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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 June 30, 2007
 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 1-4874
 
 Tennessee Gas Pipeline Company
  Delaware
(State or Other Jurisdiction 
of Incorporation or Organization)
    
    74-1056569
(I.R.S. Employer
Identification No.)El Paso Building 
1001 Louisiana Street 
Houston, Texas
(Address of Principal Executive Offices)
    
    77002
(Zip Code)
 Telephone Number: (713) 420-2600
 þ o
  Large accelerated filer o
    
    Accelerated filer o
    
    Non-accelerated filer
þ
 o þ
   TENNESSEE GAS PIPELINE COMPANY MEETS THE CONDITIONS OF GENERAL INSTRUCTION H(1)(a) AND (b) TO
FORM 10-Q AND IS THEREFORE FILING THIS REPORT WITH A REDUCED DISCLOSURE FORMAT AS PERMITTED BY SUCH
INSTRUCTION.




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##### 



TENNESSEE GAS PIPELINE COMPANY
 TABLE OF CONTENTS
 Caption
    
    PagePART I  Financial InformationItem 1.
    
    Financial  Statements
    
    1Item 2.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    9Item 3.
    
    Quantitative and Qualitative Disclosures About Market Risk
    
    *Item 4T.
    
    Controls and Procedures
    
    11PART II  Other InformationItem 1.
    
    Legal Proceedings
    
    12Item 1A.
    
    Risk Factors
    
    12Item 2.
    
    Unregistered Sales of Equity Securities and Use of Proceeds
    
    *Item 3.
    
    Defaults Upon Senior Securities
    
    *Item 4.
    
    Submission of Matters to a Vote of Security Holders
    
    *Item 5.
    
    Other Information
    
    12Item 6.
    
    Exhibits
    
    12Signatures
    
    13Certification of Principal Executive Officer Pursuant to Section 302Certification of Chief Financial Officer Pursuant to Section 302Certification of Principal Executive Officer Pursuant to Section 906Certification of Chief Financial Officer Pursuant to Section 906
  
 *
    
    We have not included a response to this item in this document since no
response is required pursuant to the reduced disclosure format permitted by
General Instruction H to Form 10-Q.Below is a list of terms that are common to our industry and used throughout this document:/d
    
    = per day
    BBtu =
billion British thermal unitsBcf
    
    = billion cubic feetWhen we refer to cubic feet measurements, all measurements are at a pressure
of 14.73 pounds per square inch.When we refer to us, we, our, or ours, we are describing Tennessee
Gas Pipeline Company and/or our subsidiaries. i




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PART I  FINANCIAL INFORMATION
 
 Item 1. Financial Statements
 TENNESSEE GAS PIPELINE COMPANY
 CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In millions)
(Unaudited)
 Quarter Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2007
    
    
    2006
    
    
    2007
    
    
    2006Operating revenues
    
    $
    220
    
    
    $
    194
    
    
    $
    446
    
    
    $
    424Operating expensesOperation and maintenance
    
    
    76
    
    
    
    78
    
    
    
    152
    
    
    
    151Depreciation and amortization
    
    
    42
    
    
    
    41
    
    
    
    84
    
    
    
    82Gain on sale of asset
    
    
    
    
    
    
    
    
    
    
    (7
    )
    
    
    Taxes, other than income taxes
    
    
    17
    
    
    
    13
    
    
    
    31
    
    
    
    28135
    
    
    
    132
    
    
    
    260
    
    
    
    261Operating income
    
    
    85
    
    
    
    62
    
    
    
    186
    
    
    
    163Earnings from unconsolidated affiliate
    
    
    4
    
    
    
    3
    
    
    
    8
    
    
    
    6Other income, net
    
    
    4
    
    
    
    3
    
    
    
    9
    
    
    
    6Interest and debt expense
    
    
    (33
    )
    
    
    (32
    )
    
    
    (65
    )
    
    
    (65
    )Affiliated interest income, net
    
    
    11
    
    
    
    11
    
    
    
    22
    
    
    
    21Income before income taxes
    
    
    71
    
    
    
    47
    
    
    
    160
    
    
    
    131Income taxes
    
    
    28
    
    
    
    18
    
    
    
    62
    
    
    
    50Net income
    
    $
    43
    
    
    $
    29
    
    
    $
    98
    
    
    $
    81
  1




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TENNESSEE GAS PIPELINE COMPANY
 CONDENSED CONSOLIDATED BALANCE SHEETS
(In millions, except share amounts)
(Unaudited)
 June 30,
    
    
    December 31,2007
    
    
    2006ASSETSCurrent assetsCash and cash equivalents
    
    $
    
    
    
    $
    Accounts and notes receivableCustomer
    
    
    32
    
    
    
    21Affiliates
    
    
    48
    
    
    
    70Other
    
    
    56
    
    
    
    43Materials and supplies
    
    
    31
    
    
    
    28Deferred income taxes
    
    
    14
    
    
    
    117Assets held for sale
    
    
    
