UNITED STATES SECURITIES AND EXCHANGE
COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1995
Commission File Number 1-3423
ENRON CORP.
(Exact name of registrant as specified in its charter)
Delaware 47-0255140
(State or other jurisdiction of (I.R.S. Employer Identification
incorporation or organization) Number)
Enron Building
1400 Smith Street
Houston, Texas 77002
(Address of principal executive (Zip Code)
Offices)
(713) 853-6161
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has
filed all reports required to be filed by Section 13 or
15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has
been subject to such filing requirements for the past 90
days.
Yes [X] No [ ]
Indicate the number of shares outstanding of each of
the issuer's classes of common stock, as of the latest
practicable date.
Class Outstanding at April 30, 1995
Common Stock, $.10 Par Value 251,845,942 shares
1 of 18
<PAGE>
ENRON CORP. AND SUBSIDIARIES
TABLE OF CONTENTS
Page No.
PART I. FINANCIAL INFORMATION
ITEM 1. Financial Statements
Consolidated Income Statement - Three
Months Ended March 31, 1995 and 1994 3
Consolidated Balance Sheet - March 31, 1995
and December 31, 1994 4
Consolidated Statement of Cash Flows - Three
Months Ended March 31, 1995 and 1994 6
Notes to Consolidated Financial Statements 7
ITEM 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 9
PART II. OTHER INFORMATION
ITEM 1. Legal Proceedings 17
ITEM 5. Other Information 17
ITEM 6. Exhibits and Reports on Form 8-K 17
2
<PAGE>
<TABLE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
ENRON CORP. AND SUBSIDIARIES
CONSOLIDATED INCOME STATEMENT
(In Thousands, Except Per Share Amounts)
(Unaudited)
<CAPTION>
Three Months Ended
March 31,
1995 1994
<S> <C> <C>
Revenues $2,303,949 $2,455,726
Costs and Expenses
Cost of gas and other products 1,619,433 1,782,393
Operating expenses 211,688 222,385
Amortization of deferred contract
reformation costs 10,770 24,368
Oil and gas exploration expenses 20,125 16,050
Depreciation, depletion and amortization 107,396 115,048
Taxes, other than income taxes 30,730 31,336
2,000,142 2,191,580
Operating Income 303,807 264,146
Other Income and Deductions
Equity in earnings of unconsolidated
subsidiaries 15,200 14,205
Interest income 6,899 9,427
Other, net 45,536 48,288
Income before Interest, Minority Interests
and Income Taxes 371,442 336,066
Interest and Related Charges, net 67,008 69,689
Dividends on Preferred Stock of Subsidiaries 7,848 4,275
Minority Interests 9,831 6,052
Income Taxes 91,805 82,987
Net Income 194,950 173,063
Preferred Stock Dividends 3,819 3,722
Earnings on Common Stock $ 191,131 $ 169,341
Earnings per Share of Common Stock
Primary $ 0.79 $ 0.70
Fully diluted $ 0.73 $ 0.65
Average Number of Common Shares Used in
Primary Computation 243,217 242,483
<FN>
The accompanying notes are an integral part of these consolidated financial
statements.
</TABLE>
3
<PAGE>
<TABLE>
PART I. FINANCIAL INFORMATION - (Continued)
ITEM 1. FINANCIAL STATEMENTS - (Continued)
ENRON CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(In Thousands)
(Unaudited)
<CAPTION>
March 31, December 31,
1995 1994
<S> <C> <C>
ASSETS
Current Assets
Cash and cash equivalents $ 93,031 $ 132,336
Trade receivables 488,665 604,985
Other receivables 234,492 233,213
Transportation and exchange gas receivable 105,411 98,787
Inventories 106,736 138,405
Assets from price risk management activities 530,542 449,588
Other 293,943 251,679
Total Current Assets 1,852,820 1,908,993
Investments and Other Assets
Investments in unconsolidated subsidiaries 1,123,354 1,065,189
Assets from price risk management activities 1,203,597 1,027,945
Other 1,369,986 1,225,224
Total Investments and Other Assets 3,696,937 3,318,358
Property, Plant and Equipment, at cost 11,122,040 10,964,401
Less accumulated depreciation, depletion
and amortization 4,390,521 4,225,741
Net Property, Plant and Equipment 6,731,519 6,738,660
Total Assets $12,281,276 $11,966,011
<FN>
The accompanying notes are an integral part of these consolidated financial
statements.
