PLEASE DISREGARD THE PANHANDLE EASTERN CORPORATION QUARTERLY REPORT ON
FORM 10-Q FILED ON NOVEMBER 14, 1994, WHICH IS BEING REPLACED IN ITS ENTIRETY
BY THIS QUARTERLY REPORT ON FORM 10-Q/A.
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SECURITIES AND EXCHANGE COMMISSION
----------------------------------
WASHINGTON, D.C. 20549
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FORM 10-Q/A
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QUARTERLY REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the Quarter Ended September 30, 1994
Commission File No. 1-8157
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PANHANDLE EASTERN CORPORATION
(Exact name of registrant as specified in its charter)
A Delaware Corporation
(State of Incorporation or Organization)
74-2150460
(IRS Employer Identification No.)
5400 Westheimer Court, P.O. Box 1642, Houston, Texas 77251-1642
(Address of principal executive offices, including zip code)
(713) 627-5400
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding twelve 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 registrant's classes
of common stock, as of the latest practicable date:
Class Outstanding at October 31, 1994
-------------------------- -------------------------------
Common Stock, $1 par value 120,719,811
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<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements - Unaudited
Panhandle Eastern Corporation and Subsidiaries
CONSOLIDATED STATEMENT OF INCOME
<TABLE>
<CAPTION>
Periods Ended September 30
Three Months Nine Months
---------------- -------------------
Millions, except per share amounts 1994 1993 1994 1993
- ---------------------------------- ------ ------ -------- --------
<S> <C> <C> <C> <C>
Operating Revenues
Transportation of natural gas$314.3 $283.2 $ 950.5 $ 728.7
Sales of natural gas and liquids 215.2 247.0 689.0 1,059.3
Natural gas storage and other 49.8 37.5 165.1 137.9
------ ------ -------- --------
Total (Note 4) 579.3 567.7 1,804.6 1,925.9
------ ------ -------- --------
Costs and Expenses
Gas purchased 189.5 216.8 615.7 718.2
Operating and maintenance 130.5 113.0 379.7 401.7
General and administrative 57.7 54.7 173.1 167.6
Depreciation and amortization 51.8 57.1 167.3 169.6
Miscellaneous taxes 20.9 20.1 60.1 61.6
------ ------ -------- --------
Total 450.4 461.7 1,395.9 1,518.7
------ ------ -------- --------
Operating Income 128.9 106.0 408.7 407.2
------ ------ -------- --------
Other Income and Deductions
Equity in earnings of
unconsolidated affiliates 11.8 5.1 24.2 14.2
Other income, net of deductions(2.8) 4.8 (0.9) 13.9
------ ------ -------- --------
Total 9.0 9.9 23.3 28.1
------ ------ -------- --------
Gross Income 137.9 115.9 432.0 435.3
Interest Expense 56.0 65.6 166.7 212.7
------ ------ -------- --------
Income before Income Tax 81.9 50.3 265.3 222.6
Income Tax 32.4 24.7 108.1 93.1
------ ------ -------- --------
NET INCOME $ 49.5 $ 25.6 $ 157.2 $ 129.5
====== ====== ======== ========
Average Common Shares Outstanding 120.7 119.3 120.4 113.4
====== ====== ======== ========
Earnings per Common Share $ 0.41 $ 0.21 $ 1.31 $ 1.14
====== ====== ======== ========
Dividends per Common Share $ 0.21 $ 0.20 $ 0.63 $ 0.60
====== ====== ======== ========
</TABLE>
See accompanying notes to consolidated financial statements
2<PAGE>
<PAGE>
Item 1. Financial Statements - Unaudited (Continued)
Panhandle Eastern Corporation and Subsidiaries
CONSOLIDATED BALANCE SHEET
ASSETS
<TABLE>
<CAPTION>
September 30, December 31,
Millions 1994 1993
- -------- ------------- ------------
<S> <C> <C>
Current Assets
Cash and cash equivalents $ 53.2 $ 18.4
Accounts and notes receivable 200.3 294.2
Inventory and supplies 113.7 114.0
Other (Notes 4, 6 and 9) 296.3 328.5
--------- ---------
Total 663.5 755.1
--------- ---------
Investments
Affiliates 146.7 129.2
Other 75.5 90.2
--------- ---------
Total 222.2 219.4
--------- ---------
Plant, Property and Equipment
Original cost 7,355.6 7,076.2
Accumulated depreciation and amortization (2,859.3) (2,732.9)
--------- ---------
Net plant, property and equipment 4,496.3 4,343.3
--------- ---------
Deferred Charges
Goodwill, net (Note 5) 317.8 520.5
Prepaid pension 235.5 222.8
Other (Notes 4 and 9) 841.5 866.2
--------- ---------
Total 1,394.8 1,609.5
--------- ---------
TOTAL ASSETS $ 6,776.8 $ 6,927.3
========= =========
</TABLE>
See accompanying notes to consolidated financial statements
3<PAGE>
<PAGE>
Item 1. Financial Statements - Unaudited (Continued)
Panhandle Eastern Corporation and Subsidiaries
CONSOLIDATED BALANCE SHEET
LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
September 30, December 31,
Millions 1994 1993
- -------- ------------- ------------
<S> <C> <C>
Current Liabilities
Long-term debt due within one year $ 125.0 $ 62.5
Notes payable - 18.4
Rate refund provisions (Note 4) 194.5 67.8
Accounts payable 80.6 67.2
Accrued interest 57.9 60.6
Taxes payable 57.3 70.9
Other (Notes 4, 6 and 9) 458.2 564.4
-------- --------
Total 973.5 911.8
-------- --------
Deferred Liabilities and Credits
Deferred income tax (Note 5) 1,168.9 1,308.6
Deferred revenue - liquefied
natural gas project 71.8 78.1
Other (Notes 4 and 9) 872.6 1,040.7
-------- --------
Total 2,113.3 2,427.4
-------- --------
Long-term Debt 1,926.0 1,922.5
-------- --------
Commitments and Contingent Liabilities
(Notes 4, 7, 9 and 10)
Common Stockholders' Equity
Common stock, 120.7 million (1994) and
120 million (1993) shares issued and
outstanding, $1 par value per share 120.7 120.0
Paid-in capital 2,056.8 2,040.4
Retained earnings (deficit) (413.5) (494.8)
-------- --------
Total (Note 8) 1,764.0 1,665.6
-------- --------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $6,776.8 $6,927.3
======== ========
</TABLE>
See accompanying notes to consolidated financial statements
4<PAGE>
<PAGE>
Item 1. Financial Statements - Unaudited (Continued)
Panhandle Eastern Corporation and Subsidiaries
CONSOLIDATED STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
Nine Months Ended
September 30
--------------------
Millions 1994 1993
- -------- ------- --------
<S> <C> <C>
Operating Activities
Net income $ 157.2 $ 129.5
Adjustments to reconcile net income to operating
cash flows:
Depreciation and amortization 167.3 169.6
