NOTES TO UNAUDITED PRO FORMA CONDENSED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1997
(a) Reflects the reduction in selling, general and administrative and certain
administrative charges in operating expenses to the amount of the
administrative fee to be paid to EPCO in the first year of the EPCO
Agreement. Pursuant to the EPCO Agreement, EPCO will be reimbursed at cost
for all expenses that it incurs in connection with managing the business
and affairs of the Company, except that EPCO will not be entitled to be
reimbursed for any selling, general and administrative expenses. In lieu
of reimbursement for such selling, general and administrative expenses,
EPCO will be entitled to receive an annual administrative services fee
that will initially equal $12.0 million. The General Partner, with the
approval and consent of the Audit and Conflicts Committee, will have the
right to agree to increases in such administrative services fee of up to
10% each year during the 10-year term of the EPCO Agreement and may agree
to further increases in such fee in connection with expansions of the
Company's operations through the construction of new facilities or the
completion of acquisitions that require additional management personnel.
Based upon its analysis of 1997 selling, general and administrative
expenses, EPCO's management believes that the fee to be paid under the
EPCO Agreement includes all such expenses that the Company would have
incurred, including additional amounts attributable to being a public
company, had the Company operated independently from EPCO.
(b) Reflects the elimination of interest expense due to the repayment of all
debt assumed from EPCO.
(c) Reflects accrual of $6.0 million of interest on $89.2 million of assumed
borrowings under the bank credit facility at 6.47% per annum plus a 0.2%
fee for the unused portion of the $200.0 million bank credit facility.
(d) Reflects interest income earned on the purchase of $41.6 million of
participation interests in bank notes of EPCO's unconsolidated affiliates,
BEF and Mont Belvieu Associates.
(e) Reflects the additional minority interest associated with the pro forma
adjustments for the 1% minority interest of the Operating Partnership held
by the General Partner.
The pro forma condensed statement of operations for the year ended December
31, 1997 does not include a pro forma adjustment for the loss expected to be
incurred on the early extinguishment of debt assumed from EPCO. Such loss, in
accordance with generally accepted accounting principles, will be reported as
an extraordinary loss when the debt is repaid. See "Management's Discussion
and Analysis of Financial Condition and Results of Operations--General--
Prepayment Penalties on Extinguishment of Debt."