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 March 31, 1999
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: (270) 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 May 9, 1999
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
TABLE OF CONTENTS
Page
Part I. Financial Information
Item 1. Financial Statements
Consolidated Balance Sheets - Assets........................... 3
Consolidated Balance Sheets - Liabilities and Stockholder's
Equity....................................................... 4
Consolidated Statements of Income.............................. 5
Consolidated Statements of Cash Flows.......................... 6
Condensed Notes to Consolidated Financial Statements........... 7
Item 2. Management's Narrative Analysis of the Results of Operations... 11
Part II. Other Information
Item 6. Exhibits and Reports on Form 8-K............................... 15
Signature............................................................... 16
Certain matters discussed in this report, excluding historical
information, include forward-looking statements. Although Texas
Gas Transmission Corporation believes such forward-looking
statements are based on reasonable assumptions, no assurance can
be given that every objective will be achieved. Such statements
are made in reliance on the "safe harbor" protections provided
under the Private Securities Reform Act of 1995. Additional
information about issues that could lead to material changes in
performance is contained in Texas Gas Transmission Corporation's
Annual Report on Form 10-K.
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
TEXAS GAS TRANSMISSION CORPORATION
CONSOLIDATED BALANCE SHEETS
(Thousands of Dollars)
(Unaudited)
<TABLE>
<CAPTION>
March 31, December 31,
ASSETS 1999 1998
<S> <C> <C>
Current Assets:
Cash and temporary cash investments $ 323 $ 201
Receivables:
Trade 9,267 8,493
Affiliates 1,021 1,049
Other 1,246 702
Transportation and exchange receivable 7,015 2,807
Advances to affiliates 76,133 82,755
Inventories 15,709 15,341
Deferred income taxes 14,045 14,496
Costs recoverable from customers 9,891 10,085
Gas stored underground 10,409 10,409
Other 2,160 1,676
Total current assets 147,219 148,014
Investments, at cost 346 340
Property, Plant and Equipment, at cost:
Natural gas transmission plant 1,063,827 1,069,259
Less -- Accumulated depreciation and
amortization 123,485 128,759
Property, plant and equipment, net 940,342 940,500
Other Assets:
Gas stored underground 99,024 113,468
Costs recoverable from customers 51,824 52,358
Other 36,157 38,991
Total other assets 187,005 204,817
Total Assets $1,274,912 $1,293,671
</TABLE>
The accompanying condensed notes are an integral part of these
consolidated financial statements.
<PAGE>
TEXAS GAS TRANSMISSION CORPORATION
CONSOLIDATED BALANCE SHEETS
(Thousands of Dollars)
(Unaudited)
<TABLE>
<CAPTION>
March 31, December 31,
LIABILITIES AND STOCKHOLDER'S EQUITY 1999 1998
<S> <C> <C>
Current Liabilities:
Payables:
Trade $ 2,770 $ 3,016
Affiliates 38,644 17,828
Other 3,051 7,026
Gas Payables:
Transportation and exchange 5,734 12,764
Storage 10,391 13,010
Accrued taxes 22,025 22,752
Accrued interest 1,510 6,557
Other accrued liabilities 43,360 48,253
Reserve for regulatory and rate matters 2,826 20,150
Total current liabilities 130,311 151,356
Long-Term Debt 251,087 251,160
Other Liabilities and Deferred Credits:
Deferred income taxes 160,172 156,253
Postretirement benefits other than
pensions 40,857 41,392
Other 57,695 60,213
Total other liabilities and deferred
credits 258,724 257,858
Contingent Liabilities and Commitments
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 627,046 627,046
Retained earnings 7,743 6,250
Total stockholder's equity 634,790 633,297
Total Liabilities and Stockholder's
Equity $1,274,912 $1,293,671
</TABLE>
The accompanying condensed notes are an integral part of these
consolidated financial statements.
