-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, bae+mFMkwZOeeHDPZep/7iMG77XmbxUnmc08dNrl7bAuTWYCV2BXsKB01ipHHRp7 8xhgKJnqlb8OvICRzA2EIg== 0000099231-94-000016.txt : 19941116 0000099231-94-000016.hdr.sgml : 19941116 ACCESSION NUMBER: 0000099231-94-000016 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19940930 FILED AS OF DATE: 19941114 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: TRANSCONTINENTAL GAS PIPE LINE CORP CENTRAL INDEX KEY: 0000099250 STANDARD INDUSTRIAL CLASSIFICATION: 4922 IRS NUMBER: 741079400 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-07584 FILM NUMBER: 94559971 BUSINESS ADDRESS: STREET 1: 2800 POST OAK BLVD STREET 2: P O BOX 1396 CITY: HOUSTON STATE: TX ZIP: 77251 BUSINESS PHONE: 7134392000 MAIL ADDRESS: STREET 1: 2800 POST OAK BLVD STREET 2: P O BOX 1396 CITY: HOUSTON STATE: TX ZIP: 77251 10-Q 1 `2 UNITED STATES 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, 1994 / / 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 (I.R.S. Employer of 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 report), 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 September 30, 1994 was 100. 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. 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 normal and recurring adjustments, necessary for a fair presentation of the financial position as of the date 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 1993 Annual Report on Form 10-K and included in TGPL's 1994 First and Second Quarter Reports on Form 10-Q. TRANSCONTINENTAL GAS PIPE LINE CORPORATION CONDENSED BALANCE SHEET (Thousands of Dollars)
September 30, December 31, 1994 1993 _____________ _____________ ASSETS Current Assets: Cash . . . . . . . . . . . . . . . . . . . . . . . . $ 1,775 $ 1,094 Deposits . . . . . . . . . . . . . . . . . . . . . . 7,983 7,348 Receivables: Trade. . . . . . . . . . . . . . . . . . . . . . 26,146 53,924 Other. . . . . . . . . . . . . . . . . . . . . . 27,740 39,257 Advances to Transco . . . . . . . . . . . . . . . . 114,241 133,304 Transportation and exchange gas receivable - others. 22,000 22,000 Inventories. . . . . . . . . . . . . . . . . . . . . 65,713 79,547 Deferred income tax benefits . . . . . . . . . . . . 12,422 - Other. . . . . . . . . . . . . . . . . . . . . . . . 24,140 23,739 _____________ _____________ Total current assets . . . . . . . . . . . . . . 302,160 360,213 _____________ _____________ Property, Plant and Equipment, at cost: Natural gas transmission plant . . . . . . . . . . . 4,285,531 4,223,501 Less - Accumulated depreciation and amortization . . 2,573,084 2,480,332 _____________ _____________ Property, plant and equipment, net . . . . . . . 1,712,447 1,743,169 _____________ _____________ Other Assets: Transportation and exchange gas receivable: Affiliates . . . . . . . . . . . . . . . . . . . 17,339 32,155 Others . . . . . . . . . . . . . . . . . . . . . 89,314 92,960 Other. . . . . . . . . . . . . . . . . . . . . . . . 83,220 75,728 _____________ _____________ Total other assets . . . . . . . . . . . . . . . 189,873 200,843 _____________ _____________ $ 2,204,480 $ 2,304,225 _____________ _____________ _____________ _____________ The accompanying condensed notes are an integral part of these condensed financial statements.
TRANSCONTINENTAL GAS PIPE LINE CORPORATION CONDENSED BALANCE SHEET (Thousands of Dollars)
September 30, December 31, 1994 1993 _____________ _____________ LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities: Payables . . . . . . . . . . . . . . . . . . . . . . $ 113,220 $ 199,635 Transportation and exchange gas payable - others . . 12,000 12,000 Accrued liabilities. . . . . . . . . . . . . . . . . 87,287 73,145 Reserve for legal and regulatory issues. . . . . . . 1,466 5,240 Reserve for rate refunds . . . . . . . . . . . . . . 72,362 141,270 Deferred income taxes. . . . . . . . . . . . . . . . - 1,452 Other. . . . . . . . . . . . . . . . . . . . . . . . 12,423 16,162 _____________ _____________ Total current liabilities. . . . . . . . . . . . 298,758 448,904 _____________ _____________ Long-Term Debt, less current maturities . . . . . . . . . 644,129 643,799 _____________ _____________ Other Liabilities and Deferred Credits: Income taxes . . . . . . . . . . . . . . . . . . . . 283,913 279,303 Income taxes refundable to customers . . . . . . . . 11,373 19,148 Transportation and exchange gas payable: Affiliates . . . . . . . . . . . . . . . . . . . 1,890 726 Others . . . . . . . . . . . . . . . . . . . . . 44,268 64,976 Other. . . . . . . . . . . . . . . . . . . . . . . . 63,957 64,888 _____________ _____________ Total other liabilities and deferred credits . . 405,401 429,041 _____________ _____________ Commitments and contingencies . . . . . . . . . . . . . . - - Cumulative Redeemable Preferred Stock, without par value: Authorized 10,000,000 shares: Stated value $100 per share, issued and outstanding 722,444 shares and 757,427 shares in 1994 and 1993, respectively . . . . . . . . . . . . . . . . . . 72,244 75,743 Less - Issue expense . . . . . . . . . . . . . . 503 552 _____________ _____________ Total preferred stock. . . . . . . . . . . . . . 71,741 75,191 _____________ _____________ 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 . 285,279 283,037 Retained earnings. . . . . . . . . . . . . . . . . . 499,172 424,253 _____________ _____________ Total common stockholder's equity. . . . . . . . 784,451 707,290 _____________ _____________ $ 2,204,480 $ 2,304,225 _____________ _____________ _____________ _____________ The accompanying condensed notes are an integral part of these condensed financial statements.