Deferred income tax expense 59.2 29.3
LNG project settlement 0.4 193.8
Net pension benefit (15.0) (11.1)
Other non-cash items in net income (40.1) (5.1)
Net change in other operating assets
and liabilities 90.3 88.8
------- -------
Net Cash Flows Provided by Operating Activities 419.3 594.8
------- -------
Investing Activities
Additions to plant, property and equipment (329.7) (207.3)
Net investment decreases (increases) (42.8) 21.4
Property sales, retirements and other 17.3 49.1
------- -------
Net Cash Flows Used in Investing Activities (355.2) (136.8)
------- -------
Financing Activities
Retirement of debt (50.0) (864.3)
Issuance of debt 99.9 253.8
Net increase (decrease) in notes payable (18.4) 30.3
Common stock issuance 15.9 225.9
Dividends paid (75.9) (67.4)
Other (0.8) (8.8)
------- -------
Net Cash Flows Used in Financing Activities (29.3) (430.5)
------- -------
Net Change in Cash
Increase in cash and cash equivalents 34.8 27.5
Cash and cash equivalents, beginning of period 18.4 3.0
------- -------
Cash and Cash Equivalents, End of Period $ 53.2 $ 30.5
======= =======
Supplemental Disclosures
Cash paid for interest (net of amount capitalized) $ 152.4 $ 196.3
Cash paid for income tax 45.7 29.6
</TABLE>
See accompanying notes to consolidated financial statements
5<PAGE>
<PAGE>
PANHANDLE EASTERN CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. References
Panhandle Eastern Corporation (PEC) and its subsidiaries (the Company)
are predominantly involved in the interstate transportation and storage
of natural gas. The interstate gas transmission operations of Texas
Eastern Transmission Corporation (TETCO), Algonquin Gas Transmission
Company (Algonquin), Panhandle Eastern Pipe Line Company (PEPL) and
Trunkline Gas Company (Trunkline), and the liquefied natural gas (LNG)
facilities of Trunkline LNG Company (Trunkline LNG), are subject to the
rules, regulations and accounting procedures of the Federal Energy
Regulatory Commission (FERC). Certain amounts for the prior periods
have been reclassified in the consolidated financial statements to
conform to the current presentation.
2. Accounting Policy Change
The Company adopted Statement of Financial Accounting Standards
(Accounting Standard) No. 112, "Employers' Accounting for Postemployment
Benefits," effective January 1, 1994. This standard requires accruals
for benefits provided by the Company to certain former or inactive
employees. As a result of implementation of Accounting Standard
No. 112, the Company recorded additional liabilities and regulatory
assets of approximately $17 million. The Company's pipelines have
received permission from FERC to defer such costs, pending future rate
filings requesting recovery. The earnings impact of this change in
accounting policy is not significant.
3. Merger Agreement with Associated Natural Gas Corporation (ANGC)
On October 9, 1994, PEC and a special purpose subsidiary of PEC entered
into an agreement with ANGC to merge on a tax-free, stock-for-stock
basis. ANGC is a holding company whose subsidiaries purchase, gather,
process, transport and market natural gas, natural gas liquids (NGLs)
and crude oil. Pursuant to the proposed merger, each share of ANGC
common stock outstanding immediately prior to the effective date of the
merger will be converted into the right to receive between 1.5725 and
1.8750 shares of PEC common stock. The exact exchange ratio within this
range will be determined based on the average PEC stock closing prices
in a specified 15-day period.
Completion of the merger is expected by year-end, subject to certain
conditions, including review by various regulatory agencies and approval
by the stockholders of PEC and ANGC. The merger is expected to be
accounted for under the pooling of interests method of accounting for
a business combination and ANGC will become a wholly-owned PEC
subsidiary. Nonrecurring expenses incurred as a direct result of the
merger are expected to total approximately $10 million and will be
included in the Company's and ANGC's results of operations, as
appropriate, in the periods incurred.
6 <PAGE>
<PAGE>
The table below sets forth unaudited proforma operating revenues, net
income and earnings per common share for the three and nine months ended
September 30, 1994 and 1993 assuming the merger occurred as of
January 1, 1993 and assuming an exchange ratio of 1.7105 (the ratio
resulting from an average daily price of PEC common stock of $22.80,
which is the midpoint of the price range of $20.80 and $24.80 for PEC
common stock used to determine the maximum and minimum exchange ratios,
respectively). ANGC's consolidated financial statements are based on
a fiscal year end of September 30, as compared to PEC's fiscal year end
of December 31. As a result, the following proforma information
combines the Company's consolidated results of operations for the three
and nine months ended September 30, 1994 and 1993 with ANGC's
consolidated results of operations for the three and nine months ended
June 30, 1994 and 1993. This unaudited proforma financial information
is not necessarily indicative of the results of operations that would
have occurred had the merger occurred as of January 1, 1993, nor is it
necessarily indicative of future operating results of the combined
companies.
<TABLE>
<CAPTION>
Periods Ended September 30
Three Months Nine Months
------------------- ------------------
Millions, except
per share amounts 1994 1993 1994 1993
----------------- -------- -------- -------- --------
<S> <C> <C> <C> <C>
Operating revenues
PEC $ 579.3 $ 567.7 $1,804.6 $1,925.9
ANGC 545.0 447.6 1,612.1 1,316.4
-------- -------- -------- --------
Proforma operating
revenues $1,124.3 $1,015.3 $3,416.7 $3,242.3
======== ======== ======== ========
Net income
PEC $ 49.5 $ 25.6 $ 157.2 $ 129.5
ANGC 1.6 4.7 14.8 18.7
-------- -------- -------- --------
Proforma net income $ 51.1 $ 30.3 $ 172.0 $ 148.2
======== ======== ======== ========
Proforma earnings per
common share $ 0.35 $ 0.21 $ 1.18 $ 1.07
======== ======== ======== ========
</TABLE>
4. Natural Gas Revenues and Regulatory Matters
When rate cases are pending final FERC approval, a portion of revenues
collected by each natural gas pipeline is subject to possible refunds.