<PAGE>
TEXAS GAS TRANSMISSION CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(Thousands of Dollars)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended March 31,
1999 1998
<S> <C> <C>
Operating Revenues:
Gas transportation $ 87,391 $ 87,041
Gas sales 101 4,178
Other 876 570
Total operating revenues 88,368 91,789
Operating Costs and Expenses:
Cost of gas transportation 1,759 6,075
Cost of gas sold 106 4,097
Operation and maintenance 11,528 12,015
Administrative and general 13,417 13,108
Depreciation and amortization 11,033 10,529
Taxes other than income taxes 4,289 4,136
Total operating costs and expenses 42,132 49,960
Operating Income 46,236 41,829
Other Deductions (Income):
Interest expense 4,875 5,296
Interest income (1,036) (1,347)
Miscellaneous other deductions 60 212
Total other deductions 3,899 4,161
Income Before Income Taxes 42,337 37,668
Provision for Income Taxes 16,844 14,981
Net Income $ 25,493 $ 22,687
</TABLE>
The accompanying condensed notes are an integral part of these
consolidated financial statements.
<PAGE>
TEXAS GAS TRANSMISSION CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Thousands of Dollars)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended March 31,
1999 1998
<S> <C> <C>
OPERATING ACTIVITIES:
Net income $ 25,493 $ 22,687
Adjustments to reconcile to cash
provided from operations:
Depreciation and amortization 11,033 10,529
Provision for deferred income taxes 4,370 4,728
Changes in receivables sold (900) (6,300)
Changes in receivables (4,602) (4,583)
Changes in inventories (368) (24)
Changes in other current assets (294) 315
Changes in accounts payable (4,221) (4,902)
Changes in accrued liabilities (37,680) (74)
Other, including changes in noncurrent
assets and liabilities 35,507 18,112
Net cash provided by operating
activities 28,338 40,488
FINANCING ACTIVITIES:
Dividends and returns of capital (24,000) (21,000)
Net cash (used in) financing
activities (24,000) (21,000)
INVESTING ACTIVITIES:
Property, plant and equipment:
Capital expenditures, net of AFUDC (8,769) (11,194)
Proceeds from sales and salvage values,
net of costs of removal (2,069) 614
Advances to affiliates, net 6,622 (8,892)
Net cash (used in) investing
activities (4,216) (19,472)
Increase in cash and cash equivalents 122 16
Cash and cash equivalents at beginning
of period 201 235
Cash and cash equivalents at end of period $ 323 $ 251
</TABLE>
The accompanying condensed notes are an integral part of these
consolidated financial statements.
<PAGE>
TEXAS GAS TRANSMISSION CORPORATION
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
A. Corporate Structure and Control and Basis of Presentation
Corporate Structure and Control
Texas Gas Transmission Corporation and its wholly owned
subsidiary, TGT Enterprises, Inc., (collectively, Texas Gas) is
wholly owned by Williams Gas Pipeline Company, which is a wholly
owned subsidiary of The Williams Companies, Inc. (Williams).
Seasonal Variation
Operating income may vary by quarter. Based on current rate
structure, Texas Gas experiences higher operating income in the
first and fourth quarters as compared to the second and third
quarters.
Basis of Presentation
The consolidated financial statements have been prepared from
the books and records of Texas Gas without audit. Certain
information and footnote disclosures normally included in
consolidated financial statements prepared in accordance with
generally accepted accounting principles have been condensed or
omitted. The accompanying unaudited consolidated financial
statements include all adjustments, both normal recurring and
others, which, in the opinion of Texas Gas' management, are
necessary to present fairly its financial position at March 31,
1999, and results of operations and cash flows for the three
months ended March 31, 1999 and 1998. These consolidated
financial statements should be read in conjunction with the
financial statements, notes thereto and management's narrative
analysis contained in Texas Gas' 1998 Annual Report on Form 10-K.
B. Contingent Liabilities and Commitments
Regulatory and Rate Matters and Related Litigation
FERC Order 636
Effective November 1, 1993, Texas Gas restructured its
business to implement the provisions of FERC Order 636, which,
among other things, required pipelines to unbundle their merchant
role from their transportation services. FERC Order 636 also
provides that pipelines should be allowed the opportunity to
recover all prudently incurred transition costs which, for Texas
Gas, are primarily related to gas supply realignment (GSR) costs
and unrecovered purchased gas costs. Certain aspects of Texas
Gas' FERC Order 636 restructuring are under appeal.