</TABLE>
4
<PAGE>
<TABLE>
PART I. FINANCIAL INFORMATION - (Continued)
ITEM 1. FINANCIAL STATEMENTS - (Continued)
ENRON CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(In Thousands)
(Unaudited)
<CAPTION>
March 31, December 31,
1995 1994
<S> <C> <C>
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Accounts payable $ 709,679 $ 924,446
Transportation and exchange gas payable 127,241 114,124
Accrued taxes 95,130 90,906
Accrued interest 58,312 58,569
Liabilities from price risk management
activities 574,272 522,070
Other 404,778 587,271
Total Current Liabilities 1,969,412 2,297,386
Long-Term Debt 3,099,342 2,805,142
Deferred Credits and Other Liabilities
Deferred income taxes 1,960,732 1,893,450
Deferred revenue 237,295 256,298
Liabilities from price risk management
activities 707,563 575,377
Other 571,011 591,134
Total 3,476,601 3,316,259
Minority Interests 301,032 290,146
Preferred Stock of Subsidiary Companies 395,750 376,750
Shareholders' Equity
Second preferred stock, cumulative, $1 par
value 139,736 140,498
Common stock, $0.10 par value 25,308 25,308
Additional paid in capital 1,782,968 1,788,044
Retained earnings 1,490,963 1,351,297
Cumulative foreign currency translation
adjustment (152,149) (158,881)
Common stock held in treasury (35,059) (41,090)
Other (including Flexible Equity Trust) (212,628) (224,848)
Total 3,039,139 2,880,328
Total Liabilities and Shareholders' Equity $12,281,276 $11,966,011
<FN>
The accompanying notes are an integral part of these consolidated financial
statements.
</TABLE>
5
<PAGE>
<TABLE>
PART I. FINANCIAL INFORMATION - (Continued)
ITEM 1. FINANCIAL STATEMENTS - (Continued)
ENRON CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
(In Thousands)
(Unaudited)
<CAPTION>
Three Months Ended
March 31,
1995 1994
<S> <C> <C>
Cash Flows From Operating Activities
Reconciliation of net income to net cash
provided by (used in) operating activities
Net Income $ 194,950 $ 173,063
Depreciation, depletion and amortization 107,396 115,048
Oil and gas exploration expenses 20,125 16,050
Amortization of deferred contract reformation
costs 10,770 24,368
Deferred income taxes 64,559 46,833
Gain on sale of assets (29,035) (24,433)
Regulatory, litigation and other contingency
adjustments (19,893) (15,035)
Changes in components of working capital (309,601) (475,970)
Deferred contract reformation costs 1,127 (18,342)
Deferred revenues (7,879) (4,179)
Net assets from price risk management activities (72,217) (48,255)
Other, net (87,558) 842
Net Cash Used in Operating Activities (127,256) (210,010)
Cash Flows From Investing Activities
Proceeds from sale of assets and investments 31,726 194,776
Additions to property, plant and equipment (116,241) (118,657)
Other, net (48,851) (50,742)
Net Cash Provided by (Used in) Investing
Activities (133,366) 25,377
Cash Flows From Financing Activities
Issuance of long-term debt 211,406 320
Net increase in short-term borrowings 126,698 260,106
Decrease in long-term debt (44,060) (30,973)
Acquisition of treasury stock (17,087) (412)
Issuance of treasury stock 9,130 -
Issuance of common stock - 9,677
Dividends paid (64,770) (58,597)
Net Cash Provided by Financing Activities 221,317 180,121
Decrease in Cash and Cash Equivalents (39,305) (4,512)
Cash and Cash Equivalents, Beginning of Period 132,336 140,240
Cash and Cash Equivalents, End of Period $ 93,031 $ 135,728
<FN>
The accompanying notes are an integral part of these consolidated financial
statements.
</TABLE>
6
<PAGE>
PART I. FINANCIAL INFORMATION - (Continued)
ITEM 1. FINANCIAL STATEMENTS - (Continued)
ENRON CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. The consolidated financial statements included herein
have been prepared by Enron Corp. without audit pursuant to
the rules and regulations of the Securities and Exchange
Commission. Accordingly, these statements reflect all
adjustments (consisting only of normal recurring entries)
which are, in the opinion of management, necessary for a
fair statement of the financial results for the interim
periods. Certain information and notes normally included in
financial statements prepared in accordance with generally
accepted accounting principles have been condensed or
omitted pursuant to such rules and regulations, although
Enron Corp. believes that the disclosures are adequate to
make the information presented not misleading. These
consolidated financial statements should be read in
conjunction with the financial statements and the notes
thereto included in Enron Corp.'s Annual Report on Form 10-K
for the year ended December 31, 1994 (Form 10-K).
