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Table of Contents

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

Form 10-Q

 

 

(Mark One)

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2012

OR

 

¨ 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, L.L.C.

(Exact Name of Registrant as Specified in Its Charter)

 

 

 

Delaware   84-0173305

(State or Other Jurisdiction

of Incorporation or Organization)

 

(I.R.S. Employer

Identification No.)

El Paso Building  

1001 Louisiana Street

Houston, Texas

  77002
(Address of Principal Executive Offices)   (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  x    No  ¨

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  x    No  ¨

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   ¨    Accelerated filer   ¨
Non-accelerated filer   x  (Do not check if a smaller reporting company)    Smaller reporting company   ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ¨    No  x

 

 

 


Table of Contents

COLORADO INTERSTATE GAS COMPANY, L.L.C.

TABLE OF CONTENTS

 

    

Caption

   Page  
   PART I — Financial Information   

Item 1.

   Financial Statements      1   

Item 2.

   Management’s Discussion and Analysis of Financial Condition and Results of Operations      8   

Item 3.

   Quantitative and Qualitative Disclosures About Market Risk      11   

Item 4.

   Controls and Procedures      11   
   PART II — Other Information   

Item 1.

   Legal Proceedings      12   

Item 1A.

   Risk Factors      12   

Item 2.

   Unregistered Sales of Equity Securities and Use of Proceeds      12   

Item 3.

   Defaults Upon Senior Securities      12   

Item 4.

   Mine Safety Disclosures      12   

Item 5.

   Other Information      12   

Item 6.

   Exhibits      13   
   Signatures      14   

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, L.L.C. and/or our subsidiaries.

 

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Table of Contents

PART I — FINANCIAL INFORMATION

Item 1. Financial Statements

COLORADO INTERSTATE GAS COMPANY, L.L.C.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

(In millions)

(Unaudited)

 

     Quarter Ended
March  31,
 
         2012             2011      

Operating revenues

   $ 109      $ 116   
  

 

 

   

 

 

 

Operating expenses

    

Operation and maintenance

     29        36   

Depreciation and amortization

     11        11   

Taxes, other than income taxes

     6        6   
  

 

 

   

 

 

 
     46        53   
  

 

 

   

 

 

 

Operating income

     63        63   

Interest and debt expense, net

     (15     (15
  

 

 

   

 

 

 

Net income

     48        48   

Other comprehensive income

    

Unrealized actuarial gains on postretirement benefit obligations

     —          —     
  

 

 

   

 

 

 

Comprehensive income

   $ 48      $ 48   
  

 

 

   

 

 

 

See accompanying notes.

 

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Table of Contents

COLORADO INTERSTATE GAS COMPANY, L.L.C.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In millions)

(Unaudited)

 

     March 31,
2012
     December 31,
2011
 
ASSETS      

Current assets

     

Cash and cash equivalents

   $ 2       $ 2   

Accounts and note receivable

     

Customer, net of allowance

     1         1   

Affiliates

     6         8   

Other

     15         14   

Materials and supplies

     8         8   

Regulatory assets

     3         3   

Other

     4         4   
  

 

 

    

 

 

 

Total current assets

     39         40   
  

 

 

    

 

 

 

Property, plant and equipment, at cost

     1,905         1,904   

Less accumulated depreciation and amortization

     502         496   
  

 

 

    

 

 

 

Total property, plant and equipment, net

     1,403         1,408   
  

 

 

    

 

 

 

Other long-term assets

     

Note receivable from affiliate

     92         61   

Other

     45         46   
  

 

 

    

 

 

 
     137         107   
  

 

 

    

 

 

 

Total assets

   $ 1,579       $ 1,555   
  

 

 

    

 

 

 
LIABILITIES AND MEMBERS’ EQUITY      

Current liabilities

     

Accounts payable

     

Trade

   $ 5       $ 7   

Affiliates

     17         19   

Other

     7         7   

Current maturities of other financing obligations

     5         5   

Taxes payable

     22         17   

Regulatory liabilities

     9         9   

Contractual deposits

     8         8   

Other

     15         9   
  

 

