================================================================================ UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED) AUGUST 7, 2003 PANHANDLE EASTERN PIPE LINE COMPANY, LLC (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) DELAWARE 1-2921 44-0382470 (STATE OR OTHER JURISDICTION (COMMISSION FILE NUMBER) (I.R.S. EMPLOYER OF INCORPORATION) IDENTIFICATION NO.) 5444 WESTHEIMER COURT HOUSTON, TEXAS 77056 (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (713) 989-7000 ================================================================================
-2- ITEM 9. REGULATION FD DISCLOSURE On August 7, 2003, Panhandle Eastern Pipe Line Company, LLC ("Panhandle" or the "Company") issued the press release furnished as Exhibit 99.1 regarding extension of the expiration date for its cash tender offers for any and all of its outstanding senior notes to August 14, 2003 at 5:00 p.m. New York City time, unless extended. Set forth below are certain unaudited pro forma consolidated condensed financial statements for the Company being furnished by the Company under Item 9. UNAUDITED PRO FORMA CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS The following tables set forth our unaudited pro forma consolidated condensed statements of operations for the periods indicated. The unaudited pro forma consolidated condensed statement of operations for the year ended December 31, 2002 set forth below is based upon our audited historical consolidated statements of operations and the related notes for the same period. The unaudited pro forma consolidated condensed statements of operations for the period June 12 through June 30, 2003 and January 1 through June 11, 2003 set forth below are based upon our unaudited historical consolidated statements of operations and the related notes for the same periods, which have been filed previously with the Commission. The unaudited pro forma consolidated condensed statements of operations for the year ended December 31, 2002 and for the periods June 12 through June 30, 2003 and January 1 through June 11, 2003 are presented as if Southern Union Company ("Southern Union") had acquired us (the "Panhandle Acquisition"), we had purchased, pursuant to our pending cash tenders, those senior notes that had been tendered to us as of the early tender date of August 7, 2003, we had redeemed all of our outstanding debentures, and we had issued new senior notes to refinance those repurchased notes and redeemed debentures (the "Refinancing" and, together with the Panhandle Acquisition, the "Restructuring"), in each case, as of January 1, 2002. The unaudited pro forma consolidated condensed statements of operations set forth below are for illustrative purposes only and do not indicate the results of operations that would have been achieved had the Restructuring been completed on January 1, 2002 nor are they indicative of results that may be obtained in the future. You should read these statements and the notes thereto together with our consolidated financial statements and the related notes thereto, "Management's Discussion and Analysis of Financial Condition and Results of Operations" and other financial information previously filed by us with the Commission. We believe the estimates and assumptions used to prepare these unaudited pro forma consolidated condensed financial statements provide a reasonable basis for presenting the significant effects of the Restructuring, and that the pro forma adjustments give appropriate effect to the estimates and assumptions and are properly applied in the unaudited pro forma consolidated financial statements. The unaudited pro forma consolidated condensed statement of operations for the year ended December 31, 2002 set forth below has been revised to reflect the application of SFAS 145, which dictates that gains and losses on debt extinguishments are no longer classified as extraordinary items, and have been reclassified to Other income (losses), net. See accompanying Notes to Unaudited Pro Forma Consolidated Condensed Statements of Operations.
UNAUDITED PRO FORMA CONSOLIDATED CONDENSED STATEMENT OF OPERATIONS FOR THE PERIOD JUNE 12 THROUGH JUNE 30, 2003 PRO FORMA HISTORICAL ADJUSTMENT PRO FORMA ------------ ------------ ---------- (IN MILLIONS) Operating revenue ................................................. $25 $-- $25 Operating expenses: Operation, maintenance and general ............................... 10 -- 10 Depreciation and amortization .................................... 3 -- 3 General taxes .................................................... 2 -- 2 --- --- --- Total operating expenses ....................................... 15 -- 15 --- --- --- Pretax operating income ........................................... 10 -- 10 Other income (losses), net ........................................ -- -- -- Interest expense .................................................. 2 -- 2 --- --- --- Income before income taxes ........................................ 8 -- 8 Income taxes ...................................................... 3 -- 3 --- --- --- Income before cumulative effect of change in accounting principle . $ 5 $-- $ 5 === === === UNAUDITED PRO FORMA CONSOLIDATED CONDENSED STATEMENT OF OPERATIONS FOR THE PERIOD JANUARY 1 THROUGH JUNE 11, 2003 PRO FORMA HISTORICAL ADJUSTMENT PRO FORMA ------------ ------------ ---------- (IN MILLIONS) Operating revenue ................................................. $234 $ -- $234 Operating expenses: Operation, maintenance and general ............................... 91 -- 91 Depreciation and amortization .................................... 23 5 A 28 General taxes .................................................... 12 -- 12 ---- ---- ---- Total operating expenses ....................................... 126 5 131 ---- ---- ---- Pretax operating income ........................................... 108 (5) 103 Other income (losses), net ........................................ 6 (6) B -- Interest expense .................................................. 36 (8) C 28 ---- ---- ---- Income before income taxes ........................................ 78 (3) 75 Income taxes ...................................................... 30 (1) D 29 ---- ---- ---- Income before cumulative effect of change in accounting principle . $ 48 $ (2) $ 46 ==== ==== ==== See accompanying Notes to Unaudited Pro Forma Consolidated Condensed Statements of Operations.