Certain reclassifications have been made in the 1994
amounts to conform with the 1995 presentation.
"Enron" is used from time to time herein as a collective
reference to Enron Corp. and its subsidiaries and
affiliates. In material respects, the businesses of Enron
are conducted by Enron Corp.'s subsidiaries and affiliates
whose operations are managed by their respective officers.
2. Supplemental Cash Flow Information
Net cash received for income tax refunds was $0.4 million
and $6.2 million for the first quarters of 1995 and 1994,
respectively. Cash paid for interest expense for the same
periods, net of amounts capitalized was $68.2 million and
$60.3 million, respectively.
Non-cash financing activities during the first quarter of
1995 included the issuance of preferred stock of an Enron
subsidiary in exchange for oil and gas properties, in a
transaction valued at $19 million.
Changes in components of working capital are as follows
(in thousands):
<TABLE>
<CAPTION>
First Quarter
1995 1994
<S> <C> <C>
Receivables $ 108,417 $(271,426)
Inventories 31,669 63,601
Payables (201,650) (212,265)
Accrued taxes 4,224 61,537
Accrued interest (257) 6,235
Other (252,004) (123,652)
Total $(309,601) $(475,970)
</TABLE>
7
<PAGE>
PART I. FINANCIAL INFORMATION - (Continued)
ITEM 1. FINANCIAL STATEMENTS - (Concluded)
ENRON CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
3. Litigation and Contingencies
As reported in Form 10-K, TransAmerican Natural Gas
Corporation (TransAmerican) has filed a petition against
Enron Corp. and Enron Oil & Gas Company (EOG) alleging
breach of confidentiality agreements, misappropriation of
trade secrets and unfair competition, with respect to four
tracts in Webb County, Texas, which EOG leased for their oil
and gas exploration and development potential.
TransAmerican seeks actual damages of $100 million and
exemplary damages of $300 million. EOG has filed claims
against TransAmerican and its sole shareholder alleging
common law fraud, negligent misrepresentation and breach of
state antitrust laws. On April 6, 1994, Enron Corp. was
granted summary judgment, wherein the court ordered that
TransAmerican take nothing on its claims against Enron Corp.
As to EOG, the trial date, which was most recently set for
September 12, 1994, has been continued and there is no
current setting. Although no assurances can be given, Enron
believes that TransAmerican's claims are without merit.
Enron believes that the ultimate resolution of this matter
will not have a materially adverse effect on its financial
position or results of operations.
As reported in Form 10-K, a pipeline company in which an
Enron affiliate has a minority interest and for which an
Enron affiliate has served as operator, filed a petition
against Enron and certain affiliates alleging an unspecified
amount of damages relating to the operation of such pipeline
company. A settlement agreement has been executed whereby,
upon certain conditions being met, such lawsuit will be
dismissed. Enron believes that the terms of the settlement
agreement, if consummated, will not have a materially
adverse effect on Enron's financial position or results of
operations. If such conditions are not met and the
settlement is not consummated, the proceedings in said
lawsuit will be resumed. In that event, and based upon
information currently available, it is not possible to
predict the outcome of such litigation; however, Enron
believes that the results will not have a materially adverse
effect on Enron's financial position or results of
operations.
During October 1994, an explosion occurred at Enron's
methanol plant in Pasadena, Texas. Before the explosion,
the plant was producing approximately 420,000 gallons of
methanol per day, approximately half of which was being used
at Enron's MTBE plant. There were no fatalities or serious
injuries as a result of the explosion. The plant is
expected to be placed back into commercial operations in May
1995. Enron is currently investigating the explosion to
determine the full extent of any damages; however, based
upon business interruption and other insurance coverages,
Enron currently anticipates that the explosion will not have
a material adverse effect on its financial position or
results of operations.
8
<PAGE>
PART I. FINANCIAL INFORMATION - (Continued)
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
ENRON CORP. AND SUBSIDIARIES
RESULTS OF OPERATIONS
First Quarter 1995
vs. First Quarter 1994
The following review of Enron's results of operations
should be read in conjunction with the Consolidated
Financial Statements.
