x
|
ANNUAL
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF
1934
|
o
|
TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF
1934
|
Title
of each class
|
Name
of each exchange on which registered
|
|||
Common
Units Representing Limited Partner Interests
|
New
York Stock Exchange
|
Large
accelerated filer
o
|
Accelerated
filer
¨
|
Non-accelerated
filer
x
|
Overview
|
Recent
Expansion Projects
|
Trends
and Uncertainties
|
Critical
Accounting Policies and Estimates
|
Financial
Analysis of Operations
|
Liquidity
and Capital Resources
|
Forward-Looking
Statements
|
•
|
“BGL”
refers to Boardwalk GP, LLC, the general partner of Boardwalk GP;
|
•
|
“Boardwalk
GP” refers to Boardwalk GP, LP, the general partner of Boardwalk Pipeline
Partners, LP;
|
•
|
“Boardwalk
Pipelines” refers to Boardwalk Pipelines, LP (formerly Boardwalk
Pipelines, LLC);
|
•
|
“BPHC”
refers to Boardwalk Pipelines Holding
Corp;
|
•
|
“Gulf
South” refers to Gulf South Pipeline Company,
LP;
|
•
|
“Loews”
refers to Loews Corporation;
|
•
|
“our
general partner” refers collectively to Boardwalk GP and
BGL;
|
•
|
“Texas
Gas” refers to Texas Gas Transmission, LLC; and
|
•
|
the
“Partnership,” “we,” “us,” “our” and like terms refer to Boardwalk
Pipeline Partners, LP, collectively with our subsidiaries unless
the
context indicates otherwise.
|
•
|
approximately
5,900 miles of pipelines, having a peak-day delivery capacity of
approximately 2.8 Bcf/day;
|
•
|
31
compressor stations having an aggregate of approximately 531,000
horsepower; and
|
•
|
nine
natural gas storage fields located in Indiana and Kentucky, having
aggregate storage capacity of approximately 178 Bcf of gas, of which
approximately 63 Bcf is certificated as working gas.
|
•
|
approximately
7,570 miles of pipeline, having a peak-day delivery capacity of
approximately 3.5 Bcf/day;
|
•
|
29
compressor stations having an aggregate of approximately 223,000
horsepower; and
|
•
|
two
natural gas storage fields located in Louisiana and Mississippi,
having
aggregate storage capacity of approximately 129 Bcf of gas, of which
approximately 80 Bcf is certificated as working gas.
|
(a)
|
the
Clean Air Act and analogous state laws which impose obligations related
to
air emissions;
|
(b)
|
the
Water Pollution Control Act, commonly referred to as the Clean Water
Act
and analogous state laws which regulate discharge of wastewaters
from our
facilities into state and federal waters;
|
(c)
|
the
Comprehensive Environmental Response, Compensation and Liability
Act,
commonly referred to as CERCLA, or the Superfund law, and analogous
state
laws which regulate the cleanup of hazardous substances that may
have been
released at properties currently or previously owned or operated
by us or
locations to which we have sent wastes for disposal; and
|
(d)
|
the
Resource Conservation and Recovery Act, and analogous state laws
which
impose requirements for the handling and discharge of solid and hazardous
waste from our facilities. For further discussion regarding our
environmental risk factors, please read Item 1A, "Risk
Factors."
|
•
|
operating
terms and conditions of service;
|
•
|
the
types of services we may offer to our customers;
|
•
|
construction
of new facilities;
|
•
|
acquisition,
extension or abandonment of services or facilities;
|
•
|
accounts
and records; and
|
•
|
relationships
with affiliated companies involved in all aspects of the natural
gas
business.
|
(a)
|
the
Clean Air Act and analogous state laws which impose obligations related
to
air emissions;
|
(b)
|
the
Water Pollution Control Act, commonly referred to as the Clean Water
Act,
and analogous state laws which regulate discharge of wastewaters
from our
facilities into state and federal waters;
|
(c)
|
CERCLA
or the Superfund law, and analogous state laws which regulate the
cleanup
of hazardous substances that may have been released at properties
currently or previously owned or operated by us or locations to which
we
have sent wastes for disposal; and
|
(d)
|
the
Resource Conservation and Recovery Act, and analogous state laws
which
impose requirements for the handling and discharge of solid and hazardous
waste from our facilities.
|
•
|
existing
and new competition to deliver natural gas to our markets;
|
•
|
the
growth in demand for natural gas in our markets;
|
•
|
whether
the market will continue to support long-term contracts;
|
•
|
the
reduction of basis differentials across our pipeline systems;
|
•
|
whether
our business strategy continues to be successful; and
|
•
|
the
effects of state regulation on customer contracting practices.
|
•
|
worldwide
economic conditions;
|
•
|
weather
conditions and seasonal trends;
|
•
|
levels
of domestic production and consumer demand;
|
•
|
the
availability of LNG;
|
•
|
the
availability of adequate transportation capacity;
|
•
|
the
price and availability of alternative fuels;
|
•
|
the
effect of energy conservation measures;
|
•
|
the
nature and extent of governmental regulation and taxation; and
|
•
|
the
anticipated future prices of natural gas, LNG and other commodities.
|
•
|
performance
of our business following the acquisition, expansion or construction
of
assets that does not meet expectations;
|
•
|
a
significant increase in our indebtedness and working capital requirements,
which could, among other things, have an adverse impact on our credit
ratings;
|
•
|
the
inability to timely and effectively integrate into our operations
the
operations of newly acquired, expanded or constructed assets;
|
•
|
the
incurrence of substantial unforeseen environmental and other liabilities,
including liabilities arising from the operation of an acquired business
or asset prior to our acquisition for which we are not indemnified
or for
which the indemnity is inadequate;
|
•
|
diversion
of our management’s attention from other business concerns; and
|
•
|
regulatory
risks created by the nature or location of acquired businesses.
|
•
|
we
are unable to identify attractive expansion projects or acquisition
candidates or we are outbid by competitors;
|
•
|
we
are unable to obtain necessary governmental approvals;
|
•
|
we
are unable to raise financing for such expansions or acquisitions
on
economically acceptable terms; or
|
•
|
we
are unable to secure adequate customer commitments to use the expanded
or
acquired facilities.
|
•
|
Loews
and its affiliates may engage in competition with us;
|
•
|
Neither
our partnership agreement nor any other agreement requires Loews
or its
affiliates (other than our general partner) to pursue a business
strategy
that favors us. Directors and officers of Loews and its affiliates
have a
fiduciary duty to make decisions in the best interest of its shareholders,
which may be contrary to our interests. Our general partner intends
to
limit its liability regarding our contractual obligations;
|
•
|
Our
general partner is allowed to take into account the interests of
parties
other than us, such as Loews and its affiliates, in resolving conflicts
of
interest, which has the effect of limiting its fiduciary duty to
our
unitholders;
|
•
|
Our
partnership agreement limits the liability and reduces the fiduciary
duties of our general partner, while also restricting the remedies
available to our unitholders for actions that, without these limitations,
might constitute breaches of fiduciary duty. Common units are deemed
to
have consented to some actions and conflicts of interest that might
otherwise constitute a breach of fiduciary or other duties under
applicable law.
|
•
|
permits
our general partner to make a number of decisions in its individual
capacity, as opposed to in its capacity as our general partner. This
entitles our general partner to consider only the interests and factors
that it desires, and it has no duty or obligation to give any
consideration to any interest of, or factors affecting, us, our affiliates
or any limited partner. Decisions made by our general partner in
its
individual capacity will be made by a majority of the owners of our
general partner, and not by the board of directors of our general
partner.
Examples include the exercise of our general partner's limited call
rights, as provided in our partnership agreement, its voting rights
with
respect to the units it owns and its right to cause us to register
resale
of our units held by it under the Securities Act of 1933, and the
determination of whether to consent to any merger or consolidation
of the
partnership;
|
•
|
provides
that our general partner shall not have any liability to us or our
unitholders for decisions made in its capacity as general partner
so long
as it acted in good faith, meaning it believed that the decisions
were in
the best interests of the partnership;
|
•
|
generally
provides that affiliate transactions and resolutions of conflicts
of
interest not approved by the conflicts committee of the board of
directors
of our general partner and not involving a vote of unitholders must
be on
terms no less favorable to us than those generally provided to or
available from unrelated third parties or be “fair and reasonable” to us
and that, in determining whether a transaction or resolution is “fair and
reasonable,” our general partner may consider the totality of the
relationships between the parties involved, including other transactions
that may be particularly advantageous or beneficial to us; and
|
•
|
provides
that our general partner and its officers and directors will not
be liable
for monetary damages to us, our limited partners or assignees for
any acts
or omissions unless there has been a final and non-appealable judgment
entered by a court of competent jurisdiction determining that the
general
partner or those other persons acted in bad faith or engaged in fraud
or
willful misconduct.
|
•
|
First,
98% to the common unitholders, pro rata, and 2% to our general partner,
until we distribute for each outstanding common unit an amount equal
to
the minimum quarterly distribution for that
quarter;
|
•
|
Second,
98% to the common unitholders, pro rata, and 2% to our general partner,
until we distribute for each outstanding common unit an amount equal
to
any arrearages in payment of the minimum quarterly distribution on
the
common units for any prior quarters during the subordination
period;
|
•
|
Third,
98% to the subordinated unitholders, pro rata, and 2% to our general
partner, until we distribute for each subordinated unit an amount
equal to
the minimum quarterly distribution for that quarter;
and
|
•
|
Thereafter,
98% to the common and subordinated unitholders, pro rata, and 2%
to our
general partner, except as described below under “Incentive Distribution
Rights.”
|
•
|
First,
98% to all unitholders, pro rata, and 2% to our general partner,
until
each unitholder receives a total of $0.4025 per unit for that quarter,
the
“first target distribution”;
|
•
|
Second,
85% to all unitholders, pro rata, and 15% to our general partner,
until
each unitholder receives a total of $0.4375 per unit for that quarter,
the
“second target distribution”;
|
•
|
Third,
75% to all unitholders, pro rata, and 25% to our general partner,
until
each unitholder receives a total of $0.5250 per unit for that quarter,
the
“third target distribution”; and
|
•
|
Thereafter,
50% to all unitholders, pro rata, and 50% to our general
partner.
