<PAGE>
________________________________________________________________________
________________________________________________________________________
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_______________
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ___________________ to __________________
Commission File Number 1-4101
_______________
TENNESSEE GAS PIPELINE COMPANY
(Exact name of registrant as specified in its charter)
Delaware 74-1056569
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
Tenneco Building, Houston, Texas 77002
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (713) 757-2131
_______________
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. Common
Stock, par value $5 per share, 200 shares as of September 30, 1995.
TENNESSEE GAS PIPELINE COMPANY MEETS THE CONDITIONS OF GENERAL
INSTRUCTION H(1)(a) AND (b) OF FORM 10-Q AND IS THEREFORE FILING THIS
REPORT WITH A REDUCED DISCLOSURE FORMAT AS PERMITTED BY SUCH
INSTRUCTION.<PAGE>
______________________________________________________________________
______________________________________________________________________<PAGE>
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
Part I--Financial Information
Tennessee Gas Pipeline Company and Consolidated
Subsidiaries--
Statements of Income....................................... 2
Statements of Cash Flows................................... 3
Balance Sheets............................................. 4
Statements of Changes in Shareowner's Equity............... 6
Notes to Financial Statements.............................. 7
Management's Discussion and Analysis of Financial
Condition and Results of Operations....................... 14
Part II--Other Information
Item 1. Legal Proceedings.................................... 21
Item 2. Changes in Securities................................ *
Item 3. Defaults Upon Senior Securities...................... *
Item 4. Submission of Matters to a Vote of Security
Holders............................................. *
Item 5. Other Information.................................... *
Item 6. Exhibits and Reports on Form 8-K..................... 22
</TABLE>
__________
* No response to this item is included herein for the reason that it
is inapplicable or the answer to such item is negative.
1<PAGE>
<PAGE>
PART I--FINANCIAL INFORMATION
TENNESSEE GAS PIPELINE COMPANY
AND CONSOLIDATED SUBSIDIARIES
STATEMENTS OF INCOME
(Unaudited)
<TABLE>
<CAPTION>
(Millions)
Three Months Ended Nine Months Ended
September 30, September 30,
1995 1994 1995 1994
<S> <C> <C> <C> <C>
Revenues:
Net sales and operating revenues--
Natural gas pipelines...................... $ 427 $ 549 $1,364 $1,847
Automotive parts........................... 586 478 1,823 1,416
Packaging.................................. 665 562 1,983 1,580
Shipbuilding............................... 445 424 1,290 1,291
Farm and construction equipment............ - - - 518
Other...................................... (2) (2) (6) (6)
2,121 2,011 6,454 6,646
Other income--
Interest income--
Affiliated companies..................... 91 80 271 176
Other.................................... 9 11 36 27
Gain (loss) on sale of businesses and
assets, net............................... (71) 12 (64) (8)
Other income, net.......................... 18 13 82 29
2,168 2,127 6,779 6,870
Costs and Expenses:
Cost of sales (exclusive of depreciation
shown below)................................ 1,293 1,111 3,820 3,753
Operating expenses........................... 277 435 963 1,489
Selling, general and administrative.......... 175 141 531 484
Finance charges of Tennessee's finance
subsidiaries................................ - - - 8
Depreciation, depletion and amortization..... 112 64 321 220
1,857 1,751 5,635 5,954
Income Before Interest Expense, Income Taxes
and Minority Interest......................... 311 376 1,144 916
Interest Expense (net of interest capitalized):
Affiliated companies......................... 41 29 112 74
Other........................................ 27 37 100 125
68 66 212 199
Income Before Income Taxes and Minority
Interest...................................... 243 310 932 717
Income Tax Expense............................. 90 94 370 282
Income Before Minority Interest................ 153 216 562 435
Minority Interest.............................. 8 - 26 -
Income From Continuing Operations.............. 145 216 536 435
Income From Discontinued Operations, Net of
Income Tax.................................... - 7 - 5
Income Before Cumulative Effect of Change in<PAGE>
Accounting Principle.......................... 145 223 536 440
Cumulative Effect of Change in Accounting
Principle, Net of Income Tax.................. - - - (13)
Net Income..................................... $ 145 $ 223 $ 536 $ 427
</TABLE>
(The accompanying notes to financial statements are an
integral part of these statements of income.)
2<PAGE>
<PAGE>
TENNESSEE GAS PIPELINE COMPANY
AND CONSOLIDATED SUBSIDIARIES
STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
(Millions)
Nine Months Ended
September 30,
1995 1994
<S> <C> <C>
Cash Flows from Operating Activities:
Income from continuing operations..................................... $ 536 $ 435
Adjustments to reconcile income from continuing operations to cash
provided (used) by continuing operations--
Depreciation, depletion and amortization............................ 321 220
Deferred income taxes............................................... 12 (81)
Loss on sale of businesses and assets, net.......................... 64 8
Changes in components of working capital--
(Increase) decrease in receivables................................ (170) 174
(Increase) decrease in inventories................................ (205) (80)
(Increase) decrease in prepayments and other current assets....... (23) 33
Increase (decrease) in payables................................... (380) (157)
Increase (decrease) in taxes accrued.............................. 43 147
Increase (decrease) in interest accrued........................... (7) 4
Increase (decrease) in restructuring liability.................... - (5)
Increase (decrease) in natural gas pipeline revenue reservation... (169) (96)
Increase (decrease) in other current liabilities.................. (59) 107
(Increase) decrease in long-term notes and receivables.............. - 4
Take-or-pay (refunds to customers) recoupments, net................. 35 15
Other............................................................... 68 13
Cash provided (used) by continuing operations..................... 66 741
Cash provided (used) by discontinued operations................... (11) 15
Net Cash Provided (Used) by Operating Activities........................ 55 756
Cash Flows from Investing Activities:
Net proceeds (expenditures) related to the sale of discontinued
operations........................................................... 690 (15)
Net proceeds from sale of businesses and assets....................... 70 223
Expenditures for plant, property and equipment--
Continuing operations............................................... (565) (328)
Discontinued operations............................................. (4) (47)
Acquisitions of business.............................................. (323) (4)
(Increase) decrease in Tenneco Inc. receivables....................... 447 (2,067)
(Increase) decrease in notes receivable from other affiliates......... - 1,599
Investments and other................................................. 15 (49)
Net Cash Provided (Used) by Investing Activities........................ 330 (688)
Cash Flows from Financing Activities:
Capital contribution from (distribution to) affiliates, net........... 5 -
Issuance of long-term debt............................................ - 2
Retirement of long-term debt.......................................... (153) (139)
Net increase (decrease) in short-term debt excluding current
maturities on long-term debt......................................... 4 249
Net Cash Provided (Used) by Financing Activities........................ (144) 112
Effect of Foreign Exchange Rate Changes on Cash and Temporary
Cash Investments....................................................... 6 13
Increase (Decrease) in Cash and Temporary Cash Investments.............. 247 193
Cash and Temporary Cash Investments, January 1.......................... 459 220<PAGE>
Cash and Temporary Cash Investments, September 30 (Note)................ $ 706 $ 413
Cash Paid During the Period for Interest................................ $ 213 $ 203
Cash Paid During the Period for Income Taxes (net of refunds)........... $ 395 $ 227
</TABLE>
__________
NOTE: Cash and temporary cash investments include highly liquid investments
with a maturity of three months or less at date of purchase.
