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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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) AUGUST 7, 2003
PANHANDLE EASTERN PIPE LINE COMPANY, LLC
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 1-2921 44-0382470
(STATE OR OTHER JURISDICTION (COMMISSION FILE NUMBER) (I.R.S. EMPLOYER
OF INCORPORATION) IDENTIFICATION NO.)
5444 WESTHEIMER COURT
HOUSTON, TEXAS 77056
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (713) 989-7000
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ITEM 9. REGULATION FD DISCLOSURE
On August 7, 2003, Panhandle Eastern Pipe Line Company, LLC ("Panhandle" or the
"Company") issued the press release furnished as Exhibit 99.1 regarding
extension of the expiration date for its cash tender offers for any and all of
its outstanding senior notes to August 14, 2003 at 5:00 p.m. New York City time,
unless extended.
Set forth below are certain unaudited pro forma consolidated condensed financial
statements for the Company being furnished by the Company under Item 9.
UNAUDITED PRO FORMA
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
The following tables set forth our unaudited pro forma consolidated
condensed statements of operations for the periods indicated. The unaudited pro
forma consolidated condensed statement of operations for the year ended December
31, 2002 set forth below is based upon our audited historical consolidated
statements of operations and the related notes for the same period. The
unaudited pro forma consolidated condensed statements of operations for the
period June 12 through June 30, 2003 and January 1 through June 11, 2003 set
forth below are based upon our unaudited historical consolidated statements of
operations and the related notes for the same periods, which have been filed
previously with the Commission. The unaudited pro forma consolidated condensed
statements of operations for the year ended December 31, 2002 and for the
periods June 12 through June 30, 2003 and January 1 through June 11, 2003 are
presented as if Southern Union Company ("Southern Union") had acquired us (the
"Panhandle Acquisition"), we had purchased, pursuant to our pending cash
tenders, those senior notes that had been tendered to us as of the early tender
date of August 7, 2003, we had redeemed all of our outstanding debentures, and
we had issued new senior notes to refinance those repurchased notes and redeemed
debentures (the "Refinancing" and, together with the Panhandle Acquisition, the
"Restructuring"), in each case, as of January 1, 2002. The unaudited pro forma
consolidated condensed statements of operations set forth below are for
illustrative purposes only and do not indicate the results of operations that
would have been achieved had the Restructuring been completed on January 1, 2002
nor are they indicative of results that may be obtained in the future. You
should read these statements and the notes thereto together with our
consolidated financial statements and the related notes thereto, "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and
other financial information previously filed by us with the Commission. We
believe the estimates and assumptions used to prepare these unaudited pro forma
consolidated condensed financial statements provide a reasonable basis for
presenting the significant effects of the Restructuring, and that the pro forma
adjustments give appropriate effect to the estimates and assumptions and are
properly applied in the unaudited pro forma consolidated financial statements.
The unaudited pro forma consolidated condensed statement of operations for the
year ended December 31, 2002 set forth below has been revised to reflect the
application of SFAS 145, which dictates that gains and losses on debt
extinguishments are no longer classified as extraordinary items, and have been
reclassified to Other income (losses), net.
See accompanying Notes to Unaudited Pro Forma Consolidated Condensed Statements
of Operations.
UNAUDITED PRO FORMA
CONSOLIDATED CONDENSED STATEMENT OF OPERATIONS
FOR THE PERIOD JUNE 12 THROUGH JUNE 30, 2003
PRO FORMA
HISTORICAL ADJUSTMENT PRO FORMA
------------ ------------ ----------
(IN MILLIONS)
Operating revenue ................................................. $25 $-- $25
Operating expenses:
Operation, maintenance and general ............................... 10 -- 10
Depreciation and amortization .................................... 3 -- 3
General taxes .................................................... 2 -- 2
--- --- ---
Total operating expenses ....................................... 15 -- 15
--- --- ---
Pretax operating income ........................................... 10 -- 10
Other income (losses), net ........................................ -- -- --
Interest expense .................................................. 2 -- 2
--- --- ---
Income before income taxes ........................................ 8 -- 8
Income taxes ...................................................... 3 -- 3
--- --- ---
Income before cumulative effect of change in accounting principle . $ 5 $-- $ 5
=== === ===
UNAUDITED PRO FORMA
CONSOLIDATED CONDENSED STATEMENT OF OPERATIONS
FOR THE PERIOD JANUARY 1 THROUGH JUNE 11, 2003
PRO FORMA
HISTORICAL ADJUSTMENT PRO FORMA
------------ ------------ ----------
(IN MILLIONS)
Operating revenue ................................................. $234 $ -- $234
Operating expenses:
Operation, maintenance and general ............................... 91 -- 91
Depreciation and amortization .................................... 23 5 A 28
General taxes .................................................... 12 -- 12
---- ---- ----
Total operating expenses ....................................... 126 5 131
---- ---- ----
Pretax operating income ........................................... 108 (5) 103
Other income (losses), net ........................................ 6 (6) B --
Interest expense .................................................. 36 (8) C 28
---- ---- ----
Income before income taxes ........................................ 78 (3) 75
Income taxes ...................................................... 30 (1) D 29
---- ---- ----
Income before cumulative effect of change in accounting principle . $ 48 $ (2) $ 46
==== ==== ====
See accompanying Notes to Unaudited Pro Forma Consolidated Condensed Statements
of Operations.