|
Proceeds
received:
|
||||
Sale
of common units
|
$
|
292.5
|
||
Borrowings
under credit facility
|
42.1
|
|||
$
|
334.6
|
|||
Use
of proceeds:
|
||||
Underwriting
discount
|
$
|
17.6
|
||
Structuring
fee
|
1.2
|
|||
Professional
fees and offering costs
|
2.3
|
|||
Reimbursement
of BPHC for capital expenditures
|
42.1
|
|||
Repayment
of debt owed to Loews
|
250.0
|
|||
Retained
for working capital
|
21.4
|
|||
Total
|
$
|
334.6
|
Plan
category
|
Number
of securities to be issued upon exercise of outstanding options,
warrants
and rights
|
Weighted-average
exercise price of outstanding options, warrants and
rights
|
Number
of securities remaining available for future issuance under equity
compensation plan (excluding securities reflected in the first
column)
|
|||
Equity
compensation plans approved by security holders
|
-
|
N/A
|
-
|
|||
Equity
compensation plans not approved by security holders
|
-
|
N/A
|
3,525,000
|
Boardwalk
Pipeline Partners
|
Predecessor
|
||||||||||||||||||||
(Expressed
in thousands)
|
For
the Year Ended
December
31, 2005
|
For
the Year Ended
December
31, 2004
|
For
the Period May 17, 2003 through December 31, 2003
|
For
the Period January 1, 2003 through
May
16, 2003
|
For
the Year Ended
December
31, 2002
|
For
the Year
Ended
December
31, 2001
|
|||||||||||||||
Total
operating revenues
|
$
|
560,466
|
$
|
263,621
|
$
|
142,860
|
$
|
113,447
|
$
|
266,674
|
$
|
251,585
|
|||||||||
Net
income
|
100,925
|
48,825
|
22,451
|
34,474
|
56,099
|
45,131
|
|||||||||||||||
EBITDA**
|
291,188
|
144,864
|
77,467
|
80,345
|
151,042
|
143,114
|
|||||||||||||||
Total
assets
|
2,465,491
|
2,472,140
|
1,238,627
|
N/A
|
1,412,148
|
1,396,
519
|
|||||||||||||||
Long-term
debt
|
1,101,290
|
1,106,135
|
548,115
|
N/A
|
249,781
|
250,174
|
•
|
our
financial performance without regard to financing methods, capital
structure or historical cost basis;
|
•
|
our
ability to generate cash sufficient to pay interest on our indebtedness
and to make distributions to our partners;
|
•
|
our
operating performance and return on invested capital as compared
to those
of other companies in the natural gas transportation and storage
business,
without regard to financing methods and capital structure; and
|
•
|
the
viability of acquisitions and capital expenditure projects.
|
Boardwalk
Pipeline Partners
|
Predecessor
|
||||||||||||||||||||
For
the Year Ended
December
31, 2005
|
For
the Year Ended
December
31, 2004
|
For
the Period May 17, 2003 through December 31, 2003
|
For
the Period January 1, 2003 through
May
16, 2003
|
For
the Year Ended
December
31, 2002
|
For
the Year Ended
December
31, 2001
|
||||||||||||||||
Net
income
|
$
|
100,925
|
$
|
48,825
|
$
|
22,451
|
$
|
34,474
|
$
|
56,099
|
$
|
45,131
|
|||||||||
Provision
for income taxes
|
-
|
-
|
-
|
22,387
|
36,647
|
30,484
|
|||||||||||||||
Charge-in-lieu
of income taxes
|
49,494
|
32,333
|
15,104
|
-
|
-
|
-
|
|||||||||||||||
Elimination
of cumulative deferred taxes
|
10,102
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||||
Depreciation
and amortization
|
72,078
|
33,977
|
20,544
|
16,092
|
37,806
|
45,821
|
|||||||||||||||
Interest
expense
|
58,589
|
29,729
|
19,368
|
7,392
|
20,490
|
21,678
|
|||||||||||||||
EBITDA
|
$
|
291,188
|
$
|
144,864
|
$
|
77,467
|
$
|
80,345
|
$
|
151,042
|
$
|
143,114
|
•
|
the
level of firm service for our transportation and storage
businesses;
|
•
|
the
level of interruptible service for our transportation and storage
businesses;
|
•
|
the
average rate for our firm and interruptible services;
|
•
|
operating
costs and expenses; and
|
•
|
EBITDA.
|
•
|
increasing
competition for the transportation and storage of available gas supplies
originating in a number of our supply
areas;
|
•
|
increasing
competition from new and proposed pipelines providing natural gas
to our
market areas from other supply
areas;
|
•
|
a
desire by certain of our customers to replace long-term contracts
with
contracts of shorter duration when their current contracts
expire;
|
•
|
disruption
at the facilities of gas suppliers and end users in the Gulf Coast
region
and other uncertainties regarding the impact of Hurricanes Katrina
and
Rita;
|
•
|
increased
demand for natural gas in our traditional market areas at a rate
greater
than discoveries of natural gas in our supply
areas;
|
•
|
the
likelihood that LNG from the Gulf Coast region will become an increasingly
important source of supply for our
customers;
|
•
|
a
widening basis, meaning increases in the differential between the
sale
price of natural gas in our market areas and the price at which natural
gas may be purchased in certain of our supply areas, particularly
East
Texas, where pipeline capacity constraints limit the gas which may
be sold
from that region.
|
•
|
On
November 1, 2005, we completed our market area storage expansion
project
in Western Kentucky and the associated transportation agreements
contributed approximately $2 million in revenues during 2005;
and
|
•
|
On
December 1, 2005, we increased capacity from Carthage, Texas by leasing
capacity on a third party pipeline which contributed approximately
$1
million in revenues during 2005.
|
December
31, 2005
|
December
31, 2004
|
||||||
Maintenance
capital
|
$
|
52.9
|
$
|
34.2
|
|||
Expansion
capital
|
30.1
|
7.7
|
|||||
Total
|
$
|
83.0
|
$
|
41.9
|
|
Payments
due by Period
|
|||||||||||||||
Total
|
Less than
1
Year
|
1-2 Years
|
3-5 Years
|
More than
5
Years
|
||||||||||||
Lease
commitments
|
$
|
21.1
|
$
|
4.9
|
$
|
7.2
|
$
|
5.8
|
$
|
3.2
|
||||||
Interest
on long-term debt
|
709.9
|
58.8
|
117.5
|
117.5
|
416.1
|
|||||||||||
Capital
commitments
|
15.8
|
15.7
|
0.1
|
-
|
-
|
|||||||||||
Principal
payments on long-term debt
|
1,110.0
|
-
|
-
|
-
|
1,110.0
|
|||||||||||
Total
|
$
|
1,856.8
|
$
|
79.4
|
$
|
124.8
|
$
|
123.3
|
$
|
1,529.3
|
•
|
The
gas transmission and storage operations of our subsidiaries are subject
to
rate-making policies that could have an adverse impact on our ability
to
recover the full cost of operating our pipelines, including a reasonable
return.
|
•
|
The
impact of Hurricanes Katrina and Rita could have a material adverse
effect
on our business, financial condition and results of operations because
some of our damages may not be covered by
insurance.
|
•
|
We
are subject to laws and regulations relating to the environment and
pipeline operations which may expose us to significant costs, liabilities
and loss of revenues. Any changes in such regulations or their application
could negatively affect our results of
operations.
|
•
|
Our
operations are subject to operational hazards and unforeseen interruptions
for which we may not be adequately
insured.
|
•
|
Because
of the natural decline in gas production from existing wells, our
success
depends on our ability to obtain access to new sources of natural
gas,
which is dependent on factors beyond our control. Any decrease in
supplies
of natural gas in our supply areas could adversely affect our business
and
operating results.
|
•
|
Successful
development of LNG import terminals in the eastern or northeastern
United
States could reduce the demand for our
services.
|
•
|
We
may not be able to maintain or replace expiring gas transportation
and
storage contracts at favorable
rates.
|
•
|
We
depend on certain key customers for a significant portion of our
revenues.
The loss of any of these key customers could result in a decline
in our
revenues.
|
•
|
Significant
changes in natural gas prices could affect supply and demand, reducing
system throughput and adversely affecting our revenues
.
|
•
|
We
may not complete projects, including growth or expansion projects,
that we
commence, or we may complete projects on materially different terms
or
timing than anticipated and we may not be able to achieve the intended
benefits of any such project, if
completed.
