-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, FPd/OtrXi95WPqM/pP+XkcuSaRmxbij8JhFBGsQSvNpzEZvAWjIr3lhx6Q5NcRyD SSiE636PCK2PcZ8Qcv56Bg== 0000097142-95-000002.txt : 19951119 0000097142-95-000002.hdr.sgml : 19951119 ACCESSION NUMBER: 0000097142-95-000002 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19950930 FILED AS OF DATE: 19951114 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: TENNESSEE GAS PIPELINE CO CENTRAL INDEX KEY: 0000097142 STANDARD INDUSTRIAL CLASSIFICATION: FARM MACHINERY & EQUIPMENT [3523] IRS NUMBER: 741056569 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-04101 FILM NUMBER: 95592876 BUSINESS ADDRESS: STREET 1: TENNECO BLDG STREET 2: 1010 MILAM STREET CITY: HOUSTON STATE: TX ZIP: 77002 BUSINESS PHONE: 7137572131 MAIL ADDRESS: STREET 1: 1010 MILAM ST CITY: HOUSTON STATE: TX ZIP: 77002 FORMER COMPANY: FORMER CONFORMED NAME: TENNECO INC DATE OF NAME CHANGE: 19871227 FORMER COMPANY: FORMER CONFORMED NAME: TENNESSEE GAS TRANSMISSION CO DATE OF NAME CHANGE: 19680411 10-Q 1 FORM 10-Q ________________________________________________________________________ ________________________________________________________________________ SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 _______________ FORM 10-Q [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 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 1-4101 _______________ TENNESSEE GAS PIPELINE COMPANY (Exact name of registrant as specified in its charter) Delaware 74-1056569 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) Tenneco Building, Houston, Texas 77002 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (713) 757-2131 _______________ Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. YES [X] NO [ ] Indicate the number of shares outstanding of each of the issuer's classes of common stock as of the latest practicable date. Common Stock, par value $5 per share, 200 shares as of September 30, 1995. TENNESSEE GAS PIPELINE COMPANY MEETS THE CONDITIONS OF GENERAL INSTRUCTION H(1)(a) AND (b) OF FORM 10-Q AND IS THEREFORE FILING THIS REPORT WITH A REDUCED DISCLOSURE FORMAT AS PERMITTED BY SUCH INSTRUCTION. ______________________________________________________________________ ______________________________________________________________________ TABLE OF CONTENTS
Page Part I--Financial Information Tennessee Gas Pipeline Company and Consolidated Subsidiaries-- Statements of Income....................................... 2 Statements of Cash Flows................................... 3 Balance Sheets............................................. 4 Statements of Changes in Shareowner's Equity............... 6 Notes to Financial Statements.............................. 7 Management's Discussion and Analysis of Financial Condition and Results of Operations....................... 14 Part II--Other Information Item 1. Legal Proceedings.................................... 21 Item 2. Changes in Securities................................ * Item 3. Defaults Upon Senior Securities...................... * Item 4. Submission of Matters to a Vote of Security Holders............................................. * Item 5. Other Information.................................... * Item 6. Exhibits and Reports on Form 8-K..................... 22
__________ * No response to this item is included herein for the reason that it is inapplicable or the answer to such item is negative. 1 PART I--FINANCIAL INFORMATION TENNESSEE GAS PIPELINE COMPANY AND CONSOLIDATED SUBSIDIARIES STATEMENTS OF INCOME (Unaudited)
(Millions) Three Months Ended Nine Months Ended September 30, September 30, 1995 1994 1995 1994 Revenues: Net sales and operating revenues-- Natural gas pipelines...................... $ 427 $ 549 $1,364 $1,847 Automotive parts........................... 586 478 1,823 1,416 Packaging.................................. 665 562 1,983 1,580 Shipbuilding............................... 445 424 1,290 1,291 Farm and construction equipment............ - - - 518 Other...................................... (2) (2) (6) (6) 2,121 2,011 6,454 6,646 Other income-- Interest income-- Affiliated companies..................... 91 80 271 176 Other.................................... 9 11 36 27 Gain (loss) on sale of businesses and assets, net............................... (71) 12 (64) (8) Other income, net.......................... 18 13 82 29 2,168 2,127 6,779 6,870 Costs and Expenses: Cost of sales (exclusive of depreciation shown below)................................ 1,293 1,111 3,820 3,753 Operating expenses........................... 277 435 963 1,489 Selling, general and administrative.......... 175 141 531 484 Finance charges of Tennessee's finance subsidiaries................................ - - - 8 Depreciation, depletion and amortization..... 112 64 321 220 1,857 1,751 5,635 5,954 Income Before Interest Expense, Income Taxes and Minority Interest......................... 311 376 1,144 916 Interest Expense (net of interest capitalized): Affiliated companies......................... 41 29 112 74 Other........................................ 27 37 100 125 68 66 212 199 Income Before Income Taxes and Minority Interest...................................... 243 310 932 717 Income Tax Expense............................. 90 94 370 282 Income Before Minority Interest................ 153 216 562 435 Minority Interest.............................. 8 - 26 - Income From Continuing Operations.............. 145 216 536 435 Income From Discontinued Operations, Net of Income Tax.................................... - 7 - 5 Income Before Cumulative Effect of Change in Accounting Principle.......................... 145 223 536 440 Cumulative Effect of Change in Accounting Principle, Net of Income Tax.................. - - - (13) Net Income..................................... $ 145 $ 223 $ 536 $ 427
(The accompanying notes to financial statements are an integral part of these statements of income.) 2 TENNESSEE GAS PIPELINE COMPANY AND CONSOLIDATED SUBSIDIARIES STATEMENTS OF CASH FLOWS (Unaudited)
(Millions) Nine Months Ended September 30, 1995 1994 Cash Flows from Operating Activities: Income from continuing operations..................................... $ 536 $ 435 Adjustments to reconcile income from continuing operations to cash provided (used) by continuing operations-- Depreciation, depletion and amortization............................ 321 220 Deferred income taxes............................................... 12 (81) Loss on sale of businesses and assets, net.......................... 64 8 Changes in components of working capital-- (Increase) decrease in receivables................................ (170) 174 (Increase) decrease in inventories................................ (205) (80) (Increase) decrease in prepayments and other current assets....... (23) 33 Increase (decrease) in payables................................... (380) (157) Increase (decrease) in taxes accrued.............................. 43 147 Increase (decrease) in interest accrued........................... (7) 4 Increase (decrease) in restructuring liability.................... - (5) Increase (decrease) in natural gas pipeline revenue reservation... (169) (96) Increase (decrease) in other current liabilities.................. (59) 107 (Increase) decrease in long-term notes and receivables.............. - 4 Take-or-pay (refunds to customers) recoupments, net................. 35 15 Other............................................................... 68 13 Cash provided (used) by continuing operations..................... 66 741 Cash provided (used) by discontinued operations................... (11) 15 Net Cash Provided (Used) by Operating Activities........................ 