UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-Q
 (Mark One)
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended March 31, 2011
 OR
 o
    
    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 1-7584
 TRANSCONTINENTAL GAS PIPE LINE COMPANY, LLC
 (Exact Name of Registrant as Specified in Its Charter)
 Delaware
    
    74-1079400(State or Other Jurisdiction of
    
    (I.R.S. EmployerIncorporation or Organization)
    
    Identification No.)2800 Post Oak BoulevardHouston, Texas
    
    77056(Address of Principal Executive Offices)
    
    (Zip Code)
 (713-215-2000)
Registrants Telephone Number, Including Area Code
 No Change
(Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report)
 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 þ No o
 Indicate by check mark whether the registrant has submitted electronically and posted on
its corporate Web site, if any, every Interactive Data File required to be submitted and posted
pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months
(or for such shorter period that the registrant was required to submit and post such files).
Yes o No o
 Indicate by check mark whether the registrant is a large accelerated filer, an accelerated
filer, a non-accelerated filer, or a smaller reporting company. See the definitions of large
accelerated filer, accelerated filer, and smaller reporting company in Rule 12b-2 of the
Exchange Act. (Check one):
 Large accelerated filer o
Accelerated filer o
Non-accelerated filer þ(Do not check if a smaller reporting company)
Smaller reporting company o
 Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2
of the Exchange Act). Yes o No þ
 REGISTRANT MEETS THE CONDITIONS SET FORTH IN GENERAL INSTRUCTIONS H (1)(a) AND (b) OF FORM
10-Q AND IS THEREFORE FILING THIS FORM 10-Q WITH THE REDUCED DISCLOSURE FORMAT.




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PagePART I. FINANCIAL INFORMATION:Item 1. Financial Statements Condensed Consolidated Statement of Income for the three months ended
March 31, 2011 and 2010
    
    
    5Condensed Consolidated Balance Sheet as of March 31, 2011 and December
31, 2010
    
    
    6Condensed Consolidated Statement of Cash Flows for the three months ended
March 31, 2011 and 2010
    
    
    8Notes to Condensed Consolidated Financial Statements
    
    
    9Item 2. Managements Discussion and Analysis of Financial Condition and
Results of Operations
    
    
    16Item 4. Control and Procedures
    
    
    20PART II. OTHER INFORMATION
    
    
    21Item 1. Legal Proceedings
    
    
    21Item 1A. Risk Factors
    
    
    21Item 6. Exhibits
    
    
    22
 Forward Looking Statements
   2




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
    
    Amounts and nature of future capital expenditures;
    
    Expansion and growth of our business and operations;
    
    Financial condition and liquidity;
    
    Business strategy;
    
    Cash flow from operations or results of operations;
    
    Rate case filings; and
    
    Natural gas prices and demand.
  
    
    Availability of supplies (including the uncertainties inherent in assessing and
estimating future natural gas reserves), market demand, volatility of prices, and the
availability and cost of capital;
    
    Inflation, interest rates and general economic conditions (including future disruptions
and volatility in the global credit markets and the impact of these events on our customers
and suppliers);
    
    The strength and financial resources of our competitors;
    
    Development of alternative energy sources;
    
    The impact of operational and development hazards;
    
    Cost of, changes in, or the results of laws, government regulations (including proposed
climate change legislation), environmental liabilities, litigation and rate proceedings;
    
    Our allocated costs for defined benefit pension plans and other postretirement benefit
plans sponsored by our affiliates;
    
    Changes in maintenance and construction costs;
    
    Changes in the current geopolitical situation;
 3




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
    
    Our exposure to the credit risk of our customers;
    
    Risks related to strategy and financing, including restrictions stemming from our debt
agreements, future changes in our credit rating and the availability and cost of credit;
    
    Risks associated with future weather conditions;
    
    Acts of terrorism; and
    
    Additional risks described in our filings with the Securities and Exchange Commission
(SEC).
    4




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PART 1   FINANCIAL INFORMATION.
 
