SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2002
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _______________ to ________________
Commission file number: 1-4998
ATLAS PIPELINE PARTNERS, L.P.
(Exact name of registrant as specified in its charter)
DELAWARE 23-3011077
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
311 Rouser Road
Moon Township, Pennsylvania 15108
(Address of principal executive office) (Zip code)
Registrant's telephone number, including area code: (412) 262-2830
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes [X] No [ ]
As of November 4, 2002, there were outstanding 1,621,159 Common Units
and 1,641,026 Subordinated Units.
ATLAS PIPELINE PARTNERS, L.P. AND SUBSIDIARIES
INDEX TO QUARTERLY REPORT
ON FORM 10-Q
PART I. FINANCIAL INFORMATION PAGE
----
Item 1. Financial Statements
Consolidated Balance Sheets as of September 30, 2002 (Unaudited) and December 31, 2001................ 3
Consolidated Statements of Income for the Three Months and Nine Months Ended
September 30, 2002 and September 30, 2001 (Unaudited)............................................... 4
Consolidated Statement of Partners' Capital (Deficit) for the Nine Months
Ended September 30, 2002 (Unaudited)................................................................ 5
Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2002 and
September 30, 2001 (Unaudited)...................................................................... 6
Notes to Consolidated Financial Statements - September 30, 2002 (Unaudited)........................... 7 - 11
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations (Unaudited)...............................................................12 - 21
Item 3. Quantitative and Qualitative Disclosures about Market Risk............................................ 22
Item 4. Evaluation of Disclosure Controls and Procedures...................................................... 22
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K...................................................................... 23
SIGNATURES ...................................................................................................... 24
CERTIFICATIONS......................................................................................................25 - 26
2
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
ATLAS PIPELINE PARTNERS, L.P. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
AS OF SEPTEMBER 30, 2002 (Unaudited) AND DECEMBER 31, 2001
September 30, December 31,
2002 2001
------------- ------------
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents........................................................ $ 1,935,400 $ 2,162,200
Accounts receivable............................................................ 750,000 -
Accounts receivable - affiliates................................................. - 1,312,300
Prepaid expenses................................................................. 64,200 123,500
----------- -----------
Total current assets........................................................... 2,749,600 3,598,000
Property and equipment:
Gas gathering and transmission facilities........................................ 28,105,700 24,153,400
Less - accumulated depreciation.................................................. (5,227,700) (4,144,000)
----------- -----------
Net property and equipment..................................................... 22,878,000 20,009,400
Goodwill (net of accumulated amortization of $285,300).............................. 2,304,600 2,304,600
Other Assets (net of accumulated amortization of $82,200 and $53,300)............... 50,900 89,800
----------- -----------
$27,983,100 $26,001,800
=========== ===========
LIABILITIES AND PARTNERS' CAPITAL (DEFICIT)
Current liabilities:
Accounts payable and accrued liabilities......................................... $ 140,800 $ 189,600
Accounts payable - affiliates.................................................... 201,600 -
Distribution payable............................................................. 1,873,800 2,049,600
----------- -----------
Total current liabilities...................................................... 2,216,200 2,239,200
Long-term debt...................................................................... 5,604,800 2,089,000
Partners' capital (deficit):
Common unitholders, 1,621,159 units outstanding.................................. 19,394,400 20,128,700
Subordinated unitholder, 1,641,026 units outstanding............................. 917,500 1,660,900
General partner.................................................................. (149,800) (116,000)
----------- -----------
Total partners' capital........................................................ 20,162,100 21,673,600
----------- -----------
$27,983,100 $26,001,800
=========== ===========
See accompanying notes to consolidated financial statements
3
ATLAS PIPELINE PARTNERS, L.P. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
----------------------- -----------------------
2002 2001 2002 2001
---------- ---------- ---------- -----------
(in thousands, except per unit data)
REVENUES:
Transportation and compression.................................... $2,666,100 $2,577,100 $7,857,400 $10,260,000
Interest income................................................... 700 10,000 5,100 31,900
---------- ---------- ---------- -----------
2,666,800 2,587,100 7,862,500 10,291,900
COST AND EXPENSES:
Transportation and compression.................................... 475,900 548,000 1,480,800 1,411,100
General and administrative........................................ 366,500 287,300 1,158,000 839,300
Depreciation and amortization..................................... 376,000 350,400 1,083,700 1,013,700
Interest.......................................................... 57,000 44,500 140,000 135,400
---------- ---------- ---------- -----------
1,275,400 1,230,200 3,862,500 3,399,500
---------- ---------- ---------- -----------
Net income........................................................ $1,391,400 $1,356,900 $4,000,000 $ 6,892,400
========== ========== ========== ===========
Net income - limited partners..................................... $1,290,200 $1,195,100 $3,725,400 $ 5,983,700
========== ========== ========== ===========
Net income - general partners..................................... $ 101,200 $ 161,800 $ 274,600 $ 908,700
========== ========== ========== ===========
Basic and diluted net income per limited partner unit............. $ .40 $ .37 $ 1.14 $ 1.84
========== ========== ========== ===========
Weighted average limited partner units outstanding................ 3,262,185 3,262,185 3,262,185 3,246,859
========== ========== ========== ===========
See accompanying notes to consolidated financial statements
4
ATLAS PIPELINE PARTNERS, L.P. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF PARTNERS' CAPITAL (DEFICIT)
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2002
(Unaudited)
Number of Limited Partners' Capital (Deficit)
Partner Units --------------------------------------- Total
------------------------ General Partners'
Common Subordinated Common Subordinated Partner Capital (Deficit)
--------- ------------ ----------- ------------ --------- -----------------
Balance at January 1, 2002................ 1,621,159 1,641,026 $20,128,700 $ 1,660,900 $(116,000) $21,673,600
Distribution to partners.................. - - (1,710,300) (1,731,200) (196,200) (3,637,700)
Distribution payable...................... - - (875,400) (886,200) (112,200) (1,873,800)
Net income................................ - - 1,851,400 1,874,000 274,600 4,000,000
--------- --------- ----------- ----------- --------- -----------
Balance at September 30, 2002............. 1,621,159 1,641,026 $19,394,400 $ 917,500 $(149,800) $20,162,100
========= ========= =========== =========== ========= ===========
See accompanying notes to consolidated financial statements
5
