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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Earliest Event Reported: April 29, 1998
NGC CORPORATION
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(Exact Name of Registrant As Specified In Its Charter)
Delaware 1-11156 94-3248415
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(State or Other Jurisdiction (Commission File Number) (IRS Employer
of Incorporation) Identification Number)
1000 Louisiana, Suite 5800
Houston, Texas 77002
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(Address of Principal Executive Offices)
Registrant's Telephone Number:
(713) 507-6400
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ITEM 5: OTHER EVENTS
On April 29, 1998, NGC Corporation ("NGC") issued a press release
announcing its 1998 first-quarter results. A copy of NGC's press
release is annexed hereto as Exhibit 99.1 and incorporated herein by
reference.
ITEM 7: FINANCIAL STATEMENTS, PRO-FORMA FINANCIAL INFORMATION AND EXHIBITS
(a) FINANCIAL STATEMENTS - Not applicable.
(b) PRO-FORMA FINANCIAL INFORMATION - Not applicable.
(c) EXHIBITS -
99.1 Press Release dated April 29, 1998.
2
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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 hereunto duly authorized.
NGC CORPORATION
By:/s/ Lisa Q. Metts
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Lisa Q. Metts
Assistant General Counsel
DATE: May 7, 1998
3
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EXHIBIT INDEX
EXHIBIT SEQUENTIALLY
Number DESCRIPTION NUMBERED PAGE
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99.1 Press Release dated April 29, 1998 5
4
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MEDIA CONTACT: Maripat Sexton
713-507-3936
ANALYST CONTACT: R. Dean Ayers
713-507-6852
NGC CORPORATION REPORTS FIRST QUARTER RESULTS
HOUSTON (April 29, 1998) -- NGC Corporation (NYSE:NGL) reported net income
for the quarter ended March 31, 1998, of $12.3 million, or $ 0.07 per share on a
diluted basis, compared with $4.6 million, or $0.03 per share reported in the
first quarter of 1997. Excluding certain charges in both periods as described
below, NGC's net income for the first quarter of 1998 was $18.6 million, or
$0.11 per share on a diluted basis, compared to $26.6 million or $0.16 per share
in 1997.
The 1998 first quarter results include previously announced severance
charges of $9.6 million, $6.3 million after tax, or $0.04 per share, related
principally to the restructuring of the Company's natural gas liquids business.
The 1997 first quarter earnings included net charges totaling $22.0 million,
$0.13 per share, primarily related to the Company's inventory positions in
liquids and crude oil, and a reserve related to an investment in a gas storage
project.
Commenting on the results, NGC Chairman and Chief Executive Officer Chuck
Watson said, "During this quarter we were pleased to see improvement in our gas
marketing and liquids marketing operations, both in North America and the U.K.
However, the fundamental improvements in these businesses were offset by an El
Nino-influenced mild winter and lower natural gas liquids prices, the weakest in
several years.
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NGC CORPORATION REPORTS FIRST QUARTER RESULTS
2-2-2-2-2
"We estimate that the deterioration in market prices impacted our operating
margin by $25-30 million on a quarter-to-quarter basis." Watson, continued,
"During the quarter, we began to see the benefits from the successful
integration of the assets of Destec and Chevron into NGC and improved efficiency
from the ongoing restructuring of our liquids operation. Management remains
focused on delivering the highest returns possible to our shareholders."
Watson added, "This year we expect to continue to strengthen our strategic
commitment to our power generation business and to exploit the unique synergies
between NGC's asset and commercial businesses. As new regional electric markets
open, we believe that our approach to capturing market share by offering
customers a full complement of energy products and services will build
profitability for NGC along the entire value chain."
"Also, our business processes and infrastructure systems have been scaled
up and are now in line with the businesses of the larger organization that has
resulted from our expansion as a company," said Watson.
Consolidated operating margin for the first quarter increased to $97.0
million from the $67.3 million reported last year. The increase reflects
improved results in natural gas and natural gas liquids marketing, the
contribution from power generation as a result of the July 1997 acquisition of
Destec Energy and improved results from the U.K., offset by lower results in the
Company's gas processing business due to the precipitous drop in average natural
gas liquids prices, experienced by industry.
NATURAL GAS AND POWER MARKETING SEGMENT
The Marketing segment reported operating margin of $23.6 million, compared
with the $19.5 million earnings reported a year ago, due to higher unit margins
as a result of improved results in the Company's gas business, offset by a $2.4
million loss in the Company's electric power marketing business.
