<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-Q
-----------------
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended June 30, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Transition Period from to
Commission File Number 1-7414
NORTHWEST PIPELINE CORPORATION
------------------------------------------------------
(Exact name of registrant as specified in its charter)
DELAWARE 87-0269236
- ------------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
295 Chipeta Way
Salt Lake City, Utah 84158-0900
-----------------------------------------------------
(Address of principal executive offices and Zip Code)
(801) 583-8800
----------------------------------------------------
(Registrant's telephone number, including area code)
No Change
--------------------------------------------------------------------------
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
----- -----
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Class Outstanding at August 13, 1996
- -------------------------- ------------------------------
Common stock, $1 par value 1,000 shares
The registrant meets the conditions set forth in General Instruction (H)(1)(a)
and (b) of Form 10-Q and is therefore filing this Form 10-Q with the reduced
disclosure format.
<PAGE> 2
NORTHWEST PIPELINE CORPORATION
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
PART I. FINANCIAL INFORMATION:
Item 1. Financial Statements -
Statement of Income, three and six months
ended June 30, 1996 and 1995. . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Balance Sheet as of June 30, 1996 and
December 31, 1995. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Statement of Cash Flows, six
months ended June 30, 1996 and 1995 . . . . . . . . . . . . . . . . . . . . . . . 4
Notes to Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations . . . . . . . . . . . . . . . . . . . . . 7
PART II. OTHER INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
</TABLE>
i
<PAGE> 3
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
NORTHWEST PIPELINE CORPORATION
STATEMENT OF INCOME
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
---------------------- --------------------------
1996 1995 1996 1995
-------- -------- ---------- ---------
(Thousands)
<S> <C> <C> <C> <C>
OPERATING REVENUES . . . . . . . . . . . . . . . . $ 68,868 $ 59,052 $ 136,452 $ 118,125
-------- -------- ---------- ---------
OPERATING EXPENSES:
Operation . . . . . . . . . . . . . . . . . . . . 20,357 18,803 40,572 38,523
Maintenance . . . . . . . . . . . . . . . . . . . 2,104 3,924 3,884
Depreciation and amortization . . . . . . . . . . 1,806 7,605 17,725 15,295
Taxes, other than income taxes . . . . . . . . . 8,956 3,243 7,415 6,719
3,421
-------- -------- ---------- ---------
34,540 31,755 69,636 64,421
-------- -------- ---------- ---------
Operating income . . . . . . . . . . . . . . . 34,328 27,297 66,816 53,704
-------- -------- ---------- ---------
OTHER INCOME - net . . . . . . . . . . . . . . . . 1,949 903 2,732 1,742
-------- -------- ---------- ---------
INTEREST CHARGES:
Interest on long-term debt . . . . . . . . . . . 8,503 7,228 17,111 14,561
Other interest . . . . . . . . . . . . . . . . . 1,422 1,568 2,288 2,888
Allowance for borrowed funds used during (111) (667) (134) (1,102)
construction. . . . . . . . . . . . . . . . . . -------- -------- ---------- ---------
9,814 8,129 19,265 16,347
-------- -------- ---------- ---------
INCOME BEFORE INCOME TAXES . . . . . . . . . . . . 26,463 20,071 50,283 39,099
PROVISION FOR INCOME TAXES . . . . . . . . . . . . 10,916 4,472 19,558 10,922
-------- -------- ---------- ---------
NET INCOME . . . . . . . . . . . . . . . . . . . . $ 15,547 $ 15,599 $ 30,725 $ 28,177
======== ======== ========== =========
CASH DIVIDENDS ON COMMON STOCK . . . . . . . . . . $ - $ - $ 7,000 $ -
======== ======== ========== =========
</TABLE>
________________________________________
See accompanying notes.
