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EXCEL - IDEA: XBRL DOCUMENT - COLORADO INTERSTATE GAS COMPANY, L.L.C. | Financial_Report.xls |
EX-3.A - EX-3.A - COLORADO INTERSTATE GAS COMPANY, L.L.C. | h83143exv3wa.htm |
EX-31.B - EX-31.B - COLORADO INTERSTATE GAS COMPANY, L.L.C. | h83143exv31wb.htm |
EX-32.A - EX-32.A - COLORADO INTERSTATE GAS COMPANY, L.L.C. | h83143exv32wa.htm |
EX-31.A - EX-31.A - COLORADO INTERSTATE GAS COMPANY, L.L.C. | h83143exv31wa.htm |
EX-32.B - EX-32.B - COLORADO INTERSTATE GAS COMPANY, L.L.C. | h83143exv32wb.htm |
Table of Contents
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
(Mark One)
þ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended June 30, 2011
OR
o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
Commission File Number 1-4874
Colorado Interstate Gas Company
(Exact Name of Registrant as Specified in Its Charter)
Delaware (State or Other Jurisdiction of Incorporation or Organization) |
84-0173305 (I.R.S. Employer Identification No.) |
|
El Paso Building 1001 Louisiana Street Houston, Texas (Address of Principal Executive Offices) |
77002 (Zip Code) |
Telephone Number: (713) 420-2600
Indicate by check mark whether the registrant (1) has filed all reports required to be filed
by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes þ No o
Indicate by check mark whether the registrant has submitted electronically and posted on its
corporate Web site, if any, every Interactive Data File required to be submitted and posted
pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period
that the registrant was required to submit and post such files). Yes þ No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated
filer, a non-accelerated filer, or a smaller reporting company. See the definitions of large
accelerated filer, accelerated filer and smaller reporting company in Rule 12b-2 of the
Exchange Act.
Large accelerated filer o | Accelerated filer o | Non-accelerated filer þ (Do not check if a smaller reporting company) | Smaller reporting company o |
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of
the Exchange Act). Yes o No þ
COLORADO INTERSTATE GAS COMPANY
TABLE OF CONTENTS
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EX-3.A | ||||||||
EX-31.A | ||||||||
EX-31.B | ||||||||
EX-32.A | ||||||||
EX-32.B | ||||||||
EX-101 INSTANCE DOCUMENT | ||||||||
EX-101 SCHEMA DOCUMENT | ||||||||
EX-101 CALCULATION LINKBASE DOCUMENT | ||||||||
EX-101 LABELS LINKBASE DOCUMENT | ||||||||
EX-101 PRESENTATION LINKBASE DOCUMENT |
Below is a list of terms that are common to our industry and used throughout this document:
/d = per day
|
BBtu = billion British thermal units |
When we refer to us, we, our, ours, or CIG, we are describing
Colorado Interstate Gas Company and/or our subsidiaries.
i
Table of Contents
PART I FINANCIAL INFORMATION
Item 1. Financial Statements
COLORADO INTERSTATE GAS COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In millions)
(Unaudited)
(In millions)
(Unaudited)
Quarter Ended | Six Months Ended | |||||||||||||||
June 30, | June 30, | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
Operating revenues |
$ | 100 | $ | 97 | $ | 216 | $ | 210 | ||||||||
Operating expenses |
||||||||||||||||
Operation and maintenance |
38 | 35 | 74 | 67 | ||||||||||||
Depreciation and amortization |
12 | 10 | 23 | 20 | ||||||||||||
Taxes, other than income taxes |
6 | 5 | 12 | 11 | ||||||||||||
56 | 50 | 109 | 98 | |||||||||||||
Operating income |
44 | 47 | 107 | 112 | ||||||||||||
Other income, net |
1 | 2 | 1 | 5 | ||||||||||||
Interest and debt expense, net |
(16 | ) | (15 | ) | (31 | ) | (29 | ) | ||||||||
Net income |
$ | 29 | $ | 34 | $ | 77 | $ | 88 | ||||||||
See accompanying notes.
