SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20579
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) February 9, 1995
Transco Energy Company
(Exact name of registrant as specified in its charter)
Delaware 1-7513 74-1758039
(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification No.)
incorporation)
2800 Post Oak Boulevard, Houston, TX 77056
(Address of principal executive offices) (Zip Code)
(713) 439-2000
Registrant's telephone number, including area code:
Not applicable
(Former name or former address, if changed since last report)
Item 5. OTHER EVENTS
On February 9, 1995, Registrant issued a press release
in which it published certain quarterly and year-end financial
information for the fiscal quarter and year ended December 31, 1994.
Item 7. EXHIBITS
(c)
1. Press release of Registrant dated February 9, 1995.
SIGNATURE
Pursuant to the requirements of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be
signed on its behalf by the undersigned hereunto duly authorized.
TRANSCO ENERGY COMPANY
By: /s/ David E. Varner
______________________________
Name: David E. Varner
Title: Senior Vice President,
General Counsel and Secretary
Date: February 14, 1995
EXHIBIT INDEX
Exhibit Description Page
1. Press release of Registrant dated
February 9, 1995.
NR95-06
Media Inquiries: Katherine K. Putnam
(713) 439-2455
Analyst Inquiries: Molly E. Ladd
(713) 439-2592
TRANSCO REPORTS FOURTH QUARTER, YEAR-END RESULTS
* 1994 FOURTH QUARTER EPS $0.51 VS $0.41 IN 1993, EXCLUDING
SELECTED ITEMS
* 1994 EPS $1.15 VS $0.82 IN 1993, EXCLUDING SELECTED ITEMS
* OPERATING INCOME, BEFORE SELECTED ITEMS, INCREASED 6 PERCENT
OVER 1993
HOUSTON (Feb.9, 1995) -- Transco Energy Company
reported an unaudited net loss of $38.7 million, or $0.95 per
share, for the fourth quarter of 1994, compared with a net loss
of $29.1 million, or $0.73 per share, for the fourth quarter of
1993. The 1994 results include after-tax charges totaling $59.3
million, or $1.46 per share, related to a write-down of the
company's non-operating investment in the Black Warrior Basin
coalbed methane properties, a provision for impairment of certain
assets and to provide a reserve for a regulatory issue. The 1993
net loss includes an after-tax charge of $45.5 million, or $1.14
per share, also related to the coalbed methane properties.
Excluding these charges, Transco reported net income for the
fourth quarter of 1994 of $20.6 million, or $0.51 per share,
compared to $16.4 million, or $0.41 per share, in 1993. The 1994
fourth quarter results reflect improvements in financial results
of the pipelines, gas marketing and coal segments.
The pipelines segment reported operating income of
$82.0 million, which includes a $6.0 million pretax reserve
established by Transcontinental Gas Pipe Line Corporation (TGPL)
for refunds ordered by the Federal Energy Regulatory Commission
(FERC) of certain FERC Order 94 production-related costs, and a
$4.2 million pretax charge to establish a reserve for Transco's
interest in the Liberty Pipeline partnership following the
indefinite delay of the project. Excluding these charges, the
pipelines segment's operating income for the fourth quarter
increased to $92.2 million from 1993's $84.3 million. Excluding
the charge for the regulatory reserve, TGPL reported operating
income of $64.8 million for the quarter compared with $63.5
million a year ago, while Texas Gas Transmission Corporation's
operating income increased to $27.4 million for the fourth
quarter from $20.7 million in 1993. The increase in Texas Gas'
operating income was largely due to seasonal demand revenues,
which are higher in the first and fourth quarters, under Texas
Gas' Federal Energy Regulatory Commission Order 636 service.
The gas marketing segment reported a fourth quarter
operating loss of $18.0 million, which includes charges totaling
$18.4 million for a reserve to reduce the book value of certain
liquids facilities. The facilities have experienced lower-than-
expected throughput due to the decline in drilling activity
resulting from lower gas prices than anticipated at the time
those assets were developed. Excluding the charges, the gas
marketing segment reported improved results as its operating
income increased to $0.4 million, compared with a fourth quarter
1993 loss of $0.3 million. The improvement is primarily the
result of improvements in the natural gas liquids business,
offset somewhat by lower gas margins. The coal segment recorded
fourth quarter operating income of $0.6 million compared with
$0.2 million a year ago primarily due to higher sales prices.
