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, 1995
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 1-7584
TRANSCONTINENTAL GAS PIPE LINE CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 74-1079400
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2800 Post Oak Boulevard
P. O. Box 1396
Houston, Texas 77251
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (713) 439-2000
None
(Former name, former address and former fiscal year, if changed
since last report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period
that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes /X/ No / /
The number of shares of Common Stock, par value $1.00 per share,
outstanding as of March 31, 1995 was 100.
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
COMPANY OR GROUP OF COMPANIES FOR WHICH REPORT IS FILED:
TRANSCONTINENTAL GAS PIPE LINE CORPORATION (TGPL)
The condensed financial statements included herein have been prepared
by TGPL, without audit, pursuant to the rules and regulations of the
Securities and Exchange Commission (SEC). 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 TGPL's management, however, all adjustments, consisting only of
the pushdown of the purchase price paid by Williams as described in Note
A, Organization and Control and Basis of Presentation, of the Notes to
Condensed Financial Statements, and normal and recurring adjustments,
necessary for a fair presentation of the financial position as of the
dates 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 Items 7 and 8 of
TGPL's 1994 Annual Report on Form 10-K.
<PAGE>
<TABLE>
<CAPTION>
The acquisition of Transco Energy Company and subsidiaries, including TGPL, by The Williams Companies was
accounted for using the purchase method of accounting. Accordingly, the purchase price was "pushed-down" and
recorded in the accompanying financial statements which affects the comparability of the post-acquisition and
pre-acquisition financial position, results of operations and cash flows.
TRANSCONTINENTAL GAS PIPE LINE CORPORATION
CONDENSED BALANCE SHEET
(Thousands of Dollars)
Post-Acquisition Pre-Acquisition
________________ _______________
March 31, | December 31,
1995 | 1994
________________ | _______________
ASSETS |
|
Current Assets: |
<S> <C> | <C>
Cash $ 4,343 | $ 1,628
Deposits 7,944 | 7,218
Receivables 131,802 | 61,113
Advances to Transco - | 115,974
Transportation and exchange gas receivables: |
Affiliates 21,111 | 18,882
Others 93,990 | 92,870
Inventories 74,340 | 63,098
Deferred income tax benefits 37,105 | 34,578
Other 17,133 | 20,628
______________ | _______________
Total current assets 387,768 | 415,989
______________ | _______________
|
|
Property, Plant and Equipment, at cost: |
Natural gas transmission plant 2,991,576 | 4,340,912
Less-Accumulated depreciation and amortization 31,344 | 2,578,069
______________ | _______________
|
Property, plant and equipment, net 2,960,232 | 1,762,843
______________ | _______________
|
|
Other Assets: |
Other 167,872 | 91,796
______________ | _______________
Total other assets 167,872 | 91,796
______________ | _______________
|
$ 3,515,872 | $ 2,270,628
______________ | _______________
______________ | _______________
The accompanying condensed notes are an integral part of these condensed financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
The acquisition of Transco Energy Company and subsidiaries, including TGPL, by The Williams Companies was
accounted for using the purchase method of accounting. Accordingly, the purchase price was "pushed-down" and
recorded in the accompanying financial statements which affects the comparability of the post-acquisition and
pre-acquisition financial position, results of operations and cash flows.
TRANSCONTINENTAL GAS PIPE LINE CORPORATION
CONDENSED BALANCE SHEET
(Thousands of Dollars)
Post-Acquisition Pre-Acquisition
________________ _______________
March 31, | December 31,
1995 | 1994
________________ | _______________
LIABILITIES AND STOCKHOLDERS' EQUITY |
|
|
Current Liabilities: |
<S> <C> | <C>
Payables $ 166,958 | $ 170,938
Advances from Transco 16,831 | -
Transportation and exchange gas payables: |
Affiliates 1,158 | 2,687
Others 51,382 | 47,218
Accrued liabilities 106,340 | 84,535
Reserve for rate refunds 24,082 | 68,862
Other 13,440 | 13,553
______________ | ______________
Total current liabilities 380,191 | 387,793
______________ | ______________
|
Long-Term Debt, less current maturities 671,987 | 644,238
______________ | ______________
|
Other Liabilities and Deferred Credits: |
Income taxes 794,291 | 302,846
Income taxes refundable to customers 6,189 | 8,781
Other 110,014 | 62,768
______________ | ______________
Total other liabilities and deferred credits 910,494 | 374,395
______________ | ______________
|
|
Commitments and contingencies (Notes C, D and E) |
|
|
Cumulative Redeemable Preferred Stock, without par value: |
Authorized 10,000,000 shares: |
Stated value $100 per share, issued and outstanding |
- 0 - and 497,444 shares in 1995 and 1994, respectively - | 49,744
Less - Issue expense - | 369
_____________ | _____________
Total Preferred stock - | 49,375
_____________ | _____________
|
|
Cumulative Redeemable Second Preferred Stock, |
without par value: |
Authorized 2,000,000 shares: none issued or outstanding - | -
_____________ | _____________
|
|
Common Stockholder's Equity: |
Common stock $1.00 par value |
100 shares authorized, issued and outstanding - | -
Premium on capital stock and other paid-in capital 1,532,915 | 285,792
Retained earnings 20,285 | 529,035
______________ | ______________
Total common stockholder's equity 1,553,200 | 814,827
______________ | ______________
|
$ 3,515,872 | $ 2,270,628
______________ | ______________
______________ | ______________
The accompanying condensed notes are an integral part of these condensed financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
The acquisition of Transco Energy Company and subsidiaries, including TGPL, by The Williams Companies was accounted for using
the purchase method of accounting. Accordingly, the purchase price was "pushed-down" and recorded in the accompanying
financial statements which affects the comparability of the post-acquisition and pre-acquisition financial position, results
of operations and cash flows.
