UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-Q
(Mark One)
/x/ Quarterly report pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the quarterly period ended June 30, 1994
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 1-4169
TEXAS GAS TRANSMISSION CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 61-0405152
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
3800 Frederica Street, Owensboro, Kentucky 42301
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (502) 926-8686
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. 1,000 shares as of
August 12, 1994
REGISTRANT MEETS THE CONDITIONS SET FORTH IN GENERAL INSTRUCTIONS H(1)(a)
and (b) OF FORM 10-Q AND IS THEREFORE FILING THIS FORM WITH THE REDUCED
DISCLOSURE FORMAT.
<PAGE>
TEXAS GAS TRANSMISSION CORPORATION
INDEX
Page
Number
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements 3
Condensed Balance Sheets -
June 30, 1994 and December 31, 1993 4-5
Condensed Statements of Income -
Three and Six Months Ended June 30, 1994 and 1993 6
Condensed Statements of Cash Flows -
Six Months Ended June 30, 1994 and 1993 7
Notes to Condensed Financial Statements 8-10
Item 2. Management's Narrative Analysis of
the Results of Operations 11-15
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 16
SIGNATURES 17
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.
Company or group of companies for which report is filed:
TEXAS GAS TRANSMISSION CORPORATION
The condensed financial statements included herein have been prepared by
Texas Gas Transmission Corporation (the Company), without audit, pursuant
to the rules and regulations of the Securities and Exchange Commission.
Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted pursuant to such
rules and regulations. In the opinion of the Company's management,
however, all adjustments, consisting only of normal and recurring
adjustments, necessary for a fair presentation of the financial position
as of the date and results of operations for the periods included herein
have been made and the disclosures contained herein are adequate to make
the information presented not misleading. These condensed financial
statements should be read in conjunction with the financial statements,
notes thereto and management's discussion contained in the Company's 1993
Annual Report on Form 10-K and the Company's 1994 First Quarter Report on
Form 10-Q.
<PAGE>
<TABLE>
TEXAS GAS TRANSMISSION CORPORATION
CONDENSED BALANCE SHEETS
(Thousands of Dollars)
<CAPTION>
June 30, December 31,
1994 1993
ASSETS
<S> <C> <C>
Current Assets:
Cash and temporary cash
investments $ 1,115 $ 292
Receivables:
Trade 2,845 16,441
Affiliates 9,878 4,761
Other 908 1,934
Advances to affiliates 64,076 65,667
Transportation and exchange gas
receivable 18,395 25,112
Costs recoverable from customers:
Gas purchase 3,075 5,590
Gas supply realignment 39,058 19,231
Other 16,685 3,886
Inventories 14,525 14,724
Deferred income tax benefits 18,441 17,680
Other 1,610 2,932
Total current assets 190,611 178,250
Advances to Affiliates 128,000 137,000
Investments, at Cost 2,643 2,635
Property, Plant and Equipment,
at cost:
Natural gas transmission plant 850,428 835,044
Less - Accumulated depreciation
and amortization 194,829 173,201
Property, plant and
equipment, net 655,599 661,843
Other Assets:
Gas stored underground 88,331 92,103
Other 41,642 60,515
Total other assets 129,973 152,618
Total Assets $1,106,826 $ 1,132,346
The accompanying condensed notes are an integral part of these condensed
financial statements.
</TABLE>
<PAGE>
<TABLE>
TEXAS GAS TRANSMISSION CORPORATION
CONDENSED BALANCE SHEETS
(Thousands of Dollars)
<CAPTION>
June 30, December 31,
1994 1993
LIABILITIES AND STOCKHOLDER'S EQUITY
<S> <C> <C>
Current Liabilities:
Current maturities of long-term debt $ - $ 150,000
Payables:
Trade 10,406 13,821
Affiliates 7,803 13,274
Other 7,833 30,714
Advances from affiliates 1,659 1,576
Transportation and exchange gas payable 15,410 17,109
Accrued liabilities 42,486 44,134
Costs refundable to customers:
Accrued gas supply realignment costs 9,500 24,750
Transportation cost adjustment 9,466 4,643
Income taxes refundable 676 676
Upstream producer settlement costs 17,685 1,525
Reserve for regulatory and rate matters 43,430 23,063
Total current liabilities 166,354 325,285
Long-Term Debt 246,115 98,678
Other Liabilities and Deferred Credits:
Income taxes refundable to customers 6,904 7,243
Deferred income taxes 36,428 35,348
Upstream producer settlement costs - 16,145
Other 42,557 42,411
Total other liabilities and
deferred credits 85,889 101,147
Stockholder's Equity:
Common stock, $1.00 par value, 1,000 shares
authorized, issued and outstanding 1 1
Premium on capital stock and other
paid-in-capital 584,712 584,712
Retained earnings 23,755 22,523
Total stockholder's equity 608,468 607,236
Total Liabilities and Stockholder's
Equity $1,106,826 $1,132,346
The accompanying condensed notes are an integral part of these condensed
financial statements.