CONSOLIDATED NET INCOME
Enron's first quarter 1995 net income increased to $195
million as compared to $173 million during the first quarter
of 1994. The $22 million increase in consolidated net
income primarily reflects improved income before interest,
minority interests and income taxes for the transportation
and operation and exploration and production segments. This
increase was partially offset by lower income before
interest, minority interests and income taxes for the
corporate and other segment combined with higher income
taxes. Earnings per share rose to $.79 in the first quarter
of 1995 from $.70 in the same period in 1994.
INCOME BEFORE INTEREST, MINORITY INTERESTS AND INCOME TAXES
The following table presents income before interest,
minority interests and income taxes (IBIT) for each of
Enron's operating segments (in millions).
<TABLE>
<CAPTION>
First Quarter Increase
1995 1994 (Decrease)
<S> <C> <C> <C>
Transportation and Operation $181 $153 $28
Domestic Gas and Power Services 51 49 2
International Gas and Power Services 51 51 -
Exploration and Production 58 40 18
Corporate and Other 30 43 (13)
Total $371 $336 $35
</TABLE>
TRANSPORTATION AND OPERATION
The transportation and operation segment includes Enron's
regulated natural gas pipelines, construction, management
and operation of pipelines, liquids plants and power
facilities and Enron's investments in crude oil marketing
and transportation operations conducted by EOTT Energy Corp.
(EOTT) and liquids pipeline operations. The segment
realized a $28 million increase in IBIT for the first
quarter of 1995 as compared to the same period in 1994. The
increase was due primarily to a gain of $29 million on the
sale of non-strategic natural gas processing and gathering
related assets and increased earnings from construction,
management and operations activities, partially offset by
lower results from EOTT. In the first quarter of 1994,
EOTT, a wholly-owned subsidiary of Enron, sold its crude oil
trading and transportation operations to EOTT Energy
Partners, L.P. (the EOTT Partnership).
9
<PAGE>
PART I. FINANCIAL INFORMATION - (Continued)
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS - (Continued)
ENRON CORP. AND SUBSIDIARIES
EOTT continues to own approximately 40% of the EOTT
Partnership. The following discussion analyzes the
significant changes in the various components of IBIT for
the transportation and operation segment.
REVENUES
Revenues of the transportation and operation segment
decreased approximately $50 million (16%) during the first
quarter of 1995 as compared to the same period in 1994. The
decrease in revenues primarily reflects the reduced
ownership interest in EOTT and reduced sales revenue at
Northern Natural Gas Company (Northern Natural) as that
pipeline is now almost exclusively a transporter of natural
gas. Northern Natural's sales volumes decreased from 146
million cubic feet per day (Mmcf/d) in the first quarter of
1994 to 71 Mmcf/d in the same period in 1995. These
declines were partially offset by increased engineering and
construction revenues associated with Enron's international
assets.
COST OF GAS AND OTHER PRODUCTS SOLD
The cost of gas and other products sold by the
transportation and operation segment decreased by $20
million (85%) during the first quarter of 1995 compared to
the same period in 1994 primarily as a result of the reduced
ownership interest in EOTT and decreased gas purchases by
Northern Natural.
OPERATING EXPENSES
Operating expenses in the transportation and operation
segment declined 12% during the first quarter of 1995 as
compared to the same period in 1994. The decline primarily
reflects lower operating expenses of the regulated natural
gas pipelines due to lower transmission, compression and
storage cost of gas purchased for resale as a result of the
previously discussed transition to being almost exclusively
transporters of natural gas, as well as the effect of the
reduced ownership interest in EOTT.
Amortization of deferred contract reformation costs
decreased 56% in the first quarter of 1995, primarily due to
the completion by Northern Natural of the recovery of
certain transition costs in early 1995.
Depreciation expense for the transportation and operation
segment decreased $3 million (12%) during the first quarter
of 1995 as compared to the same period in 1994 primarily as
a result of the reduced ownership interest in EOTT.