    
    
    
    28Other
    
    
    6
    
    
    
    7Total current assets
    
    
    187
    
    
    
    314Property, plant and equipment, at cost
    
    
    3,852
    
    
    
    3,707Less accumulated depreciation and amortization
    
    
    674
    
    
    
    6063,178
    
    
    
    3,101Additional acquisition cost assigned to utility plant, net
    
    
    2,059
    
    
    
    2,079Total property, plant and equipment, net
    
    
    5,237
    
    
    
    5,180Other assetsNotes receivable from affiliates
    
    
    1,085
    
    
    
    1,073Investment in unconsolidated affiliate
    
    
    106
    
    
    
    98Other
    
    
    51
    
    
    
    371,242
    
    
    
    1,208Total assets
    
    $
    6,666
    
    
    $
    6,702LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilitiesAccounts payableTrade
    
    $
    70
    
    
    $
    90Affiliates
    
    
    23
    
    
    
    26Other
    
    
    54
    
    
    
    44Current maturities of long-term debt
    
    
    
    
    
    
    300Taxes payable
    
    
    57
    
    
    
    78Asset retirement obligations
    
    
    27
    
    
    
    33Accrued interest
    
    
    24
    
    
    
    24Contractual deposits
    
    
    28
    
    
    
    28Other
    
    
    10
    
    
    
    12Total current liabilities
    
    
    293
    
    
    
    635Long-term debt, less current maturities
    
    
    1,603
    
    
    
    1,302Other liabilitiesDeferred income taxes
    
    
    1,303
    
    
    
    1,407Other
    
    
    229
    
    
    
    2011,532
    
    
    
    1,608Commitments and contingenciesStockholders equityCommon stock, par value $5 per share; 300 shares
authorized; 208 shares issued and outstanding
    
    
    
    
    
    
    Additional paid-in capital
    
    
    2,208
    
    
    
    2,207Retained earnings
    
    
    1,030
    
    
    
    947Accumulated other comprehensive income
    
    
    
    
    
    
    3Total stockholders equity
    
    
    3,238
    
    
    
    3,157Total liabilities and stockholders equity
    
    $
    6,666
    
    
    $
    6,702
  2




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TENNESSEE GAS PIPELINE COMPANY
 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In millions)
(Unaudited)
 Six Months EndedJune 30,2007
    
    
    2006Cash flows from operating activitiesNet income
    
    $
    98
    
    
    $
    81Adjustments to reconcile net income to net cash from operating activitiesDepreciation and amortization
    
    
    84
    
    
    
    82Earnings from unconsolidated affiliate
    
    
    (8
    )
    
    
    (6
    )Gain on sale of asset
    
    
    (7
    )
    
    
    Deferred income taxes
    
    
    80
    
    
    
    22Other non-cash income items
    
    
    (5
    )
    
    
    (2
    )Asset and liability changes
    
    
    (139
    )
    
    
    20Net cash provided by operating activities
    
    
    103
    
    
    
    197Cash flows from investing activitiesAdditions to property, plant and equipment
    
    
    (126
    )
    
    
    (160
    )Proceeds from disposal of asset
    
    
    35
    
    
    
    Net change in notes receivable from affiliates
    
    
    (12
    )
    
    
    (41
    )Other
    
    
    
    
    
    
    4Net cash used in investing activities
    
    
    (103
    )
    
    
    (197
    )Net change in cash and cash equivalents
    
    
    
    
    
    
    Cash and cash equivalentsBeginning of period
    
    
    
    
    
    
    End of period
    
    $
    
    
    
    $
    
  3




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TENNESSEE GAS PIPELINE COMPANY
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
 1. Basis of Presentation and Significant Accounting Policies
 Basis of Presentation
  Significant Accounting Policies
  Accounting for Uncertainty in Income Taxes. Accounting for Uncertainty in Income
Taxes. Accounting
for Income Taxes,
 2. Divestitures
  3. Income Taxes
  4




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4. Credit Facilities
  5. Commitments and Contingencies
 Legal Proceedings
 Gas Measurement Cases. re: Natural Gas Royalties
Qui Tam Litigation,
 Will Price, et
al. v. Gas Pipelines and Their Predecessors, et al.,
  Environmental Matters
  5




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Balance at January 1, 2007
    
    $
    15Adjustments for remediation activities
    
    
    (1
    )Payments for remediation activities
    
    
    (2
    )Balance at June 30, 2007
    
    $
    12
  Polychlorinated Biphenyls (PCB) Cost Recoveries.
 Comprehensive Environmental Response, Compensation and Liability Act (CERCLA) Matters.
  6




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6. Retirement Benefits
 Employers Accounting
for Defined Benefit Pension and Other Postretirement Plans  an amendment of FASB Statements No.
87, 88, 106, and 132(R), Employers Accounting for Postretirement Benefits Other Than Pensions,
 7. Investment in Unconsolidated Affiliate and Transactions with Affiliates
 Investment in Unconsolidated Affiliate
  Quarter Ended
    
