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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 QUARTER ENDED SEPTEMBER 30, 1998 COMMISSION FILE NUMBER 1-2921
PANHANDLE EASTERN PIPE LINE COMPANY
(Exact name of Registrant as Specified in its Charter)
DELAWARE 44-0382470
(State or Other Jurisdiction of
Incorporation) (IRS Employer Identification No.)
5400 WESTHEIMER COURT
P.O. BOX 1642
HOUSTON, TX 77251-1642
(Address of Principal Executive Offices)
(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 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 __
The Registrant meets the conditions set forth in General Instructions (H)(1)(a)
and (b) of Form 10-Q and is therefore filing this Form 10-Q with the reduced
disclosure format. Part I, Item 2 has been reduced and Part II, Item 4 has been
omitted in accordance with such Instruction H.
All of the Registrant's common shares are indirectly owned by Duke Energy
Corporation (File No. 1-4928), which files reports and proxy materials pursuant
to the Securities Exchange Act of 1934.
Indicate the number of shares outstanding of each of the Registrant's classes of
common stock, as of the latest practicable date:
Number of shares of Common Stock, no par value, outstanding at
November 11, 1998.........................................................1,000
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PANHANDLE EASTERN PIPE LINE COMPANY
FORM 10-Q FOR THE QUARTER ENDED SEPTEMBER 30, 1998
INDEX
<TABLE>
<CAPTION>
ITEM PAGE
PART I. FINANCIAL INFORMATION
<S> <C>
1. Financial Statements...............................................................................1
Consolidated Statements of Income for the Three and Nine Months Ended September 30,
1998 and 1997................................................................................1
Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 1998 and 1997...2
Consolidated Balance Sheets as of September 30, 1998 and December 31, 1997......................3
Notes to Consolidated Financial Statements......................................................5
2. Management's Discussion and Analysis of Results of Operations and Financial Condition..........7
PART II. OTHER INFORMATION
1. Legal Proceedings.................................................................................10
5. Other Information.................................................................................10
6. Exhibits and Reports on Form 8-K..................................................................10
Signatures........................................................................................11
</TABLE>
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
PANHANDLE EASTERN PIPE LINE COMPANY
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
(IN MILLIONS)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30 September 30
------------------------ ------------------------
1998 1997 1998 1997
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
OPERATING REVENUES
Transportation and storage of natural gas $ 108.4 $ 109.5 $ 345.9 $ 376.5
Other 2.6 6.1 19.2 24.8
----------- ----------- ----------- -----------
Total operating revenues 111.0 115.6 365.1 401.3
----------- ----------- ----------- -----------
OPERATING EXPENSES
Operation and maintenance 54.7 70.2 154.0 180.7
Depreciation and amortization 14.0 14.6 41.5 44.0
Property and other taxes 6.3 6.5 19.6 20.5
----------- ----------- ----------- -----------
Total operating expenses 75.0 91.3 215.1 245.2
----------- ----------- ----------- -----------
OPERATING INCOME 36.0 24.3 150.0 156.1
----------- ----------- ----------- -----------
OTHER INCOME AND EXPENSES 1.1 (0.6) 10.1 11.4
----------- ----------- ----------- -----------
EARNINGS BEFORE INTEREST AND TAXES 37.1 23.7 160.1 167.5
INTEREST EXPENSE 19.7 18.1 57.8 55.2
----------- ----------- ----------- -----------
EARNINGS BEFORE INCOME TAXES 17.4 5.6 102.3 112.3
INCOME TAXES 6.4 2.0 38.5 42.7
----------- ----------- ----------- -----------
NET INCOME $ 11.0 $ 3.6 $ 63.8 $ 69.6
=========== =========== =========== ===========
</TABLE>
See Notes to Consolidated Financial Statements.