55 756 Cash Flows from Investing Activities: Net proceeds (expenditures) related to the sale of discontinued operations........................................................... 690 (15) Net proceeds from sale of businesses and assets....................... 70 223 Expenditures for plant, property and equipment-- Continuing operations............................................... (565) (328) Discontinued operations............................................. (4) (47) Acquisitions of business.............................................. (323) (4) (Increase) decrease in Tenneco Inc. receivables....................... 447 (2,067) (Increase) decrease in notes receivable from other affiliates......... - 1,599 Investments and other................................................. 15 (49) Net Cash Provided (Used) by Investing Activities........................ 330 (688) Cash Flows from Financing Activities: Capital contribution from (distribution to) affiliates, net........... 5 - Issuance of long-term debt............................................ - 2 Retirement of long-term debt.......................................... (153) (139) Net increase (decrease) in short-term debt excluding current maturities on long-term debt......................................... 4 249 Net Cash Provided (Used) by Financing Activities........................ (144) 112 Effect of Foreign Exchange Rate Changes on Cash and Temporary Cash Investments....................................................... 6 13 Increase (Decrease) in Cash and Temporary Cash Investments.............. 247 193 Cash and Temporary Cash Investments, January 1.......................... 459 220 Cash and Temporary Cash Investments, September 30 (Note)................ $ 706 $ 413 Cash Paid During the Period for Interest................................ $ 213 $ 203 Cash Paid During the Period for Income Taxes (net of refunds)........... $ 395 $ 227
__________ NOTE: Cash and temporary cash investments include highly liquid investments with a maturity of three months or less at date of purchase. (The accompanying notes to financial statements are an integral part of these statements of cash flows.) 3 TENNESSEE GAS PIPELINE COMPANY AND CONSOLIDATED SUBSIDIARIES BALANCE SHEETS (Unaudited)
(Millions) September 30, December 31, September 30, ASSETS 1995 1994 1994 Current Assets: Cash and temporary cash investments.............. $ 706 $ 459 $ 413 Receivables-- Customer notes and accounts (net).............. 474 644 694 Affiliated companies........................... 491 297 342 Gas transportation and exchange................ 145 214 330 Other.......................................... 254 164 142 Notes receivable from Tenneco Inc................ 2,754 3,201 2,812 Inventories-- Finished goods................................. 312 355 297 Work in process................................ 96 82 72 Long-term contracts in progress, less progress billings...................................... 227 138 100 Raw materials.................................. 212 178 189 Materials and supplies......................... 152 156 154 Deferred income taxes............................ 79 43 90 Prepayments and other............................ 250 301 261 6,152 6,232 5,896 Investments and Other Assets: Investment in affiliated companies............... 418 523 588 Other investments, at cost....................... 40 49 54 Long-term receivables-- Notes and other................................ 138 156 168 Affiliated companies........................... 1 1 171 Investment in subsidiaries in excess of fair value of net assets at date of acquisition, less amortization............................... 325 329 279 Deferred income taxes............................ 53 49 54 Other............................................ 1,263 733 698 2,238 1,840 2,012 Plant, Property and Equipment, at cost............. 10,908 11,009 10,484 Less--Reserves for depreciation, depletion and amortization.................................... 5,598 5,851 5,614 5,310 5,158 4,870 $13,700 $13,230 $12,778
(The accompanying notes to financial statements are an integral part of these balance sheets.) 4 TENNESSEE GAS PIPELINE COMPANY AND CONSOLIDATED SUBSIDIARIES BALANCE SHEETS (Unaudited)
(Millions) September 30, December 31, September 30, LIABILITIES AND SHAREOWNER'S EQUITY 1995 1994 1994 Current Liabilities: Short-term debt (including current maturities on long-term debt)............................... $ 422 $ 298 $ 250 Payables-- Trade........................................... 776 1,029 896 Affiliated companies............................ 46 244 84 Gas transportation and exchange................. 117 159 218 Taxes accrued..................................... 159 49 340 Interest accrued.................................. 55 37 60 Restructuring liability........................... - - 12 Natural gas pipeline revenue reservation.......... 13 190 182 Other............................................. 891 787 824 2,479 2,793 2,866 Long-term Debt...................................... 536 793 874 Deferred Income Taxes............................... 1,251 1,408 1,233 Postretirement Benefits............................. 597 380 366 Deferred Credits and Other Liabilities.............. 631 422 475 Commitments and Contingencies Minority Interest................................... 485 475 18 Shareowner's Equity: Common stock, par value $5 per share, authorized, issued and outstanding 200 shares................ - - - Premium on common stock and other capital surplus. 3,499 3,494 3,494 Cumulative translation adjustments................ 47 (174) (124) Retained earnings................................. 4,175 3,639 3,576 7,721 6,959 6,946 $13,700 $13,230 $12,778
(The accompanying notes to financial statements are an integral part of these balance sheets.) 5 TENNESSEE GAS PIPELINE COMPANY AND CONSOLIDATED SUBSIDIARIES STATEMENTS OF CHANGES IN SHAREOWNER'S EQUITY (Unaudited)
(Millions Except Share Amounts) Nine Months Ended September 30, 1995 1994 Shares Amount Shares Amount Common Stock: Balance January 1 and September 30................ 200 $ - 200 $ - Premium on Common Stock and Other Capital Surplus: Balance January 1................................. 3,494 3,494 Capital contribution from (distribution to) affiliates (net)............................... 5 - Balance September 30.............................. 3,499 3,494 Cumulative Translation Adjustments: Balance January 1................................. (174) (297) Translation of foreign currency statements...... 28 174 Sale of investment in foreign subsidiaries...... 193 - Hedges of net investment in foreign sub- sidiaries (net of income taxes)................ - (1) Balance September 30.............................. 47 (124) Retained Earnings: Balance January 1................................. 3,639 3,149 Net income...................................... 536 427 Balance September 30.............................. 4,175 3,576 Total......................................... $7,721 $6,946