<PAGE>
In September 1995, Texas Gas received FERC approval of a
settlement agreement which resolves all issues regarding Texas
Gas' recovery of GSR costs. The settlement provides that Texas
Gas will recover 100 percent of its GSR costs up to $50 million,
will share in costs incurred between $50 million and $80 million
and will absorb any GSR costs above $80 million. Under the
settlement, all challenges to these costs, on the grounds of
imprudence or otherwise, will be withdrawn and no future
challenges will be filed. Ninety percent of the cost recovery is
collected through demand surcharges on Texas Gas' firm
transportation services; the remaining ten percent should be
recovered from its interruptible transportation service.
Effective July 1, 1997, the FERC allowed Texas Gas to suspend its
GSR surcharge applicable to firm transportation services due to
the full recovery of incurred GSR costs allocated to these
services. The GSR cost increment included in the interruptible
transportation rates, as well as no-notice and firm
transportation overrun rates, remains in effect. To date, Texas
Gas has paid $76.2 million and collected $66.4 million, plus
interest, related to GSR. Texas Gas expects to pay no more than
$80 million for GSR costs, primarily as a result of contract
terminations, and has provided reserves for the remaining GSR
costs it may be required to pay, as well as a regulatory asset
for the estimated future amounts recoverable.
General Rate Issues
On April 30, 1997, Texas Gas filed a general rate case (Docket
No. RP97-344) effective November 1, 1997, subject to refund. On
March 20, 1998, Texas Gas filed an offer of settlement. On July
15, 1998, the FERC issued an "Order Approving Offer of Settlement
and Remanding Case for Hearing" which approved the settlement
without modification, but remanded the proceeding back to an
administrative law judge for the sole purpose of conducting a
hearing on an issue related to production area rates raised by a
single intervenor. On October 14, 1998, the FERC issued an
"Order Denying Rehearing and Providing Guidance on Hearing
Issues." On November 9, 1998, that intervenor filed a notice of
withdrawal from the case and on November 10, 1998, the presiding
administrative law judge issued an order suspending the
procedural schedule on the remanded hearing. No parties
requested rehearing of the October 14, 1998, order and on
November 30, 1998, Texas Gas filed tariff sheets to implement the
settlement. Texas Gas had established an adequate reserve for
the difference between collected rates and the settlement rates.
Refunds, including interest, of $17.2 million were distributed to
customers on January 13, 1999.
Royalty Claims and Producer Litigation
In connection with Texas Gas' renegotiations of supply
contracts with producers to resolve take-or-pay and other
contract claims, Texas Gas has entered into certain settlements
which may require the indemnification by Texas Gas of certain
claims for royalties which a producer may be required to pay as a
result of such settlements. Texas Gas has been made aware of
demands on producers for additional royalties and may receive
other demands which could result in claims against Texas Gas
pursuant to the indemnification provision in its settlements.
Indemnification for royalties will depend on, among other things,
the specific lease provisions between the producer and the lessor
and the terms of the settlement between the producer and Texas
Gas.
<PAGE>
Pursuant to such an indemnity, in January 1998, Texas Gas
reimbursed a producer for approximately $1.7 million in costs
paid to settle a take-or-pay royalty claim. Texas Gas may file
to recover 75 percent of any such amounts it may be required to
pay pursuant to indemnifications for royalties under the
provisions of FERC Order 528. Texas Gas has provided reserves
for the estimated settlement costs of its royalty claims and
litigation.
Environmental Matters
As of March 31, 1999, Texas Gas had a reserve of approximately
$1.7 million for estimated costs associated with environmental
assessment and remediation, including remediation associated with
the historical use of polychlorinated biphenyls and hydrocarbons.
This estimate depends upon a number of assumptions concerning the
scope of remediation that will be required at certain locations
and the cost of remedial measures to be undertaken. Texas Gas is
continuing to conduct environmental assessments and is
implementing a variety of remedial measures that may result in
increases or decreases in the total estimated costs.
Texas Gas currently is either named as a potentially
responsible party or has received an information request
regarding its potential involvement at certain Superfund and
state waste disposal sites. The anticipated remediation costs,
if any, associated with these sites have been included in the
reserve discussed above.
Texas Gas considers environmental assessment and remediation
costs and costs associated with compliance with environmental
standards to be recoverable through rates, as they are prudent
costs incurred in the ordinary course of business. The actual
costs incurred will depend on the actual amount and extent of
contamination discovered, the final cleanup standards mandated by
the U.S. Environmental Protection Agency or other governmental
authorities, and other factors.
