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>
 
combine us with a wholly-owned subsidiary of Enterprise. See Part II, Other
Information, Item 4. Submission of Matters to a Vote of Security Holders, for
the results of the unitholder vote. We expect the completion of the merger to
occur in the third quarter of 2004, although it remains subject to review by the
Federal Trade Commission (FTC) and the satisfaction of other conditions to
close.
 
  MERGER-RELATED COSTS
 
     As a result of the pending merger with Enterprise, we determined that it
was in our and our unitholders' best interest to offer selected employees of El
Paso Corporation incentives to continue to focus on the business of the
partnership during the merger process. We have accounted for these incentives
under the provisions of SFAS No. 146, Accounting for Costs Associated with Exit
or Disposal Activities. In March 2004, we recorded a liability and a related
deferred charge of $4.3 million, which was reflected in other current
liabilities and other current assets on our balance sheets. Our liability was
estimated based upon the number of employees accepting the offer and the
discounted amount they are expected to be paid. We are amortizing the deferred
charge to expense ratably over the expected period of the services required in
order to qualify for receiving the payments. We expect to amortize the entire
expense by merger close. During the quarter and six months ended June 30, 2004,
we amortized $2.2 million and $2.8 million to expense. As of June 30, 2004, the
remaining deferred charge was $1.5 million. If our expectations of future
amounts to be paid or the period of service to be rendered change, we will
adjust our liability.
 
     Additionally, during the first quarter of 2004, we recognized an expense of
$3.5 million associated with a fairness opinion we received on our pending
merger with Enterprise. During the quarter and six months ended June 30, 2004,
we recognized expenses for legal and audit fees totaling $1.4 million and $1.5
million associated with our pending merger with Enterprise. All of our
merger-related costs are included in operation and maintenance expenses on our
statements of income and are allocated across all of our operating segments.
 
3. PROPERTY, PLANT AND EQUIPMENT
 
     Our property, plant and equipment consisted of the following:
 

<Table>
<Caption>
                                                               JUNE 30,    DECEMBER 31,
                                                                 2004          2003
                                                              ----------   ------------
                                                                   (IN THOUSANDS)
<S>                                                           <C>          <C>
Property, plant and equipment, at cost(1)
  Pipelines.................................................  $2,526,336    $2,487,102
  Platforms and facilities..................................     164,212       121,105
  Processing plants.........................................     305,904       305,904
  Oil and natural gas properties............................     131,100       131,100
  Storage facilities........................................     338,735       337,535
  Construction work-in-progress.............................     386,875       383,640
                                                              ----------    ----------
                                                               3,853,162     3,766,386
Less accumulated depreciation, depletion and amortization...     923,157       871,894
                                                              ----------    ----------
     Total property, plant and equipment, net...............  $2,930,005    $2,894,492
                                                              ==========    ==========
</Table>

 
---------------
 
(1) Includes leasehold acquisition costs with an unamortized balance of $2.1
    million and $3.2 million at June 30, 2004 and December 31, 2003. One
    interpretation being considered relative to SFAS No. 141, Business
    Combinations, and SFAS No. 142, Goodwill and Intangible Assets, is that oil
    and gas mineral rights held under lease and other contractual arrangements
    representing the right to extract such reserves for both undeveloped and
    developed leaseholds should be classified separately from oil and gas
    properties, as intangible assets on our consolidated balance sheets. We will
    continue to include these costs in property, plant, and equipment until
    definitive guidance is provided.
 
                                        8