UNAUDITED PRO FORMA CONSOLIDATED CONDENSED STATEMENT OF OPERATIONS FOR THE TWELVE MONTHS ENDED DECEMBER 31, 2002 PRO FORMA HISTORICAL ADJUSTMENT PRO FORMA ------------ ------------ ---------- (IN MILLIONS) Operating revenue ........................................................ $ 484 $ 7 E $491 Operating expenses: Operation, maintenance and general ...................................... 202 -- 202 Depreciation and amortization ........................................... 51 11 A 62 General taxes ........................................................... 22 -- 22 ----- ---- ---- Total operating expenses .............................................. 275 11 286 ----- ---- ---- Pretax operating income .................................................. 209 (4) 205 Other income (losses), net and minority interest ......................... (18) 17 B (1) Interest expense ......................................................... 76 (19)C 57 ----- ---- ---- Income before income taxes ............................................... 115 32 147 Income taxes ............................................................. 46 12 D 58 ----- ---- ---- Income before cumulative effect of change in accounting principle ........ $ 69 $ 20 $ 89 ===== ==== ==== See accompanying notes to Unaudited Pro Forma Consolidated Condensed Statements of Operations.
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS (A) Reflects amortization of the Panhandle Acquisition step-up of Panhandle of $5 million and $11 million for the period January 1 through June 11, 2003 and for the year ended December 31, 2002, respectively, which is assumed to be allocable to property, plant and equipment and certain intangibles, amortized on a straight-line basis over a 30-year period and 5-year period, respectively, based on the estimated useful lives of these assets. (B) Reflects the elimination of (i) ($6) million and ($9) million of net intercompany interest income of Panhandle on the note receivable from a subsidiary of CMS Energy, for the period January 1 through June 11, 2003 and for the year ended December 31, 2002, respectively, presented as a result of the elimination of such note receivable in connection with the Panhandle Acquisition and (ii) the $26 million write-down of Centennial Pipeline, LLC recorded in December 2002 for the year ended December 31, 2002. (C) Reflects a decrease in interest expense of ($4) million and ($12) million for the period January 1 through June 11, 2003 and for the year ended December 31, 2002, respectively, due to the amortization of the debt premiums recorded to adjust the Panhandle debt to fair value upon the Panhandle Acquisition and a decrease in interest expense of ($4) million and ($7) million for the period January 1 through June 11, 2003 and for the year ended December 31, 2002, respectively, related to the Refinancing. Assumes a rate of interest of 5.3% on the senior notes assumed to have been issued. (D) Reflects the income tax effects at the 39% estimated statutory tax rate (federal and state) of the pre-tax pro forma adjustments. Does not reflect any specific terms of any tax sharing agreement which Panhandle has entered into with Southern Union. (E) Reflects an adjustment to operating revenue for the elimination of equity losses related to Panhandle's ownership in Centennial Pipeline, LLC (sold in February 2003) of $8 million and Guardian Pipeline, L.L.C. (ownership transferred to CMS Energy affiliated entity in March 2003) income of ($1) million. The disclosure and the exhibits contained in this Form 8-K are furnished pursuant to Item 9 and not filed. Important factors could cause actual results to differ materially from the forward-looking projections or expectations. These factors include, but are not limited to: customer growth; gas throughput volumes and available sources of natural gas; abnormal weather conditions in our service territories; new legislation and government regulations affecting or involving us; our ability to comply with or to challenge successfully existing or new environmental regulations; the outcome of pending and future litigation; the impact of relations with labor unions of bargaining-unit union employees; the impact of future rate cases or regulatory rulings; our ability to control costs successfully and achieve operating efficiencies, including the purchase and implementation of new technologies for achieving such efficiencies; the nature and impact of any extraordinary transactions, such as any acquisition or divestiture of a business unit or any assets; the economic climate and growth in our industry and service territories and competitive conditions of energy markets in general inflationary trends; changes in gas or other energy market commodity prices and interest rates; the current market conditions causing more customer contracts to be of shorter duration, which may increase revenue volatility; exposure to customer concentration with a significant portion of revenues realized from a relatively small number of customers and any credit risks associated with the financial position of those customers; our or any of our affiliates' debt securities ratings; factors affecting operations such as maintenance or repairs, environmental incidents or gas pipeline system constraints; the possibility of war or terrorist attacks; and other risks and unforeseen events.
SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. PANHANDLE EASTERN PIPE LINE COMPANY, LLC Dated: August 12, 2003 By: /s/ David J. Kvapil ------------------------------------ David J. Kvapil Executive Vice President and Chief Financial Officer EXHIBIT INDEX Exhibit Number Description - -------------- ------------------------------------------------------- 99.1 Press Release issued by the Company dated August 7, 2003, regarding extension of the Company's cash tender offers for any and all of its senior notes.
