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EXHIBIT 99.3
Contact: William E. Keslar
Don H. Herring
(412) 433-6870
FOR IMMEDIATE RELEASE
USX CORPORATION ANNOUNCES FIRST QUARTER DELHI GROUP FINANCIAL RESULTS
PITTSBURGH, April 26, 1994 -- USX Corporation reported first quarter
1994 net income for its Delhi Group (NYSE:DGP) of $.4 million, or $.03 per
share, which included an estimated aftertax benefit of $1.0 million for an
accrual reversal related to a litigation settlement. First quarter 1994 sales
totaled $154.4 million, an increase of 18 percent from the prior-year quarter.
Net income in the first quarter of 1993 was $8.7 million, or $.62 per share.
USX Corporation Board Chairman Charles A. Corry noted, "Despite the
lower first quarter results, Delhi continued to expand its capital expenditure
program to connect dedicated natural gas reserves. This is reflected in
increased first quarter gas sales throughput volumes, which were up 22 percent
over 1993 first quarter volumes."
First quarter operating income for the Delhi Group totaled $2.5
million, down $14.6 million from the first quarter of 1993. The benefits of
higher gas sales throughput were more than offset by lower average sales prices
for natural gas liquids (NGLs), higher plant feedstock costs and lower gas
sales margins primarily resulting from reduced premiums from Southwestern
Electric Power Company (SWEPCO) and warmer weather in Delhi's premium customer
service areas. Most of the increase in sales
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throughput was due to increased spot market sales rather than higher margin
sales to premium customers. Due to lower first quarter 1994 NGLs sales prices,
which were adversely impacted by falling crude oil prices, Delhi chose not to
fully process some gas, which resulted in a decline in NGLs sales volumes.
First quarter 1994 operating income included a $1.6 million favorable pretax
effect of the settlement of litigation for less than the amount previously
accrued. First quarter 1993 operating income included a $1.8 million favorable
effect of the reversal of a prior-period accrual related to a natural gas
contract settlement.
On January 26, 1994, Delhi and SWEPCO resolved litigation related to
a 15-year natural gas purchase contract which was due to expire in April 1995.
The settlement agreement provided that SWEPCO pay Delhi the original contract
price through January 1994. Concurrently, Delhi executed a new four-year
agreement enabling Delhi to supply increased volumes of gas to two SWEPCO power
plants in East Texas at market sensitive prices with premiums based on the
level of service provided. The agreement provides for swing service and does
not require any minimum gas purchase volumes. Although the agreement adversely
impacted first quarter 1994 operating income by about $3 million due to the
lower premiums received in February and March, it provides for the continuation
of a long-standing relationship with a major customer.
During the first quarter of 1994, Delhi completed a project in
western Oklahoma which expanded system and processing capacity and improved
Delhi's access to interstate markets. Delhi added compression, made new
pipeline interconnections with third parties, and redesigned and moved a
previously idled processing plant which began operation in March.
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Corry noted, "Delhi remains committed to optimizing existing assets
such as those in western Oklahoma. In the third quarter of 1994, we expect to
complete a project there which includes constructing approximately 21 miles of
pipe to provide additional system capacity to the newly relocated plant.
System flexibility and reliability were also enhanced in the first quarter as
we began utilizing our East Texas storage space. An arrangement to store up to
2.5 billion cubic feet of natural gas was entered into in the fourth quarter of
last year with a large local distribution company (LDC)."
Corry also stated, "Delhi is well positioned to take advantage of
emerging fundamentals in the gas industry. Demand continues to be high, pumped
up by 'clean fuels' initiatives and increased economic activity. Our capital
and marketing efforts, particularly a multi-pipeline interconnection and
compression project in the Carthage area of East Texas, were successful in
generating new premium market sales which included winter month off-system
sales associated with FERC Order No. 636. These first quarter sales were to
LDCs outside Delhi's traditional marketing area and are representative of our
increasing ability to access new marketing opportunities developing in the
Midwest and Northeast."
Delhi is an established natural gas merchant engaged in the
purchasing, gathering, processing, transporting and marketing of natural gas.
It operates an extensive pipeline system of over 8,000 miles and has 22 gas
processing plants, primarily in Texas and Oklahoma.
* * * * * *
Supplemental statistics and condensed financial statements for the
Delhi Group and condensed consolidated financial statements for USX Corporation
are attached.
