Dreyfus (A)


Pro Forma Adjustments

Pro
Forma Combined

(Millions)

ASSETS

Current Assets:

     Cash and cash equivalents

$        87 

$         5 

$       92 

     Accounts receivable, net

544 

69 

613 

     Inventories

166 

166 

     Commodity contract assets

567 

74 

641 

     Broker margin deposits

26 

26 

     Prepayments

103 

103 

     Other

93 

98 

     Net assets held for sale

         70 

                 

                 

         70 

     Total current assets

      1,656 

          153 

                 

      1,809 

Investments

        230 

                 

                 

       230 

Property, Plant and Equipment:

     Property, plant and equipment

9,995 

2,195 

$192

(D1)

12,382 

     Accumulated depreciation, depletion, and      amortization


     (5,114)


       (665)


         665


(D1)


     (5,114)

     Total property, plant and equipment

      4,881 

      1,530 

         857

      7,268 

Deferred Charges and Other Assets:

     Goodwill, net

468

(D2)

468 

     Regulatory assets, net

185 

185 

     Prepaid pension costs

527 

527 

     Commodity contract assets

298 

64 

362 

     Other

         31 

           4 

              

         35 

     Total deferred charges and other assets

     1,041 

          68 

          468

      1,577 

Total assets

$    7,808 

$     1,751 

$     1,325

$   10,884 

See Notes to Unaudited Pro Forma Combined Condensed Consolidated Financial Data

PAGE 4

CONSOLIDATED NATURAL GAS COMPANY

UNAUDITED PRO FORMA COMBINED CONDENSED CONSOLIDATED BALANCE SHEET

                                     At September 30, 2001                                 


CNG (As Reported)


Louis
Dreyfus (A)


Pro Forma Adjustments

Pro
Forma Combined

(Millions)

LIABILITIES AND SHAREHOLDER'S EQUITY

Current Liabilities:

     Short-term debt

$        486

$        486

     Accounts payable, trade

421

$          92

$         22 

(F)

535

     Payables to affiliated companies

199

199

     Commodity contract liabilities

307

8

315

     Broker margin liabilities

248

248

     Other

          497

           21

           33 

(F)

          551

     Total current liabilities

        2,158

             121

          55 

        2,334

Long-term debt

        2,196

             514

         712 

(B)

        3,422

Deferred Credits and Other Liabilities

     Deferred taxes

995

188

316 

(D3)

1,499

     Commodity contract liabilities

116

46

162

     Other

          156

           30

             

          186

     Total deferred credits and other liabilities

        1,267

         264

         316 

        1,847

Total liabilities

        5,621

          899

       1,083 

        7,603

Obligated manditorily redeemable preferred

     securities of subsidiary trusts

              

                    

         200 

(B)

          200

Common Shareholder's Equity:

     Common stock

1,816

1,816

     Other paid-in capital

40

511

383 

(C,H)

934

     Accumulated other comprehensive income

140

63

(63)

(H)

140

     Retaining earnings

191

289

(289)

(H)

191

     Treasury stock

                   

         (11)

          11 

(H)

             -

Total common shareholders' equity

        2,187

          852

          42 

       3,081

Total liabilities and shareholders' equity

$       7,808

$       1,751

$     1,325 

$    10,884

See Notes to Unaudited Pro Forma Combined Condensed Consolidated Financial Data

PAGE 5

NOTES TO UNAUDITED PRO FORMA COMBINED CONDENSED CONSOLIDATED
FINANCIAL DATA

The Unaudited Pro Forma Combined Condensed Consolidated Financial Data are based on the following assumptions:

A. Certain revenues, expenses, assets and liabilities of Louis Dreyfus have been reclassified to conform to CNG' s presentation.

B. The issuance of $950 million of long-term debt and $200 million of trust preferred securities by CNG at an average coupon rate of 6.14% to fund the cash consideration distributed in exchange for the outstanding shares of Louis Dreyfus at the closing of the merger. In addition, CNG retired $185 million of Louis Dreyfus bank debt with proceeds from these financings and assuming any excess proceeds from the issuance of long term debt will be used to retire existing long term debt. Additionally, certain debt of Louis Dreyfus, which was not retired, is adjusted to fair market value.

C. Dominion's transfer of its wholly owned subsidiary, into which Louis Dreyfus was merged, to CNG as a capital contribution. The net assets of this subsidiary total $894 million and include 1) $881 million, the estimated value of the 14.3 million shares of Dominion common stock distributed at the closing of the merger based on the exchange ratio of 0.3226 share of Dominion common stock for each share of Louis Dreyfus common stock; and 2) the conversion of Louis Dreyfus common stock options into Dominion common stock options with an estimated fair value of $13 million.

D. Purchase adjustments which have been made to the assets and liabilities of Louis Dreyfus to reflect the effect of the merger being accounted for as a purchase business combination are as follows (in millions):

Total oil and gas exploration and production properties (1)

$857

Goodwill (2)

468

Deferred taxes (3)

316

1. Oil and gas exploration and production properties are adjusted to reflect the Louis Dreyfus exploration and production properties at estimated fair value. The fair value of proved reserves are estimated to be $1.5 billion and unproved properties are estimated to be $812 million.

2. Goodwill is recognized, representing the portion of the purchase price in excess of the estimated fair value of identified assets and liabilities. No amortization of goodwill is included in the Unaudited Pro Forma Combined Condensed Consolidated Financial Data, as provided in Statement of Financial Accounting Standards No. 142, Goodwill and Other Intangible Assets, for business combinations completed after June 30, 2001. The final allocation of the purchase price will be based on the fair value of identified assets and liabilities. Accordingly, goodwill will be adjusted as a result of the final determination of such fair values and thus may differ significantly from the amount reported in the Unaudited Pro Forma Combined Condensed Consolidated Balance Sheet.

3. Deferred taxes are adjusted to record the additional deferred taxes, resulting primarily from the recognition of the estimated fair value of the Louis Dreyfus exploration and production properties. The estimated provision for income taxes related to the pro forma adjustments are based on an assumed combined federal and state income tax rate of 38%.

E. Pro forma adjustments reflect the additional depletion related to the adjustment of the Louis Dreyfus exploration and production properties to estimated fair value under the full cost method of accounting. See Note G.

PAGE 6

 

F. Direct costs of the merger include approximately $22 million for fees of financial advisors, legal counsel, and independent auditors. In addition, estimated payments of $33 million are expected to be made under certain employment contracts, seismic licensing agreements and other liabilities. The Unaudited Pro Forma Combined Condensed Consolidated Financial Data do not reflect the nonrecurring costs and expenses associated with integrating the operations of the two companies, nor any of the anticipated recurring expense savings arising from the integration.

G. CNG uses the full cost method to account for its oil and gas operations. Louis Dreyfus utilized the successful efforts method of accounting for its oil and gas operations. The pro forma data reflect an estimate of the change from the successful efforts method to the full cost method for the Louis Dreyfus oil and gas operations. This change resulted in a $12 million and $6 million increase in after-tax earnings in the Unaudited Pro Forma Combined Condensed Consolidated Statements of Income from Continuing Operations for the year ended December 31, 2000 and the nine months ended September 30, 2001, respectively.

H. The application of the purchase method of accounting eliminates the preexisting balances of Louis Dreyfus' other paid-in capital, accumulated other comprehensive income, retained earnings, and treasury stock.