Other Legal Issues
In 1998, the United States Department of Justice informed
Williams that Jack Grynberg, an individual, had filed claims in
the United States District Court for the District of Colorado
under the False Claims Act against Williams and certain of its
wholly owned subsidiaries including Texas Gas, Williams Gas
Pipelines Central, Inc., Kern River Gas Transmission Company,
Northwest Pipeline Corporation, Williams Gas Pipeline Company,
Transcontinental Gas Pipe Line Corporation, and Williams
Production Company. Mr. Grynberg has also filed claims against
approximately 300 other energy companies and alleges that the
defendants violated the False Claims Act in connection with the
measurement and purchase of hydrocarbons. The relief sought is
an unspecified amount of royalties allegedly not paid to the
federal government, treble damages, a civil penalty, attorneys'
fees, and costs. On April 9, 1999, the United States Department
of Justice announced that it was declining to intervene in any of
the Grynberg qui tam cases; including the action filed against
the Williams entities in the United States District Court for the
District of Colorado.
<PAGE>
Summary of Contingent Liabilities and Commitments
While no assurances may be given, Texas Gas does not believe
that the ultimate resolution of the foregoing matters, taken as a
whole and after consideration of amounts accrued, insurance
coverage, potential recovery from customers or other
indemnification arrangements, will have a materially adverse
effect on Texas Gas' future financial position, results of
operations or cash flow requirements.
<PAGE>
Item 2. Management's Narrative Analysis of the Results of Operations
(Filed Pursuant to General Instruction H)
Financial Analysis of Operations
Three Months Ended March 31, 1999 Compared to
Three Months Ended March 31, 1998
Operating income was $4.4 million higher for the three months
ended March 31, 1999, than for the three months ended March 31,
1998. The increase in operating income was due primarily to
lower cost of gas transportation. Operating income also
increased due to recognition of $3.0 million of previously
deferred revenues associated with allocations related to Texas
Gas' January 1999 GSR reconciliation filing with the FERC, offset
by a first quarter 1998 adjustment to estimated GSR costs of $2.0
million. Compared to 1998, net income was $2.8 million higher
for the same reasons.
Operating revenues decreased $3.4 million primarily
attributable to lower gas sales offset by the recognition of
deferred revenues discussed above. Texas Gas' gas sales result
from requirements to meet its pre-Order 636 gas purchase
commitments, substantially all of which are managed by Texas Gas'
gas marketing affiliate, Williams Energy Services Company, as
exclusive agent for Texas Gas. Although the sales and purchase
commitments remain in Texas Gas' name, their management and any
associated profit or loss is solely the responsibility of the
agent. Therefore, the resulting sales and purchases have no
impact on Texas Gas' results of operations. Total deliveries
were 235.9 Tbtu and 219.9 Tbtu for the first quarter of 1999 and
1998, respectively.
Operating costs and expenses decreased $7.8 million primarily
attributable to lower cost of gas transportation and lower cost
of gas sold, including a 1998 adjustment to GSR costs discussed
above.
Financial Condition and Liquidity
Through the years, Texas Gas has consistently maintained its
financial strength and experienced strong operational results.
Williams' ownership of Texas Gas further enhances its financial
and operational strength, as well as allows Texas Gas to take
advantage of new opportunities for growth. Texas Gas expects to
access public and private capital markets, as needed, to finance
its own capital requirements.
As of March 31, 1999, Texas Gas has $100 million of shelf
availability remaining under a Registration Statement filed with
the Securities and Exchange Commission in 1997.
Texas Gas is a participant with other Williams subsidiaries in
a $1 billion credit agreement under which Texas Gas may borrow up
to $200 million, subject to borrowings by other affiliated
companies. Interest rates vary with current market conditions.
To date, Texas Gas has no amounts outstanding under this
facility.
<PAGE>
Texas Gas is a participant in Williams' cash management
program. The advances due Texas Gas by Williams are represented
by demand notes payable. The interest rate on intercompany demand
notes is the London Interbank Offered Rate on the first day of
the month plus an applicable margin based on the current Standard
and Poor's Rating of the Borrower.