 

    

 

 

 

Total current liabilities

     88         81   
  

 

 

    

 

 

 

Long-term debt and other financing obligations, less current maturities

     646         647   
  

 

 

    

 

 

 

Other long-term liabilities

     15         18   
  

 

 

    

 

 

 

Commitments and contingencies (Note 3)

     

Members’ equity

     821         800   

Accumulated other comprehensive income

     9         9   
  

 

 

    

 

 

 

Total members’ equity

     830         809   
  

 

 

    

 

 

 

Total liabilities and members’ equity

   $ 1,579       $ 1,555   
  

 

 

    

 

 

 

See accompanying notes.

 

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Table of Contents

COLORADO INTERSTATE GAS COMPANY, L.L.C.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In millions)

(Unaudited)

 

     Quarter Ended
March  31,
 
         2012             2011      

Cash flows from operating activities

    

Net income

   $ 48      $ 48   

Adjustments to reconcile net income to net cash from operating activities

    

Depreciation and amortization

     11        11   

Other non-cash income items

     1        4   

Asset and liability changes

     2        4   
  

 

 

   

 

 

 

Net cash provided by operating activities

     62        67   
  

 

 

   

 

 

 

Cash flows from investing activities

    

Capital expenditures

     (7     (13

Net change in note receivable from affiliate

     (27     (23
  

 

 

   

 

 

 

Net cash used in investing activities

     (34     (36
  

 

 

   

 

 

 

Cash flows from financing activities

    

Payments to retire other financing obligations

     (1     (1

Distributions to members/partners

     (37     (44

Contributions from members/partners

     10        19   
  

 

 

   

 

 

 

Net cash used in financing activities

     (28     (26
  

 

 

   

 

 

 

Net change in cash and cash equivalents

     —          5   

Cash and cash equivalents

    

Beginning of period

     2        1   
  

 

 

   

 

 

 

End of period

   $ 2      $ 6   
  

 

 

   

 

 

 

See accompanying notes.

 

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Table of Contents

COLORADO INTERSTATE GAS COMPANY, L.L.C.

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 2011 Annual Report on Form 10-K. The financial statements as of March 31, 2012, and for the quarters ended March 31, 2012 and 2011, are unaudited. The condensed consolidated balance sheet as of December 31, 2011, was derived from the audited balance sheet filed in our 2011 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 2011 Annual Report on Form 10-K.

In October 2011, El Paso Corporation (El Paso) entered into a definitive merger agreement with Kinder Morgan, Inc. (KMI) whereby KMI will acquire El Paso in a transaction that valued El Paso at approximately $38 billion (based on the KMI stock price at that date), including the assumption of debt. In March 2012, both El Paso’s and KMI’s stockholders approved the merger agreement and a series of transactions to effectuate the merger. On May 1, 2012, KMI announced that it received approval from the Federal Trade Commission (FTC) for the merger, subject to the previously announced divestiture of certain assets. The completion of the merger transactions is expected by the end of May 2012, subject to other remaining closing conditions and regulatory approvals.

Significant Accounting Policies

There were no changes in the significant accounting policies described in our 2011 Annual Report on Form 10-K and no significant accounting pronouncements issued but not yet adopted as of March 31, 2012.

2. Financial Instruments

The following table reflects the carrying value and fair value of our long-term debt and other financing obligations:

 

     March 31, 2012      December 31, 2011  
     Carrying
Amount
     Fair
Value
     Carrying
Amount
     Fair
Value
 
     (In millions)  

Long-term debt and other financing obligations, including current maturities

   $ 651       $ 704       $ 652       $ 702   

We estimated the fair value of our long-term debt and other financing obligations (representing a Level 2 fair value measurement further discussed below) primarily based on quoted market prices for the same or similar issuances. As of March 31, 2012 and December 31, 2011, the carrying amounts of cash and cash equivalents, accounts receivable and accounts payable represent fair value based on the short-term nature of these instruments. The carrying amount of our affiliate note receivable approximates its fair value based on an analysis of the nature of the interest rate and our assessment of the ability to recover this amount.