ATLAS PIPELINE PARTNERS, L.P. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2002 AND 2001
(Unaudited)
2002 2001
----------- -----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income.......................................................................... $ 4,000,000 $ 6,892,400
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization.................................................... 1,083,700 1,013,700
Amortization of deferred financing costs......................................... 28,900 34,100
Changes in operating assets and liabilities:
Decrease (increase) in accounts receivable - affiliates and prepaid expenses..... 621,600 (86,000)
Decrease in accounts payable and accrued liabilities............................. (48,800) (20,900)
Increase in accounts payable - affiliates........................................ 201,600 -
----------- -----------
Net cash provided by operating activities...................................... 5,887,000 7,833,300
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisitions of gathering systems................................................... (165,000) (1,400,000)
Capital expenditures................................................................ (3,787,300) (1,191,800)
----------- -----------
Net cash used in investing activities.......................................... (3,952,300) (2,591,800)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings on long-term debt........................................................ 3,515,800 2,089,000
Capital contributions............................................................... - 45,500
Distributions paid to partners...................................................... (5,687,300) (6,980,900)
Decrease (increase) in other assets................................................. 10,000 (3,000)
----------- -----------
Net cash used in financing activities.......................................... (2,161,500) (4,849,400)
----------- -----------
(Decrease) increase in cash and cash equivalents.................................... (226,800) 392,100
Cash and cash equivalents, beginning of period...................................... 2,162,200 2,043,500
----------- -----------
Cash and cash equivalents, end of period............................................ $ 1,935,400 $ 2,435,600
=========== ===========
See accompanying notes to consolidated financial statements
6
ATLAS PIPELINE PARTNERS, L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2002
(Unaudited)
NOTE 1 - BASIS OF PRESENTATION
The accompanying consolidated financial statements have been prepared
by the Partnership without audit and reflect all adjustments, consisting of
normal recurring adjustments and accruals, which are, in the opinion of
management, necessary for a fair statement of financial position and the results
of operations for the interim periods. The statements have been prepared in
accordance with the regulations of the Securities and Exchange Commission, but
omit certain information and footnote disclosures necessary to present the
statements in accordance with accounting principles generally accepted in the
United States. For further information, refer to the consolidated financial
statements and notes thereto included in the Partnership's Annual Report on Form
10-K for the fiscal year ended December 31, 2001.
Certain reclassifications have been made to the consolidated financial
statements for the nine months ended September 30, 2001 to conform with the nine
months ended September 30, 2002.
The accompanying consolidated financial statements and related notes
present the Partnership's consolidated financial position as of September 30,
2002 and December 31, 2001 and the results of its consolidated operations,
changes in partners' capital (deficit) and cash flows for the nine months ended
September 30, 2002 and 2001.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Fair Value of Financial Instruments
For cash and cash equivalents, receivables and payables, the carrying
amounts approximate fair value because of the short maturity of these items.
Net Income Per Unit
There is no difference between basic and diluted net income per limited
partner unit since there are no potentially dilutive units outstanding. Net
income per limited partner unit is determined by dividing net income, after
deducting the general partner's 2% and incentive interests, by the weighted
average number of outstanding common units and subordinated units.
Comprehensive Income
The Partnership is subject to the provisions of Statement of Financial
Accounting Standards ("SFAS") No. 130," Reporting Comprehensive Income," which
requires disclosure of comprehensive income and its components. Comprehensive
income includes net income and all other changes in the equity of a business
during a period from non-owner sources. These changes, other than net income,
are referred to as "other comprehensive income." The Partnership has no elements
of comprehensive income, other than net income, to report.
Cash Flow Statements
For purposes of the statements of cash flows, all highly liquid debt
instruments purchased with a maturity of nine months or less are considered to
be cash equivalents.
7
ATLAS PIPELINE PARTNERS, L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
SEPTEMBER 30, 2002
(Unaudited)
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - (Continued)
Segment Information
The Partnership has one business segment, the transportation segment.
The transportation segment derives its revenues primarily from the
transportation of natural gas that it receives from producers. Revenues from the
transportation segment are, for the most part, based on contractual arrangements
with Atlas America, Inc. and its affiliates. The Partnership has an omnibus
agreement and a master natural gas gathering agreement with Atlas America and
two of its affiliates, Resource Energy, Inc. and Viking Resources Corporation.
The purpose of these agreements is to maximize the use and expansion of the
Partnerships gathering systems and the volume of natural gas they transport.
Supplemental Disclosure of Cash Flow Information
Information for the nine months ended September 30, 2002 and 2001,
respectively, is as follows:
2002 2001
------- ----------
Cash paid for:
Interest....................................................................... $83,600 $ 90,800
======= ==========
Non-cash activities:
Issuance of common units in exchange for
gas gathering and transmission facilities.................................. $ - $2,250,000
======= ==========
New Accounting Standards
In June 2001, the Financial Accounting Standards Board ("FASB") issued
SFAS No. 141, "Business Combinations" ("SFAS 141"), SFAS No. 142, "Goodwill and
Other Intangible Assets" ("SFAS 142"), and SFAS No. 143, "Accounting for Asset
Retirement Obligations" ("SFAS 143").
SFAS 141 requires that the purchase method of accounting be used for
all business combinations initiated or completed after June 2001. SFAS 141 also
specifies the criteria that intangible assets acquired in a purchase method
business combination must meet to be recognized and reported apart from
goodwill. The adoption of SFAS 141 as of July 2001 had no impact on the
Partnership's consolidated financial statements.
SFAS 142 requires that goodwill no longer be amortized, but instead
tested for impairment at least annually. Any goodwill and any intangible asset
determined to have an indefinite useful life that is acquired in a purchase
business combination completed after September 2001 is not amortized, but is
evaluated for impairment in accordance with the appropriate existing accounting
literature. The Partnership adopted SFAS 142 on January 1, 2002. At that date,
the Partnership had unamortized goodwill in the amount of $2,304,600, which was
subject to the transition provisions of SFAS 142. The adoption of SFAS 142 as of
January 1, 2002 will reduce amortization expense for the year ended December 31,
2002 by approximately $88,000 as compared to the year ended December 31, 2001.
