PRO FORMA FINANCIAL DATA
The following unaudited pro forma financial data reflects our historical
results as adjusted on a pro forma basis to give effect to our April 2004
offering of common units, together with the completion of the acquisition of
Spectrum Field Services, Inc. and the offering of 2,100,000 common units,
assuming that the underwriters do not exercise their over-allotment option to
purchase up to an additional 315,000 common units, as referred to in Item 5 of
this Form 8-K report. The unaudited pro forma balance sheet is prepared as
though these transactions occurred as of March 31, 2004. The unaudited pro forma
statement of operations for the year ended December 31, 2003 is prepared as
though these transactions occurred as of January 1, 2003. The unaudited pro
forma statement of operations for the three months ended March 31, 2004 is
prepared as though these transactions occurred as of January 1, 2004. The
acquisition and offering adjustments are described in the notes to the unaudited
pro forma financial data. The unaudited pro forma financial data and
accompanying notes should be read together with our "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and our and
Spectrum's historical financial statements and related notes included or
incorporated by reference in the prospectus supplement referred to in Item 5 of
this Form 8-K report. Because we will not complete the Alaska Pipeline
acquisition due to recent events, that acquisition is not included in these
unaudited pro forma financial statements.
We accounted for the acquisition of Spectrum in the unaudited pro forma
financial statements using the purchase method in accordance with the guidance
of Statement of Financial Accounting Standards No. 141, "Business
Combinations." For purposes of developing the unaudited pro forma financial
information, we have allocated the purchase price to Spectrum's gas gathering
and transmission facilities based on fair market value.
The unaudited pro forma financial statements presented are for informational
purposes only and are based upon available information and assumptions that we
believe are reasonable under the circumstances. You should not construe the
unaudited pro forma financial statements as indicative of the combined
financial position or results of operations that we and Spectrum would have
achieved had the transaction been consummated on the dates assumed. Moreover,
they do not purport to represent our and Spectrum's combined financial
position or results of operations for any future date or period or constitute
a representation that we will complete the Spectrum acquisition.
ATLAS PIPELINE PARTNERS, L.P.
PRO FORMA BALANCE SHEET (UNAUDITED)
MARCH 31, 2004
(in thousands)
Historical Pro forma
Atlas Historical Acquisition pre-offering Offering Pro forma
Pipeline Spectrum adjustments consolidated adjustments consolidated
---------- ---------- ----------- ------------ ----------- ------------
ASSETS
Current assets:
Cash and cash equivalents .................. $11,979 $ -- $ 545(a)(b) $ 12,524 $ 1,457(i) $ 13,981
Accounts receivable ........................ 3 9,430 -- 9,433 -- 9,433
Inventories ................................ -- 334 -- 334 -- 334
Prepaid expenses ........................... 223 115 -- 338 -- 338
Other ...................................... -- 338 (10)(b) 328 -- 328
------- ------- ------- -------- -------- --------
Total current assets ....................... 12,205 10,217 535 22,957 1,457 24,414
Property and equipment:
Gas gathering and transmission facilities .. 38,203 56,902 84,794(b) 179,899 -- 179,899
Less - accumulated depreciation ............ (7,909) (7,306) 7,306(b) (7,909) -- (7,909)
------- ------- ------- -------- -------- --------
Net property and equipment ................. 30,294 49,596 92,100 171,990 -- 171,990
Goodwill .................................... 2,305 -- -- 2,305 -- 2,305
Deferred income taxes ....................... -- 1,645 (1,645)(b) -- -- --
Other assets ................................ 2,546 1,613 2,916(b) 7,075 -- 7,075
------- ------- ------- -------- -------- --------
$47,350 $63,071 $93,906 $204,327 $ 1,457 $205,784
======= ======= ======= ======== ======== ========
LIABILITIES AND PARTNERS' CAPITAL
Current liabilities:
Accounts payable and accrued liabilities ... $ 260 $10,794 $ -- $ 11,054 $ -- $ 11,054
Accounts payable - affiliates .............. 368 -- -- 368 -- 368
Current portion of long-term debt .......... -- 4,992 (4,992)(b) -- -- --
Distribution payable ....................... 3,118 2,392 (2,392)(b) 3,118 -- 3,118
------- ------- ------- -------- -------- --------
Total current liabilities .................. 3,746 18,178 (7,384) 14,540 -- 14,540
Long-term debt .............................. -- 42,433 57,567(b) 100,000 (49,147)(h) 50,853
Preferred equity ............................ -- -- 20,638(b) 20,638 (20,638)(h) --
Stockholders' equity ........................ -- 2,460 (2,460)(b) -- -- --
Partners' capital:
Common unitholders ......................... 43,163 -- 25,000(a) 68,163 69,785(h) 137,948
Subordinated unitholders ................... 120 -- -- 120 -- 120
General partner ............................ 321 -- 545(a) 866 1,457(i) 2,323
------- ------- ------- -------- -------- --------
Total partners' capital .................... 43,604 -- 25,545 69,149 71,242 140,391
------- ------- ------- -------- -------- --------
$47,350 $63,071 $93,906 $204,327 $ 1,457 $205,784
======= ======= ======= ======== ======== ========
See notes to pro forma financial statements
2
ATLAS PIPELINE PARTNERS, L.P.