(The accompanying notes to financial statements are an integral part of these statements of changes in shareowner's equity.) 6 TENNESSEE GAS PIPELINE COMPANY AND CONSOLIDATED SUBSIDIARIES NOTES TO FINANCIAL STATEMENTS (Unaudited) (1) In the opinion of Tennessee Gas Pipeline Company (the "Company"), the accompanying unaudited financial statements of Tennessee Gas Pipeline Company and Consolidated Subsidiaries ("Tennessee") contain all adjustments necessary to present fairly the financial position as of September 30, 1995, and the results of operations; changes in shareowner's equity; and cash flows for the periods indicated. In June 1994, Tenneco Inc. and its subsidiaries ("Tenneco") completed an initial public offering ("IPO") of approximately 29% of the common stock of Case Corporation ("Case"), the holder of Tenneco's Farm and construction equipment segment. In November 1994, a secondary offering of Case's common stock reduced Tenneco's ownership to approximately 44%. A third public offering in August 1995 reduced Tenneco's ownership further to approximately 21%. Prior to the IPO, Tenneco reorganized this segment resulting in Tennessee selling all of its Farm and construction equipment net assets to Case for consideration of Case common stock and cash. From January through June 1994, Tennessee's Farm and construction equipment segment was fully consolidated; subsequent to June 1994, it was reflected in Tennessee's financial statements using the cost method of accounting. Tennessee's remaining investment in Case is not significant to its consolidated financial position. See Note 5 for additional information regarding Tennessee's investment in Case. Prior year's financial statements have been reclassified where appropriate to conform to 1995 presentations. (2) Pursuant to Order 636 issued by the Federal Energy Regulatory Commission ("FERC") on April 8, 1992, the Company implemented revisions to its tariff which put into effect on September 1, 1993, the restructuring of its transportation, storage and sales services. Pursuant to the provisions of Order 636 allowing for the recovery of transition costs related to the restructuring, the Company has made filings to recover gas production costs related to its Bastian Bay facilities, the remaining balance of purchased gas ("PGA") costs, stranded transportation ("TBO") costs and gas supply realignment ("GSR") costs resulting from remaining gas purchase obligations. The Company's filings to recover production costs related to its Bastian Bay facilities have been rejected by the FERC based on the continued use of the gas production from the field; however, the FERC recognized the ability of the Company to file for the recovery of losses upon disposition of these assets. The Company has filed for appellate review of the FERC actions and is confident that the Bastian Bay costs will ultimately be recovered as transition costs directly related to Order 636, and no FERC order has questioned the ultimate recoverability of these costs. The filings implementing the Company's recovery mechanisms for the following transition costs were accepted effective September 1, 7 TENNESSEE GAS PIPELINE COMPANY AND CONSOLIDATED SUBSIDIARIES NOTES TO FINANCIAL STATEMENTS--(Continued) 1993, and made subject to refund pending FERC review: 1) direct- billing of unrecovered PGA costs to its former sales customers over a twelve-month period, 2) recovery of TBO costs, which the Company is obligated to pay under existing contracts, through a surcharge from firm transportation customers, adjusted annually, and 3) GSR cost recovery of 90% of such costs over a period of up to thirty-six months from firm transportation customers and recovery of 10% of such costs from interruptible transportation customers. Following negotiations with its customers, the Company filed in July 1994 with the FERC a Stipulation and Agreement (the "PGA Stipulation"), which provides for the recovery of PGA costs of approximately $100 million and the recovery of costs associated with the transfer of storage gas inventory to new storage customers in the Company's restructuring proceeding. The PGA Stipulation eliminates all challenges to the PGA costs, but establishes a cap on the charges that may be imposed upon former sales customers. On November 15, 1994, the FERC issued an order approving the PGA Stipulation and resolving all outstanding issues. On April 5, 1995, the FERC issued its order on rehearing affirming its initial approval of the PGA Stipulation. The Company implemented the terms of the PGA Stipulation and made refunds in May 1995. The orders approving the PGA Stipulation have been appealed to the D.C. Circuit Court of Appeals by certain customers. The Company believes the PGA Stipulation will be upheld on appeal. The Company is recovering TBO costs formerly incurred to perform its sales functions, subject to refund, pending review of data submitted by the Company. On November 18, 1994, the FERC issued an order on the Company's initial TBO surcharge filing to recover TBO costs for the twelve-month period beginning September 1, 1993. The order required the Company to remove certain costs from this surcharge. The Company has appealed this decision to the D.C. Circuit Court of Appeals. On November 30, 1994, the Company filed with the FERC to collect through a surcharge approximately $25 million annually of TBO costs in compliance with the FERC's November 18, 1994 order, and in a separate filing, the Company filed to recover its projected annual TBO costs of approximately $21 million for the twelve-month period beginning January 1, 1995. The FERC accepted the Company's filing to recover its projected TBO costs, subject to refund. With regard to the Company's GSR costs, the Company, along with three other pipelines, executed four separate settlement agreements with Dakota Gasification Company and the U.S. Department of Energy and initiated four separate proceedings at the FERC seeking approval to implement the settlement agreements. The settlement resolved litigation concerning purchases made by the Company of synthetic gas produced from the Great Plains Coal Gasification plant ("Great Plains"). On October 18, 1994, the FERC consolidated the four proceedings and set them for hearing before an administrative law judge ("ALJ"). The hearing, which concluded in July 1995, was limited to the issue of whether the settlement agreements are 8 TENNESSEE GAS PIPELINE COMPANY AND CONSOLIDATED SUBSIDIARIES NOTES TO FINANCIAL STATEMENTS--(Continued) prudent. The ALJ is required to issue his initial decision by December 31, 1995. The FERC has committed to issuing a final order by December 31, 1996. Previously, the FERC has ruled that the costs related to the Great Plains project are eligible for recovery through GSR and other special recovery mechanisms and that the costs are eligible for recovery for the duration of the term of the original gas purchase agreements. Also related to the Company's GSR costs, on October 14, 1993, the Company was sued in the State District Court of Ector County, Texas, by ICA Energy, Inc. ("ICA") and TransTexas Gas Corporation ("TransTexas"). In that suit, ICA and TransTexas contended that the Company had an obligation to purchase gas production which TransTexas thereafter attempted to add unilaterally to the reserves originally dedicated to a 1979 gas contract. On two subsequent occasions, TransTexas gave the Company notice that it was adding new production and/or acreage "to the contract." An amendment to the pleadings seeks $1.5 billion from the Company for alleged damages caused by the Company's refusal to purchase gas produced from the TransTexas leases covering the new production and lands. Neither ICA nor TransTexas were original parties to that contract. However, they contend that any stranger acquiring a fractional interest in the original committed reserves thereby obtains a right to add to the contract unlimited volumes of gas production from locations in South Texas. The Company filed a motion for summary judgment, asserting that the Texas statutes of frauds precluded the plaintiffs from adding new production or acreage to the contract. On May 4, 1995, the trial court granted the Company's motion for summary judgment; the plaintiffs have filed a notice of appeal. Thereafter, ICA and TransTexas filed a motion for summary judgment on a separate issue involving the term "committed reserves" and whether the Company has a contractual obligation to purchase gas produced from a lease not described in the gas