UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.  20549

 
FORM 8-K/A

 
 
CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED) May 14, 2003
 
CROSSTEX ENERGY, L.P.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

DELAWARE	 	000-50067	 	16-1616605	
(State or other jurisdiction	 	(Commission	 	(I.R.S. Employer	
of  incorporation or organization)	 	File Number)	 	Identification Number)	

2501 CEDAR SPRINGS, SUITE 600, DALLAS, TEXAS 75201
 (Address of principal executive offices)
 
REGISTRANT’S TELEPHONE NUMBER, INCLUDING AREA CODE: (214) 953-9500

 
Explanatory Note:
 
This Form 8-K/A amends the Form 8-K dated as of May 14, 2003 wherein Crosstex Energy, L.P. (the “Partnership”) issued a press release announcing first quarter 2003 earnings. This amendment corrects the previously-filed section “Guidance for 2003 Net Income and Reconciliation to Distributable Cash Flow,” as well as minor typographical errors contained in the previously-filed press release.
 
The full press release, as corrected, is attached as Exhibit 99.1.
 
ITEM 7.  FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
 
(c)        EXHIBITS
 
Pursuant to the rules and regulations of the Securities and Exchange Commission, the exhibit referenced below and the information set forth therein are deemed to be furnished pursuant to Item 9 and Item 12 hereof and shall not be deemed to be “filed” under the Securities Exchange Act of 1934.

EXHIBIT
NUMBER	 	DESCRIPTION	 	
99.1	 	Press release dated May 14, 2003.	 	

ITEM 9.  REGULATION FD DISCLOSURE.
 
The following information is being furnished under Item 9 and, in accordance with Securities and Exchange Commission Release No. 33-8126, under Item 12, “Results of Operations and Financial Condition,” by being presented under Item 9.
 
On May 14 2003, the Partnership issued a press release reporting its results for the quarter ended March 31, 2003. A copy of the press release as of May 14, 2003 is attached as Exhibit 99.1 to this Current Report and has been published on the Partnership’s website at http://www.crosstexenergy.com.
 
Pursuant to the rules and regulations of the Securities and Exchange Commission, the press release attached as Exhibit 99.1 is deemed to be furnished and shall not be deemed to be “filed” under the Securities Exchange Act of 1934.
 
2

SIGNATURES
 
Pursuant to the requirements of the Securities and Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 	CROSSTEX ENERGY, L.P.
(Registrant)	
 	 	 	
 	By:	Crosstex Energy GP, L.P., 
 its General Partner	
 	 	 	
 	By:	Crosstex Energy GP,LLC,
its General Partner	
 	 	 	
Date: May 14, 2003	By:	/s/ William W. Davis	
 	 	William W. Davis	
 	 	Senior Vice President and	
 	 	Chief Financial Officer	

 
3

 
INDEX TO EXHIBITS

EXHIBIT 
 NUMBER	 	DESCRIPTION	
99.1	 	Press release dated May 14, 2003.	

4

Exhibit 99.1

 
 
PRESS RELEASE
 
FOR IMMEDIATE RELEASE

Contact:	 	Barry E. Davis, President and Chief Executive Officer	
 	 	William W. Davis, Sr. V.P. and Chief Financial Officer	
Phone:	 	(214) 953-9500	
 
CROSSTEX REPORTS FIRST QUARTER 2003 RESULTS
 
DALLAS, May 14, 2003 — Crosstex Energy, L.P. (NasdaqNM: XTEX), a Texas-based midstream natural gas company, reported first quarter net income of $832 thousand, or $0.11 per limited partner unit, compared to a net loss in the first quarter of 2002 of $252 thousand. (Limited partner units were not outstanding in the 2002 period, as the Partnership completed its initial public offering in December 2002.) Distributable Cash Flow for the quarter was $5.4 million, or 1.46 times the amount required to cover the Minimum Quarterly Distribution. Distributable Cash Flow was $2.0 million in the 2002 period. (The next-to-last paragraph of this release contains a discussion of the Partnership’s use of Distributable Cash Flow, which is a non-generally accepted accounting principle financial measure. Also, in the tables at the end of this release is a reconciliation of this measure to net income.)
 
“With the great start we have had in 2003 in the performance of our existing asset base, our Board increased the quarterly distribution by $0.05 per unit to $0.55 per quarter. Beginning with the distribution in the second quarter, our distribution will be $2.20 per year,” said Barry E. Davis, President and Chief Executive Officer of Crosstex. “We have continued our record of growth from both acquisitions and internal growth through increased utilization of our existing systems.”
 