 ITEM 1. Financial Statements.
  
 
 Three Months EndedMarch 31,2011
    
    
    2010Operating Revenues:Natural gas sales
    
    $
    27,042
    
    
    $
    27,722Natural gas transportation
    
    
    240,376
    
    
    
    234,315Natural gas storage
    
    
    36,820
    
    
    
    37,188Other
    
    
    1,118
    
    
    
    1,824Total operating revenues
    
    
    305,356
    
    
    
    301,049Operating Costs and Expenses:Cost of natural gas sales
    
    
    27,042
    
    
    
    27,722Cost of natural gas transportation
    
    
    11,364
    
    
    
    8,529Operation and maintenance
    
    
    59,435
    
    
    
    58,852Administrative and general
    
    
    42,786
    
    
    
    35,116Depreciation and amortization
    
    
    64,243
    
    
    
    62,494Taxes  other than income taxes
    
    
    13,535
    
    
    
    12,508Other (income) expense, net
    
    
    (9,850
    )
    
    
    1,193Total operating costs and expenses
    
    
    208,555
    
    
    
    206,414Operating Income
    
    
    96,801
    
    
    
    94,635Other (Income) and Other Deductions:Interest expense
    
    
    23,822
    
    
    
    23,547Interest income  affiliates
    
    
    (10
    )
    
    
    (2,162
    )Allowance
for equity and borrowed funds used during construction (AFUDC)
    
    
    (5,337
    )
    
    
    (2,568
    )Equity in earnings of unconsolidated affiliates
    
    
    (1,318
    )
    
    
    (1,541
    )Miscellaneous other (income) deductions, net
    
    
    (2,145
    )
    
    
    1,236Total other (income) and other deductions
    
    
    15,012
    
    
    
    18,512Income before Income Taxes
    
    
    81,789
    
    
    
    76,123Provision for Income Taxes
    
    
    103
    
    
    
    129Net Income
    
    $
    81,686
    
    
    $
    75,994
  5




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March 31,
    
    
    December 31,2011
    
    
    2010ASSETSCurrent Assets:Cash
    
    $
    107
    
    
    $
    148Receivables:Affiliates
    
    
    2,654
    
    
    
    4,921Advances to affiliates
    
    
    180,898
    
    
    
    108,838Others, less allowance of $406 ($406 in 2010)
    
    
    102,851
    
    
    
    110,434Transportation and exchange gas receivables
    
    
    5,892
    
    
    
    2,417Inventories
    
    
    80,592
    
    
    
    85,425Regulatory assets
    
    
    45,343
    
    
    
    48,444Other
    
    
    6,330
    
    
    
    13,132Total current assets
    
    
    424,667
    
    
    
    373,759Investments, at cost plus equity in undistributed earnings
    
    
    47,927
    
    
    
    43,753Property, Plant and Equipment:Natural gas transmission plant
    
    
    7,769,754
    
    
    
    7,674,366Less-Accumulated depreciation and amortization
    
    
    2,707,123
    
    
    
    2,650,133Total property, plant and equipment, net
    
    
    5,062,631
    
    
    
    5,024,233Other Assets:Regulatory assets
    
    
    199,019
    
    
    
    198,921Other
    
    
    57,195
    
    
    
    59,223Total other assets
    
    
    256,214
    
    
    
    258,144Total assets
    
    $
    5,791,439
    
    
    $
    5,699,889
  6




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March 31,
    
    
    December 31,2011
    
    
    2010LIABILITIES AND OWNERS EQUITYCurrent Liabilities:Payables:Affiliates
    
    $
    24,872
    
    
    $
    18,769Other
    
    
    97,821
    
    
    
    92,647Transportation and exchange gas payables
    
    
    1,585
    
    
    
    1,646Accrued liabilities
    
    
    122,401
    
    
    
    119,125Current maturities of long-term debt
    
    
    299,959
    
    
    
    299,932Total current liabilities
    
    
    546,638
    
    
    
    532,119Long-Term Debt
    
    
    980,302
    
    
    