The Company has established adequate reserves where required for such
cases. The following is a summary of pending rate cases before FERC and
certain regulatory matters.
7<PAGE>
<PAGE>
FERC Order 636
During the second and third quarters of 1993, the Company's interstate
natural gas pipelines began providing restructured services pursuant to
FERC Order 636. This order, which is on appeal to the courts, requires
pipeline service restructuring that "unbundles" sales, transportation
and storage services. Order 636 provides for the use of the straight
fixed-variable (SFV) rate design, which assigns return on equity,
related taxes and other fixed costs to the demand component of rates.
In addition, Order 636 allows pipelines to recover eligible costs
resulting from implementation of the order (transition costs).
On August 1, 1994, TETCO implemented a FERC-approved comprehensive
settlement that resolves issues related primarily to Order 636
transition costs and a number of other issues related to services prior
to Order 636.
At September 30, 1994 and December 31, 1993, the Company's pipelines had
recorded approximately $40 million and $310 million (1994), and
$25 million and $365 million (1993) of current and long-term regulatory
assets, respectively, representing transition costs incurred or
estimated to be incurred that will be recovered from customers. TETCO's
settlement provides for the recovery of transition costs through
volumetric and reservation charges through the year 2002. PEPL's and
Trunkline's transition cost recoveries, which are subject to certain
challenges that are pending further FERC action, will occur over the
next three years.
At September 30, 1994 and December 31, 1993, the Company had recorded
estimated current and long-term liabilities related to Order 636
transition costs of approximately $130 million and $135 million (1994),
and $100 million and $290 million (1993), respectively. In addition,
the Company had recorded current liabilities of approximately
$85 million and $60 million at September 30, 1994 and December 31, 1993,
respectively, for estimated refunds pursuant to certain provisions of
TETCO's settlement.
The Company believes the exposure associated with gas purchase contract
commitments and the significant reduction of the Company's pipeline
merchant services will be substantially mitigated by transition cost
recoveries pursuant to TETCO's settlement, Order 636 and other
mechanisms, including assignments of certain gas purchase contracts to
third parties. As a result, the Company believes that transition cost
issues related to Order 636 will not have a material adverse effect on
future consolidated results of operations or financial position.
8<PAGE>
<PAGE>
Take-or-Pay
In the past, during the normal course of business, the Company's
pipelines entered into certain gas purchase contracts containing take-
or-pay provisions, which may expose the Company to financial risk.
Based on market and regulatory conditions, including Order 636
provisions that provide for the recovery of prudently incurred
transition costs, the Company believes such risk was not material to the
Company's consolidated results of operations or financial position as
of September 30, 1994.
PEPL and Trunkline are currently collecting certain take-or-pay
settlement costs through a combination of direct billings and volumetric
surcharges. The volumetric surcharges are being collected with interest
over a period extending through 1997.
The U.S. Department of the Interior has announced its intention to seek
additional royalties from gas producers as a result of payments received
by such producers in connection with past take-or-pay settlements,
buyouts and buydowns of gas sales contracts with natural gas pipelines.
The Company's pipelines, with respect to certain producer contract
settlements, may be contractually required to reimburse or, in some
instances, to indemnify producers against such royalty claims. If the
pipelines ultimately have to reimburse or indemnify the producers, the
potential exists for some recovery from pipeline customers. The
potential liability of the producers to the government and of the
pipelines to the producers involves complex issues of law and fact which
are likely to take a substantial period of time to resolve. Management
believes this matter will not have a material adverse effect on the
Company's consolidated financial position.
Jurisdictional Transportation and Sales Rates
PEPL - On April 1, 1992 and November 1, 1992, PEPL placed into effect,
subject to refund, general rate increases incorporating the SFV rate
design. Hearings in these rate proceedings were completed in the first
half of 1994, and a favorable initial decision by the FERC
Administrative Law Judge (ALJ) was received in the earlier rate case on
August 4, 1994. An initial ALJ decision in the other proceeding is
expected later in 1994.
Effective April 1, 1989, PEPL placed into effect, subject to refund,
sales and transportation rates reflecting a redesign of rates, including
seasonal rate structures. PEPL and others are appealing various FERC
orders related to these rates. On September 26, 1994, PEPL and certain
other parties filed a settlement agreement with FERC. If approved by
FERC, this settlement would resolve refund matters and terminate other
actions for the period these rates were effective for the settling
parties.
Trunkline - On September 1, 1994, Trunkline placed into effect, subject
to refund, a general rate increase as a result of a filing made in
accordance with terms of a rate case settlement in 1993. FERC has set
the rate case for hearing to begin in July 1995.
9<PAGE>
<PAGE>
Other - The Company's pipelines, pursuant to FERC requirements,
requested FERC approval to record the impact of adopting Accounting
Standard No. 109, "Accounting for Income Taxes," including the
recognition of a portion of the impact as an increase to stockholders'
equity. FERC has denied approval of certain of these requests, pending
rate case review, and the Company's pipelines, where approval has been
denied, have filed for rehearing. The Company believes the ultimate
resolution of this matter will not have a material adverse effect on
consolidated financial position.
5. Income Tax
The Company's investment tax credit carryforward of $72.1 million at
December 31, 1993 will begin to expire in 1996 and will be extinguished
in 2002 if not utilized sooner. The alternative minimum tax credit
carryforward of $57.3 million at December 31, 1993 can be carried
forward indefinitely.
In 1990, the Internal Revenue Service (IRS) issued regulations which
disallow for tax purposes losses incurred in the Company's 1989 sales
of certain assets that were acquired in the purchase of Texas Eastern
Corporation (TEC). During the third quarter of 1994, upon completion
of the IRS field examination, the Company reduced the related deferred
income tax liabilities and goodwill by approximately $200 million.
6. Gas Imbalances
The consolidated balance sheet includes in-kind balances as a result of
differences in gas volumes received and delivered. At September 30,
1994 and December 31, 1993, other current assets and other current
liabilities included $10.4 million and $11 million (1994), and
$64.8 million and $67.9 million (1993), respectively, for these
imbalances.
7. Other Contingencies
TEPPCO Partners, L.P. - TEPPCO Partners, L.P. is a master limited
partnership (MLP) that owns and operates a petroleum products pipeline.