</TABLE>
<PAGE>
<TABLE>
TEXAS GAS TRANSMISSION CORPORATION
CONDENSED STATEMENTS OF INCOME
(Thousands of Dollars)
<CAPTION>
Three Months Six Months
Ended June 30, Ended June 30,
1994 1993 1994 1993
<S> <C> <C> <C> <C>
Operating Revenues:
Gas sales $30,464$ 49,042$ 73,389$158,238
Gas transportation 63,531 45,688 154,199 95,391
Other 482 981 1,127 2,782
Total operating revenues 94,477 95,711 228,715 256,411
Operating Costs and Expenses:
Cost of gas sold 29,932 24,373 71,830 103,905
Cost of transportation of gas
by others 10,986 10,567 28,276 23,375
Operation and maintenance 14,956 14,944 27,850 27,435
Administrative and general 14,820 15,207 32,179 29,244
Depreciation and amortization 11,072 9,469 20,879 19,048
Taxes other than income taxes 3,546 3,192 7,362 6,543
Total operating costs and expenses 85,312 77,752 188,376 209,550
Operating Income 9,165 17,959 40,339 46,861
Other (Income) Deductions:
Interest expense 7,159 6,352 13,606 12,689
Interest income (2,907) (2,777) (5,374) (5,816)
Miscellaneous other deductions 162 719 931 1,861
Total other (income) deductions 4,414 4,294 9,163 8,734
Income Before Income Taxes 4,751 13,665 31,176 38,127
Provision for Income Taxes 1,992 5,289 12,454 14,883
Net Income $2,759 $8,376 $18,722 $23,244
The accompanying condensed notes are an integral part of these condensed
financial statements.
</TABLE>
<PAGE>
<TABLE>
TEXAS GAS TRANSMISSION CORPORATION
CONDENSED STATEMENTS OF CASH FLOWS
(Thousands of Dollars)
<CAPTION>
Six Months Ended June 30,
1994 1993
<S> <C> <C>
Cash flows from operating activities:
Net income $ 18,722 $ 23,244
Adjustments to reconcile net income to net
cash from operating activities:
Depreciation and amortization 21,767 19,882
Deferred income taxes 318 3,249
Decrease (increase) in:
Receivables 12,772 17,210
Transportation and exchange gas
receivable 6,716 21,786
Inventories 199 10,059
Deferred gas costs 2,516 (460)
Other current assets (20,151) 3,663
Increase (decrease) in:
Payables (34,939) (14,464)
Transportation and exchange gas
payable (1,699) (20,387)
Accrued liabilities (16,882) (32,730)
Reserve for regulatory and
rate matters 22,414 2,766
Other current liabilities 4,822 -
Other, net 10,180 (7,257)
Net cash from operating
activities 26,755 26,561
Cash flows from financing activities:
Advances from affiliates, net 83 129
Long-term debt - repayment (150,000) -
- borrowing, net 146,753 -
Dividends on common stock (17,490) (20,825)
Net cash from financing
activities (20,654) (20,696)
Cash flows from investing activities:
Property, plant and equipment, net of
equity AFUDC (17,080) (8,214)
Advances to affiliates, net 10,591 222
Other, net 1,211 1,906
Net cash from investing
activities (5,278) (6,086)
Net increase (decrease) in cash and
cash equivalents 823 (221)
Cash and cash equivalents at beginning
of period 292 560
Cash and cash equivalents at end
of period $ 1,115 $ 339
_______________________________________________________________________
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest (net of amount capitalized) $ 12,191 $ 15,926
Income taxes, net 23,274 3,923
The accompanying condensed notes are an integral part of these condensed
financial statements.
