Delaware
(State or other jurisdiction of
incorporation or organization)
|
75-0571592
(I.R.S. Employer
Identification No.)
|
5444 Westheimer Road
Houston, Texas
(Address of principal executive offices)
|
77056-5306
(Zip Code)
|
Three Months Ended June 30,
|
Six Months Ended June 30,
|
|||||||||||||||
2011
|
2010
|
2011
|
2010
|
|||||||||||||
(In thousands, except per share amounts)
|
||||||||||||||||
Operating revenues (Note 13)
|
$ | 631,607 | $ | 573,096 | $ | 1,378,429 | $ | 1,332,090 | ||||||||
Operating expenses
|
||||||||||||||||
Cost of natural gas and other energy
|
315,575 | 246,626 | 741,207 | 685,635 | ||||||||||||
Operating, maintenance and general
|
123,858 | 118,723 | 244,852 | 232,608 | ||||||||||||
Depreciation and amortization
|
59,295 | 57,559 | 118,622 | 112,753 | ||||||||||||
Revenue-related taxes
|
5,200 | 4,806 | 22,567 | 21,848 | ||||||||||||
Taxes, other than on income and revenues
|
12,657 | 13,638 | 28,127 | 28,224 | ||||||||||||
Total operating expenses
|
516,585 | 441,352 | 1,155,375 | 1,081,068 | ||||||||||||
Operating income
|
115,022 | 131,744 | 223,054 | 251,022 | ||||||||||||
Other income (expenses)
|
||||||||||||||||
Interest expense
|
(54,933 | ) | (55,436 | ) | (110,504 | ) | (106,312 | ) | ||||||||
Earnings from unconsolidated investments
|
25,048 | 27,542 | 51,749 | 46,120 | ||||||||||||
Other, net
|
224 | (352 | ) | 366 | (63 | ) | ||||||||||
Total other expenses, net
|
(29,661 | ) | (28,246 | ) | (58,389 | ) | (60,255 | ) | ||||||||
Earnings before income taxes
|
85,361 | 103,498 | 164,665 | 190,767 | ||||||||||||
Federal and state income tax expense (Note 9)
|
25,588 | 28,609 | 44,230 | 59,418 | ||||||||||||
Net earnings
|
59,773 | 74,889 | 120,435 | 131,349 | ||||||||||||
Preferred stock dividends
|
- | (2,170 | ) | - | (4,341 | ) | ||||||||||
Loss on extinguishment of preferred stock
|
- | (3,295 | ) | - | (3,295 | ) | ||||||||||
Net earnings available for common stockholders
|
$ | 59,773 | $ | 69,424 | $ | 120,435 | $ | 123,713 | ||||||||
Net earnings available for common stockholders per share
|
||||||||||||||||
Basic
|
$ | 0.48 | $ | 0.56 | $ | 0.97 | $ | 0.99 | ||||||||
Diluted
|
$ | 0.47 | $ | 0.55 | $ | 0.96 | $ | 0.99 | ||||||||
Cash dividends declared on common stock per share
|
$ | 0.15 | $ | 0.15 | $ | 0.30 | $ | 0.30 | ||||||||
Weighted average shares outstanding (Note 4)
|
||||||||||||||||
Basic
|
124,712 | 124,474 | 124,685 | 124,445 | ||||||||||||
Diluted
|
125,875 | 125,244 | 125,737 | 125,202 |
ASSETS
|
||||||||
June 30,
|
December 31,
|
|||||||
2011
|
2010
|
|||||||
(In thousands)
|
||||||||
Current assets
|
||||||||
Cash and cash equivalents
|
$ | 3,013 | $ | 3,299 | ||||
Accounts receivable
|
||||||||
net of allowances of $4,467 and $3,321, respectively
|
262,293 | 310,006 | ||||||
Accounts receivable – affiliates
|
7,863 | 10,747 | ||||||
Inventories
|
174,040 | 226,875 | ||||||
Deferred natural gas purchases
|
13,396 | 85,138 | ||||||
Natural gas imbalances - receivable
|
72,006 | 52,141 | ||||||
Prepayments and other assets
|
70,241 | 67,535 | ||||||
Total current assets
|
602,852 | 755,741 | ||||||
Property, plant and equipment
|
||||||||
Plant in service
|
7,020,306 | 6,957,989 | ||||||
Construction work in progress
|
165,126 | 120,264 | ||||||
7,185,432 | 7,078,253 | |||||||
Less accumulated depreciation and amortization
|
1,487,919 | 1,373,794 | ||||||
Net property, plant and equipment
|
5,697,513 | 5,704,459 | ||||||
Deferred charges
|
||||||||
Regulatory assets
|
63,022 | 66,216 | ||||||
Deferred charges
|
64,731 | 66,929 | ||||||
Total deferred charges
|
127,753 | 133,145 | ||||||
Unconsolidated investments (Note 5)
|
1,587,863 | 1,538,548 | ||||||
Goodwill
|
89,227 | 89,227 | ||||||
Other
|
84,861 | 17,423 | ||||||
Total assets
|
$ | 8,190,069 | $ | 8,238,543 |
STOCKHOLDERS' EQUITY AND LIABILITIES
|
||||||||
June 30,
|
December 31,
|
|||||||
2011
|
2010
|
|||||||
(In thousands)
|
||||||||
Stockholders’ equity (Note 15)
|
||||||||
Common stock, $1 par value; 200,000 shares authorized; 125,975
|
||||||||
and 125,839 shares issued, respectively
|
$ | 125,975 | $ | 125,839 | ||||
Premium on capital stock
|
1,927,356 | 1,920,622 | ||||||
Less treasury stock: 1,240 and 1,230 shares, respectively, at cost
|
(30,809 | ) | (30,532 | ) | ||||
Less common stock held in trust: 573 and 597 shares, respectively
|
(10,543 | ) | (10,857 | ) | ||||
Deferred compensation plans
|
10,543 | 10,857 | ||||||
Accumulated other comprehensive loss
|
(51,507 | ) | (40,157 | ) | ||||
Retained earnings
|
634,236 | 551,210 | ||||||
Total stockholders' equity
|
2,605,251 | 2,526,982 | ||||||
Long-term debt obligations (Note 7)
|
2,705,534 | 3,520,906 | ||||||
Total capitalization
|
5,310,785 | 6,047,888 | ||||||
Current liabilities
|
||||||||
Long-term debt due within one year (Note 7)
|
816,272 | 1,083 | ||||||
Notes payable (Note 7)
|
195,479 | 297,051 | ||||||
Accounts payable and accrued liabilities
|
198,357 | 218,531 | ||||||
Federal, state and local taxes payable
|
35,824 | 35,235 | ||||||
Accrued interest
|
37,397 | 37,464 | ||||||
Natural gas imbalances - payable
|
152,211 | 178,087 | ||||||
Derivative instruments (Note 10 and 11)
|
56,200 | 67,026 | ||||||
Other
|
124,997 | 137,221 | ||||||
Total current liabilities
|
1,616,737 | 971,698 | ||||||
Deferred credits
|
203,202 | 205,094 | ||||||
Accumulated deferred income taxes
|
1,059,345 | 1,013,863 | ||||||
Commitments and contingencies (Note 12)
|
||||||||
Total stockholders' equity and liabilities
|
$ | 8,190,069 | $ | 8,238,543 | ||||
Six Months Ended June 30,
|
||||||||
2011
|
2010
|
|||||||
(In thousands)
|
||||||||
Cash flows provided by (used in) operating activities:
|
||||||||
Net earnings
|
$ | 120,435 | $ | 131,349 | ||||
Adjustments to reconcile net earnings to net cash flows
|
||||||||
provided by (used in) operating activities:
|
||||||||
Depreciation and amortization
|
118,622 | 112,753 | ||||||
Deferred income taxes
|
51,543 | 60,087 | ||||||
Provision for bad debts
|
9,864 | 9,562 | ||||||
Unrealized loss (gain) on commodity derivatives
|
14,413 | (16,654 | ) | |||||
Share-based compensation expense
|
4,899 | 4,454 | ||||||
Earnings from unconsolidated investments,
|
||||||||
adjusted for cash distributions
|
(50,249 | ) | (42,396 | ) | ||||
Changes in operating assets and liabilities
|
81,384 | (16,663 | ) | |||||
Net cash flows provided by operating activities
|
350,911 | 242,492 | ||||||
Cash flows (used in) provided by investing activities:
|
||||||||
Additions to property, plant and equipment
|
(143,902 | ) | (129,379 | ) | ||||
Loan to unconsolidated investments
|
(72,000 | ) | - | |||||
Plant retirements and other
|
(488 | ) | 359 | |||||
Net cash flows used in investing activities
|
(216,390 | ) | (129,020 | ) | ||||
Cash flows provided by (used in) financing activities:
|
||||||||
Increase (decrease) in book overdraft
|
4,877 | (12,030 | ) | |||||
Issuance of long-term debt
|
- | 857 | ||||||
Renewal cost for credit facilities
|
(2,138 | ) | (5,831 | ) | ||||
Dividends paid on common stock
|
(37,390 | ) | (37,322 | ) | ||||
Dividends paid on preferred stock
|
- | (4,341 | ) | |||||
Repayment of long-term debt obligation
|
(278 | ) | (140,723 | ) | ||||
Net change in revolving credit facilities
|
(101,572 | ) | 76,095 | |||||
Other
|
1,694 | 1,866 | ||||||
Net cash flows used in financing activities
|
(134,807 | ) | (121,429 | ) | ||||
Change in cash and cash equivalents
|
(286 | ) | (7,957 | ) | ||||
Cash and cash equivalents at beginning of period
|
3,299 | 10,545 | ||||||
Cash and cash equivalents at end of period
|
$ | 3,013 | $ | 2,588 |
Common
|
Premium
|
Common
|
Deferred
|
Accumulated
|
Total
|
|||||||||||||||||||||||||||
Stock,
|
on
|
Treasury
|
Stock
|
Compen-
|
Other
|
Stock-
|
||||||||||||||||||||||||||
$1 Par
|
Capital
|
Stock,
|
Held
|
sation
|
Comprehensive
|
Retained
|
holders'
|
|||||||||||||||||||||||||
Value
|
Stock
|
at cost
|
In Trust
|
Plans
|
Loss
|
Earnings
|
Equity
|
|||||||||||||||||||||||||
(In thousands)
|
||||||||||||||||||||||||||||||||
Balance December 31, 2010
|
$ | 125,839 | $ | 1,920,622 | $ | (30,532 | ) | $ | (10,857 | ) | $ | 10,857 | $ | (40,157 | ) | $ | 551,210 | $ | 2,526,982 | |||||||||||||
Comprehensive income (loss):
|
||||||||||||||||||||||||||||||||
Net earnings
|
- | - | - | - | - | - | 120,435 | 120,435 | ||||||||||||||||||||||||
Net change in other
|
||||||||||||||||||||||||||||||||
comprehensive loss (Note 6)
|
- | - | - | - | - | (11,350 | ) | - | (11,350 | ) | ||||||||||||||||||||||
Comprehensive income
|
- | - | - | - | - | - | - | 109,085 | ||||||||||||||||||||||||
Common stock dividends declared
|
- | - | - | - | - | - | (37,409 | ) | (37,409 | ) | ||||||||||||||||||||||
Share-based compensation
|
- | 4,899 | - | - | - | - | - | 4,899 | ||||||||||||||||||||||||
Restricted stock issuances
|
7 | (7 | ) | - | - | - | - | - | - | |||||||||||||||||||||||
Exercise of stock options
|
129 | 1,842 | (277 | ) | - | - | - | - | 1,694 | |||||||||||||||||||||||
Contributions to Trust
|
- | - | - | (355 | ) | 355 | - | - | - | |||||||||||||||||||||||
Disbursements from Trust
|
- | - | - | 669 | (669 | ) | - | - | - | |||||||||||||||||||||||
Balance June 30, 2011
|
$ | 125,975 | $ | 1,927,356 | $ | (30,809 | ) | $ | (10,543 | ) | $ | 10,543 | $ | (51,507 | ) | $ | 634,236 | $ | 2,605,251 | |||||||||||||
The Company’s common stock is $1 par value. Therefore, the change in Common Stock, $1 par value, is equivalent to the change in the number of shares of common stock issued.
