ITEM 1. BUSINESS
GENERAL
Panhandle Eastern Corporation ("PEC"), a Delaware corporation, is a holding company whose subsidiaries are engaged primarily in the transportation of natural gas in interstate commerce and related services. The principal operating subsidiaries of PEC are Texas Eastern Transmission Corporation ("TETCO"), Algonquin Gas Transmission Company ("Algonquin"), Panhandle Eastern Pipe Line Company ("PEPL") and Trunkline Gas Company ("Trunkline"). Subsidiaries 1 Source Corporation ("1 Source") and Centana Energy Corporation ("Centana") pursue emerging opportunities in the natural gas market and producing areas, respectively. 1 Source provides customized transportation management services. In addition to gathering and processing natural gas, Centana owns and operates an intrastate pipeline system, markets hydrocarbon liquids and is a leading producer of helium. PEC also owns subsidiaries engaged in the importation of liquefied natural gas ("LNG") from Algeria, as well as in the transportation, storage and regasification of LNG. In addition, PEC owns subsidiaries engaged in the non-regulated marketing of natural gas in the national market and in investment in a cogeneration venture. Through subsidiaries, PEC also owns interests in a joint venture that owns and operates a chemical-grade methanol plant in Saudi Arabia and in a master limited partnership engaged in the transportation and storage of petroleum products.
PEC and its subsidiaries are treated for reporting purposes as being predominately involved in the interstate transportation and storage of natural gas. Information concerning components of consolidated operating revenues, including revenues attributable to transportation and sales of natural gas, for the years 1993, 1992 and 1991 is contained in the Consolidated Statement of Income on page 41 of the PEC 1993 Annual Report to Stockholders (the "Annual Report"), filed as Exhibit 13, which is incorporated herein by reference.
PEC was organized in 1981 pursuant to the corporate restructuring of PEPL, which was incorporated in 1929. Executive offices of PEC are located at 5400 Westheimer Court, Houston, Texas 77056-5310, and the telephone number is (713) 627-5400. As used herein, and unless otherwise stated, "PEC" refers to Panhandle Eastern Corporation and "Company" refers to Panhandle Eastern Corporation and its subsidiaries.
NATURAL GAS PIPELINES
Together, TETCO, Algonquin, PEPL and Trunkline own and operate one of the nation's largest gas transmission networks. This fully interconnected 26,000-mile system can receive natural gas from most major North American producing regions for delivery to markets throughout the Mid-Atlantic, New England and Midwest states. Within these states, the Company's pipelines hold an approximate one-third market share. During 1993, the Company's pipelines delivered 2.39 trillion cubic feet of natural gas, equal to approximately 12% of U.S. consumption.
Since the early 1980s, the business operations of interstate pipelines have undergone substantial transformation, reflecting both significant changes in the marketplace for natural gas and sweeping changes in regulatory policies. As a consequence of these changes, TETCO, Algonquin, PEPL, Trunkline and many other pipelines have significantly adjusted operations to respond more effectively to an evolving business environment. During 1993, all four of the Company's pipelines implemented restructured services under Order 636. See "Regulation."
CERTAIN TERMS
Certain terms used in the description of the Company's business are explained below.
Demand or Reservation Charge: The amount paid by firm sales, transportation and storage customers to reserve pipeline and storage capacity.
Federal Energy Regulatory Commission ("FERC"): The agency that regulates the transportation and sale of natural gas in interstate commerce under the Natural Gas Act of 1938 (the "NGA") and the Natural
Gas Policy Act of 1978 (the "NGPA"). FERC's jurisdiction includes rate-making, construction of facilities and authorization to provide service.
Firm Service: Transportation, storage or sales of third-party gas, where customers pay a charge to reserve pipeline or storage capacity.
Gathering Systems: Pipeline, processing and related facilities having the purpose of accessing production and other sources of natural gas supplies for delivery to a mainline transportation system.
Interruptible Service: Transportation or storage of third-party gas provided on a capacity-available basis.
Local Distribution Company ("LDC"): A municipal or investor-owned utility that sells or transports gas to local commercial, industrial and residential consumers.
Merchant Sales Service: Volumes aggregated by pipelines, under purchase contracts with producers, that are transported and resold to LDCs and other customers at FERC-approved rates.
Open-Access: Service provided on a non-discriminatory basis to any shipper pursuant to applicable FERC rules and regulations.
