NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note
1
:
Basis of Presentation
Boardwalk Pipeline Partners, LP (the Partnership) is a Delaware limited partnership formed in 2005 to own and operate the business conducted by its primary subsidiary Boardwalk Pipelines, LP (Boardwalk Pipelines) and its operating subsidiaries, which consists of integrated natural gas and natural gas liquids and other hydrocarbons (herein referred to together as NGLs) pipeline and storage systems.
As of
July 28, 2017
, Boardwalk Pipelines Holding Corp. (BPHC), a wholly-owned subsidiary of Loews Corporation (Loews), owned
125.6 million
of the Partnership’s common units, and, through Boardwalk GP, LP (Boardwalk GP), an indirect wholly-owned subsidiary of BPHC, holds the
2%
general partner interest and all of the incentive distribution rights (IDRs) of the Partnership. As of
July 28, 2017
, the common units and general partner interest owned by BPHC represent approximately
51%
of the Partnership’s equity interests, excluding the IDRs. The Partnership’s common units are traded under the symbol “BWP” on the New York Stock Exchange.
The accompanying unaudited condensed consolidated financial statements of the Partnership were prepared pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (U.S.) (GAAP) have been condensed or omitted pursuant to such rules and regulations. In the opinion of management, the accompanying unaudited condensed consolidated financial statements reflect all adjustments (consisting of only normal recurring accruals) necessary to present fairly the Partnership's financial position as of
June 30, 2017
, and
December 31, 2016
, and its results of operations and comprehensive income for the
three and six
months ended
June 30, 2017
and
2016
, and changes in cash flows and changes in partners' capital for the
six months
ended
June 30, 2017
and
2016
. Reference is made to the Notes to Consolidated Financial Statements in the Partnership's
Annual Report on Form 10-K
for the year ended
December 31, 2016
(
2016
Annual Report on Form 10-K
), which should be read in conjunction with these unaudited condensed consolidated financial statements. The accounting policies described in Note
2
to the Consolidated Financial Statements included in the
2016
Annual Report on Form 10-K
are the same used in preparing the accompanying unaudited condensed consolidated financial statements.
Net income for interim periods may not necessarily be indicative of results for the full year.
Note
2
:
Asset Disposition and Impairments
On
May 9, 2017
, the Partnership sold its Flag City Processing Partners, LLC subsidiary, which owns the Flag City processing plant and related assets, to a third party for approximately
$64.7 million
, including customary adjustments. The Partnership recorded losses and impairments, reported within
Total Operating Costs and Expenses,
of
$47.1 million
on the sale. The fair value measurements of the assets sold and impaired were based on Level 3 inputs under the fair value hierarchy.
Note
3
:
Gas and Liquids Stored Underground and Gas and NGLs Receivables and Payables
The operating subsidiaries of the Partnership provide storage services whereby they store natural gas or NGLs on behalf of customers and also periodically hold customer gas under parking and lending (PAL) services. Since the customers retain title to the gas held by the Partnership in providing these services, the Partnership does not record the related gas on its balance sheet.
The operating subsidiaries of the Partnership also periodically lend gas to customers under PAL and no-notice services (NNS), and gas or NGLs may be owed to the operating subsidiaries as a result of transportation imbalances. As of
June 30, 2017
, the amount of gas owed to the operating subsidiaries of the Partnership due to gas imbalances and gas loaned under PAL and NNS was approximately
11.0
trillion British thermal units (TBtu). Assuming an average market price during
June 2017
of
$2.85
per million British thermal unit, the market value of that gas was approximately
$31.4 million
. As of
June 30, 2017
, there were
no
outstanding NGLs imbalances owed to the operating subsidiaries. As of
December 31, 2016
, the amount of gas owed to the operating subsidiaries of the Partnership due to gas imbalances and gas loaned under PAL and NNS was approximately
13.6
TBtu. As of
December 31, 2016
, the amount of NGLs owed to the operating subsidiaries due to imbalances was less than
0.1
million barrels. If any significant customer should have credit or financial problems resulting in a delay or failure to repay the gas owed
to the operating subsidiaries, it could have a material adverse effect on the Partnership’s financial condition, results of operations or cash flows.
Note
4
:
Other Comprehensive Income (OCI) and Fair Value Measurements
OCI
The Partnership had
no
outstanding derivatives at
June 30, 2017
, and
December 31, 2016
, but had
$6.2 million
and
$6.0 million
of Accumulated other comprehensive income (loss)
(AOCI)
related to cash flow hedges as of
June 30, 2017
, and
December 31, 2016
, which relate to settled treasury rate locks that are being amortized to earnings over the terms of the related interest payments, generally the terms of the related debt. The Partnership estimates that approximately
$2.0 million
of net losses from cash flow hedges reported in
AOCI
as of
June 30, 2017
, are expected to be reclassified into earnings within the next twelve months.
The following table shows the components and reclassifications to net income of
AOCI
which is included in
Partners' Capital
on the Condensed Consolidated Balance Sheets for the
three months ended
June 30, 2017
(in millions):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Flow Hedges
|
|
Pension and
Other
Postretirement Costs
|
|
Total
|
Beginning balance, April 1, 2017
|
$
|
(6.8
|
)
|
|
$
|
(73.8
|
)
|
|
$
|
(80.6
|
)
|
Reclassifications:
|
|
|
|
|
|
|
|
|
Interest expense
|
|
0.6
|
|
|
|
—
|
|
|
|
0.6
|
|
Pension and other postretirement benefit costs
|
|
—
|
|
|
|
0.4
|
|
|
|
0.4
|
|
|
|
|
|
|
|
|
|
|
Ending balance, June 30, 2017
|
$
|
(6.2
|
)
|
|
$
|
(73.4
|
)
|
|
$
|
(79.6
|
)
|
The following table shows the components and reclassifications to net income of
AOCI
which is included in
Partners' Capital
on the Condensed Consolidated Balance Sheets for the
three months ended
June 30, 2016
(in millions):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Flow Hedges
|
|
Pension and
Other
Postretirement Costs
|
|
Total
|
Beginning balance, April 1, 2016
|
$
|
(7.8
|
)
|
|
$
|
(75.3
|
)
|
|
$
|
(83.1
|
)
|
Reclassifications:
|
|
|
|
|
|
|
|
|
Interest expense
|
|
0.6
|
|
|
|
—
|
|
|
|
0.6
|
|
Pension and other postretirement benefit costs
|
|
—
|
|
|
|
1.1
|
|
|
|
1.1
|
|
|
|
|
|
|
|
|
|
|
Ending balance, June 30, 2016
|
$
|
(7.2
|
)
|
|
$
|
(74.2
|
)
|
|
$
|
(81.4
|
)
|
The following table shows the components and reclassifications to net income of
AOCI
which is included in
Partners' Capital
on the Condensed Consolidated Balance Sheets for the
six months
ended
June 30, 2017
(in millions):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Flow Hedges
|
|
Pension and
Other
Postretirement Costs
|
|
Total
|
Beginning balance, January 1, 2017
|
$
|
(6.0
|
)
|
|
$
|
(74.1
|
)
|
|
$
|
(80.1
|
)
|
Loss recorded in AOCI
|
|
(1.5
|
)
|
|
|
—
|
|
|
|
(1.5
|
)
|
Reclassifications:
|
|
|
|
|
|
|
|
|
Interest expense
|
|
1.3
|
|
|
|
—
|
|
|
|
1.3
|
|
Pension and other postretirement benefit costs
|
|
—
|
|
|
|
0.7
|
|
|
|
0.7
|
|
|
|
|
|
|
|
|
|
|
Ending balance, June 30, 2017
|
$
|
(6.2
|
)
|
|
$
|
(73.4
|
)
|
|
$
|
(79.6
|
)
|
The following table shows the components and reclassifications to net income of
AOCI
which is included in
Partners' Capital
on the Condensed Consolidated Balance Sheets for the
six months
ended
June 30, 2016
(in millions):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Flow Hedges
|
|
Pension and
Other
Postretirement Costs
|
|
Total
|
Beginning balance, January 1, 2016
|
$
|
(8.4
|
)
|
|
$
|
(75.9
|
)
|
|
$
|
(84.3
|
)
|
Reclassifications:
|
|
|
|
|
|
|
|
|
Interest expense
|
|
1.2
|
|
|
|
—
|
|
|
|
1.2
|
|
Pension and other postretirement benefit costs
|
|
—
|
|
|
|
1.7
|
|
|
|
1.7
|
|
|
|
|
|
|
|
|
|
|
Ending balance, June 30, 2016
|
$
|
(7.2
|
)
|
|
$
|
(74.2
|
)
|
|
$
|
(81.4
|
)
|
Financial Assets and Liabilities
The following methods and assumptions were used in estimating the fair value amounts included in the disclosures for financial assets and liabilities, which are consistent with those disclosed in the
2016
Annual Report on Form 10-K
:
Cash and Cash Equivalents:
For cash and short-term financial assets, the carrying amount is a reasonable estimate of fair value due to the short maturity of those instruments.
