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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 1-4456
TEXAS EASTERN TRANSMISSION CORPORATION
(Exact name of Registrant as Specified in its Charter)
Delaware 72-0378240
(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, $1 par value, outstanding at
November 11, 1998..................................................... 1,000
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<PAGE>
TEXAS EASTERN TRANSMISSION CORPORATION
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.
TEXAS EASTERN TRANSMISSION CORPORATION
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 $ 203.1 $ 211.0 $ 638.5 $ 653.6
Other 12.5 10.5 38.6 35.9
----------- ----------- ----------- -----------
Total operating revenues 215.6 221.5 677.1 689.5
----------- ----------- ----------- -----------
Operating Expenses
Operation and maintenance 53.2 91.3 244.3 298.1
Depreciation and amortization 37.7 36.8 112.8 110.2
Property and other taxes 9.9 5.8 18.1 27.7
----------- ----------- ----------- -----------
Total operating expenses 100.8 133.9 375.2 436.0
----------- ----------- ----------- -----------
Operating Income 114.8 87.6 301.9 253.5
----------- ----------- ----------- -----------
Other Income and Expenses 5.1 3.2 9.4 8.1
----------- ----------- ----------- -----------
Earnings Before Interest and Taxes 119.9 90.8 311.3 261.6
Interest Expense 27.4 28.7 83.2 87.2
----------- ----------- ----------- -----------
Earnings Before Income Taxes 92.5 62.1 228.1 174.4
Income Taxes 34.8 23.8 85.0 66.5
----------- ----------- ----------- -----------
Net Income $ 57.7 $ 38.3 $ 143.1 $ 107.9
=========== =========== =========== ===========
</TABLE>
See Notes to Consolidated Financial Statements.
1
<PAGE>
TEXAS EASTERN TRANSMISSION CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In millions)
<TABLE>
<CAPTION>
Nine Months Ended
September 30
-------------------------------------
1998 1997
----------------- -----------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 143.1 $ 107.9
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization 116.1 113.8
Deferred income taxes 11.1 10.2
Natural gas transition cost (55.6) (33.4)
Net change in current assets and liabilities (61.6) (68.4)
Other, net 12.5 (33.0)
----------------- -----------------
Net cash provided by operating activities 165.6 97.1
----------------- -----------------
CASH FLOWS FROM INVESTING ACTIVITIES
Capital and investment expenditures (84.9) (71.0)
Net increase in advances receivable - parent (83.9) (23.7)
Retirements and other 3.2 (2.4)
----------------- -----------------
Net cash used in investing activities (165.6) (97.1)
----------------- -----------------
Net change in cash and cash equivalents - -
Cash and cash equivalents at beginning of period - -
================= =================
Cash and cash equivalents at end of period $ - $ -
================= =================
Supplemental Disclosures
Cash paid for interest (net of amount capitalized) $ 78.3 $ 77.7
Cash paid for income taxes $ 75.5 $ 50.0
</TABLE>
See Notes to Consolidated Financial Statements.
2
<PAGE>
TEXAS EASTERN TRANSMISSION CORPORATION
CONSOLIDATED BALANCE SHEETS
(In millions)
<TABLE>
<CAPTION>
September 30, December 31,
1998 1997
(Unaudited)
-------------- -------------
<S> <C> <C>
ASSETS
Current Assets
Receivables $ 77.5 $ 80.6
Inventory 12.7 14.3
Current portion of natural gas transition costs 100.0 66.4
Current portion of environmental clean-up costs 13.7 12.3
Other 31.9 19.8
-------------- -------------
Total current assets 235.8 193.4
-------------- -------------
Investments and Other Assets
Advances receivable - parent 1,057.6 973.7
Goodwill, net 152.5 156.2
Other 9.7 16.8
-------------- -------------
Total investments and other assets 1,219.8 1,146.7
-------------- -------------
Property, Plant and Equipment
Cost 3,464.4 3,411.0
Less accumulated depreciation and amortization 982.9 908.0
-------------- -------------
Net property, plant and equipment 2,481.5 2,503.0
-------------- -------------
Regulatory Assets and Deferred Debits
Debt expense 41.7 45.5
Natural gas transition costs 106.6 192.9
Environmental clean-up costs 68.7 78.6
Other 53.5 73.1
-------------- -------------
Total regulatory assets and deferred debits 270.5 390.1
-------------- -------------
Total Assets $ 4,207.6 $ 4,233.2
============== =============
</TABLE>
See Notes to Consolidated Financial Statements.