10
<PAGE>
PART I. FINANCIAL INFORMATION - (Continued)
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS - (Continued)
ENRON CORP. AND SUBSIDIARIES
OTHER INCOME AND DEDUCTIONS
Equity in earnings of unconsolidated subsidiaries was $4
million in both quarters. The first quarter 1995 results
reflected improved earnings from Citrus Corp. The increase
in Citrus' earnings are a result of increased allowances for
funds used during construction related to the Florida Gas
Transmission Company Phase III pipeline expansion, which was
placed in service March 1, 1995, increased revenues after
the expansion pipeline was placed in service and improved
sales margins as a result of contract renegotiations. These
increases were partially offset by a loss from the EOTT
Partnership, due primarily to weak industry-wide crude oil
processing margins on the West Coast.
Other income, net increased $30 million, from $19 million
to $49 million, primarily due to the gain of $29 million on
the sale of non-strategic natural gas processing and
gathering facilities.
DOMESTIC GAS AND POWER SERVICES
Enron's domestic gas and power activities are conducted
by Enron Capital & Trade Resources Corp. (ECT) and can be
categorized into three business lines: Cash and Physical,
Risk Management and Finance. The domestic gas and power
services segment had a $2 million (5%) increase in IBIT for
the first quarter of 1995 as compared to the same period in
1994. This increase was primarily due to increased earnings
in the risk management and finance businesses, partially
offset by lower earnings in the cash and physical business.
The following discussion analyzes the contributions to IBIT
for each of these businesses.
11
<PAGE>
PART I. FINANCIAL INFORMATION - (Continued)
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS - (Continued)
ENRON CORP. AND SUBSIDIARIES
Volume and price statistics (including intercompany
amounts) are as follows:
<TABLE>
<CAPTION>
First Quarter
1995 1994
<S> <C> <C>
Physical/Notional Quantities (BBtue/d) (1)
Firm (2) 5,366 5,175
Interruptible 2,117 1,799
Transport Volumes 699 583
Financial Settlements (Notional) 32,752 14,495
Total 40,934 22,052
Production Payments and Financings
Arranged (In Millions) $ 54.3 $ 12.4
Fixed Price Contract Originations (TBtue) (3) 1,498 1,400
Electricity (Megawatts/hour)
Owned Production 376 346
Transaction Volumes Marketed 332 -
Liquids Marketing (Mmgal) (4)
Domestic NGL Marketed 514 582
MTBE Marketed 174 65
Domestic Gas Processing
Total Production Volumes (Mmgal) (4) 300 271
Processing Margin ($/Gal) $ 0.061 $ 0.054
<FN>
(1) Billion British thermal units equivalent per day.
(2) Commitments to deliver a specified volume of gas at a
fixed or market responsive price.
(3) Trillion British thermal units equivalent.
(4) Million gallons.
</TABLE>
The cash and physical operations include earnings from
physical contracts of one year or less involving marketing
and transportation of physical natural gas, liquids,
electricity, and other commodities, earnings from the
management of ECT's contract portfolio and earnings related
to the physical assets of ECT, including the domestic gas
processing activity. Also reported in this line of business
are the effects of actual settlements of ECT's long-term
physical and notional quantity based contracts. The cash
and physical operations' earnings before overhead expenses
were $33 million in the first quarter of 1995 and were less
than the prior year's earnings due primarily to lower margins
for physical natural gas resulting from less volatile market
conditions due to weather in the first quarter of 1995. This
decrease was partially offset by an increase in earnings from
Canadian operations and the marketing of electricity.
Additionally, 1994 results included the impact of reflecting
clean fuels contractual commitments at market value. The
cash and physical operations contributed 37% of ECT's earnings
before overhead expenses in the first quarter of 1995 as compared
to 92% in the first quarter of 1994.
12
<PAGE>
PART I. FINANCIAL INFORMATION - (Continued)
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS - (Continued)
ENRON CORP. AND SUBSIDIARIES
The risk management operations consist of market
origination activity on new long-term contracts
(transactions greater than one year) and restructuring of
existing long-term contracts. Earnings before overhead
expenses from these activities increased to $36 million due
primarily to the originations from long-term contracts with
independent power plants (IPP), as well as originations
related to Canadian gas supply. Included in originations is
$19 million associated with the non-affiliated portion of
earnings from a long-term gas supply contract with a 50%-
owned IPP. Earnings from risk management originations were
40% and 8% of ECT earnings before overhead expenses in the
first quarter of 1995 and 1994, respectively.
