Enterprise Products Partners L.P.

SEC Filings

10-K
ENTERPRISE PRODUCTS PARTNERS L P filed this Form 10-K on 02/28/2018
Entire Document
 


Financing Activities
Cash provided by financing activities for the year ended December 31, 2016 was $321.7 million compared to cash used in financing activities for the year ended December 31, 2015 of $616.0 million.  The $937.7 million year-to-year change in cash flow from financing activities was primarily due to:

§
a $1.35 billion year-to-year increase in net cash proceeds from the issuance of common units.  We issued an aggregate 104,183,571 common units in connection with our ATM program, DRIP and EUPP during 2016, which generated $2.54 billion of net cash proceeds.  This compares to an aggregate 38,314,337 common units we issued in connection with these programs and plans during 2015, which collectively generated $1.19 billion of net cash proceeds; partially offset by

§
a $356.8 million year-to-year increase in cash distributions paid to limited partners during 2016 when compared to 2015.  The increase in cash distributions is due to increases in both the number of distribution-bearing common units outstanding and the quarterly cash distribution rates per unit; and

§
a $72.6 million year-to-year decrease in net borrowings under our consolidated debt agreements.  EPO issued $1.25 billion and repaid $750.0 billion in principal amount of senior notes during 2016, compared to the issuance of $2.5 billion and repayment of $1.48 billion in principal amount of senior and junior notes during 2015.  Net proceeds from the issuance of short-term notes under EPO’s commercial paper program were $647.9 million during 2016 compared to $202.2 million during 2015.

Cash Distributions to Limited Partners

Our partnership agreement requires us to make quarterly distributions to our unitholders of all available cash, after any cash reserves established by Enterprise GP in its sole discretion.  Cash reserves include those for the proper conduct of our business including, for example, those for capital expenditures, debt service, working capital, operating expenses, commitments and contingencies and other significant amounts.  The retention of cash by the partnership allows us to reinvest in our growth and reduce our future reliance on the equity and debt capital markets.  

In January 2018, the Board declared a cash distribution of $0.4250 per common unit with respect to the fourth quarter of 2017.  In addition, our management announced plans in October 2017 to recommend to the Board additional quarterly cash distribution increases of $0.0025 per unit with respect to each of the four quarters of 2018. For additional information regarding our expected distribution growth rate, see “Significant Recent Developments” within this Item 7.

We measure available cash by reference to “distributable cash flow,” which is a non-GAAP liquidity measure.  Distributable cash flow is an important non-GAAP financial measure for our limited partners since it serves as an indicator of our success in providing a cash return on investment.  Specifically, this financial measure indicates to investors whether or not we are generating cash flows at a level that can sustain or support an increase in our quarterly cash distributions.  Distributable cash flow is also a quantitative standard used by the investment community with respect to publicly traded partnerships because the value of a partnership unit is, in part, measured by its yield, which is based on the amount of cash distributions a partnership can pay to a unitholder.  Our management compares the distributable cash flow we generate to the cash distributions we expect to pay our partners.  Using this metric, management computes our distribution coverage ratio.  

Based on the level of available cash, management proposes a quarterly cash distribution rate to the Board of Enterprise GP, which has sole authority in approving such matters.  Unlike several other master limited partnerships, our general partner has a non-economic ownership interest in us and is not entitled to receive any cash distributions from us based on incentive distribution rights or other equity interests.

Our use of distributable cash flow for the limited purposes described above and in this report is not a substitute for net cash flows provided by operating activities, which is the most comparable GAAP measure. For a discussion of net cash flows provided by operating activities, see the previous section titled “Cash Flows from Operating, Investing and Financing Activities” within this Item 7.
96