(The accompanying notes to financial statements are an
integral part of these statements of cash flows.)
3<PAGE>
<PAGE>
TENNESSEE GAS PIPELINE COMPANY
AND CONSOLIDATED SUBSIDIARIES
BALANCE SHEETS
(Unaudited)
<TABLE>
<CAPTION>
(Millions)
September 30, December 31, September 30,
ASSETS 1995 1994 1994
<S> <C> <C> <C>
Current Assets:
Cash and temporary cash investments.............. $ 706 $ 459 $ 413
Receivables--
Customer notes and accounts (net).............. 474 644 694
Affiliated companies........................... 491 297 342
Gas transportation and exchange................ 145 214 330
Other.......................................... 254 164 142
Notes receivable from Tenneco Inc................ 2,754 3,201 2,812
Inventories--
Finished goods................................. 312 355 297
Work in process................................ 96 82 72
Long-term contracts in progress, less progress
billings...................................... 227 138 100
Raw materials.................................. 212 178 189
Materials and supplies......................... 152 156 154
Deferred income taxes............................ 79 43 90
Prepayments and other............................ 250 301 261
6,152 6,232 5,896
Investments and Other Assets:
Investment in affiliated companies............... 418 523 588
Other investments, at cost....................... 40 49 54
Long-term receivables--
Notes and other................................ 138 156 168
Affiliated companies........................... 1 1 171
Investment in subsidiaries in excess of fair
value of net assets at date of acquisition,
less amortization............................... 325 329 279
Deferred income taxes............................ 53 49 54
Other............................................ 1,263 733 698
2,238 1,840 2,012
Plant, Property and Equipment, at cost............. 10,908 11,009 10,484
Less--Reserves for depreciation, depletion and
amortization.................................... 5,598 5,851 5,614
5,310 5,158 4,870
$13,700 $13,230 $12,778
</TABLE>
(The accompanying notes to financial statements are an
integral part of these balance sheets.)
4<PAGE>
<PAGE>
TENNESSEE GAS PIPELINE COMPANY
AND CONSOLIDATED SUBSIDIARIES
BALANCE SHEETS
(Unaudited)
<TABLE>
<CAPTION>
(Millions)
September 30, December 31, September 30,
LIABILITIES AND SHAREOWNER'S EQUITY 1995 1994 1994
<S> <C> <C> <C>
Current Liabilities:
Short-term debt (including current maturities
on long-term debt)............................... $ 422 $ 298 $ 250
Payables--
Trade........................................... 776 1,029 896
Affiliated companies............................ 46 244 84
Gas transportation and exchange................. 117 159 218
Taxes accrued..................................... 159 49 340
Interest accrued.................................. 55 37 60
Restructuring liability........................... - - 12
Natural gas pipeline revenue reservation.......... 13 190 182
Other............................................. 891 787 824
2,479 2,793 2,866
Long-term Debt...................................... 536 793 874
Deferred Income Taxes............................... 1,251 1,408 1,233
Postretirement Benefits............................. 597 380 366
Deferred Credits and Other Liabilities.............. 631 422 475
Commitments and Contingencies
Minority Interest................................... 485 475 18
Shareowner's Equity:
Common stock, par value $5 per share, authorized,
issued and outstanding 200 shares................ - - -
Premium on common stock and other capital surplus. 3,499 3,494 3,494
Cumulative translation adjustments................ 47 (174) (124)
Retained earnings................................. 4,175 3,639 3,576
7,721 6,959 6,946
$13,700 $13,230 $12,778
</TABLE>
(The accompanying notes to financial statements are an
integral part of these balance sheets.)
5<PAGE>
<PAGE>
TENNESSEE GAS PIPELINE COMPANY
AND CONSOLIDATED SUBSIDIARIES
STATEMENTS OF CHANGES IN SHAREOWNER'S EQUITY
(Unaudited)
<TABLE>
<CAPTION>
(Millions Except Share Amounts)
Nine Months Ended September 30,
1995 1994
Shares Amount Shares Amount
<S> <C> <C> <C> <C>
Common Stock:
Balance January 1 and September 30................ 200 $ - 200 $ -
Premium on Common Stock and Other Capital Surplus:
Balance January 1................................. 3,494 3,494
Capital contribution from (distribution to)
affiliates (net)............................... 5 -
Balance September 30.............................. 3,499 3,494
Cumulative Translation Adjustments:
Balance January 1................................. (174) (297)
Translation of foreign currency statements...... 28 174
Sale of investment in foreign subsidiaries...... 193 -
Hedges of net investment in foreign sub-
sidiaries (net of income taxes)................ - (1)
Balance September 30.............................. 47 (124)
Retained Earnings:
Balance January 1................................. 3,639 3,149
Net income...................................... 536 427
Balance September 30.............................. 4,175 3,576
Total......................................... $7,721 $6,946
</TABLE>
(The accompanying notes to financial statements are an
integral part of these statements of changes in
shareowner's equity.)
6<PAGE>
<PAGE>
TENNESSEE GAS PIPELINE COMPANY
AND CONSOLIDATED SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
(1) In the opinion of Tennessee Gas Pipeline Company (the
"Company"), the accompanying unaudited financial statements of
Tennessee Gas Pipeline Company and Consolidated Subsidiaries
("Tennessee") contain all adjustments necessary to present fairly
the financial position as of September 30, 1995, and the results of
operations; changes in shareowner's equity; and cash flows for the
periods indicated.