TRANSCONTINENTAL GAS PIPE LINE CORPORATION
CONDENSED STATEMENT OF INCOME
(Thousands of Dollars)
Post-Acquisition Pre-Acquisition
__________________ __________________________________________
| For the Period
For the Period | January 1, 1995 For the Three
January 18, 1995 | to Months Ended
to March 31, 1995 | January 17, 1995 March 31, 1994
__________________ | __________________ ________________
|
|
Operating Revenues: |
<S> <C> | <C> <C>
Natural gas sales $ 118,960 | $ 31,701 $ 226,412
Natural gas transportation 142,827 | 32,775 166,123
Natural gas storage 32,851 | 7,452 37,728
Other 1,021 | 133 1,652
_________________ | _________________ _______________
Total operating revenues 295,659 | 72,061 431,915
_________________ | _________________ _______________
|
Operating Costs and Expenses: |
Cost of natural gas sales 118,952 | 31,691 226,561
Cost of natural gas transportation 26,072 | 6,279 28,184
Operation and maintenance 36,302 | 8,722 40,814
Administrative and general 30,164 | 7,063 37,057
Provision for executive severance benefits - | 16,048 -
Depreciation and amortization 30,649 | 5,560 30,143
Taxes - other than income taxes 6,978 | 1,558 8,716
_________________ | _________________ _______________
Total operating costs and expenses 249,117 | 76,921 371,475
_________________ | _________________ _______________
|
Operating Income (Loss) 46,542 | (4,860) 60,440
_________________ | _________________ _______________
|
Other (Income) and Other Deductions: |
Interest expense - affiliates 128 | 2 -
- other 12,494 | 2,595 15,805
Interest income - affiliates (304) | (207) (1,790)
- other ( 79) | ( 12) ( 125)
Allowance for equity and borrowed funds used |
during construction (AFUDC) (946) | (234) (835)
Miscellaneous other (income) and deductions, net 1,006 | 349 2,114
_________________ | _________________ _______________
Total other (income) and other deductions 12,299 | 2,493 15,169
_________________ | _________________ _______________
|
Income (Loss) Before Income Taxes 34,243 | (7,353) 45,271
|
Provision for Income Taxes 13,236 | 2,309 16,023
_________________ | _________________ _______________
|
Net Income (Loss) 21,007 | (9,662) 29,248
|
Dividends on Preferred Stock 722 | 194 1,599
_________________ | _________________ _______________
|
Common Stock Equity in Net Income (Loss) $ 20,285 | $ (9,856) $ 27,649
_________________ | _________________ _______________
_________________ | _________________ _______________
The accompanying condensed notes are an integral part of these condensed financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
The acquisition of Transco Energy Company and subsidiaries, including TGPL, by The Williams Companies was accounted for using
the purchase method of accounting. Accordingly, the purchase price was "pushed-down" and recorded in the accompanying financial
statements which affects the comparability of the post-acquisition and pre-acquisition financial position, results of operations
and cash flows.
TRANSCONTINENTAL GAS PIPE LINE CORPORATION
CONDENSED STATEMENT OF CASH FLOWS
(Thousands of Dollars)
Post-Acquisition Pre-Acquisition
__________________ ______________________________________
| For the Period
For the Period | January 1, 1995 For the Three
January 18, 1995 | to Months Ended
to March 31, 1995 | January 17, 1995 March 31, 1994
__________________ | __________________ ________________
|
|
Cash flows from operating activities: |
<S> <C> | <C> <C>
Net income (loss) $ 21,007 | $ (9,662) $ 29,248
Adjustments to reconcile net income to net cash |
provided by (used in) operating activities: |
Depreciation and amortization 33,579 | 6,165 34,201
Deferred income taxes (9,116) | 5,348 (9,472)
Provision for executive severance benefits - | 16,048 -
Tran$tock compensation expense - | - 900
Allowance for equity funds used during |
construction (AFUDC) (787) | (190) (608)
Changes in operating assets and liabilities: |
Deposits ( 1,237) | 511 ( 164)
Receivables (63,575) | (7,114) 25,643
Transportation and exchange gas receivable 2,352 | (5,701) (18,901)
Inventories (8,595) | (2,647) 17,077
Payables 5,397 | (8,059) (44,889)
Transportation and exchange gas payable (2,299) | 4,934 21,511
Accrued liabilities 2,742 | (4,755) (1,367)
Reserve for rate refunds (17,935) | (26,846) (61,948)
Other, net ( 6,172) | (439) (4,383)
_____________ | ____________ ____________
Net cash used in operating activities (44,639) | (32,407) (13,152)
_____________ | ____________ ____________
|
Cash flows from financing activities: |
Additions to long-term debt 20,000 | - -
Retirement of preferred stock (49,744) | - -
Advances from Transco 125,410 | 11,647 -
Retirement of advances from Transco (116,774) | (3,452) -
Dividends on preferred stock (1,647) | - (1,599)
_____________ | _____________ _____________
Net cash provided by (used in) financing activities (22,755) | 8,195 (1,599)
_____________ | _____________ _____________
|
Cash flows from investing activities: |
Property, plant and equipment, net of equity AFUDC (28,438) | (4,896) (11,375)
Sale of assets 11,755 | - -
Advances to Transco (232,939) | (72,621) (439,106)
Retirement of advances to Transco 285,314 | 136,220 465,199
Other, net (50) | (24) 444
_____________ | _____________ _____________
Net cash provided by investing activities 35,642 | 58,679 15,162
_____________ | _____________ _____________
|
Net increase (decrease) in cash and cash equivalents (31,752) | 34,467 411
Cash and cash equivalents at beginning of period 36,095 | 1,628 1,094
_____________ | _____________ _____________
Cash and cash equivalents at end of period $ 4,343 | $ 36,095 $ 1,505
_____________ | _____________ _____________
_____________ | _____________ _____________
|
Supplemental disclosures of cash flow information: |
Cash paid (refunded) during the year for: |
Interest (net of amount capitalized) $ 12,448 | $ 5,406 $ 21,296
Income taxes, net 445 | 12,286 (28,453)
The accompanying condensed notes are an integral part of these condensed financial statements.
</TABLE>
<PAGE>
TRANSCONTINENTAL GAS PIPE LINE CORPORATION
NOTES TO CONDENSED FINANCIAL STATEMENTS
A. ORGANIZATION AND CONTROL AND BASIS OF PRESENTATION
Organization and Control
________________________
Prior to May 1, 1995, Transcontinental Gas Pipe Line Corporation (TGPL)
was a wholly-owned subsidiary of Transco Gas Company (TGC). TGC is a
wholly-owned subsidiary of Transco Energy Company and, as used herein, the
term "Transco" refers to Transco Energy Company and its wholly-owned
subsidiaries unless the context otherwise requires.