1
Table of Contents
COLORADO INTERSTATE GAS COMPANY
CONDENSED CONSOLIDATED BALANCE SHEETS
(In millions)
(Unaudited)
(In millions)
(Unaudited)
June 30, | December 31, | |||||||
2011 | 2010 | |||||||
ASSETS |
||||||||
Current assets |
||||||||
Cash and cash equivalents |
$ | 7 | $ | 1 | ||||
Accounts and notes receivable |
||||||||
Customer, net of allowance |
1 | 1 | ||||||
Affiliates |
2 | 3 | ||||||
Other |
18 | 16 | ||||||
Materials and supplies |
9 | 8 | ||||||
Other |
5 | 6 | ||||||
Total current assets |
42 | 35 | ||||||
Property, plant and equipment, at cost |
1,861 | 1,850 | ||||||
Less accumulated depreciation and amortization |
468 | 455 | ||||||
Total property, plant and equipment, net |
1,393 | 1,395 | ||||||
Other non-current assets |
||||||||
Note receivable from affiliate |
52 | 63 | ||||||
Other |
47 | 49 | ||||||
99 | 112 | |||||||
Total assets |
$ | 1,534 | $ | 1,542 | ||||
LIABILITIES AND PARTNERS CAPITAL |
||||||||
Current liabilities |
||||||||
Accounts payable |
||||||||
Trade |
$ | 7 | $ | 5 | ||||
Affiliates |
16 | 19 | ||||||
Other |
5 | 17 | ||||||
Short-term other financing obligations, including current maturities |
5 | 5 | ||||||
Taxes payable |
10 | 15 | ||||||
Regulatory liabilities |
9 | 8 | ||||||
Accrued interest |
4 | 4 | ||||||
Contractual deposits |
8 | 11 | ||||||
Other |
2 | 3 | ||||||
Total current liabilities |
66 | 87 | ||||||
Long-term debt and other financing obligations, less current maturities |
648 | 649 | ||||||
Other non-current liabilities |
38 | 37 | ||||||
Commitments and contingencies (Note 3) |
||||||||
Partners capital |
782 | 769 | ||||||
Total liabilities and partners capital |
$ | 1,534 | $ | 1,542 | ||||
See accompanying notes.
2
Table of Contents
COLORADO INTERSTATE GAS COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In millions)
(Unaudited)
(In millions)
(Unaudited)
Six Months Ended | ||||||||
June 30, | ||||||||
2011 | 2010 | |||||||
Cash flows from operating activities |
||||||||
Net income |
$ | 77 | $ | 88 | ||||
Adjustments to reconcile net income to net cash from operating activities |
||||||||
Depreciation and amortization |
23 | 20 | ||||||
Other non-cash income items |
12 | 4 | ||||||
Asset and liability changes |
(19 | ) | (30 | ) | ||||
Net cash provided by operating activities |
93 | 82 | ||||||
Cash flows from investing activities |
||||||||
Capital expenditures |
(30 | ) | (14 | ) | ||||
Net change in notes receivable from affiliates |
11 | 37 | ||||||
Other |
(2 | ) | 5 | |||||
Net cash provided by (used in) investing activities |
(21 | ) | 28 | |||||
Cash flows from financing activities |
||||||||
Payments to retire long-term debt and other financing obligations |
(2 | ) | | |||||
Distributions to partners |
(95 | ) | (100 | ) | ||||
Contributions from partners |
31 | | ||||||
Other |
| (2 | ) | |||||
Net cash used in financing activities |
(66 | ) | (102 | ) | ||||
Net change in cash and cash equivalents |
6 | 8 | ||||||
Cash and cash equivalents |
||||||||
Beginning of period |
1 | 2 | ||||||
End of period |
$ | 7 | $ | 10 | ||||
See accompanying notes.