1
<PAGE>
<TABLE>
<CAPTION>
PANHANDLE EASTERN PIPE LINE COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(IN MILLIONS)
Nine Months Ended
September 30
------------------------
1998 1997
----------- -----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 63.8 $ 69.6
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization 45.8 45.6
Deferred income taxes (6.9) 4.5
Rate settlement - (70.5)
Net change in current assets and liabilites 2.3 (48.6)
Other, net 14.4 43.3
----------- -----------
Net cash provided by operating activities 119.4 43.9
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES
Capital and investment expenditures (66.5) (64.5)
Net decrease (increase) in advances receivable - parent (52.6) 18.7
Retirements and other (0.3) 1.8
----------- -----------
Net cash used in investing activities (119.4) (44.0)
----------- -----------
Net decrease in cash and cash equivalents - (0.1)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD - 0.1
=========== ===========
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ - $ -
=========== ===========
SUPPLEMENTAL DISCLOSURES
Cash paid for interest (net of amount capitalized) $ 63.9 $ 68.3
Cash paid for income taxes $ 56.2 $ 64.8
</TABLE>
See Notes to Consolidated Financial Statements.
2
<PAGE>
<TABLE>
<CAPTION>
PANHANDLE EASTERN PIPE LINE COMPANY
CONSOLIDATED BALANCE SHEETS
(IN MILLIONS)
September 30, December 31,
1998 1997
(Unaudited)
----------- -----------
ASSETS
<S> <C> <C>
CURRENT ASSETS
Receivables $ 85.8 $ 106.0
Inventory and supplies 50.7 38.2
Current portion of regulatory assets 5.9 6.5
Other 23.7 41.6
----------- -----------
Total current assets 166.1 192.3
----------- -----------
INVESTMENTS AND OTHER ASSETS
Advances and note receivable - parent 714.7 662.1
Investment in affiliates 46.6 47.0
Other 7.2 7.1
----------- -----------
Total investments and other assets 768.5 716.2
----------- -----------
PROPERTY, PLANT AND EQUIPMENT
Cost 2,776.7 2,733.9
Less accumulated depreciation and amortization 1,800.2 1,776.0
----------- -----------
Net property, plant and equipment 976.5 957.9
----------- -----------
REGULATORY ASSETS
Debt expense 11.3 12.7
Other 18.0 21.5
----------- -----------
Total regulatory assets 29.3 34.2
----------- -----------
TOTAL ASSETS $ 1,940.4 $ 1,900.6
=========== ===========
</TABLE>
See Notes to Consolidated Financial Statements.
3
<PAGE>
<TABLE>
<CAPTION>
PANHANDLE EASTERN PIPE LINE COMPANY
CONSOLIDATED BALANCE SHEETS
(IN MILLIONS, EXCEPT SHARE AMOUNTS)
September 30, December 31,
1998 1997
(Unaudited)
----------- -----------
<S> <C> <C>
LIABILITIES AND STOCKHOLDER'S EQUITY
CURRENT LIABILITIES
Accounts payable $ 48.9 $ 45.5
Notes payable - parent 675.0 675.0
Taxes accrued 68.6 76.7
Interest accrued 2.4 8.0
Other 104.3 114.1
----------- -----------
Total current liabilities 899.2 919.3
----------- -----------
LONG-TERM DEBT 299.3 299.2
----------- -----------
DEFERRED CREDITS AND OTHER LIABILITIES
Deferred income taxes 72.6 82.1
Other 106.4 99.0
----------- -----------
Total deferred credits and other liabilities 179.0 181.1
----------- -----------
COMMON STOCKHOLDER'S EQUITY
Common stock, no par, 1,000 shares authorized, issued and outstanding 1.0 1.0
Paid-in capital 465.9 465.9
Retained earnings 96.0 34.1
----------- -----------
Total common stockholder's equity 562.9 501.0
----------- -----------
TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY $ 1,940.4 $ 1,900.6
=========== ===========
</TABLE>
See Notes to Consolidated Financial Statements.
4
<PAGE>
PANHANDLE EASTERN PIPE LINE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. GENERAL
Panhandle Eastern Pipe Line Company (PEPL) is a wholly owned subsidiary of
PanEnergy Corp (PanEnergy), which is an indirect wholly owned subsidiary of Duke
Energy Corporation. PEPL and its subsidiaries (the Company) are primarily
engaged in the interstate transportation and storage of natural gas. The
interstate natural gas transmission operations of the Company are subject to the
rules and regulations of the Federal Energy Regulatory Commission (FERC).
The consolidated financial statements include the accounts of the Company and
all majority-owned subsidiaries. These consolidated financial statements reflect
all normal recurring adjustments that are, in the opinion of management,
necessary to present fairly the financial position and results of operations for
the respective periods.