PRO FORMA STATEMENT OF OPERATIONS (UNAUDITED)
FOR THE YEAR ENDED DECEMBER 31, 2003
(in thousands, except per unit data)
Historical Pro forma
Atlas Historical Acquisition pre-offering Offering Pro forma
Pipeline Spectrum adjustments consolidated adjustments consolidated
---------- ---------- ----------- ------------ ----------- ------------
Revenues:
Transportation and compression ............. $15,651 $ -- $ -- $ 15,651 $ -- $ 15,651
Sales of natural gas and liquids ........... -- 98,772 -- 98,772 -- 98,772
------- -------- ------- -------- ------- --------
15,651 98,772 -- 114,423 -- 114,423
Costs and expenses:
Transportation and compression ............. 2,421 -- -- 2,421 -- 2,421
Cost of gas sold ........................... -- 78,827 -- 78,827 -- 78,827
General and administrative ................. 1,661 4,322 -- 5,983 -- 5,983
Operations and maintenance ................. -- 6,262 -- 6,262 -- 6,262
Depreciation and amortization .............. 1,770 16,050 (7,156)(d) 10,664 -- 10,664
------- -------- ------- -------- ------- --------
5,852 105,461 (7,156) 104,157 -- 104,157
------- -------- ------- -------- ------- --------
Operating income (loss) .................... 9,799 (6,689) 7,156 10,266 -- 10,266
------- -------- ------- -------- ------- --------
Other income (deductions):
Interest expense ........................... (258) (2,725) (2,873)(c)(e) (5,856) 2,408(j)(k)(l)(3,448)
Other ...................................... 98 (843) -- (745) -- (745)
------- -------- ------- -------- ------- --------
(160) (3,568) (2,873) (6,601) 2,408 (4,193)
------- -------- ------- -------- ------- --------
Income (loss) before income taxes............ 9,639 (10,257) 4,283 3,665 2,408 6,073
Provision for income taxes................... -- (4,303) 4,303(f) -- -- --
------- -------- ------- -------- ------- --------
Net income (loss) .......................... 9,639 (5,954) (20) 3,665 2,408 6,073
Preferred stock dividends .................. -- 1,054 1,573(g) 2,627 (2,627)(m) --
------- -------- ------- -------- ------- --------
Net income (loss) attributable to partners... $ 9,639 $ (7,008) $(1,593)(g) $ 1,038 $ 5,035 $ 6,073
======= ======== ======= ======== ======= ========
Net income (loss) - limited partners......... $ 8,651 $ 120 $ 4,873
======= ======== ========
Net income (loss) - general partner.......... $ 988 $ 918 $ 1,200
======= ======== ========
Basic and diluted net income (loss) per
limited partner unit....................... $ 2.17 $ .03 $ .80
======= ======== ========
Weighted average units outstanding........... 3,981 3,981 2,100 6,081
======= ======== ======= ========
See notes to pro forma financial statements
3
ATLAS PIPELINE PARTNERS, L.P.