|
Three Months Ended June 30,
|
Six Months Ended June 30,
|
|||||||||||||||
2011
|
2010
|
2011
|
2010
|
|||||||||||||
(In thousands)
|
||||||||||||||||
Weighted average shares outstanding - Basic
|
124,712 | 124,474 | 124,685 | 124,445 | ||||||||||||
Dilutive effect of share-based compensation awards
|
1,163 | 770 | 1,052 | 757 | ||||||||||||
Weighted average shares outstanding - Diluted
|
125,875 | 125,244 | 125,737 | 125,202 |
Three Months Ended June 30,
|
Six Months Ended June 30,
|
|||||||||||||||
2011
|
2010
|
2011
|
2010
|
|||||||||||||
(In thousands, except per share amounts)
|
||||||||||||||||
Options and SARs excluded
|
- | 1,235 | - | 1,235 | ||||||||||||
Exercise price ranges
|
N/A | $ | 24.06 - 28.48 | N/A | $ | 24.06 - 28.48 | ||||||||||
Weighted-average market price
|
$ | 30.11 | $ | 23.70 | $ | 28.67 | $ | 23.73 |
June 30,
|
December 31,
|
|||||||
2011
|
2010
|
|||||||
(In thousands)
|
||||||||
Citrus (1)
|
$ | 1,561,664 | $ | 1,510,847 | ||||
Other
|
26,199 | 27,701 | ||||||
$ | 1,587,863 | $ | 1,538,548 |
Three Months Ended June 30,
|
|||||||||||||
2011
|
2010
|
||||||||||||
Other Equity
|
Other Equity
|
||||||||||||
Citrus
|
Investments
|
Citrus
|
Investments
|
||||||||||
(In thousands)
|
|||||||||||||
Statement of Operations Data:
|
|||||||||||||
Revenues
|
$ | 194,361 | $ | 2,506 | $ | 140,572 | $ | 5,823 | |||||
Operating income
|
118,716 | 705 | 77,323 | 3,297 | |||||||||
Net earnings
|
47,173 | 689 | 46,460 | 3,101 | |||||||||
Six Months Ended June 30,
|
|||||||||||||
2011 | 2010 | ||||||||||||
Other Equity
|
Other Equity
|
||||||||||||
Citrus
|
Investments
|
Citrus
|
Investments
|
||||||||||
(In thousands)
|
|||||||||||||
Statement of Operations Data:
|
|||||||||||||
Revenues
|
$ | 308,246 | $ | 5,082 | $ | 254,711 | $ | 11,684 | |||||
Operating income
|
168,598 | 1,637 | 129,694 | 6,482 | |||||||||
Net earnings
|
96,526 | 1,844 | 76,087 | 6,270 |
Three Months Ended
|
Six Months Ended
|
|||||||||||||||
June 30,
|
June 30,
|
|||||||||||||||
2011
|
2010
|
2011
|
2010
|
|||||||||||||
(In thousands)
|
||||||||||||||||
Net earnings
|
$ | 59,773 | $ | 74,889 | $ | 120,435 | $ | 131,349 | ||||||||
Change in fair value of interest rate hedges, net of tax of
|
||||||||||||||||
$(6,891), $(1,308), $(7,757) and $(3,614), respectively
|
(11,587 | ) | (1,945 | ) | (12,991 | ) | (5,375 | ) | ||||||||
Reclassification of unrealized loss on interest rate hedges
|
||||||||||||||||
into earnings, net of tax of $2,253, $2,250, $4,481
|
||||||||||||||||
and $4,554, respectively
|
3,362 | 3,357 | 6,685 | 6,803 | ||||||||||||
Change in fair value of commodity hedges, net of tax of $194,
|
||||||||||||||||
$(390), $(365) and $9,613, respectively
|
344 | (690 | ) | (649 | ) | 17,061 | ||||||||||
Reclassification of unrealized gain on commodity hedges
|
||||||||||||||||
into earnings, net of tax of $(1,678), $(1,830), $(3,310) and $(2,272), respectively
|
(2,977 | ) | (3,247 | ) | (5,874 | ) | (4,032 | ) | ||||||||
Reclassification of net actuarial loss and prior service credit
|
||||||||||||||||
relating to pension and other postretirement benefits into
|
||||||||||||||||
earnings, net of tax of $568, $551, $1,142
|
||||||||||||||||
and $1,102, respectively
|
706 | 722 | 1,407 | 1,442 | ||||||||||||
Change in other comprehensive income from equity
|
||||||||||||||||
investments, net of tax of $21, $22, $43 and $44, respectively
|
37 | 35 | 72 | 71 | ||||||||||||
Total other comprehensive income (loss)
|
(10,115 | ) | (1,768 | ) | (11,350 | ) | 15,970 | |||||||||
Total comprehensive income
|
$ | 49,658 | $ | 73,121 | $ | 109,085 | $ | 147,319 |
June 30,
|
December 31,
|
|||||||
2011
|
2010
|
|||||||
(In thousands)
|
||||||||
Interest rate hedges, net
|
$ | (23,538 | ) | $ | (17,232 | ) | ||
Commodity hedges, net
|
4,005 | 10,528 | ||||||
Benefit plans:
|
||||||||
Net actuarial loss and prior service costs, net - pensions
|
(30,372 | ) | (32,982 | ) | ||||
Net actuarial gain and prior service credit, net - other postretirement benefits
|
1,004 | 2,207 | ||||||
Equity investments, net
|
(2,606 | ) | (2,678 | ) | ||||
Total Accumulated other comprehensive income, net of tax
|
$ | (51,507 | ) | $ | (40,157 | ) |
June 30, 2011
|
December 31, 2010
|
|||||||||||||||
Carrying Amount
|
Fair Value
|
Carrying Amount
|
Fair Value
|
|||||||||||||
(In thousands)
|
||||||||||||||||
Long-Term Debt Obligations:
|
||||||||||||||||
Southern Union:
|
||||||||||||||||
7.60% Senior Notes due 2024
|
$ | 359,765 | $ | 428,300 | $ | 359,765 | $ | 392,144 | ||||||||
8.25% Senior Notes due 2029
|
300,000 | 377,403 | 300,000 | 332,922 | ||||||||||||
7.24% to 9.44% First Mortgage Bonds
|
||||||||||||||||
due 2020 to 2027
|
19,500 | 23,558 | 19,500 | 21,473 | ||||||||||||
7.20% Junior Subordinated Notes due 2066
|
600,000 | 575,280 | 600,000 | 609,743 | ||||||||||||
Term Loan due 2013
|
250,000 | 252,491 | 250,000 | 249,915 | ||||||||||||
Note Payable
|
8,019 | 8,019 | 8,297 | 8,297 | ||||||||||||
1,537,284 | 1,665,051 | 1,537,562 | 1,614,494 | |||||||||||||
Panhandle:
|
||||||||||||||||
6.05% Senior Notes due 2013
|
250,000 | 273,260 | 250,000 | 268,988 | ||||||||||||
6.20% Senior Notes due 2017
|
300,000 | 346,413 | 300,000 | 322,893 | ||||||||||||
8.125% Senior Notes due 2019
|
150,000 | 183,813 | 150,000 | 169,671 | ||||||||||||
7.00% Senior Notes due 2029
|
66,305 | 70,068 | 66,305 | 69,911 | ||||||||||||
7.00% Senior Notes due 2018
|
400,000 | 472,416 | 400,000 | 442,120 | ||||||||||||
Term Loans due 2012
|
815,391 | 808,481 | 815,391 | 799,084 | ||||||||||||
Net premiums on long-term debt
|
2,826 | 2,826 | 2,731 | 2,731 | ||||||||||||
1,984,522 | 2,157,277 | 1,984,427 | 2,075,398 | |||||||||||||
Total Long-Term Debt Obligations
|
3,521,806 | 3,822,328 | 3,521,989 | 3,689,892 | ||||||||||||
Credit Facilities
|
195,479 | 195,487 | 297,051 | 301,312 | ||||||||||||
Total consolidated debt obligations
|
3,717,285 | $ | 4,017,815 | 3,819,040 | $ | 3,991,204 | ||||||||||
Less current portion of long-term debt
|
816,272 | 1,083 | ||||||||||||||
Less short-term debt
|
195,479 | 297,051 | ||||||||||||||
Total long-term debt
|
$ | 2,705,534 | $ | 3,520,906 |
Pension Benefits
|
Other Postretirement Benefits
|
|||||||||||||||||
Three Months Ended June 30,
|
Three Months Ended June 30,
|
|||||||||||||||||
2011
|
2010
|
2011
|
2010
|
|||||||||||||||
(In thousands)
|
||||||||||||||||||
Service cost
|
$ | 935 | $ | 768 | $ | 881 | $ | 793 | ||||||||||
Interest cost
|
2,525 | 2,509 | 1,446 | 1,409 | ||||||||||||||
Expected return on plan assets
|
(2,647 | ) | (2,337 | ) | (1,450 | ) | (1,269 | ) | ||||||||||
Prior service cost (credit)
|
||||||||||||||||||
amortization
|
147 | 138 | (453 | ) | (411 | ) | ||||||||||||
Actuarial loss (gain)
|
||||||||||||||||||
amortization
|
1,984 | 1,996 | (403 | ) | (451 | ) | ||||||||||||
2,944 | 3,074 | 21 | 71 | |||||||||||||||
Regulatory adjustment (1)
|
191 | 52 | 666 | 666 | ||||||||||||||
Net periodic benefit cost
|
$ | 3,135 | $ | 3,126 | $ | 687 | $ | 737 | ||||||||||
Pension Benefits
|
Other Postretirement Benefits
|
|||||||||||||||||
Six Months Ended June 30,
|
Six Months Ended June 30,
|
|||||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||||
(In thousands)
|
||||||||||||||||||
Service cost
|
$ | 1,870 | $ | 1,535 | $ | 1,761 | $ | 1,586 | ||||||||||
Interest cost
|
5,050 | 5,019 | 2,892 | 2,819 | ||||||||||||||
Expected return on plan assets
|
(5,293 | ) | (4,674 | ) | (2,899 | ) | (2,311 | ) | ||||||||||
Prior service cost (credit)
|
||||||||||||||||||
amortization
|
294 | 276 | (906 | ) | (823 | ) | ||||||||||||
Actuarial loss (gain)
|
||||||||||||||||||
amortization
|
3,967 | 3,993 | (806 | ) | (901 | ) | ||||||||||||
5,888 | 6,149 | 42 | 370 | |||||||||||||||
Regulatory adjustment (1)
|
383 | 157 | 1,332 | 1,332 | ||||||||||||||
Net periodic benefit cost
|
$ | 6,271 | $ | 6,306 | $ | 1,374 | $ | 1,702 |
(1)
|
In the Distribution segment, the Company recovers certain qualified pension benefit plan and other postretirement benefit plan costs through rates charged to utility customers. Certain utility commissions require that the recovery of these costs be based on the Employee Retirement Income Security Act of 1974, as amended, or other utility commission specific guidelines. The difference between these regulatory-based amounts and the periodic benefit cost calculated pursuant to GAAP is deferred as a regulatory asset or liability and amortized to expense over periods in which this difference will be recovered in rates, as promulgated by the applicable utility commission.
|
Three Months Ended June 30,
|
Six Months Ended June 30,
|
|||||||||||||||
2011
|
2010
|
2011
|
2010
|
|||||||||||||
(In thousands) | ||||||||||||||||
Income tax expense
|
$ | 25,588 | $ | 28,609 | $ | 44,230 | $ | 59,418 | ||||||||
Effective tax rate
|
30 | % | 28 | % | 27 | % | 31 | % |
Asset Derivatives (1)
|
Liability Derivatives (1)
|
|||||||||||||||
June 30,
|
December 31,
|
June 30,
|
December 31,
|
|||||||||||||
Balance Sheet Location
|
2011
|
2010
|
2011
|
2010
|
||||||||||||
(In thousands)
|
(In thousands)
|
|||||||||||||||
Cash Flow Hedges:
|
||||||||||||||||
Interest rate contracts
|
||||||||||||||||
Derivative instruments-liabilities
|
$ | - | $ | - | $ | 23,353 | $ | 19,694 | ||||||||
Deferred credits
|
- | - | 11,039 | 4,652 | ||||||||||||
Commodity contracts - Gathering and Processing:
|
||||||||||||||||
Natural gas price swaps
|
||||||||||||||||
Derivative instruments-liabilities
|
$ | 9,275 | $ | 16,459 | $ | - | $ | - | ||||||||
Deferred credits
|
230 | - | - | - | ||||||||||||
NGL price swaps
|
||||||||||||||||
Derivative instruments-liabilities
|
- | - | 2,408 | - | ||||||||||||
Deferred credits
|
- | - | 836 | - | ||||||||||||
$ | 9,505 | $ | 16,459 | $ | 37,636 | $ | 24,346 | |||||||||
Economic Hedges:
|
||||||||||||||||
Commodity contracts - Gathering and Processing:
|
||||||||||||||||
NGL processing spread swaps
|
||||||||||||||||
Derivative instruments-liabilities
|
$ | - | $ | - | $ | 26,716 | $ | 29,057 | ||||||||
Other derivative instruments
|
||||||||||||||||
Prepayments and other assets
|
9 | 133 | - | - | ||||||||||||
Commodity contracts - Distribution:
|
||||||||||||||||
Natural gas price swaps
|
||||||||||||||||
Derivative instruments-liabilities
|
$ | 100 | $ | 234 | $ | 13,098 | $ | 34,968 | ||||||||
Deferred credits
|
51 | 105 | 716 | 2,806 | ||||||||||||
$ | 160 | $ | 472 | $ | 40,530 | $ | 66,831 | |||||||||
Total
|
$ | 9,665 | $ | 16,931 | $ | 78,166 | $ | 91,177 | ||||||||
(1)
|
The Company has master netting arrangements with certain of its counterparties, which permit applicable obligations of the parties to be settled on a net versus gross basis. If a right of offset exists, the fair value amounts for the derivative instruments are reported in the unaudited interim Condensed Consolidated Balance Sheet on a net basis and disclosed herein on a gross basis.
|
|
Three Months Ended June 30,
|
Six Months Ended June 30,
|
||||||||||||||
|
2011
|
2010
|
2011
|
2010
|
||||||||||||
|
(In thousands)
|
|||||||||||||||
Cash Flow Hedges: (1)
|
|
|
|
|
||||||||||||
Interest rate contracts:
|
|
|
|
|
||||||||||||
Change in fair value - increase in Accumulated other comprehensive
|
|
|
|
|
||||||||||||
loss, excluding tax expense effect of $6,891, $1,308, $7,757 and $3,614, respectively
|
$ | 18,478 | $ | 3,253 | $ | 20,748 | $ | 8,989 | ||||||||
Reclassification of unrealized loss from Accumulated other
|
||||||||||||||||
comprehensive loss - increase of Interest expense, excluding tax
|
||||||||||||||||
expense effect of $2,253, $2,250, $4,481 and $4,554 respectively
|
5,615 | 5,607 | 11,166 | 11,357 | ||||||||||||
Commodity contracts - Gathering and Processing:
|
||||||||||||||||
Change in fair value - increase/(decrease) in Accumulated other
|
||||||||||||||||
comprehensive loss, excluding tax expense effect of $(194), $390, $365 and $(9,613), respectively
|
(538 | ) | 1,080 | 1,014 | (26,674 | ) | ||||||||||
Reclassification of unrealized gain from Accumulated other
|
||||||||||||||||
comprehensive loss - increase of Operating revenues, excluding
|
||||||||||||||||
tax expense effect of $1,678, $1,830, $3,310 and $2,272, respectively
|
4,655 | 5,077 | 9,184 | 6,304 | ||||||||||||
|
||||||||||||||||
Economic Hedges:
|
||||||||||||||||
Commodity contracts - Gathering and Processing:
|
||||||||||||||||
Change in fair value of strategic hedges - (increase)/decrease in Operating revenues (2)
|
7,149 | (21,597 | ) | 23,865 | (14,672 | ) | ||||||||||
Change in fair value of other hedges - (increase)/decrease in Operating revenues
|
(18 | ) | (375 | ) | (217 | ) | 186 | |||||||||
Commodity contracts - Distribution:
|
||||||||||||||||
Change in fair value - decrease in Deferred natural gas purchases
|
(4,279 | ) | (23,947 | ) | (23,772 | ) | (7,707 | ) |
(1)
|
See Note 6 – Comprehensive Income (Loss) for additional related information.