Open Season: A specified period during which potential customers are asked to indicate interest in contracting for capacity in a new project. Expression of such interest is non-binding and generally followed by negotiations to establish firm commitments.
Order 636: The FERC pipeline service restructuring rule that guided the industry's transition to unbundled, open-access pipeline services, creating a more market-responsive environment.
Straight Fixed-Variable ("SFV") Method: A rate design method, provided for in Order 636, which assigns return on equity, related taxes and other fixed costs to the demand component of rates.
Transition Costs: Those costs incurred as a result of the pipelines' transition to unbundled services under Order 636. The disposition of natural gas contracts tied to the former merchant sales function comprise the majority of such costs.
Units of Measure:
MARKET AND SUPPLY AREA DELIVERIES
Market-area natural gas deliveries by the Company's four interstate pipelines were 2.08 Tcf in 1993, up from the 2.03 Tcf delivered in 1992. Consolidated pipeline deliveries totaled 2.39 Tcf, compared to 2.38 Tcf in 1992. Transportation volumes increased to 94% of market-area throughput in 1993, compared with 87% in 1992, as the Company's pipelines replaced merchant sales of gas with transportation service.
As used herein, "market area" with respect to each pipeline refers to those portions of the pipeline that include primarily delivery points for natural gas leaving the pipeline, and "supply area" with respect to each pipeline refers to those portions of the pipeline that include primarily receipt points for gas entering the pipeline. Market-area transportation represents volumes of gas delivered to the market area under transportation service agreements, while supply-area transportation represents volumes of gas delivered to the supply area under transportation service agreements. Generally, rates for supply-area transportation have lower margins than rates for market-area transportation. Market-area throughput (deliveries) refers to combined market-area transportation volumes and merchant sales volumes.
Set forth below is information concerning volumes for PEC's pipeline subsidiaries for 1993, 1992 and 1991 (volumes in Bcf).
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(1) Represents intercompany transactions.
(2) Excludes 41 Bcf which was both sold and transported, and was reported as transportation throughput in 1993.
During 1993, total billings for sales and transportation services provided by the Company to Consumers Power Company ("Consumers") accounted for approximately 14% of the Company's consolidated revenues. Consumers was the only customer of the Company accounting for 10% or more of consolidated revenues in 1993.
Demand for gas transmission on the Company's pipeline systems is seasonal, with the highest throughput occurring during the colder periods in the first and fourth quarters -- the winter heating season. See also "Management's Discussion and Analysis of Financial Condition and Results of Operations" on page 31 of the Annual Report, which is incorporated herein by reference.
NORTHEAST AREA
TETCO. TETCO's principal customers are located in Pennsylvania, New Jersey and New York, and include LDCs serving the Pittsburgh, Philadelphia, Newark and New York City metropolitan areas.
On June 1, 1993, TETCO implemented restructured services pursuant to Order 636, terminating its firm merchant service in connection therewith. Customers converted existing sales contracts to firm transportation contracts, and began purchasing all gas supplies directly from producers and marketers. As a result, market-area transportation increased to 86% of 1993 total throughput, as compared with 75% in 1992. Total market-area throughput increased 11% in 1993 as a result of expanded marketing efforts, TETCO's early implementation of Order 636 and completion of several expansion projects in late 1992.
TETCO continues to pursue a strategy of growing through fully subscribed customer-driven expansions of pipeline capacity. Market-expansion projects added 63 MMcf/d of transportation service to customers under long-term firm contracts during 1993, including the first 33 MMcf/d of service for the Integrated Transportation Program initiated on November 1, 1993. TETCO and Algonquin have agreed to add a total of approximately 200 MMcf/d of firm service to Northeast customers through 1995, utilizing capacity on all four of the Company's pipelines.
Liberty Pipeline Company, 30% owned by the Company, proposes to construct a 38-mile, 500 MMcf/d pipeline from interconnections with TETCO and another system in New Jersey to a delivery point on Long Island, with service to be phased in during 1995 and 1996. TETCO's Liberty Upstream expansion project, pending FERC approvals, will provide 243 MMcf/d of firm service to Liberty Pipeline. PEPL will provide 60 MMcf/d of firm service to TETCO in connection with the project.
On the supply area portion of its system, TETCO in 1993 continued to deliver gas to PEMEX Gas and Basic Petrochemicals, Mexico's national gas and petrochemical company, under a contract providing for interruptible transportation service. TETCO also transported Mexican gas from the U.S.-Mexico border into the United States during December under various shipping contracts.