As discussed in TGPL's 1994 Annual Report on Form 10-K, on December 12,
1994, Transco and The Williams Companies, Inc. (Williams) announced that
they had entered into a merger agreement (Merger Agreement) pursuant to
which Williams acquired through a cash tender offer 24.6 million shares,
or approximately 60% of the outstanding shares of Transco's common stock.
The cash tender offer was then followed by a stock merger (Merger) in
which shares of Transco's common stock not purchased in the tender offer
were exchanged for approximately 10.2 million shares of Williams' common
stock.
The tender offer began on December 16, 1994 and expired on January 17,
1995. Approximately 35.2 million shares, or approximately 86.7% of the
outstanding shares of Transco's common stock were tendered to Williams for
purchase and not withdrawn. Pursuant to the Merger Agreement, on January
18, 1995, Williams accepted for payment 24.6 million shares of Transco's
common stock for $17.50 per share as the first step in acquiring the
entire equity interest of Transco. The exchange of the remainder of the
outstanding shares of Transco's common stock for Williams' common stock
was approved by a majority of Transco's stockholders on April 28, 1995 and
occurred on the May 1, 1995 effective date of the Merger.
In addition, at the effective date of the Merger, Transco declared and
paid as dividends to Williams all of Transco's interests in its principal
operating subsidiaries, TGPL, Texas Gas Transmission Corporation (Texas
Gas), Transco Gas Marketing Company (TGMC) and Transco Coal Company.
Basis of Presentation
_____________________
The condensed financial statements have been prepared from the books and
records of TGPL 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 and the notes thereto
included in TGPL's 1994 Annual Report on Form 10-K.
Prior to 1993, TGPL was responsible for all jurisdictional gas sales to
its pipeline customers. After Federal Energy Regulatory Commission (FERC)
approval in January 1993, Transco realigned its gas marketing businesses
under the common management of TGMC to more closely coordinate gas
marketing operations to improve efficiencies, reduce costs and improve
profitability. In January 1993, TGMC, through an agency agreement, began
to manage all jurisdictional merchant gas sales of TGPL. Under this
agency agreement, TGMC bills TGPL for the cost of managing TGPL's merchant
gas sales service and receives all margins associated with such business.
Consequently, TGPL's merchant gas sales service has had no impact on its
results of operations.
Pursuant to a settlement that TGPL has with all its sales customers, TGPL
has in place a gas inventory charge (GIC) designed to allow TGPL to
recover its above-spot-market gas cost through March 31, 2001. TGPL
believes that the GIC agreed to with its customers will be adequate to
enable full recovery of its above-spot-market gas costs. Through an
agency agreement with TGPL, TGMC has assumed management of TGPL's
jurisdictional merchant gas sales service and, as TGPL's agent, is at risk
for any above-spot-market gas costs it may incur in excess of the amounts
recovered under the GIC.
As a subsidiary of Transco, TGPL has engaged in transactions with Transco
and other Transco subsidiaries, characteristic of group operations. For
consolidated cash management purposes, TGPL has made interest-bearing
advances to Transco and received interest-bearing advances and capital
contributions from Transco. These advances are represented by demand
notes. TGPL currently expects to receive payment of these advances within
the next twelve months and has recorded such advances as current in the
accompanying Balance Sheet. As general Transco corporate policy, the
interest rate on intercompany demand notes is 1-1/2% below the prime rate
of Citibank, N.A.
Effective May 1, 1995, TGPL began participation in Williams' cash
management program. On that date, the balance of the advances due to
Transco were transferred by Transco to Williams. These advances are
represented by demand notes. According to Williams' general corporate
policy, the interest rate on intercompany demand notes is the London
Interbank Offered Rate on the first day of the month plus 0.45%.
The acquisition of Transco Energy Company and its subsidiaries, including
TGPL, by Williams has been accounted for using the purchase method of
accounting. Accordingly, a preliminary allocation of the estimated
purchase price was assigned to the assets and liabilities of TGPL based on
their estimated fair values. The accompanying financial statements
reflect the pushdown of TGPL's share of 100% of the estimated purchase
price, even though Williams owned only 60% of Transco at March 31, 1995,
due to the certainty of Williams closing on the remaining 40% of Transco
on May 1, 1995. The estimated purchase price allocation to TGPL primarily
consisted of a $1.2 billion allocation to property, plant and equipment,
which will be amortized over the useful lives of those assets, and
adjustments to deferred taxes based upon the book basis of the net assets
recorded as a result of the acquisition. Current FERC policy does not
permit TGPL to recover through rates amounts in excess of original cost.
Williams is continuing to evaluate the purchase price allocation.
Therefore, TGPL's Condensed Balance Sheet as of March 31, 1995 and
Condensed Statement of Income for the period January 18, 1995 to March 31,
1995 have been prepared based on a preliminary allocation of the purchase
price prior to the completion of studies and other information necessary
for the final purchase price allocation. Accordingly, the amounts
presented are subject to change, but any differences in the final purchase
price allocation are not expected to have a material effect on TGPL's
condensed financial statements.
Further, as a result of the change in control of Transco on January 18,
1995 and the effects of the preliminary allocation of the estimated
purchase price, TGPL's Condensed Statement of Income and Condensed
Statement of Cash Flows for the three months ended March 31, 1995, have
been segregated into a pre-acquisition period ending January 17, 1995 and
a post-acquisition period beginning January 18, 1995.
Certain other reclassifications have been made in the 1994 financial
statements to conform with the 1995 presentation.
<PAGE>
B. MERGER WITH THE WILLIAMS COMPANIES, INC.
The following table presents the changes in the components of TGPL's
common stockholder's equity, including the effects of the acquisition by
Williams, for the three months ended March 31, 1995 (expressed in
thousands).