We separate the fair values of our financial instruments into three levels (Levels 1, 2, and 3) based on our assessment of the availability of observable market data and the significance of non-observable data used to determine fair value. Our assessment and classification of an instrument within a level can change over time based on the maturity or liquidity of the instrument and would be reflected at the end of the period in which the change occurs. During the quarter ended March 31, 2012, there have been no changes to the inputs and valuation techniques used to measure fair value, the types of instruments, or the levels in which they are classified.

 

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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 March 31, 2012. 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, and these adjustments could be material.

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 March 31, 2012, our accrual was approximately $9 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 $31 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 2012, we estimate that our total remediation expenditures will be approximately $3 million, most of which will be expended under government directed clean-up plans. In addition, we expect to make capital expenditures for environmental matters of approximately $5 million in the aggregate for the remainder of 2012 through 2016, including capital expenditures associated with the impact of the Environmental Protection Agency (EPA) 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.

On April 17, 2012, the EPA issued regulations pursuant to the federal Clean Air Act to reduce various air pollutants from the oil and natural gas industry. These regulations will limit emissions from certain equipment including compressors, storage vessels and natural gas processing plants. We are still evaluating the regulations and their impact on our operating and our financial results.

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.

Other Commitments

For further discussion of our other commitments, see our 2011 Annual Report on Form 10-K.

 

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Table of Contents

4. Accounts Receivable Sales Program

We currently 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 existing program is scheduled to terminate on May 29, 2012 however, we are evaluating options to extend the program. 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 tables below contain information related to our accounts receivable sales program.

 

     Quarter Ended March 31,  
     2012      2011  
     (In millions)  

Accounts receivable sold to the third party financial institution(1)

   $ 105       $ 113   

Cash received for accounts receivable sold under the program

     64         63   

Deferred purchase price related to accounts receivable sold

     41         50   

Cash received related to the deferred purchase price

     41         47   

 

(1) During the quarters ended March 31, 2012 and 2011, losses recognized on the sale of accounts receivable were immaterial.

 

     March 31,      December 31,  
     2012      2011  
     (In millions)  

Accounts receivable sold and held by third party financial institution

   $ 34       $ 36   

Uncollected deferred purchase price related to accounts receivable sold(1)

     14         14   

 

(1) Initially recorded at an amount which approximates its fair value using observable inputs other than quoted prices in active markets (Level 2 fair value measurement).

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 programs 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 ended March 31, 2012 and 2011.

5. Investment in Unconsolidated Affiliate and Transactions with Affiliates

Investment in Unconsolidated Affiliate

We have a 50 percent investment in WYCO Development L.L.C. (WYCO). At March 31, 2012 and December 31, 2011, our investment balance in WYCO was approximately $14 million and was reflected in other long-term assets on our balance sheets. Our equity earnings for the quarter ended March 31, 2012 and 2011 were less than $1 million in both periods. Additionally, for the quarter ended March 31, 2012 and 2011, we received cash distributions of less than $1 million from WYCO.

 

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Table of Contents

Transactions with Affiliates

Other Financing Obligations. We have other financing obligations payable to WYCO related to the Totem storage facility and the High Plains pipeline. At March 31, 2012 and December 31, 2011, these other financing obligations were $176 million and $177 million. For a further discussion of our other financing obligations, see our 2011 Annual Report on Form 10-K.

Distributions and Contributions. We are required to make distributions to our owners as defined in our limited liability company agreement on a quarterly basis. During the quarters ended March 31, 2012 and 2011, we paid cash distributions of approximately $37 million and $44 million to our members/partners. In addition, in April 2012, we paid cash distributions to our members of approximately $54 million. During quarters ended March 31, 2012 and 2011, we received cash contributions of approximately $10 million and $19 million from our members/partners to fund our expansion projects.

