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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-Q/A
 (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, 2005
 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 CORPORATION
 (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 BoulevardP. O. Box 1396Houston, Texas
    
    77251(Address of principal executive offices)
    
    (Zip Code)
 Registrants telephone number, including area code (713) 215-2000
 None
(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 is an accelerated filer (as defined in
Exchange Act Rule 12b-2). Yes o No þ
 The number of shares of Common Stock, par value $1.00 per share, outstanding as of
April 30, 2005 was 100.
 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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1




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PagePART I. FINANCIAL INFORMATION:Item 1. Financial Statements  (Restated)Condensed Consolidated Statement of Income for the three months
ended March 31, 2005 and 2004.
    
    
    3Condensed Consolidated Balance Sheet as of March 31, 2005 and
December 31, 2004
    
    
    4Condensed Consolidated Statement of Cash Flows for the three
months ended March 31, 2005 and 2004
    
    
    6Notes to Condensed Consolidated Financial Statements
    
    
    7Item 2. Managements Narrative Analysis of the Results of Operations (Restated)
    
    
    26Item 4. Controls and Procedures (Restated)
    
    
    31PART II. OTHER INFORMATION
    
    
    33Item 1. Legal Proceedings.
    
    
    33Item 6. Exhibits
    
    
    33Certification of Principal Executive OfficerCertification of Principal Financial OfficerCertification Pursuant to 18 U.S.C. Section 1350
    2




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PART 1  FINANCIAL INFORMATION
 
 ITEM 1. Financial Statements.
  
 
 Three Months EndedMarch 31,2005
    
    2004Restated
    
    RestatedOperating Revenues:Natural gas sales
    
    $
    120,506
    
    
    $
    124,374Natural gas transportation
    
    
    195,258
    
    
    
    206,926Natural gas storage
    
    
    30,874
    
    
    
    31,560Other
    
    
    2,307
    
    
    
    2,478Total operating revenues
    
    
    348,945
    
    
    
    365,338Operating Costs and Expenses:Cost of natural gas sales
    
    
    120,506
    
    
    
    122,325Cost of natural gas transportation
    
    
    2,021
    
    
    
    7,603Operation and maintenance
    
    
    47,357
    
    
    
    49,397Administrative and general
    
    
    25,908
    
    
    
    30,618Depreciation and amortization
    
    
    48,921
    
    
    
    51,493Taxes  other than income taxes
    
    
    12,247
    
    
    
    11,743Other (income) expense, net
    
    
    221
    
    
    
    (13
    )Total operating costs and expenses
    
    
    257,181
    
    
    
    273,166Operating Income
    
    
    91,764
    
    
    
    92,172Other (Income) and Other Deductions:Interest expense
    
    
    20,120
    
    
    
    22,166Interest income  affiliates
    
    
    (2,662
    )
    
    
    (1,371
    )Allowance for equity and borrowed funds used during construction (AFUDC)
    
    
    (1,691
    )
    
    
    (1,518
    )Equity in earnings of unconsolidated affiliates
    
    
    (1,647
    )
    
    
    (1,676
    )Miscellaneous other (income) deductions, net
    
    
    (818
    )
    
    
    (745
    )Total other (income) and other deductions
    
    
    13,302
    
    
    
    16,856Income before Income Taxes
    
    
    78,462
    
    
    
    75,316Provision for Income Taxes
    
    
    29,542
    
    
    
    28,894Net Income
    
    $
    48,920
    
    
    $
    46,422
  3




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March 31,
    
    December 31,2005
    
    2004Restated
    
    RestatedASSETSCurrent Assets:Cash
    
    $
    190
    
    
    $
    176Receivables:Affiliates
    
    
    2,357
    
    
    
    1,947Advances to affiliates
    
    
    92,740
    
    
    
    302,765Others less allowance of $909 ($778 in 2004)
    
    
    130,710
    
    
    
    113,333Transportation and exchange gas receivables
    
    
    12,575
    
    
    
    5,810Inventories
    
    
    90,418
    
    
    