The Company has a 10.45% ownership interest in the MLP. Prior to
April 1, 1994, 8.45% of the Company's ownership interest was
nonparticipating in allocations of income and cash distributions. To
support the MLP's ability to make the minimum quarterly distributions
on all MLP units, PEC has agreed, under certain circumstances and
subject to certain limitations, to contribute cash to the MLP in return
for additional limited partner interests (APIs). Subject to certain
exceptions, the support period will extend through December 31, 1994.
PEC's obligation to purchase APIs is limited to an aggregate of
$50 million (maximum outstanding at any time) during this support
period. No API purchases have been required since inception through the
date of this report. Furthermore, a subsidiary partnership of the MLP
has $356.5 million in First Mortgage Notes outstanding with recourse to
the general partner, a subsidiary of PEC. These notes have annual
principal payments due through 2010.
10<PAGE>
<PAGE>
Petrolane Incorporated (Petrolane) - In connection with the sale of
Petrolane in 1989, TEC agreed to indemnify Petrolane against certain
obligations for guaranteed leases and environmental matters. Certain
of the lease obligations relate to Petrolane's divestiture of
supermarket operations prior to its acquisition by TEC and, as of
December 31, 1993, totaled approximately $95.7 million over the
remaining terms of the leases, which expire in 2006. In the opinion of
management, the probability that TEC will be required to perform under
this indemnity provision is remote.
Petrolane was named in a suit filed by the city of Fresno, California
(the City) in the U.S. District Court for the Eastern District of
California on February 18, 1993 seeking contribution from 22 parties for
characterization and remediation costs related to the Fresno Sanitary
Landfill (the Landfill). The City, under a mandate from the U.S.
Environmental Protection Agency (EPA), is obligated to characterize and
remediate environmental contamination at the Landfill, which is on the
National Priorities List. One of Petrolane's former subsidiaries is
alleged to have disposed of hazardous substances at the Landfill. Since
characterization of the Landfill has not been completed, the Company is
unable at this time to estimate its share of cleanup costs or the timing
of such costs, but expects that this matter will not have a material
adverse effect on the Company's consolidated financial position.
Northern Border Pipeline Company (Northern Border) - Under the terms of
a settlement related to a transportation agreement between PEPL and
Northern Border, PEPL guarantees payment to Northern Border under a
transportation agreement by an affiliate of Pan-Alberta Gas Limited.
The transportation agreement requires estimated total payments of
$212.8 million for the years 1994 through 2001. In the opinion of
management, the probability that performance will be required under this
guarantee is remote.
8. Stockholders' Equity
Under the most restrictive covenants contained in the Company's debt
agreements, $721.4 million of PEC's common stockholders' equity was
available for the payment of dividends at September 30, 1994.
11<PAGE>
<PAGE>
9. Environmental Matters
TETCO - TETCO is currently conducting a PCB (polychlorinated biphenyl)
characterization and cleanup program at certain of its compressor
station sites under conditions stipulated by a U.S. Consent Decree. The
program includes on- and off-site characterization, installation of on-
site source control equipment and groundwater monitoring wells, and on-
site cleanup work. TETCO expects to complete the program at up to
89 sites in as many as 14 states over an approximate 10-year period that
began in 1990. TETCO also has ongoing cleanup and remediation programs
in Pennsylvania and New Jersey, implemented pursuant to settlement
agreements with those states. In 1991, TETCO entered into an Interim
Agreed Order with the state of Kentucky concerning characterization of
TETCO's three compressor station sites in that state and TETCO has
substantially completed work under the Interim Agreed Order. The
Company is negotiating an Agreed Order with the state of Kentucky for
remediation of those sites and is currently remediating one of those
sites. The state of Kentucky is currently considering the imposition
of a fine. The Company previously established a reserve for potential
fines and penalties. Site assessment and characterization activities,
under a consent order with the state of Mississippi, have been
substantially completed. The cleanup programs are not expected to
interrupt or diminish TETCO's operational ability to deliver natural gas
to customers.
At September 30, 1994 and December 31, 1993, TETCO had recorded current
and long-term liabilities of $58.6 million and $306.5 million (1994),
and $93 million and $298.7 million (1993), respectively, for remaining
estimated cleanup costs. These cost estimates represent gross cleanup
costs expected to be incurred by TETCO, have not been reduced by
customer or insurance recoveries and do not include fines, penalties or
third-party claims. TETCO is recovering 57.5% of cleanup costs in rates
pursuant to a stipulation and agreement approved by FERC in 1992. At
September 30, 1994 and December 31, 1993, TETCO had recorded current and
long-term regulatory assets of $20.4 million and $182.7 million (1994),
and $31.1 million and $196.3 million (1993), respectively, representing
costs to be recovered from customers.
TETCO's litigation with its insurance carriers to recover cleanup and
other costs and to enforce the carriers' duty to defend and indemnify
TETCO has concluded. TETCO's petition for a writ of certiorari with the
U.S. Supreme Court was denied on October 3, 1994 allowing judgment in
favor of the insurance carriers to stand.
TETCO, as well as certain other PEC subsidiaries in some of the cases,
are defendants in several private plaintiff suits in various courts.
These suits seek relief for actual and punitive damages that allegedly
resulted from the release of PCBs and other hazardous substances in
violation of federal and state laws. The Company is continuing to
defend itself vigorously in these suits.
The Company believes the ultimate resolution of these matters relating
to the PCB cleanup programs will not have a material adverse effect on
consolidated results of operations or financial position.
12<PAGE>
<PAGE>
PEPL and Trunkline - The Company has notified the EPA of PCB
contamination at up to 41 sites on the PEPL and Trunkline systems, and
is undertaking a remediation program at these sites, while continuing
to discuss with and provide information to the EPA on these matters.
Localized contamination of these sites resulted from the past use of
lubricants containing PCBs in auxiliary equipment. Soil and sediment
testing, to date, has detected no significant off-site contamination.
The Company is also involved in the cleanup and removal of wastewater
collection facilities at 14 PEPL and Trunkline sites. The PCB and
wastewater cleanup programs are expected to extend over a 10-year period
that began in 1992. In addition to these ongoing assessments, PEPL and
Trunkline are evaluating the prior use of disposal areas to determine
if those areas potentially contain hazardous substances. The Company
is unable at this time to estimate remediation costs that will result
from these evaluations.
The Company recorded $33 million for liabilities relating to PEPL and
Trunkline existing cleanup programs and recorded regulatory assets for
the same amount, representing costs to be recovered from customers. The
Company does not expect the resolution of the PEPL and Trunkline
environmental matters to have a material adverse effect on consolidated
financial position.
