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
 
<PAGE>
 
     In July 2003, to achieve a more balanced mix of fixed rate debt and
variable rate debt, we entered into an eight-year interest rate swap agreement
to provide for a floating interest rate on $250 million of our 8 1/2% senior
subordinated notes due 2011. With this swap agreement, we paid the counterparty
a LIBOR based interest rate plus a spread of 4.20% and received a fixed rate of
8 1/2%. We accounted for this derivative as a fair value hedge under SFAS No.
133. In March 2004, we terminated our fixed to floating interest rate swap with
our counterparty. The value of the transaction at termination was zero, and as
such, neither we, nor our counterparty, were required to make any payments.
Also, neither we, nor our counterparty, have any future obligations under this
transaction.
 

ITEM 4. CONTROLS AND PROCEDURES
 
     Evaluation of Controls and Procedures.  Under the supervision and with the
participation of management, including our principal executive officer and
principal financial officer, we have evaluated the effectiveness of the design
and operation of our disclosure controls and procedures (Disclosure Controls)
and internal controls over financial reporting (Internal Controls) as of the end
of the period covered by this Quarterly Report pursuant to Rules 13a-15 and
15d-15 under the Securities Exchange Act of 1934 (Exchange Act).
 
     Definition of Disclosure Controls and Internal Controls.  Disclosure
Controls are our controls and other procedures that are designed to ensure that
information required to be disclosed by us in the reports that we file or submit
under the Exchange Act is recorded, processed, summarized and reported, within
the time periods specified under the Exchange Act. Disclosure Controls include,
without limitation, controls and procedures designed to ensure that information
required to be disclosed by us in the reports that we file under the Exchange
Act is accumulated and communicated to our management, including our principal
executive officer and principal financial officer, as appropriate to allow
timely decisions regarding required disclosure. Internal Controls are procedures
which are designed with the objective of providing reasonable assurance that (1)
our transactions are properly authorized; (2) our assets are safeguarded against
unauthorized or improper use; and (3) our transactions are properly recorded and
reported, all to permit the preparation of our financial statements in
conformity with generally accepted accounting principles.
 
     Limitations on the Effectiveness of Controls.  Our management, including
the principal executive officer and principal financial officer, does not expect
that our Disclosure Controls and Internal Controls will prevent all errors and
all fraud. The design of a control system must reflect the fact that there are
resource constraints, and the benefits of controls must be considered relative
to their costs. Because of the inherent limitations in all control systems, no
evaluation of controls can provide absolute assurance that all control issues
and instances of fraud, if any, within the company have been detected. These
inherent limitations include the realities that judgments in decision-making can
be faulty, and that breakdowns can occur because of simple errors or mistakes.
Additionally, controls can be circumvented by the individual acts of some
persons, by collusion of two or more people, or by management override of the
controls. The design of any system of controls also is based in part upon
certain assumptions about the likelihood of future events. Therefore, a control
system, no matter how well conceived and operated, can provide only reasonable,
not absolute, assurance that the objectives of the control system are met. Our
Disclosure Controls and Internal Controls are designed to provide such
reasonable assurances of achieving our desired control objectives, and our
principal executive officer and principal financial officer have concluded that
our Disclosure Controls and Internal Controls are effective in achieving that
level of reasonable assurance.
 
     No Significant Changes in Internal Controls.  We have sought to determine
whether there were any "material weaknesses" in our Internal Controls, or
whether we had identified any acts of fraud involving personnel who have a
significant role in our Internal Controls. This information was important both
for the controls evaluation generally and because the principal executive
officer and principal financial officer are required to disclose that
information to the Audit and Conflicts Committee of our general partner's board
of directors and our independent auditors and to report on related matters in
this section of the Quarterly Report. The principal executive officer and
principal financial officer note that there have not been any significant
changes in Internal Controls or in other factors that could significantly affect
Internal Controls, including any corrective actions with regard to material
weaknesses.
                                        57