UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): March 1, 2005
ENTERPRISE PRODUCTS PARTNERS L.P.
(Exact name of registrant as specified in its charter)
| Delaware | 1-14323 | 76-0568219 |
|---|---|---|
| (State or Other Jurisdiction of Incorporation or Organization) |
(Commission File Number) | (I.R.S. Employer Identification No.) |
| 2727 North Loop West, Houston, Texas | 77008-1044 | ||
|---|---|---|---|
| (Address of Principal Executive Offices) | (Zip Code) |
Registrant’s Telephone Number, including Area Code: (713) 880-6500
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Section 7 – Regulation FD
Item 7.01 Regulation FD Disclosure.
On March 1, 2005, Robert G. Phillips (CEO) and Michael A. Creel (CFO), executive officers of the general partner of Enterprise Products Partners L.P. ("Enterprise"), will present at the Fourth Annual Coalition of Publicly Traded Partnerships Conference in New York, New York. For the benefit of all investors, the slides accompanying this presentation are attached as Exhibit 99.1 to this current report on Form 8-K and will be posted on Enterprise's website, www.epplp.com, under the section titled "Investor Resources."
The attached slide presentation utilizes the non-GAAP financial measure of gross operating margin (Slides 18 and 19). We define gross operating margin as operating income before (i) depreciation, depletion and amortization expense; (ii) operating lease expenses for which we do not have the payment obligation; (iii) gains and losses on the sale of assets; and (iv) selling, general and administrative expenses. The GAAP measure most directly comparable to gross operating margin is operating income. A reconciliation of gross operating margin to operating income is presented on Slide 25.
The attached slide presentation also utilizes the non-GAAP financial measure of EBITDA (Slides 19 and 20). We define EBITDA as net income or loss plus interest expense, provision for income taxes and depreciation, depletion and amortization expense. The GAAP measure most directly comparable to EBITDA is cash provided by or used in operating activities. A reconciliation of EBITDA to this GAAP measure is presented on Slide 26. For information regarding the reasons why our management believes that presentation of gross operating margin and EBITDA provides useful information to investors with respect to our financial condition and results of operations, and the additional purposes for which our management uses gross operating margin and EBITDA, please refer to “Item 2.02 Results of Operations and Financial Condition — Use of Non-GAAP Financial Measures” in our Current Report on Form 8-K filed with the Securities and Exchange Commission on February 3, 2005.
Also, Slide 20 presents selected pro forma unaudited balance sheet information at December 31, 2004 to reflect the application of proceeds from debt and equity offerings we completed during February 2005.
Section 9 – Financial Statements and Exhibits
Item 9.01. Financial Statements and Exhibits.
|
(a) |
Financial Statements of Businesses Acquired. |
Not applicable.
|
(b) |
Pro Forma Financial Information. |
Not applicable.
|
(c) |
Exhibits. |
|
99.1 |
Enterprise Products Partners L.P. March 1, 2005 slide presentation. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this Report to be signed on its behalf by the undersigned hereunto duly authorized.
| ENTERPRISE PRODUCTS PARTNERS L.P. | ||
| By: | Enterprise Products GP, LLC,
its General Partner | |
| Date: March 1, 2005 | By: | /s/ Michael J. Knesek |
| Name: | Michael J. Knesek | |
| Title: | Senior Vice President, Controller and Principal
Accounting Officer of Enterprise Products GP, LLC | |
EXHIBIT 99.1
PRESENTATION
| Enterprise Products Partners L.P. Coalition of Publicly Traded Partnerships Annual Investor Conference March 1, 2005 Robert G. Phillips President & CEO Michael A. Creel EVP & CFO |
| This presentation contains forward-looking statements and information that are based on Enterprise’s beliefs and those of its general partner, as well as assumptions made by and information currently available to them. When used in this presentation, words such as “anticipate,” “project,” “expect,” “plan,” “goal,” “forecast,” “intend,” “could,” “believe,” “may,” and similar expressions and statements regarding the contemplated transaction and the plans and objectives of Enterprise for future operations, are intended to identify forward-looking statements. Although Enterprise and its general partner believes that such expectations reflected in such forward looking statements are reasonable, neither it nor its general partner can give assurances that such expectations will prove to be correct. Such statements are subject to a variety of risks, uncertainties and assumptions. If one or more of these risks or uncertainties materialize, or if underlying assumptions prove incorrect, actual results may vary materially from those Enterprise anticipated, estimated, projected or expected. Among the key risk factors that may have a direct bearing on Enterprise’s results of operations and financial condition are: |
| Forward Looking Statements (cont.) Fluctuations in oil, natural gas and NGL prices; A reduction in demand for its products by the petrochemical, refining or heating industries; A decline in the volumes of NGLs delivered by its facilities; The failure of its credit risk management efforts to adequately protect it against customer non-payment; Terrorist attacks aimed at its facilities; The failure to successfully integrate any future acquisitions; and The failure to realize the anticipated cost savings, synergies and other benefits of the merger with GulfTerra. Enterprise has no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise. This presentation also includes Non-GAAP financial measures. Please refer to the reconciliations of GAAP financial statements to Non-GAAP financial measures included in the back of this handout. |
