Annual report pursuant to Section 13 and 15(d)

Schedule I

v2.4.0.6
Schedule I
 12 Months Ended
Dec. 31, 2011
Condensed Financial Information of Parent Company Only Disclosure [Abstract]  
Condensed Financial Information of Parent Company Only Disclosure [Text Block]
CONDENSED BALANCE SHEET
(in thousands)
 
 
December 31,
 
2011
 
2010
ASSETS
 

 
 
Debt receivable—affiliates
706,776

 
672,562

Other
293

 
795

Total assets
$
707,069

 
673,357

 
 
 
 
LIABILITIES AND STOCKHOLDERS’ DEFICIT
 
 
 
Current accrued liabilities
$
1,920

 
1,956

Current debt
194,724

 
—

Current debt—affiliate
443,227

 
—

Long-term debt
—

 
179,129

Long-term debt—affiliate
—

 
405,035

Investment in and equity in losses of affiliates
240,190

 
559,847

Commitments and contingencies
—

 
—

Stockholders' deficit
(172,992
)
 
(472,610
)
Total liabilities and stockholders’ deficit
$
707,069

 
673,357



CONDENSED STATEMENT OF OPERATIONS
(in thousands)
 
 
Year Ended December 31,
 
2011
 
2010
 
2009
Revenues
$
—

 
$
—

 
$
—

Operating costs and expenses
(133
)
 
135

 
422

Gain (loss) from operations
133

 
(135
)
 
(422
)
 
 
 
 
 
 
Gain on early extinguishment of debt
—

 
—

 
45,362

Interest expense, net
(20,709
)
 
(19,112
)
 
(21,312
)
Interest income
—

 
—

 
12

Interest income—affiliates
34,213

 
22,778

 
34,213

Interest expense—affiliates
(38,192
)
 
(25,426
)
 
(38,192
)
Equity losses of affiliates
24,356

 
(54,308
)
 
(181,151
)
Net loss
$
(199
)
 
$
(76,203
)
 
$
(161,490
)


CONDENSED STATEMENT OF CASH FLOWS
(in thousands)
 
 
 
Year Ended December 31,
 
 
2011
 
2010
 
2009
Net cash used in operating activitiies
 
$
(4,479
)
 
$
(27,531
)
 
$
(6,773
)
 
 
 
 
 
 
 
Cash flows from investing activities
 
 

 
 

 
 

Return of capital from (investments in) affiliates
 
(449,756
)
 
(18,934
)
 
28,635

Net cash provided by (used in) investing activities
 
$
(449,756
)
 
$
(18,934
)
 
$
28,635

 
 
 
 
 
 
 
Cash flows from financing activities
 
 

 
 

 
 

Purchase of treasury shares
 
(14,363
)
 
(2,844
)
 
(985
)
Repurchase of long-term debt
 
—

 
—

 
(30,029
)
Sale of common stock
 
468,598

 
49,308

 
—

Issuance of restricted stock
 
—

 
1

 
—

Net cash provided by (used in) financing activities
 
$
454,235

 
$
46,465

 
$
(31,014
)
 
 
 
 
 
 
 
Net decrease in cash and cash equivalents
 
—

 
—

 
(9,152
)
Cash and cash equivalents—beginning of year
 
—

 
—

 
9,152

Cash and cash equivalents—end of year
 
$
—

 
$
—

 
$
—

 

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 
The condensed financial statements represent the financial information required by Securities and Exchange Commission Regulation S-X 5-04 for Cheniere Energy, Inc ("Cheniere").
 
In the condensed financial statements, Cheniere’s investments in affiliates are presented under the equity method of accounting. Under this method, the assets and liabilities of affiliates are not consolidated. The investments in net assets of the affiliates are recorded in the balance sheet. The loss from operations of the affiliates is reported on a net basis as equity in net losses of affiliates.
 
A substantial amount of Cheniere’s operating, investing, and financing activities are conducted by its affiliates. The condensed financial statements should be read in conjunction with Cheniere’s consolidated financial statements.
  