|
(2)
|
Includes $7.3 million and $16.8 million of the cash settlement impact for previously recognized unrealized losses in the three-month and six-month periods ended June 30, 2011, respectively. Includes $9 million and $20 million of the cash settlement impact for previously recognized unrealized losses in the three-month and six-month periods ended June 30, 2010, respectively. Additionally, includes a $300,000 unrealized mark-to-market gain and a $14.4 million unrealized mark-to-market loss recorded in the three-month and six-month periods ended June 30, 2011, respectively, and $22.3 million and $16.6 million of unrealized mark-to-market gains recorded in the three-month and six-month periods ended June 30, 2010, respectively.
|
Fair Value
|
Fair Value Measurements at June 30, 2011
|
|||||||||||||||
as of
|
Using Fair Value Hierarchy
|
|||||||||||||||
June 30, 2011
|
Level 1
|
Level 2
|
Level 3
|
|||||||||||||
(In thousands)
|
||||||||||||||||
Assets:
|
||||||||||||||||
Commodity derivatives
|
$ | 9 | $ | - | $ | 9 | $ | - | ||||||||
Long-term investments
|
1,027 | 1,027 | - | - | ||||||||||||
Total
|
$ | 1,036 | $ | 1,027 | $ | 9 | $ | - | ||||||||
Liabilities:
|
||||||||||||||||
Commodity derivatives
|
$ | 34,118 | $ | - | $ | 34,118 | $ | - | ||||||||
Interest-rate swap derivatives
|
34,392 | - | 34,392 | - | ||||||||||||
Total
|
$ | 68,510 | $ | - | $ | 68,510 | $ | - |
June 30,
|
December 31,
|
|||||||
2011
|
2010
|
|||||||
(In thousands)
|
||||||||
Current
|
$ | 5,890 | $ | 10,648 | ||||
Noncurrent
|
15,517 | 11,920 | ||||||
Total environmental liabilities
|
$ | 21,407 | $ | 22,568 |
·
|
items that do not impact net earnings, such as extraordinary items, discontinued operations and the impact of changes in accounting principles;
|
·
|
income taxes;
|
·
|
interest;
|
·
|
dividends on preferred stock; and
|
·
|
loss on extinguishment of preferred stock.
|
Three Months Ended
|
Six Months Ended
|
|||||||||||||||
June 30,
|
June 30,
|
|||||||||||||||
2011
|
2010
|
2011
|
2010
|
|||||||||||||
(In thousands)
|
||||||||||||||||
Operating revenues from external customers:
|
||||||||||||||||
Transportation and Storage
|
$ | 189,760 | $ | 187,090 | $ | 392,054 | $ | 373,765 | ||||||||
Gathering and Processing
|
328,515 | 282,707 | 552,167 | 543,567 | ||||||||||||
Distribution
|
109,076 | 99,711 | 425,649 | 407,972 | ||||||||||||
Total segment operating revenues
|
627,351 | 569,508 | 1,369,870 | 1,325,304 | ||||||||||||
Corporate and other activities
|
4,256 | 3,588 | 8,559 | 6,786 | ||||||||||||
$ | 631,607 | $ | 573,096 | $ | 1,378,429 | $ | 1,332,090 | |||||||||
Depreciation and amortization:
|
||||||||||||||||
Transportation and Storage
|
$ | 31,963 | $ | 30,896 | $ | 64,237 | $ | 60,073 | ||||||||
Gathering and Processing
|
18,065 | 17,971 | 35,852 | 35,291 | ||||||||||||
Distribution
|
8,407 | 7,967 | 16,814 | 15,923 | ||||||||||||
Total segment depreciation and amortization
|
58,435 | 56,834 | 116,903 | 111,287 | ||||||||||||
Corporate and other activities
|
860 | 725 | 1,719 | 1,466 | ||||||||||||
$ | 59,295 | $ | 57,559 | $ | 118,622 | $ | 112,753 | |||||||||
Earnings from unconsolidated investments:
|
||||||||||||||||
Transportation and Storage
|
$ | 24,852 | $ | 25,748 | $ | 50,883 | $ | 42,994 | ||||||||
Gathering and Processing
|
(158 | ) | 1,395 | 30 | 2,380 | |||||||||||
Corporate and other activities
|
354 | 399 | 836 | 746 | ||||||||||||
$ | 25,048 | $ | 27,542 | $ | 51,749 | $ | 46,120 | |||||||||
Segment performance:
|
||||||||||||||||
Transportation and Storage EBIT
|
$ | 117,495 | $ | 111,246 | $ | 239,593 | $ | 213,671 | ||||||||
Gathering and Processing EBIT
|
21,333 | 40,526 | 9,104 | 47,081 | ||||||||||||
Distribution EBIT
|
3,374 | 6,865 | 26,941 | 35,710 | ||||||||||||
Total segment EBIT
|
142,202 | 158,637 | 275,638 | 296,462 | ||||||||||||
Corporate and other activities
|
(1,908 | ) | 297 | (469 | ) | 617 | ||||||||||
Interest expense
|
54,933 | 55,436 | 110,504 | 106,312 | ||||||||||||
Federal and state income taxes
|
25,588 | 28,609 | 44,230 | 59,418 | ||||||||||||
Net earnings
|
59,773 | 74,889 | 120,435 | 131,349 | ||||||||||||
Preferred stock dividends
|
- | 2,170 | - | 4,341 | ||||||||||||
Loss on extinguishment of preferred stock
|
- | 3,295 | - | 3,295 | ||||||||||||
Net earnings available for common
|
||||||||||||||||
stockholders
|
$ | 59,773 | $ | 69,424 | $ | 120,435 | $ | 123,713 | ||||||||
June 30,
|
December 31,
|
||||||||||||||
2011
|
2010
|
||||||||||||||
(In thousands)
|
|||||||||||||||
Total assets:
|
|||||||||||||||
Transportation and Storage |
$
|
5,281,414
|
$
|
5,224,992
|
|||||||||||
Gathering and Processing |
1,740,188
|
1,700,598
|
|||||||||||||
Distribution |
989,680
|
1,135,352
|
|||||||||||||
Total segment assets |
8,011,282
|
8,060,942
|
|||||||||||||
Corporate and other activities |
178,787
|
177,601
|
|||||||||||||
Total assets |
$
|
8,190,069
|
$
|
8,238,543
|
|||||||||||
Three Months Ended
|
Six Months Ended
|
||||||||||||||
June 30,
|
June 30,
|
||||||||||||||
2011
|
2010
|
2011
|
2010
|
||||||||||||
(In thousands)
|
|||||||||||||||
Expenditures for long-lived assets:
|
|||||||||||||||
Transportation and Storage |
$
|
28,911
|
$
|
25,886
|
$
|
39,169
|
$
|
56,257
|
|||||||
Gathering and Processing |
20,903
|
15,823
|
56,513
|
41,706
|
|||||||||||
Distribution |
13,447
|
9,151
|
20,409
|
16,255
|
|||||||||||
Total segment expenditures for long-lived | |||||||||||||||
assets |
63,261
|
50,860
|
116,091
|
114,218
|
|||||||||||
Corporate and other activities |
1,321
|
4,166
|
1,904
|
6,281
|
|||||||||||
Total expenditures for long-lived assets (1) |
$
|
64,582
|
$
|
55,026
|
$
|
117,995
|
$
|
120,499
|
(1)
|
Related cash impact includes the net reduction in capital accruals totaling $10.4 million and $7.9 million for the three-month periods ended June 30, 2011 and 2010, respectively. Related cash impact includes the net reduction in capital accruals totaling $26 million and $(7.9) million for the six-month periods ended June 30, 2011 and 2010, respectively.
|
Shareholder
|
Date
|
Amount
|
Amount
|
|||||||
Record Date
|
Paid
|
Per Share
|
Paid
|
|||||||
(In thousands)
|
||||||||||
June 24, 2011
|
July 8, 2011
|
$ | 0.15 | $ | 18,709 | |||||
March 25, 2011
|
April 8, 2011
|
0.15 | 18,700 |
Three Months Ended June 30,
|
Six Months Ended June 30,
|
|||||||||||||||
2011
|
2010
|
2011
|
2010
|
|||||||||||||
(In thousands)
|
||||||||||||||||
EBIT:
|
||||||||||||||||
Transportation and storage segment
|
$ | 117,495 | $ | 111,246 | $ | 239,593 | $ | 213,671 | ||||||||
Gathering and processing segment
|
21,333 | 40,526 | 9,104 | 47,081 | ||||||||||||
Distribution segment
|
3,374 | 6,865 | 26,941 | 35,710 | ||||||||||||
Corporate and other activities
|
(1,908 | ) | 297 | (469 | ) | 617 | ||||||||||
Total EBIT
|
140,294 | 158,934 | 275,169 | 297,079 | ||||||||||||
Interest expense
|
54,933 | 55,436 | 110,504 | 106,312 | ||||||||||||
Earnings before income taxes
|
85,361 | 103,498 | 164,665 | 190,767 | ||||||||||||
Federal and state income tax expense
|
25,588 | 28,609 | 44,230 | 59,418 | ||||||||||||
Net earnings
|
59,773 | 74,889 | 120,435 | 131,349 | ||||||||||||
Preferred stock dividends
|
- | 2,170 | - | 4,341 | ||||||||||||
Loss on extinguishment of preferred stock
|
- | 3,295 | - | 3,295 | ||||||||||||
Net earnings available for common stockholders
|
$ | 59,773 | $ | 69,424 | $ | 120,435 | $ | 123,713 |
·
|
Lower EBIT contribution of $19.2 million from the Gathering and Processing segment largely attributable to lower gross margin of $14.7 million resulting from the impact of a $2.5 million net hedging loss in 2011 versus a net hedging gain of $26.8 million in 2010, offset by a higher net revenue margin of $14.6 million (unadjusted for the impact of hedges) primarily due to higher market-driven realized average natural gas and NGL prices in the 2011 period;
|
·
|
Lower EBIT contribution of $3.5 million from the Distribution segment mainly due to higher operating, maintenance and general expenses of $4.8 million primarily due to the impact of a $1.5 million favorable environmental settlement realized in 2010 and higher provisions for uncollectible accounts of $1.1 million in 2011, partially offset by higher net operating revenues of $700,000 largely attributable to the impact of new customer rates effective April 1, 2011 at New England Gas Company; and
|
·
|
Lower EBIT contribution of $2.2 million from Corporate and other activities primarily due to legal and other outside service costs related to the potential merger with ETE.
|
·
|
Higher EBIT contribution of $6.2 million from the Transportation and Storage segment as Panhandle’s contribution increased $7.1 million on lower operating, maintenance and general expense of $4.9 million primarily attributable to reduced legal expenses resulting from a litigation settlement in the second quarter of 2011 and higher operating revenue of $2.7 million mainly due to higher short term capacity sold on Trunkline and PEPL;
|
·
|
Lower preferred stock dividends of $5.5 million due to the Company’s redemption of all of its outstanding shares of preferred stock in July 2010; and
|
·
|
Lower federal and state income tax expense of $3 million primarily due to lower pre-tax earnings in 2011.
|
·
|
Lower EBIT contribution of $38 million from the Gathering and Processing segment largely attributable to lower gross margin of $28.7 million resulting from the impact of a $14.5 million net hedging loss in 2011 versus a net hedging gain of $20.9 million in 2010 and higher operating expenses of $5.7 million, offset by a higher net revenue margin of $6.7 million (unadjusted for the impact of hedges) driven by higher market-driven realized average NGL prices in the 2011 period;
|
·
|
Lower EBIT contribution of $8.8 million from the Distribution segment mainly due to higher operating, maintenance and general expenses of $7.8 million largely attributable to higher legal, injuries and damages costs of $3 million and the impact of a $1.5 million favorable environmental settlement realized in 2010; and
|
·
|
Higher interest expense of $4.2 million primarily attributable to the impact of the lower level of interest costs capitalized attributable to lower average capital project balances outstanding in 2011.
|
·
|
Higher EBIT contribution of $25.9 million from the Transportation and Storage segment as Panhandle’s contribution increased $18 million on higher operating revenue of $18.3 million mainly due to the LNG terminal infrastructure enhancement project being placed in service in March 2010 and higher equity earnings of $7.9 million from the Company’s unconsolidated investment in Citrus largely driven by higher transportation revenues resulting from placing Florida Gas’ Phase VIII Expansion project into service on April 1, 2011;
|
·
|
Lower federal and state income tax expense of $15.2 million primarily due to lower pre-tax earnings in 2011, the impact of $5.3 million of state investment tax credits recorded in 2011 and $4.2 million of higher income tax expense in 2010 resulting from the elimination of the Medicare Part D tax subsidy in the Patient Protection and Affordable Care Act (PPACA) legislation signed into law in March 2010; and
|
·
|
Lower preferred stock dividends of $7.6 million due to the Company’s redemption of all of its outstanding shares of preferred stock in July 2010.