</TABLE>
<PAGE>
TEXAS GAS TRANSMISSION CORPORATION
NOTES TO CONDENSED FINANCIAL STATEMENTS
A. CORPORATE STRUCTURE AND CONTROL
AND BASIS OF PRESENTATION
Corporate Structure and Control
Texas Gas Transmission Corporation (the Company) is a wholly owned
subsidiary of Transco Gas Company (TGC), which is a wholly owned
subsidiary of Transco Energy Company (Transco). As used herein, the term
Transco refers to Transco Energy Company and its wholly owned subsidiary
companies, the term TGMC refers to Transco Gas Marketing Company, a wholly
owned subsidiary of Transco, and its wholly owned subsidiary companies;
and the term TGPL refers to Transcontinental Gas Pipe Line Corporation, a
wholly owned subsidiary of TGC, unless the context otherwise requires.
The condensed financial statements have been prepared from the books and
records of the Company without audit. Certain information and footnote
disclosures normally included in financial statements prepared in
accordance with generally accepted accounting principles have been
condensed or omitted. These condensed financial statements should be read
in conjunction with the financial statements, notes thereto and
management's discussion contained in the Company's 1993 Annual Report on
Form 10-K and the Company's 1994 First Quarter Report on Form 10-Q.
Certain reclassifications have been made in the 1993 financial statements
to conform to the 1994 presentation.
B. REGULATORY AND RATE MATTERS
There have been no new reportable developments from those described in the
Company's 1993 Annual Report on Form 10-K and the Company's 1994 First
Quarter Report on Form 10-Q other than described below.
FERC Order 636
As discussed in the Company's 1993 Annual Report on Form 10-K, effective
November 1, 1993, the Company restructured its business to implement the
provisions of FERC Order 636. The Company currently estimates its
transition costs under FERC Order 636 will be primarily related to Gas
Supply Realignment (GSR) contract termination costs, GSR pricing
differential costs incurred pursuant to the Company's auction process and
unrecovered purchased gas costs. Through June 30, 1994, the Company had
paid or committed to pay $41.9 million of GSR costs, as discussed below in
"Gas Supply Realignment Costs." Pursuant to the provisions of FERC Order
636, the Company expects that any transition costs incurred will be fully
recovered from its customers.
Pursuant to FERC Order 636, the Company terminated its Purchased Gas
Adjustment (PGA) clause on November 1, 1993. The Company's right to file
for future recovery, via additional
<PAGE>
direct billings, of pre-November 1, 1993 adjustments to purchased gas
costs, expired on July 31, 1994. However, the Company has filed for an
extension of the July 31, 1994 deadline to permit recovery of amounts not
yet resolved under certain contracts in litigation or pending settlements.
General Rate Issues
On April 29, 1993, the Company filed a general rate case (Docket No. RP93-
106) which became effective on November 1, 1993, subject to refund. A
settlement agreement was filed on June 14, 1994. The presiding
Administrative Law Judge (ALJ) certified the agreement to the FERC on July
18, 1994 as an uncontested settlement. The Company has provided a reserve
of approximately $37 million at June 30, 1994 which it believes is
adequate for any refunds, including interest, that may be required. Such
refunds are currently expected to be made during the fourth quarter of
1994. These refund obligations increase with the passage of time until
the refunds are made.
On July 29, 1994, the FERC issued an order accepting the June 30, 1994
filing made by the Company to resolve the transportation and exchange
imbalances pre-dating the implementation of FERC Order 636. The order
approved the timetable proposed in the filing whereby such imbalances will
be reconciled by December 31, 1994. Pursuant to the filing, these
reconciled imbalances will be repaid in cash or through receipt or
delivery of gas, upon agreements for allocation and as permitted by
operating conditions, by the end of 1995.
Gas Supply Realignment Costs
Through June 30, 1994, the Company had paid or committed to pay a total of
$41.9 million for GSR costs, primarily as a result of the GSR contract
terminations. The Company continues to make quarterly filings to recover
its GSR costs as such costs are paid. As of June 30, 1994, the Company
had recovered $3.9 million of such costs.
FERC Orders 500 and 528
On August 4, 1994, the FERC issued an order approving the settlement
agreements of the Company and its upstream pipelines in the Company's
pending FERC Order 528 flowthrough proceedings. Pursuant to the
settlements, the Company will flow through to its former sales customers
approximately $39 million, plus interest, which will resolve all the
Company's issues related to the flowthrough of upstream pipelines' take-or-
pay costs.