Gross margin in the current period increased by more than 50 percent from the prior year, driven by a 30 percent increase in on-system volumes moved by the Partnership’s Midstream Division, and by a 33 percent increase in the number of treating plants in service. Midstream gross margin increased by $2.9 million, or 56 percent, to $7.9 million, while Treating gross margin increased by $0.8 million, or 37 percent, to $2.8 million.
 
The first quarter gross margin was positively impacted by three principal factors. Gas price volatility during the quarter created some opportunities for additional margin, average on-system Midstream margins and volumes were higher than anticipated, and growth in the Treating division, which ended the quarter with 33 percent more plants in service than in the first quarter of 2002.
 
These improvements were partially offset by results at the Gregory Processing Plant, where margins were reduced in comparison to the prior period due to high gas prices relative to natural gas liquids prices.
 
Significant Midstream volume increases occurred as a result of the acquisition of the Vanderbilt system in December 2002 and the initiation of service to Florida through the Partnership’s Hallmark lateral, which also began in December. Significant volume growth was also seen in the Gregory Gathering system, as successful drilling activity by producers in the area continued to bring more gas to the system. Eight new treating plants were set for producers during the quarter, with three plants removed from service, for a net increase during the period of five plants.
 
Net income for the quarter was negatively impacted by the charge of $2.5 million in stock-based compensation that resulted from a modification in stock options in Crosstex Energy Holdings, the owner of the Partnership’s general partner, held by

 
employees of the Partnership. The charge, which is approximately $300 thousand higher than guidance previously given, has no impact on distributable cash or outstanding units of the Partnership. The increase in the charge above the level provided in the guidance is due to the increase in the Partnership’s limited partner unit price.
 
General and administrative expenses charged to the Partnership are capped at $1.5 million per quarter during 2003. Had the cap not been in place, those expenses would have been $2.0 million, reducing reported earnings and Distributable Cash Flow by approximately $500 thousand. In addition, the net loss in the prior period was benefited by approximately $2.5 million of mark-to-market gains related to the management of the Partnership’s Enron position, which was not repeated in 2003.
 
In the first quarter of 2003, pipeline throughput increased 35 percent, from 369,260 MMBtu/d to 498,643 MMBtu/d, over the first quarter of 2002. Natural gas processed increased approximately 10 percent, from 85,593 MMBtu/d to 93,855 MMBtu/d for the same period, and treating plants in operation increased from 30 at the end of the first quarter of 2002 to 40 at the end of the first quarter in 2003. Revenues for the quarter were $251 million compared to $81 million for the first quarter of 2002. The increase in revenues is attributable to higher volumes as well as a significant increase in average natural gas prices.
 
The Partnership has adjusted its guidance on net income and Distributable Cash Flow in the attached table. The adjustments take into account the current expectation that the Gregory Plant Expansion will start in the third quarter, with exact timing dependent on permitting. Given first quarter results, and assuming the acquisition from Duke Energy Field Services announced on May 2 is closed as expected, the Partnership now anticipates it will generate net income in 2003 of between $11.3 million and $13.2 million, and its estimate of Distributable Cash Flow for the year is a range of between $21.4 million and $24.3 million.
 
Crosstex will hold its quarterly conference call to discuss first quarter results today at 10:00 am Central Time (11:00 am Eastern Time). The dial-in number for the call is 800-299-9086, passcode Crosstex. A live Webcast of the call can be accessed on the investor relations page of Crosstex Energy’s Web site at www.crosstexenergy.com. The call will be available for replay for 30 days by dialing 888-286-8010, passcode 7985371. A replay of the broadcast will also be available on the company’s Web site.
 
Crosstex Energy, L.P., a mid-stream natural gas company headquartered in Dallas, operates over 1,700 miles of pipeline, two processing plants, and over 40 natural gas amine treating plants. Crosstex currently provides services for over 900,000 MMBtu/day of natural gas. Crosstex Energy was ranked first in the Mastio & Co. 2002 Producer Purchaser Satisfaction Survey of nearly 400 gas producers. Additional information about Crosstex can be found at www.crosstexenergy.com.
 
This press release contains non-generally accepted accounting principle financial measures of earnings before non-cash charges and less maintenance capital expenditures, which we refer to as Distributable Cash Flow. The amounts included in the calculation of these measures are computed in accordance with generally accepted accounting principles (GAAP), with the exception of maintenance capital expenditures, which are defined as capital expenditures (as defined by GAAP) that do not increase the capacity of the asset. We believe this measure is useful to investors because it enhances the investors’ overall understanding of our current financial performance, our prospects for future performance, and the cash that our Partnership is generating. Our reconciliation of this measure to net income is included in the following tables.
 
This press release contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements other than statements of historical facts included or incorporated herein may constitute forward-looking statements. Although the Company believes that the expectations reflected in the forward-looking statements are reasonable, it can give no assurance that such expectations will prove to be correct.