|
Three Months Ended June 30,
|
Six Months Ended June 30,
|
|||||||||||||||
2011
|
2010
|
2011
|
2010
|
|||||||||||||
(In thousands, except volumes)
|
||||||||||||||||
Operating revenues (1)
|
$ | 189,760 | $ | 187,090 | $ | 392,054 | $ | 373,765 | ||||||||
Operating, maintenance and general
|
56,914 | 61,828 | 121,559 | 124,906 | ||||||||||||
Depreciation and amortization
|
31,963 | 30,896 | 64,237 | 60,073 | ||||||||||||
Taxes other than on income and revenues
|
8,436 | 8,897 | 17,741 | 18,125 | ||||||||||||
Total operating income
|
92,447 | 85,469 | 188,517 | 170,661 | ||||||||||||
Earnings from unconsolidated investments
|
24,852 | 25,748 | 50,883 | 42,994 | ||||||||||||
Other income, net
|
196 | 29 | 193 | 16 | ||||||||||||
EBIT
|
$ | 117,495 | $ | 111,246 | $ | 239,593 | $ | 213,671 | ||||||||
Panhandle natural gas volumes transported (TBtu): (2)
|
||||||||||||||||
PEPL
|
128 | 123 | 299 | 290 | ||||||||||||
Trunkline
|
182 | 167 | 377 | 321 | ||||||||||||
Sea Robin
|
34 | 43 | 68 | 90 | ||||||||||||
Florida Gas natural gas volumes transported (3)
|
235 | 214 | 416 | 403 |
(1)
|
Reservation revenues comprised 90 percent, 88 percent, 90 percent and 89 percent of total operating revenues in the three months ended June 30, 2011 and 2010 and the six months ended June 30, 2011 and 2010, respectively.
|
(2)
|
Includes transportation deliveries made throughout the Company’s pipeline network.
|
(3)
|
Represents 100 percent of Florida Gas natural gas volumes transported versus the Company’s effective equity ownership interest of 50 percent.
|
·
|
Lower operating, maintenance and general expenses of $4.9 million in 2011 versus 2010 primarily attributable to:
|
o
|
A $12.7 million decrease in legal expenses primarily due to settlement of certain litigation in the second quarter of 2011 with several contractors related to the Company’s East End project;
|
o
|
Impact of a net reduction of $3.5 million in the 2010 period in the repair and abandonment cost provision for Hurricanes Ike and Gustav resulting from favorable weather conditions experienced and increased project efficiencies and Hurricane Ike insurance recoveries of $700,000 received in 2010;
|
o
|
A $1 million increase in fuel tracker costs primarily due to an under-recovery in 2011;
|
o
|
Higher allocated corporate service costs of $900,000 primarily due to higher employee benefits;
|
o
|
An $800,000 increase in medical costs; and
|
o
|
A $700,000 increase in compensation expense largely due to mark-to-market adjustments for liability share-based compensation awards (which are settled in cash) resulting from an increase in the Southern Union stock price impacted by the potential merger with ETE;
|
·
|
Higher operating revenues of $2.7 million primarily due to:
|
o
|
Higher short-term capacity sold of $2.5 million on Trunkline and PEPL based on operational availability;
|
o
|
Higher LNG revenues of $900,000 primarily due to a higher rate effective March 2011, partially offset by lower volumes from decreased LNG cargoes during 2011; and
|
o
|
Lower interruptible parking revenues of $1 million due to less favorable market conditions; and
|
·
|
Increased depreciation and amortization expense of $1.1 million in 2011 versus 2010 primarily due to a $103.6 million increase in property, plant and equipment placed in service after June 30, 2010. Depreciation and amortization expense is expected to continue to increase primarily due to ongoing capital additions.
|
·
|
Lower other income of $13.1 million largely driven by lower equity AFUDC due to placing Florida Gas’ Phase VIII Expansion project into service on April 1, 2011;
|
·
|
Higher interest expense of $7.9 million primarily due to lower capitalized debt AFUDC, mainly due to placing the Phase VIII Expansion project into service and higher interest on the $500 million 5.45% Senior Notes and $350 million 4.00% Senior Notes issued in July 2010, partially offset by lower interest on the $325 million 7.625% Senior Notes due December 2010 redeemed in August 2010;
|
·
|
Higher depreciation expense of $4 million primarily due to completion of the Phase VIII Expansion project;
|
·
|
A $2.2 million increase in operating expenses in the 2011 period mainly due to the Phase VIII Expansion project being place into service and other operating cost increases for materials and outside services; and
|
·
|
Higher transportation revenues of $27 million primarily due to placing the Phase VIII Expansion project into service on April 1, 2011.
|
·
|
Higher operating revenues of $18.3 million primarily due to:
|
o
|
Higher LNG revenues of $17.5 million primarily due to the LNG terminal infrastructure enhancement construction project placed in service in March 2010;
|
o
|
Higher transportation reservation revenues of $3.1 million primarily due to higher short-term capacity sold on Trunkline based on operational availability;
|
o
|
Lower transportation interruptible revenues of $1.6 million largely attributable to lower volumes in 2011 on Sea Robin primarily resulting from market conditions; and
|
o
|
Lower interruptible parking revenues of $1.4 million due to less favorable market conditions;
|
·
|
Lower operating, maintenance and general expenses of $3.3 million in 2011 versus 2010 primarily attributable to:
|
o
|
A $9.4 million net reduction in legal expenses resulting from the settlement of certain litigation in the second quarter of 2011 with several contractors related to the Company’s East End project;
|
o
|
Impact of a net reduction of $3.5 million in the 2010 period in the repair and abandonment cost provision for Hurricanes Ike and Gustav resulting from favorable weather conditions experienced and increased project efficiencies; and
|
o
|
A $3.4 million increase in fuel tracker costs primarily due to a net under-recovery in 2011 versus an over-recovery in 2010; and
|
·
|
Increased depreciation and amortization expense of $4.2 million in 2011 versus 2010 primarily due to the LNG terminal infrastructure enhancement construction project placed in service in March 2010 and a $103.6 million increase in property, plant and equipment placed in service after June 30, 2010. Depreciation and amortization expense is expected to continue to increase primarily due to ongoing capital additions.
|
·
|
Higher transportation revenues of $26.9 million primarily due to placing the Phase VIII Expansion project into service on April 1, 2011;
|
·
|
Higher interest expense of $7.2 million primarily due to higher interest on the $500 million 5.45% Senior Notes and $350 million 4.00% Senior Notes issued in July 2010 and lower capitalized debt AFUDC mainly due to placing the Phase VIII Expansion project into service, partially offset by lower interest on the $325 million 7.625% Senior Notes due December 2010 redeemed in August 2010;
|
·
|
Higher operating expenses of $4.3 million primarily for pipeline integrity assessments;
|
·
|
Higher depreciation expense of $3 million primarily due to completion of the Phase VIII Expansion project, partially offset by reduced depreciation rates associated with the rate case settlement approved by FERC on February 24, 2011; and
|
·
|
Higher income tax expense of $6.4 million primarily due to higher pre-tax earnings.
|
Three Months Ended June 30,
|
Six Months Ended June 30,
|
|||||||||||||||
2011
|
2010
|
2011
|
2010
|
|||||||||||||
(In thousands, except volumes and
|
||||||||||||||||
average pricing)
|
||||||||||||||||
Operating revenues, excluding impact of
|
||||||||||||||||
commodity derivative instruments
|
$ | 330,992 | $ | 255,917 | $ | 566,632 | $ | 522,627 | ||||||||
Realized and unrealized commodity derivatives
|
(2,477 | ) | 26,790 | (14,465 | ) | 20,940 | ||||||||||
Operating revenues
|
328,515 | 282,707 | 552,167 | 543,567 | ||||||||||||
Cost of natural gas and other energy (1)
|
(266,306 | ) | (205,792 | ) | (459,500 | ) | (422,249 | ) | ||||||||
Gross margin (2)
|
62,209 | 76,915 | 92,667 | 121,318 | ||||||||||||
Operating, maintenance and general
|
21,191 | 18,489 | 44,105 | 38,363 | ||||||||||||
Depreciation and amortization
|
18,065 | 17,971 | 35,852 | 35,291 | ||||||||||||
Taxes other than on income and revenues
|
1,466 | 1,331 | 3,726 | 2,965 | ||||||||||||
Total operating income
|
21,487 | 39,124 | 8,984 | 44,699 | ||||||||||||
Earnings (loss) from unconsolidated investments
|
(158 | ) | 1,395 | 30 | 2,380 | |||||||||||
Other income, net
|
4 | 7 | 90 | 2 | ||||||||||||
EBIT
|
$ | 21,333 | $ | 40,526 | $ | 9,104 | $ | 47,081 | ||||||||
Operating Information:
|
||||||||||||||||
Volumes
|
||||||||||||||||
Avg natural gas processed (MMBtu/d)
|
431,453 | 436,178 | 402,978 | 425,052 | ||||||||||||
Avg NGL produced (gallons/d)
|
1,557,025 | 1,483,284 | 1,414,597 | 1,426,420 | ||||||||||||
Avg natural gas wellhead volumes (MMBtu/d)
|
505,238 | 545,105 | 478,618 | 536,927 | ||||||||||||
Natural gas sales (MMBtu) (3)
|
18,031,648 | 20,572,042 | 34,635,292 | 40,381,059 | ||||||||||||
NGL sales (gallons) (3)
|
186,343,102 | 163,849,470 | 322,661,727 | 306,449,086 | ||||||||||||
Average Pricing
|
||||||||||||||||
Realized natural gas ($/MMBtu) (4)
|
$ | 4.19 | $ | 4.07 | $ | 4.12 | $ | 4.58 | ||||||||
Realized NGL ($/gallon) (4)
|
1.35 | 1.04 | 1.29 | 1.08 | ||||||||||||
Natural Gas Daily WAHA ($/MMBtu)
|
4.24 | 4.13 | 4.18 | 4.59 | ||||||||||||
Natural Gas Daily El Paso ($/MMBtu)
|
4.17 | 4.04 | 4.13 | 4.52 | ||||||||||||
Estimated plant processing spread ($/gallon)
|
0.97 | 0.61 | 0.91 | 0.64 |
(1)
|
Cost of natural gas and other energy consists of natural gas and NGL purchase costs, fractionation and other fees.
|
(2)
|
Gross margin consists of Operating revenues less Cost of natural gas and other energy. The Company believes that this measure is more meaningful for understanding and analyzing the Gathering and Processing segment’s operating results for the periods presented because commodity costs are a significant factor in the determination of the segment’s revenues.
|
(3)
|
Volumes processed by SUGS include volumes sold under various buy-sell arrangements. For the three-month period ended June 30, 2010, the Company’s operating revenues and related volumes attributable to its buy-sell arrangements for natural gas totaled $11.3 million and 2.4 million MMBtu. For the six-month period ended June 30, 2010, the Company’s operating revenues and related volumes attributable to its buy-sell arrangements for natural gas totaled $24.6 million and 4.7 million MMBtu. The buy-sell arrangements for natural gas terminated in November 2010. The Company’s operating revenues and related volumes attributable to its buy-sell arrangements for NGL totaled $37.1 million and $30.8 million and 28.3 million gallons and 32.4 million gallons, for the three-month periods ended June 30, 2011 and June 30, 2010, respectively. The Company’s operating revenues and related volumes attributable to its buy-sell arrangements for NGL totaled $68.4 million and $57 million and 55.7 million gallons and 58.4 million gallons, for the six-month periods ended June 30, 2011 and June 30, 2010, respectively.
|
(4)
|
Excludes impact of realized and unrealized commodity derivative gains and losses detailed in the above EBIT presentation.
|
·
|
Lower gross margin of $14.7 million primarily as the result of:
|
o
|
Impact of a net hedging loss of $2.5 million in the 2011 period versus a net hedging gain of $26.8 million in the 2010 period (which includes the impact of $300,000 of unrealized gains recorded in 2011);
|
o
|
Higher operating revenues of $75.1 million, excluding hedging gains and losses, largely attributable to higher market-driven realized average natural gas and NGL prices (unadjusted for the impact of realized and unrealized commodity derivative gains and losses) of $4.19 per MMBtu and $1.35 per gallon in the 2011 period versus $4.07 per MMBtu and $1.04 per gallon in the 2010 period, respectively; and
|
o
|
A $60.5 million increase in the cost of gas and other energy in the 2011 period versus the 2010 period due to higher market-driven natural gas and NGL purchase costs; and
|
·
|
Higher operating, maintenance and general expenses of $2.7 million primarily due to:
|
o
|
Higher labor costs of $600,000 primarily due to an increased overall headcount in the 2011 period;
|
o
|
Higher compensation expense of $500,000 largely due to mark-to-market adjustments for liability share-based compensation awards (which are settled in cash) resulting from an increase in the Southern Union stock price impacted by the potential merger with ETE;
|
o
|
An increase in chemicals and lubricants costs of $500,000, which generally track with the price of oil; and
|
o
|
Higher contract services of $500,000 primarily associated with the plant down time experienced in early 2011 due to severe cold weather.
|
·
|
Lower gross margin of $28.7 million primarily as the result of:
|
o
|
Impact of a net hedging loss of $14.5 million in the 2011 period versus a net hedging gain of $20.9 million in the 2010 period (which includes the impact of $14.4 million of unrealized losses recorded in 2011);
|
o
|
Higher operating revenues of $44 million, excluding hedging gains and losses, largely attributable to higher market-driven realized average NGL prices (unadjusted for the impact of realized and unrealized commodity derivative gains and losses) of $1.29 per gallon in the 2011 period versus $1.08 per gallon in the 2010 period. This increase was partially offset by lower realized average natural gas prices (unadjusted for the impact of realized and unrealized commodity derivative gains and losses) of $4.12 per MMBtu in the 2011 period versus $4.58 per MMBtu in the 2010 period and reduced throughput volumes as a result of processing plant outages and producer well freeze-offs resulting from unusually cold weather in early 2011; and
|
o
|
A $37.3 million increase in the cost of gas and other energy in the 2011 period versus the 2010 period mainly due to higher market-driven NGL purchase costs, partially offset by lower natural gas costs in 2011; and
|
·
|
Higher operating, maintenance and general expenses of $5.7 million primarily due to:
|
o
|
Higher contract services of $1.8 million primarily associated with the plant down time experienced in early 2011 due to severe cold weather;
|
o
|
Increased costs of $1.5 million associated with the fire at the Keystone natural gas processing plant in January 2011;
|
o
|
An increase in chemicals and lubricants costs of $1.3 million, which generally track with the price of oil; and
|
o
|
Higher labor cost of $1 million primarily due to an increased overall headcount in the 2011 period.
|
Three Months Ended June 30,
|
Six Months Ended June 30,
|
|||||||||||||||
2011
|
2010
|
2011
|
2010
|
|||||||||||||
($ in thousands)
|
||||||||||||||||
Net operating revenues (1)
|
$ | 55,633 | $ | 54,955 | $ | 123,472 | $ | 124,239 | ||||||||
Operating, maintenance and general
|
41,373 | 36,558 | 73,715 | 65,877 | ||||||||||||
Depreciation and amortization
|
8,407 | 7,967 | 16,814 | 15,923 | ||||||||||||
Taxes other than on income
|
||||||||||||||||
and revenues
|
2,458 | 3,271 | 5,926 | 6,512 | ||||||||||||
Total operating income
|
3,395 | 7,159 | 27,017 | 35,927 | ||||||||||||
Other income (expenses), net
|
(21 | ) | (294 | ) | (76 | ) | (217 | ) | ||||||||
EBIT
|
$ | 3,374 | $ | 6,865 | $ | 26,941 | $ | 35,710 | ||||||||
Operating Information:
|
||||||||||||||||
Natural gas sales volumes (MMcf)
|
6,401 | 7,285 | 39,820 | 40,842 | ||||||||||||
Natural gas transported volumes (MMcf)
|
4,860 | 5,613 | 14,777 | 14,756 | ||||||||||||
Weather – Degree Days: (2)
|
||||||||||||||||
Missouri Gas Energy service territories
|
445 | 287 | 3,401 | 3,174 | ||||||||||||
New England Gas Company service territories
|
664 | 777 | 3,585 | 3,375 |
(1) Operating revenues for the Distribution segment are reported net of Cost of natural gas and other energy and Revenue-related taxes, which are pass-through costs.
