SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 11-K
[X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 [FEE REQUIRED]
For fiscal year ended December 31, 1993
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES AND
EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
for transition period from ______________ to ______________
Commission File Number: 33-11721
A. Full title of the plan and the address of the plan if different
from that of the issuer named below: Transco Energy Company
Tran$tock Employee Stock Ownership Plan.
B. Name of issuer of the securities held pursuant to the plan and the
address of its principle executive office: Transco Energy Company,
2800 Post Oak Boulevard, P. O. Box 1396, Houston, Texas 77251.
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Administrative Committee of the
Transco Energy Company Tran$tock
Employee Stock Ownership Plan:
We have audited the accompanying statements of net assets available for
plan benefits of the Transco Energy Company Tran$tock Employee Stock
Ownership Plan as of December 31, 1993 and 1992, and the related statement
of changes in net assets available for plan benefits for the year ended
December 31, 1993. These financial statements and schedules referred to
below are the responsibility of the Plan administrator. Our
responsibility is to express an opinion on these financial statements and
schedules based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles
used and significant estimates made by the Plan administrator, as well as
evaluating the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the net assets available for plan benefits of
the Transco Energy Company Tran$tock Employee Stock Ownership Plan as of
December 31, 1993 and 1992, and the changes in net assets available for
plan benefits for the year ended December 31, 1993, in conformity with
generally accepted accounting principles.
Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedules of
assets held for investment purposes at December 31, 1993, included as
Schedule I, and reportable transactions for the year ended December 31,
1993, included as Schedule II, are presented for purposes of additional
analysis and are not a required part of the basic financial statements but
are supplementary information required by the Department of Labor's Rules
and Regulations for Reporting and Disclosure under the Employee Retirement
Income Security Act of 1974. The supplemental schedules have been
subjected to the auditing procedures applied in our audits of the basic
financial statements and, in our opinion, are fairly stated in all
material respects in relation to the basic financial statements taken as
a whole.
ARTHUR ANDERSEN & CO.
Houston, Texas
June 20, 1994
<PAGE>
TRANSCO ENERGY COMPANY
______________________
TRAN$TOCK EMPLOYEE STOCK OWNERSHIP PLAN
_______________________________________
STATEMENTS OF NET ASSETS AVAILABLE FOR PLAN BENEFITS
____________________________________________________
<TABLE>
<CAPTION>
As of December 31
_________________________________
1993 1992
_____________ _____________
<S> <C> <C>
ASSETS:
Common stock of Transco Energy Company,
3,902,782 shares and 3,917,054 shares,
respectively, at quoted market price $ 55,126,796 $ 55,818,020
Temporary cash investments 19,964 19,338
Receivable from broker - 7,568
_____________ _____________
Total assets 55,146,760 55,844,926
LESS:
Liabilities, 7.39% note due 1994 to Transco
Energy Company 9,383,340 18,224,160
_____________ _____________
NET ASSETS AVAILABLE FOR PLAN BENEFITS $ 45,763,420 $ 37,620,766
_____________ _____________
_____________ _____________
The accompanying notes are an integral part of these financial statements.
</TABLE>
<PAGE>
TRANSCO ENERGY COMPANY
______________________
TRAN$TOCK EMPLOYEE STOCK OWNERSHIP PLAN
_______________________________________
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS
_______________________________________________________________
FOR THE YEAR ENDED DECEMBER 31, 1993
____________________________________
<TABLE>
<CAPTION>
<S> <C>
INVESTMENT INCOME:
Cash dividends, Transco Energy Company common stock $ 2,345,916
Interest income on temporary cash investments 696
____________
Total investment income 2,346,612
____________
REALIZED GAIN ON SALE AND DISTRIBUTIONS OF TRANSCO ENERGY
COMPANY COMMON STOCK:
Proceeds 232,032
Basis ( 222,935)
____________
Net realized gain 9,097
____________
UNREALIZED DEPRECIATION OF TRANSCO ENERGY COMPANY
COMMON STOCK ( 476,633)
____________
EMPLOYER CONTRIBUTIONS 7,581,775
____________
WITHDRAWALS AND DISTRIBUTIONS:
Cash ( 81,638)
Securities ( 149,676)
____________
Total withdrawals and distributions ( 231,314)
____________
INTEREST EXPENSE ON LONG-TERM DEBT (1,086,883)
____________
INCREASE IN NET ASSETS AVAILABLE FOR PLAN BENEFITS 8,142,654
NET ASSETS AVAILABLE FOR PLAN BENEFITS, beginning of year 37,620,766
____________
NET ASSETS AVAILABLE FOR PLAN BENEFITS, end of year $45,763,420
____________
____________
The accompanying notes are an integral part of these financial statements.