|
December
31,
|
|||||||
ASSETS
|
2005
|
2004
|
|||||
Current
Assets:
|
|||||||
Cash
and cash equivalents
|
$
|
65,792
|
$
|
16,518
|
|||
Receivables,
net:
|
|||||||
Trade
|
59,115
|
45,662
|
|||||
Other
|
5,564
|
26,978
|
|||||
Gas
Receivables:
|
|||||||
Transportation
and exchange
|
29,557
|
34,294
|
|||||
Storage
|
12,576
|
13,948
|
|||||
Inventories
|
15,881
|
14,182
|
|||||
Costs
recoverable from customers
|
3,560
|
2,611
|
|||||
Deferred
income taxes
|
-
|
13,390
|
|||||
Gas
stored underground
|
6,500
|
3,534
|
|||||
Prepaid
expenses and other current assets
|
7,720
|
7,225
|
|||||
Total
current assets
|
206,265
|
178,342
|
|||||
Property,
Plant and Equipment:
|
|||||||
Natural
gas transmission plant
|
1,772,483
|
1,676,729
|
|||||
Other
natural gas plant
|
213,136
|
215,195
|
|||||
1,985,619
|
1,891,924
|
||||||
Less—accumulated
depreciation and amortization
|
118,213
|
49,801
|
|||||
Property,
plant and equipment, net
|
1,867,406
|
1,842,123
|
|||||
Other
Assets:
|
|||||||
Goodwill
|
163,474
|
163,474
|
|||||
Gas
stored underground
|
169,177
|
149,872
|
|||||
Deferred
income taxes
|
-
|
46,206
|
|||||
Costs
recoverable from customers
|
43,960
|
35,984
|
|||||
Advances
to affiliates, non-current
|
-
|
41,812
|
|||||
Other
|
15,209
|
14,327
|
|||||
Total
other assets
|
391,820
|
451,675
|
|||||
Total
Assets
|
$
|
2,465,491
|
$
|
2,472,140
|
December
31,
|
|||||||
LIABILITIES,
MEMBER’S EQUITY AND PARTNERS’ CAPITAL
|
2005
|
2004
|
|||||
Current
Liabilities:
|
|||||||
Payables:
|
|||||||
Trade
|
$
|
20,433
|
$
|
21,135
|
|||
Affiliates
|
835
|
1,659
|
|||||
Other
|
3,681
|
6,251
|
|||||
Gas
Payables:
|
|||||||
Transportation
and exchange
|
14,710
|
25,422
|
|||||
Storage
|
27,559
|
28,296
|
|||||
Accrued
taxes other
|
16,004
|
10,523
|
|||||
Accrued
interest
|
17,996
|
5,241
|
|||||
Accrued
payroll and employee benefits
|
29,028
|
25,796
|
|||||
Current
note payable
|
42,100
|
-
|
|||||
Other
current liabilities
|
29,941
|
37,733
|
|||||
Total
current liabilities
|
202,287
|
162,056
|
|||||
Long
-Term Debt
|
1,101,290
|
1,106,135
|
|||||
Other
Liabilities and Deferred Credits:
|
|||||||
Postretirement
benefits
|
32,413
|
28,001
|
|||||
Asset
retirement obligation
|
14,074
|
3,254
|
|||||
Provision
for other asset retirement
|
33,212
|
29,700
|
|||||
Other
|
93,541
|
50,067
|
|||||
Total
other liabilities and deferred credits
|
173,240
|
111,022
|
|||||
Commitments
and Contingencies (Note 3)
|
-
|
-
|
|||||
Member’s
Equity and Partners' Capital:
|
|||||||
Common
units - 68,256,122 common units issued and outstanding
|
705,609
|
-
|
|||||
Subordinated
units- 33,093,878 units issued and outstanding
|
266,578
|
-
|
|||||
General
partner's units - 2,068,367 units issued and outstanding
|
16,661
|
-
|
|||||
Paid-in
capital
|
-
|
1,071,651
|
|||||
Member’s
equity
|
-
|
21,276
|
|||||
Accumulated
other comprehensive loss
|
(174
|
)
|
-
|
||||
Total
member’s equity and partners’ capital
|
988,674
|
1,092,927
|
|||||
Total
Liabilities, Member’s Equity and Partners’ Capital
|
$
|
2,465,491
|
$
|
2,472,140
|
Boardwalk
Pipeline Partners
|
Predecessor
|
||||||||||||||
For
the Year Ended December 31, 2005
|
For
the Year Ended December 31, 2004
|
For
the Period May 17 through December 31, 2003
|
For
the Period January 1 through May 16, 2003
|
||||||||||||
Operating
Revenues:
|
|||||||||||||||
Gas
transportation
|
$
|
526,574
|
$
|
253,488
|
$
|
138,693
|
$
|
111,622
|
|||||||
Gas
storage
|
21,667
|
7,289
|
2,435
|
814
|
|||||||||||
Other
|
12,225
|
2,844
|
1,732
|
1,011
|
|||||||||||
Total
operating revenues
|
560,466
|
263,621
|
142,860
|
113,447
|
|||||||||||
Operating
Costs and Expenses:
|
|||||||||||||||
Operation
and maintenance
|
174,641
|
48,336
|
25,430
|
16,097
|
|||||||||||
Administrative
and general
|
78,752
|
52,535
|
29,646
|
13,642
|
|||||||||||
Depreciation
and amortization
|
72,078
|
33,977
|
20,544
|
16,092
|
|||||||||||
Taxes
other than income taxes
|
27,361
|
19,044
|
10,690
|
6,077
|
|||||||||||
Net
gain on disposal of operating assets
|
(7,846
|
)
|
-
|
-
|
(30
|
)
|
|||||||||
Total
operating costs and expenses
|
344,986
|
153,892
|
86,310
|
51,878
|
|||||||||||
Operating
Income
|
215,480
|
109,729
|
56,550
|
61,569
|
|||||||||||
Other
(Income) Deductions:
|
|||||||||||||||
Interest
expense, net
|
58,589
|
29,729
|
19,368
|
7,392
|
|||||||||||
Interest
income from affiliates
|
(2,186
|
)
|
(375
|
)
|
(21
|
)
|
(1,965
|
)
|
|||||||
Miscellaneous
other income
|
(1,444
|
)
|
(783
|
)
|
(352
|
)
|
(719
|
)
|
|||||||
Total
other deductions
|
54,959
|
28,571
|
18,995
|
4,708
|
|||||||||||
Income
before income taxes
|
160,521
|
81,158
|
37,555
|
56,861
|
|||||||||||
Provision
for income taxes *
|
-
|
-
|
-
|
22,387
|
|||||||||||
Charge-in-lieu
of income taxes *
|
49,494
|
32,333
|
15,104
|
-
|
|||||||||||
Elimination
of cumulative deferred taxes *
|
10,102
|
-
|
-
|
-
|
|||||||||||
Net
Income *
|
$
|
100,925
|
$
|
48,825
|
$
|
22,451
|
$
|
34,474
|
*Results
of operations for the year ended December 31, 2005, reflect a change
in
the tax status associated with Boardwalk Pipeline Partners and Boardwalk
Pipelines, coincident with the initial public offering. Accordingly,
Boardwalk Pipeline Partners has recorded a charge-in-lieu of income
taxes
for the period January 1, 2005 through the date of the offering and
has
recorded no income taxes thereafter. Pursuant to the change in tax
status,
Boardwalk Pipeline Partners also eliminated its balance of accumulated
deferred income taxes at the date of the offering (as presented in
line
item, "Elimination of cumulative deferred taxes"). See Note 2 to the
consolidated financial statements for additional
information.
|
Calculation
of limited partners’ interest in net income:
|
|||||||||||||||
Net
income to partners (November 15-December 31, 2005)
|
$
|
35,992
|
-
|
||||||||||||
Less
general partner's interest in net income
|
720
|
||||||||||||||
Limited
partners’ interest in net income
|
$
|
35,272
|
|||||||||||||
Net
income per limited partners’ unit:
|
|||||||||||||||
Common
units and subordinated units
|
$
|
0.35
|
|||||||||||||
Weighted-average
number of limited partners units outstanding:
|
|||||||||||||||
Common
units
|
68,256,122
|
||||||||||||||
Subordinated
units
|
33,093,878
|
Boardwalk
Pipeline Partners
|
Predecessor
|
||||||||||||||
For
the Year Ended
December
31, 2005
|
For
the Year Ended
December
31, 2004
|
For
the Period May 17, 2003 through December 31, 2003
|
For
the Period January 1, 2003 through
May
16, 2003
|
||||||||||||
OPERATING
ACTIVITIES:
|
|||||||||||||||
Net
income
|
$
|
100,925
|
$
|
48,825
|
$
|
22,451
|
$
|
34,474
|
|||||||
Adjustments
to reconcile to cash provided
|
|||||||||||||||
from
(used in) operations:
|
|||||||||||||||
Depreciation
and amortization
|
72,078
|
33,977
|
20,544
|
16,092
|
|||||||||||
Amortization
of acquired executory contracts
|
(9,630
|
)
|
-
|
-
|
-
|
||||||||||
Provision
for deferred income taxes
|
54,682
|
43,428
|
19,962
|
5,494
|
|||||||||||
Net
gain on sale of operating assets
|
(7,846
|
)
|
-
|
-
|
(30
|
)
|
|||||||||
Changes in operating assets and liabilities, net assets and liabilities
acquired:
|
|||||||||||||||
Receivables
|
(21,147
|
)
|
(9,777
|
)
|
10,378
|
(27,426
|
)
|
||||||||
Inventories
|
(1,699
|
)
|
(217
|
)
|
73
|
(22
|
)
|
||||||||
Affiliates
|
(824
|
)
|
(341
|
)
|
473
|
(7,550
|
)
|
||||||||
Other
current assets
|
(3,669
|
)
|
6,320
|
(3,126
|
)
|
5,004
|
|||||||||
Accrued
income taxes due affiliate
|
-
|
-
|
-
|
(11,306
|
)
|
||||||||||
Accrued
and deferred income taxes
|
4,908
|
(10,996
|
)
|
(5,347
|
)
|
-
|
|||||||||
Payables
and accrued liabilities
|
43,788
|
(9,532
|
)
|
32,474
|
(4,196
|
)
|
|||||||||
Other,
including changes in noncurrent assets and liabilities
|
(12,852
|
)
|
2,729
|
(36,359
|
)
|
27,196
|
|||||||||
Net
cash provided by operating activities
|
218,714
|
104,416
|
61,523
|
37,730
|
|||||||||||
INVESTING
ACTIVITIES:
|
|||||||||||||||
Capital
expenditures, net
|
(82,955
|
)
|
(41,920
|
)
|
(34,749
|
)
|
(43
|
)
|
|||||||
Proceeds
from sale of operating assets
|
4,725
|
-
|
-
|
-
|
|||||||||||
Proceeds
from insurance reimbursements
|
4,177
|
-
|
-
|
-
|
|||||||||||
Advances
to affiliates, net
|
(28,252
|
)
|
(32,194
|
)
|
(3,968
|
)
|
(37,964
|
)
|
|||||||
Investment
in Texas Gas
|
-
|
-
|
(803,748
|
)
|
-
|
||||||||||
Investment
in Gulf South, net of cash and working capital adjustment
receivable
|
-
|
(1,111,411
|
)
|
-
|
-
|
||||||||||
Net
cash used in investing activities
|
(102,305
|
)
|
(1,185,525
|
)
|
(842,465
|
)
|
(38,007
|
)
|
|||||||
FINANCING
ACTIVITIES:
|
|||||||||||||||
Proceeds
from notes payable
|
42,100
|
-
|
-
|
-
|
|||||||||||
Payments
of notes payable
|
(250,000
|
)
|
-
|
-
|
-
|
||||||||||
Proceeds
from long-term debt
|
569,369
|
575,000
|
706,918
|
-
|
|||||||||||
Payment
of long-term debt
|
(575,000
|
)
|
(17,285
|
)
|
(407,715
|
)
|
-
|
||||||||
Dividends
|
(131,686
|
)
|
(30,000
|
)
|
(20,000
|
)
|
-
|
||||||||
Capital
contribution from parent
|
6,684
|
550,741
|
520,910
|
-
|
|||||||||||
Proceeds
from sale of common units net of related transaction costs
|
271,398
|
-
|
-
|
-
|
|||||||||||
Net
cash provided by (used in) financing activities
|
(67,135
|
)
|
1,078,456
|
800,113
|
-
|
||||||||||
Increase
(decrease) in cash and cash equivalents
|
49,274
|
(2,653
|
)
|
19,171
|
(277
|
)
|
|||||||||
Cash
and cash equivalents at beginning of period
|
16,518
|
19,171
|
-
|
277
|
|||||||||||
Cash
and cash equivalents at end of period
|
$
|
65,792
|
$
|
16,518
|
$
|
19,171
|
$
|
-
|
Paid
in Capital
|
Retained
Earnings
|
Accumulated
Other Comp Income (Loss)
|
Comprehensive
Income
|
Common
Stock
|
Common
Units
|
Subordinated
Units