    980,018Other Long-Term Liabilities:Asset retirement obligations
    
    
    220,516
    
    
    
    220,644Regulatory liabilities
    
    
    115,958
    
    
    
    115,563Other
    
    
    6,548
    
    
    
    6,785Total other long-term liabilities
    
    
    343,022
    
    
    
    342,992Contingent liabilities and commitments (Note 2)Owners Equity:Members capital
    
    
    1,767,434
    
    
    
    1,727,434Retained earnings
    
    
    2,153,839
    
    
    
    2,117,153Accumulated other comprehensive income
    
    
    204
    
    
    
    173Total owners equity
    
    
    3,921,477
    
    
    
    3,844,760Total liabilities and owners equity
    
    $
    5,791,439
    
    
    $
    5,699,889
  7




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Three Months Ended March 31,2011
    
    
    2010Cash flows from operating activities:Net income
    
    $
    81,686
    
    
    $
    75,994Adjustments to reconcile net income to net cash provided by
(used in) operating activitiesDepreciation and amortization
    
    
    64,321
    
    
    
    62,323Allowance for equity funds used during construction (Equity
AFUDC)
    
    
    (3,704
    )
    
    
    (1,718
    )Changes in operating assets and liabilities:Receivables  affiliates
    
    
    2,267
    
    
    
    4,229 others
    
    
    7,583
    
    
    
    17,523Transportation and exchange gas receivables
    
    
    (3,475
    )
    
    
    (6,149
    )Inventories
    
    
    4,976
    
    
    
    (16,316
    )Payables  affiliates
    
    
    6,103
    
    
    
    (22,867
    ) others
    
    
    7,527
    
    
    
    4,997Transportation and exchange gas payables
    
    
    (61
    )
    
    
    3,050Accrued liabilities
    
    
    5,869
    
    
    
    (10,646
    )Other, net
    
    
    3,779
    
    
    
    12,392Net cash provided by operating activities
    
    
    176,871
    
    
    
    122,812Cash flows from financing activities:Cash distributions
    
    
    (45,000
    )
    
    
    (203,791
    )Cash contribution from parent
    
    
    40,000
    
    
    
    Other, net
    
    
    (6,032
    )
    
    
    (6,022
    )Net cash used in financing activities
    
    
    (11,032
    )
    
    
    (209,813
    )Cash flows from investing activities:Property, plant and equipment additions, net of equity AFUDC*
    
    
    (84,626
    )
    
    
    (56,189
    )Disposal of property, plant and equipment, net
    
    
    (8,508
    )
    
    
    5,401Advances to affiliates, net
    
    
    (72,060
    )
    
    
    140,067Purchase of long-term investments
    
    
    (5,914
    )
    
    
    Purchase of ARO trust investments
    
    
    (4,576
    )
    
    
    (5,696
    )Proceeds from sale of ARO trust investments
    
    
    7,841
    
    
    
    3,391Other, net
    
    
    1,963
    
    
    
    105Net cash provided by (used in) investing activities
    
    
    (165,880
    )
    
    
    87,079Net increase (decrease) in cash
    
    
    (41
    )
    
    
    78Cash at beginning of period
    
    
    148
    
    
    
    108Cash at end of period
    
    $
    107
    
    
    $
    186* Increases to property, plant and equipment
    
    $
    (85,712
    )
    
    $
    (38,377
    )Changes in related accounts payable and accrued liabilities
    
    
    1,086
    
    
    
    (17,812
    )Property, plant and equipment additions, net of equity AFUDC
    
    $
    (84,626
    )
    
    $
    (56,189
    )
  8




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TRANSCONTINENTAL GAS PIPE LINE COMPANY, LLC
 
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 1. BASIS OF PRESENTATION.
  General.
    9




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2. CONTINGENT LIABILITIES AND COMMITMENTS.
 Rate Matters
   Environmental Matters
   10




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2 2
 11




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2 2
   Safety Matters
 Pipeline Integrity Regulations
 Appomattox, Virginia Pipeline Rupture
 12




