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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
Form 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
Date of Report (Date of Earliest Event Reported):
June 30, 1997
COMMISSION FILE NO. 0-25842
Pacific Gas Transmission Company
(Exact name of registrant as specified in its charter)
California 94-1512922
(State or other jurisdiction of (I.R.S. employer Identification
incorporation or organization) No.)
2100 SW River Parkway, Portland, 97201
OR (Zip code)
(Address of principal executive
offices)
Registrant's telephone number, including area code: (503) 833-4000
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Item 2. Disposition of Assets
On June 30, 1997, Pacific Gas Transmission Company ("PGT") distributed
all of the shares of PG&E Energy Trading Corporation ("Energy Trading") to PGT's
sole shareholder PG&E Gas Transmission Corporation. The value of this
distribution as reflected on PGT's financial statements as of June 30, 1997 was
$49.3 million. PG&E Gas Transmission Corporation, in turn immediately
thereafter, distributed these shares to its sole shareholder PG&E Corporation.
During 1996, PGT acquired the gas marketing operations of Edisto Resources
Corporation in the United States and Canada, known jointly as "Energy Source,
Inc." which was subsequently renamed PG&E Energy Trading Corporation. Energy
Trading is engaged in the purchase and resale of natural gas to a diversified
customer base, primarily consisting of industrial and commercial companies,
local distribution companies, and industry partners.
The transfer of Energy Trading is in connection with PG&E Corporation's
decision to reorganize certain aspects of its corporate structure and business
lines.
Item 7. Pro Forma Financial Information
1. Pro Forma Condensed Consolidated Income Statements for the Year Ended
December 31, 1996 (Unaudited) (Page 3)
2. Pro Forma Condensed Consolidated Balance Sheets as of March 31, 1997
(Unaudited) (Page 4)
3. Pro Forma Condensed Consolidated Income Statements for the Three
Months Ended March 31, 1997 (Unaudited) (Page 5)
4. Notes to Pro Forma Condensed Consolidated Financial Statements
(Unaudited) (Page 6)
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
PACIFIC GAS TRANSMISSION COMPANY
------------------------------------
(Registrant)
July 11, 1997 By: /s/ STANLEY C. KARCZEWSKI
-----------------------------------
Name: Stanley C. Karczewski
Title: Vice President of Finance and Controller
and Chief Financial Officer
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<TABLE>
PACIFIC GAS TRANSMISSION COMPANY
PRO FORMA CONDENSED CONSOLIDATED INCOME STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 1996
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<CAPTION>
Historical Disposition
Consolidated of PG&E Pro Forma Pro Forma
Pacific Gas Energy Adjustments Pacific Gas
Transmission Trading due to the Transmission
Company Corporation Disposition Company
(In Thousands) Audited Unaudited Unaudited Unaudited
<S> <C> <C> <C> <C>
OPERATING REVENUES:
Gas marketing $ 281,292 $ 281,292 $ - $ -
Gas transportation 194,881 - - 194,881
Gas transportation for
PG&E 37,726 - - 37,726
Gas supply restructuring 32,120 - - 32,120
cost recovery
Other 766 - - 766
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Total operating 546,785 281,292 - 265,493
revenues
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OPERATING EXPENSES:
Gas marketing cost of sales 280,483 280,483 - -
Gas supply restructuring
costs 32,120 - - 32,120
Operations and maintenance 63,688 901 - 62,787
Depreciation and amortization 39,077 174 - 38,903
Property and other taxes 8,867 - - 8,867
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Total operating expenses 424,235 281,558 - 142,677
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OPERATING INCOME (LOSS) 122,550 (266) - 122,816
OTHER INCOME AND (INCOME (4,854) 57 (b) 35 (4,876)
DEDUCTIONS)
INTEREST EXPENSE 45,662 35 - 45,627
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INCOME (LOSS) BEFORE 72,034 (244) 35 72,313
INCOME TAX EXPENSE
INCOME TAX EXPENSE 28,889 75 14 28,828
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NET INCOME $ 43,145 $ (319) $ 21 $ 43,485
==============================================================================
</TABLE>
The accompanying Notes to Pro Forma Condensed Consolidated Financial Statements
are an integral part of these statements.
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<TABLE>
PACIFIC GAS TRANSMISSION COMPANY
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEETS
AS OF MARCH 31, 1997
(UNAUDITED)
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<CAPTION>
Historical Disposition
Consolidated of PG&E Pro Forma Pro Forma
Pacific Gas Energy Adjustments Pacific Gas
Transmission Trading Due to the Transmission
(In Thousands) Company Corporation Disposition Company
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ASSETS
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<S> <C> <C> <C> <C>
PROPERTY PLANT & EQUIPMENT:
Property, plant and equipment $ 1,614,015 $ 3,860 $ - $ 1,610,155
Accumulated depreciation (429,050) (2,243) - (426,807)
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Total property, plant &
equipment - net 1,184,965 1,617 - 1,183,348
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CURRENT ASSETS:
Cash and cash equivalents 26,652 12,149 - 14,503
Assets from risk management 23,703 23,703 - -
activities
Accounts receivable from gas 342,167 342,167 - -
marketing
Accounts receivable - gas 19,929 - - 19,929
transportation
Allowance for uncollectible (1,524) (1,524) - -
accounts
Other current assets 23,971 3,869 (a)10,244 30,346
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Total current assets 434,898 380,364 10,244 64,778
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DEFERRED CHARGES:
Goodwill, net of amortization 27,403 27,403 - -
Other deferred charges 64,845 566 - 64,279
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Total deferred charges 92,248 27,969 - 64,279
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TOTAL ASSETS $ 1,712,111 $ 409,950 $ 10,244 $ 1,312,405
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Capitalization and Liabilities
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CAPITALIZATION:
Common stock equity $ 519,815 $ 56,257 $ - $ 463,558
Long-term debt 649,671 - - 649,671
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Total capitalization 1,169,486 56,257 - 1,113,229
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CURRENT LIABILITIES:
Accounts payable from gas 336,684 336,684 - -
marketing
Other current liabilities 49,798 17,009 (a)10,244 43,033
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Total current liabilities 386,482 353,693 10,244 43,033
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DEFERRED CREDITS:
Deferred income taxes 137,639 - - 137,639
Other 18,504 - - 18,504
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Total deferred credits 156,143 - - 156,143
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TOTAL CAPITALIZATION AND $ 1,712,111 $ 409,950 $ 10,244 $ 1,312,405
LIABILITIES
==============================================================================
</TABLE>
The accompanying Notes to Pro Forma Condensed Consolidated Financial
Statements are an integral part of these statements.