Algonquin. Algonquin's major customers include LDCs and electric power generators that utilize gas transportation services to the Boston, Providence, Hartford and New Haven areas.
Algonquin's overall throughput for 1993 decreased by 7% compared to 1992. The 1993 market-area transportation volumes were virtually unchanged from the 1992 volumes. Sales volumes for 1993 decreased by 90% from 1992 due primarily to the implementation of Order 636 on June 1, 1993, which eliminated Algonquin's merchant sales function.
Continued expansion efforts added 90 MMcf/d of incremental firm transportation service to Algonquin customers during 1993, including 80 MMcf/d of new capacity to LDCs and electric power generating customer pursuant to Algonquin's Open Season project.
MIDWEST AREA
PEPL. PEPL's market volumes are concentrated among approximately 20 utilities located in the Midwest market area that encompasses large portions of Michigan, Ohio, Indiana, Illinois and Missouri. PEPL's major customers serving this market include the utilities, producers and independent marketers.
Market-area volumes in 1993 fell 13% to 560 Bcf and supply-area volumes fell 28% to 43 Bcf. The decline in market-area deliveries reflects one-time storage inventory sales in 1992, while the supply-area decline is related to the sale of a non-contiguous system during the first quarter of 1993. See Item 2.
ITEM 2. PROPERTIES
TRANSMISSION AND STORAGE FACILITIES
The combined transmission systems of TETCO, Algonquin, PEPL and Trunkline consist of approximately 26,000 miles of pipeline and 108 mainline compressor stations having an aggregate of 2,227,000 installed horsepower.
TETCO's gas transmission system extends approximately 1,700 miles from producing fields in the Gulf Coast region of Texas and Louisiana to Ohio, Pennsylvania, New Jersey and New York. It consists of two parallel systems, one comprised of three large-diameter parallel pipelines and the other comprised of from one to three large-diameter pipelines over its length. TETCO's system, including the gathering systems, has 73 compressor stations having a total of 1,345,000 installed horsepower.
The Lebanon Lateral is located between Grant County, Indiana, and Lebanon, Ohio. TETCO owns the Indiana portion and a small segment of the Ohio portion of this pipeline, while the rest of this pipeline in Ohio is jointly owned by TETCO and another interstate gas pipeline company. The Indiana portion of the Lebanon Lateral extends approximately 53 miles, while the Ohio portion of this pipeline is 61 miles long.
Algonquin's transmission system connects with TETCO's facilities in Lambertville and Hanover, New Jersey, and extends through New Jersey, New York, Connecticut, Rhode Island and Massachusetts to the Boston area. The system consists of approximately 1,000 miles of pipeline with five compressor stations having a total of approximately 99,000 installed horsepower.
PEPL's transmission system, which consists of four large-diameter parallel pipelines, gathering systems and 13 mainline compressor stations having an aggregate of 403,000 installed horsepower, extends a distance of approximately 1,300 miles from producing areas in the Anadarko Basin of Texas, Oklahoma and Kansas through the states of Missouri, Illinois, Indiana and Ohio into Michigan.
On March 31, 1993, PEPL completed the sale of the Wattenberg system, a natural gas supply system in Colorado.
Trunkline's transmission system extends approximately 1,400 miles from the Gulf Coast areas of Texas and Louisiana through the states of Arkansas, Mississippi, Tennessee, Kentucky, Illinois and Indiana to a point on the Indiana-Michigan border near Elkhart, Indiana. The system consists principally of three large-diameter parallel pipelines and 18 mainline compressor stations having an aggregate of 335,000 installed horsepower.
Trunkline also owns and operates two offshore Louisiana gas supply systems consisting of 337 miles of pipeline extending approximately 81 miles into the Gulf of Mexico. TETCO owns and operates two offshore Louisiana gas supply systems, which extend as far as 103 miles into the Gulf of Mexico and consist of 477 miles of pipeline.