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Other Matters
  Summary
  Other Commitments
 Commitments for construction and gas purchases
 3. DEBT AND FINANCING ARRANGEMENT.
 Revolving Credit and Letter of Credit Facility.
  4. FAIR VALUE MEASUREMENTS.
   13




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March 31,
    
    
    December 31,2011
    
    
    2010Money market funds
    
    $
    2.5
    
    
    $
    1.6U.S. equity funds
    
    
    15.3
    
    
    
    17.4International equity funds
    
    
    6.3
    
    
    
    6.0Municipal bond funds
    
    
    14.1
    
    
    
    15.4Total
    
    $
    38.2
    
    
    $
    40.4
  5. FINANCIAL INSTRUMENTS.
 Fair value of financial instruments.
  March 31, 2011
    
    
    December 31, 2010Carrying
    
    
    Fair
    
    
    Carrying
    
    
    FairAmount
    
    
    Value
    
    
    Amount
    
    
    ValueFinancial assets:Cash
    
    $
    107
    
    
    $
    107
    
    
    $
    148
    
    
    $
    148Short-term financial assets
    
    
    181,045
    
    
    
    181,045
    
    
    
    108,985
    
    
    
    108,985ARO Trust Investments
    
    
    38,158
    
    
    
    38,158
    
    
    
    40,413
    
    
    
    40,413Long-term financial assets
    
    
    106
    
    
    
    106
    
    
    
    144
    
    
    
    144Financial liabilities:Long-term debt, including current portion
    
    
    1,280,261
    
    
    
    1,407,776
    
    
    
    1,279,950
    
    
    
    1,432,866
  6. TRANSACTIONS WITH AFFILIATES.
  14




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15




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7. COMPREHENSIVE INCOME.
  Three MonthsEnded March 31,2011
    
    
    2010Net income
    
    $
    81,686
    
    
    $
    75,994Equity interest in unrealized gain/(loss) on
interest rate hedge
    
    
    31
    
    
    
    23Total comprehensive income
    
    $
    81,717
    
    
    $
    76,017
 
 ITEM 2. Managements Discussion and Analysis of Financial Condition and Results of Operations.
 General.
  RESULTS OF OPERATIONS.
 Operating Income and Net Income.
 Operating income Net income Operating income Natural gas transportation Operating Costs and Expenses. Net income Operating income Other (Income) and Other Deductions.
 Transportation Revenues.
 Operating revenues Natural gas transportation
 16




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Sales Revenues.
 Operating revenues Natural gas sales
 Operating Costs and Expenses.
 Cost of natural gas sales,
 
    
    A $2.9 million (34.1 percent) increase in Cost of natural gas transportationprimarily
due to higher electric power costs. Electric power costs are recovered from customers
through transportation rates resulting in no net impact on our operating income or results
of operations;
    
    A $7.7 million (21.9 percent) increase in Administrative and generalcosts primarily
resulting from an increase in employee related benefit costs, and;
    
    A $1.7 million (2.7 percent) increase in Depreciation and amortizationcosts primarily
resulting from an increase in the depreciation base due to additional plant placed in
service in 2010.
    
    Partially offset by an $11.1 million favorable increase (925.0 percent) in Other
(income) expense, netprimarily due to a $10.1 million reversal of project feasibility
costs from expense to capital associated with the Northeast Supply Link Expansion Project
upon determining that the project was probable of development. These
costs will be included in the capital costs of the project, which we
believe are probable of recovery through the project rates.
 Other (Income) and Other Deductions.
 Other (income) and other deductions Allowance for equity and borrowed funds used during construction (AFUDC) Miscellaneous other (income)
deductions, net Interest income 
affiliates
 17




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Eminence Storage Field Leak.
    Capital Expenditures.
  Mobile Bay South II Expansion Project
  85 North Expansion Project
  18




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Pascagoula Expansion Project
  Mid-South Expansion Project
  Mid-Atlantic Connector Project
  Rockaway Delivery Lateral Project
  Northeast Connector Project
  Northeast Supply Link Project
  19




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ITEM 4. Controls and Procedures.
  Evaluation of Disclosure Controls and Procedures
  First Quarter 2011 Changes in Internal Controls
  20




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PART II  OTHER INFORMATION.
 
