SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported)
February 9, 1994
ENSERCH Corporation
(Exact name of Registrant as specified in its charter)
Texas 1-3183 75-0399066
(State or other (Commission (I.R.S. Employer
jurisdiction of File Number) Identification No.)
incorporation)
ENSERCH Center, 300 S. St. Paul, Dallas, Texas 75201
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including Area Code: 214-651-8700
ITEM 5. Other Events
A. Set forth below in its entirety is a news release issued by ENSERCH
Corporation on February 9, 1994:
ENSERCH EARNINGS IMPROVE
DALLAS, TEXAS (February 9, 1994) -- ENSERCH Corporation's earnings
applicable to common stock for 1993 were $47 million, or $.70 per share,
compared with a loss applicable to common stock for 1992 of $41 million, or
$.62 per share.
"At the beginning of last year, we announced our plan for focusing the
Corporation and for balance sheet improvement," said David W. Biegler,
chairman, president, and chief executive officer. "These actions were
completed in the fourth quarter, with gains on the sale of the principal
operating assets of Ebasco and the disposal of our interest in Dorsch
providing a total gain of $1.03 per share ($68 million after tax).
Additionally, the significant cash infusion substantially improved the yearend
balance sheet."
The 1993 loss from continuing operations after provision for preferred
dividends was $27 million, or $.41 per share, compared with a loss in 1992 of
$9.4 million, or $.14 per share. Results for 1993 from continuing operations
were impacted by:
o $.12 per share ($12 million pretax) charge for efficiency
enhancements and severance expenses accrued for staff reductions in
natural gas transmission and distribution operations;
o $.16 per share ($11 million) charge to deferred federal income taxes
resulting from the 1% increase in the statutory federal income-tax
rate on corporations;
o $.15 per share ($15 million pretax) for other yearend provisions;
o $.13 per share ($13 million pretax) charge for non-U.S. gas and oil
assets that the Corporation has decided to abandon; and
o $.40 per share ($41 million pretax) charge as a result of an adverse
judgment in litigation that required additional payment for a 1989
limited partnership exchange offer beyond the amount that the
Corporation believes represented fair value.
"While an earlier view was that this payment should be capitalized, the
expensing of this adverse judgment is prudent and necessary because the final
court-ordered payment did not bring additional value to the Corporation's
reserve base," said Biegler.
Income from discontinued operations, primarily the gain on the sale of
the principal operating assets of Ebasco, was $74 million, or $1.11 per share,
compared with a loss from discontinued operations of $16 million, or $.25 per
share, recorded for 1992.
Operating income for 1993 was $73 million versus $112 million for 1992.
Excluding the unusual charges mentioned above for litigation, the natural gas
and oil properties writeoffs and the downsizing charge, 1993 operating income
would have been $140 million. Revenues for 1993 of $1.9 billion compare with
revenues of $1.7 billion for 1992.
For the fourth quarter of 1993, earnings applicable to common stock were
$36 million, or $.53 per share, versus a loss of $33 million, or $.49 per
share, for the year-ago period. The loss from continuing operations after
provision for preferred dividends was $34 million, or $.51 per share, compared
with a loss of $5.8 million, or $.08 per share, for the year-earlier period.
Results for the 1993 period were impacted by the litigation expenses, the gas
and oil properties writeoffs, the charge for severance, and other charges.
Fourth-quarter income from discontinued operations was $70 million, or
$1.04 per share, compared with a loss of $16 million, or $.25 per share, for
the 1992 period.
The following table indicates contributions to operating income by each
of the Corporation's businesses:
OPERATING INCOME (LOSS) OF MAJOR BUSINESSES
(Excludes general corporate expenses)
Three Months Ended Year Ended
December 31 December 31
--------------------- --------------------
1993 1992 1993 1992
---- ---- ---- ----
(In thousands)
Natural gas transmission
and distribution.................. $ 22,862* $37,421 $101,458* $101,996
Natural gas and oil exploration
and production.................... (51,615)** (12,892)*** (37,293)** (6,175)***
Natural gas liquids processing....... (484) 2,358 5,037 13,092
Power and other...................... (1,956) 15,128 15,478 20,167
<FN>
* Includes $12 million pretax charge for downsizing.
** Includes $41 million pretax litigation charge and $13 million pretax writeoffs ($10 million in
the fourth quarter) of non-U.S. gas and oil properties.
*** Includes $16.5 million pretax writeoff of abandoned offshore facilities.
More normal winter weather, combined with aggressive efforts to market
services and increased capacity, contributed to higher sales and
transportation volumes in 1993 for the transmission and distribution business.
