þ | QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
DELAWARE | 26-1157701 | |
(State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) |
|
295 Chipeta Way, Salt Lake City, Utah | 84108 | |
(Address of principal executive offices) | (Zip Code) |
Large accelerated filer o | Accelerated filer o | Non-accelerated filer þ | Smaller reporting company o | |||
(Do not check if a smaller reporting company) |
i
| Amounts and nature of future capital expenditures; | ||
| Expansion and growth of our business and operations; | ||
| Financial condition and liquidity; | ||
| Business strategy; | ||
| Cash flow from operations or results of operations; | ||
| Rate case filings; and | ||
| Natural gas prices and demand. |
| Availability of supplies (including the uncertainties inherent in assessing and estimating future natural gas reserves), market demand, volatility of prices, and the availability and cost of capital; | ||
| Inflation, interest rates, and general economic conditions (including future disruptions and volatility in the global credit markets and the impact of these events on our customers and suppliers); | ||
| The strength and financial resources of our competitors; | ||
| Development of alternative energy sources; | ||
| The impact of operational and development hazards; | ||
| Costs of, changes in, or the results of laws, government regulations (including climate change legislation), environmental liabilities, litigation and rate proceedings; | ||
| Our allocated costs for defined benefit pension plans and other postretirement benefit plans sponsored by our affiliates; | ||
| Changes in maintenance and construction costs; | ||
| Changes in the current geopolitical situation; | ||
| Our exposure to the credit risk of our customers; | ||
| Risks related to strategy and financing, including restrictions stemming from our debt agreements, future changes in our credit ratings, and the availability and cost of credit; | ||
| Risks associated with future weather conditions; | ||
| Acts of terrorism; and | ||
| Additional risks described in our filings with the Securities and Exchange Commission (SEC). |
ii
iii
Three Months Ended | ||||||||
March 31, | ||||||||
2011 | 2010 | |||||||
OPERATING REVENUES |
$ | 109,919 | $ | 106,110 | ||||
OPERATING EXPENSES: |
||||||||
General and administrative |
15,423 | 14,140 | ||||||
Operation and maintenance |
15,273 | 15,501 | ||||||
Depreciation |
22,558 | 21,970 | ||||||
Regulatory credits |
(267 | ) | (460 | ) | ||||
Taxes, other than income taxes |
5,700 | 4,668 | ||||||
Total operating expenses |
58,687 | 55,819 | ||||||
Operating income |
51,232 | 50,291 | ||||||
OTHER INCOME net: |
||||||||
Interest income |
||||||||
Affiliated |
3 | 4 | ||||||
Other |
| 1 | ||||||
Allowance for equity funds used during construction |
120 | 277 | ||||||
Miscellaneous other income (expense), net |
(113 | ) | (620 | ) | ||||
Total other income (expense) net |
10 | (338 | ) | |||||
INTEREST CHARGES: |
||||||||
Interest on long-term debt |
11,110 | 11,128 | ||||||
Other interest |
510 | 1,079 | ||||||
Allowance for borrowed funds used during construction |
(54 | ) | (137 | ) | ||||
Total interest charges |
11,566 | 12,070 | ||||||
INCOME BEFORE INCOME TAXES |
39,676 | 37,883 | ||||||
INCOME TAXES |
(7 | ) | | |||||
NET INCOME |
$ | 39,683 | $ | 37,883 | ||||
- 1 -
March 31, | December 31, | |||||||
2011 | 2010 | |||||||
ASSETS |
||||||||
CURRENT ASSETS: |
||||||||
Cash and cash equivalents |
$ | 69 | $ | 5 | ||||
Advances to affiliate |
83,162 | 45,045 | ||||||
Accounts receivable - |
||||||||
Trade |
36,395 | 38,515 | ||||||
Affiliated companies |
2,102 | 2,118 | ||||||
Materials and supplies, less reserves of $7 at March
31, 2011 and $613 at December 31, 2010 |
11,383 | 11,719 | ||||||
Exchange gas due from others |
1,579 | 2,323 | ||||||
Exchange gas offset |
2,795 | 3,854 | ||||||