Long-Term Debt:
The estimated fair value of the Partnership's publicly traded debt is based on quoted market prices at
June 30, 2017
, and
December 31, 2016
. The fair market value of the debt that is not publicly traded is based on market prices of similar debt at
June 30, 2017
, and
December 31, 2016
. The Partnership had
no
variable-rate debt outstanding as of
June 30, 2017
. The carrying amount of the Partnership's variable-rate debt at
December 31, 2016
, approximated fair value.
The carrying amounts and estimated fair values of the Partnership's financial assets and liabilities which were not recorded at fair value on the Condensed Consolidated Balance Sheets as of
June 30, 2017
, and
December 31, 2016
, were as follows (in millions):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of June 30, 2017
|
|
|
|
|
Estimated Fair Value
|
Financial Assets
|
|
Carrying Amount
|
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
Cash and cash equivalents
|
|
$
|
77.3
|
|
|
|
$
|
77.3
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
77.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-term debt
|
|
$
|
3,575.8
|
|
(1)
|
|
$
|
—
|
|
|
$
|
3,777.2
|
|
|
$
|
—
|
|
|
$
|
3,777.2
|
|
(1) The carrying amount of long-term debt excludes an
$8.4 million
long-term capital lease obligation and
$9.7 million
of unamortized debt issuance costs.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of December 31, 2016
|
|
|
|
|
Estimated Fair Value
|
Financial Assets
|
|
Carrying Amount
|
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
Cash and cash equivalents
|
|
$
|
4.6
|
|
|
|
$
|
4.6
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
4.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-term debt
|
|
$
|
3,558.9
|
|
(1)
|
|
$
|
—
|
|
|
$
|
3,709.2
|
|
|
$
|
—
|
|
|
$
|
3,709.2
|
|
(1) The carrying amount of long-term debt excludes an
$8.6 million
long-term capital lease obligation and
$9.5 million
of unamortized debt issuance costs.
Note
5
:
Commitments and Contingencies
Legal Proceedings and Settlements
The Partnership's subsidiaries are parties to various legal actions arising in the normal course of business. Management believes the disposition of these outstanding legal actions will not have a material impact on the Partnership's financial condition, results of operations or cash flows. Refer to Note 4 of the Consolidated Financial Statements included in Part II, Item 8 of the Partnership's
2016
Annual Report on Form 10-K
for further information regarding the Partnership’s legal proceedings.
Southeast Louisiana Flood Protection Litigation
The Partnership and its subsidiary, Gulf South Pipeline Company, LP, (Gulf South) along with approximately
100
other energy companies operating in Southern Louisiana, have been named as defendants in a petition for damages and injunctive relief in state district court for Orleans Parish, Louisiana, (Case No. 13-6911) by the Board of Commissioners of the Southeast Louisiana Flood Protection Authority - East (Flood Protection Authority). The case was filed in state court, but was removed to the U.S. District Court for the Eastern District of New Orleans (Court) in August 2013. The lawsuit claims include negligence, strict liability, public nuisance, private nuisance, breach of contract and breach of the natural servitude of drain against the defendants, alleging that the defendants’ drilling, dredging, pipeline and industrial operations since the 1930s have caused increased storm surge risk, increased flood protection costs and unspecified damages to the Flood Protection Authority. In addition to attorney fees and unspecified monetary damages, the lawsuit seeks abatement and restoration of the coastal lands, including backfilling and revegetating of canals dredged and used by the defendants, and abatement and restoration activities such as wetlands creation, reef creation, land bridge construction, hydrologic restoration, shoreline protection, structural protection, bank stabilization and ridge restoration. On February 13, 2015, the Court dismissed the case with prejudice. The Flood Protection Authority appealed the dismissal of the case to the U.S. Court of Appeals for the Fifth Circuit in May 2015 (Case No. 15-CV-30162). On March 3, 2017, the U.S. Court of Appeals for the Fifth Circuit upheld the Court’s dismissal. On April 12, 2017, the Fifth Circuit denied the Flood Protection Authorities' Petition for Rehearing En Banc. On July 11, 2017, the plaintiffs filed a writ of certiorari with the United States Supreme Court to review the case.
Settlements and Insurance Proceeds
In the second quarter 2016, the Partnership received
$12.7 million
in cash from the settlement of a legal claim which was recorded in
Transportation
revenues.
Environmental and Safety Matters
The operating subsidiaries are subject to federal, state and local environmental laws and regulations in connection with the operation and remediation of various operating sites. As of
June 30, 2017
, and
December 31, 2016
, the Partnership had an accrued liability of approximately
$4.5 million
and
$5.0 million
related to assessment and/or remediation costs associated with the historical use of polychlorinated biphenyls, petroleum hydrocarbons and mercury. The liability represents management’s estimate of the undiscounted future obligations based on evaluations and discussions with counsel and operating personnel and the current facts and circumstances related to these matters. The related expenditures are expected to occur over the next
five years
. As of
June 30, 2017
, and
December 31, 2016
, approximately
$1.7 million
was recorded in
Other current liabilities
for each period and approximately
$2.8 million
and
$3.3 million
were recorded in
Other Liabilities and Deferred Credits
.
Commitments for Construction
The Partnership’s future capital commitments are comprised of binding commitments under purchase orders for materials ordered but not received and firm commitments under binding construction service agreements. The commitments as of
June 30, 2017
, were approximately
$290.8 million
, all of which are expected to be settled within the next twelve months.
There were no substantial changes to the Partnership’s operating lease commitments, pipeline capacity agreements or capital lease obligation disclosed in Notes
4
and
10
to the Partnership’s
2016
Annual Report on Form 10-K
.
Note
6
:
Cash Distributions and Net Income per Unit
Cash Distributions
In the
second
quarters
2017
and
2016
, the Partnership declared and paid quarterly distributions to its common unitholders of record of
$0.10
per common unit and an amount to the general partner on behalf of its
2%
general partner interest. In
July
2017
, the Partnership declared a quarterly cash distribution to unitholders of record of
$0.10
per common unit.
Net Income per Unit
For purposes of calculating net income per unit, net income for the current period is reduced by the amount of available cash that will be distributed with respect to that period. Payments made on account of the Partnership’s various ownership interests are determined in relation to actual declared distributions, and are not based on the assumed allocations required under GAAP. Any residual amount representing undistributed net income (or loss) is assumed to be allocated to the various ownership interests in accordance with the contractual provisions of the partnership agreement on a pro rata basis. Net income per unit is calculated based on the weighted-average number of units outstanding for the period.