 ITEM 1.
    
    LEGAL PROCEEDINGS.
  
   Our costs of testing, maintaining or repairing our facilities may exceed our expectations and the
FERC or competition in our markets may not allow us to recover such costs in the rates we charge
for our services.
  21




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ITEM 6. EXHIBITS.
  Exhibit Number
    
    Description2.1
    
    Certificate of Conversion dated December 22, 2008 and
effective December 31, 2008. (filed on February 24,
2011 as Exhibit 2.1 to our report Form 10-K and
incorporated herein by reference).3.1
    
    Certificate of Formation dated December 22, 2008 and
effective December 31, 2008. (filed on February 24, 2011
as Exhibit 3.1 to our report Form 10-K and incorporated
herein by reference).3.2
    
    Amended and Restated Operating Agreement of
Transcontinental Gas Pipe Line Company, LLC dated February
17, 2010. (filed on October 28, 2010 as Exhibit 3.2 to our
report Form 10-Q and incorporated herein by reference).31.1*
    
    Certification of Principal Executive Officer pursuant to
Rules 13a-14(a) and 15d-14(a) promulgated under the
Securities Exchange Act of 1934, as amended, and Item
601(b)(31) of Regulation S-K, as adopted pursuant to
Section 302 of The Sarbanes-Oxley Act of 2002.31.2*
    
    Certification of Principal Financial Officer pursuant to
Rules 13a-14(a) and 15d-14(a) promulgated under the
Securities Exchange Act of 1934, as amended, and Item
601(b)(31) of Regulation S-K, as adopted pursuant to
Section 302 of The Sarbanes-Oxley Act of 2002.32 **
    
    Certification of Principal Executive Officer and Principal
Financial Officer pursuant to 18 U.S.C. Section 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002.
 
 *
    
    Filed herewith.**
    
    Furnished herewith. 22




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TRANSCONTINENTAL GAS PIPE LINE COMPANY, LLC
(Registrant)Dated: May 5, 2011
    By:
    /s/ Jeffrey P. HeinrichsJeffrey P. HeinrichsController and Assistant Treasurer
(Principal Accounting Officer) 23




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EXHIBIT INDEX.
 Exhibit Number
    
    Description2.1
    
    Certificate of Conversion dated December 22, 2008 and
effective December 31, 2008. (filed on February 24,
2011 as Exhibit 2.1 to our report Form 10-K and
incorporated herein by reference).3.1
    
    Certificate of Formation dated December 22, 2008 and
effective December 31, 2008. (filed on February 24, 2011
as Exhibit 3.1 to our report Form 10-K and incorporated
herein by reference).3.2
    
    Amended and Restated Operating Agreement of
Transcontinental Gas Pipe Line Company, LLC dated February
17, 2010. (filed on October 28, 2010 as Exhibit 3.2 to our
report Form 10-Q and incorporated herein by reference).31.1*
    
    Certification of Principal Executive Officer pursuant to
Rules 13a-14(a) and 15d-14(a) promulgated under the
Securities Exchange Act of 1934, as amended, and Item
601(b)(31) of Regulation S-K, as adopted pursuant to
Section 302 of The Sarbanes-Oxley Act of 2002.31.2*
    
    Certification of Principal Financial Officer pursuant to
Rules 13a-14(a) and 15d-14(a) promulgated under the
Securities Exchange Act of 1934, as amended, and Item
601(b)(31) of Regulation S-K, as adopted pursuant to
Section 302 of The Sarbanes-Oxley Act of 2002.32 **
    
    Certification of Principal Executive Officer and Principal
Financial Officer pursuant to 18 U.S.C. Section 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002.
 
 *
    
    Filed herewith.**
    
    Furnished herewith. 24