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DELHI GROUP OF USX CORPORATION
CONDENSED STATEMENT OF OPERATIONS (Unaudited)
Three Months Ended
March 31
(In Millions Except Per Share Data) 1994 1993
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SALES . . . . . . . . . . . . . . . . . . . . . $ 154.4 $ 131.0
Total operating costs . . . . . . . . . . . . . (151.9) (113.9)
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OPERATING INCOME. . . . . . . . . . . . . . . . 2.5 17.1
Other income. . . . . . . . . . . . . . . . . . .9 2.8
Net interest and other financial costs. . . . . (2.7) (2.5)
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TOTAL INCOME BEFORE INCOME TAXES. . . . . . . . .7 17.4
Less provision for estimated income taxes . . . .3 8.7
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NET INCOME. . . . . . . . . . . . . . . . . . . .4 8.7
Net income applicable to Retained Interest. . . (.1) (3.1)
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NET INCOME APPLICABLE TO OUTSTANDING DELHI STOCK $ .3 $ 5.6
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Per common share data:
Weighted average shares, in thousands
- Primary and fully diluted . . . . . . . . . 9,332 9,006
Net income - primary and fully diluted. . . . $ .03 $ .62
Dividends paid . . . . . . . . . . . . . . . .05 .05
CONDENSED BALANCE SHEET (Unaudited)
Mar. 31 Dec. 31 Mar. 31 Dec. 31
(In Millions) 1994 1993 1994 1993
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ASSETS LIABILITIES AND
Cash and cash . . . . . . STOCKHOLDERS' EQUITY
equivalents . . . . . . $ 1.0 $ 3.8 Current liabilities. . $105.5 $102.4
Receivables - net . . . . 9.2 24.2 Long-term debt . . . . 83.4 109.0
Inventories . . . . . . . 7.7 9.6 Other liabilities. . . 163.7 163.5
Other current assets. . . 4.6 4.6
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Total current assets 22.5 42.2 Total liabilities . . 352.6 374.9
Property, plant and Preferred stock . . . . 2.5 2.5
equipment - net. . . . . 518.5 521.8 Common stockholders'
Other assets. . . . . . . 16.8 16.4 equity . . . . . . . . 202.7 203.0
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Total . . . . . . . . . $557.8 $580.4 Total . . . . . . . . $557.8 $580.4
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The following notes are an integral part of these financial statements.
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DELHI GROUP OF USX CORPORATION
SELECTED NOTES TO CONDENSED FINANCIAL STATEMENTS
The condensed financial statements of the Delhi Group include the results of
operations and financial position for the businesses of Delhi Gas Pipeline
Corporation and certain subsidiaries of USX, and a portion of the corporate
assets, liabilities and related transactions which are not separately
identified with ongoing operating units of USX. These condensed financial
statements should be read in connection with the condensed consolidated
financial statements of USX.
The USX Board of Directors initially designated 14,000,000 shares of Delhi
Stock to represent 100% of the common stockholders' equity value of USX
attributable to the Delhi Group. The Delhi Fraction is the percentage interest
in the Delhi Group represented by the shares of Delhi Stock that are
outstanding at any particular time and, based on 9,366,673 outstanding shares
as of March 31, 1994, is approximately 67%. The Marathon Group financial
statements reflect a Retained Interest of approximately 33%.
Other income in the first quarter of 1993 included a pretax gain of $1.6
million from the sale of a 25% interest in a natural gas transmission
partnership. The provision for estimated income taxes for the first quarter of
1993 included an unfavorable tax effect associated with the sale of the
partnership interest, which resulted in a $1.2 million net loss on the
transaction.
The provision for estimated income taxes for the periods reported is based on
tax rates and amounts which recognize management's best estimate of current and
deferred tax assets and liabilities in accordance with USX's tax allocation
policy.
April 26, 1994
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DELHI GROUP OF USX CORPORATION
SUPPLEMENTAL STATISTICS
($'s in Millions)
First Quarter
Ended
March 31
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1994 1993
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SALES $154.4 $131.0
GROSS MARGIN
Gas Sales Margin $ 24.8 $ 31.4
Transportation Margin 2.6 3.8
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Systems Margin 27.4 35.2
Gas Processing Margin - 7.4
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Total Gross Margin $ 27.4 $ 42.6
OPERATING INCOME $ 2.5 $ 17.1
CAPITAL EXPENDITURES $ 4.9 $ 4.5
OPERATING STATISTICS
Natural Gas Throughput (a)
Natural Gas Sales 681.3 559.4
Transportation 244.7 304.8
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Systems Throughput 926.0 864.2
Partnerships - equity share 20.2 19.1
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Total Throughput 946.2 883.3
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Natural Gas Liquids Sales (b) 627.4 808.8
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(a) Millions of cubic feet per day
(b) Thousands of gallons per day
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USX CORPORATION AND SUBSIDIARY COMPANIES
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (Unaudited)
Three Months Ended
March 31
(In Millions Except Per Share Data) 1994 1993*
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SALES . . . . . . . . . . . . . . . . . . . . . $ 4,273 $ 4,280
Total operating costs . . . . . . . . . . . . . (4,069) (4,122)
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OPERATING INCOME. . . . . . . . . . . . . . . . 204 158
Other income. . . . . . . . . . . . . . . . . . 28 37
Net interest and other financial costs. . . . . (108) (112)
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TOTAL INCOME BEFORE INCOME TAXES AND CUMULATIVE
EFFECT OF CHANGES IN ACCOUNTING PRINCIPLES. . 124 83
Less provision for estimated income taxes . . . 49 36
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TOTAL INCOME BEFORE CUMULATIVE EFFECT OF CHANGES
IN ACCOUNTING PRINCIPLES. . . . . . . . . . . 75 47
Cumulative effect of changes in accounting
principles. . . . . . . . . . . . . . . . . . - (92)
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NET INCOME (LOSS) . . . . . . . . . . . . . . . 75 (45)
Dividends on preferred stock. . . . . . . . . . (7) (4)
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NET INCOME (LOSS) APPLICABLE TO COMMON STOCKS . $ 68 $ (49)
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*Restated as a result of the adoption of two new accounting standards.