Reserve for Regulatory and Rate Matters
The Company has established reserves for its outstanding regulatory and
rate matters which it believes are adequate to provide for any costs
incurred or refunds to be made in regard to the resolution of its
regulatory and rate issues. Although no assurances can be given, the
Company believes that the resolution of these matters will not have a
material adverse effect on its financial position or results of
operations.
<PAGE>
C. Royalty Claims and Legal Proceedings
There have been no new reportable developments from those described in the
Company's 1993 Annual Report on Form 10-K with regard to royalty claims
and legal proceedings.
D. Financing
On April 11, 1994, the Company issued $150 million of 8.625% ten-year
Notes (Notes) due April 1, 2004. The Notes are not redeemable prior to
maturity and are general unsecured obligations of the Company. Proceeds
from the issuance of the Notes were used to redeem the Company's 10%
Debentures on April 29, 1994.
As discussed in the Company's 1993 Annual Report on Form 10-K, certain of
Transco's credit facilities prohibit the Company from, among other things,
incurring or guaranteeing any additional indebtedness (except for
indebtedness incurred to refinance existing indebtedness), issuing
preferred stock or advancing cash to affiliates other than Transco.
Further, these credit facilities and Transco's indentures contain
restrictive covenants which could limit Transco's ability to make
additional borrowings and, therefore, under certain circumstances, its
ability to repay advances or make capital contributions to the Company.
<PAGE>
Item 2. Management's Narrative Analysis of the Results of
Operations (Filed Pursuant to General Instruction H)
Financial Analysis of Operations
Six Months Ended June 30, 1994 Compared to
Six Months Ended June 30, 1993
The following discussion should be read in conjunction with the condensed
financial statements, notes and management's discussion contained in the
Company's 1993 Annual Report on Form 10-K and in the Company's 1994 First
Quarter Report on Form 10-Q and with the condensed financial statements
and notes contained in this report.
On November 1, 1993, the Company implemented FERC Order 636, which
required pipelines to "unbundle" services and offer transportation and
storage services separately from the sale of gas. As a result, the
Company's gas sales result primarily from requirements to meet its
remaining gas purchase commitments. The Company's monthly gas purchases
under non-market-responsive commitments are sold at auction with any
underrecovery of such costs deferred as a regulatory asset for future
recovery as a transition cost. All other gas purchase and sales
commitments are being managed by the Company's marketing affiliate, TGMC,
as agent for the Company. The Company's gas sales currently have no
impact on its results of operations.
The Company's implementation of FERC Order 636 included a change in its
rate design method from Modified Fixed Variable (MFV) to Straight Fixed
Variable (SFV). Under the MFV method, all fixed costs, with the exception
of equity return and income taxes, were included in the demand component
of the charge to customers; the equity return and income tax components of
cost of service were included as part of the volumetric charge to
customers. Under the SFV method, all fixed costs, including equity return
and income taxes, are included in the demand charge to customers.
Accordingly, under SFV, overall throughput has a less significant impact
on the Company's results of operations.
There are various factors which may affect the Company's actual operating
results, including, but not limited to, competition from other pipelines,
its rate design structure, cost management, and, to a lesser extent,
fluctuations in its throughput which may result from a number of factors,
including weather. Furthermore, while the use of SFV rate design limits
the Company's opportunity to earn incremental revenues through increased
throughput, it also minimizes the Company's risk associated with
fluctuations in throughput. The Company believes that under FERC Order
636, with SFV rates and its anticipated transition cost recovery, its rate
structure will remain competitive.
Operating and Net Income
Operating income was $7 million lower for the six months ended June 30,
1994 than for the six months ended June 30, 1993. The decrease in
operating income was primarily due to lower interruptible transportation
revenues resulting from the implementation of FERC Order 636, seasonal
demand revenues that are lower in the second and third quarters than in
the first and fourth quarters, and reserving for an expected stated pre-
tax rate of return under the
<PAGE>
Company's pending general rate case settlement which is lower than that
included in the Company's previous rates. Net income was $5 million lower
than 1993 for the same reasons that resulted in lower operating income,
including the related income tax effects.