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NGC CORPORATION REPORTS FIRST QUARTER RESULTS
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NGC's U.S. gas sales volumes increased to 6.5 billion cubic feet per day
(Bcf/d) in the first quarter from 6.2 Bcf/d for the first quarter of 1997. In
addition, during the first quarter of 1998 NGC sold 2.1 Bcf/d in Canada and 0.7
Bcf/d in the U.K.
Electric Clearinghouse, Inc. (ECI), NGC's electric power marketing
subsidiary, reported sales volumes for the quarter of 25.0 million megawatt
hours, compared with 17.4 million megawatt hours sold in the first quarter of
1997.
POWER GENERATION
The power generation segment contributed $16.7 million to pretax earnings
during the first quarter, $9.5 million of which is included in operating margin.
The Company also reported $7.2 million in equity in earnings from unconsolidated
affiliates from power generation.
NATURAL GAS LIQUIDS, CRUDE OIL AND GAS TRANSMISSION
For the first quarter, liquids contributed $55.5 million to consolidated
operating margin, compared with $45.7 million in last year's first quarter.
Excluding the charges mentioned above, the liquids segment reported $69.0
million in operating margin for the first quarter of 1997. The decline is due
to the impact of lower natural gas liquids prices on the Company's gas
processing business mitigated, in part, by more aggressive
management of inventories which contributed to much improved results in the
natural gas liquids marketing business.
Natural gas processing volumes averaged 127.5 thousand barrels per day
(Bbls/d) gross during the first quarter of 1998 compared with 128.6 thousand
Bbls/d during the first quarter of 1997. Crude oil marketing volumes increased
to 195.2 thousand barrels per day from 151.9 thousand Bbls/d in the first
quarter of 1997.
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NGC CORPORATION REPORTS FIRST QUARTER RESULTS
4-4-4-4-4
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Global
The Company's global segment reported operating margin of $8.3 million
compared to $2.1 million due primarily to its expanding gas marketing activities
in the U.K. Prior to 1997, NGC's activities in the U.K. were conducted
principally through Accord Energy Limited, a joint venture with British Gas.
Concurrent with the restructuring of Accord in the first quarter of 1997, NGC
began commercial operations in the U.K. through a wholly owned subsidiary, NGC
U.K., Ltd. This quarter's results reflect the earnings of this subsidiary in
operating margin as well as equity earnings of $4.5 million from NGC's
restructured interest in Accord.
OTHER
Consolidated operating income for the first quarter of 1998 was $19.2
million, compared to $15.8 million reported in the first quarter of 1997. The
increase is principally a result of the increased operating margin discussed
above, offset by higher general and administrative and depreciation expenses and
the $9.6 million severance charge. The increase in general and administrative
expenses is primarily related to the start-up of NGC's wholly owned operations
in Canada and the U.K. and the Company's acquisition of Destec Energy in June
1997.
Equity in earnings of unconsolidated affiliates increased to $15.8 million
in the first quarter from $13.4 million in the first quarter of 1997, due
primarily to the contribution from Destec Energy, offset somewhat by a lower
contribution from Accord.
Interest expense increased from $14.6 million to $16 million primarily as a
result of higher debt balances associated with the Destec acquisition. Also, in
the second quarter 1997, the company issued $200 million of preferred
securities. Dividends on these securities for the first quarter of 1998 totaled
$4.2 million.
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NGC CORPORATION REPORTS FIRST QUARTER RESULTS
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NGC Corporation is one of the country's leading marketers of energy
products and services. Its leadership position in gathering, processing,
independent power generation, transportation and marketing of energy commodities
enables the Company to offer integrated energy solutions to customers in North
America and the United Kingdom. Working with strategic business partners, the
Company seeks to expand these services as marketing opportunities present
themselves in North America and selected countries worldwide.