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<TABLE>
Pacific Gas Transmission Company
Pro Forma Condensed Consolidated Income Statements
For the Three Months Ended March 31, 1997
(Unaudited)
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<CAPTION>
Historical Disposition
Consolidated of PG&E Pro Forma Pro Forma
Pacific Gas Energy Adjustments Pacific Gas
Transmission Trading due to the Transmission
Company Corporation Disposition Company
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
(In Thousands)
OPERATING REVENUES:
Gas marketing $ 922,479 $ 922,479 $ - $ -
Gas transportation 48,666 - - 48,666
Gas transportation for PG&E 12,687 - - 12,687
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Total operating revenues 983,832 922,479 - 61,353
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OPERATING EXPENSES:
Gas marketing cost of sales 920,203 920,203 - -
Operations and maintenance 20,001 2,657 - 17,344
Depreciation and amortization 10,930 600 - 10,330
Property and other taxes 3,068 - - 3,068
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Total operating expenses 954,202 923,460 - 30,742
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OPERATING INCOME (LOSS) 29,630 (981) - 30,611
OTHER INCOME AND (INCOME (247) 713 (b) 139 (821)
DEDUCTIONS)
INTEREST EXPENSE 12,255 274 - 11,981
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INCOME (LOSS) BEFORE INCOME 17,128 (542) 139 17,809
TAX EXPENSE
INCOME TAX EXPENSE 8,157 37 (c) 54 8,174
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NET INCOME (LOSS) $ 8,971 $ (579) $ 85 $ 9,635
===============================================================================
</TABLE>
The accompanying Notes to Pro Forma Condensed Consolidated Financial
Statements are an integral part of these statements.
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Notes to Pro Forma Condensed Consolidated Financial Statements
(Unaudited)
Note 1: Basis of Presentation
The accompanying unaudited pro forma condensed consolidated balance sheet
reflects the financial position of Pacific Gas Transmission Company ("PGT" or
the "Company") after giving effect to the disposition of PG&E Energy Trading
Corporation ("Energy Trading") on June 30, 1997 and the related results as if it
were consummated at March 31, 1997. The unaudited pro forma condensed
consolidated income statements reflect the disposition of Energy Trading as if
it had occurred as of the beginning of the periods presented.
The unaudited pro forma condensed consolidated financial information has
been prepared by the Company based upon assumptions deemed proper by the
Company. This information is presented for illustrative purposes only and is
not necessarily indicative of the future financial position or future results of
operations of the Company, or of the financial position or results of operations
of the Company that would have actually occurred had the transaction been in
effect as of the date or for the periods presented. In addition, it should be
noted that the Company's financial statements will reflect the disposition only
from June 30, 1997, the date of the disposition.
The unaudited pro forma condensed consolidated financial information should
be read in conjunction with the historical financial statements and related
notes of the Company.
Pacific Gas Transmission Company - Represents the condensed consolidated
balance sheet of the Company as of March 31, 1997 and the condensed consolidated
income statements of the Company for (a) the year ended December 31, 1996 and
(b) for the three months ended March 31, 1997, condensed from the related
statements as they appear in the Company's Quarterly Report on Form 10-Q for the
quarter ended March 31, 1997 and the Company's 1996 Annual Report on Form 10-K.
PG&E Energy Trading Corporation - Represents the condensed consolidated
balance sheet of the Energy Trading (formerly Energy Source, Inc.) as of March
31, 1997 and the condensed consolidated income statements of Energy Trading for
(a) the year ended December 31, 1996 and (b) for the three months ended March
31, 1997, condensed from Energy Trading's financial statements as they were
included in the Company's consolidated financial statements in its Quarterly
Report on Form 10-Q for the quarter ended March 31, 1997 and its 1996 Annual
Report on Form 10-K. The Company's results for 1996 include Energy Trading's
operations for the one month ended December 31, 1996, subsequent to the
acquisition of Energy Source, Inc. effective November 30, 1996.
Note 2: Pro Forma Adjustments
Balance Sheet
(a) Note and related interest receivable for note between PGT and Energy
Trading previously eliminated during consolidation.
Income Statement
(b) Interest income related to the note between PGT and Energy Trading
previously eliminated during consolidation.
(c) Income taxes related to the interest income from the note between
PGT and Energy Trading previously eliminated during consolidation.