Enterprise Products Partners L.P.

SEC Filings

10-Q
GULFTERRA ENERGY PARTNERS L P filed this Form 10-Q on 08/09/2004
Entire Document
 
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INDUSTRIAL DEVELOPMENT REVENUE BONDS
 
     In April 2004, we reduced the sales tax assessable by the State of
Mississippi related to our Petal natural gas storage expansion and pipeline
project completed in September 2002 by completing that project's qualification
for tax incentives available under the MBFA. To complete the qualification,
Petal, our indirect, wholly-owned subsidiary, borrowed $52 million from the MBFC
pursuant to a loan agreement between Petal and the MBFC. On the same date, the
MBFC issued $52 million in Industrial Development Revenue Bonds to GulfTerra
Field Services, L.L.C., our direct, wholly-owned subsidiary. The loan agreement
and the Industrial Development Revenue Bonds have identical interest rates of
6.25% and maturities of fifteen years. The bonds and tax exemptions are
authorized under the MBFA. Petal may repay the loan agreement without penalty,
and thus cause the Industrial Development Revenue Bonds to be redeemed, any time
after one year from their date of issue. We have netted the loan amount and the
bond amount of $52 million and the interest payable and interest receivable
amount of $0.6 million on our balance sheet as of June 30, 2004. We have also
netted the interest expense and interest income amount of $0.6 million on our
income statements for the quarter and six months ended June 30, 2004. Our
presentation of the Industrial Development Revenue Bonds is reflected in
accordance with the provisions of FIN No. 39, Offsetting of Amounts Related to
Certain Contracts, and SFAS No. 140, Accounting for Transfers and Services of
Financial Assets and Extinguishments of Liabilities, since we have the ability
and intent to offset these items.
 
CAPITAL EXPENDITURES
 
     The ability to execute our growth strategy and complete our projects is
dependent upon our access to the capital necessary to fund projects and
acquisitions. Our success with capital raising efforts, including the formation
of joint ventures to share costs and risks, continues to be the critical factor
which determines how much we actually spend. We believe our access to capital
resources is sufficient to meet the demands of our current and future operating
growth needs and, although we currently intend to make the forecasted
expenditures discussed below, we may adjust the timing and amounts of projected
expenditures as necessary to adapt to changes in the capital markets.
 
     Under the merger agreement with Enterprise, we cannot make capital
expenditures, without Enterprise's consent, in excess of $5 million individually
or $25 million in the aggregate other than (1) as required on an emergency basis
and (2) those planned expenditures previously disclosed to Enterprise. The
forecasted expenditures disclosed in the tables below were either consented to
by Enterprise, planned expenditures previously disclosed to Enterprise or
expenditures which fall within the monetary thresholds in the merger agreement.
 
     We estimate our forecasted expenditures based upon our strategic operating
and growth plans, which are also dependent upon our ability to provide capital
from operating cash flows or otherwise obtain the capital necessary to
accomplish our operating and growth objectives. These estimates may change due
to factors beyond our control, such as weather related issues, changes in
supplier prices or poor economic conditions. Further, estimates may change as a
result of decisions made at a later date, which may include acquisitions, scope
changes or decisions to take on additional partners. Our projection of
expenditures for the quarters ended June 30 and March 31, 2004 as presented in
our 2003 Annual Report on Form 10-K, as amended, was $41 million and $76
million; however, our actual expenditures were approximately $38 million and $48
million.
 
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