3
Table of Contents
COLORADO INTERSTATE GAS COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. Basis of Presentation and Significant Accounting Policies
Basis of Presentation
We prepared this Quarterly Report on Form 10-Q under the rules and regulations of the United
States Securities and Exchange Commission. As an interim period filing presented using a condensed
format, it does not include all of the disclosures required by U.S. generally accepted accounting
principles, and should be read along with our 2010 Annual Report on Form 10-K. The financial
statements as of June 30, 2011, and for the quarters and six months ended June 30, 2011 and 2010,
are unaudited. The condensed consolidated balance sheet as of December 31, 2010 was derived from
the audited balance sheet filed in our 2010 Annual Report on Form 10-K. In our opinion, we have
made adjustments, all of which are of a normal, recurring nature, to fairly present our interim
period results. Due to the seasonal nature of our business, information for interim periods may not
be indicative of our operating results for the entire year. Our disclosures in this Form 10-Q are
an update to those provided in our 2010 Annual Report on Form 10-K.
In June 2011, El Paso Pipeline Partners L.P. (EPB) acquired an additional 28 percent ownership
interest in us from El Paso Corporation (El Paso). The acquisition increased EPBs interest in us
to 86 percent with El Paso retaining the remaining 14 percent.
Significant Accounting Policies
There were no changes in the significant accounting policies described in our 2010 Annual
Report on Form 10-K and no significant accounting pronouncements issued but not yet adopted as of
June 30, 2011.
2. Financial Instruments
At June 30, 2011 and December 31, 2010, the carrying amounts of cash and cash equivalents and
trade receivables and payables represent fair value because of the short-term nature of these
instruments. At June 30, 2011 and December 31, 2010, we had an interest bearing note receivable
from EPB of $52 million and $63 million due upon demand with a variable interest rate of 2.2% and
0.8%. While we are exposed to changes in interest income based on changes to the variable
interest rate, the fair value of this note receivable approximates the carrying value due to the
note being due on demand and the market-based nature of the interest rate.
In addition, the carrying amounts of our long-term debt and other financing obligations, and
their estimated fair values, which are based on quoted market prices for the same or similar
issues, are as follows:
June 30, 2011 | December 31, 2010 | |||||||||||||||
Carrying | Fair | Carrying | Fair | |||||||||||||
Amount | Value | Amount | Value | |||||||||||||
(In millions) | ||||||||||||||||
Long-term debt
and other financing
obligations,
including current
maturities |
$ | 653 | $ | 725 | $ | 654 | $ | 703 |
4
Table of Contents
3. Commitments and Contingencies
Legal Proceedings
We and our affiliates are named defendants in numerous legal proceedings and claims that arise
in the ordinary course of our business. For each of these matters, we evaluate the merits of the
case or claim, our exposure to the matter, possible legal or settlement strategies and the
likelihood of an unfavorable outcome. If we determine that an unfavorable outcome is probable and
can be estimated, we establish the necessary accruals. While the outcome of these matters cannot be
predicted with certainty, and there are still uncertainties related to the costs we may incur,
based upon our evaluation and experience to date, we had no accruals for our outstanding legal
proceedings at June 30, 2011. It is possible however, that new information or future developments
could require us to reassess our potential exposure related to these matters and establish accruals
accordingly.
Environmental Matters
We are subject to federal, state and local laws and regulations governing environmental
quality and pollution control. These laws and regulations require us to remove or remedy the effect
of the disposal or release of specified substances at current and former operating sites. At June
30, 2011, our accrual was approximately $10 million for expected remediation costs and associated
onsite, offsite and groundwater technical studies and for related environmental legal costs;
however, we estimate that our exposure could be as high as $33 million. Our accrual includes $6
million for environmental contingencies related to properties we previously owned.
Our environmental remediation projects are in various stages of completion. Our recorded
liabilities reflect our current estimates of amounts we will spend to remediate these sites.
However, depending on the stage of completion or assessment, the ultimate extent of contamination
or remediation required may not be known. As additional assessments occur or remediation efforts
continue, we may incur additional liabilities.