In June 1994, Tenneco Inc. and its subsidiaries ("Tenneco")
completed an initial public offering ("IPO") of approximately 29% of
the common stock of Case Corporation ("Case"), the holder of
Tenneco's Farm and construction equipment segment. In November 1994,
a secondary offering of Case's common stock reduced Tenneco's
ownership to approximately 44%. A third public offering in August
1995 reduced Tenneco's ownership further to approximately 21%. Prior
to the IPO, Tenneco reorganized this segment resulting in Tennessee
selling all of its Farm and construction equipment net assets to
Case for consideration of Case common stock and cash. From January
through June 1994, Tennessee's Farm and construction equipment
segment was fully consolidated; subsequent to June 1994, it was
reflected in Tennessee's financial statements using the cost method
of accounting. Tennessee's remaining investment in Case is not
significant to its consolidated financial position. See Note 5 for
additional information regarding Tennessee's investment in Case.
Prior year's financial statements have been reclassified where
appropriate to conform to 1995 presentations.
(2) Pursuant to Order 636 issued by the Federal Energy Regulatory
Commission ("FERC") on April 8, 1992, the Company implemented
revisions to its tariff which put into effect on September 1, 1993,
the restructuring of its transportation, storage and sales services.
Pursuant to the provisions of Order 636 allowing for the recovery of
transition costs related to the restructuring, the Company has made
filings to recover gas production costs related to its Bastian Bay
facilities, the remaining balance of purchased gas ("PGA") costs,
stranded transportation ("TBO") costs and gas supply realignment
("GSR") costs resulting from remaining gas purchase obligations.
The Company's filings to recover production costs related to its
Bastian Bay facilities have been rejected by the FERC based on the
continued use of the gas production from the field; however, the
FERC recognized the ability of the Company to file for the recovery
of losses upon disposition of these assets. The Company has filed
for appellate review of the FERC actions and is confident that the
Bastian Bay costs will ultimately be recovered as transition costs
directly related to Order 636, and no FERC order has questioned the
ultimate recoverability of these costs.
The filings implementing the Company's recovery mechanisms for the
following transition costs were accepted effective September 1,
7<PAGE>
<PAGE>
TENNESSEE GAS PIPELINE COMPANY
AND CONSOLIDATED SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS--(Continued)
1993, and made subject to refund pending FERC review: 1) direct-
billing of unrecovered PGA costs to its former sales customers over
a twelve-month period, 2) recovery of TBO costs, which the Company
is obligated to pay under existing contracts, through a surcharge
from firm transportation customers, adjusted annually, and 3) GSR
cost recovery of 90% of such costs over a period of up to thirty-six
months from firm transportation customers and recovery of 10% of
such costs from interruptible transportation customers.
Following negotiations with its customers, the Company filed in
July 1994 with the FERC a Stipulation and Agreement (the "PGA
Stipulation"), which provides for the recovery of PGA costs of
approximately $100 million and the recovery of costs associated with
the transfer of storage gas inventory to new storage customers in
the Company's restructuring proceeding. The PGA Stipulation
eliminates all challenges to the PGA costs, but establishes a cap on
the charges that may be imposed upon former sales customers. On
November 15, 1994, the FERC issued an order approving the PGA
Stipulation and resolving all outstanding issues. On April 5, 1995,
the FERC issued its order on rehearing affirming its initial
approval of the PGA Stipulation. The Company implemented the terms
of the PGA Stipulation and made refunds in May 1995. The orders
approving the PGA Stipulation have been appealed to the D.C. Circuit
Court of Appeals by certain customers. The Company believes the PGA
Stipulation will be upheld on appeal.
The Company is recovering TBO costs formerly incurred to perform
its sales functions, subject to refund, pending review of data
submitted by the Company. On November 18, 1994, the FERC issued an
order on the Company's initial TBO surcharge filing to recover TBO
costs for the twelve-month period beginning September 1, 1993. The
order required the Company to remove certain costs from this
surcharge. The Company has appealed this decision to the D.C.
Circuit Court of Appeals. On November 30, 1994, the Company filed
with the FERC to collect through a surcharge approximately $25
million annually of TBO costs in compliance with the FERC's November
18, 1994 order, and in a separate filing, the Company filed to
recover its projected annual TBO costs of approximately $21 million
for the twelve-month period beginning January 1, 1995. The FERC
accepted the Company's filing to recover its projected TBO costs,
subject to refund.
With regard to the Company's GSR costs, the Company, along with
three other pipelines, executed four separate settlement agreements
with Dakota Gasification Company and the U.S. Department of Energy
and initiated four separate proceedings at the FERC seeking approval
to implement the settlement agreements. The settlement resolved
litigation concerning purchases made by the Company of synthetic gas
produced from the Great Plains Coal Gasification plant ("Great
Plains"). On October 18, 1994, the FERC consolidated the four
proceedings and set them for hearing before an administrative law
judge ("ALJ"). The hearing, which concluded in July 1995, was
limited to the issue of whether the settlement agreements are
8<PAGE>
<PAGE>
TENNESSEE GAS PIPELINE COMPANY
AND CONSOLIDATED SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS--(Continued)
prudent. The ALJ is required to issue his initial decision by
December 31, 1995. The FERC has committed to issuing a final order
by December 31, 1996. Previously, the FERC has ruled that the costs
related to the Great Plains project are eligible for recovery
through GSR and other special recovery mechanisms and that the costs
are eligible for recovery for the duration of the term of the
original gas purchase agreements.
Also related to the Company's GSR costs, on October 14, 1993, the
Company was sued in the State District Court of Ector County, Texas,
by ICA Energy, Inc. ("ICA") and TransTexas Gas Corporation
("TransTexas"). In that suit, ICA and TransTexas contended that the
Company had an obligation to purchase gas production which
TransTexas thereafter attempted to add unilaterally to the reserves
originally dedicated to a 1979 gas contract. On two subsequent
occasions, TransTexas gave the Company notice that it was adding new
production and/or acreage "to the contract." An amendment to the
pleadings seeks $1.5 billion from the Company for alleged damages
caused by the Company's refusal to purchase gas produced from the
TransTexas leases covering the new production and lands. Neither ICA
nor TransTexas were original parties to that contract. However, they
contend that any stranger acquiring a fractional interest in the
original committed reserves thereby obtains a right to add to the
contract unlimited volumes of gas production from locations in South
Texas. The Company filed a motion for summary judgment, asserting
that the Texas statutes of frauds precluded the plaintiffs from
adding new production or acreage to the contract. On May 4, 1995,
the trial court granted the Company's motion for summary judgment;
the plaintiffs have filed a notice of appeal. Thereafter, ICA and
TransTexas filed a motion for summary judgment on a separate issue
involving the term "committed reserves" and whether the Company has
a contractual obligation to purchase gas produced from a lease not
described in the gas contract. On November 8, 1995, the trial court
granted ICA's and TransTexas' motion in part. That order, which is
not final, also held that ICA's and TransTexas' rights are subject
to certain limitations of the Texas Business and Commerce Code. In
addition to these defenses, which must be resolved at trial, the
Company has other defenses which it has asserted and intends to
pursue. The November 8, 1995 ruling does not affect the trial
court's previous May 4, 1995 order granting summary judgment to the
Company.