|
General
Partner
Units
|
Total
Partners’ Capital
|
||||||||||||||||||||
Predecessor
|
||||||||||||||||||||||||||||
Balance
January 1, 2003
|
$
|
630,608
|
$
|
101,070
|
-
|
-
|
$
|
1
|
-
|
-
|
-
|
-
|
||||||||||||||||
Add
(deduct):
|
||||||||||||||||||||||||||||
Net
income
|
-
|
34,474
|
-
|
$
|
34,472
|
-
|
-
|
-
|
-
|
-
|
||||||||||||||||||
Non-cash
dividend
|
-
|
(29,022
|
)
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
||||||||||||||||||
Balance
May 16, 2003
|
$
|
630,608
|
$
|
106,522
|
-
|
$
|
34,472
|
$
|
1
|
-
|
-
|
-
|
-
|
|||||||||||||||
|
||||||||||||||||||||||||||||
Boardwalk
Pipelines, LP
|
||||||||||||||||||||||||||||
Balance
May 16, 2003
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||||||||
Add
(deduct):
|
||||||||||||||||||||||||||||
Capital
contribution
|
$
|
520,910
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||||||||
Net
income
|
-
|
$
|
22,451
|
-
|
$
|
22,451
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||||||
Dividends
paid
|
-
|
(20,000
|
)
|
-
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||||||||
Balance
January 1, 2004
|
$
|
520,910
|
$
|
2,451
|
-
|
$
|
22,451
|
-
|
-
|
-
|
-
|
-
|
||||||||||||||||
Add
(deduct):
|
||||||||||||||||||||||||||||
Capital
contribution
|
550,741
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||||||||
Net
income
|
-
|
48,825
|
-
|
48,825
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||||||||
Dividends
paid
|
-
|
(30,000
|
)
|
-
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||||||||
Balance
December 31, 2004
|
$
|
1,071,651
|
$
|
21,276
|
-
|
$
|
48,825
|
-
|
-
|
-
|
-
|
-
|
||||||||||||||||
Add
(deduct):
|
-
|
|||||||||||||||||||||||||||
Net
income
|
-
|
64,933
|
-
|
64,933
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||||||||
Capital
contribution
|
6,684
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||||||||
Dividends
paid
|
-
|
(233,087
|
)
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
||||||||||||||||||
Other
comprehensive income, net of tax
|
-
|
-
|
$
|
287
|
287
|
-
|
-
|
-
|
-
|
-
|
||||||||||||||||||
Elimination
of deferred taxes on accumulated other comprehensive
income
|
-
|
-
|
64
|
-
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||||||||
Balance
November 15, 2005
|
$
|
1,078,335
|
$
|
(146,878
|
)
|
$
|
351
|
$
|
65,220
|
-
|
-
|
-
|
-
|
-
|
||||||||||||||
Boardwalk
Pipeline Partners, LP
|
||||||||||||||||||||||||||||
Add (deduct): | ||||||||||||||||||||||||||||
Capital
contribution, including assumption of debt of $250.0 million
(53,256,122
common units, 33,093,878 subordinated units and 2,068,367 general
partner
units)
|
-
|
-
|
$
|
351
|
-
|
-
|
$
|
410,456
|
$
|
255,061
|
$
|
15,941
|
$
|
681,809
|
||||||||||||||
Sale
of common units, net of related transaction costs (15,000,000
units)
|
-
|
-
|
-
|
-
|
-
|
271,398
|
-
|
-
|
271,398
|
|||||||||||||||||||
Other
comprehensive loss
|
-
|
-
|
(525
|
)
|
$
|
(525
|
)
|
-
|
-
|
-
|
-
|
(525
|
)
|
|||||||||||||||
Net
income
|
-
|
-
|
-
|
35,992
|
-
|
23,755
|
11,517
|
720
|
35,992
|
|||||||||||||||||||
Balance
December 31, 2005
|
-
|
-
|
$
|
(174
|
)
|
$
|
35,467
|
-
|
$
|
705,609
|
$
|
266,578
|
$
|
16,661
|
$
|
988,674
|
||||||||||||
•
|
“BGL”
refers to Boardwalk GP, LLC, the general partner of Boardwalk GP;
|
•
|
“Boardwalk
GP” refers to Boardwalk GP, LP, the general partner of Boardwalk Pipeline
Partners, LP;
|
•
|
“Boardwalk
Pipeline Partners” refers to Boardwalk Pipeline Partners,
LP;
|
•
|
“Boardwalk
Pipelines” refers to Boardwalk Pipelines, LP (formerly Boardwalk
Pipelines, LLC);
|
•
|
“BPHC”
refers to Boardwalk Pipelines Holding Corp, wholly owned by
Loews;
|
•
|
“Gulf
South” refers to Gulf South Pipeline Company,
LP;
|
•
|
“Loews”
refers to Loews Corporation;
|
•
|
“general
partner” refers collectively to Boardwalk GP and BGL;
and
|
•
|
“Texas
Gas” refers to Texas Gas Transmission,
LLC.
|
Current
assets
|
$
|
71,283
|
||
Property,
plant and equipment
|
1,159,251
|
|||
Other
non-current assets
|
28,319
|
|||
Current
liabilities
|
(84,273
|
)
|
||
Other
liabilities and deferred credits
|
(53,153
|
)
|
||
$
|
1,121,427
|
(unaudited)
|
|||||||
For
the Year Ended December 31, 2004
|
For
the Year Ended December 31, 2003
|
||||||
Operating
revenues
|
$
|
504,471
|
$
|
468,046
|
|||
Income
before income taxes
|
121,598
|
75,182
|
|||||
Net
income
|
73,525
|
45,297
|
Category
|
2005
Class Amount
|
Weighted-Average
Useful Lives (Years)
|
2004
Class Amount
|
Weighted-Average
Useful Lives (Years)
|
|||||||||
Depreciable
plant:
|
|||||||||||||
Intangible
|
$
|
10,776
|
30
|
$
|
12,890
|
23
|
|||||||
Gathering
|
88,852
|
19
|
91,330
|
19
|
|||||||||
Storage
|
155,717
|
46
|
129,294
|
50
|
|||||||||
Transmission
|
1,484,901
|
42
|
1,407,055
|
43
|
|||||||||
General
|
64,548
|
19
|
47,081
|
19
|
|||||||||
Total
utility depreciable plant
|
1,804,794
|
41
|
1,687,650
|
41
|
|||||||||
Non-depreciable:
|
|||||||||||||
Land
|
9,470
|
9,318
|
|||||||||||
Storage
|
85,393
|
94,258
|
|||||||||||
Other
|
85,962
|
100,698
|
|||||||||||
Total
other
|
180,825
|
204,274
|
|||||||||||
Total
PPE
|
1,985,619
|
1,891,924
|
|||||||||||
Less:
accumulated depreciation
|
118,213
|
49,801
|
|||||||||||
Total
PPE, net
|
$
|
1,867,406
|
$
|
1,842,123
|
2005
|
2004
|
||||||
Regulatory
Assets:
|
|||||||
Pension
|
$
|
3,841
|
$
|
128
|
|||
Tax
effect of AFUDC equity
|
7,236
|
6,526
|
|||||
Unamortized
debt expense and premium on reacquired debt
|
12,701
|
13,699
|
|||||
Postretirement
benefits other than pension
|
33,156
|
32,374
|
|||||
Fuel
tracker
|
2,005
|
-
|
|||||
Imbalances/storage
valuation tracker
|
1,283
|
-
|
|||||
Gas
supply realignment costs
|
-
|
(432
|
)
|
||||
Total
regulatory assets
|
$
|
60,222
|
$
|
52,295
|
Regulatory
Liabilities:
|
|||||||
Fuel
tracker
|
-
|
$
|
917
|
||||
System
management/cashout tracker
|
-
|
77
|
|||||
Provision
for asset retirement
|
$
|
33,212
|
29,700
|
||||
Unamortized
discount on long-term debt
|
(2,024
|
)
|
(2,198
|
)
|
|||
Total
regulatory liabilities
|
$
|
31,188
|
$
|
28,496
|
2006
|
$
4.0
|
2007
|
1.1
|
2008
|
0.2
|
Balance
at beginning of year
|
$
3,254
|
Liabilities
recorded
|
10,593
|
Liabilities
settled
|
(417)
|
Accretion
expense
|
644
|
Balance
at end of year
|
$
14,074
|
Boardwalk
Pipeline Partners
|
Predecessor
|
||||||||
For
the Year Ended
December
31, 2005
|
For
the Year Ended
December
31, 2004
|
May
17, 2003 through
December
31, 2003
|
January
1, 2003
through
May
16,
2003
|
||||||
Allowance
for borrowed funds used during construction and capitalized interest
|
$
0.7
|
|
$
0.3
|
|
$
0.3
|
|
|
-
|
|
Allowance
for equity funds used during construction
|
1.4
|
|
0.8
|
|
0.7
|
|
|
$
0.2
|
•
|
the
distribution by Boardwalk Pipelines of $126.4 million of cash, receivables
and other working capital assets to
BPHC;
|
•
|
the
contribution, directly and indirectly, by BPHC of all the equity
interests
of Boardwalk Pipelines to Boardwalk Pipeline
Partners;
|
•
|
Boardwalk
Pipeline Partners’ reimbursement of BPHC for $42.1 million of capital
expenditures it incurred in connection with the acquisition of Gulf
South;
|
•
|
the
issuance by Boardwalk Pipeline Partners of 53,256,122 common units,
33,093,878 subordinated units, representing an 83.5% limited partnership
interest in Boardwalk Pipeline Partners, to BPHC;
and
|
•
|
the
issuance by Boardwalk Pipeline Partners of a 2% general partner interest
and all of its incentive distribution rights to Boardwalk
GP.
|
•
|
to
repay the $250.0 million of indebtedness that Boardwalk Pipeline
Partners
assumed from BPHC in connection with the contribution of its interest
in
Boardwalk Pipeline Partners, and
|
•
|
provide
approximately $21.4 million in additional working capital for Boardwalk
Pipeline Partners.
|
(i)
|
First,
100% to the General Partner, in an amount equal to the aggregate
net
losses allocated to the General Partner for all taxable years until
the
aggregate net income allocated to the General Partner for the current
taxable year and all previous taxable years is equal to the net losses
allocated to the General Partner for all previous taxable years;
|
(ii)
|
Second,
100% of the unitholders, in accordance with their respective percentage
interests, until the aggregate net income allocated to such Partners
for
the current taxable year and all previous taxable years is equal
to the
aggregate net losses allocated to such Partners for all previous
taxable
years; and
|
(iii)
|
Third,
the balance, if any, 100% to the unitholders, in accordance with
their
respective percentage interests. After giving effect to certain special
allocations, net losses for each taxable period and all items of
income,
gain, loss and deduction taken into account in computing net losses
for
such taxable period shall be allocated as follows:
|
a)
|
First,
100% to the unitholders, in accordance with their respective percentage
interests, until the net losses allocated for the current taxable
year and
all previous taxable years is equal to the aggregate net income allocated
to such Partners for all previous taxable years, provided that the
net
losses shall not be allocated to the extent that such allocations
would
cause any unitholder holding Limited Partner Units to have a deficit
balance to its adjusted capital account at the end of such taxable
year;
|
b)
|
Second,
100% to the unitholders, in accordance with their respective percentage
interests, provided, that net losses shall not be allocated to the
extent
that such allocation would cause any unitholders holding Limited
Partner
Units to have a deficit balance in its adjusted capital account at
the end
of such taxable year; and
|
c)
|
Third,
the balance of any, 100% to the General
Partner.