3
<PAGE>
TEXAS EASTERN TRANSMISSION CORPORATION
CONSOLIDATED BALANCE SHEETS
(In millions, except share amounts)
<TABLE>
<CAPTION>
September 30, December 31,
1998 1997
(Unaudited)
---------------- -----------------
LIABILITIES AND STOCKHOLDER'S EQUITY
CURRENT LIABILITIES
<S> <C> <C>
Accounts payable $ 11.6 $ 39.0
Taxes accrued 110.0 106.8
Interest accrued 14.8 14.1
Current portion of natural gas transition liabilities - 35.0
Current portion of environmental clean-up liabilities 5.7 9.0
Other 70.3 98.8
---------------- -----------------
Total current liabilities 212.4 302.7
---------------- -----------------
LONG-TERM DEBT
Notes payable - parent 605.0 605.0
Other 599.5 599.4
---------------- -----------------
Total long-term debt 1,204.5 1,204.4
---------------- -----------------
DEFERRED CREDITS AND OTHER LIABILITIES
Deferred income taxes 602.9 592.0
Natural gas transition liabilities 4.0 77.3
Environmental clean-up liabilities 118.5 120.1
Other 114.8 129.3
---------------- -----------------
Total deferred credits and other liabilities 840.2 918.7
---------------- -----------------
COMMMON STOCKHOLDER'S EQUITY
Common stock, $1 par value, 1,000 shares authorized,
issued and outstanding - -
Paid-in capital 1,463.5 1,463.5
Retained earnings 487.0 343.9
---------------- -----------------
Total common stockholder's equity 1,950.5 1,807.4
---------------- -----------------
TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY $ 4,207.6 $ 4,233.2
================ =================
</TABLE>
See Notes to Consolidated Financial Statements.
4
<PAGE>
TEXAS EASTERN TRANSMISSION CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. General
Texas Eastern Transmission Corporation (TETCO) is a wholly owned subsidiary of
PanEnergy Corp, which is an indirect wholly owned subsidiary of Duke Energy
Corporation. TETCO 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).
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
On August 29, 1998, the FERC approved the Company's settlement, which will
accelerate recovery of natural gas transition costs and reduce depreciation
expense to more appropriately reflect the estimated useful lives of its
facilities, principally interstate natural gas pipelines. The Company reviewed
the condition of its natural gas pipeline facilities and current maintenance
practices, and concluded that extension of the useful lives was appropriate.
These facilities have a book value of approximately $1.8 billion, net of
accumulated depreciation of $2.6 billion. The weighted average rate of
depreciation will be approximately 1.25%. Implementation of the settlement began
October 1, 1998, and a rate moratorium will be in effect until 2004. The
settlement reduces customer rates as a result of the reduced depreciation
expense offset by the accelerated recovery of natural gas transition costs.
The settlement is not expected to have a material effect on the net results of
operations or financial position of the Company.
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 $ 4.9 $ 6.2
Accounts payable 1.9 20.5
Taxes accrued 65.8 68.8
--------------------------------------------
Interest expense included $12.9 million for both the three months ended
September 30, 1998 and 1997 of interest associated with notes payable to parent.
Interest expense for the year to date September 30, 1998 and 1997 included $38.6
million and $38.2 million, respectively, of interest associated with notes
payable to parent.
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 $4.4 million and $12.6 million,
respectively, and other current liabilities included $1.1 million and $9.8
million, respectively, related to gas imbalances.
5
<PAGE>
5. Commitments and Contingencies
LITIGATION. On February 18, 1997, Amerada Hess Corporation (Amerada Hess)
notified TETCO that it intended to commence substitution of other gas reserves,
deliverability and leases for those dedicated to its natural gas purchase
contract (the Amerada Hess Contract) with TETCO. On the same date, Amerada Hess
also filed a petition in the District Court of Harris County, Texas, 157th
Judicial District, seeking a declaratory judgment that its interpretation of the
Amerada Hess Contract is correct. TETCO filed a declaratory judgment action with
respect to Amerada Hess' contentions in the U.S. District Court for the Eastern
District of Louisiana on February 21, 1997.
On September 26, 1997, the judge presiding over the Amerada Hess contract matter
issued a summary judgment in favor of TETCO. Amerada Hess subsequently filed a
notice of appeal of the summary judgment. On July 7, 1998, the Fifth Circuit
Court of Appeals affirmed the lower court's judgment in favor of TETCO. In
August 1998, Amerada Hess and TETCO entered into an agreement terminating the
Amerada Hess Contract effective June 30, 1998. Management is of the opinion that
this matter was resolved on terms favorable to the Company.