8
ATLAS PIPELINE PARTNERS, L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
SEPTEMBER 30, 2002
(Unaudited)
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - (Continued)
For the three and nine months ended September 30, 2001, the
Partnership's goodwill amortization expense was approximately $22,000 and
$66,000, respectively. Pro forma net income for the three and nine months ended
September 30, 2001 would have been $1,378,900 and $6,958,400, respectively,
excluding goodwill amortization expense. Pro forma basic and diluted income per
limited partner for the three and nine months ended September 30, 2001 would
have been $.37 and $1.86, respectively.
The Partnership has completed the transitional impairment test required
upon adoption of SFAS 142. The transitional test, which involved the use of
estimates related to the fair market value of the business operations associated
with the goodwill, did not indicate an impairment loss. The Partnership will
continue to evaluate its goodwill, at least annually, and will reflect the
impairment of goodwill, if any, in operating income in the income statement.
SFAS 143 requires entities to record the fair value of a liability for
an asset retirement obligation in the period in which it is incurred and a
corresponding increase in the carrying amount of the related long-lived asset.
SFAS 143 will be effective for fiscal years beginning after September 15, 2002.
The Partnership is evaluating the impact of SFAS 143.
In October 2001, SFAS No. 144, "Accounting for the Impairment or
Disposal of Long-Lived Assets" ("SFAS 144") was issued. SFAS 144 requires that
one accounting model be used for long-lived assets to be disposed of by sale,
whether previously held and used or newly acquired, and broadens the
presentation of discontinued operations to include more disposal transactions.
The adoption of SFAS 144 as of January 1, 2002 had no impact on the
Partnership's operations or financial position.
In May 2002, SFAS No. 145, "Rescission of FASB Statements No. 4, 44,
and 64, Amendment of FASB Statement No. 13, and Technical Corrections" ("SFAS
145") was issued. SFAS 145 rescinds the automatic treatment of gains or losses
from extinguishments of debt as extraordinary unless they meet the criteria for
extraordinary items as outlined in APB No. 30, "Reporting the Results of
Operations, Reporting the Effects of Disposal of a Segment of a Business, and
Extraordinary, Unusual and Infrequently Occurring Events and Transactions". SFAS
145 also requires sale-leaseback accounting for certain lease modifications that
have economic effects similar to a sale-leaseback transaction and makes various
technical corrections to existing pronouncements. SFAS 145 is effective for all
financial statements issued by the Partnership in 2003. The Partnership does not
expect the adoption of SFAS 145 to have a material effect on its consolidated
financial position or results of operations.
In June 2002, the FASB issued SFAS No. 146, "Accounting for Costs
Associated with Exit or Disposal Activities" (SFAS 146). SFAS 146 addresses
significant issues relating to the recognition, measurement, and reporting of
costs associated with exit and disposal activities, including restructuring
activities, and nullifies the guidance in Emerging Issues Task Force Issue No.
94-3, "Liability Recognition for Certain Employee Termination Benefits and
Other Costs to Exit an Activity (including Certain Costs Incurred in a
Restructuring)". The provisions of this statement are effective for exit and
disposal activities that are initiated after December 31, 2002, with early
application encouraged. The Partnership does not expect SFAS 146 to have a
material impact on the Partnership's results of operations or its financial
position.
9
ATLAS PIPELINE PARTNERS, L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
SEPTEMBER 30, 2002
(Unaudited)
NOTE 3 - DISTRIBUTION DECLARED
The Partnership will generally make quarterly cash distributions of
substantially all of its available cash, generally defined as cash on hand at
the end of the quarter less cash reserves deemed appropriate to provide for
future operating costs, potential acquisitions and future distributions.
On September 20, 2002, the Partnership declared a cash distribution of
$.54 per unit on its outstanding common units and subordinated units. The
distribution represents the available cash flow for the three months ended
September 30, 2002. The $1,873,800 distribution, which includes a distribution
of $112,200 to the general partner, will be paid on November 8, 2002 to
unitholders of record on September 30, 2002.
Available cash is initially distributed 98% to our limited partners and
2% to our general partner. These distribution percentages are modified to
provide for incentive distributions to be paid to our general partner in the
event that quarterly distributions to unitholders exceed certain specified
targets.
Incentive distributions are generally defined as all cash distributions
paid to our general partner that are in excess of 2% of the aggregate amount of
cash being distributed. The general partner's incentive distribution for the
distribution that we declared for the nine months ended September 30, 2002 was
$198,100. The general partner's incentive distribution for the distribution that
we declared for the third quarter of 2002 was $74,600. The general partner's
incentive distribution that we paid to our general partner was $69,400 during
the third quarter of 2002 and $361,100 during the third quarter of 2001. All
partnership distributions we declare for the fourth quarter of each year are
declared and paid in the first quarter of the following year.
NOTE 4 - LONG-TERM DEBT
The Partnership obtained a $10.0 million revolving credit facility in
October 2000. Our principal purpose in obtaining the facility was to fund the
expansion of our existing gathering systems and the acquisitions of other gas
gathering systems. In the nine months ended September 30, 2002 we used
$3,515,800 of the facility to fund capital expenditures for expansions of our
existing gathering systems and compressors. At September 30, 2002, $5,604,800
was outstanding on this facility, which is due in October 2003.
10
ATLAS PIPELINE PARTNERS, L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
SEPTEMBER 30, 2002
(Unaudited)
NOTE 5 - TERMINATION OF PROPOSED ACQUISITION
On July 31, 2002, the Partnership announced that it had terminated its
agreement with New Vulcan Coal Holdings, L.L.C. and Vulcan Intermediary, L.L.C.
(collectively, "Vulcan") to acquire Triton Coal Company ("Triton"). The related
purchase agreement for the sale of the interests held by Atlas America, Inc. in
the Partnership's general partner also terminated. The Partnership has incurred
approximately $1,375,000 in costs in connection with the Triton transaction
through September 30, 2002, subject to reimbursement by Atlas America and its
affiliates for their allocable portion of these costs. Atlas America had
advanced these costs to the Partnership. Such advances, net of reimbursements of
$437,500 from Vulcan referred to in the next paragraph, are included in accounts
payable--affiliates at September 30, 2002.