|
•
|
Litigation
filed by Jack Grynberg alleging that approximately 300 energy companies,
including Texas Gas, had violated the False Claims Act in connection
with
the measurement, royalty valuation and purchase of hydrocarbons;
and
|
•
|
A
claim by certain parties for back rental associated with their alleged
ownership of a partial mineral interest in a tract of land in a gas
storage field owned by Texas Gas. In December 2003, a lawsuit was
filed
against Texas Gas in Muhlenberg County, Kentucky, seeking unspecified
damages related to this claim. On April 18, 2005, in the first phase
of
this lawsuit, the court entered an order granting partial summary
judgment
against Texas Gas related to the vesting of legal title to the disputed
acreage. The lawsuit has moved into the next phase for determination
of
whether various legal and equitable defenses to plaintiff’s ownership are
applicable.
|
(1)
|
EPA
will not pursue any further action against Texas Gas for EPA costs
related
to the Site no matter how much the planned remedial action ultimately
may
cost, and
|
(2)
|
the
Super Fund law provides protection from “contribution” suits for parties
that settle, i.e. suits from other potentially responsible parties
that
perform or finance cleanup at the Site.
|
•
|
identification
and remediation of hydrocarbon contamination of $6.0 million;
|
•
|
enhancement
of groundwater protection measures of $2.5 million;
|
•
|
asbestos
abatement of $2.7 million;
|
•
|
identification
and remediation of mercury contamination of $2.0 million;
|
•
|
identification
and remediation of PCB contamination of $2.0 million; and
|
•
|
other
costs $1.4 million.
|
2006
|
$
4.9
|
2007
|
4.0
|
2008
|
3.2
|
2009
|
2.8
|
2010
|
2.6
|
Thereafter
|
3.6
|
Total
|
$
21.1
|
Less
than 1 year
|
$
15.7
|
|
1-2
years
|
0.1
|
|
3-5
years
|
-
|
|
More
than 5 years
|
-
|
|
Total
|
$
15.8
|
December
31,
|
|||||||
2005
|
2004
|
||||||
Boardwalk
Pipelines
|
|||||||
5.20%
Notes due 2018
|
$
|
185,000
|
$
|
185,000
|
|||
Interim
term loan
|
-
|
575,000
|
|||||
5.50%
Notes due 2017
|
300,000
|
-
|
|||||
Texas
Gas
|
|||||||
7.25%
Debentures due 2027
|
100,000
|
100,000
|
|||||
4.60%
Notes due 2015
|
250,000
|
250,000
|
|||||
Gulf
South
|
|||||||
5.05%
Notes due 2015
|
275,000
|
-
|
|||||
1,110,000
|
1,110,000
|
||||||
Unamortized
debt discount
|
(8,710
|
)
|
(3,865
|
)
|
|||
Total
long-term debt
|
$
|
1,101,290
|
$
|
1,106,135
|
For
the Year Ended
December
31, 2005
|
For
the Year Ended
December
31, 2004
|
||||||
Change
in benefit obligation:
|
|||||||
Benefit
obligation at beginning of period
|
$
|
103,473
|
$
|
90,719
|
|||
Service
cost
|
4,052
|
3,516
|
|||||
Interest
cost
|
6,220
|
5,582
|
|||||
Actuarial
loss
|
6,132
|
6,373
|
|||||
Benefits
paid
|
(3,994
|
)
|
(2,717
|
)
|
|||
Benefit
obligation at end of period
|
115,883
|
103,473
|
|||||
Change
in plan assets:
|
|||||||
Fair
value of plan assets at beginning of period
|
93,056
|
89,302
|
|||||
Actual
return on plan assets
|
7,131
|
6,471
|
|||||
Benefits
paid
|
(3,994
|
)
|
(2,717
|
)
|
|||
Fair
value of plan assets at end of period
|
96,193
|
93,056
|
|||||
Funded
status
|
(19,690
|
)
|
(10,417
|
)
|
|||
Unrecognized
net actuarial loss
|
15,849
|
10,289
|
|||||
Net
amount recognized
|
$
|
(3,841
|
)
|
$
|
(128
|
)
|
December
31, 2005
|
December
31, 2004
|
||
Accrued
benefit liability
|
$
(3,841)
|
$
(128)
|
|
Accumulated
benefit obligation (ABO)
|
$
93,928
|
$
81,376
|
For
the Year Ended
December
31, 2005
|
For
the Year Ended
December
31, 2004
|
For
the Period May 17, 2003 through December 31, 2003
|
For
the Period January 1, 2003 through
May
16, 2003
|
||||||||||||
Components
of net periodic pension expense:
|
|||||||||||||||
Service
cost
|
$
|
4,052
|
$
|
3,516
|
$
|
2,075
|
$
|
1,631
|
|||||||
Interest
cost
|
6,220
|
5,582
|
3,243
|
2,223
|
|||||||||||
Expected
return on plan assets
|
(6,859
|
)
|
(6,644
|
)
|
(4,186
|
)
|
(3,278
|
)
|
|||||||
Amortization
of prior service credit
|
-
|
-
|
-
|
(478
|
)
|
||||||||||
Amortization
of unrecognized net loss
|
300
|
-
|
-
|
-
|
|||||||||||
Regulatory
asset accrual
|
(3,713
|
)
|
(2,454
|
)
|
(1,132
|
)
|
(98
|
)
|
|||||||
Net
periodic pension expense
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
Retirement
Plan
|
|
2006
|
$
3,179
|
2007
|
3,690
|
2008
|
4,790
|
2009
|
6,447
|
2010
|
7,968
|
2011
- 2015
|
61,862
|
2005
|
2004
|
||
Debt
securities
|
62.50%
|
67.00%
|
|
Equity
securities
|
30.90%
|
29.70%
|
|
Limited
Partnership
|
6.40%
|
-
|
|
Other
|
0.20%
|
3.30%
|
|
Total
|
100.00%
|
100.00%
|
December
31, 2005
|
December
31, 2004
|
||
Discount
rate
|
5.63%
|
5.88%
|
|
Rate
of compensation increase
|
5.50%
|
5.50%
|
For
the Year Ended December 31, 2005
|
For
the Year Ended December 31, 2004
|
For
the Period
May
17, 2003 through
December
31, 2003
|
For
the Period January 1, 2003 through
May
16, 2003
|
||||
Discount
rate
|
5.88%
|
6.25%
|
6.00%
|
7.00%
|
|||
Expected
return on plan assets
|
7.50%
|
7.50%
|
7.50%
|
8.50%
|
|||
Rate
of compensation increase
|
5.50%
|
5.50%
|
5.25%
|
5.00%
|
For
the Year Ended
December
31, 2005
|
For
the Year Ended
December
31, 2004
|
||||||
Change
in plan assets:
|
|||||||
Fair
value of plan assets at beginning of period
|
76,499
|
71,717
|
|||||
Actual
return on plan assets
|
5,164
|
4,837
|
|||||
Employer
contributions
|
3,888
|
4,869
|
|||||
Plan
participants’ contributions
|
1,328
|
1,044
|
|||||
Benefits
paid
|
(7,416
|
)
|
(5,968
|
)
|
|||
Fair
value of plan assets at end of year
|
79,463
|
76,499
|
|||||
Funded
status
|
(54,725
|
)
|
(49,100
|
)
|
|||
Unrecognized
net actuarial loss
|
20,411
|
15,927
|
|||||
Net
amount recognized
|
$
|
(34,314
|
)
|
$
|
(33,173
|
)
|
Amounts
recognized in the Consolidated Balance Sheets consist
of:
|
|||||||
Accrued
benefit liability
|
$
|
(34,314
|
)
|
$
|
(33,173
|
)
|
Weighted-average
assumptions used to determine PBO:
|
|||||||
Discount
rate
|
5.63
|
%
|
5.88
|
%
|
FAS
106 Expense for the Year:
|
|||||||
Service
cost
|
$
|
2,076
|
$
|
2,095
|
|||
Interest
cost
|
7,222
|
5,912
|
|||||
Amortization
of net loss (gain)
|
362
|
(66
|
)
|
||||
Expected
return on plan assets
|
(4,632
|
)
|
(5,252
|
)
|
|||
Total
|
$
|
5,028
|
$
|
2,689
|
Weighted-average
assumptions used to determine FAS 106 expense:
|
|||||||
Discount
rate
|
5.88
|
%
|
5.88
|
%
|
|||
Return
on assets for medical/life
|
6.15%/5.00
|
%
|
7.50%/5.00
|
%
|
2006
|
$
5,292
|
2007
|
5,596
|
2008
|
5,948
|
2009
|
6,260
|
2010
|
6,502
|
2011
- 2015
|
38,754
|
Effect
of 1% Increase:
|
2005
|
2004
|
|
Benefit
obligation at end of year
|
$ 19,785
|
$
18,077
|
|
Total
of service and interest costs for year
|
1,585
|
1,352
|
Effect
of 1% Decrease:
|
|||
Benefit
obligation at end of year
|
(16,007)
|
(14,670)
|
|
Total
of service and interest costs for year
|
(1,263)
|
(1,078)
|
2005
|
2004
|
||
Fixed
income
|
45.2%
|
94.7%
|
|
Cash
and other
|
54.8%
|
5.3%
|
|
Total
|
100.0%
|
100.0%
|
Boardwalk
Pipeline Partners
|
Predecessor
|
||||||||||||||
For
the Year Ended
December
31, 2005
|
For
the Year Ended
December
31, 2004
|
For
the Period May 17, 2003 through December 31, 2003
|
For
the Period January 1, 2003 through
May
16, 2003
|
||||||||||||
Current
expense (benefit):
|
|||||||||||||||
Federal
|
$
|
4,044
|
$
|
(9,131
|
)
|
$
|
(4,141
|
)
|
$
|
14,234
|
|||||
State
|
870
|
(1,964
|
)
|
(717
|
)
|
2,659
|
|||||||||
4,914
|
(11,095
|
)
|
(4,858
|
)
|
16,893
|
||||||||||
Deferred
provision:
|
|||||||||||||||
Federal
|
36,690
|
35,803
|
17,666
|
4,522
|
|||||||||||
State
|
7,890
|
7,625
|
2,296
|
972
|
|||||||||||
Elimination
of cumulative deferred taxes
|
10,102
|
-
|
-
|
-
|
|||||||||||
54,682
|
43,428
|
19,962
|
5,494
|
||||||||||||
Net
provision for income taxes
|
-
|
-
|
-
|
$
|
22,387
|
||||||||||
Net
charge-in-lieu of income tax
|
$
|
59,596
|
$
|
32,333
|
$
|
15,104
|
Boardwalk
Pipeline Partners
|
Predecessor
|
||||||||||||||
For
the Year Ended
December
31, 2005
|
For
the Year
Ended
December
31, 2004
|
For
the Period May 17, 2003 through December 31, 2003
|
For
the Period January 1, 2003 through
May
16, 2003
|
||||||||||||
Provision
at statutory rate
|
$
|
43,583
|
$
|
28,405
|
$
|
13,145
|
$
|
19,901
|
|||||||
Increases
in taxes resulting from:
|
|||||||||||||||