10. Litigation
In connection with a rupture and fire that occurred on TETCO's 36-inch
natural gas pipeline on March 23, 1994 in Edison, New Jersey, numerous
lawsuits were filed against the Company and other defendants in the
Superior Court of New Jersey, Middlesex County, on behalf of hundreds
of individuals seeking unspecified compensatory damages for personal
injuries and property losses, as well as punitive damages. The Court
ordered a moratorium on the filing of new suits until procedures for the
handling of the suits were determined. The moratorium was lifted on
October 1, 1994. Plaintiffs are re-filing suits in accordance with case
management procedures. Requests by some plaintiffs for class action
certification have been denied by the trial and appellate courts. The
cases are expected to be consolidated for trial on the issue of
liability. The Company has also received numerous letters from
attorneys claiming to represent hundreds of additional individuals with
unspecified claims against the Company. In addition, Quality Materials,
Inc., the owner of the asphalt plant located at the site of the rupture,
has filed suit in the U.S. District Court for the District of New Jersey
against TETCO seeking to recover unspecified property damages, lost
income and punitive damages. TETCO has filed a counterclaim against
Quality Materials, Inc.
The cause of the rupture is under investigation by the National
Transportation Safety Board. The Company has recorded a $5 million
after-tax charge for costs related to this incident that are not
recoverable under the Company's insurance policies. The Company does
not expect the resolution of these matters to have a material adverse
effect on consolidated results of operations or financial position.
13<PAGE>
<PAGE>
The Company is also involved in various other legal actions and claims
arising in the normal course of business. Based upon its current
assessment of the facts and the law, management does not believe that
the outcome of any such action or claim will have a material adverse
effect upon the consolidated financial position of the Company.
However, these actions and claims in the aggregate seek substantial
damages against the Company and are subject to the uncertainties
inherent in any litigation.
11. Fair Presentation
The information as furnished reflects all normal recurring adjustments
that are, in the opinion of management, necessary for a fair
presentation of the Company's financial position as of September 30,
1994, results of operations for the three and nine months ended
September 30, 1994 and 1993, and cash flows for the nine months ended
September 30, 1994 and 1993.
14<PAGE>
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
The following information is provided to facilitate increased understanding
of the 1994 and 1993 interim consolidated financial statements and
accompanying notes presented in Item 1. The discussion of the Company's
"Operating Environment and Outlook" addresses key trends and future plans.
The "Capital Resources, Liquidity and Financial Position" section analyzes
cash flows and financial position. Material period-to-period variances in the
consolidated statement of income are discussed under "Results of Operations."
Throughout these discussions, management has addressed items that are
reasonably likely to materially affect future liquidity or earnings.
OPERATING ENVIRONMENT AND OUTLOOK
Proposed Merger - On October 9, 1994, PEC and a special-purpose subsidiary of
PEC entered into an agreement with ANGC to merge on a tax-free,
stock-for-stock basis. ANGC is a holding company whose subsidiaries purchase,
gather, process, transport and market natural gas, NGLs and crude oil.
Pursuant to the proposed merger, each share of ANGC common stock outstanding
immediately prior to the effective date of the merger will be converted into
the right to receive between 1.5725 and 1.8750 shares of PEC common stock.
The exact exchange ratio within this range will be determined based on the
average PEC stock closing prices in a specified 15-day period.
Completion of the merger is expected by year-end, subject to certain
conditions, including review by various regulatory agencies and approval by
the stockholders of PEC and ANGC. The merger is expected to be accounted for
under the pooling of interests method of accounting for a business combination
and ANGC will become a wholly-owned PEC subsidiary. Nonrecurring expenses
incurred as a direct result of the merger are expected to total approximately
$10 million and will be included in the Company's and ANGC's results of
operations, as appropriate, in the periods incurred.
The merger will make the Company the third-largest independent natural gas
marketing company, fourth-largest gas gathering company and one of the top
15 NGL producers in the nation.
Post-Order 636 - As discussed in Note 4 of the Notes to Consolidated Financial
Statements, all four of the Company's interstate pipelines implemented
restructured services in the second and third quarters of 1993 pursuant to
FERC Order 636. On August 1, 1994, TETCO implemented a FERC-approved
comprehensive settlement that resolves issues related primarily to Order 636
transition costs and a number of other issues related to services prior to
Order 636. This settlement and other Order 636 transition issues are further
discussed under "Operating Cash Flow."
As a result of the SFV rate design required by Order 636 and the elimination
by PEPL of seasonal rates, historical seasonal variations in revenues and
receivables have diminished. Generally, the Company's pipeline earnings have
become more evenly distributed throughout the year.
15<PAGE>
<PAGE>
Transportation and storage services form the core of the Company's pipeline
business in the Order 636 environment. Upon implementation of Order 636,
operating revenues and gas purchase costs decreased primarily as a result of
the elimination of natural gas sales by TETCO, Algonquin and PEPL in 1993,
while operating income generated by firm transportation and storage services
increased. Trunkline's unbundled sales contracts expired on October 31,
1994. Earnings from interruptible transportation revenues have been
significantly reduced as a result of Order 636 rate design changes and
capacity release mechanisms that allow firm customers to sell unused customer
capacity. The Company's pipelines continue to offer selective discounting to
utilize available capacity.
The Company expects to benefit from the environment created by the regulatory
changes of Order 636 by developing innovative services for customers and also
plans to continue expanding the natural gas pipeline network via major capital
projects. The Company's four interstate pipelines and the Market and Supply
Services group, which includes 1 Source Corporation and Centana Energy
Corporation, are involved in responding to new markets created, in part, by
Order 636, and to increased demand for natural gas as both a sound economic
and environmental solution to the nation's energy needs. The proposed merger
with ANGC would significantly expand the activities of the Market and Supply
Services group. See further discussion of capital expenditures in "Investing
Cash Flow."
CAPITAL RESOURCES, LIQUIDITY AND FINANCIAL POSITION
Operating Cash Flow
<TABLE>
<CAPTION>
Nine Months Ended
September 30
-------------------
Millions 1994 1993
- -------- ------ ------
<S> <C> <C>
Net Cash Flows Provided by
Operating Activities $419.3 $594.8
------ ------
</TABLE>
Historical Analysis - Operating cash flows decreased $175.5 million comparing
the nine-month period in 1994 to the same period in 1993. This decrease
between the periods reflects the sale of $173.5 million of LNG project
settlement receivables in 1993, receipts in 1993 as a result of inventory
sales and net cash outflows related to transition cost payments and
collections. These decreases were partially offset by lower interest costs
in 1994.