Certain amounts for the prior periods have been reclassified in the consolidated
financial statements to conform to the current presentation.
2. REGULATORY MATTERS
Effective August 1, 1996, Trunkline Gas Company, a subsidiary of the Company,
placed into effect a general rate increase, subject to refund. Hearings were
completed in the third quarter of 1997. A decision on the remaining phase of the
rate proceeding was received on November 2, 1998 from the administrative law
judge. The case is pending a decision by the FERC.
In conjunction with a FERC order issued in September 1997, certain natural gas
producers were required to refund previously collected Kansas ad-valorem taxes
to interstate natural gas pipelines. These pipelines were also ordered to refund
these amounts to their customers. All payments are to be made in compliance with
prescribed FERC requirements. At September 30, 1998 and December 31, 1997,
Accounts Receivable included $48.7 million and $53.6 million, respectively, due
from natural gas producers and Other Current Liabilities included $48.7 million
and $53.6 million, respectively, for related obligations.
3. RELATED PARTY TRANSACTIONS
A summary of certain balances due to or due from related parties included in the
Consolidated Balance Sheets is as follows:
--------------------------------------------
September 30, December 31,
IN MILLIONS 1998 1997
--------------------------------------------
Receivables $ 4.2 $ 8.1
Accounts payable 41.7 36.6
Taxes accrued 40.0 54.8
--------------------------------------------
Advances and Note Receivable - Parent included a $30.0 million note at September
30, 1998 and December 31, 1997.
Interest expense included $13.8 million and $13.7 million for the three months
ended September 30, 1998 and 1997, respectively, of interest associated with
notes payable to parent. Interest expense for the nine months ended September
30, 1998 and 1997 included $41.6 million and $37.9 million, respectively, of
interest associated with notes payable to parent.
5
<PAGE>
4. GAS IMBALANCES
The Consolidated Balance Sheets included in-kind balances as a result of
differences in gas volumes received and delivered. At September 30, 1998 and
December 31, 1997, other current assets included $18.9 million and $24.2
million, respectively, and other current liabilities included $23.4 million and
$22.0 million, respectively, related to gas imbalances.
5. COMMITMENTS AND CONTINGENCIES
LITIGATION. On April 25, 1997, a group of affiliated plaintiffs that own and/or
operate various pipeline and marketing companies and partnerships primarily in
Kansas filed suit against PEPL in the United States District Court for the
Western District of Missouri. The plaintiffs allege that PEPL has engaged in
unlawful and anti-competitive conduct with regard to requests for interconnects
with the PEPL system for service to the Kansas City area. Asserting that PEPL
has violated the antitrust laws and tortiously interfered with the plaintiffs'
contracts with third parties, the plaintiffs seek compensatory and punitive
damages. Based on information currently available to the Company, the Company
believes the resolution of this matter will not have a material adverse effect
on the consolidated results of operations or financial position of the Company.
On May 13, 1997, Anadarko Petroleum Corporation (Anadarko) filed suits against
PEPL and other affiliates, as defendants, both in the United States District
Court for the Southern District of Texas and State District Court of Harris
County, Texas. Anadarko claims that it was effectively indemnified by the
defendants against any responsibility for refunds of Kansas ad-valorem taxes
which are due purchasers of gas from Anadarko, retroactive to 1983. On October
20, 1998, the FERC issued an order on ad-valorem tax issues, finding that actual
sellers of gas were primarily liable for refunds and could not be relieved of
that obligation by gas purchasers. The order is subject to further FERC action
on rehearing. The FERC also noted that claims for indemnity or reimbursement
among the parties would be better addressed by the United States District Court
for the Southern District of Texas. Based on information currently available to
the Company, the Company believes the resolution of this matter will not have a
material adverse effect on the consolidated results of operations or financial
position of the Company.
The Company is also involved in other legal, tax and regulatory proceedings
before various courts, regulatory commissions and governmental agencies
regarding matters arising in the ordinary course of business, some of which
involve substantial amounts. Where appropriate for all of these matters, the
Company has made accruals in accordance with Statement of Financial Accounting
Standards No. 5, "Accounting for Contingencies," in order to provide for such
matters. Management is of the opinion that the final disposition of these
matters will not have a material adverse effect on the consolidated results of
operations or financial position of the Company.