As a result of reduced interruptible transportation revenues due to the
implementation of FERC Order 636 and the expected lower stated pre-tax
rate of return under the Company's pending general rate settlement, the
Company's interim operating income during the third quarter of 1994 could
be lower than the comparable period in 1993 and 1994 annual operating
income could be lower than the prior year. Additionally, the Company's
interim operating results are impacted by customers' ability to reserve
firm transportation levels on a seasonal basis; which, combined with SFV
rate design, results in lower operating income in the second and third
quarters than in the first and fourth quarters.
Operating Revenues
Operating revenues were $28 million lower for the six months ended June
30, 1994 than for the six months ended June 30, 1993. The decrease in
revenues was primarily a result of lower gas sales revenues due to
implementation of FERC Order 636, which ended the Company's bundled sales
service. As previously discussed, effective November 1, 1993,
substantially all of the Company's unbundled gas sales are managed by its
marketing affiliate, TGMC, as agent for the Company.
The increase in gas transportation revenues was primarily due to higher
firm transportation demand revenues as a result of the conversion of
customers' firm sales service to firm transportation service due to the
implementation of FERC Order 636. Although long-haul transportation
volumes increased, the decrease in average commodity transportation rates,
which resulted from the implementation of FERC Order 636, SFV rates and
reduced interruptible transportation revenues, more than offset the effect
on transportation revenues of the higher transportation volumes.
Operating Costs and Expenses
Cost of gas sold was $32 million lower for the six months ended June 30,
1994 than for the six months ended June 30, 1993. This decrease was
primarily due to the implementation of FERC Order 636 and the resultant
decrease in gas sales volumes. The Company's administrative and general
expenses increased $3 million, primarily due to higher costs of
postretirement benefits other than pensions which are included in rates
and to the agency fees paid to TGMC for management of its unbundled gas
sales which began in November 1993.
System Deliveries
As shown in the table below, the Company's total mainline deliveries for
the six months ended June 30, 1994 increased 23.8 Bcf, or 8.0%, as
compared to the six months ended June 30, 1993, primarily due to increased
service to other interstate natural gas pipelines and slightly colder
weather on a degree-day basis during the first quarter of 1994 in the
Company's primary market area. The revenues associated with short-haul
transportation volumes are not material to the Company.
<PAGE>
Six Months
Ended June 30,
System Deliveries (Bcf): 1994 1993
Sales - 39.6
Long-haul transportation 321.1 257.7
Total mainline deliveries 321.1 297.3
Short-haul transportation 97.7 101.8
Total system deliveries 418.8 399.1
The Company's facilities are divided into five rate zones. Generally, gas
delivered in the northern four zones is classified as long-haul
transportation. Gas delivered in the remaining southernmost zone is
classified as short-haul transportation. The Company's sales under the
FERC Order 636 environment are generally made in the southernmost zone;
however, the sales are made off system and, therefore, do not constitute
system deliveries.
Capital Resources and Liquidity
Introduction
The Company is an indirect, wholly owned subsidiary of Transco, and as
such, may be affected by the financial position and performance of Transco
and its other subsidiaries.
Over the past two years, Transco has made significant progress in
improving its results of operations and financial flexibility. Transco
remains committed to deleveraging its balance sheet, further eliminating
or mitigating the potentially adverse impact from the resolution of
remaining litigation and contingencies and further improving financial
results.
Financing
On April 11, 1994, the Company issued $150 million of 8.625% ten-year
Notes due April 1, 2004. The Notes are not redeemable prior to maturity
and are general unsecured obligations of the Company. Proceeds from the
issuance of the Notes were used to redeem the Company's 10% Debentures on
April 29, 1994.
Certain of Transco's credit facilities prohibit the Company, from among
other things, incurring or guaranteeing any additional indebtedness
(except for indebtedness incurred to refinance existing indebtedness),
issuing preferred stock or advancing cash to affiliates other than
Transco. Further, these credit facilities and Transco's indentures
contain restrictive covenants which could limit Transco's ability to make
additional borrowings, and, therefore, under certain circumstances, its
ability to repay advances or make capital contributions to the Company.
Cash Flows and Capitalization
Net cash inflows from operating activities for the six months ended June
30, 1994 were approximately equal to the six months ended June 30, 1993,
primarily as a result of the January
<PAGE>
1993 payment of the RP90-104 rate refunds in the amount of $36 million and
the 1994 collection of amounts reserved for RP93-106 rate refunds, offset
by a higher reduction in payables and by higher net withdrawals from gas
stored underground during the first six months of 1993.