- 1 -
<PAGE> 4
NORTHWEST PIPELINE CORPORATION
BALANCE SHEET
ASSETS
<TABLE>
<CAPTION>
June 30,
1996 December 31,
(Unaudited) 1995
----------- ------------
(Thousands)
<S> <C> <C>
PROPERTY, PLANT AND EQUIPMENT, at cost . . . . . . . . . . $1,446,410 $ 1,402,437
Less - Accumulated depreciation and amortization . . . . 535,364 518,780
---------- -----------
911,046 883,657
Construction work in progress . . . . . . . . . . . . . . 12,164 31,040
---------- -----------
923,210 914,697
---------- -----------
CURRENT ASSETS:
Cash and cash equivalents . . . . . . . . . . . . . . . . 525 570
Advances to parent . . . . . . . . . . . . . . . . . . . 35,524 41,215
Accounts receivable -
Trade . . . . . . . . . . . . . . . . . . . . . . . . 28,738 36,773
Affiliated companies . . . . . . . . . . . . . . . . . 639 1,234
Materials and supplies (principally at average cost) . . 11,355 11,065
Exchange gas due from others . . . . . . . . . . . . . . 6,508 9,390
Costs recoverable through rate adjustments . . . . . . . 481 5,951
Income taxes receivable . . . . . . . . . . . . . . . . . 3,224 4,480
Deferred income taxes . . . . . . . . . . . . . . . . . . 15,564 17,729
Prepayments and other . . . . . . . . . . . . . . . . . . 7,043 6,286
---------- -----------
109,601 134,693
---------- -----------
OTHER ASSETS:
Deferred charges . . . . . . . . . . . . . . . . . . . . 25,717 26,177
---------- -----------
$1,058,528 $ 1,075,567
========== ===========
</TABLE>
____________________________
See accompanying notes.
- 2 -
<PAGE> 5
NORTHWEST PIPELINE CORPORATION
BALANCE SHEET
LIABILITIES AND STOCKHOLDER'S EQUITY
<TABLE>
<CAPTION>
June 30,
1996 December 31,
(Unaudited) 1995
------------- ---------------
(Thousands)
<S> <C> <C>
CAPITALIZATION:
Common stockholder's equity -
Common stock, par value, $1 per share;
authorized and outstanding, 1,000 shares . . . . . . . . $ 1 $ 1
Additional paid-in capital . . . . . . . . . . . . . . . . 262,440 262,440
Retained earnings . . . . . . . . . . . . . . . . . . . . 220,744 197,019
------------- ---------------
483,185 459,460
Long-term debt, less current maturities (Note 2) . . . . . . . 361,399 372,228
------------- ---------------
844,584 831,688
------------- ---------------
CURRENT LIABILITIES:
Current maturities of long-term debt . . . . . . . . . . . . . 8,591 8,591
Accounts payable -
Trade . . . . . . . . . . . . . . . . . . . . . . . . . . 14,120 30,033
Affiliated companies . . . . . . . . . . . . . . . . . . . 1,946 423
Accrued liabilities -
Taxes, other than income taxes . . . . . . . . . . . . . . 5,890 4,404
Interest . . . . . . . . . . . . . . . . . . . . . . . . . 12,560 12,752
Employee costs . . . . . . . . . . . . . . . . . . . . . . 7,297 6,873
Exchange gas due to others . . . . . . . . . . . . . . . . 6,546 14,630
Reserves for estimated rate refunds . . . . . . . . . . . 30,498 43,883
Other . . . . . . . . . . . . . . . . . . . . . . . . . . 7,677 7,228
------------- ---------------
95,125 128,817
------------- ---------------
DEFERRED INCOME TAXES . . . . . . . . . . . . . . . . . . . . . . 110,207 105,855
------------- ---------------
OTHER DEFERRED CREDITS . . . . . . . . . . . . . . . . . . . . . 8,612 9,207
------------- ---------------
CONTINGENT LIABILITIES AND COMMITMENTS (Note 4) . . . . . . . . .
------------- ---------------
$ 1,058,528 $ 1,075,567
============= ===============
</TABLE>
- ----------------------------------
See accompanying notes.