    105,379Deferred income taxes
    
    
    17,378
    
    
    
    17,592Other
    
    
    20,914
    
    
    
    13,543Total current assets
    
    
    367,282
    
    
    
    560,545Investments, at cost plus equity in undistributed earnings
    
    
    43,224
    
    
    
    43,592Property, Plant and Equipment:Natural gas transmission plant
    
    
    5,892,793
    
    
    
    5,866,977Less-Accumulated depreciation and amortization
    
    
    1,630,207
    
    
    
    1,594,231Total property, plant and equipment, net
    
    
    4,262,586
    
    
    
    4,272,746Other Assets
    
    
    254,319
    
    
    
    249,291Total assets
    
    $
    4,927,411
    
    
    $
    5,126,174
  4




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March 31,
    
    December 31,2005
    
    2004Restated
    
    RestatedLIABILITIES AND STOCKHOLDERS EQUITYCurrent Liabilities:Payables:Affiliates
    
    $
    71,103
    
    
    $
    43,063Other
    
    
    53,096
    
    
    
    63,203Transportation and exchange gas payables
    
    
    15,591
    
    
    
    21,559Accrued liabilities
    
    
    114,904
    
    
    
    155,024Reserve for rate refunds
    
    
    3,912
    
    
    
    8,919Current maturities of long-term debt
    
    
    
    
    
    
    199,991Total current liabilities
    
    
    258,606
    
    
    
    491,759Long-Term Debt
    
    
    1,000,043
    
    
    
    999,858Other Long-Term Liabilities:Deferred income taxes
    
    
    967,699
    
    
    
    965,107Other
    
    
    157,072
    
    
    
    154,714Total other long-term liabilities
    
    
    1,124,771
    
    
    
    1,119,821Contingent liabilities and commitments (Note 3)Common Stockholders Equity:Common stock $1.00 par value:
100 shares authorized, issued and outstanding
    
    
    
    
    
    
    Premium on capital stock and other paid-in capital
    
    
    1,652,430
    
    
    
    1,652,430Retained earnings
    
    
    892,146
    
    
    
    863,226Accumulated other comprehensive loss
    
    
    (585
    )
    
    
    (920
    )Total common stockholders equity
    
    
    2,543,991
    
    
    
    2,514,736Total liabilities and stockholders equity
    
    $
    4,927,411
    
    
    $
    5,126,174
  5




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Three Months EndedMarch 31,2005
    
    2004Restated
    
    RestatedCash flows from operating activities:Net income
    
    $
    48,920
    
    
    $
    46,422Adjustments to reconcile net income to net cash provided
by (used in) operating activities:Depreciation and amortization
    
    
    49,448
    
    
    
    52,017Deferred income taxes
    
    
    2,598
    
    
    
    15,341Allowance for equity funds used during construction (Equity AFUDC)
    
    
    (1,029
    )
    
    
    (1,077
    )Changes in operating assets and liabilities:Receivables
    
    
    (17,787
    )
    
    
    18,831Transportation and exchange gas receivables
    
    
    (6,765
    )
    
    
    90Inventories
    
    
    14,961
    
    
    
    1,155Payables
    
    
    42,511
    
    
    
    (501
    )Transportation and exchange gas payables
    
    
    (5,968
    )
    
    
    2,105Accrued liabilities
    
    
    (47,720
    )
    
    
    (25,469
    )Reserve for rate refunds
    
    
    (5,007
    )
    
    
    (5,228
    )Other, net
    
    
    (8,753
    )
    
    
    4,043Net cash provided by operating activities
    
    
    65,409
    
    
    
    107,729Cash flows from financing activities:Retirement of long-term debt
    
    
    (200,000
    )
    
    
    Debt issue costs
    
    
    (234
    )
    
    
    Change in cash overdrafts
    
    
    (12,126
    )
    
    
    (13,568
    )Common stock dividends paid
    
    
    (20,000
    )
    
    
    Net cash used in financing activities
    
    
    (232,360
    )
    
    
    (13,568
    )Cash flows from investing activities:Property, plant and equipment:Additions, net of equity AFUDC
    