ECT's finance operations provide capital to customers
through various product offerings. Earnings before overhead
expenses from this unit increased to $21 million in the
first quarter of 1995 due primarily to its share of earnings
associated with the long-term gas supply contract with the
IPP discussed above. The finance activities contributed 23%
of ECT's earnings before overhead expenses in the first
quarter of 1995 and less than 1% in the same period in 1994.
ECT's overhead expenses such as rent, systems expenses
and other support group costs were 43% of ECT's earnings
before overhead expenses in 1995 and 38% in 1994. These
costs increased by 28% in the first quarter of 1995 due to
continued expansion into new markets.
INTERNATIONAL GAS AND POWER SERVICES
The international segment's IBIT was virtually unchanged.
The following discussion analyzes significant items in the
segment's results.
REVENUES
Net revenues improved by $5 million (9%) in the first
quarter of 1995 as compared with 1994. Included in 1995
were amounts received from the promotion of a portion of
Enron's interest in the Dabhol power project in India and
$24 million from the promotion of a portion of Enron's
interest in its power assets at Teesside in the United
Kingdom. In addition, revenues of $12 million were
recognized as a result of the expiration of certain
contingent obligations related to the formation of Enron
Global Power & Pipelines L.L.C. The 1994 results included
revenues of approximately $31 million from the promotion on
the sale of certain liquids processing facilities at
Teesside.
COSTS AND EXPENSES
Operating expenses increased by $7 million (72%) as a
result of increased international activities.
13
<PAGE>
PART I. FINANCIAL INFORMATION - (Continued)
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS - (Continued)
ENRON CORP. AND SUBSIDIARIES
OTHER INCOME AND DEDUCTIONS
Equity in earnings of unconsolidated subsidiaries
improved from $6 million in the first quarter of 1994 to $12
million in the same period in 1995 due primarily to
increased earnings from Enron's interests in international
power and pipeline projects.
EXPLORATION AND PRODUCTION
The exploration and production segment's IBIT increased
to $58 million in the first quarter of 1995 from $40 million
in the same period of 1994. The following discussion
analyzes the significant changes in the segment's results.
Volume and price statistics (including intercompany
amounts) are as follows:
<TABLE>
<CAPTION>
First Quarter
1995 1994
<S> <C> <C>
Wellhead Volumes
Natural Gas (MMcf/d) (1)(2) 716 799
Crude Oil and Condensate (MBbl/d) (1) 18.1 10.8
Natural Gas Liquids (MBbl/d) 2.5 0.7
Wellhead Average Prices
Natural Gas ($/Mcf) (3) $ 1.24 $ 1.91
Crude Oil and Condensate ($/Bbl) 16.40 12.83
Natural Gas Liquids ($/Bbl) 11.79 8.37
<FN>
(1) Million cubic feet per day or thousand barrels per day,
as applicable.
(2) Includes 48 MMcf per day for the three-month periods
ended March 31, 1995 and 1994 delivered under the terms
of volumetric production payment and exchange agreements
effective October 1, 1992, as amended.
(3) Includes an average equivalent wellhead value of
$0.87/Mcf and $1.61/Mcf for the three-month periods ended
March 31, 1995 and 1994, respectively, for the volumes
described in note (2), net of transportation costs.
</TABLE>
REVENUES
The exploration and production segment's gross revenues
increased 4% during the first quarter of 1995 as compared to
the same period in 1994. The increased revenues are
attributable to a 28% increase in average wellhead prices
for crude oil and condensate combined with a 68% increase in
average crude oil and condensate wellhead volumes. The
effects of 35% lower average wellhead natural gas prices
were partially mitigated by the positive effects of EOG's
hedging strategies. U.S. wellhead natural gas volumes were
voluntarily curtailed by an average of 150 MMcf per day
during February and March of 1995 contributing to a decrease
of 10% in volumes delivered from the first quarter of 1994.
In addition, the exploration and production segment's first
quarter 1995 and 1994 includes a $16 million gain and a $1
million loss, respectively, related to hedges placed by
Enron on open commodity positions not hedged by EOG. EOG
realized an $11 million gain in the first quarter of 1995
related to certain NYMEX-related commodity market
transactions that were designated for trading purposes in
1994. All trading positions were closed during the first
quarter of 1995.
14
<PAGE>
PART I. FINANCIAL INFORMATION - (Continued)
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS - (Continued)
ENRON CORP. AND SUBSIDIARIES
COSTS AND EXPENSES
The cost of gas sold in connection with other natural gas
marketing activities decreased $7 million (22%) from the
first quarter of 1994 compared to the same period in 1995
due to lower average associated costs per Mcf combined with
a decrease in other natural gas marketing volumes.