    Six Months EndedJune 30,
    
    June 30,2007
    
    2006
    
    2007
    
    2006(In millions)Operating results data:Operating revenues
    
    $
    4
    
    
    $
    5
    
    
    $
    10
    
    
    $
    9Operating expenses
    
    
    2
    
    
    
    2
    
    
    
    4
    
    
    
    4Income from continuing operations and net income
    
    
    4
    
    
    
    3
    
    
    
    8
    
    
    
    6
 Transactions with Affiliates
 Cash Management Program.
 Other Notes Receivable
 Accounts Receivable Sales Program.
 Taxes.
 7




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Other Affiliate Balances.
 Affiliate Revenues and Expenses.
 Quarter Ended
    
    Six Months EndedJune 30,
    
    June 30,2007
    
    2006
    
    2007
    
    2006(In millions)Revenues from affiliates
    
    $
    5
    
    
    $
    6
    
    
    $
    10
    
    
    $
    11Operation and maintenance expenses from affiliates(1)
    
    
    15
    
    
    
    15
    
    
    
    29
    
    
    
    30Reimbursements of operating expenses charged to affiliates
    
    
    11
    
    
    
    20
    
    
    
    23
    
    
    
    40
 
 (1)
    
    Includes expenses related to a long-term storage contract with an affiliate. 8




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Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
  Results of Operations
  2007
    
    
    2006(In millions,except volumes)Operating revenues
    
    $
    446
    
    
    $
    424Operating expenses
    
    
    (260
    )
    
    
    (261
    )Operating income
    
    
    186
    
    
    
    163Earnings from unconsolidated affiliate
    
    
    8
    
    
    
    6Other income, net
    
    
    9
    
    
    
    6EBIT
    
    
    203
    
    
    
    175Interest and debt expense
    
    
    (65
    )
    
    
    (65
    )Affiliated interest income, net
    
    
    22
    
    
    
    21Income taxes
    
    
    (62
    )
    
    
    (50
    )Net income
    
    $
    98
    
    
    $
    81Throughput volumes (BBtu/d)
    
    
    4,757
    
    
    
    4,721
 EBITRevenue
    
    
    Expense
    
    
    Other
    
    
    ImpactFavorable/(Unfavorable)(In millions)Services revenues
    
    $
    12
    
    
    $
    
    
    
    $
    
    
    
    $
    12Contract settlement
    
    
    10
    
    
    
    
    
    
    
    
    
    
    
    10Gain on sale of asset
    
    
    
    
    
    
    7
    
    
    
    
    
    
    
    7Other(1)
    
    
    
    
    
    
    (6
    )
    
    
    5
    
    
    
    (1
    )Total impact on EBIT
    
    $
    22
    
    
    $
    1
    
    
    $
    5
    
    
    $
    28
 
 (1)
    
    Consists of individually insignificant items. Services Revenues.
 Contract Settlement
 Gain on Sale of Asset
 9




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Expansions.
 Income Taxes
  Liquidity and Capital Expenditures
 Liquidity Overview.
    Capital Expenditures.
 Six Months Ended
    
    
    2007June 30, 2007
    
    
    Remaining
    
    
    Total(In millions)Maintenance
    
    $
    64
    (1)
    
    $
    111
    
    
    $
    175Expansion
    
    
    62
    
    
    
    158
    
    
    
    220$
    126
    
    
    $
    269
    
    
    $
    395
 
 (1)
    
    Amount includes $17 million related to hurricanes, net of insurance
proceeds. 10




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Hurricanes.
 Commitments and Contingencies
  
 Item 3. Quantitative and Qualitative Disclosures About Market Risk
  
 Item 4T. Controls and Procedures
 Evaluation of Disclosure Controls and Procedures
  Changes in Internal Control Over Financial Reporting
  11




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PART II  OTHER INFORMATION
 
 Item 1. Legal Proceedings
  
 Item 1A. Risk Factors
 CAUTIONARY STATEMENTS FOR
PURPOSES OF THE SAFE HARBOR PROVISIONS OF
THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
   
 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
  
 Item 3. Defaults Upon Senior Securities
  
 Item 4. Submission of Matters to a Vote of Security Holders
  
 Item 5. Other Information
  
 Item 6. Exhibits
  12




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SIGNATURES
  TENNESSEE GAS PIPELINE COMPANYDate: August 7, 2007
    
    
    
    /s/ JAMES C. YARDLEY

James C. YardleyChairman of the Board and President
(Principal Executive Officer)Date: August 7, 2007
    
    
    
    /s/ JOHN R. SULT

John R. SultSenior Vice President,
Chief Financial Officer and Controller
(Principal Accounting and Financial Officer)
 13




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TENNESSEE GAS PIPELINE COMPANY
 EXHIBIT INDEX
  ExhibitNumber
    
    Description31.A
    
    Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of
2002.31.B
    
    Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.32.A
    
    Certification of Principal Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of
2002.32.B
    
    Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
 14