EX-12 2 ex12.htm EXHIBIT - 12 ex12.htm
Exhibit 12

 
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 years ended December 31, 2007, 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.
  
                                     
                                     
                                     
                                     
                                     
                                     
                                     
                                     
   
Year Ended December 31,
    
6 Months Ended
    
Year Ended June 30,
  
   
2007
    
2006
    
2005
    
December 31, 2004
  
2004
    
2003
  
                                     
FIXED CHARGES:
                                    
Interest Expense
   $ 202,403     $ 202,513     $ 132,971     $ 65,344     $ 137,967     $ 91,731  
Net amortization of debt discount, premium and
                                                
   issuance expense
     743       12,130       2,186       (446 )     (10,100 )     1,612  
Capitalized Interest
     14,708       5,492       8,950       2,614       3,865       26  
Interest portion of rental expense
     6,645       6,234       6,700       3,152       5,940       2,012  
                                                 
Total Fixed Charges
   $ 224,499     $ 226,369     $ 150,807     $ 70,664     $ 137,672     $ 95,381  
                                                 
EARNINGS:
                                                
Consolidated pre-tax income (loss) from
                                                
   continuing operations
   $ 323,970     $ 326,330     $ 203,148     $ 16,954     $ 106,468     $ (14,371 )
Earnings of equity investments
     (100,914 )     (141,370 )     (70,742 )     (4,745 )     (200 )     (422 )
Distributed income from equity investments
     103,550       62,637       15,203       -       174       -  
Capitalized interest
     (14,708 )     (5,492 )     (8,950 )     (2,614 )     (3,865 )     (26 )
Total fixed charges (from above)
     224,499       226,369       150,807       70,664       137,672       95,381  
                                                 
Earnings Available for Fixed Charges
   $ 536,397     $ 468,474     $ 289,466     $ 80,259     $ 240,249     $ 80,562  
                                                 
                                                 
Ratio of Earnings to Fixed Charges
     2.4       2.1       1.9       1.1       1.7    
(a)
  
                                                 
                                                 
(a) The earnings were inadequate to cover fixed charges by approximately $14.8 million for the year ended June 30, 2003. 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 year ended June 30, 2003. All outstanding debt of Southern Union Company and its subsidiaries, other than Panhandle Eastern Pipe Line Company, LP, is maintained at Southern Union Company.