| Overview The largest publicly traded energy partnership (based on market capitalization) serving producers and consumers of natural gas, NGLs and crude oil Completed $6 billion merger with GulfTerra Energy Partners, L.P. in September 2004 Prior to GulfTerra merger, ranked 336th on Fortune 500 and 7th on Forbes list of America’s 25 Fastest-Growing Big Companies Only integrated North American midstream network, which includes natural gas and NGL transportation, fractionation, processing, crude oil pipelines, offshore platforms, storage and import / export services EPCO and affiliates own the general partner and 39% of EPD Interests closely aligned with our public limited partners |
| Successful Merger with GulfTerra Created leading provider of midstream energy services with strong position in prolific deepwater Gulf of Mexico and Rocky Mountains Diversified and complementary businesses provide a natural hedge to mitigate effects of natural gas prices Extended integrated value chain to provide new organic growth opportunities Successful integration; $140 million of targeted savings largely realized GP distribution savings $55 million Interest savings of approx. $45 million G&A and operating cost savings of approx. $40 million Record 4th quarter 2004 performance |
| High visibility of growth Building scale in core growth markets with largest network of midstream assets Access to all major NGL supply basins Leveraging each link of value chain Portfolio of assets poised for solid long-term growth Gaining momentum from GulfTerra merger leading to organic growth opportunities Supported by significant cost savings and operating synergies Aggregate benefit of recent, small-scale acquisitions EPD benefits as investors differentiate between partnerships building growth as a portfolio vs. stacking stand-alone assets Capable of being a significant acquirer in niche businesses Positioned to grow long-term cash distributions at a stronger pace than competitors Majority of organic growth prospects expected to deliver average return on capital in excess of 20% Healthy coverage ratios provides immediate visibility to funding of growth projects and increasing distributions EPD compares favorably to other MLPs with higher GP splits Lower cost of capital and risk profile in rising interest rate environment |
| Integrated Midstream Energy Services Fees are earned at each link of value chain |
| Leading Business Positions Across Midstream Energy Value Chain |
| $2 Billion of Growth Opportunities |
| Southern Green Canyon Value Chain |
| Independence Hub and Trail Designed to process up to 850 MMcf/d of natural gas production from six anchor fields Capacity to tie-back up to 11 additional fields 16 of 23 wells planned for anchor discoveries have been drilled with 1.6 Tcf of reserves Large resource basin of approx. 11,500 square miles Life of lease contracts, demand charges and lease dedications Producers include Anadarko, Kerr-McGee, Devon & Dominion First production expected in 2007 |
| Independence Hub |
| Financial Overview |
| Financial Objectives Increase cash flows from fee-based businesses Prudently invest to expand the partnership through organic growth, acquisitions and joint ventures with strategic partners Manage capital to provide financial flexibility for partnership while providing our investors with an attractive total return Maintain a strong balance sheet that supports investment grade debt ratings |
| Unique Ownership Structure Largest % ownership by Management in energy industry Management interest aligned with limited partners supported by unit purchases Approx. $382 million of new EPD units since October 2002 Acquired remaining 9.9% of EPD GP and 13.5 million EPD units from El Paso for $425 million GP focused on long-term total return to common unitholders Contributed 50% of GTM’s GP to EPD for no consideration Eliminated GP’s 50% incentive distribution right for no consideration - capped at 25% |
| MLP Math: 25% vs. 50% GP Splits Lower Splits = Lower Cost of Capital |
| Selected Organic Growth and Acquisitions (Estimated Costs) |
| Diversified Operations Gross Operating Margin by Segment Fourth Quarter 2004 NGL Pipelines & Services (51%) Natural gas processing plants & related marketing activities NGL fractionation plants NGL pipelines and storage Onshore Natural Gas Pipelines & Services (26%) Natural gas pipelines Natural gas storage facilities Offshore Pipelines & Services (12%) Natural gas pipelines Oil pipelines Platform services Petrochemical Services (11%) Propylene fractionation facilities Butane isomerization facilities Octane enhancement facilities |
| Overview of Fourth Quarter Results |
| Solid Capitalization; Ample Liquidity Pro Forma for proceeds of $397 million from an equity offering, $39 million from the DRIP, $491 million from the private placement of senior notes, and the retirement of $350 million of 8.25% notes due March 2005. All of these transactions occurred in February 2005. |
| EPD Meets S&P 500 Criteria (1) |
| Proven Growth, Superior Returns |
| Key Investment Considerations Strategically located assets serving the most prolific supply basins for natural gas, natural gas liquids (NGLs) and crude oil in the U.S. Leading business positions across midstream sector Greater cash flow stability from diversified fee-based assets following the recent completion of GulfTerra merger One of the strongest organic growth profiles in the industry Increasing cash distributions leading to superior returns Lower cost of capital than many of our competitors GP / Management’s interests aligned with limited partners Experienced management team with substantial ownership |
| Enterprise Products Partners L.P. Questions and Answers |
| Non-GAAP Reconciliations |
| Non-GAAP Reconciliations |