    
    (35,728
    )
    
    
    (24,942
    )Changes in accounts payable
    
    
    (4,852
    )
    
    
    (9,514
    )Advances to affiliates, net
    
    
    210,025
    
    
    
    (59,145
    )Other, net
    
    
    (2,480
    )
    
    
    (557
    )Net cash provided by (used in) investing activities
    
    
    166,965
    
    
    
    (94,158
    )Net increase in cash
    
    
    14
    
    
    
    3Cash at beginning of period
    
    
    176
    
    
    
    300Cash at end of period
    
    $
    190
    
    
    $
    303
  6




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TRANSCONTINENTAL GAS PIPE LINE CORPORATION
 
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 1. BASIS OF PRESENTATION
        7




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Three MonthsEnded March 31,2005
    
    2004Net income, as restated
    
    $
    48,920
    
    
    $
    46,422Equity interest in unrealized
gain/(loss) on interest rate hedge,
net of tax
    
    
    335
    
    
    
    (195
    )Total comprehensive income, as restated
    
    $
    49,255
    
    
    $
    46,227
 Recent accounting standards
   8




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2. RESTATEMENT
        9




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10




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Three Months Ended March 31, 2005(As Reported)
    
    Adjustment
    
    (As Restated)Operating Revenues:Natural gas sales
    
    $
    120,506
    
    
    $
    
    
    
    $
    120,506Natural gas transportation
    
    
    195,258
    
    
    
    
    
    
    
    195,258Natural gas storage
    
    
    30,874
    
    
    
    
    
    
    
    30,874Other
    
    
    2,307
    
    
    
    
    
    
    
    2,307Total operating revenues
    
    
    348,945
    
    
    
    
    
    
    
    348,945Operating Costs and Expenses:Cost of natural gas sales
    
    
    120,506
    
    
    
    
    
    
    
    120,506Cost of natural gas transportation
    
    
    3,296
    
    
    
    (1,275
    )
    
    
    2,021Operation and maintenance
    
    
    47,357
    
    
    
    
    
    
    
    47,357Administrative and general
    
    
    24,962
    
    
    
    946
    
    
    
    25,908Depreciation and amortization
    
    
    48,921
    
    
    
    
    
    
    
    48,921Taxes  other than income taxes
    
    
    10,088
    
    
    
    2,159
    
    
    
    12,247Other (income) expense, net
    
    
    221
    
    
    
    
    
    
    
    221Total operating costs and expenses
    
    
    255,351
    
    
    
    1,830
    
    
    
    257,181Operating Income
    
    
    93,594
    
    
    
    (1,830
    )
    
    
    91,764Other (Income) and Other Deductions:Interest expense
    
    
    20,120
    
    
    
    
    
    
    
    20,120Interest
income  affiliates
    
    
    (2,662
    )
    
    
    
    
    
    
    (2,662
    )Allowance for equity and borrowed funds used during construction (AFUDC)
    
    
    (1,691
    )
    
    
    
    
    
    
    (1,691
    )Equity in earnings of unconsolidated affiliates
    
    
    (1,647
    )
    
    
    
    
    
    
    (1,647
    )Miscellaneous other (income) deductions, net
    
    
    (818
    )
    
    
    
    
    
    
    (818
    )Total other (income) and other deductions
    
    
    13,302
    
    
    
    
    
    
    
    13,302Income before Income Taxes
    
    
    80,292
    
    
    
    (1,830
    )
    
    
    78,462Provision for Income Taxes
    
    
    30,225
    
    
    
    (683
    )
    
    
    29,542Net Income
    
    $
    50,067
    
    
    $
    (1,147
    )
    
    $
    48,920
  11




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Three Months Ended March 31, 2004(As Reported)
    
    Adjustment
    
    (As Restated)Operating Revenues:Natural gas sales
    
    $
    123,874
    
    
    $
    500
    
    
    $
    124,374Natural gas transportation
    
    
    206,926
    
    
    
    
    
    
    