Exhibit 99.1 PANHANDLE EASTERN PIPE LINE ANNOUNCES EXTENSION OF EXPIRATION DATE FOR CASH TENDER OFFERS HOUSTON--(BUSINESS WIRE)--Aug. 7, 2003--Panhandle Eastern Pipe Line Company, LLC (the "Company") announced today that it has extended the expiration date for its cash tender offers for any and all of its outstanding senior notes of the series listed below (the "Senior Notes"). The new expiration date and time is Thursday, August 14, 2003 at 5:00 P.M. New York City time, unless extended. As set forth in the Offer to Purchase, dated July 9, 2003, and the related Letter of Transmittal, the tender offers are subject to certain terms and conditions and include the condition that the Company obtain sufficient financing to pay the consideration payable in the tender offers and the consideration payable in the redemption of two series of the Company's outstanding debentures. Other than the extension of the expiration date, all other terms and conditions of the tender offers set forth in the Offer to Purchase and Letter of Transmittal remain unchanged. The table below shows the approximate principal amounts of each series of Senior Notes that have been deposited as of the morning of Thursday, August 7, 2003 and not withdrawn. Approximate Description of the Notes Principal Amount Deposited - ---------------------------------------- -------------------------- 6.125% Senior Notes Due 3/15/04 $144,395,000 7.875% Senior Notes Due 8/15/04 $ 47,507,000 6.500% Senior Notes Due 7/15/09 $ 78,074,000 8.250% Senior Notes Due 4/1/10, Series B $ 18,350,000 7.000% Senior Notes Due 7/15/29 $ 68,950,000 This press release does not constitute an offer to purchase or a solicitation of an offer to sell any of the Senior Notes. The offers are made solely by the Offer to Purchase dated July 9, 2003 and the related Letter of Transmittal. Merrill Lynch and Banc One Capital Markets, Inc. are acting as the Dealer Managers for the tender offers. Questions concerning the terms of the tender offers may be directed to them as follows: Merrill Lynch, toll-free at 888-654-8637 or by collect call at 212-449-4914; or Banc One Capital Markets, Inc., toll-free at 800-431-2731 or by collect call at 312-732-6047. Copies of the Offer to Purchase may be obtained by calling the information agent, Mellon Investor Services LLC, toll-free at 888-566-9471 or 917-320-6286 (banks and brokerage firms). Panhandle is an indirect wholly owned subsidiary of Southern Union Company (NYSE: SUG). The Company is comprised of Panhandle Eastern Pipe Line Company, Trunkline Gas Company, Trunkline LNG Company and Pan Gas Storage (widely known as Southwest Gas Storage Company). Panhandle operates more than 10,000 miles of mainline natural gas pipeline extending from the Gulf of Mexico to the Midwest and Canada, which access major natural gas supply regions of the Louisiana and Texas Gulf Coasts as well as the Midcontinent and Rocky Mountains. These pipelines have a combined peak day delivery capacity of 5.3 billion cubic feet per day, 88 billion cubic feet of underground storage facilities (including leased storage) and 6.3 billion cubic feet of above ground liquid storage facilities for liquefied natural gas (LNG) imports. For further information, visit www.panhandleenergy.com.
Southern Union Company is engaged primarily in the transportation and distribution of natural gas. Through its local distribution companies, Southern Union also serves approximately one million natural gas end-user customers in Missouri, Pennsylvania, Massachusetts and Rhode Island. For further information, visit www.southernunionco.com. This release and other Company reports and statements issued or made from time to time contain certain "forward-looking statements" concerning projected future financial performance, expected plans or future operations. Southern Union Company cautions that actual results and developments may differ materially from such projections or expectations. Important factors could cause results to differ materially from the forward-looking projections or expectations. These factors include, but are not limited to: customer growth; gas throughput volumes and available sources of natural gas; abnormal weather conditions in our service territories; new legislation and government regulations affecting or involving us; our ability to comply with or to challenge successfully existing or new environmental regulations; the outcome of pending and future litigation; the impact of relations with labor unions of bargaining-unit union employees; the impact of future rate cases or regulatory rulings; our ability to control costs successfully and achieve operating efficiencies, including the purchase and implementation of new technologies for achieving such efficiencies; the nature and impact of any extraordinary transactions, such as any acquisition or divestiture of a business unit or any assets; the economic climate and growth in our industry and service territories and competitive conditions of energy markets in general inflationary trends; changes in gas or other energy market commodity prices and interest rates; the current market conditions causing more customer contracts to be of shorter duration, which may increase revenue volatility; exposure to customer concentration with a significant portion of revenues realized from a relatively small number of customers and any credit risks associated with the financial position of those customers; our or any of our affiliates' debt securities ratings; factors affecting operations such as maintenance or repairs, environmental incidents or gas pipeline system constraints; the possibility of war or terrorist attacks; and other risks and unforeseen events. CONTACT: Southern Union Company Richard N. Marshall, 570-829-8662