<TABLE>
<CAPTION>
Post-Acquisition Pre-Acquisition
_________________ ___________________
For the Period | For the Period
January 18, 1995 | January 1, 1995
to March 31, 1995 | to January 17, 1995
_________________ | ___________________
|
Common Stock: |
<S> <C> | <C>
Balance at beginning and end of period $ - | $ -
______________ | _______________
|
Premium on Capital Stock and Other Paid-in Capital: |
Balance at beginning of period 285,792 | 285,792
Loss on reacquired preferred stock, net (369) | -
Acquisition adjustment to eliminate retained earnings 519,179 | -
Acquisition adjustment to record assets and |
liabilities at fair value 728,313 | -
______________ | _______________
|
Balance at end of period 1,532,915 | 285,792
______________ | _______________
|
Retained Earnings: |
Balance at beginning of period 519,179 | 529,035
Net income (loss) 21,007 | (9,662)
Dividends on preferred stock (722) | (194)
Acquisition adjustment to eliminate retained |
earnings (519,179) | -
_______________ | _______________
Balance at end of period 20,285 | 519,179
_______________ | _______________
|
Total Common Stockholder's Equity $ 1,553,200 | $ 804,971
_______________ | _______________
_______________ | _______________
</TABLE>
C. REGULATORY MATTERS
There have been no new developments from those described in the 1994
Annual Report on Form 10-K other than described below.
Rate Matters
____________
On March 1, 1995, TGPL filed with the FERC a general rate case (Docket No.
RP95-197). The general rate filing proposes changes in the rates for
TGPL's transportation, sales and storage service rate schedules effective
April 1, 1995. The changes in rates would generate additional
jurisdictional revenues of approximately $132 million over the rates
currently in effect, based primarily on: (1) an increase in rate base
resulting from additional plant and higher working capital requirements
and a reduction in accumulated deferred income taxes; (2) an increase in
operation and maintenance expenses; and (3) an increase in TGPL's cost of
capital resulting from an increase in the equity component of the capital
structure used (the filing is based on TGPL's own capital structure) and
in the cost of equity from the pre-filed rate of return on equity of 14.45
percent to the proposed rate of return on equity of 15.25 percent.
TGPL also proposes to: (1) eliminate the non-gas demand charge under Rate
Schedule FS; (2) refunctionalize certain jointly owned transmission
facilities to the gathering function; and (3) eliminate the interruptible
transportation (IT) crediting mechanism. TGPL also filed pro forma tariff
sheets, to be effective on a prospective basis, for two new Part 284
services, an interconnect transfer service and a gas management service,
and a pro forma tariff sheet to reflect market-based rates for its non-IT
feeder transactions, should the FERC decide to set TGPL's IT rates for
hearing in this docket. TGPL further proposed to eliminate the "at risk"
certificate condition governing its Mobile Bay facilities on a
prospective basis. Finally, TGPL proposed certain other changes to the
terms and conditions of its tariff, none of which would have a significant
impact on operating income.
On March 31, 1995, the FERC issued an order on TGPL's filing which accepts
and suspends the tariff sheets, to be effective September 1, 1995, subject
to refund, relating to TGPL's rates, and establishes hearing procedures.
The March 31 order also accepts, to be effective April 1, 1995, the tariff
sheets changing TGPL's terms and conditions of service, subject to the
outcome of a technical conference at which parties will have the
opportunity to discuss TGPL's terms and conditions of service, system
operations and proposed new services. As to market-based IT rates, the
FERC accepted TGPL's pro forma tariff sheet but deferred action until
after the FERC has completed its generic review of market-based rates. As
to the elimination of the IT crediting mechanism, the FERC permitted TGPL
to eliminate the IT crediting mechanism subject to the outcome of the
hearing where the reasonableness of TGPL's test period projections for
interruptible services must be examined.
At a prehearing conference on April 18, 1995, the presiding Administrative
Law Judge (ALJ) adopted a procedural schedule establishing a phased
hearing for the rate issues raised by TGPL's filing. The first phase will
address the rate of return and capital structure in the filing with a
hearing schedule to commence in October 1995, and the second phase will
address the remaining rate issues with a hearing to commence in May 1996.
As discussed in TGPL's 1994 Annual Report on Form 10-K, the issue of the
allocation of certain costs to TGPL's merchant sales service, among
others, was referred to the hearing in TGPL's general rate case (Docket
No. RP92-137) by the FERC orders approving TGPL's implementation of Order
636. In an ALJ's initial decision issued on October 20, 1994, the ALJ
determined that there is no genuine issue of material fact warranting a
trial-type hearing on the issue, and directed TGPL to remove from its
gathering function approximately $5.6 million of indirect costs and to
reassign this amount to its merchant sales service. On November 21, 1994,
TGPL filed a brief on exceptions with the FERC, seeking to reverse the
ALJ's decision. On December 12, 1994, certain parties, including the
FERC's staff, filed briefs opposing TGPL's exceptions. In late February
1995, the FERC issued an order affirming the ALJ's October 20, 1994
decision and directing TGPL to file, within 15 days after the FERC's final
order on the initial decision, to remove from its gathering function a
total of $5.6 million of indirect costs and to reassign that amount to its
merchant service. TGPL has filed for rehearing of the FERC's February
1995 order. Any changes in TGPL's rates or services resulting from this
issue would have a prospective effect only. Although no assurances can be
given, TGPL believes that the final resolution of this cost allocation
issue will not have a material adverse effect on its financial position,
results of operations or net cash flows.
Other Regulatory Matters
________________________
Order 636
TGPL expects that any Order 636 transition costs incurred should be
recovered from customers of TGPL, subject only to the costs and other
risks associated with the difference between the time such costs are
incurred and the time when those costs may be recovered from customers.
Order 94-A
TGPL's Rate Settlement and GIC Docket No. RP90-8 Settlement contains a
provision pursuant to which TGPL's customers, with the exception of
Columbia Gas Transmission Corporation (Columbia), have agreed not to
contest the Order 94-A payments previously made to TGPL by them. TGPL had
billed to and recovered from Columbia approximately $7 million of Order
94-A costs. In October 1993, TGPL and Columbia filed with the FERC for
approval a letter agreement in which TGPL agreed to refund $1.4 million to
Columbia, which amount is inclusive of principal and interest, in full and
final settlement of all issues in this proceeding. On January 26, 1994,
Columbia filed a letter with the FERC stating that, due to developments in
other pipeline company proceedings involving settlements of the issue of
recovery of Order 94-A costs from Columbia, Columbia could no longer
support the settlement between TGPL and Columbia. On February 13, 1995,
the FERC issued an order rejecting the October 26 settlement and requiring
TGPL to refund to Columbia within 30 days the principal amount of the
Order 94-A costs collected from Columbia. The FERC granted an extension
of time for making the refund, to and including 30 days after FERC action
on requests for rehearing. Both TGPL and Columbia requested rehearing of
the February 13 order. On May 1, 1995, the FERC issued an order denying
both TGPL's and Columbia's requests for rehearing of that order, and
directing TGPL to refund to Columbia within 30 days the principal amount
of the Order 94-A costs collected from Columbia, plus interest from March
15, 1995. TGPL has provided a reserve of approximately $7 million which
it believes is adequate to provide for any amounts which it may ultimately
be required to refund.