DEBT
 
As of December 31, 2011 and 2010, our debt consisted of the following (in thousands):
 
 
December 31,
 
 
2011
 
2010
Current debt (including affiliate)
 
 
 
 
Note—Affiliate
 
$
443,227

 
$
—

Convertible Senior Unsecured Notes
 
204,630

 
—

Total current debt
 
647,857

 
—

Current debt discount
 
 
 
 
Convertible Senior Unsecured Notes
 
(9,906
)
 
—

Total current debt, net of discount
 
$
637,951

 
$
—

 
 
 
 
 
Long-term debt (including affiliate)
 
 
 
 
Long-term Note—Affiliate
 
$
—

 
$
405,035

Convertible Senior Unsecured Notes
 
—

 
204,630

Total long-term debt
 
—

 
609,665

Long-term debt discount
 
 

 
 

Convertible Senior Unsecured Notes
 
—

 
(25,501
)
Total long-term debt (including affiliate), net of discount
 
$
—

 
$
584,164

 
 
 
 
 

Below is a schedule of future principal payments that we are obligated to make on our outstanding debt at December 31, 2011 (in thousands):
 
 
Payments Due for Years Ended December 31, (1)
 
 
Total
 
2012
 
2013 to 2014
 
2015 to 2016
 
Thereafter
Note—Affiliate
 
$
443,227

 
443,227

 
—

 
—

 
—

Convertible Senior Unsecured Notes
 
$
204,630

 
204,630

 
—

 
—

 
—

Total
 
$
647,857

 
647,857

 
—

 
—

 
—

 
(1)
Based on the total debt balance, scheduled maturities and interest rates in effect at December 31, 2011, our cash payments for interest would be $18.6 million in 2012.
 
Note—Affiliate
 
In May 2007, we entered into a $391.7 million long-term note ("Note—Affiliate") with Cheniere Subsidiary Holdings, LLC ("Cheniere Subsidiary"), a wholly owned subsidiary of Cheniere. Cheniere Subsidiary received the $391.7 million net proceeds from a $400 million credit agreement entered into in May 2007. Borrowings under the Note—Affiliate bear interest equal to the terms of Cheniere Subsidiary's credit agreement at a fixed rate of 9¾% per annum. Interest is calculated on the unpaid principal amount of the Note—Affiliate outstanding and is payable quarterly in arrears on March 31, June 30, September 30 and December 31 of each year. The Note—Affiliate will mature on May 31, 2012. In August 2008, the Note—Affiliate was replaced with a global intercompany note entered into by all Cheniere subsidiaries that were parties to the 2008 Loans. Each subsidiary is both a maker and a payee under the global intercompany note, and balances between subsidiaries are as recorded on Cheniere's books and records. The $391.7 million of proceeds from the Note—Affiliate were used for general corporate purposes, including our repurchase, completed during 2007, of approximately 9.2 million shares of our outstanding common stock pursuant to the exercise of the call options acquired in the issuer call spread purchased by us in connection with the issuance of the Convertible Senior Unsecured Notes.
GUARANTEES
 
Guarantees on Behalf of Cheniere Marketing, LLC
  
Marketing and Trading Guarantees
 
Our LNG and natural gas marketing business segment is pursuing a two-front commercial strategy focused on producing long-term recurring cash flow by capitalizing on 2.0 Bcf/d of regasification capacity at the Sabine Pass LNG terminal reserved by Cheniere Energy Investments, LLC ("Cheniere Investments"). Our strategy is to remain engaged in the LNG spot market as opportunities arise, and to maintain relationships with key suppliers and market participants that we believe are candidates for entering into long-term LNG cargo sales and/or the purchase of TUA capacity currently reserved by Cheniere Investments. Many of Cheniere Marketing, LLC’s natural gas purchase, sale, transportation and shipping agreements have been guaranteed by Cheniere. As of December 31, 2011, these contracts have been guaranteed by Cheniere and have zero amount of exposure to the potential of future payments. There was zero carrying amount of liability related to these guaranteed contracts as of December 31, 2011.
 
Guarantee on behalf of Sabine Pass Tug Services, LLC
 
Sabine Pass Tug Services, LLC ("Tug Services"), a wholly owned subsidiary of Cheniere Energy Partners, L.P., entered into a Marine Services Agreement ("Tug Agreement") for three tugs with Alpha Marine Services, LLC. The initial term of the Tug Agreement ends on the tenth anniversary of the service date, with Tug Services having the option for two additional extension terms of five years each. This contract has been guaranteed by Cheniere for up to $5.0 million.
SUPPLEMENTAL CASH FLOW INFORMATION AND DISCLOSURES OF NON-CASH TRANSACTIONS

 
 
Year Ended December 31,
 
 
2011
 
2010
 
2009
 
 
(in thousands)
Non-cash capital contributions (1)
 
$
24,356

 
$
(54,308
)
 
$
181,151

 
(1)
Amounts represent equity losses of affiliates not funded by Cheniere.