CONDENSED CONSOLIDATED BALANCE SHEET (Unaudited)
Mar. 31 Dec. 31 Mar. 31 Dec. 31
(In Millions) 1994 1993 1994 1993
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ASSETS LIABILITIES AND
Cash and cash STOCKHOLDERS' EQUITY
equivalents . . . . . $ 137 $ 268 Current liabilities. . $ 2,728 $ 3,334
Receivables - net . . . . 844 932 Long-term debt . . . . 5,695 5,888
Inventories . . . . . . . 1,663 1,626 Other liabilities. . . 4,619 4,288
Other current assets. . . 356 354
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Total current assets 3,000 3,180 Total liabilities. . 13,042 13,510
Property, plant and Preferred stock . . . . 112 112
equipment - net. . . . 11,488 11,603 Common stockholders'
Other assets. . . . . . . 2,623 2,591 equity . . . . . . . 3,957 3,752
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Total. . . . . . . . . $17,111 $17,374 Total. . . . . . . . $17,111 $17,374
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The following common share data and notes are an integral part of these
financial statements.
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USX CORPORATION AND SUBSIDIARY COMPANIES
COMMON SHARE DATA (Unaudited)
Three Months Ended
March 31
(In Millions Except Per Share Data) 1994 1993*
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Applicable to Marathon Stock
Total income before cumulative effect of
changes in accounting principles applicable
to Marathon Stock. . . . . . . . . . . . . $ 109 $ 29
--Per share - primary and fully diluted. . .38 .10
Cumulative effect of changes in accounting
principles . . . . . . . . . . . . . . . . - (23)
--Per share - primary and fully diluted. . - (.08)
Net income applicable to Marathon Stock. . . 109 6
--Per share - primary and fully diluted. . .38 .02
Dividends paid per share . . . . . . . . . . .17 .17
Weighted average shares, in thousands
--Primary. . . . . . . . . . . . . . . . . 286,582 286,610
--Fully diluted. . . . . . . . . . . . . . 292,829 286,612
Applicable to Steel Stock
Total income (loss) before cumulative effect
of change in accounting principle
applicable to Steel Stock. . . . . . . . . $ (41) $ 8
--Per share - primary and fully diluted. . (.56) .13
Cumulative effect of change in accounting
principle. . . . . . . . . . . . . . . . . - (69)
--Per share - primary and fully diluted. . - (1.16)
Net loss applicable to Steel Stock . . . . . (41) (61)
--Per share - primary and fully diluted. . (.56) (1.03)
Dividends paid per share . . . . . . . . . . .25 .25
Weighted average shares, in thousands
--Primary. . . . . . . . . . . . . . . . . 73,598 59,978
--Fully diluted. . . . . . . . . . . . . . 73,598 59,981
Applicable to Delhi Stock
Net income applicable to Delhi Stock . . . . $ - $ 6
--Per share - primary and fully diluted. . .03 .62
Dividends paid per share . . . . . . . . . . .05 .05
Weighted average shares, in thousands
--Primary and fully diluted. . . . . . . . 9,332 9,006
*Restated as a result of the adoption of two new accounting standards.
The following notes are an integral part of these financial statements.
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USX CORPORATION AND SUBSIDIARY COMPANIES
SELECTED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
The financial information for the Marathon Group, the U. S. Steel Group and the
Delhi Group, taken together, includes all accounts which comprise the
corresponding consolidated financial information for USX.
Changes in the inventory market valuation reserve resulted in a $128 million
and $23 million credit to operating income in the first quarter of 1994 and
1993, respectively.
Other income in the first quarter of 1994 included pretax gains of $24 million
from disposal of assets, primarily related to the sale of certain Marathon
production assets. Other income in the first quarter of 1993 included a pretax
gain of $46 million from the disposal of assets, including the sale of an
investment in an insurance company.
The provision for estimated income taxes for periods reported is based on tax
rates and amounts which recognize management's best estimate of current and
deferred tax assets and liabilities.
In 1993, USX adopted Statement of Financial Accounting Standards No. 112,
"Employers' Accounting for Postemployment Benefits" (SFAS No. 112), and
Emerging Issues Task Force Consensus No. 93-14, "Accounting for Multiple-Year
Retrospectively Rated Insurance Contracts" (EITF No. 93-14). The cumulative
effect of these changes in accounting principles decreased first quarter 1993
net income by $86 million, net of $50 million income tax effect, for SFAS No.
112; and $6 million, net of $3 million income tax effect, for EITF No. 93-14.
In the first quarter of 1994, USX sold 5,000,000 shares of Steel Stock to the
public. In addition, USX Capital LLC, a wholly owned subsidiary of USX, sold
$250 million of 8-3/4% Cumulative Monthly Income Preferred Shares.
April 26, 1994