Texas Gas' capital expenditures for the first three months of
1999 and 1998 were $8.8 and $11.2 million, respectively. Capital
expenditures for 1999 are expected to approximate $80.3 million.
Texas Gas' debt as a percentage of total capitalization at March
31, 1999 and December 31, 1998 was 28.3% and 28.4%, respectively.
On April 30, 1997, Texas Gas filed a general rate case (Docket
No. RP97-344) effective November 1, 1997, subject to refund. On
March 20, 1998, Texas Gas filed an offer of settlement. On July
15, 1998, the FERC issued an "Order Approving Offer of Settlement
and Remanding Case for Hearing" which approved the settlement
without modification, but remanded the proceeding back to an
administrative law judge for the sole purpose of conducting a
hearing on an issue related to production area rates raised by a
single intervenor. On October 14, 1998, the FERC issued an
"Order Denying Rehearing and Providing Guidance on Hearing
Issues." On November 9, 1998, that intervenor filed a notice of
withdrawal from the case and on November 10, 1998, the presiding
administrative law judge issued an order suspending the
procedural schedule on the remanded hearing. No parties
requested rehearing of the October 14, 1998, order and on
November 30, 1998, Texas Gas filed tariff sheets to implement the
settlement. Texas Gas had established an adequate reserve for
the difference between collected rates and the settlement rates.
Refunds, including interest, of $17.2 million were distributed to
customers on January 13, 1999.
Year 2000 Compliance
Williams, including Texas Gas, initiated an enterprise-wide
project in 1997 to address the year 2000 compliance issue for
both traditional information technology areas and non-traditional
areas, including embedded technology that is prevalent
throughout the company. This project focuses on all technology
hardware and software, external interfaces with customers and
suppliers, operations process control, automation and
instrumentation systems, and facility items. The phases of the
project are awareness, inventory and assessment, renovation and
replacement, and testing and validation. The awareness and
inventory/assessment phases of this project as they relate to
both traditional and non-traditional information technology areas
have been substantially completed. During the inventory and
assessment phase, all systems with possible year 2000
implications were inventoried and classified into five
categories: 1) highest, business critical, 2) high, compliance
necessary within a short period of time following January 1,
2000, 3) medium, compliance necessary within 30 days from January
1, 2000, 4) low, compliance desirable but not required, and 5)
unnecessary. Categories 1 through 3 were designated as critical
and are the major focus of this project. Renovation/replacement
and testing/validation of critical systems is expected to be
completed by June 30, 1999, except for replacement of certain
critical systems scheduled for completion later in 1999. Some
non-critical systems may not be compliant by January 1, 2000.
Testing and validation activities have begun and will continue
throughout the process. Year 2000 test labs are in place and
operational. As expected, few problems have been detected during
<PAGE>
testing for items believed to be compliant. The following table
indicates the project status as of March 31, 1999, for
traditional information technology and non-traditional areas.
The tested category indicates the percentage that has been fully
tested or otherwise validated as compliant. The untested
category includes items that are believed to be compliant but
which have not yet been validated. The not compliant category
includes items which have been identified as not year 2000
compliant.
Tested Untested Not Compliant
Traditional Information Technology: 86% 2% 12%
Non-Traditional Information Technology: 93 0 7
Texas Gas initiated a formal communications process with other
companies in 1998 to determine the extent to which those
companies are addressing year 2000 compliance. In connection
with this process, Texas Gas sent approximately 1,200 letters and
questionnaires to third parties including customers, vendors and
service providers. Texas Gas is evaluating responses as they are
received or otherwise investigating the status of these
companies' year 2000 compliance efforts. As of March 31, 1999,
approximately 36 percent of the companies contacted have
responded and virtually all of these indicated that they are
already compliant or will be compliant on a timely basis. Where
necessary, Texas Gas will be working with key business partners
to reduce the risk of a break in service or supply and with non-
compliant companies to mitigate any material adverse effect on
Texas Gas.