The Company and its subsidiaries are 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, 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
proceedings 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, buyouts and buydowns of gas sales contracts with
natural gas pipelines. The Company, 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 will
file with FERC to recover a portion of these costs from pipeline customers.
Periodically, the Company may become involved in contractual disputes with
natural gas transmission customers involving potential or threatened abrogation
of contracts by the customers. If the customers are successful, the Company may
not receive the full value of anticipated benefits under the contracts.
Management is of the opinion that these commitments and contingencies will not
have a material adverse effect on the consolidated results of operations or the
financial position of the Company.
6
<PAGE>
Item 2. Management's Discussion and Analysis of Results of Operations and
Financial Condition.
INTRODUCTION
Texas Eastern Transmission Corporation (TETCO) is a wholly owned subsidiary of
PanEnergy Corp, which is an indirect wholly owned subsidiary of Duke Energy
Corporation. TETCO 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 $143.1 million, up
$35.2 million from the comparable period in 1997. This increase is primarily the
result of the favorable resolution of gas supply realignment cost issues,
favorable state property tax rulings and 1997 non-recurring severance expenses,
all of which are included in operating expenses. Market expansion projects,
partially offset by decreased throughput, also contributed to the increase in
net income.
LIQUIDITY AND CAPITAL RESOURCES
For the nine months ended September 30, 1998, capital and investment
expenditures totaled $84.9 million compared with $71.0 million for the same
period in 1997. The increase is primarily due to business expansion projects,
including the Philadelphia Lateral Expansion project completed in March 1998.
The Philadelphia Lateral Expansion is a pipeline restoration which provides up
to 120 million cubic feet per day (MMcf/d) of additional natural gas service to
PECO Energy Company and 8 MMcf/d of new service to Mobil Oil Corp's Paulsboro,
N.J. refinery. Projected 1998 capital and investment expenditures, including
allowance for funds used during construction, are approximately $150.0 million.
These projections are subject to periodic review and revision. Expenditures for
1998 are expected to be funded by cash from operations and/or collection of
intercompany advances receivable.
On August 29, 1998, the FERC approved the Company's settlement to accelerate
recovery of natural gas transition costs and reduce depreciation expense to more
appropriately reflect the estimated useful lives of its facilities, principally
interstate natural gas pipelines. The order was effective October 1, 1998 and
includes a rate moratorium until 2004. Cash flows from operations are not
expected to change for the first two years after implementation due to the
offsetting effect on customer rates of the reduced depreciation expense and
increased recovery of natural gas transition costs. Once the natural gas
transition costs are fully recovered, cash flows from operations are expected to
decrease during 2001 through 2003 by an estimated total of $270 million. For
more information concerning the settlement, see Note 2 to the Consolidated
Financial Statements.
CURRENT ISSUES
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.
7
<PAGE>
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.
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 $2.0 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.
8
<PAGE>
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.
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.
TEXAS EASTERN TRANSMISSION CORPORATION
November 11, 1998 /s/ Richard J. Osborne
--------------------------------------
Richard J. Osborne
Senior Vice President and
Chief Financial Officer
11
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Texas Eastern Transmission Corporation 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> 0000097432
<NAME> TEXAS EASTERN TRANSMISSION CORPORATION
<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> 77500
<ALLOWANCES> 0
<INVENTORY> 12700
<CURRENT-ASSETS> 235800
<PP&E> 3464400
<DEPRECIATION> 982900
<TOTAL-ASSETS> 4207600
<CURRENT-LIABILITIES> 212400
<BONDS> 1204500
0
0
<COMMON> 0
<OTHER-SE> 1950500
<TOTAL-LIABILITY-AND-EQUITY> 4207600
<SALES> 0
<TOTAL-REVENUES> 677100
<CGS> 0
<TOTAL-COSTS> 244300
<OTHER-EXPENSES> 130900
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 83200
<INCOME-PRETAX> 311300
<INCOME-TAX> 85000
<INCOME-CONTINUING> 143100
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 143100
<EPS-PRIMARY> 0 <F1>
<EPS-DILUTED> 0 <F1>
<FN>
<F1>Not meaningful since Texas Eastern Transmission Corporation is a
wholly-owned subsidiary.
</FN>
</TABLE>