contract. On November 8, 1995, the trial court granted ICA's and TransTexas' motion in part. That order, which is not final, also held that ICA's and TransTexas' rights are subject to certain limitations of the Texas Business and Commerce Code. In addition to these defenses, which must be resolved at trial, the Company has other defenses which it has asserted and intends to pursue. The November 8, 1995 ruling does not affect the trial court's previous May 4, 1995 order granting summary judgment to the Company. The Company has been engaged in separate settlement and contract reformation discussions with holders of certain gas purchase contracts who have sued the Company. Although the Company believes that its defenses in the underlying gas purchase contract actions are meritorious, the Company recorded liabilities in the first quarter of 1995 which it believes are adequate to cover the resolution of these matters. On August 1, 1995, the Texas Supreme Court affirmed a ruling favorable to the Company of the Court of 9 TENNESSEE GAS PIPELINE COMPANY AND CONSOLIDATED SUBSIDIARIES NOTES TO FINANCIAL STATEMENTS--(Continued) Appeals in one of these matters and indicated that it would remand the case to the trial court. Motions for rehearing have been filed by the producers. As of the date hereof, the court had not ruled on those motions and mandate had not been issued. As of September 30, 1995, the Company has deferred GSR costs yet to be recovered from its customers of approximately $487 million, net of $290 million previously recovered from its customers, subject to refund. Proceedings have commenced to review the recovery of these GSR costs; however, the FERC has generally encouraged pipelines to settle such issues through negotiations with customers. Although Order 636 contemplates complete recovery by pipelines of qualified transition costs, the Company is engaged in settlement discussions with its customers concerning the amount of recoverable GSR costs in response to the FERC and customer statements acknowledging the desirability of such settlements. Given the uncertainty over the results of ongoing discussions between the Company and its customers related to the recovery of GSR costs and the uncertainty related to predicting the outcome of its gas purchase contract reformation efforts and the associated litigation, Tennessee is unable to predict the timing or the ultimate impact the resolution of these issues will have on its consolidated financial position or results of operations. On December 30, 1994, the Company filed a general rate increase in Docket No. RP95-112 (the "1995 Rate Case"). On January 25, 1995, the FERC accepted the filing, suspended its effectiveness for the maximum period of five months pursuant to normal regulatory process, and set the matter for hearing. On July 1, 1995, the Company began collecting rates, subject to refund, reflecting an $87 million increase in the Company's revenue requirement. Settlement discussions with the FERC staff and customers are ongoing and the Company is reserving revenues it believes adequate to cover any refunds which may be required upon final settlement of this proceeding. Also on January 25, 1995, the FERC issued an order requiring the convening of a technical conference to discuss certain issues in the 1995 Rate Case and concerns expressed in response to operational issues in a 1995 tariff filing. The concerns include the Company's ability to provide its shippers with timely and accurate operating and billing information and the associated systems costs. Several technical conferences were held during the first half of 1995 resulting in modifications to the 1995 tariff filing, the assignment of certain issues to the 1995 Rate Case for final resolution, and the negotiation of a settlement with the Company's customers as to certain operational tariff issues. On November 1, 1995, the FERC approved the settlement of the 1995 tariff issues noting the efforts the Company has made with its customers. The ultimate resolution of these issues may result in adjustments to customer billings. 10 TENNESSEE GAS PIPELINE COMPANY AND CONSOLIDATED SUBSIDIARIES NOTES TO FINANCIAL STATEMENTS--(Continued) (3) Reference is made to Note 2 for information concerning gas supply litigation. Tennessee Gas Pipeline Company and its subsidiaries are parties to numerous other legal proceedings arising from their operations. Tennessee Gas Pipeline Company believes that the outcome of these other proceedings, individually and in the aggregate, will have no material effect on the financial position or results of operations of Tennessee Gas Pipeline Company and its consolidated subsidiaries. (4) Since 1988, the Company has been engaged in an internal project to identify and deal with the presence of polychlorinated biphenyls ("PCBs") and other substances of concern, including substances on the U.S. Environmental Protection Agency ("EPA") List of Hazardous Substances ("HS List") at compressor stations and other facilities operated by both its interstate and intrastate natural gas pipeline systems. While conducting this project, the Company has been in frequent contact with federal and state regulatory agencies, both through informal negotiation and formal entry of consent orders, in order to assure that its efforts meet regulatory requirements. Tennessee has established a reserve for the Company's environmental expenses, which includes: 1) expected remediation expense and associated onsite, offsite and groundwater technical studies, 2) legal fees and 3) settlement of third party and governmental litigation, including civil penalties. Through September 30, 1995, Tennessee has charged approximately $121 million against the environmental reserve. Of the remaining reserve, $38 million has been recorded on the balance sheet under "Payables- Trade" and $104 million under "Deferred Credits and Other Liabilities." Due to the current uncertainty regarding the estimated costs of the further activity necessary for the Company to address the presence of the PCBs, the substances on the HS List and other substances of concern on its sites, including the requirements for additional site characterization, the actual amount of such substances at the sites, and the final, site-specific cleanup decisions to be made with respect to cleanup levels and remediation technologies, the Company cannot at this time accurately project what additional costs, if any, may arise from future characterization and remediation activities. While there are still many uncertainties relating to the ultimate costs which may be incurred, based upon the Company's evaluation and experience to date, Tennessee continues to believe that the amount of the reserve is adequate. Tennessee believes that a substantial portion of these costs, which will be expended over the next five to ten years, will be recovered from customers of its natural gas pipelines. The 11 TENNESSEE GAS PIPELINE COMPANY AND CONSOLIDATED SUBSIDIARIES NOTES TO FINANCIAL STATEMENTS--(Continued) Stipulation and Agreement approved by the FERC in the Company's 1991 rate case established procedures for resolving the recovery of certain environmental expenditures. These environmental costs are currently being collected in the Company's rates subject to further review and possible refund. Following negotiations with its customers, the Company in May 1995 filed with the FERC a separate Stipulation and Agreement (the "Environmental Stipulation") that addresses the recovery of environmental costs currently being recovered in its rates and also establishes a mechanism for recovering a substantial portion of the environmental costs that will be expended in the future. Upon FERC approval, the Environmental Stipulation