The Partnership and its affiliates have requested reimbursement from
Vulcan under the terms of the acquisition agreement for $1,187,500 of the
transaction costs. The Partnership has expensed transaction costs of $187,500,
the difference between costs incurred and those reimbursable by Vulcan. As of
September 30, 2002 Vulcan has reimbursed the Partnership $437,500 of these
costs, which in turn were reimbursed to Atlas America. The remaining costs of
$750,000 that are reimbursable by Vulcan are included on the Partnership's
consolidated balance sheet as accounts receivable and are expected to be
collected over the next three quarters. The Partnership anticipates that it will
further repay Atlas America from the Vulcan reimbursement.
11
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS - (Unaudited)
Forward-Looking Statements
When used in this Form 10-Q, the words "believes" "anticipates"
"expects" and similar expressions are intended to identify forward-looking
statements. Such statements are subject to certain risks and uncertainties more
particularly described in Item 1, under the caption "Risk Factors," in our
annual report on Form 10-K for fiscal 2001. These risks and uncertainties could
cause actual results to differ materially. Readers are cautioned not to place
undue reliance on these forward-looking statements, which speak only as of the
date hereof. We undertake no obligation to publicly release the results of any
revisions to forward-looking statements which we may make to reflect events or
circumstances after the date of this Form 10-Q or to reflect the occurrence of
unanticipated events.
The following important factors could affect our future results and
could cause those results to differ materially from those expressed in our
forward-looking statements:
o weather conditions resulting in reduced demand for the natural gas we
transport;
o changes in laws and regulations, including safety, tax and accounting
matters;
o increased supply of natural gas or competitive pressures from
alternative energy sources that reduces the price of natural gas and,
as a result, the transportation rates we receive;
o liability for environmental claims;
o improvements in energy efficiency and technology resulting in reduced
demand thereby reducing the amount of natural gas we transport or the
price at which it is sold and, as a result, the transportation rates
we receive;
o the number of new wells connected to our gathering systems;
o changes in real property tax assessments;
o adverse regional economic conditions reducing demand for the natural
gas we transport;
o security issues relating to our assets; and
o interest rate fluctuations and other capital market conditions.
These factors are not necessarily all of the important factors that
could cause actual results to differ materially from those expected in any of
our forward-looking statements. Other unknown or unpredictable factors could
also have a material adverse effect on future results.
The following discussion provides information to assist in
understanding our financial condition and results of operation. This discussion
should be read in conjunction with our consolidated financial statements and
related notes appearing elsewhere in this report.
General
Our principal business objective is to generate income for distribution
to our unitholders from the transportation of natural gas through our gathering
systems. We completed an initial public offering of our common units in February
2000 and used the proceeds of that offering to acquire the gathering systems
formerly owned by Atlas America and its affiliates, all subsidiaries of Resource
America. The gathering systems gather natural gas from wells in eastern Ohio,
western New York, and western Pennsylvania and transport the natural gas
primarily to public utility pipelines. To a lesser extent, the gathering systems
transport natural gas to end-users.
12
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS - (Unaudited) - (Continued)
General - (Continued)
In January 2001, we acquired the gas gathering system of Kingston Oil
Corporation. The gas gathering system consisted of approximately 100 miles of
pipeline located in southeastern Ohio. In March 2001, we acquired the gas
gathering system of American Refining and Exploration Company. The gas gathering
system consisted of approximately 20 miles of pipeline located in Fayette
County, Pennsylvania. These acquisitions were accounted for under the purchase
method of accounting and, accordingly, we allocated the purchase prices to the
assets acquired based on their fair values at the dates of acquisition. Our
results of operations include the operations of these gathering systems from
their respective dates of acquisition. These acquisitions were immaterial to the
results of operations of the Partnership, and therefore, pro forma information
is excluded.
On January 18, 2002 we entered into an agreement to acquire
substantially all of the equity interests in Triton Coal Company, from New
Vulcan Coal Holdings, L.L.C. and Vulcan Intermediary, L.L.C. The Vulcan entities
were to contribute 98% of the equity interests in Triton and $6.0 million in
cash to us in exchange for approximately 7.0 million common units, approximately
4.0 million newly created subordinated units and approximately 17.6 million
newly created deferred participation units. On July 31, 2002, we announced that
we had terminated the agreement to acquire Triton. The related purchase
agreement for the sale to the Vulcan entities of the interests held by Atlas
America, Inc. in our general partner also terminated.
We have incurred approximately $1,375,000 in costs in connection with
the Triton transaction through September 30, 2002, subject to reimbursement by
Atlas America and its affiliates for their allocable portion of these costs.
Atlas America had advanced these costs to us. Such advances, net of
reimbursements of $437,500 from the Vulcan entities discussed in the next
paragraph, are included in accounts payable--affiliates at September 30, 2002.
We and our affiliates have requested reimbursement from Vulcan under
the terms of the acquisition agreement for $1,187,500 of the transaction costs.
We have expensed transaction costs of $187,500, the difference between costs
incurred and those reimbursable by Vulcan. As of September 30, 2002 Vulcan has
reimbursed us $437,500 of these costs, which in turn were reimbursed to Atlas
America. The remaining costs of $750,000 that are reimbursable by Vulcan are
included on our consolidated balance sheet as accounts receivable and are
expected to be collected over the next three quarters. We anticipate that we
will further repay Atlas America from the Vulcan reimbursement.
13
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS - (Unaudited) - (Continued)
Results of Operations
Our revenues for the three and nine months ended September 30, 2002,
other than interest income, were derived from our transportation and compression
operations. The principal variables which affect our transportation and
compression revenues are:
o the volumes of natural gas transported by us which in turn, depend
upon the number of wells connected to our gathering system and the
amount of gas they produce, and also the demand for that natural gas
in the regions we serve;
o the transportation fees paid to us which, in turn, depend upon the
price of the natural gas we transport, which itself is a function of
the relevant supply and demand in the Mid-Atlantic and North-Eastern
part of the United States.