TRANSCONTINENTAL GAS PIPE LINE CORPORATION CONDENSED STATEMENT OF INCOME (Thousands of Dollars)
Three Months Ended September 30, ______________________________ 1994 1993 _____________ _____________ Operating Revenues: Natural gas sales . . . . . . . . . . . . . . . . . . . $ 164,881 $ 154,579 Natural gas transportation . . . . . . . . . . . . . . 164,170 154,973 Natural gas storage . . . . . . . . . . . . . . . . . . 37,980 37,565 Other . . . . . . . . . . . . . . . . . . . . . . . . . 1,454 1,442 _____________ _____________ Total operating revenues . . . . . . . . . . . . . . . 368,485 348,559 _____________ _____________ Operating Costs and Expenses: Cost of natural gas sales . . . . . . . . . . . . . . . 164,873 155,123 Cost of natural gas transportation. . . . . . . . . . . 28,253 22,979 Operation and maintenance . . . . . . . . . . . . . . . 48,471 48,048 Administrative and general. . . . . . . . . . . . . . . 36,370 36,752 Depreciation and amortization . . . . . . . . . . . . . 30,203 29,897 Taxes - other than income taxes . . . . . . . . . . . . 8,818 8,033 Write-off of note receivable. . . . . . . . . . . . . . - 20,125 _____________ _____________ Total operating costs and expenses . . . . . . . . . . 316,988 320,957 _____________ _____________ Operating Income. . . . . . . . . . . . . . . . . . . . . . 51,497 27,602 _____________ _____________ Other (Income) and Other Deductions: Interest expense. . . . . . . . . . . . . . . . . . . . 14,832 15,235 Interest income - affiliates . . . . . . . . . . . . . ( 1,626) ( 969) - other. . . . . . . . . . . . . . . . ( 165) ( 1) Allowance for equity and borrowed funds used during construction (AFUDC) . . . . . . . . . . . . . . . . . ( 1,122) ( 3,086) Miscellaneous other (income) and deductions, net. . . . 1,966 2,243 _____________ _____________ Total other (income) and other deductions . . . . . . 13,885 13,422 _____________ _____________ Income Before Income Taxes. . . . . . . . . . . . . . . . . 37,612 14,180 Provision for Income Taxes. . . . . . . . . . . . . . . . . 13,068 5,380 _____________ _____________ Net Income. . . . . . . . . . . . . . . . . . . . . . . . . 24,544 8,800 Dividends on Preferred Stock. . . . . . . . . . . . . . . . 1,551 2,091 _____________ _____________ Common Stock Equity in Net Income . . . . . . . . . . . . . $ 22,993 $ 6,709 _____________ _____________ _____________ _____________ The accompanying condensed notes are an integral part of these condensed financial statements.
TRANSCONTINENTAL GAS PIPE LINE CORPORATION CONDENSED STATEMENT OF INCOME (Thousands of Dollars)
Nine Months Ended September 30, ______________________________ 1994 1993 _____________ _____________ Operating Revenues: Natural gas sales . . . . . . . . . . . . . . . . . . . $ 586,667 $ 463,259 Natural gas transportation . . . . . . . . . . . . . . 496,692 512,987 Natural gas storage . . . . . . . . . . . . . . . . . . 110,986 111,300 Other . . . . . . . . . . . . . . . . . . . . . . . . . 4,716 4,259 _____________ _____________ Total operating revenues . . . . . . . . . . . . . . . 1,199,061 1,091,805 _____________ _____________ Operating Costs and Expenses: Cost of natural gas sales . . . . . . . . . . . . . . . 586,809 462,353 Cost of natural gas transportation. . . . . . . . . . . 87,407 108,727 Operation and maintenance . . . . . . . . . . . . . . . 132,186 132,697 Administrative and general. . . . . . . . . . . . . . . 110,327 113,309 Depreciation and amortization . . . . . . . . . . . . . 90,490 89,461 Taxes - other than income taxes . . . . . . . . . . . . 26,121 24,954 Write-off of note receivable. . . . . . . . . . . . . . - 20,125 _____________ _____________ Total operating costs and expenses . . . . . . . . . . 1,033,340 951,626 _____________ _____________ Operating Income. . . . . . . . . . . . . . . . . . . . . . 165,721 140,179 _____________ _____________ Other (Income) and Other Deductions: Interest expense - affiliates . . . . . . . . . . . . . - 221 - other. . . . . . . . . . . . . . . . 45,161 46,664 Interest income - affiliates . . . . . . . . . . . . . ( 4,297) ( 1,721) - other. . . . . . . . . . . . . . . . ( 496) ( 1,889) Allowance for equity and borrowed funds used during construction (AFUDC) . . . . . . . . . . . . . . . . . ( 2,757) ( 3,856) Miscellaneous other (income) and deductions, net. . . . 5,504 5,715 _____________ _____________ Total other (income) and other deductions . . . . . . 43,115 45,134 _____________ _____________ Income Before Income Taxes. . . . . . . . . . . . . . . . . 122,606 95,045 Provision for Income Taxes. . . . . . . . . . . . . . . . . 42,965 33,177 _____________ _____________ Net Income. . . . . . . . . . . . . . . . . . . . . . . . . 79,641 61,868 Dividends on Preferred Stock. . . . . . . . . . . . . . . . 4,722 6,343 _____________ _____________ Common Stock Equity in Net Income . . . . . . . . . . . . . $ 74,919 $ 55,525 _____________ _____________ _____________ _____________ The accompanying condensed notes are an integral part of these condensed financial statements.