The Company has been engaged in separate settlement and contract
reformation discussions with holders of certain gas purchase
contracts who have sued the Company. Although the Company believes
that its defenses in the underlying gas purchase contract actions
are meritorious, the Company recorded liabilities in the first
quarter of 1995 which it believes are adequate to cover the
resolution of these matters. On August 1, 1995, the Texas Supreme
Court affirmed a ruling favorable to the Company of the Court of
9<PAGE>
<PAGE>
TENNESSEE GAS PIPELINE COMPANY
AND CONSOLIDATED SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS--(Continued)
Appeals in one of these matters and indicated that it would remand
the case to the trial court. Motions for rehearing have been filed
by the producers. As of the date hereof, the court had not ruled on
those motions and mandate had not been issued.
As of September 30, 1995, the Company has deferred GSR costs yet
to be recovered from its customers of approximately $487 million,
net of $290 million previously recovered from its customers, subject
to refund. Proceedings have commenced to review the recovery of
these GSR costs; however, the FERC has generally encouraged
pipelines to settle such issues through negotiations with customers.
Although Order 636 contemplates complete recovery by pipelines of
qualified transition costs, the Company is engaged in settlement
discussions with its customers concerning the amount of recoverable
GSR costs in response to the FERC and customer statements
acknowledging the desirability of such settlements.
Given the uncertainty over the results of ongoing discussions
between the Company and its customers related to the recovery of GSR
costs and the uncertainty related to predicting the outcome of its
gas purchase contract reformation efforts and the associated
litigation, Tennessee is unable to predict the timing or the
ultimate impact the resolution of these issues will have on its
consolidated financial position or results of operations.
On December 30, 1994, the Company filed a general rate increase in
Docket No. RP95-112 (the "1995 Rate Case"). On January 25, 1995, the
FERC accepted the filing, suspended its effectiveness for the
maximum period of five months pursuant to normal regulatory process,
and set the matter for hearing. On July 1, 1995, the Company began
collecting rates, subject to refund, reflecting an $87 million
increase in the Company's revenue requirement. Settlement
discussions with the FERC staff and customers are ongoing and the
Company is reserving revenues it believes adequate to cover any
refunds which may be required upon final settlement of this
proceeding.
Also on January 25, 1995, the FERC issued an order requiring the
convening of a technical conference to discuss certain issues in the
1995 Rate Case and concerns expressed in response to operational
issues in a 1995 tariff filing. The concerns include the Company's
ability to provide its shippers with timely and accurate operating
and billing information and the associated systems costs. Several
technical conferences were held during the first half of 1995
resulting in modifications to the 1995 tariff filing, the assignment
of certain issues to the 1995 Rate Case for final resolution, and
the negotiation of a settlement with the Company's customers as to
certain operational tariff issues. On November 1, 1995, the FERC
approved the settlement of the 1995 tariff issues noting the efforts
the Company has made with its customers. The ultimate resolution of
these issues may result in adjustments to customer billings.
10<PAGE>
<PAGE>
TENNESSEE GAS PIPELINE COMPANY
AND CONSOLIDATED SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS--(Continued)
(3) Reference is made to Note 2 for information concerning gas
supply litigation. Tennessee Gas Pipeline Company and its
subsidiaries are parties to numerous other legal proceedings arising
from their operations. Tennessee Gas Pipeline Company believes that
the outcome of these other proceedings, individually and in the
aggregate, will have no material effect on the financial position or
results of operations of Tennessee Gas Pipeline Company and its
consolidated subsidiaries.
(4) Since 1988, the Company has been engaged in an internal
project to identify and deal with the presence of polychlorinated
biphenyls ("PCBs") and other substances of concern, including
substances on the U.S. Environmental Protection Agency ("EPA") List
of Hazardous Substances ("HS List") at compressor stations and other
facilities operated by both its interstate and intrastate natural
gas pipeline systems. While conducting this project, the Company has
been in frequent contact with federal and state regulatory agencies,
both through informal negotiation and formal entry of consent
orders, in order to assure that its efforts meet regulatory
requirements.
Tennessee has established a reserve for the Company's
environmental expenses, which includes: 1) expected remediation
expense and associated onsite, offsite and groundwater technical
studies, 2) legal fees and 3) settlement of third party and
governmental litigation, including civil penalties. Through
September 30, 1995, Tennessee has charged approximately $121 million
against the environmental reserve. Of the remaining reserve, $38
million has been recorded on the balance sheet under "Payables-
Trade" and $104 million under "Deferred Credits and Other
Liabilities."
Due to the current uncertainty regarding the estimated costs of
the further activity necessary for the Company to address the
presence of the PCBs, the substances on the HS List and other
substances of concern on its sites, including the requirements for
additional site characterization, the actual amount of such
substances at the sites, and the final, site-specific cleanup
decisions to be made with respect to cleanup levels and remediation
technologies, the Company cannot at this time accurately project
what additional costs, if any, may arise from future
characterization and remediation activities. While there are still
many uncertainties relating to the ultimate costs which may be
incurred, based upon the Company's evaluation and experience to
date, Tennessee continues to believe that the amount of the reserve
is adequate.
Tennessee believes that a substantial portion of these costs,
which will be expended over the next five to ten years, will be
recovered from customers of its natural gas pipelines. The
11<PAGE>
<PAGE>
TENNESSEE GAS PIPELINE COMPANY
AND CONSOLIDATED SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS--(Continued)
Stipulation and Agreement approved by the FERC in the Company's 1991
rate case established procedures for resolving the recovery of
certain environmental expenditures. These environmental costs are
currently being collected in the Company's rates subject to further
review and possible refund. Following negotiations with its
customers, the Company in May 1995 filed with the FERC a separate
Stipulation and Agreement (the "Environmental Stipulation") that
addresses the recovery of environmental costs currently being
recovered in its rates and also establishes a mechanism for
recovering a substantial portion of the environmental costs that
will be expended in the future. Upon FERC approval, the
Environmental Stipulation will become effective as of July 1, 1995,
and will have no material effect on Tennessee's financial position
or results of operations. As of September 30, 1995, the balance of
the regulatory asset is $109 million.