Transco's other businesses recorded operating losses of
$67.5 million for the fourth quarter of 1994, compared with
operating losses of $74.0 million in the same quarter a year ago,
including selected items in both periods. The fourth quarter
1994 selected items include the $45.0 million charge related to
the writedown of the company's non-operating investment in the
Black Warrior Basin coalbed methane properties, which was due to
the decline in natural gas prices. The selected items also
include a provision of $18.5 million related to asset
impairments, which includes a reserve of $14.9 million associated
with receivables from a cogeneration facility that is in
bankruptcy proceedings. Excluding the charges in both periods,
the company's other business segment reported operating losses of
$4.0 million in both periods.
For the full year, Transco reported a net loss of $17.0
million, or $0.42 per share, compared to a net loss from
continuing operations, after preferred dividends, of $29.0
million, or $0.74 per share, for the prior year. For 1994,
Transco reported net income, excluding the effects of selected
items, of $46.8 million, or $1.15 per share, compared with net
income from continuing operations, after preferred dividends,
excluding the effect of selected items, of $32.3 million, or
$0.82 per share, in 1993. In addition to the charges in the
fourth quarter, the 1994 results include a $2.6 million after-tax
loss related to an adverse court decision against a Transco Coal
Company subsidiary and a $1.6 million after-tax loss related to
the settlement of a lawsuit against both TGPL and TXP Operating
Company, a Transco affiliate liquidated in 1992, both recorded in
the third quarter. The 1993 results exclude after-tax charges
totaling $61.2 million related to Transco's non-operating
interest in the Black Warrior Basin coalbed methane properties;
an agreement with Corpus Christi Gas Gathering, Inc., to resolve
litigation and acquire various assets; the write-off by TGPL of a
note receivable; and the one percent increase in the corporate
federal income tax rate.
Excluding the pretax impact of the selected items
discussed above, Transco's 1994 consolidated operating income
increased to $302.4 million from last year's $286.7 million,
mainly due to the significant improvement in gas marketing.
Excluding the charge for the regulatory reserve and the
Liberty Pipeline partnership, the pipeline segment reported
operating income of $303.7 million compared to $307.3 million in
1993. Excluding the regulatory reserve, TGPL reported operating
income of $230.5 million, compared to $224.5 million in 1993,
mainly due to higher transportation revenues. Texas Gas reported
operating income of $73.2 million compared to $83.0 million in
1993 due to lower interruptible transportation revenues resulting
from the implementation of the Federal Energy Regulatory
Commission Order 636 on Nov. 1, 1993, and a lower pretax rate-of-
return under Texas Gas' current general rate case.
Excluding the charges discussed above, the marketing
segment reported operating income of $7.7 million for 1994
compared to a loss of $7.8 million a year ago. This improvement
is primarily due to the result of the restructuring of certain
contracts and higher gas sales volumes. The coal segment
reported operating income of $4.0 million, excluding the
litigation charge, compared to $7.0 million in 1993 due to lower
contract prices. Excluding the charges discussed above,
Transco's other businesses reported an operating loss of $13.1
million for 1994, compared with a 1993 operating loss of $19.8
million. The improvement in other businesses is primarily the
result of lower operating costs in the gas gathering segment and
the elimination of operating losses from the coalbed methane
properties that were transferred to TECO Energy, Inc. in July 1993.
The Williams Companies, Inc. (NYSE:WMB) began a cash
tender offer on December 16, 1994, for up to 24.6 million
shares, or 60 percent, of Transco Energy Company's common stock
and related common stock purchase rights for $17.50 per share and
right. Following the expiration of the tender offer Jan. 17,
1995, a total of 35,207,328 shares of Transco common stock were
tendered to Williams for purchase. Williams purchased 69.8718
percent of the shares accompanying each valid tender. The tender
offer will be followed by a merger in which each share of Transco
common stock not purchased or not tendered will be exchanged for
0.625 of a share of Williams common stock. The merger is
expected to be effective in April.
Transco Energy Company (NYSE:E) transports natural gas
through its two interstate pipelines, the 10,500-mile
Transcontinental Gas Pipe Line Corporation system and the 6,050-
mile Texas Gas Transmission Corporation system, to markets in the
eastern and midwestern United States, respectively. Transco also
buys, sells and arranges for the transportation of natural gas
throughout the United States and Canada through its marketing
subsidiary, Transco Gas Marketing Company. Through Interstate
Coal Company, Transco mines coal in eastern Kentucky and
Tennessee, which it markets primarily to electric power companies
in the eastern United States.