D. LEGAL PROCEEDINGS
There have been no new developments from those described in the 1994
Annual Report on Form 10-K other than as described below.
Royalty claims
______________
As discussed in TGPL's 1994 Annual Report on Form 10-K, in connection with
TGPL's renegotiations with producers to resolve take-or-pay and other
contract claims and to amend gas purchase contracts, TGPL has entered into
certain settlements which may require the indemnification by TGPL of
certain claims for "excess royalties" which producers may be required to
pay as a result of such settlements. As also discussed in TGPL's 1994
Annual Report on Form 10-K, TGPL has been advised by Freeport-McMoRan,
Inc. (FMP) that the Minerals Management Service has made claims due under
certain gas contracts. FMP has asserted that TGPL's royalty reimbursement
obligation to FMP is approximately $5.7 million, including interest. TGPL
has denied any liability to FMP. On or about March 3, 1995, TGPL filed
suit against FMP, FM Properties Operating Co. and FMP Operating Company in
the 53rd Judicial District Court of Travis County, Texas, under the Texas
Uniform Declaratory Judgements Act seeking a determination that TGPL is
not liable to defendants under the terms of the gas contracts. On April
3, 1995, the defendants filed their answer and a plea in abatement. On or
about March 30, 1995, FMP and FM Properties Operating Co., filed a
petition for specific performance seeking recovery against TGPL and
Transco, for the sums claimed under the gas contracts. On May 4, 1995,
TGPL and Transco filed an answer denying any liability to plaintiffs.
E. ENVIRONMENTAL MATTERS
There have been no new developments from those described in the 1994
Annual Report on Form 10-K other than as described below.
TGPL is subject to the federal Clean Air Act and to the federal Clean Air
Act Amendments of 1990 (1990 Amendments), which added significantly to the
existing requirements established by the federal Clean Air Act. In
addition, pursuant to the 1990 Amendments, the Environmental Protection
Agency (EPA) has issued regulations under which states must implement new
air pollution controls to achieve attainment of national ambient air
quality standards in areas where they are not currently achieved.
In February 1995, three citizens filed suit against TGPL in federal
district court in Virginia for alleged violations of several provisions of
both federal and state air regulations. Since 1991, TGPL has worked with
the appropriate Virginia agencies pursuant to an agreement to resolve the
emissions issues raised by the citizens. TGPL believes the state agencies
are in agreement with the actions proposed by TGPL which will resolve
emission issues at its Virginia facilities. TGPL believes the citizens'
claims are without merit and is prepared to vigorously defend any suit
brought by the citizens. In March 1995, TGPL filed a motion to dismiss
based on lack of subject matter jurisdiction and failure to state a claim.
Although no assurances can be given, TGPL does not believe that this issue
will have a material adverse effect on its financial condition, results of
operations or net cash flows.
F. FINANCING
Recapitalization
________________
In connection with the Merger, in January 1995, the boards of directors of
Transco and Williams approved a recapitalization plan for Transco under
which Williams agreed to advance or contribute to Transco up to an
estimated $950 million. The following actions were completed in the first
quarter of 1995 in connection with the recapitalization plan, as it
impacts TGPL:
- - Termination of Transco's Amended Bank Credit Facility dated December
31, 1993, and the repayment of the outstanding balance of $36 million,
replacing it with the Williams Credit Agreement described below;
- - Termination of the program to sell monthly trade receivables of TGPL,
replacing it with the Williams Credit Agreement described below with
the expectation that at some future time Williams will enter into a
new receivables program; and
- - Termination of Transco's Reimbursement Facility dated December 31,
1993.
Transco's Amended Bank Credit Facility was replaced with a Credit
Agreement among Williams and certain of its subsidiaries, TGPL and Texas
Gas (Williams Credit Agreement).
The Williams Credit Agreement, with a group of 22 banks, provides for an
$800 million working capital line of credit, under which TGPL can borrow
up to $400 million. Interest on advances is paid at a rate based on the
base rate of Citibank N.A.; the latest three-week moving average of
secondary market morning offering rates in the United States for three-
month certificates of deposit of major United States money market banks,
plus 1/2%; or the Federal Funds Rate in effect, plus 1/2%.
G. PREFERRED STOCK
TGPL redeemed all outstanding shares of its three cumulative preferred
stock series in March 1995 for $49.7 million, or $100.00 per share, plus
accrued dividends of $0.6 million.
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF TRANSCONTINENTAL GAS
PIPE LINE CORPORATION'S (TGPL) FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
The following discussion should be read in conjunction with the financial
statements, notes and management's discussion contained in Items 7 and 8
of TGPL's 1994 Annual Report on Form 10-K and with the condensed
financial statements and notes contained in this report.
INTRODUCTION
As discussed in Note A, Organization and Control and Basis of
Presentation, of the Notes to Condensed Financial Statements, Transco and
Williams announced that they had entered into a Merger Agreement pursuant
to which Williams acquired on January 18, 1995, through a cash tender
offer 24.6 million shares, or approximately 60%, of the outstanding shares
of Transco's common stock. The cash offer was then followed by a Merger
in which shares of Transco's common stock not purchased in the tender
offer were exchanged for approximately 10.2 million shares of Williams'
common stock. The Merger was effective on May 1, 1995.
CAPITAL RESOURCES AND LIQUIDITY
Financing
_________
Prior to the completion of the Offer, TGPL funded its capital
requirements, including its working capital requirements, with cash flows
from operating activities, including the sale of trade receivables,
supplemented, when required, by repayments of funds advanced to Transco or
advances by Transco.
After the completion of the Offer, TGPL began funding its capital
requirements with cash flows from operating activities, by repayments of
funds advanced to Transco and advances by Transco and borrowings under the
Williams Credit Agreement. At March 31, 1995, there were outstanding
advances from Transco totaling $17 million and borrowings under the
Williams Credit Agreement totaling $20 million.
In connection with the Merger, in January 1995, the boards of directors of
Transco and Williams approved a recapitalization plan for Transco under
which Williams agreed to advance or contribute to Transco up to an
estimated $950 million.