Tennessee believes that its liability insurance policies in effect
during the period in which the environmental issues occurred provide
coverage for remediation costs and related claims. The Company has
pending litigation in a Louisiana state court against its insurance
carriers during this period, seeking recovery of costs which the
Company incurred. The issues in dispute involve determining: 1)
whether the presence of PCBs and other substances at each compressor
station constituted a separate occurrence for purposes of the per-
occurrence limits of the policies; 2) the applicability of the
pollution exclusions in certain policies issued after 1971; 3) the
applicability of provisions which exclude the environmental impacts
located solely on the insured's property; 4) whether the term
"property damage" in the policies will cover the cost of compliance
with governmental cleanup directives; 5) the allocation of costs to
the various policies in effect during the period the environmental
impact occurred; 6) the applicability of provisions excluding
pollution that is "expected or intended" and 7) the adequacy of
notice of claims to insurance carriers. Tennessee has completed
settlements with and has received payments from the majority of the
defendant carriers and believes that the likelihood of recovery of a
portion of its remediation costs and claims against the remaining
defendant carriers is reasonably possible.
In July 1994, the Company commenced litigation in a Kentucky state
court against the manufacturer of the PCB-containing lubricant used
by the Company, seeking reimbursement of sums the Company has and
will incur in the defense and settlement of PCB-related claims
brought by state and federal agencies, private individuals and
others. The Company anticipates that the defendant will raise a
variety of issues in dispute of the Company's claims.
While Tennessee believes its legal position to be meritorious,
Tennessee has not adjusted its environmental reserve to reflect any
anticipated insurance recoveries or recoveries from the manufacturer
of the PCB-containing lubricant. Recoveries could reduce the amount
ultimately recoverable from customers.
12<PAGE>
<PAGE>
TENNESSEE GAS PIPELINE COMPANY
AND CONSOLIDATED SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS--(Continued)
Tennessee has identified other sites in its various operating
divisions where environmental remediation expenses may be required
should there be a change in ownership, operations or applicable
regulation. These possibilities cannot be predicted or quantified at
this time and accordingly, no provision has been recorded. However,
provisions have been made for all instances where it has been
determined that the incurrence of any material remedial expense is
probable.
(5) On August 9, 1995, Tenneco sold in a public offering 16.1
million shares of common stock of Case Corporation at $35 per share.
The offering reduced Tenneco's ownership in Case from 44% to 21%. Of
the 16.1 million shares sold, approximately 646,000 shares were
owned by Tennessee. In connection with the offering, Tennessee
received net proceeds of $22 million and recognized a loss of $35
million, including $35 million of income tax benefit. Although
Tennessee recorded a loss on this transaction, Tenneco in the
aggregate recorded a gain of $101 million.
(6) In September 1995, Tenneco announced that it had entered into
an agreement to sell Kern River Corporation which holds a 50%
interest in Kern River Gas Transmission Company ("Kern River") for
approximately $225 million. The transaction is expected to be
finalized in 1995. Kern River owns a 904-mile natural gas pipeline
system extending from southwestern Wyoming to Bakersfield,
California.
(7) On October 2, 1995, Tenneco announced that it had signed a
definitive agreement to acquire the Mobil Plastics business from
Mobil Corporation for $1.27 billion. The acquired operations will
become part of Tenneco's packaging division. Mobil Plastics is the
largest North American producer of polyethylene and polystyrene
packaging. Mobil Plastics' consumer products are sold under the
Hefty, Kordite and Baggies brand names. For food service and
industrial consumers, Mobil Plastics is a leader in polystyrene foam
packaging, thermoformed polystyrene packaging and polyethylene film
products. The acquisition is scheduled to be completed in mid-
November.
(8) In March 1995, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 121 which
establishes new accounting standards for the impairment of long-
lived assets and for long-lived assets to be disposed of. Tennessee
will adopt the new standard in the first quarter of 1996 but does
not expect that the adoption will have a material effect on
Tennessee's consolidated financial position or results of
operations.
(The above notes are an integral part of the foregoing
financial statements.)
13<PAGE>
<PAGE>
TENNESSEE GAS PIPELINE COMPANY
AND CONSOLIDATED SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
THREE MONTHS RESULTS
Revenues
Net sales and operating revenues for the third quarter of 1995
were $2.1 billion, up from $2.0 billion in the third quarter of
1994. Natural gas pipelines revenues were down $122 million or 22
percent primarily due to the nonregulated sector where both spot
prices and volumes decreased as a result of increased supply
availability and the effect of storage reserves on prices. In the
regulated sector, revenues declined $25 million due to the continued
phase-out of merchant gas sales as a result of operating under Order
636 of the Federal Energy Regulatory Commission ("FERC").
Automotive parts revenues increased $108 million or 23 percent,
including revenues of $76 million resulting from the November 1994
acquisition of Heinrich Gillet GmbH & Company ("Gillet"). Packaging
revenues increased $103 million or 18 percent from strong market
conditions in the paperboard packaging sector and increased pricing
in the specialty segment. Shipbuilding revenues increased $21
million or 5 percent primarily as a result of higher volume on the
aircraft carrier RONALD REAGAN.
Income Before Interest Expense, Income Taxes and Minority Interest
("Operating Income")
Operating income for the third quarter of 1995 was $311
million, down $65 million or 17 percent, compared with $376 million
for the 1994 third quarter, primarily due to the sale of Case
Corporation ("Case") stock. On August 9, 1995, Tenneco sold in a
public offering 16.1 million shares of common stock of Case at $35
per share. The offering reduced Tenneco's ownership in Case from 44
percent to 21 percent. Of the 16.1 million shares sold,
approximately 646,000 shares were owned by Tennessee. In connection
with the offering, Tennessee received net proceeds of $22 million
and recognized a loss of $35 million, including $35 million of
income tax benefit. Although Tennessee recorded a loss on this
transaction, Tenneco in the aggregate recorded a gain of $101
million. The third quarter 1994 included a $16 million benefit from
a contract settlement with Columbia Gas.
Natural Gas Pipelines
Natural gas pipelines reported operating income of $81 million in
the 1995 third quarter compared with $97 million in the 1994 third
quarter. Revenues for the third quarter of 1995 decreased to $427
million compared with $549 million in the third quarter of 1994.
Third quarter 1995 operating income slightly improved compared with
the 1994 third quarter after excluding a $2 million lawsuit
settlement related to an interstate pipeline issue in the 1995 third
14<PAGE>
<PAGE>
quarter and a $16 million benefit from a contract settlement from
Columbia Gas received in the 1994 third quarter. Excluding the
above special items, operating income in the regulated segment was
flat compared with the 1994 third quarter. Higher operating income
related to the implementation of a new rate structure was offset by
lower operating income from expiring gas transportation contracts
and higher administrative expenses. Operating income in the
nonregulated segment improved compared with the 1994 third quarter
primarily due to the acquisition of natural gas pipeline assets from
the Pipeline Authority of South Australia (PASA), partially offset
by decreases in operating income as a result of lower natural gas
volumes and prices.