TRANSCONTINENTAL GAS PIPE LINE CORPORATION CONDENSED STATEMENT OF CASH FLOWS (Thousands of Dollars)
Nine Months Ended September 30, ______________________________ 1994 1993 _____________ _____________ Cash flows from operating activities: Net income. . . . . . . . . . . . . . . . . . . . . . . $ 79,641 $ 61,868 Adjustments to reconcile net income to net cash provided by (used in) operating activities: Depreciation and amortization. . . . . . . . . . . . 100,669 99,995 Deferred income taxes. . . . . . . . . . . . . . . . ( 18,042) ( 42,317) Tran$tock compensation expense . . . . . . . . . . . 2,291 2,177 Write-off of note receivable . . . . . . . . . . . . - 20,125 Allowance for equity funds used during construction (AFUDC). . . . . . . . . . . . . . . ( 2,168) ( 2,028) _____________ _____________ 162,391 139,820 Nonrecoverable producer settlements. . . . . . . . . - ( 26,300) Changes in operating assets and liabilities: Deposits . . . . . . . . . . . . . . . . . . . . . . ( 635) ( 1,354) Receivables. . . . . . . . . . . . . . . . . . . . . 39,295 24,701 Transportation and exchange gas receivable . . . . . 18,462 26,953 Inventories. . . . . . . . . . . . . . . . . . . . . 13,834 ( 419) Payables . . . . . . . . . . . . . . . . . . . . . . ( 82,602) ( 22,314) Transportation and exchange gas payable. . . . . . . ( 19,544) ( 37,886) Accrued liabilities. . . . . . . . . . . . . . . . . 12,799 7,619 Reserve for rate refunds . . . . . . . . . . . . . . ( 68,908) 73,796 Other, net. . . . . . . . . . . . . . . . . . . . . . . ( 15,015) ( 4,282) _____________ _____________ Net cash provided by operating activities . . . . 60,077 180,334 _____________ _____________ Cash flows from financing activities: Retirement of long-term debt. . . . . . . . . . . . . . - ( 29,856) Retirement of preferred stock . . . . . . . . . . . . . 3,499) ( 3,498) Dividends on preferred stock. . . . . . . . . . . . . . ( 4,769) ( 6,392) Other, net. . . . . . . . . . . . . . . . . . . . . . . - ( 2,161) _____________ _____________ Net cash used in financing activities . . . . . . ( 8,268) ( 41,907) _____________ _____________ Cash flows from investing activities: Property, plant and equipment, net of equity AFUDC. . . ( 71,711) ( 67,078) Recovery of producer settlements. . . . . . . . . . . . - 30,411 Advances to Transco . . . . . . . . . . . . . . . . . . ( 1,283,589) ( 903,398) Retirement of advances to Transco . . . . . . . . . . . 1,302,652 794,305 Other, net. . . . . . . . . . . . . . . . . . . . . . . ( 1,520 8,261 _____________ _____________ Net cash used in investing activities . . . . . . ( 51,128) ( 137,499) _____________ _____________ Net increase in cash and cash equivalents . . . . . . . . 681 928 Cash and cash equivalents at beginning of period. . . . . 1,094 1,259 _____________ ______________ Cash and cash equivalents at end of period. . . . . . . . $ 1,775 $ 2,187 _____________ ______________ _____________ ______________ Supplemental disclosures of cash flow information: Cash paid (refunded) during the year for: Interest (net of amount capitalized). . . . . . . . . $ 49,039 $ 45,154 Income taxes, net . . . . . . . . . . . . . . . . . . 14,290 73,059 The accompanying condensed notes are an integral part of these condensed financial statements.