</TABLE>
<PAGE>
TRANSCO ENERGY COMPANY
______________________
TRAN$TOCK EMPLOYEE STOCK OWNERSHIP PLAN
_______________________________________
NOTES TO FINANCIAL STATEMENTS
_____________________________
1. DESCRIPTION OF THE PLAN:
________________________
General
_______
The Transco Energy Company Tran$tock Employee Stock Ownership Plan (the
Plan) was established on January 1, 1987, and approved by the board of
directors of Transco Energy Company (the Company) on January 28, 1987.
The Plan subsequently purchased approximately 3.97 million shares of the
Company's newly issued common stock. The Plan was funded with the
proceeds of a $180 million loan (the Loan) to the Plan by the Company
which was subsequently reduced by the transfer of approximately $120
million of excess assets from the terminated Transco Energy Company
Retirement Plan for Retired and Terminated Vested Employees (the Retire-
ment Plan). The purposes of the Plan are (a) to promote and encourage
employees to remain as employees of the Company, (b) to enable such
employees who participate in the Plan to become stockholders of the
Company and (c) to provide benefits for their future through a stock
ownership program.
Each participant's interest in the Plan is maintained in two separate
accounts, a savings account and an incentive account. The savings account
is intended to increase a participant's ownership of the Company's stock.
The savings account will receive an allocation of stock for each year in
which the employee is a participant in the Plan until all shares in the
Plan have been allocated. The value of these stock allocations to the
savings account may be up to, but not exceeding, 8 percent of the
participant's annual base compensation. If the allocation exceeds
8 percent of the participant's annual base compensation, such excess
amount is allocated to the participant's incentive account. The incentive
account is intended to provide a participant with additional benefits for
retirement. All shares are being allocated over an eight-year period,
beginning in 1987.
A suspense account holds the Plan's shares of the Company's stock which
have not been allocated to the participants' savings and incentive
accounts.
Participation and Vesting
_________________________
Participation in the Plan is available to each employee of the Company who
(a) has completed at least one year of service, (b) is not a member of or
represented by a collective bargaining unit, unless eligibility is
required by the terms of any collective bargaining agreement and (c) is
not a nonresident alien.
A participant vests in the savings account at a rate of 20 percent per
year of service. A participant's prior Company service is credited toward
vesting in this account. A participant's incentive account will become
100 percent vested upon the completion of five years of service with the
Company after December 31, 1986, or upon completion of 20 years of service
and attainment of age 55. In the event of the participant's death or
total and permanent disability or upon reaching age 65, the participant
will become 100 percent vested in both their incentive and savings
accounts regardless of years of service. Pursuant to Plan amendments,
certain terminating participants also became 100 percent vested in both
their incentive and savings accounts. Nonvested Company contributions are
forfeited five years after the employee's termination date. Forfeited
shares are held in the suspense account and allocated to participants.
Administration
______________
The Plan is administered by an administrative committee (the Committee) of
not less than three employees of the Company who may, but need not, be
participants in the Plan. The members of the Committee are appointed by
and may be removed by the Company's board of directors. The members of
the Committee and their alternates receive no compensation for their
services, as such, but are paid by the Company as its employees.
All administrative expenses of the Plan and the related trust are paid by
the Company. Except for such right of The Bank of New York (the Plan
Trustee), no person has or may create a lien on any funds, securities or
other property held under the Plan.
Brokerage fees and transfer taxes resulting from the sales and withdrawal
of securities are charged to the accounts of the participants requesting
the transactions.
Contributions and Funding
_________________________
The Company may make contributions in cash and/or in shares. The Company
makes additional contributions in such amounts and at such times as needed
to provide the funds to pay any principal and interest payments under the
Loan which are not satisfied by dividends paid on common stock held by the
Plan. No participants are required or permitted to make contributions
under the Plan.