- 3 -
<PAGE> 6
NORTHWEST PIPELINE CORPORATION
STATEMENT OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended
June 30,
----------------------------
1996 1995
-------- --------
(Thousands)
<S> <C> <C>
OPERATING ACTIVITIES:
Net Income . . . . . . . . . . . . . . . . . . . . . . . . . . $ 30,725 $ 28,177
Adjustments to reconcile to cash provided by operations -
Depreciation and amortization . . . . . . . . . . . . . . . . 17,725 15,295
Provision for deferred income taxes . . . . . . . . . . . . . 6,517 5,673
Amortization of deferred charges and credits . . . . . . . . 167 450
Allowance for equity funds used during construction . . . . . (205) (1,054)
Increase (decrease) from changes in:
Accounts receivable . . . . . . . . . . . . . . . . . . . . 12,768 (1,663)
Inventory . . . . . . . . . . . . . . . . . . . . . . . . . (290) 2,366
Other current assets . . . . . . . . . . . . . . . . . . . 4,713 (9,790)
Other assets and deferred charges . . . . . . . . . . . . . 99 (770)
Accounts payable . . . . . . . . . . . . . . . . . . . . . (13,209) (15,533)
Other current liabilities . . . . . . . . . . . . . . . . . (11,218) 11,520
Other deferred credits . . . . . . . . . . . . . . . . . . (714) 166
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . (21) (45)
-------- --------
Net cash provided by operating activities . . . . . . . . . . . 47,057 34,792
-------- --------
INVESTING ACTIVITIES:
Property, plant and equipment -
Capital expenditures . . . . . . . . . . . . . . . . . . . . (25,390) (36,932)
Asset removal cost . . . . . . . . . . . . . . . . . . . . . (355) (235)
Changes in accounts payable . . . . . . . . . . . . . . . . . (9,532) 20,295
Advances to parent . . . . . . . . . . . . . . . . . . . . . . 5,691 (8,676)
-------- --------
Net cash used by investing activities . . . . . . . . . . . . . (29,586) (25,548)
-------- --------
FINANCING ACTIVITIES:
Principal payments on long-term debt . . . . . . . . . . . . . (10,516) (10,515)
Cash dividends paid . . . . . . . . . . . . . . . . . . . . . . (7,000) -
-------- --------
Net cash used by financing activities . . . . . . . . . . . . . (17,516) (10,515)
-------- --------
NET DECREASE IN CASH AND CASH EQUIVALENTS . . . . . . . . . . . . . (1,271)
(45)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD . . . . . . . . . 570 1,818
-------- --------
CASH AND CASH EQUIVALENTS AT END OF PERIOD . . . . . . . . . . . . $ 525 $ 547
======== ========
</TABLE>
- ------------------------------
See accompanying notes.
- 4 -
<PAGE> 7
NORTHWEST PIPELINE CORPORATION
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
(1) GENERAL
The accompanying, unaudited interim financial statements of Northwest
Pipeline Corporation ("Pipeline"), included herein, have been prepared pursuant
to the rules and regulations of the Securities and Exchange Commission.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted pursuant to such rules and regulations; however,
Pipeline believes that the disclosures made are adequate to make the
information presented not misleading. In the opinion of Pipeline, all
adjustments, which include only normal operating adjustments, have been made to
present fairly the financial position of Pipeline as of June 30, 1996 and
December 31, 1995, the results of operations for the three and six month
periods ended June 30, 1996 and 1995, and cash flows for the six month periods
ended June 30, 1996 and 1995. The results of operations for the periods
presented are not necessarily indicative of the results for the respective
complete years. It is suggested that these condensed financial statements be
read in conjunction with the statements and the notes thereto included in
Pipeline's 1995 Annual Report Form 10-K.
Cash payments for interest were $17 million and $13.6 million, net of
$.1 million and $1.1 million of interest capitalized, in the six month periods
ended June 30, 1996 and 1995, respectively.
Net cash payments made to The Williams Companies, Inc. ("Williams") for
income taxes were $11.8 million and $7.7 million in the six month periods ended
June 30, 1996 and 1995, respectively.
(2) LONG-TERM DEBT AND BANKING ARRANGEMENTS
On May 31, 1996, Pipeline called $1.9 million of its outstanding 9.25%
Series C Debentures, due 2006 under terms of the optional prepayment provisions
in the debenture agreement. The prepayment was in addition to the scheduled
May 31, 1996 sinking fund payments of $5 million for the 9% Series B and $1.9
million for the 9.25% Series C.
Pipeline shares in a $800 million Revolving Credit Agreement with
Williams and four affiliated companies. Pipeline's maximum borrowing
availability, subject to prior borrowing by other affiliated companies, is $400
million, none of which was used by Pipeline at June 30, 1996. Interest rates
vary with current market conditions. The agreement contains restrictions which
limit, under certain circumstances, the issuance of additional debt, the
attachment of liens on any assets and any change of ownership of Pipeline. Any
borrowings by Pipeline using this agreement are not guaranteed by Williams and
are based on Pipeline's financial need and credit worthiness.