TRANSCONTINENTAL GAS PIPE LINE CORPORATION NOTES TO CONDENSED FINANCIAL STATEMENTS A. CORPORATE STRUCTURE AND CONTROL Transcontinental Gas Pipe Line Corporation (TGPL) is 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. 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 1993 Annual Report on Form 10-K and included in the Form 10-Q for the quarters ended March 31, 1994 and June 30, 1994 (First and Second Quarter Form 10-Q). Certain reclassifications have been made in the 1993 financial statements to conform with the 1994 presentation. 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 implemented a plan to consolidate its gas marketing businesses under the common management of Transco Gas Marketing Company (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 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 had no impact on its results of operations. Pursuant to a settlement that TGPL has with its 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. Pursuant to this settlement, in 1993 and early 1994, TGPL's agreements with its customers were renegotiated by TGMC, as agent for TGPL. TGMC and TGPL believe that the GIC agreed to with TGPL's customers will be adequate to enable recovery of its above-spot-market gas costs. B. REGULATORY MATTERS There have been no new developments from those described in TGPL's 1993 Annual Report on Form 10-K and in its First and Second Quarter Form 10-Q other than described below. Rate Matters ____________ In the first nine months of 1994, TGPL made partial refunds of approximately $123 million, including interest, under Docket No. RP92-137. TGPL had previously provided a reserve for these refunds. TGPL has also provided a reserve which it believes is adequate for any additional refunds that may be required under Docket No. RP92-137. At September 30, 1994, these additional refunds, which are currently expected to be made during the fourth quarter of 1994, are estimated to be approximately $52 million, including interest. Interest will continue to accrue until all refunds are made. On October 20, 1994, an Administrative Law Judge (ALJ) issued an initial decision granting a motion filed by certain parties for summary disposition with respect to the issue of the allocation of certain costs to TGPL's merchant sales service. That issue, among others, was referred to the hearing in Docket No. RP92-137 by the FERC's orders approving TGPL's implementation of Order 636. TGPL had opposed the motion. In his initial decision, the ALJ determined that there is no genuine issue of material fact warranting a trial-type hearing on the issue. The ALJ's decision directs TGPL to remove from its gathering function approximately $5.6 million of indirect costs and to reassign this amount to its merchant sales service. The ALJ's decision is subject to final approval by the FERC. Briefs on exceptions to the ALJ's decision are due on or before November 21, 1994. 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 or results of operations. 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. The notice states that Fina Natural Gas Company has filed a complaint requesting that the FERC initiate a proceeding under Natural Gas Act of 1938 (NGA) section 5 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. Responses to the notice are due on or before November 28, 1994. 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 or results of operations. C. LEGAL PROCEEDINGS There have been no new developments from those described in TGPL's 1993 Annual Report on Form 10-K or in its First and Second Quarter Form 10-Q other than as described below. Producer Contract Litigation ____________________________ As discussed in TGPL's 1993 Annual Report on Form 10-K, in TGPL's only remaining proceeding involving take-or-pay and other producer contract claims, a producer filed in United States District Court for the Southern District of Texas (Federal District Court) claiming that it should have received more favorable terms for settlement of its contract claims and asserting federal antitrust claims. The Federal District Court issued an order granting TGPL's motion for summary judgment, which was appealed by the producer to the United States Court of Appeals for the Fifth Circuit (Fifth Circuit Court). On July 1, 1994, the Fifth Circuit Court affirmed the judgment of the Federal District Court dismissing the producer's claims in all respects and on July 27, 1994, denied the producer's petition for rehearing. Dakota Gasification Litigation ______________________________ As discussed in TGPL's 1993 Annual Report on Form 10-K and in the First and Second Quarter Form 10-Q, in October 1990, Dakota Gasification Company (Dakota), the owner of the Great Plains Coal Gasification Plant, filed suit in the United States District Court in North Dakota against TGPL and three other pipeline companies alleging that TGPL and the other pipeline companies had not complied with their respective obligations under certain gas purchase and gas transportation contracts. On March 30, 1994, the parties executed definitive agreements which would settle the litigation subject to final nonappealable regulatory approvals. The settlement is also subject to a FERC ruling that TGPL's existing authority to recover in rates certain costs related to the purchase and transportation of gas produced by Dakota will pertain to gas purchase and transportation costs TGPL will pay Dakota under the terms of the settlement. On June 23, 1994, TGPL filed a petition with the FERC seeking approval of the settlement provisions and the contract amendment including pass-through of all costs to TGPL's customers. On October 18, 1994, the FERC issued an order consolidating TGPL's petition with the petitions filed by the other three pipeline companies and setting the matter for hearing before an ALJ. The hearing will be limited to the issues of (i) whether the revised agreements are prudent, and (ii) the level of Dakota costs to be recovered in the proceeding. The FERC directed the ALJ to convene a prehearing conference within 20 days of October 18, 1994 and directed that the ALJ issue an initial decision by December 31, 1995, in order that final FERC approval may take place by December 31, 1996. On November 7, 1994, the ALJ convened a prehearing conference and adopted a procedural schedule to govern the hearing. Under that procedural schedule, the hearing is scheduled to commence on June 20, 1995. In the event that the necessary regulatory approvals are not obtained, TGPL, Transco and Transco Coal Gas Company intend to vigorously defend the suit. Although no assurances can be given, TGPL does not believe that the ultimate resolution of this litigation will have a material adverse effect on its financial position or results of operations. Royalty Claims ______________ As discussed in TGPL's 1993 Annual Report on Form 10-K and in the First and Second Quarter Form 10-Q, 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 additional royalties which producers may be required to pay as a result of such settlements. TGPL has been made aware of demands on producers for additional royalties and such producers may receive other demands which could result in claims against TGPL pursuant to the indemnification provision in its settlement. Indemnification for royalties will depend on, among other things, the specific lease provisions between the producer and the lessor and the terms of the settlement between the producer and TGPL. All parties in the Duplantis lawsuit, including Transco Exploration Company (TXC) and TXP Operating Company (TXPO), have reached a settlement in principle. Under