The following table provides a reconciliation of net income and the assumed allocation of net income to the common units for purposes of computing net income per unit for the
three months ended
June 30, 2017
(in millions, except per unit data):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
Common
Units
|
|
General Partner
and IDRs
|
Net income
|
$
|
23.7
|
|
|
|
|
|
Declared distribution
|
25.6
|
|
|
$
|
25.1
|
|
|
$
|
0.5
|
|
Assumed allocation of undistributed net loss
|
(1.9
|
)
|
|
(1.9
|
)
|
|
—
|
|
Assumed allocation of net income attributable to limited
partner unitholders and general partner
|
$
|
23.7
|
|
|
$
|
23.2
|
|
|
$
|
0.5
|
|
Weighted-average units outstanding
|
|
|
250.3
|
|
|
|
Net income per unit
|
|
|
$
|
0.09
|
|
|
|
The following table provides a reconciliation of net income and the assumed allocation of net income to the common units for purposes of computing net income per unit for the
three months ended
June 30, 2016
(in millions, except per unit data):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
Common
Units
|
|
General Partner
and IDRs
|
Net income
|
$
|
65.7
|
|
|
|
|
|
Declared distribution
|
25.6
|
|
|
$
|
25.1
|
|
|
$
|
0.5
|
|
Assumed allocation of undistributed net income
|
40.1
|
|
|
39.3
|
|
|
0.8
|
|
Assumed allocation of net income attributable to limited
partner unitholders and general partner
|
$
|
65.7
|
|
|
$
|
64.4
|
|
|
$
|
1.3
|
|
Weighted-average units outstanding
|
|
|
|
250.3
|
|
|
|
|
Net income per unit
|
|
|
|
$
|
0.26
|
|
|
|
|
The following table provides a reconciliation of net income and the assumed allocation of net income to the common units for purposes of computing net income per unit for the
six months
ended
June 30, 2017
(in millions, except per unit data):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
Common
Units
|
|
General Partner
and IDRs
|
Net income
|
$
|
143.0
|
|
|
|
|
|
Declared distribution
|
51.1
|
|
|
$
|
50.1
|
|
|
$
|
1.0
|
|
Assumed allocation of undistributed net income
|
91.9
|
|
|
90.1
|
|
|
1.8
|
|
Assumed allocation of net income attributable to limited
partner unitholders and general partner
|
$
|
143.0
|
|
|
$
|
140.2
|
|
|
$
|
2.8
|
|
Weighted-average units outstanding
|
|
|
250.3
|
|
|
|
Net income per unit
|
|
|
$
|
0.56
|
|
|
|
The following table provides a reconciliation of net income and the assumed allocation of net income to the common units for purposes of computing net income per unit for the
six months
ended
June 30, 2016
(in millions, except per unit data):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
Common
Units
|
|
General Partner
and IDRs
|
Net income
|
$
|
166.7
|
|
|
|
|
|
Declared distribution
|
51.1
|
|
|
$
|
50.1
|
|
|
$
|
1.0
|
|
Assumed allocation of undistributed net income
|
115.6
|
|
|
113.3
|
|
|
2.3
|
|
Assumed allocation of net income attributable to limited
partner unitholders and general partner
|
$
|
166.7
|
|
|
$
|
163.4
|
|
|
$
|
3.3
|
|
Weighted-average units outstanding
|
|
|
|
250.3
|
|
|
|
|
Net income per unit
|
|
|
|
$
|
0.65
|
|
|
|
|
Note
7
:
Financing
Notes and Debentures
As of
June 30, 2017
, and
December 31, 2016
, the Partnership had notes and debentures outstanding of
$3.6 billion
and
$3.4 billion
with weighted-average interest rates of
5.29%
and
5.46%
. The indentures governing the notes and debentures have restrictive covenants which provide that, with certain exceptions, neither the Partnership nor any of its subsidiaries may create, assume or suffer to exist any lien upon any property to secure any indebtedness unless the debentures and notes shall be equally and ratably secured. All of the Partnership's debt obligations are unsecured. At
June 30, 2017
, Boardwalk Pipelines and its operating subsidiaries were in compliance with their debt covenants.
The Partnership has included
$460.0 million
of notes which mature in less than one year as long-term debt on its Condensed Consolidated Balance Sheet as of
June 30, 2017
. The Partnership has the intent and the ability to refinance the notes through the available borrowing capacity under its revolving credit facility as of
June 30, 2017
. The Partnership expects to retire these notes at their maturity.
Issuance of Notes
For the six months ended
June 30, 2017
and
2016
, the Partnership completed the following debt issuances (in millions, except interest rates):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Date of
Issuance
|
|
Issuing Subsidiary
|
|
Amount of
Issuance
|
|
Purchaser
Discounts
and
Expenses
|
|
Net
Proceeds
|
|
Interest
Rate
|
|
Maturity Date
|
|
Interest Payable
|
January 2017
|
|
Boardwalk Pipelines
|
|
$
|
500.0
|
|
|
$
|
6.0
|
|
|
|
|
$
|
494.0
|
|
|
|
(1)
|
4.45%
|
|
July 15, 2027
|
|
January 15 and July 15
|
May 2016
|
|
Boardwalk Pipelines
|
|
$
|
550.0
|
|
|
$
|
10.9
|
|
|
|
|
$
|
539.1
|
|
|
|
(2)
|
5.95%
|
|
June 1, 2026
|
|
June 1 and December 1
|
(1) The net proceeds of this offering will be used to refinance future maturities of debt and to fund growth capital expenditures. Initially, the proceeds were used to reduce outstanding borrowings under the revolving credit facility.
(2) The net proceeds of this offering were used to retire the outstanding
$250.0 million
aggregate principal amount of Boardwalk Pipelines
5.875%
notes due 2016 and the outstanding
$300.0 million
aggregate principal amount of Boardwalk Pipelines
5.50%
notes due 2017 at their maturity. Initially, the Partnership used the net proceeds to reduce outstanding borrowings under its revolving credit facility.
Revolving Credit Facility
As of
June 30, 2017
, the Partnership had
no
outstanding borrowings under its revolving credit facility. Outstanding borrowings under the Partnership’s revolving credit facility as of
December 31, 2016
, were
$180.0 million
with a weighted-average borrowing rate of
1.96%
. The Partnership and its subsidiaries were in compliance with all covenant requirements under the revolving credit facility as of
June 30, 2017
. In July 2017, the Partnership extended the maturity date of the revolving credit facility by one additional year to May 26, 2022. The borrowing capacity of the revolving credit facility is
$1.475 billion
for the first extension period of May 27, 2020, to May 26, 2021, and
$1.393 billion
for the second extension period of May 27, 2021, to May 26, 2022, as certain banks elected to not participate in the extensions.
Subordinated Loan Agreement with Affiliate
The Partnership has in place a Subordinated Loan Agreement with BPHC (Subordinated Loan) under which the Partnership can borrow up to
$300.0 million
through
December 31, 2018
. Through the date of this Report, the Partnership had
no
outstanding borrowings under the Subordinated Loan.
Note
8
:
Employee Benefits
Defined Benefit Retirement Plans and Postretirement Benefits Other Than Pension (PBOP)
Components of net periodic benefit cost for both the Retirement Plans and PBOP for the
three months ended
June 30, 2017
and
2016
, were as follows (in millions):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Retirement Plans
|
|
PBOP
|
|
For the
Three Months Ended
June 30,
|
|
For the
Three Months Ended
June 30,
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
Service cost
|
$
|
0.9
|
|
|
$
|
0.9
|
|
|
$
|
—
|
|
|
$
|
0.1
|
|
Interest cost
|
1.1
|
|
|
1.2
|
|
|
0.4
|
|
|
0.5
|
|
Expected return on plan assets
|
(2.0
|
)
|
|
(2.0
|
)
|
|
(1.1
|
)
|
|
(1.2
|
)
|
Amortization of prior service credit
|
—
|
|
|
—
|
|
|
—
|
|
|
(0.2
|
)
|
Amortization of unrecognized net loss
|
0.5
|
|
|
0.6
|
|
|
—
|
|
|
—
|
|
Settlement charge
|
0.6
|
|
|
1.2
|
|
|
—
|
|
|
—
|
|
Net periodic benefit cost
|
$
|
1.1
|
|
|
$
|
1.9
|
|
|
$
|
(0.7
|
)
|
|
$
|
(0.8
|
)
|
Components of net periodic benefit cost for both the Retirement Plans and PBOP for the
six months
ended
June 30, 2017
and
2016
, were as follows (in millions):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Retirement Plans
|
|
PBOP
|
|
For the
Six Months Ended
June 30,
|
|
For the
Six Months Ended
June 30,
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
Service cost
|
$
|
1.8
|
|
|
$
|
1.8
|
|
|
$
|
0.1
|
|
|
$
|
0.2
|
|
Interest cost
|
2.3
|
|
|
2.4
|
|
|
0.8
|
|
|
1.0
|
|
Expected return on plan assets
|
(3.9
|
)
|
|
(4.0
|
)
|
|
(2.2
|
)
|
|
(2.4
|
)
|
Amortization of prior service credit
|
—
|
|
|
—
|
|
|
—
|
|
|
(0.5
|
)
|
Amortization of unrecognized net loss
|
0.9
|
|
|
1.2
|
|
|
—
|
|
|
—
|
|
Settlement charge
|
1.1
|
|
|
2.0
|
|
|
—
|
|
|
—
|
|
Net periodic benefit cost
|
$
|
2.2
|
|
|
$
|
3.4
|
|
|
$
|
(1.3
|
)
|
|
$
|
(1.7
|
)
|
Through the date of this filing, the Partnership has made
no
contributions to the defined benefit pension plan in
2017
, but expects to fund
$3.0 million
in the third quarter
2017
.