Net cash outflows from financing activities for the six months ended June
30, 1994 were approximately equal to the six months ended June 30, 1993,
primarily due to decreased dividends paid to Transco offset by the net
effects of the Company's debt repayment and proceeds from the Company's
April 1994 debt issue.
Net cash outflows from investing activities for the six months ended June
30, 1994 were approximately $1 million lower than the six months ended
June 30, 1993, primarily due to higher net repayments by Transco of cash
advanced to Transco under Transco's cash management program partially
offset by increased capital expenditures.
The Company's capital expenditures for the first six months of 1994 were
$17 million, including $12 million for maintenance of existing facilities
and $5 million for market expansion projects. Capital expenditures for
the first six months of 1993 were $8 million, including $7 million for
maintenance of existing facilities and $1 million for market expansion
projects.
The Company's debt as a percentage of total capitalization was 29% at June
30, 1994. Due to the maturity of the Company's 10% Debentures in 1994,
debt, net of current maturities, was 14% of total capitalization at
December 31, 1993.
Transition Cost Recoveries
The Company continues to make quarterly filings to recover its GSR costs
as such costs are paid. As of June 30, 1994, the Company had recovered
$3.9 million of such costs.
Pursuant to FERC Order 636, the Company terminated its PGA clause on
November 1, 1993. The Company's right to file for future recovery, via
additional direct billings, of pre-November 1, 1993 adjustments to
purchased gas costs, expired on July 31, 1994. However, the Company has
filed for an extension of the July 31, 1994 deadline to permit recovery of
amounts not yet resolved under certain contracts in litigation or pending
settlements.
Other Future Capital Requirements and Contingencies
The Company's future capital requirements and contingencies are discussed
in the Company's 1993 Annual Report on Form 10-K. Other than described in
Note B of the Notes to Condensed Financial Statements and below, there
have been no new reportable developments from those described in the
Company's 1993 Annual Report on Form 10-K or the Company's 1994 First
Quarter Report on Form 10-Q, with regard to other future capital
requirements and contingencies.
<PAGE>
Liberty Pipeline Company
In 1992, Liberty Pipeline Company, a partnership of interstate pipelines
and local distribution companies, filed for FERC approval to construct and
operate a natural gas pipeline to provide 500 million cubic feet per day
in firm transportation service to the greater New York City area. The
partnership was comprised of subsidiaries of Transco, two other interstate
pipelines and subsidiaries of three Transco customers in New York.
On August 1, 1994, the partners of Liberty Pipeline Company sent a letter
to the FERC, asking it to postpone indefinitely its review of the Liberty
Pipeline project. The decision follows the withdrawal in early June of
one key shipper and project partner and the recent with
drawal of another shipper. The partners also reaffirmed their belief that
an additional delivery point to the New York facilities system, as
proposed by Liberty, will be necessary in the future and advised FERC that
the Liberty partners will continue to pursue that goal.
Rate Matters
As discussed in Note B of the Notes to Condensed Financial Statements, the
presiding ALJ certified a settlement agreement of the Company's general
rate case (RP93-106) to the FERC on July 18, 1994 as an uncontested
settlement. The Company has provided a reserve of approximately $37
million at June 30, 1994 which it believes to be adequate for any refunds,
including interest, that may be required. Such refunds are currently
expected to be made during the fourth quarter of 1994. These refund
obligations increase with the passage of time until the refunds are made.
Conclusion
Although no assurances can be given, the Company currently believes that
the aggregate of cash flows from operating activities supplemented, when
necessary, by repayments of funds advanced to Transco, will provide the
Company with sufficient liquidity to meet its capital requirements.
<PAGE>
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits.
None.
(b) Reports on Form 8-K.
The Company filed Form 8-K, Current Report dated April
13, 1994, in connection with the sale of $150 million of
Notes due April 1, 2004 of Texas Gas Transmission
Corporation pursuant to its Registration Statement on
Form S-2 under the Securities Act of 1933 (Registration
No. 33-52707), which became effective March 28, 1994.
<PAGE>
S I G N A T U R E S
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 GAS TRANSMISSION CORPORATION
DATE: August 12, 1994 BY: /s/ G. D. Lauderdale
G. D. Lauderdale
Senior Vice President
Rates and Finance/
Treasurer
DATE: August 12, 1994 BY: /s/ E. J. Ralph
E. J. Ralph
Vice President and Controller
<PAGE>