(more)

 
 
Selected Financial and Operating Data
(All amounts in thousands except per unit numbers)

 	 	Three Months Ended March 31,	 	
 	 	2003	 	2002	 	
Revenues	 	 	 	 	 	
Midstream	 	$	245,315	 	$	77,808	 	
Treating	 	5,255	 	3,185	 	
 	 	250,570	 	80,993	 	
Cost of Gas	 	 	 	 	 	
Midstream	 	237,408	 	72,759	 	
Treating	 	2,416	 	1,113	 	
 	 	239,824	 	73,872	 	
 	 	 	 	 	 	
Gross Margin	 	10,746	 	7,121	 	
 	 	 	 	 	 	
Operating Expenses	 	3,210	 	2,440	 	
General & Administrative	 	1,500	 	1,934	 	
Impairments	 	—	 	3,150	 	
(Profit) Loss on Energy Trading Contracts	 	(107	)	(2,775	)	
Stock Based Compensation	 	2,504	 	—	 	
Depreciation and Amortization	 	2,435	 	1,909	 	
Total	 	9,542	 	6,658	 	
 	 	 	 	 	 	
Operating Income	 	1,204	 	463	 	
 	 	 	 	 	 	
Interest Expense	 	(410	)	(680	)	
Other	 	38	 	(35	)	
Total Other	 	(372	)	(715	)	
Net Income	 	$	832	 	$	(252	)	
General Partner Share of Net Income	 	$	17	 	 	 	
Limited Partners Share of Net Income	 	$	815	 	 	 	
Net Income per Limited Partners’ Unit (diluted)	 	$	0.11	 	 	 	
Weighted Average Limited Partners’ Units Outstanding
(diluted)	 	7,340	 	 	 	

 
Reconciliation of Net Income to Distributable Cash Flow

Net Income	 	$	832	 	$	(252	)	
Depreciation and Amortization	 	2,435	 	1,909	 	
Impairments	 	—	 	3,150	 	
(Profit) Loss on Energy Trading Contracts	 	—	 	(2,463	)	
Stock Based Compensation	 	2,504	 	—	 	
Cash Flow	 	5,771	 	2,344	 	
 	 	 	 	 	 	
Maintenance Capital Expenditures	 	344	 	323	 	
Distributable Cash Flow	 	$	5,427	 	$	2,021	 	
Minimum Quarterly Distribution (MQD)	 	$	3,725	 	 	 	
Distributable Cash Flow / MQD	 	1.46	 	 	 	

 
Operating Data
(All volumes in MMBtu/d)

 	 	Three Months Ended March 31,	 	
 	 	2003	 	2002	 	
Pipeline Throughput	 	 	 	 	 	
Gulf Coast Transmission	 	94,903	 	104,908	 	
 	 	 	 	 	 	
Vanderbilt	 	35,082	 	—	 	
 	 	 	 	 	 	
CCNG Transmission	 	158,292	 	142,327	 	
 	 	 	 	 	 	
CCNG Transmission — Hallmark	 	52,443	 	—	 	
 	 	 	 	 	 	
Gregory Gathering	 	133,994	 	96,038	 	
 	 	 	 	 	 	
Arkoma	 	10,478	 	11,186	 	
 	 	 	 	 	 	
Other Midstream	 	13,451	 	14,801	 	
 	 	 	 	 	 	
Total Pipeline Throughput	 	498,643	 	369,260	 	
 	 	 	 	 	 	
Natural Gas Processed	 	 	 	 	 	
Gregory Processing	 	93,855	 	85,593	 	
 	 	 	 	 	 	
Total On-System Volumes	 	592,498	 	454,853	 	
 	 	 	 	 	 	
Producer Services Volumes	 	253,985	 	214,432	 	
 	 	 	 	 	 	
Treating Volumes (1)	 	87,561	 	91,581	 	
 	 	 	 	 	 	
Treating Plants In Service (2)	 	40	 	30	 	

(1) Volumes represent volumes on volume-sensitive plants only.
(2) Plants in service represent plants in service on the last day of the quarter ended March 31, 2003.

 
Guidance for 2003 Net Income and Reconciliation to
Distributable Cash Flow
(In millions)

 	 	Range	 	
 	 	Low	 	High	 	
Net Income	 	$	11.3	 	$	13.2	 	
 	 	 	 	 	 	
Depreciation and Amortization	 	12.6	 	12.6	 	
 	 	 	 	 	 	
Stock Based Compensation	 	2.5	 	2.5	 	
 	 	 	 	 	 	
Cash Flow	 	26.4	 	28.3	 	
 	 	 	 	 	 	
Maintenance Capital	 	(5.0	)	(4.0	)	
 	 	 	 	 	 	
Distributable Cash Flow	 	$	21.4	 	$	24.3