(2) "Degree days" are a measure of the coldness of the weather experienced. A degree day is equivalent to each degree that the daily mean temperature for a day falls below 65 degrees Fahrenheit.
|
·
|
Higher operating, maintenance and general expenses of $4.8 million primarily attributable to:
|
o
|
Impact of a $1.5 million settlement in 2010 for a previous environmental cost reimbursement claim made by the Company;
|
o
|
Higher provisions for uncollectible customer accounts of approximately $1.1 million mainly resulting from the impact of decreased governmental assistance provided to Missouri Gas Energy’s low income customers;
|
o
|
Higher costs of approximately $1 million related to the tornadoes in Joplin, Missouri during the second quarter of 2011;
|
o
|
Higher legal, injuries and damage claims of $500,000 primarily due to ongoing litigation; and
|
o
|
Higher labor costs of $400,000 largely due to new positions filled in the 2011 period; and
|
·
|
Higher net operating revenues of $700,000 largely attributable to higher revenues at New England Gas Company primarily resulting from the impact of new customer rates effective April 1, 2011.
|
·
|
Higher operating, maintenance and general expenses of $7.8 million primarily attributable to:
|
o
|
Higher legal, injuries and damage claims of $3 million primarily due to ongoing litigation;
|
o
|
Impact of a $1.5 million settlement in 2010 for a previous environmental cost reimbursement claim made by the Company;
|
o
|
Higher costs of approximately $1 million related to the tornadoes in Joplin, Missouri during the second quarter of 2011;
|
o
|
Higher amortized pension costs of $700,000, which were previously being deferred until such costs were included in Missouri Gas Energy’s new rates, which became effective February 28, 2010; and
|
o
|
Higher labor costs of $700,000 largely due to new positions filled in the 2011 period; and
|
·
|
Lower net operating revenues of $800,000 largely attributable to $3 million of lower net operating revenues at Missouri Gas Energy primarily due to the impact of the new customer rates effective February 28, 2010, which eliminated the impact of weather and conservation for the majority of Missouri Gas Energy’s revenues (resulting in lower reported revenues in the traditional winter heating season), partially offset by higher revenues of $2.3 million at New England Gas Company primarily due to colder weather in the 2011 winter season and the impact of new customer rates effective April 1, 2011.
|
Three Months Ended June 30,
|
Six Months Ended June 30,
|
|||||||||||||||
2011
|
2010
|
2011
|
2010
|
|||||||||||||
(In thousands)
|
||||||||||||||||
Income tax expense
|
$ | 25,588 | $ | 28,609 | $ | 44,230 | $ | 59,418 | ||||||||
Effective tax rate (1)
|
30 | % | 28 | % | 27 | % | 31 | % |
(1)
|
The EITR is generally lower than the U.S. federal income tax statutory rate of 35 percent primarily due to the 80 percent dividends received deduction for the anticipated receipt of dividends associated with earnings from the Company’s unconsolidated Citrus affiliate, partially offset by the impact of state income taxes, net of the federal income tax benefit.
|
Six Months Ended June 30,
|
||||||||
2011
|
2010
|
|||||||
(In thousands)
|
||||||||
Cash flows provided by (used in):
|
||||||||
Operating activities
|
$ | 350,911 | $ | 242,492 | ||||
Investing activities
|
(216,390 | ) | (129,020 | ) | ||||
Financing activities
|
(134,807 | ) | (121,429 | ) | ||||
Increase (decrease) in cash and cash equivalents
|
$ | (286 | ) | $ | (7,957 | ) |
·
|
An increase in cash of $62.6 million in the Distribution segment associated with recovery of a higher amount of previously deferred natural gas purchase costs from customers in the 2011 period; and
|
·
|
An increase of cash of $13.1 million at Missouri Gas Energy primarily due to the impact of a one-time catch-up contribution to Missouri Gas Energy’s other postretirement benefit plan in the 2010 period in accordance with its approved rate case effective February 28, 2010.
|
·
|
Repayments of $101.6 million under the Company’s credit facilities in the 2011 period compared to $76.1 million of borrowings in 2010; and
|
·
|
Net repayments of $139.9 million of long-term debt in the 2010 period.
|
·
|
Borrowing costs associated with existing debt obligations could increase annually up to approximately $6.6 million in the event of a credit rating downgrade;
|
·
|
The costs of refinancing debt that is maturing or any new debt issuances could increase due to being placed on credit watch or due to a credit rating downgrade;
|
·
|
The costs of maintaining certain contractual relationships could increase, primarily related to the potential requirement for the Company to post collateral associated with its derivative financial instruments; and
|
·
|
Regulators may be unwilling to allow the Company to pass along increased debt service costs to natural gas customers.
|
|
Date of Last
|
|
Company
|
Rate Filing
|
Rate Proceedings Status
|
|
|
|
PEPL
|
May 1992
|
Settlement effective April 1997
|
Trunkline
|
January 1996
|
Settlement effective May 2001
|
Sea Robin
|
June 2007
|
Settlement effective December 2008 (1)
|
Trunkline LNG
|
June 2001
|
Settlement effective January 2002 (2)
|
Southwest Gas Storage
|
August 2007
|
Settlement effective February 2008
|
Florida Gas
|
October 2009
|
Settlement effective April 2011 (3)
|
(3)
|
Settlement provides for a rate moratorium until January 1, 2013 and requires another rate case to be filed by November 2014.
|
·
|
processing plant outages;
|
·
|
limitations on treating capacity;
|
·
|
higher than anticipated fuel, flare and unaccounted-for natural gas levels;
|
·
|
impact of commodity prices in general;
|
·
|
decline in drilling and/or connections of new supply;
|
·
|
limitations in available natural gas and NGL take-away capacity;
|
·
|
reduction in NGL available from wellhead supply;
|
·
|
lower than expected recovery of NGL from the inlet natural gas stream;
|
·
|
lower than expected receipt of natural gas volumes to be processed;
|
·
|
limitations on NGL fractionation capacity;
|
·
|
renegotiation of existing contracts;
|
·
|
change in contracting practices vis-à-vis type(s) of processing contracts;
|
·
|
competition for new wellhead supplies; and
|
·
|
changes to environmental or other laws and regulations.
|
Average
|
Volumes
|
Fair Value
|
||||||||||||||||
Fixed Price
|
(MMBtu/d)
|
of Assets
|
||||||||||||||||
Instrument Type
|
Index
|
(per MMBtu)
|
2011
|
2012
|
(Liabilities) (6) | |||||||||||||
(In thousands)
|
||||||||||||||||||
Natural Gas - Cash Flow Hedges: (1)(4) | ||||||||||||||||||
Receive-fixed swap
|
Gas Daily - Waha/El Paso Permian
|
$
|
6.12
|
25,000
|
-
|
$
|
8,253
|
|||||||||||
Receive-fixed swap
|
Gas Daily - Waha/El Paso Permian
|
$
|
4.46
|
20,000
|
-
|
514
|
||||||||||||
Receive-fixed swap
|
Gas Daily - Waha/El Paso Permian
|
$
|
4.82
|
-
|
10,000
|
738
|
||||||||||||
45,000
|
10,000
|
$
|
9,505
|
|||||||||||||||
Processing Spread - Economic Hedges: (3) | ||||||||||||||||||
Receive-fixed swap
|
Gas Daily - Waha/El Paso Permian & OPIS Mt. Belvieu
|
$
|
5.51
|
25,000
|
-
|
$
|
(26,716)
|
|||||||||||
Average
|
Volumes
|
Fair Value
|
||||||||||||||||
Fixed Price
|
(Gallons/d)
|
of Assets
|
||||||||||||||||
Instrument Type
|
Index
|
(per Gallon)
|
2011
|
2012
|
(Liabilities) (6) | |||||||||||||
(In thousands)
|
||||||||||||||||||
Natural Gas Liquids - Cash Flow Hedges: (2) | ||||||||||||||||||
Receive-fixed swap (5) |
OPIS Mt. Belvieu
|
$
|
1.15
|
-
|
178,629
|
$
|
(3,244)
|
(1)
|
The Company’s natural gas swap arrangements have been designated as cash flow hedges. The effective portion of changes in the fair value of the cash flow hedges is recorded in Accumulated other comprehensive loss until the related hedged items impact earnings. Any ineffective portion of a cash flow hedge is reported in current-period earnings.
|
(2)
|
The Company's NGL swap arrangements have been designated as cash flow hedges. The effective portion of changes in the fair value of the cash flow hedges is recorded in Accumulated other comprehensive loss until the related hedged items impact earnings. Any ineffective portion of a cash flow hedge is reported in current-period earnings.
|
(3)
|
The Company’s processing spread swap arrangements, which hedge the pricing differential between NGL volumes and natural gas volumes, are treated as economic hedges. The ratio of NGL product sold per MMBtu is approximately: 34 percent ethane, 32 percent propane, 5 percent isobutane, 14 percent normal butane and 15 percent natural gasoline. The change in fair value is reported in current-period earnings.
|
(4)
|
Volumes are applicable to the period July 1, 2011 to December 31, 2011, with 55.25 percent of the volumes settled against Gas Daily - Waha and 44.75 percent of the volumes settled against Gas Daily - El Paso Permian.
|
(5)
|
The Company's NGL swap arrangements consist of a ratio of NGL product that is approximately (on a gallon basis): 44 percent ethane, 29 percent propane, 4 percent iso-butane, 11 percent normal butane and 12 percent natural gasoline. The arrangements approximate 15,000 MMBtu/d equivalents at a weighted average fixed price of $13.66 per MMBtu.
|
(6)
|
See Part I, Item 1. Financial Statements (Unaudited), Note 10 – Derivative Instruments and Hedging Activities – Commodity Contracts – Gathering and Processing Segment for additional related information.
|
·
|
changes in demand for natural gas or NGL and related services by customers, in the composition of the Company’s customer base and in the sources of natural gas or NGL accessible to the Company’s system;
|
·
|
the effects of inflation and the timing and extent of changes in the prices and overall demand for and availability of natural gas or NGL as well as electricity, oil, coal and other bulk materials and chemicals;
|
·
|
adverse weather conditions, such as warmer or colder than normal weather in the Company’s service territories, as applicable, and the operational impact of natural disasters;
|
·
|
changes in laws or regulations, third-party relations and approvals, and decisions of courts, regulators and/or governmental bodies affecting or involving the Company, including deregulation initiatives and the impact of rate and tariff proceedings before FERC and various state regulatory commissions;
|
·
|
the speed and degree to which additional competition, including competition from alternative forms of energy, is introduced to the Company’s business and the resulting effect on revenues;
|
·
|
the impact and outcome of pending and future litigation and/or regulatory investigations, proceedings or inquiries;
|
·
|
the ability to comply with or to successfully challenge existing and/or or new environmental, safety and other laws and regulations;
|
·
|
unanticipated environmental liabilities;
|
·
|
the uncertainty of estimates, including accruals and costs of environmental remediation;
|
·
|
the impact of potential impairment charges;
|
·
|
exposure to highly competitive commodity businesses and the effectiveness of the Company's hedging program;
|
·
|
the ability to acquire new businesses and assets and to integrate those operations into its existing operations, as well as its ability to expand its existing businesses and facilities;
|
·
|
the timely receipt of required approvals by applicable governmental entities for the construction and operation of the pipelines and other projects;
|
·
|
the ability to complete expansion projects on time and on budget;
|
·
|
the ability to control costs successfully and achieve operating efficiencies, including the purchase and implementation of new technologies for achieving such efficiencies;
|
·
|
the impact of factors affecting operations such as maintenance or repairs, environmental incidents, natural gas pipeline system constraints and relations with labor unions representing bargaining-unit employees;
|
·
|
the performance of contractual obligations by customers, service providers and contractors;
|
·
|
exposure to customer concentrations 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;
|
·
|
changes in the ratings of the Company’s debt securities;
|
·
|
the risk of a prolonged slow-down in growth or decline in the United States economy or the risk of delay in growth or decline in the United States economy, including liquidity risks in United States credit markets;
|
·
|
the impact of unsold pipeline capacity being greater than expected;
|
·
|
changes in interest rates and other general market and economic conditions, and in the Company’s ability to continue to access its revolving credit facility and to obtain additional financing on acceptable terms, whether in the capital markets or otherwise;
|
·
|
declines in the market prices of equity and debt securities and resulting funding requirements for defined benefit pension plans and other postretirement benefit plans;
|
·
|
acts of nature, sabotage, terrorism or other similar acts that cause damage to the facilities or those of the Company’s suppliers' or customers' facilities;
|
·
|
market risks beyond the Company’s control affecting its risk management activities including market liquidity, commodity price volatility and counterparty creditworthiness;
|
·
|
the availability/cost of insurance coverage and the ability to collect under existing insurance policies;
|
·
|
the risk that material weaknesses or significant deficiencies in internal controls over financial reporting could emerge or that minor problems could become significant;
|
·
|
changes in accounting rules, regulations and pronouncements that impact the measurement of the results of operations, the timing of when such measurements are to be made and recorded and the disclosures surrounding these activities;
|
·
|
the effects of changes in governmental policies and regulatory actions, including changes with respect to income and other taxes, environmental compliance, climate change initiatives, authorized rates of recovery of costs (including pipeline relocation costs), and permitting for new natural gas production accessible to the Company’s systems;
|
|
·
|
market risks affecting the Company’s pricing of its services provided and renewal of significant customer contracts;
|
·
|
other risks and unforeseen events, including other financial, operational and legal risks and uncertainties detailed from time to time in filings with the SEC;
|
·
|
actions taken to protect species under the Endangered Species Act and the effect of those actions on the Company’s operations; and
|
·
|
the likelihood and timing of the completion of the proposed merger with ETE, the terms and conditions of any required regulatory approvals of the proposed merger, the impact of the proposed merger on Southern Union’s employees and potential diversion of management’s time and attention from ongoing business during this time period.