Pipeline has also arranged various uncommitted lines-of-credit at market
interest rates. Pipeline's credit facilities are subject to Pipeline's
continued credit worthiness.
(3) ADOPTION OF ACCOUNTING STANDARD
Effective January 1, 1996, Pipeline adopted Statement of Financial
Accounting Standards No. 121, "Accounting for Impairment of Long-Lived Assets
and for Long-Lived Assets to be Disposed Of." Adoption of the standard had no
effect on Pipeline's financial position or results of operations.
- 5 -
<PAGE> 8
NORTHWEST PIPELINE CORPORATION
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
(4) CONTINGENT LIABILITIES AND COMMITMENTS
Pending Rate Cases
On April 1, 1993, Pipeline began collecting new rates, subject to
refund, under the provisions of its rate case filed October 1, 1992. On May
31, 1995, Pipeline received a favorable order from the Federal Energy
Regulatory Commission ("FERC") on this rate case. In an order on rehearing
issued July 19, 1996, FERC required that an Administrative Law Judge ("ALJ")
reconsider one element of the rate of return formula, but upheld its May 31,
1995 decision on all other issues. Pipeline adjusted its reserve accruals in
the accompanying financial statements to reflect the May 31, 1995 order from
the FERC as upheld on rehearing. Any further reserve accrual adjustments are
pending a final resolution of the rate of return issue.
On November 1, 1994, Pipeline began collecting new rates, subject to
refund, under the provisions of its rate case filed April 29, 1994. This
filing sought a revenue increase for a projected deficiency caused by increased
costs and the impact of a transportation contract terminated subsequent to the
rate case filed on October 1, 1992. On November 14, 1995, Pipeline filed an
uncontested settlement proposal with the FERC. The settlement resolved
substantially all the issues in this rate case. The FERC approved the
Settlement in a Letter Order dated February 14, 1996 and no rehearing petitions
were filed with respect to that order. During the second quarter of 1996,
Pipeline finalized and paid the settlement refunds, the effects of which are
reflected in the accompanying financial statements.
On February 1, 1996, Pipeline began collecting new rates, subject to
refund, under the provisions of its rate case filed August 1, 1995. This rate
case is set for hearing in the fall of 1996. The filing seeks a revenue
increase for increases in rate base related primarily to the mainline expansion
facilities placed into service December 1, 1995, increased operating costs
primarily associated with an increase in headquarters office rent and increased
depreciation expense.
Significant Litigation
In October 1995, Pipeline received a judge's order following a non-jury
trial involving claims arising from a transportation agreement of a former
customer. In the decision, which was amended in January 1996, it was held that
Pipeline was liable to the former customer in the amount of $5.3 million, plus
interest. Although Pipeline recorded a charge to "other expenses" in the third
quarter 1995, Pipeline is appealing the decision.
On July 18, 1996, Jack J. Grynberg filed a lawsuit in the United States
District Court for the District of Columbia against 70 natural gas pipelines
and other gas purchasers or former gas purchasers. All of the Williams'
natural gas pipeline subsidiaries are named as defendants in the lawsuit. The
plaintiff claims, on behalf of the United States under the False Claims Act,
that the pipelines have incorrectly measured the heating value or volume of gas
purchased by the defendants. The plaintiff claims that the United States has
lost royalty payments as a result of these practices. The pipelines intend to
vigorously defend against these claims.
Other Legal and Regulatory Matters
In addition to the foregoing, various other proceedings are pending
against Pipeline incidental to its operations.
Summary of Contingent Liabilities
Management believes that the ultimate resolution of the foregoing
matters, after consideration of amounts accrued, insurance coverage or other
indemnification arrangements, will not have a materially adverse effect upon
Pipeline's future financial position, results of operations, and future cash
flow requirements.
- 6 -
<PAGE> 9
Item 2. Management's Discussion and
Analysis of Financial Condition and
Results of Operations
This analysis discusses financial results of Pipeline's operations for
the quarters and six month periods ended June 30, 1996 and 1995. Variances due
to changes in price and volume no longer have a significant impact on revenues,
because under its straight-fixed-variable rate design methodology, the majority
of Pipeline's overall cost of service is recovered through fixed demand charges
in its transportation rates.