will become effective as of July 1, 1995, and will have no material effect on Tennessee's financial position or results of operations. As of September 30, 1995, the balance of the regulatory asset is $109 million. Tennessee believes that its liability insurance policies in effect during the period in which the environmental issues occurred provide coverage for remediation costs and related claims. The Company has pending litigation in a Louisiana state court against its insurance carriers during this period, seeking recovery of costs which the Company incurred. The issues in dispute involve determining: 1) whether the presence of PCBs and other substances at each compressor station constituted a separate occurrence for purposes of the per- occurrence limits of the policies; 2) the applicability of the pollution exclusions in certain policies issued after 1971; 3) the applicability of provisions which exclude the environmental impacts located solely on the insured's property; 4) whether the term "property damage" in the policies will cover the cost of compliance with governmental cleanup directives; 5) the allocation of costs to the various policies in effect during the period the environmental impact occurred; 6) the applicability of provisions excluding pollution that is "expected or intended" and 7) the adequacy of notice of claims to insurance carriers. Tennessee has completed settlements with and has received payments from the majority of the defendant carriers and believes that the likelihood of recovery of a portion of its remediation costs and claims against the remaining defendant carriers is reasonably possible. In July 1994, the Company commenced litigation in a Kentucky state court against the manufacturer of the PCB-containing lubricant used by the Company, seeking reimbursement of sums the Company has and will incur in the defense and settlement of PCB-related claims brought by state and federal agencies, private individuals and others. The Company anticipates that the defendant will raise a variety of issues in dispute of the Company's claims. While Tennessee believes its legal position to be meritorious, Tennessee has not adjusted its environmental reserve to reflect any anticipated insurance recoveries or recoveries from the manufacturer of the PCB-containing lubricant. Recoveries could reduce the amount ultimately recoverable from customers. 12 TENNESSEE GAS PIPELINE COMPANY AND CONSOLIDATED SUBSIDIARIES NOTES TO FINANCIAL STATEMENTS--(Continued) Tennessee has identified other sites in its various operating divisions where environmental remediation expenses may be required should there be a change in ownership, operations or applicable regulation. These possibilities cannot be predicted or quantified at this time and accordingly, no provision has been recorded. However, provisions have been made for all instances where it has been determined that the incurrence of any material remedial expense is probable. (5) On August 9, 1995, Tenneco sold in a public offering 16.1 million shares of common stock of Case Corporation at $35 per share. The offering reduced Tenneco's ownership in Case from 44% to 21%. Of the 16.1 million shares sold, approximately 646,000 shares were owned by Tennessee. In connection with the offering, Tennessee received net proceeds of $22 million and recognized a loss of $35 million, including $35 million of income tax benefit. Although Tennessee recorded a loss on this transaction, Tenneco in the aggregate recorded a gain of $101 million. (6) In September 1995, Tenneco announced that it had entered into an agreement to sell Kern River Corporation which holds a 50% interest in Kern River Gas Transmission Company ("Kern River") for approximately $225 million. The transaction is expected to be finalized in 1995. Kern River owns a 904-mile natural gas pipeline system extending from southwestern Wyoming to Bakersfield, California. (7) On October 2, 1995, Tenneco announced that it had signed a definitive agreement to acquire the Mobil Plastics business from Mobil Corporation for $1.27 billion. The acquired operations will become part of Tenneco's packaging division. Mobil Plastics is the largest North American producer of polyethylene and polystyrene packaging. Mobil Plastics' consumer products are sold under the Hefty, Kordite and Baggies brand names. For food service and industrial consumers, Mobil Plastics is a leader in polystyrene foam packaging, thermoformed polystyrene packaging and polyethylene film products. The acquisition is scheduled to be completed in mid- November. (8) In March 1995, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 121 which establishes new accounting standards for the impairment of long- lived assets and for long-lived assets to be disposed of. Tennessee will adopt the new standard in the first quarter of 1996 but does not expect that the adoption will have a material effect on Tennessee's consolidated financial position or results of operations. (The above notes are an integral part of the foregoing financial statements.) 13 TENNESSEE GAS PIPELINE COMPANY AND CONSOLIDATED SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS THREE MONTHS RESULTS Revenues Net sales and operating revenues for the third quarter of 1995 were $2.1 billion, up from $2.0 billion in the third quarter of 1994. Natural gas pipelines revenues were down $122 million or 22 percent primarily due to the nonregulated sector where both spot prices and volumes decreased as a result of increased supply availability and the effect of storage reserves on prices. In the regulated sector, revenues declined $25 million due to the continued phase-out of merchant gas sales as a result of operating under Order 636 of the Federal Energy Regulatory Commission ("FERC"). Automotive parts revenues increased $108 million or 23 percent, including revenues of $76 million resulting from the November 1994 acquisition of Heinrich Gillet GmbH & Company ("Gillet"). Packaging revenues increased $103 million or 18 percent from strong market conditions in the paperboard packaging sector and increased pricing in the specialty segment. Shipbuilding revenues increased $21 million or 5 percent primarily as a result of higher volume on the aircraft carrier RONALD REAGAN. Income Before Interest Expense, Income Taxes and Minority Interest ("Operating Income") Operating income for the third quarter of 1995 was $311 million, down $65 million or 17 percent, compared with $376 million for the 1994 third quarter, primarily due to the sale of Case Corporation ("Case") stock. On August 9, 1995, Tenneco sold in a public offering 16.1 million shares of common stock of Case at $35 per share. The offering reduced Tenneco's ownership in Case from 44 percent to 21 percent. Of the 16.1 million shares sold, approximately 646,000 shares were owned by Tennessee. In connection with the offering, Tennessee received net proceeds of $22 million and recognized a loss of $35 million, including $35 million of income tax benefit. Although Tennessee recorded a loss on this transaction, Tenneco in the aggregate recorded a gain of $101 million. The third quarter 1994 included a $16 million benefit from a contract settlement with Columbia Gas. Natural Gas Pipelines Natural gas pipelines reported operating income of $81 million in the 1995 third quarter compared with $97 million in the 1994 third quarter. Revenues for the third quarter of 1995 decreased to $427 million compared with $549 million in the third quarter of 1994. Third quarter 1995 operating income slightly improved compared with the 1994 third quarter after excluding a $2 million lawsuit settlement related to an interstate pipeline issue in the 1995 third 14 quarter and a $16 million benefit from a