|
·
|
under the merger agreement, Southern Union may be required, under certain circumstances, to pay ETE a breakup fee of $181.3 million and up to $54.0 million of ETE’s expenses;
|
·
|
Southern Union will be required to pay certain costs relating to the merger, whether or not the merger is completed, such as legal, accounting, financial advisor and printing fees;
|
·
|
Southern Union would not realize the expected benefits of the merger;
|
·
|
under the merger agreement, Southern Union is subject to certain restrictions on the conduct of its business prior to completing the merger which may adversely affect its ability to execute certain of its business strategies; and
|
·
|
matters relating to the merger may require substantial commitments of time and resources by Southern Union management, which could otherwise have been devoted to other opportunities that may have been beneficial to Southern Union as an independent company.
|
|
Total Number
|
Average
|
|||||||
of Shares
|
Price Paid
|
|||||||
Purchased (1)
|
per Share
|
|||||||
Month Ended April 30, 2011
|
5,674 | $ | 28.63 | |||||
Month Ended May 31, 2011
|
363 | 29.67 | ||||||
Month Ended June 30, 2011
|
2,442 | 38.37 | ||||||
Total
|
8,479 | $ | 31.48 | |||||
|
2(a)
|
Agreement and Plan of Merger, dated as of June 15, 2011, as Amended and Restated as of July 4, 2011 and July 19, 2011, by and between the Southern Union Company, Energy Transfer Equity, L.P. and Sigma Acquisition Corporation (Filed as Exhibit 2.1 to Southern Union’s Current Report on Form 8-K filed on July 20, 2011 and incorporated herein by reference.)
|
|
2(b)
|
Purchase and Sale Agreement between Southern Union Company and UGI Corporation, dated as of January 26, 2006. (Filed as Exhibit 10.1 to Southern Union’s Current Report on Form 8-K filed on January 30, 2006 and incorporated herein by reference.)
|
|
2(c)
|
First Amendment to the Purchase and Sale Agreement between Southern Union Company and UGI Corporation, dated as of August 24, 2006. (Filed as Exhibit 10.1 to Southern Union’s Current Report on Form 8-K filed on August 30, 2006 and incorporated herein by reference.)
|
|
2(d)
|
Purchase and Sale Agreement between Southern Union Company and National Grid USA, dated as of February 15, 2006. (Filed as Exhibit 10.1 to Southern Union’s Current Report on Form 8-K filed on February 17, 2006 and incorporated herein by reference.)
|
|
2(e)
|
Limited Settlement Agreement between Southern Union Company, Narragansett Electric Company d/b/a National Grid, the Department of the Attorney General for the State of Rhode Island and the Rhode Island Department of Environmental Management, dated as of August 24, 2006. (Filed as Exhibit 10.2 to Southern Union’s Current Report on Form 8-K filed on August 30, 2006 and incorporated herein by reference.)
|
|
2(f)
|
First Amendment to the Purchase and Sale Agreement between Southern Union Company and National Grid USA, dated as of August 24, 2006. (Filed as Exhibit 10.3 to Southern Union’s Current Report on Form 8-K filed on August 30, 2006 and incorporated herein by reference.)
|
|
3(a)
|
Amended and Restated Certificate of Incorporation of Southern Union Company. (Filed as Exhibit 3(a) to Southern Union’s Annual Report on Form 10-K for the year ended December 31, 2005 and incorporated herein by reference.)
|
|
3(b)
|
By-Laws of Southern Union Company, as amended. (Filed as Exhibit 3(b) to Southern Union’s Annual Report on Form 10-K for the year ended December 31, 2009 and incorporated herein by reference.)
|
|
4(a)
|
Specimen Common Stock Certificate. (Filed as Exhibit 4(a) to Southern Union's Annual Report on Form 10-K for the year ended December 31, 1989 and incorporated herein by reference.)
|
|
4(b)
|
Senior Debt Securities Indenture between Southern Union and The Chase Manhattan Bank (National Association), which changed its name to JP Morgan Chase Bank and then to JP Morgan Chase Bank, N.A., which was then succeeded to by The Bank of New York Trust Company, N.A., which changed its name to The Bank of New York Mellon Trust Company N.A., as Trustee (Filed as Exhibit 4.1 to Southern Union’s Current Report on Form 8-K dated February 15, 1994 and incorporated here-in by reference.)
|
|
4(c)
|
Officers' Certificate dated January 31, 1994 setting forth the terms of the 7.60% Senior Debt Securities due 2024. (Filed as Exhibit 4.2 to Southern Union's Current Report on Form 8-K dated February 15, 1994 and incorporated herein by reference.)
|
|
4(d)
|
Officer's Certificate of Southern Union Company dated November 3, 1999 with respect to 8.25% Senior Notes due 2029. (Filed as Exhibit 99.1 to Southern Union's Current Report on Form 8-K filed on November 19, 1999 and incorporated herein by reference.)
|
|
4(e)
|
Form of Supplemental Indenture No. 1, dated June 11, 2003, between Southern Union Company and JP Morgan Chase Bank, which changed its name to JP Morgan Chase Bank, N.A., the predecessor to The Bank of New York Trust Company, N.A., which changed its name to The Bank of New York Mellon Trust Company, N.A. (Filed as Exhibit 4.5 to Southern Union’s Form 8-A/A dated June 20, 2003 and incorporated herein by reference.)
|
|
4(f)
|
Supplemental Indenture No. 2, dated February 11, 2005, between Southern Union Company and JP Morgan Chase Bank, N.A., the predecessor to The Bank of New York Trust Company, N.A., which changed its name to The Bank of New York Mellon Trust Company, N.A. (Filed as Exhibit 4.4 to Southern Union’s Form 8-A/A dated February 22, 2005 and incorporated herein by reference.)
|
4(g)
|
Subordinated Debt Securities Indenture between Southern Union and The Chase Manhattan Bank (National Association), which changed its name to JP Morgan Chase Bank and then to JP Morgan Chase Bank, N.A., which was then succeeded to by The Bank of New York Trust Company, N.A., which changed its name to The Bank of New York Mellon Trust Company, N.A., as Trustee (Filed as Exhibit 4-G to Southern Union’s Registration Statement on Form S-3 (No. 33-58297) and incorporated herein by reference.)
|
|
4(h)
|
Second Supplemental Indenture, dated October 23, 2006, between Southern Union Company and The Bank of New York Trust Company, N.A., now known as The Bank of New York Mellon Trust Company, N.A. (Filed as Exhibit 4.1 to Southern Union’s Form 8-K/A dated October 24, 2006 and incorporated herein by reference.)
|
|
4(i)
|
2006 Series A Junior Subordinated Notes Due November 1, 2066 dated October 23, 2006. (Filed as Exhibit 4.2 to Southern Unions Current Report on Form 8-K/A filed on October 24, 2006 and incorporated herein by reference.)
|
|
4(j)
|
Replacement Capital Covenant, dated as of October 23, 2006 by Southern Union Company, a Delaware corporation with its successors and assigns, in favor of and for the benefit of each Covered Debtor (as defined in the Covenant). (Filed as Exhibit 4.3 to Southern Union’s Current Report on Form 8-K/A filed on October 24, 2006 and incorporated herein by reference.)
|
4(k)
|
Southern Union is a party to other debt instruments, none of which authorizes the issuance of debt securities in an amount which exceeds 10% of the total assets of Southern Union. Southern Union hereby agrees to furnish a copy of any of these instruments to the Commission upon request.
|
|
10(a)
|
Seventh Amended and Restated Revolving Credit Agreement, dated as of May 20, 2011, among the Company, as borrower, and the lenders party thereto. (Filed as Exhibit 10.1 to Southern Union’s Current Report on Form 8-K filed on May 24, 2011 and incorporated herein by reference.)
|
|
10(b)
|
Amended and Restated Credit Agreement, dated as of August 3, 2010, among the Company, as borrower, and the lenders party thereto (Filed as Exhibit 10(b) to Southern Union Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2010 and incorporated herein by reference.)
|
|
10(c)
|
First Amendment to Construction and Term Loan Agreement between Citrus Corp., as borrower, and Pipeline Funding Company, LLC, as lender and administrative agent, dated as of August 6, 2008. (Filed as Exhibit 10(a) to Southern Union Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2008 and incorporated herein by reference.)
|
|
10(d)
|
Construction and Term Loan Agreement between Citrus Corp., as borrower, and Pipeline Funding Company, LLC, as lender and administrative agent, dated as of February 5, 2008. (Filed as Exhibit 10.1 to Southern Union’s Current Report on Form 8-K filed on February 8, 2008 and incorporated herein by reference.)
|
|
10(e)
|
Amendment Number 1 to the Amended and Restated Credit Agreement between Trunkline LNG Holdings, LLC, as borrower, Panhandle Eastern Pipe Line Company, LP and CrossCountry Citrus, LLC, as guarantors, the financial institutions listed therein and Bayerische Hypo-Und Vereinsbank AG, New York Branch, as administrative agent, dated as of June 13, 2008. (Filed as Exhibit 10(d) to Southern Union Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2008 and incorporated herein by reference.)
|
|
10(f)
|
Amended and Restated Credit Agreement between Trunkline LNG Holdings, LLC, as borrower, Panhandle Eastern Pipeline Company, LP and CrossCountry Citrus, LLC, as guarantors, the financial institutions listed therein and Bayerische Hypo-Und Vereinsbank AG, New York Branch, as administrative agent, dated as of June 29, 2007. (Filed as Exhibit 10.1 to Southern Union’s Current Report on Form 8-K filed on July 6, 2007 and incorporated herein by reference.)
|
|
10(g)
|
Credit Agreement between Trunkline LNG Holdings, LLC, as borrower, Panhandle Eastern Pipeline Company, LP and Trunkline LNG Company, LLC, as guarantors, the financial institutions listed therein and Hypo-Und Vereinsbank AG, New York Branch, as administrative agent, dated as of March 15, 2007. (Filed as Exhibit 10.1 to Southern Union’s Current Report on Form 8-K filed on March 21, 2007 and incorporated herein by reference.)
|
|
10(h)
|
Form of Indemnification Agreement between Southern Union Company and each of the Directors of Southern Union Company and certain senior executive officers. (Filed as Exhibit 10(g) to Southern Union’s Annual Report on Form 10-K for the year ended December 31, 2008 and incorporated herein by reference.)
|
|
10(i)
|
Southern Union Company 1992 Long-Term Stock Incentive Plan, As Amended. (Filed as Exhibit 10(l) to Southern Union’s Annual Report on Form 10-K for the year ended June 30, 1998 and incorporated herein by reference.) *
|
|
10(j)
|
Southern Union Company Director's Deferred Compensation Plan. (Filed as Exhibit 10(g) to Southern Union's Annual Report on Form 10-K for the year ended December 31, 1993 and incorporated herein by reference.)
|
|
10(k)
|
First Amendment to Southern Union Company Director’s Deferred Compensation Plan, effective April 1, 2007. (Filed as Exhibit 10(h) to Southern Union Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2007 and incorporated herein by reference.)