The following table sets forth the average volumes transported, average
transportation rates per mcf (thousand cubic feet) and revenues received by us
for the periods indicated.
Three Months Ended Nine Months Ended
September 30, September 30,
----------------------- -----------------------
2002 2001 2002 2001
---------- ---------- ---------- -----------
Average daily throughput volumes (mcf)............................ 51,264 47,208 50,510 46,160
========== ========== ========== ===========
Average transportation rate (per mcf)............................. $ .57 $ .59 $ .57 $ .81
========== ========== ========== ===========
Total transportation and compression revenues..................... $2,666,100 $2,577,100 $7,857,400 $10,260,000
========== ========== ========== ===========
14
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS - (Unaudited) - (Continued)
Results of Operations - (Continued)
Three Months Ended September 30, 2002 as Compared to the Three Months Ended
September 30, 2001
Revenues. Our transportation and compression revenues increased to
$2,666,100 in the three months ended September 30, 2002 from $2,577,100 in the
three months ended September 30, 2001. The increase of $89,000 (3%) resulted
from an increase in the volumes of natural gas we transported ($210,900),
partially offset by a decrease in the average transportation rate paid to us
($121,900).
Our average daily throughput volumes were 51,264 mcfs in the three
months ended September 30, 2002 as compared to 47,208 mcfs in the three months
ended September 30, 2001, an increase of 4,056 mcfs (9%). The increase in the
average daily throughput volume resulted principally from volumes associated
with new wells added to our pipeline system; 137 wells were connected to our
gathering system and began production in the nine months ended September 30,
2002. These increases were partially offset by the natural decline in production
volumes from wells already connected to our gathering system.
Our transportation rates are primarily at fixed percentages of the
sales price of the natural gas we transport. Our transportation fees for natural
gas produced by Atlas America and its affiliates also have specified minimums.
Our average transportation rate was $.57 per mcf in the three months ended
September 30, 2002 as compared to $.59 per mcf in the three months ended
September 30, 2001, a decrease of $.02 per mcf (3%).
Interest income of $700 consists of interest earned on funds
temporarily invested in short-term money market accounts, a decrease of $9,300
(93%) from $10,000 for the three months ended September 30, 2001, as a result of
a decrease in funds invested and lower rates earned on those funds.
Costs and Expenses. Our transportation and compression expenses
decreased to $475,900 in the three months ended September 30, 2002 as compared
to $548,000 in the three months ended September 30, 2001, a decrease of $72,100
(13%). Our average cost per mcf of transportation and compression was $.10 in
the three months ended September 30, 2002 as compared to $.13 in the three
months ended September 30, 2001, a decrease of $.03 (23%). This decrease
resulted primarily from a decrease in compressor expenses ($32,300) and
decreased labor and benefits ($21,800) as a result of a decrease in normal
pipeline maintenance and repairs in the three months ended September 30, 2002 as
compared to the prior period.
Our general and administrative expenses increased to $366,500 in the
three months ended September 30, 2002 as compared to $287,300 in the three
months ended September 30, 2001, an increase of $79,200 (28%). This increase
primarily resulted from increase wages and benefits ($37,600) and professional
fees ($44,500) as a result of growth in our operations.
Our depreciation and amortization expense increased to $376,000 in the
three months ended September 30, 2002 as compared to $350,400 in the three
months ended September 30, 2001, an increase of $25,600 (7%). This increase
resulted from the increased asset base associated with pipeline extensions and
acquisitions partially offset by a reduction in goodwill amortization as
compared to the previous period due to the adoption of SFAS 142 on January 1,
2002.
Our interest expense increased to $57,000 in the three months ended
September 30, 2002 as compared to $44,500 in the three months ended September
30, 2001. This increase of $12,500 (28%) resulted from an increase in the amount
of funds borrowed due to increased pipeline extensions, partially offset by
lower borrowing rates.
15
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS - (Unaudited) - (Continued)
Results of Operations - (Continued)
Nine Months Ended September 30, 2002 Compared to the Nine Months Ended
September 30, 2001
Revenues. Our transportation and compression revenues decreased to
$7,857,400 in the nine months ended September 30, 2002 from $10,260,000 in the
nine months ended September 30, 2001. The decrease of $2,402,600 (23%) resulted
from a decrease in the average transportation rate paid to us ($3,079,300),
partially offset by an increase in the volumes of natural gas we transported
($676,700).
Our average daily throughput volumes were 50,510 mcfs in the nine
months ended September 30, 2002 as compared to 46,160 mcfs in the nine months
ended September 30, 2001, an increase of 4,350 mcfs (9%). The increase in the
average daily throughput volumes resulted principally from volumes associated
with new wells added to our pipeline system; 137 wells were connected to our
gathering system and began production in the nine months ended September 30,
2002. These increases were partially offset by the natural decline in production
volumes from wells already connected to our gathering system.
Our transportation rates are primarily at fixed percentages of the
sales price of the natural gas we transport. Our transportation fees for natural
gas produced by Atlas America and its affiliates also have specified minimums.
Our average transportation rate was $.57 per mcf in the nine months ended
September 30, 2002 as compared to $.81 per mcf in the nine months ended
September 30, 2001, a decrease of $.24 per mcf (30%). In the first half of 2001,
natural gas prices increased significantly over historical prices. During
subsequent quarters, prices returned to previous levels. As a result, our
average transportation rate decreased.
Interest income of $5,100 consists of interest earned on funds
temporarily invested in short-term money market accounts, a decrease of $26,800
(84%) from $31,900 for the nine months ended September 30, 2001, as a result of
a decrease in funds invested and lower rates earned on those funds.
Costs and Expenses. Our transportation and compression expenses
increased to $1,480,800 in the nine months ended September 30, 2002, as compared
to $1,411,100 in the nine months ended September 30, 2001, an increase of
$69,700 (5%). Our average cost per mcf of transportation and compression was
$.11 in both the nine months ended September 30, 2002 and 2001.
Our general and administrative expenses increased to $1,158,000 in the
nine months ended September 30, 2002 as compared to $839,300 in the nine months
ended September 30, 2001, an increase of $318,700 (38%). This increase primarily
resulted from an increase in professional fees associated with the terminated
Triton acquisition ($187,500), an increase in wages and benefits ($38,100) and
an increase in our cost of insurance ($82,600), reflecting increased operating
activities and assets, as well as significant increases in insurance rates in
general.
