Exhibit 12.2
RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth the ratio of earnings to fixed charges for Southern Union on a historical basis for the six months ended June 30, 2007, the years ended December 31, 2006 and 2005, the six months ended December 31, 2004, and the years ended June 30, 2004, 2003 and 2002. For the purpose of calculating such ratios, “earnings” consist of pre-tax income from continuing operations before income or loss from equity investees, adjusted to reflect distributed income from equity investments, and fixed charges, less capitalized interest. “Fixed charges” consist of interest costs, amortization of debt discount, premiums and issuance costs and an estimate of interest implicit in rentals. No adjustment has been made to earnings for the amortization of capital interest for the periods presented as such amount is immaterial. Interest on FIN 48 liabilities is excluded from the computation of fixed charges as it is recorded by Southern Union in income tax expense versus interest expense.
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| 6 Months Ended |
| Year Ended |
| Year Ended |
| 6 Months Ended |
| Year Ended |
| Year Ended |
| Year Ended |
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| June 30, 2007 |
| December 31, 2006 |
| December 31, 2005 |
| December 31, 2004 |
| June 30, 2004 |
| June 30, 2003 |
| June 30, 2002 |
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FIXED CHARGES: |
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Interest Expense |
| $ | 102,770 |
| $ | 202,513 |
| $ | 132,971 |
| $ | 65,344 |
| $ | 137,967 |
| $ | 91,731 |
| $ | 98,269 |
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Net amortization of debt discount, premium and issuance expense |
| 561 |
| 12,130 |
| 2,186 |
| (446 | ) | (10,100 | ) | 1,612 |
| 2,936 |
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Capitalized Interest |
| 4,632 |
| 5,492 |
| 8,950 |
| 2,614 |
| 3,865 |
| 26 |
| 177 |
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Interest portion of rental expense |
| 3,254 |
| 6,234 |
| 6,700 |
| 3,152 |
| 5,940 |
| 2,012 |
| 3,049 |
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Total Fixed Charges |
| $ | 111,217 |
| $ | 226,369 |
| $ | 150,807 |
| $ | 70,664 |
| $ | 137,672 |
| $ | 95,381 |
| $ | 104,431 |
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EARNINGS: |
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Consolidated pre-tax income (loss) from continuing operations |
| $ | 174,590 |
| $ | 326,330 |
| $ | 203,148 |
| $ | 16,954 |
| $ | 106,468 |
| $ | (14,371 | ) | $ | (78,626 | ) |
Earnings of equity investments |
| (57,166 | ) | (141,370 | ) | (70,742 | ) | (4,745 | ) | (200 | ) | (422 | ) | (1,420 | ) | |||||||
Distributed income from equity investments |
| 69,654 |
| 62,637 |
| 15,203 |
| — |
| 174 |
| — |
| — |
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Capitalized interest |
| (4,632 | ) | (5,492 | ) | (8,950 | ) | (2,614 | ) | (3,865 | ) | (26 | ) | (177 | ) | |||||||
Total fixed charges (from above) |
| 111,217 |
| 226,369 |
| 150,807 |
| 70,664 |
| 137,672 |
| 95,381 |
| 104,431 |
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Earnings Available for Fixed Charges |
| $ | 293,663 |
| $ | 468,474 |
| $ | 289,466 |
| $ | 80,259 |
| $ | 240,249 |
| $ | 80,562 |
| $ | 24,208 |
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Ratio of Earnings to Fixed Charges |
| 2.6 |
| 2.1 |
| 1.9 |
| 1.1 |
| 1.7 |
| (a | ) | (a | ) |
(a) The earnings were inadequate to cover fixed charges by approximately $14.8 million and $80.2 million for the years ended June 30, 2003 and 2002, respectively. In accordance with accounting principles generally accepted in the United States of America, we did not allocate interest expense or other corporate costs to discontinued operations for any periods presented (except where the underlying debt was assumed by the buyers of these operations), resulting in the recognition of losses from continuing operations for the years ended June 30, 2003 and 2002. All outstanding debt of Southern Union Company and its subsidiaries, other than Panhandle Eastern Pipe Line Company, LP, is maintained at Southern Union Company.