16<PAGE>
<PAGE>
Order 636 Transition Costs - With implementation of Order 636 and the
significant reduction in pipeline merchant services that has resulted, the
Company's pipelines are incurring certain costs for the transition, primarily
related to TETCO's gas purchase contract commitments. TETCO, Algonquin and
PEPL no longer offer merchant sales of natural gas, thereby substantially
eliminating the need for gas purchase contracts. Trunkline's gas purchase
commitments primarily related to unbundled sales contracts that expired
October 31, 1994. At September 30, 1994, the Company's gross commitments
under gas purchase contracts that do not contain market-sensitive pricing
provisions were approximately $225 million, $175 million, $90 million,
$50 million and $35 million for the years 1994 through 1998, respectively, and
a total of $25 million thereafter. These estimates reflect significant
assumptions regarding deliverability and escalation clauses.
TETCO's Order 636 settlement provides for the recovery of transition costs,
including interest, through volumetric and reservation charges through the
year 2002. PEPL's and Trunkline's recoveries, which are subject to further
FERC action, will occur over the next three years. For the remainder of 1994
and during the following one to two years, above-market gas purchase contract
payments by the pipelines are expected to exceed transition cost collections
from customers. Cash requirements related to transition costs will be funded
by cash from operations and/or available credit facilities and are not
expected to have a material adverse effect on liquidity. Net cash receipts
related to transition costs are expected to occur in periods beyond 1995 or
1996.
The Company believes the exposure associated with gas purchase contract
commitments and the elimination of the Company's merchant services will be
substantially mitigated by transition cost recovery pursuant to TETCO's
settlement, Order 636 and other mechanisms, including assignments of certain
gas purchase contracts to third parties. As a result, the Company believes
that transition cost issues related to Order 636 will not have a material
adverse effect on consolidated financial position.
Environmental Matters - The Company believes it will be able to fund the
TETCO, PEPL and Trunkline PCB and other existing cleanup program costs from
customer recoveries and other cash flows. In addition, PEPL and Trunkline are
evaluating the prior use of disposal areas to determine if those areas
potentially contain hazardous substances. The Company is unable at this time
to estimate remediation costs that will result from these evaluations. See
Note 9 of the Notes to Consolidated Financial Statements. As discussed in
Note 7 of the Notes to Consolidated Financial Statements, the Company is also
unable at this time to estimate its share or the timing of cleanup costs
related to the Fresno Sanitary Landfill. The Company believes that resolution
of these environmental matters will not have a material adverse effect on the
Company's consolidated financial position or liquidity.
17<PAGE>
<PAGE>
Litigation - In connection with a rupture and fire that occurred on TETCO's
36-inch natural gas pipeline on March 23, 1994 in Edison, New Jersey, numerous
lawsuits were filed against the Company and other defendants in the Superior
Court of New Jersey, Middlesex County, on behalf of hundreds of individuals
seeking unspecified compensatory damages for personal injuries and property
losses, as well as punitive damages. The Court ordered a moratorium on the
filing of new suits until procedures for the handling of the suits were
determined. The moratorium was lifted on October 1, 1994. Plaintiffs are
re-filing suits in accordance with case management procedures. Requests by
some plaintiffs for class action certification have been denied by the trial
and appellate courts. The cases are expected to be consolidated for trial on
the issue of liability. The Company has also received numerous letters from
attorneys claiming to represent hundreds of additional individuals with
unspecified claims against the Company. In addition, Quality Materials, Inc.,
the owner of the asphalt plant located at the site of the rupture, has filed
suit in the U.S. District Court for the District of New Jersey against TETCO
seeking to recover unspecified property damages, lost income and punitive
damages. TETCO has filed a counterclaim against Quality Materials, Inc.
The cause of the rupture is under investigation by the National Transportation
Safety Board. The Company has recorded a $5 million after-tax charge for
costs related to this incident that are not recoverable under the Company's
insurance policies. The Company does not expect the resolution of these
matters to have a material adverse effect on consolidated financial position
or liquidity.
Other - The Company expects to generate sufficient future taxable income from
operations to fully utilize deferred tax assets, net of valuation allowance,
including the investment tax credit carryforward. However, if needed, the
Company could implement tax-planning strategies to accelerate approximately
$300 million of taxable income, prior to expiration of the carryforward.
See Note 4 of the Notes to Consolidated Financial Statements for a discussion
of other regulatory proceedings.
On September 1, 1994, Trunkline placed into effect, subject to refund, a
general rate increase as a result of a filing made in accordance with terms
of a rate case settlement in 1993. FERC set the rate case for hearing to
begin in July 1995.
Other operating cash needs for the next 12 months are expected to include rate
refunds. These and any other operating requirements are expected to be funded
by cash from operations, debt issuances and/or available credit facilities.
The Company continues to make periodic sales of trade receivables, with
limited recourse.
18<PAGE>
<PAGE>
Investing Cash Flow
<TABLE>
<CAPTION>
Nine Months Ended
September 30
-- ---------------------
Millions 1994 1993
- -------- ------ ------
<S> <C> <C>
Net Cash Flows Used in Investing Activities $355.2 $136.8
------ ------
</TABLE>
Capital Expenditures - Capital expenditures totaled $329.7 million in the
first nine months of 1994, compared with $207.3 million for the same period
in 1993. Capital expenditures for 1994 are expected to approximate
$500 million and are being funded by cash from operations, debt issuances
and/or available credit facilities. These capital expenditures include
significant amounts for TETCO and Algonquin customer-supported market
expansion projects.
Capital expenditures for 1994 also reflect completion by the Company in June
1994 of the purchase of certain intrastate natural gas pipeline, storage and
processing facilities in south Texas for more than $100 million. Additional
related purchases are expected to be completed during the next nine months.
These transactions will enable the Company to provide expanded services for
natural gas producers and other customers in the Gulf Coast region.
Liberty Pipeline Company (Liberty), in which a TETCO subsidiary owns a
30% interest, has postponed indefinitely the proposed $162 million Liberty
pipeline as a result of two customers withdrawing from the project. TETCO's
planned expansion to deliver natural gas to Liberty also has been postponed
pending redefinition of the project.