Our depreciation and amortization expense increased to $1,083,700 in
the nine months ended September 30, 2002 as compared to $1,013,700 in the nine
months ended September 30, 2001, an increase of $70,000 (7%). This increase
resulted from the increased asset base associated with pipeline extensions and
acquisitions, partially offset by a reduction in goodwill amortization due to
the adoption of SFAS 142 on January 1, 2002.
Our interest expense increased to $140,000 in the nine months ended
September 30, 2002 as compared to $135,400 in the nine months ended September
30, 2001. The $4,600 (3%) increase resulted from an increase in the amount of
funds borrowed during the period due to increased pipeline extensions, partially
offset by lower borrowing rates.
16
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS - (Unaudited) - (Continued)
Liquidity and Capital Resources
Our primary cash requirements, in addition to normal operating
expenses, are debt service, sustaining capital expenditures, expansion capital
expenditures and quarterly distributions to our common unitholders, subordinated
unitholders and general partner. In addition to utilizing cash generated from
operations, we have the ability to meet our cash requirements (other than
distributions to our common unitholders, subordinated unitholders and general
partner) through borrowings under our credit facility. We have $4.4 million of
remaining borrowing capacity under our credit facility. In general, we expect to
fund:
o cash distributions and sustaining capital expenditures with existing
cash and cash flows from operating activities;
o expansion capital expenditures and working capital deficits through
the retention of cash and additional borrowings;
o interest payments from cash flows from operating activities; and
o debt principal payments with additional borrowings as they become due
or by the issuance of additional common units.
The following table summarizes our financial condition for the periods
indicated:
September 30,
----------------------------------
2002 2001
------------- -------------
Current ratio.............................................................. 1.2 to 1.0 1.6 to 1.0
Working capital............................................................ $ 533,400 $ 1,358,800
Ratio of long-term debt to total partners' capital......................... .28 to 1.0 .09 to 1.0
During the nine months ended September 30, 2002, net cash provided by
operations was $5,887,000 as compared to $7,833,300 in the nine months ended
September 30, 2001. This decrease of $1,946,300 resulted primarily from a
decrease in income from operations before depreciation and amortization of
$2,827,600 partially offset by the effects of changes in operating assets and
liabilities of $881,300 resulting primarily from the advance by Atlas America of
expenses incurred in connection with the Triton acquisition.
Net cash used in investing activities was $3,952,300 for the nine
months ended September 30, 2002, an increase of $1,360,500 from $2,591,800 the
nine months ended September 30, 2001. Net cash used in investing activities
during the nine months ended September 30, 2001 consisted of the acquisition of
two small pipelines from third parties ($1,400,000) and capital expenditures
associated with gathering system extensions and compressor upgrades to our
existing pipeline systems ($1,191,800). In the nine months ended September 30,
2002, we used $165,000 for the acquisition of one small gathering system and
incurred capital expenditures of $3,787,300 for gathering system extensions and
compressor upgrades to accommodate new wells drilled by Atlas America and its
affiliates.
17
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS - (Unaudited) - (Continued)
Liquidity and Capital Resources - (Continued)
Net cash used in financing activities was $2,161,500 for the nine
months ended September 30, 2002, a decrease of $2,687,900 from cash used in
financing activities of $4,849,400 in the nine months ended September 30, 2001.
Distributions paid to partners in the nine months ended September 30, 2002
decreased $1,293,600 as compared to the nine months ended September 30, 2001 as
a result of a decrease in net income. Borrowings increased $1,426,800 to
$3,515,800 in the nine months ended September 30, 2002 due to an increase in
pipeline extensions and compressor upgrades.
Partnership Distributions
Our partnership agreement requires that we distribute 100% of available
cash as defined in our partnership agreement to our partners within 45 days
following the end of each calendar quarter in accordance with their respective
percentage interests. Available cash consists generally of all of our cash
receipts, including cash received by our operating partnerships, less cash
disbursements and net additions to reserves (including any reserves required
under debt instruments for future principal and interest payments).
Our general partner is granted discretion by our partnership agreement,
to establish, maintain and adjust reserves for future operating expenses, debt
service, maintenance capital expenditures, rate refunds and distributions for
the next four quarters. These reserves are not restricted by magnitude, but only
by type of future cash requirements with which they can be associated. When our
general partner determines our quarterly distributions, it considers current and
expected reserve needs along with current and expected cash flows to identify
the appropriate sustainable distribution level.
Available cash is initially distributed 98% to our limited partners and
2% to our general partner. These distribution percentages are modified to
provide for incentive distributions to be paid to our general partner in the
event that quarterly distributions to unitholders exceed certain specified
targets.
Incentive distributions are generally defined as all cash distributions
paid to our general partner that are in excess of 2% of the aggregate amount of
cash being distributed. The general partner's incentive distribution for the
distribution that we declared for the nine months ended September 30, 2002 was
$198,100. The general partner's incentive distribution for the distribution that
we declared for the third quarter of 2002 was $74,600. The general partner's
incentive distribution that we paid to our general partner was $69,400 during
the third quarter of 2002 and $361,100 during the third quarter of 2001. All
partnership distributions we declare for the fourth quarter of each year are
declared and paid in the first quarter of the following year.
18
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS - (Unaudited) - (Continued)
Contractual Obligations and Commercial Commitments
We had no commercial commitments at September 30, 2002. The following
table summarizes our contractual obligations at September 30, 2002:
Payments Due By Period
-----------------------------------------------------------------
Contractual cash obligations Less than 1 - 3 4 - 5 After 5
Total 1 Year Years Years Years
------------ ----------- ------------- ----------- -----------
Long-term debt......................... $ 5,604,800 $ - $ 5,604,800 $ - $ -
Capital lease obligations.............. - - - - -
Operating leases....................... 146,500 146,500 - - -
Unconditional purchase obligations..... - - - - -
Other long-term obligations............ - - - - -
------------ ----------- ------------- ----------- -----------
Total contractual cash obligations..... $ 5,751,300 $ 146,500 $ 5,604,800 $ - $ -
============ =========== ============= =========== ===========
Our operating lease commitments are with respect to leases for
compressors with varying expiration dates. These commitments are routine and
were made in the normal course of our business.