RESULTS OF OPERATIONS
Quarter Ended June 30, 1996 vs. Quarter Ended June 30, 1995
Operating revenues increased $9.8 million, or 17%, due primarily to
increased transportation rates effective February 1, 1996, resulting from
mainline expansion facilities placed in service during December of 1995. Also
affecting revenues was an increase of $4.3 million from the reversal of
reserves for potential fuel refunds.
Pipeline's transportation service accounted for 95% and 92% of operating
revenues for the quarters ended June 30, 1996 and 1995, respectively. Of those
amounts, Pipeline's firm transportation service accounted for 99.98% and 99% in
the quarters ended June 30, 1996 and 1995, respectively. The remaining .02%
and 1% for each period, respectively, represented interruptible transportation
service. Additionally, 5% and 4% of operating revenues represented gas storage
service for the quarters ended June 30, 1996 and 1995, respectively.
Operating expenses increased $2.8 million, or 9%, due primarily to
increased operation expenses resulting from an increase in the headquarters
office rent and increased depreciation and property taxes related to Pipeline's
mainline expansion.
Operating income increased $7 million, or 26%, primarily due to revenues
from higher rates associated with mainline expansion facilities placed in
service during December of 1995 and the reversal of reserves for potential fuel
refunds, partially offset by the increase in the headquarters office rent and
increased operating expenses associated with the mainline expansion.
Interest on long-term debt increased $1.3 million due to the issuance
of $85 million in debentures during the fourth quarter of 1995.
Six Months Ended June 30, 1996 vs. Six Months Ended June 30, 1995
Operating revenues increased $18.3 million, or 16%, due primarily to
increased transportation rates effective February 1, 1996, resulting from
mainline expansion facilities placed in service during December of 1995. A
$4.6 million settlement of a previous rate case in February 1996 also had a
positive impact on revenues.
Pipeline's transportation service accounted for 93% of operating
revenues for each of the six month periods ended June 30, 1996 and 1995. Of
those amounts, Pipeline's firm transportation service accounted for 99.89% and
98% in the six month periods ended June 30, 1996 and 1995, respectively. The
remaining .11% and 2% for each period, respectively, represented interruptible
transportation service. Additionally, 6% and 4% of operating revenues
represented gas storage service for the six month periods ended June 30, 1996
and 1995, respectively.
Operating expenses increased $5.2 million, or 8%, due primarily to
increased depreciation and property taxes related to Pipeline's mainline
expansion and increased operation expense caused by an increase in the
headquarters office rent.
Operating income increased $13.1 million, or 24%, primarily due to
revenues from higher rates associated with mainline expansion facilities placed
in service during December of 1995 and the settlement of a previous rate case,
partially offset by increased operating expenses associated with the mainline
expansion and the increase in the headquarters office rent.
- 7 -
<PAGE> 10
Interest on long-term debt increased $2.6 million due to the issuance of
$85 million in debentures during the fourth quarter of 1995.
The following table summarizes year-to-date volumes and average daily
volumes for the periods indicated:
<TABLE>
<CAPTION>
Six Months Ended June 30,
-------------------------
1996 1995
---- ----
<S> <C> <C>
Total Gas volumes throughput (TBtu) 439 397
Average Daily Transportation Volumes (TBtu) 2.4 2.2
Average Daily Firm Reserved Capacity (TBtu) 2.6 2.4
</TABLE>
FINANCIAL CONDITION AND LIQUIDITY
Pipeline anticipates 1996 capital expenditures will total approximately
$76.8 million, of which $25.4 million has been expended through June 30, 1996.
Funds necessary to complete capital projects are expected to come from several
sources, including Pipeline's operations and the return of funds previously
advanced to Williams. In addition, Pipeline expects to be able to obtain
financing, when necessary, on reasonable terms. To allow flexibility in the
timing of issuance of long-term securities, financing may be provided on an
interim basis with bank debt and from sources discussed below.
Pipeline shares in a $800 million Revolving Credit Agreement with
Williams and four affiliated companies. Pipeline's maximum borrowing
availability, subject to prior borrowing by other affiliated companies, is $400
million, none of which was used by Pipeline at June 30, 1996. Interest rates
vary with current market conditions. The agreement contains restrictions which
limit, under certain circumstances, the issuance of additional debt, the
attachment of liens on any assets and any change of ownership of Pipeline. Any
borrowings by Pipeline using this agreement are not guaranteed by Williams and
are based on Pipeline's financial need and credit worthiness.