Prepayments and other |
3,018 | 3,415 | ||||||
Total current assets |
140,503 | 106,994 | ||||||
PROPERTY, PLANT AND EQUIPMENT, at cost |
2,968,501 | 2,965,097 | ||||||
Less Accumulated depreciation |
1,034,919 | 1,017,634 | ||||||
Total property, plant and equipment, net |
1,933,582 | 1,947,463 | ||||||
OTHER ASSETS: |
||||||||
Deferred charges |
12,026 | 11,817 | ||||||
Regulatory assets |
59,884 | 60,176 | ||||||
Total other assets |
71,910 | 71,993 | ||||||
Total assets |
$ | 2,145,995 | $ | 2,126,450 | ||||
- 2 -
March 31, | December 31, | |||||||
2011 | 2010 | |||||||
LIABILITIES AND OWNERS EQUITY |
||||||||
CURRENT LIABILITIES: |
||||||||
Accounts payable - |
||||||||
Trade |
$ | 4,633 | $ | 13,177 | ||||
Affiliated companies |
9,019 | 10,105 | ||||||
Accrued liabilities - |
||||||||
Taxes, other than income taxes |
14,012 | 10,186 | ||||||
Interest |
15,155 | 4,045 | ||||||
Exchange gas due to others |
8,439 | 13,115 | ||||||
Other |
4,612 | 4,245 | ||||||
Total current liabilities |
55,870 | 54,873 | ||||||
LONG-TERM DEBT |
693,683 | 693,634 | ||||||
DEFERRED CREDITS AND OTHER NONCURRENT
LIABILITIES |
89,679 | 88,347 | ||||||
CONTINGENT LIABILITIES AND COMMITMENTS |
||||||||
OWNERS EQUITY: |
||||||||
Owners capital |
1,050,362 | 1,046,862 | ||||||
Retained earnings |
256,079 | 242,396 | ||||||
Accumulated other comprehensive income |
322 | 338 | ||||||
Total owners equity |
1,306,763 | 1,289,596 | ||||||
Total liabilities and owners equity |
$ | 2,145,995 | $ | 2,126,450 | ||||
- 3 -
Three Months Ended | ||||||||
March 31 | ||||||||
2011 | 2010 | |||||||
OPERATING ACTIVITIES: |
||||||||
Net income |
$ | 39,683 | $ | 37,883 | ||||
Adjustments to reconcile to net cash provided by operating
activities - |
||||||||
Depreciation |
22,558 | 21,970 | ||||||
Regulatory credits |
(267 | ) | (460 | ) | ||||
Amortization of deferred charges and credits |
425 | 1,251 | ||||||
Allowance for equity funds used during construction |
(120 | ) | (277 | ) | ||||
Cash provided (used) by changes in current assets and
liabilities: |
||||||||
Trade accounts receivable |
2,120 | 2,411 | ||||||
Affiliated receivables |
16 | 3,953 | ||||||
Exchange gas due from others |
4,675 | 2,362 | ||||||
Materials and supplies |
336 | 2 | ||||||
Other current assets |
397 | 381 | ||||||
Trade accounts payable |
(3,656 | ) | (3,503 | ) | ||||
Affiliated payables |
(1,086 | ) | (12,225 | ) | ||||
Exchange gas due to others |
(4,676 | ) | (2,361 | ) | ||||
Other accrued liabilities |
15,302 | 14,439 | ||||||
Changes in noncurrent assets and liabilities: |
||||||||
Deferred charges |
(1,179 | ) | (912 | ) | ||||
Other deferred credits |
1,399 | 1,632 | ||||||
Net cash provided by operating activities |
75,927 | 66,546 | ||||||
FINANCING ACTIVITIES: |
||||||||
Proceeds from issuance of long-term debt |
| 8,000 | ||||||
Capital contribution from parent |
3,500 | 4,000 | ||||||
Distributions paid |
(26,000 | ) | (75,280 | ) | ||||
Other |
(2,302 | ) | (2,613 | ) | ||||
Net cash used in financing activities |
(24,802 | ) | (65,893 | ) | ||||
INVESTING ACTIVITIES: |
||||||||
Property, plant and equipment - |
||||||||
Capital expenditures* |
(13,820 | ) | (10,408 | ) | ||||
Proceeds from sales |
876 | 24 | ||||||
Repayments from (advances to) affiliates |
(38,117 | ) | 9,379 | |||||
Net cash used in investing activities |
(51,061 | ) | (1,005 | ) | ||||
NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS |
64 | (352 | ) | |||||
CASH AND CASH EQUIVALENTS AT BEGINNING OF
PERIOD |
5 | 402 | ||||||
CASH AND CASH EQUIVALENTS AT END OF PERIOD |
$ | 69 | $ | 50 | ||||
* Increases to property, plant and equipment |
(11,234 | ) | (6,691 | ) | ||||
Changes in related accounts payable and accrued liabilities |
(2,586 | ) | (3,717 | ) | ||||
Capital expenditures |
(13,820 | ) | (10,408 | ) | ||||
- 4 -
- 5 -
- 6 -
- 7 -
Three Months Ended | ||||||||
March 31, | ||||||||