Distributions and Withdrawals
_____________________________
Upon the death, disability or retirement at age 65 of a participant, the
total current balance of the participant's accounts as of the last day of
such termination of employment will be distributed in a lump sum to the
participant or the participant's beneficiary.
Upon termination for any reason other than those specified above,
distribution of the vested portion of the current balance of the
participant's accounts will be made as of the end of the Plan year
coinciding with or immediately following the participant's termination
date unless the participant elects to defer distribution to a later date.
The distribution will be made in five equal annual payments unless the
participant elects in writing prior to the commencement of the annual
payments to receive a lump-sum payment. Provided the terminated
participant has not reached the age of 65, the distribution will not
include any shares of the Company's stock acquired with the proceeds of
the Loan until the close of the Plan year that the Loan is repaid.
If there are no loans outstanding with respect to the Plan, a participant
who has completed five or more years of participation in the Plan may
voluntarily withdraw all or any part of the vested portion of his savings
account, but he will be suspended from participation for the following
six-month period. Only one such withdrawal may be made during any 12-
month period. No withdrawal is permitted from the incentive account prior
to a participant's termination of employment with the Company. At
December 31, 1993, certain participants had requested to have shares sold
on their behalf which had not occurred by year-end. Of the net assets
available for Plan benefits, approximately $7,862 represents amounts
requested for withdrawal at December 31, 1993, which were not withdrawn
until 1994.
<PAGE>
Voting Rights
_____________
All shares credited to a participant's account are voted in confidence by
the Plan Trustee in accordance with the participant's written
instructions. In the absence of such instructions at least five business
days prior to the date of the meeting at which the vote is to be taken,
the Plan Trustee will vote such shares and the shares in the suspense
account in the same proportion as the participant's directions that are
timely received.
2. SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES:
______________________
Basis of Accounting
___________________
The financial statements of the Plan are presented on the accrual basis of
accounting. Two separate accounts, a savings account and an incentive
account, which reflect the balance of common stock of the Company credited
thereto, are maintained for each participant.
Asset Valuation
_______________
The assets of the Plan are recorded at cost in the participants' accounts
and adjusted to market value for financial statement presentation.
Pursuant to Department of Labor regulations, the realized gain on the sale
of the Company's common stock withdrawals of securities in-kind and
unrealized depreciation of the Company's common stock are based on the
value of those assets at the beginning of the Plan year or at the time of
purchase, if acquired during the year.
Allocation of Shares
____________________
The allocation of stock for each Plan year is made to participants at the
beginning of the subsequent Plan year. The Plan allocated 503,309 shares
in 1994 for the 1993 Plan year, and 497,426 shares in 1993 for the 1992
Plan year, which included the retroactive dividend adjustment as discussed
in the federal income tax note below.
The following tables set forth the number of shares allocated to the
participants' savings and incentive accounts for the Plan years ended
December 31, 1993 and 1992, and the number of allocated and unallocated
shares held by the Plan at December 31, 1993 and 1992:
Shares Allocated
For the
Year Ended
December 31
_______________________
1993 1992
__________ __________
Savings account 477,327 475,078
Incentive account 25,982 22,348
<TABLE>
<CAPTION>
Balance at December 31
_________________________________________________________________
1993 1992
______________________________ ______________________________
Shares Amount Shares Amount
_____________ _____________ _____________ _____________
<S> <C> <C> <C> <C>
Allocated 3,501,148 $ 49,453,716 2,960,937 $ 42,193,352
Unallocated 401,634 5,673,080 956,117 13,624,668
</TABLE>
3. FEDERAL INCOME TAXES:
_____________________
The Plan obtained its latest determination letter on July 2, 1990, in
which the Internal Revenue Service stated that the Plan, as then designed,
was in compliance with the applicable requirements of the Internal Revenue
Code. The Plan has been amended since receiving the determination letter.
However, the Plan administrator and the Plan's tax counsel believe that
the Plan is currently designed and being operated in compliance with the
applicable requirements of the Internal Revenue Code. Therefore, they
believe that the Plan was qualified and the related trust was tax-exempt
as of December 31, 1993 and 1992.
4. LONG-TERM DEBT:
_______________
The Plan was initially funded by a $180 million loan from the Company at
an interest rate of 7.39 percent due in 1994. In 1987, the Company
contributed approximately $120 million to the Plan as a direct transfer
from the trustee of the excess assets from the terminated Retirement Plan.