Operating expenses for the exploration and production
segment increased $1 million (4%) and oil and gas
exploration expenses increased $4 million (25%) during the
first quarter of 1995 when compared to the same period in
1994 primarily reflecting increased international operations
and exploration activities.
Depreciation, depletion and amortization (DD&A) expense
decreased $12 million reflecting a decrease in production
volumes and a decrease in the average DD&A rate from $0.83
per thousand cubic feet equivalent (Mcfe) in the first
quarter of 1994 to $0.70 per Mcfe in the first quarter of
1995. A portion of the DD&A rate decrease is attributable
to a lower average rate relating to increased production
from international operations versus that for North American
operations. The remainder of the decrease is primarily due
to increased production from lower cost fields, the
disposition of higher cost North American properties and
increases in reserve estimates.
CORPORATE AND OTHER
The corporate and other segment's IBIT was $30 million in
the first quarter of 1995 as compared to $43 million in the
first quarter of 1994. The 1994 amount includes a gain
related to the sale of 10 million common units of the EOTT
Partnership and general and administrative expense
reductions realized in 1994. The 1995 results include
amounts recognized following the further resolution of
certain litigation in 1995.
DIVIDENDS ON PREFERRED STOCK OF SUBSIDIARIES
The increase in dividends on preferred stock of
subsidiaries reflects the issuance by Enron Capital
Resources, L.P. of 3 million shares of 9% Cumulative
Preferred Securities, Series A ($25 per share liquidation
value) in August 1994 and the issuance in December 1994 of
880 shares of 8.57% Preferred Stock, $0.001 par value,
($100,000 per share liquidation value) by Enron Equity Corp.
15
<PAGE>
PART I. FINANCIAL INFORMATION - (Concluded)
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS - (Concluded)
ENRON CORP. AND SUBSIDIARIES
INCOME TAXES
Income taxes increased during the first quarter of 1995
as compared to the first quarter of 1994 primarily as a
result of increased pretax income.
FINANCIAL CONDITION
Cash used in operating activities totaled approximately
$127 million as compared to $210 million during the same
period last year. The improvement primarily reflects
reduced working capital requirements.
Cash used in investing activities totaled $133 million
during the first quarter of 1995 as compared to cash
provided of $25 million during the same period in 1994.
This change primarily resulted from the sale of EOTT's
operations in the first quarter of 1994.
Cash provided by financing activities totaled $221
million during the first quarter of 1995 as compared to $180
million during the same period in 1994. During the first
quarter of 1995, net issuances of short- and long-term debt
totaled $294 million. Proceeds from these issuances were
used primarily to fund capital and other expenditures and
meet working capital requirements.
At March 31, 1995, Enron had a working capital deficit of
$117 million as compared to a deficit of $388 million at
December 31, 1994. Enron is able to fund its normal working
capital deficit through the utilization of credit facilities
and its ability to sell commercial paper and accounts
receivable.
Total capitalization at March 31, 1995 was $6.8 billion.
Debt as a percentage of total capitalization was 45.4% at
March 31, 1995 as compared to 44.2% at year-end 1994 and
47.7% at March 31, 1994. The increase from December 31,
1994 primarily reflects the increase in debt levels
occurring during the first quarter of 1995 as discussed
above.
16
<PAGE>
PART II. OTHER INFORMATION
ENRON CORP. AND SUBSIDIARIES
ITEM 1. Legal Proceedings
See Part I. Item 1, Note 3 to Consolidated Financial
Statements entitled "Litigation and Contingencies," which is
incorporated herein by reference.
ITEM 5. Other Information
The annual meeting of stockholders of Enron Corp. was held
on May 2, 1995. In addition to the election of directors
and procedure items, the stockholders voted 220,911,042
shares in the affirmative and 9,799,125 shares in the
negative, with 4,882,634 shares abstaining, to approve the
Enron Corp. Amended and Restated Performance Unit Plan, the
purpose of which is to advance the interests of Enron and
its subsidiaries and their stockholders by providing long-
term incentive compensation tied to increases in stockholder
value to those key executive employees who are in a position
to make substantial contributions to the long-term financial
success of Enron and its subsidiaries.
ITEM 6. Exhibits and Reports on Form 8-K
(a) Exhibits.