State
income taxes
|
5,694
|
3,680
|
1,709
|
2,587
|
|||||||||||
Other,
net
|
217
|
248
|
250
|
(101
|
)
|
||||||||||
Elimination
of deferred taxes
|
10,102
|
-
|
-
|
-
|
|||||||||||
Net
provision for income taxes
|
-
|
-
|
-
|
$
|
22,387
|
||||||||||
Charge-in-lieu
of income taxes
|
$
|
59,596
|
$
|
32,333
|
$
|
15,104
|
December
31, 2004
|
||||
Deferred
tax assets:
|
||||
Property,
plant and equipment
|
$
|
93,498
|
||
Accrued
payroll, pension and other benefits
|
14,018
|
|||
Deferred
income
|
1,086
|
|||
Net
operating loss carryover
|
16,216
|
|||
Other
assets
|
3,479
|
|||
Total
deferred tax assets
|
128,297
|
|||
Deferred
tax liabilities:
|
||||
Storage
gas
|
65,568
|
|||
Unamortized
debt expense
|
3,133
|
|||
Total
deferred tax liabilities
|
68,701
|
|||
Net
deferred tax assets
|
$
|
59,596
|
2005
|
2004
|
||||||||||||
Financial
Assets
|
Carrying
Amount
|
Fair
Value
|
Carrying
Amount
|
Fair
Value
|
|||||||||
Cash
and cash equivalents
|
$
|
65,792
|
$
|
65,792
|
$
|
16,518
|
$
|
16,518
|
|||||
Advances
to affiliates
|
-
|
-
|
41,812
|
41,812
|
|||||||||
Financial
Liabilities
|
|||||||||||||
Long-term
debt
|
$
|
1,101,290
|
$
|
1,090,854
|
$
|
1,106,135
|
$
|
1,105,411
|
For
the Year Ended
December
31, 2005
|
For
the Year Ended
December
31, 2004
|
For
the Period
May
17, 2003
through
December
31, 2003
|
For
the Period
January
1, 2003
through
May
16, 2003
|
|||||||||||||
Customer
|
Revenue
|
%
|
Revenue
|
%
|
Revenue
|
%
|
Revenue
|
%
|
||||||||
ProLiance
Energy, LLC
|
$
51,168
|
-9.13%
|
$
56,742
|
21.53%
|
$
28,110
|
19.68%
|
$
22,157
|
19.53%
|
||||||||
Atmos
Energy
|
$
61,774
|
11.02%
|
$
28,569
|
10.84%
|
$
16,208
|
11.35%
|
$
13,318
|
11.74%
|
Predecessor
|
For
the Period
January
1, 2003
through
May
16, 2003
|
|
Williams
Energy Services Co.
|
$ 292
|
|
Transcontinental
Gas Pipe Line Corp.
|
1,670
|
|
Total
transportation for affiliates
|
$
1,962
|
Boardwalk
Pipeline Partners
|
Predecessor
|
||||||||||||||
(
Expressed
in thousands)
|
For
the Year Ended
December
31, 2005
|
For
the Year Ended
December
31,
2004
|
For
the Period May 17, 2003 through December 31, 2003
|
For
the Period January 1, 2003 through
May
16, 2003
|
|||||||||||
Supplemental
Disclosure of Cash Flow Information:
|
|||||||||||||||
Cash
paid during the period for:
|
|||||||||||||||
Interest
(net of amount capitalized)
|
$
|
45,357
|
$
|
28,847
|
$
|
15,295
|
$
|
9,852
|
|||||||
Income
taxes, net
|
-
|
-
|
492
|
28,199
|
|||||||||||
Non-cash
capital contribution
|
681,809
|
-
|
-
|
-
|
|||||||||||
Non-cash
dividends
|
101,401
|
-
|
-
|
29,022
|
2005
For
the Quarter Ended:
|
|||||||||||||
December
31
|
September
30
|
June
30
|
March
31
|
||||||||||
Operating
revenues
|
$
|
170,905
|
$
|
120,916
|
$
|
118,263
|
$
|
150,382
|
|||||
Operating
expenses
|
89,378
|
99,898
|
81,910
|
73,800
|
|||||||||
Operating
income
|
81,527
|
21,018
|
36,353
|
76,582
|
|||||||||
Interest
expense, net
|
14,964
|
14,632
|
14,482
|
14,511
|
|||||||||
Other
income
|
722
|
1,215
|
922
|
771
|
|||||||||
Income
before income taxes
|
67,285
|
7,601
|
22,793
|
62,842
|
|||||||||
Charge-in-lieu
of income taxes
|
22,476
|
3,047
|
9,088
|
24,985
|
|||||||||
Net
income
|
$
|
44,809
|
$
|
4,554
|
$
|
13,705
|
$
|
37,857
|
2004
For
the Quarter Ended:
|
|||||||||||||
December
31
|
September
30
|
June
30
|
March
31
|
||||||||||
Operating
revenues
|
$
|
79,103
|
$
|
46,920
|
$
|
51,925
|
$
|
85,673
|
|||||
Operating
expenses
|
44,371
|
38,068
|
36,308
|
35,145
|
|||||||||
Operating
income
|
34,732
|
8,852
|
15,617
|
50,528
|
|||||||||
Interest
expense, net
|
7,444
|
7,276
|
7,314
|
7,695
|
|||||||||
Other
income
|
525
|
254
|
139
|
240
|
|||||||||
Income
before income taxes
|
27,813
|
1,830
|
8,442
|
43,073
|
|||||||||
Charge-in-lieu
of income taxes
|
11,032
|
813
|
3,458
|
17,030
|
|||||||||
Net
income
|
$
|
16,781
|
$
|
1,017
|
$
|
4,984
|
$
|
26,043
|
Name
|
Age
|
Position
|
||
Rolf
A. Gafvert
|
52
|
Co-President
and Director
|
||
H.
Dean Jones II
|
53
|
Co-President
and Director
|
||
Jamie
L. Buskill
|
41
|
Chief
Financial Officer
|
||
Arthur
L. Rebell
|
64
|
Director,
Chairman of the Board
|
||
Thomas
E. Hyland
|
60
|
Director
|
||
Jonathan
E. Nathanson
|
43
|
Director
|
||
Mark
L. Shapiro
|
61
|
Director
|
||
Andrew
H. Tisch
|
56
|
Director
|
(i)
|
during
the past three years the director has been an employee, or an immediate
family member has been an executive officer, of us;
|
(ii)
|
the
director or an immediate family member received, during any twelve
month
period within the past three years, more than $100,000 in direct
compensation from us, excluding director and committee fees, pension
payments and certain forms of deferred compensation;
|
(iii)
|
the
director is a current partner or employee or an immediate family
member is
a current partner of a firm that is our internal or external auditor,
or an immediate family member is a current employee of such a firm
and
participates in the firm’s audit, assurance or tax compliance (but not tax
planning) practice or, within the last three years, the director
or an
immediate family member was a partner employee of such a firm and
personally worked on our audit within that time;
|
(iv)
|
the
director or an immediate family member has at any time during the
past
three years been employed as an executive officer of another company
where
any of our present executive officers at the same time serves or
served on that company’s compensation committee; or
|
(v)
|
the
director is a current employee, or an immediate family member is
a current
executive officer, of a company that has made payments to, or received
payments from us for property or services in an amount which, in any
of the last three years, exceeds the greater of $1 million, or 2%
of the
other company’s consolidated gross
revenues.
|
Long-Term
|
||||
Annual
Compensation
|
Compensation
|
|||
Grants
of
|
All
Other
|
|||
Name
and Position
|
Salary
|
Bonus
(1)
|
Phantom
Units (2)
|
Compensation
|
Rolf
A. Gafvert
|
$
240,000
|
$
350,000
|
$
150,000
|
$
21,525 (3)
|
Co-President
and
|
||||
President
of Gulf South
|
||||
H.
Dean Jones II
|
282,692
|
195,000
|
80,000
|
171,412
(4)
|
Co-President
and
|
||||
President
of Texas Gas
|
||||
Jamie
L. Buskill
|
170,000
|
100,000
|
35,000
|
55,283 (5)
|
Chief
Financial Officer
|
||||
and
CFO of Texas Gas
|
(1)
|
Reflects
amounts paid to the named executive officers in 2006 for services
performed by them during 2005.
|
(2)
|
Reflects
the cash value at the date of grant of grants under our Long-Term
Incentive Plan of 8,030, 4,283 and 1,874 phantom units, respectively,
to
Messrs. Gafvert, Jones and Buskill on December 15, 2005. The closing
price
of our common units on such date on the New York Stock Exchange was
$18.68. Each such grant: included a tandem grant of Distribution
Equivalent Rights (DERs); vests 50% on the second anniversary of
the grant
date and 50% on the third anniversary of the grant date; and will
be
payable to the grantee in cash upon vesting in an amount equal to
the sum
of the Fair Market Value of the Units (as defined in the plan) that
vest
on the vesting date plus the vested amount then credited to the grantee’s
DER account, less applicable taxes.
|
(3)
|
Includes
matching contributions made under a 401(k) and money purchase plan,
and
insurance premiums.
|
(4)
|
Includes
matching contributions made under a 401(k) plan, interest and pay
credits
on existing balances under a non-qualified supplemental retirement
plan
and qualified retirement plan, interest on existing balances under
an
inactive salary continuation plan, and insurance
premiums.
|
(5)
|
Includes
matching contributions made under a 401(k) plan, interest and pay
credits
on existing balances under a non-qualified supplemental retirement
plan
and qualified retirement plan, and insurance
premiums.
|
Name
of Beneficial Owner
|
Common Units
Beneficially Owned
|
Percentage of
Common Units
Beneficially Owned (1)
|
Subordinated
Units
Beneficially Owned
|
Percentage
of
Subordinated
Units
Beneficially Owned
(1)
|
Percentage
of Total Equity Securities Beneficially Owned
|
Jamie
L. Buskill
|
-
|
-
|
-
|
-
|
-
|
Rolf
A. Gafvert
|
-
|
-
|
-
|
-
|
-
|
Thomas
E. Hyland
|
-
|
-
|
-
|
-
|
-
|
H.