Defined Contribution Plans
Texas Gas Transmission, LLC employees hired on or after November 1, 2006, and all other employees of the Partnership are provided retirement benefits under a defined contribution money purchase plan. The Partnership also provides 401(k) plan benefits to its employees. Costs related to the Partnership’s defined contribution plans were
$2.7 million
and
$2.6 million
for the
three months ended
June 30, 2017
and
2016
, and
$5.4 million
and
$5.1 million
for the
six months
ended
June 30, 2017
and
2016
.
Note
9
:
Related Party Transactions
Loews provides a variety of corporate services to the Partnership under service agreements, including but not limited to, information technology, tax, risk management, internal audit and corporate development services and also charges the Partnership for allocated overheads. The Partnership incurred charges related to these services of
$1.6 million
and
$1.8 million
for the
three months ended
June 30, 2017
and
2016
, and
$3.3 million
and
$3.5 million
for the
six months
ended
June 30, 2017
and
2016
.
Distributions paid related to limited partner units held by BPHC and the
2%
general partner interest held by Boardwalk GP were
$13.0 million
and
$13.2 million
for the
three months ended
June 30, 2017
and
2016
, and
$26.1 million
and
$26.3 million
for the
six months
ended
June 30, 2017
and
2016
.
Note
10
:
Supplemental Disclosure of Cash Flow Information
(in millions):
|
|
|
|
|
|
|
|
|
|
For the
Six Months Ended
June 30,
|
|
2017
|
|
2016
|
Cash paid during the period for:
|
|
|
|
Interest (net of amount capitalized)
|
$
|
82.4
|
|
|
$
|
78.7
|
|
Non-cash adjustments:
|
|
|
|
Accounts payable and property, plant and equipment
|
90.0
|
|
|
94.6
|
|
Note
11
:
Recently Issued Accounting Pronouncements
In May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update 2014-09,
Revenue from Contracts with Customers
(Topic 606), (ASU 2014-09) which will
require entities to recognize revenue in an amount that reflects the transfer of promised goods or services to a customer in an amount based on the consideration the entity expects to be entitled to in exchange for those goods or services. ASU 2014-09 also requires disclosures regarding the nature, amount, timing and uncertainty of revenues and cash flows from contracts with customers. The amendments may be applied retrospectively to each prior period presented, or retrospectively with the cumulative effect recognized as of the date of initial application. ASU 2014-09 is effective for interim and annual reporting periods beginning after December 15, 2017. The Partnership has substantially completed a review of its contracts with customers in relation to the requirements of ASU 2014-09, and has tentatively concluded that the implementation of ASU 2014-09 will not have a material impact on its revenue recognition policies for a substantial number of its contracts. However, certain items remain outstanding that could change those conclusions. The Partnership is working with an industry group to develop positions regarding those outstanding items. The Partnership intends to apply ASU 2014-09 to its financial statements retrospectively with the cumulative effect of implementation recognized as of January 1, 2018.
In February 2016, the FASB issued Accounting Standards Update 2016-02,
Leases (Topic 842)
(ASU 2016-02), which will require, among other things, the recognition of lease assets and lease liabilities by lessees for those leases classified as operating leases under current GAAP. The amendments are to be applied at the beginning of the earliest period presented using a modified retrospective approach. ASU 2016-02 is effective for interim and annual reporting periods beginning after December 15, 2018, however, early adoption is permitted. The Partnership has initiated a project to evaluate the impact that ASU 2016-02 will have on its financial statements when implemented, however, no conclusions have been reached.
Note
12
:
Guarantee of Securities of Subsidiaries
Boardwalk Pipelines (Subsidiary Issuer) has issued securities which have been fully and unconditionally guaranteed by the Partnership (Parent Guarantor). The Subsidiary Issuer is
100%
owned by the Parent Guarantor. The Partnership's subsidiaries have
no
significant restrictions on their ability to pay distributions or make loans to the Partnership except as noted in the debt covenants and have
no
restricted assets at
June 30, 2017
, and
December 31, 2016
. Note
7
contains additional information regarding the Partnership's debt and related covenants.
The Partnership has provided the following condensed consolidating financial information in accordance with Regulation S-X Rule 3-10,
Financial Statements of Guarantors and Issuers of Guaranteed Securities Registered or Being Registered
.
Condensed Consolidating Balance Sheets as of
June 30, 2017
(Millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Assets
|
|
Parent
Guarantor
|
|
Subsidiary
Issuer
|
|
Non-guarantor Subsidiaries
|
|
Eliminations
|
|
Consolidated Boardwalk Pipeline Partners, LP
|
Cash and cash equivalents
|
|
$
|
0.7
|
|
|
$
|
75.0
|
|
|
$
|
1.6
|
|
|
$
|
—
|
|
|
$
|
77.3
|
|
Receivables
|
|
—
|
|
|
—
|
|
|
112.8
|
|
|
—
|
|
|
112.8
|
|
Receivables - affiliate
|
|
—
|
|
|
—
|
|
|
6.9
|
|
|
(6.9
|
)
|
|
—
|
|
Gas and liquids stored underground
|
|