The Plan subsequently used these funds to reduce the outstanding Loan
balance. Interest and principal on the remaining Loan balance will be
serviced by the cash dividends from the shares held by the Plan over the
eight-year term of the Loan. The Company is required to make additional
contributions in such amounts and at such times as necessary to provide
the funds to pay any principal and interest payments under the Loan which
are not satisfied by dividends paid on common stock held by the Plan. The
outstanding Loan is collateralized by unallocated shares held in the
suspense account. From time to time, the outstanding balance on the Loan
exceeds the market value of the shares pledged as collateral on the Loan
due to changes in the market price of the Company's common stock. The
Company does not plan to proceed against the collateral.
During Plan years 1993 and 1992, $2,345,916 and $2,354,769, respectively,
of cash dividends were used to pay a portion of the outstanding principal
and interest due on the Loan. The Company made additional contributions
of $7,581,775 and $7,702,219 in these years, respectively, to pay the
remaining principal and interest on the Loan.
The outstanding Loan balance of $9,383,340 at December 31, 1993, is
payable in four quarterly payments, with the final payment due on
December 31, 1994.
5. AMENDMENT AND TERMINATION:
__________________________
The Company has reserved the right to amend or terminate the Plan and the
related trust at any time or discontinue its liability to make
contributions to the Plan. No amendment, change or modification of the
Plan or trust agreement may be made which will reduce participants'
accrued benefits under the Plan or give the Company any rights in funds
contributed or in assets held by the Plan Trustee, without the consent of
the participants, or which will alter the duties or liabilities of the
Plan Trustee without its consent. The Company intends to continue the
Plan indefinitely.
<TABLE>
<CAPTION>
SCHEDULE I
TRANSCO ENERGY COMPANY
______________________
TRAN$TOCK EMPLOYEE STOCK OWNERSHIP PLAN
_______________________________________
SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
________________________________________________
AS OF DECEMBER 31, 1993
________________________
Identity of Number of
Issuer Description Shares Cost Current Value
_______________ ____________________________ ___________ _____________ _____________
<S> <S> <C> <C> <C>
Transco Energy
Company Common stock * 3,902,782 $177,901,056 $ 55,126,796
Bank of
New York Temporary cash investments * 19,964
_____________
Total assets held for
investment purposes $ 55,146,760
_____________
_____________
* Party-in-interest investment
The accompanying financial statements are an integral part of this schedule.
</TABLE>
<TABLE>
<CAPTION>
SCHEDULE II
TRANSCO ENERGY COMPANY
______________________
TRAN$TOCK EMPLOYEE STOCK OWNERSHIP PLAN
_______________________________________
SCHEDULE OF REPORTABLE TRANSACTIONS
___________________________________
AS OF DECEMBER 31, 1993
_______________________
Identity of Number of Purchase Selling Cost of Net
___________________
Party Involved Description Purchases Sales Price Price** Asset Sold Gain (Loss)
_____________________________ _________ _______ ____________ ____________ ____________ ___________
<S> <S> <C> <C> <C> <C> <C> <C>
Bank of Temporary Cash
New York Investments * 41 24 $ 2,420,715 $2,420,089 $2,420,089 $ -
* Party-in-interest transaction
** Selling price equals the current value of asset on applicable transaction date
The accompanying financial statements are an integral part of this schedule.
</TABLE>
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the members of the Tran$tock Employee Stock Ownership Plan Committee have
duly caused this annual report to be signed on its behalf by the
undersigned hereunto duly authorized.
TRANSCO ENERGY COMPANY
TRAN$TOCK
EMPLOYEE STOCK OWNERSHIP PLAN
Date: June 28, 1994 By: /s/ D. E. Varner
______________________ ________________________
D. E. Varner
Senior Vice President, General
Counsel and Secretary
Transco Energy Company
Member of Tran$tock Employee
Stock Ownership Plan
Administrative Committee
<PAGE>
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation
of our report, dated June 20, 1994, included in this Form 11-K, into the
Transco Energy Company Tran$tock Employee Stock Ownership Plan's
previously filed Form S-8 Registration Statement (File No. 33-11721).
ARTHUR ANDERSEN & CO.
Houston, Texas
June 28, 1994