|
|
10(l)
|
Southern Union Company Amended Supplemental Deferred Compensation Plan with Amendments. (Filed as Exhibit 4 to Southern Union’s Form S-8 filed May 27, 1999 and incorporated herein by reference.) *
|
|
10(m)
|
Second Amended and Restated Southern Union Company 2003 Stock and Incentive Plan. (Filed as Exhibit 4 to Form S-8, SEC File No. 333-138524, filed on November 8, 2006 and incorporated herein by reference.) *
|
10(n)
|
Third Amended and Restated Southern Union Company 2003 Stock and Incentive Plan. (Filed as Appendix I to Southern Union’s proxy statement on Schedule 14A filed on April 16, 2009 and incorporated herein by reference).*
|
|
10(o)
|
Form of Long Term Incentive Award Agreement, dated December 28, 2006, between Southern Union Company and the undersigned. (Filed as Exhibit 99.1 to Southern Union’s Form 8-K dated January 3, 2007) and incorporated herein by reference.) *
|
|
10(p)
|
Employment Agreement between Southern Union Company and George L. Lindemann, dated as of August 28, 2008. (Filed as Exhibit 10(f) to Southern Union Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2008 and incorporated herein by reference.) *
|
|
10(q)
|
Employment Agreement between Southern Union Company and Eric D. Herschmann, dated as of August 28, 2008. (Filed as Exhibit 10(g) to Southern Union Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2008 and incorporated herein by reference.) *
|
|
10(r)
|
Employment Agreement between Southern Union Company and Robert O. Bond, dated as of August 28, 2008. (Filed as Exhibit 10(h) to Southern Union Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2008 and incorporated herein by reference.) *
|
|
10(s)
|
Employment Agreement between Southern Union Company and Monica M. Gaudiosi, dated as of August 28, 2008. (Filed as Exhibit 10(i) to Southern Union Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2008 and incorporated herein by reference.) *
|
10(t)
|
Second Amended and Restated Southern Union Company Executive Incentive Bonus Plan, dated March 25, 2010 (Filed as Appendix I to Southern Union’s proxy statement on Schedule 14A filed on March 26, 2006 and incorporate herein by reference.) *
|
|
10(u)
|
Employment Agreement between Southern Union Company and Richard N. Marshall, dated as of August 28, 2008. (Filed as Exhibit 10(j) to Southern Union Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2008 and incorporated herein by reference.) *
|
|
10(v)
|
Form of Change in Control Severance Agreement, between Southern Union Company and certain Executives (filed as Exhibit 10.2 to Southern Union’s Current Report on Form 8-K filed on August 28, 2008 and incorporated herein by reference.) *
|
10(w)
|
Capital Stock Agreement dated June 30, 1986, as amended April 3, 2000 ("Agreement"), among El Paso Energy Corporation (as successor in interest to Sonat, Inc.); CrossCountry Energy, LLC (assignee of Enron Corp., which is the successor in interest to InterNorth, Inc. by virtue of a name change and successor in interest to Houston Natural Gas Corporation by virtue of a merger) and Citrus Corp. (Filed as Exhibit 10(t) to Southern Union’s Annual Report on Form 10-K for the year ended December 31, 2008 and incorporated herein by reference.)
|
10(x)
|
Certificate of Incorporation of Citrus Corp. (Filed as Exhibit 10(q) to Southern Union’s Annual Report on Form 10-K for the year ended December 31, 2006 and incorporated herein by reference.)
|
10(y)
|
By-Laws of Citrus Corp., filed herewith. (Filed as Exhibit 10(r) to Southern Union’s Annual Report on Form 10-K for the year ended December 31, 2006 and incorporated herein by reference.)
|
|
12
|
Ratio of earnings to fixed charges. (Filed herewith as Exhibit 12.)
|
|
14
|
Code of Ethics and Business Conduct. (Filed as Exhibit 14 to Southern Union’s Annual Report on Form 10-K filed on March 16, 2006 and incorporated herein by reference.)
|
|
|
31.1
|
Certificate by Chief Executive Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) promulgated under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
31.2
|
Certificate by Chief Financial Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) promulgated under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
32.1
|
Certificate by Chief Executive Officer pursuant to Rule 13a-14(b) or Rule 15d-14(b) promulgated under the Securities Exchange Act of 1934 and Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350.
|
|
32.2
|
Certificate by Chief Financial Officer pursuant to Rule 13a-14(b) or Rule 15d-14(b) promulgated under the Securities Exchange Act of 1934 and Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350.
|
101.INS
|
XBRL Instance Document **
|
101.SCH |
XBRL Taxonomy Extension Schema Document **
|
101.CAL |
XBRL Taxonomy Calculation Linkbase Document **
|
101.DEF
|
XBRL Taxonomy Extension Definitions Document **
|
101.LAB
|
XBRL Taxonomy Label Linkbase Document **
|
|
|
101.PRE
|
XBRL Taxonomy Presentation Linkbase Document **
|
SOUTHERN UNION COMPANY
|
|
|
(Registrant)
|
Date: August 9, 2011
|
By /s/ GEORGE E. ALDRICH
|
George E. Aldrich
Senior Vice President and Controller
(authorized officer and principal
accounting officer)
|
|
6 Months Ended
|
Year Ended December 31,
|
|||||||||||||||||||||||
June 30, 2011
|
2010
|
2009
|
2008
|
2007
|
2006
|
|||||||||||||||||||
(In thousands)
|
||||||||||||||||||||||||
FIXED CHARGES:
|
||||||||||||||||||||||||
Interest Expense
|
$ | 107,572 | $ | 210,008 | $ | 191,022 | $ | 204,272 | $ | 202,403 | $ | 202,513 | ||||||||||||
Net amortization of debt discount, premium and
|
||||||||||||||||||||||||
issuance expense
|
2,932 | 6,657 | 5,778 | 3,136 | 743 | 12,130 | ||||||||||||||||||
Capitalized Interest
|
513 | 6,646 | 25,747 | 18,963 | 14,708 | 5,492 | ||||||||||||||||||
Interest portion of rental expense
|
3,372 | 6,685 | 7,576 | 6,386 | 6,645 | 6,234 | ||||||||||||||||||
Total Fixed Charges
|
$ | 114,389 | $ | 229,996 | $ | 230,123 | $ | 232,757 | $ | 224,499 | $ | 226,369 | ||||||||||||
EARNINGS:
|
||||||||||||||||||||||||
Consolidated pre-tax income from
|
||||||||||||||||||||||||
continuing operations
|
$ | 164,665 | $ | 349,677 | $ | 251,480 | $ | 399,926 | $ | 323,970 | $ | 326,330 | ||||||||||||
Earnings of equity investments
|
(51,749 | ) | (105,415 | ) | (80,790 | ) | (75,030 | ) | (100,914 | ) | (141,370 | ) | ||||||||||||
Distributed income from equity investments
|
1,500 | 3,500 | - | 77,150 | 103,550 | 62,637 | ||||||||||||||||||
Capitalized interest
|
(513 | ) | (6,646 | ) | (25,747 | ) | (18,963 | ) | (14,708 | ) | (5,492 | ) | ||||||||||||
Total fixed charges (from above)
|
114,389 | 229,996 | 230,123 | 232,757 | 224,499 | 226,369 | ||||||||||||||||||
Earnings Available for Fixed Charges
|
$ | 228,292 | $ | 471,112 | $ | 375,066 | $ | 615,840 | $ | 536,397 | $ | 468,474 | ||||||||||||
Ratio of Earnings to Fixed Charges
|
2.0 | 2.0 | 1.6 | 2.6 | 2.4 | 2.1 |
|
Exhibit 31.1
|
(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 registrant’s 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 registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
(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 registrant’s 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 registrant’s internal control over financial reporting.
|
(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 registrant’s 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 registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
(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 registrant’s 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 registrant’s internal control over financial reporting.
|
Derivative Instrument and Hedging Activities 2 (Details) (USD $)
In Thousands |
Jun. 30, 2011
|
Dec. 31, 2010
|
---|---|---|
Derivatives Fair Value Line Items | ||
Derivative Fair Value Of Derivative Asset | $ 9,665 | $ 16,931 |
Derivative Fair Value Of Derivative Liability | 78,166 | 91,177 |
Gathering And Processing [Member] | Derivative Instruments Liabilitiy [Member] | Designated As Hedging Instrument [Member] | Natural Gas Price Swaps [Member]
|
||
Derivatives Fair Value Line Items | ||
Derivative Fair Value Of Derivative Asset | 9,275 | 16,459 |
Derivative Fair Value Of Derivative Liability | 0 | 0 |
Gathering And Processing [Member] | Derivative Instruments Liabilitiy [Member] | Designated As Hedging Instrument [Member] | NGL Price Swaps [Member]
|
||
Derivatives Fair Value Line Items | ||
Derivative Fair Value Of Derivative Asset | 0 | 0 |
Derivative Fair Value Of Derivative Liability | 2,408 | 0 |
Gathering And Processing [Member] | Derivative Instruments Liabilitiy [Member] | Nondesignated [Member] | NGL Processing Spread Swaps [Member]
|
||
Derivatives Fair Value Line Items | ||
Derivative Fair Value Of Derivative Asset | 0 | 0 |
Derivative Fair Value Of Derivative Liability | 26,716 | 29,057 |
Distribution [Member] | Derivative Instruments Liabilitiy [Member] | Nondesignated [Member] | Natural Gas Price Swaps [Member]
|
||
Derivatives Fair Value Line Items | ||
Derivative Fair Value Of Derivative Asset | 100 | 234 |
Derivative Fair Value Of Derivative Liability | 13,098 | 34,968 |
Derivative Instruments Liabilitiy [Member] | Designated As Hedging Instrument [Member] | Interest Rate Contract [Member]
|
||
Derivatives Fair Value Line Items | ||
Derivative Fair Value Of Derivative Asset | 0 | 0 |
Derivative Fair Value Of Derivative Liability | 23,353 | 19,694 |
Gathering And Processing [Member] | Prepayments And Other Assets [Member] | Nondesignated [Member] | Other Derivative Instruments [Member]
|
||
Derivatives Fair Value Line Items | ||
Derivative Fair Value Of Derivative Asset | 9 | 133 |
Derivative Fair Value Of Derivative Liability | 0 | 0 |
Gathering And Processing [Member] | Deferred Credits [Member] | Designated As Hedging Instrument [Member] | Natural Gas Price Swaps [Member]
|
||
Derivatives Fair Value Line Items | ||
Derivative Fair Value Of Derivative Asset | 230 | 0 |
Derivative Fair Value Of Derivative Liability | 0 | 0 |
Gathering And Processing [Member] | Deferred Credits [Member] | Designated As Hedging Instrument [Member] | NGL Price Swaps [Member]
|
||
Derivatives Fair Value Line Items | ||
Derivative Fair Value Of Derivative Asset | 0 | 0 |
Derivative Fair Value Of Derivative Liability | 836 | 0 |
Distribution [Member] | Deferred Credits [Member] | Nondesignated [Member] | Natural Gas Price Swaps [Member]
|
||
Derivatives Fair Value Line Items | ||
Derivative Fair Value Of Derivative Asset | 51 | 105 |
Derivative Fair Value Of Derivative Liability | 716 | 2,806 |
Deferred Credits [Member] | Designated As Hedging Instrument [Member] | Interest Rate Contract [Member]
|
||
Derivatives Fair Value Line Items | ||
Derivative Fair Value Of Derivative Asset | 0 | 0 |
Derivative Fair Value Of Derivative Liability | 11,039 | 4,652 |
Designated As Hedging Instrument [Member]
|
||
Derivatives Fair Value Line Items | ||
Derivative Fair Value Of Derivative Asset | 9,505 | 16,459 |
Derivative Fair Value Of Derivative Liability | 37,636 | 24,346 |
Nondesignated [Member]
|
||
Derivatives Fair Value Line Items | ||
Derivative Fair Value Of Derivative Asset | 160 | 472 |
Derivative Fair Value Of Derivative Liability | $ 40,530 | $ 66,831 |
PARENTHETICAL DISCLOSURE OF CONDENSED CONSOLIDATED BALANCE SHEET (USD $)
In Thousands, except Per Share data |
Jun. 30, 2011
|
Dec. 31, 2010
|
---|---|---|
Statement of Financial Position [Abstract] | ||
Allowance for doubtful accounts | $ 4,467 | $ 3,321 |
Stockholders equity: | ||
Common stock, par value | $ 1 | $ 1 |
Common stock, shares authorized | 200,000 | 200,000 |
Common stock, shares issued | 125,975 | 125,839 |
Treasury stock, shares | 1,240 | 1,230 |
Common stock, Shares Held in Employee Trust | 573 | 597 |
Fair Value Measurement (Details) (Fair Value Measurements Recurring [Member], USD $)
In Thousands |
Jun. 30, 2011
|
---|---|
Fair Value Line Items [Abstract] | |
Commodity derivatives | $ 9 |
Long-term investments | 1,027 |
Total | 1,036 |
Commodity derivatives | 34,118 |
Interest-rate swap derivatives | 34,392 |
Total | 68,510 |
Level 1 [Member]
|
|
Fair Value Line Items [Abstract] | |
Commodity derivatives | 0 |
Long-term investments | 1,027 |
Total | 1,027 |
Commodity derivatives | 0 |
Interest-rate swap derivatives | 0 |
Total | 0 |
Level 2 [Member]
|
|
Fair Value Line Items [Abstract] | |
Commodity derivatives | 9 |
Long-term investments | 0 |
Total | 9 |
Commodity derivatives | 34,118 |
Interest-rate swap derivatives | 34,392 |
Total | 68,510 |
Level 3 [Member]
|
|
Fair Value Line Items [Abstract] | |
Commodity derivatives | 0 |
Long-term investments | 0 |
Total | 0 |
Commodity derivatives | 0 |
Interest-rate swap derivatives | 0 |
Total | $ 0 |
New Accounting Principles and Other Matters (Tables)
|
6 Months Ended |
---|---|
Jun. 30, 2011
|
|
Notes to Financial Statements [Abstract] | |
Summary of Significant Accounting Policies and Other Matters | 2. New Accounting Principles
Accounting Principles Not Yet Adopted. In June 2011, the FASB issued authoritative guidance that changes how a company may present comprehensive income. The guidance allows entities to elect to present items of net income and other comprehensive income in one continuous statement or in two separate, but consecutive statements and eliminates the current option to report other comprehensive income and its components in the statement of changes in equity. The guidance is effective as of the beginning of a fiscal year that begins after December 15, 2011 and interim and annual periods thereafter, with early adoption permitted. The Company does not expect the guidance to materially impact its consolidated financial statements as the guidance only requires a change in the placement of previously disclosed information.
