SECURITIES AND EXCHANGE COMMISSION
Form 10-Q
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þ
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QUARTERLY REPORT PURSUANT TO SECTION 13
OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
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| For the quarterly period ended September 30, 2004 | ||
| OR | ||
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o
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TRANSITION REPORT PURSUANT TO SECTION 13
OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
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| For the transition period from to | ||
Commission file number: 000-50067
Crosstex Energy, L.P.
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Delaware
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16-1616605 | |
| (State of organization) | (I.R.S. Employer Identification No.) |
2501 CEDAR SPRINGS, SUITE 600
(214) 953-9500
Indicate by check mark whether 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 is an accelerated filer (as defined in Rule 12b-2 of the Act). Yes o No þ
As of October 29, 2004, the Registrant had 8,750,659 common units and 9,334,000 subordinated units outstanding.
TABLE OF CONTENTS
GLOSSARY OF TERMS
As generally used in the energy industry and in this document, the following terms have the following meanings:
| /d = per day | |
| MMBtu = million British thermal units | |
| NGL’s = Natural gas liquids |
1
CROSSTEX ENERGY, L.P.
CONSOLIDATED BALANCE SHEETS
| September 30, | December 31, | ||||||||||
| 2004 | 2003 | ||||||||||
| (Unaudited) | (Restated) | ||||||||||
| (Dollars in thousands) | |||||||||||
| ASSETS | |||||||||||
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Current assets:
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|||||||||||
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Cash and cash equivalents
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$ | 715 | $ | 166 | |||||||
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Accounts receivable:
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|||||||||||
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Trade
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33,575 | 10,238 | |||||||||
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Accrued revenues
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152,363 | 124,517 | |||||||||
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Imbalances
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627 | 447 | |||||||||
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Related party
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319 | 1,618 | |||||||||
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Note receivable
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575 | 535 | |||||||||
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Other
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834 | 2,588 | |||||||||
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Fair value of derivative assets
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10,211 | 4,080 | |||||||||
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Prepaid expenses and other
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3,027 | 1,979 | |||||||||
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Total current assets
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202,246 | 146,168 | |||||||||
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Property and equipment:
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|||||||||||
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Property and equipment
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350,361 | 228,386 | |||||||||
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Accumulated depreciation
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(39,199 | ) | (24,477 | ) | |||||||
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Property and equipment, net
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311,162 | 203,909 | |||||||||
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Intangible assets, net
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5,610 | 5,366 | |||||||||
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Goodwill, net
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4,873 | 4,873 | |||||||||
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Investment in limited partnerships
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453 | 2,560 | |||||||||
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Other assets, net
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3,914 | 3,174 | |||||||||
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Total assets
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$ | 528,258 | $ | 366,050 | |||||||
| LIABILITIES AND PARTNERS’ EQUITY | |||||||||||
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Current liabilities:
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|||||||||||
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Drafts payable
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$ | 24,861 | $ | 10,446 | |||||||
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Accounts payable
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4,772 | 6,325 | |||||||||
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Accrued gas purchases
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153,176 | 119,900 | |||||||||
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Accounts payable — related party
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— | 448 | |||||||||
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Accrued imbalances payable
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1,520 | 212 | |||||||||
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Fair value of derivative liabilities
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10,976 | 2,486 | |||||||||
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Current portion of long-term debt
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50 | 50 | |||||||||
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Other current liabilities
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18,122 | 10,873 | |||||||||
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Total current liabilities
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213,477 | 150,740 | |||||||||
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Long-term debt
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153,650 | 60,700 | |||||||||
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Deferred tax liability
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13,055 | — | |||||||||
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Minority interest in subsidiary
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2,670 | — | |||||||||
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Fair value of derivative liabilities
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235 | — | |||||||||
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Partners’ equity:
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|||||||||||
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Common unit-holders (8,750,659 and
8,716,000 units issued and outstanding at
September 30, 2004 and December 31, 2003, respectively)
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113,537 | 116,780 | |||||||||
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Subordinated unit-holders (9,334,000 units
issued and outstanding at September 30, 2004 and
December 31, 2003)
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29,770 | 33,593 | |||||||||
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General partner interest (2% interest with
369,075 and 368,368 equivalent units outstanding at
September 30, 2004 and December 31, 2003, respectively)
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3,744 | 2,854 | |||||||||
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Accumulated other comprehensive income (loss)
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(1,880 | ) | 1,383 | ||||||||
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Total partners’ equity
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145,171 | 154,610 | |||||||||
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Total liabilities and partners’ equity
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$ | 528,258 | $ | 366,050 | |||||||
See accompanying notes to consolidated financial statements.
2
CROSSTEX ENERGY, L.P.