For the remainder of 2011, we estimate that our total remediation expenditures will be
approximately $2 million, most of which will be expended under government directed clean-up
programs. In addition, we expect to make capital expenditures for environmental matters of
approximately $4 million in the aggregate for the remainder of 2011 through 2015, including capital
expenditures associated with the impact of the Environmental Protection Agency rule on emissions of
hazardous air pollutants from reciprocating internal combustion engines which are subject to
regulations with which we have to be in compliance by October 2013.
It is possible that new information or future developments could require us to reassess our
potential exposure related to environmental matters. We may incur significant costs and liabilities
in order to comply with existing environmental laws and regulations. It is also possible that other
developments, such as increasingly strict environmental laws, regulations and orders of regulatory
agencies, as well as claims for damages to property and the environment or injuries to other
persons resulting from our current or past operations, could result in substantial costs and
liabilities in the future. As this information becomes available, or other relevant developments
occur, we will adjust our accrual amounts accordingly. While there are still uncertainties related
to the ultimate costs we may incur, based upon our evaluation and experience to date, we believe
our reserves are adequate.
Regulatory Matter
In May 2011, we reached a pre-filing settlement with all of our shippers of a rate case
required under the terms of a previous settlement. We have filed the proposed settlement with the
Federal Energy Regulatory Commission (FERC) which provides for our current tariff rates to continue
until our next general rate case which will be effective after October 1, 2014 but no later than
October 1, 2016. At this time, the FERC has not ruled on that petition and the outcome of this
matter is not determinable.
5
Table of Contents
4. Accounts Receivable Sales Program
We participate in an accounts receivable sales program where we sell receivables in their
entirety to a third-party financial institution (through a wholly-owned special purpose entity).
The sale of these accounts receivable (which are short-term assets that generally settle within 60
days) qualify for sale accounting. The third party financial institution involved in our accounts
receivable sales program acquires interests in various financial assets and issues commercial paper
to fund those acquisitions. We do not consolidate the third party financial institution because we
do not have the power to control, direct or exert significant influence over its overall activities
since our receivables do not comprise a significant portion of its operations.
In connection with our accounts receivable sales, we receive a portion of the sales proceeds
up front and receive an additional amount upon the collection of the underlying receivables (which
we refer to as a deferred purchase price). Our ability to recover the deferred purchase price is
based solely on the collection of the underlying receivables. The table below contains information
related to our accounts receivable sales program.
Quarter Ended | Six Months Ended | |||||||||||||||
June 30, | June 30, | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
(In millions) | ||||||||||||||||
Accounts receivable sold to the third-party financial institution(1) |
$ | 102 | $ | 92 | $ | 215 | $ | 206 | ||||||||
Cash received for accounts receivable sold under the program |
49 | 48 | 112 | 127 | ||||||||||||
Deferred purchase price related to accounts receivable sold |
53 | 44 | 103 | 79 | ||||||||||||
Cash received related to the deferred purchase price |
54 | 44 | 101 | 95 | ||||||||||||
Amount paid in conjunction with terminated programs (2) |
| | | 20 |
(1) | During the quarters and six months ended June 30, 2011 and 2010, losses recognized on the sale of accounts receivable were immaterial. | |
(2) | In January 2010, we terminated our previous accounts receivable sales program and paid $20 million to acquire the related senior interests in certain receivables under that program. See our 2010 Annual Report on Form 10-K for further information. |
June 30, | December 31, | |||||||
2011 | 2010 | |||||||
(In millions) | ||||||||
Accounts receivable sold and held by third-party financial institution |
$ | 32 | $ | 37 | ||||
Uncollected deferred purchase price related to accounts receivable sold (1) |
17 | 15 |
(1) | Initially recorded at an amount which approximates its fair value using observable inputs other than quoted prices in active markets. |
The deferred purchase price related to the accounts receivable sold is reflected as other
accounts receivable on our balance sheet. Because the cash received up front and the deferred
purchase price relate to the sale or ultimate collection of the underlying receivables, and are not
subject to significant other risks given their short term nature, we reflect all cash flows under
the accounts receivable sales program as operating cash flows on our statement of cash flows.
Under the accounts receivable sales program, we service the underlying receivables for a fee. The
fair value of this servicing agreement as well as the fees earned, were not material to our
financial statements for the quarters and six months ended June 30, 2011 and 2010.