More information on NGC Corporation is accessible at:
http://www.ngccorp.com/
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NGC CORPORATION REPORTS FIRST QUARTER RESULTS
6-6-6-6-6
NGC CORPORATION
UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(IN THOUSANDS, EXCEPT PER-SHARE AMOUNTS)
THREE MONTHS ENDED
MARCH 31,
--------------------------------
1998 1997
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Operating Revenues $3,315,569 $3,272,080
Cost of Sales 3,218,580 3,204,733
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OPERATING MARGIN 96,989 67,347
Depreciation 25,532 23,348
General and Administrative
Expenses 42,606 28,199
Severance Charge 9,644 -
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OPERATING INCOME 19,207 15,800
Interest Expense (16,005) (14,624)
Equity in Earnings of
Unconsolidated Affiliates 15,755 13,386
Minority Interest in Income
of Subsidiary/1/ (4,158) -
Other Income and
(Deductions), Net 1,612 (10,133)
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INCOME BEFORE INCOME TAXES
16,411 4,429
Provision for (Benefit of)
Income Taxes 4,072 (185)
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NET INCOME $ 12,339 $ 4,614
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Basic Earnings Per Share of
Common Stock $ 0.08 $ 0.03
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Diluted Earnings Per
Share of Common Stock $ 0.07 $ 0.03
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Basic Shares Outstanding 151,533 150,176
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Diluted Shares Outstanding 166,282 167,812
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NGC CORPORATION REPORTS FIRST QUARTER RESULTS
7-7-7-7-7
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/1/ Represents distributions related to $200 million of 8.316% Company Obligated
Preferred Securities sold by the Company in the second quarter of 1997.
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NGC CORPORATION
UNAUDITED OPERATING MARGIN BY SEGMENT
(IN THOUSANDS)
THREE MONTHS ENDED
MARCH 31,
1998 1997
Natural Gas Marketing $26,053 $ 17,605
Electric Power Marketing (2,435) 1,923
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23,618 19,528
Power Generation 9,515 -
Natural Gas Liquids, Crude Oil and
Gas Transmission Segment:
Natural Gas Processing
Field Plants 22,616 49,327
Natural Gas Processing
Straddle Plants 5,180 3,622
Fractionation 7,252 6,082
Natural Gas Liquids Marketing 13,718 (16,335)
Crude Oil Marketing 2,709 (999)
Natural Gas Gathering and
Transmission 4,056 4,154
Other - (178)
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55,531 45,673
Global:
Gas Sales 6,092 350
LPG Sales 2,233 1,797
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8,325 2,147
TOTAL OPERATING MARGIN $96,989 $67,348
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NGC CORPORATION REPORTS FIRST QUARTER RESULTS
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8-8-8-8-8
NGC CORPORATION
VOLUMETRIC INFORMATION
THREE MONTHS ENDED
MARCH 31,
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1998 1997
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Natural Gas Sales (Bcf/d):
U.S./1/ 6.5 6.2
Canada/2/ 2.1 -
Electric Power Marketing:
Million Megawatt hours sold 25.0 17.4
Power Generation:
Million Megawatt Hours Generated
Gross 3.3 -
Net 2.1 -
Natural Gas Liquids Processed:
Thousand Bbls/d
Field Plants 86.7 80.3
Straddle Plants 40.8 48.3
Natural Gas Liquids Sold:
Thousand Bbls/d 431.7 424.2
Fractionation Volumes:
Thousand Bbls/d 159.4 149.6
Gas Gathering and Transmission (Bcf/d) 0.4 0.3
Crude Oil Volumes:
Thousand Bbls/d 195.2 151.9
Global Sales:
LPG Sales (MMBbls) 5.4 3.9
Gas Sales (Bcf/d) 3 0.7 0.1
1. Includes 0.2 Bcf/d in inter-affiliate gas sales for the quarter ended March
31, 1997.
2. Represents volumes sold by NGC Canada, Inc. beginning April 1, 1997. Volumes
sold by NCL prior to April 1, 1997 are not comparable.
3. Represents volumes sold by NGC UK. Ltd. Beginning March 1997.
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NGC CORPORATION REPORTS FIRST QUARTER RESULTS
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NGC CORPORATION
UNAUDITED SCHEDULE OF EQUITY IN EARNINGS OF UNCONSOLIDATED AFFILIATES
(IN THOUSANDS)
THREE MONTHS ENDED
MARCH 31,
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1998 1997
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Accord Energy Limited $ 4,500 $ 9,000
Gulf Coast Fractionators 1,189 1,373
West Texas Pipeline 1,717 1,540
Venice Energy Services 1,763 2,691
Waskom Gas Processing 418 -
Destec equity investments 7,154 -
Other, net (986) (1,218)
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$15,755 $13,386
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