Long-Term Debt
We obtained a $10.0 million revolving credit facility in October 2000.
Our principal purpose in obtaining the facility was to fund the expansion of our
existing gathering systems and the acquisitions of other gas gathering systems.
In the nine months ended September 30, 2002 we used $3,515,800 of the facility
to fund capital expenditures for expansions of our existing gathering systems
and compressors. At September 30, 2002, $5,604,800 was outstanding on this
facility, which is due in October 2003.
Capital Expenditures
Our property and equipment was 82% and 77% of our total consolidated
assets at September 30, 2002 and December 31, 2001, respectively. Capital
expenditures, other than the acquisitions of gathering systems, were $3,787,300
and $1,191,800 for the nine months ended September 30, 2002 and 2001,
respectively. These capital expenditures principally consisted of costs relating
to expansion of our existing gathering systems as a result of new wells
connected to our system and compressor upgrades. During calendar 2001 and the
nine months ended September 30, 2002, 333 wells were connected to our gathering
system. Future capital expenditures will be funded by a combination of cash
generated from operations and, and if required, from our existing credit
facility. Our capital expenditures could increase materially if the number of
wells connected to our gathering systems in fiscal 2002 exceeds our current
expectations.
19
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS - (Unaudited) - (Continued)
Critical Accounting Policies and Estimates
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America ("GAAP") requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and liabilities at
the date of the financial statements and the reported amounts of actual revenues
and expenses during the reporting period. Although we believe these estimates
are reasonable, actual results could differ from those estimates. Our
significant accounting policies are summarized in Note 2 to the Consolidated
Financial Statements included in our Annual Report on Form 10-K for the year
ended December 31, 2001. The critical accounting policies that we have
identified are discussed below.
Revenue and Expenses
We routinely make accruals for both revenues and expenses due to the
timing of receiving information from third parties and reconciling our records
with those of third parties. We have determined these estimates using available
market data and valuation methodologies. We believe our estimates for these
items are reasonable, but there is no assurance that actual amounts will not
vary from estimated amounts.
Depreciation and Amortization
We calculate our depreciation and amortization based on estimated
useful lives and salvage values of our assets. When assets are put into service,
we make estimates with respect to useful lives that we believe are reasonable.
However, factors such as competition, regulation or environmental matters could
cause us to change our estimates, thus impacting the future calculation of
depreciation and amortization.
Impairment of Assets
Effective January 1, 2002, we adopted SFAS No. 144, "Accounting for the
Impairment or Disposal of Long-Lived Assets." In accordance with SFAS No. 144,
whenever events or changes in circumstances indicate that the carrying amount of
long-lived assets may not be recoverable, we review our long-lived assets for
impairment, and would recognize an impairment loss when estimated future cash
flows associated with an asset or group of assets are less than the asset
carrying amount.
Our gathering systems are subject to factors which could affect future
cash flows. These factors include competition, regulation, environmental
matters, consolidation in the industry, demand, area market price structures and
continued development drilling in certain areas of the United States. We
continuously monitor these factors and pursue alternative strategies to maintain
or enhance cash flows associated with these assets; however, no assurances can
be given that we can mitigate the effects, if any, on future cash flows related
to any changes in these factors.
20
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS - (Unaudited) - (Continued)
Recently Issued Financial Accounting Standards
Recently the Financial Accounting Standards Boards ("FASB") issued SFAS
No. 143, "Accounting for Asset Retirement Obligations" ("SFAS 143"), and
Statement of Financial Accounting Standards No. 144, "Accounting for the
Impairment or Disposal of Long-Lived Assets" ("SFAS 144"). SFAS 143 establishes
requirements for the accounting for removal costs associated with asset
retirements and SFAS 144 addresses financial accounting and reporting for the
impairment or disposal of long-lived assets. SFAS 143 is effective for fiscal
years beginning after September 15, 2002, with earlier adoption encouraged, and
SFAS 144 is effective for fiscal years beginning after December 15, 2001 and
interim periods within those fiscal years. We are currently assessing the impact
of SFAS 143 on our consolidated financial statements. The adoption of SFAS 144
had no impact on our operations or financial position.
In May 2002, SFAS No. 145, "Rescission of FASB Statements No. 4, 44,
and 64, Amendment of FASB Statement No. 13, and Technical Corrections" ("SFAS
145") was issued. SFAS 145 rescinds the automatic treatment of gains or losses
from extinguishments of debt as extraordinary unless they meet the criteria for
extraordinary items as outlined in APB No. 30, "Reporting the Results of
Operations, Reporting the Effects of Disposal of a Segment of a Business, and
Extraordinary, Unusual and Infrequently Occurring Events and Transactions". SFAS
145 also requires sale-leaseback accounting for certain lease modifications that
have economic effects similar to a sale-leaseback transaction and makes various
technical corrections to existing pronouncements. SFAS 145 is effective for all
financial statements issued by us in 2003. We do not expect the adoption of SFAS
145 to have a material effect on our consolidated financial position or results
of operations.
In June 2002, the FASB issued SFAS No. 146, "Accounting for Costs
Associated with Exit or Disposal Activities" (SFAS 146). SFAS 146 addresses
significant issues relating to the recognition, measurement, and reporting of
costs associated with exit and disposal activities, including restructuring
activities, and nullifies the guidance in Emerging Issues Task Force Issue No.
94-3 ("EITF 94-3"), Liability Recognition for Certain Employee Termination
Benefits and Other Costs to Exit an Activity (including Certain Costs Incurred
in a Restructuring). The provisions of this statement are effective for exit
and disposal activities that are initiated after December 31, 2002, with early
application encouraged. We do not expect SFAS 146 to have a material impact on
our results of operations or its financial position.
21
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
All of our assets and liabilities are denominated in U.S. dollars, and
as a result, we do not have exposure to currency exchange risks.
We do not engage in any interest rate, foreign currency exchange rate
or commodity price-hedging transactions, and as a result, we do not have
exposure to derivatives risk.