the terms of the settlement, TXC and TXPO will pay, in total, approximately $2.5 million, which represents TXC and TXPO's portion of an $8.4 million settlement to be paid by all of the defendant- producers. The settlement also releases TGPL from any liability to the plaintiffs and the defendant-producers. The settlement is expected to close on November 30, 1994. In the Marathon lawsuit, trial has been set for July 31, 1995. In the Vaquillas Ranch lawsuit, a motion by the plaintiffs to extend the December 2, 1994 trial date has been granted. However, a new trial date has not been set. In addition, the U. S. District Court judge recently recommended that the case be remanded to state court. Texaco and TGPL have moved for reconsideration of this ruling and a determination is expected soon. On July 5, 1994, the plaintiffs in the Vaquillas Ranch lawsuit filed a separate lawsuit in the 111th Judicial District Court of Webb County, Texas (Vaquillas Ranch Company, Ltd., et. al. vs. Transcontinental Gas Pipe Line Corporation and Transco Gas Supply Company) in which the plaintiffs contend that TGPL tortiously interfered with the plaintiffs' lease by inducing the producer to enter into certain agreements that reduced TGPL's take-or-pay obligations and the price TGPL was obligated to pay for the gas it purchased. The plaintiffs are requesting an unspecified amount of actual and punitive damages for the alleged tortious interference. No trial date has been set. In the Billings lawsuit, the U. S. District Court judge authorized the plaintiffs to amend their complaint to exclude the parent of the producer- defendant as a defendant and remanded the case to state court. The producer-defendant has filed a motion to reconsider this order and TGPL joined this motion. No trial date has been set. Each of these lawsuits is in the discovery process. TGPL has denied liability in the litigation and believes that it has meritorious defenses to the claims which it intends to pursue vigorously. TGPL believes at this time that its exposure, if any, under the provisions of its settlements with the producers is substantially less than the amounts claimed by the royalty owners. Although no assurances can be given, TGPL believes that the ultimate resolution of these royalty claims and litigation will not have a material adverse effect on TGPL's financial position or results of operations. D. ENVIRONMENTAL MATTERS There have been no new developments from those described in TGPL's 1993 Annual Report on Form 10-K other than as described below. TGPL is subject to the Federal Clean Air Act and the Federal Clean Air Act Amendments of 1990 (1990 Amendments), which added significantly to the existing requirements established by the Federal Clean Air Act. The 1990 Amendments required that the Environmental Protection Agency (EPA) issue new regulations, mainly related to mobile sources, air toxics, ozone non- attainment areas and acid rain. TGPL is installing new emission control devices where required and conducting certain emission testing programs to comply with the Federal Clean Air Act standards and the 1990 Amendments. In addition, pursuant to the 1990 Amendments, the 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. TGPL has compressor stations in ozone non-attainment areas that could require substantial air pollution reduction expenditures, depending on the requirements imposed. While it will not be possible to estimate the ultimate costs of compliance with these new requirements until states approve TGPL's proposed plans for modifications, TGPL expects that significant capital spending will be required to modify TGPL's facilities, particularly the compressor engines along TGPL's pipeline system. Additions to facilities for compliance with currently known Federal Clean Air Act standards and the 1990 Amendments are expected to cost in the range of $50 million to $60 million over the next five years and will be recorded as additions to property, plant and equipment as the facilities are added. Such costs, however, may increase, depending on the requirements imposed. E. FINANCING Restrictive Covenants _____________________ As described in TGPL's 1993 Annual Report on Form 10-K and in its First and Second Quarter Form 10-Q, certain of Transco's credit facilities and indentures prohibit TGPL from, among other things, placing a lien on any of the property or assets owned by TGPL, incurring or guaranteeing any additional indebtedness, except for indebtedness incurred to refinance existing indebtedness, issuing preferred stock or advancing cash to affiliates other than Transco. Further, certain of Transco's credit facilities and indentures contain restrictive covenants which could limit Transco's ability to make additional borrowings and, therefore, under certain circumstances, its ability to make or repay advances to TGPL or make capital contributions to TGPL. Additionally, certain of TGPL's debt instruments restrict the amount of dividends distributable. As of September 30, 1994, approximately $351 million of TGPL's retained earnings of $499 million was available for distribution. 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 1993 Annual Report on Form 10-K and in its First and Second Quarter Form 10-Q and with the condensed financial statements and notes contained in this report. INTRODUCTION TGPL is an indirect wholly-owned subsidiary of Transco and as such may be affected by the financial position and performance of Transco and its subsidiaries other than TGPL. Over the past two years, Transco has made significant progress in improving its results of operations and financial flexibility. Transco remains committed to deleveraging its balance sheet, further eliminating or mitigating the potentially adverse impact from the resolution of remaining litigation and contingencies and further improving financial results. CAPITAL RESOURCES AND LIQUIDITY Financing _________ Certain of Transco's credit facilities and indentures prohibit TGPL from, among other things, placing a lien on any property or assets owned by TGPL, incurring or guaranteeing any additional indebtedness (except for indebtedness incurred to refinance existing indebtedness), issuing preferred stock or advancing cash to affiliates other than Transco. Further, certain of Transco's credit facilities and indentures contain restrictive covenants which could limit Transco's ability to make additional borrowings and, therefore, under certain circumstances, Transco's ability to repay advances or make capital contributions to TGPL. Additionally, certain of TGPL's debt instruments restrict the amount of dividends distributable. As of September 30, 1994, approximately $351 million of TGPL's retained earnings of $499 million was available for distribution. In September 1993, TGPL entered into a new program to sell monthly trade receivables to replace a similar program which expired. The new trade receivables program, which expires in September 1995, provides for the sale of up to $100 million of trade receivables without recourse. As of December 31, 1993 and September 30, 1994, $100 million and $84 million, respectively, in trade receivables were held by the investor. Capitalization and Cash Flows _____________________________ As shown in the following table, at September 30, 1994, the percentage of total debt to total invested capital was 42.9%, compared to 45.1% at December 31, 1993. Although total debt at September 30, 1994, remained approximately the same as at December 31, 1993, net income during the first nine months of 1994 had the effect of reducing the percentage of total debt to total invested capital.