—
|
|
|
—
|
|
|
4.7
|
|
|
—
|
|
|
4.7
|
|
Prepayments
|
|
0.5
|
|
|
0.1
|
|
|
21.3
|
|
|
—
|
|
|
21.9
|
|
Advances to affiliates
|
|
—
|
|
|
2.4
|
|
|
10.1
|
|
|
(12.5
|
)
|
|
—
|
|
Other current assets
|
|
—
|
|
|
0.1
|
|
|
6.8
|
|
|
(1.5
|
)
|
|
5.4
|
|
Total current assets
|
|
1.2
|
|
|
77.6
|
|
|
164.2
|
|
|
(20.9
|
)
|
|
222.1
|
|
Investment in consolidated subsidiaries
|
|
2,544.6
|
|
|
6,829.8
|
|
|
—
|
|
|
(9,374.4
|
)
|
|
—
|
|
Property, plant and equipment, gross
|
|
0.6
|
|
|
—
|
|
|
10,498.0
|
|
|
—
|
|
|
10,498.6
|
|
Less–accumulated depreciation
and amortization
|
|
0.6
|
|
|
—
|
|
|
2,467.5
|
|
|
—
|
|
|
2,468.1
|
|
Property, plant and equipment, net
|
|
—
|
|
|
—
|
|
|
8,030.5
|
|
|
—
|
|
|
8,030.5
|
|
Advances to affiliates – noncurrent
|
|
2,095.3
|
|
|
508.7
|
|
|
283.3
|
|
|
(2,887.3
|
)
|
|
—
|
|
Other noncurrent assets
|
|
—
|
|
|
2.9
|
|
|
467.5
|
|
|
0.3
|
|
|
470.7
|
|
Total other assets
|
|
2,095.3
|
|
|
511.6
|
|
|
750.8
|
|
|
(2,887.0
|
)
|
|
470.7
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Assets
|
|
$
|
4,641.1
|
|
|
$
|
7,419.0
|
|
|
$
|
8,945.5
|
|
|
$
|
(12,282.3
|
)
|
|
$
|
8,723.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities and Partners' Capital
|
|
Parent
Guarantor
|
|
Subsidiary
Issuer
|
|
Non-guarantor Subsidiaries
|
|
Eliminations
|
|
Consolidated Boardwalk Pipeline Partners, LP
|
Payables
|
|
$
|
0.3
|
|
|
$
|
0.2
|
|
|
$
|
127.8
|
|
|
$
|
—
|
|
|
$
|
128.3
|
|
Payable to affiliates
|
|
1.5
|
|
|
—
|
|
|
6.9
|
|
|
(6.9
|
)
|
|
1.5
|
|
Advances from affiliates
|
|
—
|
|
|
10.1
|
|
|
2.4
|
|
|
(12.5
|
)
|
|
—
|
|
Other current liabilities
|
|
—
|
|
|
25.3
|
|
|
155.5
|
|
|
(1.2
|
)
|
|
179.6
|
|
Total current liabilities
|
|
1.8
|
|
|
35.6
|
|
|
292.6
|
|
|
(20.6
|
)
|
|
309.4
|
|
Long-term debt and capital lease
obligation
|
|
—
|
|
|
2,460.2
|
|
|
1,114.3
|
|
|
—
|
|
|
3,574.5
|
|
Payable to affiliate - noncurrent
|
|
16.0
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
16.0
|
|
Advances from affiliates - noncurrent
|
|
—
|
|
|
2,378.6
|
|
|
508.7
|
|
|
(2,887.3
|
)
|
|
—
|
|
Other noncurrent liabilities
|
|
—
|
|
|
—
|
|
|
200.1
|
|
|
—
|
|
|
200.1
|
|
Total other liabilities and deferred
credits
|
|
16.0
|
|
|
2,378.6
|
|
|
708.8
|
|
|
(2,887.3
|
)
|
|
216.1
|
|
Total partners' capital
|
|
4,623.3
|
|
|
2,544.6
|
|
|
6,829.8
|
|
|
(9,374.4
|
)
|
|
4,623.3
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Liabilities and Partners' Capital
|
|
$
|
4,641.1
|
|
|
$
|
7,419.0
|
|
|
$
|
8,945.5
|
|
|
$
|
(12,282.3
|
)
|
|
$
|
8,723.3
|
|
Condensed Consolidating Balance Sheets as of
December 31, 2016
(Millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Assets
|
|
Parent
Guarantor
|
|
Subsidiary
Issuer
|
|
Non-guarantor Subsidiaries
|
|
Eliminations
|
|
Consolidated Boardwalk Pipeline Partners, LP
|
Cash and cash equivalents
|
|
$
|
0.6
|
|
|
$
|
1.8
|
|
|
$
|
2.2
|
|
|
$
|
—
|
|
|
$
|
4.6
|
|
Receivables
|
|
—
|
|
|
—
|
|
|
139.8
|
|
|
—
|
|
|
139.8
|
|
Receivables - affiliate
|
|
—
|
|
|
—
|
|
|
7.0
|
|
|
(7.0
|
)
|
|
—
|
|
Gas and liquids stored underground
|
|
—
|
|
|
—
|
|
|
1.3
|
|
|
—
|
|
|
1.3
|
|
Prepayments
|
|
0.4
|
|
|
—
|
|
|
17.3
|
|
|
—
|
|
|
17.7
|
|
Advances to affiliates
|
|
—
|
|
|
72.9
|
|
|
102.7
|
|
|
(175.6
|
)
|
|
—
|
|
Other current assets
|
|
—
|
|
|
—
|
|
|
13.9
|
|
|
(3.1
|
)
|
|
10.8
|
|
Total current assets
|
|
1.0
|
|
|
74.7
|
|
|
284.2
|
|
|
(185.7
|
)
|
|
174.2
|
|
Investment in consolidated subsidiaries
|
|
2,423.2
|
|
|
6,653.6
|
|
|
—
|
|
|
(9,076.8
|
)
|
|
—
|
|
Property, plant and equipment, gross
|
|
0.6
|
|
|
—
|
|
|
10,326.7
|
|
|
—
|
|
|
10,327.3
|
|
Less–accumulated depreciation
and amortization
|
|
0.6
|
|
|
—
|
|
|
2,333.2
|
|
|
—
|
|
|
2,333.8
|
|
Property, plant and equipment, net
|
|
—
|
|
|
—
|
|
|
7,993.5
|
|
|
—
|
|
|
7,993.5
|
|
Advances to affiliates – noncurrent
|
|
2,125.0
|
|
|
435.0
|
|
|
229.3
|
|
|
(2,789.3
|
)
|
|
—
|
|
Other noncurrent assets
|
|
—
|
|
|
3.3
|
|
|
466.8
|
|
|
—
|
|
|
470.1
|
|
Total other assets
|
|
2,125.0
|
|
|
438.3
|
|
|
696.1
|
|
|
(2,789.3
|
)
|
|
470.1
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Assets
|
|
$
|
4,549.2
|
|
|
$
|
7,166.6
|
|
|
$
|
8,973.8
|
|
|
$
|
(12,051.8
|
)
|
|
$
|
8,637.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities and Partners' Capital
|
|
Parent
Guarantor
|
|
Subsidiary
Issuer
|
|
Non-guarantor Subsidiaries
|
|
Eliminations
|
|
Consolidated Boardwalk Pipeline Partners, LP
|
Payables
|
|
$
|
0.9
|
|
|
$
|
0.2
|
|
|
$
|
136.4
|
|
|
$
|
—
|
|
|
$
|
137.5
|
|
Payable to affiliates
|
|
1.4
|
|
|
—
|
|
|
7.0
|
|
|
(7.0
|
)
|
|
1.4
|
|
Advances from affiliates
|
|
—
|
|
|
102.7
|
|
|
72.9
|
|
|
(175.6
|
)
|
|
—
|
|
Other current liabilities
|
|
—
|
|
|
21.8
|
|
|
175.3
|
|
|
(3.1
|
)
|
|
194.0
|
|
Total current liabilities
|
|
2.3
|
|
|
124.7
|
|
|
391.6
|
|
|
(185.7
|
)
|
|
332.9
|
|
Long-term debt and capital lease
obligation
|
|
—
|
|
|
2,264.4
|
|
|
1,293.6
|
|
|
—
|
|
|
3,558.0
|
|
Payable to affiliate - noncurrent
|
|
16.0
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
16.0
|
|
Advances from affiliates - noncurrent
|
|
—
|
|
|
2,354.3
|
|
|
435.0
|
|
|
(2,789.3
|
)
|
|
—
|
|
Other noncurrent liabilities
|
|
—
|
|
|
—
|
|
|
200.0
|
|
|
—
|
|
|
200.0
|
|
Total other liabilities and deferred
credits
|
|
16.0
|
|
|
2,354.3
|
|
|
635.0
|
|
|
(2,789.3
|
)
|
|
216.0