5. Investment in Unconsolidated Affiliate and Transactions with Affiliates
Investment in Unconsolidated Affiliate
We have a 50 percent investment in WYCO Development LLC (WYCO). At June 30, 2011 and December
31, 2010, our investment balance in WYCO was approximately $15 million and was reflected in other
non-current assets on our balance sheets. Our equity earnings for the quarter ended June 30, 2011
were $1 million and for the quarter ended June 30, 2010, our equity earnings were less than $1
million. For the six months ended June 30, 2011 and 2010, our equity earnings were $1 million. We
reflect equity earnings in other income on our income statements. Additionally, for the six months
ended June 30, 2011 and 2010, we received cash distributions of $1 million and less than $1 million
from WYCO.
6
Table of Contents
Transactions with Affiliates
Other Financing Obligations. We have other financing obligations payable to WYCO related to
Totem Gas Storage and High Plains Pipeline. At June 30, 2011 and December 31, 2010 these other
financing obligations were $178 million and $179 million. For a further discussion of our other
financing obligations, see our 2010 Annual Report on Form 10-K.
Distributions and Contributions. We are required to make distributions of available cash as
defined in our partnership agreement on a quarterly basis to our partners. During the six months
ended June 30, 2011 and 2010, we paid cash distributions of approximately $95 million and $100
million to our partners. In addition, in July 2011, we paid cash distributions to our partners of
approximately $31 million. During the six months ended June 30, 2011, we received cash
contributions of approximately $31 million from our partners to fund our expansion projects.
Cash Management Program. We participate in EPBs cash management program which matches our
short-term cash surpluses and needs, thus minimizing our total borrowings from outside sources.
EPB uses the cash management program to settle intercompany transactions between participating
affiliates. At June 30, 2011 and December 31, 2010, we had a note receivable from EPB of
approximately $52 million and $63 million, which was classified as non-current on our balance
sheets. The interest rate on this note is variable and was 2.2% and 0.8% at June 30, 2011 and
December 31, 2010.
Other Affiliate Balances. At June 30, 2011 and December 31, 2010, we had contractual deposits
from our affiliates of $7 million at each balance sheet date, included in other current liabilities
on our balance sheets.
Affiliate Revenues and Expenses. We enter into transactions with our affiliates within the
ordinary course of business. For a further discussion of our affiliated transactions, see our 2010
Annual Report on Form 10-K. The following table shows revenues and charges from our affiliates:
Quarter Ended | Six Months Ended | |||||||||||||||
June 30, | June 30, | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
(In millions) | ||||||||||||||||
Revenues |
$ | 3 | $ | 3 | $ | 6 | $ | 6 | ||||||||
Operation and maintenance expenses |
24 | 21 | 47 | 42 | ||||||||||||
Reimbursement of operating expenses |
2 | 3 | 4 | 6 |
7
Table of Contents
Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
The information contained in Item 2 updates, and should be read in conjunction with, the
information disclosed in our 2010 Annual Report on Form 10-K, and the financial statements and
notes presented in Item 1 of this Quarterly Report on Form 10-Q.
Results of Operations
Beginning January 1, 2011, our management uses segment earnings before interest expense and
income taxes (Segment EBIT) as a measure to assess the operating results and effectiveness of our
business, which consists of consolidated operations as well as an investment in an unconsolidated
affiliate. We believe Segment EBIT is useful to investors to provide them with the same measure
used by our management to evaluate our performance and so that investors may evaluate our operating
results without regard to our financing methods. Segment EBIT is defined as net income adjusted for
items such as interest and debt expense and affiliated interest income. Segment EBIT may not be
comparable to measures used by other companies. Additionally, Segment EBIT should be considered in
conjunction with net income and other performance measures such as operating income or operating
cash flows. Below is a reconciliation of our Segment EBIT to net income, our throughput volumes and
an analysis and discussion of our results for the quarters and six months ended June 30, 2011
compared with the same periods in 2010.