The following actions were completed in the first quarter of 1995 in
connection with the recapitalization plan, as it impacts TGPL:
- - Termination of Transco's Amended Bank Credit Facility dated
December 31, 1993, replacing it with the Williams Credit Agreement;
- - Termination of the program to sell monthly trade receivables of TGPL,
replacing it with the Williams Credit Agreement with the expectation
that at some future time Williams will enter into a new receivables
program;
- - Termination of Transco's Reimbursement Facility dated December 31,
1993; and
- - Redemption by TGPL of all of its outstanding preferred stock at $100.00
per share plus accrued dividends.
In February 1995, Standard & Poor's Corporation and Moody's Investors
Service upgraded TGPL's debt securities from BB and Ba2 to BBB and Baal,
respectively and TGPL's preferred stock from BB- and B1 to BBB- and Baa2,
respectively. These upgrades should provide TGPL with greater access to
capital markets. A security rating is not a recommendation to buy, sell
or hold securities; it may be subject to revision or withdrawal at any
time by the assigning rating organization. Each rating should be
evaluated independently of any other rating.
Capitalization and Cash Flows
_____________________________
As shown in the following table, which is expressed in millions, at
March 31, 1995, the percentage of total debt to total invested capital
was 30.2%, compared to 42.7% at December 31, 1994. The increase in common
stockholder's equity due to the preliminary allocation of the Williams
purchase price, partially offset by the retirement of TGPL's preferred
stock, was the primary reason for the reduction of the percentage of total
debt to total invested capital.
<TABLE>
<CAPTION>
Post-Acquisition| Pre-Acquisition
________________| _______________
March 31, | December 31,
1995 | 1994
_____________ | ____________
|
<S> <C> | <C>
Common Stockholder's Equity $ 1,553.2 | $ 814.8
Preferred Stock - | 49.4
Long-term Debt, less Current Maturities 672.0 | 644.2
___________ | ___________
Total Capitalization 2,225.2 | 1,508.4
Short-term Debt and Current Maturities of Long-term Debt - | -
___________ | ___________
Total Invested Capital $ 2,225.2 | $ 1,508.4
___________ | ___________
___________ | ___________
|
Long-term Debt, less Current Maturities, as a Percentage |
of Total Capitalization 30.2% | 42.7%
Common Stockholder's Equity as a Percentage |
of Total Capitalization 69.8% | 54.0%
Total Debt as a Percentage of Total Invested Capital 30.2% | 42.7%
</TABLE>
For purposes of the discussion of variances between the first quarter of
1995 and the first quarter of 1994, the pre-acquisition and post-
acquisition periods presented in the accompanying financial statements for
the first quarter of 1995 have been combined for a pro forma presentation
of cash flows for the first quarter of 1995.
<TABLE>
<CAPTION>
Three Months
Ended March 31,
__________________________
1995 1994
__________ __________
(In millions)
<S> <C> <C>
Cash Flows Used In Operating Activities $ 77.0 $ 13.2
__________ __________
__________ __________
</TABLE>
Net cash flows used in operating activities for the three months ended
March 31, 1995 were $64 million higher than for the three months ended
March 31, 1994. This increase in cash outflows was primarily the result
of the termination of the program to sell monthly trade receivables of
TGPL in the first quarter of 1995.
<TABLE>
<CAPTION>
Three Months
Ended March 31,
__________________________
1995 1994
__________ __________
(In millions)
<S> <C> <C>
Cash Flows Used In Financing Activities $ 14.6 $ 1.6
__________ __________
__________ __________
</TABLE>
Net cash flows used in financing activities for the three months ended
March 31, 1995 included cash outflows for the retirement of $50 million of
preferred stock by TGPL, partly offset by borrowings of $20 million by
TGPL under the Williams Credit Agreement and net advances from Transco of
$17 million.
Net cash flows used in financing activities for the three months ended
March 31, 1994 were attributable to dividends of $2 million on preferred
stock.
<TABLE>
<CAPTION>
Three Months
Ended March 31,
__________________________
1995 1994
__________ __________
(In millions)
<S> <C> <C>
Cash Flows provided by Investing Activities $ 94.3 $ 15.2
__________ __________
__________ __________
</TABLE>
For the three months ended March 31, 1995, net cash flows provided by
investing activities primarily included the net repayment of advances to
Transco of $116 million and proceeds of $12 million from the sale of an
interest in the Mobile Bay lateral, partly offset by capital expenditures
for property, plant and equipment as shown on the following table.
For the three months ended March 31, 1994, cash flows from investing
activities, primarily from Transco's net repayment of advances from TGPL,
exceeded the cash outflows for capital expenditures for property, plant
and equipment.
<TABLE>
<CAPTION>
Three Months
Ended March 31,
__________________________
Capital Expenditures 1995 1994
____________________ __________ __________
(In millions)
<S> <C> <C>
Market-Area Projects $ 11.2 $ 2.7
Supply-Area Projects 0.6 2.5
Existing Facilities and Other Projects 21.5 6.2
__________ __________
Total Capital Expenditures $ 33.3 $ 11.4
__________ __________
__________ __________
</TABLE>
Other Capital Requirements and Contingencies
____________________________________________
TGPL's capital requirements and contingencies are discussed its 1994
Annual Report on Form 10-K. Other than described in Notes C, D and E of
the Notes to Condensed Financial Statements, there have been no new
developments from those described in TGPL's 1994 Annual Report on Form 10-
K with regard to other capital requirements and contingencies.
CONCLUSION
__________
Although no assurances can be given, TGPL currently believes that the
aggregate of cash flows from operating activities, supplemented, when
necessary, by advances or capital contributions from Williams and
borrowings under the Williams Credit Agreement, will provide sufficient
liquidity to meet its capital requirements. If necessary, TGPL also
expects to be able to access public and private markets to finance its
capital requirements.
<PAGE>
RESULTS OF OPERATIONS
In January 1993, upon FERC approval, Transco realigned its gas marketing
businesses under the common management of TGMC. TGMC, through an agency
agreement with TGPL, manages all jurisdictional merchant gas sales made by
TGPL. The financial performance of TGPL's sales service, both merchant
and non-merchant, is discussed separately in the following discussion.