Texas Gas expects to utilize internal resources to complete
the year 2000 compliance project. Texas Gas has a core group of
20 people involved in this project. This includes four
individuals responsible for coordinating, organizing, managing,
communicating, and monitoring the project and another 16 staff
members responsible for completing the project. Depending on
which phase the project is in and what area is being focused on
at any given point in time, there can be up to an additional 160
employees who are also contributing a portion of their time to
the completion of this project. Costs incurred for new software
and hardware purchases are being capitalized and other costs are
being expensed as incurred. Texas Gas currently estimates the
total cost of the project, including any accelerated system
replacements, will total less than $2 million. Texas Gas will
update this estimate as additional information becomes available.
Less than $0.3 million of costs (including capital expenditures)
have been incurred through March 31, 1999.
Although all critical systems over which Texas Gas has control
are planned to be compliant and tested before the year 2000,
Texas Gas has identified two areas that would equate to a most
reasonably likely worst case scenario. First is the possibility
of service interruptions due to non-compliance by third parties.
For example, power failures along the communications network or
transportation systems would cause service interruptions. This
risk should be minimized by the enterprise-wide
communications effort and evaluation of third-party compliance
plans. Another area of risk for non-compliance is the delay of
system replacements scheduled for completion during 1999. The
status of these systems is being closely monitored to reduce the
chance of delays in completion dates. It is not possible to
quantify the possible financial impact if this most reasonably
likely worst case scenario were to come to fruition.
Initial contingency planning began during 1998. Significant
focus on that phase of the project is taking place in 1999.
Guidelines for that process were issued in January 1999 in the
<PAGE>
form of a formal business continuity plan. Contingency plans are
being developed for critical business processes, critical business
partners, suppliers and system replacements that experience significant
delays. These plans are expected to be defined by August 31, 1999 and
implemented where appropriate.
The preceding discussion contains forward-looking statements
including, without limitation, statements relating to Texas Gas'
plans, strategies, objectives, expectations, intentions, and
adequate resources, that are made pursuant to the "safe harbor"
provisions of the Private Securities Litigation Reform Act of
1995. Readers are cautioned that such forward-looking statements
contained in the year 2000 update are based on certain
assumptions which may vary from actual results. Specifically,
the dates on which Texas Gas believes the year 2000 project will
be completed and computer systems will be implemented are based
on management's best estimates, which were derived utilizing
numerous assumptions of future events, including the continued
availability of certain resources, third-party modification plans
and other factors. However, there can be no guarantee that these
estimates will be achieved, or that there will not be a delay in,
or increased costs associated with, the implementation of the
year 2000 project. Other specific factors that might cause
differences between the estimates and actual results include, but
are not limited to, the availability and cost of personnel
trained in these areas, the ability to locate and correct all
relevant computer code, timely responses to and corrections by
third parties and suppliers, the ability to implement interfaces
between the new systems and the systems not being replaced, and
similar uncertainties. Due to the general uncertainty inherent
in the year 2000 problem, resulting in large part from the
uncertainty of the year 2000 readiness of third parties, Texas
Gas cannot ensure its ability to timely and cost effectively
resolve problems associated with the year 2000 issue that may
affect its operations and business, or expose it to third-party
liability.
<PAGE>
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
* 27.1 Financial Data Schedule for Texas Gas Transmission
for the first quarter ending March 31,1999.
(b) Reports on Form 8-K
None
_____________________________
* Filed herewith
<PAGE>
S I G N A T U R E
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: May 12, 1999 BY: /s/ S. W. Harris
S. W. Harris
Controller and Chief Accounting Officer
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000097452
<NAME> TEXAS GAS TRANSMISSION CORPORATION
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> MAR-31-1999
<CASH> 323
<SECURITIES> 0
<RECEIVABLES> 9,267
<ALLOWANCES> 0
<INVENTORY> 15,709
<CURRENT-ASSETS> 147,219
<PP&E> 1,063,827
<DEPRECIATION> 123,485
<TOTAL-ASSETS> 1,274,912
<CURRENT-LIABILITIES> 130,311
<BONDS> 251,087
0
0
<COMMON> 1
<OTHER-SE> 634,789
<TOTAL-LIABILITY-AND-EQUITY> 1,274,912
<SALES> 101
<TOTAL-REVENUES> 88,368
<CGS> 106
<TOTAL-COSTS> 13,393
<OTHER-EXPENSES> 15,322
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 4,875
<INCOME-PRETAX> 42,337
<INCOME-TAX> 16,844
<INCOME-CONTINUING> 25,493
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 25,493
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