Northern Border Pipeline Company ("Northern Border"), in which a PEPL subsidiary has an approximate 6% effective ownership interest, owns a transmission system consisting of 969 miles of pipeline extending from the Canadian border through Montana to Iowa. Northern Border transports gas both under traditional long-term contracts and on an open-access basis. It has a certificated transport capacity of 975 MMcf/d. In 1992, PEPL terminated its gas supply arrangements with respect to Canadian gas. The agreement calls for an affiliate of Pan Alberta Gas Limited ("Pan Alberta") to assume PEPL's 150 MMcf/d of transportation capacity on Northern Border. PEPL has guaranteed payments to Northern Border by Pan Alberta's affiliate. For information regarding this guarantee and the sale of a portion of the Company's interest in Northern Border, see Note 6 of the Notes to Consolidated Financial Statements on page 51 of the Annual Report, which is incorporated herein by reference.
For information concerning natural gas storage properties, see "Natural Gas Pipelines -- Natural Gas Storage" under Item 1, which is incorporated herein by reference.
LNG FACILITIES
Algonquin LNG, Inc., a subsidiary of Algonquin, owns and operates an LNG storage facility in Providence, Rhode Island. This facility has a storage capacity of 600,000 barrels, which approximates 2 Bcf, and a design output capacity of 100 MMcf/d.
Trunkline LNG owns a marine terminal, storage and regasification facility for LNG located near Lake Charles, Louisiana. The Trunkline LNG facilities have a design output capacity of approximately 700 MMcf/d and a storage capacity of approximately 1.8 million barrels, which approximates 6 Bcf.
Lachmar, a partnership in which subsidiaries of PEC own all of the partnership interests, owns two LNG ships, each with a transportation capacity of 125,000 cubic meters of LNG. Both ships are currently under charter to Indonesia's national oil and gas company. The Company continues to examine opportunities to better utilize its LNG assets, including the ships.
TEPPCO PARTNERS FACILITIES
TEPPCO Partners owns and operates an approximate 4,200-mile refined petroleum products and LPG pipeline system extending from southeast Texas through the midwestern and central United States to the northeastern United States. The pipeline system includes delivery terminals along the pipeline for outloading product to tank trucks, rail cars or barges, as well as storage capacity at Mont Belvieu, Texas, the largest LPG storage complex in the United States, and at other locations. TEPPCO Partners also owns two marine receiving terminals at Beaumont, Texas, and Providence, Rhode Island. The TEPPCO Partners pipeline system is the only pipeline that transports LPGs to the Northeast.
OTHER
None of the other properties used in connection with the Company's other business activities, which are described under "Other Business Activities" under Item 1, is considered material to the Company's operations as a whole.
[MAP]
ITEM 3.
ITEM 3. LEGAL PROCEEDINGS
For information concerning material legal proceedings, see Notes 2, 3, 9 and 11, on pages 47 through 50, 53, 54 and 55 of the Annual Report, which are incorporated herein by reference.
In connection with the incident on March 24, 1994 in Edison, New Jersey (see "Recent Development" under Item 1), a lawsuit was filed by Nancy Kemps, et al. in the Superior Court of New Jersey for Middlesex county naming TETCO as one of the defendants. The plaintiffs seek unspecified damages for personal injury and property damage and request the court to grant class certification. Other lawsuits have been reported but the Company has not been served.
ITEM 4.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
There were no matters submitted to a vote of security holders during the fourth quarter of the fiscal year.
EXECUTIVE OFFICERS OF REGISTRANT
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(1) Mr. Hendrix was elected Chairman of the Board, President and Chief Executive Officer in 1990 and relinquished the title of President to Mr. Anderson in December 1993. Mr. Hendrix was President, TEC, 1985-1989; and Chief Executive Officer, TEC, 1987-1989.
(2) Mr. Anderson was Executive Vice President from March 1991 until December 1993, when he was elected President. Prior to joining PEC, Mr. Anderson was Vice President, Finance and Chief Financial Officer, Inland Steel Industries, Inc., 1990-1991. He was Senior Vice President, TEC, 1987-1989.
(3) Mr. Mazanec was Executive Vice President from April 1991 until December 1993, when he was elected Vice Chairman of the Board. Prior thereto, he was Group Vice President from November 1989 until April 1991, and Senior Vice President, TEC and TETCO, 1987-1989.
(4) Mr. Hipple was elected Senior Vice President and Chief Financial Officer in July 1990. Prior to his election as Senior Vice President and Chief Financial Officer, Mr. Hipple served as Senior Vice President-Finance from July 1989.
(5) Mr. King was elected Senior Vice President and General Counsel in 1990. Prior to joining PEC, Mr. King was President, Oil Tool Division, Cooper Industries, 1989-1990; and Senior Vice President, Cameron Iron Works (oil field equipment manufacturer), 1984-1989.
