UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported): June 10, 2004
ATLAS PIPELINE PARTNERS, L.P.
(Exact name of registrant as specified in its charter)
Delaware 1-14998 23-3011077
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(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) File Number) Identification No.)
311 Rouser Road, Moon Township, Pennsylvania 15108
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(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code: (412) 262-2830
Item 5. Other Events and Required FD Disclosure.
Spectrum Acquisition. As previously announced, Atlas Pipeline Partners,
L.P. entered into an agreement on June 10, 2004 to acquire Spectrum Field
Services, Inc., whose principal assets include 1,900 miles of natural gas
pipelines and a natural gas processing facility in Velma, Oklahoma. The total
consideration will be approximately $140 million, including the payment of
anticipated taxes due as a result of the transaction. The acquisition agreement
is attached as Exhibit 2.1 to this report. Atlas Pipeline Partners expects to
complete the acquisition in July 2004, subject to receipt of various approvals
and other customary closing conditions. Also as previously announced, Atlas
Pipeline Partners currently expects, based upon its evaluation of Spectrum's
historical operating results and other information available to it, that the
Spectrum acquisition will result in approximately 17% accretion to cash
available for distribution. The ultimate level of accretion to cash available
for distribution, if any, will depend upon actual operating results following
closing of the acquisition.
Offering of Common Units. Atlas Pipeline Partners is filing a
preliminary prospectus supplement to its prospectus dated April 5, 2004, which
forms part of its registration statement on Form S-3 (SEC Registration No.
333-113523), in order to offer 2,100,000 common units. The underwriters also
have an option to purchase up to an additional 315,000 common units to cover
over-allotments, if any. In connection with the offering, Atlas Pipeline
Partners is filing the financial statements of Spectrum Field Services and the
pro forma financial statements of Atlas Pipeline Partners described in this
report, and the consent of independent registered public accounting firm
attached as Exhibit 23.1 to this report.
Second Quarter Earnings. Atlas Pipeline Partners currently expects to
report revenues, earnings before interest, taxes, depreciation and amortization
("EBITDA"), net income and net income per limited partner unit - basic and
diluted to be $4.5 million, $3.4 million, $2.8 million and $.47, respectively
for the second fiscal quarter ended June 30, 2004. Results for the second
quarter are still being finalized and Atlas Pipeline Partners anticipates
releasing final second quarter earnings in early August 2004. Atlas Pipeline
Partners' actual results could vary from those currently expected.
Atlas Pipeline Partners defines EBITDA as earnings before interest,
taxes, depreciation, depletion and amortization. EBITDA is not a measure of
performance calculated in accordance with generally accepted accounting
principles in the United States, or GAAP. Although not prescribed under GAAP,
Atlas Pipeline Partners believes the presentation of EBITDA is relevant and
useful because it helps its investors to understand its operating performance
and makes it easier to compare its results with other companies that have
different financing and capital structures or tax rates. EBITDA should not be
considered in isolation of, or as a substitute for, net income as an indicator
of operating performance or cash flows from operating activities or as a measure
of liquidity. EBITDA, as Atlas Pipeline Partners calculates it, may not be
comparable to EBITDA measures reported by other companies. In addition, EBITDA
does not represent funds available for discretionary use. The following
reconciles EBITDA to net income for the second fiscal quarter ended June 30,
2004:
(in thousands)
Net income......................................... $ 2,773
Plus:
Interest expense................................ 64
Depreciation and amortization................... 592
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EBITDA........................................ $ 3,429
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Hedging. Atlas Pipeline Partners has been advised by Atlas America,
Inc. that Atlas America has hedged 57% of its anticipated production in the
remainder of 2004 at a price of $6.05 per mcf, has hedged 41% of its anticipated
production in 2005 at a price of $6.61 per mcf and has hedged 36% of its
anticipated production in the first quarter of 2006 at a price of $6.69 per mcf.
Hedging by Atlas America affects Atlas Pipeline Partners in that Atlas Pipeline
Partners receives transportation fees from Atlas America generally based upon a
percentage of the selling price received by Atlas America, and Atlas America
provides substantially all of the natural gas Atlas Pipeline Partners
transports. All of Atlas America's hedges are physical hedges.
Atlas Pipeline Partners also has been advised by Spectrum Field
Services that Spectrum has hedged 30% of its share of anticipated residue
natural gas production in the remainder of 2004 at a price of $5.35 per mcf, 70%
of its share of anticipated residue natural gas production in 2005 at a price of
$6.16 per mcf, and 70% of its share of anticipated natural gas liquids
production at a price of $0.54 per gallon.
Item 7. Financial Statements and Exhibits
(a) Financial Statements
The balance sheets of Spectrum Field Services, Inc. as of
December 31, 2003 and 2002, the related statements of
operations, comprehensive income (loss), changes in
shareholders' equity and cash flows for each of the three
years in the period ended December 31, 2003 and the related
notes, together with the report of the independent registered
public accounting firm, and the unaudited inteim balance sheet
as of March 31, 2004, the unaudited interim statements of
operations and accumulated deficit, comprehensive income
(loss), changes in shareholders' equity and cash flows for the
three months ended March 31, 2004 and 2003 and the related
notes are filed as Exhibit 99.1 of this report.
(b) Pro Forma Financial Information
The unaudited pro forma balance sheet of Atlas Pipeline
Partners, L.P. as of March 31, 2004, statement of operations
for the year ended December 31, 2003 and the three months
ended March 31, 2004 and the related notes are filed as
Exhibit 99.2 of this report.
(c) Exhibits
2.1 Securities Purchase Agreement dated June 10, 2004.
23.1 Consent of Grant Thornton LLP (Atlas Pipeline
Partners)
23.2 Consent of Grant Thornton LLP (Spectrum Field
Services)
99.1 Financial statements of Spectrum Field Services, Inc.
99.2 Unaudited Pro Forma Financial Statements of Atlas
Pipeline Partners, L.P.
Item 12. Results of Operations and Financial Condition.
Atlas Pipeline Partners has provided earnings information for the
second fiscal quarter of 2004 in Item 5 of this Form 8-K. Such information is to
be considered filed under the Securities Exchange Act of 1934, as amended.
SIGNATURES
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 hereunto duly authorized.
ATLAS PIPELINE PARTNERS, L.P.
By: Atlas Pipeline Partners GP, LLC
Its General Partner
Date: July 12, 2004
By: /s/ Michael L. Staines
President and Chief Operating Officer