For purposes of the discussion of variances between the first quarter of
1995 and the first quarter of 1994, the pre-acquisition and post-
acquisition periods presented in the accompanying financial statements for
the first quarter of 1995 have been combined for a pro forma presentation
of results of operations for the first quarter of 1995.
Net and Operating Income
TGPL's net income for the three months ended March 31, 1995 was $10.4
million, compared with net income of $27.6 million for the three months
ended March 31, 1994. The 1995 results include net after-tax charges
related to the Merger totaling $18.3 million, primarily to provide for
executive severance and termination benefits, substantially all of which
were not deductible for federal income tax purposes, and the amortization
of the amount of the Williams purchase price allocated to TGPL's property,
plant and equipment. Excluding the after-tax charges, TGPL reported net
income for the first quarter of 1995 of $28.8 million.
Excluding the charges related to the Merger, the higher net income was
primarily due to higher net transportation revenues of $5.3 million (net
of the related cost of transportation) and lower dividends on preferred
stock of $0.7 million, partly offset by higher operation and maintenance
costs of $4.2 million.
Transportation Services
TGPL's operating revenues, excluding sales and storage services increased
$9 million to $177 million for the quarter ended March 31, 1995, when
compared to the 1994 first quarter. Transportation revenues increased $9
million when compared to 1994, primarily due to increased throughput on
the Mobile Bay lateral ($4.6 million) as a result of the change from
interruptible transportation to firm transportation combined with
additional demand revenues from the 1994 Southeast Expansion Project which
was placed into service in November 1994 ($1.0 million).
Excluding the pre-tax effects of the charges related to the Merger in 1995
and the cost of sales and transportation of $183 million for 1995 and $255
million for 1994, TGPL's operating expenses for the first three months of
1995 increased approximately $5.1 million over the same period in 1994.
The increase for the quarter was primarily due to higher costs for
underground storage ($2.4 million) and miscellaneous contractual services
($1.0 million), partly offset by lower costs for main engine repairs ($0.6
million).
As shown in the table below, TGPL's total market-area deliveries for the
first three months of 1995 were 8.1 Bcf, or 2%, lower than the 1994 first
quarter. The decreased deliveries, primarily firm transportation volumes,
are mainly due to the colder-than-normal weather in the market area during
January and February 1994. The production-area deliveries for the first
three months of 1995 increased slightly when compared to the same period
in 1994. As a result of a straight fixed-variable (SFV) rate design and
the interruptible transportation revenue crediting requirement, decreases
or increases in system deliveries have no significant impact on operating
income.
<PAGE>
<TABLE>
<CAPTION>
Three Months
Ended March 31,
____________________________
TGPL System Deliveries (Bcf) 1995 1994
____________________________ __________ __________
<S> <C> <C>
Market-area deliveries:
Long-haul transportation 217.3 230.8
Market-area transportation 139.6 134.2
_________ _________
Total market-area deliveries 356.9 365.0
Production-area transportation 37.3 36.3
_________ _________
Total system deliveries 394.2 401.3
_________ _________
_________ _________
</TABLE>
TGPL's facilities are divided into seven rate zones. Four are located in
the production area and three are located in the market area. Long-haul
transportation is gas that is received in one of the production-area zones
and delivered in a market-area zone. Market-area transportation is gas
that is both received and delivered within market-area zones. Production-
area transportation is gas that is both received and delivered within
production-area zones.
TGPL has expressed to the FERC concerns that inconsistent treatment under
Order 636 of TGPL and its competitor pipelines with regard to rate design
and cost allocation issues in the production area may result in rates
which could make TGPL less competitive, both in terms of production-area
and long-haul transportation. A hearing before a FERC ALJ, dealing with,
among other things, TGPL's production-area rate design, concluded in June
1994 and the parties submitted briefs to the ALJ in August and September
1994. The decision of the ALJ, when issued, will be subject to review by
the FERC. TGPL is unable at this time to fully assess the long-term
competitive effect and resulting financial impact on TGPL of having to
maintain its current production-area rate design which is different than
that of its competitors.
On September 17, 1992, the FERC issued a decision addressing the single
issue of the appropriate rate of return in Docket No. RP92-137. The FERC,
using a hypothetical capital structure based on the average capital
structure of a group of seven publicly-traded companies with pipeline
subsidiaries, determined TGPL's appropriate after-tax rate of return on
equity to be 14.45%. The FERC did not determine TGPL's cost of debt and
preferred stock, suggesting that this issue should be the subject of
further proceedings in the context of the general rate case.
Consequently, TGPL's current settlement rates reflect an after-tax rate of
return on equity of 14.45% but, consistent with the FERC order, the rates
continue to reflect the cost of debt and preferred stock originally filed
in the general rate case. The issue of the appropriate rate of return for
TGPL was appealed to the United States Court of Appeals for the D.C.
Circuit (D.C. Circuit Court). TGPL appealed, seeking to increase the rate
of return, and certain other parties appealed, seeking to lower the rate
of return. On December 23, 1994, the D.C. Circuit Court issued an opinion
remanding to the FERC the FERC's September 17, 1992 order. The D.C.
Circuit Court determined that the FERC had failed to explain adequately
its decisions to use a hypothetical capital structure for TGPL, to select
a rate of return on equity at the top range of reasonableness, and to use
as a proxy group to develop TGPL's hypothetical capital structure a group
of publicly-traded parent companies with pipeline subsidiaries rather than
a group of regulated pipelines. Accordingly, the D.C. Circuit Court
remanded the order to the FERC for further consideration. Although no
assurances can be given, TGPL believes the final outcome of this issue
will not have a material adverse effect on TGPL's financial position,
results of operations or net cash flows.
On October 26, 1994, the FERC issued a notice of a request for initiation
of a complaint proceeding in TGPL's Order 636 restructuring docket,
stating that Fina Natural Gas Company (Fina) has filed a complaint
requesting that the FERC initiate a proceeding under section 5 of the NGA
to investigate the functionalization of TGPL's production-area facilities.