(6) Mr. Ferguson was elected Vice President, Finance and Accounting, in 1992. Prior thereto, Mr. Ferguson was Vice President and Treasurer from 1990, after having served as Treasurer. Mr. Ferguson was Treasurer, TEC, 1988-1989.
(7) Mr. Hart has been an officer or employee of PEC, or a subsidiary of PEC, for at least five years.
(8) Mr. Ludwig was elected Vice President, Corporate Development, in January 1993. He was President of Algonquin Energy Corporation and Algonquin from April 1991 and January 1991, respectively, until January 1993. Prior thereto, Mr. Ludwig was Executive Vice President of those companies from July 1986.
(9) Ms. Meyer has been an officer or employee of PEC, or a subsidiary of PEC, for at least five years. She was elected Controller of PEC in 1993.
(10) Mr. Thomas was elected Treasurer of the Company, PEPL, TEC and TETCO in April 1992. He was Assistant Treasurer of those companies from January 1991 to April 1992, and held various financial management positions at PEC and TEC for more than five years prior thereto.
(11) Mr. Church was elected Senior Vice President of TETCO in January 1994. Prior thereto, he was Vice President of TETCO since January 1991. He was an Executive Vice President of Texas Eastern Gas Pipeline Company ("TEGP"), a division of TETCO, 1987-1989, and Senior Vice President, TEGP, 1985-1987. In January 1994, Mr. Church was appointed to the Company's Executive Management Committee.
(12) Mr. Fowler was elected President of TETCO in January 1994. Prior thereto, he was the Company's Vice President of Marketing from December 1992 until January 1994; President and Director of 1 Source from March 1993 until January 1994; President of Trunkline from January 1991 to December 1992; Vice President of PEPL and Trunkline from January 1988 to January 1991, and of TETCO from July 1989 to January 1991. In December 1992, Mr. Fowler was appointed to the Company's Executive Management Committee.
(13) Mr. Perkins was elected President of 1 Source in January 1994. Prior thereto, he was Senior Vice President, TETCO, from May 1992 until January 1994; Vice President of TETCO from January 1991 to May 1992; and an officer or employee of PEC, or a subsidiary of PEC, for more than five years. In January 1994, Mr. Perkins was appointed to the Company's Executive Management Committee.
All officers of PEC are elected in April of each year at the organizational meeting of the Board of Directors. There are no family relationships among any directors or executive officers of PEC.
PART II
ITEM 5.
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
See "Stockholders' Information -- Common Stock" on page 59 and Note 10 of the Notes to Consolidated Financial Statements on page 54 of the Annual Report, which are incorporated herein by reference. The Common Stock is listed on the New York and Pacific Stock Exchanges. At February 28, 1994, there were 30,195 holders of record of the Common Stock.
ITEM 6.
ITEM 6. SELECTED FINANCIAL DATA
See page 58 of the Annual Report, which is incorporated herein by reference.
ITEM 7.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
See pages 31 through 39 of the Annual Report, which are incorporated herein by reference.
ITEM 8.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Reference is made to "Index -- Financial Statements" under Item 14(a)(1).
See the consolidated quarterly financial data on page 57 of the Annual Report, which is incorporated herein by reference.
ITEM 9.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.
PART III
ITEM 10.
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
See pages 2 through 4 and page 6 of the Panhandle Eastern Corporation Definitive Proxy Statement, dated March 11, 1994 ("Proxy Statement"), which are incorporated herein by reference.
See list of "Executive Officers of Registrant" on pages 15 and 16, which is incorporated herein by reference.
ITEM 11.
ITEM 11. EXECUTIVE COMPENSATION
See pages 8 through 16 of the Proxy Statement, which are incorporated herein by reference.
ITEM 12.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
See pages 7 and 8 of the Proxy Statement, which are incorporated herein by reference.
ITEM 13.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
See pages 2 through 4, 7 and 8 of the Proxy Statement, which are incorporated herein by reference.
PART IV
ITEM 14.
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) The following documents are filed as a part of this report or incorporated herein by reference:
(1) The Consolidated Financial Statements and Financial Statement Schedules of Panhandle Eastern Corporation and Subsidiaries are listed on the Index, page 19.
(2) Exhibits not incorporated by reference to a prior filing are designated by an asterisk (*) and are filed herewith; all exhibits not so designated are incorporated herein by reference to a prior filing as indicated. Items constituting management contracts or compensatory plans or arrangements are designated by a double asterisk (**).