CONSOLIDATED STATEMENTS OF OPERATIONS
| Three Months Ended | Nine Months Ended | |||||||||||||||||
| September 30, | September 30, | |||||||||||||||||
| 2004 | 2003 | 2004 | 2003 | |||||||||||||||
| (Unaudited) | ||||||||||||||||||
| (In thousands, except per unit amounts) | ||||||||||||||||||
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Revenues:
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||||||||||||||||||
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Midstream
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$ | 501,004 | $ | 276,222 | $ | 1,327,181 | $ | 745,567 | ||||||||||
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Treating
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7,880 | 6,976 | 22,592 | 17,453 | ||||||||||||||
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Total revenues
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508,884 | 283,198 | 1,349,773 | 763,020 | ||||||||||||||
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Operating costs and expenses:
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Midstream purchased gas
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478,536 | 264,035 | 1,266,624 | 715,514 | ||||||||||||||
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Treating purchased gas
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1,229 | 1,860 | 4,092 | 6,311 | ||||||||||||||
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Operating expenses
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10,013 | 5,462 | 26,542 | 12,007 | ||||||||||||||
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General and administrative
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4,907 | 1,721 | 13,236 | 5,112 | ||||||||||||||
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Stock based compensation
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288 | 1,577 | 766 | 4,649 | ||||||||||||||
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Profit on energy trading activities
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(766 | ) | (646 | ) | (1,792 | ) | (1,491 | ) | ||||||||||
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Gain on sale of property
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(287 | ) | — | (12 | ) | — | ||||||||||||
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Depreciation and amortization
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6,160 | 4,031 | 16,499 | 9,077 | ||||||||||||||
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Total operating costs and expenses
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500,080 | 278,040 | 1,325,955 | 751,179 | ||||||||||||||
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Operating income
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8,804 | 5,158 | 23,818 | 11,841 | ||||||||||||||
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Other income (expense):
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Interest expense, net
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(2,872 | ) | (1,321 | ) | (6,214 | ) | (2,196 | ) | ||||||||||
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Other
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51 | 51 | 254 | 50 | ||||||||||||||
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Total other income (expense)
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(2,821 | ) | (1,270 | ) | (5,960 | ) | (2,146 | ) | ||||||||||
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Income before minority interest and income tax
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5,983 | 3,888 | 17,858 | 9,695 | ||||||||||||||
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Minority interest in subsidiary
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(51 | ) | — | (150 | ) | — | ||||||||||||
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Income tax expense
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13 | — | (116 | ) | — | |||||||||||||
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Net income
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$ | 5,945 | $ | 3,888 | $ | 17,592 | $ | 9,695 | ||||||||||
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General partner interest in net income
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$ | 1,563 | $ | 450 | $ | 4,005 | $ | 621 | ||||||||||
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Limited partners’ interest in net income
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$ | 4,382 | $ | 3,438 | $ | 13,587 | $ | 9,074 | ||||||||||
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Net income per limited partners’ unit:
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Basic
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$ | 0.24 | $ | 0.22 | $ | 0.75 | $ | 0.61 | ||||||||||
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Diluted
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$ | 0.23 | $ | 0.22 | $ | 0.73 | $ | 0.60 | ||||||||||
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Weighted average limited partners’ units
outstanding:
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Basic
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18,083 | 15,462 | 18,079 | 14,890 | ||||||||||||||
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Diluted
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18,662 | 15,860 | 18,607 | 15,096 | ||||||||||||||
See accompanying notes to consolidated financial statements.
3
CROSSTEX ENERGY, L.P.
CONSOLIDATED STATEMENTS OF CHANGES IN PARTNERS’ EQUITY
| Accumulated | ||||||||||||||||||||
| General | Other | |||||||||||||||||||
| Common | Subordinated | Partner | Comprehensive | |||||||||||||||||
| Units | Units | Interest | Income | Total | ||||||||||||||||
| (Unaudited) | ||||||||||||||||||||
| (In thousands) | ||||||||||||||||||||
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Balance, December 31, 2003 (Restated)
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$ | 116,780 | $ | 33,593 | $ | 2,854 | $ | 1,383 | $ | 154,610 | ||||||||||
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Stock based compensation
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296 | 315 | 155 | — | 766 | |||||||||||||||
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Distributions
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(10,453 | ) | (11,154 | ) | (3,270 | ) | — | (24,877 | ) | |||||||||||
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Net income
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6,571 | 7,016 | 4,005 | — | 17,592 | |||||||||||||||
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Proceeds from exercise of unit options
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343 | — | — | — | 343 | |||||||||||||||
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Hedging gains or losses reclassified to earnings
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— | — | — | (4,564 | ) | (4,564 | ) | |||||||||||||
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Adjustment in fair value of derivatives
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— | — | — | 1,301 | 1,301 | |||||||||||||||
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Balance, September 30, 2004
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$ | 113,537 | $ | 29,770 | $ | 3,744 | $ | (1,880 | ) | $ | 145,171 | |||||||||
See accompanying notes to consolidated financial statements.
4
CROSSTEX ENERGY, L.P.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
| Nine Months Ended | |||||||||
| September 30, | |||||||||
| 2004 | 2003 | ||||||||
| (Unaudited) | |||||||||
| (In thousands) | |||||||||
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Net income
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$ | 17,592 | $ | 9,695 | |||||
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Hedging gains or losses reclassified to earnings
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(4,564 | ) | 2,056 | ||||||
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Adjustment in fair value of derivatives
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1,301 | (4,258 | ) | ||||||
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Comprehensive income
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$ | 14,329 | $ | 7,493 | |||||
See accompanying notes to consolidated financial statements.
5
CROSSTEX ENERGY, L.P.
CONSOLIDATED STATEMENTS OF CASH FLOWS
| Nine Months Ended | ||||||||||||
| September 30, | ||||||||||||
| 2004 | 2003 | |||||||||||
| (Unaudited) | ||||||||||||
| (In thousands) | ||||||||||||
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Cash flows from operating activities:
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||||||||||||
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Net income
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$ | 17,592 | $ | 9,695 | ||||||||
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Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
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||||||||||||
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Depreciation and amortization
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16,499 | 9,077 | ||||||||||
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Income from investment in affiliated partnerships
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(229 | ) | (173 | ) | ||||||||
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Non-cash stock based compensation
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766 | 4,649 | ||||||||||
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Gain on sale of property
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(12 | ) | — | |||||||||
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Minority interest in subsidiary
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150 | — | ||||||||||
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Deferred taxes
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(168 | ) | — | |||||||||
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Changes in current assets and liabilities, net of
acquisition effects:
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||||||||||||
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Accounts receivable and accrued revenue
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(2,942 | ) | (24,943 | ) | ||||||||
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Prepaid expenses
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