PRO FORMA STATEMENT OF OPERATIONS (UNAUDITED)
FOR THE THREE MONTHS ENDED MARCH 31, 2004
(in thousands, except per unit data)
Historical Pro forma
Atlas Historical Acquisition pre-offering Offering Pro forma
Pipeline Spectrum adjustments consolidated adjustments consolidated
---------- ---------- ----------- ------------ ----------- ------------
Revenues:
Transportation and compression ............. $4,210 $ -- $ -- $ 4,210 $ -- $ 4,210
Sales of natural gas and liquids ........... -- 27,785 -- 27,785 -- 27,785
------ ------- ------- ------- ------ -------
4,210 27,785 -- 31,995 -- 31,995
Costs and expenses:
Transportation and compression ............. 607 -- -- 607 -- 607
Cost of gas sold ........................... -- 21,951 -- 21,951 -- 21,951
General and administrative ................. 581 673 -- 1,254 -- 1,254
Operations and maintenance ................. -- 1,115 -- 1,115 -- 1,115
Depreciation and amortization .............. 519 740 1,484(d) 2,743 -- 2,743
------ ------- ------- ------- ------ -------
1,707 24,479 1,484 27,670 -- 27,670
------ ------- ------- ------- ------ -------
Operating income ........................... 2,503 3,306 (1,484) 4,325 -- 4,325
------ ------- ------- ------- ------ -------
Other income (deductions):
Interest expense ........................... (63) (778) (488)(c)(e) (1,329) (777)(j)(k)(l(2,106)
Other ...................................... 36 (378) -- (342) -- (342)
------ ------- ------- ------- ------ -------
(27) (1,156) (488) (1,671) (777) (2,448)
------ ------- ------- ------- ------ -------
Income (loss) before income taxes............ 2,476 2,150 (1,972) 2,654 (777) 1,877
Provision for income taxes................... -- 816 (816)(f) -- -- --
------ ------- ------- ------- ------ -------
Net income (loss) .......................... 2,476 1,334 (1,156) 2,654 (777) 1,877
Preferred stock dividends .................. -- 264 393(g) 657 (657)(m) --
------ ------- ------- ------- ------ -------
Net income (loss) attributable to partners... $2,476 $ 1,070 $(1,549) $ 1,997 $ (120) $ 1,877
====== ======= ======= ======= ====== =======
Net income (loss) - limited partners......... $2,121 $ 823 $ 1,330
====== ======= =======
Net income (loss) general partner............ $ 355 $ 1,174 $ 547
====== ======= =======
Basic and diluted net income (loss) per
limited partner unit....................... $ .49 $ .19 $ .21
====== ======= =======
Weighted average units outstanding - basic... 4,355 4,355 2,100 6,455
====== ======= ====== =======
Weighted average units outstanding - diluted. 4,356 4,356 2,100 6,456
====== ======= ====== =======
See notes to pro forma financial statements
4
Atlas Pipeline Partners, L.P.
Notes to Unaudited Pro Forma Financial Statements
a. Reflects the net proceeds from our sale of 750,000 common units in April
2004 and our general partner's 2% capital contribution in accordance with
the terms of our partnership agreement.
b. Reflects our purchase of 100% of the equity of Spectrum for $147 million,
including estimated transaction costs. The acquisition will be financed
by a $21.9 million preferred equity investment by Atlas America and
Resource America in our operating subsidiary, the $25 million of net
proceeds from our April 2004 common unit offering and a $100 million term
loan under our new credit facility. We describe our new credit facility
under "Business--New Credit Facility." Adjustments include the payment of
$3.1 million of estimated financing costs which appear in the pro forma
balance sheet as other assets.
c. Reflects the adjustment to interest expense resulting from $100 million
of borrowings under our new credit facility bearing an interest at the
London Interbank Offered Rate, or LIBOR, plus 375 basis points, assumed
to be 5.07% for the six months ended June 30, 2003 and 4.80% for the six
months ended December 31, 2003. For the three months ended March 31,
2004, the borrowings bear an interest rate of LIBOR plus 275 basis
points, assumed to be 3.90%.
d. Reflects the adjustment to depreciation expense based upon the cost of
the acquired gas gathering and transmission facilities using depreciable
lives ranging from 3 to 26.5 years and using the straight-line method.
e. Reflects the amortization of deferred financing costs related to our new
credit facility to finance the acquisition.
f. Reflects the elimination of federal and state income taxes following the
conversion of Spectrum, currently a C-corporation, to a limited liability
company concurrent with its acquisition by us.
g. Reflects the elimination of preferred stock dividends by Spectrum paid
prior to our acquisition and payment of dividends on the preferred equity
of our operating subsidiary.
h. Reflects net proceeds in this offering of $72.1 million after offering
costs of $4.1 million, assuming the issuance of 2.1 million common units
at a price of $36.31 per unit (the average closing price from June 29,
2004 to July 6, 2004), used to repurchase the $23 million preferred
equity from Resource America and Atlas America (including a $1.1 million
repurchase premium) and repay $49.1 million of borrowings under the $100
million term loan.
i. Reflects the 2% capital contribution from our general partner in
accordance with the terms of our partnership agreement.
j. Reflects the adjustment to interest expense resulting from the issuance
of common units and the repayment of debt incurred to finance the
Spectrum acquisition.
k. Reflects a write-off of deferred financing costs in connection with a
permanent $49.1 million repayment of the $100 million term loan.
l. Reflects the adjustment to amortization as a result of the write-off of
deferred financing costs due to the partial repayment of the $100 million
term loan.
m. Reflects the elimination of dividends paid on the preferred equity of our
operating subsidiary as a result of its repurchase from the net proceeds
of this offering.
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