TRANSCO ENERGY COMPANY
Unaudited Condensed Consolidated Statement of Operations
(In Thousands Except for Per Share Amounts)
Three Months Twelve Months
Ended December 31, Ended December 31,
1994 1993 1994 1993
Operating Revenues $ 681,486 $ 787,372 $2,816,218 a $2,921,926
Operating Costs and
Expenses (683,792)be (777,209)c (2,612,401)de (2,775,644)cfg
Operating Income
(Loss) (2,306)be 10,163 c 203,817 ade 146,282 cfg
Interest Expense (48,928) (46,962) (191,066) (190,281)
Other Income
(Deductions) (2,121) (4,408) (5,290) (9,497)
Income Tax (Provision)
Benefit 20,411 17,866 (1,578) 18,081 h
Income (Loss) from Con-
tinuing Operations (32,944) (23,341) 5,883 (35,415)
Loss from
Operations of Dis-
continued Segment,
Net of Income Taxes - - - (93)
Gain on Sale of Dis-
continued Segment
Net of Income Taxes - - - 31,572
Net Income (Loss) (32,944) (23,341) 5,883 (3,936)
Preferred Dividends 5,726 5,749 22,904 25,047
Common Stock Equity
in Net Income (Loss) $(38,670)be $ (29,090)c $ (17,021)ade $(28,983)cfgh
Primary Earnings (Loss)
per Share of Common
Stock and Common
Stock Equivalents:
Continuing Operations $( 0.95) $( 0.73) $( 0.42) $( 1.54)
Discontinued Operations - - - 0.80
$( 0.95) $( 0.73) $( 0.42) $( 0.74)
Average Shares of
Common Stock and
Common Stock Equiva-
lents Outstanding 40,721 39,850 40,634 39,202
a. Includes a charge of $2.5 million ($1.6 million after-tax) related to a
royalty claims settlement.
b. Includes an adjustment of ($0.5) million (($0.3) million after-tax)
related to the coal company litigation.
c. Includes a charge of $70.0 million ($45.5 million after-tax) related to
a reduction in the book value of non-operating interest in coalbed
methane properties.
d. Includes a charge of $4.0 million ($2.6 million after-tax) related to
the coal company litigation.
e. Includes a provision of $41.1 million ($26.6 million after-tax) related
to asset impairments, a provision of $6.0 million ($3.7 million after-
tax) related to a TGPL regulatory issue; a charge of $45.0 million
($29.3 million after-tax) related to a reduction in the book value of
non-operating interest in coalbed methane properties.
f. Includes a charge of $50.3 million ($32.7 million after-tax) related to
the agreement with Corpus Christi Gas Gathering, Inc. and certain
affiliates (Corpus Christi) to resolve litigation and acquire Corpus
Christi's interest in jointly owned assets.
g. Includes a charge of $20.1 million ($12.5 million after-tax) related to
a write-off of a TGPL note receivable.
h. Includes a charge of $1.6 million for a corporate federal income tax
rate increase from 34% to 35%.
TRANSCO ENERGY COMPANY
Unaudited Operating Income (Loss) By Segment
(In Millions)
Three Months Twelve Months
Ended December 31, Ended December 31,
1994 1993 1994 1993
Pipelines
TGPL $ 58.8 $ 63.5 $ 224.5 $ 204.4
Texas Gas 27.4 20.7 73.2 83.0
Other (4.2) 0.1 (4.2) (0.3)
82.0 a 84.3 293.5 a 287.1 h
Gas Marketing (18.0)b (0.3) (10.7)b (10.8)i
Coal 1.2c 0.2 - f 7.0
Other (67.5)d (74.0)e (79.0)dg (137.0)ej
$ (2.3) $ 10.2 $ 203.8 $ 146.3
Unaudited Common Stock Equity In Net Income (Loss) By Segment
(In Millions)
Three Months Twelve Months
Ended December 31, Ended December 31,
1994 1993 1994 1993
Pipelines
TGPL $ 29.9 $ 31.0 $ 104.8 $ 86.9
Texas Gas 13.0 9.8 32.5 39.1
Other (2.8) - (2.8) (0.3)
40.1 a 40.8 134.5 a 125.7 h
Gas Marketing (11.5)b (1.8) (4.7)b (7.3)i
Coal 2.5c 1.6 4.5f 5.6
Other (69.8)d (69.7)e (151.3)dg (153.0)jk
$(38.7) $(29.1) $ (17.0) $ (29.0)
a. Includes a provision of $4.2 million ($2.7 million after-tax) related to
asset impairments and a provision of $6.0 million ($3.7 million after-
tax) related to a TGPL regulatory issue.