|
|
Total partners' capital
|
|
4,530.9
|
|
|
2,423.2
|
|
|
6,653.6
|
|
|
(9,076.8
|
)
|
|
4,530.9
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Liabilities and Partners' Capital
|
|
$
|
4,549.2
|
|
|
$
|
7,166.6
|
|
|
$
|
8,973.8
|
|
|
$
|
(12,051.8
|
)
|
|
$
|
8,637.8
|
|
Condensed Consolidating Statements of Income for the
Three Months Ended
June 30, 2017
(Millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Parent
Guarantor
|
|
Subsidiary
Issuer
|
|
Non-guarantor Subsidiaries
|
|
Eliminations
|
|
Consolidated Boardwalk Pipeline Partners, LP
|
Operating Revenues:
|
|
|
|
|
|
|
|
|
|
Transportation
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
300.6
|
|
|
$
|
(21.9
|
)
|
|
$
|
278.7
|
|
Parking and lending
|
—
|
|
|
—
|
|
|
8.1
|
|
|
(0.2
|
)
|
|
7.9
|
|
Storage
|
—
|
|
|
—
|
|
|
19.9
|
|
|
—
|
|
|
19.9
|
|
Other
|
—
|
|
|
—
|
|
|
11.1
|
|
|
—
|
|
|
11.1
|
|
Total operating revenues
|
—
|
|
|
—
|
|
|
339.7
|
|
|
(22.1
|
)
|
|
317.6
|
|
|
|
|
|
|
|
|
|
|
|
Operating Costs and Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
Fuel and transportation
|
—
|
|
|
—
|
|
|
36.6
|
|
|
(22.1
|
)
|
|
14.5
|
|
Operation and maintenance
|
—
|
|
|
—
|
|
|
51.6
|
|
|
—
|
|
|
51.6
|
|
Administrative and general
|
—
|
|
|
—
|
|
|
34.2
|
|
|
—
|
|
|
34.2
|
|
Other operating costs and expenses
|
—
|
|
|
—
|
|
|
150.1
|
|
|
—
|
|
|
150.1
|
|
Total operating costs and expenses
|
—
|
|
|
—
|
|
|
272.5
|
|
|
(22.1
|
)
|
|
250.4
|
|
Operating income
|
—
|
|
|
—
|
|
|
67.2
|
|
|
—
|
|
|
67.2
|
|
|
|
|
|
|
|
|
|
|
|
Other Deductions (Income):
|
|
|
|
|
|
|
|
|
|
|
Interest expense
|
—
|
|
|
32.4
|
|
|
11.5
|
|
|
—
|
|
|
43.9
|
|
Interest (income) expense - affiliates, net
|
(11.4
|
)
|
|
10.0
|
|
|
1.4
|
|
|
—
|
|
|
—
|
|
Interest income
|
—
|
|
|
(0.1
|
)
|
|
(0.1
|
)
|
|
—
|
|
|
(0.2
|
)
|
Equity in earnings of subsidiaries
|
(12.3
|
)
|
|
(54.6
|
)
|
|
—
|
|
|
66.9
|
|
|
—
|
|
Miscellaneous other income, net
|
—
|
|
|
—
|
|
|
(0.6
|
)
|
|
—
|
|
|
(0.6
|
)
|
Total other (income) deductions
|
(23.7
|
)
|
|
(12.3
|
)
|
|
12.2
|
|
|
66.9
|
|
|
43.1
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before income taxes
|
23.7
|
|
|
12.3
|
|
|
55.0
|
|
|
(66.9
|
)
|
|
24.1
|
|
Income taxes
|
—
|
|
|
—
|
|
|
0.4
|
|
|
—
|
|
|
0.4
|
|
Net income (loss)
|
$
|
23.7
|
|
|
$
|
12.3
|
|
|
$
|
54.6
|
|
|
$
|
(66.9
|
)
|
|
$
|
23.7
|
|
Condensed Consolidating Statements of Income for the
Three Months Ended
June 30, 2016
(Millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Parent
Guarantor
|
|
Subsidiary
Issuer
|
|
Non-guarantor Subsidiaries
|
|
Eliminations
|
|
Consolidated Boardwalk Pipeline Partners, LP
|
Operating Revenues:
|
|
|
|
|
|
|
|
|
|
Transportation
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
291.7
|
|
|
$
|
(21.9
|
)
|
|
$
|
269.8
|
|
Parking and lending
|
—
|
|
|
—
|
|
|
5.4
|
|
|
(1.0
|
)
|
|
4.4
|
|
Storage
|
—
|
|
|
—
|
|
|
23.6
|
|
|
—
|
|
|
23.6
|
|
Other
|
—
|
|
|
—
|
|
|
8.5
|
|
|
—
|
|
|
8.5
|
|
Total operating revenues
|
—
|
|
|
—
|
|
|
329.2
|
|
|
(22.9
|
)
|
|
306.3
|
|
|
|
|
|
|
|
|
|
|
|
Operating Costs and Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
Fuel and transportation
|
—
|
|
|
—
|
|
|
34.5
|
|
|
(22.9
|
)
|
|
11.6
|
|
Operation and maintenance
|
—
|
|
|
—
|
|
|
48.3
|
|
|
—
|
|
|
48.3
|
|
Administrative and general
|
—
|
|
|
—
|
|
|
35.5
|
|
|
—
|
|
|
35.5
|
|
Other operating costs and expenses
|
0.1
|
|
|
—
|
|
|
101.5
|
|
|
—
|
|
|
101.6
|
|
Total operating costs and expenses
|
0.1
|
|
|
—
|
|
|
219.8
|
|
|
(22.9
|
)
|
|
197.0
|
|
Operating (loss) income
|
(0.1
|
)
|
|
—
|
|
|
109.4
|
|
|
—
|
|
|
109.3
|
|
|
|
|
|
|
|
|
|
|
|
Other Deductions (Income):
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense
|
—
|
|
|
30.4
|
|
|
15.0
|
|
|
—
|
|
|
45.4
|
|
Interest (income) expense - affiliates, net
|
(9.0
|
)
|
|
11.5
|
|
|
(2.5
|
)
|
|
—
|
|
|
—
|
|
Interest income
|
—
|
|
|
—
|
|
|
(0.1
|
)
|
|
—
|
|
|
(0.1
|
)
|
Equity in earnings of subsidiaries
|
(57.0
|
)
|
|
(98.9
|
)
|
|
—
|
|
|
155.9
|
|
|
—
|
|
Miscellaneous other deductions
(income), net
|
0.2
|
|
|
—
|
|
|
(2.1
|
)
|
|
—
|
|
|
(1.9
|
)
|
Total other (income) deductions
|
(65.8
|
)
|
|
(57.0
|
)
|
|
10.3
|
|
|
155.9
|
|
|
43.4
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before income taxes
|
65.7
|
|
|
57.0
|
|
|
99.1
|
|
|
(155.9
|
)
|
|
65.9
|
|
Income taxes
|
—
|
|
|
—
|
|
|
0.2
|
|
|
—
|
|
|
0.2
|
|
Net income (loss)
|
$
|
65.7
|
|
|
$
|
57.0
|
|
|
$
|
98.9
|
|
|
$
|
(155.9
|
)
|
|
$
|
65.7
|
|
Condensed Consolidating Statements of Income for the
Six Months Ended
June 30, 2017
(Millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Parent
Guarantor
|
|
Subsidiary
Issuer
|
|
Non-guarantor Subsidiaries
|
|
Eliminations
|
|
Consolidated Boardwalk Pipeline Partners, LP
|
Operating Revenues:
|
|
|
|
|
|
|
|
|
|
Transportation
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
641.1
|
|
|
$
|
(43.8
|
)
|
|
$
|
597.3
|
|
Parking and lending
|
—
|
|
|
—
|
|
|
13.5
|
|
|
(0.2
|
)
|
|
13.3
|
|
Storage
|
—
|
|
|
—
|
|
|
43.3
|
|
|
—
|
|
|
43.3
|
|
Other
|
—
|
|
|
—
|
|
|
30.7
|
|
|
—
|
|
|
30.7
|
|
Total operating revenues
|
—
|
|
|
—
|
|
|
728.6
|
|
|
(44.0
|
)
|
|
684.6
|
|
|
|
|
|
|
|
|
|
|
|
Operating Costs and Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
Fuel and transportation
|
—
|
|
|
—
|
|
|
77.7
|
|
|
(44.0
|
)
|
|
33.7
|
|