2011 | 2010 | |||||||
(Thousands of Dollars) | ||||||||
Net income |
$ | 39,683 | $ | 37,883 | ||||
Amortization of cash flow hedges |
(15 | ) | (15 | ) | ||||
Total comprehensive income |
$ | 39,668 | $ | 37,868 | ||||
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Item 1. LEGAL PROCEEDINGS. | ||
The information called for by this item is provided in Note 2. Contingent Liabilities and Commitments, included in the Notes to Financial Statements included under Part1, Item 1. Financial Statements of this Form 10-Q, which information is incorporated by reference. |
Item 1A. RISK FACTORS. | ||
Part I, Item 1A. Risk Factors in our Annual Report on Form 10-K for the year ended December 31, 2010, includes certain risk factors that could materially affect our business, financial condition or future results. Those Risk Factors have not materially changed, except as set forth below: | ||
Our costs of testing, maintaining or repairing our facilities may exceed our expectations, and the FERC or competition in our markets may not allow us to recover such costs in the rates we charge for our services. | ||
We could experience unexpected leaks or ruptures on our gas pipeline system, or be required by regulatory authorities to test or undertake modifications to our systems that could result in a material adverse impact on our business, financial condition, and results of operations if the cost of testing, maintaining, or repairing our facilities exceed current expectations and the FERC or competition in our markets do not allow us to recover such costs in the rates we charge for our service. For example, in response to a recent third party pipeline rupture, the United States Department of Transportation Pipeline and Hazardous Materials Safety Administration issued an advisory bulletin which, among other things, advises pipeline operators that if they are relying on design, construction, inspection, testing or other data to determine the pressures at which their pipelines should operate, the records of that data must be traceable, verifiable, and complete. Locating such records and, in the absence of any such records, verifying maximum pressures through physical testing or modifying or replacing facilities to meet the demands of such pressures, could significantly increase our costs. |
Item 6. EXHIBITS. | ||
The following instruments are included as exhibits to this report. |
Exhibit | Description | |
3(a)
|
Statement of Partnership Existence of Northwest Pipeline GP (Exhibit 3.1 to our report on Form 8-K, filed October 2, 2007) and incorporated herein by reference. | |
3(b)
|
Amended and Restated General Partnership Agreement of Northwest Pipeline GP (Exhibit 3.1 to our report on Form 8-K, filed January 30, 2008) and incorporated herein by reference. | |
31(a)*
|
Certification of Principal Executive Officer pursuant to Rules 13a-14(a) and 15d-14(a) promulgated under the Securities Exchange Act of 1934, as amended and Item 601(b)(31) of Regulation S-K, as adopted pursuant to Section 302 of The Sarbanes-Oxley Act of 2002. | |
31(b)*
|
Certification of Principal Financial Officer pursuant to Rules 13a-14(a) and 15d-14(a) promulgated under the Securities Exchange Act of 1934, as amended, and Item 601(b)(31) of Regulation S-K, as adopted pursuant to Section 302 of The Sarbanes-Oxley Act of 2002. |
- 11 -
Exhibit | Description | |
32(a)**
|
Certification of Principal Executive Officer and Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
* | Filed herewith. | |
** | Furnished herewith. |
- 12 -
NORTHWEST PIPELINE GP | ||||
Registrant |
||||
By: | /s/ R. Rand Clark | |||
R. Rand Clark | ||||
Controller (Duly Authorized Officer and Chief Accounting Officer) |
||||
- 13 -
Exhibit | Description | |
3(a)
|
Statement of Partnership Existence of Northwest Pipeline GP (Exhibit 3.1 to our report on Form 8-K, filed October 2, 2007) and incorporated herein by reference. | |