Operating Results:
Quarter Ended | Six Months Ended | |||||||||||||||
June 30, | June 30, | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
(In millions, except for volumes) | ||||||||||||||||
Operating revenues |
$ | 100 | $ | 97 | $ | 216 | $ | 210 | ||||||||
Operating expenses |
(56 | ) | (50 | ) | (109 | ) | (98 | ) | ||||||||
Operating income |
44 | 47 | 107 | 112 | ||||||||||||
Other income, net |
1 | 2 | 1 | 5 | ||||||||||||
Segment EBIT |
45 | 49 | 108 | 117 | ||||||||||||
Interest and debt expense |
(16 | ) | (15 | ) | (31 | ) | (29 | ) | ||||||||
Net income |
$ | 29 | $ | 34 | $ | 77 | $ | 88 | ||||||||
Throughput volumes (BBtu/d) |
2,061 | 2,010 | 2,175 | 2,140 | ||||||||||||
Segment EBIT Analysis:
Quarter Ended June 30, 2011 | Six Months Ended June 30, 2011 | |||||||||||||||||||||||||||||||
Variance | Variance | |||||||||||||||||||||||||||||||
Operating | Operating | Operating | Operating | |||||||||||||||||||||||||||||
Revenue | Expense | Other | Total | Revenue | Expense | Other | Total | |||||||||||||||||||||||||
Favorable/(Unfavorable) | ||||||||||||||||||||||||||||||||
(In millions) | ||||||||||||||||||||||||||||||||
Expansions |
$ | 5 | $ | (1 | ) | $ | (1 | ) | $ | 3 | $ | 11 | $ | (1 | ) | $ | (4 | ) | $ | 6 | ||||||||||||
Operational gas,
revaluations and
processing revenues |
(1 | ) | 1 | | | (4 | ) | 3 | | (1 | ) | |||||||||||||||||||||
Operating and general
and administrative
expenses |
| (4 | ) | | (4 | ) | | (9 | ) | | (9 | ) | ||||||||||||||||||||
Other(1) |
(1 | ) | (2 | ) | | (3 | ) | (1 | ) | (4 | ) | | (5 | ) | ||||||||||||||||||
Total impact on Segment EBIT |
$ | 3 | $ | (6 | ) | $ | (1 | ) | $ | (4 | ) | $ | 6 | $ | (11 | ) | $ | (4 | ) | $ | (9 | ) | ||||||||||
(1) | Consists of individually insignificant items. |
Expansions. During 2011, we benefited from increased reservation revenues due to the Raton
2010 expansion project placed in service December 2010. For a further discussion of our expansion
projects, see our 2010 Annual Report on Form 10-K.
Operational Gas, Revaluations and Processing Revenues. Our processing revenues were $1
million and $4 million lower during the quarter and six months ended June 30, 2011 compared with
the same periods in 2010, primarily due to both an unfavorable price change and decreased demand
for natural gas liquids. This impact,
however, was offset by lower expenses due to favorable prices for gas consumed in processing
these liquids compared with the same period in 2010.
8
Table of Contents
Operating and General and Administrative Expenses. During the quarter and six months ended
June 30, 2011, our operating and general and administrative expenses were higher primarily as a
result of higher field repair and maintenance expenses and higher employee benefit costs.
Regulatory Matters
In May 2011, we reached a pre-filing settlement with all of our shippers of a rate case
required under the terms of a previous settlement. We have filed the proposed settlement with the
FERC which provides for our current tariff rates to continue until our next general rate case which
will be effective after October 1, 2014 but no later than October 1, 2016. At this time, the FERC
has not ruled on that petition and the outcome of this matter is not determinable.
Liquidity and Capital Resources
Liquidity Overview. Our primary sources of liquidity are cash flows from operating activities,
amounts available under EPBs cash management program and capital contributions from our partners,
while our primary uses of cash are for working capital, capital expenditures and required
distributions to our partners. At June 30, 2011, we had a note receivable from EPB under its cash
management program of approximately $52 million. We do not intend to settle any amounts owed under
this note within the next twelve months and therefore classified it as non-current on our balance
sheet. See Item 1, Financial Statements, Note 5 for a further discussion of EPBs cash management
program.