b. Includes a provision of $18.4 million ($12.0 million after-tax) related
to asset impairments.
c. Includes an adjustment of $0.5 million (($0.3) million after-tax) related
to the coal company litigation.
d. Includes a charge of $45.0 million ($29.3 million after-tax) related to
a reduction in the book value of non-operating interest in coalbed
methane properties and a provision of $18.5 million ($12.0 million
after-tax) related to asset impairments.
e. Includes a charge of $70.0 million ($45.5 million after-tax) related to
a reduction in the book value of non-operating interest in coalbed
methane properties.
f. Includes a charge of $4.0 million ($2.6 million after-tax) related to
the coal company litigation.
g. Includes a charge of $2.5 million ($1.6 million after-tax) related to a
royalty claims settlement.
h. Includes a charge of $20.1 million ($12.5 million after-tax) related to
a write-off of a TGPL note receivable.
i. Includes a charge of $3.0 million ($2.0 million after-tax) related to
the agreement with Corpus Christi Gas Gathering, Inc. and certain
affiliates (Corpus Christi) to resolve litigation and acquire Corpus
Christi's jointly owned assets.
j. Includes a charge of $47.3 million ($30.7 million after-tax) related to
the agreement with Corpus Christi to resolve litigation and acquire
Corpus Christi's interest in jointly owned assets.
k. Includes a gain of $50.5 million ($31.6 million after-tax) on the sale
of a power generation subsidiary.
TRANSCO ENERGY COMPANY
Unaudited Reported/Normalized Operating Income
(In Millions)
Three Months Twelve Months
Ended December 31, Ended December 31,
1994 1993 1994 1993
Reported Operating
Income (Loss) $ 2.3 $ 10.2 $ 203.8 $ 146.3
Selected Items:
Provision for
Asset Impairments 41.1 - 41.1 -
Provision for
Regulatory Issue 6.0 - 6.0 -
Coal Litigation (0.5) - 4.0 -
Royalty Claims
Settlement - - 2.5 -
Reduction in Book
Value of Non-
operating Interest
in Coalbed Methane
Properties 45.0 70.0 45.0 70.0
Corpus Christi
Settlement - - - 50.3
Write-off of a Note
Receivable - - - 20.1
Normalized Operating
Income $ 89.3 $ 80.2 $ 302.4 $ 286.7
TRANSCO ENERGY COMPANY
Unaudited Reported/Normalized
Common Stock Equity In Net Income
(In Millions)
Three Months Twelve Months
Ended December 31, Ended December 31,
1994 1993 1994 1993
Reported Common Stock
Equity in Net Income
(Loss) $(38.7) $(29.1) $ (17.0) $ (29.0)
Selected Items:
Provision for
Asset Impairments 26.6 - 26.6 -
Provision for
Regulatory Issue 3.7 - 3.7 -
Coal Litigation (0.3) - 2.6 -
Royalty Claims
Settlement - - 1.6 -
Reduction in Book
Value of Non-
operating Interest
in Coalbed Methane
Properties 29.3 45.5 29.3 45.5
Corpus Christi
Settlement - - - 32.7
Sales of Assets - - - 0.5
Write-off of a Note
Receivable - - - 12.5
Federal Tax Rate
Increase - - - 1.6
(Income) Loss From
Operations of Dis-
continued Segment - - - 0.1
Gain on Sale of Dis-
continued Segment - - - (31.6)
Normalized Common
Stock Equity in
Net Income $ 20.6 $ 16.4 $ 46.8 $ 32.3
TRANSCO ENERGY COMPANY
Volumetric Information
Three Months Twelve Months
Ended December 31, Ended December 31,
1994 1993 1994 1993
PIPELINE SYSTEM
DELIVERIES (Bcf)
TGPL:
Long-haul
Transportation 193 216 777 824
Market-area
Transportation 118 112 438 375
Total Market-area
Deliveries 311 328 1,215 1,199
Production-area
Deliveries 36 38 179 171
Total System
Deliveries 347 366 1,394 1,370
TEXAS GAS:
Sales - 5 - 51
Transportation for
Others:
Long-haul 155 156 603 520
Short-haul 38 48 183 204
Total Transportation
for Others 193 204 786 724
Total System
Deliveries 193 209 786 775
GAS MARKETING SALES
Gas Sales (Bcf) 159 160 654 561
Natural Gas Liquids
Sales (million
gallons) 17 16 94 131
COAL SHIPMENTS
Coal Sales
(thousands of tons) 1,854 2,233 8,181 8,885