Cash Management Program. We participate in El Paso Pipeline Partners, L.P.’s (EPB) cash management program which matches our short-term cash surpluses and needs of participating affiliates, thus minimizing total borrowings from outside sources. EPB uses the cash management program to settle intercompany transactions between participating affiliates. At March 31, 2012 and December 31, 2011, we had a note receivable from EPB of approximately $94 million and $67 million. We classified $2 million of this receivable as current on our balance sheet at March 31, 2012 based on the net amount we anticipate using in the next twelve months considering available cash sources and needs. The interest rate on this note is variable and was 2.2% and 2.3% at March 31, 2012 and December 31, 2011.

Other Affiliate Balances. At March 31, 2012 and December 31, 2011, we had contractual deposits from our affiliates of $7 million.

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 2011 Annual Report on Form 10-K. The following table shows revenues, expenses and reimbursements from our affiliates for the quarters ended March 31:

 

         2012              2011      
     (In millions)  

Revenues

   $ 3       $ 3   

Operation and maintenance expenses

     23         23   

Reimbursement of operating expenses

     2         2   

 

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The information contained in Item 2 updates, and should be read in conjunction with, information disclosed in our 2011 Annual Report on Form 10-K, and the financial statements and notes presented in Item 1 of this Quarterly Report on Form 10-Q.

In October 2011, El Paso entered into a definitive merger agreement with Kinder Morgan, Inc. (KMI) whereby KMI will acquire El Paso in a transaction that valued El Paso at approximately $38 billion (based on the KMI stock price at that date), including the assumption of debt. In March 2012, both El Paso’s and KMI’s stockholders approved the merger agreement and a series of transactions to effectuate the merger. On May 1, 2012, KMI announced that it received approval from the FTC for the merger, subject to the previously announced divestiture of certain assets. The completion of the merger transactions is expected by the end of May 2012, subject to other remaining closing conditions and regulatory approvals.

In April 2012, EPB received a proposal from El Paso to purchase the remaining 14 percent interest in us. The proposal is subject to approval by EPB’s Board of Directors. If approved, the transaction is expected to close contemporaneously with KMI’s acquisition of El Paso.

Results of Operations

Our management uses segment earnings before interest expense and income taxes (Segment EBIT) to measure and assess the operating results and effectiveness of our business. We believe Segment EBIT is useful to our investors because it allows them to use the same performance measure analyzed internally by our management and allows them to evaluate the performance of our business without regard to the manner in which it is financed. 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 measurements 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 quarter ended March 31, 2012 compared with the same period in 2011.

Operating Results:

 

     2012     2011  
    

(In millions,

except for volumes)

 

Operating revenues

   $ 109      $ 116   

Operating expenses

     (46     (53
  

 

 

   

 

 

 

Operating income and Segment EBIT

     63        63   

Interest and debt expense

     (15     (15
  

 

 

   

 

 

 

Net income

   $ 48      $ 48   
  

 

 

   

 

 

 

Throughput volumes (BBtu/d)

     2,145        2,291   
  

 

 

   

 

 

 

Segment EBIT Analysis:

 

     Variance  
     Operating
Revenue
    Operating
Expense
     Total  
     Favorable/(Unfavorable)  
     (In millions)  

Reservation revenues

   $ (4   $ —         $ (4

Processing revenues

     (3     3         —     

Other(1)

     —          4         4   
  

 

 

   

 

 

    

 

 

 

Total impact on Segment EBIT

   $ (7   $ 7       $ —     
  

 

 

   

 

 

    

 

 

 

 

(1) Consists of individually insignificant items.

Reservation Revenues. During the quarter ended March 31, 2012, our reservation revenues were lower when compared to the same period in 2011 by approximately $5 million due to the renewal of certain contracts at lower volumes or discounted rates and by approximately $2 million as a result of lower throughput due to warmer weather during the winter months and increased competition in the Rockies region. Partially offsetting these unfavorable items were revenues of approximately $3 million related to an expansion project.

 

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Processing Revenues. We experienced lower processing revenues of approximately $3 million for the quarter ended March 31, 2012 compared to the same period in 2011 due to decreased demand offset by lower expenses associated with the gas consumed in processing liquids.