UNAUDITED PRO FORMA
CONSOLIDATED CONDENSED STATEMENT OF OPERATIONS
FOR THE TWELVE MONTHS ENDED DECEMBER 31, 2002
PRO FORMA
HISTORICAL ADJUSTMENT PRO FORMA
------------ ------------ ----------
(IN MILLIONS)
Operating revenue ........................................................ $ 484 $ 7 E $491
Operating expenses:
Operation, maintenance and general ...................................... 202 -- 202
Depreciation and amortization ........................................... 51 11 A 62
General taxes ........................................................... 22 -- 22
----- ---- ----
Total operating expenses .............................................. 275 11 286
----- ---- ----
Pretax operating income .................................................. 209 (4) 205
Other income (losses), net and minority interest ......................... (18) 17 B (1)
Interest expense ......................................................... 76 (19)C 57
----- ---- ----
Income before income taxes ............................................... 115 32 147
Income taxes ............................................................. 46 12 D 58
----- ---- ----
Income before cumulative effect of change in accounting principle ........ $ 69 $ 20 $ 89
===== ==== ====
See accompanying notes to Unaudited Pro Forma Consolidated Condensed Statements
of Operations.
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(A) Reflects amortization of the Panhandle Acquisition step-up of Panhandle
of $5 million and $11 million for the period January 1 through June 11, 2003 and
for the year ended December 31, 2002, respectively, which is assumed to be
allocable to property, plant and equipment and certain intangibles, amortized on
a straight-line basis over a 30-year period and 5-year period, respectively,
based on the estimated useful lives of these assets.
(B) Reflects the elimination of (i) ($6) million and ($9) million of net
intercompany interest income of Panhandle on the note receivable from a
subsidiary of CMS Energy, for the period January 1 through June 11, 2003 and for
the year ended December 31, 2002, respectively, presented as a result of the
elimination of such note receivable in connection with the Panhandle Acquisition
and (ii) the $26 million write-down of Centennial Pipeline, LLC recorded in
December 2002 for the year ended December 31, 2002.
(C) Reflects a decrease in interest expense of ($4) million and ($12)
million for the period January 1 through June 11, 2003 and for the year ended
December 31, 2002, respectively, due to the amortization of the debt premiums
recorded to adjust the Panhandle debt to fair value upon the Panhandle
Acquisition and a decrease in interest expense of ($4) million and ($7) million
for the period January 1 through June 11, 2003 and for the year ended December
31, 2002, respectively, related to the Refinancing. Assumes a rate of interest
of 5.3% on the senior notes assumed to have been issued.
(D) Reflects the income tax effects at the 39% estimated statutory tax
rate (federal and state) of the pre-tax pro forma adjustments. Does not reflect
any specific terms of any tax sharing agreement which Panhandle has entered
into with Southern Union.
(E) Reflects an adjustment to operating revenue for the elimination of
equity losses related to Panhandle's ownership in Centennial Pipeline, LLC
(sold in February 2003) of $8 million and Guardian Pipeline, L.L.C. (ownership
transferred to CMS Energy affiliated entity in March 2003) income of ($1)
million.
The disclosure and the exhibits contained in this Form 8-K are furnished
pursuant to Item 9 and not filed.
Important factors could cause actual results to differ materially from the
forward-looking projections or expectations. These factors include, but are not
limited to: customer growth; gas throughput volumes and available sources of
natural gas; abnormal weather conditions in our service territories; new
legislation and government regulations affecting or involving us; our ability to
comply with or to challenge successfully existing or new environmental
regulations; the outcome of pending and future litigation; the impact of
relations with labor unions of bargaining-unit union employees; the impact of
future rate cases or regulatory rulings; our ability to control costs
successfully and achieve operating efficiencies, including the purchase and
implementation of new technologies for achieving such efficiencies; the nature
and impact of any extraordinary transactions, such as any acquisition or
divestiture of a business unit or any assets; the economic climate and growth in
our industry and service territories and competitive conditions of energy
markets in general inflationary trends; changes in gas or other energy market
commodity prices and interest rates; the current market conditions causing more
customer contracts to be of shorter duration, which may increase revenue
volatility; exposure to customer concentration with a significant portion of
revenues realized from a relatively small number of customers and any credit
risks associated with the financial position of those customers; our or any of
our affiliates' debt securities ratings; factors affecting operations such as
maintenance or repairs, environmental incidents or gas pipeline system
constraints; the possibility of war or terrorist attacks; and other risks and
unforeseen events.
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.
PANHANDLE EASTERN PIPE LINE COMPANY, LLC
Dated: August 12, 2003 By: /s/ David J. Kvapil
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David J. Kvapil
Executive Vice President and
Chief Financial Officer
EXHIBIT INDEX
Exhibit Number Description
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99.1 Press Release issued by the Company dated August 7,
2003, regarding extension of the Company's cash tender
offers for any and all of its senior notes.