Dean Jones II
|
-
|
-
|
-
|
-
|
-
|
Jonathan
E. Nathanson
|
10,000
|
*
|
-
|
-
|
-
|
Arthur
L. Rebell
|
36,000
(2)
|
*
|
-
|
-
|
-
|
Mark
L. Shapiro
|
10,000
|
*
|
-
|
-
|
-
|
Andrew
H. Tisch
|
18,550
(3)
|
*
|
-
|
-
|
-
|
All
directors and executive officers as a group
|
74,550
|
*
|
-
|
-
|
-
|
BPHC
(4)
|
53,256,122
|
78.02%
|
33,093,878
|
100.00%
|
85.19%
|
Loews
Corporation (4)
|
53,256,122
|
78.02%
|
33,093,878
|
100.00%
|
85.19%
|
(1)
|
As
of March 1, 2006, we had 68,256,122 common units and 33,093,878
subordinated units issued and outstanding.
|
(2)
|
30,000
of these units are owned by Arebell, LLC, a limited liability company
controlled by Mr. Rebell.
|
(3)
|
Represents
one quarter of the number of units owned by a general partnership
in which
a one-quarter interest is held by a trust of which Mr. Tisch is managing
trustee.
|
(4)
|
Loews
Corporation is the parent company of BPHC and may, therefore, be
deemed to
beneficially own the units held by BPHC. The address of BPHC is 3800
Frederica Street, Owensboro, Kentucky 42301. The address of Loews
is 667
Madison Avenue, New York, New York
10021.
|
•
|
the
distribution by Boardwalk Pipelines of $126.4 million of cash, receivables
and other working capital assets to
BPHC;
|
•
|
the
contribution, directly and indirectly, by BPHC of all the equity
interests
of Boardwalk Pipelines to us;
|
•
|
our
reimbursement of BPHC for $42.1 million of capital expenditures it
incurred in connection with the
GS-Acquisition;
|
•
|
our
assumption from BPHC of $250.0 million of indebtedness to Loews and
the
repayment of that indebtedness with proceeds from our IPO;
|
•
|
the
issuance by us to BPHC of 53,256,122 common units and 33,093,878
subordinated units, representing an 83.5% limited partnership interest
in;
and
|
•
|
the
issuance by us to Boardwalk GP of a 2% general partner interest and
all of
our incentive distribution rights.
|
2005
|
2004
|
||||||
Audit
fees (1)
|
$
|
1,271
|
$
|
554
|
|||
Audit
related fees (2)
|
720
|
-
|
|||||
Tax
fees (3)
|
6
|
18
|
|||||
All
other fees (4)
|
270
|
-
|
|||||
Total
|
$
|
2,267
|
$
|
572
|
(1)
|
Includes
the aggregate fees and expenses for annual financial statement audit
and
quarterly financial statements
reviews.
|
(2)
|
Includes
the aggregate fees and expenses for services that were reasonably
related
to the performance of the financial statement audits or reviews described
above and not included under "Audit Fees" above, including, principally,
consents and comfort letters, audits of employee benefits plans,
accounting consultations, and Sarbanes-Oxley
implementation.
|
(3)
|
Includes
the aggregate fees and expenses for tax compliance and tax planning
services.
|
(4)
|
Includes
the aggregate fees and expenses for products and services provided,
other
than the services described above, including principally, tax software
products and due diligence for the
GS-Acquisition.
|
Description
|
Balance
at Beginning of Period
|
Charged
to Costs and Expenses
|
Other
Additions (Recoveries)
|
Deductions
(Write-offs)
|
Balance
at
End
of Period
|
|||||||||||
Allowance
for doubtful accounts:
|
||||||||||||||||
2005
|
$
|
174
|
$
|
745
|
$
|
(187
|
)
|
$
|
2
|
$
|
730
|
|||||
2004
|
203
|
-
|
-
|
29
|
174
|
|||||||||||
2003
|
557
|
-
|
354
|
-
|
203
|
|||||||||||
2003
Predecessor
|
557
|
-
|
-
|
-
|
557
|
|||||||||||
Inventory
obsolescence:
|
||||||||||||||||
2005
|
201
|
-
|
11
|
212
|
-
|
|||||||||||
2004
|
630
|
-
|
16
|
445
|
201
|
|||||||||||
2003
|
650
|
-
|
-
|
20
|
630
|
|||||||||||
2003
Predecessor
|
650
|
-
|
-
|
-
|
650
|
Exhibit
Number
|
Description
|
|
3.1
|
Certificate
of Limited Partnership of Boardwalk Pipeline Partners, LP (Incorporated
by
reference to Exhibit 3.1 to the Registrant’s Registration Statement on
Form S-1, Registration No. 333-127578, filed on August 16,
2005).
|
|
3.2
|
First
Amended and Restated Agreement of Limited Partnership of Boardwalk
Pipeline Partners, LP (Incorporated by reference to Exhibit 3.1 to
the
Registrant’s Current Report on Form 8-K filed on November 18,
2005).
|
|
3.3
|
Certificate
of Limited Partnership of Boardwalk GP, LP (Incorporated by reference
to
Exhibit 3.3 to the Registrant’s Registration Statement on Form S-1,
Registration No. 333-127578, filed on August 16, 2005).
|
|
3.4
|
Agreement
of Limited Partnership of Boardwalk GP, LP (Incorporated by reference
to
Exhibit 3.4 to Amendment No. 1 to the Registrant’s Registration Statement
on Form S-1, Registration No. 333-127578, filed on September 22,
2005).
|
|
3.5
|
Certificate
of Formation of Boardwalk GP, LLC (Incorporated by reference to Exhibit
3.5 to the Registrant’s Registration Statement on Form S-1, Registration
No. 333-127578, filed on August 16, 2005).
|
|
3.6
|
Amended
and Restated Limited Liability Company Agreement (Incorporated by
reference to Exhibit 3.6 to Amendment No. 4 to Registrant’s Registration
Statement on Form S-1, Registration No. 333-127578, filed on October
31,
2005).
|
|
10.1
|
Revolving
Credit Agreement, dated as of November 15, 2005, among Boardwalk
Pipelines, LP (formerly known as Boardwalk Pipelines, LLC), Boardwalk
Pipeline Partners, LP, the several banks and other financial institutions
or entities parties to the agreement as lenders, the issuers party
to the
agreement, Citibank, N.A., as administrative agent for the lenders
and the
issuers, Wachovia Bank, National Association, as syndication agent,
JPMorgan Chase Bank, N.A., Deutsche Bank Securities, Inc. and Union
Bank
of California, N.A., as co-documentation agents, and Citigroup Global
Markets Inc. and Wachovia Capital Markets LLC, as joint lead arrangers
and
joint book managers (Incorporated by reference to Exhibit 10.1 to
the
Registrant’s Current Report on Form 8-K filed on November 18,
2005).
|
|
10.2
|
Contribution,
Conveyance and Assumption Agreement, dated as of November 15, 2005,
by and
among Boardwalk Pipelines Holding Corp., Boardwalk GP, LLC, Boardwalk
Pipeline Partners, LP, Boardwalk Operating GP, LLC, Boardwalk GP,
LP, and
Boardwalk Pipelines, LLC (Incorporated by reference to Exhibit 10.1
to the
Registrant’s Current Report on Form 8-K filed on November 18,
2005).
|
|
10.3
|
Indenture
dated July 15, 1997, between Texas Gas Transmission Corporation (now
known
as Texas Gas Transmission, LLC) and The Bank of New York, as Trustee
(Incorporated by reference to Exhibit 4.1 to Texas Gas Transmission
Corporation’s Registration Statement on Form S-3, Registration No.
333-27359, filed on May 19, 1997)
|
|
10.4
|
Indenture
dated as of May 28, 2003, between TGT Pipeline, LLC and The Bank
of New
York, as Trustee (Incorporated by reference to Exhibit 3.6 to TGT
Pipeline, LLC’s (now known as Boardwalk Pipelines, LP) Registration
Statement on Form S-4, Registration No. 333-108693, filed on September
11,
2003).
|
Boardwalk
Pipeline Partners, LP
|
||||
By:
|
Boardwalk
GP, LP
|
|||
its
general partner
|
||||
By:
|
Boardwalk
GP, LLC
|
|||
its
general partner
|
||||
Dated:
March
15, 2006
|
By:
|
/s/
Jamie L. Buskill
|
||
Jamie
L. Buskill
|
||||
Chief
Financial Officer
|
Dated:
March 16, 2006
|
/s/
H. Dean Jones II
|
|
H.
Dean Jones II
|
Co-President
and Director
(co-principal
executive officer)
|
|
Dated:
March 16, 2006
|
/s/
Rolf A. Gafvert
|
|
Rolf
A. Gafvert
|
Co-President
and Director
(co-principal
executive officer)
|
|
Dated:
March 16, 2006
|
/s/
Jamie L. Buskill
|
|
Jamie
L. Buskill
|
Chief
Financial Officer
(principal
financial and accounting officer)
|
|
Dated:
March 16, 2006
|
/s/
Thomas E. Hyland
|
|
Thomas
E. Hyland
|
Director
|
|
Dated:
March 16, 2006
|
/s/
Jonathon E. Nathanson
|
|
Jonathon
E. Nathanson
|
Director
|
|
Dated:
March 16, 2006
|
/s/
Arthur L. Rebell
|
|
Arthur
L. Rebell
|
Director
|
|
Dated:
March 16, 2006
|
/s/
Mark Shapiro
|
|
Mark
Shapiro
|
Director
|
|
Dated:
March 16, 2006
|
/s/
Andrew H. Tisch
|
|
Andrew
H. Tisch
|
Director
|
1.
|
Grant
of Phantom Units with DERs
.
Boardwalk Pipeline Partners
,
LP
(the “Partnership”) hereby grants to you ______ Phantom Units under the
Boardwalk Pipeline Partners Long-Term Incentive Plan (the “Plan”) on the
terms and conditions set forth herein. This grant of Phantom Units
includes a tandem grant of DERs with respect to each Phantom Unit.