3(b)
|
Amended and Restated General Partnership Agreement of Northwest Pipeline GP (Exhibit 3.1 to our report on Form 8-K, filed January 30, 2008) and incorporated herein by reference. | |
31(a)*
|
Certification of Principal Executive Officer pursuant to Rules 13a-14(a) and 15d-14(a) promulgated under the Securities Exchange Act of 1934, as amended and Item 601(b)(31) of Regulation S-K, as adopted pursuant to Section 302 of The Sarbanes-Oxley Act of 2002. | |
31(b)*
|
Certification of Principal Financial Officer pursuant to Rules 13a-14(a) and 15d-14(a) promulgated under the Securities Exchange Act of 1934, as amended, and Item 601(b)(31) of Regulation S-K, as adopted pursuant to Section 302 of The Sarbanes-Oxley Act of 2002. | |
32(a)**
|
Certification of Principal Executive Officer and Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
* | Filed herewith. | |
** | Furnished herewith. |
- 14 -
1. | I have reviewed this quarterly report on Form 10-Q of Northwest Pipeline GP; | |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; | |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; | |
4. | The registrants other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; | ||
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; | ||
(c) | Evaluated the effectiveness of the registrants disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and | ||
(d) | Disclosed in this report any change in the registrants internal control over financial reporting that occurred during the registrants most recent fiscal quarter (the registrants fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting; and |
5. | The registrants other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrants auditors and the audit committee of the registrants board of directors (or persons performing the equivalent functions): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrants ability to record, process, summarize and report financial information; and | ||
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal control over financial reporting. |
Date: May 5, 2011 | ||||
/s/ Randall L. Barnard | ||||
Randall L. Barnard | ||||
Senior Vice President (Principal Executive Officer) |
||||
1. | I have reviewed this quarterly report on Form 10-Q of Northwest Pipeline GP; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrants other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; | ||
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; | ||
(c) | Evaluated the effectiveness of the registrants disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and | ||
(d) | Disclosed in this report any change in the registrants internal control over financial reporting that occurred during the registrants most recent fiscal quarter (the registrants fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting; and |
5. | The registrants other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrants auditors and the audit committee of the registrants board of directors (or persons performing the equivalent functions): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrants ability to record, process, summarize and report financial information; and | ||
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal control over financial reporting. |
Date: May 5, 2011 | /s/ Richard D. Rodekohr | |||
Richard D. Rodekohr | ||||
Vice President and Treasurer (Principal Financial Officer) |
||||
(1) | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and | ||
(2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
/s/ Randall L. Barnard | ||||
Randall L. Barnard | ||||
Senior Vice President (Principal Executive Officer) May 5, 2011 |
||||
/s/ Richard D. Rodekohr | ||||
Richard D. Rodekohr | ||||
Vice President and Treasurer (Principal Financial Officer) May 5, 2011 |
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