    206,926Natural gas storage
    
    
    31,560
    
    
    
    
    
    
    
    31,560Other
    
    
    2,478
    
    
    
    
    
    
    
    2,478Total operating revenues
    
    
    364,838
    
    
    
    500
    
    
    
    365,338Operating Costs and Expenses:Cost of natural gas sales
    
    
    122,325
    
    
    
    
    
    
    
    122,325Cost of natural gas transportation
    
    
    11,240
    
    
    
    (3,637
    )
    
    
    7,603Operation and maintenance
    
    
    49,397
    
    
    
    
    
    
    
    49,397Administrative and general
    
    
    31,226
    
    
    
    (608
    )
    
    
    30,618Depreciation and amortization
    
    
    47,469
    
    
    
    4,024
    
    
    
    51,493Taxes  other than income taxes
    
    
    12,749
    
    
    
    (1,006
    )
    
    
    11,743Other (income) expense, net
    
    
    (13
    )
    
    
    
    
    
    
    (13
    )Total operating costs and expenses
    
    
    274,393
    
    
    
    (1,227
    )
    
    
    273,166Operating Income
    
    
    90,445
    
    
    
    1,727
    
    
    
    92,172Other (Income) and Other Deductions:Interest expense
    
    
    22,166
    
    
    
    
    
    
    
    22,166Interest
income  affiliates
    
    
    (1,371
    )
    
    
    
    
    
    
    (1,371
    )Allowance for equity and borrowed funds used during construction (AFUDC)
    
    
    (1,518
    )
    
    
    
    
    
    
    (1,518
    )Equity in earnings of unconsolidated affiliates
    
    
    (1,676
    )
    
    
    
    
    
    
    (1,676
    )Miscellaneous other (income) deductions, net
    
    
    (745
    )
    
    
    
    
    
    
    (745
    )Total other (income) and other deductions
    
    
    16,856
    
    
    
    
    
    
    
    16,856Income before Income Taxes
    
    
    73,589
    
    
    
    1,727
    
    
    
    75,316Provision for Income Taxes
    
    
    28,241
    
    
    
    653
    
    
    
    28,894Net Income
    
    $
    45,348
    
    
    $
    1,074
    
    
    $
    46,422
  12




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As of March 31, 2005(As Reported)
    
    Adjustments
    
    (As Restated)ASSETSCurrent Assets:Cash
    
    $
    190
    
    
    $
    
    
    
    $
    190Receivables:Affiliates
    
    
    2,357
    
    
    
    
    
    
    
    2,357Advances to affiliates
    
    
    92,740
    
    
    
    
    
    
    
    92,740Others less allowance of $909 as reported and
restated
    
    
    130,710
    
    
    
    
    
    
    
    130,710Transportation and exchange gas receivables
    
    
    12,575
    
    
    
    
    
    
    
    12,575Inventories
    
    
    90,418
    
    
    
    
    
    
    
    90,418Deferred income taxes
    
    
    20,176
    
    
    
    (2,798
    )
    
    
    17,378Other
    
    
    20,914
    
    
    
    
    
    
    
    20,914Total current assets
    
    
    370,080
    
    
    
    (2,798
    )
    
    
    367,282Investments, at cost plus equity in undistributed earnings
    
    
    43,224
    
    
    
    
    
    
    
    43,224Property, Plant and Equipment:Natural gas transmission plant
    
    
    5,894,643
    
    
    
    (1,850
    )
    
    
    5,892,793Less-Accumulated depreciation and amortization
    
    
    1,630,153
    
    
    
    54
    
    
    
    1,630,207Total property, plant and equipment, net
    
    
    4,264,490
    
    
    
    (1,904
    )
    
    
    4,262,586Other Assets
    
    
    237,175
    
    
    
    17,144
    
    
    
    254,319Total assets
    
    $
    4,914,969
    
    
    $
    12,442
    
    
    $
    4,927,411
  13




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As of March 31, 2005(As Reported)
    
    Adjustments
    
    (As Restated)LIABILITIES AND STOCKHOLDERS EQUITYCurrent Liabilities:Payables:Affiliates
    