Exhibit 11 Calculation of Earnings Per Share
Exhibit 12 Computation of Ratio of Earnings to Fixed Charges
(b) Reports on Form 8-K
None.
17
<PAGE>
SIGNATURES
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.
ENRON CORP.
(Registrant)
Date: May 12, 1995 By: Jack I. Tompkins
Jack I. Tompkins
Senior Vice President and
Chief Information, Administrative
and Accounting Officer
(Principal Accounting Officer)
18
Exhibit 11
<TABLE>
ENRON CORP. AND SUBSIDIARIES
Calculation of Earnings Per Share
(Unaudited)
<CAPTION>
Three Months Ended
March 31,
1995 1994
(in thousands except
per share amounts)
<S> <C> <C>
Primary Earnings Per Share
Earnings on common stock
Net income $194,950 $173,063
Preferred stock dividends (3,819) (3,722)
$191,131 $169,341
Average number of common shares outstanding 243,217 242,483
Primary earnings per share of common stock $ 0.79 $ 0.70
Fully Diluted Earnings Per Share
Adjusted earnings on common stock
Net income $194,950 $173,063
Preferred stock dividends (3,819) (3,722)
Add back:
Dividends on convertible preferred stock 3,819 3,722
$194,950 $173,063
Average number of common shares outstanding
on a fully diluted basis
Average number of common shares outstanding 243,217 242,483
Additional shares issuable upon:
Conversion of preferred stock 19,143 19,766
Exercise of stock options reduced by the number
of shares which could have been purchased with
the proceeds from exercise of such options 4,084 4,003
266,444 266,252
Fully diluted earnings per share of common stock $ 0.73 $ 0.65
</TABLE>
Exhibit 12
<TABLE>
ENRON CORP. AND SUBSIDIARIES
COMPUTATION OF RATIO OF EARNINGS TO
FIXED CHARGES
(In Thousands)
(Unaudited)
<CAPTION>
Three Months
Ended Year Ended December 31,
3/31/95 1994 1993 1992 1991 1990
<S> <C> <C> <C> <C> <C> <C>
Earnings available for fixed charges
Net income $194,950 $ 453,410 $332,522 $328,800 $232,146 $202,180
Less:
Undistributed earnings and
losses of less than 50% owned
affiliates (4,014) (9,453) (20,232) (32,526) (8,890) (15,468)
Capitalized interest of
nonregulated companies (2,100) (9,007) (25,434) (66,401) (36,537) (8,145)
Add:
Fixed charges (1) 98,929 467,383 471,278 452,014 454,607 425,177
Minority interest 9,831 31,041 27,605 17,632 7,210 7,129
Income tax expense 96,859 190,081 148,104 88,630 105,859 62,739
Total $394,455 $1,123,455 $933,843 $788,149 $754,395 $673,612
Fixed Charges
Interest expense (1) $ 86,306 $ 424,893 $436,211 $430,406 $425,945 $400,548
Rental expense representative of
interest factor 12,623 42,490 35,067 21,608 28,662 24,629
Total $ 98,929 $ 467,383 $471,278 $452,014 $454,607 $425,177
Ratio of earnings to fixed charges 3.99 2.40 1.98 1.74 1.66 1.58
<FN>
(1) Amounts exclude costs incurred on sales of accounts receivables.
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> MAR-31-1995
<CASH> 93,031
<SECURITIES> 0
<RECEIVABLES> 723,157
<ALLOWANCES> 0
<INVENTORY> 106,736
<CURRENT-ASSETS> 1,852,820
<PP&E> 11,122,040
<DEPRECIATION> 4,390,521
<TOTAL-ASSETS> 12,281,276
<CURRENT-LIABILITIES> 1,969,412
<BONDS> 3,099,342
<COMMON> 25,308
0
139,736
<OTHER-SE> 2,874,095
<TOTAL-LIABILITY-AND-EQUITY> 12,281,276
<SALES> 1,760,564
<TOTAL-REVENUES> 2,303,949
<CGS> 1,619,433
<TOTAL-COSTS> 2,000,142
<OTHER-EXPENSES> (67,635)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 67,008
<INCOME-PRETAX> 286,755
<INCOME-TAX> 91,805
<INCOME-CONTINUING> 194,950
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 194,950
<EPS-PRIMARY> 0.79
<EPS-DILUTED> 0.73
</TABLE>