The natural gas pipeline industry is experiencing increasing
competition, which is the result of actions by the FERC to
strengthen market forces throughout the industry. In a number of
key markets, Tennessee's interstate pipelines face competitive
pressure from other major pipeline systems, enabling local
distribution companies and end users to choose a supplier or switch
suppliers based on the short-term price of the gas and the cost of
transportation. Tennessee's pipelines have been required to
discount their transportation rates to maintain market share.
Additionally, the majority of Tennessee's transportation contracts
will be expiring over the next five years. The renegotiation of
these contracts may be impacted by such competitive factors. (See
Note 2 in the "Notes to Financial Statements" for additional
information.)
In September, 1995, Tenneco announced that it had entered into an
agreement to sell Kern River Corporation which holds a 50 percent
interest in Kern River Gas Transmission Company ("Kern River") for
approximately $225 million. The transaction is expected to be
finalized in 1995. Kern River owns a 904-mile natural gas pipeline
system extending from southwestern Wyoming to Bakersfield,
California.
Automotive Parts
Automotive parts reported third quarter 1995 operating income of
$61 million compared with $67 million in the third quarter of 1994.
Operating income decreased $6 million compared with the 1994 third
quarter primarily as a result of higher start-up costs largely
related to a new process, hydroforming, which is a liquid, high-
pressure metal-forming application. The hydroforming process is
being utilized for the manufacture of the new Ford Taurus exhaust
system. Revenues for the third quarter of 1995 increased to $586
million compared with $478 million in last year's third quarter,
primarily as a result of the acquisition of Gillet, which added $76
million in revenues. Revenues in the North American aftermarket
were down due to market weakness. Aftermarket sales were flat
worldwide as aftermarket sales in Europe increased 18 percent from
the same quarter a year ago. Original equipment sales increased
worldwide with much of this increase supplied by the Gillet
acquisition and the improving European economy.
15<PAGE>
<PAGE>
Tennessee expects new vehicle sales in Europe to continue to
improve the rest of 1995 and next year and new car and truck
production in North America to continue at its strong near-record
levels throughout 1995. The North American aftermarket, however, is
expected to remain sluggish through 1995 with a recovery beginning
next year.
Packaging
Third quarter 1995 operating income for packaging was $117
million, up $54 million, compared with $63 million generated in the
1994 third quarter. Revenues for the 1995 third quarter were $665
million compared with $562 million in the same period last year.
This increase of 18 percent was due to continuing strong market
conditions in the paperboard packaging business and increased
pricing in the specialty segment.
The paperboard packaging business reported operating income of
$108 million in the third quarter of 1995, compared with $42 million
in the year ago quarter, up more than 150 percent. The improvement
in operating income was primarily due to continued strong market
conditions, higher mill productivity and lower costs for recycled
fiber.
The outlook for containerboard remains reasonably positive, with
domestic industry containerboard production for year-to-date
September 1995 up four percent over the same period last year.
September industry inventory levels, at 5.5 weeks of supply, are in
line with historical levels and are expected to decline for the
remainder of the year.
Specialty packaging reported operating income of $9 million in the
third quarter of 1995, compared with $21 million for the same period
last year. Operating income continued to be adversely affected by
increases in raw material costs. The costs of polystyrene and
aluminum reroll were up 19 percent from the third quarter of 1994.
Raw material costs have moderated since the second quarter, however,
and fourth quarter unit margins should improve.
On October 2, 1995, Tenneco announced that it had signed a
definitive agreement to acquire the Mobil Plastics business from
Mobil Corporation for $1.27 billion. The acquired operations will
become part of Tenneco's packaging division. Mobil Plastics is the
largest North American producer of polyethylene and polystyrene
packaging. Mobil Plastics' consumer products are sold under the
Hefty, Kordite and Baggies brand names. For food service and
industrial consumers, Mobil Plastics is a leader in polystyrene foam
packaging, thermoformed polystyrene packaging and polyethylene film
products. The acquisition is scheduled to be completed in mid-
November.
16<PAGE>
<PAGE>
Shipbuilding
Shipbuilding reported third quarter 1995 operating income of $35
million compared with $52 million in the 1994 third quarter. The
$17 million decline resulted primarily from a $6 million charge for
headcount reductions recorded in the 1995 third quarter and a $14
million charge for incremental costs for the shipyard's entry into
highly competitive commercial markets. Productivity improvements
partially offset the decline. Revenues increased $21 million to
$445 million in the third quarter of 1995 compared with $424 million
in the same period last year.
The backlog at the end of the third quarter of 1995 was $4.9
billion and included construction contracts for two LOS ANGELES
CLASS submarines, three NIMITZ class aircraft carriers, four "Double
Eagle" product tankers, a conversion contract for two fast SEALIFT
ships and the overhaul contract for the aircraft carrier USS
EISENHOWER.
Other
Other operations was $17 million for the third quarter of 1995
compared with $97 million in the quarter a year ago. The third
quarter 1995 included a pre-tax loss on the sale of Case stock for
$70 million (after-tax loss of $35 million) and a $25 million charge
for the liquidation of surplus real estate holdings and notes.
Interest Expense (net of interest capitalized)
Net interest expense for the third quarter of 1995 was $68 million
compared with $66 million reported for the 1994 third quarter.
Interest capitalized was $2 million for the third quarter of 1995
compared with $1 million for the third quarter of 1994.
Income Taxes
Income tax expense for the third quarter of 1995 was $90 million
compared with $94 million reported for the 1994 third quarter.
Discontinued Operations
Income from discontinued operations in the third quarter of 1994
of $7 million represented the net income of Tennessee's chemicals
division which was sold in the fourth quarter of 1994.
Net Income
Net income for the third quarter of 1995 was $145 million compared
with net income of $223 million in the 1994 third quarter. Net
income for the 1994 period included $7 million of income from
discontinued operations (net of income tax).
17<PAGE>
<PAGE>
NINE MONTHS RESULTS
Revenues
Net sales and operating revenues for the first nine months of 1995
were $6.5 billion, down from $6.6 billion reported in 1994 primarily
due to the exclusion of farm and construction equipment revenues as
a result of the change to the cost method of accounting for Case in
July 1994. Excluding farm and construction equipment for the first
nine months of 1994, revenues increased five percent in the 1995
period compared with the prior year period. Higher revenues for
packaging (up $403 million or 26 percent) and automotive parts (up
$407 million or 29 percent) were partially offset by lower revenues
for natural gas pipelines (down $483 million or 26 percent).