Operation and maintenance
|
—
|
|
|
—
|
|
|
92.0
|
|
|
—
|
|
|
92.0
|
|
Administrative and general
|
—
|
|
|
—
|
|
|
68.8
|
|
|
—
|
|
|
68.8
|
|
Other operating costs and expenses
|
0.1
|
|
|
—
|
|
|
258.0
|
|
|
—
|
|
|
258.1
|
|
Total operating costs and expenses
|
0.1
|
|
|
—
|
|
|
496.5
|
|
|
(44.0
|
)
|
|
452.6
|
|
Operating (loss) income
|
(0.1
|
)
|
|
—
|
|
|
232.1
|
|
|
—
|
|
|
232.0
|
|
|
|
|
|
|
|
|
|
|
|
Other Deductions (Income):
|
|
|
|
|
|
|
|
|
|
|
Interest expense
|
—
|
|
|
65.4
|
|
|
24.7
|
|
|
—
|
|
|
90.1
|
|
Interest (income) expense - affiliates, net
|
(22.2
|
)
|
|
19.1
|
|
|
3.1
|
|
|
—
|
|
|
—
|
|
Interest income
|
—
|
|
|
(0.2
|
)
|
|
(0.1
|
)
|
|
—
|
|
|
(0.3
|
)
|
Equity in earnings of subsidiaries
|
(120.9
|
)
|
|
(205.2
|
)
|
|
—
|
|
|
326.1
|
|
|
—
|
|
Miscellaneous other income, net
|
—
|
|
|
—
|
|
|
(1.4
|
)
|
|
—
|
|
|
(1.4
|
)
|
Total other (income) deductions
|
(143.1
|
)
|
|
(120.9
|
)
|
|
26.3
|
|
|
326.1
|
|
|
88.4
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before income taxes
|
143.0
|
|
|
120.9
|
|
|
205.8
|
|
|
(326.1
|
)
|
|
143.6
|
|
Income taxes
|
—
|
|
|
—
|
|
|
0.6
|
|
|
—
|
|
|
0.6
|
|
Net income (loss)
|
$
|
143.0
|
|
|
$
|
120.9
|
|
|
$
|
205.2
|
|
|
$
|
(326.1
|
)
|
|
$
|
143.0
|
|
Condensed Consolidating Statements of Income for the
Six Months Ended
June 30, 2016
(Millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Parent
Guarantor
|
|
Subsidiary
Issuer
|
|
Non-guarantor Subsidiaries
|
|
Eliminations
|
|
Consolidated Boardwalk Pipeline Partners, LP
|
Operating Revenues:
|
|
|
|
|
|
|
|
|
|
Transportation
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
619.1
|
|
|
$
|
(43.4
|
)
|
|
$
|
575.7
|
|
Parking and lending
|
—
|
|
|
—
|
|
|
9.5
|
|
|
(1.0
|
)
|
|
8.5
|
|
Storage
|
—
|
|
|
—
|
|
|
44.6
|
|
|
—
|
|
|
44.6
|
|
Other
|
—
|
|
|
—
|
|
|
22.5
|
|
|
—
|
|
|
22.5
|
|
Total operating revenues
|
—
|
|
|
—
|
|
|
695.7
|
|
|
(44.4
|
)
|
|
651.3
|
|
|
|
|
|
|
|
|
|
|
|
Operating Costs and Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
Fuel and transportation
|
—
|
|
|
—
|
|
|
76.3
|
|
|
(44.4
|
)
|
|
31.9
|
|
Operation and maintenance
|
—
|
|
|
—
|
|
|
91.7
|
|
|
—
|
|
|
91.7
|
|
Administrative and general
|
0.1
|
|
|
—
|
|
|
70.1
|
|
|
—
|
|
|
70.2
|
|
Other operating costs and expenses
|
0.2
|
|
|
—
|
|
|
206.4
|
|
|
—
|
|
|
206.6
|
|
Total operating costs and expenses
|
0.3
|
|
|
—
|
|
|
444.5
|
|
|
(44.4
|
)
|
|
400.4
|
|
Operating (loss) income
|
(0.3
|
)
|
|
—
|
|
|
251.2
|
|
|
—
|
|
|
250.9
|
|
|
|
|
|
|
|
|
|
|
|
Other Deductions (Income):
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense
|
—
|
|
|
56.5
|
|
|
31.5
|
|
|
—
|
|
|
88.0
|
|
Interest (income) expense - affiliates, net
|
(17.9
|
)
|
|
23.5
|
|
|
(5.6
|
)
|
|
—
|
|
|
—
|
|
Interest income
|
—
|
|
|
—
|
|
|
(0.2
|
)
|
|
—
|
|
|
(0.2
|
)
|
Equity in earnings of subsidiaries
|
(149.3
|
)
|
|
(229.3
|
)
|
|
—
|
|
|
378.6
|
|
|
—
|
|
Miscellaneous other deductions
(income), net
|
0.2
|
|
|
—
|
|
|
(4.2
|
)
|
|
—
|
|
|
(4.0
|
)
|
Total other (income) deductions
|
(167.0
|
)
|
|
(149.3
|
)
|
|
21.5
|
|
|
378.6
|
|
|
83.8
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before income taxes
|
166.7
|
|
|
149.3
|
|
|
229.7
|
|
|
(378.6
|
)
|
|
167.1
|
|
Income taxes
|
—
|
|
|
—
|
|
|
0.4
|
|
|
—
|
|
|
0.4
|
|
Net income (loss)
|
$
|
166.7
|
|
|
$
|
149.3
|
|
|
$
|
229.3
|
|
|
$
|
(378.6
|
)
|
|
$
|
166.7
|
|
Condensed Consolidating Statements of Comprehensive Income for the
Three Months Ended
June 30, 2017
(Millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Parent
Guarantor
|
|
Subsidiary
Issuer
|
|
Non-guarantor Subsidiaries
|
|
Eliminations
|
|
Consolidated Boardwalk Pipeline Partners, LP
|
Net income (loss)
|
$
|
23.7
|
|
|
$
|
12.3
|
|
|
$
|
54.6
|
|
|
$
|
(66.9
|
)
|
|
$
|
23.7
|
|
Other comprehensive income (loss):
|
|
|
|
|
|
|
|
|
|
|
|
|
Reclassification adjustment transferred
to Net income from cash flow hedges
|
0.6
|
|
|
0.6
|
|
|
0.1
|
|
|
(0.7
|
)
|
|
0.6
|
|
Pension and other postretirement
benefit costs
|
0.4
|
|
|
0.4
|
|
|
0.4
|
|
|
(0.8
|
)
|
|
0.4
|
|
Total Comprehensive Income (Loss)
|
$
|
24.7
|
|
|
$
|
13.3
|
|
|
$
|
55.1
|
|
|
$
|
(68.4
|
)
|
|
$
|
24.7
|
|
Condensed Consolidating Statements of Comprehensive Income for the
Three Months Ended
June 30, 2016
(Millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Parent
Guarantor
|
|
Subsidiary
Issuer
|
|
Non-guarantor Subsidiaries
|
|
Eliminations
|
|
Consolidated Boardwalk Pipeline Partners, LP
|
Net income (loss)
|
$
|
65.7
|
|
|
$
|
57.0
|
|
|
$
|
98.9
|
|
|
$
|
(155.9
|
)
|
|
$
|
65.7
|
|
Other comprehensive income (loss):
|
|
|
|
|
|
|
|
|
|
|
|
|
Reclassification adjustment transferred
to Net income from cash flow hedges
|
0.6
|
|
|
0.6
|
|
|
0.2
|
|
|
(0.8
|
)
|
|
0.6
|
|
Pension and other postretirement
benefit costs
|
1.1
|
|
|
1.1
|
|
|
1.1
|
|
|
(2.2
|
)
|
|
1.1
|
|
Total Comprehensive Income (Loss)
|
$
|
67.4
|
|
|
$
|
58.7
|
|
|
$
|
100.2
|
|
|
$
|
(158.9
|
)
|
|
$
|
67.4
|
|
Condensed Consolidating Statements of Comprehensive Income for the
Six Months Ended
June 30, 2017
(Millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Parent
Guarantor
|
|
Subsidiary
Issuer
|
|
Non-guarantor Subsidiaries
|
|
Eliminations
|
|
Consolidated Boardwalk Pipeline Partners, LP
|
Net income (loss)
|
$
|
143.0
|
|
|
$
|
120.9
|
|
|
$
|
205.2
|
|