The Company's 1995 capital expenditures include plans for significant market
projects by the natural gas pipelines and the Market and Supply Services
group. The Company's current estimate for 1995 capital expenditures is
approximately $425 million. This estimate does not include the capital
projects of ANGC that will be included in the Company's 1995 capital
expenditures if the merger is consummated.
The Company continues to study the potential impact of the Clean Air Act
Amendments of 1990 (the Amendments) and the related federal and state
regulations on the Company. While many of the regulations have not yet been
finalized, the Company currently estimates that capital expenditures necessary
to comply with the requirements of the Amendments and the regulations will not
exceed $60 million. The Company's estimated 1994 and 1995 capital
expenditures include approximately $15 million and $20 million, respectively,
related to these requirements. Management believes any expenditures necessary
will be eligible for recovery in rates.
19<PAGE>
<PAGE>
Tax on Asset Sales - In 1990, the IRS issued regulations which disallow for
tax purposes losses incurred in the Company's 1989 sales of certain TEC
assets. During the third quarter of 1994, upon completion of the IRS field
examination, the Company reduced the related deferred income tax liabilities
and goodwill by approximately $200 million. Investing cash flows for the nine
months ended September 30, 1994 includes the Company's $41 million payment
with respect to prior year tax liabilities.
Financing Cash Flow
<TABLE>
<CAPTION>
Nine Months Ended
September 30
- --------------------
Millions 1994 1993
- -------- ----- ------
<S> <C> <C>
Net Cash Flows Used in Financing Activities $29.3 $430.5
----- ------
</TABLE>
Cash flows used in financing activities decreased $401.2 million comparing the
first nine months of 1994 to the same period of 1993. During the nine months
ended September 30, 1993, significant debt retirements were made, including
early redemptions of long-term debt and retirement of amounts outstanding
under the revolving credit agreements. These debt payments were partially
offset by proceeds from a 10-million-share common stock offering during the
1993 period.
Debt and Credit Facilities - In August and October 1994, respectively, PEPL
and TETCO each issued $100 million, 10-year Notes bearing interest at 7.875%
and 8.25%, respectively. TETCO and PEPL have variable-rate, revolving credit
agreements that permit these subsidiaries to borrow up to $700 million on a
combined basis, utilizing revolving credit borrowings and letter of credit
facilities. At September 30, 1994, there were no amounts outstanding under
these agreements.
Financing Requirements - Dividends and debt repayments for the next 12 months,
along with operating and investing requirements, are expected to be funded by
cash from operations, debt issuances and/or available credit facilities. As
of the date of this report, TETCO and PEPL have effective shelf registration
statements with the Securities and Exchange Commission (SEC) for the issuance
of $100 million each of unsecured debt securities. PEC filed a shelf
registration statement with the SEC on November 4, 1994 for the issuance of
up to $200 million in unsecured debt securities.
Pursuant to the proposed merger with ANGC discussed in "Operating
Environment," the outstanding shares of common stock of PEC will increase by
approximately 24 million to 28 million shares upon effectiveness of the
merger, depending upon the final exchange ratio.
20<PAGE>
<PAGE>
RESULTS OF OPERATIONS
Consolidated net income for the nine months ended September 30, 1994 was
$157.2 million, or $1.31 per share on 120.4 million average common shares
outstanding, compared with $129.5 million, or $1.14 per share on 113.4 million
average common shares outstanding, for the same period in 1993.
Operating Income Analysis
While gas transmission operations are seasonal, with the highest throughput
occurring during the first and fourth quarters, the historical seasonal
variances in financial results began to diminish in the second quarter of 1993
as a result of the SFV rate design required by Order 636 and the termination
of seasonal rates by PEPL.
Consolidated operating income increased slightly in the first nine months of
1994 compared with the same period in 1993. These results include a net
increase by the Natural Gas Transmission group, reflecting benefits recorded
in 1994 related to regulatory issues and increased revenues from new firm
contracts and projects, mostly offset by reduced earnings on interruptible
transportation revenues. Reduced margins during early 1994 on NGLs sales by
the Market and Supply Services group largely offset the net improvement by the
pipelines. These margins on NGLs sales started improving late in the second
quarter of 1994.
Total natural gas volumes were up 5% comparing these same periods, due to an
exceptionally cold winter in the market areas in the first quarter of 1994 and
incremental services initiated by TETCO and Algonquin subsequent to the 1993
third quarter. With implementation of the SFV rate design, which assigns
return on equity, related taxes and other fixed costs to the demand component
of rates, earnings fluctuations related to throughput volumes have been
minimized.
Consolidated Operating Income by Business Group
<TABLE>
<CAPTION>
Nine Months Ended September 30
------------------------------
Millions 1994 1993 % Change
-------- ------ ------ --------
<S> <C> <C> <C>
Natural Gas Transmission
TETCO $195.8 $211.2 (7)
Algonquin 50.5 42.2 20
PEPL 109.1 91.1 20
Trunkline 33.3 37.3 (11)
Other 4.0 4.1 (2)
------ ------ ----
Total 392.7 385.9 2
Market and Supply Services 14.4 18.9 (24)
LNG Project (3.1) (1.3) (138)
Parent and Other 4.7 3.7 27
------ ------ ----
Consolidated Operating Income$408.7 $407.2 -
====== ====== ====
</TABLE>
21<PAGE>
<PAGE>
Natural Gas Pipeline Volumes
<TABLE>
<CAPTION>
Nine Months Ended September 30
------------------------------
Billion cubic feet (Bcf) 1994 1993(A) % Change
------------------------ ------ ------- --------
<S> <C> <C> <C>
Market-area Transports
TETCO 761 668 14
Algonquin 198 169 17
PEPL 430 395 9
Trunkline 335 277 21
Eliminations (69) (93) (26)
----- ----- ----
1,655 1,416 17
----- ----- ----
Sales
TETCO - 33 (100)
Algonquin - 2 (100)
PEPL - 22 (100)
Trunkline - (B) 66 (B) (100)
----- ----- ----
- 123 (100)
----- ----- ----
Total Market Area 1,655 1,539 8
----- ----- ----
Supply-area Transports
TETCO 107 86 24
PEPL 29 37 (22)
Trunkline 77 119 (35)
Eliminations - (1) (100)
----- ----- ----
213 241 (12)
----- ----- ----
Total Volumes 1,868 1,780 5
===== ===== ====
----------
(A) Certain volumes for the prior period have been restated to conform
to the current reporting presentation.