Pipeline has also arranged various uncommitted lines-of-credit at market
interest rates. Pipeline's credit facilities are subject to Pipeline's
continued credit worthiness.
OTHER
Pipeline owns and operates an interstate natural gas pipeline system,
including facilities for mainline transmission and gas storage. Pipeline's
transmission and storage activities are subject to regulation by the FERC under
the Natural Gas Act of 1938 and under the Natural Gas Policy Act of 1978, and,
as such, its rates and charges for the transportation, the extension,
enlargement or abandonment of its jurisdictional facilities, and its
accounting, among other things, are subject to regulation.
Pipeline is also subject to the National Environmental Policy Act and
other federal and state legislation regulating the environmental aspects of its
business. Management believes that Pipeline is in substantial compliance with
existing environmental requirements. Pipeline believes that, with respect to
any capital expenditures required to meet applicable standards and regulations,
FERC would grant the requisite rate relief so that, for the most part, such
expenditures and a return thereon would be permitted to be recovered. Pipeline
believes that compliance with applicable environmental requirements is not
likely to have a material effect upon Pipeline's earnings, cash flow or
competitive position.
- 8 -
<PAGE> 11
The Financial Accounting Standards Board has issued a new accounting
standard, FAS No. 123 "Accounting for Stock-Based Compensation," effective for
fiscal years beginning after December 15, 1995. As provided for in the
standard, Pipeline will not adopt the recognition provisions and will provide
the pro forma financial statement disclosures required by the standard in its
1996 annual financial statements.
Pipeline currently follows Accounting Principles Board Opinion No. 25
"Accounting for Stock Issued to Employees." Under this standard, because the
exercise price of Williams' fixed plan common stock options equals the market
price of the underlying stock on the date of the grant, no compensation expense
is recognized.
In November 1995, Pipeline and Transwestern Pipeline Company entered
into an agreement for the sale by Pipeline to Transwestern of a 77.7% undivided
ownership interest in the south end of Pipeline's transmission line from
Ignacio, Colorado to Blanco, New Mexico. Transwestern will pay Pipeline at
closing 77.7% of the net book value of the South End facilities estimated to be
$21 million plus 77.7% of the cost of certain modifications necessary to
separate the operation of the South End facilities from Pipeline's mainline
estimated to be $4.9 million. The parties executed a letter of intent as of
September 22, 1995, and have tentatively agreed to a closing date of September
1, 1996. On April 29, 1996, Pipeline did receive from the FERC an order
approving the abandonment and sale of the facilities to Transwestern.
- 9 -
<PAGE> 12
PART II. OTHER INFORMATION
The information required by items in Part II is omitted because the
items are inapplicable, the answer is negative or substantially the same
information is included elsewhere in this report or has been previously
reported by the Registrant.
- 10 -
<PAGE> 13
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
NORTHWEST PIPELINE CORPORATION
------------------------------
Registrant
By: /s/ CURTIS C. KENNEDY
------------------------------
Curtis C. Kennedy
Controller and Treasurer
(Duly Authorized Officer and
Chief Financial Officer)
Date: August 13, 1996
- 11 -
<PAGE> 14
EXHIBIT INDEX
Exhibit
- -------
27 Financial Data Schedule
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1996
<CASH> 525
<SECURITIES> 0
<RECEIVABLES> 29,377
<ALLOWANCES> 0
<INVENTORY> 11,355
<CURRENT-ASSETS> 109,601
<PP&E> 1,458,574
<DEPRECIATION> 535,364
<TOTAL-ASSETS> 1,058,528
<CURRENT-LIABILITIES> 95,125
<BONDS> 361,399
<COMMON> 1
0
0
<OTHER-SE> 483,184
<TOTAL-LIABILITY-AND-EQUITY> 1,058,528
<SALES> 0
<TOTAL-REVENUES> 136,452
<CGS> 0
<TOTAL-COSTS> 69,636
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 19,265
<INCOME-PRETAX> 50,283
<INCOME-TAX> 19,558
<INCOME-CONTINUING> 30,725
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 30,725
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