|
$
|
(326.1
|
)
|
|
$
|
143.0
|
|
Other comprehensive income (loss):
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss on cash flow hedge
|
(1.5
|
)
|
|
(1.5
|
)
|
|
—
|
|
|
1.5
|
|
|
(1.5
|
)
|
Reclassification adjustment transferred
to Net income from cash flow hedges
|
1.3
|
|
|
1.3
|
|
|
0.3
|
|
|
(1.6
|
)
|
|
1.3
|
|
Pension and other postretirement
benefit costs
|
0.7
|
|
|
0.7
|
|
|
0.7
|
|
|
(1.4
|
)
|
|
0.7
|
|
Total Comprehensive Income (Loss)
|
$
|
143.5
|
|
|
$
|
121.4
|
|
|
$
|
206.2
|
|
|
$
|
(327.6
|
)
|
|
$
|
143.5
|
|
Condensed Consolidating Statements of Comprehensive Income for the
Six Months Ended
June 30, 2016
(Millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Parent
Guarantor
|
|
Subsidiary
Issuer
|
|
Non-guarantor Subsidiaries
|
|
Eliminations
|
|
Consolidated Boardwalk Pipeline Partners, LP
|
Net income (loss)
|
$
|
166.7
|
|
|
$
|
149.3
|
|
|
$
|
229.3
|
|
|
$
|
(378.6
|
)
|
|
$
|
166.7
|
|
Other comprehensive income (loss):
|
|
|
|
|
|
|
|
|
|
|
|
|
Reclassification adjustment transferred
to Net income from cash flow hedges
|
1.2
|
|
|
1.2
|
|
|
0.4
|
|
|
(1.6
|
)
|
|
1.2
|
|
Pension and other postretirement
benefit costs
|
1.7
|
|
|
1.7
|
|
|
1.7
|
|
|
(3.4
|
)
|
|
1.7
|
|
Total Comprehensive Income (Loss)
|
$
|
169.6
|
|
|
$
|
152.2
|
|
|
$
|
231.4
|
|
|
$
|
(383.6
|
)
|
|
$
|
169.6
|
|
Condensed Consolidating Statements of Cash Flow for the
Six Months Ended
June 30, 2017
(Millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Parent
Guarantor
|
|
Subsidiary
Issuer
|
|
Non-guarantor Subsidiaries
|
|
Eliminations
|
|
Consolidated Boardwalk Pipeline Partners, LP
|
Net cash provided by (used in)
operating activities
|
$
|
21.4
|
|
|
$
|
(79.3
|
)
|
|
$
|
405.8
|
|
|
$
|
—
|
|
|
$
|
347.9
|
|
|
|
|
|
|
|
|
|
|
|
INVESTING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital expenditures
|
—
|
|
|
—
|
|
|
(302.8
|
)
|
|
—
|
|
|
(302.8
|
)
|
Proceeds from sale of operating assets
|
—
|
|
|
—
|
|
|
64.8
|
|
|
—
|
|
|
64.8
|
|
Advances to affiliates, net
|
29.7
|
|
|
(3.2
|
)
|
|
8.6
|
|
|
(35.1
|
)
|
|
—
|
|
Net cash provided by (used in)
investing activities
|
29.7
|
|
|
(3.2
|
)
|
|
(229.4
|
)
|
|
(35.1
|
)
|
|
(238.0
|
)
|
|
|
|
|
|
|
|
|
|
|
FINANCING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds from long-term debt, net of
issuance cost
|
—
|
|
|
494.0
|
|
|
—
|
|
|
—
|
|
|
494.0
|
|
Repayment of borrowings from long-term
debt
|
—
|
|
|
(300.0
|
)
|
|
—
|
|
|
—
|
|
|
(300.0
|
)
|
Proceeds from borrowings on revolving
credit agreement
|
—
|
|
|
—
|
|
|
160.0
|
|
|
—
|
|
|
160.0
|
|
Repayment of borrowings on revolving
credit agreement
|
—
|
|
|
—
|
|
|
(340.0
|
)
|
|
—
|
|
|
(340.0
|
)
|
Principal payment of capital lease
obligation
|
—
|
|
|
—
|
|
|
(0.2
|
)
|
|
—
|
|
|
(0.2
|
)
|
Advances from affiliates, net
|
0.1
|
|
|
(38.3
|
)
|
|
3.2
|
|
|
35.1
|
|
|
0.1
|
|
Distributions paid
|
(51.1
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(51.1
|
)
|
Net cash (used in) provided by
financing activities
|
(51.0
|
)
|
|
155.7
|
|
|
(177.0
|
)
|
|
35.1
|
|
|
(37.2
|
)
|
|
|
|
|
|
|
|
|
|
|
Increase (decrease) in cash and cash
equivalents
|
0.1
|
|
|
73.2
|
|
|
(0.6
|
)
|
|
—
|
|
|
72.7
|
|
Cash and cash equivalents at
beginning of period
|
0.6
|
|
|
1.8
|
|
|
2.2
|
|
|
—
|
|
|
4.6
|
|
Cash and cash equivalents at
end of period
|
$
|
0.7
|
|
|
$
|
75.0
|
|
|
$
|
1.6
|
|
|
$
|
—
|
|
|
$
|
77.3
|
|
Condensed Consolidating Statements of Cash Flow for the
Six Months Ended
June 30, 2016
(Millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Parent
Guarantor
|
|
Subsidiary
Issuer
|
|
Non-guarantor Subsidiaries
|
|
Eliminations
|
|
Consolidated Boardwalk Pipeline Partners, LP
|
Net cash provided by (used in)
operating activities
|
$
|
17.8
|
|
|
$
|
(73.3
|
)
|
|
$
|
360.2
|
|
|
$
|
—
|
|
|
$
|
304.7
|
|
|
|
|
|
|
|
|
|
|
|
INVESTING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital expenditures
|
—
|
|
|
—
|
|
|
(259.0
|
)
|
|
—
|
|
|
(259.0
|
)
|
Proceeds from sale of operating assets
|
—
|
|
|
—
|
|
|
0.1
|
|
|
—
|
|
|
0.1
|
|
Advances to affiliates, net
|
33.6
|
|
|
(6.5
|
)
|
|
270.1
|
|
|
(297.2
|
)
|
|
—
|
|
Net cash provided by (used in)
investing activities
|
33.6
|
|
|
(6.5
|
)
|
|
11.2
|
|
|
(297.2
|
)
|
|
(258.9
|
)
|
|
|
|
|
|
|
|
|
|
|
FINANCING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds from long-term debt, net of
issuance cost
|
—
|
|
|
539.1
|
|
|
—
|
|
|
—
|
|
|
539.1
|
|
Proceeds from borrowings on revolving
credit agreement
|
—
|
|
|
—
|
|
|
255.0
|
|
|
—
|
|
|
255.0
|
|
Repayment of borrowings on revolving
credit agreement
|
—
|
|
|
—
|
|
|
(630.0
|
)
|
|
—
|
|
|
(630.0
|
)
|
Principal payment of capital lease
obligation
|
—
|
|
|
—
|
|
|
(0.2
|
)
|
|
—
|
|
|
(0.2
|
)
|
Advances from affiliates, net
|
0.1
|
|
|
(303.7
|
)
|
|
6.5
|
|
|
297.2
|
|
|
0.1
|
|
Distributions paid
|
(51.1
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(51.1
|
)
|
Net cash (used in) provided by
financing activities
|
(51.0
|
)
|
|
235.4
|
|
|
(368.7
|
)
|
|
297.2
|
|
|
112.9
|
|
|
|
|
|
|
|
|
|
|
|
Increase in cash and cash
equivalents
|
0.4
|
|
|
155.6
|
|
|
2.7
|
|
|
—
|
|
|
158.7
|
|
Cash and cash equivalents at
beginning of period
|
—
|
|
|
0.3
|
|
|
2.8
|
|
|
—
|
|
|
3.1
|
|
Cash and cash equivalents at
end of period
|
$
|
0.4
|
|
|
$
|
155.9
|
|
|
$
|
5.5
|
|
|
$
|
—
|
|
|
$
|
161.8
|
|