The
Partnership shall establish a DER bookkeeping account for you with
respect
to each Phantom Unit granted that shall be credited with an amount
equal
to any cash distributions made by the Partnership on a Common Unit
during
the period such Phantom Unit is outstanding. In the event of any
conflict
between the terms of this Agreement and the Plan, which is incorporated
herein by reference as a part of this Agreement, the terms of the
Plan
shall control. A copy of the Plan is attached hereto. Capitalized
terms
used in this Agreement but not defined herein shall have the meanings
ascribed to such terms in the Plan, unless the context requires otherwise.
|
2.
|
Vesting
.
Except
as otherwise provided in Paragraph 3 below, the Phantom Units granted
hereunder shall vest on the anniversary of the Grant Date as
follows:
|
Anniversary
of
Grant
Date
|
Cumulative
Vested
Percentage
|
prior
to 2nd anniversary
|
0%
|
on
2nd anniversary
|
50%
|
on
3rd anniversary
|
100%
|
3.
|
Events
Occurring Prior to Full Vesting
.
|
(a)
|
Death,
Disability or Retirement
.
If your employment with the Partnership or an Affiliate terminates
as a
result of your death, a disability that entitles you to benefits
under the
Partnership’s or an Affiliate’s long-term disability plan or on or after
you qualify for retirement, the Phantom Units then held by you
automatically will become fully vested upon such termination. As
used
herein, “retirement” means your termination of employment on or after age
65 other than for “cause,” as defined below, or your termination of
employment other than for cause, with the consent of the Committee,
on or
after reaching age 60.
|
(b)
|
Involuntary
Termination for Cause
.
If your employment with the Partnership is terminated by the Partnership
other than for cause, the Phantom Units then held by you automatically
will become fully vested upon such termination. As used herein, “cause”
shall have the meaning set forth in the employment or engagement
agreement
between a Participant and the Partnership or any Affiliate thereof,
if
such an agreement exists and contains a definition of cause; otherwise
cause shall mean (1) conviction of the Participant for committing
a felony
under federal law or the law of the state in which such action occurred,
(2) dishonesty in the course of fulfilling a Participant’s employment,
engagement or directorial duties, (3) willful and deliberate failure
on
the part of a Participant to perform the Participant’s employment,
engagement or directorial duties in any material respect or (4) such
other
events as shall be determined in good faith by the Committee. The
Committee shall, unless otherwise provided in an Award Agreement
or
employment agreement with the Participant, have the sole discretion
to
determine whether cause exists, and its determination shall be
final.
|
(c)
|
Other
Terminations
.
If your employment with the Partnership terminates for any reason
other
than as provided in Paragraphs 3(a) and (b) above, all unvested Phantom
Units then held by you automatically shall be forfeited without payment
upon such termination.
|
(d)
|
Change
of Control
.
All outstanding Phantom Units held by you automatically shall become
fully
vested upon a Change of Control.
|
4.
|
Payment
.
As soon as administratively practicable after the date of the vesting
of a
Phantom Unit, the Partnership or an Affiliate shall pay you an amount
of
cash equal to the sum of the Fair Market Value of the Unit on the
vesting
date and the vested amount then credited to your tandem DER account,
less
any taxes the Partnership or the Affiliate is required to withhold
from
such payment.
|
5.
|
Limitations
Upon Transfer
.
All rights under this Agreement shall belong to you alone and may
not be
transferred, assigned, pledged, or hypothecated by you in any way
(whether
by operation of law or otherwise), other than by will or the laws
of
descent and distribution and shall not be subject to execution,
attachment, or similar process. Upon any attempt by you to transfer,
assign, pledge, hypothecate, or otherwise dispose of such rights
contrary
to the provisions in this Agreement or the Plan, or upon the levy
of any
attachment or similar process upon such rights, such rights shall
immediately become null and void.
|
6.
|
Binding
Effect
.
This Agreement shall be binding upon and inure to the benefit of
any
successor or successors of the Partnership and upon any person lawfully
claiming under you.
|
7.
|
Entire
Agreement
.
This Agreement constitutes the entire agreement of the parties with
regard
to the subject matter hereof, and contains all the covenants, promises,
representations, warranties and agreements between the parties with
respect to the Phantom Units granted hereby. Without limiting the
scope of
the preceding sentence, all prior understandings and agreements,
if any,
among the parties hereto relating to the subject matter hereof are
hereby
null and void and of no further force and effect.
|
8.
|
Modifications
.
Except as provided below, any modification of this Agreement shall
be
effective only if it is in writing and signed by both you and an
authorized officer of the General
Partner.
|
9.
|
Governing
Law
.
This
grant shall be governed by, and construed in accordance with, the
laws of
the State of Delaware, without regard to conflicts of laws principles
thereof.
|
Name
of Subsidiary
|
Organized
Under Laws of
|
Business
Names
|
|
Boardwalk
Operating GP, LLC
|
Delaware
|
||
Boardwalk
Pipelines, LP
|
Delaware
|
||
Texas
Gas Transmission, LLC
|
Delaware
|
Texas
Gas
|
|
Gulf
South Pipeline Company, LP
|
Delaware
|
Gulf
South
|
|
GS
Pipeline Company, LLC
|
Delaware
|
1)
|
I
have reviewed this report on Form 10-K of Boardwalk Pipeline Partners,
LP;
|
2)
|
Based
on my knowledge, this report does not contain any untrue statement
of a
material fact or omit to state a material fact necessary to make
the
statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this
report;
|
3)
|
Based
on my knowledge, the consolidated financial statements, and other
financial information included in this report, fairly present in
all
material respects the balance sheets, statements of income and cash
flows
of the registrant as of, and for, the periods presented in this report;
|
4)
|
The
registrant’s other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant
and have:
|
a)
|
Designed
such disclosure controls and procedures, or caused such disclosure
controls and procedures to be designed under its supervision, to
ensure
that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this report is
being
prepared;
|
b)
|
Evaluated
the effectiveness of the registrant’s disclosure controls and procedures
and presented in this report its conclusions about the effectiveness
of
the disclosure controls and procedures, as of the end of the period
covered by this report based on such evaluation;
and
|
c)
|
Disclosed
in this report any change in the registrant’s internal control over
financial reporting that occurred during the registrant’s most recent
fiscal quarter (the registrant’s fourth fiscal quarter in the case of an
annual report) that has materially affected, or is reasonably likely
to
materially affect, the registrant’s internal control over financial
reporting; and
|
5)
|
The
registrant’s other certifying officers and I have disclosed, based on our
most recent evaluation of internal control over financial reporting,
to
the registrant’s auditors and the audit committee of the registrant’s
board of directors (or persons performing the equivalent
functions):
|
a)
|
All
significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are
reasonably likely to adversely affect the registrant’s ability to record,
process, summarize and report financial information; and
|
b)
|
Any
fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
control
over financial reporting.
|
Dated:
March 16, 2006
|
/s/
Rolf A. Gafvert
|
||
Rolf
A. Gafvert, Co-President and Director
|
1)
|
I
have reviewed this report on Form 10-K of Boardwalk Pipeline Partners,
LP;
|
2)
|
Based
on my knowledge, this report does not contain any untrue statement
of a
material fact or omit to state a material fact necessary to make
the
statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this
report;
|
3)
|
Based
on my knowledge, the consolidated financial statements, and other
financial information included in this report, fairly present in
all
material respects the balance sheets, statements of income and cash
flows
of the registrant as of, and for, the periods presented in this report;
|
4)
|
The
registrant’s other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant
and have:
|
a)
|
Designed
such disclosure controls and procedures, or caused such disclosure
controls and procedures to be designed under its supervision, to
ensure
that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this report is
being
prepared;
|
b)
|
Evaluated
the effectiveness of the registrant’s disclosure controls and procedures
and presented in this report its conclusions about the effectiveness
of
the disclosure controls and procedures, as of the end of the period
covered by this report based on such evaluation;
and
|
c)
|
Disclosed
in this report any change in the registrant’s internal control over
financial reporting that occurred during the registrant’s most recent
fiscal quarter (the registrant’s fourth fiscal quarter in the case of an
annual report) that has materially affected, or is reasonably likely
to
materially affect, the registrant’s internal control over financial
reporting; and
|
5)
|
The
registrant’s other certifying officers and I have disclosed, based on our
most recent evaluation of internal control over financial reporting,
to
the registrant’s auditors and the audit committee of the registrant’s
board of directors (or persons performing the equivalent
functions):
|
a)
|
All
significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are
reasonably likely to adversely affect the registrant’s ability to record,
process, summarize and report financial information; and
|
b)
|
Any
fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
control
over financial reporting.
|
Dated:
March 16, 2006
|
/s/
H. Dean Jones II
|
||
H.
Dean Jones II, Co-President and Director
|
1)
|
I
have reviewed this report on Form 10-K of Boardwalk Pipeline Partners,
LP;
|
2)
|
Based
on my knowledge, this report does not contain any untrue statement
of a
material fact or omit to state a material fact necessary to make
the
statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this
report;
|
3)
|
Based
on my knowledge, the consolidated financial statements, and other
financial information included in this report, fairly present in
all
material respects the balance sheets, statements of income and cash
flows
of the registrant as of, and for, the periods presented in this report;
|
4)
|
The
registrant’s other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant
and have:
|
a)
|
Designed
such disclosure controls and procedures, or caused such disclosure
controls and procedures to be designed under its supervision, to
ensure
that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this report is
being
prepared;
|
b)
|
Evaluated
the effectiveness of the registrant’s disclosure controls and procedures
and presented in this report its conclusions about the effectiveness
of
the disclosure controls and procedures, as of the end of the period
covered by this report based on such evaluation;
and
|
c)
|
Disclosed
in this report any change in the registrant’s internal control over
financial reporting that occurred during the registrant’s most recent
fiscal quarter (the registrant’s fourth fiscal quarter in the case of an
annual report) that has materially affected, or is reasonably likely
to
materially affect, the registrant’s internal control over financial
reporting; and
|
5)
|
The
registrant’s other certifying officers and I have disclosed, based on our
most recent evaluation of internal control over financial reporting,
to
the registrant’s auditors and the audit committee of the registrant’s
board of directors (or persons performing the equivalent
functions):
|
a)
|
All
significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are
reasonably likely to adversely affect the registrant’s ability to record,
process, summarize and report financial information; and
|
b)
|
Any
fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
control
over financial reporting.
|
Dated:
March 16, 2006
|
/s/
Jamie L. Buskill
|
||
Jamie
L. Buskill
|
|||
Chief
Financial Officer
|