We believe we have adequate liquidity available to us to meet our capital requirements and our
existing operating needs through cash flows from operating activities, amounts available under
EPBs cash management program, and capital contributions from our partners. While we do not
anticipate a need to directly access the financial markets in the remainder of 2011 for any of our
operating activities or expansion capital needs based on liquidity available to us, market
conditions may impact our or EPBs ability to act opportunistically.
9
Table of Contents
Cash Flow Activities. Our cash flows for the six months ended June 30, 2011 are summarized as
follows (in millions):
Cash Flow from Operations |
||||
Net income |
$ | 77 | ||
Non-cash income adjustments |
35 | |||
Change in assets and liabilities |
(19 | ) | ||
Total cash flow from operations |
93 | |||
Other Cash Inflows |
||||
Investing activities |
||||
Net change in note receivable from affiliate |
11 | |||
Financing activities |
||||
Contributions from partners |
31 | |||
Total other cash inflows |
42 | |||
Cash Outflows |
||||
Investing activities |
||||
Capital expenditures |
30 | |||
Other |
2 | |||
Total other cash outflows |
32 | |||
Financing activities |
||||
Distributions to partners |
95 | |||
Payments to retire long-term debt and other financing obligations |
2 | |||
97 | ||||
Total cash outflows |
129 | |||
Net change in cash and cash equivalents |
$ | 6 | ||
During the six months ended June 30, 2011, we generated $93 million of operating cash flows.
We used these amounts primarily to fund maintenance capital expenditures, as well as pay
distributions to our partners. During the six months ended June 30, 2011, we paid cash
distributions of approximately $95 million to our partners. In addition, in July 2011 we paid cash
distributions to our partners of approximately $31 million. During 2011, we received cash
contributions of approximately $31 million from our partners to fund our expansion projects.
Our cash capital expenditures for the six months ended June 30, 2011, and our estimated
capital expenditures for the remainder of this year to expand and maintain our system are listed
below:
Six Months Ended | 2011 | |||||||||||
June 30, 2011 | Remaining | Total | ||||||||||
(In millions) | ||||||||||||
Maintenance |
$ | 16 | $ | 18 | $ | 34 | ||||||
Expansion |
14 | 12 | 26 | |||||||||
$ | 30 | $ | 30 | $ | 60 | |||||||
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Commitments and Contingencies
For a further discussion of our commitments and contingencies, see Item 1, Financial
Statements, Note 3 which is incorporated herein by reference and our 2010 Annual Report on Form
10-K.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
There are no material changes in our quantitative and qualitative disclosures about market
risks from those reported in our 2010 Annual Report on Form 10-K.
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
As of June 30, 2011, we carried out an evaluation under the supervision and with the
participation of our management, including our President and Chief Financial Officer (CFO), as to
the effectiveness, design and operation of our disclosure controls and procedures. This evaluation
considered the various processes carried out under the direction of our disclosure committee in an
effort to ensure that information required to be disclosed in the U.S. Securities and Exchange
Commission reports we file or submit under the Securities Exchange Act of 1934, as amended
(Exchange Act) is accurate, complete and timely. Our management, including our President and CFO,
does not expect that our disclosure controls and procedures or our internal controls will prevent
and/or detect all errors and all fraud. A control system, no matter how well conceived and
operated, can provide only reasonable, not absolute, assurance that the objectives of the control
system are met. Further, the design of a control system must reflect the fact that there are
resource constraints, and the benefits of controls must be considered relative to their costs.
Because of the inherent limitations in all control systems, no evaluation of controls can provide
absolute assurance that all control issues and instances of fraud, if any, within our company have
been detected. Our disclosure controls and procedures are designed to provide reasonable assurance
of achieving their objectives and our President and CFO concluded that our disclosure controls and
procedures (as defined in Exchange Act Rules 13a 15(e) and 15d 15(e)) were effective as of
June 30, 2011.