Fina asserts that some of TGPL's production-area facilities have been
misfunctionalized as transmission, and that under recent gathering orders,
those facilities should properly be functionalized as gathering
facilities. On November 28, 1994, TGPL filed an answer in response to the
notice. In that answer, TGPL requested that the FERC defer action on
Fina's complaint until June 1, 1995. TGPL advised the FERC that, in light
of the FERC's evolving policies on gathering and production-area rate
design, TGPL is evaluating which, if any, of its Gulf Coast gathering
facilities could be spun down into a nonjurisdictional subsidiary. TGPL
stated that it anticipates that it will complete that evaluation on or
before June 1, 1995, at which point TGPL will either submit a proposal to
the FERC or will notify the FERC of its intentions. If the FERC elects to
initiate a proceeding, any change in classification of the function of
plant facilities between transmission and gathering would be prospective
only. Although no assurances can be given, TGPL does not believe the
final outcome of this issue will have a material adverse effect on TGPL's
financial position, results of operations or net cash flows.
Sales services
TGPL makes jurisdictional merchant gas sales to customers through a Firm
Sales (FS) program and an Optional Firm Sales (OFS) program coupled with
a firm transportation program as replacement for contract sales quantity.
These programs give customers the option to purchase daily quantities of
gas from TGPL at market-responsive prices in exchange for a demand charge
payment to TGPL designed to recover the costs of gas in excess of current
month spot prices that TGPL is obligated to pay under its producer
contracts. In addition, TGPL makes jurisdictional merchant sales through
an Interruptible Sales (IS) program and a Negotiated Sales (NS) program.
TGPL's operating revenues related to its sales service decreased $76
million to $151 million for the first quarter of 1995, when compared to
the same period in 1994. Of this decrease, $70 million was related to
lower volumes sold through TGPL's jurisdictional merchant sales services
and $6 million was related to TGPL's cash-out program for the settlement
of current month transportation imbalances; however, this decrease in
revenues had no effect on TGPL's operating or net income variances when
compared to the prior year quarter since the decrease was offset by a
corresponding decrease in the cost of sales.
<TABLE>
<CAPTION>
Three Months
Ended March 31,
__________________________
Gas Sales Volumes (Bcf)(1) 1995 1994
__________________________ ________ ________
<S> <C> <C>
Long-term sales 53.7 67.2
Short-term sales 28.2 18.0
________ ________
Total gas sales 81.9 85.2
________ ________
________ ________
(1) Effective January 1993, TGMC, through an agency agreement with TGPL, assumed management of TGPL's
merchant sales service.
</TABLE>
The issue of the allocation of certain costs to TGPL's merchant sales
service, among others, was referred to the hearing in Docket No. RP92-137
by the FERC orders approving TGPL's implementation of Order 636. In an
ALJ's initial decision issued on October 20, 1994, the ALJ determined that
there is no genuine issue of material fact warranting a trial-type hearing
on the issue and directed TGPL to remove from its gathering function
approximately $5.6 million of indirect costs and to reassign this amount
to its merchant sales service. On November 21, 1994, TGPL filed a brief
on exceptions with the FERC, seeking to reverse the ALJ's decision. On
December 12, 1994, certain parties, including the FERC's staff, filed
briefs opposing TGPL's exceptions. In late February 1995, the FERC issued
an order affirming the ALJ's October 20, 1994 decision and directing TGPL
to file within 15 days after the FERC's final order on the initial
decision, to remove from its gathering function a total of $5.6 million of
indirect costs and to reassign that amount to its merchant service. TGPL
has filed for rehearing of the FERC's February 1995 order. Any changes in
TGPL's rates or services resulting from this issue would have a
prospective effect only. Although no assurances can be given, TGPL
believes that the final resolution of this cost allocation issue will not
have a material adverse effect on its financial position, results of
operations or net cash flows.
Storage Services
TGPL's operating revenues for the first quarter of 1995 related to its
storage services increased $3 million when compared to the first quarter
of 1994. This increase reflects an increase in TGPL's storage rates
effective in July 1994 due to higher storage rates charged to TGPL by the
operator of the Leidy and Wharton storage fields; however, this increase
in revenues was offset by a corresponding increase in underground storage
costs as reflected in the operating expense variance discussed above.
<PAGE>
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
See discussion of legal proceedings in Note D of the Notes to
Condensed Financial Statements included herein.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits.
None.
(b) Reports on Form 8-K.
1 - TGPL filed a Form 8-K, Current Report dated April 18,
1995, to report that Transco notified Arthur Andersen
LLP that it was replacing Arthur Andersen LLP with
Ernst & Young LLP, the independent public accountants of
The Williams Companies, Inc.
<PAGE>
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 thereunto duly authorized.
TRANSCONTINENTAL GAS PIPE LINE
CORPORATION
Dated: May 12, 1995 By /s/ Nick A. Bacile
__________________________________
(Signature)
Nick A. Bacile
Vice President, Finance and Controller
(Principal Financial Officer)
<PAGE>
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 thereunto duly authorized.
TRANSCONTINENTAL GAS PIPE LINE
CORPORATION
Dated: May 12, 1995
__________________________________
(Signature)
Nick A. Bacile
Vice President, Finance and Controller
(Principal Financial Officer)
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONDENSED BALANCE SHEET AND THE CONDENSED STATEMENT OF INCOME FOR THE THREE
MONTHS ENDED MARCH 31, 1995, CONTAINED IN TRANSCONTINENTAL GAS PIPE LINE
CORPORATION'S 1995 FIRST QUARTER REPORT ON FORM 10-Q AND IS QUALIFIED IN
ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> MAR-31-1995
<CASH> 4,343
<SECURITIES> 0
<RECEIVABLES> 110,381
<ALLOWANCES> 0
<INVENTORY> 74,340
<CURRENT-ASSETS> 387,768
<PP&E> 2,991,576
<DEPRECIATION> 31,344
<TOTAL-ASSETS> 3,515,872
<CURRENT-LIABILITIES> 380,191
<BONDS> 671,987<F1>
<COMMON> 0
0
0
<OTHER-SE> 1,553,200
<TOTAL-LIABILITY-AND-EQUITY> 3,515,872
<SALES> 150,661
<TOTAL-REVENUES> 367,720
<CGS> 150,643
<TOTAL-COSTS> 272,763
<OTHER-EXPENSES> 16,048
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 15,219
<INCOME-PRETAX> 26,890
<INCOME-TAX> 15,545
<INCOME-CONTINUING> 11,345
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 11,345<F2>
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
<FN>
<F1>NET OF UNAMORTIZED DEBT PREMIUM AND DISCOUNT
<F2>BEFORE PREFERRED DIVIDENDS OF 916
</FN>
</TABLE>