Market risk inherent in our debt is the potential change arising from
increases or decreases in interest rates. Interest rate changes usually do not
affect the fair value of our variable debt instrument, but may affect our future
earnings and cash flows.
We have a $10.0 million revolving credit facility to fund the expansion
of our existing gathering systems and the acquisition of other gas gathering
systems. The carrying value of our debt was $5,604,800 and the weighted average
interest rate was 3.27% at September 30, 2002. A hypothetical 10% change in the
average interest rate applicable to this debt would result in a change of
approximately $18,000 in our net income and would not affect the market value of
this debt.
ITEM 4. EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
The Chief Operating Officer and Chief Financial Officer of our general
partner, after evaluating the effectiveness of our "disclosure controls and
procedures" (as defined in the Securities Exchange Act of 1934 Rules 13a-14(c)
and 15d-14(c)) as of a date (the "Evaluation Date") within 90 days before the
filing date of this quarterly report, have concluded that as of the Evaluation
Date, our disclosure controls and procedures were adequate and designed to
ensure that material information relating to us would be made known to them by
others within the Partnership.
Changes in Internal Controls
There were no significant changes in the Partnership's internal
controls or in other factors that could significantly affect these controls
since the date of the Partnership's last evaluation of internal controls.
22
PART II. OTHER INFORMATION
ITEM 6. Exhibits And Reports On Form 8-K
(a) Exhibits:
2.1 (1) Contribution Agreement among Vulcan Intermediary,
L.L.C., New Vulcan Holding, L.L.C., Atlas Pipeline
Partners GP, LLC, Atlas Pipeline Partners, L.P. and
Resource America, Inc.
2.2 (2) First Amendment to Contribution Agreement among
Vulcan Intermediary, L.L.C., New Vulcan Holding,
L.L.C., Atlas Pipeline Partners, GP, Atlas Pipeline
Partners, L.P. and Resource America, Inc.
3.1 (3) First Amended and Restated Agreement of Limited
Partnership
3.2 (3) Certificate of Limited Partnership of Atlas
Pipeline Partners, L.P.
3.3 (3) Amended and Restated Agreement of Limited
Partnership of Atlas Pipeline Operating
Partnership, L.P.
3.4 (3) Certificate of Limited Partnership of Atlas
Pipeline Operating Partnership, L.P.
99.1 Certification Pursuant to 18 U.S.C. Section 1350,
as Adopted Pursuant to Section 906 of The
Sarbanes-Oxley Act of 2002
99.2 Certification Pursuant to 18 U.S.C. Section 1350,
as Adopted Pursuant to Section 906 of The
Sarbanes-Oxley Act of 2002
----------------
(1) Previously filed as an exhibit to the Partnership's
current report on Form 8-K dated January 18, 2002 and
incorporated herein by reference.
(2) Previously filed as an exhibit to the Partnership's
current report on Form 8-K dated May 9, 2002, and
incorporated herein by reference.
(3) Previously filed as an exhibit to the Partnership's
registration statement on Form S-1, Registration No.
333-85193 and incorporated herein by reference.
(b) Reports on Form 8-K:
During the quarter for which this report is being filed, the
Partnership filed a current report on Form 8-K dated July 31,
2002 regarding termination of the agreement to acquire Triton
Coal Company, LLC.
23
SIGNATURES
ATLAS PIPELINE PARTNERS, L.P.
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
By: Atlas Pipeline Partners GP, LLC,
its General Partner
Date: November 13, 2002 By: /s/ Michael L. Staines
----------------------
MICHAEL L. STAINES
President, Chief Operating Officer,
Secretary and Managing Board Member of the
General Partner
Date: November 13, 2002 By: /s/ Nancy J. McGurk
-------------------
NANCY J. McGURK
Chief Accounting Officer of the
General Partner
24
CERTIFICATIONS
I, Michael L. Staines, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Atlas Pipeline
Partners, L.P.;
2. Based on my knowledge, this quarterly 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 quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and
cash flows of the registrant as of, and for, the periods presented in
this quarterly report;
4. The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and
we have:
a) designed such disclosure controls and procedures 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
quarterly report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure
controls and procedures as of a date within 90 days prior to the
filing date of this quarterly report (the "Evaluation Date");
and
c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on
our evaluation as of the Evaluation Date;
5. The registrant's other certifying officer and I have disclosed, based on
our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent function):
a) all significant deficiencies in the design or operation of
internal controls which could adversely affect the registrant's
ability to record, process, summarize and report financial data
and have identified for the registrant's auditors any material
weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's
internal controls; and
6. The registrant's other certifying officer and I have indicated in this
quarterly report whether or not there were significant changes in
internal controls or in other factors that could significantly affect
internal controls subsequent to the date of our most recent evaluation,
including any corrective actions with regard to significant deficiencies
and material weaknesses.
Date: November 13, 2002
/s/ Michael L. Staines
Michael L. Staines
Chief Operating Officer of the General Partner
25
CERTIFICATIONS
I, Nancy J. McGurk, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Atlas Pipeline
Partners, L.P.;
2. Based on my knowledge, this quarterly 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 quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and
cash flows of the registrant as of, and for, the periods presented in
this quarterly report;
4. The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and
we have:
a) designed such disclosure controls and procedures 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
quarterly report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure
controls and procedures as of a date within 90 days prior to the
filing date of this quarterly report (the "Evaluation Date");
and
c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on
our evaluation as of the Evaluation Date;
5. The registrant's other certifying officer and I have disclosed, based on
our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent function):
a) all significant deficiencies in the design or operation of
internal controls which could adversely affect the registrant's
ability to record, process, summarize and report financial data
and have identified for the registrant's auditors any material
weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's
internal controls; and
6. The registrant's other certifying officer and I have indicated in this
quarterly report whether or not there were significant changes in
internal controls or in other factors that could significantly affect
internal controls subsequent to the date of our most recent evaluation,
including any corrective actions with regard to significant deficiencies
and material weaknesses.
Date: November 13, 2002
/s/ Nancy J. McGurk
Nancy J. McGurk
Chief Accounting Officer of the General Partner
26