Income Before Interest Expense, Income Taxes and Minority Interest
("Operating Income")
Operating income for the first nine months of 1995 was $1,144
million compared with $916 million reported for the 1994 period, an
improvement of 25 percent.
Natural gas pipelines reported operating income of $229 million
for the first nine months of 1995 compared with $291 million in the
same period of 1994. Revenues decreased to $1.36 billion compared
with $1.85 billion in the first nine months of 1994 primarily due to
the decline in gas spot prices and lower volumes in the nonregulated
segment and the phase-out of merchant gas sales by the regulated
pipelines. Operating income declined in the first nine months of
1995 compared with 1994 mainly due to competitive pressures related
to operating under FERC Order 636 and the $16 million benefit from a
contract settlement with Columbia Gas in the third quarter of 1994.
Operating income also decreased as a result of depressed natural gas
volumes and prices in the nonregulated business.
Automotive parts reported operating income of $191 million for the
first nine months of 1995 compared with $190 million recorded in the
same period a year ago. Year-to-date revenues for 1995 totaled
$1.82 billion compared with last year's amount of $1.42 billion.
Revenues increased as a result of the acquisition of Gillet, which
added $249 million in revenues, and increased European aftermarket
revenues. Profit margins declined in the first nine months of 1995
due to higher start-up costs associated with a new process discussed
in the "Three Months Results" and competitive pressures in the North
American original equipment and aftermarket.
Shipbuilding reported operating income of $125 million for the
nine months ended September 1995 compared with $153 million in the
same period in 1994. Revenues were $1.29 billion for the first nine
months of both 1995 and 1994. Operating income declined primarily
as a result of lower profit margins on SEALIFT work, incremental
costs for the shipyard's entry into highly competitive commercial
markets and a charge related to personnel reductions.
18<PAGE>
<PAGE>
Packaging had operating income of $374 million in the first nine
months of 1995 compared with $127 million in the prior year period.
Revenues were $1.98 billion in the first nine months of 1995
compared with $1.58 billion in the prior year period. Higher
revenues and operating income were primarily due to strengthening
containerboard pricing partially offset by lower operating income in
specialty packaging associated with higher raw material costs. In
addition, the 1995 first quarter operating income included a $14
million gain on the sale of a mill in Sylva, North Carolina.
Tennessee's other operations reported operating income of $225
million for the 1995 nine-month period compared with $155 million
for the year ago period. Operating income improved primarily due to
higher interest income from affiliated companies and other
investments partially offset by the loss on the sale of the Case
stock.
Interest Expense (net of interest capitalized)
Net interest expense decreased from $212 million in the first nine
months of 1994 to $199 million in the first nine months of 1995.
Interest capitalized was $2 million in the first nine months of 1994
compared with $5 million in the current year period.
Income Taxes
Income tax expense for the first nine months of 1995 was $370
million compared with $282 million in the same period of 1994.
Income tax expense increased in the first nine months of 1995
primarily due to higher pre-tax income which was partially offset by
the tax benefit associated to the loss on the Case sale.
Discontinued Operations
Income from discontinued operations for the first nine months of
1994 of $5 million (net of an income tax benefit of $2 million)
included a $20 million loss (net of income tax benefit of $15
million) on the sale of Tennessee's brakes business and a loss of $3
million (net of income tax benefit of $4 million) from the brakes
operations. Net income from the chemicals operations for the first
nine months of 1994 was $28 million, net of income tax expense of
$17 million.
Cumulative Effect of a Change in Accounting Principle
Effective January 1, 1994, Tennessee adopted Statement of
Financial Accounting Standards ("FAS") No. 112, Employers'
Accounting for Postemployment Benefits. This new standard was
adopted using the cumulative catch-up method and requires employers
to account for postemployment benefits for former or inactive
employees after employment but before retirement on the accrual
basis rather than the "pay-as-you-go" basis. As a result of the
adoption of this statement, the 1994 Statement of Income includes an
after-tax charge of $13 million, for the cumulative effect of the
accounting change.
19<PAGE>
<PAGE>
Net Income
Income from continuing operations for the first nine months of
1995 was $536 million compared with income from continuing
operations of $435 million in the 1994 period. The first nine
months of 1994 net income includes income from continuing operations
of $435 million, income from discontinued operations of $5 million
and a charge of $13 million (net of income tax) relating to the
cumulative effect of a change in accounting principle.
Capital Expenditures
Expenditures for plant, property and equipment from continuing
operations for the first nine months of 1995 were $565 million
compared with $328 million for the first nine months of 1994.
Increased expenditures for natural gas pipelines ($74 million),
automotive parts ($75 million), shipbuilding ($30 million) and
packaging ($61 million) were partially offset by the decline for
farm and construction equipment ($3 million).
Other Matters
In March 1995, the Financial Accounting Standards Board issued
Financial Accounting Standards No. 121 which establishes new
accounting standards for the impairment of long-lived assets and for
long-lived assets to be disposed of. Tennessee will adopt the new
standard in the first quarter of 1996 but does not expect that the
adoption will have a material effect on Tennessee's consolidated
financial position or results of operations.
20<PAGE>
<PAGE>
PART II
OTHER INFORMATION
Item 1. Legal Proceedings.
(1) Environmental Proceedings.
The Company is a party in proceedings involving federal and state
authorities regarding the past use by the Company of a lubricant
containing polychlorinated biphenyls ("PCBs") in its starting air
systems.
The Company has executed a consent order with the United States
Environmental Protection Agency ("EPA") governing the remediation of
its compressor stations in Regions IV, V and VI. With respect to the
stations in Regions II and III, EPA has advised the Company that it
is deferring to the Pennsylvania and New York environmental agencies
to specify the remediation requirements applicable to the Company.
The Company has executed a consent order with the Pennsylvania
Department of Environmental Resources dated August 1, 1995,
governing remediation at the Pennsylvania stations; this consent
order also obligates the Company to pay a civil penalty of $500,000.
In addition, the Company has agreed to fund environmentally
beneficial projects within the State of Pennsylvania over the next
three years; those projects are expected to have a total cost to the
Company of approximately $490,000. The Company will continue its
negotiations with the New York Department of Environmental
Conservation on remediation at the New York stations. The Company
believes that the ultimate resolution of this matter will not have a
material adverse effect on the financial condition or results of
operations of the Company and its consolidated subsidiaries.