(B) Trunkline's unbundled sales volumes, which are both sold and
transported, are included in transportation throughput. These
volumes total 82 Bcf and 10 Bcf for the nine month periods ended
September 30, 1994 and 1993, respectively.
</TABLE>
22<PAGE>
<PAGE>
TETCO - Operating income for TETCO decreased $15.4 million comparing the first
nine months of 1994 with the same period in 1993 primarily due to reduced
interruptible transportation revenues. Net sales revenue decreased
$129.6 million, reflecting the elimination of TETCO's traditional merchant
function effective June 1, 1993. Transportation revenue increased
$123.8 million, or 31%, as transportation volumes increased 15%, reflecting
the SFV rate design, the conversion of sales contracts to firm transportation
and incremental projects that began service in late 1993. Operating expenses
for TETCO increased in the third quarter of 1994 reflecting the amortization
of costs that are recovered in transportation and storage rates.
Algonquin - Algonquin's operating income remained fairly constant in the first
nine months of 1994 compared with the same period in 1993, excluding an
$8 million benefit recorded in the second quarter of 1994 for the settlement
of certain rate cases. Transportation revenue increased $21.1 million,
offsetting declines in net sales and storage revenues. The decreases in net
sales and storage revenues reflect the elimination of Algonquin's traditional
merchant function and the unbundling of a component of storage revenues to
transportation revenues upon implementation of Order 636.
PEPL - This pipeline's operating income increased $18 million comparing the
first nine months of 1994 and 1993. PEPL's operating income benefited in the
second and third quarters of 1994 from increased firm transportation contracts
(including several long-term contracts), $11 million related to a partial
resolution of a regulatory proceeding, as well as reduced expenses. This
improvement offset the first quarter decrease that resulted from the
elimination of seasonal rates that were in effect prior to PEPL's
implementation of Order 636 on May 1, 1993. Increased revenues from unbundled
transportation and storage services partially offset reduced net sales
revenues resulting from the elimination of PEPL's merchant function. Operating
expenses decreased as a result of lower expenses related to sales volumes, as
well as the release in the first and second quarters of 1994 of $10.6 million
in provisions established for gas supply matters that have been resolved.
Trunkline - Operating income for Trunkline decreased $4 million comparing the
first nine months of 1994 with the same period in 1993, primarily reflecting
lower interruptible transportation revenues. Total transportation revenue
increased and net sales revenue decreased for the periods, as a result of
Order 636 unbundling. Sales revenue also declined as a result of a
$15.5 million rate case benefit recorded in the second quarter of 1993.
Trunkline's unbundled sales contracts expired on October 31, 1994.
Transportation revenues in 1994 included a nonrecurring benefit of
approximately $4 million that resulted from a contract settlement. Operating
expenses decreased primarily as a result of a $13 million charge recorded in
the second quarter of 1993 related to the estimated cost of gas purchase
contracts.
Other Operating Income - Operating income for Market and Supply Services
decreased $4.5 million comparing the first nine months of 1994 and 1993. This
decrease is primarily attributable to lower margins in 1994, partially offset
by revenues from new services provided by 1 Source Corporation, as well as
revenues from the assets acquired in June 1994 in south Texas.
23<PAGE>
<PAGE>
Other Income and Deductions - Other income and deductions decreased
$4.8 million for the first nine months of 1994 compared with the same period
in 1993. This decrease includes interest income earned in 1993 on the LNG
project settlement receivables prior to the sale of these receivables in the
second and third quarters of 1993. Partially offsetting the decrease was a
net increase in equity in earnings from investments in affiliates that
resulted from improvements primarily by National Methanol Company and a
decrease in Northern Border resulting from the sale of a portion of the
Company's interest in late 1993.
Interest Expense - Interest expense in the first nine months of 1994 decreased
$46 million, or 22%, compared to the same period in 1993. This reduction
reflects decreased interest and other expenses related to lower average debt
balances outstanding during the first nine months of 1994 compared with the
same period in 1993, primarily resulting from the Company's early retirement
of four issues of relatively high-interest debt in the last nine months of
1993. Also contributing to the decrease was interest in 1993 on refunds of
production-related costs. See discussion of 1994 debt issuances and PEC's
shelf registration statement under "Financing Cash Flow".
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
See Notes 4, 7, 9 and 10 of the Notes to Consolidated Financial Statements in
Part I of this Report, which are incorporated herein by reference. See also
Item 3 of PEC's Annual Report on Form 10-K for the year ended December 31,
1993.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits -
Exhibit Number Description
27 Financial Data Schedule
The total amount of securities of the Registrant or its subsidiaries
authorized under any instrument with respect to long-term debt not filed as
an Exhibit does not exceed 10% of the total assets of the Registrant and its
subsidiaries on a consolidated basis. The Registrant agrees, upon request of
the Securities and Exchange Commission, to furnish copies of any or all of
such instruments.
(b) Reports on Form 8-K - None
24<PAGE>
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the registrant has duly caused this report to be signed on its behalf
by the undersigned duly authorized officer and chief accounting officer.
PANHANDLE EASTERN CORPORATION
(Registrant)
/s/ Sandra P. Meyer
---------------------------------------
Sandra P. Meyer, Controller
Date: November 14, 1994
25
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Panhandle Eastern Corporation Quarterly Report on Form 10-Q/A for the quarter
ended September 30, 1994 and is qualified in its entirety by reference to such
financial statements.
</LEGEND>
<CIK> 0000351696
<NAME> PANHANDLE EASTERN CORPORATION
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> SEP-30-1994
<CASH> 53,200
<SECURITIES> 0
<RECEIVABLES> 200,300
<ALLOWANCES> 0
<INVENTORY> 113,700
<CURRENT-ASSETS> 663,500
<PP&E> 7,355,600
<DEPRECIATION> 2,859,300
<TOTAL-ASSETS> 6,776,800
<CURRENT-LIABILITIES> 973,500
<BONDS> 1,926,000
<COMMON> 120,700
0
0
<OTHER-SE> 1,643,300
<TOTAL-LIABILITY-AND-EQUITY> 6,776,800
<SALES> 689,000
<TOTAL-REVENUES> 1,804,600
<CGS> 615,700
<TOTAL-COSTS> 995,400
<OTHER-EXPENSES> 227,400
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 166,700
<INCOME-PRETAX> 265,300
<INCOME-TAX> 108,100
<INCOME-CONTINUING> 157,200
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 157,200
<EPS-PRIMARY> 1.31
<EPS-DILUTED> 1.31
</TABLE>