Changes in Internal Control Over Financial Reporting
There were no changes in our internal control over financial reporting during the second
quarter of 2011 that have materially affected or are reasonably likely to materially affect our
internal control over financial reporting.
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PART II OTHER INFORMATION
Item 1. Legal Proceedings
See Part I, Item 1, Financial Statements, Note 3, which is incorporated herein by reference.
Additional information about our legal proceedings can be found in Part I, Item 3 of our 2010
Annual Report on Form 10-K.
Item 1A. Risk Factors
CAUTIONARY STATEMENTS FOR PURPOSES OF THE SAFE HARBOR PROVISIONS OF
THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
This report contains forward-looking statements within the meaning of the Private Securities
Litigation Reform Act of 1995. These forward-looking statements are based on assumptions or beliefs
that we believe to be reasonable; however, assumed facts almost always vary from actual results,
and differences between assumed facts and actual results can be material, depending upon the
circumstances. Where, based on assumptions, we or our management express an expectation or belief
as to future results, that expectation or belief is expressed in good faith and is believed to have
a reasonable basis. We cannot assure you, however, that the stated expectation or belief will
occur, be achieved or accomplished. The words believe, expect, estimate, anticipate, and
similar expressions will generally identify forward-looking statements. All of our forward-looking
statements, whether written or oral, are expressly qualified by these cautionary statements and any
other cautionary statements that may accompany such forward-looking statements. In addition, we
disclaim any obligation to update any forward-looking statements to reflect events or circumstances
after the date of this report.
Important factors that could cause actual results to differ materially from estimates or
projections contained in forward-looking statements are described in our 2010 Annual Report on Form
10-K under Part I, Item 1A, Risk Factors. There have been no material changes in these risk factors
since that report.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
None.
Item 3. Defaults Upon Senior Securities
None.
Item 4. (Removed and Reserved)
Item 5. Other Information
None.
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Item 6. Exhibits
The Exhibit Index is hereby incorporated herein by reference.
The agreements included as exhibits to this report are intended to provide information
regarding their terms and not to provide any other factual or disclosure information about us or
the other parties to the agreements. The agreements may contain representations and warranties by
the parties to the agreements, including us, solely for the benefit of the other parties to the
applicable agreement and:
| should not in all instances be treated as categorical statements of fact, but rather as a way of allocating the risk to one of the parties if those statements prove to be inaccurate; |
| may have been qualified by disclosures that were made to the other party in connection with the negotiation of the applicable agreement, which disclosures are not necessarily reflected in the agreement; |
| may apply standards of materiality in a way that is different from what may be viewed as material to certain investors; and |
| were made only as of the date of the applicable agreement or such other date or dates as may be specified in the agreement and are subject to more recent developments. |
Accordingly, these representations and warranties may not describe the actual state of affairs
as of the date they were made or at any other time.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, Colorado Interstate Gas
Company has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
COLORADO INTERSTATE GAS COMPANY |
||||
Date: August 5, 2011 | /s/ James J. Cleary | |||
James J. Cleary | ||||
President (Principal Executive Officer) |
||||
Date: August 5, 2011 | /s/ John R. Sult | |||
John R. Sult | ||||
Executive Vice President and Chief Financial Officer (Principal Financial Officer) |
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COLORADO INTERSTATE GAS COMPANY
EXHIBIT INDEX
Each exhibit identified below is filed as a part of this Report. Exhibits filed with this
Report are designated by *. All exhibits not so designated are incorporated herein by reference
to a prior filing as indicated.
Exhibit | ||
Number | Description | |
*3.A
|
Third Amendment to General Partnership Agreement of Colorado Interstate Gas Company. | |
*31.A
|
Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | |
*31.B
|
Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | |
*32.A
|
Certification of Principal Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | |
*32.B
|
Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | |
*101.INS
|
XBRL Instance Document. | |
*101.SCH
|
XBRL Schema Document. | |
*101.CAL
|
XBRL Calculation Linkbase Document. | |
*101.LAB
|
XBRL Labels Linkbase Document. | |
*101.PRE
|
XBRL Presentation Linkbase Document. |
15