    $
    71,103
    
    
    $
    
    
    
    $
    71,103Other
    
    
    56,088
    
    
    
    (2,992
    )
    
    
    53,096Transportation and exchange gas payables
    
    
    18,438
    
    
    
    (2,847
    )
    
    
    15,591Accrued liabilities
    
    
    115,302
    
    
    
    (398
    )
    
    
    114,904Reserve for rate refunds
    
    
    3,912
    
    
    
    
    
    
    
    3,912Total current liabilities
    
    
    264,843
    
    
    
    (6,237
    )
    
    
    258,606Long-Term Debt
    
    
    1,000,043
    
    
    
    
    
    
    
    1,000,043Other Long-Term Liabilities:Deferred income taxes
    
    
    962,118
    
    
    
    5,581
    
    
    
    967,699Other
    
    
    157,072
    
    
    
    
    
    
    
    157,072Total other long-term liabilities
    
    
    1,119,190
    
    
    
    5,581
    
    
    
    1,124,771Contingent liabilities and commitments (Note 3)Common Stockholders Equity:Common stock $1.00 par value:100 shares authorized, issued and outstanding
    
    
    
    
    
    
    
    
    
    
    Premium on capital stock and other paid-in capital
    
    
    1,652,430
    
    
    
    
    
    
    
    1,652,430Retained earnings
    
    
    879,048
    
    
    
    13,098
    
    
    
    892,146Accumulated other comprehensive loss
    
    
    (585
    )
    
    
    
    
    
    
    (585
    )Total common stockholders equity
    
    
    2,530,893
    
    
    
    13,098
    
    
    
    2,543,991Total liabilities and stockholders equity
    
    $
    4,914,969
    
    
    $
    12,442
    
    
    $
    4,927,411
  14




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As of December 31, 2004(As Reported)
    
    Adjustments
    
    (As Restated)ASSETSCurrent Assets:Cash
    
    $
    176
    
    
    $
    
    
    
    $
    176Receivables:Affiliates
    
    
    1,947
    
    
    
    
    
    
    
    1,947Advances to affiliates
    
    
    302,765
    
    
    
    
    
    
    
    302,765Others less allowance of $1,724 as reported, $778
as restated
    
    
    112,387
    
    
    
    946
    
    
    
    113,333Transportation and exchange gas receivables
    
    
    5,810
    
    
    
    
    
    
    
    5,810Inventories
    
    
    105,379
    
    
    
    
    
    
    
    105,379Deferred income taxes
    
    
    20,494
    
    
    
    (2,902
    )
    
    
    17,592Other
    
    
    13,543
    
    
    
    
    
    
    
    13,543Total current assets
    
    
    562,501
    
    
    
    (1,956
    )
    
    
    560,545Investments, at cost plus equity in undistributed earnings
    
    
    43,592
    
    
    
    
    
    
    
    43,592Property, Plant and Equipment:Natural gas transmission plant
    
    
    5,879,814
    
    
    
    (12,837
    )
    
    
    5,866,977Less-Accumulated depreciation and amortization
    
    
    1,594,177
    
    
    
    54
    
    
    
    1,594,231Total property, plant and equipment, net
    
    
    4,285,637
    
    
    
    (12,891
    )
    
    
    4,272,746Other Assets
    
    
    232,147
    
    
    
    17,144
    
    
    
    249,291Total Assets
    
    $
    5,123,877
    
    
    $
    2,297
    
    
    $
    5,126,174
  15




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As of December 31, 2004(As Reported)
    
    Adjustments
    
    (As Restated)LIABILITIES AND STOCKHOLDERS EQUITYCurrent Liabilities:Payables:Affiliates
    
    $
    43,063
    
    
    $
    
    
    
    $
    43,063Other
    
    
    66,195
    
    
    
    (2,992
    )
    
    
    63,203Transportation and exchange gas payables
    
    
    23,131
    
    
    
    (1,572
    )
    
    
    21,559Accrued liabilities
    
    
    164,528
    
    
    