September 30, December 31, 1994 1993 ______________ _______________ (In millions) Common Stockholder's Equity . . . . . . . . . . . . . . . . $ 784.5 $ 707.3 Preferred Stock . . . . . . . . . . . . . . . . . . . . . . 71.7 75.2 Long-term Debt, less Current Maturities . . . . . . . . . . 644.1 643.8 ______________ _______________ Total Capitalization. . . . . . . . . . . . . . . . . . 1,500.3 1,426.3 Current Maturities of Long-term Debt. . . . . . . . . . . . - - ______________ _______________ Total Invested Capital. . . . . . . . . . . . . . . . . $ 1,500.3 $ 1,426.3 ______________ _______________ ______________ _______________ Long-term Debt, less Current Maturities as a Percentage of Total Capitalization. . . . . . . . . . . . . . . . . . . . . 42.9% 45.1% Common Stockholder's Equity as a Percentage of Total Capitalization. . . . . . . . . . . . . . . . . . . . . 52.3% 49.6% Total Debt as a Percentage of Total Invested Capital. . . . 42.9% 45.1%
At September 30, 1994, TGPL had a working capital surplus of $3 million, compared to a deficit of $89 million at December 31, 1993. The most significant factor influencing the reduction in the working capital deficit was payments made during the first nine months of 1994 for TGPL's initial refunds under Docket No. RP92-137, as discussed in Note B of the Notes to Condensed Financial Statements. The refunds were made from funds generated by operating activities during the first nine months of 1994.
Nine Months Ended September 30, __________________________ 1994 1993 _________ __________ (In millions) Cash Flows Provided by Operating Activities . . . . . . . . $ 60.1 $ 180.3 _________ __________ _________ __________
For the nine months ended September 30, 1994, cash flows from operating activities were $120 million lower than the nine months ended September 30, 1993. The lower cash flows for 1994 are primarily the result of cash refunds made in the first nine months of 1994 in connection with the settlement of TGPL's general rate case (Docket No. RP92-137), partly offset by payments made in 1993 for nonrecoverable producer settlements.
Nine Months Ended September 30, __________________________ 1994 1993 __________ __________ (In millions) Cash Flows Used in Financing Activities . . . . . . . . . . $ 8.3 $ 41.9 __________ __________ __________ __________
The cash flows used in financing activities for the nine months ended September 30, 1994, were attributable to dividend payments of $5 million on preferred stock and $3 million for the retirement of preferred stock. For the nine months ended September 30, 1993, cash flows used in financing activities were primarily attributable to the retirement of $33 million of long-term debt and preferred stock and dividend payments of $6 million on preferred stock.
Nine Months Ended September 30, __________________________ 1994 1993 __________ __________ (In millions) Cash Flows Used in Investing Activities . . . . . . . . . . $ 51.1 $ 137.5 __________ __________ __________ __________
For the nine months ended September 30, 1994, cash flows used in investing activities were primarily for capital expenditures for property, plant and equipment, as shown on the following table, slightly offset by Transco's net repayment of advances from TGPL. For the nine months ended September 30, 1993, cash flows used in investing activities were primarily for capital expenditures for property, plant and equipment, as shown on the following table, and net advances to Transco, partly offset by the recovery of producer settlement costs.