Results were reduced by some $12 million for the ongoing reengineering
of this business. "This program will enhance the future earnings power of our
transmission and distribution operation," said Biegler.
Overall, sales volumes improved, with total system throughput increasing
22% over the 1992 level to 645 billion cubic feet (Bcf). Residential and
commercial sales volumes increased 16% compared with 1992, primarily due to
the colder winter weather during the first and fourth quarters. Heating
degree days rose 27% over the prior year and were slightly above normal for
the first time since 1989. Gas volumes transported rose 21% above the 1992
level.
Operating income from gas and oil exploration and production, before the
writeoffs, increased nearly 70% for 1993, the result of significantly
improved natural-gas prices and higher sales volumes. Natural-gas sales
volumes were 70 Bcf, a 7% increase from the year-ago period, with the average
sales price of $2.09 per thousand cubic feet up 15% from 1992. Oil sales
volumes declined 9% to 2.1 million barrels, with the average price per barrel
of $17.24 down 10% from the year-earlier level.
Operating income from natural gas liquids (NGL) processing was down
significantly from the prior year. Higher prices for natural gas, the
feedstock used in NGL production, and continued lower NGL sales prices caused
margins to decline. NGL processing sales volumes increased slightly from
1992; however, the average sales price per barrel declined 8% to $12.34.
ENSERCH's power and other activities had full-year operating income of
$15 million, some 23% lower than in 1992. These results include Enserch
Environmental Corporation, retained when the remainder of Ebasco's operating
assets were sold. Enserch Environmental had operating income for 1993 of
$5.7 million and a backlog of $600 million at December 31, 1993.
ENSERCH Corporation is an integrated natural-gas company.
ENSERCH CORPORATION
and Subsidiary Companies
SUMMARY OF OPERATIONS
(In thousands except per share amounts)
Three Months Ended
December 31
------------------
1993 1992
---- ----
Revenues.....................................$ 542,209 $ 551,173
Operating income (loss)...................... (35,202)* 35,730**
Loss from continuing operations.............. (30,978) (2,623)
Income (loss) from discontinued operations... 69,764 (16,399)
Extraordinary loss on
extinguishment of debt.................. -- (10,430)
Net income (loss)............................ 38,786 (29,452)
Earnings (loss) applicable to common stock... 35,629 (32,649)
Earnings (loss) per share:...................
Continuing operations...................$ (.51) $ (.08)
Discontinued operations................. 1.04 (.25)
Extraordinary loss...................... -- (.16)
----------- -----------
Earnings (loss) per share..........$ .53 $ (.49)
Average common and dilutive common
equivalent shares outstanding........... 66,832 65,976
<FN>
*Includes $12 million pretax charge for downsizing, $41 million pretax
litigation charge and $10 million pretax writeoffs of non-U.S. gas and oil
properties.
**Includes a $16.5 million pretax writeoff of abandoned offshore facilities.
ENSERCH CORPORATION
and Subsidiary Companies
SUMMARY OF OPERATIONS
(In thousands except per share amounts)
Twelve Months Ended
December 31
-------------------
1993 1992
---- ----
Revenues.....................................$ 1,902,125 $ 1,714,561
Operating income ............................ 72,812* 112,208**
Income (loss) from continuing operations..... (14,712) 3,514
Income (loss) from discontinued operations... 73,949 (16,162)
Extraordinary loss on
extinguishment of debt.................. -- (15,358)
Net income (loss)............................ 59,237 (28,006)
Earnings (loss) applicable to common stock... 46,574 (40,958)
Earnings (loss) per share:
Continuing operations...................$ (.41) $ (.14)
Discontinued operations................. 1.11 (.25)
Extraordinary loss...................... -- (.23)
----------- -----------
Earnings (loss) per share..........$ .70 $ (.62)
Average common and dilutive common
equivalent shares outstanding........... 66,598 65,695
<FN>
*Includes $12 million pretax charge for downsizing, $41 million pretax
litigation charge and $13 million pretax writeoffs of non-U.S. gas and oil
properties.
**Includes a $16.5 million pretax writeoff of abandoned offshore facilities.
B. As estimated by DeGolyer & MacNaughton, Enserch Exploration had, as of
January 1, 1994 and 1993, net proved reserves of 1.1 trillion cubic fee
of natural gas and, as of January 1, 1994 and 1993, net provided
reserves of 39.3 million and 39.2 million barrels, respectively, of oil
and condensate, including natural gas liquids attributable to leasehold
interests.
SIGNATURES
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.
ENSERCH Corporation
Date: February 17, 1994 By: /s/ Jerry W. Pinkerton
Jerry W. Pinkerton
Vice President and Controller,
Chief Accounting Officer