contract settlement from Columbia Gas received in the 1994 third quarter. Excluding the above special items, operating income in the regulated segment was flat compared with the 1994 third quarter. Higher operating income related to the implementation of a new rate structure was offset by lower operating income from expiring gas transportation contracts and higher administrative expenses. Operating income in the nonregulated segment improved compared with the 1994 third quarter primarily due to the acquisition of natural gas pipeline assets from the Pipeline Authority of South Australia (PASA), partially offset by decreases in operating income as a result of lower natural gas volumes and prices. The natural gas pipeline industry is experiencing increasing competition, which is the result of actions by the FERC to strengthen market forces throughout the industry. In a number of key markets, Tennessee's interstate pipelines face competitive pressure from other major pipeline systems, enabling local distribution companies and end users to choose a supplier or switch suppliers based on the short-term price of the gas and the cost of transportation. Tennessee's pipelines have been required to discount their transportation rates to maintain market share. Additionally, the majority of Tennessee's transportation contracts will be expiring over the next five years. The renegotiation of these contracts may be impacted by such competitive factors. (See Note 2 in the "Notes to Financial Statements" for additional information.) In September, 1995, Tenneco announced that it had entered into an agreement to sell Kern River Corporation which holds a 50 percent interest in Kern River Gas Transmission Company ("Kern River") for approximately $225 million. The transaction is expected to be finalized in 1995. Kern River owns a 904-mile natural gas pipeline system extending from southwestern Wyoming to Bakersfield, California. Automotive Parts Automotive parts reported third quarter 1995 operating income of $61 million compared with $67 million in the third quarter of 1994. Operating income decreased $6 million compared with the 1994 third quarter primarily as a result of higher start-up costs largely related to a new process, hydroforming, which is a liquid, high- pressure metal-forming application. The hydroforming process is being utilized for the manufacture of the new Ford Taurus exhaust system. Revenues for the third quarter of 1995 increased to $586 million compared with $478 million in last year's third quarter, primarily as a result of the acquisition of Gillet, which added $76 million in revenues. Revenues in the North American aftermarket were down due to market weakness. Aftermarket sales were flat worldwide as aftermarket sales in Europe increased 18 percent from the same quarter a year ago. Original equipment sales increased worldwide with much of this increase supplied by the Gillet acquisition and the improving European economy. 15 Tennessee expects new vehicle sales in Europe to continue to improve the rest of 1995 and next year and new car and truck production in North America to continue at its strong near-record levels throughout 1995. The North American aftermarket, however, is expected to remain sluggish through 1995 with a recovery beginning next year. Packaging Third quarter 1995 operating income for packaging was $117 million, up $54 million, compared with $63 million generated in the 1994 third quarter. Revenues for the 1995 third quarter were $665 million compared with $562 million in the same period last year. This increase of 18 percent was due to continuing strong market conditions in the paperboard packaging business and increased pricing in the specialty segment. The paperboard packaging business reported operating income of $108 million in the third quarter of 1995, compared with $42 million in the year ago quarter, up more than 150 percent. The improvement in operating income was primarily due to continued strong market conditions, higher mill productivity and lower costs for recycled fiber. The outlook for containerboard remains reasonably positive, with domestic industry containerboard production for year-to-date September 1995 up four percent over the same period last year. September industry inventory levels, at 5.5 weeks of supply, are in line with historical levels and are expected to decline for the remainder of the year. Specialty packaging reported operating income of $9 million in the third quarter of 1995, compared with $21 million for the same period last year. Operating income continued to be adversely affected by increases in raw material costs. The costs of polystyrene and aluminum reroll were up 19 percent from the third quarter of 1994. Raw material costs have moderated since the second quarter, however, and fourth quarter unit margins should improve. On October 2, 1995, Tenneco announced that it had signed a definitive agreement to acquire the Mobil Plastics business from Mobil Corporation for $1.27 billion. The acquired operations will become part of Tenneco's packaging division. Mobil Plastics is the largest North American producer of polyethylene and polystyrene packaging. Mobil Plastics' consumer products are sold under the Hefty, Kordite and Baggies brand names. For food service and industrial consumers, Mobil Plastics is a leader in polystyrene foam packaging, thermoformed polystyrene packaging and polyethylene film products. The acquisition is scheduled to be completed in mid- November. 16 Shipbuilding Shipbuilding reported third quarter 1995 operating income of $35 million compared with $52 million in the 1994 third quarter. The $17 million decline resulted primarily from a $6 million charge for headcount reductions recorded in the 1995 third quarter and a $14 million charge for incremental costs for the shipyard's entry into highly competitive commercial markets. Productivity improvements partially offset the decline. Revenues increased $21 million to $445 million in the third quarter of 1995 compared with $424 million in the same period last year. The backlog at the end of the third quarter of 1995 was $4.9 billion and included construction contracts for two LOS ANGELES CLASS submarines, three NIMITZ class aircraft carriers, four "Double Eagle" product tankers, a conversion contract for two fast SEALIFT ships and the overhaul contract for the aircraft carrier USS EISENHOWER. Other Other operations was $17 million for the third quarter of 1995 compared with $97 million in the quarter a year ago. The third quarter 1995 included a pre-tax loss on the sale of Case stock for $70 million (after-tax loss of $35 million) and a $25 million charge for the liquidation of surplus real estate holdings and notes. Interest Expense (net of interest capitalized) Net interest expense for the third quarter of 1995 was $68 million compared with $66 million reported for the 1994 third quarter. Interest capitalized was $2 million for the third quarter of 1995 compared with $1 million for the third quarter of 1994. Income Taxes Income tax expense for the third quarter of 1995 was $90 million compared with $94 million reported for the 1994 third quarter. Discontinued Operations Income from discontinued operations in the third quarter of 1994 of $7 million represented the net income of Tennessee's chemicals division which was sold in the fourth quarter of 1994. Net Income Net income for the third quarter of 1995 was $145 million compared with net income of $223 million in the 1994 third quarter. Net income for the 1994 period included $7 million of income from discontinued operations (net of income tax). 