    (9,504
    )
    
    
    155,024Reserve for rate refunds
    
    
    8,919
    
    
    
    
    
    
    
    8,919Current maturities of long-term debt
    
    
    199,991
    
    
    
    
    
    
    
    199,991Total current liabilities
    
    
    505,827
    
    
    
    (14,068
    )
    
    
    491,759Long-Term Debt
    
    
    999,858
    
    
    
    
    
    
    
    999,858Other Long-Term Liabilities:Deferred income taxes
    
    
    962,987
    
    
    
    2,120
    
    
    
    965,107Other
    
    
    154,714
    
    
    
    
    
    
    
    154,714Total other long-term liabilities
    
    
    1,117,701
    
    
    
    2,120
    
    
    
    1,119,821Contingent liabilities and commitments (Note 3)Common Stockholders Equity:Common Stock $1.00 par value:100 shares authorized, issued and outstanding
    
    
    
    
    
    
    
    
    
    
    Premium on capital stock and other paid-in capital
    
    
    1,652,430
    
    
    
    
    
    
    
    1,652,430Retained earnings
    
    
    848,981
    
    
    
    14,245
    
    
    
    863,226Accumulated other comprehensive loss
    
    
    (920
    )
    
    
    
    
    
    
    (920
    )Total common stockholders equity
    
    
    2,500,491
    
    
    
    14,245
    
    
    
    2,514,736Total liabilities and stockholders equity
    
    $
    5,123,877
    
    
    $
    2,297
    
    
    $
    5,126,174
  16




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##### Table of Contents



Three Months Ended March 31, 2005(As Reported)
    
    Adjustment
    
    (As Restated)Cash flows from operating activities:Net income
    
    $
    50,067
    
    
    $
    (1,147
    )
    
    $
    48,920Adjustments to reconcile net income to net cash provided
by (used in) operating activities:Depreciation and amortization
    
    
    49,448
    
    
    
    
    
    
    
    49,448Deferred income taxes
    
    
    2,883
    
    
    
    (285
    )
    
    
    2,598Allowance for equity funds used during construction (Equity AFUDC)
    
    
    (1,029
    )
    
    
    
    
    
    
    (1,029
    )Changes in operating assets and liabilities:Receivables
    
    
    (18,733
    )
    
    
    946
    
    
    
    (17,787
    )Transportation and exchange gas receivables
    
    
    (6,765
    )
    
    
    
    
    
    
    (6,765
    )Inventories
    
    
    14,961
    
    
    
    
    
    
    
    14,961Payables
    
    
    42,511
    
    
    
    
    
    
    
    42,511Transportation and exchange gas payables
    
    
    (4,693
    )
    
    
    (1,275
    )
    
    
    (5,968
    )Accrued liabilities
    
    
    (49,481
    )
    
    
    1,761
    
    
    
    (47,720
    )Reserve for rate refunds
    
    
    (5,007
    )
    
    
    
    
    
    
    (5,007
    )Other, net
    
    
    (8,753
    )
    
    
    
    
    
    
    (8,753
    )Net cash provided by operating activities
    
    
    65,409
    
    
    
    
    
    
    
    65,409Cash flows from financing activities:Retirement of long-term debt
    
    
    (200,000
    )
    
    
    
    
    
    
    (200,000
    )Debt issue costs
    
    
    (234
    )
    
    
    
    
    
    
    (234
    )Change in cash overdrafts
    
    
    (12,126
    )
    
    
    
    
    
    
    (12,126
    )Common stock dividends paid
    
    
    (20,000
    )
    
    
    
    
    
    
    (20,000
    )Net cash used in financing activities
    
    
    (232,360
    )
    
    
    
    
    
    
    (232,360
    )Cash flows from investing activities:Property, plant and equipment:Additions, net of equity AFUDC
    
    
    (35,728
    )
    
    
    
    
    
    
    (35,728
    )Changes in accounts payable
    
    
    (4,852
    )
    
    
    
    
    