In May 2011, the FASB issued authoritative guidance on fair value measurements that clarifies some existing concepts, eliminates wording differences between GAAP and International Financial Reporting Standards (IFRS), and in some limited cases, changes some principles to achieve convergence between GAAP and IFRS. The guidance provides a consistent definition of fair value and common requirements for measurement of and disclosure about fair value between GAAP and IFRS and also expands the disclosures for fair value measurements that are estimated using significant unobservable (Level 3) inputs. The guidance is effective for periods beginning after December 15, 2011. The Company is currently evaluating the impact of this guidance, but does not expect it will materially impact its consolidated financial statements.
|
Document And Entity Information (USD $)
|
6 Months Ended | ||
---|---|---|---|
Jun. 30, 2011
|
Aug. 05, 2011
|
Jun. 30, 2010
|
|
Document Information Line Items | |||
Document Type | 10-Q | ||
Amendment Flag | false | ||
Document Period End Date | Jun. 30, 2011 | ||
Document Fiscal Year Focus | 2011 | ||
Document Fiscal Period Focus | Q2 | ||
Entity Information Line Items | |||
Entity Registrant Name | Southern Union Co | ||
Entity Central Index Key | 0000203248 | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Well-known Seasoned Issuer | Yes | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Filer Category | Large Accelerated Filer | ||
Entity Public Float | $ 2,529,540,437 | ||
Entity Common Stock, Shares Outstanding | 124,745,576 |
Taxes on Income 2 Narrative (Details)
|
6 Months Ended |
---|---|
Jun. 30, 2011
|
|
Income Tax Disclosure [Abstract] | |
Statutory rate | 35.00% |
Dividends received deduction | 80.00% |
Comprehensive Income (Loss) (Tables)
|
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Notes to Financial Statements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
ScheduleOfComprehensiveIncomeLossTableTextBlock |
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Schedule of Accumulated Other Comprehensive Income (Loss) [Table Text Block] |
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Taxes on Income 1 (Details) (USD $)
In Thousands, unless otherwise specified |
3 Months Ended | 6 Months Ended | ||
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Jun. 30, 2011
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Jun. 30, 2010
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Jun. 30, 2011
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Jun. 30, 2010
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Income Tax Disclosure [Abstract] | ||||
Income tax expense | $ 25,588 | $ 28,609 | $ 44,230 | $ 59,418 |
Effective tax rate | 30.00% | 28.00% | 27.00% | 31.00% |
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Comprehensive Income (Loss)
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Jun. 30, 2011
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Accumulated Other Comprehensive Loss | 6. Comprehensive Income (Loss) The table below provides an overview of Comprehensive income (loss) for the periods presented.
The table below provides an overview of the components in Accumulated other comprehensive loss as of the dates indicated.
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Debt Obligations (Tables)
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Schedule Of Debt Instruments Text Block |
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Comprehensive Income (Loss) 3 (Details) (USD $)
In Thousands |
Jun. 30, 2011
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Dec. 31, 2010
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Comprehensive Income Loss [Line Items] | ||
Interest rate hedges, net | $ (23,538) | $ (17,232) |
Commodity hedges, net | 4,005 | 10,528 |
Benefit Plans [Abstract] | ||
Net actuarial loss and prior service costs, net - pensions | (30,372) | (32,982) |
Net actuarial gain and prior service credit, net- other postretirement benefits | 1,004 | 2,207 |
Equity investments, net | (2,606) | (2,678) |
Total Accumulated other comprehensive income, net of tax | $ (51,507) | $ (40,157) |
Unconsolidated Investments 1 (Details) (USD $)
In Thousands |
Jun. 30, 2011
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Dec. 31, 2010
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Schedule Of Equity Method Investments Line Items | ||
Unconsolidated investments | $ 1,587,863 | $ 1,538,548 |
Citrus [Member]
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Schedule Of Equity Method Investments Line Items | ||
Unconsolidated investments | 1,561,664 | 1,510,847 |
Other Unconsolidated Investments [Member]
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Schedule Of Equity Method Investments Line Items | ||
Unconsolidated investments | $ 26,199 | $ 27,701 |
Unconsolidated Investments (Tables)
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Equity Method Investments Text Block |
___________________ (1) See Note 3 – ETE Merger for information regarding the Company's intent for its ownership interest in Citrus to be merged with an ETP subsidiary.
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Unconsolidated Investments Summarized Financial Information Table [Text Block] |
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Fair Value Measurement
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Fair Value Measurement | 11. Fair Value Measurement
The following table sets forth the Company's assets and liabilities that are measured at fair value on a recurring basis at the dates indicated.
The Company's Level 1 instruments primarily consist of trading securities related to a non-qualified deferred compensation plan that are valued based on active market quotes. The Company's Level 2 instruments primarily include natural gas and NGL price swaps and NGL processing spread swap derivatives and interest-rate swap derivatives that are valued using pricing models based on an income approach that discounts future cash flows to a present value amount. The significant pricing model inputs for natural gas and NGL price swaps and NGL processing spread swap derivatives include published NYMEX forward index prices for delivery of natural gas at Henry Hub, Permian Basin and Waha, and NGL at Mont Belvieu. The significant pricing model inputs for interest-rate swaps include published rates for U.S. Dollar LIBOR interest rate swaps. The pricing models also adjust for nonperformance risk associated with the counterparty or Company, as applicable, through the use of credit risk adjusted discount rates based on published default rates. The Company did not have any Level 3 instruments measured at fair value at June 30, 2011 or December 31, 2010.
The approximate fair value of the Company's cash and cash equivalents, accounts receivable and accounts payable is equal to book value, due to their short-term nature.
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New Accounting Principles and Other Matters
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6 Months Ended |
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Jun. 30, 2011
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Notes to Financial Statements [Abstract] | |
Summary of Significant Accounting Policies and Other Matters | 2. New Accounting Principles
Accounting Principles Not Yet Adopted. In June 2011, the FASB issued authoritative guidance that changes how a company may present comprehensive income. The guidance allows entities to elect to present items of net income and other comprehensive income in one continuous statement or in two separate, but consecutive statements and eliminates the current option to report other comprehensive income and its components in the statement of changes in equity. The guidance is effective as of the beginning of a fiscal year that begins after December 15, 2011 and interim and annual periods thereafter, with early adoption permitted. The Company does not expect the guidance to materially impact its consolidated financial statements as the guidance only requires a change in the placement of previously disclosed information.
In May 2011, the FASB issued authoritative guidance on fair value measurements that clarifies some existing concepts, eliminates wording differences between GAAP and International Financial Reporting Standards (IFRS), and in some limited cases, changes some principles to achieve convergence between GAAP and IFRS. The guidance provides a consistent definition of fair value and common requirements for measurement of and disclosure about fair value between GAAP and IFRS and also expands the disclosures for fair value measurements that are estimated using significant unobservable (Level 3) inputs. The guidance is effective for periods beginning after December 15, 2011. The Company is currently evaluating the impact of this guidance, but does not expect it will materially impact its consolidated financial statements.
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ETE Merger (Details) (USD $)
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0 Months Ended |
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Jul. 19, 2011
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Plan Of Merger [Line Items] | |
Percentages Of Shares Cash | at least 50 percent, and no more than 60 percent |
Percentage Of Shares Shares | in the event that holders of more than 60 percent of the Outstanding Shares elect to receive cash) and at least 40 percent, and no more than 50 percent |
Value Outstanding Share | $ 44.25 |
Common Units Per Outstanding Share | 1.0 |
Contract Termination Fee | 181,300,000 |
Obligated Maximum Merger Costs | 54,000,000 |
Citrus [Member]
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Plan Of Merger [Line Items] | |
Percentage Owned By Equity Investment | 100.00% |
Total Merger Amount | 2,000,000,000 |
Merger Cash | 1,895,000,000 |
Merger Common Units | 105,000,000 |
Maximum Contribution Equity Interest Merger | $ 1,450,000,000 |
Employee Benefits
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Benefits | 8. Benefits
Components of Net Periodic Benefit Cost. The following table sets forth the components of net periodic benefit cost of the Company's pension and postretirement benefit plans for the periods presented.
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Reportable Segments
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Notes to Financial Statements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Reportable Segments | 13. Reportable Segments The Company's operating segments, which are individually disclosed as its reportable business segments, are: Transportation and Storage, Gathering and Processing, and Distribution. These operating segments are organized for segment reporting purposes based on the way internal managerial reporting presents the results of the Company's various businesses to its chief operating decision maker for use in determining the performance of the businesses.
The Transportation and Storage segment operations are conducted through Panhandle and the Company's investment in Citrus. The Gathering and Processing segment operations are conducted through SUGS. The Distribution segment is primarily engaged in the local distribution of natural gas in Missouri and Massachusetts, through its Missouri Gas Energy and New England Gas Company operating divisions, respectively. See Note 1 – Description of Business for additional information associated with the Company's reportable segments.
The remainder of the Company's business operations, which do not meet the quantitative threshold for segment reporting, are presented as Corporate and other activities. Corporate and other activities consist of unallocated corporate costs, a wholly-owned subsidiary with ownership interests in electric power plants, and other miscellaneous activities.
The Company evaluates operational and financial segment performance based on several factors, of which the primary financial measure is EBIT, a non-GAAP measure. The Company defines EBIT as Net earnings available for common stockholders, adjusted for the following:
EBIT may not be comparable to measures used by other companies and should be considered in conjunction with net earnings and other performance measures such as operating income or net cash flows provided by operating activities.
Sales of products or services between segments are billed at regulated rates or at market rates, as applicable. There were no material intersegment revenues during the three- and six-month periods ended June 30, 2011 and 2010.
The following tables set forth certain selected financial information for the Company's segments for the periods presented or at the dates indicated.
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Taxes on Income
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Notes to Financial Statements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Taxes on Income | 9. Taxes on Income The following table summarizes the Company's income taxes for the periods presented.
The EITR is generally lower than the U.S. federal income tax statutory rate of 35 percent primarily due to the 80 percent dividends received deduction for the anticipated receipt of dividends associated with earnings from the Company's unconsolidated investment in Citrus.
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Commitments and Contingencies (Tables)
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Environmental Liabilities Table [Text Block] |
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Debt Obligations
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Debt Obligations | 7. Debt Obligations The following table sets forth the debt obligations of Southern Union and Panhandle at the dates indicated.
The fair value of the Company's term loans and credit facilities as of June 30, 2011 and December 31, 2010 were determined using the market approach, which utilized reported recent loan transactions for parties of similar credit quality and remaining life, as there is no active secondary market for loans of these types and sizes.
The fair value of the Company's other long-term debt as of June 30, 2011 and December 31, 2010 was also determined using the market approach, which utilized observable market data to corroborate the estimated credit spreads and prices for the Company's non-bank long-term debt securities in the secondary market. Those valuations were based in part upon the reported trades of the Company's non-bank long-term debt securities where available and the actual trades of debt securities of similar credit quality and remaining life where no secondary market trades were reported for the Company's non-bank long-term debt securities.
Interest Rate Swaps. The Company has entered into interest rate swap agreements that effectively fix the interest rate applicable to the floating rate on a portion of the $600 million Junior Subordinated Notes due 2066 (Junior Subordinated Notes). See Note 10 – Derivative Instruments and Hedging Activities – Interest Rate Contracts – Interest Rate Swaps for more information regarding these swap agreements.
Credit Facilities. During the second quarter of 2011, the Company entered into the Seventh Amended and Restated Revolving Credit Agreement with certain banks in the amount of $550 million (2011 Revolver). The 2011 Revolver is an amendment, restatement and refinancing of the Company's $550 million Sixth Amended and Restated Revolving Credit Agreement (Revolver), which was otherwise scheduled to mature on May 28, 2013. The 2011 Revolver will mature on May 20, 2016. Borrowings under the 2011 Revolver are available for the Company's working capital, other general corporate purposes and letter of credit requirements. The interest rate and commitment fee under the 2011 Revolver are calculated using a pricing grid, which is based upon the credit rating for the Company's senior unsecured notes. The annualized interest rate and commitment fee rate bases for the 2011 Revolver at June 30, 2011 were LIBOR plus 162.5 basis points and 25 basis points, respectively.
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Derivative Instrument and Hedging Activities 4 Parentheticals (Details) (USD $)
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3 Months Ended | 6 Months Ended | ||
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Jun. 30, 2011
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Jun. 30, 2010
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Jun. 30, 2011
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Jun. 30, 2010
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Cash Flow Hedges Tax [Abstract] | ||||
Change in fair value of interest rate hedges tax | $ 6,891,000 | $ 1,308,000 | $ 7,757,000 | $ 3,614,000 |
Reclassification of unrealized loss (gain) on interest rate hedges tax | 2,253,000 | 2,250,000 | 4,481,000 | 4,554,000 |
Commodity Contracts Gathering and Processing Tax [Abstract] | ||||
Change in fair value of commodity hedges tax | (194,000) | 390,000 | 365,000 | (9,613,000) |
Relcassification of unrealized (gain) loss on commodity hedges into earnings tax | 1,678,000 | 1,830,000 | 3,310,000 | 2,272,000 |
Strategic Hedges [Abstract] | ||||
DerivativeCashReceivedOnHedge | 7,300,000 | 9,000,000 | 16,800,000 | 20,000,000 |
Unrealized (gain) loss on commodity derivatives | $ (300,000) | $ (22,300,000) | $ 14,413,000 | $ (16,654,000) |
CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS EQUITY AND COMPREHENSIVE INCOME (UNAUDITED) (USD $)
In Thousands |
Total
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Common Stock [Member]
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Additional Paid-in Capital [Member]
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Treasury Stock [Member]
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Common Stock Held In Trust [Member]
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Deferred Compensation, Share-based Payments [Member]
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Accumulated Other Comprehensive Income [Member]
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Retained Earnings [Member]
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Beginning Balance at Dec. 31, 2010 | $ 2,526,982 | $ 125,839 | $ 1,920,622 | $ (30,532) | $ (10,857) | $ 10,857 | $ (40,157) | $ 551,210 |
Comprehensive income: | ||||||||
Net earnings | 120,435 | 120,435 | ||||||
Net change in other comprehensive loss | (11,350) | (11,350) | ||||||
Comprehensive income | 109,085 | |||||||
Common stock dividends declared | (37,409) | (37,409) | ||||||
Share-based compensation | 4,899 | 4,899 | ||||||
Restricted stock issuances | 0 | 7 | (7) | 0 | ||||
Exercise of stock options | 1,694 | 129 | 1,842 | (277) | ||||
Contributions to Trust | 0 | 0 | 0 | 0 | (355) | 355 | 0 | 0 |
Disbursements from Trust | 0 | 669 | (669) | |||||
Ending balance at Jun. 30, 2011 | $ 2,605,251 | $ 125,975 | $ 1,927,356 | $ (30,809) | $ (10,543) | $ 10,543 | $ (51,507) | $ 634,236 |
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