(2) Other Proceedings.
On October 14, 1993, the Company was sued in the State District
Court of Ector County, Texas by ICA Energy, Inc. ("ICA") and
TransTexas Gas Corporation ("TransTexas"). In that suit, ICA and
TransTexas contended that the Company had an obligation to purchase
gas production which TransTexas thereafter attempted to add
unilaterally to the reserves originally dedicated to a 1979 gas
contract. On two subsequent occasions, TransTexas gave the Company
notice that it was adding new production and/or acreage "to the
contract." An amendment to the pleadings seeks $1.5 billion from the
Company for alleged damages caused by the Company's refusal to
purchase gas produced from the TransTexas leases covering the new
production and lands. Neither ICA nor TransTexas were original
parties to that contract. However, they contend that any stranger
acquiring a fractional interest in the original committed reserves
thereby obtains a right to add to the contract unlimited volumes of
gas production from locations in South Texas. The Company filed a
motion for summary judgment, asserting that the Texas statutes of
frauds precluded the plaintiffs from adding new production or
acreage to the contract. On May 4, 1995, the trial court granted the
Company's motion for summary judgment; the plaintiffs have filed a
notice of appeal. Thereafter, ICA and TransTexas filed a motion for
21<PAGE>
<PAGE>
summary judgment on a separate issue involving the term "committed
reserves" and whether the Company has a contractual obligation to
purchase gas produced from a lease not described in the gas
contract. On November 8, 1995, the trial court granted ICA's and
TransTexas' motion in part. That order, which is not final, also
held that ICA's and TransTexas' rights are subject to certain
limitations of the Texas Business and Commerce Code. In addition to
these defenses, which must be resolved at trial, the Company has
other defenses which it has asserted and intends to pursue. The
November 8, 1995 ruling does not affect the trial court's previous
May 4, 1995 order granting summary judgment to the Company.
(3) Potential Superfund Liability.
At September 30, 1995, the Company has been designated as a
potentially responsible party in 54 "Superfund" sites. With respect
to its pro rata share of the remediation costs of certain sites, the
Company is fully indemnified by third parties. With respect to
certain other sites, the Company has sought to resolve its liability
through payments to the other potentially responsible parties. For
the remaining sites, the Company has estimated its share of the
remediation costs to be between $12 million and $69 million or 0.4
percent to 2.5 percent of the total remediation costs for those
sites and has provided reserves that it believes are adequate for
such costs. Because the clean-up costs are estimates and are subject
to revision as more information becomes available about the extent
of remediation required, the Company's estimate of its share of
remediation costs could change. Moreover, liability under the
Comprehensive Environmental Response, Compensation and Liability Act
is joint and several, meaning that the Company could be required to
pay in excess of its pro rata share of remediation costs. The
Company's understanding of the financial strength of other
potentially responsible parties has been considered, where
appropriate, in the Company's determination of its estimated
liability. The Company does not believe that the costs associated
with its current status as a potentially responsible party in the
Superfund sites described above will be material to its consolidated
financial position or results of operations.
For additional information concerning environmental matters, see
Note 4 in the "Notes to Financial Statements" of Tennessee Gas
Pipeline Company and Consolidated Subsidiaries.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits.
27--Financial Data Schedule
(b) Reports on Form 8-K. Tennessee Gas Pipeline Company did not
file any Current Reports on Form 8-K during the quarter ended
September 30, 1995.
22<PAGE>
<PAGE>
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.
TENNESSEE GAS PIPELINE COMPANY
By ROBERT T. BLAKELY
Robert T. Blakely
Senior Vice President--
Principal Financial and
Accounting Officer
Date: November 14, 1995
23<PAGE>
<PAGE>
Exhibit 27
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION
EXTRACTED FROM THE TENNESSEE GAS PIPELINE COMPANY AND CONSOLIDATED
SUBSIDIARIES FINANCIAL STATEMENTS AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
TENNESSEE GAS PIPELINE COMPANY AND CONSOLIDATED SUBSIDIARIES
FINANCIAL DATA SCHEDULE
<TABLE>
<CAPTION>
(Millions Except
Per Share Data)
As of
September 30, 1995
and for the Nine
Months Then Ended
<S> <C>
Cash and cash items............................................ $ 706
Marketable securities.......................................... 0
Notes and accounts receivable--trade........................... 474
Allowances for doubtful accounts............................... 0
Inventory...................................................... 999
Total current assets........................................... 6,152
Property, plant and equipment.................................. 10,908
Accumulated depreciation....................................... 5,598
Total assets................................................... 13,700
Total current liabilities...................................... 2,479
Bonds, mortgages and similar debt.............................. 536
Preferred stock--mandatory redemption.......................... 0
Preferred stock--no mandatory redemption....................... 0
Common stock................................................... 0
Other stockholders' equity..................................... 7,721
Total liabilities and stockholders' equity..................... 13,700
Net sales of tangible products................................. 6,454
Total revenues................................................. 6,454
Cost of tangible goods sold.................................... 4,783
Total costs and expenses applicable to sales and revenues...... 4,783
Other costs and expenses....................................... 852
Provision for doubtful accounts and notes...................... 0
Interest and amortization of debt discount..................... 212
Income before taxes and other items............................ 932
Income tax expense............................................. 370
Income/loss continuing operations.............................. 536
Discontinued operations........................................ 0
Extraordinary items............................................ 0
Cumulative effect--changes in accounting principles............ 0
Net income or loss............................................. $ 536
Earnings per share--primary.................................... 0
Earnings per share--fully diluted.............................. 0
/TABLE
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
TENNESSEE GAS PIPELINE COMPANY AND CONSOLIDATED SUBSIDIARIES FINANCIAL
STATEMENTS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> SEP-30-1995
<CASH> $706
<SECURITIES> 0
<RECEIVABLES> 474
<ALLOWANCES> 0
<INVENTORY> 999
<CURRENT-ASSETS> 6,152
<PP&E> 10,908
<DEPRECIATION> 5,598
<TOTAL-ASSETS> 13,700
<CURRENT-LIABILITIES> 2,479
<BONDS> 536
<COMMON> 0
0
0
<OTHER-SE> 7,721
<TOTAL-LIABILITY-AND-EQUITY> 13,700
<SALES> 6,454
<TOTAL-REVENUES> 6,454
<CGS> 4,783
<TOTAL-COSTS> 4,783
<OTHER-EXPENSES> 852
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 212
<INCOME-PRETAX> 932
<INCOME-TAX> 370
<INCOME-CONTINUING> 536
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> $536
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