OTHER COMMITMENTS AND CONTINGENCIES. In 1993, the U.S. Department of the
Interior 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, and 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. 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
substantial time to resolve. If required to reimburse or indemnify the
producers, the Company's pipelines will file with FERC to recover a portion of
these costs from pipeline customers. Management is of the opinion that the
resolution of this matter will not have a material adverse effect on the
consolidated results of operations or financial position of the Company.
PEPL owns an effective 5.3% ownership interest in Northern Border Pipeline
Company (Northern Border) through a master limited partnership. 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 held by an affiliate of Pan-Alberta Gas Limited. The transportation
agreement requires estimated total payments of $63.0 million for the remainder
of 1998 through 2001. In the opinion of management, the probability that PEPL
will be required to perform under this guarantee is remote.
6
<PAGE>
6. SUBSEQUENT EVENT
PanEnergy and Texas Eastern Corporation (TEC), a subsidiary of PanEnergy,
entered into a Stock Purchase Agreement between PanEnergy, TEC and CMS Energy
Corporation (CMS Energy) dated October 31, 1998. Pursuant to the agreement,
PEPL, Trunkline Gas Company and the storage related to those systems , along
with the Trunkline LNG Company, which is owned by TEC, will be sold to CMS
Energy. The sales price of $2.2 billion involves a cash payment of $1.9 billion
and existing PEPL debt of approximately $300 million. Certain assets and
liabilities will be retained, such as the Houston office building, certain
environmental, legal and tax liabilities, and substantially all intercompany
balances. The sale will result in an after tax gain to PanEnergy of
approximately $700 million and is contingent upon completion of due diligence
and receipt of clearances under the Hart-Scott-Rodino Act. Closing is
anticipated in January 1999.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
FINANCIAL CONDITION.
INTRODUCTION
Panhandle Eastern Pipe Line Company (PEPL) is a wholly owned subsidiary of
PanEnergy Corp (PanEnergy), which is an indirect wholly owned subsidiary of Duke
Energy Corporation. PEPL and its subsidiaries (the Company) are primarily
engaged in the interstate transportation and storage of natural gas. The
interstate natural gas transmission and storage operations of the Company are
subject to the rules and regulations of the Federal Energy Regulatory Commission
(FERC).
RESULTS OF OPERATIONS
For the nine months ended September 30, 1998, net income was $63.8 million, down
$5.8 million from the comparable period in 1997. Total natural gas
transportation volumes for the nine months ended September 30, 1998 decreased
9.4% from the same period in 1997, primarily due to warmer weather.
Revenues for the nine months ended September 30, 1998 decreased $36.2 million
from the comparable period in 1997, due primarily to favorable resolution of
regulatory matters in 1997 and decreased transportation volumes in 1998.
Operating expenses for the nine months ended September 30, 1998 decreased $30.1
million from the prior year comparable period, primarily as a result of
litigation expenses in 1997 and lower regulatory asset amortization expense in
1998.
LIQUIDITY AND CAPITAL RESOURCES
For the nine months ended September 30, 1998, capital and investment
expenditures totaled $66.5 million compared with $64.5 million for the same
period in 1997. Projected 1998 capital and investment expenditures, including
allowance for funds used during construction, are approximately $89.9 million.
These projections are subject to periodic review and revision. Expenditures for
1998 are expected to be funded by cash from operations and/or the collection of
intercompany advances and receivables.
CURRENT ISSUES
DISPOSITIONS
PanEnergy and Texas Eastern Corporation (TEC), a subsidiary of PanEnergy,
entered into a Stock Purchase Agreement between PanEnergy, TEC and CMS Energy
Corporation (CMS Energy) dated October 31, 1998. Pursuant to the agreement,
PEPL, Trunkline Gas Company, a subsidiary of the Company, and the storage
related to those systems, along with the Trunkline LNG Company, which is owned
by TEC, will be sold to CMS Energy. The sales price of $2.2 billion
7
<PAGE>
involves a cash payment of $1.9 billion and existing PEPL debt of approximately
$300 million. Certain assets and liabilities will be retained, such as the
Houston office building, certain environmental, legal and tax liabilities, and
substantially all intercompany balances. The sale will result in an after tax
gain to PanEnergy of approximately $700 million and is contingent upon
completion of due diligence and receipt of clearances under the Hart-Scott-
Rodino Act. Closing is anticipated in January 1999.