Nine Months Ended September 30, __________________________ Capital Expenditures 1994 1993 ____________________ __________ __________ (In millions) Market-Area Projects . . . . . . . . . . . . . . . . . . . $ 10.0 $ 6.9 Supply-Area Projects. . . . . . . . . . . . . . . . . . . . 7.6 19.8 Maintenance of Existing Facilities and Other Projects . . . 54.1 40.4 __________ __________ Total Capital Expenditures. . . . . . . . . . . . . . . $ 71.7 $ 67.1 __________ __________ __________ __________
Other Capital Requirements and Contingencies ____________________________________________ TGPL's capital requirements and contingencies are discussed in TGPL's 1993 Annual Report on Form 10-K and in its First and Second Quarter Form 10-Q. Other than described in Notes B, C and D of the Notes to the Condensed Financial Statements and below, there have been no new developments from those described in TGPL's 1993 Annual Report on Form 10-K and in its First and Second Quarter Form 10-Q with regard to other capital requirements and contingencies. Liberty Pipeline Company In 1992, Liberty Pipeline Company (Liberty), a partnership of interstate pipelines and local distribution companies, filed for FERC approval to construct and operate a natural gas pipeline to provide 500 million cubic feet per day in firm transportation service to the greater New York City area. The partnership was comprised of subsidiaries of Transco and two other interstate pipelines and subsidiaries of three TGPL customers in New York. On August 1, 1994, Liberty asked the FERC to postpone indefinitely its review of the project. The decision follows the withdrawal of two key shippers from the project. The partners reaffirmed their belief that an additional delivery point to the New York facilities system, as proposed by Liberty, would be necessary in the future and advised the FERC that the Liberty partners would continue to pursue that goal. On August 12, 1994, the FERC dismissed, without prejudice, the applications of Liberty and other upstream pipeline companies for authority to build the pipeline and other related facilities. Rate Refunds In the first nine months of 1994, TGPL made partial refunds of approximately $123 million, including interest, under Docket No. RP92-137. TGPL had previously provided a reserve for these refunds. TGPL has also provided a reserve which it believes is adequate for any additional refunds that may be required under Docket No. RP92-137. At September 30, 1994, these additional refunds, which are currently expected to be made during the fourth quarter of 1994, are estimated to be approximately $52 million, including interest. Interest will continue to accrue until all refunds are made. Conclusion __________ Although no assurances can be given, TGPL currently believes that the aggregate of cash flows from operating activities, supplemented, when necessary, by repayments of funds advanced to Transco or advances by Transco, will provide TGPL with sufficient liquidity to meet its capital requirements. RESULTS OF OPERATIONS As discussed in TGPL's 1993 Annual Report on Form 10-K and in its First and Second Quarter Form 10-Q, effective January 1, 1993, TGMC, through an agency management agreement with TGPL, manages all jurisdictional merchant gas sales made by TGPL. The financial performance of TGPL's sales service is discussed separately in the following discussion. Net and Operating Income ________________________ TGPL's net income was higher by $16.3 million and $19.4 million for the three months and nine months ended September 30, 1994 , respectively, than net income for the three months and nine months ended September 30, 1993, due primarily to the 1993 third quarter after-tax charge of $12.5 million related to the write-off of a note receivable from TGPL's prior sale of an interest in a gas field and related gas processing plant. Excluding the net income impact of this write-off of a note receivable, TGPL's net income was higher by $3.8 million for the three months ended September 30, 1994 compared to the three months ended September 30, 1993, due primarily to higher net transportation revenues (net of the related cost of transportation), and lower dividends on preferred stock, partly offset by a lower allowance for funds used during construction (AFUDC). Operating income for the three months ended September 30, 1994 was $51.5 million compared to operating income of $27.6 million ($47.7 million excluding the write-off of the note receivable) for the three months ended September 30, 1993. This $3.8 million increase, excluding the write-off of the note receivable, was primarily due to higher net transportation revenues. Excluding the net income impact of the write-off of a note receivable in 1993, TGPL's net income for the nine months ended September 30, 1994 was $6.9 million higher than the comparable period in 1993, primarily due to higher net transportation revenues, lower net interest expense and lower dividends on preferred stock. Operating income for the nine months ended September 30, 1994 was $165.7 million compared to operating income of $140.2 million ($160.3 million excluding the write-off of the note receivable) for the nine months ended September 30, 1993. This increase of $5.4 million, excluding the write-off of the note receivable, reflects the higher net transportation revenues. Transportation Services and Other _________________________________ TGPL's operating revenues, excluding sales and storage services, increased $9 million to $166 million for the quarter ended September 30, 1994, when compared to the same period in 1993, reflecting higher transportation revenues. TGPL's operating revenues, excluding sales and storage services, decreased by $16 million to $501 million for the nine months ended September 30, 1994, when compared to the nine months ended September 30, 1993. The lower operating revenues reflect a decrease of $29 million due to lower transportation rates resulting from the elimination of the producer settlement surcharge which expired on May 31, 1993, partly offset by higher transportation revenues of $13 million. However, the decrease in transportation rates related to the surcharge did not affect TGPL's operating or net income since the expiration of the producer settlement surcharge also resulted in lower cost of transportation when compared with the prior year. Excluding the pre-tax effects of the note receivable write-off in 1993 and the cost of sales and transportation of $193 million and $674 million for the three months and nine months ended September 30, 1994, respectively, and $178 million and $571 million for the three months and nine months ended September 30, 1993, respectively, TGPL's operating expenses for the quarter and for the first nine months of 1994 were comparable to the same periods in 1993. As shown in the table below, TGPL's total market-area deliveries for the three months ended September 30, 1994 were 17.5 billion cubic feet (Bcf), or 7%, higher than the same period in 1993. The increased deliveries, primarily firm transportation volumes, are higher than the same period in 1993 primarily due to increased injections into storage during the quarter resulting from the colder-than-normal weather in the market area during January and February 1994 and to recapturing business from competing pipelines due to TGPL's implementation of Order 636. TGPL's total market- area deliveries for the nine months ended September 30, 1994 were 34.4 Bcf, or 4%, higher than the nine months ended September 30, 1993. The increased deliveries, primarily firm transportation volumes, are higher than the same period in 1993 mainly due to the colder-than-normal weather in the market area during January and February 1994, coupled with the strong deliveries of gas used for electric generation for summer cooling. The production-area deliveries for the three months ended September 30, 1994, decreased 2.2 Bcf, or 4%, when compared to the same period in 1993, due to competitive pressures. The production-area deliveries for the nine months ended September 30, 1994 increased 9.5 Bcf, or 7%, when compared to the same period in 1993 due to TGPL's decreased rates resulting from the elimination of the producer settlement surcharge which expired on May 31, 1993. As a result of a straight fixed-variable (SFV) rate design and the interruptible transportation revenue crediting requirement, these increases in system deliveries have no significant impact on operating income; however, these increases show the strength of the TGPL franchise.