    
    (4,852
    )Advances to affiliates, net
    
    
    210,025
    
    
    
    
    
    
    
    210,025Other, net
    
    
    (2,480
    )
    
    
    
    
    
    
    (2,480
    )Net cash provided by investing activities
    
    
    166,965
    
    
    
    
    
    
    
    166,965Net increase in cash
    
    
    14
    
    
    
    
    
    
    
    14Cash at beginning of period
    
    
    176
    
    
    
    
    
    
    
    176Cash at end of period
    
    $
    190
    
    
    $
    
    
    
    $
    190
  17




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##### Table of Contents



Three Months Ended March 31, 2004(As Reported)
    
    Adjustment
    
    (As Restated)Cash flows from operating activities:Net income
    
    $
    45,348
    
    
    $
    1,074
    
    
    $
    46,422Adjustments to reconcile net income to net cash provided
by (used in) operating activities:Depreciation and amortization
    
    
    47,991
    
    
    
    4,026
    
    
    
    52,017Deferred income taxes
    
    
    14,688
    
    
    
    653
    
    
    
    15,341Allowance for equity funds used during construction (Equity AFUDC)
    
    
    (1,077
    )
    
    
    
    
    
    
    (1,077
    )Changes in operating assets and liabilities:
    
    
    
    
    
    
    Receivables
    
    
    18,831
    
    
    
    
    
    
    
    18,831Transportation and exchange gas receivables
    
    
    90
    
    
    
    
    
    
    
    90Inventories
    
    
    1,155
    
    
    
    
    
    
    
    1,155Payables
    
    
    (314
    )
    
    
    (187
    )
    
    
    (501
    )Transportation and exchange gas payables
    
    
    672
    
    
    
    1,433
    
    
    
    2,105Accrued liabilities
    
    
    (25,724
    )
    
    
    255
    
    
    
    (25,469
    )Reserve for rate refunds
    
    
    (5,228
    )
    
    
    
    
    
    
    (5,228
    )Other, net
    
    
    11,434
    
    
    
    (7,391
    )
    
    
    4,043Net cash provided by (used in) operating activities
    
    
    107,866
    
    
    
    (137
    )
    
    
    107,729Cash flows from financing activities:Retirement of long-term debt
    
    
    
    
    
    
    
    
    
    
    Debt issue costs
    
    
    
    
    
    
    
    
    
    
    Change in cash overdrafts
    
    
    (13,568
    )
    
    
    
    
    
    
    (13,568
    )Common stock dividends paid
    
    
    
    
    
    
    
    
    
    
    Net cash used in financing activities
    
    
    (13,568
    )
    
    
    
    
    
    
    (13,568
    )Cash flows from investing activities:Property, plant and equipment:Additions, net of equity AFUDC
    
    
    (25,079
    )
    
    
    137
    
    
    
    (24,942
    )Changes in accounts payable
    
    
    (9,514
    )
    
    
    
    
    
    
    (9,514
    )Advances to affiliates, net
    
    
    (59,145
    )
    
    
    
    
    
    
    (59,145
    )Other, net
    
    
    (557
    )
    
    
    
    
    
    
    (557
    )Net cash provided by (used in) investing activities
    
    
    (94,295
    )
    
    
    137
    
    
    
    (94,158
    )Net increase in cash
    
    
    3
    
    
    
    
    
    
    
    3Cash at beginning of period
    
    
    300
    
    
    
    
    
    
    
    300Cash at end of period
    
    $
    303
    
    
    $
    
    
    
    $
    303
  18




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##### Table of Contents



3. CONTINGENT LIABILITIES AND COMMITMENTS
 Rate and Regulatory Matters
 General rate case (Docket No. RP01-245)
    Gathering facilities spin-down order (Docket Nos. CP96-206-000 and CP96-207-000)
 19




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##### Table of Contents



North Padre Island/Central Texas Systems Spin-down Proceeding (Docket Nos. CP01-32 and
CP01-34)
  20