REGULATORY MATTERS
On July 29, 1998, the FERC issued a Notice of Proposed Rulemaking (NOPR) on
short-term natural gas transportation services, which proposed an integrated
package of revisions to its regulations governing interstate natural gas
pipelines. "Short term" has been defined in the NOPR as all transactions of less
than one year. Under the proposed approach, cost-based regulation would be
eliminated for short-term transportation and replaced by regulatory policies
intended to maximize competition in the short-term transportation market,
mitigate the ability of companies to exercise residual monopoly power, and
provide opportunities for greater flexibility providing pipeline services. The
proposed changes include initiatives to revise pipeline scheduling procedures,
receipt and delivery point policies, and penalty policies; require pipelines to
auction short-term capacity; improve the FERC's reporting requirements; permit
pipelines to negotiate rates and terms of services; and revise certain rate and
certificate policies that affect competition.
In conjunction with the NOPR, the FERC also issued a Notice of Inquiry (NOI) on
its pricing policies in the existing long-term market and pricing policies for
new capacity. The FERC wants to ensure that its policies are not biased toward
either short-term or long-term service, provide accurate price signals and the
right incentives for pipelines to provide optimal transportation services and
construct facilities that meet future demand, but do not result in over building
and excess capacity. Comments on the NOPR and NOI are due January 22, 1999.
Because these notices are only at a very early stage and any ultimate resolution
is unknown, management cannot estimate the effects of these matters on future
consolidated results of operations or financial position.
YEAR 2000 READINESS PROGRAM
STATE OF READINESS
In 1996, the Company initiated its Year 2000 Readiness Program and began a
formal review of computer-based systems and devices that are used in its
business operations. These systems and devices include customer information,
financial, materials management, and personnel systems, as well as components of
natural gas production, gathering, processing and transmission.
The Company is using a three-phase approach to address Year 2000 issues: 1)
inventory and preliminary assessment of computer systems, equipment and devices;
2) detailed assessment and remediation planning; and 3) conversion, testing and
contingency planning. The Company is employing a combination of systems repair
and planned systems replacement activities to achieve Year 2000 readiness for
its business and process control systems, equipment and devices. The Company has
substantially completed the first two phases throughout its business operations,
and is in various stages of the third and final phase. The Company's goal is to
have its critical systems, equipment and devices Year 2000 ready by mid-1999.
Business acquisitions routinely involve an analysis of Year 2000 readiness and
are incorporated into the Company's overall program as necessary.
The Company is actively evaluating and tracking Year 2000 readiness of external
third parties with which it has a material relationship. Such third parties
include vendors, customers, governmental agencies and other business associates.
While the Company cannot control the Year 2000 readiness of third parties, the
Company is attempting to assess the readiness of third parties and any potential
implications to the Company. Alternate suppliers of critical products, goods and
services are being identified, where necessary.
8
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COSTS
Management believes it is devoting the resources necessary to achieve Year 2000
readiness in a timely manner. Current estimates for total costs of the program,
including internal labor as well as incremental costs such as consulting and
contract costs, are approximately $1.0 million. These costs exclude replacement
systems that, in addition to being Year 2000 ready, provide significantly
enhanced capabilities which will benefit operations in future periods.
RISKS
Management believes it has an effective program in place to manage the risks
associated with the Year 2000 issue in a timely manner. Nevertheless, since it
is not possible to anticipate all future outcomes, especially when third parties
are involved, there could be circumstances in which the Company would
temporarily be unable to deliver services to its customers. The Company believes
that the most reasonably likely worst case scenario would be small, localized
interruptions of service, which likely would be rapidly restored. In addition,
there could be a temporary reduction in the service needs of customers due to
their own Year 2000 problems. In the event that such a scenario occurs, it is
not expected to have a material adverse impact on the Company's consolidated
results of operations or financial position.
CONTINGENCY PLANS
Year 2000 contingency planning is currently underway to assure continuity of
business operations for all periods during which Year 2000 impacts may occur.
The Company intends to complete its Year 2000 contingency plans by mid-1999.