Three Months Nine Months TGPL System Deliveries (Bcf) Ended September 30, Ended September 30, ____________________________ ______________________ _____________________ 1994 1993 1994 1993 _________ ________ ________ ________ Market-area deliveries: Long-haul transportation 167.4 178.6 584.4 608.0 Market-area transportation 95.2 66.5 319.7 261.7 ________ ________ ________ ________ Total market-area deliveries 262.6 245.1 904.1 869.7 Production-area transportation 54.5 56.7 142.8 133.3 ________ ________ ________ ________ Total system deliveries 317.1 301.8 1,046.9 1,003.0 ________ ________ ________ ________ ________ ________ ________ ________
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 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 October 26, 1994, the FERC issued a notice of a request for initiation of a complaint proceeding in TGPL's Order 636 restructuring docket. The notice states that Fina Natural Gas Company has filed a complaint requesting that the FERC initiate a proceeding under NGA section 5 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. Responses to the notice are due on or before November 28, 1994. 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 or results of operations. Sales Services ______________ TGPL makes jurisdictional merchant sales to customers through a Firm Sales (FS) program, an Optional Firm Sales (OFS) program, an Interruptible Sales (IS) program and a Negotiated Sales (NS) program coupled with a firm transportation program as replacement for a 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. TGPL's sales revenues increased $10 million to $165 million for the quarter ended September 30, 1994, when compared to the quarter ended September 30, 1993. Of this increase, $5 million was related to increased volumes sold through TGPL's jurisdictional merchant sales services and $5 million was due to higher non-merchant sales related to TGPL's cash settlement of historical transportation imbalances. TGPL's sales revenues increased $123 million to $587 million for the nine months ended September 30, 1994 when compared to the same period in 1993. Of this increase, $11 million was related to the cash settlement of historical transportation imbalances and TGPL's cash-out program for the settlement of current month transportation imbalances, with the remaining increase due to higher volumes sold through TGPL's jurisdictional merchant sales services. However, the increase in TGPL's non-merchant sales revenues for the quarter and year-to-date had no impact on TGPL's operating income since these revenue variances were offset by corresponding variances in the cost of sales when compared to the prior year periods. TGPL's jurisdictional sales service also had no impact on TGPL's operating income or results of operations during the first nine months of 1994 or the same period in 1993. In January 1993, TGMC, through an agency agreement, began to manage all jurisdictional merchant 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 believes its merchant gas sales service will have no impact on its operating income or results of operations. On October 20, 1994, an ALJ issued an initial decision granting a motion filed by certain parties for summary disposition with respect to the issue of the allocation of certain costs to TGPL's merchant sales service. That issue, among others, was referred to the hearing in Docket No. RP92-137 by the FERC's orders approving TGPL's implementation of Order 636. TGPL had opposed the motion. In his initial decision, the ALJ determined that there is no genuine issue of material fact warranting a trial-type hearing on the issue. The ALJ's decision directs TGPL to remove from its gathering function approximately $5.6 million of indirect costs and to reassign this amount to its merchant sales service. The ALJ's decision is subject to final approval by the FERC. Briefs on exceptions to the ALJ's decision are due on or before November 21, 1994. 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 or results of operations.
Three Months Nine Months Gas Sales Volumes (Bcf)(1) Ended September 30, Ended September 30, ____________________________ _____________________ ____________________ 1994 1993 1994 1993 _______ ________ _______ _______ Long-term sales . . . . . . . . . . . . . . 42.4 52.4 162.3 153.2 Short-term sales. . . . . . . . . . . . . . 33.6 4.6 82.7 23.2 _______ _______ _______ _______ Total gas sales . . . . . . . . . . . . 76.0 57.0 245.0 176.4 _______ _______ _______ _______ _______ _______ _______ _______ (1) Effective January 1993, TGMC, through an agency management agreement with TGPL, assumed operation of TGPL's merchant sales service.
Storage Services ________________ TGPL's operating revenues of $38 million and $111 million, respectively, related to its storage services for the three months and nine months ended September 30, 1994 were comparable to the storage revenues for the same periods in 1993. PART II - OTHER INFORMATION Item 1. Legal Proceedings. See discussion of legal proceedings in Note C 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. None. 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: November 14, 1994 By /S/ N. A. Bacile ______________________________________ (Signature) N. A. Bacile Vice President and Controller 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: November 14, 1994 ______________________________________ (Signature) N. A. Bacile Vice President and Controller EX-27 2
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE CONDENSED BALANCE SHEET AND THE CONDENSED STATEMENT OF INCOME FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1994, CONTAINED IN TRANSCONTINENTAL GAS PIPE LINE CORPORATION'S 1994 THIRD QUARTER REPORT ON FORM 10-Q AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 9-MOS DEC-31-1994 SEP-30-1994 1,775 0 26,146 0 65,713 302,160 4,285,531 2,573,084 2,204,480 298,758 644,129 0 71,741 0 784,451 2,204,480 586,667 1,199,061 586,809 923,013 0 0 45,161 122,606 42,965 79,641 0 0 0 79,641 0 0 NET OF UNAMORTIZED DEBT PREMIUM AND DISCOUNT NET OF ISSUE EXPENSE BEFORE PREFERRED DIVIDENDS OF 4,722
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