17 NINE MONTHS RESULTS Revenues Net sales and operating revenues for the first nine months of 1995 were $6.5 billion, down from $6.6 billion reported in 1994 primarily due to the exclusion of farm and construction equipment revenues as a result of the change to the cost method of accounting for Case in July 1994. Excluding farm and construction equipment for the first nine months of 1994, revenues increased five percent in the 1995 period compared with the prior year period. Higher revenues for packaging (up $403 million or 26 percent) and automotive parts (up $407 million or 29 percent) were partially offset by lower revenues for natural gas pipelines (down $483 million or 26 percent). Income Before Interest Expense, Income Taxes and Minority Interest ("Operating Income") Operating income for the first nine months of 1995 was $1,144 million compared with $916 million reported for the 1994 period, an improvement of 25 percent. Natural gas pipelines reported operating income of $229 million for the first nine months of 1995 compared with $291 million in the same period of 1994. Revenues decreased to $1.36 billion compared with $1.85 billion in the first nine months of 1994 primarily due to the decline in gas spot prices and lower volumes in the nonregulated segment and the phase-out of merchant gas sales by the regulated pipelines. Operating income declined in the first nine months of 1995 compared with 1994 mainly due to competitive pressures related to operating under FERC Order 636 and the $16 million benefit from a contract settlement with Columbia Gas in the third quarter of 1994. Operating income also decreased as a result of depressed natural gas volumes and prices in the nonregulated business. Automotive parts reported operating income of $191 million for the first nine months of 1995 compared with $190 million recorded in the same period a year ago. Year-to-date revenues for 1995 totaled $1.82 billion compared with last year's amount of $1.42 billion. Revenues increased as a result of the acquisition of Gillet, which added $249 million in revenues, and increased European aftermarket revenues. Profit margins declined in the first nine months of 1995 due to higher start-up costs associated with a new process discussed in the "Three Months Results" and competitive pressures in the North American original equipment and aftermarket. Shipbuilding reported operating income of $125 million for the nine months ended September 1995 compared with $153 million in the same period in 1994. Revenues were $1.29 billion for the first nine months of both 1995 and 1994. Operating income declined primarily as a result of lower profit margins on SEALIFT work, incremental costs for the shipyard's entry into highly competitive commercial markets and a charge related to personnel reductions. 18 Packaging had operating income of $374 million in the first nine months of 1995 compared with $127 million in the prior year period. Revenues were $1.98 billion in the first nine months of 1995 compared with $1.58 billion in the prior year period. Higher revenues and operating income were primarily due to strengthening containerboard pricing partially offset by lower operating income in specialty packaging associated with higher raw material costs. In addition, the 1995 first quarter operating income included a $14 million gain on the sale of a mill in Sylva, North Carolina. Tennessee's other operations reported operating income of $225 million for the 1995 nine-month period compared with $155 million for the year ago period. Operating income improved primarily due to higher interest income from affiliated companies and other investments partially offset by the loss on the sale of the Case stock. Interest Expense (net of interest capitalized) Net interest expense decreased from $212 million in the first nine months of 1994 to $199 million in the first nine months of 1995. Interest capitalized was $2 million in the first nine months of 1994 compared with $5 million in the current year period. Income Taxes Income tax expense for the first nine months of 1995 was $370 million compared with $282 million in the same period of 1994. Income tax expense increased in the first nine months of 1995 primarily due to higher pre-tax income which was partially offset by the tax benefit associated to the loss on the Case sale. Discontinued Operations Income from discontinued operations for the first nine months of 1994 of $5 million (net of an income tax benefit of $2 million) included a $20 million loss (net of income tax benefit of $15 million) on the sale of Tennessee's brakes business and a loss of $3 million (net of income tax benefit of $4 million) from the brakes operations. Net income from the chemicals operations for the first nine months of 1994 was $28 million, net of income tax expense of $17 million. Cumulative Effect of a Change in Accounting Principle Effective January 1, 1994, Tennessee adopted Statement of Financial Accounting Standards ("FAS") No. 112, Employers' Accounting for Postemployment Benefits. This new standard was adopted using the cumulative catch-up method and requires employers to account for postemployment benefits for former or inactive employees after employment but before retirement on the accrual basis rather than the "pay-as-you-go" basis. As a result of the adoption of this statement, the 1994 Statement of Income includes an after-tax charge of $13 million, for the cumulative effect of the accounting change. 19 Net Income Income from continuing operations for the first nine months of 1995 was $536 million compared with income from continuing operations of $435 million in the 1994 period. The first nine months of 1994 net income includes income from continuing operations of $435 million, income from discontinued operations of $5 million and a charge of $13 million (net of income tax) relating to the cumulative effect of a change in accounting principle. Capital Expenditures Expenditures for plant, property and equipment from continuing operations for the first nine months of 1995 were $565 million compared with $328 million for the first nine months of 1994. Increased expenditures for natural gas pipelines ($74 million), automotive parts ($75 million), shipbuilding ($30 million) and packaging ($61 million) were partially offset by the decline for farm and construction equipment ($3 million). Other Matters In March 1995, the Financial Accounting Standards Board issued Financial Accounting Standards No. 121 which establishes new accounting standards for the impairment of long-lived assets and for long-lived assets to be disposed of. Tennessee will adopt the new standard in the first quarter of 1996 but does not expect that the adoption will have a material effect on Tennessee's consolidated financial position or results of operations. 