The total amount of securities of the Registrant or its subsidiaries authorized under any instrument with respect to long-term debt not filed as an Exhibit does not exceed 10% of the total assets of the Registrant and its subsidiaries on a consolidated basis. The Registrant agrees, upon request of the Securities and Exchange Commission, to furnish copies of any or all of such instruments.
(b) Reports on Form 8-K.
No reports on Form 8-K were filed during the three months ended December 31, 1993.
PANHANDLE EASTERN CORPORATION AND SUBSIDIARIES
INDEX
FINANCIAL STATEMENTS AND SCHEDULES ---------------------
FINANCIAL STATEMENTS
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* Refers to the pages in the Panhandle Eastern Corporation 1993 Annual Report to Stockholders, which are incorporated herein by reference. ---------------------
SCHEDULES
All other Schedules are omitted because they are not applicable, not required or the information is included in the Consolidated Financial Statements or the Notes thereto.
SCHEDULE V
PANHANDLE EASTERN CORPORATION AND SUBSIDIARIES
PLANT, PROPERTY AND EQUIPMENT THREE YEARS ENDED DECEMBER 31, 1993
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(1) Includes gathering, underground storage and certain general plant and construction work in progress amounts.
(2) Includes allowance for equity funds and interest on borrowed funds charged to construction of $4.2 million for 1991, $4.4 million for 1992 and $6.4 million for 1993.
(3) Includes reclassification of costs related to TETCO's PCB (polychlorinated biphenyl) cleanup program.
(4) Includes the sale of the Wattenberg system, a natural gas supply system in Colorado.
See Note 7 of the Notes to Consolidated Financial Statements for depreciation rates.
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SCHEDULE VI
PANHANDLE EASTERN CORPORATION AND SUBSIDIARIES
ACCUMULATED DEPRECIATION AND AMORTIZATION OF PLANT, PROPERTY AND EQUIPMENT THREE YEARS ENDED DECEMBER 31, 1993
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(1) Excludes amortization of goodwill and includes amounts charged to other operating expenses.
(2) Includes a reclassification from rate refund provisions related to settlement of a PEPL rate case.
(3) Includes the sale of the Wattenberg system, a natural gas supply system in Colorado.
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SCHEDULE IX
PANHANDLE EASTERN CORPORATION AND SUBSIDIARIES
SHORT-TERM BORROWINGS THREE YEARS ENDED DECEMBER 31, 1993
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(1) Average of daily balances for period outstanding.
(2) Total interest (discounted basis) divided by average net balance for the period outstanding.
(3) Secured by future demand charges.
(4) Uncommitted bid facilities.
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SCHEDULE X
PANHANDLE EASTERN CORPORATION AND SUBSIDIARIES
SUPPLEMENTARY INCOME STATEMENT INFORMATION
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INDEPENDENT AUDITORS' REPORT
The Board of Directors Panhandle Eastern Corporation:
Under date of January 26, 1994, we reported on the consolidated balance sheet of Panhandle Eastern Corporation and Subsidiaries as of December 31, 1993 and 1992, and the related consolidated statements of income, common stockholders' equity and cash flows for each of the years in the three-year period ended December 31, 1993 as contained in the 1993 annual report to stockholders. These consolidated financial statements and our report thereon are incorporated by reference in the annual report on Form 10-K for the year 1993. In connection with our audits of the aforementioned consolidated financial statements, we also have audited the related financial statement schedules as listed in the accompanying index. These financial statement schedules are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statement schedules based on our audits.
In our opinion, such financial statement schedules, when considered in relation to the basic consolidated financial statements taken as a whole, present fairly, in all material respects, the information set forth therein.
KPMG PEAT MARWICK
Houston, Texas January 26, 1994
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SIGNATURES
PURSUANT TO THE REQUIREMENTS OF SECTION 13 OR 15(D) 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.
PANHANDLE EASTERN CORPORATION*
By ROBERT W. REED ------------------------------------ (Robert W. Reed, Secretary)
Date: March 28, 1994
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934, THIS REPORT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS ON BEHALF OF THE REGISTRANT AND IN THE CAPACITIES INDICATED ON MARCH 28, 1994.
- - - --------------- * Signed on behalf of the registrant and each of these persons:
By ROBERT W. REED ---------------------------------- (Robert W. Reed, Attorney-in-Fact)