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##### Table of Contents



North High Island/West Cameron Systems and Central Louisiana System Spin-down Proceedings
  South Texas Pipeline Facilities Abandonment Proceeding
 1999 Fuel Tracker (Docket No. TM99-6-29)
 21




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##### Table of Contents



Other
 Legal Proceedings.
 Royalty claims and litigation
 th
 22




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##### Table of Contents



Environmental Matters
  23




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##### Table of Contents



24




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##### Table of Contents



Safety Matters
 Pipeline Integrity Regulations
 Summary
  Other Commitments
 Commitments for construction
 4. DEBT AND FINANCING ARRANGEMENTS
 Revolving Credit and Letter of Credit Facilities
  Retirements
  25




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##### Table of Contents



5. STOCK-BASED COMPENSATION
  Three monthsEnded March 31,2005
    
    2004(Thousands of Dollars)Net income, as restated
    
    $
    48,920
    
    
    $
    46,422Add: Stock-based employee
compensation included in the
Condensed Consolidated Statement of
Income, net of related tax effects
    
    
    97
    
    
    
    72Deduct: Stock-based employee
compensation expense determined
under fair value based method for all
awards, net of related tax effects
    
    
    (400
    )
    
    
    (650
    )Pro forma net income, as restated
    
    $
    48,617
    
    
    $
    45,844
  
 ITEM 2. Managements Narrative Analysis of Results of Operations.
 General
  Restatement of Financial Results
  26




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##### Table of Contents



RESULTS OF OPERATIONS
 Operating Income and Net Income
  Transportation Revenues
   27




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##### Table of Contents



Three monthsEnded March 31,2005
    
    2004Transco System Deliveries (TBtu)Market-area deliveries:Long-haul transportation
    
    
    209.8
    
    
    
    213.9Market-area transportation
    
    
    267.5
    
    
    
    267.6Total market-area deliveries
    
    
    477.3
    
    
    
    481.5Production-area transportation
    
    
    60.4
    
    
    
    67.5Total system deliveries
    
    
    537.7
    
    
    
    549.0Average Daily Transportation Volumes (Tbtu)
    
    
    6.0
    
    
    
    6.0Average Daily Firm Reserved Capacity (Tbtu)
    
    
    6.9
    
    
    
    6.8
  Sales Revenues
    28




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##### Table of Contents



Three monthsEnded March 31,2005
    
    2004Gas Sales Volumes (TBtu)Long-term sales
    
    
    7.8
    
    
    
    11.5Short-term sales
    
    
    2.7
    
    
    
    2.2Total gas sales
    
    
    10.5
    
    
    
    13.7
 Storage Revenues
  Other Revenues
  Operating Costs and Expenses
  Other Income and Other Deductions
  29




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##### Table of Contents



Capital Expenditures
  Three monthsEnded March 31,2005
    
    2004(In Millions)Capital Expenditures, as restatedMarket-area projects
    
    $
    2.6
    
    
    $
    9.6Supply-area projects
    
    
    3.7
    
    
    
    4.5Maintenance of existing facilities and other projects
    
    
    34.3
    
    
    
    20.4Total capital expenditures, as restated
    
    $
    40.6
    
    
    $
    34.5
  Central New Jersey Expansion Project
 Leidy to Long Island Expansion Project
 30




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##### Table of Contents



ITEM 4. Controls and Procedures.
 Evaluation of Disclosure Controls and Procedures
     31




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##### Table of Contents



Remediation of Material Weakness in Internal Control Over Financial Reporting
 Accounting for Net Periodic Pension Expense
  
    
    The implementation of a data valuation team that validates participant data
    
    Changes in the system used to provide participant data
    
    Formal review meetings between our third-party plan administrator and our third-party
actuary to confirm data assumptions and content
 Changes in Internal Control over Financial Reporting
  32




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
    
    
    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.
    
    
    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.
  
    
    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.
 33




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TRANSCONTINENTAL GAS PIPE LINE
CORPORATION (Registrant)Dated: August 15, 2005
    
    By /s/ Jeffrey P. HeinrichsJeffrey P. HeinrichsController
(Principal Accounting Officer)
 34