Affiliated Interest Income, Net

The following table shows the average advances due from EPB and the average short-term interest rates for the quarters ended March 31:

 

     2012     2011  
     (In millions, except for rates)  

Average advance due from EPB

   $ 81      $ 82   

Average short-term interest rate

     2.3     0.8

Liquidity and Capital Resources

Liquidity Overview. Our primary sources of liquidity are cash flows from operating activities, amounts available under EPB’s cash management program and capital contributions from our members, while our primary uses of cash are for working capital, capital expenditures and required distributions to our members. At March 31, 2012, we had a note receivable from EPB under its cash management program of approximately $94 million, of which $2 million was classified as current based on the net amount we anticipate using in the next twelve months considering available cash sources and needs. See Item 1. Financial Statements, Note 5 for a further discussion of EPB’s cash management program.

Cash Flow Activities. Our cash flows for the quarter ended March 31, 2012 are summarized as follows (in millions):

 

Cash Flow from Operations

  

Net income

   $     48   

Non-cash income adjustments

     12   

Change in assets and liabilities

     2   
  

 

 

 

Total cash flow from operations

     62   
  

 

 

 

Other Cash Inflows

  

Financing activities

  

Contributions from members

     10   
  

 

 

 

Cash Outflows

  

Investing activities

  

Capital expenditures

     7   

Net change in note receivable from affiliate

     27   
  

 

 

 

Total other cash outflows

     34   
  

 

 

 

Financing activities

  

Distributions to members

     37   

Payments to retire other financing obligations

     1   
  

 

 

 
     38   
  

 

 

 

Total cash outflows

     72   
  

 

 

 

Net change in cash and cash equivalents

   $ —     
  

 

 

 

During the quarter ended March 31, 2012, we generated $62 million of operating cash flow. We used these amounts primarily to fund maintenance capital expenditures, as well as pay distributions to our members. During the quarter ended March 31, 2012, we paid cash distributions of approximately $37 million to our members. In addition, in April 2012 we paid cash distributions to our members of approximately $54 million. During the quarter ended March 31, 2012, we received cash contributions of approximately $10 million from our members to fund our expansion projects.

 

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Our cash capital expenditures for the quarter ended March 31, 2012 are listed below (in millions):

 

Maintenance

   $      4   

Expansion

     3   
  

 

 

 

Total

   $ 7   
  

 

 

 

We believe we have adequate liquidity available to us to meet our capital requirements and our existing operating needs through cash flow from operating activities, amounts available under EPB’s cash management program and capital contributions from our members. While we do not anticipate a need to directly access the financial markets for the remainder of 2012 for any of our operating activities or expansion capital needs based on liquidity available to us, market conditions may impact our, EPB’s or El Paso’s ability to act opportunistically. Our future plans could also be impacted by the completion of El Paso’s announced acquisition by KMI.

 

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Table of Contents

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 2011 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 2011 Annual Report on Form 10-K.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

As of March 31, 2012, 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 March 31, 2012.

Changes in Internal Control Over Financial Reporting

There were no changes in our internal control over financial reporting during the first quarter of 2012 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.

Item 1A. Risk Factors

CAUTIONARY STATEMENTS FOR PURPOSES OF THE “SAFE HARBOR” PROVISIONS OF

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 2011 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.

I tem 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

None.

 

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Item 6. Exhibits

The Exhibit Index is 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, L.L.C. has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 

     COLORADO INTERSTATE GAS COMPANY, L.L.C.
Date: May 4, 2012   

/s/ James J. Cleary

   James J. Cleary
   President
   (Principal Executive Officer)
Date: May 4, 2012   

/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, L.L.C.

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    First Amended and Restated Limited Liability Company Agreement of Colorado Interstate Gas Company, L.L.C. dated February 14, 2012 (incorporated by reference to Exhibit 3.B to our Annual Report on Form 10-K for the year end December 31, 2011, filed with the SEC on February 27, 2012).
*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.

 

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