These plans address various Year 2000 risk scenarios that cross departmental,
business unit and industry lines as well as specific risks from various internal
and external sources, including supplier readiness. Based on assessments
completed to date and compliance plans in process, management is of the opinion
that Year 2000 issues, including the cost of making critical systems, equipment
and devices ready, will not have a material adverse effect on the Company's
business operation or consolidated results of operations or financial position.
Nevertheless, achieving Year 2000 readiness is subject to risks and
uncertainties, including those described above. While management believes the
possibility is remote, if the Company's internal systems, or the internal
systems of external parties, fail to achieve year 2000 readiness in a timely
manner, the Company's business, consolidated results of operations or financial
condition could be adversely affected.
9
<PAGE>
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
In September 1998, the Company and the Missouri Department of Natural Resources
reached a settlement agreement related to air quality permit violations at a
natural gas compressor station, which resulted in a settlement payment of
$250,000. An additional environmental administrative proceeding is underway
before the Illinois Environmental Protection Agency relating to a natural gas
compressor station that could result in a fine in excess of $100,000.
Management is of the opinion that the resolution of these matters will not have
a material adverse effect on the consolidated results of operations or financial
position of the Company.
For information concerning material litigation and other contingencies, see Note
5 to the Consolidated Financial Statements.
ITEM 5. OTHER INFORMATION.
FORWARD-LOOKING STATEMENTS
From time to time, the Company may make statements regarding its assumptions,
projections, expectations, intentions or beliefs about future events. These
statements are intended as "forward-looking statements" under the Private
Securities Litigation Reform Act of 1995. The Company cautions that assumptions,
projections, expectations, intentions or beliefs about future events may and
often do vary from actual results and the differences between assumptions,
projections, expectations, intentions or beliefs and actual results can be
material. Accordingly, there can be no assurance that actual results will not
differ materially from those expressed or implied by the forward-looking
statements. The following are some of the factors that could cause actual
achievements and events to differ materially from those expressed or implied in
such forward-looking statements: state and federal legislative and regulatory
initiatives that affect cost and investment recovery, have an impact on rate
structures, and affect the speed and degree to which competition enters the
natural gas industry; the weather and other natural phenomena; the timing and
extent of changes in commodity prices and interest rates; changes in
environmental and other laws and regulations to which the Company and its
subsidiaries are subject or other external factors over which the Company has no
control; the results of financing efforts; growth in opportunities for the
Company's subsidiaries; achievement of Year 2000 readiness; and the effect of
the Company's accounting policies, in each case during the periods covered by
the forward-looking statements.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits
(27) Financial Data Schedule (included in electronic filing only)
(b) Reports on Form 8-K
The Company filed no reports on Form 8-K during the third quarter of
1998.
10
<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.
PANHANDLE EASTERN PIPE LINE COMPANY
November 11, 1998 /s/ Richard J. Osborne
--------------------------------------
Richard J. Osborne
Senior Vice President and
Chief Financial Officer
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Panhandle Eastern Pipe Line Company Quarterly Report on Form 10-Q for the
quarter ended September 30, 1998 and is qualified in its entirety by
reference to such financial statements.
</LEGEND>
<CIK> 0000076063
<NAME> PANHANDLE EASTERN PIPE LINE COMPANY
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> SEP-30-1998
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 85800
<ALLOWANCES> 0
<INVENTORY> 50700
<CURRENT-ASSETS> 166100
<PP&E> 2776700
<DEPRECIATION> 1800200
<TOTAL-ASSETS> 1940400
<CURRENT-LIABILITIES> 899200
<BONDS> 299300
0
0
<COMMON> 1000
<OTHER-SE> 561900
<TOTAL-LIABILITY-AND-EQUITY> 1940400
<SALES> 0
<TOTAL-REVENUES> 365100
<CGS> 0
<TOTAL-COSTS> 154000
<OTHER-EXPENSES> 61100
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 57800
<INCOME-PRETAX> 160100
<INCOME-TAX> 38500
<INCOME-CONTINUING> 63800
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 63800
<EPS-PRIMARY> 0 <F1>
<EPS-DILUTED> 0 <F1>
<FN>
<F1>Not meaningful since Panhandle Eastern Pipe Line Company is a
wholly-owned subsidiary.
</FN>
</TABLE>