20 PART II OTHER INFORMATION Item 1. Legal Proceedings. (1) Environmental Proceedings. The Company is a party in proceedings involving federal and state authorities regarding the past use by the Company of a lubricant containing polychlorinated biphenyls ("PCBs") in its starting air systems. The Company has executed a consent order with the United States Environmental Protection Agency ("EPA") governing the remediation of its compressor stations in Regions IV, V and VI. With respect to the stations in Regions II and III, EPA has advised the Company that it is deferring to the Pennsylvania and New York environmental agencies to specify the remediation requirements applicable to the Company. The Company has executed a consent order with the Pennsylvania Department of Environmental Resources dated August 1, 1995, governing remediation at the Pennsylvania stations; this consent order also obligates the Company to pay a civil penalty of $500,000. In addition, the Company has agreed to fund environmentally beneficial projects within the State of Pennsylvania over the next three years; those projects are expected to have a total cost to the Company of approximately $490,000. The Company will continue its negotiations with the New York Department of Environmental Conservation on remediation at the New York stations. The Company believes that the ultimate resolution of this matter will not have a material adverse effect on the financial condition or results of operations of the Company and its consolidated subsidiaries. (2) Other Proceedings. On October 14, 1993, the Company was sued in the State District Court of Ector County, Texas by ICA Energy, Inc. ("ICA") and TransTexas Gas Corporation ("TransTexas"). In that suit, ICA and TransTexas contended that the Company had an obligation to purchase gas production which TransTexas thereafter attempted to add unilaterally to the reserves originally dedicated to a 1979 gas contract. On two subsequent occasions, TransTexas gave the Company notice that it was adding new production and/or acreage "to the contract." An amendment to the pleadings seeks $1.5 billion from the Company for alleged damages caused by the Company's refusal to purchase gas produced from the TransTexas leases covering the new production and lands. Neither ICA nor TransTexas were original parties to that contract. However, they contend that any stranger acquiring a fractional interest in the original committed reserves thereby obtains a right to add to the contract unlimited volumes of gas production from locations in South Texas. The Company filed a motion for summary judgment, asserting that the Texas statutes of frauds precluded the plaintiffs from adding new production or acreage to the contract. On May 4, 1995, the trial court granted the Company's motion for summary judgment; the plaintiffs have filed a notice of appeal. Thereafter, ICA and TransTexas filed a motion for 21 summary judgment on a separate issue involving the term "committed reserves" and whether the Company has a contractual obligation to purchase gas produced from a lease not described in the gas contract. On November 8, 1995, the trial court granted ICA's and TransTexas' motion in part. That order, which is not final, also held that ICA's and TransTexas' rights are subject to certain limitations of the Texas Business and Commerce Code. In addition to these defenses, which must be resolved at trial, the Company has other defenses which it has asserted and intends to pursue. The November 8, 1995 ruling does not affect the trial court's previous May 4, 1995 order granting summary judgment to the Company. (3) Potential Superfund Liability. At September 30, 1995, the Company has been designated as a potentially responsible party in 54 "Superfund" sites. With respect to its pro rata share of the remediation costs of certain sites, the Company is fully indemnified by third parties. With respect to certain other sites, the Company has sought to resolve its liability through payments to the other potentially responsible parties. For the remaining sites, the Company has estimated its share of the remediation costs to be between $12 million and $69 million or 0.4 percent to 2.5 percent of the total remediation costs for those sites and has provided reserves that it believes are adequate for such costs. Because the clean-up costs are estimates and are subject to revision as more information becomes available about the extent of remediation required, the Company's estimate of its share of remediation costs could change. Moreover, liability under the Comprehensive Environmental Response, Compensation and Liability Act is joint and several, meaning that the Company could be required to pay in excess of its pro rata share of remediation costs. The Company's understanding of the financial strength of other potentially responsible parties has been considered, where appropriate, in the Company's determination of its estimated liability. The Company does not believe that the costs associated with its current status as a potentially responsible party in the Superfund sites described above will be material to its consolidated financial position or results of operations. For additional information concerning environmental matters, see Note 4 in the "Notes to Financial Statements" of Tennessee Gas Pipeline Company and Consolidated Subsidiaries. Item 6. Exhibits and Reports on Form 8-K. (a) Exhibits. 27--Financial Data Schedule (b) Reports on Form 8-K. Tennessee Gas Pipeline Company did not file any Current Reports on Form 8-K during the quarter ended September 30, 1995. 22 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. TENNESSEE GAS PIPELINE COMPANY By ROBERT T. BLAKELY Robert T. Blakely Senior Vice President-- Principal Financial and Accounting Officer Date: November 14, 1995 23 Exhibit 27 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE TENNESSEE GAS PIPELINE COMPANY AND CONSOLIDATED SUBSIDIARIES FINANCIAL STATEMENTS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. TENNESSEE GAS PIPELINE COMPANY AND CONSOLIDATED SUBSIDIARIES FINANCIAL DATA SCHEDULE
(Millions Except Per Share Data) As of September 30, 1995 and for the Nine Months Then Ended Cash and cash items............................................ $ 706 Marketable securities.......................................... 0 Notes and accounts receivable--trade........................... 474 Allowances for doubtful accounts............................... 0 Inventory...................................................... 999 Total current assets........................................... 6,152 Property, plant and equipment.................................. 10,908 Accumulated depreciation....................................... 5,598 Total assets................................................... 13,700 Total current liabilities...................................... 2,479 Bonds, mortgages and similar debt.............................. 536 Preferred stock--mandatory redemption.......................... 0 Preferred stock--no mandatory redemption....................... 0 Common stock................................................... 0 Other stockholders' equity..................................... 7,721 Total liabilities and stockholders' equity..................... 13,700 Net sales of tangible products................................. 6,454 Total revenues................................................. 6,454 Cost of tangible goods sold.................................... 4,783 Total costs and expenses applicable to sales and revenues...... 4,783 Other costs and expenses....................................... 852 Provision for doubtful accounts and notes...................... 0 Interest and amortization of debt discount..................... 212 Income before taxes and other items............................ 932 Income tax expense............................................. 370 Income/loss continuing operations.............................. 536 Discontinued operations........................................ 0 Extraordinary items............................................ 0 Cumulative effect--changes in accounting principles............ 0 Net income or loss............................................. $ 536 Earnings per share--primary.................................... 0 Earnings per share--fully diluted.............................. 0 /TABLE EX-27 2
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE TENNESSEE GAS PIPELINE COMPANY AND CONSOLIDATED SUBSIDIARIES FINANCIAL STATEMENTS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000,000 9-MOS DEC-31-1995 SEP-30-1995 $706 0 474 0 999 6,152 10,908 5,598 13,700 2,479 536 0 0 0 7,721 13,700 6,454 6,454 4,783 4,783 852 0 212 932 370 536 0 0 0 $536 0 0
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